HomeMy WebLinkAboutContract 37223 CITY Sr::CfjET,-jjy
CONTRACT NO.
HDM.
HEAUFFIGARE DATA
MANAGEMENT, INC.
PROFESSIONAL SERVICES
AGREEMENT
BETWEEN
HEALTHCARE DAT A MANAGEMENT, INC.
AND
CITY OF FORT WORTH
Healthcare Data Management, Inc
555 Croton Road, Suite 350
King of Prussia, PA 19406
www.hdminc.com
ILI
(Date of this Agreement.-
Health Benefits Review Services Agreement Between CFW and HDM Page 1 of 21
PROFESSIONAL SERVICES AGREEMENT
THIS HEALTH BENEFITS REVIEW SERVICES AGREEMENT (the "Agreement") is entered
into as of the Effective Date set forth hereafter in this Agreement, by and between the City of
Fort Worth, a home rule municipal corporation situated in Tarrant, Denton, Parker, and Wise
Counties, (hereinafter referred to as "CLIENT" or the "City"), acting by and through its duly
authorized Assistant City Manager and Healthcare Data Management, Inc., a Pennsylvania
business corporation (hereinafter referred to as "HDM"), acting by and through its duly
authorized President. HDM and CLIENT are hereinafter referred to collectively as the "Parties";
WHEREAS CLIENT is an entity that provides health benefits to its employees, retirees, and
qualified survivors of its employees and retirees.
WHEREAS HDM is a company that provides health care benefits data collection, assessment,
analysis, and related services as set forth in this Agreement.
NOW THEREFORE, the parties, in consideration of the mutual covenants and agreements set
forth herein, do hereby agree as follows:
1. GENERAL DEFINITIONS
"HEALTH BENEFITS REVIEW SERVICES" means, generally, those professional
review services, consistent with accepted industry standards and practices, associated
with the retrospective review and analysis of multiple years of CLIENT claims, billing,
other electronic records data, administrator contracts, and documents pertaining to
employee health benefits, in order to establish whether, and to the extent, claims
administered on the behalf CLIENT are accurate, appropriate, and otherwise consistent
with appropriate administration and generally accepted and reasonable parameters.
2. HDM'S SERVICES AND OBLIGATIONS
HDM agrees to provide the services and carry out the following obligations:
2.1 Audit. HDM agrees to provide those Health Benefits Review Services set forth
in Exhibit 1 to this Agreement, which is hereby incorporated by reference into
the terms of this Agreement, in accordance with: (i) all applicable local, state,
and federal laws and regulations; (ii) accepted industry standards; and (iii) the
terms and conditions set forth in this Agreement. The Exhibit 1 services are
referred to hereinafter as the "Review Services".
2.2 Confidentiality. HDM acknowledges and agrees that the performance of
Review Services involves access to and review of confidential and proprietary
information and CLIENT accounting, auditing, billing, medical and other records
and methodologies pertaining to its administrators, providers, and health plan
members. HDM agrees that all employees, consultants, agents, subcontractors,
and/or assigns designated by HDM to perform Review Services under this
Agreement shall strictly maintain the confidentiality of all documents reviewed
and comply with HIPAA guidelines and Texas law. HDM further agrees and
warrants that: (i) HDM has established effective policies and procedures to
ensure protection of the confidentiality of all documents reviewed by its
Health Benefits Review Services Agreement Between CFW and HDM Page 2 of 21
employees, consultants, subcontractors, and/or assigns during the course of
performing Review Services; and (ii) all employees, consultants, subcontractors,
and/or assigns designated by HDM to perform Review Services are familiar with
such policies and procedures and will comply with and implement such policies
and procedures in performing services throughout the term of this Agreement,
and following termination of this Agreement. All of the provisions of this Section
2.2 shall survive termination of this Agreement.
2.3 HIPAA. CLIENT and HDM shall sign a Business Associate Agreement, and any
other related document(s) required, to comply with HIPAA regulations, which are
included in Exhibit 2 to this Agreement and incorporated herein by reference and
made a part of this Agreement.
2.4 Conflict of Interest. HDM represents that it does not have any conflicts of
interest in performing services outlined in Exhibit 1. In the event that any conflict
of interest arises after the Effective Date of this Agreement, HDM agrees to make
full and immediate written disclosure to the CLIENT of such conflict.
3. CLIENT'S OBLIGATIONS
CLIENT agrees either to timely and fully perform, or to have timely and fully performed
by an authorized representative/agent, the following obligations:
3.1 Administrative Functions. CLIENT with the assistance of HDM will obtain data
from the administrators and other documents necessary and as may be required
to the administration and performance by HDM of its obligations under this
Agreement.
3.2 Confidentiality and Intellectual Property Rights. CLIENT acknowledges and
agrees that HDM considers the analytical methodologies, algorithms, program
code, software, information, and report formats employed and delivered by HDM
in the performance of its Review Services to constitute confidential and proprietary
information which are the valuable, sole, and exclusive business property of HDM
and its subcontractors (hereinafter"Intellectual Property"). CLIENT agrees that all
of its employees, consultants, subcontractors, and/or assigns who may become
apprised of HDM's Review Services or Intellectual Property under this Agreement
shall make efforts to safeguard the confidentiality of all information reviewed and
shall not voluntarily disclose such information.
