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PROSPECTUS SUPPLEMENT NO. 69 Filed pursuant to Rule 424(b)(3)
To the Prospectus dated January 5, 1998, Registration No.: 333-01926
As Supplemented to Date
1,000 Shares
of
Class B Common Stock of Doctors Health, Inc.
This Prospectus Supplement No. 69 relates to the issuance by Doctors
Health, Inc., a Maryland corporation ("Doctors Health") of 1,000 shares of its
Class B Common Stock, par value $.01 per share (the "Class B Common Stock")
pursuant to the Primary Care Participation Agreement (the "Participation
Agreement") to be entered into between Bannister L. Raines, Jr., M.D.
("Physician"), and Doctors Health. This Prospectus Supplement should be read in
conjunction with the Prospectus dated January 5, 1998, the Prospectus Supplement
No. 26 (Shareholders Letter Agreement), and the Prospectus Supplement No. 62
which contains the Company's Quarterly Report on Form 10-Q for the period ended
December 31, 1997.
Doctors Health's principal executive office is located at 10451 Mill
Run Circle, Tenth Floor, Owings Mills, Maryland 21117, telephone number (410)
654-5800.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER OF ANY
PERSON TO EXCHANGE OR SELL, OR A SOLICITATION FROM ANY PERSON OF AN OFFER TO
EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT, OR
THE SOLICITATION OF A PROXY FROM ANY PERSON, IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT NOR ANY DISTRIBUTION OF THE SECURITIES TO WHICH THIS
PROSPECTUS SUPPLEMENT RELATES SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED THEREIN IS CORRECT AT ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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See "Risk Factors" referred to on page S-2 hereof for certain
information that should be considered in connection with an investment in
securities of Doctors Health.
The date of this Prospectus Supplement is March 11, 1998.
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RISK FACTORS
Financial Performance of Doctors Health
Doctors Health has a limited operating history and for the fiscal years
ended June 30, 1996 and 1997 recorded a net loss of $7.2 million and $16.2
million, respectively. Doctors Health is likely to record a net loss for the
fiscal year ending June 30, 1997. There can be no assurance that after the
Closing Date Doctors Health will earn operating profits.
Risk Factors set forth in the Prospectus dated January 5, 1998
The Risk Factors set forth in the Prospectus are incorporated herein by
reference and should be read carefully by investors.
PROPOSED PRIMARY CARE PARTICIPATION AGREEMENT
The following description of the transactions contemplated by the
Participation Agreement does not purport to be complete and is qualified in its
entirety by reference to the Participation Agreement, a copy of which is
attached to this Prospectus Supplement as Annex A and is incorporated herein.
Physician is urged to read the Participation Agreement in its entirety.
General
Pursuant to the Participation Agreement, (i) Physician agrees to
participate in the managed care agreements that Doctors Health enters into with
Payors who have contracted with Doctors Health with respect to HMO managed care
products ("Doctors Health HMO Plans"), (ii) Physician agrees to provide eligible
persons who elect to enroll in Doctors Health HMO Plans (each, a "Doctors Health
HMO Member") with those primary care services customarily provided by primary
care physicians, as may be required by the Doctors Health HMO Plans, (iii)
Physician will be paid cash in the amount of $7,500 upon execution of the
Participation Agreement and satisfactory completion of credentialling of
Physician by Doctors Health, and (iv) Doctors Health will issue to the Physician
1,000 shares of its Class B Common Stock.
Access to Doctors Health Services; Credentialling
Pursuant to the Participation Agreement, Doctors Health agrees to
provide to Physician, once Physician has 100 Doctors Health Members in his
medical practice and at no cost to Physician, access to the managed care
component of Doctors Health's information system, which offers patient
registration, referral tracking and management and data management capabilities.
Doctors Health will also undertake to credential Physician, at no cost to
Physician. Pursuant to the Participation Agreement, Physician agrees to
cooperate with the Doctors Health credentialling and review process at no cost
to Physician.
