2013-11-14T10:10:57-06:00 2012-12-31 861065772 DELOITTE TAX LLP 201 E KENNEDY BLVD SUITE 1200 TAMPA FL 33602 990 2012-01-01 592742907 AVMED INC AVME 3523728400 SANTAFE HEALTHCAREINC PO BOX 749 GAINESVILLE FL 326270749 RANDALL L STUART 3523378730 2013-11-14 1 STEVEN EROVNER P00648526 8132738300 2012 2016-02-25 16:41:14Z AVMED HEALTH PLANS MICHAEL P GALLAGHER SANTAFE HEALTHCAREINC PO BOX 749 GAINESVILLE FL 326270749 1123414101 0 X WWW.AVMED.ORG X 1986 FL TO IMPROVE THE HEALTH & WELLNESS OF OUR MEMBERS BY PROVIDING HIGH QUALITY HEALTH CARE PLANS.TO IMPROVE THE HEALTH AND WELLNESS OF OUR ENROLLEES BY PROVIDING HIGH QUALITY, COST-EFFECTIVE HEALTH CARE PLANS AND SERVICES TO THE EMPLOYERS AND MEMBERS WE SERVE. SEE PART III, LINE 1 FOR MORE INFORMATION. 10 7 932 0 830 0 0 0 1312126001 953854151 17003605 14256856 2252586 3251226 1331382192 971362233 0 5000000 0 0 71518980 69075825 0 0 0 1318241701 874676379 1389760681 948752204 -58378489 22610029 347696970 318299641 205560304 150919491 142136666 167380150 X THE MISSION OF AVMED, INC. IS TO IMPROVE THE HEALTH AND WELLNESS OF ITS ENROLLEES BY PROVIDING ACCESS TO HIGH QUALITY, AFFORDABLE HEALTH CARE SERVICES THROUGH A NETWORK OF CREDENTIALED HEALTH CARE PROVIDERS LOCATED THROUGHOUT AVMED INC.'S SERVICE AREAS. AVMED PROVIDES AFFORDABLE, NON-COMMERCIAL-TYPE HEALTH BENEFITS CONTRACTS, EDUCATES ITS ENROLLEES ABOUT HEALTH ISSUES, PROVIDES WELLNESS AND DISEASE PREVENTION PROGRAMS, CONDUCTS HEALTH FAIRS, PROVIDES DISEASE AND CHRONIC CARE MANAGEMENT PROGRAMS, MANAGES COMPLEX CASES, AND PROVIDES PRESCRIPTION DRUGS AND CERTAIN MEDICAL RESEARCH PROGRAMS. AVMED OFFERS ITS PROGRAM OF SERVICES AT AFFORDABLE FIXED PRICES TO FLORIDA EMPLOYERS AND VULNERABLE POPULATIONS INCLUDING INDIVIDUALS, SMALL EMPLOYER GROUPS AND SENIOR CITIZENS THROUGH THE MEDICARE ADVANTAGE PROGRAM (INCLUDING PRESCRIPTION DRUGS). 0 0 862864319 930179594 AVMED INC. (AVMED OR DBA AVMED HEALTH PLANS) PROVIDED HEALTH MAINTENANCE ORGANIZATION SERVICES TO EMPLOYERS AND INDIVIDUALS, INCLUDING SMALL EMPLOYER GROUPS AND SENIOR CITIZENS, REPRESENTING 1,718,945 MEMBER MONTHS OF NETWORK ACCESS, 2,344,887 DRUG PRESCRIPTIONS, AND 65,131 DAYS OF INPATIENT CARE. 26058631 26058631 AVMED PROVIDED EDUCATION, WELLNESS AND DISEASE PREVENTION, HEALTH FAIRS, DISEASE AND CHRONIC CARE MANAGEMENT, MANAGEMENT OF COMPLEX CASES, CLINICAL EDUCATION AND COORDINATION, AND OTHER HEALTH IMPROVEMENT SERVICES. AVMED MAINTAINED ITS "EXCELLENT" ACCREDITATION STATUS FOR ITS MEDICARE PRODUCT AND "COMMENDABLE" FOR ITS COMMERCIAL PRODUCTS FROM THE NATIONAL COMMITTEE FOR QUALITY ASSURANCE (NCQA) FOR ITS PROGRAMS OF HEALTH CARE. AVMED ANNUALLY MEASURES THE HEALTH CARE PERFORMANCE OF ITS NETWORK OF PROVIDERS THROUGH THE HEALTHCARE EFFECTIVENESS DATA AND INFORMATION SET (HEDIS) PROCESS. HEDIS INCLUDES 76 MEASURES ACROSS 5 DOMAINS OF CARE.FOR HEDIS 2012, AVMED'S RESULTS WERE RANKED AT THE 75TH PERCENTILE OR HIGHER NATIONALLY FOR 10 OF THE 27 HEALTH CARE MEASURES AND AT THE 50TH PERCENTILE OR HIGHER FOR 18 OF THE 27 HEALTH CARE MEASURES USED IN THE NCQA ACCREDITATION SCORING FOR ITS COMMERCIAL PRODUCTS. FOR THE MEDICARE