This letter is in response to your request for a proposal for consultant services for' an interim credentialing manager.

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1 Kotten Associates, LLC 4186 Blueberry Lane Eagan, MN Tel: (651) Fax: (651) September 17, 1998 Kathy Ohmann Director, Medical Services HealthPart:ners th Avenue South POBox 1309 Minneapolis,MN Dear Kathy: This letter is in response to your request for a proposal for consultant services for' an interim credentialing manager. Kotten Associates will provide credentialing manager services such as: Manage credentialing, recredentialing, and privileging activities Provide leadership and coordination of process, procedure, policy, and system issues Participate in appropriate departmental and organizational meetings related to credenti alin g Coordinate compliance with regulatory, accreditation and other external requirements Coordinate compliance with the organization's credentialing plan Day-to-day management of credentialing staff Provide transition to new credentialing manager I will work with you throughout the duration of the project to prioritize and plan activities. I will work with other HealthPartners staff and committees as deemed necessary by HealthPartners. I will be available on-site four hours per day Monday through Friday with exceptions for prior commitments, e.g. NCQA conference, other client commitments. I will work with

2 you to determine a specific schedule. These interim credentialing manager services will be provided until December 31, 1998 or whenever a new manager is in place, whichever IS sooner. The fee for this project is.per hour. I will invoice HealthPartners for services on a monthly basis. I am available to begin September 28, If the terms of the project as described in this letter are acceptable, please sign and return one copy of this letter for my files. I look forward to working with you on this project. Sincerely, PatKotten Kotten Associates, LLC Accept for By Title Date

3 In follow-up to our meeting yesterday, I have reviewed NCQA andhedis requirements as they relate to credentialing files. NCQA surveyors will expect to fmd the following elements in each credentialing file: Application with specific required fields License Clinical (hospital) DEA/CDS privileges Education/training Work history Malpractice coverage Malpractice claims history NPDB State licensing board sanction MedicarelMedicaid sanction Documentation of review and consideration of site reviewfmdings Documentation of credentia:ling/recredentialing decision NCQA recredentialing requirements, include the above and documentation of review and consideration of 3 of the following: Complaints Quality activities Utilization management Member satisfaction As you know, NCQA requires primary source verification of information. If a copy of the source document is not in the file, documentation of the source document reviewed, the review date, signature/initials of the individual reviewing, and a description of the fmdings must be present. NCQA defmes"current" (e.g. for license, DEA) as current at the time the credentialing or recredentialing decision is made. There is no requirement (yet) to ensure that that information is verified between the credentialing and recredentialing processes. The issues from the last NCQA accreditation visit were primarily in regard to the review and consideration of site review information and of the other information at recredentialing. Also, DC/DDSIDPM provider files did not meet all the primary source

4 verification requriements. We will want to move on to an audit of these and other allied providers as soon as possible. HEDIS reporting specifications require reporting by product (HMO, PPO, POS) and by population (Medicaid, Medicare, commercial). Provider information required is: Degree (MD, RN, SW, masters, doctorate, etc.) Specialty (geriatricians, pediatricians, etc.) Language Board certification - for each specialty (e.g. pediatrics, oncology) Other certifications (nurse practitioner, clinical social worker, drug counselors) License Whether or not accepting new members This information is available on the credentialing application. However, reporting these HEDIS measures requires that these elements be in a database. This is a project separate from auditing for completeness of credentialing files and information. As you suggested, we may want to look at using a MIDAS printoucfor each provider for the audit tool. This, along with instructions, would be the most efficient way to collect the audit information. We may need to add items for auditing that consideration of site review information is documented and at recredentialing, that the additional information that NCQA requires was considered and documented, i.e. complaints, utilization, quality Issues. Given that there are approximately 4600 physicians in the network and a file will take approximately minutes to audit and put in correct file order, 10 FTE' s are needed for 2-3 weeks to complete this project. I anticipate that if we can utilize people with nursing backgrounds, the training will be minimal, i.e. about I hour. In addition, I recommend clerical support to pull and re-file the credentialing files. If we can get the CPN report soon and identify enough temporary staff, this initial audit could be completed as early as October 16 or more probably by October 23. I have not been able to talk with the NCQA mock site visit reviewers yet, but hope to do so soon. As next steps, I will contact the NCQA mock site visit reviewers and draft instructions for the audit team after I get a MIDAS provider printout. Have you heard about the availability of the CPN report? Did we make a fmal decision about who would do the CPN report comparison to the files? When we are ready to contact temporary staff, would you like me to do that? I understand you are out of the office on Friday; perhaps we can touch base on Monday. I plan to be in to continue working on the NCQA preparation, including credentialing.

