<PAGE>

                                                                   EXHIBIT 10.6a

                                  AMENDMENT 14

                                TO THE AGREEMENT
                                   BETWEEN THE

                       HEALTH & HUMAN SERVICES COMMISSION
                                       AND
                            SUPERIOR HEALTHPLAN, INC.

                               FOR HEALTH SERVICES
                                     TO THE
                              MEDICAID STAR PROGRAM
                                     IN THE
                           BEXAR SERVICE DELIVERY AREA

<PAGE>

                                  AMENDMENT 14
                          TO THE AGREEMENT BETWEEN THE
        HEALTH & HUMAN SERVICES COMMISSION AND SUPERIOR HEALTHPLAN, INC.
                FOR HEALTH SERVICES TO THE MEDICAID STAR PROGRAM
                       IN THE BEXAR SERVICE DELIVERY AREA

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                          <C>
ARTICLE 1. PURPOSE.....................................................................................       1
 SECTION 1.01 AUTHORIZATION............................................................................       1
SECTION 1.02 GENERAL EFFECTIVE DATE OF CHANGES.........................................................       1
 ARTICLE 2. AMENDMENT TO THE OBLIGATIONS OF THE PARTIES................................................       1
 SECTION 2.01 GENERAL..................................................................................       1
 SECTION 2.02 MODIFICATION OF ARTICLE 2, DEFINITIONS...................................................       1
 SECTION 2.03 MODIFICATION TO ARTICLE 3.2, NON-PROVIDER SUBCONTRACTS...................................       3
 SECTION 2.04 MODIFICATION TO SECTION 3.5, RECORDS REQUIREMENTS AND RECORDS RETENTION..................       3
 SECTION 2.05 MODIFICATION TO SECTION 4.10, CLAIMS PROCESSING REQUIREMENTS.............................       3
 SECTION 2.06 ADDITION TO ARTICLE 5, STATUTORY AND REGULATORY COMPLIANCE REQUIREMENTS..................       4
 SECTION 2.07 SECTION 6.1, SCOPE OF SERVICES...........................................................       4
 SECTION 2.08 ADDITION TO SECTION 6.4, CONTINUITY OF CARE AND OUT-OF-NETWORK PROVIDERS.................       5
 SECTION 2.09 MODIFICATION OF SECTION 6.5, EMERGENCY SERVICES..........................................       5
 SECTION 2.10 MODIFICATION OF SECTION 6.13, PEOPLE WITH DISABILITIES, SPECIAL HEALTH CARE
   NEEDS OR CHRONIC OR COMPLEX CONDITIONS..............................................................       7
 SECTION 2.11 MODIFICATION OF SECTION 7.1.3, TIMEFRAMES FOR ACCESS REQUIREMENTS........................      10
 SECTION 2.12 MODIFICATION OF SECTION 7.2, PROVIDER CONTRACTS..........................................      10
 SECTION 2.13 MODIFICATION OF SECTION 7.7, PROVIDER QUALIFICATIONS - GENERAL...........................      10
 SECTION 2.14 MODIFICATION OF SECTION 7.8, PRIMARY CARE PROVIDERS......................................      13
 SECTION 2.15 MODIFICATION OF SECTION 8.2, MEMBER HANDBOOK.............................................      13
 SECTION 2.16 MODIFICATION OF SECTION 8.5, MEMBER COMPLAINTS...........................................      14
 SECTION 2.17 DELETION OF SECTION 8.6, MEMBER NOTICE, APPEALS AND FAIR HEARINGS........................      21
 SECTION 2.18 MODIFICATION OF SECTION 9.01, MARKETING MATERIAL MEDIA AND DISTRIBUTION..................      21
 SECTION 2.19 MODIFICATION OF SECTION 10.7, UTILIZATION/QUALITY IMPROVEMENT SUBSYSTEM..................      21
 SECTION 2.20 MODIFICATION OF SECTION 10.12, HEALTH INSURANCE PORTABILITY AND
   ACCOUNTABILITY ACT (HIPAA) COMPLIANCE...............................................................      22
 SECTION 2.21 MODIFICATION OF SECTION 11.1, QUALITY ASSESSMENT AND PERFORMANCE
   IMPROVEMENT PROGRAM.................................................................................      22
 SECTION 2.22 MODIFICATION TO ARTICLE 11, QUALITY ASSURANCE AND QUALITY IMPROVEMENT
   PROGRAM.............................................................................................      22
 SECTION 2.23 MODIFICATION OF ARTICLE 12, REPORTING REQUIREMENTS.......................................      23
 SECTION 2.24 MODIFICATION OF SECTION 12.10, QUALITY IMPROVEMENT REPORTS...............................      23
 SECTION 2.25 MODIFICATION OF SECTION 13.1, CAPITATION AMOUNTS.........................................      24
 SECTION 2.26 MODIFICATION OF SECTION 13.3, PERFORMANCE OBJECTIVES.....................................      24
 SECTION 2.27 MODIFICATION OF SECTION 13.5, NEWBORN AND PREGNANT WOMEN PAYMENT
   PROVISIONS..........................................................................................      25
 SECTION 2.28 MODIFICATION OF SECTION 14.1, ELIGIBILITY DETERMINATION..................................      25
 SECTION 2.29 MODIFICATION OF ARTICLE 15, GENERAL PROVISIONS...........................................      25
 SECTION 2.30 MODIFICATION OF SECTION 16.3, DEFAULT BY HMO.............................................      25
 SECTION 2.31 MODIFICATION OF SECTION 18.8, CIVIL MONETARY PENALTIES...................................      26
 SECTION 2.32 MODIFICATION OF ARTICLE 19, TERM.........................................................      26
 SECTION 2.33 MODIFICATION TO APPENDIX A, STANDARDS FOR QUALITY IMPROVEMENT PROGRAMS...................      26
 SECTION 2.34 MODIFICATION TO APPENDIX D, CRITICAL ELEMENTS............................................      26
 SECTION 2.35 MODIFICATION OF APPENDIX E, TRANSPLANT FACILITIES........................................      26
 SECTION 2.36 ADDITION OF NEW APPENDIX O, STANDARD FOR MEDICAL RECORDS.................................      26
 SECTION 2.37 MODIFICATION TO APPENDIX K, PERFORMANCE OBJECTIVES.......................................      26
ARTICLE 3. REPRESENTATIONS AND AGREEMENT OF THE PARTIES................................................      27
</TABLE>

                                       i

<PAGE>

                                                  HHSC CONTRACT NO. 529-03-042-N

STATE OF TEXAS
COUNTY OF TRAVIS

                                  AMENDMENT 14
                          TO THE AGREEMENT BETWEEN THE
                       HEALTH & HUMAN SERVICES COMMISSION
                                       AND
                            SUPERIOR HEALTHPLAN, INC.
                               FOR HEALTH SERVICES
                                     TO THE
                                  STAR PROGRAM
                                     IN THE
                           BEXAR SERVICE DELIVERY AREA

         THIS CONTRACT AMENDMENT (the "Amendment") is entered into between the
HEALTH & HUMAN SERVICES COMMISSION ("HHSC"), an administrative agency within the
executive department of the State of Texas, and Superior HealthPlan, Inc.
("CONTRACTOR"), a health maintenance organization organized under the laws of
the State of Texas, possessing a certificate of authority issued by the Texas
Department of Insurance to operate as a health maintenance organization, and
having its principal office at 2100 S. IH 35, Suite 202, Austin, Texas 78704.
HHSC and CONTRACTOR may be referred to in this Amendment individually as a
"Party" and collectively as the "Parties."

         The Parties hereby agree to amend their Agreement as set forth in
Article 2 of this Amendment.

                               ARTICLE 1. PURPOSE.

SECTION 1.01 AUTHORIZATION.

         This Amendment is executed by the Parties in accordance with Article
15.2 of the Agreement.

SECTION 1.02 GENERAL EFFECTIVE DATE OF CHANGES.

         This Amendment is effective August 13, 2003.

             ARTICLE 2. AMENDMENT TO THE OBLIGATIONS OF THE PARTIES

SECTION 2.01 GENERAL

         This Amendment is to incorporate Federal regulations pertaining to
recent amendments to the Balanced Budget Act. These regulations are found in 42
C.F.R. Parts 400, 430, 431, 434, 435, 438, 440, and 447.

SECTION 2.02 MODIFICATION OF ARTICLE 2, DEFINITIONS

         The following provisions amend, modify and add to the definitions set
forth in Article 2:

                           "ACTION means the denial or limited authorization of
                  a requested service, including the type or level of service;
                  the reduction, suspension, or termination of a previously
                  authorized service; the denial in whole or in part of payment
                  for service; failure to provide services in a timely manner,
                  the failure of an HMO to act within the timeframes set forth
                  in this agreement and 42 C.F.R. Section 438.408(b); or

HHSC Contract 529-03-042-N                 1 of 27

<PAGE>

                  for a resident of a rural area with only one HMO, the denial
                  of a Medicaid Members' request to obtain services outside of
                  the network.

                           APPEAL means the formal process by which a Member or
                  his or her representative request a review of an HMO's action,
                  as defined above.

                           COLD-CALL MARKETING means any unsolicited personal
                  contact by the HMO with a potential Member for the purpose of
                  marketing.

                           MEMBER COMPLAINT or GRIEVANCE means an expression of
                  dissatisfaction about any matter other than an action, as
                  defined above. As provided by 42 C.F.R. Section 438.400,
                  possible subjects for complaints or grievances include, but
                  are not limited to, the quality of care of services provided,
                  and aspects of interpersonal relationships such as rudeness of
                  a provider or employee, or failure to respect the Member's
                  rights.

                           EMERGENCY MEDICAL CONDITION, means a medical
                  condition manifesting itself by acute symptoms of recent onset
                  and sufficient severity (including severe pain), such that a
                  prudent layperson, who possesses an average knowledge of
                  health and medicine, could reasonably expect the absence of
                  immediate medical care could result in:

                           (a) placing the patient's health in serious jeopardy;

                           (b) serious impairment to bodily functions;

                           (c) serious dysfunction of any bodily organ or part;

                           (d) serious disfigurement; or

                           (e) in the case of a pregnant women, serious jeopardy
                           to the health of a woman or her unborn child.

                           EXPERIENCE REBATE means the portion of the HMO's net
                  income before taxes (financial Statistical Report, Part 1,
                  Line 14) that is returned to the state in accordance with
                  Section 13.2.

                           EXPEDITED APPEAL means an appeal to the HMO in which
                  the decision is required quickly based on the Member's health
                  status and taking the time for a standard appeal could
                  jeopardize the Member's life or health or ability to attain,
                  maintain, or regain maximum function.

                           MARKETING means any communication from an HMO to a
                  Medicaid recipient who is not enrolled with the HMO that can
                  reasonably be interpreted as intended to influence the
                  recipient to enroll in that particular HMO's Medicaid product,
                  or either to not enroll in, or to disenroll from another HMO's
                  Medicaid product.

                           MARKETING MATERIALS means materials that are produced
                  in any medium by or on behalf of an HMO and can reasonably be
                  interpreted as intended to market to potential enrollees.

                           MEMBER or ENROLLEE, means a person who: is entitled
                  to benefits under Title XIX of the Social Security Act and the
                  Texas Medical Assistance Program (Medicaid), is in a Medicaid
                  eligibility category included in the STAR Program, and is
                  enrolled in the STAR Program.

                           POST-STABILIZATION CARE SERVICES means covered
                  services, related to an emergency medical condition that are
                  provided after an Member is

HHSC Contract 529-03-042-N                  2 of 27

<PAGE>

                  stabilized in order to maintain the stabilized condition, or,
                  under the circumstances described in 42 C.F.R. Section
                  438.114(b)&(e) and 42 C.F.R. Section 422.113(c)(iii) to
                  improve or resolve the Member's condition.

                           SPECIAL HEALTH CARE NEEDS means Member with an
                  increased prevalence of risk of disability, including but not
                  limited to: chronic physical or developmental condition;
                  severe and persistent mental illness; behavioral or emotional
                  condition that accompanies the Member's physical or
                  developmental condition.

                           STABILIZE means to provide such medical care as to
                  assure within reasonable medical probability that no
                  deterioration of the condition is likely to result from, or
                  occur from, or occur during discharge, transfer, or admission
                  of the Member."

SECTION 2.03 MODIFICATION TO ARTICLE 3.2, NON-PROVIDER SUBCONTRACTS

         Section 3.2 is modified to amend Section 3.2.4.3 add new Sections 3.2.6
         and 3.2.7, as follows:

                           "3.2.4.3 [Contractor] understands and agrees that
                  neither HHSC, nor the HMO's Medicaid Members, are liable or
                  responsible for payment for any services authorized and
                  provided under this contract.

                           3.2.6    In accordance with 42 C.F.R.
                  Section 438.230(b)(3), all subcontractors must be subject to a
                  written monitoring plan, for any subcontractor carrying out a
                  major function of the HMO's responsibility under this
                  contract. For all subcontractors carrying out a major function
                  of the HMO's contract responsibility, the HMO must prepare a
                  formal monitoring process at least annually. HHSC may request
                  copies of written monitoring plans and the results of the
                  HMO's formal monitoring process.

                           3.2.7    In accordance with 42 C.F.R. Section
                  438.210(e), HMO may not structure compensation to utilization
                  management subcontractors or entities to provide incentives to
                  deny, limit, reduce, or discontinue medically necessary
                  services to any Member."

SECTION 2.04 MODIFICATION TO SECTION 3.5, RECORDS REQUIREMENTS AND RECORDS
RETENTION

         Section 3.5.5, Medical Records, is modified as follows:

                           "3.5.5   Medical Records. HMO must require, through
                  contractual provisions or provider manual, providers to create
                  and keep medical records in compliance with the medical
                  records standards contained in Appendix O, Standards for
                  Medical Records. All medical records must be kept for at least
                  five (5) years, except for records of rural health clinics,
                  which must be kept for a period of six (6) years from the date
                  of service."

SECTION 2.05 MODIFICATION TO SECTION 4.10, CLAIMS PROCESSING REQUIREMENTS

         Section 4.10.8 is modified as follows:

                           "4.10.8  HMO must comply with the standards adopted
                  by the U.S. Department of Health and Human Services under the
                  Health Insurance Portability and Accountability Act of 1996
                  (HIPAA), Public Law 104-191, regarding submitting and
                  receiving claims information through electronic data
                  interchange (EDI) that allows for automated

HHSC Contract 529-03-042-N                  3 of 27

<PAGE>

                  processing and adjudication of claims within the federally
                  mandated timeframes (see 45 C.F.R. parts 160 through 164)."

SECTION 2.06 ADDITION TO ARTICLE 5, STATUTORY AND REGULATORY COMPLIANCE
REQUIREMENTS

         Section 5.11 is added as follows:

                      "5.11 DATA CERTIFICATION

                           5.11.1   In accordance with 42 C.F.R. Sections
                  438.604 and 438.606, HMO must certify in writing:

                           (a) encounter data;

                           (b) delivery supplemental data and other data
                  submitted pursuant to this agreement or State or Federal law
                  or regulation relating to payment for services.

                           5.11.2   The certification must be submitted to HHSC
                  concurrently with the certified data or other documents.

                           5.11.3   The certification must:

                           (a) be signed by the HMO's Chief Executive Officer;
                  Chief Financial Officer; or an individual with delegated
                  authority to sign for, and who reports directly to, either the
                  Chief Executive Officer or Chief Financial Officer; and

                           (b) contain a statement that to the best knowledge,
                  information and belief of the signatory, the HMO's certified
                  data or information are accurate, complete, and truthful."

SECTION 2.07 SECTION 6.1, SCOPE OF SERVICES

         Section 6.1 is modified to add new section 6.1.9 as follows:

                           "6.1.9   In accordance with 42 C.F.R.Section 438.102,
                  HMO may file an objection to provide, reimburse for, or
                  provide coverage of, counseling or referral service for a
                  covered benefit, based on moral or religious grounds.

                           6.1.9.1  HMO must work with HHSC to develop a work
                  plan to complete the necessary tasks to be completed and
                  determine an appropriate date for implementation of the
                  requested changes to the requirements related to covered
                  services. The work plan will include timeframes for completing
                  the necessary contract and waiver amendments, adjustments to
                  capitation rates, identification of HMO and enrollment
                  materials needing revision, and notifications to Members.

                           6.1.9.2  In order to meet the requirements of Section
                  6.1.9.1, HMO must notify HHSC of grounds for and provide
                  detail concerning its moral or religious objections and the
                  specific services covered under the objection, no less than
                  120 days prior to the proposed effective date of the policy
                  change.

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                           6.1.9.3  HMO must notify all current Members of the
                  intent to change covered services at least 30 days prior to
                  the effective date of the change in accordance with 42 C.F.R.
                  Section 438.102(b)(ii)(B).

                           6.1.9.4  HHSC will provide information to all current
                  Members on how and where to obtain the service that has been
                  discontinued by the HMO in accordance with 42 C.F.R.
                  Section 438.102(c)."

SECTION 2.08 ADDITION TO SECTION 6.4, CONTINUITY OF CARE AND OUT-OF-NETWORK
PROVIDERS

         Section 6.4 is modified to add new Sections 6.4.6 and 6.4.7 as follows:

                           "6.4.6   HMO must provide Members with timely and
                  adequate access to out-of-network services for as long as
                  those services are necessary and covered benefits not
                  available within the network, in accordance with 42 C.F.R.
                  Section 438.206(b)(4). HMO will not be obligated to provide a
                  Member with access to out-of-network services if such services
                  become available from a network provider.

                           6.4.7    HMO must require through contract provisions
                  or the provider manual that each Member have access to a
                  second opinion regarding the use of any health care service. A
                  Member must be allowed access to a second opinion from a
                  network provider or out-of-network provider if a network
                  provider is not available, at no additional cost to the
                  Member, in accordance with 42 C.F.R. Section 438.206(b)(3)."

SECTION 2.09 MODIFICATION OF SECTION 6.5, EMERGENCY SERVICES

         Section 6.5 is deleted in its entirety and replaced with the following
         language:

                           "6.5.1   HMO policy and procedures, covered benefits,
                  claims adjudication methodology, and reimbursement performance
                  for emergency services must comply with all applicable state
                  and federal laws and regulations including 42 C.F.R.
                  Section 438.114, whether the provider is in network or out of
                  network.

