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HomeMy WebLinkAboutCAG2003-0084 - Original - Premera Blue Cross - Administrative Service Contract - 01/01/2003 4 ti ADMINISTRATIVE SERVICE CONTRACT BETWEEN PREMERA BLUE CROSS AND CITY OF KENT This Contract is effective January 1,2003,by and between the group named above(hereinafter referred to as the"Plan Sponsor"),and Premera Blue Cross(hereinafter referred to as the "Claims Administrator"). WHEREAS,the Plan Sponsor has established an employee benefit plan(hereinafter referred to as the "Plan")which provides for payment of certain welfare benefits to and for certain eligible individuals as defined by the Plan Document,such individuals being hereinafter referred to as"Participants, Dependents and Beneficiaries";and, WHEREAS,the Plan Sponsor has chosen to self-insure the benefit program(s)provided under the Plan,and WHEREAS,the Plan Sponsor desires to engage the services of the Claims Administrator to provide administrative services for the Plan; NOW THEREFORE, in consideration of the mutual covenants and conditions as contained herem the parties hereto agree to the provisions in this Contract,including any Attachments and endorsements thereto The parties below have signed as duly authorized officers and have hereby executed this Contract If this Contract is not signed and returned to the Claims Administrator within sixty(60)days of its delivery to the Plan Sponsor or its agent,the Claims Administrator will assume the Plan Sponsor's concurrence and the Plan Sponsor will be bound by its terns. IN WITNESS WHEREOF the parties hereto sign their names as duly authorized officers and have executed this Contract CITY OF tZ BY /,sDATE: a— 'D_ Title ADDRESS a� PREMERA BLUE CROSS BY' DATE. June 3,2003 H.R.Brereton Barlow President and Chief Executive Officer P.O Box 327 Seattle,WA 98111-0327 7486T 1 SECTION I DUTIES AND RESPONSIBILITIES OF THE PLAN SPONSOR 1.01 The Plan Sponsor shall provide the Claims Administrator with a copy of the Plan Document and any other documents describing the benefit program(s)that the Claims Administrator may rely upon in performing its responsibilities under this Contract. 1.02 The Plan Sponsor shall have final discretionary authority to determine the benefit provisions and to construe and interpret the terms of the Plan 103 The Plan Sponsor shall have final discretionary authority to determine eligibility for benefits and the amount to be paid by the benefit program(s) 104 Unless specifically delegated to the Claims Administrator by this Contract,the Plan Sponsor shall be responsible for the proper administration of the Plan including a providing the Claims Administrator a complete and accurate list of all individuals eligible for benefits under the benefit program(s)and to update those lists monthly. The Claims Administrator shall be entitled to rely on the most recent list until it receives documentation of any change thereto b. nottfymg the Claims Administrator on a monthly basis of changes in eligibility, c distributing to all eligible Participants,Dependents and Beneficiaries all appropriate and necessary materials and documents,including but not limited to benefit program booklets,summary plan descriptions,material modifications,identification cards,enrollment applications and notices required by law or that are necessary for the operation of the Plan; d. providing the Claims Administrator with any additional information necessary to perform its functions under this Contract as may be requested by the Claims Administrator from time to time, f. maintaining adequate funds from which the total cost of all claims for each preceding week will be paid to the Claims Administrator by wire transfer Funds must be provided within forty-eight(48)hours of phone notification by the Claims Administrator to a person designated by the Plan Sponsor If timely payment for the claims is not received by the Claims Administrator,the Plan Sponsor shall pay the Claims Administrator a daily late charge. This late charge is calculated from the first day following the forty-eight(48)hour period stated above. This late charge is based on the average monthly prune rate posted by Bank of America/Nations Bank during the Contract Period,plus two(2)percent on the amount of the late payments for the number of days late. Late charges are due at the end of the Contract Period as part of the annual accounting or,if earlier,upon termination of the Contract. 105 The Plan Sponsor shall be responsible for all taxes,assessments and fees levied by any local,state or federal authority in connection with the Claims Administrator's duties pursuant to this Contract. 1.06 The Plan Sponsor shall be responsible for the Plan's continuing compliance with federal,state and local laws and regulations,including but not limited to the Internal Revenue Code,the Employee Retirement Income Security Act of 1974(ERISA),the 7486T 2 + S e Consolidated Omnibus Budget Reconciliation Act of 1985(COBRA),the Health Insurance Portability and Accountability Act of 1996(HIPAA),and the Balanced Budget Act of 1997 The Plan Sponsor,and not the Claims Administrator,is the "plan administrator" for purposes of all federal laws that impose duties or obligations on such entities. The Plan Sponsor shall be responsible for determining whether it is subject to COBRA and for notifying Participants,Dependents and Beneficiaries of their COBRA rights both initially and upon the occurrence of a qualifying event,for calculating and collecting premiums for COBRA continuation of coverage and for promptly notifying the Claims Administrator when an