PRODUCT, AVMED'S RESULTS WERE RANKED AT THE 75TH PERCENTILE OR HIGHER FOR 13 OF THE 22 HEALTH CARE MEASURES AND AT THE 50TH PERCENTILE OR HIGHER FOR 17 OUT OF THE 22 HEALTH CARE MEASURES USED IN THE NCQA ACCREDITATION SCORING.AVMED ALSO ANNUALLY MEASURES THE SATISFACTION OF ITS MEMBERS THROUGH THE CONSUMER ASSESSMENT OF HEALTHCARE PROVIDERS AND SYSTEMS (CAHPS) SURVEY. THE SURVEY PROVIDES INFORMATION ON THE EXPERIENCES OF AVMED MEMBERS WITH THE HEALTH PLAN AND HOW WELL THE HEALTH PLAN MEETS MEMBERS' EXPECTATIONS. AN OVERWHELMING MAJORITY OF AVMED'S MEMBERS WHO RESPONDED TO THE 2012 ANNUAL SURVEY RATED AVMED OVERALL AS A HEALTH PLAN AT 8, 9, OR 10 ON A SCALE OF 0 TO 10, WHERE 10 IS THE HIGHEST RATING (74.36% OF COMMERCIAL MEMBERS AND 91.6% OF MEDICARE MEMBERS). 5000000 5000000 AVMED MADE GRANTS TOTALING $5,000,000 TO SANTAFE HEALTHCARE, INC., ITS NOT-FOR-PROFIT SUPPORTING ORGANIZATION, IN SUPPORT OF SANTAFE HEALTHCARE'S EXEMPT PURPOSES. 893922950 0 0 1 0 0 0 0 1 0 1 1 0 1 1 1 1 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 1 21334 0 1 932 1 0 0 0 0 0 0 X 10 7 0 0 0 0 0 1 1 1 1 0 0 1 1 1 1 1 1 1 1 1 1 X RANDALL L STUART ASSISTANT TREASURER 3523378730 4300 NW 89TH BLVD GAINESVILLE FL 326065688 X JOE G DUNLAP 3.00 1.00 X X 56410 16444 0 ROBERT L EPLING 1.00 0.00 X X 38881 0 0 GEORGE E WILLIAMSON II 1.00 0.00 X X 38683 0 0 JOSEPH W DAVIS 1.00 0.00 X 36812 0 0 JOHN M LUDDEN MD 1.00 0.00 X 15465 0 0 PAMELA J MOONEY PHD 1.00 0.00 X 32454 0 0 PAUL R PHILIP 1.00 0.00 X 37485 0 0 HUGH J FLOYD 1.00 0.00 X 35177 0 0 ANTONIO L ARGIZ 1.00 0.00 X 14593 0 0 GORDON L JOHNSON 1.00 0.00 X 36375 0 0 ROBERT C HUDSON 1.00 0.00 X 35177 0 0 MICHAEL P GALLAGHER 45.00 15.00 X X 0 1402446 253819 EDWIN W HANNUM 60.00 0.00 X 440157 0 42825 STEVEN M ZIEGLER 47.00 16.00 X 316188 0 105589 RANDALL L STUART 58.00 7.00 X 0 413574 150122 CATHERINE E AYERS 40.00 20.00 X 433671 0 137004 SUSAN K PINNAS 50.00 0.00 X 400807 0 62597 JAMES M REPP 50.00 0.00 X 325373 0 105553 ROBERT BRADFORD BENTLEY 50.00 0.00 X 318976 0 127703 EDWIN RODRIGUEZ MD 40.00 0.00 X 341245 0 78398 ROBERT D BONNELL MD 40.00 0.00 X 311127 0 68423 BARRY G WAGNER 40.00 0.00 X 291617 0 73037 WINSTON LONSDALE 40.00 0.00 X 285903 0 72597 VINCENZO FERRI 40.00 0.00 X 267607 0 61605 GREGORY W FISCHER 0.00 0.00 X 175000 0 0 4285183 1832464 1339272 80 1 1 0 SOUTH BROWARD HOSPITAL DISTRICT 3501 JOHNSON ST HOLLYWOOD FL 33021 MEDICAL 108595220 BAPTIST HOSPITAL OF MIAMI INC 8900 N KENDALL DRIVE MIAMI FL 33176 MEDICAL 101111170 SOUTH MIAMI HOSPITAL INC 6200 SW 73RD ST MIAMI FL 33143 MEDICAL 53969560 NORTH FLORIDA MEDICAL CENTER INC PO BOX 406407 ATLANTA GA 30384 MEDICAL 32275909 UNIV OF MIAMI HOSPCLNS PO BOX 100379 ATLANTA GA 30384 MEDICAL 28348222 1147 MEDICARE REVENUE 524114 449201238 449201238 MEDICAL REVENUE 524114 439588185 439588185 SELF-FUNDED ADMIN FEE 524292 46033166 46033166 FEDERAL REVENUE 524114 19031562 19031562 953854151 5864576 5864576 110950 110950 4528297 6290416 -1762119 -1762119 -1762119 151694708 2348074 145560834 200618 6133874 2147456 8281330 830 8280500 FEE CREDITS AND SETTLEMENTS 900099 2384074 2384074 NON-RECURRING SETTLEMENT