5 Kotten Associates, LLC 4186 Blueberry Lane Eagan, IvlN Draft - Confidential TEL: (651) FAX: (651) mkouen(alworldnet.au.net December 4, 1998 Kirby J. Erickson EVP, Administration and Health HealthPartners, Inc th Avenue South Box 1309 Minneapolis; MN Dear Kirby: Following-up on our meeting last week, I am sending you a draft discussion document regarding HealthPartners desire to engage Kotten Associates for consulting services. Based on our initial discussion, Kotten Associates is uniquely qualified and positioned to work with you on this engagement. Current Situation It is my understanding that HealthPartners currently operates as four separate employers from a people perspective with four vice presidents of human resources and HR operations. Unlike other corporate functions, such as [mance, legal, communicatioils, public relations etc., there is no head of human resources for HealthPartners providing strategic people direction for the enterprise or to senior corporate executive management. The current HR organization design results in significant overhead structure and unsatisfied customers. HealthPartners seeks to engage the resources of an outside consultant in order to address its overall human resource strategy, leadership and HR operation issues (i.e. how HR services are delivered). The senior executive sponsors are Kirby Erickson, Executive Vice President, Administration and Health and Mary Brainerd, Executive Vice President, Care Delivery. Desired Outcomes Desired outcomes include a HealthPartners human resource strategy, reduced overhead structure, and improved customer satisfaction with the delivery ofhr services..j HealthPartners would like this engagement to commence in January 1999 and be completed by October 1999 for the year 2000 budgeting process. The scope of the work excludes implementation at this time. Partnering 10 Solve People-Related Business Issues

6 Kirby Erickson Page 2 Approach Kotten Associates' approach to the engagement will be to work in concert with the sponsors, other senior management, human resource organizations and customers to develop a HealthPartners' human resource strategy going into the 21 st century including alternative HR leadership models and options for delivering HR services within the HealthPartners operations. Fee Structure There are a number of ways to handle the fee structure such as per hour, per day, single project cost or retainer. The preferred fee arrangement providing the most flexibility to. both parties is a retainer basis. Jblb 1.))-b/\"~.. Next Steps Let me suggest that the next steps might be: A follow-up meeting to this discussion draft to finalize the desired outcomes, approach, ongoing working relationship, fees, etc. I would suggest this meeting include Mary Brainerd. Any letter of agreement issues. Positioning Timing Enclosed for your information is some background material on Kotten Associates. I look forward to meeting With you and Mary on this project. Sincerely, Kotten Associates, LLC Michael E. Kotten Enclosure Partnering to Solve People-Related Business Issues

7 ~H'~ ~n~ th Avenue South P.O. Box 1309 Minneapolis, MN March 16, 1999 Mr. Michael E. Kotten Managing Director Kotten Associates, LLC 4186 Blueberry Lane Eagan, MN Dear Mike: Thanks for our lunch on Friday and the opportunity to engage your services for HealthPartners beginning in April. We look forward to having you and your associates join us as we consider restructuring human resources functions across our organization. As we discussed, the consulting effort will focus on: Initial appraisal of HealthPartners HR programs, resources and budgets in both our corporate areas and our subsidiaries. Assessment of the organization's needs for HR services at the parent company and subsidiary company levels. This can be accomplished through surveys of senior officers and leaders in each of the subsidiary entities, and of customers of the HR departments. Development of alternative organization models that can meet the appropriate needs of the organization in each functional area, i.e., employment, compensation and benefits, management consulting, labor relations, HR policy, diversity, training, health services, etc. Review of budgets, including savings opportunities. It is understood that the final scope of your consulting will firm up once you get started. Mary Brainerd and I will be your primary customers for this.work and we will help assess the scope of activity you undertake: It is also understood that you will personally spend 10 days per month, and that an associate will spend up to 5 days per month on this consulting study. The initial retainer will be $16, per month. Should extra

8 March 16, 1999 Page 2 expenses be anticipated, we can discuss those with you. HP will provide you with an office and clerical support. Bob Cooley will be pulling together background material for you so that it will be available on Monday, April 5 when you expect to start work. Val Welch will also provide you with background on our labor relations strategy and its impact on the organizational stnlcture. We will be announcing your project to the officers in HealthPartners later this week. Since you know many of OUI- leaders already, I am sure you will be welcomed. We look forward to this engagement. Sincerely, ~ Kirby J. Erickson Executive Vice President, Administration and Health. (612) KJEjmbu C: George Halvorson Mary Brainerd

9 '.'.. --.' , t'lar :13 FF' HF' E>~ECUTI UE OFFICES 612 7~~5 TO F'.02/D2.Kotten Associates, LLC March 22, 1999 Kirby J. Erickson EVP, Administration and Health i~~4i~iu-wc137ili: th Avenue South Box 1309 Minneapolis, 1v!N Dear Kirby; Thank you for your letter of March 16 regarding the human resources consulting project at HealthPartners. KottenAssociates will provide the services outlined in your tetter beginning April 5. I want to clarify the fee structure for Konen Associates. I:un Dot certain from your letter that we are in complete alignment 011 that aspect. The fee for services provided by Kotten Associates is $1,600 per day for which I suggested a retainer of$16,000 per month plus any direct expenses. For this, KottenAssociates would. commit 10 days per month to the project. I expect to dedicate 10 days a month personally to the project. Project time that exceeds the 10 days per month (Le. retainer fee) will be billedat a rate of $200 per hour. I expect any direct expenses to be minimal. I will invoice HealthPartners 00 a monthly basis for services. Payment is due IS days fouowing the date of the invoice. Either party, upon 30 days notice, roay terminate this assignment. If the terms of this agreement are acceptable, let me suggest that this letter be included as an addendum to your letter of March 16. I would also ask that you sign and rerum one copy of this!ener by fax for rn~1 fil~<;. Kotten Associates looks forward to working \>withhealthpartners on this project. Sincerely, Kutten Associates. LLC For: By: