CMS Pub. 100-06, ch. 5, § 120.3

A1-1420.3, B1-4418.3

In the event of termination of the bank agreement, the bank agrees to retain the

contractor's Federal Health Insurance Account(s) for up to an additional 180-day period,

beyond the current term, to allow for clearance of outstanding checks. (See subsection C

of the IFB.) The letter-of-credit issued to the bank remains in effect to allow the bank to

draw payment vouchers to cover all outstanding checks as they are presented for

payment.

During this phase out period, the current bank agreement continues in effect with the

exception of the following:

• Letter-of-Credit - Covenant 5;

• The Term of the Bank Agreement - Covenant 7;

• Termination of Agreement - Covenants 8 and 9; and

• Renegotiation of Agreement - Covenant 10.

It is further understood that during the phase out period:

• The bank maintains collateral in an amount sufficient to cover the high balances

in the account(s) less FDIC coverage on each account;

• All bank service charges and earnings credits are consistent with those amounts

reflected in the current agreement;

• All terms and conditions of the original bid submitted by the bank, which are not

inconsistent with this additional term, remain in effect; and

• The contractor continues to complete the CMS-1521, CMS-1522 and the TAA

Schedules.

130 - Invitation For Bid (IFB) to Provide Banking Services Under The

Checks Paid Method of Letter-Of-Credit Financing - (Rev. 5, 08-30-02)

A1-1422, B1-4420

The contractor shall request the most recent copy of the IFB package from the RO to

prepare its procurement. The IFB is constantly being updated to meet CMS requirements

in the changing banking environment.

140 - Bonding - (Rev. 5, 08-30-02)

A1-1424, B1-4422

The contractor is required to have a fidelity bond on, as a minimum, each certification

and disbursement employee. Blanket bonds are an acceptable alternative.

Bonds must protect against at least the risks contained in the contractor's agreement

(specified in the article entitled "Certification and Disbursement and Indemnification").

As a general rule, the amount of the bond should equal 1/10 of the monthly limitation of

the letter of credit but not exceed $500,000.

CMS accepts a bond in excess of $500,000 and assumes an allocated share of its total

cost if the contractor determines that a larger bond is desirable.

No deductibles are permitted with respect to coverage, risks, and amounts.