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Contract 8619
CITY SECRETARY .. CONTM T. No Flo�9 GROUP HOSPITAL SERVICE, INC. (Herein called Blue Cross of Texas) AND GROUP LIFE & HEALTH INSURANCE CO. (Herein called Blue Shield of Texas) Dallas, Texas have issued this Non-Cancellable EXPERIENCE RATED GROUP COMPREHENSIVE BLUE CROSS AND BLUE SHIELD CONTRACT OFFICIAL RECORD NO. 21090 to CITY OF FORT WORTH ------ LOFFICIAL I (herein called the Employer) FT. WORTH, TEX. as of March 1 , 1976 (herein called the contract date) and thereby Blue Cross of Texas and Blue Shield of Texas severally agree to provide the benefits detailed herein, all in accordance with the conditions and provisions hereof, including those set out on the following pages which are a part of this contract as fully as if recited over the signatures hereto affixed. This contract becomes effective on the contract date, and is issued in consideration of the applica- tion herefor made by the Employer and of the timely payment of premiums as provided for herein. It will be-coni4nued -in force, subject to the Employer's right of termination, for so long as the minimum employee-participation is maintained, as set out in Article VIII, Section A, Subsection 3. IN WITNESS WHEREOF, Blue Cross of Texas and Blue Shield of Texas have caused this contract to be executed at their Home Office in Dallas, Texas. President Secretary — Countersigned: 1 Registrar L ( - J Form No.CBCBS-1 Stock No. 4750.000-M1075 ARTICLE I — DEFINITIONS AS USED HEREIN: A. CARRIER means either Blue Cross of Texas or Blue Shield of Texas, or Blue Cross and } Blue Shield of Texas, depending on the context of the use. B. EMPLOYER means, in addition to the person, firm or institution named as such on the face hereof, one or more subsidiaries or affiliates listed as such under Eligibility Regu- lations in the Schedule. C. EMPLOYEE means a person who regularly renders personal services, not less than one hundred twenty (120) hours per month in the business of the Employer, and who (except in the case of a proprietor, partner, or corporation officer or director) is com- pensated for such services by salary or wages. D. DEPENDENT means: 1. An employee's spouse or 2. Any unmarried child, not previously married, who is either under twenty-five (25) years of age or disabled; provided that in the case of a disabled child twenty-five (25) years of age or older, such child is dependent upon the employee for more than one-half of his support as defined by the Internal Revenue Code of the United States. "Disabled" means any medically determinable physical or mental condition which prevents the child from engaging in self-sustaining employment; provided that the disability commences prior to such child's attainment of age twenty-five (25) and that satisfactory proof of such disability and dependency is submitted by the employee within thirty-one (31) days following such child's attainment of age twenty-five (25). "Child" means the natural child of the employee; a legally adopted child (including a child living with the adopting parents during the period of probation); a stepchild re- siding in the employee's household; or a child permanently residing in the household of which the employee is the head and to whom the employee is legal guardian or related to the child by blood or marriage. As a condition to the continued coverage of a child as a disabled dependent beyond ® the age of twenty-five (25), the Carrier shall have the right to require periodic certifica- tion of the child's physical or mental condition but not more frequently than annually after the two-year period following the child's attainment of age twenty-five (25). E. PARTICIPANT means an employee or a dependent, as above defined, whose coverage hereunder has become effective in accordance with Article II. F. MEMBER HOSPITAL means any hospital located in the State of Texas with which Blue Cross of Texas has entered into a written Member Hospital Contract for the rendition Stock No.4751.000-M1075 of care for which benefits are provided by Articles V and VI of this contract, or any hospital located outside the State of Texas with which any other Blue Cross Plan has entered into such a contract. G. NON-MEMBER HOSPITAL means any hospital other than a member hospital which is registered with the American Hospital Association and approved by Blue Cross of Texas for the rendition of services on a non-member hospital basis. H. THERAPEUTIC CENTER means an institution other than a member or non-member hospital which is approved as a therapeutic center by Blue Cross of Texas. I. PHYSICIAN means a person (other than a hospital resident or intern) who is a Doctor of Medicine, Doctor of Osteopathy, Doctor of Podiatry, or Doctor of Dentistry and who is a member of his county medical society, state osteopathic association, state podiatry association, or state dental association, or eligible for membership in such society or association; the term shall not be deemed to include a Doctor of Optometry or a Doctor of Chiropractic, nor a Doctor of Medicine, Osteopathy, Podiatry, or Dentis- try ineligible for membership in his respective society or association. The terms Doctor — of Medicine, Doctor of Osteopathy, Doctor of Podiatry, Doctor of Dentistry, Doctor of Optometry, and Doctor of Chiropractic, as used herein, shall have the meaning as- signed to them by the Insurance Code of Texas. J. SUPPLIER means a hospital, physician or other person, firm, or institution furnish- ing to a participant an item of service or supply listed in Sections T, U, and V of this Article I. K. HOSPITAL ADMISSION means the period between the time of a participant's entry into a member or non-member hospital as a bed patient and the time of discontinuance of bed-patient hospital care or discharge by the physician, whichever first occurs. The day of entry, but not the day of discharge or departure, shall be considered in deter- mining the length of a hospital admission. If a patient is admitted to and discharged from a member or non-member hospital within a twenty-four (24) hour period but is confined as a bed patient in a bed accommodation during the period of time he is in the hospital, the admission shall be considered a hospital admission by Blue Cross of Texas. "Bed patient" means confinement in a bed accommodation located in a por- tion of the hospital which is designed, staffed and operated to render acute, short- term hospital care on a twenty-four (24) hour basis; the term does not include con- finement in a portion of the hospital designed, staffed and operated to provide long- term institutional care on a residential basis. L. CARE means the furnishing of any item of service or supply listed in Sections T, U, and -� V of this Article I, provided such service or supply is necessary and consistent with the illness or injury for which the patient is being treated. M. COVERED ORAL SURGERY means maxillo-facial surgical procedures limited to: 1. Excision of neoplasms, including benign, malignant and pre-malignant lesions, — tumors and cysts; 2. Incision and drainage of cellulitis; ;- ARTICLE I — DEFINITIONS (Continued) 3. Surgical procedures involving accessory sinuses, salivary glands and ducts; 4. Reduction of dislocation of, excision of, and injection of the temporomandibular joint (does not include any type of correction of the occlusion of the teeth to eliminate temporomandibular joint pain or disfunction). N. PRE-EXISTING CONDITION means any abnormal physical or mental condition, whether active or inactive, existing before the patient became a participant hereunder, including all deformities, ailments or prior injuries which may thereafter become ag- gravated by subsequent injury or disease. O. ACCIDENTAL INJURY means accidental bodily injury resulting, directly and indepen- dently of all other causes, in necessary care rendered by a physician within thirty (30) days after the occurrence. P. CALENDAR YEAR means each year beginning January 1 and ending the next succeed- ing December 31. Q. CONTRACT MONTH means each succeeding monthly period, beginning on the con- tract date. R. CONTRACT ANNIVERSARY means the month, day and year specified in the Em- ployer's Application herefor and the corresponding date in each year thereafter for as long as the contract is in force. S. SCHEDULE means the Schedule of Specifications appearing in the Employer's Appli- cation herefor, or the latest of any revised schedules mutually agreed to by the Employer and the Carrier to replace one previously in effect, provided that if more than one Schedule of Specifications is in effect under this contract, the term shall mean, for each employee covered hereunder, and for each participant under his coverage, the Schedule of Specifications which has Eligibility Regulations that are applicable to such employee. T. BED-PATIENT HOSPITAL EXPENSE means charges incurred for the items of service or supply listed below for the care of a participant; provided that for non-member hospitals such charges are reasonable; and provided further that such items are: (a) furnished at the direction or prescription of a physician; (b) provided by a member hospital or a non-member hospital; and (c) furnished to and used by the participant during a hospital admission. An expense shall be deemed to have been incurred on the date of rendition of the service for which the charge is made. 1. Room accommodation charges, provided that if the patient is confined in a pri- vate room the excess of the room accommodation charge over the hospital's av- erage semi-private room accommodation charge will not be considered hereun- der for any purpose. 