HDM understands and acknowledges that the CLIENT is a governmental body
under the laws of the State of Texas, and as such, the following information is
subject to disclosure under Chapter 552 of the Texas Government Code, the
Texas Public Information Act (the "Act") - 1) all documents and data held by the
CLIENT, including information obtained from HDM and 2) information held by
HDM for or on behalf of CLIENT that relates to the transaction of CLIENT'S
business and to which CLIENT has a right of access. If the CLIENT receives a
request for any documents that may reveal any of HDM'S proprietary information
under the Act, or by any other legal process, law, rule, or judicial order by a court
of competent jurisdiction, the CLIENT will utilize its best efforts to notify HDM prior
to disclosure of such documents. The CLIENT shall not be liable or responsible in
any way for the disclosure of information not clearly marked as "Proprietary /
Health Benefits Review Services Agreement Between CFW and HDM Page 3 of 21
Confidential Information" or if disclosure is required by the Act or any other
applicable law or court order. In the event there is a request for such information,
it will be the responsibility of HDM to submit reasons objecting to disclosure. A
determination on whether such reasons are sufficient will not be decided by the
CLIENT, but by the Office of the Attorney General of the State of Texas or by a
court of competent jurisdiction.
4. TERM AND TERMINATION
4.1 Effective Date and Term. This Agreement shall be effective as of the date of
the signing of this Agreement (the "Effective Date") and shall remain in effect until
December 31, 2008.
HDM also agrees to provide at the CLIENT's option ongoing claims monitoring
services for the calendar year 2008 at the negotiated price of $10,000 for each
continuous calendar quarter of data analyzed. In the event CLIENT engages
ongoing monitoring services during 2008, HDM shall also offer CLIENT the
option of continuing such ongoing monitoring during calendar year 2009 for the
same quarterly charge as long as CLIENT notifies HDM sixty days (60) prior to
the end of calendar 2008 that CLIENT wishes to continue ongoing monitoring in
2009. This Agreement places no obligation on CLIENT to engage ongoing
monitoring services. If CLIENT wishes to engage such services, CLIENT and
HDM shall either enter into a separate agreement or negotiate an amendment to
this Agreement in accordance with Section 10 below.
4.2 Material Breach; Opportunity to Cure; Termination. CLIENT may terminate
this Agreement effective immediately upon giving notice to HDM in the event of
HDM's material breach of this Agreement, provided CLIENT has first provided
HDM, pursuant to Section 8 below, with written notice containing specific details
of the stated material breach and HDM has thirty (30) days to cure the same.
Failure by HDM to cure the material breach during such thirty (30) day period will
thereafter allow for termination of this Agreement by CLIENT and payment to
HDM shall then be made pursuant to Subsection 4.4 below.
4.3 Termination Without Cause. CLIENT or HDM may terminate this Agreement,
without cause, effective 30 days after written notice to the other party, provided
pursuant to Section 8 below, and payment to HDM shall then be made pursuant
to Subsection 4.4 below
4.4 Payment to HDM. CLIENT hereby agrees to pay HDM for all services rendered
through and including the termination date.
5. FEE AND PAYMENT
In consideration of the Services to be performed hereunder by HDM, CLIENT promises
and agrees to pay HDM an amount not to exceed One-Hundred Thousand Dollars
($100,000.00) ("Fee"). The Fee shall be paid according to the following schedule: One
third of Fee is due upon execution of Contract; Second payment of one third of the Fee
will be due upon completion of the on-site audit of the Adminstrator; Final payment of
one third of the Fee will be due upon delivery of the Final Audit Report. Payment from
CLIENT to HDM shall be made on an invoice basis following receipt by CLIENT from
Health Benefits Review Services Agreement Between CFW and HDM Page 4 of 21
HDM of a signed invoice. The invoice shall be submitted to CLIENT no later than the
15th day following the end of the month. CLIENT shall pay HDM within thirty (30) days
of receipt of invoice for all fees invoiced by HDM to CLIENT. Interest of one percent
(1%) per month will be incurred on overdue payments.
6. EXPENSE REIMBURSEMENT
CLIENT agrees to reimburse HDM for travel-related expenses directly incurred in
rendering services under this Agreement ("Reimbursement"). Reimbursement by
CLIENT to HDM shall be made on an invoice basis following receipt by CLIENT from
HDM of a signed invoice. The invoice shall be submitted to CLIENT no later than the
15th day following the end of the month. CLIENT shall pay HDM within thirty (30) days
of receipt of invoice for allowable reimbursement invoiced by HDM to CLIENT.
7. MINORITY AND WOMAN BUSINESS ENTERPRISE PARTICIPATION.
In accordance with City of Fort Worth Ordinance No. 15530, the CLIENT has goals for
the participation of minority business enterprises and woman business enterprises
("M/WBE") in CLIENT contracts. HDM acknowledges the M/WBE goal established for
this Agreement and its commitment to meet that goal. Any misrepresentation of facts
(other than a negligent misrepresentation) and/or the commission of fraud by HDM may
result in the termination of this Agreement and debarment from participating in CLIENT
contracts for a period of time of not less than three (3) years.
8. NOTICES
8.1 Method of Delivery. Any notice to be given under this Agreement shall be in
writing, addressed to the other party at the address listed in Section 8.2, or such
other address as the party may designate by notice to the other party, and shall
be deemed given by in-person hand-delivery, or by depositing such notice for
delivery with the United States Postal Service, certified mail, return receipt
requested, signature required, postage prepaid or by a recognized overnight
delivery service such as Federal Express.
8.2 Addresses. The parties' names and addresses for purposes of giving notice
under this Agreement shall be as follows:
If to CLIENT: Terry Holderman
Assistant City Auditor
City of Fort Worth
1000 Throckmorton Street
Fort Worth, TX 76102
If to HDM: Healthcare Data Management, Inc.
