LOVELACE COMMUNITY HEALTH PLAN

AGREEMENT NO. PSC 02-05
BETWEEN THE STATE OF NEW MEXICO HUMAN SERVICES DEPARTMENT
AND LOVELACE COMMUNITY HEALTH PLAN


Amendment No. 1 ("Amendment") is entered into by and between the New Mexico Human Services Department (hereinafter referred to "HSD") and LOVELACE COMMUNITY HEALTH PLAN (hereinafter referred to as "CONTRACTOR" OR "MCO").


WHEREAS, the parties have previously entered into Agreement PSC 02-05 Approved by the Department of Finance and Administration (DFA) on July 1, 2001 (the "Agreement") and


WHEREAS, Article 37 of the Agreement allows for amendment of the Agreement; and


WHEREAS, the parties have determined that the term of the Agreement should be extended for an additional year.


WHEREAS, the Balanced Budget Act of 1997 requires certain changes to the Agreement; and


WHEREAS, based on the parties' experience since implementation of the Agreement, the parties have agreed to certain changes in the Agreement beneficial to the Agreement's goals;


NOW THEREFORE, the parties do amend the Agreement as follows:


1. All terms, definitions and conditions stated in the Agreement and not modified by this Amendment shall remain in full force and effect. This Amendment shall become effective July 1, 2003, provided it has been approved by the Department of Finance and Administration, and the U.S. Department of Health and Human Services, Center for Medicare/Medicaid Services (CMS). Any reference to CMS in this document is a reference to the agency formerly known as Health Care Financing Administration (HCFA);


2. This Agreement is extended to expire at midnight June 30, 2004.


3. In the event of a conflict between, on the one hand, the Agreement as amended herein, and on the other hand, the regulations promulgated by the Code of Federal Regulations (CFR) for Managed Care Organizations (MCOs) and the Human Services Department, the federal and state regulations will prevail.


IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 as of the date of execution by the State Contracts Officer, below.


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ARTICLE 1 (RECITALS), SECTION 1.2.(6). IS AMENDED TO READ AS FOLLOWS:


1.2.(6). All applicable statutes, regulations and rules implemented by
the Federal Government, the State of New Mexico ("State"), and
HSD, concerning Medicaid services, managed care organizations,
health maintenance organizations, fiscal and fiduciary
responsibilities applicable under the Insurance Code of New
Mexico, NMSA 1978 ss.ss. 59A-1-1 et. seq., and any other
applicable laws.


ARTICLE 1 (RECITALS), SECTION 1.7. IS ADDED TO READ AS FOLLOWS:


1.7. The parties to this contract acknowledge the need to work
cooperatively to address and resolve problems that may arise
in the administration and performance of this contract.


ARTICLE 1 (RECITALS), SECTION 1.8. IS ADDED TO READ AS FOLLOWS:


1.8 HSD may, in the administration of this contract, seek input on
health care related issues from any advisory group or steering
committee.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(1).A.V. IS AMENDED TO READ AS FOLLOWS:


2.1.(1).A.v. The CONTRACTOR shall provide potential members upon request
and enrolled members with a directory to include MCO addresses
and telephone numbers. The CONTRACTOR shall also provide upon
request a listing of primary care and specialty providers with
the identity, location, phone number and qualifications to
include area of specialty, board certification and any area of
special expertise that would be helpful to individuals
deciding to enroll with the CONTRACTOR. This material must be
available in a manner and format that may be easily
understood. At the option of the CONTRACTOR, the directory may
be limited to primary care and self-refer providers.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(1).A.VI. IS AMENDED TO READ AS FOLLOWS:


2.1.(1).A.vi. The CONTRACTOR shall provide potential members upon request
and enrolled members with a list of all items and services
that are available to members covered either directly or
through a method of referral and/or prior authorization. These
materials must be available in a manner and format that may be
easily understood.