PROCEEDS 900099 1498039 1498039 MANAGEMENT FEES 561000 1059449 1059449 71783 71783 5013345 971362233 956238225 830 15123178 X 5000000 5000000 2882102 1172535 1709567 52149714 31050712 21099002 4343344 2426675 1916669 5625819 3748193 1877626 4074846 2625475 1449371 2307587 2307587 809285 76200 733085 380604 380604 693623 693623 838827929 834847431 3980498 3386617 3385260 1357 8721264 3458426 5262838 6939496 1107 6938389 2506629 2102802 403827 744782 467423 277359 242921 64875 178046 62038 62038 3601284 2465450 1135834 209757 209757 LICENSES AND FEES 4246226 980791 3265435 DUES AND ASSESSMENTS 714416 48634 665782 COMMUNITY SUPPORT 281921 961 280960 948752204 893922950 54829254 0 44748491 28836362 5059156 3720103 35188809 52921574 2236509 1605661 86178298 57605588 26057718 28572710 203262525 164927448 20036188 18970505 11107574 18745278 347696970 318299641 187715270 125357010 5848367 6882675 2347340 4202631 9649327 14477175 205560304 150919491 X 142136666 167380150 142136666 167380150 347696970 318299641 X 22610029 4983706 -2350251 X X 0 1 X 1 0 8250 ORGANIZATIONS DIRECT AND INDIRECT POLITICAL CAMPAIGN ACTIVITIES: PART I-A, LINE 1: AVMED MADE DIRECT CONTRIBUTIONS TO GENERAL CAMPAIGN FUNDS OF STATE AND LOCAL POLITICAL CANDIDATES IN 2012. 0 1 X 384250 4395800 4780050 1409693 35898133 27033922 10273904 506252 395686 110566 33985678 30061269 3924409 9598492 114711 9483781 28572710 INTECH ENHANCED PLUS FUND 18773815 F PRIVATE INVESTMENTS 196690 C 18970505 INTEREST RECEIVABLE 1397274 DEPOSITS AND OTHER ASSETS 611388 REBATE RECEIVABLES 7249629 OTHER RECEIVABLES 9486987 18745278 CAPITAL LEASE OBLIGATION 3082321 BENEFITS PAYABLE 4011569 OTHER LIABILITIES 6046466 DUE TO AFFILIATES 907489 AMOUNTS DUE TO SELF INSURED GROUPS 429330 14477175 X 968397169 730068 730068 967667101 3695132 3695132 971362233 944649273 897069 897069 943752204 5000000 5000000 948752204 PART IV, LINE 2B: INCLUDED IN THIS LINE ARE OBLIGATIONS TO PAY BENEFITS FROM ESCROWED FUNDS ON BEHALF OF SELF-FUNDED HEALTH PLANS. DESCRIPTION OF UNCERTAIN TAX POSITIONS UNDER FIN 48: PART X, LINE 2: AVMED HAD NO UNCERTAIN TAX POSITIONS AS OF DECEMBER 31, 2012. AVMED INCURRED NO INTEREST EXPENSE OR PENALTIES RELATED TO UNCERTAIN INCOME TAX PROVISIONS IN 2012 OR 2011. TAX YEARS 2009 THROUGH 2012 ARE SUBJECT TO EXAMINATION BY FEDERAL AND STATE TAXING AUTHORITIES AND THERE ARE NO INCOME TAX EXAMINATIONS IN PROCESS AS OF THE DATE OF THIS REPORT. PART XI, LINE 2D - OTHER ADJUSTMENTS: RENTAL EXPENSE RECLASS FOR TAX 897,069. INVESTMENT IMPAIRMENT REALIZED FOR BOOK AND NOT FOR TAX -167,001. PART XI, LINE 4B - OTHER ADJUSTMENTS: INVESTMENT PARTNERSHIP REVENUE REALIZED FOR TAX AND NOT FOR BOOK 2,197,093. OTHER REVENUE INCLUDED FOR TAX BUT REPORTED AS NON-RECURRING GAIN FOR BOOK 1,498,039. PART XII, LINE 2D - OTHER ADJUSTMENTS: RENTAL EXPENSE RECLASS 897,069. PART XII, LINE 4B - OTHER ADJUSTMENTS: DISTRIBUTION TO SANTAFE HEALTHCARE, INC. 5,000,000. 