<PAGE>

                                AGREEMENT BETWEEN


        ----------------------------------------------------------------
                         County Name or City of New York


                                       And


        ----------------------------------------------------------------
                                 Contractor Name

                      This Agreement is made by and between


        ----------------------------------------------------------------
              County Name or City of New York (" County" or "City")


                                 Acting through,


        ----------------------------------------------------------------
           Department of Social Services (" LDSS")or Health (" CDOH")


                                   Located at

        ----------------------------------------------------------------

        ----------------------------------------------------------------

        ----------------------------------------------------------------

                                       And


        ----------------------------------------------------------------
                       Contractor Name (" the Contractor")



                                   Located At

        ----------------------------------------------------------------

        ----------------------------------------------------------------

        ----------------------------------------------------------------



                                    Recitals
                                   Page 1 of 2
                                 October 1, 1999

<PAGE>

                                    RECITALS

        Pursuant to Title XIX of the Federal Social Security Act, codified as 42
U. S. C. Section 1396 et seq. (the "Social Security Act"), and Title 11 of
Article 5 of the New York State Social Services Law ("SSL"), codified as
N.Y.S.S.L. Section 363 et seq., a comprehensive program of Medical Assistance
for needy persons exists in the State of New York ("Medicaid").

        Pursuant to Article 44 of the Public Health Law (" P. H. L."), the New
York State Department of Health (" SDOH") is authorized to issue Certificates of
Authority to establish Health Maintenance Organizations ("HMOs"), P. H. L.
Section 4400 et seq., Prepaid Health Services Plans. ("PHSPs"), P. H. L. Section
4403-a, and Integrated Delivery Systems ("IDS"), P. H. L. Section 4408-a.

        The State Social Services Law defines Medicaid to include payment of
part or all of the cost of care and services furnished by an HMO, PHSP or an
IDS, identified as Managed Care Organizations ("MCOs") in this Agreement, to
Eligible Persons, as defined in this Agreement, residing in the geographic area
specified in Appendix M (Service Area) when such care and services are furnished
in accordance with an agreement approved by the SDOH that meets the requirements
of federal law and regulations.

        The Contractor is a corporation organized under the laws of New York
State and is certified under Article 44 of the State Public Health Law or
Article 43 of the NYS Insurance Law.

         The Contractor offers a comprehensive health services plan and
represents that it is able to make provision for furnishing medical and health
service benefits and has proposed to ______________________________________to
                                            [INSERT LDSS OR CDOH]
provide these services to Eligible Persons; and

        The Contractor has applied to participate in the Medicaid Managed Care
Program and the SDOH and ____________________________________ have determined
                          [INSERT LDSS OR CITY OF NEW YORK]
that the Contractor meets the qualification criteria established for
participation.

NOW THEREFORE, the parties agree as follows:




                                    Recitals
                                   Page 2 of 2
                                 October 1, 1999

<PAGE>

                                                                    EXHIBIT 10.9


                      TABLE OF CONTENTS FOR MODEL CONTRACT


Recitals

Section 1     Definitions

Section 2     Agreement Term, Amendments, Extensions, and General Contract
              Administration Provisions
              2.1     Term
              2.2     Amendments and Extensions
              2.3     Approvals
              2.4     Entire Agreement
              2.5     Renegotiation
              2.6     Assignment and Subcontracting
              2.7     Termination
                      a.  LDSS Initiated Termination of Contract
                      b.  Contractor and LDSS Initiated Termination
                      c.  Contractor Initiated Termination
                      d.  Termination Due to Loss of Funding
              2.8     Close-Out Procedures
              2.9     Rights and Remedies
              2.10    Notices
              2.11    Severability

Section 3     Compensation
              3.1     Capitation Payments
              3.2     Modification of Rates During Contract Period
              3.3     Rate Setting Methodology
              3.4     Payment of Capitation
              3.5     Denial of Capitation Payments
              3.6     SDOH Right to Recover Premiums
              3.7     Third Party Health Insurance Determination
              3.8     Payment for Newborns
              3.9     Contractor Financial Liability
              3.10    Inpatient Hospital Stop-Loss Insurance
              3.11    Mental Health and Alcohol/Substance Abuse Stop-Loss
              3.12    Enrollment Limitations
              3.13    Tracking Visits Provided by Indian Health Clinics

Section 4     Service Area

Section 5     Eligible, Exempt and Excluded Populations
              5.1     Eligible Populations
              5.2     Exempt Populations
              5.3     Excluded Populations
              5.4     Family Enrollment



                                Table of Contents
                                      - 1 -
                                 October 1, 1999

<PAGE>

                      TABLE OF CONTENTS FOR MODEL CONTRACT


Section 6     Enrollment
              6.1     Enrollment Guidelines
              6.2     Equality of Access to Enrollment
              6.3     Enrollment Decisions
              6.4     Auto Assignment
              6.5     Prohibition Against Conditions on Enrollment
              6.6     Family Enrollment
              6.7     Newborn Enrollment
              6.8     Effective Date of Enrollment
              6.9     Roster
              6.10    Automatic Re-Enrollment

Section 7     Lock-In Provisions
              7.1     Lock-In Provisions in Voluntary Counties
              7.2     Lock-In Provisions in Mandatory Counties
              7.3     Lock-In Provisions in New York City
              7.4     Disenrollment During Lock-In Period
              7.5     Notification Regarding Lock-In and End of Lock-In Period

Section 8     Disenrollment
              8.1     Disenrollment Guidelines
              8.2     Disenrollment Prohibitions
              8.3     Reasons for Voluntary Disenrollment
              8.4     Processing of Disenrollment Requests
              8.5     Contractor Notification of Disenrollments
              8.6     Contractor's Liability
              8.7     Enrollee Initiated Disenrollment
                      a.  Disenrollment for Good Cause
                      b.  Expedited Disenrollment
              8.8     Contractor Initiated Disenrollment
              8.9     LDSS Initiated Disenrollment

