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.”

“The board composition is determined and appointed by the shareholders as described in the organizational bylaws. In addition, an independent committee of the board (one enrollee, one family member/guardian of enrollee, and one consumer advocate) is in place to provide direction, advice, and recommendations based on representation from the community. Priority Health Choice is a subsidiary of Priority Health, a 501(c)(4), whose board composition is primarily independent and provides governance and guidance.”

“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 entity's governing documents were amended to update the indemnification language to match the parent company, improve the consistency of governing provisions between the Articles of Incorporation and the Bylaws, and to allow Priority Health Choice, Inc. to have a standing council.”

“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 38-2640544), Class B Shareholder - 5.5% McLaren Northern Michigan (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 no less than three (3) and no more than nine (9) 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. The shareholders will approve the annual budget and strategic plan for the corporation. Section 5. Power to Elect President. The shareholders will select the President of the corporation who may be someone who is not a member of 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 (Including the SVP, Finance; SVP, General Counsel; VP, Controller) and shared with the members of the finance committee and board of directors. 4. The organization's SVP, Finance 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. 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 ORGANIZATIONAL INTEGRITY 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 DIS”

“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. For calendar 2017 (1/1/17-12/31/17), four health care executive compensation surveys, three medical group surveys, two pediatric hospital surveys and one health plan survey prepared by independent firms were the primary sources referenced to obtain market data for the review: * Integrated Health Care Strategies: 2015 Children's Hospitals Executive Compensation Survey * Integrated Health Care Strategies: 2016 Health Care Executive Compensation Survey * Mercer: 2016 Integrated Health Networks Compensation Survey, also provides data for health plans * Medical Group Management Association: 2016 Management Compensation Survey * Sullivan, Cotter and Associates: 2016 Survey of Manager and Executive Compensation in Hospitals and Health Systems * Sullivan, Cotter and Associates: 2016 Custom Survey of Manager and Executive Compensation in Children's Hospitals * Sullivan, Cotter and Associates: 2016 Physician Compensation and Productivity Survey Report * Towers Watson: 2016 Hospital and Health Care Management Compensation Report * Warren: Fall 2016 HMO Salary Survey In addition, one retirement community survey and four general industry surveys were referenced: * Rodeghero Consulting Group, Inc.: 2016 AAHA-CEMO Leadership Compensation Survey * Mercer: 2016 Executive Compensation Survey * Mercer: 2016 Information Technology Survey * Mercer: 2016 Human Resources Survey * Towers Watson: 2016 Top Management Compensation Report In addition to the above data sources, the Executive Committee approved the creation of a custom peer group of high performing integrated health systems to ensure robust data and a relevant comparator universe. The peer group organizations are approved by the Executive Committee and consist of double A bond rated and / or Truven top quintile organizations. Data for the peer group organizations is compiled by the independent executive compensation firm. 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 health care and / or health insurance organizations. Spectrum Health recruits nationally for its executives. Benefits data reflect national health care / 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., 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 transitioned into a medicaid health plan. In response to this transition, priority health choice, inc. Implemented a specialty care management program for this unique population. A dedicated care management team 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. This team includes care managers, community health workers, field service representatives, and other key partners, including county health departments, early on, early head start, the intermediate school districts, specialty providers, and medical suppliers. The care management team also facilitates access for families to the family center for children and youth with special health care needs, and the children's special needs funds in lansing. As of december 31, 2017, priority health choice, inc. Has nearly 1,900 members enrolled in the cshcs program, up from approximately 1,600 members in the prior year. Priority health choice, inc. Was awarded a pinnacle award by the michigan association of health plans (mahp) in a prior year for the transition of cshcs members into a medicaid managed health plan. The transition of this 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, care management services were offered, which the majority of the cshcs members utilized. A care 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. This process continues today with all newly enrolled cshcs members. 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 health care 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, 2017, priority health choice, inc. Had more than 35,000 members enrolled in the healthy michigan plan. In 2016, the mahp awarded priority health choice, inc. With a pinnacle award recognizing the innovative mednow approach. Priority health choice, inc. Partnered with mednow to virtually connect medicaid recipients and providers. Mednow provides medicaid recipients with access to a computer in-home, real-time access to primary care providers for non-life-threatening conditions, including video visits for those with a webcam and a strong internet connection. It has provided effective health care services to beneficiaries at measurable cost savings. Video-enabled virtual visits use data analytics to measure util”

“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 and the National Association of Insurance Commissioners (NAIC).”

“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 - -905112;”

“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 and the National Association of Insurance Commissioners (NAIC).”