CONSULTING SERVICES AGREEMENT 1

CONSULTING SERVICES AGREEMENT1 This Consulting Services Agreement (“Agreement”) is made and entered into this ____ day of ________, 20__, by and betwe...
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CONSULTING SERVICES AGREEMENT1 This Consulting Services Agreement (“Agreement”) is made and entered into this ____ day of ________, 20__, by and between ABC Pharmacy, Inc. (“ABC”) and XYZ Rehabilitation & Nursing Center, Inc. (“Facility”). Background A. Facility is engaged in the operation of a nursing facility for which it requires pharmaceutical products and related services to be provided in accordance with local, state and federal laws, rules and regulations applicable to Facility’s location. B. ABC is a duly registered and licensed pharmacy engaged in providing pharmacyrelated products, such as prescription and non-prescription drugs, and professional services, including pharmacy consultant services, to long term care facilities and their residents (“Consulting Services”). C. Facility desires to utilize ABC’s Consulting Services, and ABC is willing to furnish such services, as provided below. Agreement 1.

Duties and Obligations of ABC.

1.1 Consulting Services. For the benefit of Facility, ABC will appoint an individual (“Consultant”) to provide the Consulting Services set out in Schedule A. At the election of Facility, ABC will also provide the Consulting Services described in Schedule B. At the option of ABC, the Consulting Services may be performed off-site if permitted by applicable law. 1.2 Licensure Compliance. ABC and Consultant will maintain necessary licenses and certifications from all appropriate state and federal regulatory authorities including, but not limited to, the State Board of Pharmacy. 2.

Duties and Obligations of Facility.

2.1. Working Space. Facility will make available to Consultant adequate working space to allow Consultant to fulfill its obligations under this Agreement. 2.2. resident records.

Access to Records. Facility will ensure that Consultant has access to all

1

This document is provided for discussion purposes only and does not constitute legal advice from Brown & Fortunato, P.C. The reader is instructed not to use this document until this document is reviewed, revised as necessary, and approved by the reader’s attorney.

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2.3. Statement of Deficiencies and Documentation. Facility will provide Consultant with any Statement of Deficiencies submitted by a governmental agency, along with all policies and procedures relevant to the Statement of Deficiencies and any required corrective action. 2.4. Notice of Adverse Actions. Facility will immediately notify Consultant of any legal, administrative or governmental surveys, investigations, reviews, or proceedings initiated against it or any provider that might affect Facility's ability to perform its duties and obligations under this Agreement. 3.

Retainer and Compensation for Consulting Services.

3.1. Retainer. Facility will pay ABC a retainer amount of $_______ (“Retainer”) within 10 days of the Effective Date of this Agreement. The Retainer will be applied to the balance of the first invoice issued to Facility under Section 3.2 of this Agreement. In the event the Retainer exceeds the balance of the first invoice, any remaining amount will be applied to subsequent invoices. 3.2. Payment. For Consulting Services performed under this Agreement, Facility will pay ABC at the rate of $_____ per hour. In addition, Facility agrees to reimburse ABC for reasonable pre-approved expenses incurred by Consultant, including travel and other expenses that are set forth in writing and approved by Facility. 3.3. Invoices. ABC will send Facility an invoice by the 5th day of each month for Consulting Services rendered in the prior month for which Facility is liable for payment. Payment of such invoice will be due from Facility by the 1st of the following month (“Payment Due Date”). For example, if ABC sends its invoice by January 5 for Consulting Services provided in December, then the Payment Due Date is February 1. 3.4. Dispute of Invoice. If Facility disputes any amount on an invoice, Facility must provide ABC written notice of such dispute by the Payment Due Date of the invoice and must pay all amounts not in dispute. If Facility fails to provide such timely notice of dispute, then the invoice will be deemed to be a correct and accurate statement of services rendered and payments due, and Facility will be deemed to have waived all rights to dispute such invoice. 4.