Section 9     Guaranteed Eligibility

Section 10    Benefit Package, Covered and Non-Covered Services
              10.1    Contractor Responsibilities
              10.2    Compliance with State Medicaid Plan and Applicable Laws
              10.3    Definitions
              10.4    Provision of Services Through Participating and
                      Non-Participating Providers
              10.5    Child Teen Health Program /Adolescent Preventive Services
              10.6    Foster Care Children



                                Table of Contents
                                      - 2 -
                                 October 1, 1999

<PAGE>

                      TABLE OF CONTENTS FOR MODEL CONTRACT


              10.7    Child Protective Services
              10.8    Welfare Reform
              10.9    Adult Protective Services
              10.10   Court Ordered Services
              10.11   Family Planning and Reproductive Health Services
              10.12   Prenatal Care
              10.13   Direct Access
              10.14   Emergency Services
              10.15   Medicaid Utilization Thresholds (MUTS)
              10.16   Services for Which Enrollees Can Self-Refer
                      a.  Mental Health and Alcohol/Substance Abuse
                      b.  Vision Services
                      c.  Diagnosis and Treatment of Tuberculosis
                      d.  Family Planning/Reproductive Health
                      e.  Sexually Transmitted Disease (STD) Services
              10.17   Second Opinions for Medical or Surgical Care
              10.18   Coordination with Local Public Health Agencies
              10.19   Public Health Services
                      a.  Tuberculosis Screening, Diagnosis and Treatment;
                          Directly Observed Therapy (TB/DOT)
                      b.  Immunizations
                      c.  Prevention and Treatment of Sexually Transmitted
                          Diseases
                      d.  Lead Poisoning
              10.20   Adults with Chronic Illnesses and Physical or
                      Developmental Disabilities
              10.21   Children with Special Health Care Needs
              10.22   Persons Requiring Ongoing Mental Health Services
              10.23   Member Needs Relating to HIV
              10.24   Persons Requiring Alcohol/Substance Abuse Services
              10.25   Native Americans
              10.26   Women, Infants, and Children (WIC)
              10.27   Coordination of Services

Section 11    Marketing
              11.1    Marketing Plan
              11.2    Marketing Activities
              11.3    Prior Approval of Marketing Materials, Procedures,
                      Subcontracts
              11.4    Marketing Infractions
              11.5    LDSS Option to Adopt Additional Marketing Guidelines

Section 12    Member Services
              12.1    General Functions
              12.2    Translation and Oral Interpretation
              12.3    Communicating with the Visually, Hearing and Cognitively
                      Impaired



                                Table of Contents
                                      - 3 -
                                 October 1, 1999

<PAGE>

                      TABLE OF CONTENTS FOR MODEL CONTRACT


Section 13    Enrollee Notification
              13.1    Provider Directories/Office Hours for Participating
                      Providers
              13.2    Member ID Cards
              13.3    Member Handbooks
              13.4    Notification of Effective Date of Enrollment
              13.5    Notification of Enrollee Rights
              13.6    Enrollee's Rights To Advance Directives
              13.7    Approval of Written Notices
              13.8    Contractor's Duty to Report Lack of Contact
              13.9    Contractor Responsibility to Notify Enrollee of Expected
                      Effective Date of Enrollment
              13.10   LDSS Notification of Enrollee's Change in Address

Section 14    Complaint and Appeal Procedure
              14.1    Contractor Program to Address Complaints
              14.2    Notification of Complaint and Appeal Program
              14.3    Guidelines for Complaint and Appeal Program
              14.4    Complaint Investigation Determinations

Section 15    Access Requirements
              15.1    Appointment Availability Standards
              15.2    Twenty-Four (24) Hour Access
              15.3    Appointment Waiting Times
              15.4    Travel Time Standards
              15.5    Service Continuation
                      a.  New Enrollees
                      b.  Enrollees Whose Health Care Provider Leaves Network
              15.6    Standing Referrals
              15.7    Specialist as a Coordinator of Primary Care
              15.8    Specialty Care Centers

Section 16    Quality Assurance
              16.1    Internal Quality Assurance Program
              16.2    Standards of Care

Section 17    Monitoring and Evaluation
              17.1    Right To Monitor Contractor Performance
              17.2    Cooperation During Monitoring And Evaluation
              17.3    Cooperation During Annual On-Site Review
              17.4    Cooperation During Review of Services by External Review
                      Agency

Section 18    Contractor Reporting Requirements
              18.1    Time Frames for Report Submissions



                                Table of Contents
                                      - 4 -
                                 October 1, 1999

<PAGE>

                      TABLE OF CONTENTS FOR MODEL CONTRACT


              18.2    SDOH Instructions for Report Submissions
              18.3    Liquidated Damages
              18.4    Notification of Changes in Report Due Dates, Requirements
                      or Formats
              18.5    Reporting Requirements
                      a.  Annual Financial Statements
                      b.  Quarterly Financial Statements
                      c.  Other Financial Reports
                      d.  Encounter Data
                      e.  Quality of Care Performance Measures
                      f.  Complaint Reports
                      g.  Fraud and Abuse Reporting Requirements
                      h.  Participating Provider Network Reports
                      i.  Appointment Availability/Twenty-Four Hour (24) Access
                           and Availability Surveys
                      j.  Clinical Studies
                      k.  Independent Audits
                      l.  PCP Auto Assignments
                      m.  No Contact Report
                      n.  Additional Reports
                      o.  LDSS Specific Reports
              18.6    Ownership and Related Information Disclosure
              18.7    Revision of Certificate of Authority
              18.8    Public Access to Reports
              18.9    Professional Discipline
              18.10   Certification Regarding Individuals Who Have Been Debarred
                      or Suspended by Federal or State Government
              18.11   Conflict of Interest Disclosure
              18.12   Physician Incentive Plan Reporting

