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HomeMy WebLinkAboutResolution - 2009-R0512 - Renewal Amendment To Agreement - Blue Cross/Blue Shield - 11/19/2009Resolution No. 2009—RO512 November 19, 2009 Item No. 5.5 RESOLUTION BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and directed to execute for and on behalf of the City of Lubbock, a Renewal Amendment to the Administrative Services Agreement between the City of Lubbock and Blue Cross/Blue Shield of Texas, and all related documents. Said Renewal Amendment is attached hereto and incorporated in this Resolution as if fully set forth herein and shall be included in the minutes of the Council. THAT the City Manager or designee may execute any routine documents and forms associated with said insurance coverage. Passed by the City Council this 19th day of November , 2009. TOM MARTIN, MAYOR APPRO"v FD AS TO CONTENT: Leisa Hutchenson, Director of Risk Management ... a 6.1MA r -30 , rns'ccdocs Blue Cross Blue Shield Amend-med coverage.re:s 1 1.6.09 Resolution No. 2009—RO512 BlueCross B1ueShield P® of Texas RENEWAL AMENDMENT January 1, 2010 TO THE ADMINISTRATIVE SERVICES AGREEMENT THIS AMENDMENT to the Administrative Services Agreement is effective as of January 1, 2010, and is attached to and made a part of the Administrative Services Agreement by and between Blue Cross and Blue Shield of Texas, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company (hereinafter referred to as the "Claim Administrator"), and City of Lubbock (hereinafter referred to as the "Employer"), WITNESSETH AS FOLLOWS: WHEREAS, the Claim Administrator and the Employer have entered into an Administrative Services Agreement (hereinafter referred to as the "Agreement") which was effective as of January 1, 2007, as may have been amended; and WHEREAS, the parties desire to amend the Agreement as described herein; NOW, THEREFORE, in consideration of these premises and the mutual promises and agreements hereinafter set forth, the parties hereby agree to amend the Agreement as follows: A. Under RECITALS, the following is added: WHEREAS, the Employer on behalf of the Group Health Plan has executed a Benefit Program Application and the Claim Administrator hereby accepts such Benefit Program Application attached hereto as Exhibit V. B. Under Section IV: CERTAIN RESPONSIBILITIES OF THE EMPLOYER AND THE CLAIM ADMINISTRATOR, item I, is edited to read: In the event the employer directs the Claim Administrator to provide data directly to its third party consultant and/or vendor and the Claim Administrator accepts, the Employer acknowledges and agrees, and will cause its third party consultant and/or vendor to acknowledge and agree: C. Under Section VI: INDENMIFICATION, item B, the following is added: 10. Any claim arising from the Employer's directive to the Claim Administrator to include mutually agreed upon Employer Summary Plan Description information in Claim Administrator prepared benefit booklets for distribution to Covered Persons. D. Under Section XIII: ENTIRE AGREEMENT, the following is added: Exhibit V- Benefit Program Application E. Under EXHIBIT II - FEE SCHEDULE, FINANCIAL RESPONSIBILITIES AND REQUIRED DISCLOSURES, Section I. is deleted in its entirety and replaced with the following: I. FEE SCHEDULE Service charges and other Fee Schedule specifications in this Section I. are to apply for the period(s) of time indicated herein and shall continue in full force and effect until the earlier of: i) the end of the Fee Schedule Period noted below; ii) the date this Section I. Fee Schedule is amended or replaced in its entirety; and iii) the date the Agreement is terminated. HCSC TX ASA Amd 09/08 —1— Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. A Division of Health Care Service Corporation, a Mutual Legal Reserve A. FEE SCHEDULE PERIOD Fee Schedule specifications in this Section I. are for the Fee Schedule Period commencing on January 1, 2010 and ending on end of day, December 31, 2010. B. EMPLOYER GROUP NUMBER(S) For the Fee Schedule Period noted above, the Agreement shall apply to the following Employer Group Number(s): 10097. C. ADMINISTRATIVE CHARGES AND CREDITS 1. The Administrative Charge, calculated monthly, shall be equal to the sum of the amounts obtained by multiplying the total number of Covered Employees by category by the appropriate factors shown below. Composite Base Administrative Charge (Medical) $36.77 Total $36.77 Composite Base Administrative Charge (Dental) $3.85 2. The Termination Administrative Charge shall be equal to the sum of the amounts obtained by multiplying the total number of Covered Employees by category during the three (3) months immediately preceding the date of termination by the appropriate factors shown below. Composite Run-off Administrative Charge (Medical) $15.16 Composite Run-off Administrative Charge (Dental) $0.84 D. REPORTS The Claim Administrator will make available to the Employer Standard Reports and other Reporting Services as set forth in Exhibit I - CLAIM ADMINISTRATOR SERVICES of the Agreement in accordance with its standard reporting policy at no additional charge. Any additional reports required by the Employer must be mutually agreed upon by the parties in writing prior to their development and may be subject to a Supplemental Charge. E. CHARGES FOR ADDITIONAL SERVICES The following Additional Services shall be furnished: Reimbursement............................................................................................... 25% of any recovered amounts* *The indicated Reimbursement fee is based on the net recovery after attorney's fees, if any, have been paid. BlueCard® Program/Network access fees....................................................................... available upon request HCSC TX ASA Amd 09/08 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third nnrty rPnrecentativPc Pvrent ander written anreement F. PLAN DESIGN MATERIALS Benefit Booklets: Accept/Decline ❑ ® Benefit Booklets ❑ No additional charge ❑ Supplemental Billing* ® ❑ Customized Benefit Booklets ® No additional charge ❑ Supplemental Billing* ® ❑ Customized Covers ® No additional charge ❑ Supplemental Billing Subscriber Identification (ID) Cards: Accept/Decline ❑ ® Subscriber ID Cards ❑ No additional charge ❑ Supplemental Billing* ® ❑ Customized ID Cards ® No additional charge ❑ implemental Billing* Network Provider Directories ® No additional charge ❑ Supplemental Billing* Claim Forms, Application Forms, Enrollment Materials ® No additional charge ❑ Supplemental Billing* Special Mailings: Cost has been included in Administrative Charge: Yes ® No ❑ Identification Cards mailed to home addresses Yes ® No ❑ Provider Directories mailed to home addresses Yes ❑ No *Any customized materials or additional services or supplies not documented in this Fee Schedule may be subject to Supplemental Billing upon mutual agreement of the parties. G. THIS SECTION IS LEFT BLANK INTENTIONALLY H. TRANSFER PAYMENT PERIOD The Transfer Payment Period by which payments under the Section of this Exhibit titled "TRANSFER PAYMENT" are to be made is weekly. I. CLAIM SETTLEMENT PERIOD The Claim Settlement Period by which settlements under the Section of this Exhibit titled "CLAIM SETTLEMENTS" are to be made is monthly. J. RUN—OFF PERIOD The Run—Off Period immediately following termination of the Agreement during which the Claim Administrator will accept Run—Off Claims submitted for payment is twelve (12) months. HCSC TX ASA Amd 09/08 -3- Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third narty renrecentativec. exeent under written aureement. K. PLAN COVERAGE Coverage under the Employer's Plan includes the following: • Managed Health Care Coverage • Healthcare Management Services: Blue Care Connection L. NOTICE MAILING AND TRANSMISSION INFORMATION Each party's address and facsimile number for the issuance of notices in accordance the Agreement Section titled "NOTICES" are shown below. If to the Claim Administrator: Blue Cross and Blue Shield of Texas, 901 South Central Expressway Richardson, Texas 75080 Attention: Karen Jones Fax: 806-783-4654 If to the Employer: City of Lubbock 1625 13`h Street Lubbock, Texas 79401 Attention: Leisa Hutcheson Fax: 806-775-3316 Except as herein modified and amended, the provisions, conditions, and terms of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date and year specified below. Date: November 19, 2009 Date: CITY OF LUBBOCK TOM MARTIN, Mayor HCSC TX ASA Amd 09 08 -4- BLUE CROSS AND BLUE SHIELD OF TEXAS, A Division of Health Care Service Corporation, a Mutual Legal Reserve Company Jccc 2a— THERESA A. CALDERON, Local Underwriting, Texas Divisional Vice President Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies anti third nnrty rrnrrcrntntivrc rxcrnt nndrr writtrn narPrment Attest: iJAL 27 4 REBECCA GARZA, City Secreta Approved as to Content: LEISA HUTCHESON, D' ector of Risk Management DAVID M. SATTERWHITE, Assistant City Attorney HCSC TX ASA Amd 09.08 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written aereement. Resolution No. 2009—RO512 ASO Benefit Program Application ("ASO BPA") Application to Administrative Services Only (ASO) Group Accounts Administered by Blue Cross and Blue Shield of Texas, a division of Health Care Services Corporation, A Mutual Legal Reserve Company, hereinafter referred to as the "Claim Administrator' or "HCSC" Group Status: Renewing ASO Account Off Cycle Change: ❑Yes ® No Employer Account Number (6 -digits): 010097 Group Number(s): 011099 Section Number(s): All Legal Employer Name: City of Lubbock (Specify the employer or the employee trust applying for coverage. AN EMPLOYEE BENEFIT PLAN MAY NOT BE NAMED) Employer Identification Number: 75-600059-0 SIC: 9111 Public Entity? ® Yes ❑ No Primary Address: 1625 13th Street City: Lubbock State: TX Zip: 79401 Administrative Contact: Leisa Hutcheson Phone Number: 806- Fax Number: 806-775- Email Address: Title: Risk Manager 775-2277 3316 Ihutcheson@mail. ci.lubbo ck.tx.us Physical Address (if different from Primary - required): same City: State: Zip: Billing Address: P O Box 2000 City: Lubbock State: TX Zip: 79457 Billing Contact: Terri Smith Phone Number: 806- Fax Number: 806-775- Email Address: Title: Benefits Coordinator HR 775-2317 3695 tlsmith@mail.ci.lubbock.tx .us Subsidiary Companies: N/A Subsidiary Address: City: State: Zip: Administrative Contact: Title: Phone Number: Fax Number: Email Address: Blue Access for Employers (BAE) Contact: Terri Smith (The BAE Contact is the Employee of the account authorized by the Employer to access and maintain its account via BAE.) Title: Benefits Phone Number: 806- Fax Number: 806- Email Address: Coordinator HR 775-2317 775-3695 tlsmith@mail.ci.lubbock.tx.us Affiliated Companies: N/A Location(s): ERISA Plan: ❑Yes ® No If yes, specify ERISA Plan Year: (mm/dd/yy) ERISA Plan Administrator: Plan Administrator's Address: Effective Date of Coverage: 01/01/2010 Anniversary Date (AD): 01/01 Nature of Business: city government 1. Eligible Person means: ® A full-time employee of the Employer. ❑ A full-time employee who is a member of: (name of union) ❑ A part-time employee of the Employer. ® A retiree of the Employer. ❑ Other: Are any classes of employees to be excluded from coverage? ❑ Yes ® No If yes, please identify the classes and describe the exclusion: hcsc tx gen aso bpa 060309 (on-line version) 2. Full -Time Employee means: ❑ A person who is regularly scheduled to work a minimum of hours per week and who is on the permanent payroll of the Employer. ® Other: As defined by the City of Lubbock's Employee Policy Manual 3. Domestic Partners covered: ❑ Yes ® No If yes: A Domestic Partner, as defined in the Plan, shall be considered eligible for coverage. The Employer is responsible for providing notice of possible tax implications to those Covered Employees with Domestic Partners. If yes, are Domestic Partners eligible to continue coverage under COBRA? ❑ Yes ❑ No If yes, are dependents of Domestic Partners eligible for coverage? ❑ Yes ❑ No 4. Are unmarried children of any age who are medically certified as disabled and dependent on the employee for support and maintenance eligible for coverage? ® Yes ❑ No Are unmarried children over the limiting age who are medically certified as disabled and dependent on the employee for support and maintenance eligible for coverage under the plan if they were not covered under the plan prior to reaching the limiting age? ❑ Yes ® No 5. Are unmarried step -children under the limiting age eligible for coverage? ® Yes ❑ No If yes, is residency with the employee required? ❑ Yes ® No 6. Are unmarried grandchildren eligible for coverage? ® Yes ❑ No If yes, must the grandchild be dependent on the employee for federal income tax purposes at the time application is made? ® Yes ❑ No 7. The effective date for a newly eligible person who becomes effective after the employer's initial enrollment date: ❑ The date of employment. ❑ The day of employment. ❑ The day of the month following month(s) or days of employment. ❑ The day of the month following the date of employment. ® Other: Group will provide the effective date of the members Is the waiting period requirement to be waived on initial group enrollment? ❑ Yes ® No Are there multiple new hire waiting periods? ❑ Yes ® No If yes, please attach eligibility and contribution details for each section. 8. The Effective Date of termination for a person who ceases to meet the definition of Eligible Person: ® The date such person ceases to meet the definition of Eligible Person. ❑ The last day of the calendar month in which such person ceases to meet the definition of an Eligible Person. ❑ Other: Limiting Age for covered unmarried children: ® The limiting age for covered unmarried children is25. ❑ The limiting age for covered unmarried children is ; age if a full-time student. ❑ Other: Student certification: ❑ Account or ❑ BCBSTX or ® None Frequency of Certification Letters: Annually (AN) ❑ Quarterly (QU) ❑ Semi -Annually (SA) ❑ • Certification Schedule: Month 1: Month 2: Month 3 Month 4: " For Annual Notification, indicate one month (Jan -Dec) for notification, for Semi-annual, select 2 months, for quarterly, select 4 months Automatically cancel dependents who reach the maximum limiting age? ® Yes ❑ No 10. Termination of coverage upon reaching the Limiting Age: ❑ Coverage is terminated on the birthday. ❑ Coverage is terminated on the last day of the month in which the limiting age is reached. ® Coverage is terminated on the last day of the billing month. ❑ Coverage is terminated on the last day of the year (12/31) in which the limiting age is reached. ❑ Coverage is terminated on the group's Anniversary Date. Will coverage for a child who is medically certified as disabled and dependent on the parent terminate upon reaching the limiting age even if the child continues to be both disabled and dependent on the parent? ❑ Yes ® No 11. Enrollment: hcsc tx gen aso bpa 060309 (on-line version) Special Enrollment: An Eligible Person may apply for coverage, Family coverage or add dependents within thirty-one (31) days of a qualifying event if he/she did not apply prior to his/her Eligibility Date or when eligible to do so. Such person's Coverage Date, Family Coverage Date, and/or dependent's Coverage Date will be the effective date of the qualifying event or, in the event of Special Enrollment due to termination of previous coverage, the first day of the Plan Month following receipt of the application. Late Enrollment: An Eligible Person may apply for coverage, Family coverage or add dependents if he/she did not apply prior to his/her Eligibility Date or did not apply when eligible to do so. Such person's Coverage Date, Family Coverage Date, and/or dependent's Coverage Date will be a date mutually agreed to by the Claim Administrator and the Employer. An Eligible Person may apply for coverage, Family coverage or add dependents if he/she did not apply prior to his/her Eligibility Date or did not apply when eligible to do so, during the Employer's Open Enrollment Period. Such person's Coverage Date, Family Coverage Date, and/or dependent's Coverage Date will be a date mutually agreed to by the Claim Administrator and the Employer. Such date shall be subsequent to the Open Enrollment Period. Late applicant enrollment options: ❑ Annual open enrollment — late applicant may apply during open enrollment and be subject to a 12 -month pre- existing waiting period (credit will always be applied). ❑ No Annual Open Enrollment — late applicants are never eligible for coverage (dental only). ❑ Annual open enrollment — no pre-existing waiting period. ® Late applicants may apply at any time — coverage is effective first of the month following receipt of the application. An 18 -month pre-existing waiting period applies. Specify Open Enrollment Period: Month of December 12. Pre-existing waiting period (applies to the account's initial enrollment): ❑ No pre-existing waiting period. ® Pre-existing applies to all participants. ❑ Pre-existing is waived on the account's initial enrollment. All others must serve pre-existing waiting period. Benefits for treatment incurred during the 6 months prior to the effective date of membership will not be covered for 12 months after the effective date. 13. Extension of benefits due to Temporary Layoff, Disability or Leave of Absence: Temporary Layoff: As defined in Employee Policy Manual days Disability: As defined in Employee Policy Manual days Leave of Absence: As defined in Employee Policy Manual days However, benefits shall be extended for the duration of an Eligible Person's leave in accordance with any applicable federal or state law. 14. COBRA Auto Cancel? ❑ Yes ® No Member's COBRA/Continuation of Coverage will be automatically cancelled at the end of the member's eligibility period. 15. Eligibility reporting method (applies to initial enrollment): ® Account will self -enroll online through BlueAccess for Employers. ❑ Members will self -enroll online through BlueAccess for Members. ❑ BCBSTX will enter enrollment online through BlueAccess for Employers. ❑ BCBSTX will enter enrollment via paper applications. ❑ BCBSTX will enter enrollment from membership spreadsheet. ❑ BCBSTX will process enrollment via Automated Eligibility Process (AEP). 1. Total number of employees presently eligible for coverage: 2. Total number of employees serving new hire eligibility period: 3. Total number of employees with other coverage (i.e., other group coverage, Medicare, Medicaid, TRICARE/Champus): 4. Total number of individuals currently covered under COBRA: hcsc tx gen aso bpa 060309 (on-line version) EXEMPTION FROM CERTAIN HIPAA REGULATIONS ® NOT APPLICABLE ❑ SEE ADDITIONAL PROVISIONS Certain non-federal governmental ASO plans may elect to be exempted from some or all of the group market provisions in the HIPAA regulations. Such clients must apply for exemption, in writing with the Centers for Medicaid & Medicare Services (CMS). If exempt, please provide the following: (Documents attached? ❑ Yes ❑ No) • Copy of client's application to CMS for exemption • Copy of client's notice of such exemption to plan participants Indicate Opting out of: ❑ Limitations on pre-existing condition exclusion period, excluding maternity NOTE: ISDs may not opt out ❑ Limitations on pre-existing condition exclusion period, including maternity NOTE: ISDs may not opt out ❑ Special enrollment periods for individuals losing other coverage ❑ Prohibits discriminating against individual participants and beneficiaries based on health status ❑ Maternity hospital stay standards relating to mothers and their newborns ❑ Parity in the application of certain limits to mental health benefits ❑ Mandated reconstructive surgery benefits following mastectomy Late Enrollment Rules for ASO Non -Federal Governmental Accounts Electing HIPAA Exemption (Select One, Not Applicable, or See Additional Provisions) ® NOT APPLICABLE ❑ SEE ADDITIONAL PROVISIONS Note: no creditable coverage applies if opting out. Pre-existing applies, including maternity ❑ Underwrite for an AD effective date ❑ Underwrite for an effective date the next service date following approval ❑ No underwriting; effective on AD ❑ Annual open enrollment; late applicants may apply and be subject to 18 months pre-existing exclusion ® Managed Health Care Coverage ❑ Consumer Driven Health Plan (BlueEdge) ❑ Traditional coverage hcsc tx gen aso bpa 060309 (on-line version) ® PPO ❑ Dual Option High Plan Name: Low Plan Name: ❑ Annual Max ❑ HCA ❑ HSA ❑ Out -of -Area (Indemnity) ❑ Benefit Offering 4 ❑ EPO ❑ POS ❑ HMO ❑ with Drug coverage ❑ without Drug coverage ❑ Prescription Drug Coverage: ❑ Prescription Drug Program ❑ Stand -Alone Prescription Drug Program ® Comprehensive Dental Coverage ❑ Comprehensive Vision Coverage ❑ In -Hospital Indemnity (IHI) ® PPO Provider Network: ® BlueChoice (PTXOA) ❑ BlueChoice Solutions (PSNOA) ❑ Dual Network Option (both BlueChoice and BlueChoice Solutions) ® Healthcare Management Services: For BCBSTX Members: For Non-BCBSTX Members only: ® Blue Care Connection ❑ Personal Health Manager (Stand-alone) ® Special Beginnings only ❑ Health Risk Assessment (Stand-alone) ❑ BlueEdge HCA (Stand-alone) ❑ Wellness Incentives COMMENTS: 1). Page 2, number 6 - Employees are required to show legal guardianship of granchildren to be eligible. 2). The City allows newborns to be added within 60 days of birth. hcsc tx gen aso bpa 060309 (on-line version) FINANCIAL DOCUMENT ADMINISTRATION FEE SCHEDULE To begin on Effective Date of Coverage and continue for: ® 12 Months ❑ Other: Months 1. Type: ❑ Medical ® Medical / Dental ❑ Other: 2. Administrative Charge Chart for Single Year Contract: Product / Service Base Administrative Charge<`> (Medical) $36.77 $ Prescription Drug Administrative Charge $ $ Prescription Drug Rebate Credit per Covered Employee per month is the guaranteed Prescription Drug Rebate savings reflected as a Prescription Drug Rebate credit. Expected rebate amounts to be received by the Claim Administrator are passed back to the Employer with one hundred percent (100%) of the expected amount applied as a credit on the monthly billing statement on a per Covered Employee per month basis. Rebate credits are paid $ $ prospectively to the Employer and shall not continue after termination of the Prescription Drug Program. (Further information concerning this credit is included in the governing Administrative Services Agreement to which this ASO BPA is attached under the section titled "CLAIM ADMINISTRATOR'S SEPARATE FINANCIAL ARRANGEMENTS WITH PHARMACY BENEFIT MANAGERS.") Blue Care Connection ("BCC") Program: Enhanced $ $ Special Beginnings _ $ $ Other: $ $ Other: $ $ Other: $ $ Total $36.77 $ Additional Comments: None Dental: 1 $3.85 1 $ 3. Termination Administrative Charge for Single Year Contract: The Termination Administrative Charge applicable to the Run -Off Period shall be equal to the sum of the amounts obtained by multiplying the total number of Covered Employees by category (per Covered Employee per individual or family composite)during the three (3) months immediately preceding the date of termination by the appropriate factors shown below. hcsc tx gen aso bpa 060309 (on-line version) 6 Service Medical Run-off Administration Charge $15.16 $ Other: $ $ Dental Run-off Administration Charge 1 $0.84 $ Additional Comments: None Dental: I $ I $ I $ I $ I $ I $ 4. BlueCard Program/Network access fee: $ (Available upon request) 5. Reimbursement Provision: ® Yes ❑ No If yes: It is understood and agreed that in the event the Claim Administrator makes a recovery on a third -party liability 1. Benefit booklets — Is BCBSTX providing benefit booklets? ® Yes ❑ No ® Standard benefit booklet (no additional charge) ❑ Customized benefit booklets ® No additional charge ❑ Supplemental Billing" ❑ Customized booklet covers" ❑ No additional charge ❑ Supplemental Billing`* ❑ ERISA plan information ❑ No additional charge ❑ Supplemental Billing" 2. Subscriber ID cards ® Standard subscriber ID cards (no additional charge) ❑ Customized ID card services ® No additional charge ❑ Supplemental Billing" 3. Network provider directories ® No additional charge ❑ Supplemental Billing" 4. Subscriber claim forms, enrollment forms, enrollment materials ® No additional charge ❑ Supplemental Billing" 5. Special mailings Provider directories to be mailed to home addresses: ❑ Yes ® No ❑ Cost included in admin charge ❑ Supplemental Billing" 6. Other: Additional charge: $ * Custom booklet covers are not available on electronic documents. ""As indicated in fee table on previous page. hcsc tx gen aso bpa 060309 (on-line version) Payment Specifications NO ADDITIONAL PROVISIONS Employer Payment Method: ❑ Online Bill Pay ® Electronic ❑ Check Employer Payment Period: ® Weekly (cannot be selected if Check is selected as payment method above) ❑ Semi -Monthly ❑ Monthly ❑ Other (please specify) Claim Settlement Period: Monthly Run -Off Period: Transfer Payments are to be made for twelve (12) months following the end of the Fee Schedule Period. Final Settlement: Final Settlement to be made within (60) days after end of Run -Off Period. HCSC COBRA ADMINISTRATIVE SERVICES HCSC COBRA Administrative Services Purchased: ® Yes ❑ No If yes, please complete the COBRA sections below. If no, the COBRA sections below do not apply. COBRA Administrative Billing Services Only: ❑ Yes ® No COBRA Administrative Full Services: ® Yes ❑ No Notification Services included: (Full Services) Conversion Rights included: (Full Services) Monthly Reports* included: ® Yes ❑ No ® Yes ❑ No ® Yes ❑ No Email Address: tlsmith@mylubbock.us If Yes: *Paper reports provided by mail/electronic reports via email Effective dates) of services if different from ASO Effective Date of Coverage: COBRA Billing Services Fee per Participant per month: $10.00 If Notification Services included(Full Services) Notification Fee [per Participant, per notification]: $10.00 Monthly Administrative Fee: $75.00 The Employer will pay HCSC a sum of One Hundred Dollars ($100.00) per hour for any system programming costs associated with non-standard administration services. hcsc tx gen aso bpa 060309 (on-line version) 8 Number of Active Members*:N/A Number of current COBRA participants/members*:N/A Number of current COBRA retiree participants/members*:N/A 'Full Service Unit (FSU) set-up of participants/members in BlueStar required FSU Location: Wichita Falls FSU Contact: Delfina Torres Is all COBRA participant census information attached?❑ Yes ® No Email Address: WFGA Eligibility Distribution List/TX/HCSC Is -all -COBRA participant coverage(s) and level elected information attached?❑ Yes ® No y Is all dependent census information attached?[] Yes ® No Are rates (SINGLE/FAMILY or TIERED) for all coverages attached? ® Yes ❑ No Is 2% included in attached rates? ® Yes ❑ No Does Employer have any non-HCSC coverage? ® Yes ❑ No If Yes, Other Carrier(s): Name: Davis Vision Address: Capitol Region Health Park 711 Troy Schenectady Rd #301 Email Address: eligibility@davisvision.com City: Latham State: NY Zip: 12110 Administrative Contact: Melissa Phone Number: 800-793-6872 Fax Number: 800-783-9046 Senecal Name: Address: Email Address: City: State: Zip: _Administrative Contact: Phone Number: Fax Number: COBRA coverage begins: ❑ On date of Qualifying Event ® First of month following date of Qualifying Event Should 150% of the COBRA premium be charged to participants eligible for disability extension for the remaining 11 months of COBRA? ❑ Yes ® No (Extension is from 18 months to 29 months when deemed disabled by Social Security) Is contract provided and signed? ® Yes ❑ No Prior COBRA administrator info: _ Name: Address: Email Address: City: State: Zip: [Administrative Contact: Phone Number: Fax Number: hcsc tx gen aso bpa 060309 (on-line version) 9 Certificate of Creditable Coverage: ® Yes ❑ No If yes: The Employer directs the Claim Administrator to issue to individuals, whose coverage under the Plan terminates during the term of the Administrative Services Agreement to which this ASO BPA is attached, a Certificate of Creditable Coverage. The Certificate of Creditable Coverage shall be based upon information required for issuance of a Certificate of Creditable Coverage to be provided to the Claim Administrator by the Employer and coverage under the Plan during the term of the Administrative Services Agreement. Stop Loss Coverage purchased: ❑ Yes ® No (If yes, complete separate Stop Loss exhibit) Fort Dearborn Life Insurance purchased: ❑ Yes ® No (If yes, complete separate application) Health Care Account (HCA) Administrative Services purchased: ❑ Yes ® No Employer contribution. The percentage of premium to be paid by the employer is: Health -- % or $ 1 Dental -- % or $ Emp:100% $ 1 Dep: % $ 1 Emp:100% $ Dep: % $ 6. This ASO Benefit Program Application (ASO BPA) is incorporated into and made a part of the Administrative Services Agreement with both such documents to be referred to collectively as the "Agreement' unless specified otherwise. ADDITIONAL PROVISIONS: COBRA RATES: Health: $645.95 Employee Only, $1,200.27 Employee/Family Dental: $45.87 Employee Only, $76.06 Employee/Family Vision: $5.94 Employee Only, $10.69 Employee + One, $16.63 Employee/Family hcsc tx gen aso bpa 060309 (on-line version) 10 I UNDERSTAND AND AGREE THAT: The proposed fees are effective for 12 months, subject to contract provisions, and are based on the information and conditions stated. Final fees are subject to review based on actual enrollment results. If there is a 10% or greater variance in the enrollment and/or less than the minimum enrollment requirement of 1868, BCBSTX reserves the right to review the final fees. The information provided in this application is complete and accurate to the best of my knowledge. If this information is incomplete or inaccurate, BCBSTX may rerate the plan, withdraw the proposal or cancel the contract. 2. No material changes have been made to the claims experience previously provided. ❑Yes ® No If changes have been made, please complete and attach the account experience addendum. 3. No material changes have been made to the previously provided location(s) of eligible employees? ❑ Yes ®No If changes have been made, please attach new census. 4. Receipt by BCBSTX of the advance administrative fee (where applicable), in the amount of $N/A, and completed enrollment forms does not constitute approval and acceptance by the BCBSTX Home Office. 5. If applicable, effective N/A, the above-named agent(s)or agency(ies) is/are recognized as Employer's Agent of Record (AOR), to act as representative in negotiations with and to receive commissions from Blue Cross and Blue Shield of Texas, a division of Health Care Service Corporation (HCSC), a Mutual Legal Reserve Company, and HCSC subsidiaries for our employee benefit programs. This statement rescinds any and all previous Agent of Record appointments for this company. The above named agent(s) or agency(ies) is authorized to perform membership transactions on behalf of the Employer. This appointment will remain in effect until withdrawn or superseded in writing by our company. 6. BCBSTX will report the value of all remuneration by BCBSTX to ERISA plans with 100 or more participants for use in preparation of ERISA Form 5500 schedules. Reporting will also be provided upon request to non -ERISA plans or plans with fewer than 100 participants. Reporting will include base commissions, bonuses, incentives, or other forms of remuneration for which your agent/consultant is eligible for the sale or renewal of self-funded and/or insured products. Karen D. Jones Authorized BCBSTX Representative Signature of/Authorized Purchaser Account Executive Title Date Title 806-798-6322/806-783-4654 / /-,;)- C 9 BCBSTX Telelphone and Fax numbers Date Not Applicable Agent Representative (if applicable) Telephone and FAX numbers hcsc tx gen aso bpa 060309 (on-line version) 11 PROXY The undersigned hereby appoints the Board of Directors of Health Care Service Corporation, a Mutual Legal Reserve Company, or any successor thereof ("HCSC"), with full power of substitution, and such persons as the Board of Directors may designate by resolution, as the undersigned's proxy to act on behalf of the undersigned at all meetings of members of HCSC (and at all meetings of members of any successor of HCSC) and any adjournments thereof, with full power to vote on behalf of the undersigned on all matters that may come before any such meeting and any adjournment thereof. The annual meeting of members shall be held each year in the corporate headquarters on the last Tuesday of October at 12:30 p.m. Special meetings of members may be called pursuant to notice mailed to the member not less than 30 nor more than 60 days prior to such meetings. This proxy shall remain in effect until revoked in writing by the undersigned at least 20 days prior to any meeting of members or by attending and voting in person at any annual or special meeting of members. Group No.: 10097 By Print Signer's N e Here sly � oo LC-3�s-���--L i nd TitIL- Group Name: Citv of Lubbock Address: 1625 13th Street City: Lubbock State: TX Zip Code: 79401 Dated this day of Month Year hcsc tx gen aso bpa 060309 (on-line version) 12 Resolution No. 2009-RO512 B1ueCross B1ueShield of Texas RENEWAL AMENDMENT January 1, 2008 TO THE ADMINISTRATIVE SERVICES AGREEMENT THIS AMENDMENT to the Administrative Services Agreement is effective as of January 1, 2008, and is attached to and made a part of the Administrative Services Agreement by and between Blue Cross and Blue Shield of Texas, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company (hereinafter referred to as the "Claim Administrator"), and City of Lubbock (hereinafter re- ferred to as the "Employer"), WITNESSETH AS FOLLOWS: WHEREAS, the Claim Administrator and the Employer have entered into an Administrative Services Agreement (hereinafter referred to as the "Agreement") which was effective as of January 1, 2008, as may have been amended; and WHEREAS, the parties desire to amend the Agreement as described herein; NOW, THEREFORE, in consideration of these premises and the mutual promises and agreements here- inafter set forth, the parties hereby agree to amend the Agreement as follows: A. The following provision is added: RECORDS All Claim records, excluding any and all Business Proprietary Information, in the possession of the Claim Administrator are and shall remain the property of the Employer upon termination of this Agree- ment. The Claim Administrator shall return such property upon request in a form as agreed upon by the parties at the cost of preparing such property for transmittal to be borne by the Employer. All such Claim records shall be retained by the Claim Administrator until the Claim Administrator receives a request from the Employer for transmittal or for a period of ten (10) years from the date of a Claim's adjudication, whichever occurs first. B. Under the Section titled "RELATIONSHIP OF PARTIES," subsections E., F. and G. are deleted in their entirety and replaced with the following: E. The Employer hereby acknowledges (i) that an employee welfare benefit plan must be estab- lished and maintained through a separate plan document which may include the terms hereof or incorporate the terms hereof by reference, and (ii) an employee welfare benefit plan docu- ment may provide for the allocation and delegation of responsibilities thereunder. However, not- withstanding anything contained in the Plan or any other employee welfare benefit plan docu- ment of the Employer, the Employer agrees that no allocation or delegation of any fiduciary or non -fiduciary responsibilities under the Plan or any other employee welfare benefit plan of the Employer is effective with respect to or accepted by the Claim Administrator. F. The Claim Administrator is not the plan administrator of the Employer's separate employee wel- fare benefit plan as defined under ERISA. It is understood and agreed that (i) the Employer has a named Plan Administrator and a Named Fiduciary within the meaning of § 414(g) of the Inter- nal Revenue Code of 1986, as amended; (ii) said Plan Administrator serves within the meaning of § 3(16)(A) of ERISA; and (iii) the Claim Administrator is not a fiduciary of the Employer, the Plan Administrator or of the Plan. HCSC TX ASA Amd 07 -1- Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, An Independent Licensee of the Blue Cross and Blue Shield Association G. The Claim Administrator's responsibilities hereunder are intended to be limited to those of a contract claims administrator rendering advice to and administering claims on behalf of the plan administrator of the Employer's plan. As such, the Claim Administrator is intended to be a ser- vice provider but not a fiduciary with respect to the Employer's ERISA employee welfare benefit plan. The Employer represents that its ERISA employee welfare benefit plan contains the plan procedure described above regarding the designation of responsibilities under a plan and, ac- cordingly, the Claim Administrator may, pursuant to Sections 402(c)(2) and 405(c)(1)(B) of ERI- SA, render advice with respect to claims and administer claims on behalf of the plan administra- tor of the Employer's ERISA welfare benefit plan. The Claim Administrator has no other authority or responsibility with respect to Employer's ERISA employee welfare benefit plan. C. Under EXHIBIT I - CLAIM ADMINISTRATOR SERVICES, the bulleted item titled "REVIEW AND FINAL DETERMINATIONS" is deleted in its entirety. D. Under EXHIBIT II - FEE SCHEDULE, FINANCIAL RESPONSIBILITIES AND REQUIRED DISCLOSURES, Section I. is deleted in its entirety and replaced with the following: I. FEE SCHEDULE Service charges and other Fee Schedule specifications in this Section I. are to apply for the period(s) of time indicated herein and shall continue in full force and effect until the earlier of: i) the end of the Fee Schedule Period noted below; ii) the date this Section I. Fee Schedule is amended or replaced in its entirety; and iii) the date the Agreement is terminated. A. FEE SCHEDULE PERIOD Fee Schedule specifications in this Section I. are for the Fee Schedule Period commenc- ing on January 1, 2008 and ending on end of day, December 31, 2008. B. EMPLOYER GROUP NUMBER(S) For the Fee Schedule Period noted above, the Agreement shall apply to the following Em- ployer Group Number(s): 10097. C. ADMINISTRATIVE CHARGES AND CREDITS 1. The Administrative Charge, calculated monthly, shall be equal to the sum of the amounts obtained by multiplying the total number of Covered Employees by category by the appropriate factors shown below. Per Covered Employee For individual For individual & coverage family coverage Gross Medical Administrative $34.69 N/A Charge (includes Prescription Drug Program) Prescription Drug Program Rebate N/A N/A Credit Net Medical Administrative Charge 1$34.69 1 N/A HCSC TX ASA Amd 07 Dental 1$3.63 1 N/A -2- Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. 2. The Termination Administrative Charge shall be equal to the sum of the amounts obtained by multiplying the total number of Covered Employees by category during the three (3) months immediately preceding the date of termination by the appropriate factors shown below. Medical Dental $13.00 $2.09 For each Covered Employee (individual) $N/A $N/A For each Covered Employee (family) D. REPORTS The Claim Administrator will make available to the Employer Standard Reports and other Reporting Services as set forth in Exhibit I - CLAIM ADMINISTRATOR SERVICES of the Agreement in accordance with its standard reporting policy at no additional charge. Any additional reports required by the Employer must be mutually agreed upon by the parties in writing prior to their development and may be subject to a Supplemental Charge. E. CHARGES FOR ADDITIONAL SERVICES The following Additional Services shall be furnished: Reimbursement ................................. 25% of any recovered amounts* *The indicated Reimbursement fee is based on the net recovery after attorney's fees, if any, have been paid. BlueCard@ Program/Network access fees ................... available upon request F. PLAN DESIGN MATERIALS Benefit Booklets: Accept/Decline x❑ ❑ Benefit Booklets ❑x No additional charge ❑ Supplemental Billing* ❑ ❑x Customized Benefit Booklets ❑ No additional charge ❑ Supplemental Billing* ❑ ❑x Customized Covers ❑ No additional charge ❑ Supplemental Billing* Subscriber Identification (ID) Cards: Accept/Decline ® ❑ Subscriber ID Cards No additional charge ❑ Supplemental Billing* ❑ Fx Customized ID Cards ❑ No additional charge ❑ Supplemental Billing* Network Provider Directories ❑x No additional charge ❑ Supplemental Billing* Claim Forms, Application Forms, Enrollment Materials ❑x No additional charge ❑ Supplemental Billing* HCSC TX ASA Amd 07 -3- Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. Special Mailings: Cost has been included in Administrative Charge: Yes xx No ❑ Identification Cards mailed to home addresses Yes ❑x No ❑ Provider Directories mailed to home addresses Yes ❑ No ❑x *Any customized materials or additional services or supplies not documented in this Fee Schedule may be subject to Supplemental Billing upon mutual agreement of the parties. G. BROKER/CONSULTANT COMPENSATION The Employer acknowledges that if any broker/consultant acts on its behalf for purposes of purchasing services in connection with the Employer's Plan under the Agreement, the Claim Administrator may pay the Employer's broker/consultant a commission and/or other compensation in connection with such services under the Agreement. If the Employer desires additional information regarding commissions and/or other compensation paid the broker/consultant by the Claim Administrator in connection with services under the Agreement, the Employer should contact its broker/consultant. H. TRANSFER PAYMENT PERIOD The Transfer Payment Period by which payments under the Section of this Exhibit titled "TRANSFER PAYMENT" are to be made is weekly. 1. CLAIM SETTLEMENT PERIOD The Claim Settlement Period by which settlements under the Section of this Exhibit titled "CLAIM SETTLEMENTS" are to be made is monthly. J. RUN-OFF PERIOD The Run -Off Period immediately following termination of the Agreement during which the Claim Administrator will accept Run -Off Claims submitted for payment is twelve (12) months. K. PLAN COVERAGE Coverage under the Employer's Plan includes the following: • Managed Health Care Coverage • Traditional (Out -of -Area) Indemnity Coverage • Comprehensive Dental Care coverage HCSC TX ASA Amd 07 -4- Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. L. NOTICE MAILING AND TRANSMISSION INFORMATION Each party's address and facsimile number for the issuance of notices in accordance the Agreement Section titled "NOTICES" are shown below. If to the Claim Administrator: If to the Employer: Blue Cross and Blue Shield of Texas, 901 South Central Expressway Richardson, Texas 75080 Attention: Karen Jones Fax: 806-783-4654 City of Lubbock 1625 13th Street Lubbock, Texas 79457 Attention: Terri Smith Fax: 806-775-3316 Except as herein modified and amended, the provisions, conditions and terms of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date and year spe- cified below. BLUE CROSS AND BLUE SHIELD CITY OF LUBBOCK OF TEXAS, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company By: a-l� C WDt'- o-0 By. 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Co U U_ a) O X 'L7 v 7 U Y a) O N 0Z a) O iC 7 Resolution No. 2009-RO512 BlueCross BlueShield e.g. of Texas ADMINISTRATIVE SERVICES AGREEMENT This Agreement made effective as of January 1, 2007 by and between Blue Cross and Blue Shield of Texas, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company (hereinafter referred to as the "Claim Administrator"), and City of Lubbock (hereinafter referred to as the "Employer"), for the Employer Group Number(s) set forth in the Fee Schedule of Exhibit II attached hereto, WITNESSETH AS FOLLOWS: RECITALS WHEREAS, the Employer's Group Health Plan has established and adopted an employee welfare benefit plan ("Plan") as described in its plan document, which shall be provided by the Employer to the Claim Administrator; and WHEREAS, the Employer on behalf of the Group Health Plan desires to retain the Claim Administrator to provide certain administrative services with respect to the Plan; and WHEREAS, it is desirable to set forth more fully the obligations, duties, rights and liabilities of the Claim Administrator and the Employer, as representative of the Group Health Plan, with respect to the Plan; NOW, THEREFORE, in consideration of these premises and the mutual promises and agreements hereinafter set forth, the parties hereby agree as follows: I. APPOINTMENT The Employer hereby retains and appoints the Claim Administrator to provide services as hereinafter described in connection with the administration of the Plan. II. AGREEMENT DEFINITIONS "Administrative Charge" means the monthly service charge that is required by the Claim Administrator for the administrative services performed under this Agreement. The Administrative Charge(s) is indicated in the most current Fee Schedule specifications of Exhibit II of this Agreement. "Certificate of Creditable Coverage" means a document which is generated for Covered Persons terminating coverage under the Plan. The certificate is provided to Covered Persons as evidence for credit of health coverage held under the Plan during the term of this Agreement. "Claim" means notification in a form acceptable to the Claim Administrator that service has been rendered or furnished to a Covered Person. This notification must set forth in full the details of such service including, but not limited to, the Covered Person's name, age, sex and identification number, the name and address of the Provider, a specific itemized statement of the service rendered or furnished, the date of service, applicable diagnosis, the Claim Charge, and any other information which the Claim Administrator may request in connection for such service. "Claim Charge" means the amount which appears on a Claim as the Provider's regular charge for service rendered to a patient, without further adjustment or reduction. HCSC TX ASA Rev. 9/06 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, . . 1 1 . • 1.1 r1 — J nl___ cL:..l_1 A...... ,.... >...... "Claim Payment" means the benefit calculated by the Claim Administrator, plus any related Surcharges, upon submission of a Claim, in accordance with the benefits specified in the Plan. All Claim Payments shall be calculated on the basis of the Provider's Eligible Charge for Covered Services rendered to the Covered Person. "Covered Employee" shall have the same meaning as defined in the Employer's Plan. "Covered Person" shall have the same meaning as defined in the Employer's Plan. "Covered Service" means a service or supply specified in the Plan for which benefits will be provided. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Fee Schedule" means the specifications setting out certain particulars of this Agreement under Exhibit II of this Agreement including, but not limited to, the Administrative Charge and other service charges; or any such other subsequent set of specifications supplied by the Claim Administrator as a replacement to the Fee Schedule under Exhibit II. The specifications or items of the Fee Schedule shall be applicable for the Fee Schedule Period noted therein, except that any item of the Fee Schedule may be changed in accordance with such Exhibit's "COMPENSATION TO CLAIM ADMINISTRATOR" provisions; provided, however, that in no case shall the Administrative Charges in the Fee Schedule exceed the applicable amounts as set forth in Exhibit II attached hereto and incorporated herein. "Fee Schedule Period" means the period of time beginning and ending on the dates shown in the most current Fee Schedule under Exhibit II of this Agreement. "Group Health Plan" means, as applied to this Agreement, that certain self—insured employee welfare benefit plan adopted by Employer on December 15, 2005 by Resolution 2005-R0596, and amended on April 13, 2006 by Resolution 2006-R0177, and as may be further amended from time to time, and as defined by Section 160.103 of the Health Insurance Portability and Accountability Act of 1996, a copy of which has been provided to Claim Administrator. "HIPAA" means the Health Insurance Portability and Accountability Act of 1996. "Network" means identified Providers, including physicians, other professional health care providers, hospitals, ancillary providers, and other health care facilities, that have entered into agreements with the Claim Administrator (and, in some instances, with other participating Blue Cross and/or Blue Shield Plans) for participation in a participating provider option health benefit coverage program, if applicable to the Plan under this Agreement. "Provider" means any hospital, health care facility, laboratory, person or entity duly licensed to render Covered Services to a Covered Person or any other provider of medical or dental services, products or supplies which are Covered Services. "Provider's Eligible Charge" means (a) in the case of a Provider which has a written agreement with the Claim Administrator to provide care to Covered Persons at the time Covered Services are rendered, such Provider's Claim Charge for Covered Services and (b) in the case of a Provider which does not have a written agreement with the Claim Administrator to provide care to Covered Persons at the time Covered Services are rendered, such Provider's Claim Charge for Covered Services, not to exceed the allowable amount therefor as reasonably determined by the Claim Administrator. "Supplemental Charge" means a charge for costs due and payable to the Claim Administrator by the Employer that is separate and apart from the service charges detailed in Exhibit II of this Agreement. A Supplemental Charge may be applied for any customized reports, forms or other HCSC TX ASA Rev. 9/06 2 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. IV. materials or for any additional services or supplies not documented in the most current Fee Schedule of Exhibit II. Such services and/or supplies and any applicable Supplemental Charge(s) are to be agreed upon by the parties in writing prior to the Claim Administrator's performance and/or provision of such. "Surcharges" means state or federal taxes, surcharges or other fees, including, but not limited to World Access Fees, paid by the Claim Administrator which are imposed upon or resulting from this Agreement. "Timely" means the following, unless an alternative standard is specified in this Agreement or is mutually agreed to by the parties in writing: 1. With respect to all payments due the Claim Administrator by the Employer under this Agreement, within ten (10) calendar days of notification of the Employer by the Claim Administrator; or 2. With respect to all information due the Claim Administrator by the Employer concerning Covered Persons, within thirty—one (31) calendar days of a Covered Person's effective date of coverage or change in coverage status under the Plan; or 3. With respect to all Plan information due the Claim Administrator by the Employer, upon the effective date of this Agreement and at least ninety (90) calendar days prior to the effective date of change or amendment to the Plan thereafter. "World Access Fee" means the Surcharge imposed upon the Claim Administrator for the administration of an international Claim. SERVICES TO BE PROVIDED BY THE CLAIM ADMINISTRATOR During the continuance of this Agreement, the Claim Administrator will perform such services as set forth in Exhibit I of this Agreement, attached hereto and made a part hereof. The Claim Administrator, at its sole discretion, may contract with other entities for performance of any of the services to be performed by the Claim Administrator hereunder; provided, however, the Claim Administrator shall remain fully responsible and liable for performance of any such services to be performed by the Claim Administrator but delegated to other entities. Further, any of the services to be performed by the Claim Administrator under this Agreement may be performed by the Claim Administrator, or any of its subsidiaries (including any successor corporation, whether by merger, consolidation, or reorganization), without prior written approval by the Employer. Any reference in this Agreement to the Claim Administrator shall include its directors, officers and employees as well as the directors, officers and employees of any of its subsidiaries and the Claim Administrator shall be responsible and liable for all performance or failure to perform by such subsidiaries in connection with this Agreement. CERTAIN RESPONSIBILITIES OF THE EMPLOYER AND THE CLAIM ADMINISTRATOR A. The Employer retains full and final authority and responsibility for the Plan and its operation. The Claim Administrator is empowered to act on behalf of the Employer in connection with the Plan only as expressly stated in this Agreement or as mutually agreed to in writing by the parties hereto. B. The Claim Administrator shall have no responsibility for or liability with respect to the compliance or non—compliance of the Plan with any applicable federal, state and local rules, laws and regulations; and the Employer shall have the sole responsibility for and shall bear the entire cost of compliance with all federal, state and local rules, laws and regulations, including, but not limited to, any licensing, filing, reporting, modification HCSC TX ASA Rev. 9/06 3 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. requirements and disclosure requirements as may apply to the Plan, and all costs, expenses and fees relating thereto; provided, however, the Claim Administrator shall have the responsibility for and bear the cost of compliance with any federal, state or local laws as may apply to the Claim Administrator in connection with the performance of its obligations under this Agreement. C. Each party shall, to the extent possible, advise the other party of any legal actions against it or the other party which involve the Plan or the obligations of either party under the Plan or this Agreement. The Employer shall undertake the defense of such action and be responsible for the costs of defense; provided, however, that the Claim Administrator shall have the option, at its sole discretion, to employ attorneys selected by it to defend any such action, the costs and expenses of which shall be the responsibility of the Claim Administrator. It is further agreed that each party (provided no conflicts of interest exist) shall fully cooperate with the other party in the defense of any action arising out of matters related to the Plan or this Agreement. D. The Employer acknowledges that unintentional administrative errors may occur. When the Claim Administrator becomes aware of a Claim overpayment, the Claim Administrator will make a diligent attempt to recover any such payment. The Claim Administrator, however, will not be required to enter into litigation to obtain a recovery, unless specifically provided for elsewhere in this Agreement, nor will the Claim Administrator be required to reimburse the Plan, except for gross negligence or intentional acts by the Claim Administrator. E. The Employer shall furnish on a Timely basis to the Claim Administrator certain information concerning the Plan and Covered Persons as may from time to time be required by the Claim Administrator for the performance of its duties including, but not limited to, the following: 1. All documents by which the Plan is established and any amendments or changes to the Plan. 2. All data as may be required by the Claim Administrator regarding Covered Persons who are to be covered under this Agreement. It is the Employer's obligation to Timely notify the Claim Administrator of any change in a Covered Person's status under this Agreement. All such notifications by the Employer to the Claim Administrator (including, but not limited to, forms and tapes) must be furnished in a format mutually agreed to by the parties and must include all information reasonably required by the Claim Administrator to effect such changes. F. Clerical errors in keeping or reporting data relative to coverage under this Agreement will not invalidate coverage that would otherwise be validly in force or continue coverage which would otherwise validly terminate. Such errors will be corrected by the Claim Administrator subject to the terms and conditions of this Agreement and the Claim Administrator's reasonable administrative practices in the administration of the Plan including, but not limited to, those related to Timely notification of a change in a Covered Person's status. However, the Employer is liable for any benefits paid for a terminated Covered Person if the Employer had not Timely notified the Claim Administrator of such Covered Person's termination. G. The Claim Administrator will disclose Claim information in accordance with HIPAA privacy regulations and the Business Associate Agreement entered into by the parties. Further, the Claim Administrator will provide copies of individual Claim information for a specific Covered Person, provided that the Employer secures a valid written release from the HCSC TX ASA Rev. 9/06 4 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. Covered Person specifically related to the Claim information. Upon receipt of the written request from the Employer and receipt of the Covered Person's written release form, the Claim Administrator will provide the specified Claim information. H. In the event the Employer and the Claim Administrator exchange various data and information electronically, the Employer agrees to transfer on a Timely basis all required data to the Claim Administrator via electronic transmission on the intranet and/or internet or otherwise, in a format mutually agreed to by the parties. Further, the Employer is responsible for maintaining any enrollment applications and change forms completed by Covered Persons and to allow the Claim Administrator reasonable access to this information as needed for administrative purposes. The Employer authorizes the Claim Administrator to submit reports, data and other information to the Employer in the electronic format mutually agreed to by the parties. In the event the Employer is unable or unwilling to transfer data in the electronic format mutually agreed to by the parties, the Claim Administrator is under no obligation to receive or transmit data in any other format. I. In the event the Employer directs the Claim Administrator to provide data directly to its third party consultant and/or vendor, the Employer acknowledges and agrees, and will cause its third party consultant and/or vendor to acknowledge and agree: 1. The personal and confidential nature of the requested documents, records and other information (for purposes of this Section W.I., "Confidential Information"). 2. Release of the Confidential Information may also reveal the Claim Administrator's confidential, business proprietary and trade secret information (for purposes of this Section W.I., "Proprietary Information"). 3. To maintain the confidentiality of the Confidential Information and any Proprietary Information (for purposes of this Section W.I., collectively, "Information"). 4. The third party consultant and/or vendor shall: a. Use the Information only for the purpose of complying with the terms and conditions of its contract with the Employer. b. Maintain the Information at a specific location under its control and take reasonable steps to safeguard the Information and to prevent unauthorized disclosure of the Information to third parties, including those of its employees not directly involved in the performance of duties under its contract with the Employer. c. Advise its employees who receive the Information of the existence and terms of these provisions and of the obligations of confidentiality herein. d. Use, and require its employees to use, at least the same degree of care to protect the Information as is used with its own proprietary and confidential information. e. Not duplicate the Information furnished in written, pictorial, magnetic and/or other tangible form except for purposes of this Agreement or as required by law. 5. Not to use the name, logo, trademark or any description of each other or any subsidiary of each other in any advertising, promotion, solicitation or otherwise without the express prior written consent of the consenting party with respect to each proposed use. 6. The third party consultant and/or vendor shall execute the Claim Administrator's then— current confidentiality agreement. HCSC TX ASA Rev. 9/06 5 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. 7. The Employer shall designate the third party consultant and/or vendor on the appropriate HIPAA documentation. B. The Employer shall provide the Claim Administrator with the appropriate authorization and specific written directions with respect to data release or exchange with the third party consultant and/or vendor. To the extent permitted by law, the Employer shall indemnify, defend (at the Claim Administrator's request) and hold harmless the Claim Administrator and its employees, officers, directors and agents against any and all losses, liabilities, damages, penalties and expenses, including attorneys' fees and costs, or other cost or obligation resulting from or arising out of claims, lawsuits, demands, settlements or judgments brought against the Claim Administrator in connection with any claim based upon the Claim Administrator's disclosure to the third party consultant and/or vendor of any information and/or documentation regarding any Covered Person at the direction of the Employer or breach by the third party consultant and/or vendor of any obligation described in this Agreement. J. Referral of Certain Claims/inquiries As provided in this Agreement, the Claim Administrator will receive eligibility information, re- view and process Claims, and respond to customer inquiries; however, the Claim Administrator does not have final authority to determine Covered Persons' eligibility or to establish or construe the terms and conditions of the Plan. Therefore, in certain instances, the Claim Administrator may refer certain Claims to the Employer for review and final decision. Such referral shall be at the sole discretion of the Claim Administrator. K. Claim Dispute Resolution 1. After exhaustion of all remedies offered by the Claim Administrator, a Covered Person may appeal all adverse determinations with the Employer. The Claim Administrator will cooperate in providing Claim information pursuant to Section N.G. above. 2. On occasion the Claim Administrator may deny all or part of submitted Claims. The Claim Administrator will provide a full and fair review of any determination of a Claim, any determination of a request for pre—authorization, and any other determination made in accordance with the benefits and procedures detailed in the Plan. L. Final Determination of Claims/Inquiries The Employer retains the final authority and responsibility to establish and construe the terms and conditions of the Plan and to determine Covered Persons' eligibility. Certain claims and/or inquiries will be referred to the Employer for final review and determination in the following instances: 1. When Claims for services do not appear to qualify for payment under the Plan, claims or inquiries where there is a question of eligibility, claims where there is a question as to the amount of payment due, and claims involving litigation or the threat of litigation; and 2. When a Covered Person chooses to appeal adverse determinations with the Employer after exhaustion of all remedies offered by the Claim Administrator. The Employer shall use its best efforts to cooperate with and assist the Claim Administrator, as applicable, in the performance of its duties hereunder. HCSC TX ASA Rev. 9/06 h of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. V. CERTIFICATE OF CREDITABLE COVERAGE The Claim Administrator, at the direction of the Employer, shall issue a Certificate of Creditable Coverage consistent with the requirements under HIPAA. The Certificate of Creditable Coverage shall be based upon coverage under the Plan during the term of this Agreement and information provided to the Claim Administrator by the Employer. VI. INDEMNIFICATION A. The Claim Administrator hereby agrees to indemnify and hold harmless the Employer and its directors, officers, elected officials, and employees against any and all loss, liability, damages, penalties and expenses, including attorneys' fees, or other cost or obligation resulting from or arising out of claims, lawsuits, demands, settlements or judgments with respect to the Plan or this Agreement resulting from or arising out of any acts or omissions of the Claim Administrator or its directors, officers or employees which have been adjudged to be (i) grossly negligent, dishonest, fraudulent or criminal or (ii) in material breach of the terms of this Agreement; provided, however, notwithstanding anything herein to the contrary pursuant to Section VII.B. below, the Claim Administrator shall be responsible for the correction of Claim Payment errors by the Claim Administrator. B. The Claim Administrator does not insure or underwrite the liability of the Employer under the Plan and has no responsibility for designing the terms of the Plan or the benefits to be provided thereunder. The Employer retains the ultimate responsibility for claims under the Plan and all expenses incident to the Plan, except as specifically undertaken in this Agreement by the Claim Administrator. To the extent permitted by law, the Employer agrees to indemnify and hold harmless the Claim Administrator and its directors, officers and employees against any and all loss, liability, damages, penalties and expenses, including attorneys' fees, or other cost or obligation resulting from or arising out of claims, lawsuits, demands, settlements or judgments brought against the Claim Administrator in connection with the design or administration of the Plan, unless the liability therefor was the direct consequence of the acts or omissions of the Claim Administrator or its directors, officers or employees and is adjudged to be (i) grossly negligent, dishonest, fraudulent or criminal or (ii) in material breach of the terms of this Agreement; provided, however, notwithstanding anything herein to the contrary pursuant to Section VII.B. below, the Claim Administrator shall be responsible for the correction of Claim Payment errors by the Claim Administrator. 1. Any claim in connection with a claim for benefits under the Plan. 2. Any claim based upon the disclosure of any information regarding a Covered Person by the Claim Administrator to the Employer. 3. Any claim in connection with un—Timely and/or inaccurate eligibility data or Claim information data provided by the Employer to the Claim Administrator, or any such data provided by the Employer in a format not approved by the Claim Administrator. 4. Any claim arising out of the electronic transfer of data i) from the Employer or the Employer's third parry consultant and/or vendor to the Claim Administrator; or ii) from the Claim Administrator to the Employer or, pursuant to Section [V.I. of this Agreement, the Employer's third party consultant and/or vendor; including liability arising out of erroneous, misdirected, intercepted, incomplete or otherwise defective information and transfers of information, including, but not limited to, garbled transmissions, transmissions to third parties, and intercepted transmissions. HCSC TX ASA Rev. 9/06 7 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. 5. Any claim arising from the Employer's use or posting of electronic files on the intranet and/or internet pursuant to Section XI. below. 6. Any claim that may arise from or in connection with the Claim Administrator's suspension of Claim Payments due to the Employer's failure to pay when due any amounts owed the Claim Administrator under this Agreement and/or the termination of this Agreement in accordance with Section VIII. below. 7. Any claim arising from the Employer's directive to the Claim Administrator to print Employer—assigned unique identification numbers on membership identification cards or to otherwise use such assigned numbers in violation of any applicable federal, state and local rules, laws and regulations. 8. Any claim based upon Medicare Secondary Payer ("MSP") laws or regulations. 9. Any claim that may arise from or in connection with the Claim Administrator's issuance of Certificate(s) of Creditable Coverage based upon un—Timely and/or inaccurate data provided by the Employer to the Claim Administrator with respect to individuals whose coverage under this Agreement terminates. C. Further, Claim Administrator and its directors, officers and employees shall not be liable to the Employer for loss, liability, damages, penalties and expenses, including attorneys' fees, or other costs or obligation to the extent resulting from or arising out of third party claims, lawsuits, demands, settlements or judgments in connection with the design of the Plan and Employer actions (independently of Claim Administrator's) and written directives of the Employer in connection with the administration of the Plan by the Employer. VII. AUDIT AND CORRECTION OF AUDIT ERRORS A. During the term of this Agreement and within one hundred eighty (180) days after its termination, the Employer or an authorized agent of the Employer (as mutually agreed to by the Claim Administrator and the Employer) may, upon at least ninety (90) days prior written notice to the Claim Administrator, conduct reasonable audits of the Claim Administrator's records in regard to Claim Payments made under the Agreement. The Employer and such agent that have access to the information and files maintained by the Claim Administrator will agree not to disclose any proprietary or confidential information. The Employer, to the extent permitted by law, and the authorized agent of the Employer shall hold harmless and indemnify the Claim Administrator in writing of any liability from disclosure of such proprietary or confidential information. Audits performed on a contingency fee basis will not be allowed or supported by the Claim Administrator. The Employer will be responsible for all costs associated with the inspection or audit. All such audits shall be subject to the Claim Administrator's external audit policy and procedures, a copy of which shall be furnished to the Employer upon request to the Claim Administrator. B. The Claim Administrator shall be responsible only for the correction of errors identified in specific Claim Payments subject to the terms and conditions of the Agreement and shall not be responsible for errors calculated to exist in a population of Claim Payments on the basis of a sample drawn from that population. Further, the Claim Administrator has the right to implement reasonable administrative practices in the administration of this Agreement. Minor deviations in Claim Payments from the provisions of the Agreement as a result of such reasonable administrative practices shall not be considered errors. C. During the term of this Agreement and within one hundred eighty (180) days after its termination, the Claim Administrator may, upon at least thirty (30) days prior written notice HCSC TX ASA Rev. 9/06 R of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. to the Employer, conduct reasonable audits of Employer's membership records with respect to eligibility. VIII. TERM AND TERMINATION OF AGREEMENT This Agreement will continue in full force and effect from the effective date and continue, subject to appropriation by Employer, for a period of three (3) years therefrom unless terminated as provided herein. A. This Agreement may be terminated as follows: 1. By either party upon ninety (90) days prior written notice to the other party; or 2. By both parties on any date mutually agreed to in writing; or 3. By the Claim Administrator if no funds or insufficient funds are appropriated and budgeted in any fiscal period of the Employer for payments to be made under this Agreement. In such event, the Employer will notify the Claim Administrator in writing of that occurrence, and this Agreement will terminate on the earlier of the last day of the fiscal period for which sufficient appropriation was made or whenever the funds appropriated for payment under this Agreement are exhausted. Payments due the Claim Administrator to the date of notification will be made to Claim Administrator. Upon written request from Claim Administrator, the Employer will provide to Claim Administrator, the balance of appropriated funds available, when due and payable, for any calendar year to make payments under this Agreement. 4. By either party, in the event of fraud, misinterpretation of a material fact or not complying with the terms of this Agreement, upon written notice as provided under Section XIV. below. B. In accordance with Exhibit II, Section III.E., of this Agreement, this Agreement may terminate upon failure of the Employer to pay all amounts due under this Agreement including, but not limited to, all amounts pursuant to and in accordance with the specifications of the most current Fee Schedule and Financial Responsibilities provisions of Exhibit II. C. The parties hereto further acknowledge and agree that this Agreement shall be effective only upon the final and timely execution of this Agreement, said execution to occur on or before November 15, 2006, which the parties acknowledge shall be necessary to effectuate the terms, conditions, duties, obligations, and responsibilities of the parties under this Agreement. The parties hereto further acknowledge and agree that this Agreement shall be effective only upon the completion and acceptance of the following documents, which shall occur on or before December 31, 2006. 1. Claims Administrative Document for Managed Health Care; and 2. Claims Administrative Document for Dental Benefits. The parties agree to the following schedule: 1. Employer shall provide Claims Administrator necessary benefit summaries and eligibility criteria for Claims Administrator to administer the Plan on or before November 1, 2006. HCSC TX ASA Rev. 9/06 9 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. 2. Claims Administrator shall provide Employer a proposed document on or before November 21, 2006. 3. Employer shall provide corrections and comments, if any, to the proposed document on or before December 8, 2006. 4. Claims Administrator shall provide a new, proposed document to Employer on or before December 18. 5. Employer and Claims Administrator shall discuss the final document as necessary to meet the December 31, 2006 deadline. 6. A benefit booklet in PDF format will be made available to Employer to be placed on its website within ten work days of approval of the Claims Administrative Document. If this Agreement is terminated pursuant to this Section VIII., the Employer agrees to notify all Covered Employees. The parties agree that the Employer will give such notice because the Employer maintains direct and ongoing communication with, and maintains current addresses for, all such Covered Employees. IX. RELATIONSHIP OF PARTIES A. The Claim Administrator is an independent contractor with respect to the Employer. Neither party shall be construed, represented or held to be an agent, partner, associate, joint venturer nor employee of the other. Further, nothing in this Agreement shall create or be construed to create the relationship of employer and employee between the Claim Administrator and the Employer; nor shall the Employer's agents, officers or employees be considered or construed to be considered employees of the Claim Administrator for any purpose whatsoever. B. It is understood and agreed that nothing contained in this Agreement shall confer or be construed to confer any benefit on persons who are not parties to this Agreement including, but not limited to, employees of the Employer and their dependents. C. The Employer agrees not to engage any other party to perform the same services that the Claim Administrator performs hereunder while this Agreement is in effect, unless the Employer gives notice of termination pursuant to the terms of this Agreement. D. Notwithstanding anything to the contrary in Section III. above, no part of this Agreement, or any rights, duties or obligations described herein, shall be assigned or delegated without the prior express written consent of both parties. Any such attempted assignment shall be null and void. The Claim Administrator's standing contractual arrangements for the acquisition and use of facilities, services, supplies, equipment and personnel shall not constitute an assignment under this Agreement. E. The Employer hereby acknowledges (i) that an employee welfare benefit plan must be established and maintained through a separate plan document which may include the terms hereof or incorporate the terms hereof by reference, and (ii) an employee welfare benefit plan document may provide for the allocation and delegation of responsibilities thereunder. However, notwithstanding anything contained in the Plan or any other employee welfare benefit plan document of the Employer, the Employer agrees that no allocation or delegation of any fiduciary or non—fiduciary responsibilities under the Plan or any other employee welfare benefit plan of the Employer is effective with respect to or accepted by the Claim Administrator. F. The Claim Administrator is not the plan administrator of the Employer's separate employee welfare benefit plan as defined under ERISA. It is understood and agreed that (i) the HCSC TX ASA Rev. 9/06 10of43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. Employer has a named Plan Administrator and a Named Fiduciary within the meaning of w 414(g) of the Internal Revenue Code of 1986, as amended; (ii) said Plan Administrator serves within the meaning of w 3(16)(A) of ERISA; and (iii) the Claim Administrator is not a fiduciary of the Employer, the Plan Administrator or of the Plan. G. The Claim Administrator's responsibilities hereunder are intended to be limited to those of a contract claims administrator rendering advice to and administering claims on behalf of the plan administrator of the Employer's plan. As such, the Claim Administrator is intended to be a service provider but not a fiduciary with respect to the Employer's ERISA employee welfare benefit plan. The Employer represents that its ERISA employee welfare benefit plan contains the plan procedure described above regarding the designation of responsibilities under a plan and, accordingly, the Claim Administrator may, pursuant to Sections 402(c)(2) and 405(c)(1)(B) of ERISA, render advice with respect to claims and administer claims on behalf of the plan administrator of the Employer's ERISA welfare benefit plan. The Claim Administrator has no other authority or responsibility with respect to Employer's ERISA employee welfare benefit plan. X. PROPRIETARY MATERIALS The parties acknowledge that each party has developed operating manuals, certain symbols, trademarks, service marks, designs, data, processes, plans, procedures and information, all of which are proprietary information ("Business Proprietary Information"). Neither party shall use or disclose to any third parry Business Proprietary Information without prior written consent of the other party. Neither party shall use the name, symbols, copyrights, trademarks or service marks ("Proprietary Marks") of the other party or the other party's respective clients in advertising or promotional materials without prior written consent of the other party; provided, however, that the Claim Administrator may include the Employer in its list of clients. The Employer acknowledges that the Claim Administrator's Proprietary Marks and Business Proprietary Information are the sole property of the Blue Cross and Blue Shield Association or of the Claim Administrator and agrees not to contest the Blue Cross and Blue Shield Association's or the Claim Administrator's ownership or the license granted to the Claim Administrator for use of such Proprietary Marks. The Claim Administrator agrees not to infringe upon, dilute or harm the Employer's rights in its Proprietary Marks. The Employer agrees not to infringe upon, dilute or harm the Blue Cross and Blue Shield Association's ownership rights or the Claim Administrator's rights as a licensee in its Proprietary Marks. XI. ELECTRONIC DOCUMENTS The Employer consents to receive via an electronic file or access to an electronic file any document the Employer requests from the Claim Administrator describing the benefits under, or the administration of, the Plan. In the event the Claim Administrator provides to the Employer such an electronic file for the Employer's use, including, but not limited to the Employer's posting of such documents on the intranet and/or internet, the Employer acknowledges and agrees that such electronic file is not intended to meet the Employer's requirements for compliance under ERISA. The Employer further acknowledges and agrees that it is solely responsible for providing employees access, via the intranet, internet, or otherwise, to the most current version of any electronic file provided to the Employer by the Claim Administrator at the Employer's request. In addition, in all instances, the electronic file of the most current document issued to the Employer by the Claim Administrator for use by the Employer is the legal document used to administer the HCSC TX ASA Rev. 9/06 1 1 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. Employer's Plan and will prevail in the event of any conflict between such electronic file and any other electronic or paper file. The Employer is solely responsible for any and all claims for loss, liability or damages, arising either directly or indirectly from the use or posting of the electronic file on the intranet and/or internet. XII. APPLICABLE LAW This Agreement shall be governed by, and shall be construed in accordance with, the laws of the state of Texas without regard to any state choice—of—law statutes, and any applicable federal law. All disputes arising out of this Agreement will be resolved in Texas. XIII. ENTIRE AGREEMENT This Agreement, including all Exhibits and Addenda, represents the entire agreement and understandings of the parties hereto and all prior agreements, understandings, representations and warranties, whether written or oral, in regard to the subject matter hereof, including any proposal document submitted by the Claim Administrator to the Employer pursuant to this Agreement, are and have been merged herein to the extent applicable. In the event of a conflict, the provisions of this Agreement and the Exhibits and Addenda of this Agreement shall prevail. The Exhibits and Addenda of this Agreement as of the Agreement's effective date are: • Exhibit I - Claim Administrator Services • Exhibit II - Fee Schedule, Financial Responsibilities & Required Disclosures • Exhibit III - Network Discount Guarantee Summary • Exhibit IV — Performance Guarantee Agreement This Agreement may be amended or altered in any of its provisions, including the addition or deletion of any Exhibits and/or Addenda as provided herein, by the parties hereto and any such change shall become effective when reduced to writing and signed by an authorized representative of the parties or at such time as said amendment may provide. XIV. NOTICE AND SATISFACTION Unless specifically stated otherwise in this Agreement, the Employer and the Claim Administrator agree to give one another written notice (pursuant to Section XVIII. Notices below) of any complaint or concern the other party may have about the performance of obligations under this Agreement and to allow the notified party thirty (30) days in which to make necessary adjustments or corrections to satisfy the complaint or concern prior to taking any further action with regard to such. XV. LIMITATION OF LIABILITY Liability for any errors or omissions by the Claim Administrator (or its officers, directors, employees, agents or independent contractors) in the administration of this Agreement, or in the performance of any duty or responsibility contemplated by this Agreement, shall be limited to the maximum benefits which should have been paid under this Agreement had the errors or omissions not occurred (including the Claim Administrator's share of any arbitration expenses incurred, unless any such errors or omissions are adjudged to be the result of intentional misconduct, gross negligence or intentional breach of a duty under this Agreement by the Claim Administrator. XVI. INSURANCE Claim Administrator shall submit the Employer proof of insurance containing coverage for the following: HCSC TX ASA Rev. 9/06 12 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. General Liability Insurance per occurrence $1,000,000.00 General aggregate Products-Comp/Op AGG Personal & Adv. Injury Professional Liability Insurance $1,000,000.00 Auto Liability Insurance (Any auto) $ 300,000.00 Worker's Compensation and Employers Liability Insurance: Claim Administrator shall elect to obtain workers' compensation coverage pursuant to Section 406.002 of the Texas Labor Code. Further, Claim Administrator shall maintain said coverage throughout the term of this Agreement, and shall comply with all provisions of Title 5 of the Texas Labor Code to ensure that the Claim Administrator maintains said coverage. Any termination of workers' compensation insurance coverage by Claim Administrator or any cancellation or non -renewal of workers' compensation insurance coverage for the Claim Administrator shall be a material breach of this Agreement. The Claim Administrator may maintain Occupational Accident and Disability Insurance in lieu of Workers' Compensation Employer's Liability with limits of at least $500,000.00 each accident, $500,000.00 by disease policy limit, and $500,000.00 by disease each employee shall also be obtained and maintained throughout the term of this Agreement. Upon award of the Agreement to the Claim Administrator, the Claim Administrator shall submit a certificate of insurance. XVII. DISPUTE RESOLUTION Any dispute arising out of or relating to this Agreement shall be resolved in accordance with the procedures specified in this Section XVII., which shall be the sole and exclusive procedures for the resolution of any such disputes. All negotiations pursuant to this Section XVII. are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence, except where disclosure thereof is required by law. A. Arbitration In the event the parties fail to agree with respect to any matter covered herein, the question in dispute shall be submitted for arbitration in Texas. The arbitrator shall be selected as follows: 1. Upon declaration by one of the parties hereto that a deadlock exists, the parties shall by agreement select an arbitrator; 2. If no appointment is made within thirty (30) days after the deadlock is declared and the amount in contest is in excess of $200, the American Arbitration Association shall recommend an arbitrator; or 3. If no appointment is made within thirty (30) days after the deadlock is declared and the amount in question is $200 or less, the Claim Administrator shall select an independent third party to be the arbitrator. The arbitrator will submit a decision within thirty (30) days after appointment or as soon as reasonably feasible and such decision shall be binding on the parties hereto. Arbitration expenses will be shared equally by the parties. All other expenses (legal, incidental, etc.) shall be borne by the losing party or, if both parties prevail, be apportioned by the arbitrator HCSC TX ASA Rev. 9/06 13 of 41 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. to each party. Arbitration proceedings will be governed by the Rules of the American Arbitration Association then in effect. HCSC TX ASA Rev. 9/06 14 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. B. Obligation to Continue Performance Except as provided otherwise in this Agreement, each party is required to continue to per- form its obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement. XVIII. NOTICES All notices given under this Agreement must be in writing and shall be deemed to have been given for all purposes when personally delivered and received or when deposited in the United States mail, first—class postage prepaid, and addressed to the parties at their respective addresses or when transmitted by facsimile via their respective facsimile numbers as indicated in the most current Fee Schedule specifications of Exhibit II of this Agreement. Each party may change such notice mailing and/or transmission information upon Timely prior written notification to the other party. XIX. SEVERABILITY Should any provision(s) contained in this Agreement be held to be invalid, illegal, or otherwise unenforceable, the remaining provisions of the Agreement shall be construed in their entirety as if separate and apart from the invalid, illegal or unenforceable provision(s) unless such construction were to materially change the terms and conditions of this Agreement. XX. ENFORCEMENT Any delay or inconsistency in the enforcement of any part of this Agreement shall not constitute a waiver of any rights with respect to the enforcement of this Agreement at any future date nor shall it limit any remedies which may be sought in any action to enforce any provision of this Agreement. XXI. FORCE MAJEURE Neither party shall be liable for any failure to Timely perform its obligations under this Agreement if prevented from doing so by a cause or causes beyond its commercially reasonable control including, but not limited to, acts of God or nature, fires, floods, storms, earthquakes, riots, strikes, wars or restraints of government. XXII. NOTICE OF ANNUAL MEETING The Employer is hereby notified that it is a Member of Health Care Service Corporation (HCSC), a Mutual Legal Reserve Company, and is entitled to vote either in person, by its designated representative, or by proxy at all meetings of Members of said Company. The annual meeting is held at its principal office at 300 East Randolph Street, Chicago, Illinois each year on the last Tuesday in October at 12:30 P.M. For purposes of this Agreement, the term "Member' means the group, trust, association or other entity with which this Agreement has been entered. It does not include Covered Employees or Covered Persons under the Plan. HCSC TX ASA Rev. 9/06 1.5 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. The Effective Date of this Agreement is January 1, 2007. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. Date October 26, 2006 CITY OF LUBBOCK DAVID A. ILLER, Mayor Attest: REBECCA GARZA, City Secret s toSubstance: f. LEISA HUTCHESON, Risk Manager As to Form: • `�' ��►t� Assistant City Attorney HCSC TX ASA Rev. 9/06 16 of 43 Date: /0l / Dia BLUE CROSS AND BLUE SHIELD OF TEXAS, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company THERESA A. CALDERON, Local Underwriting, Texas Divisional Vice President Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. EXHIBIT I CLAIM ADMINISTRATOR SERVICES • CLAIMS ADJUDICATION Examination of Claims and determination of payment levels, including data entry of Claims by Claims departments, maintenance of Claims experience files, use of medical and/or dental consultants, review of utilization and allowable amounts and Coordination of Benefits (COB). • EXPLANATION OF BENEFITS (EOB) Preparation and mailing of EOB forms. • CLAIMS/MEMBERSHIP INQUIRIES Handling of inquiries — written, phone or in—person — related to membership, benefits, and Claim Payment or denial. • ENROLLMENT SERVICE Upon Employer request, assist Employer, in accordance with Claim Administrator's standard procedures, in initial enrollment activities, including education of Covered Persons about benefits, the enrollment process, selection of health care providers and how to file a Claim for benefits; issue Claim submission instructions on behalf of Employer to health care providers who render services to Covered Persons. CLIENT SERVICES AND MATERIALS Provision of those items as elected by Employer from listing below: a. Enrollment Materials. Implementation materials to be provided by Claim Administrator's Marketing Administration Division during the enrollment process; any custom designed materials may be subject to Supplemental Charge. b. Standard Identification Cards. Provision of identification cards appropriate to health benefit Plan coverage(s) selected. c. Standard Provider Directories. Access to Network Provider directories and periodic updates to such, if applicable to the health benefit Plan coverage(s) under the Agreement. d. Customer Service. Access to toll—free customer service telephone number. e. Medical Pre—authorization Helpline. For those services determined by Employer and provided in writing to Claim Administrator that require pre—authorization, advance Claim Administrator review of medical necessity of such services covered under the Plan; access to toll—free medical pre—authorization helpline for Covered Persons and their health care providers to call for assistance. • MEMBERSHIP VALIDATION Verification of membership by wire, listing, electronic on—line query or other method prior to or during adjudication. • MEMBERSHIP FILE UPDATES Maintenance of membership status files, processing of inter—plan transfers and processing of contract changes. HCSC TX ASA Rev. 9/06 17 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third panty representatives, except under written agreement. OTHER MEMBERSHIP SERVICES Contact Employer and/or Covered Employees regarding adding, changing or renewing coverage. STANDARD REPORTS Make available Claim data, Claim Settlement statements (as outlined in Exhibit II, Section III.D.) and periodic reports in Claim Administrator's standard format(s) in accordance with Claim Administrator's standard reporting policy, including quarterly claim file reports as mutually agreed upon by the parties. STOP LOSS COORDINATION Coordinate all necessary reporting, tracking, notification and other similar financial and/or administrative services pursuant to settlements under stop loss policy(ies) purchased from Claim Administrator in conjunction with the Agreement. For stop loss coverage purchased from entity(ies) other than Claim Administrator, such coordination is limited to this Exhibit's STANDARD REPORTS to be made available to Employer subject to the Agreement's disclosure requirements. • REPORTING SERVICES Preparation and filing of annual Internal Revenue Service (IRS) 1099 forms for the reporting of payments to health care providers who render services to Covered Persons and who are reimbursed by the Plan for those services. • ACTUARIAL AND STATISTICAL Determination of claims projections and pricing of administrative services and stop—loss coverage. • FINANCIAL SERVICES Financial functions such as cash receipts, cash disbursements, payroll and general ledger processing, general accounting, preparation of financial statements, billing, group settlement and wire transfers. • FRAUD DETECTION AND PREVENTION Identify and investigate suspected fraudulent activity by Providers and/or Covered Persons and inform Employer of findings and proof of fraud; address any related recovery litigation as set forth in Exhibit III of the Agreement. • BLUE ACCESS FOR EMPLOYERS Provides Employer on—line access to conduct a variety of secure membership, enrollment, reporting, administrative and billing transactions faster, more accurately and in real—time. • BLUE ACCESS FOR MEMBERS An on—line resource for personalized information about a Covered Person's health care coverage, including, but not limited to, Claims status, email notification when a Claim has been finalized, access to health and wellness information from Mayo Clinic, verification of dependents covered on their plan and health risk assessment and such other services as become available. • PROVIDER NETWORK(S) If applicable to the health benefit Plan coverage(s) under the Agreement, establish, arrange and maintain a Network(s) through contractual arrangements with Providers within the designated service area(s). • CERTIFICATE OF CREDITABLE COVERAGE At the direction of Employer, issuance of Certificates of Creditable Coverage. HCSC TX ASA Rev. 9/06 19 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. BLUE CARE® CONNECTION Full Blue Care Connection is an integrated, member -centric, approach to medical management. The program includes Disease Management (with programs for Asthma, Diabetes, Congestive Heart Failure and Coronary Artery Disease), Special Beginnings, 24 -Hour Nurse Line, Preventive Care Initiatives and Predictive Modeling with Intense Case Management. ADDITIONAL SERVICES NOT SPECIFIED Claim Administrator may provide additional services not specified in the Agreement; such services will be mutually agreed upon between the parties in writing prior to their performance and may be subject to Supplemental Charge. HCSC TX ASA Rev. 9/06 19 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. EXHIBIT II FEE SCHEDULE, FINANCIAL RESPONSIBILITIES, AND REQUIRED DISCLOSURES I. FEE SCHEDULE Service charges and other Fee Schedule specifications in this Section I. are to apply for the period(s) of time indicated herein and shall continue in full force and effect until the earlier of: i) the end of the Fee Schedule Period noted below; ii) the date this Section I. Fee Schedule is amended or replaced in its entirety; and iii) the date the Agreement is terminated. A. FEE SCHEDULE PERIOD Fee Schedule specifications in this Section I. are for the Fee Schedule Period indicated below. B. EMPLOYER GROUP NUMBER(S) For the Fee Schedule Period noted above, the Agreement shall apply to the following Employer Group Number(s): To Be Determined ("TBD"). C. ADMINISTRATIVE CHARGES AND CREDITS 1. The Administrative Charge, calculated monthly, shall be equal to the sum of the amounts obtained by multiplying the total number of Covered Employees by category by the appropriate factors shown below. Fee Schedule Period commencing January 1, 2007 and ending on end of day, December 31, 2007. Per Covered Employee Composite (for individual & family coverage) Base Medical Administrative Charge $25.98 Blue Care Connection $2.20 Cost Containment $1.95 Total: $30.13 Medical Dental $30.13 $2.95 For each Covered Employee (individual/family composite) Fee Schedule Period commencing January 1, 2008 and ending on end of day, December 31, 2008. HCSC TX ASA Rev. 9/06 Per Covered Employee Composite (for individual & family coverage) Base Medical Administrative Charge $30.54 Blue Care Connection $2.20 Cost Containment $1.95 Total: $34.69 20 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. Medical Dental $34.69 $3.63 For each Covered Employee (individual/family composite) Fee Schedule Period commencing January 1, 2009 and ending on end of day, December 31, 2009. Per Covered Employee Composite (for individual & family coverage) Base Medical Administrative Charge $32.62 Blue Care Connection $2.20 Cost Containment $1.95 Total: $36.77 Medical Dental $36.77 $3.85 For each Covered Employee (individual/family composite) The Administrative Charges for the periods beginning January 1, 2008 and January 1, 2009 are contingent upon BCBSTX being the administrator for all medical coverage, the enrollment not changing by more than 10%, the benefit design remaining in place, and no necessary mandated legislative adjustments being imposed. 2. The Termination Administrative Charge shall be equal to the sum of the amounts obtained by multiplying the total number of Covered Employees by category during the three (3) months immediately preceding the date of termination by the appropriate factors shown below. Fee Schedule Period commencing January 1, 2007 and ending on end of day, December 31, 2007. Medical Dental $13.00 $2.09 For each Covered Employee (individual/family composite) Fee Schedule Period commencing January 1, 2008 and ending on end of day, December 31, 2008 and Fee Schedule Period commencing January 1, 2009 and ending on end of day, December 31, 2009. To be determined D. REPORTS The Claim Administrator will make available to the Employer Standard Reports and other Reporting Services as set forth in Exhibit I - CLAIM ADMINISTRATOR SERVICES of the Agreement in accordance with its standard reporting policy at no additional charge. Any additional reports required by the Employer must be mutually agreed upon by the parties in writing prior to their development and may be subject to a Supplemental Charge. HCSC TX ASA Rev. 9/06 21 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. E. CHARGES FOR ADDITIONAL SERVICES The following Additional Services shall be furnished: Reimbursement: 25% of any recovered amounts` *The indicated Reimbursement fee is based on the net recovery after attorney's fees, if any, have been paid. BlueCard® Program/Network access fees available upon request. F. PLAN DESIGN MATERIALS Benefit Booklets: ® No additional charge Accept/Decline ❑ ® Customized ID Cards ❑ No additional charge ® ❑ Benefit Booklets ® No additional charge ® No additional charge ❑ Supplemental Billing* ❑ ® Customized Benefit Booklets ❑ No additional charge ❑ Supplemental Billing* ❑ Supplemental Billing* ❑ ® Customized Covers ❑ No additional charge Yes ® No ❑ ❑ Supplemental Billing* Subscriber Identification (ID) Cards: Accept/Decline ® ❑ Subscriber ID Cards ® No additional charge ❑ Supplemental Billing* ❑ ® Customized ID Cards ❑ No additional charge ❑ Supplemental Billing* Network Provider Directories ® No additional charge ❑ Supplemental Billing* Claim Forms, Application Forms, Enrollment Materials ® No additional charge ❑ Supplemental Billing* Special Mailings: Cost has been included in Administrative Charge: Yes ® No ❑ Identification Cards mailed to home addresses Yes ® No ❑ Provider Directories mailed to home addresses Yes ❑ No *Any customized materials or additional services or supplies not documented in this Fee Schedule may be subject to Supplemental Billing upon mutual agreement of the parties. G. TRANSFER PAYMENT PERIOD The Transfer Payment Period by which payments under Section III.C. of this Exhibit are to be made is weekly. H. CLAIM SETTLEMENT PERIOD The Claim Settlement Period by which settlements under Section IIID. of this Exhibit are to be made is monthly. HCSC TX ASA Rev. 9/06 22 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. RUN—OFF PERIOD The Run—Off Period immediately following termination of the Agreement during which the Claim Administrator will accept Run—Off Claims submitted for payment is twelve -(12) months. J. PLAN COVERAGE Coverage under the Employer's Plan includes the following: • Managed Health Care Coverage • Comprehensive Dental Care coverage K. NOTICE MAILING AND TRANSMISSION INFORMATION Each party's address and facsimile number for the issuance of notices in accordance with Section XVII. of the Agreement are shown below. If to the Claim Administrator: Blue Cross and Blue Shield of Texas, a Division of Health Care Service Corporation a Mutual Legal Reserve Company 901 South Central Expressway Richardson, Texas 75080 Attention: Janet Pennington Fax: 972-789-0224 If to the Employer: City of Lubbock 1625 13th Street Lubbock, Texas 79457 Attention: Leisa Hutcheson Fax: 806-775-3316 With copy to: City Attorney's Office City of Lubbock 162513 th Street Lubbock,Texas 79457 Fax: 806-775-3307 II. EXHIBIT DEFINITIONS Other definitions applicable to this Exhibit are contained in Section 11. AGREEMENT DEFINITIONS of the Agreement. "Copayment" means a specified dollar amount that a Covered Person is required to pay toward a Covered Service. "Coshare" means a percentage of an eligible expense that a Covered Person is required to pay toward a Covered Service. HCSC TX ASA Rev. 9/06 23 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. "Medicare Secondary Payer ("MSP")" means those provisions of the Social Security Act set forth in 42 U.S.C. w1395 y (b), and the implementing regulations set forth in 42 C.F.R. Part 411, as amended, which regulate the manner in which certain employers may offer group health care coverage to Medicare—eligible employees, their spouses and, in some cases, dependent children. (See Section IV.D. of this Exhibit titled "MEDICARE SECONDARY PAYER ("MSP") DATA MATCH.") "Run—Off Claim" means a Claim incurred prior to the termination of the Agreement that is submitted for payment during the Run—Off Period. "Run—Off Period" means the time period immediately following termination of the Agreement, as specified in the most current Fee Schedule specifications of this Exhibit, during which the Claim Administrator will accept Run—Off Claims submitted for payment. "Termination Administrative Charge" means the consideration that is required by the Claim Administrator upon termination of the Agreement, notwithstanding any services that may be performed by the Claim Administrator during the Run—Off Period. "Transfer Payment" means a payment in the amount outlined in Section III.C. of this Exhibit, via wire, draft, electronic fund transfer (EFT) or such other method as mutually agreed to by the parties in writing. III. FINANCIAL RESPONSIBILITIES A. COMPENSATION TO CLAIM ADMINISTRATOR The Employer will pay service charges to the Claim Administrator, in accordance with the most current Fee Schedule specifications of Section I. of this Exhibit. Unless otherwise provided in this Agreement, such Fee Schedule specifications represent the sole compensation to Claim Administrator for the processing of Claims and administrative and other services provided to the Employer. 1. The service charges, which are guaranteed for the Fee Schedule Period indicated in the most current Fee Schedule specifications of Section I. of this Exhibit, have been determined in accordance with the Claim Administrator's current regulatory status and the Employer's existing benefit program. The service charges shall be subject to change by the Claim Administrator as follows: a. At the end of the Fee Schedule Period indicated in the most current Fee Schedule specifications of Section I. of this Exhibit, provided that sixty (60) days prior written notice is given by the Claim Administrator; b. On the effective date of any changes or benefit variances in the Plan, its administration, or the level of benefit valuation which would increase the Claim Administrator's cost of administration; c. On any date changes imposed by governmental entities increase expenses incurred by the Claim Administrator, provided that such increases shall be limited to an amount sufficient to recover such increase in expenses; d. On any date that the number of Covered Employees enrolled in the Plan changes by an amount equal to ten percent (10%) or more of total enrollment over a one (1) month period or twenty—five percent (25%) or more of total enrollment over a three (3) month period; or e. On any date an affiliate, subsidiary, or other business entity is added or dropped by the Employer. HCSC TX ASA Rev. 9/06 24 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. 2. In the event the Agreement is terminated in accordance with the "TERM AND TERMINATION" provisions of the Agreement, the Employer will pay to the Claim Administrator the Termination Administrative Charge indicated in the most current Fee Schedule specifications of Section I. of this Exhibit ten (10) days before the date of termination. This Termination Administrative Charge will be due and payable regardless of whether or not the Claim Administrator processes and pays Run—Off Claims during the Run—Off Period. 3. In addition to the amounts due and payable each month in accordance with the most current Fee Schedule specifications of Section I. of this Exhibit, the Claim Administrator may charge the Employer for: a. Any applicable Supplemental Charge(s); b. Reasonable fees for the reproduction or return of Claim records requested by the Employer, a governmental agency or pursuant to a court order; and/or c. Any other fees that may be assessed by third parties for services rendered to the Employer and/or any other fees for services mutually agreed upon by the parties in writing. 4. Administrative Charges will be paid based upon information the Claim Administrator receives regarding current Plan enrollment as of the first day of each month. Appropriate adjustments will be made for enrollment variances or corrections. 5. Performance of all duties and obligations of the Claim Administrator under the Agreement are contingent upon the Timely payment of any amount owed the Claim Administrator by the Employer. B. CLAIM PAYMENTS 1. Upon receipt of a Claim, the Claim Administrator will make a Claim Payment provided that all payments due the Claim Administrator under the terms of the Agreement are paid when due. 2. Any reasonable determination by the Claim Administrator in adjudicating a Claim under the Agreement that a Covered Person is entitled to a Claim Payment is conclusive evidence of the liability of the Employer to the Claim Administrator for such Claim Payment pursuant to Section IIID. below titled "CLAIM SETTLEMENTS." 3. If the Employer has failed to pay when due any amount owed the Claim Administrator, the Claim Administrator shall be under no obligation to make any further Claim Payments until such default is cured. C. TRANSFER PAYMENT In consideration of the Claim Administrator's obligations as set forth in the Agreement and at the end of each Transfer Payment Period, the Employer shall transfer to the Claim Administrator's account an amount equal to the Transfer Payment Period's Claim Payments plus the applicable service charges. The Transfer Payment Period shall be as indicated in the most current Fee Schedule specifications of Section I. of this Exhibit. The Claim Administrator shall advise the Employer's Financial Division by email or facsimile (at an email address or facsimile number to be furnished by the Employer prior to the effective date of the Agreement) of the amount of Claim Payments pursuant to the Agreement for which reimbursement has not been previously made by the Employer to the Claim Administrator, plus the applicable service charges. Transfer Payment must be made HCSC TX ASA Rev. 9/06 25 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. within twenty—four (24) hours of the Employer's notification by the Claim Administrator. If any day on which a Transfer Payment is due is a holiday, such payment will be made on the next business day. Late payments are subject to the penalties outlined in Section III.E. of this Exhibit. D. CLAIM SETTLEMENTS 1. A Claim Settlement shall be determined for each Claim Settlement Period indicated in the most current Fee Schedule specifications of Section I. of this Exhibit. The Claim Settlement shall reflect the sum of the following: a. All Claim Payments paid by the Claim Administrator in the particular Claim Settlement Period. b. All Claim Payments paid by the Claim Administrator in prior Claim Settlement Periods that have not been included in a prior Claim Settlement. c. The Administrative Charges and Credits and other applicable service charges as indicated in the most current Fee Schedule specifications of Section I. of this Exhibit and any applicable Supplemental Charge(s). The sum of a., b., and c. above shall be referred to as the Claim Settlement Total. 2. If, within the Claim Settlement Period, the Claim Settlement Total exceeds the Transfer Payments, the Employer will pay the difference to the Claim Administrator. The Claim Settlement will be determined within thirty (30) days from the last day of the Claim Settlement Period. The Claim Administrator will notify the Employer in writing of the results of the Claim Settlement. Any sums due the Claim Administrator will be paid Timely by the Employer. 3. If, within the Claim Settlement Period, the Transfer Payments exceed the Claim Settlement Total, the Claim Administrator may, at its option, pay such difference to the Employer, apply the difference against amounts then owed the Claim Administrator by the Employer or authorize a reduction equal to such difference from the next Claim Settlement due the Claim Administrator from the Employer. E. LATE PAYMENTS AND REMEDIES 1. If the Employer fails to pay when due any amount required to be paid to the Claim Administrator under the Agreement, and such default is not cured within ten (10) days of written notice to the Employer, the Claim Administrator may, at its option: a. Suspend Claim Payments; or b. Terminate the Agreement as of the effective date specified in such notice. 2. Pursuant to Section XX. "ENFORCEMENT' of the Agreement, the Claim Administrator's failure to provide the Employer with timely notice of any amount due hereunder shall not be considered a waiver of payment of any amount which may otherwise be due hereunder from the Employer. 3. If the Employer fails to make any payment required by the Agreement on a Timely basis, the Claim Administrator, at its option, may assess a daily charge for the late remittance from the due date of any amount(s) payable to the Claim Administrator by the Employer. This daily charge shall be an amount equal to the amount resulting from multiplying the amount due times the lesser of: HCSC TX ASA Rev. 9/06 26 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. a. The rate of .0329% per day which equates to an amount of twelve percent (12%) per annum; or b. The maximum rate permitted by state law. 4. In addition, if the Employer becomes insolvent, however evidenced, or is in default of its obligation to make any Transfer Payment as provided hereunder, or if any other default hereunder has occurred and is continuing, then any indebtedness of the Claim Administrator to the Employer (including any and all contractual obligations of the Claim Administrator to the Employer) may be offset and/or recouped and applied toward the payment of the Employer's obligations hereunder, whether or not such obligations, or any part thereof, shall then be due the Employer. F. FINANCIAL OBLIGATIONS UPON AGREEMENT TERMINATION 1. The Employer hereby acknowledges that on the date of termination of the Agreement in accordance with the provisions of either Section III.E. of this Exhibit or Section VIII. of the Agreement, there may be an undetermined but substantial number of Claims for services rendered or furnished prior to that date which have not been submitted to the Claim Administrator for reimbursement and also an undetermined but substantial number of Claims submitted for reimbursement which have not been paid by the Claim Administrator ("Run—Off Claims"). The Employer shall be responsible for the reimbursement of all Run—Off Claims, whether or not such Claims have been submitted, or whether or not Claim Payments for such Claims have been made by the Claim Administrator, as of the date of termination, including, but not limited to, Claim Payments made in accordance with MSP laws, and for the payment of the Termination Administrative Charge and any other applicable service charges as indicated in the most current Fee Schedule specifications of Section I. of this Exhibit and any applicable Supplemental Charge(s) pursuant to the processing of such Claims after the Agreement's termination date. 2. In consideration of the Claim Administrator's continuing to make Claim Payments in accordance with Section III.B. of this Exhibit for Run—Off Claims, the Employer shall continue to make Transfer Payments for all such Claims paid by the Claim Administrator up to the Final Settlement outlined below. 3. A Final Settlement shall be made within sixty (60) days after the last day of the Run— Off Period. This Final Settlement shall compare the Transfer Payments against the Claim Settlement Totals for all Run—Off Claims paid up to the date of the Final Settlement. The difference shall be paid or applied as set forth in Section III.D. of this Exhibit. However, if the Transfer Payments exceed the Claim Settlement Totals for all Run—Off Claims paid up to the Final Settlement, the Claim Administrator shall pay such difference to the Employer after applying the difference against amounts, if any, then owed to the Claim Administrator by the Employer. IV. REQUIRED DISCLOSURE PROVISIONS The Employer represents that it acknowledges and has communicated the provisions stated in this Section IV. to its Covered Persons. A. PAYMENT OF CLAIMS AND ASSIGNMENT OF BENEFITS 1. All payments by the Claim Administrator for the benefit of any Covered Person may be made directly to any Provider furnishing Covered Services for which such payment is due, and the Claim Administrator is authorized by such Covered Person to make such HCSC TX ASA Rev. 9/06 27 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. payments directly to such Providers. However, the Claim Administrator reserves the right in its sole discretion to pay any benefits that are payable under the terms of the Plan directly to the Covered Person or Provider furnishing Covered Services. All benefits payable to the Covered Person which remain unpaid at the time of the death of the Covered Person will be paid to the estate of the Covered Person. 2. Once Covered Services are rendered by a Provider, the Covered Person has no right to request the Claim Administrator not to pay the Claim submitted by such Provider and no such request by a Covered Person or his agent will be given effect. Furthermore, the Claim Administrator will have no liability to the Covered Person or any other person because of its rejection of such request. 3. Neither the Plan nor a Covered Person's claims for payment of benefits under the Plan are assignable in whole or in part to any person or entity at any time. Coverage under the Plan is expressly non—assignable or non—transferable and will be forfeited if a Covered Person attempts to assign or transfer coverage or aids or attempts to aid any other person in fraudulently obtaining coverage under the Plan. However, if the Claim Administrator makes payment because of a person's wrongful use of the identification card of a Covered Person, such payment will be considered a proper payment and the Claim Administrator will have no obligation to pursue recovery of such payment. B. COVERED PERSON/PROVIDER RELATIONSHIP The choice of a Provider is solely the choice of the Covered Person and the Claim Administrator will not interfere with the Covered Person's relationship with any Provider. 