                           6.5.2    HMO must pay for the professional, facility,
                  and ancillary services that are medically necessary to perform
                  the medical screening examination and stabilization of HMO
                  Member presenting as an emergency medical condition or an
                  emergency behavioral health condition to the hospital
                  emergency department, 24 hours a day, 7 days a week, rendered
                  by either HMO's in-network or out-of-network providers.

                           6.5.2.1  For all out-of-network emergency services
                  providers, HMO will pay a reasonable and customary amount for
                  emergency services. HMO policies and procedures must be
                  consistent with this agreement's prudent lay person definition
                  of an emergency medical condition and claims adjudication
                  processes required under Section 7.6 of this agreement and 42
                  C.F.R. Section 438.114.

                           HMO will pay a reasonable and customary amount for
                  services for all out-of-network emergency services provider
                  claims with dates of service between September 1, 2002 and
                  November 30,

HHSC Contract 529-03-042-N                5 of 27

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                  2002. HMO must forward any complaints submitted by
                  out-of-network emergency services providers during this time
                  to HHSC. HHSC will review all complaints and determine whether
                  payments were reasonable and customary. HHSC will direct the
                  HMO to pay a reasonable and customary amount, as determined by
                  HHSC, if it concludes that the payments were not reasonable
                  and customary for the provider.

                           6.5.2.2  For all out-of-network emergency services
                  provider claims with dates of service on or after December 1,
                  2002, HMO must pay providers a reasonable and customary amount
                  consistent with a methodology approved by HHSC. HMO must
                  submit its methodology, along with any supporting
                  documentation, to HHSC by September 30, 2002. HHSC will review
                  and respond to the information by November 15, 2002. HMO must
                  forward any complaints by out-of-network emergency services
                  providers to HHSC, which will review all complaints. If HHSC
                  determines that payment is not consistent with the HMO's
                  approved methodology, the HMO must pay the emergency services
                  provider a rate, using the approved reasonable and customary
                  methodology, as determined by HHSC. Failure to comply with
                  this provision constitutes a default under Article 16, Default
                  and Remedies.

                           6.5.3    HMO must ensure that its network primary
                  care providers (PCPs) have after-hours telephone availability
                  that is consistent with Section 7.8.10 of this contract. This
                  telephone access must be available 24 hours a day, 7 days a
                  week throughout the service area.

                           6.5.4    HMO cannot require prior authorization as a
                  condition for payment for an emergency medical condition, an
                  emergency behavioral health condition, or labor and delivery.
                  HMO cannot limit what constitutes an emergency medical
                  condition on the basis of lists of diagnoses or symptoms. HMO
                  cannot refuse to cover emergency services based on the
                  emergency room provider, hospital, or fiscal agent not
                  notifying the Member's primary care provider or HMO of the
                  Member's screening and treatment within 10 calendar days of
                  presentation for emergency services. HMO may not hold the
                  Member who has an emergency medical condition liable for
                  payment of subsequent screening and treatment needed to
                  diagnose the specific condition or stabilize the patient. HMO
                  must accept the emergency physician or provider's
                  determination of when the Member is sufficiently stabilized
                  for transfer or discharge.

                           6.5.5    Medical Screening Examination for emergency
                  services. A medical screening examination needed to diagnose
                  an emergency medical condition shall be provided in a hospital
                  based emergency department that meets the requirements of the
                  Emergency Medical Treatment and Active Labor Act (EMTALA) 42
                  C.F.R. Section 489.20, Section 489.24 and Section
                  438.114(b)&(c). HMO must pay for the emergency medical
                  screening examination, as required by 42 U.S.C. Section
                  1395dd. HMOs must reimburse for both the physician's services
                  and the hospital's emergency services, including the emergency
                  room and its ancillary services.

                           6.5.6    Stabilization Services. When the medical
                  screening examination determines that an emergency medical
                  condition exists,

HHSC Contract 529-03-042-N                6 of 27

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                  HMO must pay for emergency services performed to stabilize the
                  Member. The emergency physician must document these services
                  in the Member's medical record. HMOs must reimburse for both
                  the physician's and hospital's emergency stabilization
                  services including the emergency room and its ancillary
                  services.

                           6.5.7    Post-stabilization Care Services. HMO must
                  cover and pay for post-stabilization care services in the
                  amount, duration, and scope necessary to comply with 42 C.F.R.
                  Section 438.114(b)&(e) and 42 C.F.R. 422.113(c)(iii). The HMO
                  is financially responsible for post- stabilization care
                  services obtained within or outside the network that are not
                  pre-approved by a plan provider or other HMO representative,
                  but administered to maintain, improve, or resolve the Member's
                  stabilized condition if:

                           (a) the HMO does not respond to a request for
                  preapproval within 1 hour;

                           (b) the HMO cannot be contacted;

                           (c) or the HMO representative and the treating
                  physician cannot reach an agreement concerning the Member's
                  care and a plan physician is not available for consultation.
                  In this situation, the HMO must give the treating physician
                  the opportunity to consult with a plan physician and the
                  treating physician may continue with care of the patient until
                  an HMO physician is reached or the HMO's financial
                  responsibility ends as follows: the HMO physician with
                  privileges at the treating hospital assumes responsibility for
                  the Member's care; the HMO physician assumes responsibility
                  for the Member's care through transfer; the HMO representative
                  and the treating physician reach an agreement concerning the
                  Member's care; or the Member is discharged.

                           6.5.8    HMO must provide access to the
                  HHSC-designated Level I and Level II trauma centers within the
                  State or hospitals meeting the equivalent level of trauma
                  care. HMOs may make out-of-network reimbursement arrangements
                  with the HHSC-designated Level I and Level II trauma centers
                  to satisfy this access requirement."

SECTION 2.10 MODIFICATION OF SECTION 6.13, PEOPLE WITH DISABILITIES, SPECIAL
   HEALTH CARE NEEDS OR CHRONIC OR COMPLEX CONDITIONS

         Section 6.13 is deleted in its entirety and replaced with the
         following:

                           "6.13.1  HMO shall provide the following services to
                  persons with disabilities, special health care needs, or
                  chronic or complex conditions. These services are in addition
                  to the covered services described in detail in the Texas
                  Medicaid Provider Procedures Manual (Provider Procedures
                  Manual) and the Texas Medicaid Bulletin, which is the
                  bi-monthly update to the Provider Procedures Manual. Clinical
                  information regarding covered services is published by the
                  Texas Medicaid program in the Texas Medicaid Service Delivery
                  Guide.

                           6.13.2   HMO must develop and maintain a system and
                  procedures for identifying Members who have disabilities,
                  special health care needs or chronic or complex medical and
                  behavioral health

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                  conditions. Once identified, HMO must have effective health
                  delivery systems to provide the covered services to meet the
                  special preventive, primary acute, and specialty health care
                  needs appropriate for treatment of the individual's condition.
                  The guidelines and standards established by the American
                  Academy of Pediatrics, the American College of
                  Obstetrics/Gynecologists, the U.S. Public Health Service, and
                  other medical and professional health organizations and
                  associations' practice guidelines whose standards are
                  recognized by HHSC must be used in determining the medically
                  necessary services, assessment and plan of care for each
                  individual.

                           6.13.2.1 In accordance with 42 C.F.R. 438.208(b)(3),
                  HMO shall provide information that identifies Members who the
                  HMO has assessed as special health care needs Members to the
                  State's enrollment broker. The information will be provided in
                  a format to be specified by HHSC and updated by the 10th day
                  of each month. In the event that a special health care needs
                  Member changes health plans, HMO will work with receiving HMO
                  to provide information concerning the results of the HMO's
                  identification and assessment of that Member's needs, to
                  prevent duplication of those activities.

                           6.13.3   HMO must require that the PCP for all
                  persons with disabilities, special health care needs or
                  chronic or complex conditions develop a plan of care to meet
                  the needs of the Member. The plan of care must be based on
                  health needs, specialist(s) recommendations, and periodic
                  reassessment of the Member's developmental and functional
                  status and service delivery needs. HMO must require providers
                  to maintain record keeping systems to ensure that each Member
                  who has been identified with a disability or chronic or
                  complex condition has an initial plan of care in the primary
                  care provider's medical records, that Member agrees to that
                  plan of care, and that the plan is updated as often as the
                  Member's needs change, but at least annually.

                           6.13.4   HMO must provide a primary care and
                  specialty care provider network for persons with disabilities,
                  special health care needs, or chronic or complex conditions.
                  Specialty and subspecialty providers serving all Members must
                  be Board Certified/Board Eligible in their specialty. HMO may
                  request exceptions from HHSC for approval of traditional
                  providers who are not board-certified or board-eligible but
                  who otherwise meet HMO's credentialing requirements.

                           6.13.5   HMO must have in its network PCPs and
                  specialty care providers that have documented experience in
                  treating people with disabilities, special health care needs,
                  or chronic or complex conditions, including children. For
                  services to children with disabilities, special health care
                  needs, or chronic or complex conditions, HMO must have in its
                  network PCPs and specialty care providers that have
                  demonstrated experience with children with disabilities,
                  special health care needs, or chronic or complex conditions in
                  pediatric specialty centers such as children's hospitals,
                  medical schools, teaching hospitals and tertiary center
                  levels.

