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R-05-11-22-9C1 - 11/22/2005RESOLUTION NO. R -05-11-22-9C1 WHEREAS, the City of Round Rock desires to retain professional services to provide independent third -party administration of the City's self-funded health plan, and WHEREAS, Aetna Life Insurance Company ("Aetna") has submitted a proposal to provide said services, and WHEREAS, pending the final negotiation of the terms and provisions of an Administrative Services Agreement, the City Council desires to approve a Letter of Understanding with Aetna, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City a Letter of Understanding with Aetna Life Insurance Company, a copy of said Letter of Understanding being attached hereto as Exhibit "A" and incorporated herein for all purposes. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended. RESOLVED this 22nd day of November, 2005. WELL, ayor City of Round Rock, Texas CHRISTINE R. MARTINEZ, City Secret C.PFDesktop\::ODMA/WORLDOX/O:/WdoX/RESOLUTI/R51122C1.WPD/sls November 2, 2005 City of Round Rock, Texas Round Rock, TX 78664 Dear City of Round Rock Re: Letter of Understanding for the City of Round Rock Thank you for selecting Aetna. We are excited about the opportunity to transition the City of Round Rock to Aetna. Prior to delivery of the final formal contract, we provide this Letter of Understanding which outlines and confirms the services Aetna has agreed to provide to the City of Round Rock and also addresses any special issues that may not be addressed specifically by our written contract. This Letter of Understanding is not a substitute for the final contractual documents. It is still important that the final contractual documents be finalized and signed as soon as possible. This Letter of Understanding relates to the final contractual documents that will be entered into by the City of Round Rock and Aetna Life Insurance Company effective January 1, 2006. This letter is organized as follows: I. BENEFITS AND FINANCIAL ARRANGEMENTS II. ADMINSTRATIVE SERVICES AGREEMENT FEES AND UNDERSTANDINGS III. GUARANTEES IV. SERVICES NOT INCLUDED IN ADMINISTRATIVE SERVICES AGREEMENT FEES V. CONCLUSION EXHIBIT b9 z a nArr I. BENEFITS AND FINANCIAL ARRANGEMENTS Aetna will administer the following benefit plans for the City of Round Rock Benefit Financial Arrangement Medical: Choice POS II Administrative Services Agreement Pharmacy Administrative Services Agreement Dental: Dental PPO Administrative Services Agreement Vision Administrative Services Agreement FSA Administrative Services Agreement II. ADMINISTRATIVE SERVICES AGREEMENT FEES AND UNDERSTANDINGS ADMINISTRATIVE SERVICES AGREEMENT FEES: Aetna and the City of Round Rock have agreed upon the following: Medical/Pharmacy: Benefit Projected Enrollment Year 1 Fee Mature Choice POS II (High) 496 $29.78 PEPM Choice POS II (Low) 161 $29.78 PEPM Self Funded Fees include, but not limited to: - Informed Health® Line - Medical Management services including inpatient precertification, case management, concurrent review and discharge planning - Mental Health/Substance Abuse services - Simple Steps to a Healthier Life® - Two ad-hoc reporting hours - Vision One° discount program - NaturallAlternatives - Globale itTM - Aetna NavigatorTM member self-service website Services provided at an additional cost include: - National Advantage' Program (NAP): The fee for NAP is 50% of savings Facility Charge Review Program: The fee for the FCR program is 50% of savings - Claims Subrogation: A contingency fee of 27% is collected upon recovery - Disease Management: Our Healthy Outlook Program® will be charged on a per participating member per month basis. UNDERSTANDINGS: • Participation Requirement - There is a minimum requirement of 250 enrolled employees for administration of the proposed self-funded plan. However, any Performance Guarantee is contingent upon the total number of covered lives (i.e., the total number of the City of Round Rock employees enrolled for coverage) set out in our proposal. • Self -Funded Fee Guarantee - The first-year fees for the self-funded coverages included in this proposal for the period January 1, 2006 through December 31, 2006 are guaranteed according to the per employee, per month fees as illustrated on the financial exhibit(s). Second year cap will not exceed the current fee times 1.03 plus $1.65. Third year cap will not exceed the Second year fee times 1.03 plus $1.65. ■ Advance Notification of Fee Change - We will notify the City of Round Rock of any fee change, which would be effective on the first day of any subsequent contract year, within 120 days of the fee change. • Banking Method- The claim payment method for your Medical coverages will be on a drafts cleared basis. The payment method for APM (managed pharmacy) prescription drug coverage is on a cleared basis. We have agreed to a weekly transfer of claims and the $4,300 fee associated with "stockpiling" of claims has been conceded. We will also provide detailed supporting documentation on a weekly basis and the fee for this service is forthcoming. ■ Late Payment - If the City of Round Rock fails to provide funds on a timely basis to cover benefit payments as provided in the Agreement, and/or fails to pay Service Fees on a timely basis as provided in such Agreement, Aetna will assess a late payment charge. The charges for 2005 are: • late funds to cover benefit payments (e.g., late wire transfers after 24-hour request): 9.0% annual rate • late payments of Service Fees after 31 day grace period: 9.0% annual rate Aetna will provide written notice to the City of Round Rock of late payment charges for subsequent years. The late payment charges described in this section are without limitation to any other rights or remedies available to Aetna under the Agreement or at law or in equity for failure to pay. ■ Seed Money - An advance deposit (to be determined) is required to fund the bank account used in conjunction with the self-funded arrangement. Or a letter of credit from your bank will suffice in lieu of the seed money. • Plan Design - We have previously sent the quoted plan designs. • Aetna Choice POS II Service Center - We have assumed that claim administration and member services for the quoted Aetna Choice® POS II plans will be provided centrally by the Bismarck, North Dakota Service Center. • Toll -Free Medical Member Services - The cost for toll-free access to our Member Service representatives is included in our quotation. Members will be able to reach the Member Service representatives Monday through Friday, 8:00 a.m. to 8:00 p.m. CST. ■ Medical EOB Suppression - Unless required by state law, we do not produce EOBs for Aetna Choice POS II claims when there is no member liability. • Run -Off Claims Processing - Our administrative fees reflect an incurred (mature) claim base and take into account the expenses associated with the processing of run-off claims following cancellation, subject to the conditions of our financial proposal. • Claim Fiduciary - Our proposal assumes that the City of Round Rock will assume claim fiduciary responsibilities. As claim fiduciary, the City of Round Rock will be responsible for final claim determination and the legal defense of disputed benefit payments. • Health Insurance Portability and Accountability Act (HIPAA) - Our proposal assumes that Aetna will not be providing HIPAA certifications of coverage for terminated employees. We would be willing to provide HIPAA certifications for an additional charge of $0.20 per employee, per month. • Eligibility Transmission - Our proposal assumes we will receive eligibility information [bi- weekly, monthly, or quarterly], from one City of Round Rock location by tape/diskette, paper form, Secure Transport`'"'` , EZLinkTh , EZConnectm , mainframe to mainframe. Submission of eligibility information by more than one location or via multiple methods will result in additional charges. Costs associated with any custom programming necessary to accept the City of Round Rock's eligibility information are excluded. During the installation, we will review all available methods of submitting eligibility information and identify the approach that best meets the City of Round Rock's needs. • Claims History Transfer - These files are used to administer deductible and internal maximums. There is no cost associated with receiving claim history files electronically from the prior carrier. There will be a charge for files received in a format other than electronically; costs are based on the complexity and format of the data. • Healthy Outlook Program® - Our Healthy Outlook, disease management program charge structure for the City of Round Rock will be per participating member per month basis charged through the claim wire. These rates are shown below as either A ctizely Managed or Educational Material case rates: Healthy Outlook Program® Case Rate Per Actiwly Managed Participant Per Month Case Rate Per Educational Material Participant Per Month Caring forAsthmz $55.00 $3.00 Caring for Diabetes $108.00 $3.00 Caring for Heart Failure $194.00 $3.00 Caring for Coronary rtery Disease $71.00 $3.00 Actively Managed Member: • Meets clinical criteria for high touch program eligibility (may not have been contacted directly by Aetna) • Agrees to participate in the program with high levels of interventions • Receives scheduled/outbound calls from a disease management nurse • Receives educational materials • Access to online materials Educational Member. • Participating member who has the disease • Receives educational materials • Access to online materials • National Advantage'` Program — The City of Round Rock has [elected] [not elected] to participate in the National Advantage Program (NAP) under the Administrative Services Agreement. The City of Round Rock has [elected] [not elected] to participate in the Facility Charge Review (FCR) component of NAP. FCR utilizes a vendor for making reasonable charge determination. The vendor is Global Claim Services. The fee for the National Advantage program is 50% of savings and is not included in the per employee per month fee. Since the fee is only charged when contracted rates or R&C savings are applied, there is no downside to enrolling in the program. • Formulary Rebates - Based on the number of employees enrolled in the pharmacy benefit plan, the City of Round Rock may qualify to receive a percent of the manufacturer volume discounts we receive based on actual utilization of formulary drugs under contract. The percent share is based solely on the number of employees enrolled in the pharmacy benefit plan. We have assumed the City of Round Rock will receive a share of 10% in contract year one based on expected enrollment of 657 employees. In year two, the City of Round Rock will receive a share of 25% and year three they will receive a share of 50%. If enrollment in the pharmacy program increases or decreases, the percentage indicated above would be updated accordingly. • Producer Compensation - Aetna has various programs for compensating agents, brokers and consultants. If you would like information regarding compensation programs for which your producer is eligible, payments (if any) which Aetna has made to your producer, or other material relationships your producer may have with Aetna, you may contact your producer or your Aetna account representative. Information regarding Aetna's programs for compensating producers is also available at www.aetna.com. The following is a list of additional factors that may impact our administrative services fees or the medical benefit plan. We reserve the right to change our fees, at any time during the policy year effective on the date the change occurred, in the following circumstances: We assumed the following for purposes of our proposal: We reserve the right to change our rates if: Enrollment by line of coverage would be as follows: Choice POS II -657 employee lives The actual enrollment in any line of coverage changes from the assumed enrollment by 10%. The enrolled member to employee ratio by line of coverage would be no greater than Choice POS II - 1.81 The actual member to employee ratio for case size less than 1,000 employees exceeds the assumed ratio by 10% or more. The processed claims transactions (PCI) per employee per year ratio by line of coverage would be Choice POS II Rx - 21.05 The actual PCI ratio exceeds the assumed ratio by 10% or more. The percentage of the enrolled employees that are over 65 retirees would be 4%. The actual percentage of retirees exceeds the assumed percentage by 10% or more. Your plan design remains unchanged. The plan design changes from the proposed benefits. Please note any changes must be approved by Aetna. No more than three primary banking lines will be utilized. You decide not to purchase any of the quoted ancillary products or you cancel any such ancillary product mid-term. • Proposed Plan Design Changes — Wellness: Well Child examinations and immunizations for children less than 1 year of age will be covered subject to applicable plan co -payment, deductible and co-insurance provisions without a specified dollar maximum. Physical examinations and immunizations for children 1 year and older will be covered subject to applicable plan co -payment, deductible, and co-insurance provisions up to a $500 annual maximum. Adult physical examinations will be covered subject to applicable plan co- payment, deductible and co-insurance provisions up to a $500 annual maximum. Well woman gynecological examinations including age appropriate mammograms will be covered subject to applicable plan co -payment, deductible and co-insurance provisions without a specified dollar maximum. Covered expenses for these services will not apply toward the $500 physical examination maximum. Age appropriate prostate examinations will be covered subject to applicable plan co -payment, deductible and co-insurance provisions without a specified dollar maximum. Prescription Drugs: A 90 day supply of medications fulfilled through mail order services will require a co -payment equal to 2x the co -payment for a 30 day supply fulfilled through a participating retail pharmacy. Participants are not required to use mail order services for maintenance medications. Dental: Benefit Projected Enrollment Year 1 Fee Mature Dental PPO 666 $3.75 • Self Funded Fee Guarantee - The fust -year fees for the self-funded coverages included in this proposal for the period January 1, 2006 through December 31, 2006 are guaranteed according to the per employee, per month fees as illustrated on the financial exhibit(s). • Advance Notification of Fee Change — We will notify the City of Round Rock of any fee change, which would be effective on the first day of any subsequent contract year, within 120 days of the fee change • Late Fee Payment - If the City of Round Rock fails to provide funds on a timely basis to cover benefit payments as provided in the Agreement, and/or fails to pay Service Fees on a timely basis as provided in such Agreement, Aetna will assess a late payment charge. The charges for 2005 are: ■ late funds to cover benefit payments (e.g., late wire transfers after 24-hour request): 9.0% annual rate ■ late payments of Service Fees after 31 day grace period: 9.0% annual rate Aetna will provide written notice to the City of Round Rock of late payment charges for subsequent years. The late payment charges described in this section are without limitation to any other rights or remedies available to Aetna under the Agreement or at law or in equity for failure to pay. • Run -Off Claim Processing - Our rates reflect an incurred (mature) claim base and take into account the expenses associated with the processing of run-off claims following cancellation, subject to the conditions of our financial proposal. • Dental PPO Service Center - We have assumed that claim administration for the quoted Dental PPO and Indemnity Dental plans will be provided centrally by the Jacksonville, FL Service Center. • Toll -Free Dental Member Services - Member services for all Aetna dental plans are provided on a regional basis through our national Dental Service Centers. The cost for toll-free access to our Member Service representatives is included in our quotation. This service is available to all members enrolled in the quoted plan of benefits. Members will be able to reach the Member Service representatives Monday through Friday, 8:00 a.m. to 6:00 p.m. EST. • Claim Fiduciary - Our proposal assumes that the City of Round Rock will assume claim fiduciary responsibilities. As claim fiduciary, the City of Round Rock will be responsible for final claim determination and the legal defense of disputed benefit payments. The following is a list of additional factors that may impact our administrative services fees for the dental benefit plan. We reserve the right to change our fees, at any time during the policy year effective on the date the change occurred, in the following circumstances: We assumed the following for purposes of our proposal: We reserve the right to change our rates if: Enrollment by line of coverage would be as follows: Dental PPO -657 employee lives The actual enrollment in any line of coverage changes from the assumed enrollment by 10%. The enrolled member to employee ratio by line of coverage would be no greater than Dental PPO - 1.99 The actual member to employee ratio for case size less than 1,000 employees exceeds the assumed ratio by 10% or more. Your plan design remains unchanged. The plan design changes from the proposed benefits. Please note any changes must be approved by Aetna. FSA/ COBRA: FSA: Benefit Projected Enrollment Per Participant Per Month Charge FSA 99 $7.15 • FSA Administration - We have assumed 99 employees or 15% of the City of Round Rock employees will participate in the Flexible Spending Account (FSA) plan. Our FSA fees are provided based upon the assumptions noted in our FSA proposal. If actual services vary -from those assumed, an adjustment to our fees may be necessary. We assumed the following for purposes of our proposal: We reserve the right to change our rates if: Enrollment by line of coverage would be as follows: FSA - 99 employee lives The actual enrollment in any line of coverage changes from the assumed enrollment by 10%. Assumed Services include Health Care and Dependent Care with streamline and direct deposit of FSA reimbursements into members' accounts. The plan sponsor requires greater than: 10 suffix accounts, 3 banking lines or any other optional services outlined in our proposal. • COBRA Administration - Aetna will provide COBRA Administration for the City of Round Rock. The costs associated with these services vary depending on account structure and number of participants. Therefore, since the variable costs are not known at this time, the cost of COBRA and all other continuation administration services is excluded from the pricing provided. We have, however, provided a summary of COBRA fee components above. If this service is elected, these charges will be billed as incurred. III. GUARANTE E S Performance/Discount Guarantees — Medical, Dental, and Pharmacy We will put 10 % of our Medical annualized administrative service fees at risk through Performance/Discount Guarantees. The annualized administrative service fee will be calculated at the beginning of the contract period and will be based on the total number of employees actually enrolled in the Aetna plan on the effective date. This guarantee does not apply to non - Aetna benefits or networks. We will put 10% of our Dental annualized administrative service fee at risk through Performance/Discount Guarantees. The annualized administrative service fee will be calculated at the beginning of the contract period and will be based on the total number of employees actually enrolled in the Aetna plan on the effective date. This guarantee does not apply to non - Aetna benefits or networks. The guarantees described herein will be effective for a period of 12 months and will run from January 1, 2006 through December 31, 2006. Please refer to our most recent Performance/Discount Guarantee document(s) for complete descriptions of each guarantee. V. SERVICES NOT INCLUDED IN ADMINISTRATIVE SERVICES AGREEMENT FEES The quoted Administrative service fees do not include charges for such things as: • Printing expenses for booklets/certificates and costs for customized forms. Charges for customized communications such as special open enrollment packets are charged as incurred. • Other miscellaneous services excluded from our Administrative fees include: optional, or customized, reports and extra claim tapes, consulting services and special research, drafting of custom agreements and/or contracts, data processing services, and special claim office services and/or audits. • Our fees do not include the cost for third party stop loss reports. Reporting options and associated fees can be provided upon request. There will be no additional fees for third party stop loss reports if Aetna is selected as the stop loss carrier. If the City of Round Rock would like us to provide these services, additional charge(s) will apply. Direct charges for items not anticipated in our assumptions and special services beyond those outlined will be added and collected as part of the Administrative services fees billed to the City of Round Rock on a per employee per month basis. VI. CONCLUSION We are extremely excited about the opportunity to transition the City of Round Rock's benefit plans to Aetna, and to provide high quality service to the City of Round Rock and its employees. Your business is extremely important to us and we appreciate it! This confirms our understanding of the products, services, fees, plan designs, account structure and assumptions as presented. If there is an addition or correction you would like to make to the material in the Letter of Understanding, please contact me. If we do not hear from you, we will assume that the letter is accurate and proceed with the implementation and administration of your plan. Accepted for the City of Round Rock Accepted for Aetna: Officer Aetna Sale Support/Underwriting Mgr Print Name/Title: Date Please note: This letter is not meant to supersede the final contract or any item in our proposal that is not mentioned here. Sincerely, Jeff Marchino Senior Account Executive cc: Terry Hatzikostas, Stop Loss CITY OF ROUND ROC!