D.6_Appendix_C_–_(Template)_Tripartite_Agreement.doc

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TRI-PARTITE BANK AGREEMENT FOR MEDICARE BANK SERVICES

This AGREEMENT (the “Tri-Partite Agreement”) is effective starting on (insert Month, Day Year) or whatever date the Medicare Claims Processor actually begins to use the banking contractor discussed herein, and is between the Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS), represented by the Director, Division of Financial Strategies and Evaluation or his/her designee executing this Agreement; (insert name of contracting company) (hereinafter called the Contractor); and (inset name of bank) (hereinafter called the Bank).

RECITALS

(1) CMS and the Contractor are parties to (insert contract number) or a supplemental agreement thereto, if applicable, individually and collectively referred to herein as the “Agreements”, providing for an advance of funds pursuant to the “Automated Standard Application for Payment (ASAP) Account Guidelines,” and for purposes of this Tri-Partite Agreement, shall be referred to as the “Letter of Credit.”

(2) The Agreements require that funds withdrawn thereunder be used solely for payment of items and services covered under the Program of Health Insurance for the Aged and Disabled established by Title 18 of the Social Security Act (commonly known as “Medicare”), as further described in Addendum B Procedures Applicable to the Checks Paid Method. Such funds must be deposited in a Federal Health Insurance Benefits Account (further described below) at a member bank or banks of the Federal Reserve System or any “insured” bank within the meaning of the Act creating the Federal Deposit Insurance Corporation (“FDIC”) (Act of August 23, 1935; 49 Stat. 684, as amended; 12 U.S.C.264), separate from the Contractor's general or other funds; and, the Bank being such a bank, the parties are agreeable to so depositing said amounts with the Bank.

(3) The Federal Health Insurance Benefits Account, which Account includes one or more of a controlled disbursement account, deposit account, and/or funding account (the “FHIBA”) shall be designated the Highmark Medicare Services, Inc. Federal Health Insurance Benefits Account.

COVENANTS

In consideration of the foregoing, and for other good and valuable consideration, it is agreed that:

(1) CMS shall have a lien upon the credit balances in the FHIBA to secure the repayment of all funds in the FHIBA, which lien shall be superior to any lien or claim of the Bank or Contractor with respect to such account.

(2) The Bank shall not be responsible for (a) the application of funds withdrawn from the FHIBA, or (b) determining whether any person or entity is entitled to receive funds ordered or directed to be paid by the Contractor. Provided that the Bank exercises ordinary care, after receipt by the Bank of written directions from the duly authorized representative of CMS or the Contractor, the Bank shall act thereon and shall be under no liability to any party hereto or any third party for any action taken or not taken in accordance with such written directions, including without limitation any directions in the form of electronic transmission, file, mail or other electronic instruction or transaction, including automated clearing house entry, or for the breach of any warranty or representation by CMS or the Contractor, as the case may be. Any such written directions or instructions received by the Bank from or at the direction of the Director, Division of Financial Strategies and Evaluation, CMS, or from the duly authorized representative of same may, in so far as the rights, duties and liabilities of the Bank are concerned, be considered as having been properly issued and filed with the Bank by CMS.

(3) CMS or its authorized representatives may request copies of the establishment and maintenance of, and transactions in the FHIBA at CMS’s expense. Such copies shall be available within a reasonable time. Such records shall be preserved by the Bank for a period of six (6) years following the close of the calendar year in which the records were created unless prior to that time, the Bank has been notified in writing by CMS that preservation of such records for a longer period of time is necessary for purposes of litigation or dispute.

(4) In the event of the service of any writ of attachment, levy of execution, or commencement of garnishment proceedings with respect to the FHIBA, the Bank will promptly notify CMS.

(5) CMS will arrange for an electronic Letter of Credit issued by the United States Treasury (irrevocable to the extent obligations arise when the Bank has acted in accordance with instructions of the Contractor) to the Bank, for the benefit of the FHIBA. CMS authorizes the Bank to issue a 1031 draw-down request (the “Draw-down”) against the Letter of Credit in accordance with the Draw-down instructions agreed to by the parties (the “Draw-down Instructions”), to the appropriate Federal Reserve Bank. The Draw-downs shall be limited to the amount of (a) checks and other items, including electronic funds transfer (EFT) items issued by or in the name of the Contractor, presented for payment each day or projected to be presented for payment each day (individually, “Item” and collectively, the “Items”); (b) any withdrawals or debits to the FHIBA in accordance with ordinary procedures for processing any Items, including, without limitation, any adjustments and charge backs in connection with any Items (the “Adjustments”), and (c) prior overdrafts, if any, less other collected deposits. In conjunction with any transfers of funds, the parties agree to be bound by the then current Operating Rules and Guidelines of the National Automated Clearinghouse Association (the “NACHA Rules”), except that with respect to the Government, as such NACHA Rules are modified by Department of the Treasury Regulations. Notwithstanding anything to the contrary herein, Bank shall be under no obligation to follow the instructions or directions of CMS or the Contractor to reverse any entries or Items unless such reversal is in accordance with the NACHA Rules or Department of Treasury Regulations. Bank agrees to service the FHIBA in the manner set forth herein and based on the specifications and pricing schedules contained in Addenda A and B.