4VIS Stock No.4752.000-M1075 2. All other care in the nature of usual hospital services which are necessary and consistent with the condition of the patient. U. OUT-PATIENT HOSPITAL EXPENSE means charges incurred for items of service or supply for the care of a participant, provided that such items are: (a) furnished at the direction or prescription of a physician; (b) provided by a member hospital, a non- member hospital or a therapeutic center; and (c) furnished to and used by the par- ticipant during an out-patient visit; and provided further that for non-member hospitals and therapeutic centers, such charges are reasonable, V. OTHER MEDICAL EXPENSE means charges incurred for the items of service or supply listed below for the care of a participant, provided such charges are reasonable and such items are: (a) furnished by or at the direction or prescription of a physician and (b) are not included as an item of Bed-Patient Hospital Expense or Out-Patient Hospi- tal Expense under Section T or U of this Article I. An expense shall be deemed to have been incurred on the date of rendition of the service for which the charge is made. 1. Services of physicians, except that the charge of a Doctor of Podiatry shall be considered Other Medical Expense only if such service is an operative or cutting procedure, the setting of a fracture or dislocation, or a diagnostic x-ray or laboratory procedure. 2. Services of a certified registered nurse-anesthetist. 3. Services of a private-duty registered nurse or licensed vocational nurse not re- lated to the patient by blood or marriage. 4. Services of a licensed professional physical therapist. 5. Diagnostic x-ray and laboratory procedures. 6. Radiation therapy. 7. Drugs and medicines purchased for use outside of a hospital which require a -- written prescription for purchase. 8. Rental of durable medical equipment required for therapeutic use unless pur- chase of such equipment is required by the Carrier. The term "durable medical equipment" shall not include equipment primarily designed for alleviation of pain or provision of patient comfort. 9. Professional ground ambulance service used to and from the nearest hospital appropriately equipped and staffed for treatment of the participant's condition when rendered in connection with out-patient care following accidental injury oc- curring immediately prior to the hospital visit or in connection with bed-patient care. 10. Anesthetics and administration thereof. ARTICLE I — DEFINITIONS (Continued) 11. Oxygen and its administration. 12. Blood transfusions, including cost of blood, blood plasma and blood plasma expanders. 13. Prosthetic appliances required for the alleviation or correction of conditions aris- ing out of accidental injury occurring or illness commencing after the partici- pant's effective date of coverage hereunder. 14. Orthopedic braces (except shoes) and crutches. I� MI I ' 1 Stock No. 4753.000-b91075 ARTICLE II — ELIGIBILITY FOR COVERAGE; EFFECTIVE DATES A. ELIGIBILITY FOR COVERAGE 1. Any employee of the classifications described under Eligibility Regulations in the Schedule shall, upon the later of completion of the length of service therein specified or the contract date, become eligible to apply for coverage hereunder for himself or for himself and his family members as dependents. 2. Family members acquired after the effective date of the employee's coverage shall become eligible on the date the family member becomes a dependent as defined in Article I, Section D, of this contract. 3. Coverage of the employee shall be a condition precedent to coverage of his eligi- ble dependents. B. APPLICATION FOR COVERAGE Coverage of each eligible employee or dependent shall be contingent upon the employee's making application therefor in accordance with the approved procedures established by the Carrier; thereupon, subject to acceptance by the Carrier, coverage shall become effective in accordance with the following sections of this Article II. C. EFFECTIVE DATES — EMPLOYEES If the application is for coverage of an employee or of an employee and his eligible dependents, and 1. If the employee is eligible on the contract date and if the application is made prior thereto, the coverage shall become effective on the contract date. 2. If the employee becomes eligible on or after the contract date and if the applica- tion is made after the contract date but within the first thirty (30) days following - the date of eligibility, and a. If "Standard Option" is specified under Effective Dates in the Schedule, the coverage shall become effective on the employee's date of eligibility; b. If "Option I" is specified under Effective Dates in the Schedule, the coverage v shall become effective on the second premium due date following the date that the application is made; c. If "Option 11" is specified under Effective Dates in the Schedule, the coverage shall become effective on the first premium due date following the date that the application is made. 3. If the application is made more than thirty (30) days after the date such employee becomes eligible, the coverage shall become effective on the later of the succeed- ing contract anniversary or the first premium due date occurring thirty (30) days Stock No. 4754.000-M1075 , after the application is made, provided that if the employee elects, or is required by the provisions of Section B of this Article II to submit evidence of insurability satisfactory to the Carrier with his application, the coverage shall become effec- tive on the first premium due date following the date the Carrier determines such evidence to be satisfactory. 4. Regardless of the above subsections of this Section C, if "Other" is specified under Effective Dates in the Schedule, coverage shall become effective as set forth thereunder. D. EFFECTIVE DATES — DEPENDENTS If the application is for coverage of a dependent of an employee already having cover- age under this contract, and 1. If the dependent is eligible on or after the contract date and application is made after the contract date but within the first thirty (30) days following the date of eligibility, coverage shall become effective on the dependent's date of eligibility. 2. If the application is made more than thirty (30) days after the date the dependent becomes eligible, the coverage shall become effective as follows: a. If the addition of the dependent to the coverage does not result in an increase in premium on the date of application, the coverage shall become effective on _ the later of: (1) the date of eligibility of the dependent; or (2) the first date on which the addition of the dependent would not have re- sulted in an increase in premium; b. If the addition of the dependent to the coverage does result in an increase in premium on the date of application, the coverage shall become effective on the earlier of the following dates: (1) the first premium due date occurring at least ninety (90) days after receipt — of the application; or (2) the succeeding contract anniversary occurring at least thirty(30) days after the application is made. ARTICLE II — ELIGIBILITY FOR COVERAGE; EFFECTIVE DATES (Continued) 3. Notwithstanding the provisions of Subsection 2, above, of this Section D, cover- age of a child born after the employee's effective date shall be in effect from the date of birth through the thirty-first (31st) day following the date of birth; provided that for coverage to be in effect following such thirty-first (31st) day, the employee must: (1) either (a) submit notification within the first thirty-one (31) days following date of birth or (b) show that it was not reasonably possible to submit notification within thirty-one (31) days following date of birth and that the notification was submitted as soon as was reasonably possible and in no event, except in the absence of legal capacity, later than thirteen (13) months from the date of birth, and (2) remit all premiums duefrom the date of birth to the second premium due date following the date such notification is submitted. WR Stock No. 4755.000-M1075 I ARTICLE III — PREMIUMS A. The premium rates initially effective shall be shown under "Premiums" in the Em- ployer's Application, and continuance of the coverage hereunder shall be contingent upon payment of the premiums by the Employer at the Home Office of the Carrier in Dallas, Texas, in accordance with the following provisions: the first premium is due on the contract date; subsequent premiums are, during the continuance of this