<PAGE>
                                                                   EXHIBIT 10.26


                                CONTRACT BETWEEN
                   THE OFFICE OF MEDICAID POLICY AND PLANNING,
              THE OFFICE OF THE CHILDREN'S HEALTH INSURANCE PROGRAM
                                       AND
                    COORDINATED CARE CORPORATION INDIANA, INC

         This Contract is made and entered into by and between the State of
Indiana (hereinafter "State" or "State of Indiana"), through the Office of
Medicaid Policy and Planning and the Office of Children's Health Insurance
Program (hereinafter "the Offices"), of the Indiana Family and Social Services
Administration, 402 West Washington Street, W382, Indianapolis, Indiana, and
Coordinated Care Corporation Indiana, Inc., doing business as Managed Health
Services, 1099 North Meridian, Suite 400, Indianapolis, Indiana 46204,
(hereinafter "Contractor").

         WHEREAS, I.C. 12-15-30-1 and I.C. 12-17.6 authorize the Offices to
enter into contracts to assist in the administration of the Indiana Medicaid and
the Indiana Children's Health Insurance Program (CHIP), respectively;

         WHEREAS, the State of Indiana desires to contract for services to
arrange for and to administer a risk-based managed care program (RBMC) for
certain Hoosier Healthwise enrollees in Packages A, B and C as procured through
BAA 01-28;

         WHEREAS this Contract contains the payment rates under which the
Contractor shall be paid and that these rates have been determined to be
actuarially sound for risk contracts, in accordance with applicable law;

         WHEREAS, the Contractor is willing and able to perform the desired
services for Hoosier Healthwise Packages A, B and C;

         WHEREAS, the Family and Social Services Administration (FSSA) is
issuing new contract documents in lieu of renewal or amendment documents so that
FSSA may move its contract data into a single contract database. The original
contract was issued for the contract term starting January 1, 2001, through
December 31, 2002, and provided for a renewal clause, exercised at the option of
the State for two additional years. The State is hereby exercising this option
and renewing the contract.

         THEREFORE, the parties to this Contract agree that the terms and
conditions specified below will apply to services in connection with this
contract, and such terms and conditions are as follows:


                           I. TERM AND RENEWAL OPTION

         This Contract is effective from January 1, 2003 through December 31,
2004. In no event shall the term exceed December 31, 2004.



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                                 II. DEFINITIONS

         For the purposes of this contract, terms not defined herein shall be
  defined as they are in the documents incorporated in and attached to this
  document, subject to the order of precedence spelled out in Section V of this
  document.


  "Contract" means this document and all documents or standards incorporated
  herein, expressly including but not limited to the following documents
  appended hereto and listed in chronological order and to be given precedence
  as described in Section V of this document, entitled "Order of Precedence":

         Attachment 1 - BAA 01-28, released July 31, 2000;

         Attachment 2 - Original contract (effective January 1, 2001);

         Attachment 3 - First Amendment to the original contract
                        (effective April 1, 2002) and its associated
                        attachments; and

         Any other documents, standards, laws, rules or regulations incorporated
         by reference in the above materials, all of which are hereby
         incorporated by reference.

"Covered Services" means all services required to be arranged, administered,
managed or provided by or on behalf of the Contractor under this contract.

"Effective Date of Enrollment" means:

         o        The first day of the birth month of a newborn that is
                  determined by the Offices to be an enrolled member;

         o        The fifteenth day of the current month for a member who has,
                  between the twenty-sixth day of the previous month and the
                  tenth day of the current month, been determined by the Offices
                  to be an enrolled member; and,

         o        The first day of the following month for a member who has,
                  between the eleventh day and the twenty-fifth day of a month,
                  been determined by the Offices to be an enrolled member.

"Enrolled Member", or "Enrollee", means a Hoosier Healthwise-eligible member who
is listed by the Offices on the enrollment rosters to receive covered services
from the Contractor or its subcontractors, employees, agents, or providers, as
of the Effective Date of Enrollment, under this contract.

"Provider" means a physician, hospital, home health agency or any other
institution, or health or other professional person or entity, which
participates in the provision of services to an enrolled member under BAA 01-28,
whether as an independent contractor, a subcontractor, employee, or agent of the
Contractor.

"Broad Agency Announcement", or "BAA", means BAA 01-28 for providers of managed
care services, released July 31, 2000.



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                          III. DUTIES OF THE CONTRACTOR

A.       The Contractor agrees to assume financial risk for developing and
         managing a health care delivery system and for arranging or
         administering all Hoosier Healthwise covered services except, as set
         out in section 3.4.3 of the BAA, dental care, long-term institutional
         care, services provided as part of an individualized education plan
         (IEP) pursuant to the Individuals with Disabilities Education Act
         (IDEA) at 20 U.S.C. 1400 et seq., behavioral health, and hospice
         services, in exchange for a per-enrollee, per-month fixed fee, to
         certain enrollees in Hoosier Healthwise Packages A, B and C. Wards of
         the State, foster children and children receiving adoption assistance
         may enroll on a voluntary basis and will not be subject to
         auto-assignment into the Hoosier Healthwise program. The Contractor
         must, at a minimum, furnish covered services up to the limits specified
         by the Medicaid and CHIP programs. The Contractor may exceed these
         limits. However, in no instance may any covered service's limitations
         be more restrictive than those which exist in the Indiana Medicaid
         fee-for-service program for Packages A and B, and the Children's Health
         Insurance Program for Package C.

B.       The Contractor agrees to perform all duties and arrange and administer
         the provision of all services as set out herein and contained in the
         BAA as attached and the Contractor's responses to the BAA as attached,
         all of which are incorporated into this Contract by reference. In
         addition, the Contractor shall comply with all policies and procedures
         defined in any bulletin, manual, or handbook yet to be distributed by
         the State or its agents insofar as those policies and procedures
         provide further clarification and are no more restrictive than any
         policies and procedures contained in the BAA and any amendments to the
         BAA. The Contractor agrees to comply with all pertinent state and
         federal statutes and regulations in effect throughout the duration of
         this Contract and as they may be amended from time to time.

C.       The Contractor agrees that it will not discriminate against individuals
         eligible to be covered under this Contract on the basis of health
         status or need for health services; and the Contractor may not
         terminate an enrollee's enrollment, or act to encourage an enrollee to
         terminate his/her enrollment, because of an adverse change in the
         enrollee's health. The disenrollment function will be carried out by a
         State contractor who is independent of the Contractor; therefore, any
         request to terminate an enrollee's enrollment must be approved by the
         Offices.

D.       The Contractor agrees that no services or duties owed by the Contractor
         under this Contract will be performed or provided by any person or
         entity other than the Contractor, except as contained in written
         subcontracts or other legally binding agreements. Prior to entering
         into any such subcontract or other legally binding agreement, the
         Contractor shall, in each case, submit the proposed subcontract or
         other legally binding agreement to the Offices for prior review and
         approval. Prior review and approval of a subcontract or legally binding
         agreement shall not be unreasonably delayed by the Offices. The Offices
         shall, in appropriate cases and as requested by the Contractor,
         expedite the review and approval process. Under no circumstances shall



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         the Contractor be deemed to have breached its obligations under this
         Contract if such breach was a result of the Offices' failure to review
         and approve timely any proposed subcontract or other legally binding
         agreement. If the Offices disapprove any proposed subcontract or other
         legally binding agreement, the Offices shall state with reasonable
         particularity the basis for such disapproval. No subcontract into which
         the Contractor enters with respect to performance under this Contract
         shall in any way relieve the Contractor of any responsibility for the
         performance of duties under this Contract. All subcontracts and
         amendments thereto executed by the Contractor under this Contract must
         meet the following requirements; any existing subcontracts or legally
         binding agreements which fail to meet the following requirements shall
         be revised to include the requirements within ninety (90) days from the
         effective date of this Contract:

         1.       Be in writing and specify the functions of the subcontractor.

         2.       Be legally binding agreements.

         3.       Specify the amount, duration and scope of services to be
                  provided by the subcontractor.

         4.       Provide that the Offices may evaluate, through inspection or
                  other means, the quality, appropriateness, and timeliness of
                  services performed.