Section 19    Records Maintenance and Audit Rights
              19.1    Maintenance of Contractor Performance Records
              19.2    Maintenance of Financial Records and Statistical Data
              19.3    Access to Contractor Records
              19.4    Retention Periods

Section 20    Confidentiality
              20.1    Confidentiality of Identifying Information about Medicaid
                      Recipients and Applicants
              20.2    Medical Records of Foster Children
              20.3    Confidentiality of Medical Records
              20.4    Length of Confidentiality Requirements

Section 21    Participating Providers
              21.1    Network Requirements



                                Table of Contents
                                      - 5 -
                                 October 1, 1999

<PAGE>

                      TABLE OF CONTENTS FOR MODEL CONTRACT


              21.2    Credentialing
              21.3    SDOH Exclusion or Termination of Providers
              21.4    Evaluation Information
              21.5    Payment In Full
              21.6    Choice/Assignment of PCPs
              21.7    PCP Changes
              21.8    PCP Status Changes
              21.9    PCP Responsibilities
              21.10   Member to Provider Ratios
              21.11   Minimum Office Hours
              21.12   Primary Care Practitioners
              21.13   PCP Teams
              21.14   Hospitals
              21.15   Dental Networks
              21.16   Presumptive Eligibility Providers
              21.17   Mental Health, Alcohol and Substance Abuse Providers
              21.18   Laboratory Procedures
              21.19   School-Based Health Centers
              21.20   Federally Qualified Health Centers (FQHCs)
              21.21   Provider Services Function

Section 22    Subcontracts and Provider Agreements
              22.1    Written Subcontracts
              22.2    Permissible Subcontracts
              22.3    Provision of Services Through Provider Agreements 22.4
                      Approvals
              22.5    Required Components
              22.6    Timely Payment
              22.7    Restrictions on Disclosure
              22.8    Transfer of Liability
              22.9    Termination of Health Care Professional Agreements
              22.10   Health Care Professional Hearings
              22.11   Non-Renewal of Provider Agreements
              22.12   Physician Incentive Plan

Section 23    Fraud and Abuse Prevention Plan

Section 24    Americans With Disabilities Act Compliance Plan

Section 25    Fair Hearings
              25.1    Enrollee Access to Fair Hearing Process
              25.2    Enrollee Rights to a Fair Hearing
              25.3    Contractor Notice to Enrollees
              25.4    Aid Continuing



                                Table of Contents
                                      - 6 -
                                 October 1, 1999

<PAGE>

                      TABLE OF CONTENTS FOR MODEL CONTRACT


              25.5    Responsibilities of SDOH
              25.6    Contractor's Obligations

Section 26    External Appeal

              26.1    Basis for External Appeal
              26.2    Eligibility For External Appeal
              26.3    External Appeal Determinations
              26.4    Compliance With External Appeal Laws and Regulations

Section 27    Intermediate Sanctions

Section 28    Environmental Compliance

Section 29    Energy Conservation

Section 30    Independent Capacity of Contractor

Section 31    No Third Party Beneficiaries

Section 32    Indemnification
              32.1    Indemnification by Contractor
              32.2    Indemnification by LDSS

Section 33    Prohibition on Use of Federal Funds for Lobbying
              33.1    Prohibition of Use of Federal Funds for Lobbying
              33.2    Disclosure Form to Report Lobbying

Section 34    Non-Discrimination
              34.1    Equal Access to Benefit Package
              34.2    Non-Discrimination
              34.3    Equal Employment Opportunity
              34.4    Native Americans Access to Services From Tribal or Urban
                      Indian Health Facility

Section 35    Compliance with Applicable Laws
              35.1    Contractor and LDSS Compliance With Applicable Laws
              35.2    Nullification of Illegal, Unenforceable, Ineffective or
                      Void Contract Provisions
              35.3    Certificate of Authority Requirements
              35.4    Notification of Changes In Certificate of Incorporation
              35.5    Contractor's Financial Solvency Requirements
              35.6    Compliance With Care For Maternity Patients
              35.7    Informed Consent Procedures for Hysterectomy and
                      Sterilization



                                Table of Contents
                                      - 7 -
                                 October 1, 1999

<PAGE>

                      TABLE OF CONTENTS FOR MODEL CONTRACT

              35.8     Non-Liability of Enrollees For Contractor's Debts
              35.9     LDSS Compliance With Conflict of Interest Laws
              35.10    Compliance With PHL Regarding External Appeals

Section 36    New York State Standard Contract Clauses

Section 37    Insurance Requirements

Signature Page










                                Table of Contents
                                      - 8 -
                                 October 1, 1999

<PAGE>

                      TABLE OF CONTENTS FOR MODEL CONTRACT


                                   APPENDICES

A.      New York State Standard Clauses and Local Standard Clauses, if
        applicable

B.      Certification Regarding Lobbying

C.      New York State Department of Health Guidelines for the Provision of
        Family Planning and Reproductive Health Services

D.      New York State Department of Health Marketing Guidelines

E.      New York State Department of Health Member Handbook Guidelines

F.      New York State Department of Health Managed Care Complaint and Appeals
        Program Guidelines

G.      New York State Department of Health Guidelines for the Provision of
        Emergency Care and Services

H.      New York State Department of Health Guidelines for the Processing of
        Enrollments and Disenrollments

I.      New York State Department of Health Guidelines for Use of Medical
        Residents

J.      New York State Department of Health Guidelines of Federal Americans with
        Disabilities Act

K.      Prepaid Benefit Package Definitions of Covered and Non-Covered Services

L.      Approved Upper Payment Limit and Capitation Payment Rates

M.      Service Area

N.      Contractor-County Specific Agreements

Copies of Appendices will be abailable upon request.