contract, payable in advance. The Carrier may refuse to accept any payment which does not represent a total monthly premium. B. This contract shall be non-assessable. It does not share in the earnings of the Carrier, but the Carrier reserves the right to change the premium rates on the first and any subsequent contract anniversary, as applicable to the succeeding year provided that: 1. If the Carrier does not change the premium rates on any of the above contract anniversaries, it shall have the right to change premium rates once on any pre- mium due date occurring between such contract anniversary and the next suc- ceeding contract anniversary and such change shall be applicable to the contract months succeeding such premium due date; 2. In the event price controls are established by the state or federal governments while this contract is in effect, the Carrier reserves the right to adjust premium rates on any premium due date occurring between the date of imposition of such controls and the contract anniversary following termination of such controls. Any such change shall be made uniformly applicable to all employees within any sub- group or other classification under this contract. C. Premiums may be paid on a monthly, quarterly, semi-annual, or annual basis as the Employer may elect, but without discount. D. The premium to be paid hereunder shall be determined by multiplying the number of employees covered for each classification by the rate then applicable for that classifi- cation, and totalling the extensions thus obtained; provided, however, that for partici- pants whose coverage becomes effective in accordance with Article II on other than the first day of a contract month, no premium shall be due for any portion of the contract month in which the coverage becomes effective. E. A grace period of thirty-one (31) days, without interest charge, shall be allowed for the payment of each premium except the first. If any premium is not paid within the grace period, this contract shall terminate at the end of such grace period., except that the contract shall terminate at an earlier date (which is not prior to the end of the period for which premiums have been paid) provided the Employer shall have given the Car- rier written notice of such earlier date of termination in accordance with the provisions of Article VIII, Section A. If the contract terminates during or at the end of the grace period, the Employer shall be liable to the Carrier for payment of a pro rata premium for the time the contract was in force during the grace period. The allowance of the grace period is applicable only to the total monthly premium, and shall not be con- strued so as to extend the coverage of any employee for whom a premium has not been paid as a part of the group remittance. Stock No. 4756.000-M1075 IV ARTICLE IV — PAYMENT OF BENEFITS; COORDINATION OF BENEFITS A. Subject to the qualifications, limitations, and exclusions set forth herein, Blue Cross of Texas will provide the benefits listed for care furnished by member or non-member hospitals, or therapeutic centers, as detailed in Articles V and VI. Payment of benefits .A by Blue Cross of Texas to the supplier supplying the care or to the employee, as Blue Cross of Texas may elect, shall constitute full discharge of all responsibility of Blue Cross of Texas to the employee on account of care rendered to any participant under ® his contract. B. Subject to the qualifications, limitations and exclusions set forth herein, when obli- gated for the provision of benefits hereunder, Blue Shield of Texas will provide the benefits listed for services and supplies in accordance with Articles V and VI, which are rendered by suppliers other than member or non-member hospitals or therapeutic centers provided, however, that such payment shall not exceed the amount specified therein. It is understood and agreed that the allowances set out in Articles V and VI are not intended to and do not fix the value of the services of the supplier nor in any way - relate to or regulate such value; that the supplier is privileged to make its regular charges and that the stipulated amounts are merely to apply as credits thereon. All payments for operations or services as set forth in Articles V and VI are payable to the supplier rendering the service, or to the employee, as Blue Shield of Texas elects, except that such payments shall be made to the employee if he so directs before payment is made to the supplier. Such payment in either event shall constitute full discharge of all responsibility of Blue Shield of Texas to the employee for benefits on account of such services. C. Any benefits hereunder, payable to the employee, shall, if unpaid at his death, be paid to the surviving spouse of the employee, as beneficiary; if there is no surviving spouse, 4 then such benefits shall be paid to the employee's estate. D. The benefits provided hereunder are not assignable. E. It is hereby declared to be the intent of the Employer and the Carrier that the availabil- ity of the benefits herein specified shall be contingent upon the absence of other coverage. Any other contract or policy under which the participant holds protection for hospitalization and/or medical-surgical expenses by virtue of his membership in or relation to a particular group shall be considered "other coverage" within the meaning hereof, whether issued by the Carrier or any other carrier, and whether the benefits are in the nature of indemnity or prepaid services. The term shall likewise be deemed to y include any governmental program existing by statutory authority, under which he is entitled to hospitalization and/or medical-surgical benefits. The term shall not be deemed to include any coverage held by the participant for hospitalization and/or medical-surgical expenses which is written as a part of or in conjunction with any automobile casualty insurance policy. When, therefore, other coverage applies, the benefits of this contract shall be coordinated therewith and determined in accordance with the following subsections of this Section E: Stock No. 4758.000—M10 75 1. The benefits of this contract shall be modified by the provisions of this Section E only when the Carrier is the "Secondary Carrier.'' The Carrier is the "Secondary Carrier" when the other coverage has provisions which state that it will provide its full benefits regardless of the benefits of this contract or when the other coverage �. has provisions corresponding to the provisions of this Section E and: a. The patient is classified as employee or primary insured under the other coverage and as dependent under this contract, or as dependent of a male person under the other coverage and dependent of a female person under this contract; or if those conditions do not exist, b. The effective date of the patient's participation under the other coverage is earlier than the effective date of this coverage hereunder, or when the other coverage has provisions (hereafter referred to as "coordination of benefits excess provisions") which state that it will provide.benefits only for the excess of charges over the benefits of this contract regardless of the patient in- volved or the effective date of coverage. 2. In the event a separate dental benefit contract is issued by Group Life & Health Insurance Company, Dallas, Texas, to the Employer, the Carrier shall be consid- ered the "Secondary Carrier" for any services for which benefits are available under this contract if benefits are available for those services under that dental benefit contract. 3. Determination of benefits under this Section E shall be made in relation to the services furnished to a participant during any one calendar year. — 4. When the Carrier is the "Secondary Carrier" and the other coverage does not have coordination of benefits excess provisions, the benefits of the other cover- age shall be deducted from the charges of all items of hospitalization and/or medical-surgical services for which any benefit is provided under Articles V and VI, hereof, or other coverage, and the Carrier will pay the remainder of the charges for such items; provided, however, that in no event shall the provisions of this section be construed to increase the amount of total benefits which would be payable in any case hereunder in the absence of other coverage. 5. When the Carrier is the "Secondary Carrier" and the other coverage has coordi- nation of benefits excess provisions, the benefits of both this contract and the -- other coverage that would have been provided for the charges involved in the absence of this provision will first be determined. a. If the above determines) benefits under both this contract and the other cover- age each equal or exceed fifty percent (50%) of the charges involved, the Car- rier will provide benefits equal to fifty percent (50%) of the charges involved. b. If the above determined benefits under the other coverage equal less than fifty percent (50%) of the charges involved, the Carrier will provide benefits equal to the lesser of the above determined benefits of this contract or the excess of the charges involved over the above determined benefits of the other cover- age. ARTICLE IV — PAYMENT OF BENEFITS; COORDINATION OF BENEFITS (Continued) c. If the above determined benefits of this contract equal less than fifty percent (50%) of the charges involved, the Carrier will provide benefits equal to the above determined benefits of this contract. 