Priority Health Choice Inc.

“Priority Health Managed Benefits, Inc. (PHMB), an entity related through common ownership, provides contracted management services to Priority Health Choice, Inc. and its affiliates. Priority Health, a 501(c)(4), is the parent company to the organization. Priority Health's governing body retains control of the activities of PHMB as the governing bodies of Priority Health and PHMB are comprised of the same directors and officers.”

“MANAGEMENT 1. Upon acceptance of an employment offer, each member of management completes a conflict of interest disclosure questionnaire. A copy of the member of management's disclosure questionnaire is sent to the organization's legal department. A copy of the member of management's disclosure is reviewed by the organization's COI coordinator and escalated to the COI Committee if necessary. 2. Annually, each member of management completes an annual conflict of interest disclosure questionnaire electronically. The disclosure questionnaire is reviewed by the legal, organizational integrity, internal audit, and human resources departments. 3. There is an ongoing requirement that members of management complete another disclosure questionnaire at any point during his/her employment when a new potential conflict of interest arises. If a member of management completes a disclosure questionnaire as a result of a new potential conflict of interest, that disclosure questionnaire is submitted to the legal, organizational integrity, internal audit, and human resources departments. 4. The legal, organizational integrity, internal audit, and human resources departments, in consultation with executive management, determine how any reported conflicts should be managed. Management of a conflict may take a variety of different forms from implementation of a management plan to requiring that the member of management cease the activity creating the conflict or, in extreme cases, leave the organization's employment. Management is determined on an individual basis based upon the facts and circumstances surrounding the disclosure. The purpose of conflict management is to provide transparency within the organization and to ensure that the organization's employees are always acting in the best interest of the organization.”

“CERTAIN MEMBERS OF THE BOARD OF DIRECTORS AND OFFICERS OF THE ORGANIZATION ALSO SERVE ON THE BOARD OF DIRECTORS AND/OR AS OFFICERS OF RELATED TAXABLE ENTITIES - Business relationship”

“The parent organization is Priority Health (EIN 38-2715520), a tax-exempt 501(c)(4) organization. Priority Health controls 100% of the Organization. Priority Health has three shareholders as follows: Spectrum Health System (EIN 38-3382353), Class A Shareholder - 93.9% Munson Healthcare (EIN 38-1362830), Class B Shareholder - 5.5% Northern Michigan Regional Health System (EIN 38-2146751), Class B Shareholder - .6% All Shareholders are tax-exempt Internal Revenue Code Section 501(c)(3) organizations.”

“Election of Members and Their Rights from Priority Health Choice, Inc. bylaws: Article V Section 2. Number and Class of Directors. The Board of Directors will be comprised of six (6) members as follows: a. One (1) member will be the President and Chief Executive Officer of Priority Health. b. One (1) member will be the Chief Financial Officer of Priority Health. c. One (1) member will be the Chief Medical Officer of Priority Health. d. One (1) member will be the Chief Operations officer of Priority Health. e. Two (2) members will be Adult Enrollee Members of Priority Health Choice, Inc. Section 3. Election of Adult Enrollee Members. The Board of Directors will solicit names of potential candidates from the members, shareholders, directors and community. The Priority Health Choice, Inc. Board of Directors will submit a list of nominees for election to the Board of Directors as adult enrollee representatives. At least one (1) member will be nominated for each directorship to be filled at such annual meeting. In addition, any group of adult enrollees in the corporation's health maintenance plan, upon filing a petition with more than one hundred (100) legitimate signatures of current members with the Secretary of the Board of Directors at least ninety (90) days prior to the annual meeting, may nominate a candidate for election to the Board of Directors. Eligible members will be given the opportunity to vote on the candidates for election to the Board of Directors.”