         5.       Provide for inspections of any records pertinent to the
                  contract by the Offices.

         6.       Require an adequate record system to be maintained for
                  recording services, charges, dates and all other commonly
                  accepted information elements for services rendered to
                  recipients under the contract.

         7.       Provide for the participation of the Contractor and
                  subcontractor in any internal and external quality assurance,
                  utilization review, peer review, and grievance procedures
                  established by the Contractor, in conjunction with the
                  Offices.

         8.       Provide that the subcontractor indemnify and hold harmless the
                  State of Indiana, its officers, and employees from all claims
                  and suits, including court costs, attorney's fees, and other
                  expenses, brought because of injuries or damage received or
                  sustained by any person, persons, or property that is caused
                  by any act or omission of the Contractor and/or the
                  subcontractors. The State shall not provide such
                  indemnification to the subcontractor.

         9.       Identify and incorporate the applicable terms of this Contract
                  and any incorporated documents. The subcontract shall provide
                  that the subcontractor agrees to perform duties under the
                  subcontract, as those duties pertain to enrollees, in
                  accordance with the applicable terms and conditions set out in
                  this Contract, any incorporated documents, and all applicable
                  state and federal laws, as amended.



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E.       The Contractor agrees that, during the term of this Contract, it shall
         maintain, with any innetwork provider rendering health care services
         under the BAA, provider service agreements which meet the following
         requirements:

         1.       Identify and incorporate the applicable terms of this Contract
                  and any incorporated documents. Under the terms of the
                  provider services agreement, the provider shall agree that the
                  applicable terms and conditions set out in this Contract, any
                  incorporated documents, and all applicable state and federal
                  laws, as amended, govern the duties and responsibilities of
                  the provider with regard to the provision of services to
                  enrollees.

         2.       Reference a written provider claim resolution procedure as set
                  out in section III.Q. below.

F.       The Contractor agrees that all laboratory testing sites providing
         services under this Contract must have a valid Clinical Laboratory
         Improvement Amendments (CLIA) certificate and comply with the CLIA
         regulations at 42 C.F.R. Part 493.

G.       The Contractor agrees that it shall:

         1.       Retain, at all times during the period of this Contract, a
                  valid Certificate of Authority under applicable State laws
                  issued by the State of Indiana Department of Insurance.

         2.       Ensure that, during the term of this Contract, each provider
                  rendering health care services under the BAA is authorized to
                  do so in accordance with the following:

                  a.       The provider must maintain a current Indiana Health
                           Coverage Programs (IHCP) provider agreement and must
                           be duly licensed in accordance with the appropriate
                           state licensing board and shall remain in good
                           standing with said board.

                  b.       If a provider is not authorized to provide such
                           services under a current IHCP provider agreement or
                           is no longer licensed by said board, the Contractor
                           is obligated to terminate its contractual
                           relationship authorizing or requiring such provider
                           to provide services under the BAA. The Contractor
                           must terminate its contractual relationship with the
                           provider as soon as the Contractor has knowledge of
                           the termination of the provider's license or the IHCP
                           provider agreement.

         3.       Comply with the specific requirements for Health Maintenance
                  Organizations (HMOs) eligible to receive Federal Financial
                  Participation (FFP) under Medicaid, as listed in the State
                  Organization and General Administration Chapter of the Health
                  Care Financing Administration (HCFA) Medicaid Manual. These
                  requirements include, but are not limited to the following:



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                  a.       The Contractor shall meet the definition of HMO as
                           specified in the Indiana State Medicaid Plan.

                  b.       Throughout the duration of this Contract, the
                           Contractor shall satisfy the Chicago Regional Office
                           of the Centers for Medicare and Medicaid Services
                           (hereinafter called CMS) that the Contractor is
                           compliant with the Federal requirements for
                           protection against insolvency pursuant to 42 CFR
                           434.20(c)(3) and 434.50(a), the requirement that the
                           Contractor shall continue to provide services to
                           Contractor enrollees until the end of the month in
                           which insolvency has occurred, and the requirement
                           that the Contractor shall continue to provide
                           inpatient services until the date of discharge for an
                           enrollee who is institutionalized when insolvency
                           occurs. The Contractor shall meet this requirement by
                           posting a performance bond pursuant to Section VII,
                           paragraph C, of this Contract, and satisfying the
                           statutory reserve requirements of the Indiana
                           Department of Insurance.

                  c.       The Contractor shall comply with, and shall exclude
                           from participation as either a provider or
                           subcontractor of the Contractor, any entity or person
                           that has been excluded under the authority of
                           Sections 1124A, 1128 or 1128A of the Social Security
                           Act or does not comply with the requirements of
                           Section 1128(b) of the Social Security Act.

                  d.       In the event that the CMS determines that the
                           Contractor has violated any of the provisions of 42
                           CFR 434.67(a), CMS may deny payment of FFP for new
                           enrollees of the HMO under 42 USC 1396b(m)(5)(B)(ii).
                           The Offices shall automatically deny State payment
                           for new enrollees whenever, and for so long as,
                           Federal payment for such enrollees has been denied.

H.       The Contractor shall submit proof, satisfactory to the Offices, of
         indemnification of the Contractor by the Contractor's parent
         corporation, if applicable, and by all of its subcontractors.

I.       The Contractor shall submit proof, satisfactory to the Offices, that
         all subcontractors will hold the State harmless from liability under
         the subcontract. This assurance in no way relieves the Contractor of
         any responsibilities under the BAA or this Contract.

K.       The Contractor shall establish and maintain a quality improvement
         program that meets the requirements of 42 CFR 434.34, as well as other
         specific requirements set forth in the BAA. The Offices and the CMS may
         evaluate, through inspection or other means, including but not limited
         to, the review of the quality assurance reports required under this
         Contract, and the quality, appropriateness, and timeliness of services
         performed under this Contract. The Contractor agrees to participate and
         cooperate, as directed by the Offices, in the annual external quality
         review of the services furnished by the Contractor.

         Annual HEDIS rates must be submitted in a manner and timeline
         established by the Office, including but not limited, to HEDIS rates
         that have been audited by a HEDIS-certified audit firm within 30 days
         of receiving their final audit report. The HEDIS rates which have



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         completed the certified audit may be submitted for 2003 HEDIS rates,
         but must be submitted for 2004 HEDIS rates and all other HEDIS rates in
         the future.

L.       In accordance with 42 CFR 434.28, the Contractor agrees that it and any
         of its subcontractors shall comply with the requirements, if
         applicable, of 42 CFR 489, Subpart I, relating to maintaining and
         distributing written policies and procedures respecting advance
         directives. The Contractor shall distribute policies and procedures to
         adult individuals during the enrollee enrollment process and whenever
         there are revisions to these policies and procedures. The Contractor
         shall make available for inspection, upon reasonable notice and request
         by the Offices, documentation concerning its written policies,
         procedures and distribution of such written procedures to enrollees.

M.       Pursuant to 42 C.F.R. 417.479(a), the Contractor agrees that no
         specific payment can be made directly or indirectly under a physician
         incentive plan to a physician or physician group as an inducement to
         reduce or limit medically necessary services furnished to an individual
         enrollee. The Contractor must disclose to the State the information on
         provider incentive plans listed in 42 C.F.R. 417.479(h)(1) and
         417.479(i) at the times indicated at 42 C.F.R. 434.70(a)(3), in order
         to determine whether the incentive plan meets the requirements of 42
         C.F.R. 417(d)-(g). The Contractor must provide the capitation data
         required under paragraph (h)(1)(vi) for the previous calendar year to
         the State by application/contract renewal of each year. The Contractor
         will provide the information on its physician incentive plan(s) listed
         in 42 C.F.R. 417.479(h)(3) to any enrollee upon request.

N.       The Contractor must not prohibit or restrict a health care professional
         from advising an enrollee about his/her health status, medical care, or
         treatment, regardless of whether benefits for such care are provided
         under this Contract, if the professional is acting within the lawful
         scope of practice. However, this provision does not require the
         Contractor to provide coverage of a counseling or referral service if
         the Contractor objects to the service on moral or religious grounds and
         makes available information on its policies to potential enrollees and
         enrollees within ninety (90) days after the date the Contractor adopts
         a change in policy regarding such counseling or referral service.