individual is no longer eligible for COBRA continuation of coverage 107 The Plan Sponsor shall be responsible for defending any legal action brought against the Plan,including a claim for benefits by or on behalf of any individual or entity,including but not limited to any Participant or former Participant,Dependent, Beneficiary,any fiduciary or other party. This responsibility includes the selection and payment of counsel. The Plan Sponsor shall not settle any legal action or claim without the prior consent of the Claims Administrator if the action or claim could result in the Claims Administrator being liable,including for example,any liability for contribution to or indemnification of the Plan Sponsor or other third party either directly or indirectly 108 In the event the Claims Administrator does not have adequate information to complete the Certificate of Group Health Coverage as required by HIPAA,the Plan Sponsor shall be responsible for completing the missing information on the Certificate and forwarding it to the Participant,Dependent or Beneficiary upon their termination from the Plan or upon request within 24 months of termination 1.09 If the Plan Sponsor writes or revises its benefit booklet,the Claims Administrator must review and approve in advance the draft of the benefit booklet that is printed and distributed to Participants. 1 10 If an adverse decision is made in the Claims Administrator's second level of review, the Plan Sponsor shall offer the Participant a review by an Independent Review Organization(IRO). The Plan Sponsor shall pay all costs of the IRO review 1 11 If the Plan Sponsor elects to opt out of compliance with certain federal mandates as allowed by HIPAA,the Plan Sponsor is responsible to file its opt-out with federal regulators for each contract period and to notify Participants,Dependents,and Beneficiaries of the opt-out in accordance with federal law and regulations then in effect The Plan Sponsor agrees to hold the Claims Administrator harmless for any and all consequences ansing from the Plan Sponsor's failure to file an opt-out as required by law for a given contract period,errors in the opt-out filing,or failure to notify an enrollee as required by federal law. SECTION II DUTIES AND RESPONSIBILITIES OF THE CLAIMS ADMINISTRATOR 201 The Claims Administrator agrees to perform the following administrative services for the Plan Sponsor. The Claims Administrator shall: a assist in the preparation and printing of the benefit program booklets, identification cards,and other materials necessary for the operation of the Plan; b process all eligible claims incurred after the effective date of this Contract which are properly submitted in accordance with the procedures set forth in the Plan Sponsor's benefit booklet. Checks will be issued on the Claims 7486T 3 Administrator's check stock,but the responsibility for funding benefits is the Plan Sponsor's and the Claims Administrator is not acting as an insurer The Claims Administrator shall make reasonable efforts to determine that a claim is covered under the terms of the benefit program(s)as described in the benefit booklet,to apply the coordination of benefits provisions,identify subrogation claims,and make reasonable efforts to recover subrogated amounts administratively,and prepare and distribute benefit payments to Participants, Dependents and Beneficiaries and/or service providers; C. notify the Group weekly by telephone or electronic medium of the amount due for the prior week's claims; d perform reasonable internal audits, e. answer inquiries from the Plan Sponsor,Participants, Dependents and Beneficiaries, and service providers regarding the terms of the Plan, although final authority for construing the terms of the Plan's eligibility and benefit provisions is the Plan Sponsors, f prepare and provide to the Plan Sponsor monthly reports of claims paid under the Plan in accordance with Attachment B; g prepare and provide the Plan Sponsor with an annual report of the operations of the Plan in accordance with Attachment B, It coordinate with any stop-loss insurance carrier, 1. when"preferred provider"benefits are provided,maintain a network of hospital and professional providers;paid claims will reflect any negotiated provider discounts, J. perform utilization management services(as identified). k provide a Certificate of Group Health Coverage to Participants, Dependents and Beneficiaries when their coverage under this Plan terminates or upon their request within 24 months of termination In the event the Claims Administrator does not have adequate information to complete the Certificate,the Plan Sponsor will be responsible for completing the missing information on the Certificate and forwarding it to the Participant, Dependent or Beneficiary. 