                                Table of Contents
                                      - 9 -
                                 October 1, 1999

<PAGE>

1.      DEFINITIONS

        "ALCOHOL AND SUBSTANCE ABUSE SERVICE" means the treatment of addiction
        to alcohol and/or one or more drugs or the treatment of impairments to
        normal development or functioning including, but not limited to, social,
        emotional, familial, educational, vocational or physical impairments due
        to use of alcohol or drugs.

        "AUTO-ASSIGNMENT" means a process by which an Eligible Person, who is
        mandated to enroll in managed care, but who has not chosen to enroll
        within sixty (60) days of receipt of the mandatory notice, is assigned
        to a MCO contracted with the LDSS as a Medicaid Managed Care Provider in
        accordance with the auto-assignment algorithm determined by the SDOH.

        "BEHAVIORAL HEALTH SERVICE" means the assessment or treatment of mental
        and/or alcohol disorders and/or substance abuse disorders.

        "BENEFIT PACKAGE" means the covered services described in Appendix K of
        this Agreement to be provided to the Enrollee, as Enrollee is
        hereinafter defined, by or through the Contractor.

        "CAPITATION RATE" means the fixed monthly amount that the Contractor
        receives for an Enrollee to provide that Enrollee with the Benefit
        Package.

        "CHILD/TEEN HEALTH PROGRAM" or "C/THP" means the program of early and
        periodic screening, including inter-periodic, diagnostic and treatment
        services (EPSDT) that New York State offers all Medicaid eligible
        children under twenty-one (21) years of age. Care and services are
        provided in accordance with the periodicity schedule and guidelines
        developed by the New York State Department of Health. The services
        include administrative services designed to help families obtain
        services for children including outreach, information, appointment
        scheduling, administrative case management and transportation
        assistance, to the extent that transportation is included in the Benefit
        Package.

        "COURT-ORDERED SERVICES" means those services that the Contractor is
        required to provide to Enrollees pursuant to orders of courts of
        competent jurisdiction, provided however, that such ordered services are
        within the Contractor's Medicaid managed care Benefit Package and
        reimbursable under Title XIX of the Federal Social Security Act (SSL
        364-j(4)(r)).

        "DAYS" means calendar days except as otherwise stated.

        "DISENROLLMENT" means the process by which an Enrollee's membership in
        the Contractor's plan terminates.



                                    SECTION 1
                                  (DEFINITIONS)
                                 October 1, 1999
                                       1-1

<PAGE>

        "EFFECTIVE DATE OF DISENROLLMENT" means the date on which an Enrollee
        may no longer receive services from the Contractor, pursuant to Section
        6.8(b) and Appendix H of this Agreement.

        "EFFECTIVE DATE OF ENROLLMENT" means the date on which an Enrollee may
        receive services from the Contractor, pursuant to Section 6.8(b) and
        Appendix H of this Agreement.

        "ELIGIBLE PERSON" means a person whom the LDSS, state or federal
        government determines to be eligible for Medicaid and who meets all the
        other conditions for enrollment in Medicaid managed care as set forth in
        this Agreement.

        "EMERGENCY MEDICAL CONDITION" means a medical or behavioral condition,
        the onset of which is sudden, that manifests itself by symptoms of
        sufficient severity, including severe pain, that a prudent lay person,
        possessing an average knowledge of medicine and health, could reasonably
        expect the absence of immediate medical attention to result in: (i)
        placing the health of the person afflicted with such condition in
        serious jeopardy, or in the case of a behavioral condition, placing the
        health of the person or others in serious jeopardy; or (ii) serious
        impairment to such person's bodily functions; or (iii) serious
        dysfunction of any bodily organ or part of such person; or (iv) serious
        disfigurement of such person.

        "ENROLLEE" means an Eligible Person who, either personally or through an
        authorized representative, has enrolled (or who has been auto-assigned)
        in the Contractor's plan pursuant to Section 6 of this Agreement.

        "ENROLLMENT" means the process by which an Enrollee's membership in a
        Contractor's Plan begins.

        "ENROLLMENT BROKER" means the state and/or county-contracted entity that
        provides enrollment, education, and outreach services; effectuates
        enrollments and disenrollments in Medicaid managed care; and provides
        other contracted services on behalf of the SDOH and the LDSS.

        "FAMILY" means a mother and child(ren), a father and child(ren), a
        father and mother and child(ren), or a husband and wife residing in the
        same household or persons included in the same case for purposes of
        family enrollment in mandatory counties.

        "FISCAL AGENT" means the entity that processes or pays vendor claims on
        behalf of the Medicaid state agency pursuant to an agreement between the
        entity and such agency.

        "GUARANTEED ELIGIBILITY" means the period beginning on the Enrollee's
        Effective Date of Enrollment with the Contractor and ending six (6)
        months thereafter, during which the Enrollee may be entitled to
        continued enrollment in the Contractor's plan despite the loss of
        Medicaid eligibility as set forth in Section 9 of this Agreement.



                                    SECTION 1
                                  (DEFINITIONS)
                                 October 1, 1999
                                       1-2

<PAGE>

        "HEALTH PROVIDER NETWORK" or "HPN" means a closed communication network
        dedicated to secure data exchange and distribution of health related
        information between various health facility providers and the SDOH. HPN
        functions include: collection of Medicaid complaint and disenrollment
        information; collection of Medicaid financial reports; collection and
        reporting of managed care provider networks systems (PNS); and the
        reporting of Medicaid encounter data systems (MEDS).

