Exhibit 10.1
THIRD AMENDMENT TO THE AGREEMENT FOR THE PROVISION OF SERVICES
This Third
Amendment
(“Amendment”) to the Agreement for the Provision of Services (the “Agreement”), with an effective date of May 1, 2012 (the “Effective Date”), entered into by and between CompCare de Puerto Rico, Inc.
(“CCPR”) and MSO of Puerto Rico, Inc. (“MSO”) sets forth additional duties and obligations.
WHEREAS, the Agreement made
between the parties referred to above, as amended, is scheduled to expire on December 31, 2012; and
WHEREAS, the parties wish to arrange
for a smooth collaboration in the event said Agreement is not renewed or otherwise extended; and
WHEREAS, the parties have agreed upon the
method of operation between the date hereof and December 31, 2012 (the “Collaboration Period”).
NOW, THEREFORE, in
consideration of the mutual promises and obligations contained herein, including the work schedules agreed by the parties and other good and valuable consideration, the parties agree as follows.
1.
Provider Network
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a. From the “Effective Date” hereof to December 31, 2012, MSO shall deposit the MHSA capitation fee, as referred to in the Agreement, into a checking account at Banco Popular de Puerto Rico
to be opened by MSO (the “Claims Account”). The MHSA capitation fee shall be used primarily for purposes of paying clean claims of providers as that term is understood under the Agreement and as established in the work schedules. It is
understood that payment to the providers is and shall remain the sole responsibility of CCPR.
b. Any Pharmacy Adjustment
surplus, as that term is understood under the Agreement, shall be deposited into the Claims Account and used exclusively for the payment of provider claims (clean claims). If the Pharmacy Adjustment surplus exceeds the amount of money required to
pay provider claims, the excess shall be maintained in the Claims Account as a reserve against future provider claims. Any surplus remaining in this account on the expiration of the Agreement shall be returned to CCPR the earlier of six
(6) months from the expiration date or when the parties mutually agree that all, or substantially all, provider claims have been received through December 31, 2012.
c. At and following December 31, 2012, all remaining provider claims shall be the exclusive responsibility of CCPR, who shall have sole authority to pay, adjust or otherwise compromise with providers
all monies owed to them as a result of their servicing MSO’s members.
d. On or about December 31, 2012, MSO and CCPR
shall enter into such agreement as may be mutually agreed upon assigning to MSO the contracts existing between CCPR and its providers, provided that CCPR may reserve the right to use the providers’ services as part of CCPR’s network
servicing CCPR’s other and/or future accounts in Puerto Rico. In this connection, CCPR will provide MSO with all credentialing material utilized by CCPR in connection with establishing its network.
2.
Collaboration Period
. Commencing on the Effective Date of this Amendment and continuing to
December 31, 2012 date (the “Collaboration Period”), CCPR will operate the business of CompCare de Puerto Rico, Inc. as it pertains to MSO’s business and the Agreement as follows:
a. Subject to the terms of this Agreement and MSO’s rights as set forth below, CCPR will continue to be responsible for the MHSA
Services as defined in the Agreement for:
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i.
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professional services;
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ii.
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institutional services; and
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iii.
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pharmacy expenses, provided that CCPR’s responsibility for drugs shall be limited to drugs prescribed for mental health conditions as described in Exhibit B of the
Agreement. Psychotropic drugs shall only be included as part of CCPR’s responsibility under Exhibit B if it is prescribed to address a current behavioral health diagnosis.
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iv.
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The parties to this Amendment agree to settle a claim presented by CCPR on letter dated April 16, 2012, related to drugs not prescribed for mental health
conditions. Notwithstanding the provision of Exhibit A with regard to a limitation of 45 days for claiming any amounts in the Pharmacy Adjustment, MSO and CCPR agree that all Pharmacy Adjustments previously identified, as it relates to drugs which
have not been prescribed for mental health conditions, shall be settled for all periods prior to April 1, 2012 for an amount equal to $2.2 million, which sum was, prior to the date hereof, paid by MSO to providers for CCPR’s account. CCPR
waives any additional claim related to its April 16, 2012 letter regarding drugs which have not been prescribed for mental health conditions for the period prior to April 1, 2012.
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b.
