<PAGE>
 
                                                                    Exhibit 10.4


                     (Contract Period 01/01/99 - 12/31/99)



              HEALTH INSURANCE BENEFITS FOR THE AGED AND DISABLED
               (Contract With Eligible Organization Pursuant to
                   section 1876 of the Social Security Act)


                             CONTRACT (No. H1031)


                                    Between


         The Secretary of the Department of Health and Human Services,
            who has delegated authority to the Administrator of the
     Health Care Financing Administration, hereinafter referred to as HCFA


                                      and


                           SunStar Health Plan, Inc.
                 (hereinafter referred to as the Organization)



The Secretary and the Organization, a health maintenance organization or
competitive medical plan which has been determined to be an eligible
organization by the Administrator of the Health Care Financing Administration
under CFR 417.406, agree to the following for the purposes of section 1876 of
the Social Security Act:
<PAGE>
 
           (Contract # H1031) (Contract Period 01/01/99 - 12/31/99)

                                   Article I

                               Term of Contract

The contract shall begin on January 1, 199 and end on December 31, 1999. The
contract will be automatically renewed for successive periods of one year unless
the Organization or HCFA gives written notice of intention not to renew the
contract at least 90 days before the end of the current period. (Additional
requirements concerning nonrenewal of contracts, binding on both HCFA and the
Organization, may be found at 42 CFR 417.492) This contract supersedes any
previous contract under sections 1833 or 1876 of the Social Security Act (the
Act).

                                  ARTICLE II

                          Election of Payment Method

Under section 1876(a) of the Act of the Organization may elect a method of
payment for which it is eligible and qualified and will be accordingly governed
by the statute and regulations which pertain to that method. The Organization
agrees to receive payment:
                         (initial one selection below)

______   1.   On a risk basis under section 1876(g) of the Act, subject to the
                          provisions of the Article V;

  X      2.   On a reasonable cost basis under section 1876 (h) of the Act,
------
                           subject to the provisions of
                               ARTICLE VI AND ITS IMPLEMENTING REGULATIONS AT 
                                    42 CFR 417.530-417.576.

                               Select one option (see 42 CFR 417.532(c)):
                               _____   1.  (direct payment of Organization's
                               providers by HCFA)
                               _____   2.  (direct payment of Organization's
                               providers by the Organization

                               If option 2, lists names of providers to be
                               paid by the Organization:

                                      ------------------------
                                      ------------------------
                                      (list others separately)

______   3.   On a risk basis under section 1876(g) for new Medicare enrollees
                          and payment on a reasonable cost basis for
                          unconverted, current non-risk Medicare enrollees,
                          subject to the provisions of Articles V and VI.
<PAGE>
 
                                  Article III

                                GEOGRAPHIC AREA

The Organization agrees that the contract shall be effective for the geographic
area described in the attachment to this contract. (Modifications to the
geographic area during the period of the contract are governed by Article VII.)

                                  Article IV

                              General Conditions

A.   The Organization agrees to comply with the law, regulations, and general
     instructions of the Health Care Financing Administration (HCFA) which
     concern the participation of health maintenance organizations (HMOs) and
     competitive medical plans (CMPs) in the Medicare program.

B.   As part of its ongoing quality assurance program:

     1.   The Organization agrees to comply with the requirements for Peer
          Review Organization (PRO) review of services furnished to Medicare
          enrollees as set forth in Subchapter D of Chapter IV, Title 42, Code
          of Federal Regulations 417.478(a).

     2.   The Organization shall furnish to the Peer Review Organization (PRO)
          requested on-site access to or copies of patient area records and
          other pertinent data, and permit the PRO of its subcontractor to
          examine its operations and records as necessary for the PRO to carry
          out its functions under the Act.

     3.   Each organization receiving payment on a risk basis will maintain a
          written agreement with a utilization and quality control Peer Review
          Organization with which HCFA has a contract under Part B of Title XI
          of the Act for the area in which the Organization is located. In
          accordance with sections 1154 (a)(4)(B) and (a)(14) of the Act, the
          agreement must provide for the review of services (including both
          impatient and outpatient services) provided by the organization
          pursuant to this contract for the purpose of determining whether such
          services meet professionally recognized standards of health care,
          including whether appropriate services have not been provided or have
          been provided in inappropriate settings. The agreement must also
          provide for review by the PRO of all written complaints filed by
          Medicare beneficiaries or their representatives about ht equality of
          services provided by the Organization. The cost of such agreement will
          be paid by HCFA directly to the PRO on behalf of the Organization.
<PAGE>
 
     4.   Each Organization receiving payment on a risk basis must ensure that
          all hospitalization data required on HCFA Form 1450(UB-82) for
          Medicate enrollees discharged between April 1, 1987 and July 31, 1988
          is submitted to the fiscal intermediary or other HCFA designated
          entity.

