Provider Services Agreement, dated as of August 1, 2002, by and among the Company, HealthSmart Holdings, Inc. and HealthSmar t Preferred Care II, L.P, and Amendment No. 1, 2, 3 and 4 thereto, dated September 1, 2005, January 1, 2007, July 31, 2007, and December 20, 2008, respectively

6.2.           This Agreement, including all Exhibits hereto, may be amended only by a writing signed by both parties.

 

6.3.           This Agreement shall be construed in accordance with the laws of the State of Texas and venue for any disputes shall be in Dallas County, Texas.

 

6.4.           All notices required by this Agreement shall be given in writing signed by the party giving the notice and delivered by hand or first class mail to the other party at the address set forth below or such other address as has been given by proper notice.

 

 

6.5.           This Agreement contains the entire contract between the parties, as to the subject matters hereto, and may not be amended, altered or modified except by written agreement of the parties.&nb sp; This Agreement may be amended only by written amendment signed by both parties.

 

6.6.           Except as otherwise provided herein, this Agreement may not be assigned by any party except with the prior written consent of the other party.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date first written above.

 

The State of Texas.

HEALTHSMART provider contracts to be excluded from the provisions of Section 3.4.

 

This Amendment supplements the agreement between the parties dated August 1, 2002 “American CareSource Client Agreement with HealthSmart Preferred Care II, LP” (hereinafter referred to as “Client Agreement”).  It shall have no effect apart from the Client Agreement.  This Amendment's use o f terms, names, or labels that are different from those of the Client Agreement shall not by itself alter the effect of either document.  The terms of this Amendment preempt, supersede, and override all contrary terms of the Client Agreement.  For the purpose of this Amendment, “ACS” refers to American CareSource Holdings Inc., and “HealthSmart” refers to HealthSmart Preferred Care II, LP.

 

This Amendment may be modified or supplemented only by an express amendment dated and signed by authorized representatives of the parties.  Except for blanks on originally printed forms, no handwritten or separately printed additions or changes on this document will be effective, even if they are initialed or sign ed.

 

Amendment effective date:  September 1, 2005

 

It is mutually agreed upon that the following sections of the Client Agreement are amended as follows:

 

 

Definition of “Referral Call Center Program” is deleted from the Client Agreement.

 

 

All previous language pursuant to Section II, Paragraphs 2.1, 2.2, 2.3, 2.4, 2.5, 2.7, 2.8 and 2.9 are replaced with the amended language as follows:

 

2.1           Network Providers.  During the term of this Agreement, ACS will maintain a fully-credentialed network of ancillary health care service providers and will provide HealthSmart Participants access to those Network Providers.  ACS will supply the names and provider demographics for each Network Provider to HealthSmart at least monthly in a mutually agreed-upon electronic format.  HSPC shall not exclude ACS Network Providers for any purpose or reason other than the exceptions of (1) the necessity to have the provider remain with the HSPC network, (2) participation in ACS network would prohibit the provider from representation by HSPC for contracting via the administrative fee business model, and (3) inclusion of the ACS provider would cause potential harm or discord to HSPC provider rates or relationships.  ACS will not notify its Network Providers that HealthSmart Participants will begin utilizing the Network Providers.  ACS will notify their network providers of any new payor to the ACS network that HSPC participants will begin utilizing.  The network contact letter must be approved by HSPC.

 

2.2           Claims Processing of Covered Services.  ACS shall ensure that Network Providers submit claims for Covered Services provided to HealthSmart Participants to the electronic or U.S. mail addresses designated by HealthSmart.

 

2.3           Claim Payment Responsibility.  ACS agrees to bill HealthSmart Customers for the Negotiated Client Rates applicable to covered Services provided to covered Persons.  ACS agrees to look solely to HealthSmart customers, and not to HealthSmart, for payment for these services and fees.

 

2.5           Payment of Network Providers and Network Providers Relations.  Following receipt of payment for Covered Services provided to HealthSmart Participants, ACS shall pay the Network Pr oviders who provided the Covered Services in accordance with the Network Provider's ACS Provider Agreement within 14 days.  ACS shall provide all Explanation of Payment/Benefit forms to such Network Providers when payment is made, which will allow the Network Provider to collect remaining allowable Participant Expenses for the Covered Services.  ACS will provide Network Provider Relations services for Network Providers for claims paid by ACS to the Network Provider, including toll-free telephone lines, to address any payment or claims review issues involving the payment of the claim under the Provider Agreement.

