Member GMH Contract Letter

January 23, 2012

Dear Valued TakeCare Member:

We are writing you today to inform you of a decision made by the Guam Memorial Hospital Authority ("GMHA") Board of Trustees ("the Board") last Thursday during its regular board meeting. The Board voted to provide TakeCare Insurance Company, Inc. ("TakeCare") with 60 days' notice of termination of The Direct Payer Agreement between GMHA. The Direct Payer Agreement allows TakeCare to receive Members' claims directly from GMHA and for TakeCare to make payment on behalf of its Members directly to GMHA.

The written notice of termination which TakeCare received today does not identify a reason for the termination of the agreement by the Board. A copy of that notice is attached for your reference. As you can see the notice provides that effective March 20, 2012, GMHA will treat TakeCare Members as "self-pay" patients. We met with members of the GMHA administration this morning and are working with them to try to understand why the Board would seek to terminate the agreement with TakeCare, and to determine what steps can be taken to avoid the termination of the Direct Payer Agreement. While we know GMHA has had numerous billing and financial difficulties for years, we find the action taken by the Board to give notice to TakeCare of the termination of the Direct Payer Agreement not to be in the best interests of anyone.

Over the past several months, in response to several requests by the GMHA administration, TakeCare has advanced the Hospital $700,000 to help them meet payroll and other financial obligations at GMHA. This $700,000 was given in addition to the usual bi-weekly payments TakeCare submits to GMHA for clean claims on behalf of its Members under the Direct Payer Agreement. We have and will continue to meet monthly with GMHA administration in an effort to create more accuracy and efficiency in their billing processes, and to resolve disputes over non- clean claims.

The termination of the Direct Payer Agreement will not affect TakeCare Members' insurance coverage. TakeCare will continue to provide payment on behalf of its Members for all covered services. The termination of the agreement only affects the hospital's agreement to send bills directly to TakeCare for payment on behalf of a Member. Members may still be treated at Guam Memorial Hospital and GMHA legally must treat them. However, in the absence of the agreement, GMHA may bill the Member directly. The extra step of a Member having to present the billing to TakeCare for payment of covered services is an unfortunate inconvenience, but will not affect TakeCare's obligation to pay for covered services. Nor will it affect Members' right to contest inaccurate billings generated by GMHA.

Please rest assured that if the agreement with TakeCare is ultimately terminated, TakeCare will continue to cover all services for its members pursuant to the terms of its policies. We will also work in good faith to restore the Direct Payer Agreement with GMHA. If, however, that is not possible, TakeCare will develop a process for payment/reimbursement to GMHA on behalf of its Members, or make payment/reimbursement directly to its Members who receive care at Guam Memorial Hospital.

While this action by the GMHA Board is regrettable, it will in no way affect a TakeCare Member's ability to access care at the hospital. As the island's only public hospital, GMHA is a component of the Government of Guam in which services cannot be withheld and members of the public cannot be discriminated against. Legislative mandate requires the Hospital to accept every person who presents themselves with a medical condition.

At TakeCare we hold ourselves to a very high standard of patient care and strive to ensure through care coordination and quality review, our patients get the most from their health plan benefits. You and your employees can be assured TakeCare is making every effort to quickly and prudently resolve this matter. Our customers are of utmost priority and we will continue to ensure adequate member access and patient care will be maintained as we work through this. We will continue to update you on the progress of this issue. If you have any questions or concerns, please contact our Customer Service department at 671-647-3526.

Thank you and TakeCare,

Jeff Larsen Chief Operating Officer