Term & Termination.

4.1. Term. This Agreement will be effective for the period beginning on the ____ day of _______, 20__ (the “Effective Date”) and will continue for a term of _____ year(s) (the “Initial Term”). This Agreement will automatically renew for a term of ___ year(s) (“Renewal Term”) upon the expiration of the Initial Term or subsequent Renewal Term, unless one party provides written notice to the other party of its intent to not renew the Agreement no later than 60 days prior to the expiration of the then current term.

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4.2.

Termination with Cause.

4.2.1. In the event a party defaults under the terms of this Agreement (“Defaulting Party”) then the other party (“Non-Defaulting Party”) will give the Defaulting Party written notice of the default. The Defaulting Party will then have 30 days within which to cure the default to the reasonable satisfaction of the Non-Defaulting Party. In the event that the Defaulting Party does not cure the default as specified in the preceding sentence, then the NonDefaulting Party may immediately terminate this Agreement upon written notice thereof and exercise any remedies allowed by law. 4.2.2. In the event Facility fails to make timely payments for amounts due hereunder, ABC may give Facility 10 days within which to cure the nonpayment. If Facility fails to cure the nonpayment as specified in the preceding sentence, then ABC may immediately terminate this Agreement upon written notice thereof and exercise any remedies allowed by law. 4.2.3. Notwithstanding the foregoing, ABC may immediately terminate this Agreement upon giving written notice thereof to Facility (but without giving Facility a right to cure) in the event that: 4.2.3.1. ABC reasonably concludes that Facility has engaged in conduct that adversely affects ABC’s name or goodwill; 4.2.3.2. Any license or certification pertaining to Facility is suspended, revoked of terminated; or 4.2.3.3. Facility (or any of its officers, directors, employees or contractors) is: (1) convicted of a criminal offense related to health care and/or related to the provision of services paid for by Medicare, Medicaid, or another federal or state health care program; (2) assessed civil money penalties for an offense related to health care and/or related to the provision of services paid for by Medicare, Medicaid, or another federal or state health care program; or (3) excluded from participation in any federal or state health care program, or excluded by any federal agency from receiving federal contracts. If Facility becomes the subject of any of the actions described in this paragraph, then it will notify ABC within five days after the date of the action. 4.3. Termination without Cause. During the Initial Term, ABC may terminate this Agreement without cause no sooner than 60 days after providing written notice of same. During a Renewal Term, either party may terminate this Agreement without cause no sooner than 60 days after providing written notice of same. 4.4. Effect of Termination on Compensation. If this Agreement is terminated for any reason, Facility will be liable to pay ABC any compensation accrued up to the effective date of the termination. Facility will make such payment no later than 10 days after receipt of ABC’s invoice for Consulting Services rendered prior to the date of termination but not previously invoiced. Such 10-day deadline will be considered a Payment Due Date and payment of such invoice will be under the terms and conditions of Section 3.3.

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5. HIPAA Compliance. The parties agree to execute the Business Associate Addendum to this Agreement in compliance with the Security Standards for the Protection of Electronic Protected Health Information and the Standards for Privacy of Individually Identifiable Health Information (collectively the “HIPAA Standards”), 45 CFR parts 160 and 164 6.

Representations, Warranties and Covenants. 6.1.

Each party represents and warrants the following to the other party:

6.1.1. Organization and Good Standing. The party is a corporation or other recognized legal business or entity duly organized, validly existing and in good standing under the laws of the state in which it is incorporated or organized. The party has the full corporate power and authority to carry on its business as presently conducted. The party is qualified to conduct business in all states or other jurisdictions where the nature of the business transacted or properties owned by it makes such qualification necessary. 6.1.2. Authorization. The party has full corporate power and authority necessary to execute, deliver and perform its obligations under this Agreement and all documents and agreements reasonably necessary to give effect to the provisions of this Agreement. The party has duly authorized, executed and delivered this Agreement. This Agreement constitutes a legal, valid and binding obligation that is enforceable against such party in accordance with its terms. 6.2. Non-Disclosure of Confidential Information. In the performance of this Agreement, the parties may be provided or may otherwise come into the possession of proprietary information, customer information, product and service information, and other confidential information (the “Confidential Information”) regarding the business and services of the parties, all of which are valuable to the parties. The parties agree to receive, hold and treat all Confidential Information received from each other as confidential and secret and agree to use best efforts to protect the confidentiality and secrecy of such Confidential Information. The parties agree that they will disclose such Confidential Information only to employees who are required to have such knowledge in connection with the performance of their obligations under this Agreement, and the parties will not disclose, directly or indirectly, any Confidential Information for self benefit or the benefit of any third party. Confidential Information does not include information that (i) was or becomes generally available to the public, (ii) was or becomes available on a non-confidential basis, provided that the source of such information was not bound by a confidentiality agreement in respect thereof, (iii) was within the parties possession prior to being furnished by or on behalf of the parties provided that the source of such information was not bound by a confidentiality agreement in respect thereof, or (iv) the information is a duplication of materials that the parties already possesses. In the event this Agreement is terminated for any reason, ABC and Consultant will deliver to Facility, within 10 days of the date of termination, all originals and copies of any and all records, papers, programs, computer software, documents, and all matter of whatever nature that bears or contains Facility’s confidential information.

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6.2. Survival. The covenants herein will survive the expiration or termination of this Agreement and will be enforceable according to their terms. 7.

Miscellaneous.

7.1. Insurance. Each party will maintain its own general and professional liability insurance. Each party will, upon request, provide the other party with a certificate of insurance evidencing such coverage and will also provide to the other party written notice of cancellation of any such policies no less than 30 days prior to the effective date of such cancellation. 7.2. Independent Contractor Relationship. The relationship between ABC and Facility, established by this Agreement is solely that of independent contractors. Neither party will be considered the legal representative or agent of the other, nor authorized or empowered to assume any obligation of any kind, implied or expressed, on behalf of the other party, except with the express prior written consent of the other party. 7.3. No Violation. Neither party will be deemed to be in violation of this Agreement if it is, or reasonably determines that it is, prevented from performing any of its duties or obligations hereunder for any reason beyond such party's control, including without limitation flood, storm, strikes, acts of God or the public enemy, or statute, ordinance, regulation, rule or action of any applicable governmental entity. 7.4. Notices. Any notice required or permitted to be given under this Agreement will be in writing and will be hand delivered, sent by certified mail with return receipt requested, or delivered by overnight courier service providing written proof of delivery, addressed as follows: ABC:

ABC Pharmacy, Inc.

Attn: Facility:

XYZ Rehabilitation & Nursing Center, Inc.

Attn: or to such other address as either party may designate by notice pursuant to this section. Any notice sent in compliance with this section will be deemed to have been given upon the earlier of actual receipt or three days after deposit in the mail or courier, except that notice of change of address will not be deemed effective until actual receipt by the intended recipient. 7.5. Licensure and Certification. Each party will operate at all times in compliance with federal, state and local laws, and all currently accepted methods and practices related to the provision of services contemplated hereunder. Each party certifies that it is licensed