1. review and respond to the initial appeals of adverse benefit determinations as described in the benefit booklet provided by the Claims Administrator for this Plan. The Claims Administrator shall also provide a second review of adverse appeal decisions made after its initial review. This review will be conducted as described in the benefit booklet provided by the Claims Administrator for tins Plan. An"adverse benefit determination"means any of the following-a denial, reduction,or termination of,or a failure to provide or make payment(in whole or in part)for,a benefit,including payment that is based on a determination of the eligibility of a Participant,Dependent,or Beneficiary to participate in the Plan. This includes any denials,reductions,or failures to provide or make payment resulting from the application of utilization review or limitations on experimental and investigational services,medical necessity,or appropriateness of care. 7486T 4 If an adverse decision is made in the Claims Administrator's second level of review,the Claims Administrator also agrees to facilitate a review of the appeal by an Independent Review Organization(IRO)on behalf of the Plan Sponsor. The Claims Administrator will submit all documentation regarding the appeal to the IRO and work with the IRO as needed to complete its review The Claims administrator shall pass all costs of the IRO review on to the Plan Sponsor. SECTION III LIMITS OF THE CLAIMS ADMINISTRATOR'S RESPONSIBILITY 301 It is recognized and understood by the Plan Sponsor that the Claims Administrator is not an insurer and that the Claims Administrator's sole function is to provide claims administration services and the Claims Administrator shall have no liability for the funding of benefits. The Claims Administrator is empowered to act on behalf of the Plan Sponsor in connection with the Plan only as expressly stated in this agreement or as mutually agreed to in writing by the Claims Administrator and the Plan Sponsor 302 If,during the course of an audit performed internally by the Claims Administrator pursuant to Section 2 Ol.d.or by the Plan Sponsor pursuant to Section VI o f this Contract,any error is discovered,the Claims Administrator shall use reasonable efforts to recover any loss resulting from such error 3 03 The Claims Administrator is an independent contractor with respect to the services being performed pursuant to this Contract and shall not for any purpose be deemed an employee of the Plan Sponsor. 304 This Contract is between the Claims Administrator and the Plan Sponsor and does not create any legal relationship between the Claims Administrator and any Participant,Dependent,Beneficiary or any other individual. 305 It is recognized by the parties that errors may occur and it is agreed that the Claims Administrator will not be held liable for such errors unless they resulted from its gross negligence or willful misconduct. The Plan Sponsor agrees to defend, indemnify,and hold harmless the Claim Administrator from all claims,damages, liabilities,losses,and expenses ansuig out of the Claims Administrator's performance of administration services under the terms of this Contract,so long as they did not arse out of the Clanns Administrator's gross negligence or willful misconduct. SECTION IV FEES OF THE CLAIMS ADMINISTRATOR 401 By the first of each month,The Plan Sponsor shalt pay the Claims Administrator in accordance with the fee schedule set forth in Attachment C that is incorporated herein by reference 4.02 Late Payments a. If,for any reason whatsoever,the Plan Sponsor fails to make a timely payment required under this Contract by the tenth day of the month in which payment is due,the Claims Administrator may suspend performance of services to the Plan Sponsor,including processing and payment of claims, until such time as the Plan Sponsor makes the required payment,including interest as set forth in b below. 7486T 5 b. In the event of late payment,the Claims Administrator may terminate this Contract pursuant to Section 9 05 Acceptance of late payments by the Claims Administrator shall not constitute a waiver of its right to cancel this Contract due to delinquent or nonpayment of fees. c The Claims Administrator will charge interest to the Plan Sponsor on all payments received after the tenth day of the month in which they are due, including amounts paid to reinstate this Contract after termination pursuant to Section 9.05,at the average prune rate posted by Bank of America/Nations Bank during the Contract Period plus two(2)percent on the amount of the late payments for the number of days late Interest will be in addition to any other amounts payable under this Contract SECTION V BLUECARD®PROGRAM 501 Premera Blue Cross,like all Blue Cross and/or Blue Shield Licensees,participates in a program called"BlueCard" Whenever enrollees access health care services outside Washington and Alaska,the claim for those services may be processed through BlueCard and presented to us for payment Payment is made according to the terms and limitations of your plan document and network access rules in the BlueCard Policies then in effect Under BlueCard,when enrollees receive covered services within the area served by another Blue Cross and/or B lue Shield Licensee (called the"Host Blue"in this section),Premera Blue Cross remains responsible for fulfilling our obligations under this contract The Host Blue will only be responsible for such services as contracting with providers and handling all interaction with contracting providers The Host Blue must perform these duties in accordance with applicable Blue Card Policies. The financial terms of BlueCard are described generally below• 5 02 Liability Calculation Method Per Claim The amount the enrollee pays for covered services obtamed outside{Washington and Alaska/Washington/this Plan's service area) through BlueCard is calculated on the lower of 1)the billed charges for the enrollee's covered services,or 2)the "negotiated price" that the Host Blue passes on to Premera Blue Cross for the enrollee's covered services Most often,the Plan Sponsor's liability for covered services processed through BlueCard is calculated on the same amount on which the enrollee's liability is calculated However,in rare cases required by the Host Blue's contract with the provider,the Plan Sponsor's liability will be calculated on the Host Blue's negotiated price even when that price exceeds