CORNERSTONE ALLIANCE, INC.
Payer Contracting Information Sheet
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General

• Cornerstone’s relationship with each Physician (as well as certain limited license practitioners and ancillary providers) is governed by a written Membership and Participation Agreement (“MPA”).  The MPA contains, among other things, general terms and conditions for participation in payer contracts.  Except as modified by a Product Description (next bullet) the MPA governs the Physicians relationship with a payer through Cornerstone.
• For each payer arrangement in which a Physician agrees to participate, the MPA is supplemented by a “Product Description” that describes the fee arrangement and any terms of the payer contract that are additional to, or different from, the general terms and conditions of the MPA.  The additional terms of the Product Description are binding on the Physician and control over any inconsistent terms of the MPA. 
• To effectuate the payer relationships, the MPA grants Cornerstone a limited power of attorney to execute payer contracts on behalf of the Physician with respect to those payer arrangements individually accepted by the Physician.

Physician Participation in Payer Contracts

• Non-Exclusive.  Cornerstone’s contracting authority is non-exclusive.  Physicians may negotiate independently with any payer regardless of whether the payer also has contracted or may contract with Cornerstone.
• Payer-Specific.  Each Physician elects to participate in payer arrangements on a case-by-case basis.  There is no requirement that a Physician participate in every Cornerstone-payer contract. 
• Notice.  Member Physicians are entitled to notice (through the issuance of a Product Description) of each new payer arrangement, and a reasonable period of time (not less than 15 days) to evaluate the payer’s offer and to make a decision whether or not to participate in that Product.
• Voluntary Termination.  Member Physicians may terminate participation in any individual Product without cause on 90 days prior written notice.  Termination is subject to reasonable continuity-of-care requirements of the payer.
• Involuntary Termination.  Physician participation in any product is subject to involuntary termination for cause, in accordance with the policies and procedures of the payer.
• Amendments.  A Member Physician is entitled to 30 days notice of any amendment to a payer contract (including fee schedule changes).  Within the 30-day period, the Physician can reject any amendment unless the amendment is required by a change in law.  If the amendment is withdrawn prior to the effective date of the Physician’s termination, the Physician’s notice of termination is automatically deemed to be withdrawn also.

Physician Obligations Under the MPA

The following summarize the general terms and conditions of the MPA by which Member Physicians are bound:

• Credentialing and Compliance. Comply with Cornerstone’s credentialing and re-credentialing standards and procedures, and comply with applicable legal requirements.
• Availability and Coverage.  Provide medically necessary covered services on a 24/7 basis (including coverage arrangements), and in the same manner and availability to payer enrollees as to other patients, and not discriminate in the provision of services based on any customary prohibited ground (race, creed, color, etc.). 
• Practice Closing.  Use best efforts to provide 60 days prior notice of any closing of the practice to new patients if the closing is expected to be 30 days or more in duration.
• Referrals.  Refer enrollees only to other providers participating with the payer except in emergencies or unless the referral is deemed by the Physician to be medically unsound.
• Payer Policies and Procedures.  Comply with payer policies and procedures that have been properly disclosed to the Physician, including verification of eligibility and pre-certification requirements, quality assurance and utilization review policies, and patient complaint/grievance procedures.
• Confidentiality.  Maintain the confidentiality of (i) patient information as required by law and (ii) payer information, including the compensation terms of the agreement, payer manuals, policies, procedures, etc., except as otherwise required by law.  However, Physicians are expressly permitted to discuss coverage issues with their patients.
• Records.  Maintain, permit access to, and allow inspection and copying of, customary medical and financial records, and maintain such records for the period required by law.
• Use of Information.  Permit payers to (i) have access to Cornerstone credentialing and peer review information (to the extent not otherwise restricted by contract or legally privileged) and (ii) use Physician’s name and directory information in marketing.

Terms and Conditions of the MPA Governing Payment-Related Matters

• Claims Submission.  Physicians will use best efforts to submit claims within 90 days of the service date (or within 90 days of the date on which the payer’s liability is determined), absent good cause for later filing.  
• Payment in Full; Hold Harmless.  Physicians agree to accept the contractual payment as payment in full and to hold the enrollee (and persons acting on the enrollee’s behalf) harmless for unpaid amounts except as noted in the next paragraph.  Physicians may not bill the patient for claims denied on medical necessity grounds.  Physicians may bill and collect from the patient: (i) cost-sharing amounts per the plan specifications; (ii) charges for non-covered services; (iii) amounts due from other payers under COB; and (iv) charges for services in instances where the patient is determined to be non-eligible.
• Coordination of Benefits.  Physicians will be paid the contract rate for medically necessary covered services in any situation in which the payer is primary.  If the payer is secondary, Physician will be paid not less than the amount that, when added to the primary payment, equals the contract rate.