Revised service payment process
. Consistent with the provisions of paragraph 1 above, CCPR’s monthly MHSA capitation
payments, as well as any Pharmacy Adjustment surplus, shall be deposited into the Claims Account as described above. CCPR shall be responsible for issuing timely 835/EOP’s to MHSA providers.
c.
Revised claims adjudication process
. CCPR will report on a bi-weekly basis:
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i.
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the volume and detail of claims received by provider;
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ii.
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the volume and dollar amount of claims adjudicated whether for payment, denied or suspended; and
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iii.
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aged report of claims adjudicated pending for payment release.
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d.
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MSO’s personnel will have access to CCPR’s employees working on MSO’s matters and access to CCPR’s premises in relation to the preauthorization
process and other areas and other areas relating to MSO’s business, as requested.
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e. CCPR’s
administration during transition period:
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i.
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MSO will pay directly to CCPR the monthly Administrative Services Capitation fee in a timely manner, according to the Agreement.
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ii.
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CCPR will report on a monthly basis the use of the Administrative Services Capitation by type of expense with an amount not to exceed $200,000 for corporate overhead
from the Tampa office. The report shall be on an accrual basis, in arrears, for the previous month.
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iii. CCPR
will provide MSO, within forty-five (45) days of the Effective Date, the following documentation:
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1)
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providers’ demographic and credentialing file;
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2)
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detail of claim encounter data through April 30, 2012;
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3)
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list of employees and organizational chart; and
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4)
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providers’ contract, including fee schedule.
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3.
Post-Collaboration Obligations of CCPR
. Following the Collaboration Period, in addition to December 31, 2012 documents herein before described for December 31, 2012 of this
transaction, CCPR will:
a. deliver to MSO CCPR’s description, policies and procedures for Utilization Management
Programs; and
b. allow MSO to solicit CCPR’s employees or contract with CCPR’s employees or officers who reside in
Puerto Rico, free of any restrictive covenant that said employees/officers may have with CCPR. Provided, nothing contained herein shall be deemed to remove any confidentiality undertaking which may exist between said employees/officers and CCPR,
except as may be specified herein;
4.
Option to Extend
. Anything contained herein to the contrary notwithstanding, on the
expiration of the Agreement, as amended, MSO shall have the option of extending the Agreement in accordance with the terms of the Agreement. Provided, MSO’s election to do so must be made no less than 45 days prior to the expiration of the
Agreement.
5.
“WHEREAS” Clauses
. The “WHEREAS” clauses are incorporated herein by reference as if set forth
at length.
Except as expressly set forth in this Amendment, the terms and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF,
the parties hereto have caused their respective duly authorized officers to execute and deliver this Amendment as
of the date first written above, to be effective on the Effective Date.
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COMPCARE DE PUERTO RICO, INC.
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MSO of Puerto Rico, Inc.
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By:
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/s/ Clark A. Marcus
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By:
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/s/ Raul Montalvo-Orsini
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Printed Name: Clark A. Marcus
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Printed Name: Raul Montalvo-Orsini, M.D.
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Title:
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Chief Executive Officer
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Title:
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President
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Comprehensive Behavioral Care Inc. and Comprehensive Care Corporation, jointly and severally, hereby
guarantee all the payment and performance obligations of CompCare de Puerto Rico, Inc. under or relating to this Agreement.
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COMPREHENSIVE BEHAVIORAL CARE, INC.
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COMPREHENSIVE CARE CORPORATION
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By:
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/s/ Clark A. Marcus
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By:
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/s/ Clark A. Marcus
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Printed Name: Clark A. Marcus
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Printed Name: Clark A. Marcus
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Title:
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Chief Executive Officer
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Title:
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Chief Executive Officer
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Exhibit 99.1
CompCare Announces Preliminary Revenue and Expected Profitability
for the Second Quarter 2012
TAMPA, Florida: June 25, 2012:
Comprehensive Care Corporation (“CompCare” or the “Company”) (OTCBB: CHCR) announced today that it expects to report a profit for the second
quarter of 2012, with revenues for the quarter of approximately $18 million. Revenues for the same quarter in 2011 were $18.6 million. However, during that quarter, the Company posted a loss of $4 million.