                           6.13.6   HMO must provide information, education and
                  training programs to Members, families, PCPs, specialty
                  physicians, and community agencies about the care and
                  treatment available in

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<PAGE>

                  HMO's plan for Members with disabilities, special health care
                  needs, or chronic or complex conditions.

                           HMO must ensure Members with disabilities, special
                  health care needs, or chronic or complex conditions have
                  direct access to a specialist.

                           6.13.7   HMO must coordinate care and establish
                  linkages, as appropriate for a particular Member, with
                  existing community-based entities and services, including but
                  not limited to: Maternal and Child Health, Children with
                  Special Health Care Needs (CSHCN), the Medically Dependent
                  Children Program (MDCP), Community Resource Coordination
                  Groups (CRCGs), Interagency Council on Early Childhood
                  Intervention (ECI), Home and Community-based Services (HCS),
                  Community Living Assistance and Support Services (CLASS),
                  Community Based Alternatives (CBA), In Home Family Support,
                  Primary Home Care, Day Activity and Health Services (DAHS),
                  Deaf/Blind Multiple Disabled waiver program and Medical
                  Transportation Program (MTP).

                           6.13.8   HMO must include TDH approved pediatric
                  transplant centers, TDH designated trauma centers, and TDH
                  designated hemophilia centers in its provider network (see
                  Appendices E, F, and G for a listing of these facilities).

                           6.13.9   HMO must ensure Members with disabilities or
                  chronic or complex conditions have access to treatment by a
                  multidisciplinary team when determined by the Member's PCP to
                  be medically necessary for effective treatment, or to avoid
                  separate and fragmented evaluations and service plans. The
                  teams must include both physician and non-physician providers
                  determined to be necessary by the Member's PCP for the
                  comprehensive treatment of the Member. The team must:

                           6.13.9.1 Participate in hospital discharge planning;

                           6.13.9.2 Participate in pre-admission hospital
                  planning for non-emergency hospitalizations;

                           6.13.9.3 Develop specialty care and support service
                  recommendations to be incorporated into the primary care
                  provider's plan of care;

                           6.13.9.4 Provide information to the Member and the
                  Member's family concerning the specialty care recommendations;
                  and

                           6.13.9.5 HMO must develop and implement training
                  programs for primary care providers, community agencies,
                  ancillary care providers, and families concerning the care and
                  treatment of a Member with a disability or chronic or complex
                  conditions.

                           6.13.10  HMO must identify coordinators of medical
                  care to assist providers who serve Members with disabilities
                  and chronic or complex conditions and the Members and their
                  families in locating and accessing appropriate providers
                  inside and outside HMO's network.

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                           6.13.11  HMO must assist, through information and
                  referral, eligible Members in accessing providers of
                  non-capitated Medicaid services listed in Article 6.1.8, as
                  applicable.

                           6.13.12  HMO must ensure that Members who require
                  routine or regular laboratory and ancillary medical tests or
                  procedures to monitor disabilities, special health care needs,
                  or chronic or complex conditions are allowed by HMO to receive
                  the services from the provider in the provider's office or at
                  a contracted lab located at or near the provider's office."

SECTION 2.11 MODIFICATION OF SECTION 7.1.3, TIMEFRAMES FOR ACCESS REQUIREMENTS

         Section 7.1.3 is amended to add new Section 7.1.3.5, as follows:

                           "7.1.3.5 Prenatal Care within 2 weeks of request."

SECTION 2.12 MODIFICATION OF SECTION 7.2, PROVIDER CONTRACTS

         Section 7.2.8.2.1 is added and Section 7.2.9.2 is modified, as follows:

                           "7.2.8.2.1 [Provider] understands and agrees that the
                  HMO's Medicaid enrollees are not to be held liable for the
                  HMO's debts in the event of the entity's insolvency in
                  accordance with 42 C.F.R. Section 438.106(a).

                           7.2.9.2  A provider who is terminated is entitled to
                  an expedited review process by HMO on request by the provider.
                  HMO must make a good faith effort to provide written notice of
                  the provider's termination to HMO's Members receiving primary
                  care from, or who were seen on a regular basis by, the
                  terminated provider within 15 days after receipt or issuance
                  of the termination notice, in accordance with 42 C.F.R.
                  Section 438.10(f)(5). If a provider is terminated for reasons
                  related to imminent harm to patient health, HMO must notify
                  its Members immediately of the provider's termination.

                           7.2.12   Notice to Rejected Providers. In accordance
                  with 42 C.F.R.Section 438.129(a)(2), if an HMO declines to
                  include individual or groups of providers in its network, it
                  must give the affected providers written notice of the reason
                  for its decision."

SECTION 2.13 MODIFICATION OF SECTION 7.7, PROVIDER QUALIFICATIONS - GENERAL

         The qualifications for a "Hospital" in Section 7.7 is replaced with the
         following language. Section 7.7 is retitled Section 7.7.1 and new
         Section 7.7.2, Provider Credentialing and Recredentialing is added to
         Section 7.7:

                           "7.7.1   PROVIDER QUALIFICATIONS - GENERAL

<TABLE>
<CAPTION>
PROVIDER      QUALIFICATION
<S>           <C>
Hospital      An institution licensed as a general or special hospital by the
              State of Texas under Chapter 241 of the Health and Safety Code,
              which is enrolled as a provider in the Texas Medicaid Program. HMO
              will require that all facilities in the network used for acute
              inpatient specialty care for people under age 21 with
              disabilities, special health care needs, or chronic or complex
              conditions will have a designated pediatric unit; 24 hour
              laboratory and blood bank
</TABLE>

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<TABLE>
<CAPTION>
PROVIDER      QUALIFICATION
<S>           <C>
              availability; pediatric radiological capability; meet JCAHO
              standards; and have discharge planning and social service units.
              HMO may request exceptions to this requirement for specific
              hospitals within their networks, from HHSC."
</TABLE>

                           "7.7.2   PROVIDER CREDENTIALING AND RECREDENTIALING

                           In accordance with 42 C.F.R. Section 438.214, HMO's
                  standard credentialing and recredentialing process must
                  include the following provisions to determine whether
                  physicians and other health care professionals, who are
                  licensed by the State and who are under contract with HMO, are
                  qualified to perform their services.

                           7.7.2.1  Written Policies and Procedures. MCO has
                  written policies and procedures for the credentialing process
                  that includes MCO's initial credentialing of practitioners as
                  well as its subsequent recredentialing, recertifying and/or
                  reappointment of practitioners.

                           7.7.2.2  Oversight by Governing Body. The Governing
                  Body, or the group or individual to which the Governing Body
                  has formally delegated the credentialing function, has
                  reviewed and approved the credentialing policies and
                  procedures.

                           7.7.2.3  Credentialing Entity. The plan designates a
                  credentialing committee or other peer review body, which makes
                  recommendations regarding credentialing decisions.

                           7.7.2.4  Scope. The plan identifies those
                  practitioners who fall under its scope of authority and
                  action. This shall include, at a minimum, all physicians,
                  dentists, and other licensed health practitioners included in
                  the review organization's literature for Members, as an
                  indication of those practitioners whose service to Members is
                  contracted or anticipated.

                           7.7.2.5  Process. The initial credentialing process
                  obtains and reviews verification of the following information,
                  at a minimum:

                           a) The practitioner holds a current valid license to
                  practice;

                           b) Valid DEA or CDS certificate, as applicable;

                           c) Graduation from medical school and completion of a
                  residency or other post-graduate training, as applicable;

                           d) Work history;

                           e) Professional liability claims history;

                           f) The practitioner holds current, adequate
                  malpractice insurance according to the plan's policy;

                           g) Any revocation or suspension of a state license or
                  DEA/BNDD number;

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                           h) Any curtailment or suspension of medical staff
                  privileges (other than for incomplete medical records);

                           i) Any sanctions imposed by Medicaid and/or Medicare;

                           j) Any censure by the State or County Medical
                  Association;

                           k) MCO requests information on the practitioner from
                  the National Practitioner Data Bank and the State Board of
                  Medical Examiners;

                           l) The application process includes a statement by
                  the Applicant regarding: (This information should be used to
                  evaluate the practitioner's current ability to practice.)

                           m) Any physical or mental health problems that may
                  affect current ability to provide health care;

                           n) Any history of chemical dependency/substance
                  abuse;

                           o) History of loss of license and/or felony
                  convictions;

                           p) History of loss or limitation of privileges or
                  disciplinary activity; and

                           q) An attestation to correctness/completeness of the
                  application.

                           7.2.2.6  There is an initial visit to each potential
                  primary care practitioner's office, including documentation of
                  a structured review of the site and medical record keeping
                  practices to ensure conformance with MCO's standards.

                           7.7.2.7  Recredentialing. A process for the periodic
                  reverification of clinical credentials (recredentialing,
                  reappointment, or recertification) is described in MCO's
                  policies and procedures.

