2016-10-19T10:49:55-05:00 2015-12-31 ERNST & YOUNG US LLP 5 TIMES SQUARE NEW YORK NY 100366530 990 2015-01-01 113029569 Healthfirst Health Plan Inc % CRAIG BARATTIN-VP CONTROLLER HEAL 100 CHURCH ST FL 18 New York NY 100072601 JOHN BERMEL CFO 2128016000 2016-10-12 LAURA KIELCZEWSKI P00740769 2127733000 2016-10-11 2015 2017-02-10 21:41:12Z PATRICIA J WANG 100 CHURCH ST FL 18 NEW YORK NY 100072601 2028384559 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. 5 3 0 0 0 0 0 1777556176 2023330551 3199054 5054008 0 0 1780755230 2028384559 0 0 0 0 0 0 0 0 0 1813071250 2022601004 1813071250 2022601004 -32316020 5783555 564772819 652104450 349305203 380834271 215467616 271270179 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. true false 1629584620 1695748010 MEDICARE: HEALTHFIRST HEALTH PLAN, INC. (HFHP), FORMERLY KNOWN AS MANAGED HEALTH, INC. (MHI), 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 2015, THERE ARE ABOUT 71 PARTICIPATING HOSPITALS WITH HFHP THAT SERVED 124,841 MEDICARE MEMBERS. 259568904 270107761 COMPLETECARE: HEALTHFIRST HEALTH PLAN, INC. (HFHP), FORMERLY KNOWN AS MANAGED HEALTH, INC. (MHI), 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 2015, THERE ARE ABOUT 71 PARTICIPATING HOSPITALS WITH HFHP THAT SERVED 3,659 COMPLETE CARE MEMBERS. 55125925 57364114 FIDA: HEALTHFIRST HEALTH PLAN, INC. (HFHP), FORMERLY KNOWN AS MANAGED HEALTH, INC. (MHI), 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 2015, THERE ARE ABOUT 71 PARTICIPATING HOSPITALS WITH HFHP THAT SERVED 1,261 FIDA MEMBERS. 106348 110666 HEALTHY NEW YORK: THERE ARE 203 HEALTHY NEW YORK MEMBERS AND 71 PARTICIPATING HOSPITALS. A PROGRAM OVERSEEN BY NY STATE DEPT. OF FINANCIAL SERVICES TO PROVIDE AFFORDABLE HEALTH CARE. 106348 110666 1944385797 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 9093 0 true 0 false false false false false false X 5 3 false true true 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 825941 123545 ELIZABETH RST CLAIR CHIEF LEGAL OFFICER/SECRETARY 1.0 40.0 X X 0 844528 147946 STEVE 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 1866666 380227 DANIEL P MCCARTHY PRESIDENT & COO 1.0 40.0 X 0 1180164 203594 MICHAEL FEDYNA-End 72115 CHIEF FINANCIAL OFFICER 1.0 40.0 X 0 558793 20625 CRAIG BARATTIN-Beg 72115 VP CONTROLLER 1.0 40.0 X 0 339385 26659 PAUL E PORTSMORE JR SVP, BUS DEV AND MBR ACQUI 1.0 40.0 X 0 509969 94721 IAN SHAFFER EXEC MED DIR BEHAV HEALTH 1.0 40.0 X 0 451567 23673 REBECCA SCHWIETZ SVP CLINICAL SERVICES 1.0 40.0 X 0 449023 67824 GERALD T SWEENEY SVP CHIEF INFORMATION OFFICER 1.0 40.0 X 0 652647 122076 SEAN KANE CHIEF HR OFFICER 1.0 40.0 X 0 604132 99081 MARYBETH A TITA SVP-CORP. FINANCE 1.0 0.0 X 0 1104691 30296 0 9387506 1340267 0 true true false CAREMARK LLC ONE CVS DRIVE WOONSOCKET RI 02895 PHARMACY 713701426 NEW YORK CITY HEALTH AND HOSPITAL C 125 WORTH STREET ROOM 514 NEW YORK NY 10013 MEDICAL/HOSPITAL 219017737 MONTEFIORE MEDICAL CENTER PO BOX 4296 CHURCH STREET STATION NEW YORK NY 10261 MEDICAL/HOSPITAL 138877343 NY PRESBYTERIAN HOSP-COLUMBIA PO BOX 6154 NEW YORK NY 10249 MEDICAL/HOSPITAL 61340964 BRONX LEBANON HOSPITAL CENTER 1276 FULTON AVENUE BRONX NY 10456 MEDICAL/HOSPITAL 51346754 1117 0 MEDICARE (INCLUDES PART D) 524114 1695748010 1695748010 COMPLETE CARE (INCLUDES PART D) 524114 270107761 270107761 FIDA 524114 57364114 57364114 COMMERCIAL (INCLUDES HEALTHY NY) 524114 110666 110666 2023330551 5054008 5054008 0 0 0 0 0 0 0 0 0 0 2028384559 2023330551 5054008 0 0 0 0 0 0 0 0 0 0 235550296 157818698 77731598 0 0 0 0 0 541091 205713 335378 5223493 5223493 179013 49448 129565 0 0 0 0 0 0 628785 628785 0 0 0 HEALTHCARE SERVICE COSTS 1752411339 1752411339 MEDICAL ADMINISTRATIVE 27804641 27804641 CLAIMS ADJUSTMENT EXPENSE 20662 20662 UNPAID CLAIMS PROCESSING EXP 223018 223018 18666 18666 2022601004 1944385797 78215207 0 0 0 94251449 74939016 0 0 65333197 69654202 0 0 0 0 0 0 0 0 0 0 0 274576548 297086412 0 0 0 0 0 0 130611625 210424820 564772819 652104450 320939632 342643503 0 0 0 0 0 0 0 0 0 0 0 0 0 0 28365571 38190768 349305203 380834271 X 215467616 271270179 0 0 0 0 215467616 271270179 564772819 652104450 X 5783555 -2868053 52887061 X X false true X true false INTEREST RECEIVABLE 1146520 PHARMACY REBATE RECEIVABLE 126271604 COVERAGE GAP DISCOUNT PROGRAM 3927476 MEDICARE NEGATIVE VENDOR BAL 3419246 MEDICARE D PLAN-TO-PLAN RECV 2171 OTHER CURRENT ASSETS/PREPAID 6872570 OTHER MEDICAL RECEIVABLE 3395342 SECURITY DEPOSIT - OTHER 147200 PART D DEPOSIT - LOW INCOME 8347396 PART D DEPOSIT - REINSURANCE 56878458 DUE FROM HEALTHFIRST OF NJ 16837 210424820 0 DUE TO CMS 3920675 MEDICARE PART D DEPOSIT LIABIL 2430535 DUE TO 501(C)(3) AFFILIATE 5483760 NOTE PAYABLE TO RELATED PARTY 15100901 OTHER CURRENT LIABILITIES 11254897 38190768 2078403567 -2868053 52887061 50019008 2028384559 2028384559 2022601004 2022601004 2022601004 PART XI, LINE 2D - OTHER ADJUSTMENTS NET WITHHOLDINGS FOR FINANCIAL SECURITY DEPOSITS FOR MEMBER HOSPITALS: $935,247. ADMINISTRATIVE CHARGES: $51,951,814. The health care services agreements with certain hospitals provide that amounts attributable to a % of premium are retained by HFHP for required reserves and other administrative charges. true true false false false false false false false JAY A SCHECHTMAN CHIEF MEDICAL OFFICER 443673 282285 99983 107190 16515 949646 98301 ELIZABETH RST CLAIR CHIEF LEGAL OFFICER/SECRETARY 475584 252992 115952 136827 11288 992643 111594 PATRICIA J WANG CHIEF EXECUTIVE OFFICER 948768 617525 300373 374851 5762 2247279 295743 MARYBETH A TITA SVP-CORP. FINANCE 123823 303775 677093 25902 4554 1135147 314420 DANIEL P MCCARTHY PRESIDENT & COO 689231 353800 137133 188278 15550 1383992 132773 PAUL E PORTSMORE JR SVP, BUS DEV AND MBR ACQUI 359404 148375 2190 94721 150 604840 IAN SHAFFER EXEC MED DIR BEHAV HEALTH 333306 111044 7217 15900 7903 475370 REBECCA SCHWIETZ SVP CLINICAL SERVICES 324010 124400 613 50639 17321 516983 MICHAEL FEDYNA-End 72115 CHIEF FINANCIAL OFFICER 456921 97400 4472 9211 11550 579554 CRAIG BARATTIN-Beg 72115 VP CONTROLLER 264705 74396 284 9474 17293 366152 GERALD T SWEENEY SVP CHIEF INFORMATION OFFICER 452608 198500 1539 104891 17350 774888 SEAN KANE CHIEF HR OFFICER 398862 203400 1870 99081 148 703361 SCHEDULE J, PART 1, LINE 4A THE FOLLOWING INDIVIDUAL ENTERED INTO SEVERANCE AGREEMENTS AND/OR RECEIVED SEVERANCE PAYMENTS FROM HF MANAGEMENT SERVICES, LLC - A RELATED ORGANIZATION. MARYBETH TITA TOTAL SEVERANCE: $454,200, SEVERANCE PAID IN 2015: $338,274, SEVERANCE DEFERRED: $115,926. 