 

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All previous language pursuant to Section III, Paragraphs 3.1, 3.4, and 3.5 are replaced with the amended language as set forth below.  Paragraph 3.6 and 3.7 are added to the Client Agreement.

 

3.1    & nbsp;      Claims Processing of Covered Services.  As defined in Exhibit E, HealthSmart shall receive all claims from Network Providers for Covered Services provided to HealthSmart/Payor Participants in accordance with the claim routing instructions established by HealthSmart and the HealthSmart customers and forward ACS Network Provider claims to ACS.  ACS will reprice claims utilizing the Negotiated Client Rates.  Payers shall adjudicate claims as “In-Network” as they would if the ACS Network Providers were directly contracted by HealthSmart.  Payer shall send an applicable explanation of payment/benefit information to enable ACS to provide such information to the Network Provider, including the amount of Participant Expense for each claim.

3.6           Payment.  When Payor has finally adjudicated the repriced Network Provider claims for Participants, it will remit all Benefit Plan payments to ACS for each such Network Provider, Payor will pay ACS the repriced amount, less applicable Participant Expenses (copayments and deductibles).  Payor will utilize ACS' tax identification number for all such payments, recognizing the assignment of the claim from the Network Provider to ACS.  Payments to ACS shall be made as soon as possible following adjudication of the claim to ensure satisfaction of timely claims payment guidelines.

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1)	ACS agrees to allow HealthSmart to outsource the access to and electronic routing of ACS provider claims, through HealthSmart to ACS for the benefit of their respective client base. Affiliated Entities will be identified on the attached Exhibit A as they are approved and implemented by both parties.

2)	ACS agrees to develop and maintain an ancillary provider service solution for HealthSmart and the Affiliated Entities identified in Exhibit A for the benefit of their clients.

a)	ACS has the obligation to maintain an ancillary service solution as required by HealthSmart and become the primary point of contact for ACS providers.

b)	In addition, as ACS expands its ancillary service solution, ACS providers will be made available to HealthSmart.

4)	Administrative Services Fees will be estimated by ACS monthly based on claims paid during the immediately preceding month.

a)    

Monthly payments will be made within 30 days following the end of each calendar month of the year under this Agreement. Within 60 days following the end of each quarter under this Agreement

(1)	ACS shall reconcile the monthly payments made during the previous quarter and calculate the final payment for that previous quarter based on actual receipts.

(2)	All adjustments will be made in conjunction with the next scheduled payment.

b)	ACS will provide the existing HealthSmart approved monthly Financial Report with monthly payments.

5)	ACS and HealthSmart agree to work together on a continuing basis to establish, enhance, and modify their respective electronic inter faces and claims processing/repricing requirements for the benefit of HealthSmart. ACS and HealthSmart agree to create a process to identify, route, reprice and distribute ACS provider claims from HealthSmart, as outlined in Exhibit B.

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6)

ACS Appeals Policy - ACS will require ACS providers to follow an established appeals process if they disagree with t he payment of services and/or explanation of benefits received. An appeal is warranted when there is a dispute between the ACS provider and Ancillary Care Services, Inc. for reason(s) including, but not limited to: contractual issues, timely filing, authorization, and notification of payment issues. Providers will not be penalized for filing an appeal.

7)

The Agreement and any amendments to the Agreement will automatically renew for three years unless either party provides one hundred and twenty (120) days notice of its intent to modify or terminate the Agreement prior to the contract term. However, either party may, except as otherwise set forth in the Agreement or amendments to the Agreement, terminate the Agreement and any amendments to the Agreement for good cause upon no less than sixty (60) days prior written notice to the other party. These amended provisions supersede the language of the underlying agreement regarding modification or termination.

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1.	American Administrative Group, Inc. (AAG)

2.	CareVu Corporation

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1.	HealthSmart/CareVu - an implementation of a two-way electronic exchange of UB92 claims to ACS for repricing, to be completed by February 28, 2007.

2.	AAG/CareVu - AAG to use ACS for non-HealthSmart clients wherever possible. AAG may implement this on a staggered timetable for its clients. This project includes the following sub-projects:

a.	AAG Network Setup

b.	AAG PMA Load

c.    < /div>	AAG Provider Load

d.	AAG/CareVu - two-way electronic exchange of claims to ACS for repricing.

3.	AAG will develop a detailed project plan by February 2, 2007, which includes specific tasks to be completed by AAG, ACS and CareVu, as well as projected completion dates.

