Agreement Between Network Health Plan of Wisc.

Exhibit 10.3


Confidential Materials omitted and filed separately with
The Securities and Exchange Commission. Asterisks denote omissions.


AGREEMENT


This Agreement is entered into effective the 1/st/ day of January, 2001, by and between Network Health Plan of Wisconsin, Inc. (hereinafter referred to as "NHP"), a Wisconsin insurance corporation, and Managed Health Services Insurance Corp. (hereinafter referred to as "MHSIC"), a Wisconsin insurance corporation.


WHEREAS, NHP is a domestic insurance corporation organized under the laws of the State of Wisconsin and maintaining a health maintenance organization for its eligible members through contractual arrangements with various participating providers and other entities;


WHEREAS, NHP has contracted with the Wisconsin Department of Health and Family Services (hereinafter referred to as "DHFS") to provide and pay for Medical Assistance/BadgerCare contract services to recipients enrolled in NHP under the State Medical Assistance Plan (hereinafter referred to as "ENROLLEES");


WHEREAS, the DHFS contract for services permits NHP to subcontract its duties and functions subject to the right of DHFS to approve such subcontracts;


WHEREAS, MHSIC desires to enter into a subcontract with NHP under the terms and conditions set forth herein;


WHEREAS, the parties desire to enter into this Agreement in order to facilitate the provision of cost effective, covered health care services to NHP ENROLLEES in Wisconsin;


NOW, THEREFORE, in consideration of the premises set forth above and the terms, covenants and conditions set forth below, the parties mutually agree as follows:


1. MHSIC agrees to be obligated to NHP for all functions and duties assumed by NHP in the Contract for Services between NHP and DHFS, as renewed. amended, or replaced (hereinafter referred to as the "CONTRACT FOR SERVICES"), with respect to all NHP ENROLLEES in Wisconsin, with the exception of those functions specified herein as the obligations of NHP. MHSIC shall be responsible to comply with the requirements of the CONTRACT FOR SERVICES to the same extent as NHP is responsible for such requirements to DHFS. Unless the contract clearly requires otherwise, words used in this Agreement shall have the meanings assigned to them by the CONTRACT FOR SERVICES. A copy of the CONTRACT FOR SERVICES is attached hereto as Exhibit 1.


2. The parties agree that MHSIC may enter into written agreements or subcontracts in order to fulfill MHSIC's duties under this Agreement. Such subcontracts shall be in accord with the requirements set forth in the CONTRACT FOR SERVICES, Addendum I-Subcontracts. MHSIC affirms that it may terminate a subcontract agreement immediately whenever the MHSIC Quality Assurance Committee and MHSIC Board of Directors determine the health or safety of ENROLLEES utilizing such subcontractor is endangered by actions of the subcontractor.


3. In consideration for the services to be provided hereunder. NHP agrees to pay MHSIC an amount equal to all premium payments, supplemental payments and any other form


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of compensation received by NHP under the CONTRACT FOR SERVICES from the State of Wisconsin or its agent or representative allocable to periods during which this Agreement is in effect, less an amount equal to [****] per month per member, plus an amount equal to the actual per member assessment for the Health Insurance Risk Sharing Pool (HIRSP) that is allocable to all NHP ENROLLEES in Wisconsin for the period during which this Agreement is in effect. NHP shall give DHFS written authorization to issue directly to MHSIC monthly checks and any and all other payments for the full amount of the compensation paid to NHP by the State of Wisconsin. Within five (5) business days from the receipt of such monthly compensation from the State of Wisconsin, MHSIC shall remit directly to NHP on a monthly basis the amount specified above per NHP Enrollee in Wisconsin.


4. ENROLLEES shall be held harmless by MHSIC and/or its subcontracted providers for payment of monies owed by MHSIC. Neither MHSIC nor its subcontracted providers shall bill, collect from, or charge ENROLLEES for Covered Services or impose any surcharges for the provision of Covered Services. If MHSIC learns of any such unauthorized charge or surcharge, MHSIC shall take appropriate action to ensure a prompt refund. MHSIC and/or its subcontracted providers may bill ENROLLEES for noncovered services, or for services rendered after the ENROLLEES discontinue, or cease to be eligible for NHP membership. This section supersedes any present or future agreement to the contrary between an ENROLLEE or an ENROLLEE'S representative and MHSIC regarding payment for Covered Services.