     5.   Each Organization receiving payment on a risk basis must provide the
          hospital with any information necessary for the completion of HCFA
          Form 1450(UB-82) which the hospital must submit to the intermediary
          for any discharges after July 31, 1988.

For purposes of this section, Peer Review Organization (PRO) is also deemed
reference to other appropriate entitles with which HCFA has contracted pursuant
to Section 1154(a)(4)(c) of the Act.

C.   The Organization agrees to comply with:

     1.   Sections 1318(a) and (c) of the Public Health Service Act which
          pertain to disclosure of certain financial information;

     2.   Sections 1301(c)(1) and (c)(8) of the Public Health Service Act, which
          relate to fiscal, administrative, and management requirements and
          liability arrangements to protect all members of the organization; and
          to notify HCFA 60 days prior to any changes in its insolvency
          arrangements; and

     3.   The reporting requirements in 42 CFR 417.107(j)(1) which pertain to
          the monitoring of an organization's continued compliance. For purposes
          of this paragraph, references in that section to an "HMO" are also
          deemed references to a "CMP."

D.   The Organization agrees to comply with Title VI of the Civil Rights Act of
     1964 (and pertinent regulations at 45 CFR Part 80), section 504 of the
     Rehabilitation Act of 1973 (and pertinent regulations at 45 CFR Part 84),
     and the Age Discrimination Act of 1975 (and pertinent regulations at 45 CFR
     Part 91).

E.   The Organization agrees to the following:

     1.   HCFA may evaluate, through inspection or other means, the quality,
          appropriateness, and timeliness of services furnished under the
          contract to the Organization's Medicare enrollees;

     2.   HCFA may evaluate, through inspection or other means, the facilities
          of the organization when there is reasonable evidence of some need for
          that inspection;
<PAGE>
 
     3.   HCFA, the Comptroller General, or their designees may audit or inspect
          any books and records of the organization or its transferee that
          pertain to any aspect of services performed, reconciliation of benefit
          liabilities, and determination of amounts payable under the contract;

     4.   HCFA may evaluate, through inspection or other means, the enrollment
          and disenrollment records for the current contract period and three
          prior periods, when there is reasonable evidence of some need for that
          inspection;

     5.   The right to inspect, evaluate, and audit, will extend through three
          years from the date of the final settlement for any contract period
          unless-

          a.   HCFA determines there is a special need to retain a particular
               record or group of records for a longer period and notifies the
               Organization at least 30 days before the normal disposition date;

          b.   There has been a termination, dispute, fraud, or similar fault by
               the Organization, in which case the retention may be extended to
               three years from the date of any resulting final settlement; or

          c.   HCFA determines that there is a reasonable possibility of fraud,
               in which case it may reopen a final settlement at any time.

F.   The Organization shall submit to HCFA (in such form and detail as the HCFA
     shall prescribe in regulations and general instructions), the following
     reports:

     1.   Data pertaining to health insurance claim numbers from beneficiaries,
          which shall be transmitted initially and on a continuing basis, as
          required to annotate the health insurance master file;

     2.   Statistical data on provider services and on medical and other
          services;

     3.   Enrollment and actuarial data; and

     4.   Any other reports or data that HCFA may require.

G.   The Organization agrees to report all enrollment, disenrollment, and other
     beneficiary characteristic records according to HCFA program instructions.
     All records must be transmitted 1) through an approved HCFA systems
     contractor, or 2) over data transmission lines directly to HCFA. All
     electronic transmissions and tapes must be totally compatible and
     consistent with the relevant HCFA computer record systems.
<PAGE>
 
H.   The Organization shall furnish to organizations serving as carriers and
     intermediaries under Title XVIII, information necessary to allow the
     carriers or intermediaries to make proper payment under Title XVIII for
     Medicare beneficiaries enrolled in the Organization.