O.       In accordance with 42 U.S.C.ss. 1396u-2(b)(6), the Contractor agrees
         that an enrollee may not be held liable for the following:

         1.       Debts of the Contractor, or its subcontractors, in the event
                  of any organization's insolvency;

         2.       Services provided to the enrollee in the event the Contractor
                  fails to receive payment from the Offices for such services or
                  in the event a provider fails to receive payment from the
                  Contractor or Offices; or

         3.       Payments made to a provider in excess of the amount that would
                  be owed by the enrollee if the Contractor had directly
                  provided the services.



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P.       The Offices may from time to time request and the Contractor, and all
         of its subcontractors, agree that the Contractor, or its
         subcontractors, shall prepare and submit additional compilations and
         reports as requested by the Offices. Such requests will be limited to
         situations in which the desired data is considered essential and cannot
         be obtained through existing Contractor reports. The Contractor, and
         all of its subcontractors, agree that a response to the request shall
         be submitted within thirty (30) days from the date of the request, or
         by the Offices' requested completion date, whichever is earliest. The
         response shall include the additional compilations and reports as
         requested, or the status of the requested information and an expected
         completion date. When such requests pertain to legislative inquiries or
         expedited inquiries from the Office of the Governor, the additional
         compilations and reports shall be submitted by the Offices' requested
         completion date. Failure by the Contractor, or its subcontractors, to
         comply with response time frames shall be considered grounds for the
         Offices to pursue the provisions outlined in Section 3.16.5 of the BAA.
         In the event that delays in submissions are a consequence of a delay by
         the Offices or the Medicaid Fiscal Agent, the time frame for submission
         shall be extended by the length of time of the delay.

Q.       The Contractor shall establish a written claim resolution procedure
         applicable to both in-network and out-of-network providers which shall
         be distributed to all in-network providers and shall be available to
         out-of-network providers upon request. The Contractor shall negotiate
         the terms of a written claim resolution procedure with in-network
         providers individually; but if the Contractor and an in-network
         provider are unable to reach agreement on the terms of such procedure,
         the out-of-network provider claims resolution procedure approved by the
         Offices under this section shall govern the resolution of such
         in-network provider's claims with the Contractor.

         1.       A statement noting that providers objecting to determinations
                  involving their claims will be provided due process through
                  the Contractor's claim resolution procedure.

         2.       A description of both the informal and formal claim resolution
                  procedures that will be available to resolve a provider's
                  objection to a determination involving the provider's claim.

         3.       An informal claim resolution procedure which:

                  a.       shall be available for the resolution of claims
                           submitted to the Contractor by the provider within
                           120 days after the date on which services were
                           rendered;

                  b.       shall precede the formal claim resolution procedure;

                  c.       shall be used to resolve a provider's objection to a
                           determination by the Contractor involving the
                           provider's claim, including a provider's objection
                           to:

                           (1) any determination by the Contractor regarding
                           payment for a claim submitted by the provider,
                           including the amount of such payment; and



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                           (2) the Contractor's determination that a claim
                           submitted by the provider lacks sufficient supporting
                           information, records, or other materials;

                  d.       may, at the election of a provider, be utilized to
                           determine the payment due for a claim in the event
                           the Contractor fails, within thirty (30) days after
                           the provider submits the claim, to notify the
                           provider of:

                           (1) its determination regarding payment for the
                           provider's claim; or

                           (2) its determination that the provider's claim
                           lacked sufficient supporting information, records, or
                           other materials;

                  e.       shall be commenced by a provider submitting to the
                           Contractor:

                           (1) within sixty (60) days after the provider's
                           receipt of written notification of the Contractor's
                           determination regarding the provider's claim, the
                           provider's written objection to the Contractor's
                           determination and an explanation of the objection; or

                           (2) within sixty (60) days after the Contractor fails
                           to make a determination as described in subparagraph
                           (d), a written notice of the provider's election to
                           utilize the informal claims resolution procedure
                           under subparagraph (d) above;

                  f.       shall allow providers and the Contractor to make
                           verbal inquiries and to otherwise informally
                           undertake to resolve the matter submitted for
                           resolution by the provider.

         4.       In the event the matter submitted for informal resolution is
                  not resolved to the provider's satisfaction within thirty (30)
                  days after the provider commenced the informal claim
                  resolution procedure, the provider shall have sixty (60) days
                  from that point to submit to the Contractor written
                  notification of the provider's election to submit the matter
                  to the formal claim resolution procedure. The provider's
                  notice must specify the basis of the provider's dispute with
                  the Contractor. The Contractor's receipt of the provider's
                  written notice shall commence the formal claim resolution
                  procedure.

         5.       The formal claim resolution procedure shall be conducted by a
                  panel of one (1) or more individuals selected by the
                  Contractor. Each panel must be knowledgeable about the policy,
                  legal, and clinical issues involved in the matter that is the
                  subject of the formal claim resolution procedure. An
                  individual who has been involved in any previous consideration
                  of the matter by the Contractor may not serve on the panel.
                  The Contractor's medical director, or another licensed
                  physician designated by the medical director, shall serve as a
                  consultant to the panel in the event the matter involves a
                  question of medical necessity or medical appropriateness.

         6.       The panel shall consider all information and material
                  submitted to it by the provider that bears directly upon an
                  issue involved in the matter that is the subject of the formal



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                  claim resolution procedure. The panel shall allow the provider
                  an opportunity to appear in person before the panel, or to
                  communicate with the panel through appropriate other means if
                  the provider is unable to appear in person, and question the
                  panel in regard to issues involved in the matter. The provider
                  shall not be required to be represented by an attorney for
                  purposes of the formal claim review procedure.

         7.       Within forty-five (45) days after the commencement of the
                  formal claim resolution procedure, the panel shall deliver to
                  the provider the panel's written determination of the matter
                  before it. Such determination shall be the Contractor's final
                  position in regard to the matter. The written determination
                  shall include, as applicable, a detailed explanation of the
                  factual, legal, policy and clinical basis of the panel's
                  determination.

         8.       In the event the panel fails to deliver to the provider the
                  panel's written determination within forty-five (45) days
                  after the after the commencement of the formal claim
                  resolution procedure, such failure on the part of the panel
                  shall have the effect of a denial by the panel of the
                  provider's claim.

         9.       The panel's written determination shall include notice to the
                  provider of the provider's right, within sixty (60) days after
                  the provider's receipt of the panel's written determination,
                  to submit to binding arbitration the matter that was the
                  subject of the formal claim resolution procedure. The provider
                  shall also have the right to submit the matter to binding
                  arbitration if the panel has failed to deliver its written
                  determination to the provider within the required forty-five
                  (45) day period.

         10.      Any procedure involving binding arbitration must be conducted
                  in accordance with the rules and regulations of the American
                  Health Lawyers Association (AHLA), pursuant to the Uniform
                  Arbitration Act as adopted in the State of Indiana at I.C.
                  34-57-2, unless the provider and Contractor mutually agree to
                  some other binding resolution procedure. However, any
                  Contractor and provider that are subject to statutorily
                  imposed arbitration procedures for the resolution of these
                  claims shall be required to follow the statutorily imposed
                  arbitration procedures, but only to the extent those
                  procedures differ from, or are irreconcilable with, the rules
                  and regulations of the American Health Lawyers Association
                  (AHLA), pursuant to the Uniform Arbitration Act as adopted in
                  the State of Indiana at I.C. 34-57-2.

         11.      A provider may, within the requisite sixty (60) day time
                  period, include in a single arbitration proceeding matters
                  from multiple formal claim resolution procedures involving the
                  Contractor and the provider.

