The Kaiser Papers A Public Service Web Sitebusinesspractices.kaiserpapers.org

Link for Translation of this Kaiser Papers page from Google Translation Service

Kaiser Permanente MEDICAL SERVICE AGREEMENT

PART THREE

FINANCIAL ARRANGEMENTS

ARTICLE J

Base Compensation to Medical Group



     Health Plan will pay Medical Group the amounts specified in this Article J and in Article K for Medical Services and other services provided by Medical Group hereunder.

Section J-1. Ratemaking Forecast, Operating Budget, Capital Budget and Memorandum of Understanding

Each year a Ratemaking Forecast will be prepared for the following year.  the Ratemaking forecast will include projections with respect to all items that must be taken into consideration to develop a meaningful forecast, including levels of dues and Supplemental Charges and other expected revenues, number of Members, Medical Group staffing and compensation (including Base Compensation to Medical Group AND PLANNED AT RISK COMPENSATION [vts' highlighting]), appropriate levels of support personnel in medical offices, hospital and medical office utilization rates, Capital Budget, and other relevant factors.

     Before the end of each year, Health Plan and Medical Group will:

     (a)  prepare an Operating Budget that includes, at a minimum, provisions regarding the items contained in the Ratemaking Forecast including a Capital Budget; and

     (b)  enter into a Memorandum of Understanding for the following calendar year.

     The Memorandum of Understanding will be part of this Agreement.  To the extent that the Operating Budget contains information or amounts required to apply the provisions of this Agreement, it, too, will be part of this Agreement.  However, the Operating Budget does not represent a commitment to pay or allocate funds.

Section J-2.     Per Capita Compensation

      Per Capita compensation is the primary payment to Medical Group.  Per Capital Compensation is determined monthly by Health Plan and Medical Group and is the product of the number of actual Members during the month multiplied by the Per Capita Amount.  Year to date adjustments will be made for retroactive terminations and enrollments.  The total of the monthly Per Capita Compensation payments for the calendar year is the Per Capita Compensation for the year.

Section J-3. Adjustments to Per Capita Compensation to Determine Base Compensation to Medical Group
Base Compensation to Medical Group is Per Capita Compensation adjusted as provided in this Section.
 
          (a) Increases in Per Capita Compensation.

            Per Capita Compensation will be increased by the sum of:

                     (i)  the cost of Medical Group fringe benefits agreed to by Health Plan (and for this purpose the cost of any retirement plan is the actual amount paid by Health Plan to Medical Group therefor); plus

                      (ii)  The cost of items identified in the Memorandum of Understanding as reimbursable on a dollar-for-dollar basis; plus

                       (iii)  An amount equal to 15% of revenue (less 15% of the allowance for uncollected revenue) attributable to Nonmember and Workers' Compensation Medical Services rendered by Medical Group; plus

                       (iv)  Any other amount agreed to in writing by Health Plan and Medical Group.

(b)  Decreases in Per Capita Compensation

           Per Capita Compensation is established without regard to the following items of revenue and therefore will be decreased by the sum of:
 
      (i)  All revenue (less allowance for uncollected revenue) attributable to Nonmember and Workers' Compensation Medical Services rendered by Medical Group, excluding any payment under Section J-3 (a) (iii); plus

      (ii)  Other Revenue; plus

      (iii)  Any other amount agreed to in writing by Health Plan and Medical Group.

(c)  Increases or Decreases in Per Capita Compensation

The Operating Forecast may include an amount to cover payroll expenses for certain medical office personnel (whether employed by Health Plan or Medical Group) identified in the Operating Forecast as subject to this provision.  Health Plan will pay these costs.  However, if the Per Member Payroll Cost (which is the net product of actual total paid hours of these medical office personnel multiplied by the weighted average hourly rate of compensation therefor included in the Operating forecast, divided by the actual number of Member months during the year) exceeds the amount included in the Operating forecast to cover this Cost, the Per Capita Amount will be decreased by the amount of the difference; if this Cost is less than the amount included in the Operating Forecast to cover this Cost, the Per Capita Amount will be increased by the amount of the difference.

Section J-4.     Time of Payment

     Health Plan will pay Medical Group (as a credit against Base Compensation to Medical Group) the amounts required to equalize Medical Group cash flow and Medical Group disbursements month by month, except that the final payment by Health Plan to Medical Group for the year will be adjusted to reflect all payments to Medical Group to the end that total payments by Health Plan to Medical Group for the year will be as computed under Articles J and K of this agreement.

 




 

Back to businesspractices.kaiserpapers.org 

To The Kaiser Papers

BACK TO MEDICAL SERVICE AGREEMENT INDEX