( City of Round Rock 2006 Cost Projections assuming a $75,000 ISL Level (All Numbers Adjusted to 2006 Projected Enrollment) 2006 Budgeted Employee Count: 753 I. Stop -Loss Premium Costs A. Specific Deductible Specific Premium - Single PEPM - Family PEPM Estimated Annual Premium: B. Aggregate Premium PEPM: Estimated Annual Premium: 2005 w/AIG Stop -Loss $75,000 $40.57 $114.05 *644,213 Oria final 2006 wIAIG Change -/+% Stop -Loss *75,000 $46.66 $131.16 $740,845 15.0% 15.0% 15.0% 2006 w/AIG Stop -Loss $75,000 Estimated.Stop-LosssPremiums:. IL Stop -Loss Aggregate Factors: Single PEPM Family PEPM Expected Aggregate;Deductibie . *4.10 *37,048 see note to below $681;261 $4.10 *37,048 -5777,863 $46.66 $131.16 $740,845 $4.10 $37,048 see note ib below Change -1+ % 111. Administration Fees on a PEPM basis: - Medical Administration PEPM: - COBRA & HIPAA Administration PEPM: - Prescription Drug Admin Costs (including dispensing fees) - Dental Administration PEPM: - Utilization Review - PPO Network Access Fee PEPM: Total TPA Admin Fees, PEPM: FSA Administration PEPM Administrative Fees Total (see note 2) $419.38 $1,068.71 $8,242-;823 $418.79 $1,067.21 56;334;05!) IV. Estimated MAXIMUM Liability to Round Rock Aggregate Deductible Paid Dental Claims Paid Vision Claims Administrative Fees Stop -Loss Fees TotaI;TPAAdmin:Fees, PEPM: V. Estimated Paid Liability to Round Rock Paid Medical Claims Dilution and Stop Loss Lasers Paid Dental Claims Paid Vision Claims Administrative Fees Stop -Loss Fees .Total. TPA Adrn(n $27.95 $1.75 Included *3.50 Included Included $33.20 *5.65 $28,1,781 $33.08 $0.55 Incl. $3.75 Incl. Incl. *37.38 $7.00 83318,316 18.4% -68.5% 7.1% 12.6% 23.9% 13.0% $418.79 $1,067.21 61234 osD $29.78 $0.55 Incl. 3.75 Incl. Incl. *34.08 $7.00 $291'4229:. 15.0% "'a4.2'Ie 3.4% *6,242,823 *308,669 *86,745 $281,781 $681,261 $7;601,279 *6,234,050 $297,565 Incl. $318,316 *777,893 $7,627,824 -0.1% -3.6% 13.0% 14.2% 0.3% *5,137,015 N/A $308,669 $86,745 $281,781 $681,261 . 0A9li0i *4,359,418 *621,045 *297,565 Incl. $318,316 *777,893 Note: la. Based on an estimated enrollment of 438 single and 315 families. (753 total) 2. Assumes 20% of employees enrolled in the FSA program. -15.1% -3.6% 13.0% 14.2% $6,234,050 $297,565 Incl. $291,229 $777,893 $7,600,737 *4,359,418 $621,045 $297,565 Incl. $291,229 $777,893 1 ilat34 ..0o% DATE: November 17, 2005 SUBJECT: City Council Meeting - November 22, 2005 ITEM: 9.C.1. Consider a resolution authorizing the Mayor to execute a Letter of Understanding with Aetna Life Insurance Company for independent third -party administration of the City's self-funded health plan. Department: Human Resources Staff Person: Teresa Bledsoe, Human Resources Director Justification: The City sent out a Request for Proposal to solicit proposals from vendors for Administrative Services to administer the City's Employee Self -Insured Benefit Plan. We conducted a market search to identify the lowest net cost provider who could still meet our provider access, quality of care and customer service requirements. Funding: Cost: General Fund, Water/Waster Utility Fund The cost of this insurance is a function of the number of employees and dependent units covered. Source of funds: City contribution and employee paid premiums for dependent health care. Outside Resources: N/A Background Information: For the past three years we have utilized Great -West for medical, Rx, dental, and vision administrative services. We have incurred significant cost increases over this period. Analysis has shown that we have had higher than normal catastrophic claims and that the network discounts are not at a market competitive level. This agreement moves us to the lowest projected net cost administrator. The agreement enables us to access: • The most cost-effective network as measured by the average hospital and physician discounts in the Round Rock/Austin area. • Better prescription drug pricing and significant participation in pharmacy manufacturer rebates through Aetna's internally owned Pharmacy Benefit Management Company. • The most well -integrated approach to medical management and medical cost containment. • A market leader in consumer -directed plans should we elect to move in this direction in the future. • A dental network of providers who will provide financial and administrative benefits to participants. Public Comment: N/A EXECUTED DOCUMENT FOLLOWS lAetna November 18, 2005 Mr. Howard Baker Purchasing Manager City of Round Rock Round Rock, TX .78664 Jeff Marchino Senior Account Executive 2777 Stemmons Freeway - 3`d Fl Sales Dallas, TX 75207 (214) 200-8980 (214) 200-8916 FAX Re: Letter of Understanding for the City of Round Rock Dear Howard: Thank you for selecting Aetna. We are excited about the opportunity to transition the City of Round Rock to Aetna. Prior to delivery of the final formal contract, we provide this Letter of Understanding which outlines and confirms the services Aetna has agreed to provide to the City of Round Rock and also addresses any special issues that may not be addressed specifically by our written contract. This Letter of Understanding is not a substitute for the final contractual documents. It is still important that the final contractual documents be finalized and signed as soon as possible. This Letter of Understanding relates to the final contractual documents that will be entered into by the City of Round Rock and Aetna Life Insurance Company effective January 1, 2006. This letter is organized as follows: I. BENEFITS AND FINANCIAL ARRANGEMENTS II. ADMINSTRATIVE SERVICES AGREEMENT FEES AND UNDERSTANDINGS III. GUARANTEES IV. SERVICES NOT INCLUDED IN ADMINISTRATIVE SERVICES AGREEMENT FEES V. CONCLUSION I. BENEFITS AND FINANCIAL ARRANGEMENTS Aetna will administer the following benefit plans for the City of Round Rock: Benefit Financial Arrangement Medical: Choice POS II Administrative Services A. eement Pharmacy Administrative Services Agreement Dental: Dental PPO Administrative Services Agreement Vision Administrative Services Agreement FSA Administrative Services Agreement II. ADMINISTRATIVE SERVICES AGREEMENT FEES AND UNDERSTANDINGS ADMINISTRATIVE SERVICES AGREEMENT FEES: Aetna and the City of Round Rock have agreed upon the following. Medical/Pharmacy: Benefit Projected Enrollment Year 1 Fee Mature Choice POS II (High) 496 $29.78 PEPM Choice POS II (Low) 161 $29.78 PEPM Self Funded Fees include, but not limited to: Informed Health® Line - Medical Management services including inpatient pre -certification, case management, concurrent review and discharge planning Mental Health/Substance Abuse services Simple Steps to a Healthier Life® Two ad-hoc reporting hours Vision One® discount program Natural Alternatives GlobalFitTM Aetna NavigatorTM member self-service website Services provided at an additional cost include: - National AdvantageTM Program (NAP): The fee for NAP is 50% of savings - Facility Charge Review Program: The fee for the FCR program is 50% of savings Claims Subrogation: A contingency fee of 27% is collected upon recovery Disease Management: Our Healthy Outlook Program® will be charged on a per participating member per month basis. UNDERSTANDINGS: ■ Participation Requirement — There is a minimum requirement of 250 enrolled employees for administration of the proposed self-funded plan. However, any Performance Guarantee is contingent upon the total number of covered lives (i.e., the total number of the City of Round Rock employees enrolled for coverage) set out in our proposal. ■ Self -Funded Fee Guarantee - The first-year fees for the self-funded coverage included in this proposal for the period January 1, 2006 through December 31, 2006 are guaranteed according to the per employee, per month fees as illustrated on the financial exhibit(s). Second year cap will not exceed the current fee times 1.03 plus $1.65. Third year cap will not exceed the Second year fee times 1.03 plus $1.65. • Advance Notification of Fee Change — We will notify the City of Round Rock of any fee change, which would be effective on the first day of any subsequent contract year, within 120 days of the fee change. ■ Banking Method- The claim payment method for your Medical coverage will be on a drafts cleared basis. The payment method for APM (managed pharmacy) prescription drug coverage is on a cleared basis. We have agreed to a weekly transfer of claims and the $4,300 fee associated with "stockpiling" of claims has been conceded. We will also provide detailed supporting documentation on a weekly basis and the fee for this service is forthcoming. ■ Late Payment - If the City of Round Rock fails to provide funds on a timely basis to cover benefit payments as provided in the Agreement, and/or fails to pay Service Fees on a timely basis as provided in such Agreement, Aetna will assess a Iate payment charge. The charges for 2005 are: • late funds to cover benefit payments (e.g., late wire transfers after 24-hour request): 9.0% annual rate • late payments of Service Fees after 31 day grace period: 9.0% annual rate Aetna will provide written notice to the City of Round Rock of late payment charges for subsequent years. The late payment charges described in this section are without limitation to any other rights or remedies available to Aetna under the Agreement or at law or in equity for failure to pay. s Seed Money - An advance deposit (to be determined) is required to fund the bank account used in conjunction with the self-funded arrangement. Or a letter of credit from your bank will suffice in lieu of the seed money. • Plan Design — We have previously sent the quoted plan designs. ■ Aetna Choice POS II Service Center - We have assumed that claim administration and member services for the quoted Aetna Choice POS II plans will be provided centrally by the Bismarck, North Dakota Service Center. ■ Toll -Free Medical Member Services - The cost for toll-free access to our Member Service representatives is included in our quotation. Members will be able to reach the Member Service representatives Monday through Friday, 8:00 a.m. to 8:00 p.m. CST. ■ Medical EOB Suppression — Unless required by state law, we do not produce EOBs for Aetna Choice® POS II claims when there is no member liability. • Run -Off Claims Processing - Our administrative fees reflect an incurred (mature) claim base and take into account the expenses associated with the processing of run-off claims following cancellation, subject to the conditions of our financial proposal. • Claim Fiduciary - Our proposal assumes that the City of Round Rock will assume claim fiduciary responsibilities. As claim fiduciary, the City of Round Rock will be responsible for final claim determination and the legal defense of disputed benefit payments. • Health Insurance Portability and Accountability Act (HIPAA) - Our proposal assumes that Aetna will not be providing HIPAA certifications of coverage for terminated employees. We would be willing to provide HIPAA certifications for an additional charge of $0.20 per employee, per month. • Eligibility Transmission - Our proposal assumes we will receive eligibility information [bi- weekly, monthly, or quarterly], from one City of Round Rock location by tape/diskette, paper form, Secure TransportTM, EZLinkTM, EZConnectTM, mainframe to mainframe. Submission of eligibility information by more than one location or via multiple methods will result in additional charges. Costs associated with any custom programming necessary to accept the City of Round Rock's eligibility information are excluded. During the installation, we will review all available methods of submitting eligibility information and identify the approach that best meets the City of Round Rock's needs. • Claims History Transfer - These files are used to administer deductible and internal maximums. There is no cost associated with receiving claim history files electronically from the prior carrier. There will be a charge for files received in a format other than electronically; costs are based on the complexity and format of the data. • Healthy Outlook Program® - Our Healthy Outlook, disease management program charge structure for the City of Round Rock will be per participating member per month basis charged through the claim wire. These rates are shown below as either Actively Managed or Educational Material case rates: Healthy Outlook Program® Case Rate Per Actively Managed Participant Per Month Case Rate Per Educational Material Participant Per Month Caring forAsthma $55.00 $3.00 Caring for Diabetes $108.00 $3.00 Caring for Heart Failure $194.00 $3.00 Caring for Coronary Artery Disease $71.00 $3.00 Actively Managed Member: • Meets clinical criteria for high touch program eligibility (may not have been contacted directly by Aetna) • Agrees to participate in the program with high levels of interventions • Receives scheduled/outbound calls from a disease management nurse • Receives educational materials • Access to online materials Educational Member: • Participating member who has the disease • Receives educational materials • Access to online materials ■ National AdvantageTM Program — The City of Round Rock has elected to participate in the National Advantage Program (NAP) under the Administrative Services Agreement. The City of Round Rock has elected to participate in the Facility Charge Review (FCR) component of NAP. FCR utilizes a vendor for making reasonable charge determination. The vendor is Global Claim Services. The fee for the National Advantage program is 50% of savings and is not included in the per employee per month fee. Since the fee is only charged when contracted rates or R&C savings are applied, there is no downside to enrolling in the program. ■ Formulary Rebates - Based on the number of employees enrolled in the pharmacy benefit plan, the City of Round Rock may gnalify to receive a percent of the manufacturer volume discounts we receive based on actual utilization of formulary drugs under contract. The percent share is based solely on the number of employees enrolled in the pharmacy benefit plan. We have assumed the City of Round Rock will receive a share of 10% in contract year one based on expected enrollment of 657 employees. In year two, the City of Round Rock will receive a share of 25% and year three they will receive a share of 50%. If enrollment in the pharmacy program increases or decreases, the percentage indicated above would be updated accordingly. • Producer Compensation - Aetna has various programs for compensating agents, brokers and consultants. If you would like information regarding compensation programs for which your producer is eligible, payments (if any) which Aetna has made to your producer, or other material relationships your producer may have with Aetna, you may contact your producer or your Aetna account representative. Information regarding Aetna s programs for compensating producers is also available at www.aetna.com. The following is a list of additional factors that may impact our administrative services fees or the medical benefit plan. We reserve the right to change our fees, at any time during the policy year effective on the date the change occurred, in the following circumstances: We assumed the following for purposes of our proposal: We reserve the right to change our rates if: Enrollment by line of coverage would be as follows: Choice POS II -657 employee lives The actual enrollment in any line of coverage changes from the assumed enrollment by 10%. The enrolled member to employee ratio by line of coverage would be no greater than Choice POS I1 -1.81 The actual member to employee ratio for case size less than 1,000 employees exceeds the assumed ratio by 10% or more. The processed claims transactions (PCT) per employee per year ratio by line of coverage would be Choice POS I1 Rx - 21.05 The actual PCT ratio exceeds the assumed ratio by 10% or more. The percentage of the enrolled employees that are over 65 retirees would be 4%. The actual percentage of retirees exceeds the assumed percentage by 10% or more. Your plan design remains unchanged. The plan design changes from the proposed benefits. Please note any changes must be approved by Aetna. No more than three primary banking lines will be utilized. You decide not to purchase any of the quoted ancillary products or you cancel any such ancillary product mid-term. • Proposed Plan Design Changes — Wellness: Well Child examinations and immunizations for children less than 1 year of age will be covered subject to applicable plan co -payment, deductible and co-insurance provisions without a specified dollar maximum. Physical examinations and immunizations for children 1 year and older will be covered subject to applicable plan co -payment, deductible, and co-insurance provisions up to a $500 annual maximum. Adult physical examinations will be covered subject to applicable plan co- payment, deductible and co-insurance provisions up to a $500 annual maximum. Well woman gynecological examinations including age appropriate mammograms will be covered subject to applicable plan co -payment, deductible and co-insurance provisions without a specified dollar maximum. Covered expenses for these services will not apply toward the $500 physical examination maximum. Age appropriate prostate examinations will be covered subject to applicable plan co -payment, deductible and co-insurance provisions without a specified dollar maximum. Prescription Drugs: A 90 day supply of medications fulfilled through mail order services will require a co -payment equal to 2x the co -payment for a 30 day supply fulfilled through a participating retail pharmacy. Participants are not required to use mail order services for maintenance medications. Dental: Benefit Projected Enrollment Year 1 Fee Mature Dental PPO 666 $3.75 ■ Self Funded Fee Guarantee - The first-year fees for the self-funded coverages included in this proposal for the period January 1, 2006 through December 31, 2006 are guaranteed according to the per employee, per month fees as illustrated on the financial exhibit(s). • Advance Notification of Fee Change — We will notify the City of Round Rock of any fee change, which would be effective on the first day of any subsequent contract year, within 120 days of the fee change. ■ Late Fee Payment - If the City of Round Rock fails to provide funds on a timely basis to cover benefit payments as provided in the Agreement, and/or fails to pay Service Fees on a timely basis as provided in such Agreement, Aetna will assess a late payment charge. The charges for 2005 are: • late funds to cover benefit payments (e.g., late wire transfers after 24-hour request): 9.0% annual rate ■ late payments of Service Fees after 31 day grace period: 9.0% annual rate Aetna will provide written notice to the City of Round Rock of late payment charges for subsequent years. The late payment charges described in this section are without limitation to any other rights or remedies available to Aetna under the Agreement or at law or in equity for failure to pay. • Run -Off Claim Processing - Our rates reflect an incurred (mature) claim base and take into account the expenses associated with the processing of run-off claims following cancellation, subject to the conditions of our financial proposal. • Dental PPO Service Center - We have assumed that claim administration for the quoted Dental PPO and Indemnity Dental plans will be provided centrally by the Jacksonville, FL Service Center. ■ Toll -Free Dental Member Services — Member services for all Aetna dental plans are provided on a regional basis through our national Dental Service Centers. The cost for toll-free access to our Member Service representatives is included in our quotation. This service is available to all members enrolled in the quoted ptan of benefits. Members will be able to reach the Member Service representatives Monday through Friday, 8:00 a.m. to 6:00 p.m. EST. is Claim Fiduciary - Our proposal assumes that the City of Round Rock will assume claim fiduciary responsibilities. As claim fiduciary, the City of Round Rock will be responsible for final claim determination and the legal defense of disputed benefit payments. The following is a list of additional factors that may impact our administrative services fees for the dental benefit plan. We reserve the right to change our fees, at any time during the policy year effective on the date the change occurred, in the following circumstances: We assumed the following for purposes of our proposal: We reserve the right to change our rates if: Enrollment by line of coverage would be as follows: Dental PPO -657 employee lives The actual enrollment in any line of coverage changes from the assumed enrollment by 10%. The enrolled member to employee ratio by line of coverage would be no greater than Dental PPO —1.99 The actual member to employee ratio for case size less than 1,000 employees exceeds the assumed ratio by 10% or more. Your plan design remains unchanged. The plan design changes from the proposed benefits. Please note any changes must be approved by Aetna. FSA/COBRA: FSA: Benefit Projected Enrollment Per Participant Per Month Charge FSA 99 $7.15 ■ FSA Administration - We have assumed 99 employees or 15% of the City of Round Rock employees will participate in the Flexible Spending Account (FSA) plan. Our FSA fees are provided based upon the assumptions noted in our FSA proposal. If actual services vary from those assumed, an adjustment to our fees may be necessary. We assumed the following for purposes of our proposal: We reserve the right to change our rates if: Enrollment by line of coverage would be as follows: FSA - 99 employee lives The actual enrollment in any line of coverage changes from the assumed enrollment by 10%. Assumed Services include Health Care and Dependent Care with streamline and direct deposit of FSA reimbursements into members' accounts. The plan sponsor requires greater than: 10 suffix accounts, 3 banking lines or any other optional services outlined in our proposal. • COBRA Administration - Aetna will provide COBRA Administration for the City of Round Rock. The costs associated with these services vary depending on account structure and number of participants. Therefore, since the variable costs are not known at this time, the cost of COBRA and all other continuation administration services is excluded from the pricing provided. We have, however, provided a summary of COBRA fee components above. If this service is elected, these charges will be billed as incurred. III. GUARANTEES Performance/Discount Guarantees — Medical, Dental, and Pharmacy We will put 10 % of our Medical annualized administrative service fees at risk through Performance/Discount Guarantees. The annualized administrative service fee will be calculated at the beginning of the contract period and will be based on the total number of employees actually enrolled in the Aetna plan on the effective date. This guarantee does not apply to non -Aetna benefits or networks. We will put 10% of our Dental annualized administrative service fee at risk through Performance/Discount Guarantees. The annualized administrative service fee will be calculated at the beginning of the contract period and will be based on the total number of employees actually enrolled in the Aetna plan on the effective date. This guarantee does not apply to non -Aetna benefits or networks. The guarantees described herein will be effective for a period of 12 months and will run from January 1, 2006 through December 31, 2006. Please refer to our most recent Performance/Discount Guarantee document(s) for complete descriptions of each guarantee. V. SERVICES NOT INCLUDED IN ADMINISTRATIVE SERVICES AGREEMENT FEES The quoted Administrative service fees do not include charges for such things as: ■ Printing expenses for booklets/certificates and costs for customized forms. Charges for customized communications such as special open enrollment packets are charged as incurred. • Other miscellaneous services excluded from our Administrative fees include: optional, or customized, reports and extra claim tapes, consulting services and special research, drafting of custom agreements and/or contracts, data processing services, and special claim office services and/or audits. Our fees do not include the cost for third party stop loss reports. Reporting options and associated fees can be provided upon request. There will be no additional fees for third party stop loss reports if Aetna is selected as the stop loss carrier. If the City of Round Rock would like us to provide these services, additional charge(s) will apply. Direct charges for items not anticipated in our assumptions and special services beyond those outlined will be added and collected as part of the Administrative services fees billed to the City of Round Rock on a per employee per month basis. VI. CONCLUSION We are extremely excited about the opportunity to transition the City of Round Rock's benefit plans to Aetna, and to provide high quality service to the City of Round Rock and its employees. Your business is extremely important to us and we appreciate it! This confirms our understanding of the products, services, fees, plan designs, account structure and assumptions as presented. If there is an addition or correction you would like to make to the material in the Letter of Understanding, please contact me. If we do not hear from you, we will assume that the letter is accurate and proceed with the implementation and administration of your plan. Print Name/Title: yLE rnI&L) r11A1/4i o� Date i r _„Z' 05 ccep/tted forrA'i///{{{9! 1pf/ VO- Aetna Sale Support/Underwriting Mgr Please note: This letter is not meant to supersede the final contract or any item in our proposal that is not mentioned here. Sincerely, Jeff Marchino Senior Account Executive cc: Terry Hatzikostas, Stop Loss No. 819919 ADMINISTRATIVE SERVICES AGREEMENT AGREEMENT NUMBER ASA -819919 This Administrative Services Agreement (hereinafter "Services Agreement") is made and entered into by and between Aetna Life Insurance Company on behalf of itself and its affiliated health maintenance organizations ("HMOs") (collectively "Aetna") and City of Round Rock (hereinafter "Customer"). WHEREAS, Customer has established a self-funded employee health benefits plan (the "Plan") for certain eligible individuals described in Appendix I of this Services Agreement; and WHEREAS, pursuant to the Plan, Customer wishes to make available one or more coverage products offered by the HMOs (the "Products"), as specified in Appendix I of this Services Agreement; and WHEREAS, Aetna has arranged to provide integrated administration of these Product(s) and, if requested by the Customer, has also agreed to provide certain supplemental administrative services and Products not available through the HMOs; THEREFORE, in consideration of the mutual covenants and promises stated herein and other good and valuable consideration, the parties hereby enter into this Services Agreement. This Services Agreement includes and incorporates by reference the attached Service and Fee Schedule, General Conditions Addendum, Description of Services Addendum, National Advantage Program Addendum, and Appendices. Customer hereby elects to receive the Services for Products/Programs designated in the Service and Fee Schedule as well as any supplemental Services identified therein. The corresponding Service Fees effective for the period beginning January 1, 2006 and ending December 31, 2006 are specified in the Service and Fee Schedule, which shall be amended for future periods, in accordance with Section 3 of the General Conditions Addendum, to reflect the Services elected and corresponding Service Fees for such periods. The HMOs include the following entities to the extent that Plan beneficiaries elect coverage under Products offered in geographic areas served by such entity: Aetna Health Inc. (CT), Aetna Health Inc. (ME), Aetna Health Inc. (MA), Aetna Health Inc. (NH), Aetna Health Inc. (NY), Aetna Health Inc. (DE), Aetna Health Inc. (NJ), Aetna Health Inc. (PA), Aetna Health Inc. (MD), Aetna Health Inc. (FL), Aetna Health Inc. (TN), Aetna Health Inc. (GA), Aetna Health of the Carolinas Inc., Aetna Health Inc. (LA), Aetna Health Inc. (CO), Aetna Health of Illinois Inc., Aetna Health Inc. (MI), Aetna Health Inc. (MO), Aetna Health Inc. (OH), Aetna Health Inc. (OK), Aetna Health Inc. (TX), Aetna Health Inc. (AZ), Aetna Health Inc. (WA). Aetna Life Insurance Company is authorized to represent the HMOs for purposes of the execution and administration of this Services Agreement, including receipt of any notices to Aetna required hereunder. This Services Agreement (including incorporated attachments) constitutes the complete and exclusive contract between the parties and supersedes any and all prior or contemporaneous oral or written communications or proposals not expressly included herein. No modification or amendment of this Services Agreement shall be valid unless in a writing signed by a duly authorized representative of Aetna and a duly authorized representative of Customer. By executing this Services Agreement, Customer and Aetna acknowledge and agree that they have reviewed all terms and conditions incorporated into this Services Agreement and intends to be legally bound by the same. The Effective Date of this Services Agreement shall be January 1, 2006. ASA Page 1 IN WITNESS WHEREOF, the parties hereto have caused this Services Agreement to be executed by their duly authorized representatives. CITY OF ROUND ROCK ("CUSTOMER") By: Name: N 1 L6 0114 XLC E— L Title: 1 /4 Date: q-,3. 07 Address: d 1 -al cs . %n j f City: /1 L!L Jt r OC k , State: 7->c, Zip: 7 S (i} 4t) AETNA LIFE INSURANCE COMPANY ("AETNA") By: ASA Page 2 Ronald A. Williams President SERVICE AND FEE SCHEDULE This Service and Fee Schedule is an attachment to Services Agreement Number ASA -819919 between Aetna and Customer (as identified therein) and is incorporated into the Services Agreement by reference. Customer hereby elects to receive the Services for Products/Programs designated below. The corresponding Service Fees effective for the period beginning January 1, 2006 and ending December 31, 2006 are specified below. It shall be amended for future periods, in accordance with Section 3 of the General Conditions Addendum to reflect the Services elected and corresponding Service Fees for such periods. Services Aetna ChoiceTM POS II I. Administration Services Included II. Patient Management Services Precertification Concurrent Review/ Discharge Planning Case Management National Medical Excellence/ Institutes of Excellence Behavioral Health Depression Disease Management Medical/ Psychiatric High - Risk Case Management Focused Psychiatric Review Healthy Outlook Program2 Comprehensive Included Included Included Included Included Not Included Not Included N/A Included MEDICAL PRODUCTS SFS Page 3 Informed Health Line: 1-800 # Included IHL Materials Not Included IHL Re s orts Not Included Moms -To -Babies Maternity Management ProgramTM Simple Steps To Not Included A Healthier Included LifeTM MedQuerysM Not Included Weight Management Not Included Program Wellness Not Included Counseling Enhanced Member Not Included Outreach ProgramsM III.Network Access Included Services Total Fee for 1st $ 29.98 Services Agreement Period (Per Employee *Per Month) 2nd Services Agreement Period ** 3rd Services Agreement Period *** * A person in those classes of employees, retirees, COBRA continuees and any other persons within classes that are specifically described in Appendix I, including employees, retirees, COBRA continuees and any other persons within classes of subsidiaries and affiliates of Customer who are reported, in writing, to Aetna for inclusion in the Services Agreement. ** Any increase in the Total Fees for the 2nd Services Agreement beginning January 1, 2007 and ending December 31, 2007 will not exceed the Total Fees shown above times 3% plus $1.65. *** Any increase in the Total Fees for the 3rd Services Agreement beginning January 1, 2008 and ending December 31, 2008 will not exceed the Total Fees for the 2nd Services Agreement times 3% plus $1.65. SFS Page 4 Aetna NavigatorTm, Aetna's secure member website, is an online resource for personalized benefits and health information. Available 24 hours a day, 7 days a week, Aetna Navigator allows members to find health care professionals, change their primary care physician and/or dentist, request a member ID card, track claims, access a vast amount of health and wellness information and much more! Exception: Total Fee above is exclusive of the Fees for the following Healthy Outlook Program components (if such Program is included in the above schedule) which are charged on a per participant per month basis. These Fees will be included in the Plan Benefit Funding Request from Bank. Monthly Fees Monthly Fees Per Actively Managed Member Per Educational Member Asthma $ 55.00 $ 3.00 Diabetes $ 108.00 $ 3.00 Chronic Heart Failure $ 194.00 $ 3.00 Coronary Artery Disease $ 71.00 $ 3.00 An Actively Managed Member is a participating Member who meets clinical criteria for high touch program eligibility and who agrees to participate in a Program with high levels of intervention including scheduled/outbound calls, educational materials, access to online materials, etc.. This includes Members who meet clinical criteria for increased outreach but who have not yet been contacted by Aetna. An Educational Member is a participating Member who has the disease and is receiving educational materials, access to online materials, etc.. These Members do not receive scheduled/outbound calls. Medical Network Discount Arrangement for: Aetna ChoiceTM POS II Not Included IV. Aetna Subrogation Program 27% of recovered amount will be retained for administrative expenses V. National Advantage Program (NAP) National Advantage - Facility Charge Review (NAP -FCR) Included Not Included National Advantage Access Fee: 50% of Aggregate Savings - Fee will be included in Plan Benefit Funding Request from Bank. SFS Page 5 DENTAL PRODUCTS Services PPO Dental I. Administration Services Included Subrogation II. Network Access Services Included Total Fee (Per Employee* Per Month) $ 3.75 *A person in those classes of employees, retirees, COBRA continuees and any other persons within classes that are specifically described in Appendix I, including employees, retirees, COBRA continuees and any other persons within classes of subsidiaries and affiliates of Customer who are reported, in writing, to Aetna for inclusion in the Services Agreement. III.Dental Network Discount Arrangement Not Included IV. Aetna Not Included Subrogation Program Aetna also may adjust Service Fees effective as of the date on which any of the following occurs. (1) If, for any product, there is a: • 10% decrease in the number of Employees from the number assumed in Aetna's quotation of October 24, 2005, i.e. 657 Employees for Aetna ChoiceTM POS II Medical, 657 Employees for PPO Dental, or from any subsequently reset assumptions. • 10% increase in the retiree percentage from the percentage assumed in Aetna's quotation of October 24, 2005, i.e. 4 % for Aetna ChoiceTM POS II Medical or from any subsequently reset assumptions. • 10% increase in the Member to Employee ratio from the ratio assumed in Aetna's quotation of October 24, 2005, i.e., 1.81 Members per Employee for Aetna ChoiceTM POS II Medical, 1.99 Members per Employee for PPO Dental or from any subsequently reset assumptions. • 10% increase in the processed claim transactions per Employee (PCTs) ratio from the ratio assumed in Aetna's quotation of October 24, 2005, i.e. 21.05 PCTs to 657 Employees for Pharmacy, or from any subsequently reset assumptions. (2) Change in Plan - A material change in Plan is initiated by Customer or by legislative action. (3) Change in Claim Administration - A material change in claim payment requirements or procedures, account structure, or any other change materially affecting the manner or cost of paying benefits. SFS Page 6 Late Payment Charges If Customer fails to provide funds on a timely basis to cover benefit payments as provided in Section 5 of the General Conditions Addendum, and/or fails to pay Service Fees on a timely basis as provided in Section 3 of such Addendum, Aetna will assess a late payment charge. The per annum charge for 2006 will be as follows: (i) late funds to cover benefit payments (e.g., late wire transfers): 9% annual rate (ii) late payments of Service Fees: 9% annual rate In addition, Aetna will make a charge to recover its cost of collection, including reasonable attorneys' fees. Aetna will provide written notice to Customer of the late payment charges for subsequent years. Prompt Payment Policy: Payments will be made within thirty days after the City receives the supplies, materials, equipment, or the day on which the performance of services was completed or the day on which the City receives a correct invoice for the supplies, materials, equipment or services, whichever is later. The Contractor may charge a late fee (fee shall not be greater than that which is permitted by Texas law) for payments not made in accordance with this prompt payment policy; however, this policy does not apply to payments made by the City in the event: 1.1 There is a bona fide dispute between the City and Contractor concerning the supplies, materials, or equipment delivered or the services performed that causes the payment to be late; or 1.2 The terms of a federal agreement, grant, regulation, or statute prevent the City from making a timely payment with Federal Funds; or 1.3 There is a bona fide dispute between the Contractor and a subcontractor or between a subcontractor and its suppliers concerning supplies, material, or equipment delivered or the services performed which caused the payment to be late; or 1.4 The invoice is not mailed to the City in strict accordance with instructions, if any, on the purchase order or agreement or other such contractual agreement. Invoices shall be mailed to: City of Round Rock Attn: Accounts Payable 221 E. Main Street Round Rock, Texas 78664-5299 SFS Page 7 GENERAL CONDITIONS ADDENDUM This General Conditions Addendum is an attachment to Services Agreement Number ASA -819919 between Aetna and Customer (as identified therein) and is incorporated into the Services Agreement by reference. Definitions: In this General Conditions Addendum and in all attachments to the Services Agreement: (A) "Plan(s)" means only the portions of the Customer's employee benefit plan(s) that are described in Appendix I. (B) "Employee" means only a person in those classes of employees and retirees that are specifically described in Appendix I, including employees and retirees of subsidiaries and affiliates of Customer who are reported, in writing, to Aetna for inclusion in the Services Agreement.. (C) "Dependent" means only a person in a class described in Appendix I as a dependent of an employee. (D) "Members" means Employees and Dependents covered under the Plan. (E) "Bank" means the bank selected by Aetna on which benefit payment checks are drawn in satisfaction of a claim for Plan benefits. (F) The term "Payment Due Date" shall have the meaning set forth in Section 3 of this General Conditions Addendum. (G) "Product" means a health benefit plan arrangement such as an indemnity, point of service (POS), preferred provider organization (PPO) or exclusive provider organization (EPO) arrangement. (H) The term "Service Fees" shall have the meaning set forth in Section 3 of this General Conditions Addendum. (I) The term "Services Agreement Period" shall have the meaning set forth in Section 2 of this General Conditions Addendum. (J) The term "Services" shall have the meaning set forth in Section 1 to this General Conditions Addendum. The following are the terms and conditions under which Aetna agrees to perform Services for Customer: 1. Purpose. Customer will purchase and Aetna will provide to Customer the services designated in the Services Agreement and such other services Customer requests of Aetna and Aetna agrees in writing to perform, as described in the Service and Fee Schedule and the Description of Services Addendum with respect to the Plan(s) (the "Services"). 2. Term. The term of this Agreement shall be for three (3) consecutive one year periods of time beginning January 1, 2006, and ending December 31, 2008. This Agreement may be renewed for two (2) additional periods of time not to exceed one (1) year each provided both parties agree in writing. The City reserves the right to review Aetna's performance at the end of each period of time and cancel all or part of the Agreement(s).continue the Agreement(s) through the next period of time. 3. Service Fees; Renewals. The Service Fees payable by Customer to Aetna for the Services shall be determined in accordance with the Service and Fee Schedule identified in the Services Agreement. No Services other than those identified in the Service and Fee Schedule are included in the Service Fees. The Services to be provided by Aetna and the Service Fees may be adjusted annually effective on the anniversary of the Effective Date (the "Contract Anniversary Date") by Aetna. Aetna shall give Customer one hundred twenty (120) days prior written notice of such adjustments in Services and Service Fees. Aetna also may adjust the Service Fees at other times in accordance with the terms and conditions of the Service and Fee Schedule. Aetna shall submit to Customer a statement for each month this Services Agreement is in effect showing the Service Fees for that month. Customer shall pay Aetna the amount of the Service Fees no later than thirty-one (31) calendar days following the first calendar day of the month in which the services are provided (the "Payment Due Date"). GCA Page 8 Customer shall reimburse Aetna for additional expenses incurred by Aetna and agreed to by the parties on behalf of the Plan or Customer which are necessary for the administration of the Plan, including, but not limited to, special hospital audit fees, fees paid or expenses incurred to recover Plan assets and customized printing fees and for any other services performed which are not Services under the Services Agreement. The payment by Aetna on behalf of the Customer of any such expenses shall constitute part of the services hereunder, provided, except for special hospital audit fees and fees paid or expenses incurred to recover Plan assets, Aetna obtains Customer's authorization to incur such expenses prior to the expenses being incurred. Reimbursement by the Customer for expenses incurred by Aetna for special hospital audits and to recover Plan assets will only be required where savings are realized or recoveries are made, and such expenses will be applied against such savings/recoveries and not billed directly to the Customer. The payment by Aetna on behalf of Customer of any such expenses shall constitute part of the Services hereunder, provided, however, with respect to any payments made by Aetna on behalf of and at the request of the Customer to Customer's vendors, Customer shall be responsible for filing any notices, such as Form 1099 or other forms. All overdue amounts shall be subject to the late charges set forth in the Service and Fee Schedule. Following the close of a Service Agreement Period, Aetna will prepare and submit to the Customer a report showing the Service Fees paid. 4. Termination. The Services Agreement may be terminated by Aetna or the Customer as follows: (A) Legal Prohibition - If any state or other jurisdiction enacts a law which prohibits the continuance of this Services Agreement, or an existing law is interpreted to so prohibit the continuance of this Services Agreement, the Services Agreement shall terminate automatically as to such state or jurisdiction on the effective date of such law or interpretation; provided, however, that if only a portion of the Services Agreement is prohibited by such law, only that portion of the Services Agreement shall be affected, and the Services Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted. (B) Customer Termination - Customer may terminate the Services Agreement with respect to all Employees (including their Dependents) or any group of Employees included under the Services Agreement or any subsidiary or affiliate of Customer that is covered under the Services Agreement by giving Aetna at least thirty- one (31) days written notice stating when, after the date of such notice, such termination shall become effective. (C) Aetna Termination - (1) Aetna may terminate the Services Agreement by giving to Customer at least one hundred twenty (120) days written notice stating when, after the date of such notice, such termination shall become effective. (2) If Customer fails to respond to Aetna's or the Bank's initial request to provide funds to the Bank for the payment of checks or other payments approved and recorded by Aetna, Aetna shall have the right to cease processing of benefit payment requests and suspend other Services until the requested funds have been provided. Aetna may terminate the Services Agreement immediately upon transmission of notice to Customer by mail, facsimile transmission or other means of communication (including electronic mail) if (a) Customer fails to provide the requested funds within (5) business days of such notice by Aetna, or (b) Aetna determines that Customer will not meet its obligation to provide such funds within such five (5) business days. (3) If Customer fails to pay Service Fees by the Payment Due Date, Aetna shall have the right to suspend Services until the charges have been paid. Aetna may terminate the Services Agreement immediately upon transmission of notice to Customer by mail, facsimile transmission or other means of communication (including electronic mail) if (a) Customer either fails to pay such charges within five (5) business days of such notice of unpaid Service Fees by Aetna, or (b) Aetna determines that Customer will not meet its obligation to pay such charges within such five (5) business days. (4) Any acceptance by Aetna of funds or Service Fees described in paragraphs (2) or (3) above, after the grace periods specified therein have elapsed and prior to any action by Aetna to suspend Services or terminate the Services Agreement, shall not constitute a waiver of Aetna's right to suspend Services or terminate the Services Agreement in accordance with this section with respect to any other failure of Customer to meet its obligations hereunder. GCA Page 9 (D) Responsibilities on Termination - Upon termination of the Services Agreement, Aetna will continue to process runoff claims for Plan benefits that were incurred prior to but not processed as of the termination date which are received by Aetna not more than twelve (12) months following the termination date. The Service Fee for such activity is included in the Service Fee described in Section 3 of this General Conditions Addendum. The procedures and obligations described in the Services Agreement, to the extent applicable, shall survive the termination of the Services Agreement and remain in effect with respect to such claims. Benefit payments processed by Aetna with respect to such claims which are pended or disputed will be handled to their conclusion by Aetna and the procedures and obligations described in the Services Agreement, to the extent applicable, shall survive the expiration of the twelve (12) month period. Requests for benefit payments received after such twelve (12) month period will be returned to the Customer or, upon its direction, to a successor administrator at the Customer's expense. Customer will be liable for all Plan benefit payments made by Aetna in accordance with the preceding paragraph (D) following the termination date or which are outstanding on the termination date. Customer will continue to fund benefit payments through the banking arrangement described in Section 5 of this General Conditions Addendum and agrees to instruct its bank to continue wire funds until all outstanding benefit payments have been funded by the Customer or until such time as mutually agreed upon by Aetna and Customer (e.g., Customer's wire line and bank account from which the Bank requests funds must remain open for one (1) year after runoff processing ends, two (2) years after termination). All costs associated with the release of data, records, and files from Aetna to Customer shall be paid by Customer. Subsidiaries and affiliates of Customer who are covered under the Services Agreement may be terminated by Customer giving timely written notice to Aetna. 5. Funding of Plan Benefits. Benefit payments and related charges of any amount payable under the Plan shall be made by check drawn by Aetna payable through the Bank or by electronic funds transfer or other reasonable transfer method. Customer, by execution of the Services Agreement, expressly authorizes Aetna to issue and accept such checks on behalf of Customer for the purpose of payment of Plan benefits and other related charges. Customer agrees to provide funds through its designated bank sufficient to satisfy all Plan benefits and related charges upon transmission by Aetna of an electronic mail of the amount of payments made by Aetna. Customer agrees to instruct its bank to forward an amount in Federal funds on the day of the request equal to such liability by wire transfer or such other transfer method agreed upon between Customer and Aetna. As used herein, "Plan benefits" means payments under the Plan, excluding copayments, coinsurance, or deductibles required by the Plan. A stop payment will be made on all outstanding benefit checks (checks which have not been presented for payment) on the sooner of: (A) one (1) year following the date Aetna completes its runoff processing obligations. (B) the date the Customer ceases to fund benefit payments. Prior to the Effective Date of this Agreement, Customer shall deposit a "Payment Fund" with the Bank subject to the Bank's control. Such Payment Fund shall be in an amount determined by Aetna to be sufficient to fund all Plan benefits for a period of at least two weeks and shall not be drawn from Plan assets. Aetna will periodically assess the sufficiency of the Payment Fund and may, at its sole discretion, direct Customer to deposit additional amounts to the Payment Fund upon fourteen (14) days written notice. The Payment Fund may be used to fund Plan benefits and related charges in the event Customer fails to perform its payment and funding obligation under the first paragraph of this Section 5. The Payment Fund shall be maintained by the Bank following termination of the Services Agreement for such period of time as Aetna determines is necessary to cover Plan benefits. Customer will not be credited with interest on amounts held in the Payment Fund. For any calendar month, the maximum payment to be made to the Bank to fund Plan benefit payments and related charges is described below. Plan benefit payments and related charges in a calendar month which exceed the maximum payment for the month will be carried forward to be funded by Customer in future calendar months of the current Services Agreement Period, except that for the last calendar month of the Services Agreement Period, Customer is liable for any benefit payments which exceed the maximum payment for that month. The maximum payment for any calendar month shall be equal to (i) less (ii) where: GCA Page 10 (i) shall be equal to the product of (A) and (B) where: (A) equals the sum of the number of employees as indicated by Aetna records at the beginning of each calendar month of the Services Agreement Period up to and including the current calendar month (provided the sum shall not be less than the number of calendar months up to and including the current calendar month times the number of employees as indicated by Aetna records as of the beginning of the first Services Agreement month), times (B) the maximum benefit payment factor. This factor shall be determined by Aetna and shall be effective as of the first calendar month of a Services Agreement Period. The maximum benefit payment factor may be changed at such other times as the Aggregate Stop Loss Factor under Contractual Liability Insurance Policy No. SL -819919 is adjusted. (ii) shall equal the Plan benefit payments funded by Customer during the preceding calendar months of the Services Agreement Period. On the termination date, in addition to the liabilities described in Section 4, Customer is liable for and must provide funds to the Bank equal to the difference between: (i) the total amount of benefit payments by Aetna during the Services Agreement Period; and (ii) the amount of benefit payments by Aetna during the Services Agreement Period for which Customer has provided funds up to the date of termination. 6. Customer's Responsibilities. Customer shall supply Aetna in writing or by electronic medium acceptable to Aetna with all information regarding the eligibility of Members including but not limited to the identification of any Sponsored Dependents defined in Appendix I and shall submit to Aetna eligibility information in the form and based on the timing mutually agreed to by the parties. Aetna has no responsibility for determining whether an individual meets the definition of a Sponsored Dependent. Aetna shall not be responsible in any manner, including but not limited to, any obligations set forth in Section 12 below, for any delay or error caused by the Customer's failure to furnish accurate eligibility information in a timely fashion. Customer shall provide Aetna with all Plan documents at least thirty (30) days prior to the Effective Date or such other date as may be mutually agreed upon by the parties. Customer shall notify Aetna in writing of any changes in Plan documents or Plan benefits at least thirty (30) days prior to the effective date of such changes. Aetna shall have thirty (30) days following receipt of such notice to inform Customer of whether it will administer such proposed changes. Appendix I hereto shall be deemed to be automatically modified to reflect such proposed changes if Aetna either agrees to administer the changes as proposed or fails to object to such changes within thirty (30) days of receipt of the foregoing notice. The description of Plan benefits in Appendix I may otherwise be amended only by mutual written agreement of the parties. Aetna may charge additional fees relating to any increase in cost to administer the Plan because of changes which Aetna agrees to administer. Customer shall immediately provide Aetna with such information regarding administration of the Plan as Aetna may request from time to time. Aetna is entitled to rely on the information most recently supplied by Customer in connection with Aetna's Services and its other obligations under the Services Agreement. Aetna shall not be responsible for any delay or error caused by Customer's failure to furnish correct information in a timely manner. Customer agrees that it will provide Aetna with a copy of its Summary Plan Description (SPD) so that Aetna may reconcile any potential differences that may exist among the SPD, the description of Plan benefits in Appendix I and Aetna's internal policies and procedures. Customer also agrees that it is responsible for satisfying any and all Plan reporting and disclosure requirements imposed by law. 7. Services. Aetna shall perform the Services set forth in the Service and Fee Schedule and the Description of Services Addendum identified in the Services Agreement. Customer acknowledges that Aetna may utilize the services of external reviewers or contractors in performing these services. 8. Standard of Care. Aetna will discharge its obligations under the Services Agreement with that level of reasonable care which a similarly situated administrator of claims would exercise under similar circumstances. GCA Page 11 9. Fiduciary Duty. It is understood and agreed that the Customer retains complete authority and responsibility for the Plan, its operation, and the benefits provided thereunder, and that Aetna is empowered to act on behalf of Customer in connection with the Plan only to the extent expressly stated in the Services Agreement or as agreed to in writing by Aetna and Customer. Customer and Aetna agree that Aetna will be the "appropriate named fiduciary" of the Plan for the first two levels of appeal for purpose of reviewing denied claims under the Plan. In exercising such fiduciary responsibility, Aetna will have discretionary authority to determine entitlement to Plan benefits as determined by the Plan documents for each claim received and to construe the terms of the Plan. If the denial is upheld in the second level of appeal, Aetna will determine if the appeal is eligible for External Review Organization ("ERO"). If the appeal is eligible for ERO, then Aetna will inform the Member of his right to appeal to ERO. If the appeal is not eligible for ERO or if the ERO upholds the denial, then Aetna will inform the Member of his right to appeal to the Customer for final review. Customer shall be the "appropriate named fiduciary" of the Plan for the final appeal. Customer has the sole and complete authority to determine eligibility of persons to participate in the Plan. It is also agreed that Aetna has no other fiduciary responsibility under the Plan. 10. Records. Customer acknowledges and agrees that Aetna or one of its affiliates or authorized agents shall have the right to use all documents, records, reports, and data, including data recorded in Aetna's data processing systems ("Documentation"), for legitimate Plan, health operations, research or public health purposes, including without limitation: claims payment and fraud prevention; preventive health, early detection and disease management programs; coordination of patient care; member education; quality improvement/management assessment; utilization review and management; design of benefit plans, provider network activities; fulfilling certain state and federal requirements; HEDIS and similar data collection and reporting; accreditation by the National Committee for Quality Assurance and other accrediting organizations; and statistical research; provided, that in all respects Aetna shall use Documentation in compliance with privacy laws and regulations, including without limitation regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996. Upon reasonable prior written request, subject to the provisions of Sections 11 and 17 hereof, and as permitted by law or regulation, the benefit payment information contained in the Documentation shall be made available to Customer or, at Customer's request, to a third party designated by Customer for inspection during regular business hours at the place or places of business where it is maintained by Aetna, for purposes related to the administration of the Plan. Aetna may assess a charge to recover costs in connection with documentation requests which are excessively repetitive or burdensome. Such Documentation will be kept by Aetna for seven (7) years after the year in which a claim is paid, unless Aetna turns such Documentation over to Customer or a designee of Customer. 