         12.      For claims disputed under Paragraph 3. c. (2) above:

                  a.       a claim that is finally determined through the
                           Contractor's claim resolution procedure (including
                           arbitration) not to lack sufficient supporting
                           documentation shall be processed by the Contractor
                           within thirty (30) days after such final



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                           determination. The processing of the claim and the
                           Contractor's determination involving the claim shall
                           be subject to Paragraph 3. c. and Paragraph 3. d. and
                           the Contractor's formal claim resolution procedure
                           and binding arbitration.

                  b.       a claim that is finally determined through the
                           Contractor's claim resolution procedure (including
                           arbitration) to lack sufficient supporting
                           documentation shall be processed by the Contractor
                           within thirty (30) days after the provider submits to
                           the Contractor the requisite supporting
                           documentation. The provider shall have thirty (30)
                           days after written notice of the final determination
                           establishing that the claim lacked sufficient
                           supporting documentation is received by the provider
                           to submit the requisite supporting documentation. The
                           processing of the claim and the Contractor's
                           determination involving the claim shall be subject to
                           Paragraph 3. c. and Paragraph 3. d. and the
                           Contractor's formal claim resolution procedure and
                           binding arbitration.

         13.      A Contractor may not include in its claim resolution
                  procedures elements that restrict or diminish the claim review
                  procedures, time periods or subject matter provided for in
                  paragraphs 1 through l2 above.

         14.      A Contractor shall maintain a log of all informally and
                  formally filed provider objections to determinations involving
                  claims. The logged information shall include the provider's
                  name, date of objection, nature of the objection, and
                  disposition. The Contractor shall submit quarterly reports to
                  the Offices regarding the number and type of provider
                  objections.

R.       In accordance with the First Amendment to the original contract between
         the parties dated April 1, 2002, Section 3.6.1.3 of the BAA is amended
         to require the Contractor to submit the "Mandatory RBMC Transition
         Report" (Attachment A) according the schedule set out in the "2002
         Hoosier Healthwise MCO Reporting Calendar for Mandatory RBMC Transition
         Report" (Attachment B), unless the MCO has received written
         notification from OMPP that the report, or certain data elements in the
         report, is/are no longer required or may be reported less frequently.
         Pursuant to the reporting calendar (Attachment B), the final submission
         shall be due on January 6, 2003.

S.       In accordance with the First Amendment to the original contract between
         the parties dated April 1, 2002, Section 3.6.3 of the BAA is amended to
         require the Contractor to obtain written approval of the State prior to
         closing its provider networks, which shall not be unreasonably withheld
         or delayed.

T.       In accordance with the First Amendment to the original contract between
         the parties dated April 1, 2002, Sections 3.6.6 and 3.6.7.3 of the BAA
         are amended to require the Contractor to maintain a monthly telephone
         abandonment rate equal to or less than five percent of calls received
         each by the member helpline and provider helpline. The parties agree
         that BAA Section 3.16 is amended to add a new section 3.16.8 to read as
         follows:



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<PAGE>


         Section 3.16.8 The MCO will comply with the call abandonment
         requirements for the member and provider helplines described in
         Sections 3.6.6. and 3.6.7.3 of this BAA. Because actual damages caused
         by non-compliance are not subject to exact determination, the State
         will assess the MCO, as liquidated damages and not as a penalty, (a)
         two hundred dollars ($200.00) for each business day the MCO fails to
         submit required documentation to provide evidence of compliance with
         this requirement, or (b) two thousand dollars ($2000.00) for each month
         the MCO fails to meet the requirement after 2 consecutive months of
         non-compliance on the member helpline or (c) two thousand dollars
         ($2000.00) for each month the MCO fails to meet the requirement after 2
         consecutive months of non-compliance on the provider helpline.

U.       In accordance with the First Amendment to the original contract between
         the parties dated April 1, 2002, Section 3.5.3 of the BAA is amended to
         allow OMPP to change, at OMPP's discretion, the frequency of the MCO
         Enrollment Rosters generated by OMPP's fiscal agent to once per month,
         upon reasonable and adequate prior written notice to the Contractor.

V.       In accordance with the First Amendment to the original contract between
         the parties dated April 1, 2002, Section 3.6.3 of the BAA is amended to
         require the Contractor to develop and adhere to a plan for identifying
         and serving people with special needs. The plan must satisfy any
         applicable federal requirements.

W.       In accordance with the First Amendment to the original contract between
         the parties dated April 1, 2002, the Contractor agrees to provide OMPP
         with prior written notice at least ninety (90) days in advance of their
         inability to maintain a sufficient Primary Medical Provider (PMP)
         network in any of the counties where mandatory RBMC has been or will be
         implemented, including Marion, Allen, Elkhart, St. Joseph, Lake,
         Hamilton, and Vanderburgh Counties, such that the program would not be
         able to maintain the appropriate member choice of two (2) MCOs,
         pursuant to federal requirements.

X.       In accordance with the First Amendment to the original contract between
         the parties dated April 1, 2002, the Contractor agrees that agreements
         with PMPs in mandatory counties shall comply with the following
         requirements:

         1.       Any PMP agreements entered into on or after April 1, 2002,
                  shall include a provision allowing the PMP to terminate the
                  agreement for any reason upon written notice to the
                  Contractor. The Contractor may require that the physician
                  provide said notice to the Contractor up to ninety (90) days
                  prior to termination.

         2.       Any PMP agreements entered into before April 1, 2002, in which
                  the initial term, as defined in the agreement, will expire on
                  or after June 30, 2002, will be amended by July 1, 2002, to
                  allow the PMP to terminate the agreement for any reason upon
                  written notice to the Contractor. The Contractor may require
                  that the physician provide said notice to the Contractor up to
                  ninety (90) days prior to termination. The Contractor agrees
                  to notify these PMPs, by April 30, 2002, that their agreements
                  will be amended and that they may terminate the agreement upon
                  ninety (90) days written notice.



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<PAGE>


         3.       Existing PMP agreements in which the initial term expired
                  before July 1, 2002, may be terminated by the PMP for any
                  reason upon one hundred twenty (120) days written notice to
                  the Contractor. The Contractor agrees to notify the PMPs whose
                  initial agreement term has expired that they may terminate the
                  agreement upon one hundred twenty (120) days written notice.
                  If an agreement described in this paragraph is amended for any
                  reason, the agreement shall include a provision allowing the
                  PMP to terminate the agreement for any reason upon written
                  notice to the Contractor. The Contractor may require that the
                  physician provide said notice to the Contractor up to ninety
                  (90) days prior to termination.


           //The remainder of this page is intentionally left blank.//




MCO Renewel Contract           Page 13 of 27             Managed Health Services

<PAGE>




                                   IV. PAYMENT

A.       In consideration of the services to be performed by the Contractor, the
         Offices agree to pay the Contractor the following amounts per month per
         enrolled member as contained in the Offices' capitation payment listing
         based upon the capitation rates by category and benefit package as
         listed below:

<TABLE>
<CAPTION>
                    --------------------------------------------------------------------------------------
                                                    2003 CAPITATION RATES
                    ------------------------ -------------------------------- ----------------------------
                    CATEGORY                          PACKAGES A/B                     PACKAGE C
                    ======================== ================================ ============================
                    NORTH REGION
                    ======================== ================================ ============================
<S>                 <C>                      <C>                              <C>
                    Newborns                             $345.03                        $120.80
                    ------------------------ -------------------------------- ----------------------------
                    Preschool                            $73.77                         $77.43
                    ------------------------ -------------------------------- ----------------------------
                    Children                             $60.75                         $65.44
                    ------------------------ -------------------------------- ----------------------------
                    Adolescents                          $92.44                         $94.60
                    ------------------------ -------------------------------- ----------------------------
                    Adult Males                          $255.16
                    ------------------------ -------------------------------- ----------------------------
                    Adult Females                        $199.62
                    ------------------------ -------------------------------- ----------------------------
                    Deliveries                     $3,380.41/delivery             $3,393.54/delivery
                    ======================== ================================ ============================
                    CENTRAL REGION
                    ======================== ================================ ============================
                    Newborns                             $362.15                        $119.28
                    ------------------------ -------------------------------- ----------------------------
                    Preschool                            $77.43                         $76.45
                    ------------------------ -------------------------------- ----------------------------
                    Children                             $63.73                         $64.62
                    ------------------------ -------------------------------- ----------------------------
                    Adolescents                          $97.03                         $93.42
                    ------------------------ -------------------------------- ----------------------------
                    Adult Males                          $267.82
                    ------------------------ -------------------------------- ----------------------------
                    Adult Females                        $209.53
                    ------------------------ -------------------------------- ----------------------------
                    Deliveries                     $3,481.35/delivery             $3,491.61/delivery
                    ======================== ================================ ============================
                    SOUTH REGION
                    ======================== ================================ ============================
                    Newborns                             $348.38                        $116.83
                    ------------------------ -------------------------------- ----------------------------
                    Preschool                            $74.48                         $74.88
                    ------------------------ -------------------------------- ----------------------------
                    Children                             $61.31                         $63.29
                    ------------------------ -------------------------------- ----------------------------
                    Adolescents                          $93.34                         $91.49
                    ------------------------ -------------------------------- ----------------------------
                    Adult Males                          $257.64
                    ------------------------ -------------------------------- ----------------------------
                    Adult Females                        $201.56
                    ------------------------ -------------------------------- ----------------------------
                    Deliveries                     $3,544.51/delivery             $3,544.51/delivery
                    ------------------------ -------------------------------- ----------------------------
</TABLE>