4.	AAG and ACS agree to hold regularly scheduled meetings during the entire implementation proces s. AAG and ACS agree to diligently strive to follow and meet completion dates reflected in the project plan.

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1)

HSPC agrees to use ACS as the Primary ancillary benefits manager for HSPC Customers.  Primary Ancillary benefits manager means that ACS will have primary responsibility and priority in providing Ancillary Care Services, including network development, contracting and provider maintenance, to HSPC Customers, subject to Customer's agreement.  ACS and HSPC will work together to communicate the benefits of ACS' provider network to these customers.  ACS provider contracts will be placed in priority, first tier position for HSPC Covered Persons' access.  ACS will be responsible for properly and accurately repricing all submitted claims that match an ACS provider TIN file.  ; Upon mutual development of targeted ancillary providers (as provided for in Section 15, below), HSPC contracting staff will use commercially reasonable efforts to assist ACS in obtaining contracts with identified ancillary providers.  Notwithstanding, HSPC may contract directly for ancillary care providers as part of HSPC's routine hospital and physician contracting, and/or with specific ancillary providers.

2)	HSPC agrees to devote necessary internal contracting resources to the joint strategic contracting plan as described in Section 15, below.  The initial phase of joint strategic contracting plan will be defined and implemented by HSPC and ACS no later then August 1, 2007.

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4)	HSPC agrees that no HSPC contracted providers will be excluded from the primary claims sort process that identifies that provider as an ACS contracted provider unless a more beneficial rate adjustment may be obtained by accessing an existing HSPC ancillary provider agreement.

	HSPC agrees that no ACS providers will be excluded by HSPC, HSPC customers, or its Affiliated Entities unless ACS cannot provide at least equivalent specific provider average savings compared to savings currently being achieved through alternative cost reduction mechanisms.  Current average savings are calculated using a minimum (90) day time frame and a minimum of ten (10) claims.

6)	HSPC will maintain the confidentiality and proprietary nature of the ACS provider discounts.  During the term of this Agreement, except as otherwise provided herein, HSPC agrees not to contract with any third-party vendors to receive services substantially similar to those provided by ACS hereunder.

7)	HSPC and ACS agree to develop a joint communication plan that will communicate this relationship to providers and payors.  Both parties will work together to determine the written and oral communication used to describe and sell this arrangement to the various parties.

8)	HSPC will communicate, as a follow up to communications sent by ACS, as necessary, to the providers included under this agreement, that they have contracted with ACS to manage the agreed upon ancillary service categories.

9)	HSPC will communicate, as necessary to its Customers, that they have contracted ACS to manage the agreed upon ancillary service categories with the ACS Network Providers.

10)	HSPC will dedicate staff to support the communication and conversion of providers to the ACS network as well as support communication with Customers to ensure timely implementation.

11)	HSPC agrees to allow a press release by ACS announcing this expanded relationship.  HSPC and ACS will jointly develop the copy for the press release and such release must be preagreed upon, in writing, prior to release.  Approval will not be unreasonably withheld.

12)

HSPC agrees that if they engage in any merger, acquisition or partnership with an organization that processes, produces or has access to ancillary claims that match TINs in the ACS provider network, that commercially reasonable efforts will be made to assure that such claims be included with and subject to the same process and terms of this agreement, provided that both HSPC and ACS agree at the time that such action will be mutually beneficial to the parties.

13)	ACS will provide HealthSmart with a complete ACS provider network download no later than July 15, 2007.  Effective August 1, 2007 HSPC will have downloaded the ACS provider network directory into the HSPC claims system as HealthSmart's primary ancillary network.

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14)	Effective August 1, 2007, HSPC will:  (1) receive claims from HSPC Customers and/or providers, as applicable, with ACS provider TIN's and (2) submit all such claims that match the ACS provider TIN's directly to ACS for repricing in accordance with the Client Fee Schedule without exclusion (except as otherwise provided herein).

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15)	The parties will jointly develop a strategic contracting plan that will define targeted providers and timetables for ACS/HSPC contracting efforts.  This project plan will be mutually agreed upon and incorporated into the Provider Service Agreement by subsequent amendment.

16)	HSPC and ACS agree to work diligently to complete and execute a new contract updating all terms, conditions and language within one-hundred-eighty (180) days from August 1, 2007.

17)

Non-Solicitation; Non-Interference.  While this Agreement is in effect, and for a period of one (1) year following the termination of this Agreement, neither party shall, directly or indirectly, (i) solicit or attempt to induce any individual who then is, or at anytime during the preceding six (6) month period was, an employee of the other party to become employed by or otherwise render services to the other party or (ii) employ any such individual.