William Conlan, President
555 Croton Road, Suite 350
King of Prussia, PA 19406
Health Benefits Review Services Agreement Between CFW and HDM Page 5 of 21
9. INDEPENDENT CONTRACTORS; NO PARTNERSHIP OR JOINT VENTURE
Neither party to this Agreement nor their respective employees or agents shall be
deemed to be an officer, agent, employee, or servant of the other party. HDM shall have
exclusive control of and the exclusive right to control the details of the services
performed hereunder, and all persons performing same, and shall be solely responsible
for the acts and omissions of its officers, agents, servants, employees, and
subcontractors. The doctrine of respondeat superior shall not apply as between the
CLIENT and HDM, its officers, agents, servants, employees, or subcontractors. The
parties acknowledge and agree that the relationship between them shall be that of
independent contractors. Nothing in this Agreement or in Exhibit 1 or any exhibit or
related agreement hereto shall be construed or interpreted to form, establish, or operate
as a partnership or joint venture or enterprise between HDM and CLIENT. It is expressly
understood and agreed that no officer, agent, employee, or subcontractor of HDM is in
the paid service of CLIENT.
10. ENTIRE AGREEMENT/AMENDMENTS
This Agreement and the Exhibits to this Agreement constitute the entire agreement
between the parties. There are no agreements or understandings between CLIENT and
HDM that are not set forth in this Agreement or an Exhibit hereto and this Agreement
replaces any and all such other agreements or understandings. No Amendment to this
Agreement shall be effective unless in writing, signed by both parties, other than as
provided in Subsection 10.1 hereinbelow:
10.1 Exception — Changes in Law. In the event that CLIENT and/or HDM
reasonably determine that applicable federal and/or state and/or local law or
regulation requires amendment to this Agreement, then such party shall give the
other thirty (30) days prior written notice as provided in Section 8 above, and
upon expiration of such 30-day period, this Agreement shall be automatically
amended to include the amendment set forth in such notice, as if the same had
been accomplished in accordance with the amendment procedure set for in
section 10 above.
11. INDEMNITY
HDM agrees to indemnify, defend and hold harmless CLIENT of, for, from and against
any and all claims, suits, demands, actions, settlements, judgments, penalties, actual,
reasonable attorneys' fees and/or other monetary losses sustained by CLIENT as a
result of errors or omissions by HDM in the performance of Review Services under this
Agreement.
HDM COVENANTS AND AGREES TO INDEMNIFY, HOLD HARMLESS AND DEFEND,
AT ITS OWN EXPENSE, CLIENT AND ITS OFFICERS, AGENTS, SERVANTS, AND
EMPLOYEES FROM AND AGAINST ANY AND ALL CLAIMS OR SUITS FOR
PROPERTY LOSS OR DAMAGE AND/OR PERSONAL INJURY, INCLUDING DEATH,
TO ANY AND ALL PERSONS, OF WHATSOEVER KIND OR CHARACTER, WHETHER
REAL OR ASSERTED, ARISING OUT OF OR IN CONNECTION WITH THE
Health Benefits Review Services Agreement Between CFW and HDM Page 6 of 21
EXECUTION, PERFORMANCE, ATTEMPTED PERFORMANCE OR
NONPERFORMANCE OF THIS AGREEMENT AND/OR THE OPERATIONS,
ACTIVITIES AND SERVICES DESCRIBED HEREIN, WHETHER OR NOT CAUSED, IN
WHOLE OR IN PART, BY ALLEGED NEGLIGENCE OF OFFICERS, AGENTS,
SERVANTS, EMPLOYEES, CONTRACTORS, OR SUBCONTRACTORS OF CLIENT;
AND HDM HEREBY ASSUMES ALL LIABILITY AND RESPONSIBILITY OF CLIENT
AND ITS OFFICERS, AGENTS, SERVANTS, AND EMPLOYEES FOR ANY AND ALL
CLAIMS OR SUITS FOR PROPERTY LOSS OR DAMAGE AND/OR PERSONAL
INJURY, INCLUDING DEATH, TO ANY AND ALL PERSONS, OF WHATSOEVER
KINDS OR CHARACTER, WHETHER REAL OR ASSERTED, ARISING OUT OF OR IN
CONNECTION WITH THE EXECUTION, PERFORMANCE, ATTEMPTED
PERFORMANCE OR NON-PERFORMANCE OF THIS AGREEMENT AND/OR THE
OPERATIONS, ACTIVITIES AND SERVICES DESCRIBED HEREIN, WHETHER OR
NOT CAUSED IN WHOLE OR IN PART, BY ALLEGED NEGLIGENCE OF OFFICERS,
AGENTS, SERVANTS, EMPLOYEES, CONTRACTORS OR SUBCONTRACTORS OF
CLIENT. HDM LIKEWISE COVENANTS AND AGREES TO AND DOES HEREBY
INDEMNIFY AND HOLD HARMLESS CLIENT FROM AND AGAINST ANY AND ALL
INJURY, DAMAGE OR DESTRUCTION OF PROPERTY OF CLIENT, ARISING OUT OF
OR IN CONNECTION WITH ALL ACTS OR OMISSIONS OF HDM, ITS OFFICERS,
MEMBERS, AGENTS, EMPLOYEES, SUBCONTRACTORS, INVITEES, LICENSEES,
OR PROGRAM PARTICIPANTS, WHETHER OR NOT CAUSED, IN WHOLE OR IN
PART, BY ALLEGED NEGLIGENCE OF OFFICERS, AGENTS, SERVANTS,
EMPLOYEES, CONTRACTORS OR SUBCONTRACTORS OF CLIENT.
HDM AGREES TO AND SHALL RELEASE CLIENT, ITS AGENTS, EMPLOYEES,
OFFICERS AND LEGAL REPRESENTATIVES FROM ALL LIABILITY FOR INJURY,
DEATH, DAMAGE OR LOSS TO PERSONS OR PROPERTY SUSTAINED IN
CONNECTION WITH OR INCIDENTAL TO PERFORMANCE UNDER THIS
AGREEMENT, EVEN IF THE INJURY, DEATH, DAMAGE OR LOSS IS CAUSED BY
CLIENT'S SOLE OR CONCURRENT NEGLIGENCE.
