Scan Group

“The Form 990 is prepared by BDO USA, LLP, working in conjunction with SCAN's Finance Department. SCAN Health Plan's Director of Accounting has direct responsibility for this effort, subject to supervision by the SCAN Health Plan Controller. 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 in addition to the compensation 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.”

“SCAN Group 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 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.”

“The process for determining the compensation of the Chief Executive Officer of SCAN Group 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 Chief Executive Officer'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 Chief Executive Officer'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 Group based on various metrics. The Compensation Committee deliberates on the issue of the Chief Executive Officer'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 Group regarding the compensation package for the following year. The full Board of Directors of SCAN Group deliberates on and then votes on such recommendation; the Chief Executive Officer is recused for the entirety of such deliberations and vote. The minutes of the Compensation Committee and the Board of Directors for these meetings are prepared substantially contemporaneously and substantiate such deliberations and decisions.”

“The process for determining the compensation of officers or other key employees of SCAN Group is conducted by the Human Resources Department and Chief Executive Officer of SCAN Group, and the Compensation Committee of the Board of Directors of SCAN Group; all of the voting members of such committee are independent persons. In determining such employee's compensation, the Human Resources Department and 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 Human Resources Department and Compensation Committee 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 Group based on various metrics. The Chief Executive Officer makes a recommendation to the Compensation Committee with respect to each of such employees' compensation package in light of the Ernst & Young Executive Compensation Report. At the Compensation Committee meeting addressing such matters, 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 decision regarding the compensation package for such employees for the following year. The minutes of the Compensation Committee for this meeting are prepared substantially contemporaneously and substantiate such deliberations and decisions.”

“SCAN Group's governing documents and conflict of interest policy are not made available to the public. SCAN Group makes its Form 990 available for public inspection, which contains financial information.”

“Changes made to the organizations governing documents: 1) Article 5, Section 7: Created a quality committee of the board of directors. 2)Article 5, Section 9: Changed the board member terms from 3 years to 1 year and removed the term limits.”

“Fund Balance Transfer in from SCAN Health Plan 75,000,000 Fund Balance Transfer out to SCAN California MSO -1,500,000 =========== Total To Form 990, Part XI, Line 9 73,500,000”

“The following departments within SCAN Group; Health Care Compliance Administration, Regulatory Compliance Administration, and Medical Compliance Administration were classified as Program Services within the 2012 Form 990. In adherence to NAIC regulations, those departments were determined to not directly benefit the patients health care quality or improve healthcare outcomes and thus were reclassified in 2013 as Management and General Cost Centers within the 2013 Form 990. Additionally, other departments and their costs that impacted Program Services were moved to SCAN Health Plan in 2013. The end result of these changes that all costs for Program Services were eliminated from the 2013 Form 990.”

“Description:other expenses total expenses:239753 management and general:239753”