                           7.7.2.8  There is evidence that the procedure is
                  implemented at least every three years.

                           7.7.2.9  MCO conducts periodic review of information
                  from the National Practitioner Data Bank, along with
                  performance data on all physicians, to decide whether to renew
                  the participating physician agreement. At a minimum, the
                  recredentialing, recertification or reappointment process is
                  organized to verify current standing on items listed in "E-1"
                  through "E-7" and item "E-13" above.

                           7.7.2.10 The recredentialing, recertification or
                  reappointment process also includes review of data from: a)
                  Member complaints and b) results of quality reviews.

                           7.7.2.11 Delegation of Credentialing Activities. If
                  MCO delegates credentialing (and recredentialing,
                  recertification, or reappointment) activities, there is a
                  written description of the delegated activities, and the
                  delegate's accountability for these activities. There is also
                  evidence that the delegate accomplished the credentialing
                  activities. MCO monitors the effectiveness of the delegate's
                  credentialing and reappointment or recertification process.

                           7.7.2.12 Retention of Credentialing Authority. MCO
                  retains the right to approve new providers and sites and to
                  terminate or

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<PAGE>

                  suspend individual providers. MCO has policies and procedures
                  for the suspension, reduction or termination of practitioner
                  privileges.

                           7.7.2.13 Reporting Requirement. There is a mechanism
                  for, and evidence of implementation of, the reporting of
                  serious quality deficiencies resulting in suspension or
                  termination of a practitioner, to the appropriate authorities.
                  MCO will implement and maintain policies and procedures for
                  disciplinary actions including reducing, suspending, or
                  terminating a practitioner's privileges.

                           7.7.2.14 Appeals Process. There is a provider
                  appellate process for instances where MCO chooses to reduce,
                  suspend or terminate a practitioner's privileges with the
                  organization.

SECTION 2.14 MODIFICATION OF SECTION 7.8, PRIMARY CARE PROVIDERS

         Section 7.8.1.1 is added and Sections 7.8.8 and 7.8.11.4 are modified
         with the following language:

                           "7.8.1.1 HMO must provide supporting documentation,
                  as specified and requested by the State, to verify that their
                  provider network meets the requirements of this contract at
                  the time the HMO enters into a contract and at the time of a
                  significant change as required by 42 C.F.R. Section
                  438.207(b). A significant change can be, but is not limited
                  to, change in ownership (purchase, merger, acquisition), new
                  start-up, bankruptcy, and/or a major subcontractor change
                  directly affecting a provider network such as (IPA's, BHO,
                  medical groups, etc.).

                           7.8.8    The PCP for a Member with disabilities,
                  special health care needs, or chronic or complex conditions
                  may be a specialist who agrees to provide PCP services to the
                  Member. The specialty provider must agree to perform all PCP
                  duties required in the contract and PCP duties must be within
                  the scope of the specialist's license. Any interested person
                  may initiate the request for a specialist to serve as a PCP
                  for a Member with disabilities, special health care needs, or
                  chronic or complex conditions.

                           7.8.11.4 HMO must require PCPs for children under the
                  age of 21 to provide or arrange to have provided all services
                  required under Section 6.8 relating to Texas Health Steps,
                  Section 6.9 relating to Perinatal Services, Section 6.10
                  relating to Early Childhood Intervention, Section 6.11
                  relating to WIC, Section 6.13 relating to People With
                  Disabilities, special health care needs, or chronic or complex
                  conditions, and Section 6.14 relating to Health Education and
                  Wellness and Prevention Plans. PCP must cooperate and
                  coordinate with HMO to provide Member and the Member's family
                  with knowledge of and access to available services."

SECTION 2.15 MODIFICATION OF SECTION 8.2, MEMBER HANDBOOK

         Section 8.2.4 is added with the following language:

                           "8.2.4   In accordance with 42 C.F.R. Section
                  438.100, HMO must maintain written policies and procedures for
                  informing Members of their rights and responsibilities. HMO
                  must notify its Members of their right to request a copy of
                  these rights and responsibilities."

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SECTION 2.16 MODIFICATION OF SECTION 8.5, MEMBER COMPLAINTS

         Section 8.5 is deleted in its entirety and replaced with the following
         language:

                           "8.5     MEMBER COMPLAINT AND APPEAL SYSTEM

                           HMO must develop, implement and maintain a Member
                  complaint and appeal system that complies with the
                  requirements in applicable federal and state laws and
                  regulations, including 42 C.F.R. Section 431.200 and 42 C.F.R.
                  Part 483, Subpart F, "Grievance System;" and the provisions of
                  1 T.A.C. Chapter 357 relating to managed care organizations.
                  The complaint and appeal system must include a complaint
                  process, an appeal process, and access to HHSC's Fair Hearing
                  System. The procedures must be reviewed and approved in
                  writing by HHSC. Modifications and amendments to the Member
                  complaint and appeal system must be submitted to HHSC at least
                  30 days prior to the implementation of the modification or
                  amendment.

                           For purposes of Section 8.5., an "authorized
                  representative" is any person or entity acting on behalf of
                  the Member and with the Member's written consent. A provider
                  may be an "authorized representative."

                           8.5.1    MEMBER COMPLAINT PROCESS

                           8.5.1.1  HMO must have written policies and
                  procedures for receiving, tracking, responding to, reviewing,
                  reporting and resolving complaints by Members or their
                  authorized representatives.

                           8.5.1.2  HMO must resolve complaints within 30 days
                  from the date that the complaint was received. The complaint
                  procedure must be the same for all Members under this
                  contract. The Member or Member's authorized representative may
                  file a complaint either orally or in writing. HMO must also
                  inform Members how to file a complaint directly with HHSC.

                           8.5.1.3  HMO must designate an officer of HMO who has
                  primary responsibility for ensuring that complaints are
                  resolved in compliance with written policy and within the time
                  required. An "officer" of HMO means a president, vice
                  president, secretary, treasurer, or chairperson of the board
                  for a corporation, the sole proprietor, the managing general
                  partner of a partnership, or a person having similar executive
                  authority in the organization.

                           8.5.1.4  HMO must have a routine process to detect
                  patterns of complaints. The process must involve management,
                  supervisory, and quality improvement staff in the development
                  of policy and procedural improvements to address the
                  complaints.

                           8.5.1.5  HMO's complaint procedures must be provided
                  to Members in writing and through oral interpretive services.
                  A written description of HMO's complaint procedures must be
                  available in prevalent non-English languages identified by
                  HHSC, at a 4th to 6th grade reading level. HMO must include a
                  written description of the complaint process in the Member
                  Handbook. HMO must maintain and

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<PAGE>

                  publish in the Member Handbook, at least one local and one
                  toll-free telephone number with
                  TeleTypewriter/Telecommunications Device for the Deaf
                  (TTY/TTD) and interpreter capabilities for making complaints.

                           8.5.1.6  HMO's process must require that every
                  complaint received in person, by telephone or in writing must
                  be acknowledged and recorded in a written record and logged
                  with the following details: date; identification of the
                  individual filing the complaint; identification of the
                  individual recording the complaint; nature of the complaint;
                  disposition of the complaint (i.e., how the HMO resolved the
                  complaint); corrective action required; and date resolved.

                           8.5.1.7  HMO is prohibited from discriminating or
                  taking punitive action against a Member or his or her
                  representative for making a complaint.

                           8.5.1.8  If the Member makes a request for
                  disenrollment, the HMO shall give the Member information on
                  the disenrollment process and direct the Member to the
                  Enrollment Broker. If the request for disenrollment includes a
                  complaint by the Member, the complaint will be processed
                  separately from the disenrollment request, through the
                  complaint process.

                           8.5.1.9  HMO will cooperate with the Enrollment
                  Broker, HHSC, and HHSC's Member resolution service contractors
                  to resolve all Member complaints. Such cooperation may
                  include, but is not limited to, providing information or
                  assistance to internal complaint committees.

                           8.5.1.10 HMO must provide designated staff to assist
                  Members in understanding and using HMO's complaint system.
                  HMO's designated staff must assist Members in writing or
                  filing a complaint and monitoring the complaint through the
                  HMO's complaint process until the issue is resolved.

                           8.5.2    STANDARD MEMBER APPEAL PROCESS

                           8.5.2.1  HMO must develop, implement and maintain an
                  appeal procedure that complies with the requirements in
                  federal laws and regulations, including 42 C.F.R. Section
                  431.200 and 42 C.F.R. Part 438, Subpart F, "Grievance System."
                  An appeal is a disagreement with an "action" as defined in
                  Article 2 of the Contract. The appeal procedure must be the
                  same for all Members. When a Member or his or her authorized
                  representative expresses orally or in writing any
                  dissatisfaction or disagreement with an action, the HMO must
                  regard the expression of dissatisfaction as a request to
                  appeal an action.

                           8.5.2.2  A Member must file a request for an internal
                  appeal within 30 days from receipt of the notice of the
                  action. To ensure continuation of currently authorized
                  services, however, the Member must file the appeal on or
                  before the later of: 10 days following the HMO's mailing of
                  the notice of the action or the intended effective date of the
                  proposed action.