18)	ACS represents and warrants that the ASC established Client Fee Schedule for HSPC and their Affiliates will demonstrate superior overall savings for their Customers and equivalent or superior savings per specific provider.  The specific benchmarks to demonstrate and document those savings will be jointly developed and incorporated into the Provider Service Agreement by subsequent amendment.

19)	Section 3 of the January 1, 2007 Client Amendment is deleted in its entirety and replaced with the following:

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1.	American Administrative Group, Inc. (AAG)

2.	CareVu Corporation

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1)

In order to assist HSPC in coordinating and integrating access to the ACS network by members of the IHG network, ACS agrees to pay to HSPC one million dollars ($1,000,000) to offset integration costs incurred in connection therewith including, but not limited to, costs associated with salaries, benefits, and third party contract costs.  The payment shall be made by ACS to HSPC within ninety (90) days of the execution of this Amendment.  Both ACS and the HealthSmart Entities will maintain the confidentiality and proprietary nature of the payment and other terms described herein , to the extent public disclosure is not required by applicable law.

2)	The term of the Provider Service Agreement is hereby extended through December 31, 2012.

a)	The Provider Service Agreement, as amended, may not be terminated or amended by either party without the prior written consent of the other party other than upon any default by the other party, which default remains uncured for a period of 60 days following notice in writing thereof.

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b)    

The Provider Service Agreement, as amended, shall apply to and bind each and all of the HealthSmart Entities.  By executing this Amendment, Parent accepts and ratifies such agreement, as amended, on behalf of itself and all Affiliated Entities, as defined in Exhibit A.

 

c)	This agreement shall survive a change in control of Parent or HSPC or its operating divisions subject to the Provider Service Agreement, as amended, and shall be binding upon any successor in interest thereto and no such change in control shall be effective without the express assumption of the terms of all agreements between the parties by the acquiror.

 

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4)	ACS warrants that it will provide the same level of discounts to HealthSmart Entities that it provides other clients for similar products and levels of support.

 

5)	Each of HSPC and Parent represents and warrants to ACS that it does not control, is not controlled by and is not under common control with (in each case directly or indirectly through one or more intermediaries) any person other than the Affiliated Entities, as defined in Exhibit A.

 

6)

The parties will jointly develop a strategic contracting plan (the “Project Plan”) that will define a list of targeted providers and timetables for ACS/HSPC contracting efforts pursuant to the Provider Service Agreement, as amended.  The Project Plan will be mutually agreed upon no later than January 15, 2009.  HSPC agrees to devote necessary internal contracting resources to the development of the Project Plan.  In addition, each of ACS and HSPC will dedicate a named point person who will devote substantially all of their time to the ACS/HSPC contracting efforts and the ongoing management of the relationship between ACS and HSPC by January 15, 2009.

 

The Project Plan will also include the following provisions:

 

a)

ACS will be the outsourced ancillary contracting and network management provider for HealthSmart's group health clients, any Third Party Administrators (“TPAs”) currently owned by or affiliated with HealthSmart (including American Administrative Group (AAG)) and any entities, including any primary PPO networks and any TPAs, that may be controlled by (in each case directly or indirectly whether or not through one or more intermediaries) HSPC at any time in the future and with respect to which the ACS model could be deployed; provided, however, that HealthSmart payors who are not accessing a HealthSmart network as their primary PPO shall not be covered by this provision.

 

i)	HealthSmart will give ACS the rights of first refusal to add ancillary providers to the network.

 

ii)	HealthSmart will not pursue ancillary co ntracts for its group health business and TPAs, except through the Provider Services Agreement, as amended, and the Project Plan.

 

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iii)	ACS and HealthSmart will jointly develop network service standards, and hereby agree to be bound by such standards, that will define the coverage and response necessary to meet the demands of HealthSmart.

 

iv)	The provisions of this Amendment will have no binding effect on HealthSmart's routine hospital and physician contracting.

 

b)	HSPC contracting staff will notify targeted contracted ancillary providers that HSPC has engaged ACS to be the contracted ancillary management vendor for HealthSmart Entities.  Access to the HealthSmart group health lines of business can only occur through a direct contract with ACS, provided that the ACS discounts are equal to or greater than HSPC network discounts currently in force.

 

i)	HSPC will support the ACS contracting efforts through both written and verbal confirmation that ACS is the outsourced group health ancillary network for HealthSmart Entities.