Exclusive IPA Arrangement
Pursuant to the Participation Agreement, Physician agrees to
participate in the managed care agreements that Doctors Health enters into with
Doctors Health HMO Plans. Physician is required pursuant to the Participation
Agreement to cooperate with Doctors Health in accepting Doctors Health HMO
Members under the Doctors Health HMO Plans, and agrees not to participate or
contract with any other HMO or other payor offering managed care or other
risk-type plans directly or indirectly; provided, however, that if Doctors
Health chooses not to pursue a contract with an identified HMO or is unable to
negotiate such a contract within a commercially reasonable time period,
Physician shall be free to pursue a contract with the identified HMO.
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Capitation Rates; Bonus Pool
The Participation Agreement provides that Doctors Health will determine
the commercial and Medicare primary care base capitation rates using their good
faith best efforts to reflect the prevailing market rate for the county and city
in which Physician provides covered services (the "Primary Care Base Capitation
Rates"). The Primary Care Base Capitation Rates may be adjusted for age and sex
of the Doctors Health HMO members. The Primary Care Base Capitation Rate shall
be adjusted by an amount up to ten percent each based upon (i) a formula for
Commercial HMO Members taking into account certain factors as capitation panel
size, Doctors Health membership growth, scheduled office hours and service and
medical care coordination considerations; and (ii) a formula for Medicare HMO
Members taking into account the number of HMO Members served by Physician's
medical practice. The Commercial and Medicare formulas are set forth on Exhibit
D-21 of the Participation Agreement. All payments of the Primary Care Base
Capitation Rates will be made by Doctors Health directly to Physician, by the
fifth day of the month for the prior month's enrollment. Physician agrees
pursuant to the Participation Agreement not to seek or collect or accept any
reimbursement from Doctors Health HMO Members or the Doctors Health HMO Plans
for any covered services provided to Doctors Health HMO Members, except for
copayments and coinsurance.
The Participation Agreement also provides that Physician may
participate in a bonus pool established by Doctors Health's affiliated
physicians. The amount of bonus awards are determined according to Doctors
Health's primary care bonus system, rewarding high clinical quality, appropriate
utilization, patient satisfaction and retention and the extent of cooperation
with other participating physicians, and Doctors Health. Based upon these
factors, Physician may receive a bonus based upon the surplus generated in
Physician's panel of Doctors Health HMO Members, after managed care expenses, up
to a maximum of 25% of all Primary Care Base Capitation payments received by
Physician that year or the limits provided by applicable health care
regulations. Bonus awards for a calendar year, if any, will be paid by April of
the following year. There can be no assurance that a bonus will be paid in any
given year or, if paid, as to the amount of any bonus. A copy of Doctors
Health's bonus system for primary care physicians is on file at the offices of
Doctors Health and will be made available at the request of Physician.
Obligations of Physician
Pursuant to the Participation Agreement, Physician agrees to abide by
and comply with the relevant provisions of the agreements between Doctors Health
and the Doctors Health HMO Plans. Doctors Health will provide Physician with all
relevant provisions that may apply to such Physician. In such connection, the
Participation Agreement provides that Physician shall work cooperatively and in
good faith with Doctors Health and the other Doctors Health affiliated
physicians providing services to the Doctors Health HMO members. Physicians are
required to (i) prepare and maintain customary medical records for services
provided to Doctors Health HMO Members and provide Doctors Health with access to
such records without charge, (ii) comply with and accept the payment conditions
of the Participation Agreement, (iii) comply with managed care medical standards
adopted by Doctors Health affiliated physicians as part of the arrangements with
the Doctors Health HMO Plans, and (iv) cooperate with Doctors Health's efforts
to contact eligible Medicare and adult medicine patients in Physician's
practice, including providing mailing lists and the use of Physician's name in
correspondence, and (v) sign and submit in a timely manner authorizations,
consents, encounter data and other forms adopted by Doctors Health.
Pursuant to the Participation Agreement, Physician will own and operate
all aspects of his medical practice and will remain responsible for all
operations of the medical practice, including all patient treatment decisions
and employee, office, lease and financial affairs. Doctors Health is not engaged
in the practice of medicine and will not interfere in any patient treatment
decisions. The Participation Agreement provides an agreement by Physician not to
differentiate or discriminate in
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the treatment of patients as to the quality of services delivered because of
race, sex, age, religion, place of residence, health status or source of
payment. Physician is required to make arrangements for 24 hour, seven day per
week coverage to Doctors Health HMO Members through other primary care
physicians who participate in the Doctors Health provider network.