B.       The actuarial basis for computing the rates set forth above is as
         follows: The capitation rates have been determined from historical
         Hoosier Healthwise claim experience for the PCCM enrollees. The
         historical experience has been adjusted to reflect anticipated trend in
         the Hoosier Healthwise program, cost containment initiatives, morbidity
         variations between the PCCM and RBMC enrollees, and anticipated managed
         care utilization adjustments. The Offices may rely on self-report RBMC
         experience to determine appropriate managed care utilization
         adjustments and other morbidity variation adjustments.

C.       The parties agree that the Offices have the option to adjust the
         capitation rates annually. In the event that the Offices adjust the
         fee-for-service (FFS) rates, the Offices may, in its sole discretion,
         further adjust the capitation rates in accordance with the FFS




MCO Renewel Contract           Page 14 of 27             Managed Health Services

<PAGE>

         adjustment. If the Offices made such an adjustment, it shall apply only
         to the specific service component of the capitation rate that
         corresponds to the FFS adjustment. Any capitation rates adjusted due to
         a change in the FFS program may be further adjusted to ensure actuarial
         soundness. All adjustments are subject to federal regulations for risk
         contracts. Rates revised under this provision shall be implemented only
         after a contract amendment is executed and approved.

D.       All payment obligations of the Offices are subject to the encumbrance
         of monies and shall be paid to the Contractor on the first Wednesday
         after the fifteenth of the month.

E.       The capitation payment will be prospective, based upon the number of
         enrollees assigned to the Contractor as of the first of the month. The
         Offices will establish an administrative procedure to allow retroactive
         or other payment adjustments as necessary to implement this contract.

F.       The Contractor will be provided a capitation payment listing which
         includes a detailed listing of all enrollees for which the Contractor
         is receiving a capitation payment.

G.       It is understood and agreed upon by the parties that all obligations of
         the State of Indiana are contingent upon the availability and continued
         appropriation of State and Federal funds, and in no event shall the
         State of Indiana be liable for any payments in excess of available
         appropriated funds.

H.       When the Director of the State Budget Agency makes a written
         determination that funds are not appropriated or otherwise available to
         support continuation of performance of this Contract, the Contract
         shall be cancelled. A determination by the State Budget Director that
         funds are not appropriated or otherwise available to support
         continuation of performance shall be final and conclusive.



                             V. ORDER OF PRECEDENCE

Any inconsistency or ambiguity in this Contract shall be resolved by giving
precedence in the following order:

         1)       The express terms of this contract;

         2)       Attachment 1 - BAA 01-28, released July 31, 2000, and
                  Attachment 3 - First Amendment to the original contract,
                  effective April 1, 2002;

         3)       Attachment 2 - Contractor's response to the BAA;

         4)       Any other documents, standards, laws, rules or regulations
                  incorporated by reference in the above materials, all of which
                  are hereby incorporated by reference.




MCO Renewel Contract           Page 15 of 27             Managed Health Services



<PAGE>


                                   VI. NOTICE

A.       Whenever notice is required to be given to the other party, it shall be
         made in writing and delivered to that party. Delivery shall be deemed
         to have occurred if a signed receipt is obtained when delivered by hand
         or according to the date on the return receipt if sent by certified
         mail, return receipt requested. Notices shall be addressed as follows:

<TABLE>
<S>     <C>                                                   <C>
         In case of notice to the Contractor:                 In case of notice to the Offices:

         Rita Johnson-Mills, President                        John Barth, Managed Care Director
         Managed Health Services                              Office of Medicaid Policy and Planning
         1099 North Meridian, Suite 400                       Family and Social Services Administration
         Indianapolis, IN  46204                              402 W. Washington St., IGCS W382, MS07
                                                              Indianapolis, Indiana 46204
</TABLE>

B.       Said notices shall become effective on the date of delivery or the date
         specified within the notice, whichever comes later. Either party may
         change its address for notification purposes by mailing a notice
         stating the change and setting forth the new address.


                          VII. MISCELLANEOUS PROVISIONS


A.       Entire Agreement. This Contract constitutes the entire agreement
         between the parties with respect to the subject matter; all prior
         agreements, representations, statements, negotiations, and undertakings
         are superseded hereby.

B.       Changes. Any changes to this Contract shall be by formal amendment of
         this Contract signed by all parties required by Indiana law.

C.       Termination. The Office may, without cause, cancel and terminate this
         Contract in whole or in part upon sixty (60) days' prior written
         notice. The Contractor will be reimbursed for services performed prior
         to the date of termination consistent with the terms of the Contract.
         The Office will not be liable for services performed after notice of
         termination, but before the date of termination, without written
         authorization from the Office. In no event will the Office be liable
         for services performed after the termination date.

         In the event that the Office requests that the Contractor perform any
         additional services associated with the transition or turnover of the
         contract, the Office agrees to pay reasonable costs for those
         additional services specifically requested by the Office. Any
         additional services and costs must receive prior approval in writing by
         the Office.

D.       Disputes. Should any disputes arise with respect to this Contract, the
         Contractor and the State of Indiana agree to act immediately to resolve
         any such disputes. Time is of the essence in the resolution of
         disputes.




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<PAGE>


         The Contractor agrees that, the existence of a dispute notwithstanding,
         it will continue without delay to carry out all of its responsibilities
         under this Contract which are not affected by the dispute. Should the
         Contractor fail to continue without delay to perform its
         responsibilities under this Contract in the accomplishment of all
         non-disputed work, any additional costs incurred by the Contractor or
         the State of Indiana as a result of such failure to proceed shall be
         borne by the Contractor, and the Contractor shall make no claim against
         the State of Indiana for such costs. If the Contractor and the State of
         Indiana cannot resolve a dispute within ten (10) working days following
         notification in writing by either party of the existence of said
         dispute, then the following procedure shall apply:

         1.       The parties agree to resolve such matters through submission
                  of their dispute to the Commissioner of the Indiana Department
                  of Administration who shall reduce a decision to writing and
                  mail or otherwise furnish a copy thereof to the Contractor and
                  the State of Indiana within ten (10) working days after
                  presentation of such dispute for decision. The Commissioner's
                  decision shall be final and conclusive unless either party
                  mails or otherwise furnishes to the Commissioner, within ten
                  (10) working days after receipt of the Commissioner's
                  decision, a written appeal. Within ten (10) working days of
                  receipt by the Commissioner of a written request for appeal,
                  the decision may be reconsidered. If no reconsideration is
                  provided within ten (10) working days the Contractor may
                  submit the dispute to an Indiana court of competent
                  jurisdiction.

         2.       The State of Indiana may withhold payments on disputed items
                  pending resolution of the dispute. The non-payment by the
                  State of Indiana to the Contractor of one or more invoices not
                  in dispute shall not constitute default, however, the
                  Contractor may bring suit to collect such monies without
                  following the disputes procedure contained herein.

E.       Debarment and Suspension. Contractor certifies, by entering into this
         agreement, that neither it nor its principals are presently debarred,
         suspended, proposed for debarment, declared ineligible, or voluntarily
         excluded from entering into this agreement by any federal agency or
         department, agency or political subdivision of the State of Indiana.
         The term "principal" for the purposes of this agreement is defined as
         an officer, director, owner, partner, key employee, or other person
         with primary management or supervisory responsibilities or a person who
         has a critical influence on or substantive control over the operations
         of the Contractor.

