Exhibit 10.2
Contract Amendment for Medicaid and BadgerCare Services
Managed Health Services
The agreement entered into for the period of February 1, 2006 through
December 31, 2007, between the State of Wisconsin acting by or through the
Department of Health and Family Services, hereinafter referred to as the
“Department” and Managed Health Services, an insurer with a certificate of
authority to do business in Wisconsin for the Medicaid and BadgerCare Managed
Care Program is hereby amended as follows:

1.   Article III, B. Compliance with Applicable Federal Law       After the
first paragraph, add the following paragraph:
“Federal funds cannot be used for lobbying. Specifically and as applicable, the
Contractor agrees to abide by the Copeland Anti-Kickback Act, the Davis-Bacon
Act, federal contract work hours and safety standards requirements, the Federal
Clean Air Act and the Federal Water Pollution Control Act.   2.   Article VI, K,
Incentive for Expansion       Change “compared to enrollment numbers shown on
the January 2006 MMIS” to “compared to the average BadgerCare enrollment shown
on the February through April 2006 MMIS”       Delete the last sentence. Add the
following:

  a.   An incentive payment is available to all plans that remove or increase
current enrollment caps in the following service areas and/or enter the
following service areas resulting in increased BadgerCare enrollment.

1 — Duluth-Superior
2 — Wausau-Rhinelander
3 — Green Bay
4 — Twin Cities
5 — Stevens Point – Marshfield
7 — LaCrosse
8 — South Central WI/Madison
11 — Dane County

  b.   The incentive payment will not become part of the base rate.     c.   An
HMO that accepts the incentive proposal cannot lower the enrollment limit or
entirely leave a rate region prior to July 1, 2008 without prior approval from
the Department. An HMO that chooses to

 

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      impose lower enrollment caps or leave a rate region is not eligible for an
incentive payment and any previous incentive payments will be recouped.     d.  
The incentive payment will be made for BadgerCare enrollment for State Fiscal
Year 2007 only. BadgerCare enrollment is defined as recipients in medical status
codes Bl, B2, B3, B4, B5, B6 and GP and enrolled in a Health Maintenance
Organization.     e.   An average BadgerCare capitation rate, specific to each
HMO, will be calculated using the actual payments made during the enrollment
period February 2006 to April 2006.     f.   The amount of the incentive payment
per enrollment month will be 7.0% of the average BadgerCare capitation payment
as described in # 5.     g.   The percentage growth in eligibility will be
determined by dividing the average monthly enrollment for the entire HMO rate
region in BadgerCare medical status codes (B1, B2, B3, B4, B5, B6 and GP) during
the incentive period by the average monthly BadgerCare enrollment for the entire
rate region in the base period (February 2006 through April 2006). There will be
two incentive periods: One from July, 2006 through December, 2006 and the other
from January, 2007 through June, 2007.     h.   The total incentive payment, for
each incentive period, will be calculated by the following method:

  i.   First by determining the adjusted enrollment during the base period. This
is calculated by using the HMO’s average monthly enrollment during the base
period and multiplying this by the growth in eligibility (see “g”).     ii.  
Next, this amount will be subtracted from the HMO’s average monthly enrollment
during the incentive period.     ii.   If this number is greater than zero, it
will be multiplied by the number of months in the incentive period (six months)
and then multiplied by the incentive payment amount (see “e”).

  i.   The payment will be made by March 1, 2007 for the July through
December 2006 incentive period and prior to July 31, 2007 for the January
through June 2007 incentive period.     j.   Should an HMO cease doing business
in the state, the HMO will be paid for that portion of the incentive period that
they were doing business in the targeted rate region(s).

 

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  k.   An example of the incentive payment is shown below:         Determine
Actual Enrollment:         Base period enrollment = 700 of the county’s 1,000
total eligibles are enrolled (70%):         HMO A = 20% of total county
enrollment or 140 enrollees
HMO B = 45% of total county enrollment or 315 enrollees
HMO C = 35% of total county enrollment or 245 enrollees
        The average monthly enrollment for the incentive period = 960 of 1,200
eligibles (80%):         HMO A = 25% of total county enrollment or 240 enrollees
HMO B = 40% of total county enrollment or 384 enrollees
HMO C = 35% of total county enrollment or 336 enrollees         Factor out
eligibility growth & determine average enrollment above base enrollment:        
Because eligibility growth is 20%, the average enrollment months for the
incentive period are:         HMO A = 240 – (120% x 140) = 72 enrollees
HMO B = 384 – (120% x 315) = 6 enrollees
HMO C = 336 - (120% x 245) = 42 enrollees
Totals       960 -          840        = 120 enrollees         Enrollment above
base enrollment & adjusted for growth =120 enrollees.         Calculate
incentive amount for the incentive period:         The incentive payment
assuming 7% of the average cap rate is $11.00 would be:         Total Incentive
pool = 960 - 840 = 120 x 6 months x $11 = $7,920.         HMO A = 72 enrollment
months x 6 months x $11 = $4,752.00
HMO B = 6 enrollment months x 6 months x $11 = $396.00
HMO C = 42 enrollment months x 6 months x $11 = $2,772.00
Total Payout                                                        
        $7,920.00

 

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All terms and conditions of the February 1, 2006 through December 31, 2007
contract and any prior amendments that are not affected by this amendment shall
remain in full force and effect through the extension period.

      Managed Health Services   Department of Health and Family Services
Official Signature   Official Signature /s/ Linda McKnew           Printed Name
  Printed Name Linda McKnew   Cheryl Mcllquham       Title   Title President and
CEO   Interim Administrator     Division of Health Care Financing       Date
8-22-06   Date