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by the State of _________ and that it has all necessary approvals and certificates required by the appropriate state and federal agencies in order to qualify for and participate in the Medicaid and Medicare programs, as applicable. 7.6. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of ________. Any proceeding relating to the subject matter hereof will be maintained in the courts of _______ County, _______, or the federal court having jurisdiction over ________, _________. No provision of this Agreement will be applied to or construed in a manner inconsistent with applicable state and federal laws and regulations. 7.7. Severability. No provision of this Agreement which is in violation of any state or federal law or regulation will be effective; provided, however, if one or more provisions of the Agreement are hereinafter determined to be invalid and unenforceable, this will not operate to the detriment or invalidate the remainder of the Agreement unless the unenforceability or invalidity has the effect of substantially changing the terms and conditions of this Agreement or operates in such a manner as to invalidate or defeat the primary purposes or objectives of this Agreement. 7.8. Change in Law. In the event of a change in or adoption of new law, regulation, or policy (“Change in Law”) that materially alters a party’s rights or responsibilities hereunder, then, upon request of the affected party, the parties will negotiate, in good faith, an amendment to this Agreement so that, for the remainder of the then current term, the parties will be in the same or substantially same position with respect to the performance of this Agreement that they would have been in prior to the Change in Law. If the parties are unable to agree upon such amendment within 30 days of the affected party’s notice of Change of Law, either party may terminate this Agreement by giving the other party 10 days prior written notice of termination. 7.9. No Waiver. Neither the waiver by either party of any breach of or default under any of the provisions of this Agreement, nor the failure of either party to enforce any of the provisions of this Agreement or to exercise any right hereunder, will hereafter be construed as a waiver of any subsequent breach or default, or a waiver of any rights or provision hereunder. 7.10. Entire Agreement; Amendment. This Agreement is the entire agreement between the parties as to its subject matter, and all prior written or oral agreements, promises or representations are incorporated herein. This Agreement is the result of good faith negotiations between the parties, and the parties agree that no inference in favor of or against any party may be drawn from the fact that such party drafted any portion of this Agreement. This Agreement may be amended only by a writing executed by the parties. 7.11. Assignment. Neither party may assign its rights or obligations hereunder without the prior written approval of the other party; provided, however, that such assignment may be made to an entity that is, directly or indirectly, wholly owned or controlled by the same entity as the assigning party.

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7.12. Attorney’s Fees. If either party brings a lawsuit to enforce any of the terms of this Agreement, the prevailing party in the lawsuit will be entitled to recover its costs and attorney fees in addition to any relief may be entitled. The parties, by their duly authorized representatives, have executed this Agreement on the date first written to be effective as of the Effective Date. ABC PHARMACY, INC.

By: Name: Title: XYZ Rehabilitation & Nursing Center, Inc.

By: Name: Title:

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SCHEDULE A Consulting Services

1. Consulting Services Relating to Provision of Pharmacy Products and Services. (a) Consultant will provide Facility with consultation regarding all material aspects of providing Pharmacy Products and Services to Facility. A written report regarding the provision of Pharmacy Products and Services will be provided to Facility quarterly (or more frequently if required by applicable law). (b) Consultant will assist Facility in providing timely and appropriate Pharmacy Products and Services that support residents’ healthcare needs, that are consistent with current standards of practice, and that meet state and federal requirements. (c) Consultant will collaborate with Facility and Facility’s medical director to: (i)

Develop, implement, evaluate, and revise (as necessary) procedures for the provision of Pharmacy Products and Services;

(ii)

Coordinate the provision of Pharmacy Products and Services, if and when multiple pharmacy providers are utilized by Facility (e.g., pharmacy, infusion, hospice, and prescription drug plans);

(iii)

Develop intravenous (IV) therapy procedures (if IV medications are used within Facility) that are consistent with applicable law;

(iv)

Determine (in accordance with applicable law) the contents of emergency kits, and monitor the use, replacement, and disposition of such contents;

(v)

Develop mechanisms for communicating, addressing, and resolving issues related to Pharmacy Products and Services;

(vi)

Strive to assure that medications are requested, received and administered in a timely manner as ordered by the authorized prescriber (in accordance with applicable law);

(vii)

Provide feedback regarding performance and practices related to medication administration and medication errors;

(viii) Support the interdisciplinary team to address and resolve medication-related needs and problems;

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(ix)

Establish procedures for (a) conducting the monthly medication review (“MRR”) for each Facility resident, (b) addressing expected timeframes for conducting the MRR and reporting findings, (c) addressing any irregularities, and (d) documenting and reporting results of the MRR; and

(x)

Establish procedures that address the conduct of MRRs for (a) residents who are anticipated to stay less than 30 days, and (b) residents who experience an acute change of condition that may be medication related, as identified by Facility staff.