Doctors Health will provide to Physician a list of other physicians and
other health care providers who provide medical services in the Doctors Health
provider network. Other than in cases of a bona fide emergency, the
Participation Agreement requires Physician to utilize the Doctors Health
provider network when arranging for additional medical services required by
Doctors Health HMO Members. Doctors Health may use Physician's name, specialty,
telephone number and business location in marketing, descriptive and other
information relating to the Doctors Health HMO Plans. The Participation
Agreement provides that Physician may be precluded from participating in a
Doctors Health HMO product by one of the Doctors Health HMO Plans. In such
event, Doctors Health will notify Physician, in writing, within 30 days of
learning of such an action, and will assist Physician, if requested, in seeking
to overturn such an action.
Existing Primary Care Capitation Contracts
The Participation Agreement provides that if Physician is a party,
directly or indirectly, to any primary care capitation contract, Physician must
notify Doctors Health of such contract and must use his commercially reasonable
best efforts to assist Doctors Health in replacing such contract with a Doctors
Health HMO Plan, provided that the payment terms of such Doctors Health HMO Plan
are at or above the payment terms of such existing contract.
Quality Assurance/Utilization Review Programs
Pursuant to the Participation Agreement, Physician will participate in
all utilization review, quality assurance and credentialling programs operated
by Doctors Health to assure or improve the quality and effective utilization of
health care services to the Doctors Health HMO Members. In such connection,
Physician agrees (i) not to hold Doctors Health or any other participants in
such quality assurance/utilization review programs responsible for reasonable
recommendations made or actions taken in good faith with respect to Physician,
and (ii) to participate in all programs developed by Doctors Health that are
designed to resolve Doctors Health HMO Member grievances.
Doctors Health Protocols
Pursuant to the Participation Agreement, Physician agrees to follow the
protocols and practice procedures which have been developed by Doctors Health's
affiliated physicians which are applicable to physician participants in the
Doctors Health provider network. In such connection, if Physician should ever
deem any aspect of such protocols to be medically inappropriate or otherwise
inappropriate for utilization, Physician may notify Doctors Health in writing
with sufficient specificity to enable Doctors Health to respond to Physician's
concerns.
Term; Termination
The Participation Agreement will terminate five years from its
effective date unless earlier terminated pursuant to its terms.
Doctors Health may terminate the Participation Agreement by notice in
writing to Physician (i) if Physician materially breaches the Participation
Agreement and such breach continues for 30 days after written notice is given to
Physician by Doctors Health specifying the nature of such breach, or (ii) for
"good cause." The Participation Agreement defines "good cause "to mean the
occurrence of any one of the following: (a) Physician's membership in any
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professional organization is terminated for cause related to professional
conduct, or Physician resigns from any professional organizations under the
threat of disciplinary action for professional conduct, (b) Physician is
indicted for a charge of committing a felony or any misdemeanor involving moral
turpitude, (c) Physician fails to comply with rules, regulations and policies
imposed with regard to Medicare programs or fails to preserve his or her
eligibility to participate in Medicare programs, (d) physician fails to comply
with any material Doctors Health protocols, (e) Physician takes any action which
puts a Doctors Health HMO Member's health at risk, or (f) Physician loses his or
her license or certificate to practice medicine.
Physician may terminate the Participation Agreement upon 90 days
written notice to Doctors Health if Doctors Health fails to perform its
obligations to Physician to pay any amounts required to be paid by Doctors
Health to Physician.