“From Priority Health Choice, Inc. bylaws: Section 1. Votes. Each shareholder of record as determined in accordance with Section 2 of this Article will, at every meeting of shareholders, be entitled to one (1) vote in person or by proxy for each share of capital voting stock of the corporation held by the shareholder. A vote may be cast either verbally or in writing. Unless the Articles of Incorporation or Bylaws state otherwise, all matters will be determined by the vote of the holders of a majority of the issued and outstanding stock in the corporation. Section 2. Record Date for Determination of Shareholders. For the purpose of determining shareholders entitled to notice of, and to vote at, a meeting of shareholders, or any adjourned meeting, or to express consent to or dissent from a proposal without a meeting, or for the purpose of any other action, the Board of Directors may fix in advance a date, not more than sixty (60) days nor less than twenty-one (21) days before the date of the meeting or other action, as the record date for the determination of shareholders. Section 3. Proxies. A shareholder entitled to vote at a meeting of shareholders or to express consent or dissent without a meeting may authorize other persons to act for the shareholder by proxy. No proxy will be deemed operative unless and until signed by the shareholder or the shareholder's authorized agent or representative and filed with the corporation. Unless otherwise provided in the proxy, a proxy is valid only for three (3) years from its date. Section 4. Annual Budget and Strategic Plan. At the first meeting of the Board of Directors during each fiscal year, the Board of Directors will approve the annual budget and strategic plan for the Corporation. At the first meeting of the Board of Directors of the Shareholder during each fiscal year, the Shareholder will approve the annual budget and strategic plan for the Corporation. Section 5. Power to Elect President. The shareholders will select a President from the Board of Directors. Section 6. Removal of Officers and Agents. Any officer or agent may be removed by the shareholders whenever, in their judgment, the business interests of the corporation will be served by the removal. Section 7. Delegation of Powers. For any reason they deem sufficient, whether occasioned by absence or otherwise, the shareholders may delegate all or any of the powers and duties of any officer to any other officer or director. Section 8. Power to Require Bonds. The shareholders may require any officer or agent to file with the corporation a satisfactory bond conditioned for faithful performance of the officer's or agent's duties.”

“The review process for this Form 990 is as follows: 1. Preparation of the return is supervised and reviewed by the organization's Corporate Tax Manager. 2. A second review is performed by an external CPA firm with expertise in tax-exempt return preparation. 3. The return is reviewed by the organization's finance and legal departments and presented to the Finance and Audit Committee who is responsible for approving the return for filing and distribution to the Board of Directors. 4. The return is sent to the members of the Board of Directors. 5. The organization's Chief Financial Officer reviews comments or questions received by members of the Board of Directors, if any, to address or to incorporate, as appropriate, into the return prior to filing.”

“BOARD OF DIRECTORS 1. Conflicts of interest must be disclosed, BOTH VIA AN ANNUAL ELECTRONIC DISCLOSURE PROCESS as well as verbally at a board meeting prior to discussion of any agenda item with regard to which a board member has a conflict. 2. A person having a financial interest in a proposed transaction or arrangement may make a presentation at a meeting of the Board of Directors or committee considering that transaction or arrangement, but after that presentation he or she shall leave the meeting during discussion and voting on that proposed transaction or arrangement. The person having the financial interest shall not be counted in determining whether a quorum is present. 3. The chairperson of the Board of Directors or committee shall, if appropriate, appoint a disinterested person or committee (including outside advisors) to investigate alternatives to the proposed transaction or arrangement, and to advise whether the proposed transaction or arrangement is in the organization's best interest. 4. The Board of Directors or committee shall exercise due diligence to determine whether the organization can, with reasonable efforts, obtain a more advantageous transaction or arrangement that would not give rise to a conflict of interest. 5. If a more advantageous transaction or arrangement is not reasonably attainable under circumstances that would not give rise to a conflict of interest, the Board of Directors or committee shall determine by a majority vote of the disinterested directors and members whether the proposed transaction or arrangement is in the organization's best interest and for its own benefit and whether the transaction is fair and reasonable to the organization, and shall make its decision as to whether to enter into the transaction or arrangement in conformity with such determination. 6. The minutes of the meetings of the Board of Directors and all of the organization's committees shall set forth: a)The names of the persons who disclosed a financial interest in a proposed transaction or arrangement involving the organization or any of its subsidiaries and the nature of the financial interest; and b)The names of the persons who were present for discussions and votes relating to such transaction or arrangement, including any discussion of alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with that matter. The votes of individual members need not be recorded unless otherwise directed by the Board of Directors or committee. 7. There is an ongoing requirement that members of the board of directors complete another disclosure questionnaire at any point during his/her tenure on the board of directors when a new potential conflict of interest arises. If a member of the board of directors completes a disclosure questionnaire as a result of a new potential conflict of interest, that disclosure questionnaire is submitted to the legal, organizational integrity, internal audit, and human resources departments for review.”