(d) Consultant will establish a system of records of receipt and disposition of all controlled drugs in sufficient detail to enable an accurate reconciliation. (e) Consultant will determine that drug records are in order and that an account of all controlled drugs is maintained and periodically reconciled. (f) Consultant, in collaboration with Facility and the Facility’s medical director, will assist in (i) the development of procedures regarding the provision of Pharmacy Products and Services (“Procedures”) that address the needs of Facility residents, are consistent with applicable law, and reflect current standards of practice; and (ii) evaluating the implementation of the Procedures. The Procedures will address (a) the acquisition, receipt, dispensing, administering, disposing, labeling and storage of medications (including controlled substances); and (b) personnel authorized to access or administer medications. (g) Consultant will participate in quarterly Quality Assurance Committee meetings. (h) Consultant will conduct inspections of each nursing station, its related drug storage area, and emergency medication kits (as defined by applicable law). (i) When requested by Facility, Consultant will provide up to two programs for inservice education annually on topics that are mutually determined by Consultant and Facility. Such programs will be conducted by Consultant or its designee. (j) Consultant, in collaboration with Facility, will develop a process to address corrective action plans for deficiencies that relate to the provision of Pharmacy Products and Services. 2.

Unnecessary Drugs. (a) Consultant will assist Facility in developing policies that clearly identify who is responsible for prescribing and identifying indications for use of medication(s), providing and administering medication(s), and monitoring residents for the effects and potential adverse consequences of the resident’s medication regiment.

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(b) Consultant will assist Facility in ensuring that residents’ medication therapy is necessary and appropriate based upon (i) an adequate indication for use of the particular medication, (ii) use of the appropriate dose, (iii) the provision of behavioral interventions and gradual dose reduction for individuals receiving antipsychotics (unless clinically contraindicated) and the tapering of other medications when clinically indicated in an effort to reduce or discontinue such medication, (iv) use for the appropriate duration, (v) adequate monitoring to determine whether therapeutic goals are being met, and to detect the emergence or presence of adverse consequences, and (vi) dose reduction or discontinuation of the medication in the presence of adverse consequences. (c) To comply with requirements relating to unnecessary medications, Facility is obligated to (i) assess each resident to ascertain, to the extent possible, the causes of the condition or symptoms requiring treatment, including recognizing, evaluating, and determining whether the resident’s condition or symptoms reflect an adverse medication consequence, (ii) determine whether, based on such assessment, medication therapy is indicated, (iii) utilize only those medications in appropriate doses for the appropriate duration, which are clinically necessary to treat the resident’s assessed condition(s), (iv) implement a gradual dose reduction and behavioral interventions for a resident receiving antipsychotic medications unless such reduction is clinically contraindicated, (v) monitor the resident for progress towards therapeutic goal(s) and for the emergence or presence of adverse consequences, and (vi) adjust or discontinue the dose of a medication in response to adverse consequences, unless clinically contraindicated. Consultant will assist Facility with regard to such assessments by documenting any irregularities that are found. (d) In lieu of the obligations of Consultant, Facility and prescribers described in subsections (b) and (c) of this Section 2, Consultant may elect to (i) evaluate the resident to determine indications for the use of a particular medication (including initiation or continued use of an antipsychotic medication), (ii) monitor the resident for efficacy and adverse consequences, (iii) determine the appropriateness of the dose prescribed for a particular resident, (iv) determine the appropriateness of the duration of use of a particular medication, and (v) determine whether the tapering of a medication dose or gradual dose reduction is appropriate for a particular resident. 3. Medication Regimen Review. (a) Frequency. (i)

Consultant will conduct an MRR for each Facility resident at least one time per month. The first MRR will be conducted within 31 days of the resident’s date of admission.