6. When benefits are provided by other coverage for certain itemized services or for more than one item of service in an unallocated amount, they will be deemed to apply pro rata to all such items. When a deductible amount applies to the benefits of other coverage, it shall be deemed to apply pro rata to each of the benefit factors thereunder. 7. The Carrier assumes no obligation to discover the existence of other coverage or the benefits payable under it if discovered, but only to give effect to the provisions of this Section E in accordance with information furnished it by an authoritative source. It shall, however, be entitled to obtain and/or to release such information as reasonably necessary to give effect to these provisions, without the consent of or notice to any person; and any person claiming benefits hereunder shall, as a condition precedent to his right of recovery, furnish to the Carrier full information concerning the existence of other coverage and the benefits thereof. 8. The Carrier shall be entitled at any time to recover benefits paid in excess of the obligation as determined under the provisions of this Section E, irrespective of or .. to whom such benefits were paid, from an issuer or provider of the other cover- age, a hospital, therapeutic center, or any person or firm to or for whom such payment was made, or from any combination of such sources. 9. When benefits have been paid under other coverage, the Carrier shall have the right, in its discretion, to pay over to the issuer or provider of such other coverage any portion of the benefits available under this contract which the Carrier may determine to be due in order to give effect to the intent of this Section E and corresponding coordination of benefits provisions in such other coverage. The amount so paid shall be deemed to be benefits provided under this contract, and to the extent thereof, the Carrier shall be fully discharged from liability hereunder. 10. If the Carrier is the "Secondary Carrier" under this Section E but is unable to determine the benefits of the other coverage for the charges involved, it will esti- mate in good faith the benefits of the other coverage and provide the benefits of this contract on the basis of that estimate. Payment under this Subsection 10 shall constitute full discharge of the liability of the Carrier for the charges involved, subject only to adjustment in the event the Carrier later determines the actual benefits of the other coverage prior to the expiration of the period set forth in Article X, Section I. I { I [ I Stock No. 4759.000-M1075 ARTICLE V — BENEFITS PROVIDED (OTHER THAN MATERNITY) A. BENEFITS FOR BED-PATIENT HOSPITAL EXPENSE and certain Out-Patient Hospital Expense When any participant, while covered hereunder and during a calendar year, shall incur: 1. Bed-Patient Hospital Expense, or 2. Out-Patient Hospital Expense for treatment of an accidental injury occurring not more than seventy-two (72) hours preceding the out-patient visit, or for minor surgery performed during the course of the out-patient visit, the Carrier will pay benefits equal to the amount determined by application of the percentage stipulated in item 1 of the Schedule to the amount of expense involved. The excess of the expense involved over the above determined benefit is the partici- pant's "Coinsurance Amount" of that expense. B. BENEFITS FOR OTHER MEDICAL EXPENSE and certain Out-Patient Hospital Expense 1. Benefit: When any participant, while covered hereunder and during a calendar year, shall incur: (1) Other Medical Expense and/or (2) Out-Patient Hospital Expense for which benefits are not available under Section A of this Article V, in excess of the deductible stipulated in item 2 of the Schedule, the Carrier will pay benefits equal to the amount determined by application of the percentage stipulated in item 4 of the Schedule to such excess, except that the deductible will not be applied to any item of the above expense that is for treatment of an accidental injury which was sustained during the calendar year involved or during the last three months of the immediately preceding calendar year. Such expense, minus the deductible and the benefits of this Subsection 1, is the participant's "Coinsurance Amount" of � such expense. 2. Exceptions: The following exceptions to the above Benefit will be applicable: a. Any Other Medical Expense or any Out-Patient Hospital Expense incurred during the last three months of a calendar year and applied towards satisfac- tion of the deductible for such calendar year may be applied towards satisfac- tion of the deductible for the next succeeding calendar year. b. When a total of three participants under the coverage of one employee have satisfied the deductible stipulated in item 2 of the Schedule for a calendar year, any other participants under that employee's coverage will not have to satisfy a deductible for that calendar year. Stock No. 4760.000-M1075 C. SECURITY PROVISION; MAXIMUM BENEFITS 1. Security Provision: If the Security Provision is applied for in item 8 of the Schedule, when a partici- pant's "Coinsurance Amounts" for a calendar year under Sections A and B of this Article V and Subsections 1 and 2 of Section B of Article VI total $1,000, the per- centages stipulated in items 1 and 4 of the Schedule shall automatically become one hundred percent (100%) for purposes of determining the benefits available for all other Bed-Patient Hospital Expense and/or Other Medical Expense incurred by such participant during the calendar year involved; provided that when the Carrier is the Secondary Carrier under Article IV, Section E, of this contract, no — "Coinsurance Amounts" shall be credited under this Subsection 1 for the charges involved under that Section E. 2. Maximum Benefits: The total amount of benefits available to any one participant under this contract shall not exceed $250,000. D. PSYCHIATRIC LIMITATIONS 1. The benefits of this Article V for Bed-Patient Hospital Expense incurred by a par- ticipant for psychiatric care shall be available only for such expenses incurred during the first one hundred twenty (120) days in which such expenses are incur- red during each calendar year. 2. The benefits of this Article V for Other Medical Expense incurred by a participant for psychiatric care during any one calendar year shall not exceed a maximum of$1,000. E. EFFECT OF CHANGES IN BENEFITS, REPLACEMENT OF COVERAGE, OR TERMINA- TION OF COVERAGE 1. Changes in Benefits: In the event the Schedule in the Application for this contract is replaced with a new Schedule of Specifications, the Coverage Factors in the new Schedule will apply to all services rendered to each participant under this contract on and after the effective date stipulated in such new Schedule, except that benefits for hospi- tal admissions commencing before the effective date stipulated in such new Schedule will be under the terms of the Schedule in effect at the commencement of the hospital admission. 2. Replacement of Coverage: a a. If coverage of any participant under this contract replaces any coverage he may have held with Blue Cross and Blue Shield of Texas, the waiting period ARTICLE V — BENEFITS PROVIDED (OTHER THAN MATERNITY) (Continued) for care of pre-existing conditions, if any, stipulated in item 7 of the Schedule will be reduced by the period of coverage under that prior contract. b. Any participant holding Catastrophic Illness coverage issued by Blue Cross of Texas and/or Blue Shield of Texas, immediately prior to his coverage effective y date under this contract, who then has an established benefit period in effect, or could upon proper claim have such a benefit period in effect on such date, _ shall continue to receive benefits for the same condition in accordance with the prior Catastrophic Illness coverage for the remainder of that benefit period or until the maximum benefit has been received, whichever occursfirst, pro- vided, however, that such benefits shall not duplicate, but shall be considered supplemental to the benefits provided by this contract, applying only to the charges in excess of the benefits of this contract, and provided furth2r that any excess for which Catastrophic Illness benefits are so provided shall not be considered as "Coinsurance Amounts" under Section C of this Article. c. If this contract replaces Major Medical coverage issued by Blue Cross of Texas to the Employer, Major Medical benefits under the prior Major Medical coverage will not be available for any expenses incurred on or after the con- tract date and any expenses incurred by participants between September 30 of the calendar year preceding the contract date and which were applied toward satisfaction of the Major Medical deductible of the prior coverage will be applied towards satisfaction of the Other Medical Expense deductible of this contract. 