Maintenance of Liability Insurance
The Participation Agreement provides that Physician must maintain, at
his expense, general and professional liability insurance coverage of not less
than $1 million per claim and $3 million per year. Physician is required
pursuant to the Participation Agreement to provide Doctors Health with copies of
such policies or other evidence of compliance with such insurance requirements
and is required to notify Doctors Health of any changes or cancellations to any
such policy. In the event of a cancellation of a policy, Physician is required
to purchase an extension of coverage endorsement within 10 days of written
notice of discontinuance and must provide Doctors Health with a copy of such
endorsement. Pursuant to the Participation Agreement, Physician must also notify
Doctors Health promptly when any patient of Physician files a claim or any
notice of intent to commence legal action alleging professional negligence
against Physician, or of the settlement of any such claim, or if a judgment is
entered against Physician in any such claim.
RESALE OF CLASS B COMMON STOCK
The shares of Class B Common Stock offered by this Prospectus
Supplement have been registered under the Securities Act of 1933, as amended.
The shares will be subject to the Stockholders Agreement attached hereto as
Annex B and therefore, will not be freely transferable. In addition, there is no
public market for the Class B Common Stock.
LEGAL MATTERS
The validity of the Class B Common Stock offered hereby have been
passed upon for the Company by Venable, Baetjer and Howard, LLP, Baltimore,
Maryland.
ANNEXES
Annex A - Participation Agreement between Doctors Health, Inc. and
Bannister L. Raines, Jr., M.D.
Annex B - Shareholders Letter Agreement, delivered to Physician as
Prospectus Supplement No. 26
Annex C - Quarterly Report for the Quarter Ended December 31, 1997,
delivered to Physician as Prospectus Supplement No. 62.
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PRIMARY CARE PARTICIPATION AGREEMENT
1. This Participation Agreement is entered into on __________________, 1997
(the "Effective Date") by DOCTORS HEALTH, INC. ("DH") and the Physician
whose name appears below.
2. DH agrees to arrange for the provision of various management,
administrative and support services in connection with managed care
contracting, including contracting, marketing, care management and
information systems support. (For a description of these services see
Exhibit A-2 attached.)
3. Physician or the Physician's group practice entity, if the Physician
participates as a partner or employee of a group practice entity, will be
paid a Signing Bonus in part cash and part shares of DH Class B Common
Stock, as set forth on Exhibit B-3 attached hereto and made a part hereof.
This payment will be made upon execution of this Agreement, satisfactory
credentialing of Physician by DH and provision of Physicians' financial
statements and Medicare patient list and is subject to modification to the
extent the information received by DH differs from the information provided
on Exhibit B-3. This payment is made based upon Physician's assurance to DH
that he/she is an actively practicing primary care physician who intends to
enter into a cooperative relationship with other DH affiliated physicians
to manage care to DH HMO Members.
4. This Agreement will expire five (5) years from the Effective Date of this
Agreement (the "Term"), unless earlier terminated pursuant to the terms
hereof.
5. DH agrees to provide Physician, once Physician has at least 100 DH HMO
Members, at no cost to the Physician, access to the DH Information System
managed care components, offering Enrollment, Eligibility, Referral
Management and Data Management capabilities.
6. Physician agrees to provide to eligible persons who elect to enroll in an
HMO managed care product offered by any Payor who has contracted with DH
(the "DH HMO Plans") those primary care services customarily provided by
primary care physicians to eligible patients, as may be required by the DH
HMO Plans. These patients are referred to in this Agreement as the "DH HMO
Members".
7. DH will credential Physician. Physician agrees to cooperate with the DH
credentialing and review process, all at no cost to Physician.
8. Physician agrees to participate in the managed care agreements that DH
enters into with DH HMO Plans. Physician agrees to cooperate with DH in
accepting DH HMO Members under the DH HMO Plans, and agrees not to
participate or contract with any other HMO or other payor offering managed
care or other risk type plans directly or through another similar entity or
other IPA. However, if DH chooses not to pursue a contract with an
identified HMO or is unable to negotiate such a contract within a
commercially reasonable period, Physician shall be free to pursue a
contract with the identified HMO.
9. If Physician, as of the Effective Date, is a party (directly or indirectly
through another similar entity or IPA) to any primary care capitation
contract (each an "Existing Primary Care Capitation Contract"), Physician
agrees to notify DH of such Existing Primary Care Capitation Contract.