11. Audit rights. (A) General Guidelines - For the purpose of this contract, an "audit" is defined as performing a review of claim transactions for the purpose of assessing the accuracy of benefit determinations. Audits must be commenced within two (2) years following the period being audited. Audits of performance guarantees must be commenced in the year following the period to which the performance guarantee results apply. The size of the audit sample may not exceed 250 claim transactions, without Aetna's written consent and the payment of fees as assessed by Aetna. If it has been determined that there is a potential systemic error or benefit issue arising from the audit, Aetna will use it's internal resources to identify potential underpayments and overpayments for recovery to the provider or member as appropriate. Aetna will provide the customer with a response and action plan on any confirmed errors or trends, or any follow-up action. Audits must be performed at the location where Customer's claims are processed. Aetna is not responsible for paying Customers' audit fees or the costs associated with the audit. Customer shall pay Aetna fees for any audit which (i) cannot be completed within a five (5) day period, (ii) contains a sample size in excess of 250 claim transactions, or (iii) otherwise creates exceptional administrative demands upon Aetna. To the extent practicable, Aetna will provide estimates of such fees to Customer prior to the Customer incurring additional fees. GCA Page 12 Any requested payment from Aetna resulting from the audit must be based upon documented findings, agreed to by both parties, and must be solely due to Aetna's actions or inactions. (B) Auditor Qualifications and Requirements - Customer will utilize individuals to conduct audits on its behalf who are qualified by appropriate training and experience for such work, and will perform its review in accordance with published administrative safeguards or procedures against unauthorized use or disclosure (in the audit report or otherwise) of any individually identifiable information (including health care information) contained in the information to be audited. Customer and such individuals will not make or retain any record of provider negotiated rates included in the audited transactions, or payment identifying information concerning treatment of drug or alcohol abuse, mental/nervous or HIV/AIDS or genetic markers, in connection with any audit. There must be no conflict of interest or past business or other relationship which would prevent the auditor from performing an independent audit to conclusion. A conflict of interest includes (but is not limited to) a situation in which the audit agent (a) is employed by an entity which is a competitor to Aetna's claims administration business; or (b) has terminated from Aetna within the past 12 months; or (c) is affiliated with a vendor subcontracted by Aetna to adjudicate claims; or (d) is compensated in a manner which could financially incent the agent to overstate or misconstrue data. Determination of the nature of a conflict of interest shall be in the sole discretion of Aetna. Aetna reserves the right to refuse to allow an auditor to conduct an audit in the event Aetna determines the auditor has a conflict of interest. The auditor chosen by the Customer must be mutually agreeable to both Customer and Aetna. Auditors may not be compensated on the basis of a contingency fee or a percentage of overpayments identified, in accordance with the provisions of Section 8.207 through 8.209 of the International Federation of Accountant's (IFAC) Code of Ethics For Professional Accountants (Revised 2004). Audits of any services are subject to any related proprietary and confidentiality requirements protecting the nature of the data. (C) Audit Coordination - The account representative must be contacted to initiate an audit. The representative will identify an audit coordinator who will have day-to-day responsibility for coordinating and facilitating the audit. (D) Customer will provide reasonable advance notice of its intent to audit and will complete an Audit Request Form providing information reasonably requested by Aetna. Further, Customer or its representative will provide the account representative at least four (4) weeks advance notice of the audit, with a complete and accurate listing of the transactions to be pulled for the audit and identification of the potential auditor. Notification requirements may exceed four weeks for unusual audit requests, including but not limited to audits involving large sample sizes (e.g., greater than 250 transactions). Aetna will communicate these requirements to Customer upon receipt of the completed Audit Request Form. No audit may commence until the Audit request Form is completed and executed by the Customer and auditor. Aetna recommends that any auditor being considered by the Customer be identified to Aetna as soon as possible so that any potential conflicts or past relationships or issues may be determined. Identification of Audit Sample - Prior to the audit, the auditors will provide a listing of the transactions selected for testing and the specific service for which each item is being tested. Unless otherwise specified in Appendix II, Performance Guarantees, the sample must be based on a statistical random sampling methodology (e.g., systematic random sampling, simple random sampling, stratified random sampling). Aetna reserves the right to review and approve the sample size, the objectives of the audit and the sampling methodology proposed by the auditors. (E) Closing Meeting - The auditors will provide their draft audit findings to Aetna, in writing, before a final audit report is presented to Customer. This draft will provide the basis for discussions between Aetna and the auditors to resolve disagreements and summarize the audit findings. (F) Audit Reports - Aetna will have a right to review the final Audit Report, before delivery to the Customer. Auditors shall provide Aetna with a copy of the final audit report delivered to Customer and Aetna shall have the right to include with the final Audit Report a supplementary statement containing facts that Aetna considers pertinent to the audit. Unless auditors are compliant with paragraphs (E) and (F), the audit will not be completed and its results are presumed invalid. GCA Page 13 12. Recovery of Overpayments. The parties will cooperate fully to make reasonable efforts to recover overpayments of benefits under the Plan. If it is determined that any payment has been made by Aetna to or on behalf of an ineligible person or if it is determined that more than the appropriate amount has been paid, Aetna shall undertake good faith efforts to recover the erroneous payment. For the purpose of this provision, "good faith efforts" means that Aetna will contact the responsible party twice via letter, phone, email or other means to try to make the recovery. If those efforts are unsuccessful in obtaining recovery, Aetna may use an outside vendor, collection agency or attorney to pursue recovery. Except as stated in this section, Aetna has no other obligation with respect to the recovery of overpayments. Overpayment recoveries made through third party recovery vendors, collection agencies, or attorneys are credited to Customer net of fees charged by them. For the purposes of Sections 11. and 13, overpayments must be determined by direct proof of specific claims. Indirect or inferential methods of proof — such as statistical sampling, etc. — may not be used to determine overpayments. In addition, application of software or other review processes that analyze claims in a manner different from the claim determination and payment procedures and standards used by Aetna may not be used to determine overpayments. Customer may not seek collection, or use a third party to seek collection, of overpayment from contracted providers pursuant to audits conducted in accordance with Sections 11. and 13., since all such recoveries are subject to the terms and provisions of the providers' contracts with Aetna. For the purpose of determining whether a provider has or has not been overpaid, Customer agrees that the rates paid to contracting providers for Covered Services shall be governed by Aetna's contracts with those providers, and shall be effective upon the loading of those contract rates into Aetna's systems, but no later than three (3) months after the effective date of the providers' contracts. Customer may not seek collection, or use a third party to seek collection, of overpayments identified pursuant to an audit conducted in accordance with Sections 11. and 13., from parties other than contracted providers as described above until Aetna has had a reasonable opportunity to recover the overpayments. 13. Indemnification. (A) Aetna shall indemnify and hold harmless Customer, its directors, officers, employees (acting in the course of their employment, but not as Members), and agents for that portion of any loss, liability, damage, expense, settlement, cost, or obligation (including reasonable attorneys' fees) which was caused solely and directly by Aetna's willful misconduct, criminal conduct, breach of the Services Agreement, fraud, breach of fiduciary responsibility, or failure to comply with Section 8 above, related to or arising out of the Services provided under the Services Agreement. (B) Except as provided in (A) above, Customer shall indemnify and hold harmless Aetna, its affiliates and their respective directors, officers, employees, and agents for that portion of any loss, liability, damage, expense, settlement, cost, or obligation (including reasonable attorney's fees): (i) which was caused solely and directly by Customer's willful misconduct, criminal conduct, breach of the Services Agreement, fraud, breach of fiduciary responsibility, or negligence, related to or arising out of the Services Agreement or Customer's role as employer or Plan sponsor; (ii) resulting from taxes, assessments, and penalties incurred by Aetna by reason of Plan benefit payments made or Services performed hereunder, and any interest thereon, provided that Customer shall not be required to pay any net income, franchise or other tax, however designated, based upon or measured by Aetna's net income, receipts, capital, or net worth; (iii) in connection with the release or transfer of Member - identifiable information to Customer or a third party designated by Customer, or the use or further disclosure of such information by Customer or such third party; (iv) resulting from the inclusion of third party vendor information on identification cards; or (v) resulting from or arising out of claims, demands, or lawsuits brought against Aetna in connection with Services provided under the Services Agreement. (C) The party seeking indemnification under (A) or (B) above must notify the indemnifying party within 30 days in writing of any actual or threatened action, suit, or proceeding to which it claims such indemnification applies. Failure to so notify the indemnifying party shall not be deemed a waiver of the right to seek indemnification, unless the actions of the indemnifying party have been prejudiced by the failure of the other party to provide notice within the required time period. The indemnifying party may then take steps to be joined as a party to such proceeding, and the party seeking indemnification shall not oppose any such joinder. Whether or not such joinder takes place, the indemnifying party shall provide the defense with respect to claims to which this Section applies and in doing so shall have the right to control the defense and settlement with respect to such claims. GCA Page 14 (D) The party seeking indemnification may assume responsibility for the direction of its own defense at any time, including the right to settle or compromise any claim against it without the consent of the indemnifying party, provided that in doing so it shall be deemed to have waived its right to indemnification except in cases where the indemnifying party has declined to defend against the claim. Customer and Aetna agree that: (i) Aetna does not render medical services or treatments to Members; (ii) neither Customer nor Aetna are responsible for the health care that is delivered by contracting health care providers; (iii) health care providers are solely responsible for the health care they deliver to Members; (iv) health care providers are not the agents or employees of Customer or Aetna; and (v) the indemnification obligations of (A) or (B) above do not apply to any portion of any loss, liability, damage, expense, settlement, cost, or obligation caused by the acts or omissions of health care providers with respect to Members. (E) The indemnification obligations under (A) above shall not apply to that portion of any loss, liability, damage, expense, settlement, cost, or obligation caused by Aetna's act or omission undertaken at the direction of Customer (other than services described in the Services Agreement), and the indemnification obligations under (B) above shall not apply to that portion of any loss, liability, damage, expense, settlement, cost, or obligation caused by Customer's act or omission undertaken at the direction of Aetna. (F) The indemnification obligations under this Section 13 shall terminate upon the expiration of this Agreement, except as to any matter concerning which a claim has been asserted by notice to the other party at the time of such expiration or within two (2) years thereafter. 14. Defense of Claim Litigation. In the event of a legal, administrative or other action ("action") arising out of the administration, processing or determination of a claim for Plan benefits, the party designated in this document as the fiduciary which rendered the decision in the appeal last exercised by the Member which is being appealed to the court ("appropriate named fiduciary") shall undertake the defense of such action at its expense and settle such action when in its reasonable judgment it appears expedient to do so. If the other party is also named as a party to such action, the appropriate named fiduciary will defend the other party PROVIDED the action relates solely and directly to actions or failure to act by the appropriate named fiduciary and there is no conflict of interest between the parties. Customer agrees to pay the amount of Plan benefits included in any judgment or settlement in such action. The other party shall not be liable for any other part of such judgment or settlement, including but not limited to legal expenses and punitive damages, except to the extent provided in Section 13 above. 15. Remedies. Neither party shall be liable to the other for any consequential, incidental, or punitive damages whatsoever. 16. Alternate Dispute Resolution Provision. The parties shall attempt in good faith to promptly resolve any dispute arising out of or relating to this Agreement, except for temporary, preliminary, or permanent injunctive relief or any other form of equitable relief, by negotiation between executives who have authority to settle the controversy and who are at a higher level of management than the persons with direct responsibility for administration of the contract. Any party may give the other party written notice of any dispute not resolved in the normal course of business, including the prescribed period to cure alleged breaches of contract. Within (15) days after delivery of the notice, the receiving party shall submit to the other a written response. The notice and the response shall include (a) a statement of each party's position and a summary of arguments supporting that position, and (b) the name and title of the executive who will represent that party and of any other person who will accompany the executive. Within thirty (30) days after delivery of the disputing party's notice, the executives of both parties shall meet at a mutually convenient time and place, and thereafter as often as they reasonably deem necessary, to attempt to resolve the dispute. All reasonable requests for information made by one party to the other will be honored. All negotiations pursuant to this provision are confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. If the dispute is not resolved by negotiation between executives, the parties shall endeavor to settle the dispute by mediation under the then current CPR/AAA Mediation Procedure. Unless otherwise agreed, the parties will select a mediator from CPR/AAA Panels of Mediators. GCA Page 15 17. Confidentiality. (A) Each party acknowledges that performance of the Services Agreement may involve access to and disclosure of data, rates, procedures, materials, lists, systems, and other information (collectively "Confidential Information") belonging to the other. The parties further acknowledge and agree that each operates in a highly regulated and competitive environment and that the unauthorized disclosure or use of Confidential Information will cause irreparable harm and significant injury to the other which will be difficult to measure with certainty or to compensate through monetary damage. Accordingly, the parties agree that injunctive or other equitable relief shall be appropriate in the event of any breach by either party, or their agents related to Confidential Information, in addition to such other remedies as may be available to them at law. No Confidential Information shall be disclosed to any third party other than representatives of such party who have a need to know such Information, provided that such representatives are informed of the confidentiality provisions hereof and agree to abide by them. All such Information must be maintained in strict confidence. In addition, each party will maintain the confidentiality of medical records and confidential patient information as required by law. Upon termination of the Services Agreement, each party, upon the request of the other, will return or destroy all copies of all of the other's Confidential Information in its possession or control except to the extent such Information must be retained pursuant to applicable law, provided, however, that either party may retain copies of any such Information it deems necessary for the defense of litigation concerning the services it provided under the Services Agreement. Customer agrees that Aetna may make lawful references to Customer in its marketing activities and in informing health care providers as to the organizations and plans for which Services are to be provided. Each party will execute and cause its employees and agents to execute any documents the other reasonably requires in connection with this confidentiality provision. (B) In addition to the provisions of the foregoing paragraph (A), any information with respect to Aetna's or any of its affiliate's fees or specific rates of payment to health care providers, and any information which may allow determination of such fees or rates, and any of the terms and provisions of the health care providers' agreements with Aetna or its affiliates are deemed to be Aetna's Confidential Information. No disclosure of any such information may be made or permitted to Customer or to any third party whatsoever, including, but not limited to, any broker, consultant, auditor, reviewer, administrator, or agent unless (i) Aetna has consented in writing to such disclosure and (ii) each such recipient has executed a confidentiality agreement in form satisfactory to Aetna's counsel. (C) Each party acknowledges that compliance with the provisions of the foregoing paragraphs (A) and (B) are necessary to protect the business and good will of the other party and that any actual or prospective breach will irreparably cause damage to either party for which money damages may not be adequate. Each party therefore agrees that if one party breaches or attempts to breach paragraphs (A) or (B) hereof, the other party or an affiliate shall be entitled to obtain temporary, preliminary, and permanent equitable relief, without bond, to restrain such breaches, together with any and all other legal and equitable remedies available under applicable law or under the Services Agreement. The breaching party shall be responsible for the attorneys' fees and costs Aetna expends in any action related to such breach or attempted breach. (D) Notwithstanding the foregoing, the parties recognize and understand that Customer is subject to the Texas Public information Act and its duties run in accordance therewith. 18. Relationship of the Parties. It is understood and agreed that Aetna is an agent with respect to claim payments and an independent contractor with respect to all other Services being performed pursuant to the Services Agreement. Aetna makes no guarantee and disclaims any obligation to make any specific health care providers or any particular number of health care providers available for use by Members or that any level of discounts or savings will be afforded to or realized by Customer, the Plan, or Members. 