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 2015: PATRICIA J. WANG $333,059 [Col. C] DANIEL P. McCARTHY $168,861 [Col. C] ELIZABETH R. ST CLAIR $111,577 [Col. C] JAY A. SCHECHTMAN $80,619 [Col. C] GERALD T. SWEENEY $102,720 [Col. C] SEAN KANE $83,181 [Col. C] PAUL PORTSMORE $78,821 [Col. C] REBECCA SCHWIETZ $34,739 [Col. C] HF MANAGEMENT SERVICES LLC COMMON OFFICERS/DIRECTORS 235550296 MANAGEMENT AND ADMIN SERVICES false HF MANAGEMENT SERVICES LLC COMMON OFFICERS/DIRECTORS 15100901 NOTES PAYABLE OUTSTANDING false HF MANAGEMENT SERVICES LLC COMMON OFFICERS/DIRECTORS 121200000 PHARMACY RECEIVABLE ASSIGNMENT false FORM 990, PART III, LINE 2 IN 2015, HEALTHFIRST HEALTH PLAN, INC. BEGAN OFFERING BENEFITS UNDER THE FULLY INTEGRATED DUALS ADVANTAGE ("FIDA") PROGRAM. FIDA IS A DEMONSTRATION PROJECT THAT INTRODUCES A MODEL OF CARE, WHICH INTEGRATES AND COORDINATES PARTICIPANT BENEFITS AND CARE ACROSS MEDICARE AND MEDICAID PROGRAMS. FORM 990, PART VI, SECTION A, LINE 3 HEALTHFIRST HEALTH PLAN INC. (HFHP), FORMERLY KNOWN AS MANAGED HEALTH INC. (MHI), 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 4 A CHANGE IN THE LEGAL NAME FROM MANAGED HEALTH INC. TO HEALTHFIRST HEALTH PLAN INC. WAS IN EFFECT ON NOVEMBER 12, 2015. ALL GOVERNING DOCUMENTS WERE CHANGED FROM MANAGED HEALTH INC. TO HEALTHFIRST HEALTH PLAN INC. 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 REVIEWS 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. EACH BOARD MEMBER, OFFICER AND KEY EMPLOYEE IS GIVEN A COPY OF THE DISCLOSURE STATEMENT TO COMPLETE ON AN ANNUAL BASIS. A NOMINATED BOARD MEMBER WHO DOES NOT COMPLETE THE STATEMENT IS NOT ALLOWED TO ASSUME THE BOARD SEAT, ATTEND BOARD MEETINGS AND MAY BE REMOVED FROM THE BOARD. AN OFFICER OR KEY EMPLOYEE WHO DOES NOT COMPLETE THE STATEMENT WILL BE DISCIPLINED, UP TO TERMINATION FROM THE POSITION. 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, 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 SOLELY OF INDEPENDENT DIRECTORS. 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 WITHHOLDINGS FOR FINANCIAL SECURITY DEPOSITS FOR MEMBER HOSPITALS: $935,247. ADMINISTRATIVE CHARGES: $51,951,814. TOTAL OTHER CHANGES IN NET ASSETS: $52,887,061. 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 9 HEALTHFIRST true HEALTHFIRST INC 100 CHURCH ST FL 18 NEW YORK NY 10007 133714932 MANAGED CARE NY 501 (C)3 11 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 9 HF MGMT SVCS true NEIGHBORHOOD HEALTH PROVIDERS INC 100 CHURCH ST FL 18 NEW YORK NY 10007 943474115 MANAGED CARE NY 501 (C) 3 9 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 true HF MANAGEMENT SERVICES LLC E 15100901 NOTES PAYABLE HF MANAGEMENT SERVICES LLC G 121200000 AGREEMENT HF MANAGEMENT SERVICES LLC M 235550296 CONTRACTED RATE HEALTHFIRST PHSP INC R 22500000 CONTRACT HEALTHFIRST PHSP INC S 300000 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, 2015. 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)&(5) : 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, A MEMBER'S POOL BALANCE IN HFHP MAY BE OFFSET BY OR MAY BE USED TO OFFSET A PERCENTAGE OF THAT MEMBER'S POOL BALANCE IN PHSP THROUGH AN INTERCOMPANY TRANSFER. THE CURRENT POLICIES PERMIT THE OFFSETTING OF ANY DEFICITS THAT MAY ACCRUE IN THE HOSPITAL POOLS MAINTAINED BY HFHP OR PHSP ON BEHALF OF A MEMBER HOSPITAL, INCLUDING AFFILIATE INSTITUTIONS, FOR ANY LINE OF BUSINESS UP TO 25% OF SURPLUSES THAT MAY ACCRUE, AND WOULD OTHERWISE BE DISTRIBUTED TO A MEMBER HOSPITAL OR AFFILIATE INSTITUTION BY EITHER PHSP OR HFHP.