Physician agrees to use his or her commercially reasonable best efforts to
assist DH in replacing such Existing Primary Care Capitation Contract with
a DH HMO Plan, provided the payment terms to the Physician under the DH HMO
Plan are at or above the payment terms of the Existing Primary Care
Capitation Contract. Until DH is able to replace the Existing Primary Care
Capitation Contract with a DH HMO Plan, the Physician shall be free to
renew the Existing Primary Care Capitation Contract for additional one year
terms.
10. Physician agrees to abide by and comply with the relevant provisions of
the agreements between DH and the DH HMO Plans. DH agrees to provide all
relevant provisions that may apply to Physician.
11. Physician agrees to work cooperatively and in good faith with DH and the
other DH affiliated physicians providing services to the DH HMO Members. To
this end, Physician will use all reasonable efforts to:
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- Prepare and maintain customary medical records for services
provided to DH HMO Members and provide the IPA with access to
such records without charge. DH agrees that all patient records
will be treated as confidential and will comply with laws and
regulations related to confidentiality and all ethical standards
for physicians regarding the confidentiality of patient records.
- Comply with and accept payment conditions of this Agreement.
- Comply with managed care medical standards adopted by DH
affiliated physicians as part of arrangements with the DH HMO
Plans.
- Cooperate with DH' efforts to contact eligible Medicare and adult
medicine patients in Physician's practice, including providing
mailing lists and use of Physician's name in correspondence.
- Sign and submit in a timely manner authorizations, consents,
encounter data and other forms adopted by DH.
- Comply with DH policies and guidelines which DH provides to
physician.
12. Physician will participate in all utilization review, quality assurance and
credentialing programs operated by DH and the IPA to assure or improve the
quality and effective utilization of health care services to the IPA HMO
Members ("QA/UR Programs"). Physician agrees not to hold DH and other
participants in the QA/UR Programs responsible for any reasonable
recommendations made or actions taken in good faith with respect to
Physician. Physician will participate in all programs developed by DH that
are designed to resolve DH HMO Member grievances.
13. Physician agrees not to differentiate or discriminate in the treatment of
patients as to the quality of services delivered to DH HMO Members because
of race, sex, age, religion, place of residence, health status or source of
payment, and to observe, protect and promote the rights of DH HMO Members
as patients.
14. Physician will in good faith make arrangements, with the support of
Physician's assigned DH representative, for twenty-four hours, seven days a
week coverage to DH HMO Members through other primary care physicians who
participate in the DH provider network to the extent the DH provider
network is adequate to provide such coverage in Physician's service area.
15. Physician agrees to respond within seven (7) days of receipt to any written
inquiry from DH regarding services provided to DH HMO Members or any other
matters relating to this Agreement, subject to all laws regarding the
confidentiality of medical records,.
16. DH will provide to Physician a list of other physicians and other health
care providers who provide medical services in the DH provider network.
Other than in cases of a bona-fide medical emergency or where DH and the
Physician have agreed the DH provider network is insufficient, Physician
agrees to utilize the DH provider network when arranging for additional
medical services required by DH HMO Members.
17. DH' affiliated physicians have developed protocols and practice procedures
applicable to fellow physician participants in the DH provider network (the
"DH Protocols"). Physician agrees to follow the DH Protocols when treating
DH HMO Members. If Physician should ever deem any aspect of the DH
Protocols to be medically inappropriate or otherwise inappropriate for
utilization by Physician, Physician may notify DH in writing, with
sufficient specificity to enable DH to respond to Physician's concerns.
18. Physician will own and operate all aspects of his or her medical practice
and will remain responsible for all operations of the medical practice,
including all patient treatment decisions and employee, office, lease and
financial affairs. DH is not engaged in the practice of medicine and will
not interfere in any patient treatment decisions.
19. DH may use Physician's name, specialty, telephone number(s), and business
location(s) in marketing, descriptive, and other information relating to
the DH HMO Plans, and will include Physician as a member of the DH provider
network during this Agreement. Physician may nonetheless be precluded from
participating in a DH HMO Product by one of the DH HMO Plans. In such an
event, DH will notify Physician, in writing, within 30 days of learning of
such an action, and will assist Physician, if requested, in seeking to
overturn such an action.