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                           8.5.2.3  HMO must designate an officer who has
                  primary responsibility for ensuring that appeals are resolved
                  in compliance with written policy and within the time
                  required. An "officer" of HMO means a president, vice
                  president, secretary, treasurer, or chairperson of the board
                  for a corporation, the sole proprietor, the managing general
                  partner of a partnership, or a person having similar executive
                  authority in the organization.

                           8.5.2.4  The provisions of Article 21.58A, Texas
                  Insurance Code, relating to a Member's right to appeal an
                  adverse determination made by HMO or a utilization review
                  agent by an independent review organization, do not apply to a
                  Medicaid recipient. Federal fair hearing requirements (Social
                  Security Act Section 1902a(3), codified at 42 C.F.R. Section
                  431.200 et. seq.) require the agency to make a final decision
                  after a fair hearing, which conflicts with the State
                  requirement that the IRO make a final decision. Therefore,
                  Article 21.58A is pre-empted by the federal requirement.

                           8.5.2.5  HMO must have policies and procedures in
                  place outlining the role of HMO's Medical Director for an
                  appeal of an action. The Medical Director must have a
                  significant role in monitoring, investigating and hearing
                  appeals. In accordance with 42 C.F.R. Section 438.406, the
                  HMO's policies and procedures must require that individuals
                  who make decisions on appeals were not involved in any
                  previous level of review or decision-making, and, are health
                  care professionals who have the appropriate clinical
                  expertise, as determined by HHSC, in treating the Member's
                  condition or disease.

                           8.5.2.6  HMO must provide designated staff to assist
                  Members in understanding and using HMO's appeal process. HMO's
                  designated staff must assist Members in writing or filing an
                  appeal and monitoring the appeal through the HMO's appeal
                  process until the issue is resolved.

                           8.5.2.7  HMO must have a routine process to detect
                  patterns of appeals. The process must involve management,
                  supervisory, and quality improvement staff in the development
                  of policy and procedural improvements to address the appeals.

                           8.5.2.8  HMO's appeal procedures must be provided to
                  Members in writing and through oral interpretive services. A
                  written description of HMO's appeal procedures must be
                  available in prevalent non-English languages identified by
                  HHSC, at a 4th to 6th grade reading level. HMO must include a
                  written description in the Member Handbook. HMO must maintain
                  and publish in the Member Handbook at least one local and one
                  toll-free telephone number with TTY/TTD and interpreter
                  capabilities for requesting an appeal of an action.

                           8.5.2.9  HMO's process must require that every oral
                  appeal received must be confirmed by a written, signed appeal
                  by the Member or his or her representative, unless the Member
                  or his or her representative requests an expedited resolution.
                  All appeals must be recorded in a written record and logged
                  with the following details: date notice is sent; effective
                  date of the action; date the Member or his or her
                  representative requested the appeal; date the appeal was
                  followed

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                  up in writing; identification of the individual filing; nature
                  of the appeal; disposition of the appeal; notice of
                  disposition to Member.

                           8.5.2.10 HMO must send a letter to the Member within
                  5 business days acknowledging receipt of the appeal request.
                  Except as provided in Section 8.5.3.2, HMO must complete the
                  entire appeal process within 30 calendar days after receipt of
                  the initial written or oral request for appeal. The timeframe
                  may be extended up to 14 calendar days if the Member requests
                  an extension; or the HMO shows that there is a need for
                  additional information and how the delay is in the Member's
                  interest. If the timeframe is extended, the HMO must give the
                  Member written notice of the reason for delay if the Member
                  had not requested the delay.

                           8.5.2.11 During the appeal process, HMO must provide
                  the Member a reasonable opportunity to present evidence, any
                  allegations of fact or law, in person as well as in writing.
                  The HMO must inform the Member of the time available for
                  providing this information, and in the case of an expedited
                  resolution, that limited time will be available (see Section
                  8.5.3.2).

                           8.5.2.12 HMO must provide the Member and his or her
                  representative opportunity, before and during the appeals
                  process, to examine the Member's case file, including medical
                  records and any other documents considered during the appeal
                  process. HMO must include, as parties to the appeal, the
                  Member and his or her representative or the legal
                  representative of a deceased Member's estate.

                           8.5.2.13 In accordance with 42.C.F.R. Section
                  438.420, HMO must continue the Member's benefits currently
                  being received by the Member, including the benefit that is
                  the subject of the appeal, if all of the following criteria
                  are met: 1) the Member or his or her representative files the
                  appeal timely (as defined in Section 8.5.2.2); 2) the appeal
                  involves the termination, suspension, or reduction of a
                  previously authorized course of treatment; 3) the services
                  were ordered by an authorized provider; 4) the original period
                  covered by the original authorization has not expired; and 5)
                  the Member requests an extension of the benefits. If, at the
                  Member's request, the HMO continues or reinstates the Member's
                  benefits while the appeal is pending, the benefits must be
                  continued until one of the following occurs: the Member
                  withdraws the appeal; 10 days pass after the HMO mails the
                  notice, providing the resolution of the appeal against the
                  Member, unless the Member, within the 10-day timeframe, has
                  requested a State fair hearing with continuation of benefits
                  until a State fair hearing decision can be reached; a state
                  fair hearing office issues a hearing decision adverse to the
                  Member; the time period or service limits of a previously
                  authorized service has been met.

                           8.5.2.14 In accordance with 42 C.F.R. Section
                  438.420(d), if the final resolution of the appeal is adverse
                  to the Member, and upholds the HMO's action, then to the
                  extent that the services were furnished to comply with Section
                  8.5.2.13, the HMO may recover such costs from the Member.

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                           8.5.2.15 If the HMO or state fair hearing officer
                  reverses a decision to deny, limit, or delay services that
                  were not furnished while the appeal was pending, the HMO must
                  authorize or provide the disputed services promptly, and as
                  expeditiously as the Member's health condition requires.

                           8.5.2.16 If the HMO or state fair hearing officer
                  reverses a decision to deny authorization of services and the
                  Member received the disputed services while the appeal was
                  pending, the HMO will be responsible for the payment of
                  services.

                           8.5.2.17 HMO is prohibited from discriminating
                  against a Member or his or her representative for making an
                  appeal.

                           8.5.3    EXPEDITED HMO APPEALS

                           8.5.3.1  In accordance with 42 C.F.R. Section
                  438.410, HMO must establish and maintain an expedited review
                  process for appeals, when the HMO determines (for a request
                  from a Member) or the provider indicates (in making the
                  request on the Member's behalf or supporting the Member's
                  request) that taking the time for a standard resolution could
                  seriously jeopardize the Member's life or health. HMO must
                  follow all appeal requirements for standard Member appeals, as
                  set forth in Section 8.5.2, except where differences are
                  specifically noted. Requests for expedited appeals must be
                  accepted orally or in writing.

                           8.5.3.2  HMO must complete investigation and
                  resolution of an appeal relating to an ongoing emergency or
                  denial of continued hospitalization: (1) in accordance with
                  the medical or dental immediacy of the case; and (2) not later
                  than one business day after the complainant's request for
                  appeal is received.

                           8.5.3.3  Members must exhaust the HMO's expedited
                  appeal process before making a request for an expedited state
                  fair hearing. After HMO receives the request for an expedited
                  appeal, it must hear an approved requests for a Member to have
                  an expedited appeal and notify the Member of the outcome of
                  the appeal within 3 business days, except as stated in
                  8.5.3.2. This timeframe may be extended up to 14 calendar days
                  if the Member requests an extension; or the HMO shows (to the
                  satisfaction of HHSC, upon HHSC's request) that there is a
                  need for additional information and how the delay is in the
                  Member's interest. If the timeframe is extended, the HMO must
                  give the Member written notice of the reason for delay if the
                  Member had not requested the delay.

                           8.5.3.4  If the decision is adverse to the Member,
                  procedures relating to the notice in Section 8.5.5 must be
                  followed. The HMO is responsible for notifying the Member of
                  their rights to access an expedited state fair hearing. HMO
                  will be responsible for providing documentation to the State
                  and the Member, indicating how the decision was made, prior to
                  state's expedited fair hearing.

                           8.5.3.5  The HMO must ensure that punitive action is
                  neither taken against a provider who requests an expedited
                  resolution or supports a Member's request.

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                           8.5.3.6  If the HMO denies a request for expedited
                  resolution of an appeal, it must: (1) transfer the appeal to
                  the timeframe for standard resolution set forth in Section
                  8.5.2, and (2) make a reasonable effort to give the Member
                  prompt oral notice of the denial, and follow up within two
                  calendar days with a written notice.

                           8.5.4    ACCESS TO STATE FAIR HEARING

                           8.5.4.1  HMO must inform Members that they generally
                  have the right to access the state fair hearing process in
                  lieu of the internal appeal system provided by HMO procedures
                  set forth in Sections 8.5.2 and 8.5.3. The notice must comply
                  with the requirements of 1 T.A.C. Chapter 357. In the case of
                  an expedited State Fair Hearing Process, the HMO must inform
                  the Member that he or she must first exhaust the HMO's
                  internal expedited appeal process.

                           8.5.4.2  HMO must notify Members that they may be
                  represented by an authorized representative in the state fair
                  hearing process.