the billed charge. The methods used to determine the negotiated price will vary among Host Blues according to the terms of their provider contracts. Often,the negotiated price will consist of a simple discount,which reflects the actual price allowed as payable by the Host Blue. But,sometimes,it is an estimated price that factors in the Host Blue's expected settlements,withholds,any other contingent payment arrangements and non-claims transactions with the enrollee's health care provider or with a specified group of providers The negotiated price may also be a discount from billed charges that reflects an average expected savings with the enrollee's health care provider or a specified group of providers. The price that reflects average savings may result in greater variation above or below the actual price than will the estimated price. In accordance with national BlueCard policy,these estimated or average prices will also be adjusted from time to time to correct for overestimation or underestimation of past prices However,the amount on which the enrollee's and 7486T 6 the Plan Sponsor's payments are based remains the final price for the covered services billed on that claim. In addition, if the Host Blue's negotiated price is an estimated or average price,as described above,some portion of the amount the Plan Sponsor pays may be held in a variance account by the Host Blue,pending settlement with its contracting providers. Because all amounts paid are final,any funds held in a variance account do not belong to the Plan Sponsor and are eventually exhausted by provider settlements and through prospective adjustments to the negotiated prices Some states may mandate a surcharge or a method of calculating what enrollees must pay on a claim that differs from B1ueCard's usual method noted above and is not pre-empted by federal law. If such a mandate is in force on the date the enrollee received care in that state,the amounts the enrollee and the Plan Sponsor must pay for any covered services will be calculated using the methods required by that state's mandate. Such methods might not reflect the entire savings expected on a particular claim. The calculation methods described above in this section 5 02 do not apply to BlueCard Worldwide claims. Under BlueCard,recoveries from a Host Blue or from contracting providers of a Host Blue can arise in several ways. Examples are antifraud and abuse audits, provider/hospital audits,credit balance audits,utilization review refunds,and unsolicited refunds. In some cases,the Host Blue will engage third parties to assist in discovery or collection of recovery amounts The fees of such a third party are netted against the recovery. Recovery amounts,net of any fees,will be applied in accordance with applicable Blue Card Policies,which generally require correction on a claim-by-claim or prospective basis. 503 BlueCard Worldwide® If enrollees are outside the United States, the Commonwealth of Puerto Rico, Jamaica and the British and U S Virgin Islands,they may be able to take advantage of BlueCard Worldwide. BlueCard Worldwide is unlike the national BlueCard program in certain ways. For instance,although BlueCard Worldwide provides a network of contracting hospitals,it offers only referrals to doctors and other health care providers. When receiving care from doctors or other health care providers, enrollees will have to submit claim forms on their own behalf to obtain reimbursement for the services provided through BlueCard Worldwide 5.04 BlueCard Fees and Compensation-Overview The Plan Sponsor understands and agrees to the following a To pay certain fees and compensation to us which we are obligated under BlueCard to pay to the Host Blue,to the Blue Cross and Blue Shield Association,or to the BlueCard vendors These fees are billed to the Plan Sponsor as shown in Attachment C,"Fees of the Claims Administrator." b. That fees and compensation under BlueCard may be revised from time to tune without the Plan Sponsor's prior approval in accordance with the Blue Cross and Blue Shield Association's standard provisions for revising fees and compensation under BlueCard. Some of these fees and compensation applyeach time a claim is processed through BlueCard. Examples of these are access fees(see 5.05 and 5 06 b elow), 7486T 7 administrative expense allowance fees,Central Financial Agency Fees,and ITS Transaction Fees. Also,some of these claim-based fees,such as the access fee and the administrative expense allowance fee,may be passed on to the Plan Sponsor as an additional claim liability Examples of fees not applied on a per-claim basis are an 800 number fee and a fee for providing provider directories If you want an updated listing of these types of fees or the amount of these fees paid directly by you,please contact us 505 Access Fees Host Blues may charge the Claims Administrator an access fee for making their discounted rates and the resulting savings available on claims incurred by the Plan Sponsor's Participants and Beneficiaries. Access fees are based on the difference between the amount paid by the Host Blue and the amount this Plan would have paid if it had dealt with the out-of-area provider directly The access fee,if one is charged,may equal up to 10 percent of the Host Licensee's discount/differential savings,but may not exceed$2,000 per claim. The access fee may be charged only if the Host Blue's arrangement with the provider prohibits billmg enrollees for amounts in excess of the discounted rate. However,providers may bill for deductibles, coinsurance,amounts in excess of stated benefit maximums,and charges for noncovered services. In the event a participating provider discount cannot be passed along to the Participant or Beneficiary,no discount or access fee will apply. 