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20. During the calendar year 1997, DH will pay to Physician, and Physician
agrees to accept from DH as compensation for all covered services provided
by Physician to DH HMO Members the Primary Care Base Capitation Rates as
shall be set forth on Exhibit C-20 to be attached hereto and made a part
hereof. For calendar year 1998 and beyond, DH shall establish in
cooperation with DH participating primary care physicians a Primary Care
Base Capitation Rate that shall reflect at least the prevailing market rate
for the county or city in which the Physician provides covered services.
21. The Primary Care Base Capitation Rates may be adjusted for age and sex of
the DH HMO Members. The Primary Care Base Capitation Rates will be
increased by an amount up to ten percent (10%) (the "Capitation Rate
Modifier"), according to a Medicare and Commercial formula established by
DH as set forth on Exhibit D-21 attached hereto and made a part hereof.
22. Physician will, in addition to the Primary Care Capitation payment, be paid
on a fee for service basis for certain identified services which are not
considered covered services according to the DH fee schedule that will be
approximately equal to cost and less than alternative specialist
expenditures.
23. In order to provide economic incentives for Physicians to provide the best
possible health care to DH HMO Members while fostering efficiencies in
utilization and quality assurance, DH' affiliated physicians have
established, and Physician will participate in, a bonus pool. The amount of
bonus awards are determined according to DH' primary care bonus point
system, rewarding high clinical quality, appropriate utilization, patient
satisfaction and retention and the extent of cooperation with other
participating physicians DH. Based upon this system, DH will fund a primary
care physician bonus pool which will be credited with 25% of the managed
care surplus remaining after deduction of the actual costs associated with
the provision of managed care services. The Physician will receive a bonus
based upon the net surplus in the bonus pool that is generated in
Physician's panel of DH HMO Members up to the limits permitted by
applicable health care regulations. The Primary Care Capitation Rates for
any year are guaranteed and never charged or offset for any losses. Losses
are the sole responsibility of DH. Bonus Awards for calendar year 1996 will
be paid by DH in April of 1997. Awards for calendar year 1997 will be made
in April of 1998 etc. (The DH "Bonus Point System" for Primary Care
Physicians is set forth on Exhibit F-23 attached hereto and made a part
hereof.)
24. All Payments of the Primary Care Capitation Rate will be made by DH
directly to Physician, by the fifth business day of each month for
the prior month's enrollment. The Capitation Rate Modifier will be
calculated at the beginning of each quarter and used to determine the
following quarters' Primary Care Capitation Rate.
25. Physician understands that DH will be paid by the DH HMO Plans for all
services provided by Physician to DH HMO Members.
26. Physician agrees not to bill or collect any reimbursement from DH HMO
Members or the DH HMO Plans unless the service provided was not a covered
service under the DH HMO Plan and the DH HMO Member was given prior written
notice that the services would not be covered. However, Physician may
charge, bill, collect and keep from DH HMO Members any copayments or
coinsurance. Physician agrees that, whether or not there is any unresolved
dispute for payment, under no circumstances, including but not limited to
nonpayment by DH or DH insolvency, will Physician make any claims, other
than for copayments or coinsurance, against any DH HMO Member for covered
services.
27. Physician will maintain, at his or her expense, general and professional
liability insurance coverage of not less than $1,000,000 per claim and
$3,000,000 per year. Physician will provide DH with copies of the policies
or other evidence of compliance with the insurance requirements. Physician
will notify DH when any patient of Physician files a claim or any notice of
intent to commence legal action alleging professional negligence against
Physician or of the settlement of any such claim by Physician or if a
judgment is rendered against Physician in any such legal action. Physician
will promptly notify DH in writing of any changes in or cancellations of
any policy of insurance maintained by Physician. If such policy is written
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on a claims made basis and such coverage is discontinued, Physician will
purchase an "Extension of Coverage Endorsement" within ten (10) days of
written notice of discontinuance and shall provide DH with a copy of this
endorsement.
28. This Agreement may be terminated by Physician upon 90 days prior written
notice to DH if DH fails to perform its obligations to Physician or to pay
any amounts required to be paid by DH to Physician.