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(ii)

Consultant will conduct MRRs more frequently than is required under subsection (i), depending upon the resident’s condition and the risks or adverse consequences related to the resident’s medications.

(iii)

For residents anticipated to stay less than 30 days or with an acute change of condition, Consultant will provide, upon the written request of Facility, Interim Medication Regimen Review (“iMRR”) reports.

(b) Factors to be considered in Conducting MRRs. In conducting the MRR, Consultant will consider whether: (i)

the physician and staff have documented objective findings, diagnoses and/or symptoms to support indications for the use of a particular medication;

(ii)

the physician and staff have identified and acted upon, or should be notified about, the resident’s allergies and/or potential side effects and significant medication interactions;

(iii)

the medication dose frequency, route of administration, and duration are consistent with the resident’s condition, manufacturer’s recommendations, and applicable standards of practice;

(iv)

the physician and staff have documented, in an accessible, standardized, cumulative format, progress towards, or maintenance of, the goals for the medication therapy;

(v)

the physician and staff have obtained and acted upon laboratory results, diagnostic studies, or other measurements, as applicable;

(vi)

medication errors exist or circumstances exist that make them likely to occur; and

(vii)

the physician and staff have noted and acted upon possible medication-related causes of recent or persistent changes in the resident’s condition, such as worsening of an existing problem or the emergence of new signs or symptoms.

(c) Identification of Irregularities. Consultant will identify any irregularities such as syndromes potentially related to medication therapy, emerging or existing adverse medication consequences, and the potential for adverse drug reactions and medication errors, including (a) the absence of or inadequate indications for use of a medication, or a medication or medication combination with significant potential for adverse consequences or medication interactions, (b) medications that could be causing or associated with new, worsening or progressive signs and symptoms, (c) the absence of any explanation as to why or how the benefit of a medication with potential for

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clinically significant adverse consequences outweighs the risk, and (d) the lack of evidence or documentation regarding progress toward reaching treatment goals. Consultant may identify and report concerns in one or more of the following categories: (i)

The use of a medication without identifiable evidence of adequate indications for use;

(ii)

The use of a medication to treat a clinical condition without identifiable evidence that safer alternatives or more clinically appropriate medications have been considered;

(iii)

The use of an appropriate medication that is not helping attain the intended treatment goals because of timing of administration, dosing intervals, sufficiency of dose, techniques of administration, or other reasons;

(iv)

The use of a medication in an excessive dose (including duplicate therapy) or for excessive duration, thereby placing the resident at greater risk for adverse consequences or causing existing adverse consequences;

(v)

The presence of an adverse consequence associated with the resident’s current medication regimen;

(vi)

The use of a medication without evidence of adequate monitoring;

(vii)

The presence of medication errors or the risk for such errors;

(viii) Presence of a clinical condition that might warrant initiation of medication therapy, and (ix)

A medication interaction associated with the current medication regimen.

(d) Notification of MRR Findings (i)

Within 48 hours of conducting an MRR, Consultant will provide a summary report to the attending physician and the Facility’s director of nursing which (a) documents that no irregularity was identified, or (b) reports any irregularities. Consultant will collaborate with Facility to determine the most effective means for assuring appropriate notification.

(ii)

Documentation of MRR findings must either be in the active record or within the Facility and readily available for review.

