2017-11-10T09:12:41-06:00 2016-12-31 ERNST & YOUNG US LLP 5 TIMES SQUARE NEW YORK NY 100366530 990 2016-01-01 113029569 Healthfirst Health Plan Inc % CRAIG BARATTIN-VP CONTROLLER HEAL 100 CHURCH ST FL 18 New York NY 100072601 JOHN BERMEL CFO 2128016000 2017-11-08 Laura Kielczewski P00740769 2127733000 2017-11-07 12.41.123.251 13966820173145000000 2017-11-10 P 48376AC60715834143EC7E8D06BB46C111BC8BCB 48376AC60715834143EC7E8D06BB46C111BC8BCB 2016 2018-03-14 21:41:22Z PATRICIA J WANG 100 CHURCH ST FL 18 NEW YORK NY 100072601 2241794543 false X www.healthfirst.org X 1990 NY IMPROVE THE HEALTH AND WELL-BEING OF UN DERSERVED POPULATIONS BY PROVIDING AFFORDABLE QUALITY HEALTH PLANS TO ELIGIBLE MEDICARE,COMPLETE CARE,FIDA&COMMERCIAL INSURANCE RECIPIENTS. 4 3 0 0 0 0 0 2023330551 2237801213 5054008 3993330 0 0 2028384559 2241794543 0 0 0 0 0 0 0 0 0 2022601004 2235299601 2022601004 2235299601 5783555 6494942 652104450 831021649 380834271 529293275 271270179 301728374 X IMPROVE THE HEALTH AND WELL-BEING OF UNDERSERVED POPULATIONS BY PROVIDING AFFORDABLE QUALITY HEALTH PLANS TO ELIGIBLE MEDICARE, COMPLETE CARE, FIDA & COMMERCIAL INSURANCE RECIPIENTS. false false 1742285189 1798754105 MEDICARE: HEALTHFIRST HEALTH PLAN, INC. (HFHP), IS INCORPORATED UNDER THE NOT-FOR-PROFIT LAW OF THE STATE OF NEW YORK AND IS LICENSED UNDER ARTICLE 44 OF THE PUBLIC HEALTH LAW OF THE STATE OF NEW YORK AS A HEALTH MAINTENANCE ORGANIZATION THAT PROVIDES ACCESS TO AFFORDABLE, QUALITY CARE THROUGH ITS NETWORK OF PARTICIPATING PROVIDERS AND HOSPITALS. HFHP PROVIDES HEALTH CARE SERVICES TO MEDICARE ADVANTAGE MEMBERS WHO ARE INDIGENT, AGED, DISABLED AND/OR MEDICALLY UNDERSERVED. IN 2016, THERE ARE APPROXIMATELY 79 PROVIDER ORGANIZATIONS WITH HFHP THAT SERVED 165,370 MEDICARE MEMBERS. 324699168 350245414 COMPLETECARE: HEALTHFIRST HEALTH PLAN, INC. (HFHP), IS INCORPORATED UNDER THE NOT-FOR-PROFIT LAW OF THE STATE OF NEW YORK AND IS LICENSED UNDER ARTICLE 44 OF THE PUBLIC HEALTH LAW OF THE STATE OF NEW YORK AS A HEALTH MAINTENANCE ORGANIZATION THAT PROVIDES ACCESS TO AFFORDABLE, QUALITY CARE THROUGH ITS NETWORK OF PARTICIPATING PROVIDERS AND HOSPITALS. HFHP PROVIDES HEALTH CARE SERVICES TO COMPLETE CARE MEMBERS. COMPLETECARE IS A MEDICAID ADVANTAGE PLUS SPECIAL NEEDS PLAN THAT COMBINES MEDICARE AND MEDICAID BENEFITS, WITH ADDED LONG-TERM CARE SERVICES FOR QUALIFIED DUAL-ELIGIBLE MEMBERS. IN 2016, THERE ARE APPROXIMATELY 57 PROVIDER ORGANIZATIONS WITH HFHP THAT SERVED 5,152 COMPLETE CARE MEMBERS. 