1 SANTAFE HEALTHCARE INC PO BOX 749 GAINESVILLE FL 326270749 592317607 501(C)(3) 5000000 AVMED, INC. PROVIDED ITS SUPPORTING ORGANIZATION (SANTAFE HEALTHCARE, INC.) A GRANT IN THE AMOUNT OF $5,000,000 TO SUPPORT AND FURTHER THE MISSION AND TAX EXEMPT PURPOSES OF SANTAFE HEALTHCARE, INC. 1 PROCEDURE FOR MONITORING GRANTS IN THE U.S.: PART I, LINE 2: SCHEDULE I, PART I, LINE 2: AVMED, INC. AND SANTAFE HEALTHCARE, INC. SHARE COMMON MANAGEMENT. AS A RESULT, MANAGEMENT ENSURES THE USE OF GRANT FUNDS BY SANTAFE HEALTHCARE IS CONSISTENT WITH THEIR INTENDED PURPOSE. X X X 1 1 1 1 0 0 0 0 0 0 0 MICHAEL P GALLAGHER 0 826579 0 117242 0 458625 0 229362 0 24457 0 1656265 0 182750 EDWIN W HANNUM 187931 0 0 0 252226 0 34500 0 8325 0 482982 0 40122 0 STEVEN M ZIEGLER 307254 0 0 0 8934 0 75899 0 29690 0 421777 0 0 0 RANDALL L STUART 0 352366 0 0 0 61208 0 127784 0 22338 0 563696 0 54252 CATHERINE E AYERS 302546 0 0 0 131125 0 105157 0 31847 0 570675 0 59674 0 SUSAN K PINNAS 315416 0 0 0 85391 0 48559 0 14038 0 463404 0 0 0 JAMES M REPP 299959 0 0 0 25414 0 85229 0 20324 0 430926 0 0 0 ROBERT BRADFORD BENTLEY 289509 0 0 0 29467 0 96134 0 31569 0 446679 0 0 0 EDWIN RODRIGUEZ MD 275125 0 0 0 66120 0 48632 0 29766 0 419643 0 28198 0 ROBERT D BONNELL MD 256808 0 0 0 54319 0 45079 0 23344 0 379550 0 25718 0 BARRY G WAGNER 248678 0 0 0 42939 0 44994 0 28043 0 364654 0 0 0 WINSTON LONSDALE 244752 0 0 0 41151 0 47114 0 25483 0 358500 0 0 0 VINCENZO FERRI 265247 0 0 0 2360 0 37837 0 23768 0 329212 0 0 0 GREGORY W FISCHER 175000 0 0 0 0 0 0 0 0 0 175000 0 0 0 PART I, LINE 1A CHARTER FLIGHTS ARE SCHEDULED AS NEEDED BETWEEN GAINESVILLE, FLORIDA AND MIAMI, FLORIDA, THE LOCATIONS OF THE TWO PRINCIPAL OFFICES OF AVMED, INC. TO COINCIDE WITH BOARD OF DIRECTORS AND OTHER CRITICAL MEETINGS. OPEN SEATS ON SUCH FLIGHTS ARE AVAILABLE TO ANY EMPLOYEE NEEDING TO CONDUCT BUSINESS IN THE MIAMI OR GAINESVILLE OFFICE. CERTAIN DIRECTORS AND THEIR COMPANIONS ATTENDED COMPANY PAID INDUSTRY SEMINARS AND TRADE CONVENTIONS AT THE REQUEST OF AVMED, INC. ALL BUSINESS COSTS, INCLUDING TRAVEL COSTS, PAID DIRECTLY BY THE ORGANIZATION OR REIMBURSED TO THE LISTED PERSON, WERE ACCOUNTED FOR UNDER AN ACCOUNTABLE PLAN UTILIZED BY THE ORGANIZATION. NO PART OF ANY TRAVEL COST WAS DEEMED A BENEFIT FOR ANY PERSON LISTED IN FORM 990, PART VII. INCIDENTAL EXPENSES ARE NOT REIMBURSED BY THE ORGANIZATION. TAX GROSS-UP PAYMENTS OCCUR FOR GROUP VARIABLE LIFE INSURANCE PREMIUMS PAID ON BEHALF OF THE LISTED AND OTHER EMPLOYEES. EMPLOYER PAID PREMIUMS ARE DEEMED TO BE TAXABLE COMPENSATION AND ARE GROSSED-UP FOR THE TAX IMPACT PRIOR TO BEING ADDED AS IMPUTED INCOME TO AN EMPLOYEE'S YEAR-END FORM W-2. TAX GROSS-UP PAYMENTS ARE PROVIDED FOR VESTED DISTRIBUTIONS FROM THE DEFINED CONTRIBUTION AND (NOW FROZEN) DEFINED BENEFIT PENSION RESTORATION PLANS. PART I, LINE 3 PART I, LINE 3: MICHAEL P GALLAGHER IS THE CHIEF EXECUTIVE OFFICER (CEO) OF AVMED, INC. MR. GALLAGHER IS COMPENSATED BY SANTAFE HEALTHCARE, INC. (SANTAFE), A RELATED SUPPORTING ORGANIZATION. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: ANNUALLY, THE SANTAFE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE INDEPENDENT CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE INDEPENDENT CONSULTING FIRM. THE INDEPENDENT CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE CEO'S FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. PART I, LINES 4A-B LISTED PERSONS ARE EMPLOYEES OF AVMED OR RELATED ORGANIZATIONS AND ARE COVERED UNDER A SEVERANCE POLICY FOR THEIR RESPECTIVE RELATED ORGANIZATION. THE SEVERANCE POLICY INCLUDES MONTHLY PAYMENTS UP TO A MAXIMUM OF 12 MONTHS UNDER QUALIFYING CIRCUMSTANCES. LISTED PERSONS ACTUALLY RECEIVING A SEVERANCE PAYMENT OR CHANGE OF CONTROL PAYMENT IN THE YEAR: GREG FISCHER RECEIVED $175,000 IN COMPENSATION PAYMENTS DUE TO A SEVERANCE AGREEMENT. SCHEDULE J, PART I, LINE 4B: LISTED PERSONS PARTICIPATING IN A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN THE YEAR: AVMED, INC. MAINTAINS TWO ACTIVE NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS FOR A CERTAIN GROUP OF EXECUTIVES TO INCLUDE THOSE LISTED EMPLOYEES OF AVMED OR RELATED ORGANIZATIONS. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF THE INTERNAL REVENUE SERVICE CODE SECTION 401 (A) (17) RECOGNIZABLE PAY LIMITS (A DEFINED CONTRIBUTION RESTORATION PLAN). VESTING FOR THIS PLAN IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. CATHERINE E AYERS RECEIVED $111,894 FROM SUPPLEMENTAL NONQUALIFIED RETIREMENT PLANS IN 2012. EDWIN W HANNUM RECEIVED $132,911 FROM SUPPLEMENTAL NONQUALIFIED RETIREMENT PLANS IN 2012. R BRADFORD BENTLEY RECEIVED $13,161 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2012. SUSAN K PINNAS RECEIVED $64,141 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2012. JIM REPP RECEIVED $10,763 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2012. ROBERT BONNELL RECEIVED $27,721 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2012. WINSTON LONSDALE RECEIVED $22,947 FROM SUPPLEMENTAL NONQUALIFIED RETIREMENT PLANS IN 2012. EDWIN RODRIGUEZ RECEIVED $54,758 FROM SUPPLEMENTAL NONQUALIFIED RETIREMENT PLANS IN 2012. BARRY WAGNER RECEIVED $34,120 FROM SUPPLEMENTAL NONQUALIFIED RETIREMENT PLANS IN 2012. MICHAEL P GALLAGHER AND RANDALL L STUART ARE EMPLOYEES OF SANTAFE HEALTHCARE, INC. (SANTAFE) A RELATED TAX-EXEMPT ORGANIZATION. THEY PARTICIPATE IN TWO NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS SPONSORED BY SANTAFE FOR A CERTAIN GROUP OF EXECUTIVES. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF THE INTERNAL REVENUE SERVICE CODE SECTION 401 (A) (17) RECOGNIZABLE PAY LIMITS (A DEFINED CONTRIBUTION RESTORATION PLAN). VESTING IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MR. GALLAGHER RECEIVED $364,445 FROM SUPPLEMENTAL NONQUALIFIED RETIREMENT PLANS IN 2012. MR. STUART RECEIVED $41,679 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2012. SUPPLEMENTAL INFORMATION PART III SCHEDULE J, PART II: CERTAIN SENIOR EXECUTIVES ARE ACCOUNTABLE FOR AND PERFORM SERVICES FOR SANTAFE HEALTHCARE, INC. AND EACH OF ITS AFFILIATES. SANTAFE HEALTHCARE AND AFFILIATES REPRESENT A DIVERSIFIED FAMILY OF NOT-FOR-PROFIT ORGANIZATIONS WITH $2 BILLION IN GROSS RECEIPTS AND APPROXIMATELY 2,000 EMPLOYEES. THESE SENIOR EXECUTIVES ARE PAID DIRECTLY BY EITHER SANTAFE HEALTHCARE, INC. OR AVMED, INC. AND THEIR COMPENSATION AND BENEFITS ARE APPORTIONED AND CHARGED TO THE RESPECTIVE AFFILIATE BASED ON