2012-11-15T10:59:37-06:00 2011-12-31 861065772 DELOITTE TAX LLP 655 WEST BROADWAY SUITE 700 SAN DIEGO CA 921018590 990 2011-01-01 731729007 SCAN HEALTH PLAN ARIZONA SCAN 5629895100 3800 KILROY AIRPORT WAY NO 100 LONG BEACH CA 908065616 ELIZABETH RUSSELL 5629895100 2012-11-15 1 DIANA J MCCUTCHEN P00545657 6192326500 2011 2016-02-24 21:20:13Z ELIZABETH RUSSELL 3800 KILROY AIRPORT WAY NO 100 LONG BEACH CA 908065616 164282258 0 X WWW.SCANHEALTHPLAN.COM/ARIZONA/MEDICARE/ X 2006 AZ TO SERVE AND TO IMPROVE THE LIVES OF THE FRAIL, ELDERLY AND DISABLED RESIDENTS OF ARIZONA. 3 0 217 0 0 0 0 0 57916933 164040421 168653 241837 0 0 58085586 164282258 0 0 0 0 2026901 2851978 0 0 0 112927247 158698955 114954148 161550933 -56868562 2731325 33787805 68565984 59440555 91156327 -25652750 -22590343 X TO SERVE AND IMPROVE THE LIVES OF THE FRAIL, ELDERLY AND DISABLED RESIDENTS OF ARIZONA BY PROVIDING MEDICAL AND PHARMACY SERVICES, COORDINATED CARE, SOCIAL SERVICES AND OTHER SERVICES TO A GERIATRIC AND DISABLED POPULATION THAT IS UNDERSERVED AND AT RISK. 0 0 148876920 164040421 THE ARIZONA COMPANIES, SCAN HEALTH PLAN ARIZONA, A MEDICARE ADVANTAGE CONTRACTOR, AND SCAN LONG TERM CARE, A PROGRAM CONTRACTOR TO THE ARIZONA LONG TERM CARE SYSTEM (ALTCS) COMPONENT OF THE ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM (AHCCCS), THE STATE MEDICAID PROGRAM, ARE NON-PROFIT MANAGED CARE ORGANIZATIONS THAT WERE CREATED TO SERVE THE HEALTH CARE AND INDEPENDENCE NEEDS OF THE SENIOR AND PHYSICALLY DISABLED CITIZENS OF MARICOPA COUNTY, ARIZONA. THE SHARED MISSION OF THE ARIZONA COMPANIES IS TO FIND INNOVATIVE WAYS TO ENHANCE THE BENEFICIARIES' ABILITY TO MANAGE THEIR HEALTH AND EXERT CONTROL OVER WHERE AND HOW THEY LIVE. WE WILL ACHIEVE THAT MISSION BY DEVELOPING PARTNERSHIPS THAT ALLOW US TO DELIVER THE RIGHT HEALTH CARE, IN THE RIGHT SETTING, AND AT THE RIGHT COST WHILE MAXIMIZING THE MEMBERS' ABILITY TO REMAIN AS INDEPENDENT AS POSSIBLE. OUR GOAL IS TO BECOME THE LEADING GERIATRIC AND PHYSICALLY DISABLED HEALTH MANAGEMENT ENTERPRISE IN MARICOPA COUNTY.SCAN LONG TERM CARE WAS SELECTED AS AN ALTCS PROGRAM CONTRACTOR IN MAY, 2006 AND BEGAN PROGRAM OPERATIONS ON OCTOBER 1, 2006. THE PLAN IS RESPONSIBLE FOR ARRANGING, MANAGING AND MONITORING THE FULL RANGE OF HEALTH CARE SERVICES (PHYSICIAN, HOSPITAL, LAB, RADIOLOGY, DURABLE MEDICAL EQUIPMENT, ETC.), NOT OTHERWISE COVERED BY MEDICARE, HOME CARE SERVICES AND RESIDENTIAL CARE SERVICES REQUIRED BY THE ALTCS BENEFICIARIES ENROLLED IN SCAN. THE ALTCS PROGRAM IS DESIGNED TO SERVE THE NEEDS OF LOW INCOME ARIZONA CITIZENS AGE 65 OR OLDER, BLIND OR DISABLED AND IN NEED OF LONG TERM CARE SERVICES. THE ENROLLMENT OF PARTICIPANTS IN THE COMPANY'S MANAGED CARE PLAN INITIALLY BEGAN ON OCTOBER 1, 2006; THE CONTRACT WAS NOT RENEWED FOR THE NEW CONTRACT YEAR, WHICH BEGAN OCTOBER 1, 2011. THE COMPANY CONTINUED TO PARTICIPATE IN THE ALTCS PROGRAM ON A CAPPED CONTRACT BASIS. ON DECEMBER 22, 2011, THE COMPANY PROVIDED WRITTEN NOTICE TO AHCCCS TERMINATING THE ALTCS PROGRAM CONTRACT. ON JANUARY 23, 2012, AHCCCS NOTIFIED THE COMPANY THAT THE TERMINATION WOULD BE EFFECTIVE MAY 1, 2012. IT IS THE COMPANY'S INTENT TO SUSTAIN POSITIVE WORKING CAPITAL AND LIQUIDITY TO MEET ALL FINANCIAL OBLIGATIONS THROUGHOUT THE TRANSITION PERIOD TO CONCLUDE THE PROGRAM.SCAN HEALTH PLAN ARIZONA BEGAN PROGRAM OPERATIONS AS A MEDICARE ADVANTAGE CONTRACTOR EFFECTIVE JANUARY 1, 2007. IT IS RESPONSIBLE FOR ARRANGING AND MONITORING THE FULL RANGE OF MEDICARE HEALTH SERVICES FOR PLAN ENROLLEES. THE PLAN BEGAN OFFERING A MEDICARE ADVANTAGE SPECIAL NEEDS PLAN (SNP) FOR BENEFICIARIES WHO ARE DUALLY ELIGIBLE AND ENROLLED IN BOTH THE MEDICARE AND ALTCS PROGRAMS. BEGINNING JANUARY 1, 2009, THE PLAN EXPANDED ITS MEDICARE ADVANTAGE PARTICIPATION TO OTHER MEDICARE BENEFICIARY POPULATIONS, THROUGH A MEDICARE ADVANTAGE PRESCRIPTION DRUG (MAPD) PLAN.IN JANUARY 2008 THE ARIZONA COMPANIES LAUNCHED THE SCAN CONNECTIONS COMMUNITY RESOURCE CENTER DESIGNED TO LINK SCAN MEMBERS, THEIR CAREGIVERS AND OTHERS IN THE MARICOPA COUNTY COMMUNITIES WITH KNOWLEDGEABLE STAFF WHO CAN ASSIST IN NAVIGATING A COMPLEX HEALTH CARE SYSTEM. THE RESOURCE CENTER STAFF BUILD BRIDGES INTO OTHER COMMUNITY ORGANIZATIONS, GOVERNMENTAL AGENCIES AND HEALTH ADVOCACY GROUPS TO PROVIDE TO THE COMMUNITY HEALTH EDUCATION AND SUPPORT SERVICES FOCUSED ON GERIATRIC, CHRONIC ILLNESS AND PHYSICALLY DISABLED CHALLENGES. SERVICES AND RESOURCES ARE PROVIDED AT THE SCAN CONNECTIONS RESOURCE CENTER IN SCAN'S OFFICE AND AT REMOTE COMMUNITY SITES.SCAN HEALTH PLAN ARIZONA HAS GROWN FROM NO MEMBERSHIP AT DECEMBER 31, 2006 AND CURRENTLY SERVES MORE THAN 13,936 ENROLLEES. THE ADDITION OF THE SCAN CLASSIC AND SCAN CONNECTIONS PROGRAMS ALLOW SCAN PERSONNEL, ESPECIALLY THE CASE MANAGEMENT TEAM, TO MORE EFFECTIVELY COORDINATE THE NEEDED HEALTH CARE SERVICES REQUIRED BY SCAN MEMBERS. FROM THE START OF OPERATIONS, THE ARIZONA COMPANIES HAVE DEVOTED NEARLY 98% OF ITS REVENUE TO THE DIRECT PROVISION OF HEALTH CARE, HOME AND COMMUNITY BASED SERVICES AND LONG TERM CARE RESIDENTIAL SERVICES. THIS REPRESENTS MORE THAN $769 MILLION OF DIRECT CARE SERVICES FOR THESE MEDICARE AND MEDICAID ENROLLEES. OF THE TOTAL AMOUNT PAID FOR MEDICAL AND RESIDENTIAL SERVICES, APPROXIMATELY 33.9% WAS DIRECTED TO LONG TERM CARE RESIDENTIAL SERVICE PROVIDERS, 21.3% WAS DIRECTED TO HOME AND COMMUNITY BASED SERVICE PROVIDERS, AND 42.1% WAS DIRECTED TO OTHER MEDICAL SERVICE PROVIDERS AND THE REMAINING 2.6% WAS DIRECTED TO CASE MANAGEMENT COORDINATION SERVICES. 148876920 0 0 0 0 0 0 0 0 0 1 1 0 0 1 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 0 1 2457 0 1 217 1 0 0 0 0 0 0 0 0 0 0 X 3 0 0 0 0 0 1 1 0 1 1 0 0 1 1 1 1 1 1 1 1 0 AZ X VIRGINIA HAVAI 5629895100 3800 KILROY AIRPORT WAY LONG BEACH CA 90806 X ELIZABETH RUSSELL 5.00 X X 0 487331 81495 DENNIS EDER 0.40 X 0 1322329 31361 RYAN TRIMBLE 0.40 X 0 921522 10976 DOUGLAS JAQUES 5.00 X X 0 416260 79903 RANDY STONE 5.00 X 0 226899 15107 DAVE FIRDAUS 5.00 X 144474 0 7647 RAJEEV NARULA 5.00 X 0 301809 41528 REBECCA LEARNER 5.00 X 0 299150 40739 MAUREEN MCGUIRRIN 40.00 X 395905 0 24174 GILBERT MILLER 40.00 X 0 257055 486 THOMAS HOEHNER 40.00 X 275777 0 11356 MARTIN GIBSON 40.00 X 0 211517 26058 JOEY ZEPEDA 40.00 X 185256 0 35729 RICHARD PEITZMEIER 40.00 X 152900 0 19643 TINA GRAHAM 40.00 X 182913 0 13324 THOMAS LESCAULT 0.00 X 252671 0 11809 1589896 4443872 451335 10 1 1 0 EXPRESS SCRIPTS INC 21653 NETWORK PLACE CHICAGO IL 606731216 MEDICAL SERVICES 24249466 JOHN C LINCOLN NORTH MOUNTAIN HOSPITAL 250 E DUNLAP AVENUE PHOENIX AZ 85020 MEDICAL SERVICES 6123207 BANNER BOSWELL MEDICAL CENTER PO BOX 29693 PHOENIX AZ 850389693 MEDICAL SERVICES 4706535 SCOTTSDALE HEALTHCARE HOSPITAL PO BOX 29682 PHOENIX AZ 850389682 MEDICAL SERVICES 4433522 BANNER BAYWOOD MEDICAL CENTER POBOX 2978 PHOENIX AZ 85062 MEDICAL SERVICES 4359394 182 MEDICARE PREMIUM 900099 137285759 137285759 PREMIUM RESERVE 900099 26754662 26754662 164040421 241837 241837 164282258 164040421 0 241837 161164 161164 2169558 1058343 1111215 98606 41038 57568 241299 92816 148483 181351 80847 100504 4808208 776059 4032149 29186 29186 102488 102488 6852816 1357102 5495714 831637 1471 830166 97062 7808 89254 14966 5673 9293 107806 107806 113378 9576 103802 13987 1460 12527 70031 35793 34238 MEDICAL SERVICES FOR EL 145392371 145392371 0 0 MANAGEMENT RECRUITMENT 142608 0 142608 0 OFFICE EQUIPMENTS 45585 5502 40083 0 TELECOMMUNICATIONS 33370 7441 25929 0 43456 3620 39836 161550933 148876920 12674013 0 24996948 57821209 14253 0 1307583 3990162 62594 38920 1951596 1613388 700165 338208 5113886 5125006 1592376 1252479 33787805 68565984 59042786 40320084 105152 509309 292617 50326934 59440555 91156327 X -25652750 -22590343 0 0 0 0 -25652750 -22590343 33787805 68565984 X 2731325 331082 X 0 1 1 X 0 883637 785856 97781 1067959 827532 240427 338208 INVESTMENT IN SCAN LONG TERM CARE 3500000 C OTHER RESTRICTED INVESTEMENTS 1625006 F 5125006 DEFERRED COMPENSATION 326934 SURPLUS NOTE PAYABLE 50000000 50326934 164282258 161550933 2731325 -25918 357000 331082 3062407 137501679 -25917 -25917 137527596 26754662 26754662 164282258 134797160 889 889 134796271 26754662 26754662 161550933 DESCRIPTION OF UNCERTAIN TAX POSITIONS UNDER FIN 48: PART X: FIN 48 (ASC 740) WAS ADOPTED BY THE ORGANIZATION DURING THE YEAR ENDED DECEMBER 31, 2009. THERE HAS BEEN NO LIABILITY FOR UNCERTAIN TAX POSITIONS RECORDED ON THE FINANCIAL STATEMENTS FOR THE CURRENT YEAR. PART XI, LINE 8 - OTHER ADJUSTMENTS: 2010 AUDIT ADJUSTMENT 357,000. PART XII, LINE 4B - OTHER ADJUSTMENTS: PREMIUM RESERVE 26,754,662. PART XIII, LINE 2D - OTHER ADJUSTMENTS: DIFFERENCE IN ADMINISTRATIVE EXPENSES 889. PART XIII, LINE 4B - OTHER ADJUSTMENTS: PREMIUM RESERVE 26,754,662. 1 1 1 0 0 0 0 0 0 ELIZABETH RUSSELL 0 315649 0 150000 0 21682 0 52323 0 29172 0 568826 0 0 DENNIS EDER 0 141030 0 102983 0 1078316 0 19682 0 11679 0 1353690 0 228326 RYAN TRIMBLE 0 566191 0 350000 0 5331 0 0 0 10976 0 932498 0 0 DOUGLAS JAQUES 0 292404 0 105783 0 18073 0 42184 0 37719 0 496163 0 0 RANDY STONE 0 207618 0 0 0 19281 0 2334 0 12773 0 242006 0 0 DAVE FIRDAUS 91182 0 46048 0 7244 0 0 0 7647 0 152121 0 0 0 RAJEEV NARULA 0 232725 0 53007 0 16077 0 17150 0 24378 0 343337 0 0 REBECCA LEARNER 0 222074 0 59855 0 17221 0 24672 0 16067 0 339889 0 0 MAUREEN MCGUIRRIN 162722 0 39558 0 193625 0 17150 0 7024 0 420079 0 0 0 GILBERT MILLER 0 80739 0 0 0 176316 0 0 0 486 0 257541 0 0 THOMAS HOEHNER 136134 0 15291 0 124352 0 7314 0 4042 0 287133 0 0 0 MARTIN GIBSON 0 153230 0 33494 0 24793 0 14244 0 11814 0 237575 0 0 JOEY ZEPEDA 148757 0 26826 0 9673 0 12990 0 22739 0 220985 0 0 0 RICHARD PEITZMEIER 137169 0 12446 0 3285 0 10692 0 8951 0 172543 0 0 0 TINA GRAHAM 140944 0 32790 0 9179 0 12167 0 1157 0 196237 0 0 0 THOMAS LESCAULT 0 0 0 0 252671 0 11809 0 0 0 264480 0 0 0 PART I, LINE 3 COMPENSATION FOR THE CEO WAS ESTABLISHED AND PAID BY A RELATED ORGANIZATION. THE RELATED ORGANIZATION USED THE FOLLOWING TO ESTABLISH THE CEO'S COMPENSATION: (1) COMPENSATION COMMITTEE; (2) INDEPENDENT COMPENSATION CONSULTANT; (3) FORM 990 OF OTHER ORGANIZATIONS; (4) WRITTEN EMPLOYMENT CONTRACTS; (5) COMPENSATION SURVEY OR STUDY; (6) APPROVAL BY THE BOARD OR COMPENSATION COMMITTEE. PART I, LINES 4A-C PART I, LINES 4A-C: 4A: DURING 2011, THE EMPLOYMENT RELATIONSHIPS OF THE FOLLOWING HIGHEST COMPENSATED EMPLOYEE'S, KEY EMPLOYEE'S AND OFFICER'S, WITH SCAN HEALTH PLAN, SCAN GROUP AND SCAN HEALTH PLAN ARIZONA WERE ENDED. IN CONNECTION WITH THE TERMINATION OF THEIR EMPLOYMENTS, SCAN HEALTH PLAN NEGOTIATED AND PAID SEVERANCE TO EACH OF THEM. THE SEVERANCE PAYMENT WAS IN ACCORDANCE WITH THE TERMS OF EACH HIGHEST COMPENSATED EMPLOYEE'S, KEY EMPLOYEE'S AND THE OFFICER'S THEN EXISTING EMPLOYMENT AGREEMENT. DENNIS EDER, CHIEF FINANCIAL OFFICER, OFFICER - SCAN HEALTH PLAN, $773,525 THOMAS LESCAULT, FORMER PRESIDENT - SCAN HEALTH PLAN ARIZONA, $236,171 THOMAS HOEHNER, HIGHLY COMPENSATED EMPLOYEE - SCAN HEALTH PLAN ARIZONA, $100,385 MAUREEN MCGUIRRIN, VP OF OPERATIONS, KEY EMPLOYEE - SCAN HEALTH PLAN ARIZONA, $146,596 4B: THE COMPANY PROVIDES A SUPPLEMENTAL NON-QUALIFIED RETIREMENT PLAN TO ONLY SENIOR EXECUTIVES OF THE COMPANY. SENIOR V.P. AND OFFICERS ARE ELIGIBLE TO PARTICIPATE IN THE SECTION 457(F) PLAN. THE FOLLOWING INDIVIDUALS PARTICIPATED IN THE COMPANY'S SECTION 457(F) DURING THE YEAR 2011: RANDY STONE, DENNIS EDER, DOUGLAS JAQUES, REBECCA LEARNER AND ELIZABETH RUSSELL. COMPENSATION PURSUANT TO THE TERMS AND CONDITIONS OF THE SECTION 457(F) PLAN, A PARTICIPANT BECOMES 100% VESTED IN THE EMPLOYER CONTRIBUTION UPON THE OCCURRENCE OF ANY OF THE FOLLOWING WHILE THE PARTICIPANT IS AN EMPLOYEE: (I) THE PARTICIPANT HAS TEN YEARS OF CONTINUOUS EMPLOYMENT, COUNTING ONLY SERVICE AFTER DECEMBER 31, 2005; (II) THE PARTICIPANT REACHES THE AGE OF 62 AND HAS FIVE YEARS OF CONTINUOUS EMPLOYMENT; (III) THE PARTICIPANT'S INVOLUNTARY TERMINATION; (IV) THE PARTICIPANT'S DISABILITY; OR (V) THE PARTICIPANT'S DEATH. THERE WAS 1 INDIVIDUAL WHO RECEIVED PAYMENTS OUT OF THE SECTION 457(F) PLAN DURING THE YEAR: DENIS EDER, $228,326. 4C: THE FOLLOWING INDIVIDUAL PARTICIPATED IN SCAN HEALTH PLAN'S KEYSOP PLAN DURING THE TAXABLE YEAR: REBECCA LEARNER. THE PLAN IS NOW FROZEN AND NO EMPLOYEES ARE BEING NEWLY ADDED AS PARTICIPANTS. FORM 990, PART VI, SECTION A, LINE 6 THE SOLE MEMBER OF THE ORGANIZATION IS SCAN GROUP, A CALIFORNIA NONPROFIT CORPORATION. FORM 990, PART VI, SECTION A, LINE 7A THE SOLE MEMBER HAS THE POWER TO APPOINT THE MEMBERS OF THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 11 THE FORM 990 IS PREPARED BY DELOITTE TAX LLP, WORKING IN CONJUNCTION WITH SCAN'S FINANCE DEPARTMENT. SCAN HEALTH PLAN'S ACCOUNTING MANAGER HAS DIRECT RESPONSIBILITY FOR THIS EFFORT, SUBJECT TO SUPERVISION BY THE SCAN HEALTH PLAN ARIZONA'S CHIEF FINANCIAL OFFICER. AFTER AN INITIAL DRAFT OF THE FORM 990 IS PREPARED, IT IS CIRCULATED FOR REVIEW AND COMMENT BY RELEVANT MEMBERS OF THE EXECUTIVE TEAM WHO HAVE RESPONSIBILITY AND/OR KNOWLEDGE ABOUT THE VARIOUS MATTERS DISCLOSED AND/OR DESCRIBED IN THE FORM. THE GENERAL COUNSEL, IN PARTICULAR, REVIEWS THE FORM 990 AND ENSURES ACCURACY OF DESCRIPTIONS AND THAT DISCLOSURE IS COMPLETE. THE DRAFT FORM 990 IS REVIEWED BY THE AUDIT AND COMPLIANCE COMMITTEE OF THE BOARD OF DIRECTORS OF SCAN GROUP, AND IS SHARED WITH ALL MEMBERS OF THE BOARD OF DIRECTORS AFTER IT IS READY FOR FILING BUT BEFORE IT IS FILED. FORM 990, PART VI, SECTION B, LINE 12C SCAN HEALTH PLAN ARIZONA REGULARLY AND CONSISTENTLY MONITORS AND ENFORCES COMPLIANCE WITH ITS CONFLICT OF INTEREST POLICY THROUGH ANNUAL CIRCULATION OF A CONFLICT OF INTEREST QUESTIONNAIRE WHICH IS REQUIRED TO BE ANSWERED BY ALL MEMBERS OF THE BOARD OF DIRECTORS, OFFICERS AND MEMBERS OF EXECUTIVE MANAGEMENT. IN ADDITION, THERE IS REGULAR EDUCATION AND ENFORCEMENT THROUGH OVERSIGHT OF SUCH POLICY AND THE SCAN HEALTH PLAN ARIZONA GIFT AND BUSINESS COURTESIES POLICY WITH RESPECT TO EACH DEPARTMENT BY MEMBERS OF THE SENIOR EXECUTIVE TEAM WITH RESPONSIBILITY FOR SUCH DEPARTMENT. THE LEGAL DEPARTMENT OF SCAN GROUP REVIEWS ALL CONTRACTUAL RELATIONSHIPS ENTERED INTO BY THE ORGANIZATION AND THE GENERAL COUNSEL OF SCAN GROUP IS RESPONSIBLE FOR MONITORING CONFLICTS OF INTEREST THROUGH THE ANNUAL CIRCULATION AND REVIEW OF THE CONFLICT OF INTEREST QUESTIONNAIRE. ACCORDINGLY, THE LEGAL DEPARTMENT OF SCAN GROUP THROUGH THE GENERAL COUNSEL IS IN A POSITION TO MONITOR AND ENFORCE COMPLIANCE WITH THE POLICY ON AN ONGOING BASIS. FORM 990, PART VI, SECTION B, LINE 15 15A: THE PROCESS FOR DETERMINING THE COMPENSATION OF THE CHIEF EXECUTIVE OFFICER OF SCAN HEALTH PLAN ARIZONA IS CONDUCTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS OF SCAN GROUP, ALL OF THE VOTING MEMBERS OF WHICH ARE INDEPENDENT PERSONS. IN DETERMINING THE CEO'S COMPENSATION, THE COMPENSATION COMMITTEE WORKS WITH AND RELIES UPON THE COUNSEL AND EXPERTISE OF ERNST & YOUNG, A CONSULTANT WITH WELL-ESTABLISHED EXPERIENCE AND EXPERTISE IN THE AREA OF NONPROFIT ORGANIZATION EXECUTIVE COMPENSATION AND COMPLIANCE WITH THE INTERMEDIATE SANCTIONS REQUIREMENTS APPLICABLE TO SUCH COMPENSATION. ERNST & YOUNG PROVIDES AN "EXECUTIVE COMPENSATION REPORT" TO THE COMPENSATION COMMITTEE EACH YEAR WHICH FURNISHES THE BASIS