        "INSTITUTION FOR MENTAL DISEASE" or "MID" means a hospital, nursing
        facility, or other institution of more than sixteen (16) beds that is
        primarily engaged in providing diagnosis, treatment or care of persons
        with mental diseases, including medical attention, nursing care and
        related services. Whether an institution is an Institution for Mental
        Disease is determined by its overall character as that of a facility
        established and maintained primarily for the care and treatment of
        individuals with mental diseases, whether or not it is licensed as such.
        An institution f or the mentally retarded is not an Institution for
        Mental Diseases.

        "LOCAL PUBLIC HEALTH Agency" means ___________________________________.
                                                  Insert Name of Agency

        "LOCK-IN PERIOD" means the period of time during which the Enrollee may
        not disenroll from the Contractor's plan, unless the Enrollee becomes
        eligible for an exclusion or an exemption or can demonstrate good cause
        as established in state law and in 18 NYCRR Section 360-10.13.

        "MANAGED CARE ORGANIZATION" or "MCO" means a health maintenance
        organization ("HMO "), prepaid health service plan ("PHSP"), or
        integrated delivery system ("IDS") certified under Article 44 of the New
        York State P. H. L.

        "MARKETING" means any activity of the Contractor, subcontractor or
        individuals or entities affiliated with the Contractor by which
        information about the Contractor is made known to Eligible Persons for
        the purpose of persuading such persons to enroll with the Contractor.

        "MARKETING Representative" means any individual or entity engaged by the
        Contractor to market on behalf of the Contractor.

        "MEDICAID MANAGEMENT INFORMATION System" or "MMIS" means the Medical
        Assistance Information and Payment System of the SDOH.

        "MEDICAL RECORD" means a complete record of care rendered by a provider
        documenting the care rendered to the Enrollee, including inpatient,
        outpatient, and emergency care, in accordance with all applicable
        federal, state and local laws, rules and regulations. Such record shall
        be signed by the medical professional rendering the services.

        "MEDICALLY NECESSARY" means health care and services that are necessary
        to prevent, diagnose, manage or treat conditions in the person that
        cause acute suffering, endanger



                                    SECTION 1
                                  (DEFINITIONS)
                                 October 1, 1999
                                       1-3

<PAGE>

        life, result in illness or infirmity, interfere with such person's
        capacity for normal activity, or threaten some significant handicap.

        "NATIVE AMERICAN" means, for purposes of this contract, a person
        identified in the Medicaid eligibility system as a Native American.

        "NON-PARTICIPATING PROVIDER" means a provider of medical care and/or
        services with which the Contractor has no Provider Agreement.

        "PARTICIPATING PROVIDER" means a provider of medical care and/or
        services that has a Provider Agreement with the Contractor.

        "PHYSICIAN INCENTIVE PLAN" or "PIP" means any compensation arrangement
        between the Contractor or one of its contracting entities and a
        physician or physician group that may directly or indirectly have the
        effect of reducing or limiting services furnished to Medicaid recipients
        enrolled by the MCO.

        "PREPAID CAPITATION PLAN ROSTER" OR "ROSTER" means the enrollment list
        generated on a monthly basis by SDOH by which LDSS and Contractor are
        informed of specifically which recipients the Contractor will be serving
        for the coming month, subject to any revisions communicated in writing
        or electronically by SDOH, LDSS, or the Enrollment Broker.

        "PRESUMPTIVE ELIGIBILITY PROVIDER" means a provider designated by the
        SDOH as qualified to determine the presumptive eligibility for pregnant
        women to allow them to receive prenatal services immediately. Such
        providers assist recipients with the completion of the full application
        for Medicaid and they may be comprehensive Prenatal Care Programs, Local
        Public Health Agencies, Certified Home Health Agencies, Public Health
        Nursing Services, Article 28 facilities, and individually licensed
        physicians and nurse practitioners.

        "PREVENTIVE CARE" means the care or services rendered to avert
        disease/illness and/or its consequences. There are three levels of
        preventive care: primary, such as immunizations, aimed at preventing
        disease; secondary, such as disease screening programs aimed at early
        detection of disease; and tertiary, such as physical therapy, aimed at
        restoring function after the disease has occurred. Commonly, the term
        "preventive care" is used to designate prevention and early detection
        programs rather than treatment programs.

        "PRIMARY CARE PROVIDER" or "PCP" means a qualified physician, or nurse
        practitioner or team of no more than four (4) qualified physicians/nurse
        practitioners which provides all required primary care services
        contained in the Benefit Package to Enrollees.

        "PROVIDER AGREEMENT" means any written contract between the Contractor
        and Participating Providers to provide medical care and/or services to
        Contractor's Enrollees.

        "SCHOOL BASED HEALTH CENTERS" or "SBHC" are SDOH approved centers which
        provide comprehensive primary and mental health services including
        health assessments,



                                    SECTION 1
                                  (DEFINITIONS)
                                 October 1, 1999
                                       1-4

<PAGE>

        diagnosis and treatment of acute illnesses, screenings and
        immunizations, routine management of chronic diseases, healtheducation,
        mental health counseling and treatment on-site in schools. Services are
        offered by multi-disciplinary staff from sponsoring Article 28 licensed
        hospitals and community health centers.

        "SERIOUSLY EMOTIONALLY DISTURBED" or "SED" means, a child through
        seventeen (17) years of age who has utilized the following during the
        twelve (12) month period prior to scheduled enrollment:
        -   ten (10) or more encounters, including visits to a mental health
            clinic, psychiatrist or psychologist, and inpatient hospital days
            relating to a psychiatric diagnosis; or
        -   one (1) or more specialty mental health visits (i. e., psychiatric
            rehabilitation treatment program; day treatment; continuing day
            treatment; comprehensive case management; partial hospitalization;
            rehabilitation services provided to residents of Office of Mental
            Health (OMH) licensed community residences and family-based
            treatment; and mental health clinics for seriously emotionally
            disturbed children).