 

ii)	HSPC will stop using a non-participating provider for any HealthSmart Entity if the ACS network is able to provide substitute coverage for the same service with quality standards and economics that satisfy either the same standards applied to the current providers or substantially similar standards actually applied to the current providers within the same geographic area.

 

c)	HSPC and the HealthSmart Entities will support the ACS ancillary network with its payors through joint sales efforts and communication to these payors about the benefits of the ACS network.

 

i)	If a HealthSmart Payor is not participating with the ACS program, they can be excluded on a case by case basis from the ACS network requirement.

 

ii)	ACS and HSPC will work together to develop a consistent provider and payor notification plan to support the contracting efforts.

 

Sections 6)a), 6)b) and 6)c) will take effect in accordance with the specific time parameters [noted above] and in no case later than 90 days following the date that the Project Plan is mutually agreed upon.

 

7)	HSPC agrees to include the ACS logo on all cards issued by it or any other HealthSmart Entity to members that are or could be eligible for the ACS network.  In addition, HSPC agrees to re-issue, by June 30, 2009 all cards previously issued to members that are eligible for the ACS network with replacement cards including the ACS logo.

 

a)	The ACS logo will be displayed in a mutually agreeable fashion, subordinated to the Health Smart and/or payor logos, as applicable.

 

b)	This will only apply where HealthSmart is responsible for producing the cards.

 

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c)	The program will be initiated no later than March 31, 2009, with cards being issued by June 30, 2009.

 

d)	HSPC will be responsible for the reasonable incremental cost of issuing and reissuing cards as described above.  This includes the cost of adding the logo to the card and printing and mailing the card.

 

8)	The ACS logo will also be included in the member directories, with the providers identified as an ACS provider.  This will be done in a mutually agreeable fashion, subordinated to the Health Smart logos as appropriate.

 

a)	The directory will include any web based or internet accessed directories prepared for participating HSPC members or companies.

 

b)	HSPC will be responsible for the reasonable incremental cost of preparing the member directories as described above.  This includes the cost of adding the logo to the directories and printin g and mailing the directories, if applicable.

 

9)	The parties further agree to use good faith efforts to cooperate on a number of projects the parties have identified to be mutually beneficial.  Such projects include but are not limited to the Anci-Select,  Anci-Concierge, and Anci-Card programs currently under development by ACS.

 

10)

In the case of any disputes or issues that may arise in connection with the respective rights and/or obligations of the parties under the Agreement, arbitration will be entered into in Dallas, Texas.  Each party will notify the other, in writing, of the name of its representative(s) who will have primary responsibility for communications with the other party.  If such representatives are unable to r esolve the dispute within 60 days of a party's written notice of a dispute, either party may demand submission of the issue to arbitration before a single arbitrator in accordance with the Alternative Dispute Resolution Service Rules of Procedure for Arbitration, as published by the American Health Lawyers Association.  The party requesting such arbitration shall pay the arbitrator's fee.  The decision of the representatives or, if applicable, the arbitrator, shall be final and binding upon the parties.

 

11)    ;	Except as otherwise stated herein, all remaining terms of the Service Provider Agreement, as previously amended, shall remain unmodified and in full force and effect.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WH EREOF, ACS, HealthSmart, and Parent acting through their authorized representatives, have signed as indicated below to signify acceptance and agreement to all of the terms and conditions contained herein.

 

AMERICAN CARESOURCE HOLDINGS, INC.		HEALTHSMART PREFERRED CARE II, L.P.
/s/ David S. Boone		Illegible
Signature		Signature
David S. Boone		Illegible
Printed Name		Printed Name
< div style="">  12/31/08		12/31/08
Date		Date
HEALTHSMART HOLDINGS, INC., on behalf of itself and the Affiliated Entities
Illegible
Signature
Illegible
Printed Name
12/31/08
Date

 

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Exhibit A - Affiliated Entities

1.	HealthSmart Holdings, Inc.

2.	American Administrative Group, Inc. (AAG)

3.	CareVu Corporation

4.	Interplan Health Group

5.	HealthSmart Benefit Solutions (including all TPA's presently or subsequently owned operated or controlled, directly or indirectly, whether or not through one or more intermediaries, by HealthSmart Holdings, Inc. or any of its subsidiaries)

6.	HealthSmart Networks (including all primary PPO networks presently or subsequently owned, operated or controlled, directly or indirectly, whether or not through one or more intermediaries, by HealthSmart Holdings, Inc. or any of its subsidiaries)

All entities listed above collectively referred to as the “Affiliated Entities”.