19. Subcontractors. The work to be performed by Aetna under the Services Agreement may, at its discretion, be performed directly by it or wholly or in part through a subsidiary or affiliate or under a contract with an organization of its choosing. Aetna will remain liable for Services under the Services Agreement. 20. Advancement of Funds. If, in the normal course of business under the Services Agreement, Aetna, or any other financial organization with which Aetna has a working arrangement, chooses to advance any funds, Customer shall reimburse Aetna or such other financial organization for such payment. In no event shall such advances by Aetna or any other financial organization be construed as obligating Aetna or such organization to make further advances, or to assume liability of Customer for the payment of Plan benefits. GCA Page 16 21. Communications. Aetna and Customer shall be entitled to rely upon any communication believed by them to be genuine and to have been signed or presented by the proper party or parties. Neither party shall be bound by any notice, direction, requisition or request unless and until it shall have been received in writing at (i) in the case of Aetna, 151 Farmington Avenue, Hartford, Connecticut 06156, Attention: Plan Sponsor Services Site Manager, Aetna, (ii) in the case of Customer, at the address shown below, or (iii) at such other address as either party specifies for the purposes of the Services Agreement by notice in writing addressed to the other party. Notices or communications shall be sent by mail, facsimile transmission, or other means of communication. Address: City of Round Rock 221 East Main Street Round Rock, TX 78664 Attn: Linda Gunther 22. Employee Notices. Customer agrees to furnish each Employee covered by the Plan written notice, satisfactory to Aetna, that Customer has complete financial liability for the payment of Plan benefits. Customer agrees to indemnify Aetna and hold Aetna harmless against any and all loss, damage, and expense (including reasonable attorneys' fees) sustained by Aetna as a result of any failure by Customer to give such notice. 23. Force Majeure. Aetna shall not be liable for any failure to meet any of the obligations or provide any of the services or benefits specified or required under the Services Agreement where such failure to perform is due to any contingency beyond the reasonable control of Aetna, its employees, officers, or directors. Such contingencies include, but are not limited to: acts or omissions of any person or entity not employed or reasonably controlled by Aetna, its employees, officers or directors; acts of God; fires; wars; accidents; labor disputes or shortages; governmental laws, ordinances, rules, regulations, or the opinions rendered by any Court, whether valid or invalid. 24. Non -Aetna Networks If Aetna is requested by Customer to arrange for network services to be provided for Employees and their Dependents in a geographic area where Aetna does not have a network of providers under contract to provide those services, Aetna may contract with another network of non -contracted providers ("non -Aetna networks") to provide the requested services. With respect to the services provided by providers who are not under contract to Aetna or any of its subsidiaries ("non -Aetna providers"), Customer acknowledges and agrees that, any other provisions of the Services Agreement notwithstanding: 1. Aetna does not credential, monitor, or oversee the providers or the administrative procedures or practices of any non -Aetna networks; 2. No particular discounts may, in fact, be provided or made available by any particular providers; 3. Such providers may not necessarily be available, accessible, or convenient; 4. Any performance guarantees appearing in the Services Agreement shall not apply to services delivered by non - Aetna providers or networks; 5. Neither non -Aetna providers nor non -Aetna networks are to be considered contractors or subcontractors of Aetna; and 6. Such providers are providers in private practice, are neither agents nor employees of Aetna, and are solely responsible for the health care services they deliver. Customer further agrees that, if Aetna subsequently establishes its own contracted provider network in a geographic area where services are being provided by a non -Aetna network, Aetna may terminate the non -Aetna network contract, and begin providing services through a network that is subject to the terms and provisions of the Services Agreement. Customer acknowledges that such conversion may cause disruption, including the possibility that a particular provider in a non -Aetna network may not be included in the replacement network. GCA Page 17 25. Health Insurance Portability And Accountability Act (HIPAA) Compliance In accordance with the services being provided under the Services Agreement, Aetna will have access to, create, and/or receive certain Protected Health Information ("PHI" as defined in Appendix A), thus necessitating a written agreement that meets the applicable requirements of the privacy and security rules promulgated by the Federal Department of Health and Human Services ("HHS"). Customer and Aetna mutually agree to satisfy the foregoing regulatory requirements through Appendix A to the Services Agreement. As of the effective dates set forth therein, the provisions of Appendix A supercede any other provision of the Services Agreement, which may be in conflict with such Appendix on or after the applicable effective date. 26. Miscellaneous. The Services Agreement shall be governed by, and interpreted in accordance with, applicable federal law. To the extent such federal law does not govern, the Services Agreement shall be governed by Texas law and the courts in such state shall have sole and exclusive jurisdiction of any dispute related hereto or arising hereunder. No delay or failure of either party in exercising any right hereunder shall be deemed to constitute a waiver of that right. There are no intended third party beneficiaries of the Services Agreement. This Section and Sections 3 through 12 and 14 through 17 shall survive termination of the Services Agreement. The provisions of Section 13 shall survive termination only to the extent stated therein. The headings in the Services Agreement are for reference only and shall not affect the interpretation or construction of the Services Agreement. 27. Non -Appropriation. This Agreement is a commitment of Customer's current revenues only. It is understood and agreed the Customer shall have the right to terminate this Agreement at the end of any Customer fiscal year if the governing body of the Customer does not appropriate sufficient funds to pay the contractual charges as stated herein or attached hereto coming due in the Customer's next fiscal year, as determined by the Customer's budget for the fiscal year in question. 28. Overcharges. Aetna hereby assigns to Customer any and all claims for overcharges associated with this Agreement which arise under the antitrust laws of the United States, 15 USGA Section 1 et seq., and which arise under the antitrust laws of the State of Texas, Bus. and Com. Code, Section 15.01, et seq. 29. Order of Precedence: 1. ASO Agreement 2. Letter of Understanding dated November 18, 2005 3. Aetna's response to RFP No. 05-058 4. Customer's RFP No. 05-058 GCA Page 18 DESCRIPTION OF SERVICES ADDENDUM This Description of Services Addendum is an addendum to Services Agreement Number ASA -819919 between Aetna and Customer (as identified therein) and is incorporated into the Services Agreement by reference. Subject to the terms and conditions of the Services Agreement, the Services available from Aetna are described below. Unless otherwise agreed in writing, only the Services selected by Customer in the Service and Fee Schedule (as modified by Aetna from time to time pursuant to Section 3 of the General Conditions Addendum) will be provided by Aetna. Additional Services may be provided at Customer's written request under the terms of the Services Agreement. I. Administration Services: A. Member and Claim Services: 1. Requests for Plan benefit payments for claims shall be made to Aetna on forms or other appropriate means approved by Aetna. Such forms (or other appropriate means) may include a consent to the release of medical, claims, and administrative records and information to Aetna. Aetna will process and pay the claims for Plan benefits incurred after the Effective Date using Aetna's normal claim determination, payment, and audit procedures, and applicable cost control standards in a manner consistent with the terms of the Plan and the Services Agreement. With respect to any Member who makes a request for Plan benefits which is denied on behalf of the Customer, Aetna will notify said Member of the denial and of said Plan Member's right of review of the denial in accordance with applicable state and federal law. 2. Whenever it is determined that benefits and related charges are payable under the Plan, Aetna will issue a payment of such benefits and related charges on behalf of the Customer. Funding of benefits and related charges shall be made as provided in Section 5 of the General Conditions Addendum. 3. Where the Plan contains a coordination of benefits clause, antiduplication clause, or provision(s) reducing benefits for injuries or illness caused or alleged to be caused by third parties, Aetna will administer all claims consistent with such provisions and any information concurrently in its possession as to duplicate coverage or the cause of the injury or illness. Aetna shall have no obligation to recover sums owed to the Plan by virtue of the Plan's rights to coordinate where the claim was incurred prior to the Effective Date. Aetna has no obligation to bring actions based on subrogation or lien rights, unless Subrogation Services are included herein, in which event its obligations are governed by Article IV of this Description of Services Addendum. B. Plan Sponsor Services: 1. Aetna will assign an Account Executive to the Customer's account. The Account Executive will be available to assist the Customer in connection with the general administration of the Plan, ongoing communications with the Customer and administration, and record-keeping systems for ongoing operation of the Plan. 2. Upon request by the Customer and consent by Aetna, Aetna will implement amendments or modifications to the Customer's Plan. A charge may be assessed for implementing such amendment or modification. The Customer's administration services fees, as set forth in the Service and Fee Schedule, will be revised if the foregoing amendments or modifications increase Aetna's costs. 3. Aetna will provide the following reports to the Customer for no additional charge: (a) Monthly/Quarterly/Annual Accounting Reports - Aetna shall prepare the following accounting reports in accordance with the benefit -account structure for use by the Customer in the financial management and administrative control for the Plan benefits: (i) a monthly listing of funds requested and received for payment of Plan benefits; (ii) a monthly reconciliation of funds requested to claims paid within the benefit -account structure; (iii) a monthly or quarterly or annual listing of paid benefits; (iv) quarterly or annual standard claim analysis report. GCA Page 19 (b) Annual Accounting Reports - Aetna shall prepare standard annual accounting reports for each major benefit line under the Plan for the Services Agreement Period that include the following: (i) forecast of claim costs; (ii) accounting of experience; and (iii) calculation of Customer reserve. Any additional reporting formats and the price for any such reports shall be mutually agreed upon by the Customer and Aetna. 4. Aetna shall develop and install all agreed upon administrative and record keeping systems, including the production of employee identification cards. 5. Aetna shall design and install a benefit -account structure separately by class of Employees, division, subsidiary, associated company, or other classification desired by the Customer. 6. Aetna shall provide plan design and underwriting services in connection with benefit revisions, additions of new benefits, and extensions of coverage to new Employees and their Dependents. 7. Aetna shall provide cost estimates and actuarial advice for benefit revisions, new benefits, and extensions of coverage being considered by Customer. 8. Upon request of the Customer, Aetna will provide the Customer with information reasonably available to Aetna which is reasonably necessary for the Customer to prepare reports for the United States Internal Revenue Service and Department of Labor. 9. (a) Upon request of the Customer, Aetna shall prepare an Aetna standard Plan description, including benefit revisions, additions of new benefits, and extension of coverage under the Plan. If the Customer elects to have an Aetna non-standard Plan description, Aetna will provide a custom Plan description with all costs borne by the Customer; or (b) Upon request of the Customer, Aetna will review the Customer prepared employee Plan descriptions, subject to the Customer's final and sole authority regarding benefits and provisions in the self-insured portion of the Plan. The Customer acknowledges its responsibility to review and approve all Plan descriptions and any revisions thereto, and to consult the Customer's legal counsel, at its discretion, with said review and approval. Aetna shall have no responsibility or liability for the content of any of Customer's Plan documents, regardless of the role Aetna may have played in the preparation of such documents. If the Customer requires both preparation (a) and review (b), there may be an additional charge. 10. Upon request by the Customer, Aetna will arrange for the printing of Plan descriptions, with all costs borne by the Customer. 11. Upon request by the Customer, Aetna will arrange for the custom printing of forms, with all costs borne by the Customer. Aetna shall furnish standard ID cards to the Customer. GCA Page 20 II. Patient Management Services: A. Precertification: 1. Inpatient Precertification: A process for collecting information prior to an inpatient confinement. Proposed treatment plans are reviewed. The goals of this process are: a. Assessment of the level and quality of the services provided; b. Determination of the coverage of the proposed treatment; c. Identification of care and treatment alternatives, when appropriate; and d. Identification of members for referral to specialized programs, such as Disease Management, Case Management, or the prenatal program; and e. Determination of the initial length of stay. The request for services is reviewed against a set of criteria established by clinical experts and administered by trained staff. Those cases not meeting criteria are subject to further review by the medical director or a specialist in the appropriate area prior to final determination. Inpatient Precertification involves medical, surgical, behavioral health, inpatient hospice, and skilled nursing facility admissions. 2. Outpatient Precertification (not applicable to Indemnity or PPO Products): A process for reviewing selected ambulatory procedures, surgeries, diagnostic tests, home health care, and durable medical equipment. The goals of this process are: a. Assessment of the level and quality of the services provided; b. Determination of the coverage of the proposed treatment; c. Identification of care and treatment alternatives, when appropriate; and d. Identification of members for referral to specialized programs. The request for services is reviewed against a set of criteria established by clinical experts and administered by trained staff. Those cases not meeting criteria are subject to further review by the medical director or a specialist in the appropriate area prior to final determination. B. Concurrent Review: This is a program in which Aetna monitors a patient's progress toward recovery after a patient is admitted to a hospital. This program focuses on the timely delivery of services and confirms the necessity of continued inpatient care. Appropriate alternatives to continued inpatient care may be identified. C. Discharge Planning: This is an interdisciplinary process that assists Members as their medical condition changes and as they transition from the inpatient setting. The discharge planning process begins upon identification of the Members' post discharge needs (which may occur during the registration, precertification, or concurrent review process). This program may include evaluation of alternate care settings and identification of care needed after discharge. The goal is to provide continuing quality of care and to avoid delay in discharge due to lack of outpatient support. D. Case Management: This program focuses on improving health and wellness. Case Management is a process of identifying persons at high risk for problems associated with complex healthcare needs, assessing opportunities to coordinate care, and identifying treatment options to improve quality of care, quality of life, and control costs. Case Managers generally assist Members in managing their illnesses, coordinate a series of intensive interventions designed to alter the natural history of a specific illness and facilitate the accessibility of resources. By integrating the record of a Member's contact with the medical delivery system, Case Managers can focus internal and external resources in an effort designed to improve the individual Member's clinical condition. GCA Page 21 E. National Medical Excellence Program: This program was created to help arrange for access to effective care for Members with particularly difficult conditions requiring transplants or complex cardiac, neurosurgical, or other procedures, when the needed care is not available in a Member's service area. The program utilizes a national network of experienced providers and facilities selected based on their volume of cases and outcomes. The National Medical Excellence Unit provides specialized Case Management through the use of nurse case managers, each with procedure and/or disease specific training. F. Behavioral Health: This program provides immediate 24-hour access to mental health benefits through a dedicated 1-800 number. Calls are received by a direct services team which verifies eligibility and then transfers the call to a behavioral health clinician. The clinician performs an assessment, determines medical necessity and appropriate level of care, and then facilitates a referral to a network provider. Local professionals may perform concurrent review and case management. G. Depression Management: This program provides a system of coordinated health care services and communications for Members with depression in an effort to improve health status and quality of life. The program offers Members self-assessment tools for depression and co -morbid disorders; psycho -educational information available electronically and through mailings; online services related to depression; case management telephonic outreach; and integration with pharmacy, primary care physicians and behavioral health providers. H. MedicaUPsychiatric High Risk Case Management: This program is designed to screen for depression in Members enrolled in both medical case management and disease management. Members who are identified as having behavioral health issues by Aetna's medical case and disease management programs are referred to behavioral health high risk case managers who provide service coordination with medical case managers as well as follow-up support and facilitated access to providers. L Focused Psychiatric Review (FPR): This is a program which provides phone -based utilization review of inpatient behavioral health admissions intended to contain confinements to appropriate lengths, assure medical necessity and appropriateness of care, and reduce costs. FPR is integrated with Inpatient Precertification. J. Healthy Outlook Program - Comprehensive: This program directs focused support and resources toward Members within a defined disease population, as determined by Aetna. The goal of this program is to provide disease management services for Members with chronic conditions, in an effort to improve health status and quality of life. This program identifies Member populations at risk for certain