The terms of this Section 11 shall survive completion and/or termination of this
Agreement.
12. INSURANCE
During the term of this Agreement, HDM shall procure and maintain at all times, in full
force and effect, a policy or policies of insurance that provide the specific coverage set
forth in this Section as well as any and all other public risks related to HDM's
Health Benefits Review Services Agreement Between CFW and HDM Page 7 of 21
performance of its obligations under this Agreement. HDM shall specifically obtain the
following types of insurance at the following limits:
Commercial General Liability:
$1,000,000 per occurrence; $2,000,000 aggregate; providing blanket contractual liability
insurance products and completed operations; independent contractor's liability; and
coverage for property damage to CLIENT facilities; the CLIENT, its Officers, Agents,
Employees, and Volunteers shall be named as an additional insured; and
O Worker's Compensation/Employer's Liability:
Worker's compensation coverage as required by applicable law; and Employer's Liability
with minimum policy limits as follows: $100,000 per accident/occurrence; $500,000
bodily injury; and .$100,000 per disease per employee; the policy shall be endorsed with
a Waiver of Subrogation on behalf of the City of Fort Worth; and.
f Errors & Omissions (Professional Liability):
If coverage is written on a claims-made basis, the retroactive date shall be coincident
with or prior to the date of the contractual agreement. The certificate of insurance shall
state that the coverage is claims-made and include the retroactive date. The insurance
shall be maintained for the duration of the contractual agreement and for five (5) years
following completion of the service provided under the contractual agreement or for the
warranty period, whichever is longer. An annual certificate of insurance submitted to the
CLIENT shall evidence coverage. Coverage shall be in the following amounts:
$1,000,000 per claim and aggregate
HDM shall promptly provide the CLIENT with certificates of insurance that verify HDM's
compliance with the insurance requirements of this Agreement. The CLIENT's Risk
Manager shall have the right to review and evaluate HDM's insurance coverage and to
make reasonable requests or revisions pertaining to the types and limits of that
coverage. HDM shall comply which such requests or revisions as a condition precedent
to the effectiveness of this Agreement
13. FORCE II AJEURE
Each Party's obligations under this Agreement shall be suspended to the extent that
such party is hindered or prevented from performance (excluding economic payments or
performance) by labor disputes, lock-outs, acts of God, fires, storms, accidents, failure of
a manufacturing, delivery or service intermediary to deliver any equipment,
governmental regulations or interference, electronic terrorist attacks or actions, or any
other cause to the extent not within the sole and exclusive control of the non-performing
Party and In any such event, the non-performing party will be excused from any further
performance or observance of the obligations so affected only for as long as such
circumstances prevail and such party continues to use commercially reasonable efforts
to recommence performance or observance as soon as practicable.
Health Benefits Review Services Agreement Between CFW and HDM Page 8 of21
14. LAW APPLICABLE
This Agreement and all covenants contained herein, shall be governed in all respects,
whether as to validity, capacity, performance or otherwise, by the laws of the State of
Texas.
15. NON-DISCRIMINATION
HDM, in the execution, performance or attempted performance of this contract and
Agreement, will not discriminate against any person or persons because of disability,
age, familial status, gender, race, religion, color, sexual orientation, or national origin,
nor will HDM permit its officers, agents, employees, or subcontractors to engage in such
discrimination.
16. PARAGRAPH HEADINGS
The paragraph headings contained in this Agreement are for convenience only and shall
under no circumstances be considered binding with respect to interpretation of this
Agreement.
17. DISPUTE RESOLUTION
The parties will attempt in good faith to resolve any controversy, dispute or claim arising
out of or relating to this Agreement promptly by negotiations between senior executives
and/or representatives of the parties who have authority to settle the controversy. If any
claim, controversy or dispute under this Agreement cannot be resolved by such
negotiations between the parties hereto, such claim, controversy or dispute shall be
submitted to mediation held in Texas, under the Commercial Mediation Rules of the
American Arbitration Association as in force at such time.
19. !VENUE AND JURISDICTION
Should any action, whether real or asserted, at law or in equity, arise out of the
execution, performance, attempted performance of this Agreement, venue for said action
shall lie exclusively in Tarrant County, Texas.
19. FISCAL FUNDING
In the event no funds or insufficient funds are appropriated by the CLIENT in any fiscal
period for any payments hereunder, CLIENT will notify HDM of such occurrence and this
Agreement shall terminate on the last day of the fiscal period for which appropriations
were received without penalty or expense to CLIENT of any kind whatsoever, except as
to the portions of the payments herein agreed upon for which funds shall have been
appropriated.
20. NON-WAIVER
The failure of CLIENT or HDM to insist on the performance of any term or provision of
this Agreement or to exercise any right herein conferred shall not be construed as a
waiver or relinquishment to any extent of CLIENT'S or HDM'S right to assert or rely on
any such term or right on any future occasion.
Health Benefits Review Services Agreement Between CFW and HDM Page 9 of 21
21. GOVERNMENTAL POWERS
It is understood and agreed that by execution of this Agreement, the CLIENT does not
waive or surrender any of its governmental powers or immunities.
22. MISCELLANEOUS
a. Neither party may assign or transfer its rights or obligations under this Agreement
without the prior written consent of the other. This Agreement is binding upon and will
inure to the benefit of the respective parties hereto and their successors and
permitted assigns.
b. Except as otherwise provided for in this Agreement, this Agreement may be
amended, supplemented, altered, or modified only in writing signed by CLIENT and
HDM.
c. Nothing in this Agreement, except as expressly stated herein, is intended to create
any benefit for any third party. This Agreement may not be construed to create
implied duties on any of the parties.
d. If any clause, paragraph, term, or provision of this Agreement shall be held or
declared void or otherwise unenforceable by any arbitrator, court, or other tribunal of
competent jurisdiction, the same shall be deemed severed, and such holding or
declaration shall have no effect upon this Agreement which shall otherwise continue
in and be given full force and effect.
e. This Agreement may be executed simultaneously in a number of counterparts, each
of which will be deemed an original, but all of which will constitute one and the same
instrument.