F.       Compliance with Laws. The Contractor agrees to comply with all
         applicable Federal, State, and local laws, rules, regulations, or
         ordinances, and all provisions required thereby to be included herein
         are hereby incorporated by reference. The enactment of any state or
         federal statute or the promulgation of regulations thereunder after
         execution of this Contract shall be reviewed by the State and the
         Contractor to determine whether the provisions of the Contract require
         formal modification.



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<PAGE>


G.       Indemnification. Contractor agrees to indemnify, defend, and hold
         harmless the State of Indiana and its agents, officers, and employees
         from all claims and suits including court costs, attorney's fees, and
         other expenses caused by any act or omission of the Contractor and/or
         its subcontractors, if any. The State shall not provide such
         indemnification to the Contractor.

H.       Nondiscrimination. Pursuant to IC 22-9-1-10 and the Civil Rights Act of
         1964, Contractor and its subcontractors shall not discriminate against
         any employee or applicant for employment in the performance of this
         contract. The Contractor shall not discriminate with respect to the
         hire, tenure, terms, conditions or privileges of employment or any
         matter directly or indirectly related to employment, because of race,
         color, religion, sex, disability, national origin or ancestry. Breach
         of this covenant may be regarded as a material breach of contract.
         Acceptance of this Contract also signifies compliance with applicable
         federal laws, regulations, and executive orders prohibiting
         discrimination in the provision of services based on race, color,
         national origin, age, sex, disability, or status as a veteran. The
         Contractor understands that the State is a recipient of federal funds.
         Pursuant to that understanding, the Contractor and its subcontractor,
         if any, agree that if the Contractor employs fifty (50) or more
         employees and does at least fifty-thousand dollars ($50,000.00) worth
         of business with the State and is not exempt, the Contractor will
         comply with the affirmative action reporting requirements of 41
         C.F.R.ss.60-1.7, if applicable. The Contractor shall comply with
         Section 202 of Executive Order 11246, as amended, 41 C.F.R.ss.60-250,
         and 41 C.F.R.ss.60-741, as amended, which are incorporated herein by
         specific reference. Breach of this covenant may be regarded as a
         material breach of contract.

I.       Confidentiality of State of Indiana Information. The Contractor
         understands and agrees that data, materials and information disclosed
         to the Contractor may contain confidential and protected data;
         therefore, the Contractor promises and assures that data, material, and
         information gathered, based upon or disclosed to the Contractor for the
         purpose of this Contract will not be disclosed to others or discussed
         with other parties without the prior written consent of the State of
         Indiana.

J.       Confidentiality of Data, Property Rights in Products, and Copyright
         Prohibition. The Contractor further agrees that all information, data,
         findings, recommendations, proposals, etc., by whatever name described
         and by whatever form therein, secured, developed, written, or produced
         by the Contractor in furtherance of this Contract shall be the property
         of the State of Indiana. The Contractor shall take such action as is
         necessary under law to preserve such property rights in and of the
         State of Indiana while such property is within the control and/or
         custody of the Contractor. By this Contract the Contractor specifically
         waives and/or releases to the State of Indiana any cognizable property
         right in the Contractor to copyright or patent such information, data,
         findings, recommendations, proposals, etc.

K.       Ownership of Documents and Materials. All documents, records, programs,
         data, film, tape, articles, memoranda, and other materials developed
         under this Contract shall be considered "work for hire" and the
         Contractor transfers any ownership claim to the State of Indiana and



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<PAGE>


         all such matters will be the property of the State of Indiana. Use of
         these materials, other than related to contract performance by the
         Contractor, without the prior written consent of the State of Indiana
         is prohibited. During the performance of the services specified herein,
         the Contractor shall be responsible for any loss or damage to these
         materials developed for or supplied by the State of Indiana and used to
         develop or assist in the services provided herein, while they are in
         the possession of the Contractor, and any loss or damage thereto shall
         be restored at the Contractor's expense. Full, immediate and
         unrestricted access to the work product of the Contractor during the
         term of this Contract shall be available to the State of Indiana. The
         Contractor will give to the State of Indiana, or the State of Indiana's
         designee, all records of other materials described in this section,
         after termination of the Contract and upon five (5) days notice of a
         request from the State of Indiana.

L.       Conveyance of Documents And Continuation of Existing Activity: Should
         the Contract for whatever reason, (i.e. completion of a contract with
         no renewal, or termination of service by either party), be discontinued
         and the activities as provided for in the Contract for services cease,
         the Contractor and any subcontractors employed by the terminating
         Contractor in the performance of the duties of the Contract shall
         promptly convey to the State of Indiana, copies of all vendor working
         papers, data collection forms, reports, charts, programs, cost records
         and all other material related to work performed on this Contract.

         The Contractor and the Office shall convene immediately upon
         notification of termination or non-renewal of the Contract to determine
         what work shall be suspended, what work shall be completed, and the
         time frame for completion and conveyance. The Office will then provide
         the Contractor with a written schedule of the completion and conveyance
         activities associated with termination. Documents/materials associated
         with suspended activities shall be conveyed by the Contractor to the
         State of Indiana upon five days' notice from the State of Indiana. Upon
         completion of those remaining activities noted on the written schedule,
         the Contractor shall also convey all documents and materials to the
         State of Indiana upon five days' notice from the State of Indiana.

M.       Independent Contractor. The Office and the Contractor acknowledge and
         agree that in the performance of this contract, the Contractor is an
         independent contractor and both parties will be acting in an individual
         capacity and not an as agents, employees, partners, joint venturers,
         officers, or associates of one another. The employees or agents of one
         party shall not be deemed or construed to be the employees or agents of
         the other party for any purposes whatsoever. Neither party will assume
         any liability for any injury (including death) to any persons, or
         damage to any property arising out of the acts or omissions of the
         agents, employees or subcontractors of the other party.

         The Contractor shall be responsible for providing all necessary
         unemployment and worker compensation insurance for the Contractor's
         employees.

N.       Work Standards. The Contractor agrees to execute its respective
         responsibilities by following and applying at all times the highest
         professional and technical guidelines and standards. If the State



MCO Renewel Contract           Page 19 of 27             Managed Health Services

<PAGE>


         becomes dissatisfied with the work product or the working relationship
         with those individuals assigned to work on this Contract, the State may
         request in writing the replacement of any or all such individuals and
         the Contractor shall grant such a request.

O.       Governing Laws. This Contract shall be construed in accordance with and
         governed by the laws of the State of Indiana and suit, if any, must be
         brought in the State of Indiana.

P.       Severability. The invalidity in whole or in part of any provision of
         this Contract shall not void or affect the validity of any other
         provision.

Q.       Waiver of Rights. No right conferred on either party under this
         Contract shall be deemed waived and no breach of this Contract deemed
         excused, unless such waiver or excuse shall be in writing and signed by
         the party claimed to have waived such right.

         Failure of the Office to enforce at any time any provision of this
         Contract shall not be construed as a waiver thereof. The remedies
         herein reserved shall be cumulative and additional to any other
         remedies in law or equity.

R.       Taxes. The State of Indiana is exempt from all State, Federal and local
         taxes. The State will not be responsible for any taxes levied on the
         Contractor as a result of this Contract.

S.       Force Majeure, Suspension and Termination. In the event either party is
         unable to perform any of its obligations under this Contract or to
         enjoy any of its benefits because of (or if failure to perform the
         service is caused by) natural disaster, actions or decrees of
         governmental bodies, or communication line failure not the fault of the
         affected party (hereinafter referred to as a "Force Majeure Event"),
         the party who has been so affected shall immediately give notice to the
         other party and shall take reasonable measures to resume performance.
         Upon receipt of such notice, all obligations under this Contract shall
         be immediately suspended. If the period of non-performance exceeds
         thirty (30) days from the receipt of notice of the Force Majeure Event,
         the party whose ability to perform has not been so affected may, by
         giving written notice, terminate this Contract.