chronic diseases, with a focus on education for the Member and provider to maximize positive health outcomes. This program offers individual disease management focused on assisting Member to identify and address health risk factors associated with their chronic condition. It also offers Members the opportunity to order educational materials that contain information about certain chronic diseases or conditions (e.g., asthma, congestive heart failure, coronary artery disease, diabetes, low back pain, depression). K. INFORMED HEALTH Line: For products other than any Aetna Health Fund product(s) elected, this service includes a toll-free 24-hour/7 day health information hotline through which Members can speak with registered nurses about a variety of health topics. The service includes a self-help handbook, entitled INFORMED HEALTH Handbook (or INFORMED HEALTH Handbook for Health Aging). The nurses can contribute to informed health care decision-making and optimal patient/provider relationships through coaching and support. The nurses cannot diagnose, prescribe treatment or give medical advice but they can provide Members with information on a broad spectrum of health issues, including self-care, prevention, chronic conditions, and complex medical situations. For any Aetna Health Fund product(s) selected, this service includes a toll-free 24-hour/7 day health information line through which Members can speak with registered nurses about a variety of health topics. The nurses encourage informed health care decision-making and optimal patient/provider relationships through coaching and support. Members can also call to listen to their topic of interest through a new audio health library, available in English and Spanish. The nurses cannot diagnose, prescribe or give medical advice. L. Moms -To -Babies Maternity Management ProgramTM: Moms -To -Babies Maternity Management ProgramTM provides services that complement covered maternity benefits including access to obstetrical nurse case management, a pregnancy risk survey, educational materials for both expectant mothers and fathers, the Smoke-free Moms-to-BeTM smoking cessation program and more. Case management nurses help coordinate services for Members provided by the obstetrician, perinatologists, any other needed specialists, and hospitals or other facilities. GCA Page 22 M. Simple Steps To A Healthier Life®: Aetna InteliHealth Inc. ("Aetna InteliHealth"), a Delaware corporation and an indirect wholly-owned subsidiary of Aetna Inc. and an affiliate of Aetna Life Insurance Company ("Aetna") (Aetna InteliHealth and Aetna are collectively referred to as "InteliHealth"), has developed an internet-based comprehensive management information resource, known as "Simple Steps To A Healthier Life" (the "Life Program") and located at www.simplestepslife.com, to be hosted by Aetna InteliHealth and designed for the eligible employees and dependants of subscribing employers (the "Users"). The Life Program is an online service that offers advice relating to disease prevention, condition education, behavior modification and health promotion programs that may contribute to the health and productivity of employees. The Life Program allows Users to create a health risk assessment profile that generates a personalized health action plan. The health action plan identifies certain potential risks and directs participants to personalized programs and services encouraging healthy lifestyle changes. Refer to Appendix B for features, system requirements and certain terms and conditions for use of this service. Customer affirms that by selecting Simple Steps To A Healthier Life on the Service and Fee Schedule attached to and made a part of the Services Agreement, Customer agrees to the terms and conditions of use set forth in Appendix B. N. MedQuerysM: The MedQuery program is a data -mining initiative, aimed at turning Aetna's data into information that physicians can use to improve clinical quality and patient safety. Through the program, Aetna's data is analyzed and the resulting information gives physicians access to a broader view of an Aetna member's clinical profile. The data which fuels this program includes claims history, current medical claims, pharmacy, physician encounter reports, and patient demographics. Data is mined on a weekly basis and compared with evidence -based treatment recommendations to find possible errors, gaps, omissions (meaning perhaps that certain accepted treatment regimens may be absent) or commissions in care (meaning, for example, drug -to -drug or drug -to -disease interactions.) When MedQuery identifies an Aetna member whose data indicates that there may be an opportunity to improve care, outreach is made to the treating physician based on the apparent urgency of the situation. 0. Weight Management Program: This program is designed to help members live a healthier lifestyle and control their weight. The program offers a tiered approach to weight management based on a member's body mass index (BMI), and the presence of medical complications such as diabetes, hyperlipidemia or coronary artery disease. Enrollment is voluntary, and includes: a. Incentives for participation and increased physical activity, such as pedometers. b. Discounts to community-based weight loss programs. c. Outreach and support from nurses and weight loss counselors, as well as coordination with the member's primary care physician. d. Ethnically appropriate, nutritional menus to encourage healthy eating among diverse populations. Members in the program with a higher BMI and the presence of complicating health factors will receive more intensive outreach from nurses and weight loss counselors. In addition, Aetna will be reaching out to network physicians, providing information on the identification of obese individuals and the positive impact of weight loss counseling, and sharing the resources available within Aetna to assist physicians in providing information to their patients. Goals for the program are to monitor member success with weight loss, lowered BMI scores, increased exercise levels, better control of blood glucose and lipid levels, and reduced hypertension, reduced obesity -related visits to physicians and adherence to medications associated with complicating medical conditions. P. Wellness Counseling: This service provides personalized decision support, educational materials, and targeted nurse outreach coaching Members to a healthier lifestyle through behavioral modification, education, and facilitation of the most effective utilization of Members benefits. Additionally, action plans may be developed and reviewed with Members, as appropriate. This service includes a toll-free health information hotline available 24 hours a day/7 days a week through which Members can speak with registered nurses about a variety of health topics. Members are identified for participation in wellness counseling through completion of the Simple Steps To A Healthier Life health risk assessment. GCA Page 23 Q. Enhanced Member Outreach Programs"': For Customers who have elected Level One Only: Aetna will engage in outbound Member outreach calls to provide education and coaching to Members based on specific criteria. Through higher touch rates of eligible members, deeper use of existing tools and an increased nurse to Member ratio, the nurses should identify additional Members for case and disease management programs (if available to Member). For Customers who have elected a buy -up to Level Two (this is in addition to Level One): Aetna will provide additional outbound calling for select clinical criteria with limited plan sponsor allocation discretion. III. Network Access Services: A. Aetna shall provide Members with access to Aetna's network hospitals, physicians and other health care providers ("Network Providers") who have agreed to provide services at agreed upon rates and are participating in the Plan covering the Members. B Aetna reserves the right to set a minimum plan benefit design structure for in -area network claims to which Customer must comply in order to participate in Aetna's Network Program. C. Aetna will provide Customer with physician directories in an amount up to 100% of eligible Employees plus 20% of the current enrolled Employees. Customer shall pay the costs of providing any additional directories which it requests. IV. Subrogation Services: Aetna will provide assistance to Customer for subrogation/reimbursement services, which will be delegated to an organization of Aetna's choosing in accordance with Section 19 of the General Conditions Addendum. Subrogation/reimbursement language must be included in the Customer's summary plan description (SPD) and the SPD must be finalized and available to Customer's employees before subrogation/reimbursement matters can be investigated and pursued. Aetna or its contracted representative shall retain a percentage of any monies collected to recover reasonable expenses incurred while pursuing subrogation/reimbursement recoveries. Reasonable expenses include but are not limited to (a) collection agency fees, (b) police and fire reports, (c) asset checks, (d) locate reports, and (e) attorneys' fees. Aetna shall advise Customer if the pursuit of recovery requires formal litigation. In such event, Customer shall have the option to instruct Aetna to cease further action toward recovery. Aetna will credit net recoveries to Customer's accounting. Aetna has the exclusive discretion: (a) to decide whether to pursue potential recoveries on subrogation/reimbursement claims; (b) to determine the reasonable methods used to pursue recoveries on such claims, subject to the proviso with respect to formal litigation above; and (c) to decide whether to accept any settlement offer relating to a subrogation/reimbursement claim. If no monies are recovered as a result of the subrogation/reimbursement pursuit, no fees or expenses incurred by Aetna or its contracted representative for subrogation/reimbursement activities will be charged to Customer. If Customer notifies Aetna of its election to terminate the Services provided by Aetna, all claims identified for potential subrogation/reimbursement recovery prior to the date notification of such election is received (i.e., pending claims) shall be handled to conclusion by Aetna and shall be governed by the terms of this provision, unless otherwise mutually agreed. Aetna will not investigate or handle subrogation/reimbursement cases or recoveries on any matters identified after Customer's termination date. GCA Page 24 NATIONAL ADVANTAGE PROGRAM ADDENDUM The National Advantage Program ("NAP") is an addendum to Services Agreement Number ASA -819919 between Aetna and Customer (as identified herein) and is incorporated into the Services Agreement by reference. I. National Advantage Program A. Summary NAP provides access to contracted rates for many medical claims that would otherwise be paid as billed under indemnity plans, the out -of -network portion of managed care plans, or for emergency/medically necessary services not provided within the network. When available, these contracted rates will produce savings for the Customer. Aetna contracts with several national third -party vendors to access their contracted rates. In addition, a significant number of Aetna directly -contracted rates are available for members with indemnity benefits. Aetna will access third -party vendor rates where Aetna directly -contracted rates are not available. If no contracted rate is available, Aetna (or one of its vendors) will attempt to negotiate an Ad -Hoc Rate (case specific discount) with non -NAP participating providers for certain larger claims or will apply Facility Charge Review, as applicable and as described below. B. Claim Submission/Payment Process Providers should bill Aetna directly for Covered Services. The Member should not make payment at the time of service. When the Provider submits the claim, Aetna will process it at the contracted rate (when applicable) and reflect the contracted amount in any explanation of payments made that the Member and Provider receives. The Member would then be responsible for any applicable coinsurance, deductible or non -covered service, based upon the plan of benefits. Because claims must be paid within specific timeframes in order to take advantage of the negotiated arrangements, the bulk payment feature will be eliminated for affected claims, and payments will be issued on a daily basis. II.National Advantage Program — Facility Charge Review Facility Charge Review is an optional component of NAP. It is only available in conjunction with the National Advantage Program, and is not available separately. A. Summary Where a contracted rate is not available under NAP, the Facility Charge Review Program provides reasonable charge allowances for most inpatient and outpatient facility claims under Members' indemnity plans and the out -of -network portion of Members' managed care plans or for emergency/medically necessary services not provided within the network. When utilized, these reasonable charges will produce savings for the Customer. B. Claim Submission/Payment Process When an inpatient or outpatient facility claim exceeds a threshold (currently $ 1,000) and Aetna does not have access to a contracted rate, Aetna will forward the claim to its Facility Charge Review vendor for review. The billed charges will be reviewed for financial reasonableness for the geographic area where the service was provided. Payment to the facility will be based on the Reasonable Charge Amount. Any excess will be considered not covered as it exceeds the reasonable charge (as defined under the Plan). Though many facilities accept the Reasonable Charge Amount as payment in full, there may be circumstances where facilities may not accept the determination of the reasonable charge and may balance bill the Member. In the event that a Member is balance billed, the vendor for the Facility Charge Review Program has a review process and will initiate negotiations with the facility in an attempt to come to a mutually agreeable payment amount. NAP -ADDENDUM Page 25 However, should the vendor be unable to negotiate a mutually agreeable rate, consistent with the terms of the Member's plan of benefits, the Member may be responsible for any charges in excess of the reasonable charge. For claims that are to be paid at the preferred/in network level under the terms of the Member's plan of benefits (e.g., emergency services), the vendor will negotiate with the facility so that the Member is not responsible for any charges in excess of any applicable deductible and coinsurance/copayments. When an inpatient or outpatient facility claim is reduced based on the Reasonable Charge Amount, the Member will receive a letter alerting them to the possibility of balance billing. The letter will ask the Member to contact the vendor in the event that the Member is balance billed, in order to obtain information about the review process. The explanation of benefits that the Member receives from Aetna, if applicable, will also indicate that the amount paid is based upon the Reasonable Charge Amount and will request that the Member contact the vendor should the member be balance billed. The amount actually paid to the provider under the Facility Charge Review Program will be used as the basis for the calculation of the Member's coinsurance and deductibles. III. Terms and Conditions A. Customer Charges For Provider Payments Subject to the terms herein, Aetna agrees that for Covered Services rendered by a Provider for which Aetna has a) accessed a contracted rate, or b) negotiated an Ad -Hoc rate, or c) applied a Reasonable Charge Amount for facility services, Customer shall be charged the amount paid to the Provider. This amount shall be equal to the contracted rate, Ad -Hoc Rate, or Reasonable Charge Amount less any payments made by the Member in accordance with the Plan. B. Access Fees 1. As compensation for the services provided by Aetna under NAP for savings achieved, Customer shall pay an Access Fee to Aetna as described in the Service and Fee Schedule (excluding Aggregate Savings with respect to claims for which Aetna is liable for funding, e.g., claims in excess of an individual or aggregate stop loss point). 2. Access Fees shall be paid by the Bank to Aetna via wire transfer or such other reasonable transfer method agreed upon by Aetna and the Bank. The Customer agrees to provide funds through its designated bank sufficient to satisfy the Access Fee in accordance with the banking agreement between the Customer and the Bank, i.e., Access Fees will be included in the request from the Bank for payment/funding of claims. 3. Aetna shall provide a quarterly report of Aggregate Savings and Access Fees. Access Fees may be included with claims in other reports. C. ID Cards For most products/plans, Customer must inform Members of the availability of NAP and Aetna will distribute ID cards with a NAP logo. Further, a Customer's Plan document language defining reasonable charge or recognized charge must conform to Aetna requirements. Aetna shall provide Information regarding participating Providers on DocFind®' Aetna's online provider listing, on our website at www.Aetna.com or by other comparable means. D. Definitions As used herein: "Access Fee" means the amount(s) to be paid by Customer to Aetna for access to the savings provided under NAP. "Ad -Hoc Rate" means the rate which was negotiated for a specific claim in the absence of a pre -negotiated contracted rate with a Provider. "Aggregate Savings" means the difference between (i) the amount which would have been due or otherwise paid to Providers for Covered Services without the benefit of NAP, and (ii) the amount due Providers for Covered Services as a result of NAP. "Covered Services" means the health services subject to NAP for which charges are paid pursuant to the Plan. NAP -ADDENDUM Page 26 "Member" means a person who is eligible for coverage as identified and specified under the terms of the Plan. "Plan" means the portion of Customer's employee welfare benefit plan, which provides medical benefits to Members as administered by Aetna. "Providers" means those physicians, hospitals and other health care providers whose services are available at a savings under NAP. "Reasonable Charge Amount" means the amount determined by Aetna (or its chosen vendor) to be a reasonable charge for a service in the geographic area where the service was provided to the Member. E. Customer Acknowledgements Customer acknowledges that: 1. The NAP listing of Providers includes Providers that are (i) participating by virtue of direct contracts with Aetna and its affiliates, and (ii) participating by virtue of Aetna's contracts with unaffiliated third parties that have contracts with Providers, and provide Aetna with access to these contracted rates for the purpose of NAP. 2. Aetna does not guarantee (a) any particular discounts or any level of discount will be made available through providers listed as participating in NAP; (b) any obligation to make any specific Providers or any particular number of Providers available for use by Plan participants. Aetna does not credential, monitor or oversee those Providers who participate through third party contracts. Providers listed as participating in NAP may not necessarily be available or convenient. 3. Aetna is not responsible for the acts or omissions of any provider listed as participating in NAP. All such providers are providers in private practice, are neither agents nor employees of Aetna, and are solely responsible for the health care services they deliver. 4. The following claim situations may not be eligible for NAP: • Small claims (currently certain claims below $ 151 and claims below $ 1000 for which there is no contracted rate). • Claims involving Medicare or coordination of benefits (COB). • Certain claims that have already been paid directly by the Member. F. General Provisions 1. Aetna's aggregate cumulative liability to the Customer for all losses or liabilities arising under or related to NAP, regardless of the form of action, shall be limited to the Access Fees actually paid to Aetna by the Customer for services rendered. 