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HomeMy WebLinkAboutES04-149 - Original - Premera Blue Cross - Administrative Service Contract - 01/01/2004 ADMINISTRATIVE SERVICE CONTRACT BETWEEN PREMERA BLUE CROSS AND CITY OF KENT This Contract is effective January 1,2004,by and between the group named above(hereinafter referred to as the"Plan Sponsor"),and Premera Blue Cross(hereinafter referred to as the"Clauns 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 progmm(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 herein 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 terms. IN WITNESS WHEREOF the parties hereto sign their names as duly authorized officers and have executed this Contract. CITY OF KENT � 5a BY: DATE: 1 O Title U V '/ �J ADDRESS: �a� — 7 l71Jlc—,�50 PREMERABLUE CROSS BY: ,/ DATE: Mazch 2,2004 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. 1.03 The Plan Sponsor shall have final discretionary authority to determine eligibility for benefits and the amount to be paid by the benefit program(s). 1.04 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. notifying 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 maybe 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 prime 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. 1.05 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 Admimstrator'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]united to the Internal Revenue Code,the Employee Retirement Income Security Act of 1974(ERISA),the 7486T 2 Consolidated Omnibus Budget Reconciliation Act of 1985(COBRA),the Health Insurance Portability and Accountability Act of 1996 allAA),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. 1.07 The Plan Sponsor shall be responsible for defending any legal action brought against the Plan,including a clavn 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 thud party either directly or indirectly. 1.08 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 arising from the Plan Sponsofa 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 H DUTIES AND RESPONSIBILITIES OF THE CLAIMS ADMINISTRATOR 2.01 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 Sponsofs and the Clairns 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 as stated in section 7.01,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 as stated in Section VI; 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 reports in accordance with Attachment B; g. prepare and provide the Plan Sponsor of the operations of the Plan in accordance with Attachment B; h. coordinate with any stop-loss insurance carrier; i. 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 this 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,radical 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 3.01 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. 3.02 It 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 of 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. 3.04 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. 3.05 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 Claims Administrator from all claims,damages, liabilities,losses,and expenses arising out of the Claims Administrator's performance of administration services under the terms of this Contract,so long as they did not arise out of the Claims Administrator's gross negligence or willful misconduct. SECTION IV FEES OF THE CLAIMS ADMINISTRATOR 4.01 By the first of each month,The Plan Sponsor shall 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, 7486T 5 until such time as the Plan Sponsor makes the required payment,including interest as set forth in b.below. 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 Admimstrator 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 prime 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 BLUECARD0 PROGRAM 5.01 Premera Blue Cross,like all Blue Cross and/or Blue Shield Licensees,participates hi 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 Blue 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 BlueCard Policies. The financial terms of BlueCard are described generally below: 5.02 Liability Calculation Method Per Claun The amount the enrollee pays for covered services obtained 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 w7th 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. Oaten, the negotiated price will consist of a simple discount,which reflects die 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,vnthholds,any other contingent payment arrangements and non-claims transactions with the enrollee's health care provider or with a specified group of providers. Tlie negotiated price may also be a discount from billed charges that reflects an average expected savings with;he enrollee's health care provider or a specified group of providers. The price that reflects average scvmgs may result in greater variation above or below the actual price than will the estimated price In accordanc1 with national BlueCard policy,these estimated or ;,486T 6 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 the Plan Sponsor's payments are based remains the final price for the covered services billed on that claim. In addition,if the Host Bluets 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 contractiug providers. Because all amounts paid are final,any funds held in a,vanance 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 frog►BlueCard'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 BlueCard Policies,which generally require correction on a claim-by-claim or prospective basis. 