        "SERIOUSLY AND PERSISTENTLY MENTALLY ILL" or "SPMI" means an adult
        eighteen (18) years or older who has utilized the following during the
        twelve (12) month period prior to scheduled enrollment:
        -   ten (10) or more encounters, including visits to a mental health
            clinic, psychiatrist or psychologist, and inpatient hospital days
            relating to a psychiatric diagnosis; or
        -   one (1) or more specialty mental health visits (i. e., psychiatric
            rehabilitation treatment program; day treatment; continuing day
            treatment; comprehensive case management; partial hospitalization;
            rehabilitation services provided to residents of OMH licensed
            community residences and family-based treatment; and mental health
            clinics for seriously emotionally disturbed children).

        "SUPPLEMENTAL NEWBORN CAPITATION PAYMENT" means the fixed amount paid to
        the Contractor for the inpatient birthing costs for a newborn enrolled
        in the plan, limited to those cases in which the plan has evidence of
        payment to the hospital for the newborn hospital stay.

        "TUBERCULOSIS DIRECTLY OBSERVED THERAPY" or "TB/DOT" means the direct
        observation of ingestion of oral TB medications to assure patient
        compliance with the physician's prescribed medication regimen.

        "URGENT MEDICAL CONDITION" means a medical or behavioral condition other
        than an emergency condition, manifesting itself by acute symptoms of
        sufficient severity that, in the assessment of a "prudent lay person",
        possessing an average knowledge of medicine and health, could reasonably
        be expected to result in serious impairment of bodily functions, serious
        dysfunction of a bodily organ, body part, or mental ability, or any
        other condition that would place the health or safety of the Enrollee or
        another individual in serious jeopardy in the absence of medical or
        behavioral treatment within twenty-four (24) hours.



                                    SECTION 1
                                  (DEFINITIONS)
                                 October 1, 1999
                                       1-5

<PAGE>

2.      AGREEMENT TERM, AMENDMENTS, EXTENSIONS, AND GENERAL CONTRACT
        ADMINISTRATION PROVISIONS

        2.1     Term

                a)      This Agreement is effective October 1, 1999 and shall
                        remain in effect until September 30, 2001 or until the
                        execution of an extension, renewal or successor
                        Agreement approved by the SDOH and the Department of
                        Health and Human Services (DHHS), whichever occurs
                        first.

                b)      The parties to this Agreement shall have the option to
                        renew this Agreement for an additional two (2) year term
                        and for a subsequent one (1) year term, subject to the
                        approval of the LDSS, SDOH, DHHS, and any other entities
                        as required by law or regulation.

                c)      However, in no event, shall the maximum duration of this
                        Agreement exceed five (5) years.

        2.2     Amendments and Extensions

                a)      This Agreement may only be modified in writing. Unless
                        otherwise specified in this Agreement, modifications
                        must be signed by the parties and approved by the SDOH,
                        DHHS, and any other entities as required by law or
                        regulation, prior to the end of the quarter in which the
                        amendment is to be effective.

                b)      This Agreement shall not be automatically renewed at its
                        expiration. This Agreement may be extended by written
                        amendment, in accordance with the procedures set forth
                        in this Section.

                c)      An extension to this Agreement may be granted for
                        reasons including, but not limited, to the following:

                        i)      Negotiations for a successor Agreement will not
                                be completed by the expiration date of the
                                current contract; or

                        ii)     The Contractor has submitted a termination
                                notice and transition of Enrollees will not be
                                completed by the expiration date of the current
                                contract.

                d)      The parties will submit, to the extent practicable, the
                        proposed signed and dated extensions, including all
                        necessary local government approvals, to SDOH prior to
                        the scheduled expiration date of this Agreement.



                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                 AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 1999
                                       2-1

<PAGE>


        2.3     Approvals

                This Agreement and any amendments to this Agreement shall not be
                effective or binding unless and until approved, in writing, by
                the DHHS, the SDOH and any other entity as required in law and
                regulation. SDOH will provide a notice of each such approval to
                the Contractor and the LDSS upon such approval.

        2.4     Entire Agreement

                This Agreement shall supersede all prior Agreements between the
                Contractor and the LDSS. This Agreement, including those
                attachments, schedules, appendices, exhibits, and addenda that
                have been specifically incorporated herein and written plans
                submitted by the Contractor and maintained on file by SDOH
                and/or LDSS pursuant to this Agreement, contains all the terms
                and conditions agreed upon by the parties, and no other
                Agreement, oral or otherwise, regarding the subject matter of
                this Agreement shall be deemed to exist or to bind any of the
                parties or vary any of the terms contained in this Agreement. In
                the event of any inconsistency or conflict among the document
                elements of this Agreement, such inconsistency or conflict
                shall be resolved by giving precedence to the document elements
                in the following order:

                        1)      The body of this Agreement;

                        2)      The appendices attached to the body of this
                                Agreement;

                        3)      The Contractor's approved:

                                i)      Marketing Plan on file with SDOH and
                                        LDSS

                                ii)     Complaint and Appeals Procedure on file
                                        with SDOH and LDSS

                                iii)    Quality Assurance Plan on file with SDOH
                                        and LDSS

                                iv)     Americans with Disabilities Act
                                        Compliance Plan on file with SDOH and
                                        LDSS

                                v)      Fraud and Abuse Prevention Plan on file
                                        with SDOH and LDSS.

        2.5     Renegotiation

                The parties to this Agreement shall have the right to
                renegotiate the terms and conditions of this Agreement in the
                event applicable local, state or federal law, regulations or
                policy are altered from those existing at the time of this
                Agreement in order to be in continuous compliance therewith.
                This Section shall not limit the right of the parties to this
                Agreement from renegotiating or amending other terms and
                conditions of this agreement. Such changes shall only be made
                with the consent of the parties and the prior approval of the
                SDOH and the DHHS.