I.   The Organization agrees to require all entities related to the
     Organization, as determined under 42 CFR 417.484 (a), to agree that-

     1.   HCFA, the Comptroller General, or their designees have the right to
          inspect, evaluate, and audit any pertinent books, documents, papers,
          and records of the subcontractor involving transactions related to the
          subcontractor; and

     2.   The right under this section to information for any particular
          contract period will exist for a period equivalent to that specified
          in section E(5) of this Article.

J.   The Organization agrees-

     1.   To submit to HCFA-

          a.   All financial information required under 42 CFR 417.530 through
               Section 417.576 and for final settlement; and

          b.   Any other information necessary for the administration or
               evaluation of the Medicare program.

     2.   To comply with the requirements set forth in 42 CFR Part 420, Subpart
          C, pertaining to the disclosure of ownership and control information;

     3.   To comply with the requirements of the Privacy Act, as implemented by
          45 CFR Part 5b and Subpart B or Part 401 of 42 CFR, with respect to
          any system of records developed in performing carrier or intermediary
          functions under 42 CFR 417.532 and section 417.533; and

     4.   To meet the confidentiality requirement of 42 CFR 482.24 for medical
          records and for all other information on enrollees, not covered under
          item 3 above, that is contained in its records or obtained from HCFA
          or others.

     5.   To provide prompt payment (consistent with the provisions of section
          1816(c)(2) and 1842 (c)(2) of claims submitted for services and items
          furnished to individuals pursuant to this contract, if the services or
          items are not furnished under a contract between the Organization and
          the provider or supplier.

K.   Pursuant to 42 CFR 417.476 conditions of qualification set forth at 42 CFR
     417.410 through section 417.418 may be waived by HCFA. However, for each of
     such qualifying conditions waived, this contract must contain-

     1.   The specific terms of the waiver;
     2.   The expiration date of the waiver;

     3.   Any other information required by HCFA.

L.   The Organization shall provide and supply (1) full and complete information
     as to ownership of a subcontractor with whom such organization has had
     during the previous twelve months, business transactions in an aggregate
     amount in excess of $25,000, and (2) full and complete information as to
     any significant business transactions during the five year period ending on
     the date of HCFA's request, between the Organization and any wholly-owned
     supplier or between the Organization
<PAGE>
 
     and any subcontractor. The required information must be provided in the
     manner required under section 1866(b)(2)(c)(ii) of the Act.

M.   The Organization shall notify HCFA of loans and other special financial
     arrangements which are made between the Organization and subcontractors,
     affiliates and related parties.

N.   The Organization agrees-

     1.   That for the duration of the contract, the Organization shall have an
          enrolled membership at least one-half of which consists of individuals
          who are not entitled to benefits under Medicare or Medicaid. HCFA may
          suspend enrollment or payment to the Organization or terminate this
          contract if this requirement is not met.

     2.   To submit quarterly reports of its commercial enrollment, Medicaid
          enrollment and Medicare enrollment in the geographic are defined by
          Article III of this contract.

O.   The Organization agrees that no marketing material may be distributed by an
     organization to (or for the use of) individuals eligible to enroll or
     enrolled in the organization under this contract unless at least 45 days
     before the distribution, the Organization has submitted the material to
     HCFA for review, and HCFA has not disapproved the distribution of the
     material.

P.   The Organization agrees to allow eligible beneficiaries to enroll under
     this contract during any open enrollment period required by HCFA through
     regulations. The Organization agrees to accept beneficiaries up to the
     limit of its capacity as approved by the HCFA.

Q.   Upon termination of this contract, the Organization agrees:

     1.   To give its Medicare enrollees a written notice of the termination at
          least 60 days before the termination date;

     2.   To be responsible for the cost of the notice;

     3.   To submit a copy of the notice to HCFA for review;
     4.   If the Organization is a risk contractor, to include with the required
          notice a written description of alternatives available for obtaining
          Medicare services after termination.

R.   The Organization hereby provides assurances to HCFA that in the event the
     Organization ceases to provide items and services under this contract, the
     Organization shall provide or arrange for supplemental coverage of benefits
     under Title XVIII of the Act related to a pre-existing condition with
     respect to any exclusion period, to all individuals enrolled with the
     entity who receive benefits under Title XVIII, for the lesser of six months
     or the duration of such period.

S.   The Organization agrees to review and act upon requests for reconsideration
     from its Medicare enrollees within 60 days of receipt of the
     reconsideration request for the provision or payment of services or items
     which were initially denied. In those cases where the Organization will
     continue to deny services or items received, the Organization must pay for
     or provide those services to the beneficiary within 60 days of the receipt
     of HCFA's or its contractor's determination.