5. NHP, or its designee, has the right, at reasonable times, on a concurrent and/or retrospective basis, to review and/or obtain copies at NHP's sole expense, of medical records of NHP ENROLLEES in order to determine compliance with quality assurance standards and utilization review standards, NHP's medical director, or his or her designee, shall have the right to attend, as an observer, any utilization review or quality assurance meeting at MHSIC at which care rendered to NHP ENROLLEES is discussed, if such attendance will not violate any Wisconsin law regarding confidentiality of peer review discussions and peer review documents. NHP agrees that the person designated to attend such meetings shall be a licensed, medical professional and shall agree in advance to abide by all requirements of confidentiality of peer review documents and peer review discussions in accordance with Wisconsin law.


6. The parties agree that all information, records and data collected in connection with this Agreement shall be protected from unauthorized disclosure as provided in Chapter 19, Subchapter II of this Wisconsin Statutes, and 42 C.F.R. ch. 431 Subpart F. Except as otherwise required by law, access to such information shall be limited by MHSIC to persons who, or agencies that require the information in order to perform their duties related to the Agreement. These persons or agencies include, but are not limited to, NHP, the US Department of Health and Human Services, the Wisconsin Department of Health and Family Services, and the Wisconsin Office of the Commissioner of Insurance, as may be necessary for compliance by NHP with the provisions of certain federal and state regulations. MHSIC shall maintain such records in accordance with the CONTRACT FOR SERVICES.


7. MHSIC shall maintain a process for Credentialing all physicians listed as providers in the provider directory provided to NHP ENROLLEES by MHSIC and shall verify


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the Medicaid certification of all subcontracted providers pursuant to the requirements of the CONTRACT FOR SERVICES.


8. MHSIC shall be responsible for prompt review and reconciliation of ENROLLEE eligibility.


9. NHP, with reasonable cause, shall have the right to review and provide oversight for all activities that have been questioned by Federal or State agencies as non-compliant with the Federal HMO Act or the CONTRACT FOR SERVICES and are performed by MHSIC. The method by which review and oversight shall occur shall be subject to mutual written agreement of both parties.


10. The effective date of this Agreement shall be January 1, 2001, and shall have an initial term of six (6) years thereafter. This Agreement shall thereafter be automatically renewed for successive five (5) year terms unless terminated by mutual consent or pursuant to this Section. Either party may terminate this Agreement upon notification to the other party two years prior to the end of the original or any renewal term. In no case shall such termination end the obligations of MHSIC and NHP to perform any remaining obligations either party has pursuant to the CONTRACT FOR SERVICES or any remaining obligations of either party as set forth in this Agreement. In addition, this Agreement may be terminated during any initial or renewal term by MHSIC due to modifications mandated by changes in the CONTRACT FOR SERVICES or in federal or state law, regulations, or policies that materially affect MHSIC's rights or responsibilities under this Agreement. In such case, MHSIC shall notify NHP. in writing, at least ninety (90) days prior to the proposed date of termination of its intent to terminate this Agreement pursuant to this Section.


11. This Agreement shall terminate if the CONTRACT FOR SERVICES is terminated. In the event of such termination, MHSIC shall be obligated to perform the obligations set forth in Article X of the CONTRACT FOR SERVICES in the paragraph entitled "Obligations of Contracting Parties" to the same extent that NHP is obligated to DHFS and NHP agrees to fulfill any remaining obligations it has to MHSIC pursuant to the terms of this Agreement.


12. In the event that either party defaults in the performance of any duties or obligations hereunder, including either party's inability or refusal to provide services hereunder or either party's frustration of the purpose of this Agreement so that the nondefaulting party is unable to perform its duties hereunder, and the default or breach has not been cured within sixty (60) days of the nondefaulting party's giving of written notice of the default, specifying the nature of the alleged default or breach, the nondefaulting party may give notice of intent to terminate this Agreement, and this Agreement will terminate on the last day of the month in which the notice of intent to terminate is received.


13. NHP and MHSIC are separate and independent entities and neither NHP nor MHSIC, nor the employees, servants, agents or representatives of either shall be considered to be the employees, servants, agents or representatives of the other party. The parties further agree that this Agreement shall also not be construed to create a partnership or joint venture between the parties.