5.03 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 user 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 time 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. 7486T 7 Some of these fees and compensation apply each time a claim is processed through B1ueCard. Examples of these are access fees(see 5.05 and 5.06 below), 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. 5.05 Access Fees Host Blues may charge the Claims Administrator an access fee for malting 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 billing 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 milA IT _ 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. 7486T 8 SECTION VII SUBROGATION 7.01 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 in section 2.0l.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 8.01 The term of this Contract shall be the period from 12:01 a.m.on January 1,2004,to midnight on December 31,2004(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. 8.03 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 the exist on the effective date of this Contract. An substantial Y Y 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 Adminlsfratoi,-shall iesult in the alteia6oii 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 parties; 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 D{ TERMINATION 9.01 The Plan Sponsor may terminate this Contract at any time by giving the Clauns 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. 9.03 Either party may terminate this Contract effective immediately 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 parry 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. 9.04 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. 9.05 The Claims Administrator may,at its sole discretion,terminate this Contract - ----- --------efle`ctive as ofa missed payment u®date fi the event that the Plan Sponsor fails to make a timely payment required under this Contract. 9.06 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. 9.07 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 9.08 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 10.01 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 11.01 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. 11.02 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;tiude rw- l s and service marks existing of hereafter estabbilied.-ThePian --------- 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 Comoration 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. 7486T 11 11.04 Notice 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. 11.05 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 71I ATTACHMENTS TO THE AWNSTRATIVE SERVICE CONTRACT 12.01 The following attach to and become part of the body of this Contract and they are herein incorporated by reference. Attachment A-Census - - --attachment IF.-Rep rtmg--- --- -- — Attachment C-Fee Schedule Attachment D-Business Associate Agreement Attachment E-Right Of Conversion 7486T 12 w ATTACHMENT A CENSUS INFORMATION Administration Fees,effective January 1,2004,are based on the following: Number of Active and Retired Enrollees: Employee Spouse Children Medical/Rx 767 536 841 Dental 807 554 876 Vision 59 25 0 Number of COBRA Enrollees: Employee Spouse Children Medical/Rx 6 0 4 Dental 6 0 4 Vision 0 0 0 Other Carriers Offered: Group Health Cooperative PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,-04 13596-99,13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004 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 Rims Monthly Premium/Claims Report Monthly Large Claims Analysis Yearly PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,-01,13596-99,13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004 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: Co osite 2004 2005 2006 13596-99 $56.03 $59.39 $61.77 17620 -Ol $54.73 $59.01 $60.33 22066 -Ol $54.73 $58.01 $60.33 13599 -01 $8.07 $8.55 $8.89 Premm Blue cross reserves the right to adjust the guaranteed administrative fees for 2005 and 2006 in the following circumstances: • City of Kent makes benefit modifications or changes in the way the plan operates that would materially increase Premera's cost to administer the plan(a change to the Dimensions platform would not be deemed to materially increase Premera's cost). • Legislated tax changes increase Premera's cost. • City of Kent enrollment(members and/or contracts)fluctuate+/- 10%per contract year. • City of Kent offers employees healthcare options other than Premera Blue Cross and Group --- ------ 33ealthCooperative- — — — --- - — B. Other Fees: Booklets $2.05 per book I.D. Cards $0.88 per card Prescription Drug a $1.40 per claim Conversion Contract Fee $1,000 per conversion C. Brokerage Fees and Commission Medical $2.36 per employee per month Freestanding Dental $ .36 per employee per month D. Claims Runout Processing Fee 10.00%of runout claims processed by PBC E BlueCardFees: Tracked and billed as part of the annual accounting for the Contract Period PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,220665-01,13596-99, 135979-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004 - ATTACHMENT D BUSINESS ASSOCIATE ATTACHMENT TO ADMINISTRATIVE SERVICE CONTRACT FOR ERISA GROUPS This Business Associate Attachment(the"AttacbmerifI shall be entered into by and between the Claims Administrator,the Plan Sponsor and the Group Health Plan(the"GHP")(as defined below)on the effective date of this Contract. Recitals. 1. In 1996,Congress enacted the Health Insurance Portability and Accountability Act("HIPAA"), which required,among other things,the promulgation of privacy rules governing the use and disclosure of protected health information. 2. In pertinent part,the HIPAA privacy rules,codified at 45 C.F.R.Parts 160 and 164,subparts A and E,and as amended(the"Privacy Rule")require that covered entities,including the GHP, maintain business associate agreements with third parties that provide certain services for and on behalf of the GHP,including the Claims Administrator,and outline specific contractual requirements to be incorporated into the business associate agreements. 3. In addition to being the business associate of the GHP,the Claims Administrator is also a covered entity,as defined in the Privacy Rule,and has policies,procedures and practices in place to ensure compliance with the Privacy Rule. --------4.--Because the Claims-Administrator is regulated under other state-and federal privacy laws;it has- — --- ---------- adopted the term"protected personal information"or"PPP'(as defined below)and will apply the obligations contained in this Attachment to that information. NOW,THEREFORE,in consideration of these premises and the mutual promises and agreements hereinafter set forth,the Plan Sponsor,the GHP and the Claims Administrator hereby agree as follows: 1. Definitions. The following definitions shall apply in interpreting this Agreement. Terms used,but not otherwise defined shall have the same meaning as those terms in the Privacy Rule(as defined below): 1.1 Group Health Plan or GHP. The GHP shall be defined consistent with 45 CFR 164103, and as amended. 1.2 dr�n •vidua]. "Individual"shall mean the person who is the subject of the PPI or their personal representative(as defined in§164.502(g)of the Privacy Rule). 1.3 Protected Personal Information or PPI. "PPr'shall mean any and all information created or received by the Claims Administrator,that identifies or can readily be associated with the identity of an Individual,whether oral or recorded in any form or medium,that directly related to:(1)the past,present or fixture physical,mental or behavioral health or condition of an Individual;(2)the past,present or future payment for the provision of health care to an Individual;(3)the provision of health care to an Individual;and(4)the past,present or future finances of an Lubvidual,including,without limitation,an Individual's name,address,telephone number,Social Security Number,subscriber number or wage information. PLAN SPONSOR: City of Kent PLAN NUMBER: 176209 22066,-01913596-99, 13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004 1.4 Seere "Secretary"shall mean the Secretary of the Department of Health and Human - Services or his designee. 2. GHP. The Claims Administrator,Plan Sponsor and GHP all agree to add the GHP as a party to the Contract and acknowledge that the GHP's obligations under the Contract are contained completely in this Attachment. 3. SafeQuard of PPL The Claims Administrator will maintain reasonable and appropriate administrative,technical and physical safeguards,as required by applicable laws to protect against reasonably anticipated threats or hazards to,and to ensure,the security and integrity of PPI,to protect against reasonably anticipated unauthorized use or disclosure of PPI,and to reasonably safeguard PPI from any intentional or unintentional use or disclosure in violation of the Attachment. 4. Permitted Uses and Disclosures of PPI by the Claims Administrator. 4.1 Functions and Activities on the GHP's Behalf. The Claims Administrator shall be permitted to use and disclose PPI for(a)the management,operation and admmmstration of the GHP and(b)as otherwise necessary to provide the services set forth in the Contract, including,but not limited to activities related to Payment and Health Care Operations as defined in§164.501 of the Privacy Rule. 4.2 Disclosures to the Plan Sgwsor.the GHP or other Business Associates of the GHP. Except as otherwise permitted by this Attachment or another written directive from GBP, the Claims Administrator,will not disclose PPI to the Plan Sponsor,the GHP or to another business associate of the GHP. The Claims Administrator,may disclose PPI only to those individuals employed by the GHP,Plan Sponsor or other business associates of the GHP,including,without limitation,the GHP's broker,identified in Exhibit D-1, ________which is attached hereto and incorporated herein. The GHP-must promptly notify the_ Claims Administrator of any changes to Exhibit D-1. 4.3 Functions and Activities on the Claims Administrator's Behalf The Claims Administrator shall be permitted to use PPI as necessary for the Claims Administrator's management and administration or to carry out its legal responsibilities as permitted or required by law. The Claims Administrator shall also be permitted to disclose PPI to its business associates,subcontractors or other third parties as necessary for proper management and administration of the Claims Administrator,or to carry out the Claims Administrator's legal responsibilities(a)if the disclosure is required by law or(b)if before the disclosure is made,the Claims Administrator,obtains a contract from the entity to which the disclosure is to be made containing reasonable assurances that the entity will also comply with the Privacy Rule's business associate requirements. 5. Minimum Necessary. The GHP and the Plan Sponsor will make reasonable efforts to request from the Claims Administrator only the minimum amount of PPI necessary for its needed purpose. In addition,the GHP and the Plan Sponsor will make reasonable efforts to only disclose to the Claims Administrator the minimum amount of PPI necessary for the Claims Administrator to perform the services identified in the Contract and other functions and activities referenced in Section 3 of this Attachment. Finally,the Claims Administrator will make reasonable efforts to use,disclose,or request only the minimum amount of PPI necessary from any third party to perform the services identified in the Contract and other functions and activities referenced in Section 3 of this Attachment. PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,-01,13596-99,13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004 • 6. Other Privacy Oblieations of the Claims Administrator. The Claims Administrator shall: 6.1 Not use or finther disclose PPI other than as permitted or required by the Contract,the Attachment or law; 62 Report to GHP any actual use or disclosure of PPI concerning GBP's Participants, Dependents and Beneficiaries not permitted or required by the Contract,the Attachment or law of which it becomes aware; 6.3 Ensure that any agents,including a subcontractor,to whom it provides PPI received from, or created or received by the business associate on behalf of;the GHP agree to the same restrictions and conditions as outlined in the Privacy Rule that apply to a business associate with respect to such information; 6.4 Make available PPI as required by§164.524; 6.5 Make available PPI for amendment and incorporate any amendments to PPI as required by§164.526; 6.6 Make available the information required to provide an accounting of disclosures as required by§164.528; 6.7 Make its internal practices,books,and records relating to the use and disclosure of PPI received from,or created or received by the Claims Administrator on behalf of,the GHP available to the Secretary for purposes of determining the GHP's compliance with the Privacy Rule;and 6_8 Refit they &and-disclosure of PPI-in accordance with-§164.522_and consistent with — the Claims Administrator's policies,procedures and practices. 7. The Claims Administrator's Privacy-Related Services Reaardine Requests by Individuals. Upon receipt,the GHP shall immediately provide notice to and forward any and all individual requests received pursuant to§164.522,§164.524, §164.526 or§164.528 of the Privacy Rule (collectively referred to as the"Requests")consistent with Exhibit D-2. Upon the Claims Administrator's receipt of the Requests,either from the GHP or directly from the Individual,the Claims Administrator shall: 7.1 Evaluate each request consistent with the Privacy Rule and the Claims Administrator's policies,procedures and practices; 7.2 For Requests that may affect the policies,procedures or practices of the GHP,coordinate with the GHP about evaluation of the Requests and mutually agree on the result; 7.3 For Requests that may involve the GHP's other business associates,request information from the business associates identified by the GHP necessary for fulfilling the Requests; 7.4 Communicate the result of the evaluation directly to the Individual within the legal timefiames established for each type of request;and 7.5 Notify the GHP of the outcome of each Request identified by the GHP at the time of notice to the Claims Administrator;and 7.6 Implement each Request that is granted. PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,-01,13596-99,13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004 • Such services shall be included in the Claims Administrator's Administration Fee set forth in -. Attachment C.. 8. GHP's Notice of Privacy Practices. 