5.06 How Access Fees Affect The Plan Access fees are considered a claims expense because they represent claims dollars the Plan Sponsor is unable to avoid paying. Instances may occur in which the Claims Administrator does not pay a claim(or pays only a small amount)because the amounts eligible for payment were applied to the deductible and/or coinsurance In these instances,the access fee would still apply even though little or none of the claim was paid SECTION VI AUDIT 6.01 Within thirty(30)days of written notice from the Plan Sponsor,the Claims Administrator shall allow an authorized agent of the Plan Sponsor to inspect or audit all records and files maintained by the Claims Administrator which are directly pertinent to the administration of the Plan for the current or most recently ended contract period. Such documents shall be made available at the administrative office of the Claims Administrator during normal business hours The Plan Sponsor shall be liable for any and all fees charged by the auditor All audits shall be subject to the Claims Administrator's audit policies and procedures then in effect. To the extent that the Plan Sponsor requests data and reports that are beyond the scope of the Claim Administrator's audit policies and procedures,the Plan Sponsor shall reimburse the Claims Administrator for the additional administrative costs incurred in producing such data and reports Any agent or auditor who has access to the records and files maintained by the Claims Administrator shall agree not to disclose any proprietary or confidential information used in the business of the Claims Administrator SECTION VII SUBROGATION 7486T 8 701 The Claims Administrator shall make reasonable efforts to pursue subrogation claims administratively on behalf of the Plan However,the Claims Administrator shall have no affirmative duty to pursue subrogation claims beyond those specified m section 2.Ol.b The Plan Sponsor shall have the sole discretion to bring any legal claim or action to enforce the Plan's subrogation provisions. The Claims Administrator will cooperate with the Plan Sponsor in the event the Plan Sponsor brings any legal action to enforce the subrogation provisions of the Plan Any costs and attorneys'fees incurred in pursuing such subrogation claims shall be the responsibility of the Plan Sponsor SECTION VIII TERM OF CONTRACT 801 The term of this Contract shall be the period from 12.01 a.m.on January 1,2003,to midnight on December 31,2003(hereinafter referred to as the "Contract Period") 8.02 Except as stated otherwise in section 9.03 below,the terms and conditions of this Contract and the fee schedule set forth in Attachment C are established for the Contract Period. 803 The Plan Sponsor acknowledges that the fee schedule set forth in Attachment C and the services provided for in this Contract are based upon the terms of the Plan and the enrollment as they exist on the effective date of this Contract. Any substantial changes,whether required by law or otherwise,in the terms and provisions of the Plan or in enrollment may require that the Claims Administrator incur additional expenses. The parties agree that any substantial change,as determined by the Claims Administrator,shall result in the alteration of the fee schedule,even if the alteration is during the Contract Period. The phrase"any substantial change"shall include,but not be limited to- a a fluctuation of twenty-five(25)percent or more in the number of Participants,Dependents and Beneficiaries as set forth on the census information included in Attachment A which is herein incorporated by reference and made a part of this Contract; b. the addition of benefit program(s)or any change in the terms of the Plan's eligibility rules,benefit provisions or record keeping rules that would increase administration costs by more than$2,000, c any change in claims administrative services,benefits or eligibility required by law; d. any change in administrative procedures from those in force at the inception of this Contract that is agreed upon by the pares; e. any additional services which the Claims Administrator undertakes to perform at the request of the Plan Sponsor which are not specified in this Contract such as the handling of mailings or preparation of statistical reports and surveys not specified in this Contract. SECTION IX TERMINATION 901 The Plan Sponsor may terminate this Contract at any time by giving the Claims Administrator thirty(30)days written notice. 7486T 9 9.02 This Contract will terminate on the last day of the Contract Period or the last day of any extension of the Contract Period granted by the Plan Administrator 903 Either party may terminate this Contract effective munediately by giving written notice to the other if a party becomes insolvent,makes a general assignment for the benefit of creditors,files a voluntary petition of bankruptcy,suffers or permits the appointment of a receiver for its business or assets,or becomes subject to any proceeding under any bankruptcy or insolvency law,whether foreign or domestic A party is insolvent if it has ceased to pay its debts in the ordinary course of business;cannot pay its debts as they become due; or the sum of its debts is greater than the value of its property at a fair valuation. 