1. It is expressly understood that the Claim Administrator does not itself undertake to furnish hospital, medical or dental service, but solely to make payment to a Provider for the Covered Services received by Covered Persons. The Claim Administrator is not in any event liable for any act or omission of any Provider or the agent or employee of such Provider, including, but not limited to, the failure or refusal to render services to a Covered Person. Professional services which can only be legally performed by a Provider are not provided by the Claim Administrator. Any contractual relationship between a Provider and the Claim Administrator shall not be construed to mean that the Claim Administrator is providing professional service. 2. The use of an adjective such as Approved, Administrator, Participating, In -Network or Network in modifying a Provider shall in no way be construed as a recommendation, referral or any other statement as to the ability or quality of such Provider. In addition, the omission, non-use or non -designation of Approved, Administrator, Participating, In - Network, Network or any similar modifier or the use of a term such as Non -Approved, Non -Administrator, Non -Participating, Out -of -Network or Non -Network should not be construed as carrying any statement or inference, negative or positive, as to the skill or quality of such Provider. 3. Each Provider provides Covered Services only to Covered Persons and does not deal with or provide any services to the Employer (other than as an individual Covered Person) or the Plan. C. CLAIM ADMINISTRATOR'S SEPARATE FINANCIAL ARRANGEMENTS WITH PROVIDERS 1. BlueCard HCSC TX ASA Rev. 9/06 29 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. Like all Blue Cross and Blue Shield Licensees, the Claim Administrator participates in a program called "BlueCard." Whenever Covered Persons access health care services outside the Claim Administrator's service area, the Claims for those services may be processed through BlueCard and presented to the Claim Administrator for payment in conformity with network access rules of the BlueCard Policies then in effect ("Policies"). Under BlueCard, when Covered Persons receive Covered Services within the geographic area served by an on—site Blue Cross and/or Blue Shield Licensee ("Host Blue"), the Claim Administrator will remain responsible to the Employer for fulfilling the Claim Administrator's contract obligations. However, the Host Blue will only be responsible, in accordance with applicable BlueCard Policies, if any, for providing such services as contracting with its participating Providers and handling all interaction with its participating Providers. The financial terms of BlueCard are described generally below. Liability Calculation Method Per Claim The calculation of a Covered Person's liability on Claims for Covered Services incurred outside the Claim Administrator's service area and processed through BlueCard will be based on the lower of the Provider's billed charges or the negotiated price the Claim Administrator pays the Host Blue. The calculation of the Employer's liability on Claims for Covered Services incurred outside the Claim Administrator's service area and processed through BlueCard will be based on the negotiated price the Claim Administrator pays the Host Blue. The methods employed by a Host Blue to determine a negotiated price will vary among Host Blues based on the terms of each Host Blue's Provider contracts. The negotiated price paid to a Host Blue by the Claim Administrator on a Claim for Covered Services processed through BlueCard may represent: (1) The actual price paid on the Claim by the Host Blue to the health care Provider ("Actual Price"), or (2) An estimated price, determined by the Host Blue in accordance with BlueCard Policies, based on the Actual Price increased or reduced to reflect aggregate payments expected to result from settlements, withholds, any other contingent payment arrangements and non—Claims transactions with all of the Host Blue's health care Providers or one or more particular Providers ("Estimated Price"), or (3) An average price, determined by the Host Blue in accordance with BlueCard Policies, based on a billed charges discount representing the Host Blue's average savings expected after settlements, withholds, any other contingent payment arrangements and non—Claims transactions for all of its Providers or for a specified group of Providers ("Average Price"). An Average Price may result in greater variation to the Covered Person and the Employer from the Actual Price than would an Estimated Price. Host Blues using either the Estimated Price or Average Price will, in accordance with BlueCard Policies, prospectively increase or reduce the Estimated Price or Average Price to correct for over— or underestimation of past prices. However, the amount paid by the Covered Person and the Employer is a final price and will not be affected by such prospective adjustment. In addition, the use of a liability calculation method of Estimated Price or Average Price may result in some portion of the amount paid by the Employer being held in a variance account by the Host Blue, pending settlement with HCSC TX ASA Rev. 9/06 29 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. its participating Providers. Because all amounts paid are final, the funds held in a variance account, if any, do not belong to the Employer and are eventually exhausted by Provider settlements and through prospective adjustments to the negotiated prices. Statutes in a small number of states may require a Host Blue either a) to use a basis for calculating a Covered Person's liability for Covered Services that does not reflect the entire savings realized, or expected to be realized, on a particular Claim or b) to add a surcharge. Should any state statutes mandate liability calculation methods that differ from the negotiated price methodology or require a surcharge, the Claim Administrator would then calculate the Covered Person's liability and the Employer's liability for any Covered Services consistent with the applicable state statute in effect at the time the Covered Person received those services. Return of Overpayments Under BlueCard, recoveries from a Host Blue or from participating Providers of a Host Blue can arise in several ways, including, but not limited to, anti—fraud 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 fees, if any, will be applied in accordance with applicable BlueCard Policies, which generally require correction on a Claim—by—Claim or prospective basis. BlueCard Fees and Compensation The Employer understands and agrees a) to pay certain fees and compensation to the Claim Administrator which the Claim Administrator is obligated under BlueCard to pay to the Host Blue, to the Blue Cross and Blue Shield Association, or to the BlueCard vendors and b) that fees and compensation under BlueCard may be revised from time to time without the Employer's prior approval in accordance with the standard procedures for revising fees and compensation under BlueCard. Some of these fees and compensation are charged each time a Claim is processed through BlueCard and include, but are not limited to, access fees, 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 Employer as an additional Claim liability. Other fees include, but are not limited to, a toll—free phone number fee and a fee for providing certain Provider directories. If you do not have a complete listing, or want an updated listing, of these types of fees or the amount of these fees paid directly by the Employer, you should contact the Claim Administrator's representative. 2. Servicing Plan Agreements between Claim Administrator and Other Blue Cross and Blue Shield Plans In some instances, the Claim Administrator has entered into agreements with other Blue Cross and Blue Shield Plans (hereinafter called the "Servicing Plans") to provide, on the Claim Administrator's behalf, Claim Payments and certain administrative services for those Covered Persons of the Employer residing in the state and/or service area of the Servicing Plans. Pursuant to the agreement between the Claim Administrator and the Servicing Plans, the Claim Administrator has agreed to reimburse each Servicing Plan for all Claim Payments made on the Claim HCSC TX ASA Rev. 9/06 30 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. Administrator's behalf for those Covered Persons of the Employer residing in the state and/or service area of such Servicing Plan. The Claim Administrator hereby informs the Employer, and the Employer shall advise its Covered Persons, that certain Servicing Plans may have contracts with certain Providers ("Servicing Plan Providers") in their service area for the provision of, and payment for, health care services to persons entitled to health care benefits under health policies and contracts to which the Servicing Plan is a party, including the Covered Persons covered under the Administrative Services Agreement, and that pursuant to the Servicing Plan's contracts with its Servicing Plan Providers, under certain circumstances described therein, the Servicing Plan may receive substantial payment from Servicing Plan Providers with respect to services rendered to such persons for which the Servicing Plan was obligated to pay the Servicing Plan Provider, or the Servicing Plan may pay Servicing Plan Providers less than their billed charges for services, by discounts or otherwise, or may receive from Servicing Plan Providers other allowances under the Servicing Plan's contracts with them. The Employer acknowledges that in negotiating the service charge set forth in the Agreement, it has taken into consideration that, among other things, the Servicing Plan may receive such payments, discounts and/or other allowances during the term of its agreement with the Claim Administrator. Further, all amounts payable to the Servicing Plan by the Claim Administrator for Claim Payments made by the Servicing Plan and applicable service charges thereon pursuant to the terms of its agreement with the Claim Administrator (and with respect to most Servicing Plans, any required deductible and Coshare amounts under the Employer's Plan) shall be calculated on the basis of the Servicing Plan Provider's Claim Charge for Covered Services rendered to a Covered Person, irrespective of any separate financial arrangement between the Servicing Plan Provider and the Servicing Plan as referred to herein. However, the Employer acknowledges that the Claim Administrator, under its contract with each Servicing Plan, may be required to reimburse the Servicing Plan only for Claim Payments which have been discounted pursuant to an agreement between the particular Servicing Plan and its Servicing Plan Providers including the service charges thereon. In any event the Employer shall reimburse the Claim Administrator the amount paid by the Claim Administrator to the Servicing Plan for Claim Payments plus any service charges payable by the Claim Administrator to the Servicing Plan, in addition to applicable service charges of the Claim Administrator hereunder. The Claim Administrator hereby informs the Employer, and the Employer acknowledges, that the Claim Administrator's, the Host Plans' and the Servicing Plans' Provider contracting arrangements, operational practices and procedures, and the policies and procedures governing software used to process Claims for services rendered by the Claim Administrator's Providers, Host Plans' Providers and the Servicing Plans' Providers may result in minor deviations in Claim processing and/or pricing of Claims for same services. D. MEDICARE SECONDARY PAYER ("MSP") DATA MATCH In an effort to facilitate the processing of Claims consistent with the requirements of the MSP statute, and to assist in meeting the statutory obligations, certain Blue Cross and Blue Shield Plans together with the Centers for Medicare & Medicaid Services ("CMS"), formerly known as Health Care Financing Administration ("HCFA"), the federal government agency which administers Medicare, have developed a new enrollment and membership system. The system, also referred to as the "Data Match," is aimed at obtaining, in a Timely and HCSC TX ASA Rev. 9/06 31 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. current fashion, information necessary for the Claim Administrator to identify dual coverage situations which fall within the MSP statute, and to determine whether primary or secondary payment should be made for a particular Claim. Under the system, the Claim Administrator will provide basic information to CMS about individuals enrolled in Group Health Plans who are also covered by Medicare so that CMS can better detect dual coverage situations. The Employer hereby authorizes and directs the Claim Administrator to disclose to CMS periodically, information pertaining to Medicare—eligible Covered Persons under the Plan. The Employer agrees that the Claim Administrator's ability to make accurate primary/secondary MSP determinations depends on the breadth and accuracy of the Claim Administrator's files concerning Covered Persons. The Employer agrees to use best efforts in responding promptly and accurately to the Claim Administrator's requests for information and to require and facilitate its Covered Persons' cooperation in responding promptly and accurately to such requests. Further, to assure the continuing accuracy of the Claim Administrator's files, the Employer agrees that it is the Employer's responsibility to notify the Claim Administrator promptly of any change in the size of the Employer's work force or status of its employees that might affect the order of payment under the MSP statute, such as information regarding working— aged persons who retire and changes in the size of the Employer's work force that place it in, or take it out of, the scope of the MSP statute. If the Claim Administrator does not receive such information from the Employer, the Claim Administrator will assume that all relevant factors remain unchanged and will process Claims accordingly. The group acknowledges and agrees that the Claim Administrator will be using the information provided by the Employer and Covered Persons to update the Claim Administrator's files, and will also forward this information to CMS so that CMS can revise its file to reflect relevant changes in primary/secondary status. The Claim Administrator may, in its sole discretion, discontinue its participation in the Data Match system as described above. Nothing in the Agreement shall be construed as obligating the Claim Administrator to continue its participation in the Data Match system. Disclosure Statement: The Employer acknowledges that the Claim Administrator has furnished it with a copy of a pamphlet entitled "Information Regarding the Medicare Secondary Payer Statute" (also referred to as the "Disclosure Statement"), prepared by the Blue Cross and Blue Shield Association and reviewed by CMS, which administers Medicare. E. REIMBURSEMENT PROVISION If a Covered Person incurs expenses for sickness or injury that occurred due to the negligence of a third party and benefits are provided for Covered Services described in the Plan, the following provisions will apply: 1. The Claim Administrator on behalf of the Employer has the right to reimbursement for all benefits the Claim Administrator provided from any and all damages collected from the third party for those same expenses whether by action at law, settlement, or compromise, by the Covered Person, the Covered Person's parents, if the Covered Person is a minor, or the Covered Person's legal representative as a result of that sickness or injury, in the amount of the Provider's Eligible Charge for Covered Services for which the Claim Administrator has provided benefits to the Covered Person. HCSC TX ASA Rev. 9/06 32 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. 2. The Claim Administrator is assigned the right to recover from the third party, or his or her insurer, to the extent of the benefits the Claim Administrator provided for that sickness or injury. The Claim Administrator shall have the right to first reimbursement out of all funds the Covered Person, the Covered Person's parents, if the Covered Person is a minor, or the Covered Person's legal representative is or was able to obtain for the same expenses for which the Claim Administrator has provided benefits as a result of that sickness or injury. The Covered Person is required to furnish any information or assistance or provide any documents that the Claim Administrator may reasonably require in order to obtain its rights under this provision. This provision applies whether or not the third party admits liability. HCSC TX ASA Rev. 9/06 33 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. EXHIBIT III CITY OF LUBBOCK NETWORK DISCOUNT GUARANTEE EFFECTIVE JANUARY 1, 2007 A. PARTICIPATING PLANS Participating Total Participation Savings % Plans Participation % of Total by BC Plan Alabama 0 0.00% 56.12% Arizona 1 0.04% 57.84% Arkansas 1 0.04% 44.35% California Cross (Wellpoint) 0 0.00% 55.05% California Shield 0 0.00% 51.68% Colorado (Wellpoint) 0 0.00% 47.52% Connecticut (Wellpoint) 0 0.00% 46.81% Delaware (Carefirst) 0 0.00% 39.41% District of Columbia (Carefirst) 0 0.00% 50.67% Florida 0 0.00% 58.75% Georgia (Wellpoint) 0 0.00% 46.27% Hawaii 0 0.00% 51.28% Idaho Cross 0 0.00% 25.94% Idaho Shield (Regence) 0 0.00% 18.35% Illinois (HCSC) 0 0.00% 50.71% Indiana (Wellpoint) 0 0.00% 43.03% Iowa (Wellmark) 0 0.00% 38.72% Kansas 0 0.00% 42.32% Kentucky (Wellpoint) 0 0.00% 49.74% Louisiana 0 0.00% 53.48% Maine (Wellpoint) 0 0.00% 24.65% Maryland (Carefirst) 0 0.00% 28.42% Massachusetts 0 0.00% 51.00% Michigan 0 0.00% 49.22% Minnesota 0 0.00% 31.63% Mississippi 0 0.00% 46.55% Missouri (Kansas City) 0 0.00% 39.73% Missouri (Wellpoint (St. Louis)) 1 0.04% 48.03% Montana 0 0.00% 19.47% Nebraska 0 0.00% 33.34% Nevada (Wellpoint) 0 0.00% 56.16% New Hampshire (Wellpoint) 0 0.00% 29.99% New Jersey 0 0.00% 59.51% New Mexico (HCSC) 1 0.04% 41.67% New York (Central) 0 0.00% 41.47% New York (Empire) 0 0.00% 56.43% New York (Finger Lakes) 0 0.00% 35.87% HCSC TX ASA Rev. 9/06 34 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. New York (Northeastern) 0 0.00% 46.63% New York (Utica) 0 0.00% 39.17% New York (Western) 0 0.00% 50.17% North Carolina 0 0.00% 46.50% North Dakota 0 0.00% 35.19% Ohio (Wellpoint) 0 0.00% 49.13% Oklahoma 0 0.00% 43.98% Oregon (Regence) 0 0.00% 32.53% Pennsylvania (Capital) 0 0.00% 44.35% Pennsylvania (Highmark) 0 0.00% 54.66% Pennsylvania (Independence) 0 0.00% 41.67% Pennsylvania (Northeastern) 0 0.00% 31.20% Puerto Rico (La Cruz Azul) 0 0.00% 0.00% Puerto Rico (Triple S) 0 0.00% 20.30% Rhode Island 0 0.00% 52.47% South Carolina 1 0.04% 46.71% South Dakota (Wellmark) 0 0.00% 33.38% Tennessee 0 0.00% 50.78% Texas (HCSC) 2,348 99.79% 52.01% Utah (Regence) 0 0.00% 32.25% Vermont 0 0.00% 22.99% Virgin Islands 0 0.00% 3.93% Virginia (Wellpoint) 0 0.00% 48.46% Washington (Seattle - Regence) 0 0.00% 43.72% Washington/Alaska (Premera) 0 0.00% 36.18% West Virginia (Mountain State) 0 0.00% 29.83% Wisconsin (Wellpoint) 0 0.00% 20.84% Wyoming 0 0.00% 9.68% Total 2,353 100.00% 52.00% *Note: Target is subject to change based on actual average participation for each Plan during the 2007 policy period. B. TOTAL AMOUNT AT RISK Total Amount at Risk: $3.50 2,353 Current Enrollment Est. Annual $98,826 HCSC TX ASA Rev. 9/06 35 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. • C. PENALTY MATRIX Total Amount at Risk* _ $98,826 Actual Discount Target 52.0% Risk Free Corridor 49.0% 48.9% $19,765 Penalty 47.0% 46.9% $39,530 Penalty 45.0% 44.9% $59,296 Penalty 43.0% -- ----- ------..