                           8.5.5    NOTICES OF ACTION AND DISPOSITION OF APPEALS

                           8.5.5.1  NOTICE OF ACTION. HMO must notify the
                  Member, in accordance with 1 T.A.C. Chapter 357, whenever HMO
                  takes an action as defined in Article 2 of this contract. The
                  notice must contain the following information:

                           (a) the action the HMO or its contractor has taken or
                  intends to take;

                           (b) the reasons for the action;

                           (c) the Member's right to access the HMO internal
                  appeal process, as set forth in Sections 8.5.2 and 8.5.3,
                  and/or to access to the State Fair Hearing Process as provided
                  in Section 8.5.4;

                           (d) the procedures by which Member may appeal HMO's
                  action;

                           (e) the circumstances under which expedited
                  resolution is available and how to request it;

                           (f) the circumstances under which a Member can
                  continue to receive benefits pending resolution of the appeal
                  (see Section 8.5.2.13), how to request that benefits be
                  continued, and the circumstances under which the Member may be
                  required to pay the costs of these services;

                           (g) the date the action will be taken;

                           (h) a reference to the HMO policies and procedures
                  supporting the HMO's action;

                           (i) an address where written requests may be sent and
                  a toll-free number that the Member can call to request the
                  assistance of a Member representative, file an appeal, or
                  request a Fair Hearing;

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                           (j) an explanation that Members may represent
                  themselves, or be represented by a provider, a friend, a
                  relative, legal counsel or another spokesperson;

                           (k) a statement that if the Member wants a HHSC Fair
                  Hearing on the action, Member must make, in writing, the
                  request for a Fair Hearing within 90 days of the date on the
                  notice or the right to request a hearing is waived;

                           (l) a statement explaining that HMO must make its
                  decision within 30 days from the date the appeal is received
                  by HMO, or 3 business days in the case of an expedited appeal;
                  and a statement explaining that the hearing officer must make
                  a final decision within 90 days from the date a Fair Hearing
                  is requested; and

                           (m) any other information required by 1 T.A.C.
                  Chapter 357 that relates to a managed care organization's
                  notice of action.

                           8.5.5.2  TIMEFRAME FOR NOTICE OF ACTION

                           In accordance with 42 C.F.R. Section 438.404(c), the
                  HMO must mail a notice of action within the following
                  timeframes:

                           (1) For termination, suspension, or reduction of
                  previously authorized Medicaid-covered services, within the
                  timeframes specified in 42 C.F.R. Sections 431.211, 431.213,
                  and 431.214.

                           (2) For denial of payment, at the time of any action
                  affecting the claim.

                           (3) For standard service authorization decisions that
                  deny or limit services, within the timeframe specified in 42
                  C.F.R. Section 438.210(d)(1).

                           (4) If the HMO extends the timeframe in accordance
                  with 42 C.F.R. Section 438.210(d)(1), it must--

                           (a) Give the Member written notice of the reason for
                  the decision to extend the timeframe and inform the Member of
                  the right to file a grievance if he or she disagrees with that
                  decision; and

                           (b) Issue and carry out its determination as
                  expeditiously as the Member's health condition requires and no
                  later than the date the extension expires.

                           (5) For service authorization decisions not reached
                  within the timeframes specified in 42 C.F.R. Section
                  438.210(d) (which constitutes a denial and is thus an adverse
                  action), on the date that the timeframes expire.

                           (6) For expedited service authorization decisions,
                  within the timeframes specified in 42 C.F.R. Section
                  438.210(d).

                           8.5.5.3. NOTICE OF DISPOSITION OF APPEAL. In
                  accordance with 42 C.F.R. Section 438.408(e), HMO must provide
                  written

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                  notice of disposition of all appeals including expedited
                  appeals. The written resolution notice must include the
                  results and date of the appeal resolution. For decisions not
                  wholly in the Members favor, the notice must contain:

                           (a) the right to request a fair hearing,

                           (b) how to request a state fair hearing,

                           (c) the circumstances under which the Member can
                  continue to receive benefits pending a hearing (see Section
                  8.5.2.13),

                           (d) how to request the continuation of benefits,

                           (e) if the HMO's action is upheld in a hearing, the
                  Member may be liable for the cost of any services furnished to
                  the Member while the appeal is pending; and

                           (f) any other information required by 1 T.A.C.
                  Chapter 357 that relates to a managed care organization's
                  notice of disposition of an appeal."

                           8.5.5.4  TIMEFRAME FOR NOTICE OF RESOLUTION OF
                  APPEALS. In accordance with 42 C.F.R. Section 438.408, HMO
                  must provide written notice of resolution of appeals,
                  including expedited appeals, as expeditiously as the Member's
                  health condition requires, but the notice must not exceed the
                  timelines as provided in 8.5.2 or 8.5.3. For expedited
                  resolution of appeals, HMO must make reasonable efforts to
                  give the Member prompt oral notice of resolution of the
                  appeal, and follow up with a written notice within the
                  timeframes set forth in Section 8.5.3. If the HMO denies a
                  request for expedited resolution of an appeal, HMO must
                  transfer the appeal to the timeframe for standard resolution
                  as provided in Section 8.5.2. and make reasonable efforts to
                  give the Member prompt oral notice of the denial, and follow
                  up within two calendar days with a written notice."

SECTION 2.17 DELETION OF SECTION 8.6, MEMBER NOTICE, APPEALS AND FAIR HEARINGS

         Section 8.6 is deleted in its entirety. (Information concerning Member
         appeals and fair hearings is now located in Section 8.5 above.)

                           8.6      [deleted]

SECTION 2.18 MODIFICATION OF SECTION 9.01, MARKETING MATERIAL MEDIA AND
DISTRIBUTION

         New Section 9.1.1 is added as follows:

                           "9.1.1   HMO may not make any assertion or statement
                  (orally or in writing) it is endorsed by the CMS, a Federal or
                  State government or agency, or similar entity."

SECTION 2.19 MODIFICATION OF SECTION 10.7, UTILIZATION/QUALITY IMPROVEMENT
SUBSYSTEM

         In Section 10.7, requirements 5 and 9 from the "Functions and Features"
         provision are deleted.

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SECTION 2.20 MODIFICATION OF SECTION 10.12, HEALTH INSURANCE PORTABILITY AND
ACCOUNTABILITY ACT (HIPAA) COMPLIANCE

         Section 10.12 is modified to add new Section 10.12.1 as follows:

                           "10.12.1 HMO must provide its Members with a privacy
                  notice as required by HIPAA. The 4th to 6th grade reading
                  level has been waived for the notices and are allowable at a
                  12th grade reading level. The HMO is not required to send the
                  notice out in Spanish but must reference on their English
                  notice, in Spanish, where to call to obtain a copy. HMO must
                  provide HHSC with a copy of their privacy notice for filing,
                  but does not need to have HHSC approval."

SECTION 2.21 MODIFICATION OF SECTION 11.1, QUALITY ASSESSMENT AND PERFORMANCE
IMPROVEMENT PROGRAM

         Sections 11.1, and 11.5 are deleted and replaced with the following
         language:

                           "11.1    QUALITY ASSESSMENT AND PERFORMANCE
                                    IMPROVEMENT PROGRAM

                           HMO must develop, maintain, and operate a quality
                  assessment and performance improvement program consistent with
                  the requirements of 42 C.F.R. Section 438.240 and Sections
                  10.7, 12.10 and Appendix A of this agreement.

                           11.5     Behavioral Health Integration into QIP. If
                  an HMO provides behavioral health services, it must integrate
                  behavioral health into its quality assessment and performance
                  improvement program and include a systematic and on-going
                  process for monitoring, evaluating, and improving the quality
                  and appropriateness of behavioral health care services
                  provided to Members. HMO must collect data, monitor and
                  evaluate for improvements to physical health outcomes
                  resulting from behavioral health integration into the overall
                  care of the Member."

SECTION 2.22 MODIFICATION TO ARTICLE 11, QUALITY ASSURANCE AND QUALITY
IMPROVEMENT PROGRAM

         Article 11 is modified to add new Section 11.7, Practice Guidelines.

                           "11.7    PRACTICE GUIDELINES

                           In accordance with 42 C.F.R. Section 438.236, HMO
                  must adopt practice guidelines, that are based on valid &
                  reliable clinical evidence or a consensus of health care
                  professionals in the particular field; consider the needs of
                  the HMO's Members; are adopted in consultation with
                  contracting health care professionals; and are reviewed and
                  updated periodically as appropriate. The HMO must disseminate
                  the guidelines to all affected providers and, upon request to
                  Members and potential Members. The HMO's decisions regarding
                  utilization management, member education, coverage of
                  services, and other areas included in the guidelines, must be
                  consistent with the HMO's guidelines."

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SECTION 2.23 MODIFICATION OF ARTICLE 12, REPORTING REQUIREMENTS

         Section 12.6, Member Complaints is replaced with the following
         language. Sections 12.8, Utilization Management Reports - Behavioral
         Health and 12.9, Utilization Management Reports - Physical Health are
         deleted and replaced with new Section 12.8, Utilization Management
         Reports, as follows:

                           "12.6    MEMBER COMPLAINTS & APPEALS

                           HMO must submit a quarterly summary report of Member
                  complaints and appeals. HMO must also report complaints and
                  appeals submitted to its subcontracted risk groups (e.g.,
                  IPAs). The complaint and appeals report must be submitted not
                  later than 45 days following the end of the state fiscal
                  quarter in a format specified by HHSC.