83430734 88666423 FIDA: HEALTHFIRST HEALTH PLAN, INC. (HFHP), IS INCORPORATED UNDER THE NOT-FOR-PROFIT LAW OF THE STATE OF NEW YORK AND IS LICENSED UNDER ARTICLE 44 OF THE PUBLIC HEALTH LAW OF THE STATE OF NEW YORK AS A HEALTH MAINTENANCE ORGANIZATION THAT PROVIDES ACCESS TO AFFORDABLE, QUALITY CARE THROUGH ITS NETWORK OF PARTICIPATING PROVIDERS AND HOSPITALS. HFHP PROVIDES HEALTH CARE SERVICES TO FIDA MEMBERS, WHOSE BENEFIT CAN BE INTEGRATED AND CARE ACROSS THE MEDICARE AND MEDICAID PROGRAMS. IN 2016, THERE ARE APPROXIMATELY 52 PROVIDER ORGANIZATIONS WITH HFHP THAT SERVED 1,463 FIDA MEMBERS. HEALTHY NEW YORK COMMERCIAL: IN 2016 THERE ARE 31 HEALTHY NEW YORK MEMBERS AND APPROXIMATELY 10 PROVIDER ORGANIZATIONS. A PROGRAM OVERSEEN BY NY STATE DEPT. OF FINANCIAL SERVICES TO PROVIDE AFFORDABLE HEALTH CARE. 129286 135271 2150544377 false false false false false false false false false false false false true true false true true false false false false false false false false false false false true false false false false false false false true false false false false false true true true false true 8487 0 0 false false false false false false X 4 3 false true false false true true true true true false false true true true true true true false false false NY X CRAIG BARATTIN-VP CONTROLLER 2128016000 100 CHURCH ST FL 18 NEW YORK NY 100072601 RICHARD MURCOTT BOARD DIRECOR-COMMUNITY REP. 1.0 0.0 X 0 0 0 JAY A SCHECHTMAN CHIEF MEDICAL OFFICER 1.0 40.0 X 0 857313 125306 ELIZABETH RST CLAIR CHIEF LGL OFFICER-End 9/30/16 1.0 40.0 X X 0 879977 110029 STEPHEN ROSENTHAL BOARD DIRECTOR 1.0 0.0 X 0 0 0 ERIC SCALETTAR BOARD DIRECTOR 1.0 0.0 X 0 0 0 PATRICIA J WANG CHIEF EXECUTIVE OFFICER 1.0 40.0 X 0 3263189 360296 DANIEL P MCCARTHY PRESIDENT & COO 1.0 40.0 X 0 1482463 198420 CRAIG BARATTIN VP CONTROLLER-END 5/11/16 1.0 40.0 X 0 379502 35322 SEAN M NATARO SECRETARY-BEG 5/11/16 1.0 40.0 X 0 386755 35322 JOHN J BERMEL CFO-BEG 2/1/16 1.0 40.0 X 0 621734 15873 PAUL E PORTSMORE JR SVP, BUS DEV AND MBR ACQUI 1.0 40.0 X 0 646818 95926 REBECCA SCHWIETZ SVP CLINICAL SERVICES 1.0 40.0 X 0 542851 86462 GERALD T SWEENEY SVP CIO 1.0 40.0 X 0 870836 137731 SEAN KANE CHIEF HR OFFICER 1.0 40.0 X 0 652845 103072 MELINDA A THIEL SVP STRAT INT & BUS TRAN 1.0 40.0 X 0 492183 70125 MARYBETH A TITA SVP-CORP. FINANCE-END 3/31/15 0.0 0.0 X 0 212981 0 MICHAEL FEDYNA CFO-END 7/21/15 1.0 40.0 X 0 503800 23002 0 11793247 1396886 0 true true false CAREMARK LLC ONE CVS DRIVE WOONSOCKET RI 02895 PHARMACY 766948748 NEW YORK CITY HEALTH AND HOSPITAL C 