__._.._...-- 42.9% - — ------ - ._..__......_ .... -.._._.._----- $79,061 Penalty 41.0% 40.9% $98,826 Penalty 39.0% - * Amount at Risk is based on current enrollment of 2,353 employees. Actual amount at risk is subject to change based on final enrollment of employees who select BCBSTX coverage. HCSC TX ASA Rev. 9/06 36 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. D. NETWORK DISCOUNT GUARANTEE SUMMARY Risk Free Corridor: No Penalty for discounts within 3.0% of the Target Discount Penalty: 20% of the total amount of risk for each band Total amount at risk*: $98,826 Target for Overall Network Discount: 52.00% 1. BCBSTX reserves the right to re-evaluate and re-establish the Target Discount if Medicare changes its payment systems during the term of this Network Discount Guarantee. 2. Network Discount Guarantee applies only to eligible employees and retirees who enroll the proposed BCBSTX benefit plans. 3. BCBSTX reserves the right to re-evaluate and re-establish the Target Discount if the participation changes by more than plus or minus 10% or if the distribution of enrolled employees between participating Plans changes significantly. 4. BCBSTX reserves the right to re-evaluate and re-establish the Target Discount if there is a change in the benefit plan design. 5. BCBS will exclude all claims in excess of $175,000 from this Network Discount Guarantee. 6. BCBSTX reserves the right to void this Network Discount Guarantee if there are less than 2,118 employees enrolled in the plan. 7. Claims will exclude Medicare -related claims and claims with COB. * Amount at Risk is based on current enrollment of 2,353 employees. Actual amount at risk is subject to change based on final enrollment of employees who select BCBSTX coverage. HCSC TX ASA Rev. 9/06 37 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. EXHIBIT IV Blue Cross and Blue Shield of Texas PPO Medical Performance Guarantees offered to CITY OF LUBBOCK Agreement Period January 1, 2007 through December 31, 2007 BCBSTX is pleased to offer the following standards on our performance. These guarantees will only apply if we obtain and maintain a minimum of 1,800 employees enrolled in the BCBSTX coverages indicated. Performance guarantee measurement will begin the 4th month following the Group effective date provided that conditions and requirements of the Administrative Services Agreement are met. Service Definition Level of Percent Performance at Risk' Claim Turnaround time is defined as the number of Turnaround days it takes to process a claim, beginning with 90.0%-100% 0% Time the date the claim is received to the check/E013 0%-89.9% 2% date on participant filed claims or to the date the claim passes all edits on provider filed claims. The standard is measured as a percent of process -ready claims2 finalized within 14 calendar on a group -specific basis. Claim -days Processing accuracy is defined as the percent of 95.0%-100% 0% Processing claims processed accurately. The level of 0%-94.9% 2% Accuracy performance is based on the results from a random sample audit of all claims processed for those customers assigned to the Unita. Claim Financial accuracy is defined as the percent of 97.0%-100% 0% Financial dollars paid accurately. The level of performance 0%-96.9% 2% Accuracy is based on the results from a random sample audit of all claims processed for those customers to the Unita. Inquiry -assigned Inquiry resolution is defined as number of days it Resolution takes to resolve a participant inquiry, beginning 95.0%-100% 0% with the date the inquiry is received to the 0%-94.9% 2% resolution date. All written and telephone inquiries will be measured. The standard is measured as a percent processed within 14 calendar days on a group -specific basis. Abandoned Abandoned calls are defined as calls, calculated HCSC TX ASA Rev. 9/06 39 of 4-1 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. Calls over the complete workday, that reach the facility 00/0-5.0% 0% and are placed in a queue, but are not answered 5.1%-10% 1 % because the caller hangs up before a service 10.1%-100% 2% representative becomes available. Any calls abandoned or terminated by the caller prior to the Average Speed to Answer number of seconds standard will not be counted as Abandoned Calls. Standard is measured using participant calls on a roup -specific basis. Average Average Speed To Answer, calculated over the Speed to complete workday, is defined as the time a caller 0-30 0% Answer spends on hold until a service representative seconds 1% becomes available. Standard is measured by 31-60 2% determining the average number of seconds the seconds caller spends waiting for a service representative. 61 seconds Standard is measured using participant calls on a or more group specific basis. Total 12% Notes: 1. Dollars at risk are based on the indicated percentage of base administrative charge. Base administrative charges exclude commissions or broker's fees and cost containment program fees. 2. Process -ready claims are defined as claims that contain all information required to process the claim. 3. Unit is defined as the area responsible for processing the Group's claims. 4. Performance guarantees will be measured and settled on an annual basis. PERFORMANCE GUARANTEES ADMINISTRATION The Performance Guarantees described herein shall apply to the Administrative Services Agreement (the Agreement) between Blue Cross and Blue Shield of Texas a Division of Health Care Service Corporation, a Mutual Legal Reserve Company, (BCBSTX or Claim Administrator) and City of Lubbock (Employer) to which this Addendum is attached and have the same force and effect as the most current Fee Schedule, unless amended, replaced, or terminated by the parties to this Agreement in writing. The Performance Guarantees set out in this Addendum are limited solely to the medical benefit coverage indicated in the most current Fee Schedule and do not include prescription drug, dental, vision, health maintenance organization (HMO), life, accidental death and disability coverage, or services, if applicable, under the medical management programs provided by Claim Administrator when elected by the Employer. HCSC TX ASA Rev. 9/06 39 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. All obligations, terms, conditions, promises, agreements, and language in the Administrative Services Agreement and the most current Fee Schedule apply equally to the obligations, terms, conditions, promises, agreements, and language in this Addendum PG and the most current Exhibit -PG. SECTION I DEFINITIONS Abandoned Calls means all Calls that reach Claim Administrator and are placed in queue but have not reached their final destination. The Call becomes an Abandoned Call when it is terminated because the Caller intentionally ends the Call before a customer service representative becomes available. Any Calls abandoned or terminated by the Caller prior to the Average Speed to Answer number of seconds standard will not be counted as Abandoned Calls. Average Speed to Answer means the time the Caller spends on hold after being placed in queue until a customer service representative becomes available. Base Administrative Charge is the portion of the Administrative Charge identified in Section I.C.1 of Exhibit II. Call means a measurable telephone Call placed by a Caller. Caller means a Covered Person, as defined under the Agreement. Claim means notification acceptable to the Claim Administrator that a service has been rendered or furnished to a covered person in accordance with the provisions of the health care benefit program in effect on the date a service is rendered or furnished. This notification must set forth in full the details of such service including, but not limited to, the covered person's name, age, sex and identification number, the name and address of the provider of service, a specific itemized statement of the service rendered or furnished, the date of service, applicable diagnosis and the fee for such service. Claim Financial Accuracy means the percent of dollars paid accurately in accordance with the provisions of the medical benefit coverage administered by Claim Administrator. Claim Payment means the benefit payment made by the Claim Administrator, upon submission of a Claim, in accordance with the Employer's health care benefit program. Claim Processing Accuracy means the accuracy rate achieved by the Claim Administrator in adjudicating claims in accordance with the provisions of the medical benefit coverage administered by Claim Administrator. Claims Processing Turnaround Time means the period beginning on the date the Claim Administrator or Host Blue receives a Claim for processing through the date the Claim passes all system edits and benefits are approved or denied by the Claim Administrator. Inquiry means a written or oral question that is submitted by a Covered Person to Claim Administrator and actually received by a Claim Administrator employee charged with responding HCSC TX ASA Rev. 9/06 40 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. to such inquiries. Notwithstanding any other considerations, oral or written Inquiries may only be actually received during Claim Administrator's normal business hours. Inquiry Timeliness means response time to a Covered Person's Inquiry. An Inquiry is resolved on the earlier of the date an oral response is communicated by Claim Administrator or the date a written response is sent by Claim Administrator. If additional information is requested outside of Claim Administrator or a professional review is required, the time from the date of the request to the date the information is received will be carved out. Examples of additional information include but are not limited to medical records that must be requested from a health care provider, coordination or maintenance of benefits, or student verification inquiries. Process -Ready Claim means a Claim that, when received by the Claim Administrator, contains all of the Claim information required to process the Claim. Settlement Period means the period for which the Claim Administrator's service performance shall be evaluated. For purposes of this Agreement, the Settlement Period is indicated on the most current Exhibit -PG. Unit means the area responsible for claims processing and customer service for the Employer. SECTION II CALCULATION A. Percentage levels of Claim Administrator's performance of administrative duties will be calculated by taking the weighted average of the levels of performance during the Settlement Period indicated on the most current Exhibit -PG. B. All measurement and calculation methods used in determining performance results are in accordance with the Blue Cross and Blue Shield Association performance reporting guidelines and/or Claim Administrator corporate policies. Each standard is measured as indicated in the most current Exhibit -PG, attached to and made a part of this Addendum PG. Highlights of those guidelines are as follows: Abandoned Call rate is measured by dividing the number of Abandoned Calls, as defined, by the total number Calls accepted. Call totals are provided by telephone reports that capture the number of Calls accepted and abandoned. Average Speed of Answer will be calculated by dividing the total length of time for all Calls, measured from the time a Call is queued by the automated telephone system for the next available customer service representative until the time the Caller is connected with a customer service representative, by the total number of Calls connected with a customer service representative at the Claim Administrator's customer service unit during the Settlement Period. The Average Speed to Answer is provided by telephone reports that compute the average number of seconds that Callers spend on hold waiting for their Call to be answered. HCSC TX ASA Rev. 9/06 41 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. Claim Financial Accuracy rate is determined from an audit of randomly selected stratified claims. Claims are stratified by amount paid. Total dollars overpaid and total dollars underpaid are projected over each stratum. The Claim Financial Accuracy is computed by summing the projected overpayments and the projected underpayments (absolute value) from each stratum and dividing by the total population dollars that should have been paid, (total population dollars paid plus projected underpayments minus projected overpayments). The end result is subtracted from one for the accuracy rate. The results incorporate statistically valid samplings. Claim Processing Accuracy rate is determined from the same stratified claims sample used to determine Claim Financial Accuracy. A Claim Processing Accuracy percentage is calculated for each stratum by dividing the number of accurately processed claims by the number of claims selected in the stratum. Each accuracy percentage is then weighted according to the total claim population. The Claim Processing Accuracy rate is determined by combining the weighted accuracy for each stratum. Claim Processing Accuracy refers to Claims processed without processing errors such as: 1. Coding - incorrect claim data entry. 2. Benefit Administration - failure to adhere to the Employer's health care benefit program design. 3. Procedural Administration - failure to adhere to the administrative procedures. 4. System Administration - computer-generated errors, benefit programming errors, calculation errors. 5. Excluding: a. Any administrative inaccuracies that do not impact claims disposition—or customer reporting; b. Errors entered by providers of service; c. Benefits provided to an ineligible claimant due to the Employer's failure to provide timely and accurate eligibility information to the Claim Administrator. Claim Processing Turnaround Time is measured from the time the claims are received in a BCBSTX office or Host Blue office to the time they pass all claims edits and a benefit determination is made. Claims delayed for any reason beyond the control of Claim Administrator (for example, when Claim Administrator is waiting on the Employer to provide membership, eligibility, or other information) and claims that involve any investigation are excluded from measurement Inquiry Resolution is measured by dividing the total number of Covered Person inquiries resolved in the number of calendar days specified in the guarantee by the total inquiries received. HCSC TX ASA Rev. 9/06 42 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. SECTION III TIMING A. The period for which Claim Administrator's performance of administrative duties will be measured and for which the Employer may receive a refund is indicated on the most current Exhibit -PG. B. The initial measurement of Performance Guarantees will begin on the date indicated on the most current Exhibit -PG provided all of the requirements listed below are completed. The requirements are as follows: 1. Benefit information and claims administrative procedures have been provided by the Employer to the Claim Administrator, 2. All accumulation totals, if applicable, have been received from the prior carrier and have been loaded onto the Claim Administrator claims processing system, 3. Accurate and complete membership information has been received and loaded onto the Claim Administrator claims processing system, and 4. Transfer Payment procedures have been established in accordance with the Administrative Services Agreement. For measurement of the Performance Guarantees to continue, Transfer Payments and all Administrative Charges must have been received by Claim Administrator in accordance with the terms detailed in the Agreement. C. If for any reason the Administrative Services Agreement is terminated prior to the end of any Settlement Period or enrollment in the Plan's medical benefit coverage administered by Claim Administrator falls below the minimum number of enrolled Subscribers indicated in the most current Exhibit PG attached to and made a part of this Addendum, Claim Administrator's performance of administrative duties will not be measured and the Employer will not receive any refund, based on that part of the Settlement Period in which the Administrative Services Agreement was in effect. SECTION IV DETERMINATION A. The Claim Administrator agrees to guarantee a level of performance satisfactory to the Employer. In the event that the Claim Administrator's level of performance is determined to be less than any of the standards described in the most current Exhibit -PG during any Settlement Period for any reason, except any disaster or epidemic which substantially disrupts the Claim Administrator's normal business operation, the Claim Administrator will be responsible for reimbursing the Employer a portion of the Base Administrative Charge. B. Claim Administrator will measure its performance of administrative duties and report the measurements to the Employer, any amounts due in accordance with HCSC TX ASA Rev. 9/06 43 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement. this Addendum within 120 days following the end of the Settlement Period indicated in the most current Exhibit -PG. C. Claim Administrator will not be obligated to measure its performance of administrative duties and will not be obligated to refund the Employer based thereon until the Administrative Services Agreement (including the most current Exhibit -PG) has been executed and is on file with Claim Administrator by the close of the applicable Settlement Period. D. Claim Administrator will not be obligated to measure its performance of administrative duties and will not be obligated to refund the Employer based thereon for any portion of the Settlement Period in which the Employer: 1. Fails to provide Claim Administrator with Timely changes in enrollment or membership information or any other reports or information as may be necessary to Claim Administrator to perform its administrative duties, including but not limited to identification or certification of claimants eligible for benefits, dates of eligibility, number of employees and dependents covered under the Plan, or 2. Fails to pay Administrative Charges in accordance with the terms of the Agreement or comply with all established Transfer Payment procedures. E. If for any reason there is a significant change in the benefit structure or the administrative procedures of the medical benefit coverage administered by Claim Administrator during any Settlement Period, Claim Administrator reserves the right to renegotiate the level of performance and/or the Base Administrative Charges at risk in this Addendum and the attached Exhibit -PG. Claim Administrator will not be obligated to measure any Performance Guarantee impacted by changes requested in writing by the Employer during the time period required to modify the Claim Administrator system and to complete all other tasks necessary to achieve the same qualitative standard of execution that existed before the change was requested. All changes or amendments to the Plan must be submitted to Claim Administrator in accordance with the Administrative Services Agreement. HCSC TX ASA Rev. 9/06 44 of 43 Proprietary Information Not for use or disclosure outside Claim Administrator, Employer, their respective affiliated companies and third party representatives, except under written agreement.