                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                 AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 1999
                                       2-2

<PAGE>

        2.6     Assignment and Subcontracting

                a)      The Contractor shall not, without LDSS and SDOH's prior
                        written consent, assign, transfer, convey, sublet, or
                        otherwise dispose of this Agreement; of the Contractor's
                        right, title, interest, obligations, or duties under the
                        Agreement; of the Contractor's power to execute the
                        Agreement; or, by power of attorney or otherwise, of any
                        of the Contractor's rights to receive monies due or to
                        become due under this Agreement. Any assignment,
                        transfer, conveyance, sublease, or other disposition
                        without LDSS and SDOH's consent shall be void.

                b)      Contractor may not enter into any subcontracts related
                        to the delivery of services to Enrollees, except by a
                        written agreement, as set forth in Section 22 of this
                        Agreement. The Contractor may subcontract for provider
                        services and management services including, but not
                        limited to, marketing, quality assurance and utilization
                        review activities and such other services as are
                        acceptable to LDSS. If such written agreement would be
                        between Contractor and a provider of health care or
                        ancillary health services or between Contractor and an
                        independent practice association, the agreement must be
                        in a form previously approved by SDOH. If such
                        subcontract is for management services under 10 NYCRR
                        '98.11, it must be approved by SDOH prior to its
                        becoming effective. Other such subcontracts are subject
                        to the prior approval of the LDSS unless prior approval
                        is waived by the LDSS. Any subcontract entered into by
                        Contractor shall fulfill the requirements of 42 CFR
                        Parts 434 and 438 that are appropriate to the service or
                        activity delegated under such subcontract. Contractor
                        agrees that it shall remain legally responsible to LDSS
                        for carrying out all activities under this Agreement and
                        that no subcontract shall limit or terminate
                        Contractor's responsibility.

                [ ]     The LDSS has elected to waive prior approval of
                        subcontracts not related to provider services and
                        management services.

                OR

                [ ]     The LDSS has elected to prior approve all subcontracts.

        2.7     Termination

                a)      LDSS Initiated Termination of Contract

                        i)      LDSS shall have the right to terminate this
                                Agreement, in whole or in part if the
                                Contractor:

                                A)      takes any action that threatens the
                                        health, safety, or welfare of its
                                        Enrollees;



                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                 AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 1999
                                       2-3

<PAGE>


                                B)      has engaged in an unacceptable practice
                                        under 18 NYCRR, Part 515, that affects
                                        the fiscal integrity of the Medicaid
                                        program;

                                C)      has its Certificate of Authority
                                        suspended, limited or revoked by SDOH;

                                D)      materially breaches the Agreement or
                                        fails to comply with any term or
                                        condition of this Agreement that is not
                                        cured within twenty (20) days, or to
                                        such longer period as the parties may
                                        agree, of LDSS's written request for
                                        compliance;

                                E)      becomes insolvent;

                                F)      brings a proceeding voluntarily, or has
                                        a proceeding brought against it
                                        involuntarily, under Title 11 of the
                                        U. S. Code (the Bankruptcy Code);

                                G)      changes the provider net work, such that
                                        Enrollees access to the Contractor's
                                        services is no longer consistent with
                                        the standards set forth in Sections 15,
                                        21 and 22 and Appendix I of this
                                        Agreement; or

                                H)      knowingly has a director, officer,
                                        partner or person owning or controlling
                                        more than five percent (5%) of the
                                        Contractor's equity, or h as a n
                                        employment, consulting, or other
                                        agreement with such a person for the
                                        provision of items and/or services that
                                        are significant to the Contractor's
                                        contractual obligation who has been
                                        debarred or suspended by the federal,
                                        state or local government, or other wise
                                        excluded from participating in
                                        procurement activities.

                        ii)     The LDDSs will notify the Contractor of its
                                intent to terminate this Agreement for the
                                Contractors failure to meet the requirements of
                                this Agreement and provide Contractor with a
                                hearing prior to the termination.

                        iii)    If SDOH suspends, limits or revokes Contractors
                                Certificate of Authority under P. H. L. '4404,
                                this Agreement shall expire on the date the
                                Contractor ceases to have authority to serve the
                                geographic area of the LDSS. No hearing will be
                                required if the contract expires due to SDOH
                                suspension, limitation or revocation of the
                                Contractors Certificate of Authority.

                        iv)     Prior to the effective date of the termination
                                the LDSS shall notify Enrollees of the
                                termination, or delegate responsibility for such
                                notification to the Contractor, and such notice
                                shall include a statement that Enrollees may
                                disenroll immediately without cause.

                b)      Contractor and LDSS Initiated Termination



                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                 AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 1999
                                       2-4

<PAGE>

                        The Contractor and the LDSS each shall have the right to
                        terminate this Agreement in the event that SDOH and the
                        Contractor fail to reach agreement on the monthly
                        Capitation Rates. In such event, the party exercising
                        its right shall give the other party, LDSS, and SDOH
                        written notice specifying the reason for and the
                        effective date of termination, which shall not be less
                        time than will permit an orderly disenrollment of
                        Enrollees to the Medicaid fee-for-service payment
                        mechanism or transfer to another MCO, as determined by
                        LDSS, but no more than ninety (90) days.

                c)      Contractor Initiated Termination

                        i)      The Contractor shall have the right to terminate
                                this Agreement in the event that LDSS materially
                                breaches the Agreement or fails to comply with
                                any term or condition of this Agreement that is
                                not cured within twenty (20) days, or to such
                                longer period as the parties may agree, of the
                                Contractor's written request for compliance. The
                                Contractor shall give LDSS written notice
                                specifying the reason for and the effective date
                                of the termination, which shall not be less time
                                than will permit an orderly disenrollment of
                                Enrollees to the Medicaid fee-for-service
                                payment mechanism or transfer to another managed
                                care program, as determined by LDSS, but no more
                                than ninety (90) days.