125 WORTH STREET ROOM 514 NEW YORK NY 10013 MEDICAL/HOSPITAL 234882507 MONTEFIORE MEDICAL CENTER PO BOX 4296 CHURCH STREET STATION NEW YORK NY 10261 MEDICAL/HOSPITAL 130157819 NY PRESBYTERIAN HOSP-COLUMBIA PO BOX 6154 NEW YORK NY 10249 MEDICAL/HOSPITAL 71686356 MOUNT SINAI HOSPITAL 1 GUSTAVE L LEVY PLACE NEW YORK NY 10029 MEDICAL/HOSPITAL 55583527 1151 0 MEDICARE (INCLUDES PART D) 524114 1798754105 1798754105 COMPLETE CARE (INCLUDES PART D) 524114 350245414 350245414 FIDA 524114 88666423 88666423 COMMERCIAL (INCLUDES HEALTHY NY) 524114 135271 135271 2237801213 3993330 3993330 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2241794543 2237801213 3993330 0 0 0 0 0 0 0 0 0 0 254812254 170724210 84088044 0 0 0 0 0 921453 365240 556213 5501935 5501935 473937 341616 132321 0 0 0 0 0 0 697565 697565 0 0 0 HEALTHCARE SERVICE COSTS 1944960121 1944960121 MEDICAL ADMINISTRATIVE 27695898 27695898 CLAIMS ADJUSTMENT EXPENSE 236438 257792 -21354 2235299601 2150544377 84755224 0 0 0 74939016 221316525 0 0 69654202 63029438 0 0 0 0 0 0 0 0 0 0 0 0 297086412 346292166 0 0 0 0 0 0 210424820 200383520 652104450 831021649 342643503 466432598 0 0 0 0 0 0 0 0 0 0 0 0 0 0 38190768 62860677 380834271 529293275 X 271270179 301728374 0 0 0 0 271270179 301728374 652104450 831021649 X 6494942 618398 23344855 X X false true X true false INTEREST RECEIVABLE 1192170 PHARMACY REBATE RECEIVABLE 145689936 COVERAGE GAP DISCOUNT PROGRAM 3482558 MEDICARE NEGATIVE VENDOR BAL 4122676 MEDICARE D PLAN-TO-PLAN RECV 4323 OTHER CURRENT ASSETS/PREPAID 6412840 OTHER MEDICAL RECEIVABLE 3763736 SECURITY DEPOSIT - OTHER 147200 PART D DEPOSIT - LOW INCOME 6046 PART D DEPOSIT - REINSURANCE 0 DUE FROM HEALTHFIRST OF NJ 9400 DUE FROM HFMS 23052635 INVESTMENT IN AFFILIATE 12500000 200383520 0 DUE TO CMS 5717646 MEDICARE PART D DEPOSIT LIABIL 20331570 DUE TO 501(C)(3) AFFILIATE 16875570 NOTE PAYABLE TO RELATED PARTY 15798466 OTHER CURRENT LIABILITIES 4137425 62860677 2265757796 618398 23344855 23963253 2241794543 2241794543 2235299601 2235299601 2235299601 PART XI, LINE 2D - OTHER ADJUSTMENTS NET RELEASES FROM FINANCIAL SECURITY DEPOSITS FOR MEMBER HOSPITALS: $(993,700). ADMINISTRATIVE CHARGES: $24,338,555. The health care services agreements with certain hospitals require that a portion of the premiums are retained as an administrative cost by Healthfirst Health Plan (HFHP), which represents the capital required for its statutory financial reserves. true true false false false false false false false JAY A SCHECHTMAN CHIEF MEDICAL