(e) Response to Irregularities Identified in the MRR. Consultant will encourage Facility to act upon a report of clinically significant risks or existing adverse consequences or

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other irregularities. Pharmacy and Facility will develop a procedure to apply when an attending physician does not concur with or take action on the report, Facility and Consultant will contact Facility’s medical director for guidance and possible intervention. Consultant may (at its option) assist Facility in developing procedures to address the situation where the non-concurring attending physician is also Facility’s medical director. (f) Exit Meeting. The Consultant will provide, if requested, a face-to-face exit summary of irregularity findings, as coordinated with the director of nursing or his/her designee. 4. Labeling and Storage of Drugs. (a) Labeling. Consultant will, in conjunction with Facility, ensure that medications are labeled in accordance with federal and state labeling requirements and accepted standards of practice. Such labeling will identify, at a minimum, the medication’s name, strength, expiration date when applicable, and lot number, and will provide instructions as necessary for safe administration. (b) Storage. (i)

Consultant will, in conjunction with Facility, ensure the safe and secure storage of medications in locked compartments under proper temperature controls in accordance with manufacturers’ specifications.

(ii)

Consultant, in conjunction with Facility, will limit access to medications only to authorized staff.

(iii)

Consultant, in conjunction with Facility, will develop and implement safeguards and systems to control, account for, and periodically reconcile controlled medications.

(c) Pharmacy Assistants/Technicians and Nurse Consultants. Where permitted by applicable law, pharmacy assistants/technicians and nurse consultants will assist Consultant in determining Facility compliance with applicable law with respect to labeling and storage of medications. Such assistance will be under the supervision of the Consultant pharmacist.

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SCHEDULE B Optional Consulting Services 1. Optional Consulting Services Relating to Provision of Pharmacy Products and Services. The Consultant may collaborate with Facility and/or Facility’s medical director to develop, implement, perform, participate in, or advise with respect to any of the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j)

Medication observation evaluations of Facility’s capabilities. Meetings in addition to the quarterly Quality Assurance Committee meeting. Facility staff in-service educational programs beyond two per year. Non-financial audits relating to the provision of medications. Potential narcotic diversion investigations. Family and/or resident council activities. Facility accreditation assistance. Drug utilization and/or evaluation activities at the request of Facility. Assistance in preparing for Facility surveys. Narcotic and/or drug destruction, regardless of whether such task is required by applicable law. (k) Anticoagulation dosing as requested by a prescriber.

2. Participation in Corrective Action Plans. Services provided by Consultant as part of corrective action plans beyond those referred to in Section 1(j) of Schedule A (as defined in the Facility process developed pursuant to each section) will incur additional charges.

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BUSINESS ASSOCIATE ADDENDUM This Business Associate Addendum (the “Addendum”) to the Consulting Services Agreement (the “Agreement”) between XYZ Rehabilitation & Nursing Center, Inc. (“Covered Entity”) and ABC Pharmacy, Inc. (“Business Associate”) is incorporated into and made part of the Agreement for purposes of complying with the Privacy, Security, Breach Notification, and Enforcement regulations at 45 CFR parts 160 and 164 (collectively the “HIPAA Standards”). The provisions of this Addendum apply with respect to all Protected Health Information (“PHI”), as defined in 45 CFR § 160.103, created, received, maintained or transmitted by Business Associate in its representation of Covered Entity. TERMS In consideration of the mutual covenants contained herein, Business Associate and Covered Entity agree as follows: 1.

Obligations of Business Associate.

(a) Business Associate will not use or disclose PHI other than as permitted or required by this Addendum or as required by law. (b) Business Associate will implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of the electronic PHI that it creates, receives, maintains, or transmits on behalf of Covered Entity as required by the HIPAA Standards, and to prevent use or disclosure of PHI other than as provided for by this Addendum. Business Associate will comply with Subpart C of 45 CFR Part 164 with respect to electronic PHI. (c) Business Associate will mitigate, to the extent practicable, any harmful effect that is known to Business Associate of a use or disclosure of PHI by Business Associate in violation of the requirements of this Addendum. (d) To the extent the Business Associate is to carry out one or more of Covered Entity’s obligations under Subpart E of 45 CFR Part 164, Business Associate will comply with the requirements of 45 CFR Part 164, Subpart E that apply to Covered Entity in the performance of such obligations. (e) Business Associate will report to Covered Entity (i) any use or disclosure of PHI not provided for by this Addendum of which Business Associate becomes aware, and (ii) any security incident (as defined in 45 CFR § 164.304) of which it becomes aware. Business Associate will notify Covered Entity of any breach of unsecured PHI, as defined in 45 CFR § 164.402, without unreasonable delay and in no case later than 10 calendar days after Business Associate discovers the breach.