2. The terms and conditions of this Addendum shall remain in effect for any claims incurred prior to the termination date that are administered by Aetna after the termination date. Except as provided herein, this Addendum is subject to all of the provisions of the Services Agreement, provided, however, in the event of any conflict between this Addendum and the Services Agreement, the terms of this Addendum shall govern. NAP -ADDENDUM Page 27 APPENDIX A HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA) THIS APPENDIX between City of Round Rock ("Customer") and Aetna Life Insurance Company or any of its corporate affiliates ("Aetna") is an attachment to Services Agreement Number ASA -819919 between Aetna and Customer (the "Agreement") and is incorporated by reference therein. In conformity with the regulations at 45 C.F.R. Parts 160-164 (the "Privacy and Security Rules") Aetna will under the following conditions and provisions have access to, maintain, transmit, create and/or receive certain Protected Health Information: 1. Definitions. The following terms shall have the meaning set forth below: (a) C.F.R. "C.F.R." means the Code of Federal Regulations. (b) Designated Record Set. "Designated Record Set" has the meaning assigned to such term in 45 C.F.R. 164.501. (c) Electronic Protected Health Information. "Electronic Protected Health Information " means information that comes within paragraphs 1(i) and 1(ii) of the definition of "Protected Health Information", as defined in 45 C.F.R. 160.103. (d) Individual. "Individual" shall have the same meaning as the term "individual" in 45 C.F.R. 160.103 and shall include a person who qualifies as personal representative in accordance with 45 C.F.R. 164.502 (g). (e) Protected Health Information. "Protected Health Information" shall have the same meaning as the term "Protected Health Information", as defined by 45 C.F.R. 160.103, limited to the information created or received by Aetna from or on behalf of Customer. (f) Required By Law. "Required By Law" shall have the same meaning as the term "required by law" in 45 C.F.R. 164.103. (g) Secretary. "Secretary" shall mean the Secretary of the Department of Health and Human Services or his designee. (h) Security Incident. "Security Incident" has the meaning assigned to such term in 45 C.F.R. 164.304. (i) Standard Transactions. "Standard Transactions" means the electronic health care transactions for which HIPAA standards have been established, as set forth in 45 C.F.R., Parts 160-162. 2.Obligations and Activities of Aetna (a) Aetna agrees to not use or disclose Protected Health Information other than as permitted or required by this Appendix or as Required By Law. (b) Aetna agrees to use appropriate safeguards to prevent use or disclosure of the Protected Health Information other than as provided for by this Appendix. (c) Aetna agrees to mitigate, to the extent practicable, any harmful effect that is known to Aetna of a use or disclosure of Protected Health Information by Aetna in violation of the requirements of this Appendix. (d) Aetna agrees to report to Customer any Security Incident or any use or disclosure of the Protected Health Information not allowed by this Appendix of which it becomes aware, except that, for purposes of the Security Incident reporting requirement, the term "Security Incident" shall not include inconsequential incidents that occur on a daily basis, such as scans, "pings", or other unsuccessful attempts to penetrate computer networks or servers containing electronic PHI maintained by Aetna. (e) Aetna agrees to ensure that any agent, including a subcontractor, to whom it provides Protected Health Information received from, or created or received by Aetna on behalf of Customer agrees to the same restrictions and conditions that apply through this Appendix to Aetna with respect to such information. (f) Aetna agrees to provide access, at the request of Customer, and in the time and manner designated by Customer, to Protected Health Information in a Designated Record Set, to Customer or, as directed by Customer, to an Individual in order to meet the requirements under 45 C.F.R. 164.524. (g) Aetna agrees to make any amendment(s) to Protected Health Information in a Designated Record Set that the Customer directs or agrees to pursuant to 45 C.F.R. 164.526 at the request of Customer or an Individual, and in the time and manner designated by Customer. (h) Aetna agrees to make (i) internal practices, books, and records, including policies and procedures, relating to the use and disclosure of Protected Health Information received from, or created or received by Aetna on behalf of, Customer, and (ii) policies, procedures, and documentation relating to the safeguarding of Electronic Protected Health Information available to the Secretary, in a time and manner designated by the Secretary, for purposes of the Secretary determining Customer's compliance with the Privacy and Security Rules. ASA-HIPAA Page 28 (i) Aetna agrees to document such disclosures of Protected Health Information as would be required for Customer to respond to a request by an Individual for an accounting of disclosures of Protected Health Information in accordance with 45 C.F.R. 164.528. (j) Aetna agrees to provide to Customer the information collected in accordance with this section to permit Customer to respond to a request by an Individual for an accounting of disclosures of Protected Health Information in accordance with 45 C.F.R. 164.528. (k) With respect to Electronic Protected Health Information, Aetna shall implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the Electronic Protected Health Information that it creates, receives, maintains, or transmits on behalf of Customer, as required by 45 C.F.R. Part 164, Subpart C. (1) With respect to Electronic Protected Health Information, Aetna shall ensure that any agent, including a subcontractor , to whom it provides Electronic Protected Health Information, agrees to implement reasonable and appropriate safeguards to protect it. (m) If Aetna conducts any Standard Transactions on behalf of Customer, Aetna shall comply with the applicable requirements of 45 C.F.R. Parts 160-162. 3. Permitted Uses and Disclosures by Aetna 3.1 General Use and Disclosure Except as otherwise provided in this Appendix, Aetna may use or disclose Protected Health Information to perform its obligations under the Agreement, provided that such use or disclosure would not violate the Privacy and Security Rules if done by Customer or the minimum necessary policies and procedures of Customer. 3.2 Specific Use and Disclosure Provisions (a) Except as otherwise provided in this Appendix, Aetna may use Protected Health Information for the proper management and administration of Aetna or to carry out the legal responsibilities of Aetna. (b) Except as otherwise provided in this Appendix, Aetna may disclose Protected Health Information for the proper management and administration of Aetna, provided that disclosures are Required by Law, or Aetna 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 Aetna of any instances of which it is aware in which the confidentiality of the information has been breached. (c) Except as otherwise provided in this Appendix, Aetna may use Protected Health Information to provide data aggregation services to Customer as permitted by 45 C.F.R. 164.504(e)(2)(i)(B). (d) Aetna may use Protected Health Information to report violations of law to appropriate Federal and State authorities, consistent with 45 C.F.R. 164.502(j)(1). 4. Obligations of Customer 4.1 Provisions for Customer to Inform Aetna of Privacy Practices and Restrictions (a) Customer shall notify Aetna of any limitation(s) in its notice of privacy practices of Customer in accordance with 45 C.F.R. § 164.520, to the extent that such limitation(s) may affect Aetna's use or disclosure of Protected Health Information. (b) Customer shall provide Aetna with any changes in, or revocation of, permission by Individual to use or disclose Protected Health Information, to the extent that such changes affect Aetna's use or disclosure of Protected Health Information. (c) Customer agrees that it will not furnish or impose by arrangements with third parties or other Covered Entities or Business Associates special limits or restrictions to the uses and disclosures of its PHI that may impact in any manner the use and disclosure of PHI by Aetna under the Services Agreement and this Appendix, including, but not limited to, restrictions on the use and/or disclosure of PHI as provided for in 45 C.F.R. 164.522. 4.2 Permissible Requests by Customer Customer shall not request Aetna to use or disclose Protected Health Information in any manner that would not be permissible under the Privacy and Security Rules if done by Customer. ASA-HIPAA Page 29 5. Term and Termination (a) Term. The provisions of this Appendix shall take effect (i) with respect to 45 C.F.R. Part 164, Subpart E (the "Privacy Rule"), on the effective date of the Agreement, and (ii) with respect to 45 C.F.R. 164, Subpart C (the "Security Rule"), the later of (1) April 21, 2005 or the compliance date applicable to the Customer under the Security Rule, if different than April 21, 2005, and (2) the effective date of the Agreement, and shall terminate when protections are extended to Protected Health Information, in accordance with Section 5(c) of this Appendix. (b) Termination for Cause. Without limiting the termination rights of the parties pursuant to the Agreement and upon Customer's knowledge of a material breach by Aetna, Customer shall either: (i) provide an opportunity for Aetna to cure the breach or end the violation or terminate the Agreement, if Aetna does not cure the breach or end the violation within the time specified by Customer; (ii) immediately terminate the Agreement, if cure of such breach is not possible; (iii) if neither termination nor cure are feasible, Customer shall report the violation to the Secretary. (c) Effect of Termination. The parties mutually agree that it is essential for Protected Health Information to be maintained after the expiration of the Services Agreement for regulatory and other business reasons. The parties further agree that it would be infeasible for Customer to maintain such records because Customer lacks the necessary system and expertise. Accordingly, Customer hereby appoints Aetna as its custodian for the safe keeping of any record -containing PHI that Aetna may determine it is appropriate to retain. Notwithstanding the expiration of the Services Agreement, Aetna shall extend the protections of this Appendix to such Protected Health Information, and limit further use or disclosure of the Protected Health Information to those purposes that make the return or destruction of the Protected Health Information infeasible. 6. Miscellaneous (a) Regulatory References. A reference in this Appendix to a section in the Privacy and Security Rules means the section as in effect or as amended, and for which compliance is required. (b) Amendment. Upon the enactment of any law or regulation affecting the use or disclosure of Protected Health Information, the safeguarding of Electronic Protected Health Information, or the publication of any decision of a court of the United States or any state relating to any such law or the publication of any interpretive policy or opinion of any governmental agency charged with the enforcement of any such law or regulation, either party may, by written notice to the other party, amend the Agreement and this Appendix in such manner as such party determines necessary to comply with such law or regulation. If the other party disagrees with such amendment, it shall so notify the first party in writing within thirty (30) days of the notice. If the parties are unable to agree on an amendment within thirty (30) days thereafter, then either of the parties may terminate the Agreement on thirty (30) days written notice to the other party. (c) Survival. The respective rights and obligations of Aetna under sections 5(c) and 6 of this Appendix shall survive the termination of this Appendix. (d) Interpretation. Any ambiguity in this Appendix shall be resolved in favor of a meaning that permits Customer to comply with the Privacy and Security Rules. (e) No third party beneficiary. Nothing express or implied in this Appendix or in the Agreement is intended to confer, nor shall anything herein confer, upon any person other than the parties and the respective successors or assigns of the parties, any rights, remedies, obligations, or liabilities whatsoever. (f) Governing Law. This Appendix shall be governed by and construed in accordance with the same internal laws as that of the Agreement. The parties hereto have executed this Appendix with the execution of the Agreement. ASA-HIPAA Page 30 APPENDIX B SIMPLE STEPS TO A HEALTHIER LIFE — FEATURES, SYSTEM REQUIREMENTS AND TERMS AND CONDITIONS OF USE I. Base Features: Simple Steps to a Healthier Life (the "Life Program") includes the following base features: Employer Features: Display of Employer Corporate Logo (optional feature) — the corporate logo of the Employer will be displayed within the Life Program navigation. Employer Broadcast Messaging by Location (optional feature) — text area used to broadcast health and benefits information to the User demographically. Limited to one update per quarter. Your Health Benefits — up to 10 links to Employer -specified Web sites of health-care insurers (Aetna Navigator). Other References & Resources - links to Employer -specified health and wellness references and resources. The User will need to register separately, if registration is applicable, to access these links from the Life Program. Standard Quarterly Management Reports are consistent with HIPAA guidelines (reports will not be provided to the Employer is the User population, by a specific category, is below 30). Event Tracking (optional feature) — ability to track an event/activity and a certain time period in order to provide incentives to the User. The fulfillment of the incentives is on behalf of the Employer and Employer understands and agrees that Employer is solely responsible for all costs and expenses in connection with the Rewards and Incentive Program. InteliHealth to provide Employer with a monthly report outlining Users who have completed events/activities, as defined by Employer. Reward Program (optional feature) — Opt in page will be displayed for Employers Users to enroll in the Reward Program and educate themselves about the rules of the program. Communications and Promotional Kit — a CD -based resource to assist in the coordination, preparation and communication strategies for the pre -launch, launch and on-going support of the Life Program. User Features: Online Health Risk Assessment (the "HRA") — the User completes an online health risk assessment (the "HRA") that is a set of health-related questions. The HRA evaluates the answers, provided by the User, based on a series of clinical risk factors that are used to determine if the User is at risk for one or more medical conditions. The User will receive a summary report, identifying the at- risk conditions, as well as other health-related areas the User may need to focus on. Health Action Plan - in addition to the summary report, the User will receive a health action plan that is generated based upon the User's completed HRA. The health action plan is stored within the "Take Action" section of the Life Program homepage. The health action plan provides information on certain ways to achieve better health. Healthy Living and Other Programs - once a User completes the HRA, the User can access certain healthy living programs from the health action plan. These programs provide information on particular at -risk conditions identified by the completed HRA. Preventive Health Schedule - a listing of certain preventive health-care activities applicable to the User, based on the User's age and gender. Condition Module - certain condition modules will provide educational information, interactive illustrations and videos, human -interest stories, if any, relating to the condition, and healthy living information. ASA -SS Page 31 Wellness Kits To Go — tools to enhance a User's knowledge about healthy lifestyle changes and how to effectively communicate with their health care providers. Informed Health Line Text Promotional Message (optional feature)— this is a separately purchased product outside of the Life Program. A text 800 number message, to contact a nurse virtually 24 hours a day, 7 days a week, will be displayed within the Life Program navigation if the Employer purchased the product through Aetna Inc. Data Feed to Aetna's Electronic Total Utilization Management System (eTUMS) (optional feature) — opt -in page for Users to consent to have their self-reported data sent to an Aetna healthcare professional (case manager). II. User System Requirements The User will need the following system requirements to access the Life Program: Standard Web Browser Requirement: Netscape Navigator 4.x or Microsoft Internet Explorer, versions 4.0 or higher. If the desktop is on a network with a firewall, the network must accept multiple cookies and javascripts; and Online Access Requirement: use of a computer system to connect to InteliHealth's system hosting the Life Program via the Internet using a standard Web browser. III. Simple Steps To A Healthier Life Agreement 1. Grant of License. Subject to all the terms and conditions of the Service Agreement and this Appendix B, InteliHealth hereby grants Customer a non-exclusive, nontransferable, world-wide right and license to use the Life Program software and documentation, together with all updates, enhancements, modifications, and fixes thereto, which are owned by InteliHealth and/or its licensors for the benefit of Customer's Users. The Life Program is more fully described in Parts I and II of this Appendix B, above. Subject to the license granted to Customer hereunder, InteliHealth shall retain sole and exclusive ownership of all right, title and interest (including all associated intellectual property rights) in and to the Life Program. 2. Warranty Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS APPENDIX B, INTELIHEALTH DOES NOT MAKE, AND SPECIFICALLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR PERFORMANCE. INTELIHEALTH DOES NOT WARRANT AND SPECIFICALLY DISCLAIMS ANY REPRESENTATION THAT THE LIFE PROGRAM, ANY DOCUMENTATION, ANY ADDITIONAL WORK, OR ANY COMPONENT OF ANY OF THE FOREGOING WILL MEET EMPLOYER'S OR ITS USERS' REQUIREMENTS OR THAT EMPLOYER'S OR ITS USERS' USE OF THE LIFE PROGRAM WILL BE UNINTERRUPTED OR ERROR FREE. INTELIHEALTH MAKES NO WARRANTY AS TO THE RELIABILITY, ACCURACY, TIMELINESS, USEFULNESS OR COMPLETENESS OF THE INFORMATION. INTELIHEALTH CANNOT AND DOES NOT WARRANT AGAINST HUMAN AND MACHINE ERRORS, OMISSIONS, DELAYS, INTERRUPTIONS OR LOSSES, INCLUDING LOSS OF DATA. INTELIHEALTH CANNOT AND DOES NOT GUARANTEE OR WARRANT THAT FILES AVAILABLE FOR DOWNLOADING FROM THE LIFE PROGRAM WILL BE FREE OF INFECTION OR VIRUSES, WORMS, TROJAN HORSES OR OTHER CODE THAT MANIFEST CONTAMINATING OR DESTRUCTIVE PROPERTIES. THE INFORMATION CONTAINED IN THE LIFE PROGRAM IS PRESENTED "AS IS" AND IN SUMMARY FORM ONLY AND INTENDED TO PROVIDE BROAD CONSUMER UNDERSTANDING AND KNOWLEDGE OF HEALTH CARE TOPICS. THE INFORMATION SHOULD NOT BE CONSIDERED EXHAUSTIVE AND SHOULD NOT BE USED IN PLACE OF A VISIT, CALL, CONSULTATION OR ADVICE OF A PHYSICIAN OR OTHER HEALTH CARE PROVIDER. INTELIHEALTH DOES NOT RECOMMEND THE SELF-MANAGEMENT OF HEALTH PROBLEMS. INFORMATION OBTAINED BY USING THE LIFE PROGRAM DOES NOT COVER ALL DISEASES, AILMENTS, PHYSICAL CONDITIONS OR THEIR TREATMENT. SHOULD A USER OF THE LIFE PROGRAM HAVE ANY HEALTH CARE -RELATED QUESTIONS, SUCH USER SHOULD CALL OR SEE THEIR PHYSICIAN OR OTHER HEALTH CARE PROVIDER PROMPTLY AND SHOULD NEVER DISREGARD MEDICAL ADVICE OR DELAY IN SEEKING IT BECAUSE OF SOMETHING THEY MAY HAVE READ IN THE LIFE PROGRAM. ASA -SS Page 32 THE INFORMATION CONTAINED IN THE LIFE PROGRAM IS COMPILED FROM A VARIETY OF SOURCES ("INFORMATION PROVIDERS"). NEITHER INTELIHEALTH AND ITS AFFILIATES NOR ANY INFORMATION PROVIDER SHALL BE RESPONSIBLE FOR INFORMATION PROVIDED HEREIN UNDER ANY THEORY OF LIABILITY OR INDEMNITY. 3. Limitation of Liability. Notwithstanding anything to the contrary contained in the Services Agreement or this Appendix B, in no event shall InteliHealth be liable to Customer for any special, indirect, incidental, punitive or consequential damages, whether based on breach of contract, tort (including negligence or strict liability), or for interrupted communications, or otherwise, whether or not Customer has been advised of the possibility of such damage. ASA -SS Page 33