THE ESTIMATED AMOUNT OF TIME SPENT ON EACH AFFILIATE'S ACTIVITIES. FOR 2012, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS (FOR THOSE SENIOR EXECUTIVES PAID BY A RELATED ORGANIZATION) IS APPORTIONED AND CHARGED TO AVMED, INC. AS FOLLOWS: 75% - MICHAEL P. GALLAGHER, PRESIDENT & CEO 89% - RANDALL L. STUART, SENIOR VICE PRESIDENT & CFO G ED WILLIAMSON II BOARD DIRECTOR G. ED WILLIAMSON, II OWNS MORE THAN 35% OF A CORPORATION THAT PURCHASES HEALTH INSURANCE COVERAGE AT MARKET RATES FROM AVMED. THE AMOUNTS PAID FOR THIS HEALTH INSURANCE COVERAGE VARY FROM MONTH TO MONTH BASED ON THE ENROLLMENT OF THE COMPANY'S EMPLOYEES. 0 GORDON L JOHNSON BOARD DIRECTOR GORDON L. JOHNSON OWNS MORE THAN 35% OF A CORPORATION THAT PURCHASES HEALTH INSURANCE COVERAGE AT MARKET RATES FROM AVMED. THE AMOUNTS PAID FOR THIS HEALTH INSURANCE COVERAGE VARY FROM MONTH TO MONTH BASED ON THE ENROLLMENT OF THE COMPANY'S EMPLOYEES. 0 FORM 990, PART VI, SECTION A, LINE 7A SANTAFE HEALTHCARE, INC., A 501(C)(3) SUPPORTING ORGANIZATION TO AVMED, INC., HAS RESERVED POWERS AS DELINEATED IN THE ARTICLES OF INCORPORATION AND BYLAWS THAT PERMITS IT TO ELECT ONE OR MORE MEMBERS OF THE GOVERNING BODY OF AVMED, INC. FORM 990, PART VI, SECTION A, LINE 7B THE RESERVED POWERS OF SANTAFE HEALTHCARE, INC., AS DELINEATED IN THE ARTICLES OF INCORPORATION AND BYLAWS, PERMIT IT TO APPROVE OR RATIFY THE GOVERNING BODY'S DECISIONS RELATED TO BOARD MEMBER ELECTIONS OR REMOVALS, THE DECISION TO DISSOLVE THE ORGANIZATION AND OTHER MATTERS THAT MAY COME BEFORE THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 11 THE ORGANIZATION'S PROCESS FOR ENSURING THE ACCURATE PREPARATION, REVIEW AND APPROVAL OF THE 2012 FORM 990 BEGAN WITH PROFESSIONAL DEVELOPMENT OF STAFF (SEVERAL OF WHICH ARE CPAS) WHICH WERE INVOLVED IN THE PREPARATION OF THE 2012 FORM 990. IN ADDITION TO STAFF DEVELOPMENT, WHICH INCLUDED ATTENDING TAX SEMINARS AND CLASSES, MANAGEMENT ALSO CONSULTED WITH INDEPENDENT ACCOUNTING FIRMS AND TAX LEGAL COUNSEL REGARDING THE IRS FORM 990 CODE AND FILING REQUIREMENTS. THE ORGANIZATION ALSO PREVIOUSLY EDUCATED ITS MANAGEMENT TEAM, OFFICERS AND DIRECTORS, WITH THE ASSISTANCE OF DELOITTE TAX LLP, REGARDING THE FORM 990 AND THEIR INVOLVEMENT IN REVIEWING THE RETURN. FOLLOWING MANAGEMENT'S PREPARATION OF THE 2012 FORM 990, DELOITTE TAX LLP REVIEWED THE 2012 FORM 990. A COPY OF THE 2012 FORM 990 AND ATTACHMENTS WERE PROVIDED TO THE ORGANIZATION'S CURRENT BOARD OF DIRECTORS FOR THEIR REVIEW AND COMMENT. EXECUTIVE MANAGEMENT ADDRESSED ANY QUESTIONS RAISED BY THE BOARD MEMBERS PRIOR TO FILING THE 2012 FORM 990 AND ATTACHMENTS WITH THE IRS. FORM 990, PART VI, SECTION B, LINE 12C AVMED HAS A POLICY FOR MONITORING AND ENFORCING COMPLIANCE WITH ITS CONFLICT OF INTEREST POLICY. THE POLICY DETAILS THAT THE CORPORATE SECRETARY HAS RESPONSIBILITY FOR DELIVERY AND RECEIPT OF DIRECTOR AND OFFICER CONFLICT OF INTEREST STATEMENTS. THE HUMAN RESOURCES DEPARTMENT OBTAINS AN ACKNOWLEDGMENT OF UNDERSTANDING OF THE CONFLICT OF INTEREST POLICY FROM EVERY NEW EMPLOYEE AT THE DATE OF HIRE AND FROM ALL EMPLOYEES ANNUALLY. ANNUAL CONFLICT OF INTEREST