ARTICLE 2 (SCOPE OF WORK), SECTION 2.1.(1).D. IS AMENDED TO READ AS FOLLOWS:


2.1.(1).D. MCO Enrollment Information


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Once a member is determined to be an MCO mandatory member, HSD
provides specific information about services included in the
benefit packages, MCOs from which the member can choose, and
enrollment of the member(s). The CONTRACTOR shall have written
policies and procedures regarding the utilization of
information on race, ethnicity, and primary language spoken,
as provided by HSD to the CONTRACTOR at the time of enrollment
in the MCO of each Medicaid member.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(1).E.II. IS AMENDED TO READ AS FOLLOWS:


2.1.(1).E.ii. The CONTRACTOR is responsible for providing members with a
member handbook and provider directory within a reasonable
time after the CONTRACTOR is notified by HSD of the member's
enrollment. The CONTRACTOR must notify all members at least
once per year of their right to request and obtain this
information. The member handbook shall include information
contained in 42 CFR, Section 438.10.F.2.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(1).E.III. IS AMENDED TO READ AS FOLLOWS:


2.1.(1).E.iii. The CONTRACTOR shall send a provider directory and member
handbook to members or potential members requesting a copy and
as requested by HSD. The CONTRACTOR may direct a person
requesting a member handbook or a provider directory to an
internet site. However, a specific request for a printed
document shall be met. The CONTRACTOR shall provide a one
page, two-sided summary of its benefits which may be
distributed by HSD at its discretion. The CONTRACTOR must
notify all members at least once per year of their right to
request and obtain this information.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(1).E.IV.A.B.C. ARE AMENDED TO READ AS FOLLOWS:


2.1.(1).E.iv. Member handbooks shall be available in formats other than
English and in an appropriate manner that takes into
consideration the special needs of those who for example, are
visually limited or have limited reading proficiency, if, in
the CONTRACTOR'S or HSD's determination there is a prevalent
population of the CONTRACTOR'S Salud! members that are
conversant only in those other languages or require alternate
formats. In addition, oral interpretation must be made
available free of charge to potential members or members.
These oral interpretations must be available in all
non-English languages, not just those that are determined to
be prevalent by the CONTRACTOR and HSD. The CONTRACTOR must
notify potential members and members that oral interpretation
is


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available in any language and that written information is
available in prevalent languages and how to access this
information.


(1) The format for the written material shall:
a) Use easily understood language and format;
b) Be available in alternative formats and in
an appropriate manner that takes into
consideration the special needs of those
who, for example, are visually limited or
have limited reading proficiency.


(2) All potential members upon request and enrolled
members must be notified how to access these formats.


(3) The handbook shall include:
a) Limitations to the receipt of care from
non-participating providers;
b) Coordination of care by PCPs;
c) The CONTRACTOR demographic information
including the organization's toll-free
member phone number;
d) Services for which prior authorization or a
referral is required, and the method
of obtaining both;
e) The provider directory, which need not
physically be part of the handbook. This
provider directory shall include the names,
locations, telephone numbers of, and non-
English languages spoken by current
contracted providers in the member's service
area, including the identification of
providers who are not accepting new
patients. At a minimum, this information
shall include Primary Care Providers (PCPs),
self referral specialists, and hospitals.
f) Any restrictions on the member's freedom of
choice among network providers;
g) Notice to members on both the CONTRACTOR'S
internal grievance and appeal processes
and HSD's fair hearing process;
h) Information on how to obtain services, such
as after hours and emergency service,
including the 911 telephone system or its
local equivalent;
i) The member's rights, protections, and
responsibilities;
j) Information on obtaining care in emergency
or urgent conditions;
k) Information on accessing behavioral health
or other specialty services, including
but not limited to EPSDT and family planning
services, information regarding the member's
rights to self-refer to in-plan and
out-of-plan family planning providers; and a
female member's right to self-refer to a
women's health specialist within the network
for covered care


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necessary to provide women's routine and
preventive health care services. This is in
addition to the member's designated source
of primary care if that source is not a
women's health specialist.
l) Information on the member's rights to
terminate enrollment and the process for
voluntarily disenrolling from the plan;
m) Other information determined by HSD to be
essential during the member's initial
contact with the CONTRACTOR;
n) The CONTRACTOR'S policy on referrals for
specialty care and other benefits not
furnished by the member's primary care
provider;
o) Information regarding advanced directives.
p) Information on cost sharing if any;
q) Additional information upon request,
including information on how to obtain the
CONTRACTOR'S structure and operation and
physician incentive plans.