OFFICER 434310 309736 113267 0 106830 0 18622 0 982765 0 93963 ELIZABETH RST CLAIR CHIEF LGL OFFICER-End 9/30/16 407339 336888 135750 0 100613 0 9567 0 990157 0 0 PATRICIA J WANG CHIEF EXECUTIVE OFFICER 1147767 979693 1135729 0 354219 0 6228 0 3623636 0 1088131 MARYBETH A TITA SVP-CORP. FINANCE-END 3/31/15 0 0 212981 0 0 0 0 0 212981 0 0 DANIEL P MCCARTHY PRESIDENT & COO 698258 607037 177168 0 186111 0 12421 0 1680995 0 157287 PAUL E PORTSMORE JR SVP, BUS DEV AND MBR ACQUI 396319 248312 2187 0 95926 0 140 0 742884 0 0 REBECCA SCHWIETZ SVP CLINICAL SERVICES 340655 201601 595 0 67040 0 19553 0 629444 0 0 MICHAEL FEDYNA CFO-END 7/21/15 221431 277971 4398 0 15900 0 7102 0 526802 0 0 CRAIG BARATTIN VP CONTROLLER-END 5/11/16 256886 122331 285 0 15900 0 19513 0 414915 0 0 GERALD T SWEENEY SVP CIO 442296 427020 1520 0 119335 0 18506 0 1008677 0 0 SEAN KANE CHIEF HR OFFICER 396551 244556 11738 0 103072 0 138 0 756055 0 9878 SEAN M NATARO SECRETARY-BEG 5/11/16 275625 109613 1517 0 15900 0 19516 0 422171 0 0 JOHN J BERMEL CFO-BEG 2/1/16 522697 99037 0 0 0 16025 0 637759 0 0 MELINDA A THIEL SVP STRAT INT & BUS TRAN 304555 185765 1863 0 70125 0 120 0 562428 0 0 SCHEDULE J, PART 1, LINE 4A THE FOLLOWING INDIVIDUALS ENTERED INTO SEVERANCE AGREEMENTS AND/OR RECEIVED SEVERANCE PAYMENTS FROM HF MANAGEMENT SERVICES, LLC - AN AFFILIATE ORGANIZATION OF HEALTHFIRST. ELIZABETH ST. CLAIR - TOTAL SEVERANCE: $759,575, SEVERANCE PAID IN 2016: $107,120 SEVERANCE DEFERRED: $652,455. MARYBETH TITA, SEVERANCE PAID IN 2016: $135,635. SCHEDULE J, PART 1, LINE 4B THE FOLLOWING INDIVIDUALS PARTICIPATED IN THE NON-QUALIFIED RETIREMENT PLAN PROVIDED BY HF MANAGEMENT SERVICES, LLC - A RELATED ORGANIZATION. THE AMOUNTS BELOW REPRESENT CONTRIBUTIONS FROM THE PLAN SPONSOR FOR 2016: PATRICIA J. WANG $338,319 [Col. C] DANIEL P. McCARTHY $176,344 [Col. C] ELIZABETH R. ST CLAIR $84,713 [Col. C] JAY A. SCHECHTMAN $90,930 [Col. C] GERALD T. SWEENEY $103,455 [Col. C] SEAN KANE $87,172 [Col. C] PAUL PORTSMORE $80,026 [Col. C] MELINDA THIEL $56,547 [Col. C] REBECCA SCHWIETZ $51,140 [Col. C] MARYBETH TITA $77,346 [Col. C] HF MANAGEMENT SERVICES LLC COMMON OFFICERS/DIRECTORS 254812254 MANAGEMENT AND ADMIN SERVICES false HF MANAGEMENT SERVICES LLC COMMON OFFICERS/DIRECTORS 15798466 NOTES PAYABLE OUTSTANDING false HF MANAGEMENT SERVICES LLC COMMON OFFICERS/DIRECTORS 38500000 PHARMACY RECEIVABLE ASSIGNMENT false HEALTHFIRST PHSP INC COMMON OFFICERS/DIRECTORS 54572000 RISK SHARING INTERCO TRANSFER false FORM 990, PART VI, SECTION