IN WITNESS WHEREOF, intending to be legally bound hereby, in consideration of the
promises and covenants exchanged herein and in the Exhibits hereto, the receipt and
sufficiency of which is hereby acknowledged, each party to this Agreement has caused
its duly authorized representative to sign this Agreement on its behalf below, effective as
of the Effective Date set forth above in this Agreement.
[SIGNATURES APPEAR ON NEXT PAGE]
Health Benefits Review Services Agreement Between CFW and HDM Page 10 of 21
CITY OF FORT WORTH
f�LLtQ:�AL�J_ By: J IVY04�1'XN ,J-46-2
Marty Hendrix Karen ontgo eery
City Secretary Assi ant City an ger
APPROVED AS TO FORM
AND LEGALITY:
Denis C. McElr
Assistant City �firorney
M&C - C-22743
HEALTHCARE DATA MANAGEMENT, INC.
By: i
NAME rn (011 GCJ'X_
President
_ lnr
Health Benefits Review Services Agreement Between CFW and HDM Page 11 of 21
6.0 EXHIBIT ONE- SCOPE OF WORK
1) HDM will conduct the audit for the purpose of ensuring accountability and compliance with
contractual requirements, and verifying that appropriate administrative procedures and
control measures are in place.
2) The audit is to be a multistage audit of both the medical and prescription drug programs.
The first level of audit will be to electronically analyze 100% of all claims incurred for the
period of January 1, 2006 through December 31, 2007 and paid through April 30, 2008, with
the primary objective of identifying the more serious problem areas. This information would
be used by HDM to select 400 claims (in cooperation with the City)to be analyzed in detail
at Aetna's Claims office in Arlington, Texas. It is anticipated that more than 400
questionable claims will be identified and each claim examined in detail will be linked to
other closely related claims not examined in detail. Before the first level of the audit can take
place, HDM will be involved in the request of needed data from Aetna.
3) The second level of the audit will involve the detailed analysis of the 400 selected claims by
HDM. After the second level of the audit is completed, HDM will work with the City in
negotiating with Aetna on any recoveries sought or any changes to processes that appear to
have been resulting in errors.
4) The objectives of the audit are to:
a) Recover funds paid in error with the City having the option to decide which funds are to
be recovered;
b) Identify issues that are not well-defined in the contract, Summary Plan Description
(SPD), or other written communications with Aetna; and,
c) Identify problems in benefit designs that have resulted in unintended benefit payments.
5) The City's health plan covers approximately 5,500 employees and 2,350 retirees &
survivors, with a total of 7,850 subscribers. The audit will review claims incurred from
January 1, 2006 through December 31, 2007 which have been paid as of April 30, 2008.,
subject to any contractual look-back restrictions The size of the sample audit is to be 400
claim transactions. Additional claim transactions over and above this limit must be approved
by the City in advance of HDM's request to Aetna to make additional claims available.
6) The onsite audits must be performed at the Aetna Claims Office located in Arlington,
Texas. Under the provisions of the City's contract with Aetna the duration of the onsite audit
is limited to five (5) days and must not create an exceptional administrative demand upon
Aetna. To the extent practicable, Aetna will provide estimates of such fees to the City prior
to the City incurring additional fees.
7) Administrative Procedures:
a) Verification of eligibility data, including verification of dependant status
b) Verification that no claims were paid after member's date of death
c) Review of the process of identifying fraudulent claims and prevalence of prior recoveries
based on provider fraud
Health Benefits Review Services Agreement Between CFW and HDM Page 12 of21
8) Reconciliation of the Summary Plan Description (SPD) versus the. description of Plan
benefits in Aetna's internal policies and procedures (as reported by Aetna).
9) Review of standard reports provided to the City
a) Monthly/Quarterly/Annual Accounting Reports including the following:
i) Monthly listing of funds requested and received for payment of plan benefits;
ii) Monthly reconciliation of funds requested to claims paid within the benefit-account
structure;
iii) Monthly/quarterly/annual listing of paid benefits;
iv) Quarterly/annual standard claim analysis report.
b) Annual Accounting of Plan experience
10) Claims Operations
a)
b) Confirm that claims were processed in accordance with the City's Summary Plan
Document(SPD). The City offers two plans: Aetna Choice POS II, which offers three
options (Basic, Basic Plus and Select), and Indemnity Medical (Traditional ). Confirm
that plan exclusions and ineligible drugs/services were not paid by Aetna.
c) Review and assess financial, procedural, and payment accuracy based on a statistically
significant random statistical sampling or judgmentally selected sample
d) Determine whether third party recovery procedures for Workers' Compensation,
automobile accidents, etc. are followed in accordance with standard insurance industry
protocols
e) Verify coordination of benefits
f) Verify allowances are within appropriate fee schedules (i.e. provider and facility
discounts)
g) Identify error patterns or trends; identify causes, assess effects, and provide
recommendations for corrections
h) Confirm accuracy of benefit accumulators (i.e. deductibles, out-of-pocket maximums, co-
insurance, and co-payments)
i) Medicare eligibility testing for medical claims and prescription drug claims and projected
loss/future savings if Medicare had been declared by the member and Medicare was the
primary payer
j) Identification and recovery of erroneous payments
k) Test automated and manual claims processing functions for accuracy.