T.       Assignment. The Contractor shall not assign or subcontract the whole or
         any part of this Contract without the State's prior written consent.
         The Contractor may assign its right to receive payments to such third
         parties as the Contractor may desire without the prior written consent
         of the State, provided that the Contractor gives written notice
         (including evidence of such assignment) to the State thirty (30) days
         in advance of any payment so assigned. The assignment shall cover all
         unpaid amounts under this Contract and shall not be made to more than
         one party.

U.       Successors and Assignees. The Contractor binds its successors,
         executors, assignees, and administrators, to all covenants of this
         Contract. Except as set forth above, the Contractor shall not assign,
         sublet, or transfer the Contractor's interest in this Contract without
         the prior written consent of the Office.



MCO Renewel Contract           Page 20 of 27             Managed Health Services

<PAGE>


V.       Drug-Free Workplace Certification

         The Contractor hereby covenants and agrees to make a good faith effort
         to provide and maintain a drug-free workplace. Contractor will give
         written notice to the State within ten (10) days after receiving actual
         notice that the Contractor or an employee of the Contractor has been
         convicted of a criminal drug violation occurring in the contractor's
         workplace.

         False certification or violation of the certification may result in
         sanctions including, but not limited to, suspension of contract
         payments, termination of the contract or agreement and/or debarment of
         contracting opportunities with the State of Indiana for up to three (3)
         years.

         In addition to the provisions of the above paragraphs, if the total
         contract amount set forth in this agreement is in excess of $25,000.00,
         Contractor hereby further agrees that this agreement is expressly
         subject to the terms, conditions, and representations of the following
         certification:

         This certification is required by Executive Order No. 90-5, April 12,
         1990, issued by the Governor of Indiana. Pursuant to its delegated
         authority, the Indiana Department of Administration is requiring the
         inclusion of this certification in all contracts with and grants from
         the State of Indiana in excess of $25,000.00. No award of a contract
         shall be made, and no contract, purchase order or agreement, the total
         amount of which exceeds $25,000.00, shall be valid, unless and until
         this certification has been fully executed by the Contractor and made a
         part of the contract or agreement as part of the contract documents.

         The Contractor certifies and agrees that it will provide a drug-free
         workplace by:

         1.       Publishing and providing to all of its employees a statement
                  notifying employees that the unlawful manufacture,
                  distribution, dispensing, possession or use of a controlled
                  substance is prohibited in the Contractor's workplace and
                  specifying the actions that will be taken against employees
                  for violations of such prohibition;

         2.       Establishing a drug-free awareness program to inform employees
                  of (1) the dangers of drug abuse in the workplace; (2) the
                  Contractor's policy of maintaining a drug-free workplace; (3)
                  any available drug counseling, rehabilitation, and employee
                  assistance programs; and (4) the penalties that may be imposed
                  upon an employee for drug abuse violations occurring in the
                  workplace;

         3.       Notifying all employees in the statement required by
                  subparagraph (1) above that as a condition of continued
                  employment the employee will (A) abide by the terms of the
                  statement; and (B) notify the Contractor of any criminal drug
                  statute conviction for a violation occurring in the workplace
                  no later than five (5) days after such conviction;



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         4.       Notifying in writing the State within ten (10) days after
                  receiving notice from an employee under subdivision (3)(B)
                  above, or otherwise receiving actual notice of such
                  conviction;

         5.       Within thirty (30) days after receiving notice under
                  subdivision (3)(B) above of a conviction, imposing the
                  following sanctions or remedial measures on any employee who
                  is convicted of drug abuse violations occurring in the
                  workplace: (1) take appropriate personnel action against the
                  employee, up to and including termination; or (2) require such
                  employee to satisfactorily participate in a drug abuse
                  assistance or rehabilitation program approved for such
                  purposes by a Federal, State or local health, law enforcement,
                  or other appropriate agency; and

         Making a good faith effort to maintain a drug-free workplace through
         the implementation of subparagraphs (1) through (5) above.

W.       Lobbying Activities. Pursuant to 31 U.S.C.ss.1352, and any regulations
         promulgated thereunder, the Contractor hereby assures and certifies
         that no federally appropriated funds have been paid, or will be paid,
         by or on behalf of the Contractor, to any person for influencing or
         attempting to influence an officer or employee of any agency, a member
         of Congress, an officer or employee of Congress, or an employee of a
         member of Congress, in connection with the awarding of any federal
         contract, the making of any federal grant, the making of any federal
         loan, the entering into of any cooperative contract, and the extension,
         continuation, renewal, amendment, or modification of any federal
         contract, grant, loan or cooperative contract. If any funds other than
         federally appropriated funds have been paid or will be paid to any
         person for influencing or attempting to influence an officer or
         employee of any agency, a member of Congress, an officer or employee of
         Congress, or an employee of a member of Congress in connection with
         this Contract, the Contractor shall complete and submit Standard
         Form-LLL, "Disclosure Form to Report Lobbying", in accordance with its
         instructions.

X.       Access to Records. The Contractor and any subcontractor shall maintain
         all books, documents, papers, accounting records, and any other
         evidence pertaining to the cost incurred under this agreement.
         Contractor and any subcontractors shall make such materials available
         at all reasonable times during the contract period and for three (3)
         years from the date of final payment under the Contract or until all
         pending matters are closed, whichever date is later, for inspection by
         the Office, or any other duly authorized representative of the State of
         Indiana or the Federal government. Copies thereof shall be furnished at
         no cost to the State if requested.

Y.       Environmental Standards. If the contract amount set forth in this
         Contract is in excess of $100,000, the Contractor shall comply with all
         applicable standards, orders, or requirements issued under section 306
         of the Clean Air Act (42 U.S.C. ss. 7606), section 508 of the Clean
         Water Act (33 U.S.C. ss. 1368), Executive Order 11738, and
         Environmental Protection Agency regulations (40 C.F.R. Part 32), which
         prohibit the use under non-exempt Federal contracts of facilities



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<PAGE>


         included on the EPA List of Violating Facilities. The Contractor shall
         report any violations of this paragraph to the State of Indiana and to
         the United States Environmental Protection Agency Assistant
         Administrator for Enforcement.

Z.       Conflict of Interest

         1.       As used in this section:

                  "Immediate family" means the spouse and the unemancipated
                  children of an individual.

                  "Interested party" means:

                  a.       The individual executing this Contract;

                  b.       An individual who has an interest of three percent
                           (3%) or more of the Contractor if the Contractor is
                           not an individual; or

                  c.       Any member of the immediate family of an individual
                           specified under subdivision a or b.

                  "Department" means the Indiana Department of Administration.

                  "Commission" means the State Ethics Commission.

         2.       The Department may cancel this Contract without recourse by
                  the Contractor if any interested party is an employee of the
                  State of Indiana.

         3.       The Department will not exercise its right of cancellation
                  under section 2 above if the Contractor gives the Department
                  an opinion by the Commission indicating that the existence of
                  this Contract and the employment by the State of Indiana of
                  the interested party does not violate any statute or code
                  relating to ethical conduct of state employees. The Department
                  may take action, including cancellation of this Contract
                  consistent with an opinion of the Commission obtained under
                  this section.

         4.       The Contractor has an affirmative obligation under this
                  Contract to disclose to the Department when an interested
                  party is or becomes an employee of the State of Indiana. The
                  obligation under this section extends only to those facts
                  which the Contractor knows or reasonably could know.

AA.      Assurance of Compliance with Civil Rights Act of 1964, Section 504 of
         the Rehabilitation Act of 1973 and the Age Discrimination Act of 1975,
         the Americans with Disabilities Act of 1990 and Title IX of the
         Education Amendments of 1972: The Contractor agrees that it, and all of
         its subcontractors and providers, will comply with the following:



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<PAGE>


         1.       Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352), as
                  amended, and all requirements imposed by or pursuant to the
                  Regulation of the Department of Health and Human Services (45
                  C.F.R. Part 80), to the end that, in accordance with Title VI
                  of that Act and the Regulation, no person in the United States
                  shall on the ground of race, color, or national origin, be
                  excluded from participation in, be denied the benefits of, or
                  be otherwise subjected to discrimination under any program or
                  activity for which the Contractor receives Federal financial
                  assistance under this Contract.