The Role and Responsibilities of Cornerstone

Contracting Procedure

• Use of Resources.  Cornerstone is a membership organization that is supported by Member dues.  Accordingly, Cornerstone will use its limited resources to analyze and administer contracts for the benefit of the Membership as a whole, and generally will not get involved in administering contracts that have very low participation rates.
• Messenger Model.  To assure antitrust compliance, Cornerstone follows a “messenger model” approach.  Cornerstone’s active negotiation role is limited to non-fee terms and conditions.  Although Cornerstone will provide information to, or otherwise assist, payers concerning prevailing fees and practices (as an individual payer may request), Cornerstone will act only as an intermediary to convey the payer’s fee offer to Physicians (and in conveying any individual counter-offers from Physicians), and in processing individual acceptances and declinations by the Physicians.
• Specific Policies.
  • Except as noted below, Cornerstone will messenger any fee offer that a payer wishes to make, regardless of whether Cornerstone believes that it meets the requirements of the market.
  • Cornerstone will actively and vigorously negotiate non-fee terms and conditions; however, non-fee terms will not be used as an excuse to terminate contract discussions when Cornerstone believes the fee terms are inadequate.
  • Cornerstone retains the right to communicate objectively with its Members regarding the fee terms that have been offered (e.g., to provide objective comparative information) and regarding the specific outcomes of negotiations over non-fee terms. 
  • Cornerstone will not directly or indirectly recommend that any Physician either accept or reject a particular offer.
  • While the offer and acceptance process is pending, Cornerstone will not facilitate any communications among Member Physicians concerning the offered terms or the acceptability of a payer agreement.
  • Cornerstone retains the right to terminate discussions if, in Cornerstone’s judgment, the offered fee terms and the negotiated non-fee terms, taken as whole, are so far below prevailing market standards that reasonable rates of participation by Member Physicians are improbable.
  • Cornerstone retains the right to terminate its role in the contract process if less than a majority of Member Physicians accept a payer’s offer.
  • At any time in the contracting process, Cornerstone will respect the right of the payer to terminate discussions with Cornerstone in favor of direct negotiations with the Member Physicians.  This includes ensuring that Member communications regarding the termination are unbiased and accurate.

Contract Terms and Conditions

Cornerstone is obligated under the MPA to seek certain minimum terms in each payer contract.  In addition, Cornerstone expects to obtain certain additional terms based on industry standards and prevailing practices in the community.  Those terms are as follows:

• Credentialing and Panel Composition.  Payers will accept Cornerstone credentialing.  Payers will contract for the services of all Physicians in the Cornerstone panel, unless the services of a specific Physician’s specialty are not covered services under the applicable plan(s).
• Financial Incentives. Plans will contain appropriate financial incentives to use participating providers in preference to non-participating providers.
• Claims Payment.  Payers will accept electronic claims submission.  Clean claims will be paid within 30 days, and untimely payment will result in loss of discount. Neither Cornerstone nor the Physicians will be responsible for resolving COB disputes.  A detailed EOB (which clearly identifies the applicable contract plan) will be generated for every claim regardless of whether a payment is made to the Physician.
• Eligibility Verification and Pre-Certification.  Physicians will be entitled to rely conclusively for service and payment purposes (i) on payer eligibility verification, unless notified of errors within a reasonable time period and (ii) on prior authorization and pre-certification of services (i.e., no payment denial for services rendered prior to actual notification of a contrary retrospective determination).  
• Payment Errors, Audit, and Recoupment.  Physicians will not be liable for overpayments by the payer unless notified of the error within one year of the claim submission date.  Physicians will not be obligated to make any repayment if the overpayment is being contested in good faith.  All claimed overpayments must be fully documented.   Physicians will have one year from the claim submission date to request correction of underpayments.
• ID Cards.  Payers will ensure that members are issued ID cards that - by logo or otherwise - clearly identify the applicable plan or contract.  Contract payment rates will only apply to services rendered to enrollees presenting a valid ID card with the correct contract logo.
• Silent PPOs.  Payers will not engage in or permit “Silent PPO” arrangements (including use of contract rates for non-disclosed and/or non-directed business, and rate-shopping among multiple contracts), and will hold Physicians financially harmless for unauthorized use of contract rates.
• Policies and Procedures.  Payers will notify Physicians/Cornerstone of policies and procedures with which Physicians must comply, including amendments.  Physicians will not be penalized for non-compliance with policies and procedures that have not been disclosed to them on a timely basis.
• Copying Costs.  Payers will reimburse Physicians at prevailing rates for copies of medical and other records, other than records required for initial claims processing and payment.
• Downstream Customers.  Every affiliate or other customer accessing the Cornerstone network through the payer will be bound by the same terms and conditions.  Cornerstone will have the right to sever any affiliate or customer from the agreement in the event of material non-compliance.

Questions concerning this summary or the MPA should be directed to Harold Bischoff, Executive Director of Cornerstone, at (419) 996-5317.

DC01/ 470305.1
DRAFT 11/24/04