904 If loss of services is caused by,or either party is unable to perform any of its obligations under this Contract,or to enjoy any of its benefits because of natural disaster,action or decrees of governmental bodies or communication failure not the fault of the affected party,such loss or inability to perform shall not be deemed a breach. The party who has been so affected shall immediately give notice to the other party and shall do everything possible to resume performance. Upon receipt of such notice,all obligations under this Contract shall be immediately suspended If the period of nonperformance exceeds thirty(30)days from the receipt of such notice,the party whose performance has not been so affected may,as its sole remedy,terminate this Contract by written notice to the other party effective immediately In the event of such termination,the Plan Sponsor shall remain liable to the Claims Administrator for all payments due,together with interest thereon as provided for in Section 4.02. 905 The Claims Administrator may,at its sole discretion,terminate this Contract effective as of a missed payment due date in the event that the Plan Sponsor fails to make a timely payment required under this Contract. 906 In the event this Contract is terminated prior to the end of the Contract Period,the Plan Sponsor shall remain liable to the Claims Administrator for all delinquent sums together with interest thereon as provided for in section 4.02 above Furthermore,the Claims Administrator will have incurred fixed costs which,but for the termination,would have been recouped over the course of the Contract Period. Therefore,in the event that the Contract terminates pursuant to Section 9 01 or 9.05,the Plan Sponsor shall also pay the Claims Administrator as liquidated damages,and not as a penalty,an amount equal to two(2)months administration fees This monthly fee shall be determined by multiplying the rate set forth in Attachment C multiplied by the average number of Participants,Dependents and Beneficiaries covered by the Plan for the immediately preceding six(6)month period or such shorter period if this Contract has not been in effect for a period of six(6)months. The Plan Sponsor shall remain liable for claims incurred during the Contract Period but not paid during the Contract Period and for the claims run-out processing fee set forth in subsection C of Attachment C 907 Within one hundred twenty(120)days of termination by either party,the Claims Administrator shall deliver to the Plan Sponsor an interim accounting Within fifteen(15)months of termination the Claims Administrator shall deliver to the Plan Sponsor a complete and final accounting of the status of the Plan. At the expense of the Plan Sponsor,the Claims Administrator shall make available a record of deductibles and coinsurance levels for each Participant, Dependent and Beneficiary and deliver this information to the Plan Sponsor or its authorized agent 7486T 10 908 For the twelve(12)month period following termination of this Contract,the Claims Administrator shall continue to process eligible claims incurred prior to termination at the claims run-out processing fee rate set forth in Attachment C SECTION X DISCLOSURE 1001 It is recognized and understood by the Plan Sponsor that the Claims Administrator is subject to all laws and regulations applicable to Claims Administrators and health care service contractors. 10.02 It is recognized and understood by the Plan Sponsor that the Claims Administrator is not acting as an insurer and also is not providing stop-loss insurance SECTION XI OTHER PROVISIONS 1101 Choice of Law The validity,interpretation,and performance of this Contract shall be controlled by and construed under the laws of the state of Washington,unless federal law applies Any and all disputes concerning this Contract shall be resolved in WASHINGTON King County Superior Court or federal court as appropriate 1102 Trademarks The Claims Administrator reserves the right to,the control of,and the use of the words"Premera Blue Cross"and, "Premera Blue Cross Blue Shield of Alaska" and all symbols,trademarks and service marks existing or hereafter established. The P Ian Sponsor shall not use such words,symbols,trademarks or service marks in advertising,promotional materials,materials supplied to Participants,Dependents and Beneficiaries or otherwise without the Claims Administrator's prior written consent which shall not be unreasonably withheld. 11.03 Independent Corporation The Plan Sponsor hereby expressly acknowledges,on behalf of itself and all of its eligible employees and their eligible dependents,its understanding that this Administrative Service Contract constitutes a Contract solely between the Plan Sponsor and the Claims Administrator,that the Claims Administrator is an independent corporation operating under a license with the Blue Cross and Blue Shield Association,an association of independent Blue Cross and Blue Shield Plans (the"Association")permitting the Claims Administrator to use the Blue Cross Service Mark in the States of Washington and Alaska,and that the Claims Administrator is not contracting as the agent of the Association The Plan Sponsor further acknowledges and agrees that it has not entered into this Administrative Service Contract based upon representations by any person other than the Claims Administrator,and that no person,entity or organization other than the Claims Administrator shall be held accountable or liable to the Plan Sponsor for any of the Claims Administrator's obligations to the Plan Sponsor created under this Administrative Service Contract This provision shall not create any additional obligations whatsoever on the Claims Administrator's part other than those obligations created under other provisions of