A, LINE 3 HEALTHFIRST HEALTH PLAN INC. (HFHP), CONTRACTS WITH HF MANAGEMENT SERVICES, LLC (HFMS), A RELATED ORGANIZATION, TO PROVIDE ALL OF ITS MANAGEMENT AND ADMINISTRATIVE SERVICES. THE NOT-FOR-PROFIT ENTITY DOES NOT MAINTAIN ITS OWN STAFF OR OFFICE SPACE; THESE ARE PROVIDED BY HFMS. HFMS CHARGES A PERCENT OF PREMIUMS ON A PER MEMBER PER MONTH BASIS OR A FLAT FEE PER MEMBER PER MONTH. THE ARRANGEMENT IS APPROVED BY STATE REGULATORS. ALL OFFICERS, KEY EMPLOYEES, AND HIGHEST COMPENSATED EMPLOYEES WERE PAID BY, AND WORKED FOR, HFMS A MANAGEMENT COMPANY WHICH PROVIDES MANAGEMENT SERVICES FOR MULTIPLE ENTITIES. NONE OF THE INDIVIDUALS LISTED EARNED ANY COMPENSATION FROM HFHP. FORM 990, PART VI, SECTION A, LINE 6 HEALTHFIRST HEALTH PLAN INC. HAS A SOLE CORPORATE MEMBER, WHICH IS HEALTHFIRST, INC. FORM 990, PART VI, SECTION A, LINE 7A HEALTHFIRST, INC., A RELATED NOT-FOR-PROFIT ORGANIZATION, HAS THE RIGHT TO APPOINT THE MEMBERS OF THE BOARD OF DIRECTORS OF HEALTHFIRST HEALTH PLAN, INC. FORM 990, PART VI, SECTION A, LINE 7B SOME DECISIONS OF THE GOVERNING BODY, SHOULD THEY OCCUR, ARE SUBJECT TO APPROVAL BY OTHER ENTITIES: * REPAYMENT OF THE ORGANIZATION'S DEBT OBLIGATIONS REQUIRES STATE REGULATORY APPROVAL * DISTRIBUTION OF THE ORGANIZATION'S NET ASSETS REQUIRES STATE REGULATORY APPROVAL * CERTAIN CHANGES TO PREMIUM RATES ARE SUBJECT TO FEDERAL OR STATE REGULATORY APPROVAL * EXPANSION TO OTHER MANAGED CARE BUSINESSES REQUIRES STATE LICENSURE * MANAGEMENT FEE RATE CHANGES REQUIRE APPROVAL FROM THE MANAGEMENT COMPANY AND STATE REGULATORS FORM 990, PART VI, SECTION B, LINE 11B THE 990 IS PREPARED BY THE HF MANAGEMENT SERVICES, LLC (HFMS) CORPORATE FINANCE DEPARTMENT STAFF AND THEN REVIEWED BY THE HFMS VICE PRESIDENT CONTROLLER AND TREASURER. SECONDARY REVIEWS ARE ALSO PERFORMED BY THE HFMS CHIEF LEGAL OFFICER AND CHIEF FINANCIAL OFFICER. THE DRAFT 990 IS THEN REVIEWED BY AN INDEPENDENT ACCOUNTING FIRM. THE DRAFT 990 IS THEN PRESENTED TO THE BOARD OF DIRECTORS FOR REVIEW. THE FINAL 990 IS SUBMITTED AFTER THE BOARD OF DIRECTORS REVIEW IT. FORM 990, PART VI, SECTION B, LINE 12C A CONFLICT OF INTEREST DISCLOSURE STATEMENT IS COMPLETED ANNUALLY BY EACH BOARD MEMBER, OFFICER AND KEY EMPLOYEE. A NOMINATED BOARD MEMBER WHO DOES NOT COMPLETE THE STATEMENT WITHIN THE CALENDAR YEAR WILL NOT BE PERMITTED TO CARRY OUT DUTIES. THE SAME APPLIES TO AN OFFICER OR KEY EMPLOYEE WHO DOES NOT COMPLETE THE APPROPRIATE DISCLOSURES. ANY DISCLOSURE OF A CONFLICT OR POTENTIAL CONFLICT IS REVIEWED BY THE CHIEF