     Services previously denied will be arranged by the Organization in a manner
     consistent with services normally provided by the Organization.

T.   If any Medicare beneficiaries residing in the Organization's service area
     are members of another risk-based contracting organization which nonrenews
     or terminates its contract, your Organization (if under a risk-based
     contract) agrees to hold a special 30-day terminations open enrollment
<PAGE>
 
     period to enroll those Medicare beneficiaries enrolled in the other risk-
     contracting organization at the time of termination or nonrenewal of the
     other organization's contract.

     This requirement will apply only to those Medicare beneficiaries enrolled
     in the other risk-sharing contracting organization who reside in your
     Organization's service area. The terminations open enrollment period must
     be conducted during the period designated by HCFA. You will be given notice
     30 days before the start of the open enrollment period.

     This does not preclude an organization from requesting a capacity waiver as
     described at 12 CFR 417.426(b)(1).

U.   As part of advance directives requirements, the Organization agrees:

V.   To inform all Medicare enrollees at the time of enrollment of their right
     (under State law whether statutory or recognized by the courts of the
     State) to accept or refuse treatment and to execute an advance directive,
     such as living wills or durable powers of attorney, and of the
     Organization's written policies on implementation of that right;

     1.   To document in the individual's medical records whether or not an
          individual has executed an advance directive;

     2.   To not condition treatment or otherwise discriminate on the basis of
          whether an individual has executed an advance directive;

     3.   To comply with State law (whether statutory or recognized by the
          courts of the State) on advance directives; and

     4.   To provide (individually or with others) for education for staff and
          community on advance directives.

W.   The Organization, if it has a risk contract, agrees no to employee or
     contract with, directly or indirectly, entities or individuals excluded
     from participation in Medicare or Medicaid under sections 1128 or 1128A of
     the Act, for the provision of health care, utilization review, medical
     social work, or administrative services.

                                   Article V

                    Conditions For Payment on a Risk Basis

The following conditions apply to the Organization if it selected, in Article II
of this contract, to be paid on a risk basis method under section 1876(g) of the
Act, or if it selected to be paid on a risk basis and paid on a reasonable cost
basis for unconverted, current non-risk Medicare enrollees:

A.   Except as provided for in Article V.(D)., HCFA shall make payment under
     this contract for services rendered to Medicare enrollees on a risk basis
     as provided in regulations.

B.   The Organization agrees to maintain, and make available to HCFA upon
     request, books, records, documents, and other evidence of accounting
     procedures and practices that-

     1.   Are sufficient to-

          a.   Establish component rates of the adjusted community rate (ACR)
               for determining additional and supplementary benefits; and
 
          b.   Determine the rates utilized in setting premiums for State
               insurance agency purposes.

<PAGE>
 
     2.   Include at least any records or financial reports filed with other
          Federal agencies or State authorities.

C.   The Organization has the right to appeal a determination that the
     Organization's ACR computation is not acceptable, pursuant to the
     provisions of 42 CFR 417.594(e)(2).

D.   To the extent that the Organization's members are unconverted, current non-
     risk Medicare enrollees, the Organization agrees to fully comply with the
     conditions in Article VI.

E.   The Organization agrees, as required by section 1876(g)(2) of the Act, that
     if the ACR (as reduced for the actuarial value of the coinsurance and
     deductibles) is less than the average of the per capita rates of payment to
     be made under section 1876(a)(1) for Medicare members enrolled under the
     risk basis method of payment, the Organization shall provide its Medicare
     members with additional benefits described at section 1876(g)(3), selected
     by the Organization, and which HCFA finds are at lease equal in value to
     the difference between the average per capita payment and the adjusted
     community rate (as so reduced). This condition shall not apply to an
     organization which agrees to accept a lesser payment to the extent that
     there is no longer a difference between the average per capita payment and
     the adjusted community rate (as so reduced.)

F.   The Organization agrees-

     1.   To publicly offer and provide at least the level of Medicare covered
          benefits approved in the ACR. The Organization may chose to offer more
          services or to impose lower premiums or other charges (in the form of
          deductibles or coinsurance) than approved in the ACR.

          However, such complimentary services or waived premiums or other
          charges must be approved in advance by HCFA and remain effect
          throughout the contract period.