1) Review internal controls for accuracy of processing and payment and support
documentation that establishes whether or not Aetna is in compliance with its benchmark
performance standards
m) Review any internal vendor audits (i.e. hospital claims and pharmacy reviews)
n) Test pharmaceutical drug claims, including retail and mail order pharmacy for accuracy
and conformance with contract.
o) Complete an analysis of pharmaceutical claim rebates
p) Test formulary quantity limitations/restrictions/co-pay limits for accuracy.
q) Sample claims to confirm appropriate case management functions are being performed
Health Benefits Review Services Agreement Between CFW and HDM Page 13 of 21
11) Performance Guarantees (15% of annualized administrative service fee at risk)
a) Confirm performance guarantees and contractual obligations are being met. Review
Aetna's backup documentation and support which substantiates whether or not they have
met their guarantees in the following areas:
i) Timeliness of claims processing/turnaround time
ii) Financial accuracy of claims processed
iii) Procedural accuracy of claims processed
iv) Payment Incidence Accuracy
v) Total Claim accuracy
vi) Customer service response time
vii)Customer service satisfaction
12) Medical Discount Guarantees (10% of gross fees at risk)
Rx (Prescription) Rebate Guarantees (based on utilization) for generic and brand name
pharmaceuticals for the audit period
13) Patient Management Services (Medical Claims) &Medical Management Guarantees
a) Pre-certification(Inpatient and Outpatient)
b) Concurrent Review/Discharge Planning
c) Case Management including:
i) Compliance/Clinical Execution
ii) Discharge Planning;
iii) Compliance/Clinical Execution Case
iv) Management; (iii) Touch rates;
v)
d) National Medical Excellence/Institutes of Excellence
e) Informed Health Line: 1-800#
f) Med Query ($1.00 PEPM): No payout if reported savings= $1.00 PEPM; Should
savings be <$1.00 PEPM,penalty will be $1.00 PEPM less the achieved savings.
Standard reports provided, which includes a savings calculation. Guarantee reconciled
once per year, assumes minimum enrollment of 7,000 employee lives, and assumes Aetna
has access to pharmacy data for employees enrolled in medical program.
14) Aetna Subrogation Program (Medical Claims)
a) Review process of identifying claims for subrogation.
b) Percent of recovered amount retained for administrative expenses
c) Reasonable expenses: collection agency fees,police and fire reports, asset checks, locate
reports, and attorneys' fees.
d) Ensure that no fees are charged if no monetary recovery is received.
15) National Advantage Program (NAP) (Medical Claims)
a) National Advantage Access Fee - % of aggregate savings
b) Facility Charge Review(threshold claim= $1,000)
16) Pharmacy Products
Health Benefits Review Services Agreement Between CFW and HDM Page 14 of21
a) Administration Services
b) Network Access Services
c) Aetna Subrogation Program - % of recovered amount will be retained for administrative
expenses
17) City of Fort Worth Wellness Program Evaluation (Cost/Benefit Analysis)
a) Determine costs from the administration of the Wellness Program for the audit period
b) Analyze claim frequency, # of physician office visits, # of prescriptions, and any other
objective criteria to evaluate cost/benefit of the Wellness Program
c) Analysis of the security involving data storage
18) Written Audit Report
a) A detailed written report will be required. HDM will submit a draft report to the City
Auditor or his designee. HDM will also be required to formally present the audit report
to the Fort Worth City Council and/or the Audit&Finance Advisory Committee.
Finally, the audit report should be sent to Aetna for review and comment. The report is
to include the following:
i) General statement of audit objectives and audit scope
ii) List of claim adjudication and administrative procedures evaluated
iii) Summary of audit steps and sampling methodology
iv) Any audit scope impairments encountered
v) Listing of all de-identified claims with errors, including a brief description of error,
amount of error, and Aetna's response to each item
vi) Total number and dollar value of claims processed during the audit period
vii)Listing of claims audited to measure processing time
viii) Summary of audit findings including the
(a) total number and dollar value of claims examined
(b) total number and percentage of claims with financial errors (dollar value
broken down into over-payments and under-payments and combined for
percentage of total claims paid
(c) total number and percentage of claims with administrative errors
ix) Comments and recommendations for improving plan design and claims
administration
x) Analysis and testing of Coordination of Benefits (Medicare and subrogation),
including dialysis treatments, Medicare Part B & D drug coverage.
Health Benefits Review Services Agreement Between CFW and HDM Page 15 of21
EXHIBIT 2
BUSINESS ASSOCIATE CONTRACT
General Purpose
Title II of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the
Standards for Privacy established by the Department of Health and Human Services require the
City of Fort Worth to obtain satisfactory assurances from its Business Associate that the
Business Associate will appropriately safeguard the protected health information it receives or
creates on behalf of the covered entity.
Definitions
Catch-all definition:
Terms used, but not otherwise defined, in this Agreement shall have the same
meaning as those terms in the Privacy Rule.
Specific definitions:
a. Business Associate. "Business Associate" shall mean Healthcare Data
Management, Inc. (HDM).
b. Covered Entity. "Covered Entity" shall mean City of Fort Worth.
c. Individual. "Individual" shall have the same meaning as the term "individual" in
45 CFR 5 160.103 and shall include a person who qualifies as a personal
representative in accordance with 45 CFR § 164.502(g).
d. Privacy Rule. "Privacy Rule" shall mean the Standards for Privacy of Individually
Identifiable Health Information at 45 CFR Part 160 and Part 164, Subparts A and
E.
e. Protected Health Information. "Protected Health Information" shall have the same
meaning as the term "protected health information" in 45 CFR § 164.501, limited
to the information created or received by Business Associate from or on behalf of
Covered Entity.
f. Required By Law. "Required By Law" shall have the same meaning as the term
"required by law" in 45 CFR § 160.103.
g. Secretary. "Secretary" shall mean the Secretary of the Department of Health and
Human Services or his designee.
Consideration
Health Benefits Review Services Agreement Between CFW and HDM Page 16 of 21
Covered Entity is obligated under federal law to secure from Business Associate the
representations and covenants, as set forth herein, in order to continue Covered Entity's business
relationship with Business Associate. The parties to this agreement acknowledge, therefore, that
the continuation of the business relationship in compliance with federal law constitutes good and
valuable consideration for this representations and covenants contained herein.
The parties acknowledge that any pre-existing agreements between the parties is not
superseded by or merged into this contract. To the extent that this Business Associate
Contract conflicts with the terms of any other agreement between the parties, the terms of
this Business Associate Contract control.
Obli;!ations and Activities of Business Associate
a. Business Associate agrees to not use or disclose Protected Health Information other than
as permitted or required by the Agreement,the Privacy Rule, or as Required By Law.
b. Business Associate agrees to use appropriate safeguards to prevent use or disclosure of
the Protected Health Information other than as provided for by this Agreement.
c. Business Associate agrees to mitigate, to the extent practicable, any harmful effect that is
known to Business Associate of a use or disclosure of Protected Health Information by
Business Associate in violation of the requirements of this Agreement.
d. Business Associate agrees to report to Covered Entity any use or disclosure of the
Protected Health Information not provided for by this Agreement of which it becomes
aware.
e. Business Associate agrees to ensure that any agent, including a subcontractor, to whom it
provides Protected Health Information received from, or created or received by Business
Associate on behalf of Covered Entity, agrees to the same restrictions and conditions that
apply through this Agreement to Business Associate with respect to such information.
f. Business Associate agrees to provide access, at the request of Covered Entity, and in the
time and manner as negotiated for auditing services, to Protected Health Information in a
Designated Record Set, to Covered Entity or, as directed by Covered Entity, to an
Individual in order to meet the requirements under 45 CFR § 164.524.
g. Business Associate agrees to make any amendment(s) to Protected Health Information in
a Designated Record Set that the Covered Entity directs or agrees to pursuant to 45 CFR
§ 164.526 at the request of Covered Entity or an Individual, and in the time and manner
as negotiated for auditing services.
h. Business Associate agrees to make internal practices, books, and records, including
policies and procedures and Protected Health Information, relating to the use and
disclosure of Protected Health Information received from, or created or received by
Business Associate on behalf of, Covered Entity available to the Covered Entity, or to the
Secretary, in a time and manner as negotiated for auditing services or designated by the
Health Benefits Review Services Agreement Between CFW and HDM Page 17 of 21
Secretary, for purposes of the Secretary determining Covered Entity's compliance with
the Privacy Rule.
i. Business Associate agrees to document such disclosures of Protected Health Information
and information related to such disclosures as would be required for Covered Entity to
respond to a request by an Individual for an accounting of disclosures of Protected Health
Information in accordance with 45 CFR § 164.528.
j. Business Associate agrees to provide to Covered Entity or an Individual, in time and
manner as negotiated in auditing services, information collected in accordance with
Provision (i) above to permit Covered Entity to respond to a request by an Individual for
an accounting of disclosures of Protected Health Information in accordance with 45 CFR
5 164.528.
Permitted Uses and Disclosures by Business Associate:
General Use and Disclosure Provisions
Business Associate may use or disclose Protected Health Information to perform
functions, activities, or services for, or on behalf of, Covered Entity as specified in this
Agreement, provided that such use or disclosure would not violate the Privacy Rule if
done by Covered Entity or the minimum necessary policies and procedures of the
Covered Entity.
Permitted Uses and Disclosures by Business Associate: Specific Use and Disclosure
Provisions
a. Except as otherwise limited in this Agreement, Business Associate may use Protected
Health Information for the proper management and administration of the Business
Associate or to carry out the legal responsibilities of the Business Associate.
b. Except as otherwise limited in this Agreement, Business Associate may disclose
Protected Health Information for the proper management and administration of the
Business Associate, provided that disclosures are Required By Law, or Business
Associate obtains reasonable assurances from the person to whom the information is
disclosed that it will remain confidential and used or further disclosed only as Required
By Law or for the purpose for which it was disclosed to the person, and the person
notifies the Business Associate of any instances of which it is aware in which the
confidentiality of the information has been breached.
c. Except as otherwise limited in this Agreement, Business Associate may use Protected
Health Information to provide Data Aggregation services to Covered Entity as permitted
by 42 CFR § 164.504(e)(2)(i)(B).
d. Business Associate may use Protected Health Information to report violations of law to
appropriate Federal and State authorities, consistent with § 164.5020)(1).
Obligations of Covered Entity:
Health Benefits Review Services Agreement Between CFW and HDM Page 18 of 21
Provisions for Covered Entity to Inform Business Associate of Privacy Practices and
Restrictions
a. Covered Entity shall notify Business Associate of any limitation(s) in its notice of
privacy practices of Covered Entity in accordance with 45 CFR § 164.520, to the extent
that such limitation may affect Business Associate's use or disclosure of Protected Health
Information.
b. Covered Entity shall notify Business Associate of any changes in, or revocation of,
permission by Individual to use or disclose Protected Health Information, to the extent
that such changes may affect Business Associate's use or disclosure of Protected Health
Information.
c. Covered Entity shall notify Business Associate of any restriction to the use or disclosure
of Protected Health Information that Covered Entity has agreed to in accordance with 45
CFR § 164.522, to the extent that such restriction may affect Business Associate's use or
disclosure of Protected Health Information.
Permissible Requests by Covered Entity
Covered Entity shall not request Business Associate to use or disclose Protected Health
Information in any manner that would not be permissible under the Privacy Rule if done by
Covered Entity.