COMPLIANCE OFFICER. CONFLICTS ARE ADDRESSED BY EXAMINING THE RELATIONSHIP OF THE INDIVIDUAL TO THE ORGANIZATION AND THE NATURE OF THE DISCLOSURE. A REPORT OF ANY CONFLICTS IS PREPARED FOR DISCUSSION WITH AUDIT AND COMPLIANCE COMMITTEE OF THE BOARD OF DIRECTORS OF HEALTHFIRST, INC., THE NOT FOR PROFIT CORPORATE PARENT, AS WELL AS THE FULL BOARD OF DIRECTORS OF HEALTHFIRST HEALTH PLAN, INC. AS APPROPRIATE. GUIDANCE IS PROVIDED TO THE NECESSARY PARTIES AND ACTION IS TAKEN, INCLUDING BUT NOT LIMITED TO DISCLOSURE AND RECUSAL FROM DECISION-MAKING, MODIFICATIONS TO BUSINESS AGREEMENTS, CHANGES IN VENDORS OR REPLACEMENT OF THE DIRECTOR, OFFICER OR KEY EMPLOYEE WITH A NON-CONFLICTED INDIVIDUAL. FORM 990, PART VI, SECTION B, LINE 15 BECAUSE THE REPORTING ORGANIZATION DID NOT COMPENSATE ANY OFFICERS OR EMPLOYEES, THE ORGANIZATION HAS RESPONDED "NO." HOWEVER, THE COMPENSATION OF THE CEO, OTHER OFFICERS AND KEY EMPLOYEES IS DETERMINED BY THE COMPENSATION COMMITTEE OF HF MANAGEMENT SERVICES, LLC, THE MANAGEMENT COMPANY THAT PROVIDES ALL SERVICES TO HFHP (A RELATED ORGANIZATION). THE COMMITTEE CONSISTS ONLY OF HFMS MEMBER HOSPITAL DIRECTORS (WHO ARE NOT EMPLOYED NOR COMPENSATED BY HFMS OR ANY OF ITS AFFILIATES). THE PROCESS FOR DETERMINING COMPENSATION IS DESCRIBED IN THE COMMITTEES CHARTER. THE PROCESS INCLUDES ENGAGEMENT OF AN OUTSIDE HUMAN RESOURCES CONSULTING FIRM TO CONDUCT A COMPARABILITY ANALYSIS. THE ANALYSIS INCLUDES COMPARABLE RANGES OF EXECUTIVE COMPENSATION USING THE COMPANY'S INDUSTRY CLASSIFICATION. THE COMMITTEE MEETS PRIOR TO IMPLEMENTATION OF ANY CHANGE IN COMPENSATION. CONTEMPORANEOUS MINUTES OF EACH MEETING ARE PREPARED. FORM 990, PART VI, SECTION C, LINE 19 THE ORGANIZATION MAKES ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND FINANCIAL STATEMENTS AVAILABLE TO THE GENERAL PUBLIC BY PROVIDING COPIES ON REQUEST FOR INSPECTION AT ITS CORPORATE OFFICES. FORM 990, PART XI, LINE 9 OTHER CHANGES IN NET ASSETS - NET RELEASES FROM FINANCIAL SECURITY DEPOSITS FOR MEMBER HOSPITALS: $(993,700). ADMINISTRATIVE CHARGES: $24,338,555. TOTAL OTHER CHANGES IN NET ASSETS: $23,344,855. FORM 990, PART XII, LINE 2C THE SELECTION OF THE INDEPENDENT AUDITOR IS ADMINISTERED BY THE AUDIT AND COMPLIANCE COMMITTEE OF THE BOARD OF DIRECTORS OF HEALTHFIRST, INC. (A RELATED ORGANIZATION). HEALTHFIRST PHSP INC 100 CHURCH ST FL 18 NEW YORK NY 10007 133783732 MANAGED CARE NY 501 (C)3 10 HEALTHFIRST true HEALTHFIRST INC 100 CHURCH ST FL 18 NEW YORK NY 10007 133714932 MANAGED CARE NY 501 (C)3 12 Type I N/A