FOR THE ESTABLISHMENT OF THE CEO'S COMPENSATION PACKAGE DURING THE FOLLOWING YEAR. THE ERNST & YOUNG EXECUTIVE COMPENSATION REPORT IS BASED ON A REVIEW OF THE EXECUTIVE COMPENSATION PRACTICES OF A VARIETY OF ORGANIZATIONS THAT ARE CONSIDERED COMPARABLE TO SCAN HEALTH PLAN ARIZONA BASED ON VARIOUS METRICS. THE COMPENSATION COMMITTEE DELIBERATES ON THE ISSUE OF THE CEO'S COMPENSATION PACKAGE IN LIGHT OF THE ERNST & YOUNG EXECUTIVE COMPENSATION REPORT AND QUESTIONS ARE ASKED OF, AND ANSWERED BY ERNST & YOUNG, REGARDING SUCH REPORT AND OTHER MATTERS RELEVANT TO SUCH PACKAGE. BASED ON SUCH DELIBERATIONS, THE COMPENSATION COMMITTEE MAKES A RECOMMENDATION TO THE BOARD OF DIRECTORS OF SCAN HEALTH PLAN ARIZONA REGARDING THE COMPENSATION PACKAGE FOR THE FOLLOWING YEAR. THE BOARD OF DIRECTORS OF SCAN HEALTH PLAN ARIZONA DELIBERATES ON AND THEN VOTES ON SUCH RECOMMENDATION; THE CEO IS RECUSED FOR THE ENTIRETY OF SUCH DELIBERATIONS AND VOTE. THE MINUTES OF THE COMPENSATION FOR THESE MEETINGS ARE PREPARED SUBSTANTIALLY CONTEMPORANEOUSLY AND SUBSTANTIATE SUCH DELIBERATIONS AND DECISIONS. 15B: THE PROCESS FOR DETERMINING THE COMPENSATION OF OFFICERS OR OTHER KEY EMPLOYEES OF SCAN HEALTH PLAN ARIZONA IS CONDUCTED BY THE HUMAN RESOURCES DEPARTMENT AND CEO. IN DETERMINING SUCH EMPLOYEE'S COMPENSATION, THE HUMAN RESOURCES DEPARTMENT WORKS WITH AND RELIES UPON THE COUNSEL AND EXPERTISE OF ERNST & YOUNG, A CONSULTANT WITH WELL-ESTABLISHED EXPERIENCE AND EXPERTISE IN THE AREA OF NONPROFIT ORGANIZATION EXECUTIVE COMPENSATION AND COMPLIANCE WITH THE INTERMEDIATE SANCTIONS REQUIREMENTS APPLICABLE TO SUCH COMPENSATION. ERNST & YOUNG PROVIDES AN "EXECUTIVE COMPENSATION REPORT" TO THE HUMAN RESOURCES DEPARTMENT EACH YEAR WHICH FURNISHES THE BASIS FOR THE ESTABLISHMENT OF SUCH EMPLOYEES' COMPENSATION PACKAGE DURING THE FOLLOWING YEAR. THE ERNST & YOUNG EXECUTIVE COMPENSATION REPORT IS BASED ON A REVIEW OF THE EXECUTIVE COMPENSATION PRACTICES OF A VARIETY OF ORGANIZATIONS THAT ARE CONSIDERED COMPARABLE TO SCAN HEALTH PLAN ARIZONA BASED ON VARIOUS METRICS. FORM 990, PART VI, SECTION C, LINE 19 SCAN HEALTH PLAN ARIZONA'S GOVERNING DOCUMENTS AND CONFLICT OF INTEREST POLICY ARE NOT MADE AVAILABLE TO THE PUBLIC. SCAN HEALTH PLAN ARIZONA'S AUDITED FINANCIAL STATEMENTS ARE PUBLICLY AVAILABLE FROM THE ARIZONA DEPARTMENT OF INSURANCE FOR A NOMINAL FEE. FORM 990, PART VII: AVG HOURS DEVOTED TO RELATED ORGANIZATION(S) WHEN RELATED COMP IS REPORTED: PART VII, SECTION A, COLUMN D REPORTS COMPENSATION PAID BY SCAN HEALTH PLAN ARIZONA FOR SERVICES PROVIDED TO SCAN HEALTH PLAN ARIZONA AND AFFILIATES. COLUMN B INCLUDES TOTAL HOURS FOR BOTH SCAN HEALTH PLAN ARIZONA AND SCAN LONG TERM CARE. BELOW IS A BREAKDOWN OF HOURS SPENT PER AFFILIATE. SCAN HEALTH PLAN AND SCAN GROUP ARE OPERATED JOINTLY. THEREFORE, THE FOLLOWING INDIVIDUALS REPORTED ABOVE SPEND AN AVERAGE OF 40 HOURS PER WEEK BETWEEN THE TWO ORGANIZATIONS, AND THEREFORE ARE REPORTED AS WORKING 40 HOURS PER WEEK FOR EACH: DENNIS EDER DOUGLAS JAQUES RANDY STONE GILBERT MILLER REBECCA LEARNER ELIZABETH RUSSELL RYAN TRIMBLE RAJEEV NARULA (NOT INCLUDED ON PART VII FOR SCAN GROUP) THE FOLLOWING OFFICERS, KEY EMPLOYEES, AND BOARD MEMBERS OF SCAN HEALTH PLAN ARIZONA ALSO DEVOTE THE FOLLOWING TIME TO SCAN FOUNDATION: DENNIS EDER - 2.0 HOURS PER WEEK DOUGLAS JAQUES - 2.0 HOURS PER WEEK RANDY STONE - 2.0 HOURS PER WEEK RYAN TRIMBLE - 1.0 HOURS PER WEEK THE 40 HOURS PER WEEK DISCLOSED IN COLUMN B FOR MAUREEN MCGURRIN, TINA GRAHAM, JOEY ZEPEDA AND THOMAS HOEHNER ARE SPLIT BETWEEN SCAN HEALTH PLAN ARIZONA AND SCAN LONG TERM CARE. CHANGES IN NET ASSETS OR FUND BALANCES: FORM 990, PART XI, LINE 5: NET UNREALIZED LOSSES ON INVESTMENTS: -25,918. 2010 AUDIT ADJUSTMENT 357,000. TOTAL TO FORM 990, PART XI, LINE 5: 331,082. SCAN GROUP 3800 KILROY AIRPORT WAY LONG BEACH CA 90806 953826037 ADMIN. SUPPORT CA 501(C)(3) LINE 11, TYPE II: 50 N/A 0 SCAN HEALTH PLAN 3800 KILROY AIRPORT WAY LONG BEACH CA 90806 953858259 MEDICARE ADVANTAGE CA 501(C)(3) LINE 9 SCAN GROUP 1 SCAN LONG TERM CARE 3800 KILROY AIRPORT WAY LONG BEACH CA 90806 204607594 MEDICAID MANAGEMENT CARE AZ 501(C)(4) SCAN HEALTH PLAN ARIZONA 1 THE SCAN FOUNDATION 3800 KILROY AIRPORT WAY LONG BEACH CA 90806 450552845 GRANT MAKING CA 501(C)(3) LINE 11, TYPE II: 50 SCAN HEALTH PLAN 1 1 0 0 0 0 1 0 0 0 0 0 0 0 1 1 1 1 0 0 SCAN LONG TERM CARE P 20508 SEE PART VII SCAN HEALTH PLAN O 2413913 SEE PART VII SCAN GROUP O 2394294 SEE PART VII SCAN LONG TERM CARE N 11209244 SEE PART VII SCAN LONG TERM CARE M 905463 SEE PART VII SCAN HEALTH PLAN E 50000000 SEE PART VII SCHEDULE R, PART V: THE PERCENTAGE OF ALLOCATION TO AFFILIATED COMPANIES IS DETERMINED BASED ON ESTIMATED PERCENTAGE OF TIME WORKED, PERCENTAGE OF HEADCOUNTS, AND THE PERCENTAGE OF SCAN MEMBERSHIP, AS APPROPRIATE BASED ON THE NATURE OF THE EXPENSE. SCAN HEALTH PLAN ARIZONA RECEIVED A $50 MILLION SURPLUS NOTE FROM SCAN HEALTH PLAN, IN ORDER TO MEET CERTAIN CAPITAL REQUIREMENTS. THE NOTE WAS APPROVED BY THE ARIZONA DEPARTMENT OF INSURANCE AND THE CALIFORNIA DEPARTMENT OF MANAGED HEALTHCARE.