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14. MHSIC agrees that ENROLLEES shall not be discriminated against on the basis of age, race, color, creed, religion, sex, sexual preference, national origin, health status, or income level.


15. This Agreement may not be assigned by either party without the prior written consent of the other party, except that NHP agrees that MHSIC may assign this agreement to any one or more of its affiliates without the prior written consent of NHP. MHSIC will notify NHP of any assignments in a timely manner.


16. Any controversy between the parties hereto not informally resolved by appropriate representatives of the parties shall, upon the request of one (1) party served on the other, be submitted to arbitration in accordance with the following provision:


If any claim, dispute or controversy shall arise among the parties
hereto with respect to the making or termination of, construction of,
the terms of, or the interpretation of this Agreement or the rights of
any party hereto or with respect to any transaction involved, the
claim, dispute or controversy shall be settled by arbitration by three
(3) arbitrators in accordance with the then current Center for Public
Resources Rules for Non-Administered Arbitration of Business Disputes.
The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. (S)(S) 1-16, and judgment based on the arbitration award
may be entered in any court having jurisdiction thereof. The place of
the arbitration shall be Milwaukee, Wisconsin. The arbitrators are not
empowered to award damages in excess of compensatory damages. Not
withstanding the foregoing requirements, any party shall have the
right to seek equitable relief, in a court of competent jurisdiction,
to the extent that equitable relief is available to a person hereto.
If a person chooses to pursue equitable relief, such conduct shall not
constitute a waiver of or be deemed inconsistent with the arbitration
provision set forth above.


17. MHSIC shall not use the name of Network Health Plan, or any derivative thereof in any advertising or materials distributed to ENROLLEES, except for normal operational correspondence with ENROLLEES.


18. Any notice, request, demand or other communication required or permitted hereunder will be given in writing, by certified mail, to the party to be notified. All communications will be deemed given upon delivery or attempted delivery to the address specified herein. The addresses for the parties are as follows:


To NHP: Donald T. Schumann
Director of Business Development
Affinity Health System
1570 Midway Place
Menasha, WI 54952


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To MHS: Kathleen Crampton
President & CEO
Managed Health Services
1205 South 70/th/ Street
West Allis, WI 53214


19. MHSIC shall maintain general liability insurance and professional liability insurance in accord with industry standards at all times during the term of this Agreement. Upon request of NHP, MHSIC shall provide a certificate of insurance evidencing such coverage. MHSIC further agrees to require that physician members and subcontracted providers of MHSIC maintain such professional liability insurance as required by Wisconsin law to participate in the Wisconsin Patients Compensation Fund.


20. MHSIC shall indemnify and hold NHP, its shareholders, officers, directors, employees, and agents harmless from and against any and all liabilities, losses, settlements, claims, demands and expenses of any kind (including, without limitation, reasonable attorneys fees), that may result from any business dispute between MHSIC and any ENROLLEE in Wisconsin, or that may arise as a result of any negligent act or intentional misconduct on the part of MHSIC, its agents, employees or representatives, with respect to the performance or failure to perform any duties assumed by MHSIC pursuant to this Agreement. NHP shall, as a condition to such indemnification, notify MHSIC within ten (10) business days after receipt of notice of any claim against NHP for which NHP seeks indemnification hereunder, and MHSIC shall be entitled to make such investigation, settlement, or defense of the claim as it deems prudent. This provision shall survive the termination of this Agreement.


21. NHP shall indemnify and hold MHSIC, its officers, directors, employees and representatives harmless from and against any and all liabilities, losses, settlements, claims, demands, and expenses of any kind (including, without limitation, reasonable attorneys fees) that may result from the contractual relationship between NHP and the State of Wisconsin or NHP and any ENROLLEE in Wisconsin or that may arise as a result of any negligent act or intentional misconduct caused or alleged to have been caused by NHP or its agents, employees or representatives in the performance or failure to perform any of the duties assumed by NHP pursuant to this Agreement. MHSIC shall, as a condition to such indemnification, notify NHP within ten (10) business days after receipt of notice of any claim against MHSIC for which MHSIC seeks indemnification hereunder, and NHP shall be entitled to make such investigation, settlement, or defense of the claim as it deems prudent. This section shall survive the termination of this Agreement.


22. Unless notice to terminate this Agreement for the next contract year is given pursuant to Sections 10-12 above by either party, MHSIC shall be responsible for preparation of any certific ...