3. Termination of Coverage: _ Termination of coverage shall not operate to deprive a participant of any benefits to which he would otherwise be entitled for Bed-Patient Hospital Expense and Other Medical Expense incurred during the course of a hospital admission com- mencing before the date of termination; except that benefits will be provided only for expenses incurred during that hospital admission or prior to the 90th day fol- lowing the date of termination, whichever occurs first. IV Stock No. 4761.000-M1075 ARTICLE VI — MATERNITY COVERAGE A. ELIGIBILITY REQUIREMENTS Benefits under this contract for Bed-Patient Hospital Expense and/or Other Medical Expense incurred by an obstetrical patient for treatment of the condition of pregnancy shall be available only if the obstetrical patient is eligible for such benefits in accord- ance with item 5 of the Schedule. B. MATERNITY BENEFITS This Article is applicable to all Bed-Patient Hospital Expense and/or Other Medical Expense incurred by an obstetrical patient for treatment of the condition of pregnancy (hereafter referred to as "maternity expenses''). This Article is not applicable to Bed- Patient Hospital Expense and/or Other Medical Expense incurred for treatment of any other conditions of the obstetrical patient, even though aggravated by the condition of the pregnancy. 1. Benefits for all expenses incurred in relation to a pregnancy shall be determined in accor- dance with the provisions of Article V unless a benefit maximum is selected in item 6 of the Schedule. 2. If a benefit maximum is selected in item 6 of the Schedule for either Bed-Patient Hospital Expense or Other Medical Expense, or both,the Carrier will pay the maternity expenses to which the maximum is applicable up to the maximum benefit amount stipulated, provided that: a. Any maternity expenses over and above such benefit maximum shall not be considered under this contract for any purpose; and b. The limitation on room accommodation charges stipulated in Subsection 1 of Section T of Article I shall not be applied to any maternity expenses to which a maternity benefit maximum is applicable. C. EFFECT OF CHANGES IN BENEFITS, REPLACEMENT OF COVERAGE, OR TERMINA- TION OF COVERAGE 1. Changes in Benefits: If the Schedule in the Application for this contract is replaced with a new Schedule of Specifications, benefits for maternity care shall be determined in ac- cordance with the Schedule in effect on the date the pregnancy commenced pro- vided the obstetrical patient is covered under this contract on the date maternity expenses are incurred. 2. Replacement of Coverage: If: (a) a participant is pregnant on the effective date of her coverage hereunder, and (b) coverage hereunder replaces any coverage she may have held with Blue Stock No. 4762.000-M1075 Cross and Blue Shield of Texas under any individual contract or with Blue Cross and Blue Shield of Texas under a contract issued to a group other than the Employer, and (c) no benefits are available for such pregnancy under that prior coverage, and (d) the participant held coverage for maternity benefits under the prior cover- age from the commencement of the pregnancy to the termination date of that prior coverage, then benefits will be provided under this contract for such pregnancy, determined on the basis of the coverage available under the prior coverage on the date the pregnancy commenced, as though the pregnancy had commenced after the effec- tive date of coverage hereunder. 3. Termination of Coverage: If: (a) coverage of an obstetrical patient under this contract terminates after commencement of a pregnancy but before termination of pregnancy, (b) due to termination of employment or cessation of eligibility as a participant hereunder, and (c) if benefits would have been provided under this contract for maternity ex- penses incurred due to such pregnancy if termination had not occurred, benefits will be provided under this contract for such maternity expenses that are incurred within nine months following termination of coverage in accordance with the Schedule in effect on the date the pregnancy commenced. ARTICLE VII — LIMITATIONS AND EXCLUSIONS The benefits of this contract are not available for: A. A hospital admission for diagnostic or evaluation procedures unless the tests could not have been performed on an out-patient basis without adversely affecting the pa- tient's physical condition or the quality of medical care rendered; B. Any services or supplies rendered in connection with a routine physical examination, or which are not medically necessary for the diagnosis or treatment of an illness, in- jury, or bodily malfunction; C. Any hospital services or supplies furnished by any institution or facility other than a member hospital, a non-member hospital, or a therapeutic center (except that in acci- dent cases, emergency care furnished by any governmental or licensed hospital shall be subject to benefits as provided in Article V); D. Any services or supplies for which benefits are, or could upon proper claim be pro- vided under the Workmen's Compensation law, or any other present or future laws enacted by the Legislature of any state, or by the Congress of the United States, or the laws, regulations or established procedures of any county or municipality; provided, however, that the exclusions of this Section D shall not be applicable to any coverage held by the participant for hospitalization and/or medical-surgical expenses which is written as a part of or in conjunction with any automobile insurance policy; E. Any services or supplies rendered for a pre-existing condition during the period of time, if any, shown in item 7 of the Schedule, commencing with the effective date of the participant's coverage hereunder; F. Any items of Other Medical Expense or Out-Patient Hospital Expense incurred for den- tal care and treatments, dental surgery, or dental appliances, (1) except for covered oral surgery, or (2) unless such services are made necessary by accidental bodily in- jury effected solely through external means and occurring while the participant is cov- ered hereunder; provided, however, that this Section F shall not be applicable to ser- vices and supplies rendered to a newborn child which are necessary for treatment or correction of a congenital defect; G. Eyeglasses including contact lenses, hearing aids, or examinations for the prescrip- tion or fitting thereof; H. Services or supplies for cosmetic purposes, except for the correction of defects incur- red through traumatic injuries sustained by the participant while covered hereunder; provided, however, that this Section H shall not be applicable to services and supplies rendered to a newborn child which are necessary for treatment or correction of a .. congenital defect; I. Travel, whether or not recommended by a physician, except as provided in Article I, Section V, Subsection 9; Stock No. 4763.000-M1075 J. Any services or supplies provided during the course of a hospital admission which commences before the patient is covered as a participant hereunder or after the ter- mination of his coverage, except as provided in Article VI, Section C, of this contract; �. K. Services or supplies rendered to any person who requires them by reason of acting as a donor of any organ or element of his body, unless such person is a participant — hereunder; L. Services or supplies not specifically defined as Bed-Patient Hospital Expense, Out- Patient Hospital Expense, or Other Medical Expense; M. Any medical social services or occupational therapy services; N. Any services or supplies rendered to any participant for treatment of obesity or for weight reduction. ARTICLE VIII — TERMINATION OF COVERAGE A. The coverage of all participants hereunder shall automatically terminate when this contract is terminated in any manner, as follows: 1. By cancellation on any premium due date, at the request in writing of the Employer furnished to the Carrier at its Home Office, not less than thirty (30) days in advance; 2. By default in premium payment, subject to the grace period provided in Article III; 3. By failure of the Employer to maintain enrollment of its employees hereunder at a level of at least seventy-five percent (75%) of the total eligible number, with a minimum enrollment of ten (10) employees; provided that the Carrier shall first notify the Employer of such enrollment deficiency, and provided further that the contract shall not terminate if, within the thirty (30) days following such notifica- tion, the deficiency is remedied. In the event of failure to remedy the enrollment deficiency in such case, the date of termination of this contract shall be the last day of the contract month following the month in which the deficiency notifica- tion is furnished. B. The coverage of any employee and his dependents included hereunder shall automat- ically terminate upon: 1. The last day of the last period for which his portion of the group premium is paid to the Carrier; provided that the Employer may terminate the coverage of any employee on the last day of any contract month for which premiums for such employee have been received by the Carrier prior to the end of such month and any premiums for such employee that are applicable to succeeding contract months will be refunded by the Carrier to the Employer upon request. 