8.1 Preparation of the GHP's Notice of Privacy Practices. Claims Administrator will provide the GHP a copy of notice of privacy practices as it relates to the Claims Administrator's functions and activities contained in the Contract and this Attachment,which the GHP shall incorporate into the GHP's Notice of Privacy Practices(the"Privacy Notice") 8.2 Amendment of the GHP's Privacy Notice. the GHP shall be responsible for modifying the Privacy Notice in the event that the GHP,the Plan Sponsor or the Claims Administrator materially changes its privacy policies,procedures or practices that affect the Privacy Notice. The party necessitating the change to the Privacy Notice shall bear any reasonable costs associated with revising and distributing the Privacy Notice. The GHP,the Plan Sponsor and the Claims Administrator will not institute such material change before the effective date of the GIIP's revised Privacy Notice. 8.3 Distribution of the M's Privacy Notice of Privacy Practices. The GHP shall be responsible for the distribution of its Privacy Notice,and any revisions to its Privacy Notice within a reasonable time. 9. Term and Termination. 9.1 Term. The Term of this Attachment shall begin as of the Effective Date contained Herein and shall remain in effect for the duration of the Contract. 9.2 Termination for Breach of Privacy Obligations. The GHP will have the right to terminate ----_--the_-Contract if the-ClaimsAdministrator has engaged in a pattern of activity or practice_--- --- -that constitutes a material breach or violation of the Claims Administrator's obligations regarding PPI under this Attachment. The contractual requirements for termination are outlined in the Contract. 9.3 Effect of Termination. a. Return or Destruction of PPI Upon Termination of Contract. Upon cancellation,termination,expiration or other conclusion of the Contract,the Claims Administrator will,if feasible,return to the GHP or else destroy PPI,in whatever form or medium that the Claims Administrator,created or received for or from the GHP,including all copies of and any data or compilations derived from such PPI that allow identification of any Individual. The Claims Administrator will complete such return or destruction as promptly as practical, but not later than sixty days after the effective date of the cancellation, termination,expiration or other conclusion of the Contract. b. Reimbursement. The Plan Sponsor will reimburse the Claims Administrator's reasonable costs and expenses incurred in retuning or destroying such PPI. C. Disposition When Return or Destruction of PPI is Not Feasible. In the event that returning or destroying the PPI is not feasible as determined by the Claims Administrator,the Claims Administrator will limit further use or disclosure of the PPI to those purposes that make their return to the GHP or destruction infeasible and shall extend the privacy protections contained herein to that PPI for as long as the Claims Administrator retains it. PLAN SPONSOR: City of Kent PLAN NUMBER: 176209 220669-01913596-9%13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004 t 10. Order of Precedence. This Attachment shall supercede and replace any and all provisions in the Contract concerning confidentiality or privacy. In addition,the notice provisions of this Attachment shall prevail over the Contract only to the extent that such notice is related to the obligations contained herein. Except as otherwise provided in this section,in the event that any other terms or conditions contained in this Attachment conflict or are inconsistent with the Contract,the terms and conditions of the Contract shall prevail. IN WITNESS WHEREOF,the parties have signed this Attachment effective as of the date indicated above. CLAIMS ADMINISTRATOR Its: President and Chief Executive Officer PLAN SPY I Da I GBP Its: - - -Dated:- PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,-01,13596-99,13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004 EXHIBIT D-1 ERISA GROUP BUSINESS ASSOCIATE ATTACHMENT GHP's Authorized Representatives GBP authorizes the Claims Administrator to disclose PPI to achieve the purpose(s)as outlined below to the following people that are(a)employed by the GB P,(b)employed by the Plan Sponsor or(c)employed by a business associate of the GIIP: Date Entity Name Purpose for Disclosure mm/dd/ GBP or Plan Sponsor) PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,-01,13596-99,13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004 TV EXHIBIT D-2 ERISA GROUP BUSINESS ASSOCIATE ATTACHMENT Notification Requirements Privacy-Related Services Regarding Requests All notices required under Section 7 of this Attachment shall be given in writing,delivered by facsimile or in person,and addressed as follows: GHP: (Name) (Department) (Telephone Number) (Fax Number) Claims Administrator: Premera Blue Cross Complaints and Appeals Department P.O.Box 91102 Seattle,WA 98111-9202 Telephone: 1.800.345.6784 Fax:425.918.5592 PLAN SPONSOR: City of Kent PLAN NUMBER: 17620,22066,-01,13596-99, 13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January i,2004 a ATTACHMENT E 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 Clams 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,-01,13596-99,13597,-01 PLAN DOCUMENT EFFECTIVE DATE: January 1,2004