this Administrative Service Contract 1104 Notice 7486T 11 Except for the notice given pursuant to section 1.041,any notice required or permitted to be given by this Contract shall be in writing and shall be deemed delivered three(3)days after deposit in the United States mail,postage fully prepaid,return receipt requested,and addressed to the other party at the address as shown on the Face Page of this Contract 1105 Integration This Contract,including any appendices or attachments incorporated herein by reference,embodies the entire Contract and understanding of the parties and supersedes all prior oral and written communications between them Only a writing signed by both parties hereto hereof may modify the terms 11.06 Assignment Neither party shall assign this Contract or any of its duties or responsibilities hereunder without the prior written approval of the other. SECTION XII ATTACHMENTS TO THE ADMINISTRATIVE SERVICE CONTRACT 1201 The following attach to and become part of the body of this Contract and they are herein incorporated by reference. Attachment A-Census Attachment B-Reporting Attachment C-Fee Schedule Attachment D-Right Of Conversion Attachment E-Plan Document Attachment F—Performance Guarantees Attachment G—Business Associate Agreement 7486T 12 ATTACHMENT A CENSUS INFORMATION Administration Fees,effective January 1,2003,are based on the following- Number of Active and Retired Enrollees: Employee Spouse Children Medical/RX 825 557 889 Dental 866 575 930 Vision 868 575 929 Number of COBRA Enrollees: Employee Spouse Children Medic81/Rx 9 5 5 Dental 9 5 5 Vision 9 5 5 Other Carriers Offered: Group Health Cooperative PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,13596-99,13597,-01,17884 PLAN DOCUMENT EFFECTIVE DATE: January 1,2003 ATTACHMENT B REPORTING The following reports will be provided to the Plan Sponsor within the fees set forth in Attachment C Report Title Frequency Weekly Claims Recap Weekly Detail Claim Runs Monthly Prem um/Clanns Report Monthly Large Claims Analysis Yearly PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,13596-99,13597,-01,17884 PLAN DOCUMENT EFFECTIVE DATE: January 1,2003 ATTACHMENT C FEES OF THE CLAIMS ADMINISTRATOR Pursuant to the Administrative Service Contract,the Group shall pay the Claims Administrator a fee,as set forth below,for administrative services A Administration Fees: Composite 13596-99 $57 22 17620,-01 $57.22 22066,-01 $57 22 13597,-01 $8.07 17884 $2.49 B Other Fees: Booklets $2 05 per book I D.Cards $0.88 per card Prescription Drug Charge $1 40 per claim Conversion Contract Fee $1,000 per conversion C Brokerage Fees and Commission Medical $2 00 per employee per month Freestanding Dental $ .36 per employee per month Freestanding Vision $ .36 per employee per month D. Claims Runout Processing Fee 5 00%of runout claims processed by PBC 12 00%of ninout claims processed by VSP E B1ueCard Fees: Tracked and billed as part of the annual accounting for the Contract Period PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,13596-99,13597,-01,17884 PLAN DOCUMENT EFFECTIVE DATE: January 1,2003 ATTACHMENT D RIGHT OF CONVERSION FOR TERMINATED PLAN PARTICIPANTS AND THEIR DEPENDENTS The Plan Sponsor requests that the Claims Administrator provide a conversion privilege to terminated Plan Participants and their dependents in consideration of the following Responsibilities of the Claims Administrator The Claims Administrator shall make available to Plan Participants and their dependents an opportunity to obtain health care coverage(hereinafter referred to as Conversion Contract)when they are no longer eligible for coverage under the Plan due to. • Termination of employment • Termination of benefits for the class in which the Plan Participant or dependent belongs • A covered dependent's attainment of the limiting age • A covered spouse's legal separation or divorce. • Death of a covered employee. The Claims Administrator shall not be required to issue a Conversion Contract if the Plan Participant or dependent becomes covered under a group health insurance policy within 31 days after termination of his or her coverage under the Plan Application and payment of the applicable rate for the Conversion Contract must be made by the Plan Participant or dependent within 31 days after such individual's conversion privilege of its group health coverage contracts. Rates for the Conversion Contract shall be determined by the Claims Administrator and be the same as those then in effect for coverage offered under the standard conversion privilege of its group health coverage contracts Rates will not be guaranteed and the Claims Administrator will have the right to change the rate of any Conversion Contract. Compensation The Plan Sponsor shall pay the Claims Administrator a$1,000 conversion privilege fee for each conversion contract issued to a former Plan Participant or dependent. The Claims Administrator shall notify the Plan Sponsor of the conversion privilege fees owed in connection with the weekly notification of claims paid PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,13596-99,13597,-01,17884 PLAN DOCUMENT EFFECTIVE DATE: January 1,2003 ATTACHMENT E PLAN DOCUMENT CITY OF KENT (Plan Sponsor) The employee benefit programs set forth in the Plan Document are available to certain eligible individuals as defined within the benefits programs. All benefits of this Plan Document are subject to the terms and conditions stated herem and included or issued thereafter Premera Blue Cross has been selected by City of Kent to administer the benefits of this Plan Document Premera Blue Cross is