         2.       Section 504 of the Rehabilitation Act of 1973 (Pub. L.
                  93-112), as amended, and all requirements imposed by or
                  pursuant to the Regulation of the Department of Health and
                  Human Services (45 C.F.R. Part 84), to the end that, in
                  accordance with Section 504 of that Act and the Regulation, no
                  otherwise qualified handicapped individual in the United
                  States shall, solely by reason of his/her handicap, be
                  excluded from participation in, be denied the benefits of, or
                  be subjected to discrimination under any program or activity
                  for which the Contractor receives Federal financial assistance
                  under this Contract.

         3.       The Age Discrimination Act of 1975 (Pub. L. 94-135), as
                  amended, and all requirements imposed by or pursuant to the
                  Regulation of the Department of Health and Human Services (45
                  C.F.R. Part 91), to the end that, in accordance with the Act
                  and the Regulation, no person in the United States shall, on
                  the basis of age, be denied the benefits of, be excluded from
                  participation in, or be subjected to discrimination under any
                  program or activity for which the Contractor receives Federal
                  financial assistance under this Contract.

         4.       The Americans with Disabilities Act of 1990 (Pub. L. 101-336),
                  as amended, and all requirements imposed by or pursuant to the
                  Regulation of the Department of Justice (28 C.F.R. 35.101 et
                  seq.), to the end that in accordance with the Act and
                  Regulation, no person in the United States with a disability
                  shall, on the basis of the disability, be excluded from
                  participation in, be denied the benefits of, or otherwise be
                  subjected to discrimination under any program or activity for
                  which the Contractor receives Federal financial assistance
                  under this Contract.

         5.       Title IX of the Education Amendments of 1972, as amended (20
                  U.S.C. ss.ss. 1681-1683, and 1685-1686), and all requirements
                  imposed by or pursuant to regulation, to the end that, in
                  accordance with the Amendments, no person in the United States
                  shall, on the basis of sex, be excluded from participation in,
                  be denied the benefits of, or otherwise be subjected to
                  discrimination under any program or activity for which the
                  Contractor receives Federal financial assistance under this
                  Contract.

         The Contractor agrees that compliance with this assurance constitutes a
         condition of continued receipt of Federal financial assistance, and
         that it is binding upon the Contractor, its successors, transferees and
         assignees for the period during which such assistance is provided. The
         Contractor further recognizes that the United States shall have the
         right to seek judicial enforcement of this assurance.



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<PAGE>


BB.      Security and Privacy of Health Information. The Contractor agrees to
         comply with all requirements of the Health Insurance Portability and
         Accountability Act of 1996 (HIPAA in all activities related to this
         contract, to maintain compliance throughout the life of the contract,
         to operate any systems used to fulfill the requirements of this
         contract in full compliance with HIPAA and to take no action which
         adversely affects the State's HIPAA compliance.

         The parties acknowledge that the Department of Health and Human
         Services has issued the Final Rule, as amended from time to time on the
         Standards for Privacy of Individually Identifiable Health Information,
         as required by the Administrative Simplification Section of the Health
         Insurance Portability and Accountability Act of 1996 (HIPAA). To the
         extent required by the provisions of HIPAA and regulations promulgated
         thereunder, the Contractor assures that it will appropriately safeguard
         Protected Health Information (PHI), as defined by the regulations,
         which is made available to or obtained by the Contractor in the course
         of its work under the contract. The Contractor agrees to comply with
         applicable requirements of law relating to PHI with respect to any task
         or other activity it performs for the Office including, as required by
         the final regulations:

         1.       Not using or further disclosing PHI other than as permitted or
                  required by this Contract or by applicable law;

         2.       Using appropriate safeguards to prevent use or disclosure of
                  PHI other than as provided by this Contract or by applicable
                  law;

         3.       Reporting to the Office any use or disclosure by the
                  Contractor, its agent, employees, subcontractors or third
                  parties, of PHI obtained under this Contract in a manner not
                  provided for by this Contract or by applicable law of which
                  the Contractor becomes aware;

         4.       Ensuring that any subcontractors or agents to whom the
                  Contractor provides PHI received from, or created or received
                  by the Contractor on behalf of the Office agrees to the same
                  restrictions, conditions and obligations applicable to such
                  party regarding PHI;

         5.       Making the Contractor's internal practices, books and records
                  related to the use of disclosure of PHI received from, or
                  created or received by the Contractor on behalf of the Office
                  available to the Secretary of the United States Department of
                  Health and Human Services for purposes of determining the
                  Office's compliance with applicable law. The Contractor shall
                  immediately notify the Office upon receipt by the Contractor
                  of any such request, and shall provide the Office with copies
                  of any materials made available in response to such a request;

         6.       Making available the information required to provide an
                  accounting of disclosures pursuant to applicable law; and

         7.       At the termination of this Contract, returning or destroying
                  all PHI obtained under this Contract.



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CC.      Substantial Performance. This Contract shall be deemed to be
         substantially performed only when fully performed according to its
         terms and conditions and any modification thereof.

DD.      Penalties/Interest/Attorney's Fees. The State will in good faith
         perform its required obligations hereunder and does not agree to pay
         any penalties, liquidated damages, interest, or attorney's fees, except
         as required by Indiana law, in part, IC 5-17-5, IC 34-54-8, and IC
         34-13-1.

EE.      Authority to Bind Contractor. Notwithstanding anything in the Contract
         to the contrary, the signatory for the Contractor represents that
         he/she has been duly authorized to execute contracts on behalf of the
         Contractor designated herein and has obtained all necessary or
         applicable approval from the home office of the Contractor, if
         applicable, to make this, the contract, fully binding upon the
         Contractor when his/her signature is affixed and is not subject to home
         office acceptance hereto when accepted by the State of Indiana.

FF.      Performance Bond. The Contractor agrees that a performance bond in the
         amount of five hundred thousand dollars ($500,000.00) will be
         maintained by the Indiana Department of Administration (IDOA). Said
         bond will be in the form of a cashier's check, a certified check, or a
         surety bond executed by a surety company authorized to do business in
         the State of Indiana as approved by the Insurance Department of State
         of Indiana. No other check or surety will be accepted. The performance
         bond shall be made payable to the IDOA and shall be effective for the
         duration of the contract and any extensions thereof. The State reserves
         the right to increase the performance bond amount if enrollment levels
         indicate the need for higher liquidated damages.

GG.      Non-Collusion and Acceptance. The undersigned attests, subject to the
         penalties for perjury, that he/she is the contracting party, or that
         he/she is the representative, agent, member or officer of the
         contracting party, that he/she has not, nor has any other member,
         employee, representative, agent, or officer of the firm, company,
         corporation, or partnership represented by him/her, directly or
         indirectly, to the best of his/her knowledge, entered into or offered
         to enter into any combination, collusion, or agreement to receive or
         pay, and that he/she has not received or paid, any sum of money or
         other consideration for the execution of this agreement other than that
         which appears upon the face of the agreement.


         /// The remainder of this page is left intentionally blank. ///




MCO Renewel Contract           Page 26 of 27             Managed Health Services


<PAGE>



IN WITNESS WHEREOF, Coordinated Care Corporation Indiana, Inc., and the State of
Indiana have, through duly authorized representatives, entered into this
agreement. The parties having read and understand the foregoing terms of the
Contract do by their respective signatures dated below hereby agree to the terms
thereof.

For the Contractor:                               For the State of Indiana:

/s/ Rita Johnson-Mills                            /s/ Melanie Bella
----------------------------                      ------------------------------
Rita Johnson-Mills, CEO                           Melanie Bella
Coordinated Care Corporation                      Assistant Secretary
  Indiana, Inc.                                   Office of Medicaid Policy &
                                                    Planning


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


                                                  /s/ Kathryn H. Moses
                                                  ------------------------------
                                                  Kathryn H. Moses, Director
                                                  Children's Health Insurance
                                                    Program

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


APPROVED:                                         APPROVED:

/s/ Marilyn Schultz                               /s/ David Perlini
------------------------------                    ------------------------------
Marilyn Schultz, Director                         David Perlini, Commissioner
State Budget Agency                               Department of Administration

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


APPROVED AS TO FORM AND LEGALITY

/s/ Stephen Carter
------------------------------
Stephen Carter
Attorney General of Indiana

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





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