Commenting on the expected results for the quarter, Robert J. Landis, CompCare’s Chief Financial Officer, stated, “The Company is particularly
excited about our second quarter expected results since, if realized, it will be the first time in many years that the Company has been able to post a profit for two consecutive quarters. The improvement in results from the second quarter of 2011 to
the second quarter of 2012, we believe, is primarily attributable to our Pharmacy Management Program which is now achieving traction and our cost reduction efforts to streamline our internal systems. Part of the shift in the pharmacy program
occurred from our establishing Company-owned clinics in areas where we experience high patient utilization and cost. The clinics have the effect of reducing those costs and providing us with a greater opportunity to directly service the needs of the
patients. Based on our best current available information, for example, the Company expects to realize a profit in its at-risk pharmacy operations in April, and this trend continues in May where preliminary numbers indicate an increase profit in the
Company’s at-risk pharmacy operations. While there can be no assurances that this trend will continue or that there might not be subsequent positive or negative adjustments to the April and May results, the upward trend is what we were looking
for since we believe that it indicates the viability of the overall program. Other aspects of the Pharmacy Management Program are in the process of being implemented and will occur shortly.”
Mr. Landis continued, “Another aspect of the Pharmacy Management Program that contributed to a successful second quarter was the signing of a
Third Amendment (the “Amendment”) to a material agreement with one of our existing, at-risk pharmacy clients. As a result of the Amendment, the Company received a $2.2 million, retroactive, cash adjustment to pharmacy prescriptions, which
were originally charged to the Company. Additionally, the Amendment shifts the financial responsibility for a significant number of prescriptions from the Company to the client for the remainder of 2012. We expect this financial responsibility shift
to further reduce the Company’s pharmacy expenses throughout the year, and although there can be no guarantees that these expectations will be achieved, we expect the shift to further enhance the Company’s profitability in its pharmacy
operations for the remainder of 2012.”
“Additionally, we were able to implement administrative, cost-saving measures that also
contributed to a profitable second quarter,” Mr. Landis said.
Revenue and other financial estimates contained in this press release
have not been audited or reviewed by the Company’s independent auditors, and accordingly they express no opinion or other form of assurance as to this information. The Company provides no assurance that these
preliminary results, future expectations or assumptions will be met for the second quarter or fiscal year 2012. The Amendment addresses a number of other aspects of the Company’s business
with its client. A complete copy of the Amendment has been filed by the Company with the Securities and Exchange Commission, which is available on its website at www.sec.gov.
About CompCare
Established in 1969, CompCare provides behavioral health, substance abuse
and employee assistance programs for governmental agencies, managed care companies and employer groups throughout the United States. Headquartered in Tampa, Florida, CompCare focuses on personalized attention, flexibility, a commitment to
high-quality services and innovative approaches to behavioral health that address both the specific needs of clients and changing healthcare industry demands. For more information, please call 813-288-4808 or visit our website at www.compcare.com.
Forward-Looking Statements
Except for statements of historical fact, the matters discussed in this press release, including but not limited to our expected profitability in the
second quarter of 2012, the continued implementation of our Pharmacy Management Program, the impact of the financial responsibility shift with one of our existing, at-risk pharmacy clients, our ability to increase margins and to obtain sustainable
profitability, our ability to reduce overhead and implement further cost savings, our ability to further improve the Company’s performance, the outcome of our business strategy, our ability to expand our pharmacy management program with higher
profit margins, and our ability to reduce pharmacy expenses throughout the year are forward looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect
numerous assumptions and involve a variety of risks and uncertainties, many of which are beyond the Company’s control that may cause actual results to differ materially from stated expectations. These risk factors include, among others, changes
in local, regional, and national economic and political conditions, the effect of governmental regulation, competitive market conditions, varying trends in member utilization, our ability to manage healthcare operating expenses, our ability to
achieve expected results from new and existing business, our ability to expand and manage our provider network, the profitability, if any, of our recently acquired or previously existing capitated contracts, the costs incurred in seeking new
contracts, the loss or termination of any existing contract, increases or variations in cost of care, seasonality, the Company’s ability to obtain additional financing, and additional risk factors as discussed in the reports filed by the
Company with the Securities and Exchange Commission, which is available on its website at
www.sec.gov.
Investor Contacts:
Paul Knopick
E & E
Communications
pknopick@eandecommunications.com
949.707.5365