The Bank and the Contractor each agree to exercise good faith to keep all withdrawals restricted so as not to cause the Letter of Credit total monthly authorization to be exceeded. In the event Items or other withdrawals presented or projected to be presented against the FHIBA exceed the Letter of Credit total monthly authorization, Bank will use commercially reasonable efforts to notify CMS before 10:00 a.m. Eastern Time, and CMS shall, within 48 hours from the time of the request, increase the Letter of Credit total monthly authorization, as necessary, to cover the excess amount. In the event that CMS fails to timely respond and Bank processes Items exceeding the amount of the Letter of Credit, the Bank may include on its monthly fee schedule any related fees and charges, plus interest, if applicable. As used herein, banking day means that part of any business day on which an office of the Bank is open to the public for carrying on substantially all of its banking functions.

The Contractor and the Bank agree to notify each other within 15 days after learning of the occurrence of any actions or omissions of which the party becomes aware that may be in violation of the Tri-Partite Agreement or which may be otherwise fraudulent or unauthorized.

Bank, Contractor and CMS agree that no person other than the parties to the Agreements are intended to be the beneficiaries of the Tri-Partite Agreement or the Agreements nor shall any other person have rights arising under same.

(6)

This Tri-Partite Agreement, with all its Provisions and covenants, shall be in effect for a term of 5 years beginning on (date of contract award to bank) and ending on (date contract between CMS and bank ends, including option periods).

(7) Notwithstanding Covenant 6, in the event the Agreements referenced in Recital (1) are not renewed or are terminated, this Tri-Partite Agreement among CMS, the Contractor, and the Bank will automatically be terminated upon the delivery of written notice to the Bank. This Tri-Partite agreement will terminate automatically at the conclusion of the term listed in (6), above.

(8) The Bank agrees that it shall not enter into any agreement with any other party to carry out the primary responsibilities of this Tri-Partite Agreement without the prior written approval of CMS.

The Bank, the Contractor, and CMS agree to comply with the provisions set forth in Addenda A and B, which are attached hereto and incorporated herein.

The Bank, the Contractor, and CMS agree that, in the event of any conflict of terms, this Tri-Partite Agreement supersedes the Bank’s standard agreements governing deposit accounts and treasury management services for any and all accounts and services that are covered by this Tri-Partite Agreement.

[SIGNATURES ON NEXT PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement, including the signature pages, to be executed as of the day and year first above written.

THE UNITED STATES OF AMERICA

CONTRACTOR

Department of Health and Human Services

(insert name of contracting company)

By: _________________________

By: __________________________ Its: _________________________

Its: __________________________ Date: ________________________

Date: _________________________

BANK

(insert name of the bank) By: _________________________

Its: _________________________

Date: _______________________

CERTIFICATE

I, __________________, certify that I am the _________________________ of the Contractor, that ___________________ who signed this Tri-Partite Agreement on behalf of the Contractor was then ___________________ of the Contractor; that said Tri-Partite Agreement was duly signed for and on behalf of the Contractor by authority of its governing body, and is within the scope of its corporate powers.

Signed: __________________________

Date: ____________________________

ADDENDUM A

CONTRACTOR' S REQUIRED MEDICARE BANKING SERVICES

Banking Contract Addendum 3, entitled Price List for Banking Services, encompasses all approved banking services that can be used by (Medicare Claims Processor). Any additional services requested must be approved by CMS.

MANDATORY REQUIREMENTS

TRANSFER OF INFORMATION - CONTRACTOR TO BANK

Daily

Monthly

MANDATORY REQUIREMENTS

TRANSFER OF INFORMATION - BANK TO CONTRACTOR

Daily

Monthly

ADDENDUM B

(All capitalized terms used herein and not otherwise defined shall have the meaning as set forth in the Tri-Partite Agreement.)

PROCEDURES APPLICABLE TO THE CHECKS PAID METHOD

1.

Under the “Checks Paid Method” of financing, a Letter of Credit will be arranged in favor of the Bank, for the benefit of the FHIBA, authorizing the appropriate Federal Reserve Bank to pay funds to the Bank on behalf of the Centers for Medicare and Medicaid Services (CMS).

2.