STATEMENTS ARE REVIEWED BY INTERNAL STAFF TO ENSURE RECORDS ARE COMPLETE. AS PART OF THE CORPORATE CONTRACT REVIEW PROCESS, CONSIDERATION IS GIVEN TO ANY POTENTIAL CONFLICTS OF INTEREST INVOLVING OPERATIONAL OR FINANCIAL TRANSACTIONS. ALL EMPLOYEES AND BOARD MEMBERS ARE EXPECTED TO NOTIFY THE CORPORATE COMPLIANCE OFFICER IF A POTENTIAL CONFLICT EXISTS. IF A CASE IS DISCOVERED OR REPORTED, THE CORPORATE COMPLIANCE OFFICER MAKES A REPORT TO THE LEGAL DEPARTMENT AND THE CHAIRMAN OF THE BOARD AS TO THE FACTS AND CIRCUMSTANCES SURROUNDING THE INCIDENT. MEMORANDUMS (OR MINUTES) ARE MADE OF EVERY FINAL DECISION, INCLUDING THE REASONS THEREFORE AND THE ACTION TAKEN, WHETHER THE QUESTION IS DETERMINED TO BE SUBSTANTIAL OR NOT; AND A COPY OF SUCH MEMORANDUM (OR MINUTES) IS FILED WITH THE CORPORATE SECRETARY FOR EXAMINATION BY THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 15 LINE 15A: MICHAEL P GALLAGHER IS THE CHIEF EXECUTIVE OFFICER (CEO) OF AVMED, INC. MR. GALLAGHER IS COMPENSATED BY SANTAFE HEALTHCARE, INC. (SANTAFE), A RELATED SUPPORTING ORGANIZATION. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: THE SANTAFE BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE INDEPENDENT CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE INDEPENDENT CONSULTING FIRM. THE INDEPENDENT CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. FORM 990, PART VI, SECTION B, LINE 15B: PROCESS FOR DETERMINING COMPENSATION FOR ALL EMPLOYEE OFFICERS AND KEY EMPLOYEES OF AVMED, INC. IS AS FOLLOWS: THE SANTAFE HEALTHCARE, INC. (SANTAFE) BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS FIRM (FIRM) TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF ALL AVMED, INC. (AVMED) OFFICERS' AND KEY EMPLOYEES' TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISONS TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. AFTER COMPLETION OF ITS REVIEW, THE FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE SANTAFE BOARD OF DIRECTORS. THE FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE DIRECT COMPENSATION AND EXECUTIVE BENEFITS. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETINGS. THE SANTAFE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY CONSULTANT TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF AVMED BOARD OF DIRECTORS' (INCLUDING OFFICER POSITIONS) COMPENSATION EVERY TWO TO THREE YEARS. THE COMPETITIVENESS ANALYSIS INCLUDES COMPARISONS TO BOTH NOT-FOR-PROFIT AND PUBLIC COMPANY (EXCLUDING EQUITY COMPONENT) DATA FOR COMPANIES WITHIN THE SAME OR SIMILAR INDUSTRY. ANY COMPENSATION CHANGES ARE APPROVED BY THE SANTAFE BOARD OF DIRECTORS BASED ON THE MARKET COMPETITIVENESS STUDY. A MARKET COMPETITIVENESS STUDY WAS CONDUCTED IN NOVEMBER 2010 FOR CHANGES MADE EFFECTIVE JANUARY 1, 2011. FORM 990, PART VI, SECTION C, LINE 19 AVMED'S PROCESS FOR MAKING ITS GOVERNING DOCUMENTS, CONFLICT OF INTEREST POLICY, AND FINANCIAL STATEMENTS AVAILABLE TO THE PUBLIC ARE AS FOLLOWS: AVMED, INC.'S CONFLICT OF INTEREST POLICY STATEMENT IS INCLUDED IN ITS CODE OF ETHICAL BUSINESS CONDUCT AND IS AVAILABLE TO THE GENERAL PUBLIC AT HTTP://WWW.AVMED.ORG. THE ARTICLES OF