2. The effective date of an amendment to this contract which terminates the cover- age of any class of employees to which he belongs. C. The coverage of any dependent of an employee included hereunder shall automati- cally terminate at the end of the contract month in which such dependent ceases to be a dependent as defined in Article I, Section D, of this contract. D. The Carrier will refund to the Employer the portion of the premium paid in advance for coverage of a dependent whose coverage terminates in accordance with the provi- sions of Section C, above; provided, however, that in case of termination on account of marriage, the refund will not be made as to any period before the Carrier is actually notified of the marriage. E. Under no circumstances shall the Carrier be obligated to notify any participant of the termination of this contract or of his coverage hereunder. x Stock No. 4764.000-M1075 ARTICLE IX — CONVERSION PRIVILEGE A. When coverage for an employee is terminated hereunder by reason of cessation of employment, he shall have the right of conversion for all participants included there- under to new individual coverage as provided for in Section D, below. B. When coverage for an employee is terminated hereunder by reason of death, his or her surviving spouse, if then included as a dependent hereunder, shall have the right of conversion to new individual coverage for himself or herself and the other previously included dependents as provided for in Section D, below. C. When coverage for a dependent child is terminated hereunder by reason of marriage or attainment of age twenty-five (25), he shall have the right of conversion to new individual coverage as provided for in Section D, below. D. Any person becoming eligible for conversion as provided for in the three preceding sections of this Article IX may, within thirty-one (31) days after termination of his coverage hereunder, submit application for new individual hospitalization and medical-surgical coverage under the form or forms of contracts then offered by the Carrier to conversion applicants. The contract applied for will be issued, without re- quirement of evidence of insurability, at the conversion premium rates then in effect. The individual contract will be made effective as of the day after the date of the termi- nation hereunder, and full recognition will be extended to the period of coverage here- under for the satisfaction of waiting periods and clauses respecting pre-existing con- ditions as may be contained in the individual contract. aw V Stock No. 4765.000-M1075 ARTICLE X — GENERAL PROVISIONS A. CONTRACT; AMENDMENTS: 1. This contract and the Application of the Employer herefor, a copy of which is attached hereto, and the applications of employees shall constitute the entire contract. All statements made by the Employer or by the employees covered shall be deemed representations and not warranties, and no statement made by any employee covered shall be used in any contest or in defense of a claim hereunder unless a copy of the instrument containing the statement is or has been furnished to such person or to his beneficiary. 2. This contract may be amended or changed at any time, subject to the laws of the jurisdiction in which it is delivered, without the consent of the employees covered hereunder or of their beneficiaries, by written agreement between the Employer and the Carrier. Only the President, a Vice President, the Secretary, or an Assis- tant Secretary of the Carrier has the power to change, modify, or waive the provi- sions of this contract, and then only in writing done at the Home Office. The Carrier shall not be bound by any promise or representation heretofore or hereaf- ter made by or to any agent other than specified above. B. INCONTESTABILITY: This contract shall be incontestable after two years from date of - issue except for non-payment of premiums. C. TIME LIMIT ON CERTAIN DEFENSES: After one year from the effective date of cover- age for any employee, no misstatements, except fraudulent misstatements, made in his application for coverage shall be used to void his coverage or to deny a claim for benefits on account of care rendered after the expiration of such one-year period. D. REINSTATEMENT: If default be made in the premium payments for this contract, the subsequent acceptance of such premium by the Carrier or any of its duly authorized agents shall fully reinstate the contract. E. NOTICE OF CLAIM: The employee shall give or cause to be given written notice to the Home Office of the Carrier at Dallas, Texas or its duly authorized agent within thirty (30) days or as soon as reasonably possible after any participant receives any of the services for which benefits are provided herein. Notice given to any member hospital at the time of admission therein as a bed patient shall satisfy this requirement for care rendered by such hospital. - F. CLAIM FORMS: The Carrier will furnish to the employee, the hospital, and/or the par- ticipant's physician, upon receipt of a notice of claim or prior thereto, such forms as are usually furnished by it for filing proof of loss. If such forms are not furnished within fifteen (15) days after the giving of such notice, the participant shall be deemed to have complied with the requirements of this contract as to proof of loss upon submit- ting, within the time fixed in the contract for filing proofs of loss, written proof cover- ing the occurrence, the character and the extent of the loss for which claim is made. G. PROOFS OF LOSS: Except for services rendered by a member hospital, written proof !�► of loss must be furnished to the Home Office of the Carrier at Dallas, Texas by the i Vi Stock No. 4766.000-M1075 employee, except in the absence of legal capacity, prior to the end of the calendar year following the year in which the services or supplies are furnished to the partici- pant involved. t H. TIME OF PAYMENT OF CLAIMS: Benefits payable under this contract for any loss will be paid immediately upon receipt of due written proof of such loss. I. LEGAL ACTIONS: No action at law or in equity shall be brought to recover under this contract unless brought within three years after the date of rendition of the services for which claim is made. J. INDIVIDUAL CERTIFICATE: The Carrier will issue to the Employer for each covered employee an individual certificate setting forth a statement as to the benefits to which he is entitled, to whom the benefits are payable, and the provisions of Article IX of this contract entitled "Conversion Privilege." Blue Cross of Texas will furnish a current list of member hospitals to any employee covered hereunder at any time, upon request, without charge. K. GENDER: Use herein of a personal pronoun in the masculine gender shall be deemed to include the feminine unless the context clearly indicates the contrary. L. COVERAGE DATA: The Employer shall furnish the Carrier all information needed to effect coverage of employees and dependents hereunder and termination changes in — such coverage. M. DISCLAIMER: The Carrier shall not be liable for any act or omission by any hospital, therapeutic center, physician, their agents or employees, in caring for a participant receiving services under this contract, and no responsibility attaches hereunder for inability of any supplier to furnish accommodations or services. Benefits are subject to the rules and regulations of the hospital selected by the participant, and are available only for illness or injury acceptable to such hospital. N. DISCLOSURE AUTHORIZATION: In consideration of the Carrier having waived physi- cal examination in connection with the application for coverage hereunder, the employee, on behalf of himself and his covered dependents, shall be deemed to have authorized any attending physician, nurse, hospital, or therapeutic center to furnish the Carrier all information and records or copies of records relating to the diagnosis, treatment, or care of any participant included under this coverage; and such partici- pants shall, by asserting claim for benefits hereunder, be deemed to have waived all provisions of law forbidding the disclosure of such information and records. O. REFUND OF BENEFITS: If and when it shall be determined that benefits have been paid hereunder to which the patient was not legally entitled, the employee or oth- er participant benefiting thereby shall, upon demand, refund such payment to the Carrier. P. SUBROGATIQN: The Carrier shall be subrogated to all rights of recovery which any -� participant may acquire against any person or organization for negligence or any will- ful act resulting in illness or injury for which benefits