ARTICLE 2 (SCOPE OF WORK), SECTION 2.1.(1).F.III. IS ADDED TO READ AS FOLLOWS:


2.1.(1).F.iii. The CONTRACTOR shall provide for a second opinion from a
qualified health care professional within the network, or
arrange for the member to obtain one outside the network if
there is not another qualified provider in the network, at no
cost to the member.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(1).I.I.D). IS AMENDED TO READ AS FOLLOWS:


2.1.(1).I.i.d) The following information regarding the member's rights of
access to and coverage of emergency services shall include:


1. The fact that the member has a right to use
any hospital or other setting for emergency
care;
2. What constitutes emergency medical
condition, emergency services, and post
stabilization services;
3. That an emergency condition is a medical
condition manifesting itself by acute
symptoms of sufficient severity (including
severe pain) such that a prudent layperson,
who possesses an average knowledge of health
and medicine, could reasonably expect the
absence of immediate medical attention to
result in placing the individual's health
(or with respect to a pregnant woman, the
health of a woman or her unborn child) in
serious jeopardy, serious impairment to
bodily function or serious dysfunction of
any bodily organ or part;
4. That post stabilization care covers services
related to an emergency medical condition,
that are provided after the


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member is stabilized in order to maintain
the stabilized condition or, to improve or
resolve the member's condition;
5. The fact that prior authorization is not
required for emergency services in or out of
the network with all emergency services
reimbursed at least at the Medicaid network
rate and that the CONTRACTOR shall not
retroactively deny a claim for an emergency
screening examination because the condition,
which appeared to be an emergency medical
condition under the prudent layperson
standard (defined above), turned out to be
non-emergency in nature;
6. The locations of any emergency settings and
other locations at which providers and
hospital furnish emergency services and post
stabilization services furnished under the
contract.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(1).I.IV. IS AMENDED TO READ AS FOLLOWS:


2.1.(1).I.iv. The CONTRACTOR shall provide affected members and/or legal
guardians with written updated information within 30 days of
the intended effective date of any material change. In
addition, the CONTRACTOR must make a good faith effort to give
written notice of termination of a contracted provider, within
fifteen days after receipt or issuance of termination notice
to each who received his or her primary care from, or was seen
on a regular basis by, the terminated provider.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(1).K. IS AMENDED TO READ AS FOLLOWS:


2.1.(1).K. The CONTRACTOR shall be required to comply with the MAD
regulation 8.305.8.15. on Patient Bill of Rights. The
CONTRACTOR shall provide each member with written information,
in English or prevalent language, as appropriate, found in the
MAD patient Bill of Rights pursuant to MAD 8.305.8.15.


ARTICLE 2 (SCOPE OF WORK), SECTION 2.1.(1).K.II.A IS AMENDED TO READ AS FOLLOWS:


2.1.(1).K.ii.a Members and, as appropriate, their families and/or legal
guardians have a right to participate with practitioners in
decision making regarding all aspects of their health care,
including development of the course of treatment. The
CONTRACTOR'S policy shall contain procedures for obtaining
informed consent.


ARTICLE 2 (SCOPE OF WORK), SECTION 2.1.(1).K.XI. IS ADDED TO READ AS FOLLOWS:


2.1.(1).K.xi. Members have a right to be free from any form of restraint or
seclusion used as a means of coercion, discipline, convenience
or retaliation, as


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specified in other federal regulations on the use of
restraints and seclusion.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(1).L.II. IS AMENDED TO READ AS FOLLOWS:


2.1.(1).L.ii. The Consumer Advisory Board shall serve to advise the
CONTRACTOR on issues concerning service delivery and quality,
member rights and responsibilities, the process for resolving
member grievances, and the needs of the groups they represent
as they pertain to Medicaid managed care. The Board shall meet
on at least a quarterly basis. The CONTRACTOR shall conduct
outreach activities in the state's regions to ensure member
input. The CONTRACTOR is responsible for keeping a written
record of the board meetings.


ARTICLE 2 (SCOPE OF WORK), SECTION 2.1.(1).M.VII IS AMENDED TO READ AS FOLLOWS:


2.1.(1).M.vii. The CONTRACTOR shall comply with NCQA standards for
Utilization Management and follow NCQA timeliness standards
for routine, urgent and emergent situations. The
decision-making timeframes should accommodate the clinical
urgency of the situation and not delay the provision of
services to member for lengthy periods of time. These required
timeframes are not to be affected by "pend" decisions. A
possible extension of up to 14 additional calendar days may
apply if:


(i) the member, or the provider, requests extension; or


(ii) the CONTRACTOR justifies to HSD a need for additional
information and demonstrates how the extension is in
the member's interest.