not the underwriter of this Plan Document. City of Kent is solely and totally responsible for funding benefits under the benefit programs,compliance with all applicable laws and regulations affecting the benefit programs;and fiduciary liability for the benefit programs. If,for any reason,the Administrative Service Contract between Premera Blue Cross and City of Kent terminates, Premera Blue Cross shall be relieved of its administrative duties under this Plan Document,except as otherwise provided in the Administrative Service Contract This Plan Document attaches to and becomes a part of the Administrative Service Contract effective January 1,2003. PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,13596-99,13597,-01,17884 PLAN DOCUMENT EFFECTIVE DATE: January 1,2003 ATTACHMENT F Performance Guarantees The following represents the standard of performance in administering the CITY OF KENT health care plan. Unless otherwise indicated,"plan"excludes any requests for out-of-contract payments. All customer service measures are based upon the overall performance of Premera Blue Cross Group Operations Division and do not reflect solely the services provided solely to CITY OF KENT unless otherwise noted. Requests for service other than from member and provider claims submittals and/or phone calls to the designated Customer Service Unit will be excluded unless otherwise indicated. The penalties will be measured on a quarterly basis unless otherwise indicated. Maximum penalties are calculated on an annual basis The annual maximum of all penalties is limited to$50,000 Financial Accuracy 0 Guarantee 97/o financial accuracy Derinition• 1-(($Overpays+$Undei a s/($Total Paid+$Underpays-$Overpays)) Annual Penalty $5,000 for every.5%below 97%;maximum penalty is$20,000 Measurement. Independent audit using a stratified random sample method with the point estimate calculated from the sample used as the measurement of financial error. Performed on an annual basis Administrative(Processing) Accuracy Guarantee 97%administrative accuracy. Definition- 1 mmus(Total number claims paid correctly/Total number claims paid) Annual Penalty: $2,500 for each 1%below 97%. Maximum penalty is$10,000 Measurement Independent audit using a stratified random sample method with the point estimate calculated from the sample used as the measurement of administrative error Performed on an annual basis. Turnaround Time Guarantee 80%of all claims are paid or processed within 14 calendar days Definition Number of days from the date of receipt of the claim to the date of final processing For out-of-contract claim payment requests,the date is measured from the receipt of the claim request in writing on the form(Administrative Request Form)provided for this purpose. Weekends and holidays are included in turnaround time. Processing includes generating requests for additional information. PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,13596-99,13597,-01,17884 PLAN DOCUMENT EFFECTIVE DATE: January 1,2003 Annual Penalty $2,500 for each 1 0%below the 80%target. Maximum penalty is$10,000 Measurement Premera's automated report showing CITY OF KENT's unit's results or using an independent audit. Performed on a quarterly basis. Satisfaction with Claim Processing Guarantee 85%of respondents to a survey of CITY OF KENT claimants will be satisfied or very satisfied with claim processing. All CITY OF KENT employees will be included in the survey. Definition: CITY OF KENT employees have overall satisfaction with claim processing based on a random survey Annual Penalty. $10,000 at risk if over 15%or more CITY OF KENT employees are dissatisfied. Performed in October 2001 for year 2001 and every twelve months thereafter. Measurement. CITY OF KENT survey which is reviewed and approved in advance by Premera Blue Cross Survey to be distributed by CITY OF KENT and results to be compiled by Broker/Consultant At least 50%of participating employees must respond to the survey before the performance is measured. Account Management Guarantee Premera Blue Cross will guarantee superior account management services Definition CITY OF KENT management will be informed in advance of all key changes affecting the program,with sufficient lead time to allow for review and approval if necessary Information regarding the administration of the program shall be communicated through all appropriate areas of Premera Blue Cross consistently,accurately,and on a timely basis. Communication shall be completed within 30 days of our receipt of written notification of changes from CITY OF KENT Annual Penalty• Fees reduced by$2,500 for each tune one of the above is not met,up to a maximum of$10,000 for both categories. Membership Services Phone Accessibility Guarantee Premera Blue Cross will guarantee Membership Services phone accessibility during regular business hours to CITY OF KENT plan members Definitions: Phone accessibility will meet the following mimmum standards 1. Satisfactory speed of answer all phone calls into local membership services'units will be answered within 45 seconds on average. 2 Satisfactory abandoned call rate: Less than 5%in aggregate PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,13596-99,13597,-01,17884 PLAN DOCUMENT EFFECTIVE DATE: January 1,2003 Annual Penalty. For every 1%below the target for 1 and 2 above,Premera Blue Cross will reduce its service fee by$2,500,up to a maximum of$10,000 for both categories combined. Measurement- Premera Blue Cross automated reports. PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,13596-99,13597,-01,17884 PLAN DOCUMENT EFFECTIVE DATE: January 1,2003