29. DH may terminate this Agreement by notice in writing to Physician for good
cause, or if Physician materially breaches this Agreement and such breach
continues for a period of thirty (30) days after written notice is given to
Physician by DH specifying the nature of the breach. Good cause means:
- Physician's membership in any professional organization is
terminated for cause related to professional conduct, or
Physician resigns from any professional organizations under the
threat of disciplinary action for professional conduct.
- Physician is indicted upon a charge of committing a felony or any
misdemeanor involving moral turpitude.
- Physician fails to comply with rules, regulations and policies
imposed with regard to the Medicare programs or to preserve his
or her eligibility to participate in the Medicare programs.
- Physician fails to comply with any material DH Protocols.
- Physician takes any action which puts a DH HMO Members' health at
risk.
- Physician loses his/her license or certificate to practice
medicine.
30. To the extent required to enable DH and the IPA to comply with Section 952
of the Medicare and Medicaid Amendments of 1980, or regulations promulgated
pursuant thereto, Physician shall until the expiration of four (4) years
after the furnishing of services under this Agreement, make available, upon
written request, to the Secretary of Health and Human Services or the
Comptroller General of the United States, or to any of their duly
authorized representatives, this Agreement and such of Physician's books,
documents and records as are necessary to certify the nature and extent of
costs under this Agreement.
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PRINTED NAME OF PHYSICIAN PHYSICIAN
By: (SEAL)
- --------------------------------- ------------------------------------
Please Attach Business Card , M.D.
DOCTORS HEALTH, INC.
By: (SEAL)
------------------------------------
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EXHIBIT A-2
Schedule of Services
I. Care Management includes:
A. Credentialing and Provider File Maintenance. In compliance
with NCQA standards, the credentialing process gathers
information on our member providers, performs primary source
verification, provides automatic recredentialing activities
and alerts providers when items need to be renewed and/or
reevaluated.
B. Referral Management. The DH Referral Management Program
provides for the maintenance of referral directories;
authorization of DH referrals to network providers; clinical
review of referrals for appropriateness, according to DH
physician approved criteria; and tracking and reporting of
referral patterns to identify outliers and encourage
recommendations for change.
C. Utilization Management. The DH Utilization Management Program
reviews and tracks the utilization of healthcare services,
particularly inpatient stays, to facilitate appropriate
hospital admissions; provides recommendations for alternate
site care and assists with the coordination of these services;
provides clinical review of procedural necessity; and works
with the physician to identify practice pattern trends.
D. Case Management. The DH Case Management Program offers to
physicians the skills of registered nurses and licensed
clinical social workers in order to assist in the coordination
of the care and services required by patients with
catastrophic and/or chronic illnesses or injuries. The case
manager works in conjunction with the physician, patient and
family to identify healthcare needs, develop a plan of care,
establish realistic treatment goals, coordinate and monitor
necessary resources, and evaluate treatment progress.
II. Data Management. The DH Data Management service coordinates the receipt
and maintenance of payor eligibility and benefit plan information. It
also allows for the coordination and integration of a variety of data
components to yield meaningful reports which will reflect the overall
performance of a provider network, i.e., utilization, costs and
quality.
III. Patient Services. DH provides all Participating Physicians, access to
nurse triage and patient advocacy services. Through these services,
specially trained nurses are available by phone to answer questions
regarding access to services, treatment alternatives and self care
options.
IV. Third Party Administration. The DH Third Party Administration services
provide for the appropriate adjudication of claims, coordination of
benefits, subrogation services and integration with the reinsurance
carrier.
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EXHIBIT B-3
SIGNING BONUS
Physician's Signing Bonus is based upon the following representations made by
Physician:
1. Physician's gross primary care collections for the 1996 calendar year
were $ ------------.
2. The number of Physician's active(1) Medicare patients is ______.
Based upon and subject to the accuracy of the information provided herein,
Physician's Signing Bonus shall be an amount equal to :
1. Cash in the amount of $ ____________.
2. __________ shares of Class B Common Stock of Doctors Health.