are provided hereunder,-but only to the extent of the benefits so provided. Any participant, by receiving benefits here- a ARTICLE X — GENERAL PROVISIONS (Continued) under in such case, shall be deemed to have assigned such rights of recovery to the Carrier and to have agreed to do whatever may be necessary to secure the recovery, including execution of all appropriate papers. = Q. DETERMINATION OF REASONABLE CHARGE: In determining the reasonable charge for a service rendered by a physician, the Carrier shall consider the charges for similar services usually made by the physician rendering the service, the charges for similar services customarily made by physicians in the locality with similar training and ex- perience, and unusual circumstances or medical complications requiring additional time, skill and experience in connection with a particular service. I rr •�• Stock No. 4767.000-M1075 i This Application No. Is Hereby Made to GROUP HOSPITAL SERVICE, INC. GROUP LIFE & HEALTH INSURANCE CO. Dallas, Texas by City of Fort Worth Fort Worth. Texas (Name of Company) (City and State) for a Group Comprehensive Blue Cross and Blue Shield Contract,Form No. CBCBS-1, in accordance with the stipulations set out herein. SCHEDULE OF SPECIFICATIONS in any space means See Special Provisions. N.L. in any space means No Limit. XXX in any space means Coverage Factor Inapplicable or Not Applied For. Item No. BED-PATIENT HOSPITAL EXPENSE BENEFITS 1 Benefit Percentage: 100 % ItkKXXXX OTHER MEDICAL EXPENSE BENEFITS 2 Deductible each calendar year . .... . . . . . . . . . . .... . .. . . ... .. $ 100.00 3 Psychiatric Care Benefit maximum each calendar year $ 1,000.00 4 Benefit Percentage . . . ...... . . . . . . .... .... .. . . .. . . . . . . .... . . . . . .. . .. . ... . . .. .. 80 ELIGIBILITY REQUIREMENTS FOR MATERNITY BENEFITS ("x" in a block means provision preceding is applicable to this contract) 5 No one is eligible for Maternity Benefits . . .. .... .. . . . . . . . . . . . . . . ... . . . . .. .. . .. . . ❑ Either employee or spouse of an employee .. . . . .. . . . .. .. . . . .. . . . . . .. . . .. . . . . . . . Im and a covered dependent daughter of an employee . . . . . ... . . . .. .. . . . .. . . . . . .. ❑ are eligible for Maternity Benefits under this contract if the obstetrical patient s holds coverage for maternity care under this contract: with her spouse as a family unit . ... . . . .. .. . . .. . . . . . . . . . . . . . . . . . . .. . .. . . . .. . . ❑ with one or more dependents . . . . .. . . . . . . . . .. .. .. . . . . . . . . . . . . .. . . . . .. . . .. .. . ❑ continuously from conception to delivery . . .. . . .. . . . . . . . .. . . . . . . . . . ... ... . . . . at delivery ❑ MATERNITY BENEFITS 6 a. Bed-Patient Hospital Expense © Regular Benefit ❑ Maximum Benefit ...... ... . ... . ... . . .. . .. . . .. . . .. . . . . . . .. . . .. . . . . . . XXX b. Other Medical Expense ®Regular Benefit ❑ Maximum Benefit . .. .. .. .. . .. . . .. . . ... . .. . . .. . . ... . ... . .. . . ... .. .. . $— XXX WAITING PERIOD ^' 7 Waiting Period for care of pre-existing conditions . . . . . . . . . . . . . . . . .. . . . . .. . . . . . .. XXX SECURITY PROVISION 8 ® Applied For ❑ Not Applied For Form No.CBCBS-I-APP-1 Stock No. 4768.000-M1075 ELIGIBILITY REGULATIONS: Persons eligible to apply for coverage under the contract shall be the employees of the concern named above i who have been continuously employed for not less than 30 days (Waived on initial en- rollment ❑Yes ® No) when their application for coverage is submitted to the Carrier. EFFECTIVE DATES: The effective dates of individual applications are to be handled under the terms of: ❑Standard Option ®Option I ❑Option II ❑Other (Specify under Special Provisions) ************END OF SCHEDULE OF SPECIFICATIONS************ CONTRACT DATES: The effective date of the contract is March 1 , 1976, and the first contract anniversary shall be January 1 19_77 , whether or not the two dates are separated by twelve months. rr MINIMUM ENROLLMENT REQUIREMENTS: The Employer certifies that 5072 employees are eligible to make application for coverage at the date of this group application, and agrees that at least 75% of that number(10 minimum) must make application for coverage before the contract date, otherwise this application ... shall be deemed to have been withdrawn. PREMIUMS: The Employer will provide payroll deduction facilities for the employee's portion of the premium and make consolidated group premium remittances. The following shall be the initial monthly premium rates: •r Employee,spouse Employee Employee Employee and Employee and and dependent child Only and Spouse Dependent child Dependent children or children $ 20.66 $ 52.84 $ 46.92 $ 46.92 $ 57.17 As of the effective date of this application, the amount of Employer contribution is: 75% of the total employee rate with no contribution toward dependents. SPECIAL PROVISIONS: The following stipulations shall be considered a part of this application: .s IM" The contract and the coverage provided thereunder shall become effective on the effective date stipulated above under Contract Dates, provided that (1)this application is executed in duplicate; (2) payment of the first month's premium is received by Group Hospital Service, Inc.; and (3) in the event of any alteration of this N, application, such alteration is accepted in writing by Group Hospital Service, Inc. and Group Life & Health Insurance Company. City of Fort Worth .� Full r ate Name of Employer 4 by Signature and Title .g Signed at Witness. On 1t. 9 Representative of t Carrier Stock No. 4769.000-M1075 AMENDMENT NO. TO Group Comprehensive Blue Cross and Blue Shield Cor race NQ. The effective date of this amendment shall be D mer' + The amount of Employer Contribution Is hereby changed to total employee rate with no am contribution toward dependents. _ r This amendment shall become effective on the date stipulated above, provided that (1) it is executed in dupli- cate; (2) payment of the premium for the first month after the effective date is received by Group Hospital Service, Inc.; and (3) in the event of any alteration of this amendment, such alteration is accepted in writing by Group Hospital Service, Inc. and Group Life and Health Insurance Company. GROUP HOSPITAL SERVICE, INC. and GROUP LIFE 8 HEE/AJTI-ISURfiNCE COMPANY By: City of Fort Worth Tom L BsauchamD,Jr. reeldent II or Corporate Name n a By: istrar Signature and Title Dab Date Stock No. 4772.000-M1075. o ` RETENTION AGREEMENT This Agreement is entered into by and between GROUP HOSPITAL SERVICE, INCORPORATED and GROUP LIFE & HEALTH INSURANCE COMPANY Dallas, Texas (hereinafter jointly called Blue Cross and Blue Shield of Texas) and CITY OF FORT WORTH Fort Worth, Texas (hereinafter called the Employer) Effective: March 1, 1976 for the purpose of determining the ultimate consideration to be paid by the Employer for the coverage of the Experience Rated Group Comprehensive Blue Cross and Blue Shield Controcts numbered 21090 and 21091, hereinafter called the Contract. I - DEFINITIONS As Used in this Agreement: A. Accounting Period means that period of time from March 1, 1976 through July 31, 1976 and each succeeding twelve (12) month period thereafter commencing on August 1, 1976. B. Deposit Premiums means the sum of the monthly premiums paid by the Employer to Blue Cross and Blue Skield of Texas which are due and payable for the Accounting Period involved under the terms of the Article in the Contract captioned "Premiums", provided, however, the term shall not include that portion of the premium which is attributable to the insurance risk of those claims in any one individual's contract in excess of $30,000. C. Incurred Claims means: 1 . The total amount of all claims paid under the benefit provisions of the Contract, curing the Accounting Period involved, but excluding that portion of any one individual's claims in excess of $30,000, plus 2. The total amount estimated by Blue Cross and Blue Shield of Texas, in accordance with their normal accounting practices as specified under "General Provisions", to be incurred but unpaid at the end of such Accounting Period, minus 3. The corresponding estimate appearing in the lost previous experience statement. ,D. Administration Charge means the consideration required by Blue Cross and Blue Shield of Texas for administration of tlie Contract and is equal to 6.24% of Deposit Premium. This percentage shall not be adjusted during the first ten (10) months this agreement is in effect; and Blue Cross and Blue Shield of Texas reserves the right to adjust such percentage on any premium due date thereafter by giving notice of such adjustment thirty ('00) days in advance thereof; provided, that no more than one (1) adjustment shall be made in any twelve (12) month period. . Notwith- standing the above, such percentage shall be automatically increased by the amount of premium taxes hereafter imposed by lawful authority over and above those presently applicable. E. Claims Fluctuation Fund means the amount of money required to absorb