ARTICLE 2 (SCOPE OF WORK), SECTION 2.1.(1).N. IS ADDED TO READ AS FOLLOWS:


A. Coverage and authorization of services.


The CONTRACTOR shall do the following:


(1) Identify, define, and specify the amount, duration, and scope
of each service that the CONTRACTOR is required to offer.


(2) Require that the services identified in paragraph (1) of this
section be furnished in an amount, duration, and scope that is
no less than the amount, duration, and scope for the same
services furnished to beneficiaries under fee-for-service
Medicaid as set forth in 42 CFR, Section 440.230.


(3) The CONTRACTOR:


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(i) shall ensure that the services are sufficient in
amount, duration, or scope to reasonably be expected
to achieve the purpose for which the services are
furnished.


(ii) may not arbitrarily deny or reduce the amount,
duration, or scope of a required service solely
because of diagnosis, type of illness, or condition
of the beneficiary;


(iii) may place appropriate limits on a service -


(a) on the basis of criteria applied under HSD,
such as medical necessity; or
(b) for the purpose of utilization control,
provided the services furnished can
reasonably be expected to achieve their
purpose, as required in paragraph
(A)(3)(i) of this section; and


(4) The CONTRACTOR shall specify what constitutes "medically
necessary services" in a manner that:


(i) Is no more restrictive than that used by HSD as
indicated in State statutes and regulations, the
State Plan, and other State policy and procedures;
and


(ii) Addresses the extent to which the CONTRACTOR is
responsible for covering services related to the
following:


(a) the prevention, diagnosis, and treatment of
health impairments;
(b) the ability to achieve age-appropriate
growth and development;
(c) the ability to attain, maintain, or regain
functional capacity.


(B) Authorization of Services
For the processing of requests for initial and continuing
authorizations of services, the CONTRACTOR must:


(1) Require that its subcontractors have in place, and follow,
written policies and procedures;


(2) Have in effect mechanisms to ensure consistent application of
review criteria for authorization decisions;


(3) Consult with the requesting provider when appropriate; and


(4) Require that any decision to deny a service authorization
request or to authorize a service in an amount, duration, or
scope that is less than requested, be made by a health care
professional who has appropriate


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clinical expertise in treating the member's condition or
disease, such as the CONTRACTOR'S Medical Director.


(C) Notice of adverse action.


The CONTRACTOR must notify the requesting provider, and give the member
written notice of any decision by the CONTRACTOR to deny a service
authorization request, or to authorize a service in an amount,
duration, or scope that is less than requested. The notice must meet
the requirement of 42 CFR Section 438.404, except that the notice to
the provider need not be in writing.


D. Compensation for utilization management activities.


Each contract must provide that, consistent with 42 CFR, Sections
438.6(h) and 422.208, compensation to individuals or entities that
conduct utilization management activities is not structured so as to
provide incentives for the individual or entity to deny, limit, or
discontinue medically necessary services to any member.


ARTICLE 2 (SCOPE OF WORK), SECTION 2.1.(1).N. (DENIALS) IS CHANGED TO SECTION 2.1.(1).O.


ARTICLE 2 (SCOPE OF WORK), SECTION 2.1.(2).F.VIII. IS AMENDED TO READ AS FOLLOWS:


2.1.(2).F.viii. The CONTRACTOR shall have written policies and procedures for
conducting member surveys.


ARTICLE 2 (SCOPE OF WORK) SECTION 2.1.(2).G.II. IS AMENDED TO READ AS FOLLOWS:


2.1.(2).G.ii. Ensure that the QI program is applied to the entire range of
health services provided through the CONTRACTOR by assuring
that all major population groups, care settings, and service
types are included in the scope of the review. A major
population group is one which represents at least five percent
of a CONTRACTOR'S enrollment.


ARTICLE 2 (SCOPE OF WORK), SECTION 2.1.(2).J.X. IS ADDED TO READ AS FOLLOWS:


2.1.(2).J.x. Ensure the delegate takes corrective action if the CONTRACTOR
identifies deficiencies.


ARTI ...