          The only mid-year changes that are permitted are those which are
          entirely advantageous to Medicare enrollees. Premiums and co-payments
          may be reduced at any time during the year, but once they are reduced,
          they cannot be increased later on during the same contract period.
          HCFA should be advised of any expanded benefits or decreases in
          premiums or co-payments arising in the middle of a contract period.

          Waived premiums and complimentary services provide solely to members
          of an employer group are governed by the Organization's contract with
          the employer.

     2.   Nothing in this article may be interpreted as a waiver or compromise
          or any appeal rights to which the Organization may be entitled under
          Title XVIII of the Act and implementing regulations.

 
<PAGE>
 
                                  Article VI

              Conditions of the Reasonable Cost Method of Payment

The following conditions apply to the Organization if it selected in Article II
of this contract to be paid on the Reasonable Cost Method under section 1876(h)
of the Act, or if it selected to be paid on a risk basis and paid on a
reasonable cost basis for unconverted, current non-risk Medicare enrollees:

A.   HCFA shall make payment under this contract for services rendered to
     Medicare enrollees on a reasonable basis as provided in regulations.

B.   The Organization agrees to maintain books, records, documents, and other
     evidence of accounting procedures and practices that -

     1.   Are sufficient to -

          a.   Ensure an audit trail; and

          b.   Properly reflect all direct and indirect costs claimed to have
               been incurred under the contract; and

     2.   Include at least records of the following:

          a.   Ownership, organization, and operation of the Organization's
               financial, medical and other recordkeeping systems

          b.   Financial statements for the current contract period and three
               prior periods;

          c.   Federal income tax or information returns for the current
               contract period and three periods;

          d.   Assets acquisition, lease, sale, or other action;

          e.   Agreements, contracts and subcontracts;

          f.   Franchise, marketing, and management agreements;

          g.   Schedules of charges for the Organization's fee-for-service
               patients;

          h.   Matters pertaining to costs of operations;

          i.   Amounts of income received, by source and payment;

          j.   Cash flow statements;

          k.   Any financial reports filed with other Federal programs or State
               authorities.

C.   The Organization has the right to appeal any final determination of costs
     pursuant to the reimbursement appeals procedures contained in the
     regulations at 42 CFR Part 405, Subpart R.
D.   The Organization shall make available for the purposes specified in
     paragraphs 1-4 of section D of Article IV, its premises, physical
     facilities, and equipment, its records relating to its Medicare enrollees,
     the records specified in 42 CFR 417.480, and any additional relevant
     information that HCFA may require.
E.   The Organization agrees that -
<PAGE>
 
     1.   Upon HCFA's request it will provide, subsequent to an accounting
          period, an independently certified financial statement of its per
          capita incurred cost, based on the types of components of expenses
          otherwise reimbursable under Title XVIII, for providing services
          described in section 1876(a)(1), including its method of allocating
          costs between individuals enrolled under this section and other
          individuals enrolled with the Organization, such statements to be
          provided in accordance with accounting procedures prescribed by HCFA.

     2.   Failure to report such information may be deemed evidence of likely
          overpayment upon which basis collection action may be taken;

     3.   The required financial statements will consolidated to include an
          accounting for the costs of entities related to the Organization by
          common ownership or control;

     4.   Allowable costs for a related organization may not include costs for
          the types of expense otherwise reimbursable under Title XVIII, in
          excess of an amount which would be determined to be reasonable in
          accordance with regulations;

     5.   In any case in which compensation is paid substantially in excess of
          what is normally paid for similar services by similar practitioners,
          such compensation may, as appropriate, be considered a distribution of
          profits.

F.   The Organization agrees to comply with the requirements of section
     1833(a)(1)(A) of the Act and its implementing regulations, 42 CFR 417.800
     through 42 CFR 417.810, for members who have not been converted from any
     previous Health Care Prepayment Plan (HCPP) contract(s) or arrangements(s).

                                  Article VII

                   Modification, Termination or Non-renewal

This contract may be modified at any time by written consent of both parties
(the Organization and HCFA). If the contract is modified, the Organization must
modify its Medicare enrollees of
<PAGE>
 
any changes that HCFA determines are appropriate for notification. It may be
terminated by either party in accordance with the provisions of 42 CFR 417.494
or a decision by either party not to renew the contract may be made in
accordance with the provisions of 42 CFR 417.492.