Term and Termination
a. Term. The Term of this Agreement shall be effective as of the date of execution of this
Agreement, and shall terminate when all of the Protected Health Information provided by
Covered Entity to Business Associate, or created or received by Business Associate on
behalf of Covered Entity, is destroyed or returned to Covered Entity, or, if it is infeasible
to return or destroy Protected Health Information, protections are extended to such
information, in accordance with the termination provisions in this Section.
b. Termination for Cause. Upon Covered Entity's knowledge of a material breach by
Business Associate, Covered Entity shall either:
1. Provide an opportunity for Business Associate to cure the breach or end the
violation and terminate this Agreement if Business Associate does not cure the
breach or end the violation within the time specified by Covered Entity;
2. Immediately terminate this Agreement if Business Associate has breached a
material term of this Agreement and cure is not possible; or
3. If neither termination nor cure is feasible, Covered Entity shall report the
violation to the Secretary.
c. Effect of Termination.
Health Benefits Review Services Agreement Between CFW and HDM Page 19 of 21
1. Except as provided in paragraph (2) of this section, upon termination of this
Agreement, for any reason, Business Associate shall return or destroy all
Protected Health Information received from Covered Entity, or created or
received by Business Associate on behalf of Covered Entity. This provision shall
apply to Protected Health Information that is in the possession of subcontractors
or agents of Business Associate. Business Associate shall retain no copies of the
Protected Health Information.
2. In the event that Business Associate determines that returning or destroying the
Protected Health Information is infeasible, Business Associate shall provide to
Covered Entity notification of the conditions that make return or destruction
infeasible. Upon event of return or destruction of Protected Health Information is
infeasible, Business Associate shall extend the protections of this Agreement to
such Protected Health Information and limit further uses and disclosures of such
Protected Health Information to those purposes that make the return or destruction
infeasible, for so long as Business Associate maintains such Protected Health
Information.
Miscellaneous
a. Regulatory References. A reference in this Agreement to a section in the Privacy Rule
means the section as in effect or as amended.
b. Amendment. The Parties agree to take such action as is necessary to amend this
Agreement from time to time as is necessary for Covered Entity to comply with the
requirements of the Privacy Rule and the Health Insurance Portability and Accountability
Act of 1996, Pub. L. No. 104-191.
c. Survival. The respective rights and obligations of Business Associate under Section C of
this Agreement shall survive the termination of this Agreement.
d. Interpretation. Any ambiguity in this Agreement shall be resolved to permit Covered
Entity to comply with the Privacy Rule.
Execution:
Covered Entity:
Health Benefits Review Services Agreement Between CFW and HDM Page 20 of21
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Health Benefits Review Services Agreement Between CFW and HDM Page 21 of21
City of Fort Worth, Texas
Mayor and Council Communication
COUNCIL ACTION: Approved on 4/8/2008
DATE: Tuesday, April 08, 2008
LOG NAME: 14AUDIT-HDM REFERENCE NO.: C-22743(Revised)
SUBJECT:
Authorize Execution of a Contract with Healthcare Data Management, Inc., to Conduct an Audit of
the Claims Payment Functions and Performance of the City's Self-Funded Group Health Benefit
Plan
RECOMMENDATION:
It is recommended that the City Council authorize the City Manager to execute a contract with Healthcare
Data Management, Inc., to conduct an audit of the claims payment functions and performance of the City's
self-funded group health benefit plan for an amount not to exceed $100,000, plus travel expenses.
DISCUSSION:
Beginning October 1, 2001, the City's Health Benefit Plan became self-funded. The health plan covers
approximately 15,000 employees, retirees, and dependents. Aetna has been the third-party administrator
(TPA), since January 1, 2005, and maintains the network and administers claims. The City is allowed to
have on-site audits of the TPA.
The City's Internal Audit Department will work collaboratively with an external auditor in reviewing the plan
and ensuring accountability and compliance. A Request for Proposal (RFP) was issued on September 6,
2007, and the following four companies submitted proposals in response:
• TFG Partners;
• Healthcare Data Management, Inc.;
• QBA Consulting; and
• Claim Technologies.
Human Resources and Internal Audit staff evaluated the proposals based upon the proposed approach and
methodology, the firm's qualifications and previous experience, the quality of the proposal, and the
proposed fee for services. Based upon these criteria, Healthcare Data Management, Inc. (HDM), was
chosen by the selection committee as the company most capable of completing the scope of work.
The scope of work in the contract will include, but is not limited to, the following audit categories and
reviews:
• Administrative procedures;
• Claims operations;
• Discounts and rebates;
• Analysis of 100 percent of City's medical and prescription claims;
• Review of Aetna's operations and internal controls, and a comparison to industry benchmarks;
• Performance guarantees;
• Identification of cost recoveries and future plan savings; and
• Detailed written report of the audit findings and recommendations.
Logname: 14AUDIT-HDM Page 1 of 2
The recommendation to contract with HDM is based upon the firm's prior experience in health care auditing,
their familiarity with our current third party plan administrator, and the firm's comprehensive electronic
auditing capabilities. The evaluation committee received positive feedback from recent clients confirming
the company's expertise and ability to achieve the desired results within the established time frame and
budget. HDM performed 22 Aetna medical claims audits and seven Aetna prescription drug audits in the
last four years.
HDM has also appeared before the Audit and Finance Advisory Committee on January 14, 2008, and
presented their proposed audit approach.
HDM is in compliance with the City's M/WBE Ordinance by committing to 10 percent M/WBE
participation. The City's goal on this project is 10 percent.
FISCAL INFORMATION/CERTIFICATION:
The Finance Director certifies that funds are available in the current operating budget, as appropriated, of
the Group Health fund.
TO Fund/Account/Centers FROM Fund/Account/Centers
FE85 539120 0148510 $100,000.00
Submitted for City Manager's Office by: Karen Montgomery (6222)
Originating Department Head: Karen Marshall (7783)
Additional Information Contact: Mark Washington (8058)
Logname: 14AUDIT-HDM Page 2 of 2