                           12.8     UTILIZATION MANAGEMENT REPORTS

                           12.8.1   Written Program Description. MCO has a
                  written utilization management program description, which
                  includes, at a minimum, procedures to evaluate medical
                  necessity, criteria used, information sources and the process
                  used to review and approve the provision of medical services.

                           12.8.2   Scope. The program has mechanisms to detect
                  underutilization as well as overutilization, including but not
                  limited to generation of provider profiles.

                           12.8.3   Preauthorization and Concurrent Review
                  Requirements. For MCOs with preauthorization or concurrent
                  review program:

                           12.8.4   Qualified medical professionals supervise
                  preauthorization and concurrent review decisions.

                           12.8.5   Efforts are made to obtain all necessary
                  information, including pertinent clinical information, and
                  consult with the treating physician as appropriate.

                           12.9     [deleted]"

SECTION 2.24 MODIFICATION OF SECTION 12.10, QUALITY IMPROVEMENT REPORTS

         Sections 12.10.1 through 12.10.3 are deleted. Sections 12.10.5 and
         12.10.6 are added as follows:

                           "12.10.1 [deleted]

                           12.10.2  [deleted]

                           12.10.3  [deleted]

                           12.10.5  Written Annual Report. HMO must file a
                  written annual report with HHSC describing the HMO's quality
                  assessment and performance improvement projects.

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                  12.10.6  Encounter Data. In accordance with 42 C.F.R.
                  438.240(c)(2), HMO must submit the encounter data identified
                  in Section 10.5 of this agreement at least monthly to HHSC, so
                  that HHSC may complete a performance measurement report."

SECTION 2.25 MODIFICATION OF SECTION 13.1, CAPITATION AMOUNTS

         Section 13.1.2 is modified as follows:

         13.1.2   The monthly capitation amounts and the Delivery Supplemental
                  Payment (DSP) amount, effective as of September 1, 2003, are
                  listed below.

<TABLE>
<CAPTION>
               BEXAR SDA                       MONTHLY         ____ HMO
               RISK GROUP                 CAPITATION AMOUNTS   ____ HHSC
               ----------                 ------------------
<S>                                       <C>                  <C>
TANF Children (> 1 year of age)                $ 71.40
TANF Adults                                    $189.24
Pregnant Women                                 $335.46
Newborns* (up to 12 Months of Age)             $408.23
Expansion Children   (> 1 year of Age)         $ 73.46
Federal Mandate Children                       $ 64.53
Disabled/Blind Administration                  $ 14.00
</TABLE>

* Includes TANF Child & Expansion Children up to 12 months of Age.

                  Delivery Supplemental Payment. A one-time per pregnancy
                  supplemental payment for each delivery shall be paid to HMO as
                  provided below in the following amount: $2,834.10.

SECTION 2.26 MODIFICATION OF SECTION 13.3, PERFORMANCE OBJECTIVES

         Section 13.3.1 is amended as follows,, and Sections 13.3.2 - 13.3.10
         are deleted in their entirety.

                           13.3.1   Performance Objectives. Performance
                  Objectives are contained in Appendix K of this contract. HMO
                  must meet the benchmarks established by HHSC for each
                  objective.

                           13.3.2   [deleted]

                           13.3.3   [deleted]

                           13.3.4   [deleted]

                           13.3.5   [deleted]

                           13.3.6   [deleted]

                           13.3.7   [deleted]

                           13.3.8   [deleted]

                           13.3.9   [deleted]

                           13.3.10  [deleted]

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                           13.3.10.1 [deleted]

SECTION 2.27 MODIFICATION OF SECTION 13.5, NEWBORN AND PREGNANT WOMEN PAYMENT
PROVISIONS

         Section 13.5.5 is modified to comply with HIPAA requirements, as
         follows:

                           "13.5.5  The Enrollment Broker will provide a daily
                  enrollment file, which will list all TP40 Members who received
                  State- issued Medicaid I.D. numbers, for each HMO. HHSC will
                  guarantee capitation payments to the HMOs for all TP40 Members
                  who appear on the capitation and capitation adjustment files.
                  The Enrollment Broker will provide a pregnant women exception
                  report to the HMOs, which can be used to reconcile the
                  pregnant women daily enrollment file with the monthly
                  enrollment, capitation and capitation adjustment files."

SECTION 2.28 MODIFICATION OF SECTION 14.1, ELIGIBILITY DETERMINATION

         Section 14.1.2.8 is modified as follows and 14.1.2.9 is deleted:

                           "14.1.2.8 FEDERAL MANDATE CHILDREN (MAO) - Children
                  aged 6-18 whose families' income is below 100% Federal Poverty
                  Income Limit.

                           14.1.2.9 [deleted]"

SECTION 2.29 MODIFICATION OF ARTICLE 15, GENERAL PROVISIONS

         Article 15 is modified to add new Section 15.14, Global Drafting
         Conventions, as follows:

                           "15.14 GLOBAL DRAFTING CONVENTIONS.

                           15.14.1  The terms "include," "includes," and
                  "including" are terms of inclusion, and where used in the
                  Agreement, are deemed to be followed by the words "without
                  limitation."

                           15.14.2  Any references to "Sections," "Exhibits," or
                  "Attachments" are deemed to be references to Sections,
                  Exhibits, or Attachments to the Agreement.

                           15.14.3  Any references to agreements, contracts,
                  statutes, or administrative rules or regulations in the
                  Agreement are deemed references to these documents as amended,
                  modified, or supplemented from time to time during the term of
                  the Agreement."

SECTION 2.30 MODIFICATION OF SECTION 16.3, DEFAULT BY HMO

         Section 16.3.4, Failure to Comply with Federal Laws and Regulations, is
         modified to add Section 16.3.4.7 with the following language:

                           "16.3.4.7 HMO's failure to comply with requirements
                  related to Members with special health care needs in Section
                  6.13 of this Contract, pursuant to 42 C.F.R.Section
                  438.208(c).

                           16.3.4.8 HMO's failure to comply with requirement in
                  Sections 7.2.6 and 7.2.8.7 of this Contract, pursuant to 42
                  C.F.R. 438.102(a).

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SECTION 2.31 MODIFICATION OF SECTION 18.8, CIVIL MONETARY PENALTIES

         Sections 18.8.2 and 18.8.7 are modified as follows:

                           "18.8.2  For a default under 16.3.4.2, for each
                  default HHSC may assess double the excess amount charged in
                  the violation of the federal requirements or $25,000,
                  whichever is greater. HHSC will deduct from the penalty the
                  amount of the overcharge and return it to the affected
                  Member(s)

                           18.8.7   HMO may be subject to civil monetary
                  penalties under the provisions of 42 C.F.R. Part 1003 and 42
                  C.F.R. Part 438, Subpart I in addition to or in place of
                  withholding payments for a default under Section 16.3.4"

SECTION 2.32 MODIFICATION OF ARTICLE 19, TERM

         Section 19.1 is modified as follows:

                           "19.1    The effective date of this contract is
                  August 31, 1999. This contract and all amendments thereto will
                  terminate on August 31, 2004, unless extended or terminated
                  earlier as provided for elsewhere in this contract."

SECTION 2.33 MODIFICATION TO APPENDIX A, STANDARDS FOR QUALITY IMPROVEMENT
PROGRAMS

                           Appendix A is replaced with the attached Appendix A
                  and Attachment A-A.

SECTION 2.34 MODIFICATION TO APPENDIX D, CRITICAL ELEMENTS

                           Appendix D is replaced with the attached Appendix D.

SECTION 2.35 MODIFICATION OF APPENDIX E, TRANSPLANT FACILITIES

                           Appendix E is replaced with the attached Appendix E.

SECTION 2.36 ADDITION OF NEW APPENDIX O, STANDARD FOR MEDICAL RECORDS

                           New Appendix O is added to the contract with the
                  attached Appendix O.

SECTION 2.37 MODIFICATION TO APPENDIX K, PERFORMANCE OBJECTIVES

                           Appendix K is replaced with the attached Appendix K

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             ARTICLE 3. REPRESENTATIONS AND AGREEMENT OF THE PARTIES

         The Parties contract and agree that the terms of the Agreement will
remain in effect and continue to govern except to the extent modified in this
Amendment.

         By signing this Amendment, the Parties expressly understand and agree
that this Amendment is hereby made a part of the Agreement as though it were set
out word for word in the Agreement.

         IN WITNESS HEREOF, HHSC AND THE CONTRACTOR HAVE EACH CAUSED THIS
AMENDMENT TO BE SIGNED AND DELIVERED BY ITS DULY AUTHORIZED REPRESENTATIVE.

         SUPERIOR HEALTHPLAN, INC.            HEALTH & HUMAN SERVICES COMMISSION

By: /s/ Christopher Bowers                    By: /s/ Albert Hawkins
   -----------------------------------           -------------------------------
        Christopher Bowers                        Albert Hawkins
        President and CEO                         Commissioner

Date:                                         Date:
     ---------------------------------             -----------------------------

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