                                 ARTICLE VIII

Any revisions to applicable provisions of Title XI or Title XVIII of the Act,
Title XIII of the Public Health Service Act, implementing regulations, policy
issuances and instructions apply as of their effective date.

                                  Article IX

                       General Contracting Requirements

A.   FACILITIES NONDISCRIMINATION CLAUSE

     The following provisions are applicable to and shall be included in all
     leases of real estate entered into for the administration of this
     agreement:

     "As used in this clause, the term `Facility' means stores, shops,
     restaurants, cafeterias, restrooms, and any other facility of a public
     nature in the building in which the space covered by this lease is located.

     "The lessor agrees that he will not discriminate by segregation or
     otherwise against any person or persons because of race, color, religion,
     sex, or national origin in furnishing or by refusing to furnish, to such
     person or persons, the use of any facility including any or all services,
     privileges, accommodations, and activities provided thereby. Nothing herein
     shall require the furnishing to the general public of the use of any
     facility customarily furnished by the lessor solely to tenants, their
     employees, customers, patients, clients, guests and invitees.

     "It is agreed that the lessor's noncompliance with the provisions of this
     clause shall constitute a material breach of this lease. In the event of
     such noncompliance, the lessee may take appropriate action to enforce
     compliance, may terminate this lease or may pursue such other remedies as
     may be provided by law. In the event of termination, the lessor shall be
     liable for all excess costs of the lessee in acquiring substitute space.
     Substitute space will be obtained in as close proximity to the lessor's
     building as is feasible and moving costs will be limited to the actual
     expenses thereof as incurred.

     "The lessor agrees to include, or to require the inclusion of the foregoing
     provisions of this clause (with the terms "lessor" and "lessee"
     appropriately modified) in every agreement or concession pursuant to which
     any person other that the lessor operates or has the right to operate any
     facility. Nothing herein contained, however, shall be deemed to require the
     lessor to include or require the inclusion of the foregoing provisions of
     this clause in any existing agreement or concession arrangement or one in
     which the contracting party other than the lessor has the unilateral right
     to renew or extend the agreement of arrangement, until the expiration of
     the existing agreement or arrangement and the unilateral right to renew or
     extend. The lessor also agrees that it will take any and all lawful actions
     as expeditiously as possible with respect to any such agreement as the
     contracting agency may direct to enforce this clause, including but not
     limited to termination of the agreement or concessions and institution of
     court action."

B.   DISCLOSURE OF INFORMATION

     The following clause shall be include in all subcontracts entered into
     either for the performance of functions required for the administration of
     this agreement or where a subcontractor, his agents, officers or employees
     might reasonable be expected to have access to information within the
     purview of section 1106 of the Social Security Act and regulations
     prescribed pursuant thereto:
<PAGE>
 
     "The contractor agrees to establish and maintain procedures and controls so
     that no information contained in its records or obtained form HCFA or from
     others in carrying out the terms of this subcontract shall be used by or
     disclosed by it, its agents, officers, or employees except as provided in
     said section 1106 of the Social Security Act and regulations prescribed
     thereunder."

C.   AUTOMATIC TERMINATION OF SUBCONTRACT CLAUSE

     The following provision are applicable to and shall be include in all
     subcontracts entered into hereafter (except for the purchase of items and
     equipment), including leases of real property which exceed the term of this
     agreement except where HCFA agrees to its omission. Failure of the
     Contractor to include the clause in such subcontract without the written
     agreement of HCFA to its omission, shall make the related costs incurred
     after the effective date of the nonrenewal or termination, unallowable.

     Notwithstanding the following, if the Contractor wishes to continue the
     subcontract relative to its own business after the contract between HCFA
     and the Contractor has been terminated or nonrenewed, it may do so provided
     it assures HCFA in writing that HCFA's obligations will terminate at the
     time the Medicare contract terminates or is nonrenewed subject to the
     termination cost provisions provide for in the contract.

     The clause is as follows: "In the event the Medicare contract between HCFA
     and (Name of Contractor) is terminated or nonrenewed, the contract between
     (Name of Contractor) and (Name of Firm) will be terminated unless HCFA and
     (Name of Contractor) agree to the contrary. Such termination shall be
     accomplished by delivery of written notice of (Name of Firm) of the date
     upon which said termination will become effective."