“The Spectrum Health System Board of Directors (through its Executive Committee) uses the following process for determining compensation of the top management official, other officers, and key employees at Priority Health Choice, Inc. Labor market data reflecting comparable organizations and jobs (prepared by independent firms) are relied upon. Competitive assessment reports are provided to the Executive Committee in advance of meetings. The competitive assessment report is prepared by a nationally known independent executive compensation firm and, for calendar 2014 (1/1/14-12/31/14), was based on the following independent surveys of healthcare executives at comparable health systems, health plans, and medical groups: * American Medical Group Association: 2013 Medical Group Compensation & Financial Survey * Chief Executive of Multi-site organizations: 2013 Leading Age-CEMO Leadership Compensation Survey * Integrated Healthcare Strategies: 2013 Children's Hospitals Executive Compensation Survey * Integrated Healthcare Strategies: 2013 Healthcare Executive Compensation Survey * Mercer Human Resources Consulting: 2013 Benchmark Database Executive Survey * Mercer Human Resources Consulting: 2013 Integrated Health Networks Compensation Survey * Medical Group Management Association: 2013 Management Compensation Survey * Sullivan, Cotter and Associates: 2013 Survey of Manager and Executive Compensation in Hospitals and Health Systems * Sullivan, Cotter and Associates: 2013 Survey of Manager and Executive Compensation in Children's Hospitals * Sullivan, Cotter and Associates: 2013 Physician Compensation and Productivity Survey Report * Towers Watson: 2013 Healthcare Executive and Management Compensation Survey Report * Towers Watson: 2013 General Industry Top Management Compensation Survey Report * Warren: Fall 2013 The HMO Salary Survey Compensation adjustments are approved by Executive Committee members, consistent with the Spectrum Health compensation philosophy described below. Minutes of Committee discussions and decisions are prepared to memorialize Executive Committee decisions based upon the above data. Cash compensation data relied upon by the Executive Committee is national and reflects the compensation paid to executives in comparable jobs in comparably-sized healthcare and / or health insurance organizations. Spectrum Health recruits nationally for its executives. Benefits data reflect national healthcare / health insurance market practices. Geographic pay differential and cost of living data indicates consistency with national data. This process is intended to assist Spectrum Health in qualifying for the rebuttable presumption of reasonableness (Intermediate Sanctions Regulations) and complying with the potential Spectrum Health Excess Benefit Transaction Policy for those individuals in the group who are disqualified persons. The opinion submitted from the third party independent consulting firm is in accordance with the provisions of Treasury Regulations Section 53.4958-6(c)(2) and is also intended to satisfy the professional advice requirement of Treasury Regulations Section 53.4958-1(d)(4)(iii).”

“See explanation provided for Form 990, Part VI, Line 15a.”

“The organization's Articles of Incorporation and Statutory Financial Statements are on file with the State of Michigan and available to the public on the State's website. The organization's bylaws and internal policies are generally not made available to the public. The overall system consolidated financial statements are provided at www.spectrumhealth.org in the section titled "about us." Financial performance is discussed at an annual public meeting held and posted to www.spectrumhealth.org annually (under the section titled "about us").”

“There are no individuals reported due to the integration with Spectrum Health System. Refer to the disclosure for Form 990, Part V, Line 2a for further detail.”

“Based on external opinion by sullivan cotter and associates, inc., obtained a few years ago, priority health choice, inc. Compensates board members in a manner that is reasonable in relation to market data. Board of directors compensation is reviewed annually by internal staff to confirm compensation falls within reasonable limits. Any compensation amount is treated as taxable to the board member and is reported and provided to them on form 1099, as required according to the reporting thresholds. Certain board members are employed by a related organization. Compensation reported in part vii, section a, column e is for services performed for the related organization, not the filing organization.”

“Children's special health care services (cshcs) is a specialty program offered by the state of michigan to provide care for children and some adults with chronic health conditions. In addition, the cshcs program offers support to the families and caregivers of the member. Cshcs program eligibility is based on more than 2,700 medical diagnoses. As of october 1, 2012, the majority of the cshcs population were required to transition into a medicaid health plan. At priority health choice, inc., a dedicated case management team facilitates and coordinates the care for these patients and their families. This team includes field service representatives, community health workers, case managers, and other key partners, including county health departments, early on, early head start, the intermediate school districts, specialty providers, and medical suppliers. The case management team can also facilitate access for families to the family center for children and youth with special healthcare needs, and the children's special needs funds in lansing. Prior to october 2012, children in the medicaid cshcs program were under a "fee-for-service" reimbursement model. After the mandated transition of this population in 2012, approximately 1,400 members enrolled in the cshcs program with priority health choice, inc. As a health plan, priority health choice, inc. Ensures cshcs members are established with a primary care medical home, while also providing care coordination between their primary care/specialty care providers and any ancillary providers.”