false HEALTHFIRST HEALTH PLAN OF NJ INC 1 WASHINGTON ST STE 1405 NEWARK NJ 07102 510609967 MANAGED CARE NJ 501 (C)4 HF MGMT SVCS true SENIOR HEALTH PARTNERS INC 100 CHURCH STREET 18FL NEW YORK NY 10007 134103882 MGD LT CARE NY 501 (C)3 10 HF MGMT SVCS true NEIGHBORHOOD HEALTH PROVIDERS INC 100 CHURCH ST FL 18 NEW YORK NY 10007 943474115 MANAGED CARE NY 501 (C)3 10 HEALTHFIRST true HF MANAGEMENT SERVICES LLC 100 CHURCH ST FL 18 NEW YORK NY 100072601 134069806 3RD PTY ADM S NY NA false 0 HF ADMINISTRATIVE SERVICES INC 100 CHURCH ST FL 18 NEW YORK NY 100072601 133873482 3RD PTY ADM S NY HF MGMT SVCS C CORP true HEALTHFIRST INSURANCE COMPANY INC 100 CHURCH STREET FL 18 New York NY 100072601 464545744 Insur. Provid NY NA C corp false false false false false true false true false false false false false true false false false false true false HF MANAGEMENT SERVICES LLC E 15798466 NOTES PAYABLE HF MANAGEMENT SERVICES LLC G 38500000 AGREEMENT HF MANAGEMENT SERVICES LLC M 254812254 CONTRACTED RATE HEALTHFIRST PHSP INC R 54572000 CONTRACT FORM 990, SCHEDULE R, PART V, LINE 2 METHOD OF DETERMINING AMOUNT INVOLVED ITEM (1): THE AMOUNT REPRESENTS THE BALANCE OUTSTANDING, INCLUDING INTEREST ACCRUED AND UNPAID, AT DECEMBER 31, 2016. ITEM (2): HFHP ENTERED INTO AN ASSIGNMENT OF PROCEEDS AGREEMENT WITH HFMS. UNDER THE TERMS OF THIS AGREEMENT, HFHP CAN ASSIGN, FROM TIME TO TIME, ALL OR PARTS OF ITS RIGHTS, TITLE AND INTEREST IN THE PROCEEDS OF CERTAIN PHARMACY REBATES RECEIVABLE TO HFMS IN EXCHANGES FOR CASH OR OTHER CONSIDERATION. IN DOING SO, HFHP RETAINS 98% OF THE VALUE OF THE ASSIGNED RECEIVABLE, WITH HFMS RECEIVING A 2% FEE FOR THE ASSIGNMENT. ITEM (3): THE AMOUNT REPRESENTS THE EXPENSES INCURRED AND PAID OR DUE TO THE RELATED ORGANIZATION FOR SERVICES RENDERED BASED ON CONTRACTED RATES APPROVED BY RESOLUTION OF THE BOARD OF DIRECTORS AND STATE REGULATORS. ITEM (4) : IN ACCORDANCE WITH HFHP'S CONTRACTUAL ARRANGEMENTS AND UPON APPROVAL BY THE BOARDS OF DIRECTORS OF HFHP, HEALTHFIRST PHSP, INC. ("PHSP"), AN AFFILIATED COMPANY, AND HEALTHFIRST, CERTAIN MEMBER DEFICIT BALANCES IN PHSP MAY BE OFFSET BY A PERCENTAGE OF THAT MEMBER'S SURPLUS BALANCE IN HFHP THROUGH AN INTERCOMPANY TRANSFER; CONVERSELY, HFHP MEMBER DEFICIT BALANCES MAY BE OFFSET BY A PERCENTAGE OF PHSP'S SURPLUS BALANCES. IN 2016, THE ALLOWABLE AMOUNT OF SURPLUS OFFSET WAS INCREASED FROM 25% TO 50% OF SURPLUSES THAT MAY ACCRUE, AND WOULD OTHERWISE BE DISTRIBUTED TO A MEMBER HOSPITAL OR AFFILIATE INSTITUTION BY EITHER PHSP OR HFHP.