a possible adverse fluc- tuation of claims experience calculated as provided below: If Last Twelve Months' Health Deposit Premiums for the Accounting Period are The Claims Fluctuation Fund shall More Than: But Less Than: then be a Total of: To - $ 200,000 0 + 8% of such Deposit Premium $ 200,000 - $ 500,000 $ 4,000 + 6% of " $ 500,000 - $1,000,000 $14,000 + 4% of " $1,000,000 - $2,000,000 $24,000 + 3% of " $2,000,000 - $5,000,000 $44,000 + 2% of " $5,000,000 - Up $94,000 + I% of If If If 11 — CONSIDERATION: SETTLEMENTS A. Blue Cross and Blue Shield of Texas will furnish the Employer a report within ninety (90) days after the end of each Accounting Period, detailing Deposit Premiums, Incurred Claims, and Administration Charge for such Accounting Period and all other data required for settlement, as provided below. B. If the report reflects that the sum of Deposit Premium exceeds Incurred Claims and Administration Charge combined, the difference shall bc" considered the Accounting Period surplus, if the reverse is true, the difference shall be considered the Accounting Period deficit. C . The Accounting Period surplus or deficit, as the case may be, shall be combined with any surplus or deficit left standing as provided below from the immediately preceding Accounting Period. At the end of each Accounting Period, interest shall be computed for such Accounting Period on any average standing surplus and applied as a credit. The average standing surplus shall be any positive figure calculated by combining: I . any surplus or deficit- left standing as provided below from the immediately preceding Accounting Period, with 2. one-half (1/2) of the surplus or deficit calculated for the current Accounting Period in accordance with the preceding Section B. . ' ��� The interest rate shall be 5.5% annual simple interest; provided, however, Blue Cross and Blue Shield of Texas reserves the right to change the interest rate applicable to the second and suc- ceeding Accounting Periods. The surplus or deficit so developed shall be left standing to be combined in future Accounting Periods; provided, however, to the extent that the surplus at the end of any Accounting Period exceeds the Claims Fluctuation Fund, such excess shall be, at the request of the Employer, refunded to the Employer or applied toward increasing benefits or re- ducing premiums for succeeding periods of coverage. In the event of any such election, the excess so refunded or applied shall be deducted from the surplus for such accounting period; and in the event of application of such excess toward increasing benefits or reducing premium rates, the amount so applied shall be deemed to be deposit premium for the purpose of the succeeding Accounting Periods affected by such application. D. On termination of the Contract the time intervening between the end of the last previous Accounting Period and the termination date shall, regardless of the number of months involved, be considered an Accounting Period and tentative settlement effected in accordance with the provisions of the foregoing Sections of this Article 11 . At reasonable intervals thereafter, Blue Cross and Blue Shield of Texas will refund to the Employer portions of the then existing surplus, if any, which are not considered by Blue Cross and Blue Shield of Texas to be reasonably neces- sary to cover the remaining claims liability. Final refund of all remaining surplus and reserves, if any, not necessary to cover any remaining claims liability wiII be made twelve (12) months from the termination date; provided, however, if there is a standing deficit on such date, the Employer will refund to Blue Cross and Blue Shield of Texas the lesser of (a) such standing deficit or (b) the amount of refunds, if any, previously made under the tentative settlement and under the settlement for the immediately preceding Accounting Period. III - GENERAL PROVISIONS A. This Agreement does not alter the contract provisions regarding the setting of (Deposit) Premium rates; but, for clarification, if needed, it is hereby declared to be the understanding and intent of the parties that premium rate adjustments will be calculated with the design that Deposit Pre- miums will approximate the final consideration. B. Blue Cross and Blue Shield of Texas have a reciprocal agreement under which they will allocate settlements as provided for in Article II hereof, and they agree that the Employer shall have no responsibility for or interest in such allocation. C. At the date of execution hereof, the normal accounting practice of Blue Cross and Blue Shield of Texas in estimating claims incurred but unpaid during an Accounting Period is to multiply the annualized premium for the Contract by twenty-two percent (22%). This formula is designed to produce a reliable estimate; therefore, the result attained is subject to modification for known claim liabilities. Also, appropriate modifications will be made for accounting periods of a dura- tion other than twelve (12) months. Blue Cross and Blue Shield of Texas reserves the right to refine and/or revise their normal account- ing practice in accordance with sustained experience upon furnishing to the Employer a statement of such change. ID. D. This agreement replaces any prior Supplemental Experience; Rating Agreement whatsoever between the parties hereto and all such agreements are terminated and supplemented on the effective date hereof. Any standing surplus or deficit, in addition to all reserves existing on the effective date hereof, shall be carried forward as a credit or debit to be combined at the end of the first Accounting Period as provided herein. E. This agreement may be terminated at the end of any Accounting Period pursuant to written notice given by any party to the others not less than thirty (30) days in advance thereof. Upon such termination, settlement for that final Accounting Period shall be effected in accordance with the provisions of Article 11 hereof. Witness our hands this day of 19 7(�a For Group Hospital Service, Incorporated and Group Life & Health Insurance Company: Tom L. Beauchamp]j Jr., President For City of Fort Worth' ;/� — Ti tl e: City of Fort. Worth, Testas 4 Mayor and Council Communication DATE REFERENCE SUBJECT: Health Insurance Contract PAGE NUMBER 12/13/76 C-3617 Iof 2 The City of Fort Worth participates in the cost of a comprehensive major medical health insurance program for City employees. Blue Cross of Texas currently has the contract for this program, following competitive bidding in December, 1975. Effective October 1, 1976, the City pays 100 per cent of the employee's premium for health insurance while the employee is responsible for the cost of any dependent coverage. During the twelve-month period ending July 31, 1976, health insurance utilization by City employees and their dependents, while continuing to be high, has shown a slight reduction over previous years. Premium income received by Blue Cross during this period of time was $2,105,447. Claims paid and/or incurred by Blue Cross were $1,820,855, which represents a utilization factor of 83.8 per cent. Current administrative charges, consistent with provisions of the Blue Cross contract, are 6.24 per cent of total premiums. The inflationary trends in hospitalization and medical costs are expected to continue during calendar year 1977. If the costs of medical and hospital services continue to increase and utilization remains fairly constant, it is anticipated that costs will increase by approximately 20 per cent. Due to the utilization rate last year and the expected continuing in- flationary trend in medical costs, the City of Fort Worth has been notified by Blue Cross that an increase of 9.2 per cent for policy year effective January 1, 1977, will be necessary. Original actuarial studies projected that a premium rate increase of 11.4 per cent was necessary. However, when Council approved 100 per cent City contribution for all City employees, an additional 679 new members were enrolled. Due to this increase in membership the actuarial division of Blue Cross has revised the needed rate adjustment from 11.4 per cent to 9.2 per cent. In addition to the premium rate increase Blue Cross is requesting an increase in administrative charges from 6.24 per cent to 7.14 per cent. This increase is due to higher operating costs experienced by Blue Cross and the awarding of the City's life insurance program to a different carrier. The separation of health and life insurance programs results in the decrease of approximately $290,037 in premiums to Blue Cross. It is anticipated that the increased City contributions can be financed within the 1976-77 budgetary appropriations as adopted. DATE REFERENCE SUBJECT: Health Insurance Contract PAGE NUMBER 12/13/76 C-3617 2 Of 2 Recommendation It is recommended that the City of Fort Worth renew its contract for health insurance with Blue Cross of Texas effective January 1, 1977, through December 31, 1977. FP:ms SUBMITTED BY: DISPOSITION BY COUNCIL: PROCESSED BY ❑ APPROVED ❑ OTHER (DESCRIBE) CITY SECRETARY IeX4-4 DATE CITY MANAGER