D.   PROHIBITION AGAINST USE OF HCFA FUNDS TO INFLUENCE LEGISLATION OR
     APPROPRIATIONS

     The following provision is applicable to this agreement:

     No part of any funds under this agreement shall be used to pay the salaries
     of expenses of any Contractor, or any agent acting for the Contractor, to
     engage in any activity designed to influence legislation or appropriations
     pending before Congress.

     Lobbying costs are defined in and are unallowable in accordance with
     Federal Acquisition Regulation 31-205-22.

E.   LIQUIDATED DAMAGES IN SUBCONTRACTS

     The following provisions are applicable to and shall be included in any
     subcontract entered into or renewed under this agreement containing a
     liquidated damages provision which related solely to Medicare:

     The Health Care Financing Administration (HCFA), after consultation with
     the Contractor, shall have the right to determine that the specified levels
     of performance have not been attained by the subcontractor. In such event,
     HCFA may direct the Contractor to notify the subcontractor of HCFA's
     determination that liquidated damages apply and to set-off the liquidated
     damages against the subcontractor. HCFA shall reimburse the Contractor for
     all reasonable costs relating to this activity and shall honor any
     judgement or award rendered against the Contractor directly resulting form
     the enforcement of such provision as directed by HCFA. Failure of the
     Contractor to timely comply with such direction, shall constitute cause for
     the application of any and all administrative, statutory, and judicial
     remedies which may be available to HCFA pursuant to this agreement,
     including but not limited to, offsetting an amount equivalent to the amount
     of such unenforced
<PAGE>
 
     liquidated damages. In the event that such offset is made, the Contractor
     shall be obligated to continue to perform all terms and conditions of this
     agreement without additional payment form HCFA attributable to such offset
     amounts.

F.   FEDERAL ACQUISITION REGULATIONS INCORPORATED BY REFERENCE

     This agreement incorporates the following clauses by reference with the
     same force and effect as if they were given full text. Upon request, HCFA
     will make their full text available:

                        FEDERAL ACQUISITION REGULATION
                          (48 CFR CHAPTER 1) CLAUSES

     52.222-26   Equal Opportunity (April 1984)

     52.203-1    Officials Not to Benefit (April 1984)

     52.203-5    Covenant Against Contingent Fees (April 1984)

     52.219-8    Utilization of Small Business Concerns and Small Disadvantaged
                 Business Concerns (April 1984)

     52.219-9    Small Business and Small Disadvantaged Business Subcontracting
                 Plan (April 1984)

     52.220-3    Utilization of Labor Surplus Area Concerns (April 1984)

     52.220-4    Labor Surplus Area Subcontracting Program (April 1984)

     52.222-3    Convict Labor (April 1984)

     52.222-21   Certification of Nonsegregated Facilities

     52.222-35   Affirmative Action for Special Disable and Vietnam Era Veterans
                 (April 1984)

     52.222-36   Affirmative Action for Handicapped Workers (April 1984)

     52.203-6    Fees or Kick-Backs by Subcontractors (Anti-Kickback Act (41
                 U.S.C. 51-54) (April 1984)

     52.219-13   Utilization of Women-Owned Small Businesses (April 1984)

     52.245-5    Government Property (April 1984) Applicable only to Contractors
                 that have been furnished Government property.
<PAGE>
 
(Contract #H1031) Contract Period, 010199 - 123199)

Signature of the official authorized to request a change in the banking
information needed for HCFA payment to your Organization.


          JACK SHIELDS                                     CFO
----------------------------------             --------------------------------
          Printed Name                                    Title


          JACK SHIELDS                                   11/5/98
----------------------------------             ---------------------------------
            Signature                                      Date


In Witness whereof, the parties execute this contract

FOR THE ORGANIZATION:


                                                                          
                                                 EXECUTIVE VICE PRESIDENT AND 
            DAVID A. JESSE                                   COO 
----------------------------------             ---------------------------------
              Printed Name                                  Title


            DAVID A. JESSE                                 11/5/98
----------------------------------             ---------------------------------
               Signature                                     Date


                                                     300 INTERNATIONAL PKWY
                                                            SUITE 230
       SUNSTAR HEALTHPLAN, INC.                           HEATHROW, FL
----------------------------------             ---------------------------------
             Organization                                   Address


FOR THE HEALTH CARE FINANCING ADMINISTRATION:


        JAN D LEMASURIER for                                11/6/98
--------------------------------------------   ---------------------------------
 Director, Health Plan Purchasing and Administration          Date
 Group Center for Health Plans and Providers