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(f) Business Associate will ensure that any agent, including a subcontractor, that receives PHI from Business Associate, or creates, receives, maintains, or transmits PHI on behalf of Business Associate, agrees to the same restrictions, conditions and requirements that apply to Business Associate with respect to such PHI, and agrees to implement reasonable and appropriate safeguards to protect the security and privacy of such PHI, by entering into an agreement with Business Associate that meets the applicable requirements of the HIPAA Standards. (g) Business Associate will make books and records relating to the use and disclosure of PHI available to the Secretary of Health and Human Services (“Secretary”) or the Secretary’s designee, in a time and manner designated by the Secretary, for purposes of the Secretary determining Covered Entity’s compliance with the HIPAA Standards. (h) At Covered Entity’s request, Business Associate will make available PHI in Business Associate’s possession to enable Covered Entity to respond to a request by an individual for access to PHI in accordance with 45 CFR § 164.524. (i) At Covered Entity’s request, Business Associate will make available PHI in Business Associate’s possession for amendment, and will incorporate any amendments to PHI, in accordance with 42 CFR § 164.526. (j) Business Associate will maintain and will provide to Covered Entity on request such documentation of disclosures of PHI as would be required for Covered Entity to respond to a request by an individual for an accounting of disclosures of PHI in accordance with 45 CFR § 164.528. Upon receipt of a request for an accounting directly from an individual, Business Associate will provide to the individual an accounting of disclosures made by Business Associate containing the information described in 42 CFR § 164.528. 2.

Uses and Disclosures by Business Associate.

(a) Business Associate may use or disclose PHI to perform services for or on behalf of Covered Entity, provided that such use or disclosure would not violate the HIPAA Standards if made by Covered Entity. (b) Business Associate may use PHI for the proper management and administration of Business Associate or to carry out the legal responsibilities of Business Associate. (c) Business Associate may disclose PHI for the proper management and administration of Business Associate or to carry out the legal responsibilities of Business Associate, if (1) the disclosure is required by law, or (2) Business Associate obtains reasonable assurances from the person to whom the information is disclosed that it will be held confidentially and used or further disclosed only as required by law or for the purpose for which it was disclosed to the person, and the person notifies Business Associate of any instances of which it is aware in which the confidentiality of the information has been breached.

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3. Remedies for Breach. Upon Covered Entity’s knowledge of a material breach of this Addendum by Business Associate, Covered Entity may either (i) provide an opportunity for Business Associate to cure the breach or end the violation, and terminate this Addendum if Business Associate does not cure the breach or end the violation within the time specified by Covered Entity; (ii) immediately terminate this Addendum if Business Associate has breached a material term of this Addendum and cure is not possible; or (iii) if neither termination nor cure is feasible, report the violation to the Secretary. 4. Return or Destruction of PHI Upon Termination. Upon termination of this Agreement, for any reason, Business Associate will return or destroy all PHI received from Covered Entity, or created or received by Business Associate on behalf of Covered Entity, if feasible. In the event that Business Associate determines that returning or destroying the PHI is infeasible, Business Associate will extend the protections of this Agreement to such PHI and limit further uses and disclosures of such PHI to those purposes that make the return or destruction infeasible, for so long as Business Associate maintains such PHI. COVERED ENTITY:

XYZ Rehabilitation & Nursing Center, Inc.

By: Name: Title:

BUSINESS ASSOCIATE:

ABC Pharmacy, Inc.

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BUSINESS ASSOCIATE ADDENDUM

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