“The transition of members into managed medicaid was recognized by the state of michigan in 2013. Priority health choice, inc. Was awarded a pinnacle award (awarded by the michigan association of health plans, an industry voice for the state's healthcare plans) for this program. The transition of the cshcs population began with an outreach call by field service representatives, who reviewed the health plan benefits with families. These benefits include transportation, primary care assignment, use of urgent care and emergency room services, referral process, pharmacy, the behavioral health benefit, and the role of the local health department. In addition, case management services were offered, which the majority of the cshcs members utilized. A case manager contacted each member/family, completed a comprehensive assessment to identify member needs, and developed a care plan with member centric goals. In addition, appropriate education was provided regarding the current disease process, preventative health, chronic disease management, and the importance of the medical home. The team works collaboratively to ensure all needs are identified and addressed utilizing in network /in state providers whenever possible. On september 16, 2013, the michigan governor signed into law michigan public act 107 of 2013, which directed the creation of the healthy michigan plan. The healthy michigan plan received approval from the centers for medicare & medicaid services on december 30, 2013. The state of michigan began to make healthcare benefits available through the healthy michigan plan effective april 1, 2014. The healthy michigan plan encourages healthy behaviors and personal responsibility, helps low-income michigan resident's access affordable health coverage, and reduces uncompensated care that shifts costs onto businesses and taxpayers. As of december 31, 2014, priority health choice, inc. Had approximately 25,000 members enrolled in the healthy michigan plan. Priority health choice, inc. Partnered with carecall to make outreach calls to each healthy michigan member. During that call, members were provided with benefit education as well as assistance in making their initial pcp appointment. During that initial pcp appointment, the member completes a health risk assessment, which identifies current behaviors, a member's readiness to change, key health metrics, and the pcp attestation. Once completed, the health risk assessment is sent to priority health choice, inc. Where the assessment is reviewed for completeness and transmitted to the state of michigan. Specific health information is sent via u.s. Mail to the member depending on which goal(s) the member chooses to work on. In addition, a medical mobile application, abriiz, is offered to this population to provide assistance to the member in tracking progress toward healthy goal(s). In 2014, 19% of healthy michigan members completed a health risk assessment, which is higher than the state average. Of those members that completed the health risk assessment, 97% identified at least 1 healthy behavior goal. In pursuit of the goal that 80 percent of continuously enrolled medicaid members will have at least one lead screening test by their second birthday, priority health redesigned the medicaid lead screening program. As such, priority health developed a progressive three-touch member outreach reminder/incentive, purchased lab equipment on behalf of provider offices and provided education to both members and providers around the importance of lead screening. By the end of 2012, the priority health healthcare effectiveness data and information set (hedis) rate for lead screening rose from 71 percent (2011) to almost 83 percent, surpassing the goal of the state standard.”

“The community healthcare access program (chap), formerly known as children's healthcare access program, is a community collaborative that was initiated in 2008 and has since expanded to service adult enrollees. The focus of the collaborative for the first several years was to increase access and quality healthcare to medicaid pediatric members. Chap contracted with primary care providers, providing care coordination and assistance with key hedis metrics. Primary care providers were reimbursed at a higher rate in exchange for their willingness to open up access, especially same day access to members. Chap provided same day transportation to urgent pcp appointments as needed. In addition, chap provided member/family education regarding appropriate emergency room and urgent care utilization. In 2014, chap developed its own identity as health net of west michigan. At the same time, the focus of intervention expanded to adults as well as children. Health net partnered with adult primary care practices to work with adult members regarding emergency room and urgent care use, while also providing education regarding specific member inpatient utilization. In addition, health net has partnered with ob-gyn residency clinics to facilitate the maternal infant health program (mihp) enrollment for pregnant women.”

“The organization's financial statements are audited annually by an independent accounting firm. The "No" response to this question relates to the fact that the GAAP basis financial statements were prepared on a consolidated basis and not on a stand alone basis. The organization is audited annually on a stand alone basis and issued financial statements on a stand alone basis which are prepared in accordance with SAP (Statutory Accounting Principles), as required by regulatory authorities. The figures in this Form 990 reconcile to the financial statements prepared under statutory accounting principles as submitted to the State of Michigan.”

“All employees of priority health choice, inc. Were employed during the year by spectrum health system (38-3382353) and leased back to priority health choice, inc. Salaries and wages, employee benefits and payroll taxes are allocated to priority health choice, inc. Via a management fee. The salaries and wages reported in part ix statement of functional expenses reflect the portion of salaries and wages allocated to priority health choice, inc. Spectrum health system filed all applicable irs tax filings including forms w-2 and w-3 on behalf of priority health choice, inc.”

“Change in Nonadmitted Assets - -450993;”

“The organization's financial statements are audited annually by an independent accounting firm. The organization issued GAAP basis financial statements which are prepared on a consolidated basis and not on a stand alone basis. The organization is audited annually on a stand alone basis and issued financial statements on a stand alone basis which are prepared in accordance with SAP (Statutory Accounting Principles), as required by regulatory authorities. The figures in this Form 990 reconcile to the financial statements prepared under statutory accounting principles as submitted to the State of Michigan.”