Except as otherwise provided, all federal funds withdrawn under the Letter of Credit will be kept separate from all other funds of the Contractor and will be designated for deposit to the FHIBA. CMS authorizes Bank to issue a 1031 draw-down request (the “Draw-down”) against the Letter of Credit in accordance with the Draw-down instructions agreed to by the parties (the “Draw-down Instructions”), to the appropriate Federal Reserve Bank. The Draw-downs shall be limited to the amount of (a) checks and other items, including electronic funds transfer (EFT) and automated clearinghouse (ACH) items issued by or in the name of the Contractor, presented for payment each day or projected to be presented for payment each day (individually, “Item” and collectively, the “Items”); (b) any withdrawals or debits to the FHIBA in accordance with ordinary procedures for processing any Items, including without limitation, any adjustments and charge backs in connection with any items (the Adjustments), and (c) prior overdrafts, if any; less other collected deposits made by the contractor into the FHIBA.

3.

The essential objective of the Checks Paid Method of financing is the maintenance of a zero balance in the FHIBA. The Contractor and the Bank each agree to exercise good faith and ordinary care to maintain the zero balance. Except as otherwise provided in the Tri-Partite Agreement, the Bank will post all Items presented for payment during the day to the FHIBA, total the amount received that day for payment, and immediately issue a Draw-down request to the Federal Reserve Bank (or execute appropriate procedures for release of funds) to cover that amount, subject to the terms of the Tri-Partite Agreement. Items presented for deposit during the day to the FHIBA will upon collection be used as an offset against the amount of funds to be drawn.

4.

If any earnings or losses result from average monthly positive or negative balances in the FHIBA, they will be:

(a) Computed monthly at the Analysis Earnings Rate (AER), as defined by the Financial Management Service, a bureau of the United States Department of the Treasury on a monthly basis. The AER is the 3-month Treasury Bill Auction Average (Investment) rate; and

(b) Included in the monthly computation of bank service charges.

5.

The Bank will provide its charge for each of the requested services, including any FDIC fee or charge required to be paid by the Bank from time to time as such fee or charge may change, as reflected in the Specifications to Provide Required Banking Services (Addendum A) and will receive monthly reimbursement for servicing the FHIBA. All such fees and charges shall be sent monthly to the CMS Director, Division of Financial Strategies and Evaluation, are due and payable by CMS within 30 days of the date of receipt, and shall be payable by wire, ACH or check. The amount of any such fees and charges not paid within such 30 day period shall accrue interest at a rate equal to the Prime Rate plus 2% per annum for actual days outstanding until paid calculated on the basis of a 365 day year.

6.

The Bank will be required to prepare a monthly reconciliation of the FHIBA. The Contractor will furnish the Bank with a record of checks/EFTs issued (numerically identified) to be matched against those checks/EFTs which have cleared through the FHIBA. The results of the Bank reconciliation will be given to the Contractor.

7.

The Bank will be required to submit to the Contractor each month:

(a) A bank statement reflecting the daily total checks/EFTs debited, daily total deposits credited, any Adjustments, and daily FHIBA balance. Draw-down deposits and other deposits must be shown separately on the statement.

(b) An analysis of the FHIBA, reflecting the Contractor’s actual account activity for the month.

8. TERMINATION PROCEDURES

In the event of termination, the Bank agrees to retain the FHIBA for an additional 365-day period beyond the current term, to allow for clearance of outstanding checks. During this 365-day period, the Bank will continue to draw against the Letter of Credit to cover all outstanding checks and EFT items presented for payment or projected to be presented for payment, and CMS shall continue its obligations to reimburse Bank for any deficiencies or overdrafts. All terms and conditions of this Agreement which are not inconsistent with this 365-day additional term will remain in effect.

During the entire 365-day period, it is further understood that all Bank service charges and fees, including any FDIC fees or charges will be consistent with and paid in accordance with the current Tri-Partite Agreement.

The current Tri-Partite Agreement will continue in effect except for the following:

The Term of the Tri-Partite Agreement--Covenant 6

Automatic Termination of Tri-Partite Agreement--Covenant 7

9. LIMITATION OF LIABILITY

(a) Provided that the Bank acts in good faith and with ordinary care, the Bank’s liability under the Tri-Partite Agreement shall be limited as follows:

(i) Actual direct costs incurred by the Contractor and/or CMS which due to the Bank’s inability, negligence, or refusal to comply with the Tri-Partite Agreement are required to be performed or completed by the Contractor (e.g., check printing costs, reconciliation, or other services included in the Tri-Partite Agreement).

(ii) Bank shall be liable for the amount of any Draw-down erroneously made by Bank that is not in accordance with Section 2 under this Addendum B. In such event, Bank's sole liability shall be for Earnings Credit on the amount of excess Draw-down, to be applied to bank service charges as described above in 4(a).

(b) The amount of interest applicable to the above shall be calculated by multiplying the applicable Federal Funds rate by the amount on which interest is payable, and then multiplying the product by the number of days for which interest is payable. The applicable Federal Funds rate is the average of the Federal Funds rates published by the Federal Reserve Bank of New York for each of the days for which interest is payable divided by 360. The Federal Funds rate for any day on which a published rate is not available is the same as the published rate for the next preceding day for which there is a published rate.