A Prospectus describing Doctors Health and its affiliates is enclosed. Please
direct your attention to pages 8 to 16 of the Prospectus which describes the
risk factors which you should consider in evaluating an investment in the
securities offered under the Prospectus and in this Agreement. We will provide
updated information about this company in the form of a Prospectus Supplement.
- -------------------
(1) Patients who have made at least one office visit to Physician during the
last two years.
A-7
<PAGE>
EXHIBIT C-20
Doctors Health, Inc.
PCP Compensation
DH Capitation - Base Rates
1998 Primary Care Base Capitation Rates
Medicare
<TABLE>
<CAPTION>
County Aged/ Disabled Institutionalized
- -------- --------------- -----------------
<S> <C> <C>
Allegany $26.70 $52.06
Anne Arundel $36.00 $60.00
Baltimore $30.36 $59.19
Baltimore City $31.23 $60.00
Calverty $26.15 $50.99
Caroline $24.00 $46.80
Carroll $26.97 $52.58
Cecil $24.86 $48.48
Charles $31.16 $60.00
Dorchester $24.00 $46.80
Frederick $24.00 $46.80
Garrett $24.00 $46.80
Harford $29.45 $57.43
Howard $30.68 $59.82
Kent $24.00 $46.80
Montgomery $32.00 $60.00
Prince Georges $42.00 $60.00
Queen Anne $24.00 $46.80
St. Marys $26.34 $51.37
Somerset $24.00 $46.80
Talbot $24.00 $46.80
Washington $24.00 $46.80
Wicomico $24.00 $46.80
Worcester $24.00 $46.80
District of Columbia $35.00 $60.00
Northern Virginia
</TABLE>
A-8
<PAGE>
EXHIBIT D-21
DH Capitation - Capitation Rate Modifier ("CRM")
(up to 10% of Base Rate)
Commercial Formula
<TABLE>
<CAPTION>
CRM
Percentage
----------
<S> <C>
I. Capitation Panel Size
- > 100 members/doctor or 200 members/practice 0.5%
- > 300 members/doctor or 750 members/practice 1.5%
- > 500 members/doctor or 1,250 members/practice 2.5%
- > 1,000 members/doctor or 2,500 members/practice 3.5%
II. DH Membership Growth
- Membership growth > 10% per year (min. = 100 patients) 1.25%
- Membership growth > 20% per year (min. = 250 patients) 2.50%
III. Scheduled Office Hours
- > 50 office hours per week 0.5%
- > 60 office hours per week 1.5%
- > 70 office hours per week 2.5%
IV. Internal Coverage 1.5%
- Coverage of the practice by its own physicians to deliver
better service and care coordination
Maximum CRM as a % of the Base Rate = 10.0%
</TABLE>
Medicare Formula
Capitated Panel Size
<TABLE>
<S> <C>
>25 Medicare HMO Members/physician or 75 Medicare HMO Members/practice group 2.5%
>50 Medicare HMO Members/physician or 150 Medicare HMO Members/practice group 5.0%
>75 Medicare HMO Members/physician or 225 Medicare HMO Members/practice group 7.5%
>100 Medicare HMO Members/physician or 300 Medicare HMO Members/practice group 10.0%
Maximum CRM as a % of the Base Rate 10.0%
</TABLE>
THE FORMULAS PROVIDED ARE SUBJECT TO CHANGE BASED UPON CHANGES IN THE MARKET AND
RECOMMENDATIONS FROM PRIMARY CARE PHYSICIANS REPRESENTING EACH COUNT
A-9
<PAGE>
EXHIBIT E-23
Point System for the Bonus Pool Distribution
<TABLE>
<CAPTION>
Available
PCP
Points
-----------
<S> <C>
I. Utilization
- Hospital 5.0
- Specialist 5.0
- Emergency room, other 5.0
II. Patient Satisfaction/Retention 2.5
- Based on results of annual surveys
III. Clinical Quality 2.5
- Chart reviews and outcomes
IV. "Citizenship" 5.0
- Overall DH cooperation and participation,
including network loyalty
MAXIMUM PCP BONUS POINTS = 25.0
</TABLE>
A-10