INCORPORATION ARE AVAILABLE FOR PUBLIC INSPECTION ONLINE AT THE STATE OF FLORIDA, DIVISION OF CORPORATIONS WEBSITE WWW.SUNBIZ.ORG. THE FLORIDA OFFICE OF INSURANCE REGULATION SERVES AS THE OVERSIGHT AND LICENSING ENTITY FOR FLORIDA HEALTH MAINTENANCE ORGANIZATIONS AND CONDUCTS ROUTINE AND REGULAR EXAMINATIONS OF THE FINANCIAL AND OPERATING CONDITIONS OF LICENSED ENTITIES. THE EXAMINATION REPORTS INCLUDE FINANCIAL STATEMENT DETAILS AND ANALYSIS, AS WELL AS EVALUATIONS AND OPINIONS ON THE ENTITY'S GOVERNING DOCUMENTS AND GOVERNING BODY OPERATIONS AND MEETINGS. THE GENERAL PUBLIC HAS ACCESS TO THE FULL EXAMINATION REPORTS AT HTTP://WWW.FLOIR.COM/SECTIONS/LANDH/MANAGEDCARE/IS_MC_FINANCIAL_EXAMS.ASPX COMPENSATION PAID BY RELATED ORGANIZATIONS: FORM 990, PART VII, SECTION A, LINE 1A: CERTAIN SENIOR EXECUTIVES ARE ACCOUNTABLE FOR AND PERFORM SERVICES FOR SANTAFE HEALTHCARE, INC. AND EACH OF ITS AFFILIATES. SANTAFE HEALTHCARE AND AFFILIATES REPRESENT A DIVERSIFIED FAMILY OF NOT-FOR-PROFIT ORGANIZATIONS WITH $2 BILLION IN GROSS RECEIPTS AND APPROXIMATELY 2,000 EMPLOYEES. THESE SENIOR EXECUTIVES ARE PAID DIRECTLY BY EITHER SANTAFE HEALTHCARE, INC. OR AVMED, INC. AND THEIR COMPENSATION AND BENEFITS ARE APPORTIONED AND CHARGED TO THE RESPECTIVE AFFILIATE BASED ON THE ESTIMATED AMOUNT OF TIME SPENT ON EACH AFFILIATE'S ACTIVITIES. FOR 2012, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS (FOR THOSE SENIOR EXECUTIVES PAID BY A RELATED ORGANIZATION) IS APPORTIONED AND CHARGED TO AVMED, INC. AS FOLLOWS: 75% - MICHAEL P. GALLAGHER, PRESIDENT & CEO 89% - RANDALL L. STUART, SENIOR VICE PRESIDENT & CFO OTHER FEES FORM 990, PART IX, LINE 11G HEALTH CARE SERVICES: PROGRAM SERVICE EXPENSES 804,127,965. MANAGEMENT AND GENERAL EXPENSES 0. FUNDRAISING EXPENSES 0. TOTAL EXPENSES 804,127,965. AGENT/BROKER COMMISSIONS AND INCENTIVES: PROGRAM SERVICE EXPENSES 25,069,097. MANAGEMENT AND GENERAL EXPENSES 0. FUNDRAISING EXPENSES 0. TOTAL EXPENSES 25,069,097. CONSULTING AND OUTSIDE SERVICES: PROGRAM SERVICE EXPENSES 4,440,103. MANAGEMENT AND GENERAL EXPENSES 3,356,087. FUNDRAISING EXPENSES 0. TOTAL EXPENSES 7,796,190. TEMPORARY HELP: PROGRAM SERVICE EXPENSES 1,210,266. MANAGEMENT AND GENERAL EXPENSES 190,818. FUNDRAISING EXPENSES 0. TOTAL EXPENSES 1,401,084. RECRUITING AND TESTING SERVICES: PROGRAM SERVICE EXPENSES 0. MANAGEMENT AND GENERAL EXPENSES 435,593. FUNDRAISING EXPENSES 0. TOTAL EXPENSES 435,593. ADJUSTMENT FOR COMPENSATION: PROGRAM SERVICE EXPENSES 0. MANAGEMENT AND GENERAL EXPENSES -2,000. FUNDRAISING EXPENSES 0. TOTAL EXPENSES -2,000. CHANGES IN NET ASSETS OR FUND BALANCES: FORM 990, PART XI, LINE 9: CHANGE IN NET ASSETS FOR NONQUALIFIED PENSION PLAN 13,843. INVESTMENT PARTNERSHIP REVENUE REALIZED FOR TAX AND NOT FOR BOOK -2,197,093. INVESTMENT IMPAIRMENT REALIZED FOR BOOK AND NOT FOR TAX -167,001. AUDIT COMMITTEE OVERSIGHT OF THE FINANCIAL STATEMENT AUDIT: FORM 990, PART XII, LINE 2C: THERE HAS BEEN NO CHANGE FROM THE PRIOR YEAR TO THE PROCESS RELATED TO AUDIT OVERSIGHT AND SELECTION OF THE INDEPENDENT ACCOUNTANT FOR THE ORGANIZATION. 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