                        ii)     The Contractor shall have the right to terminate
                                this Agreement in the event that its obligations
                                are materially changed by modifications to this
                                Agreement and its Appendices by SDOH or LDSS. In
                                such event, Contractor shall give LDSS and SDOH
                                written notice within thirty (30) days of
                                notification of changes to the Agreement or
                                Appendices specifying the reason and the
                                effective date of termination, which shall not
                                be less time than will permit an orderly
                                disenrollment of Enrollees to the Medicaid
                                fee-for-service program or transfer to another
                                MCO, as determined by the LDSS, but no more than
                                ninety (90) days.

                        iii)    The Contractor shall also have the right to
                                terminate this Agreement if the Contractor is
                                unable to provide services pursuant to this
                                Agreement because of a natural disaster and/or
                                an act of God to such a degree that Enrollees
                                cannot obtain reasonable access to services
                                within the Contractor's organization, and, after
                                diligent efforts, the Contractor cannot make
                                other provisions for the delivery of such
                                services. The Contractor shall give LDSS written
                                notice of any such termination that specifies:

                                A)      the reason for the termination, with
                                        appropriate documentation of the
                                        circumstances arising from a natural
                                        disaster and/or an act of God that
                                        preclude reasonable access to services;



                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                 AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 1999
                                       2-5

<PAGE>

                                B)      the Contractor's attempts to make other
                                        provision for the delivery of services;
                                        and

                                C)      the effective date of the termination,
                                        which shall not be less time than will
                                        permit an orderly disenrollment of
                                        Enrollees to the Medicaid
                                        fee-for-service payment mechanism or
                                        transfer to another MCO, as determined
                                        by LDSS, but no more than ninety
                                        (90)days.

                d)      Termination Due To Loss of Funding

                        In the event that State and/or Federal funding used to
                        pay for services under this Agreement is reduced so that
                        payments cannot be made in full, this Agreement shall
                        automatically terminate, unless both parties agree to a
                        modification of the obligations under this Agreement.
                        The effective date of such termination shall be ninety
                        (90) days after the Contractor receives written notice
                        of the reduction in payment, unless available funds are
                        insufficient to continue payments in full during the
                        ninety (90) day period, in which case LDSS shall give
                        the Contractor written notice of the earlier date upon
                        which the Agreement shall terminate. A reduction in
                        State and/or Federal funding cannot reduce monies due
                        and owing to the Contractor on or before the effective
                        date of the termination of the Agreement.

        2.8     Close-Out Procedures

                Upon termination or expiration of this Agreement and in the
                event that it is not scheduled for renewal, the Contractor shall
                comply with close-out procedures that the Contractor develops in
                conjunction with LDSS and that the LDSS, and the SDOH have
                approved. The close-out procedures shall include the following:

                a)      The Contractor shall promptly account for and repay
                        funds advanced by SDOH for coverage of Enrollees for
                        periods subsequent to the effective date of termination;

                b)      The Contractor shall give LDSS, SDOH, and other
                        authorized federal, state or local agencies access to
                        all books, records, and other documents and upon
                        request, portions of such books, records, or documents
                        that may be required by such agencies pursuant to the
                        terms of this Agreement;

                c)      The Contractor shall submit to LDSS, SDOH, and other
                        authorized federal, state or local agencies, within
                        ninety (90) days of termination, a final financial
                        statement and audit report relating to this Agreement,
                        made by a certified public accountant or a licensed
                        public accountant, unless the Contractor requests of
                        LDSS and receives written approval from LDSS, SDOH and
                        all other governmental agencies from which approval is
                        required, for an extension of time for this submission;



                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                 AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 1999
                                       2-6

<PAGE>

                d)      The Contractor shall furnish to SDOH immediately upon
                        receipt all information related to any request for
                        reimbursement of any medical claims that result from
                        services delivered after the date of termination of this
                        Agreement;

                e)      The Contractor shall establish an appropriate plan
                        acceptable to and prior approved by the LDSS and SDOH
                        for the orderly disenrollment of Enrollees to the
                        Medicaid fee-for-service program or enrollment into
                        another MCO. This plan shall include the provision of
                        pertinent information to identified Enrollees who are:
                        pregnant; currently receiving treatment for a chronic or
                        life threatening condition; prior approved for services
                        or surgery; or whose care is being monitored by a case
                        manager to assist them in making decisions which will
                        promote continuity of care.

                f)      The Contractor shall allow an Enrollee to continue
                        treatment with a Participating Provider if the Enrollee
                        has entered the second trimester of pregnancy, for a
                        transitional period that includes the provision of
                        post-partum are directly related to the delivery; only
                        if a participating provider is willing to:

                        i)      accept reimbursement from the Contractor at
                                rates established by the Contractor as payment
                                in full, which rates shall be no more than the
                                level of reimbursement applicable to similar
                                providers within the Contractor's network for
                                such services;

                        ii)     adhere to the Contractor's quality assurance
                                requirements and agree to provide to the
                                Contractor necessary medical information related
                                to such care; and

                        iii)    otherwise adhere to the Contractor's policies
                                and procedures including, but not limited to,
                                procedures regarding referrals and obtaining
                                preauthorization in a treatment plan approved by
                                the Contractor;

                g)      SDOH shall promptly pay all claims and amounts owed to
                        the Contractor;

                h)      Any termination of this Agreement by either the
                        Contractor or LDSS shall be done by amendment to this
                        Agreement, unless the contract is terminated by the LDSS
                        due to conditions in Section 2.7 a.(i) or Appendix A of
                        this Agreement.

        2.9     Rights and Remedies

                The rights and remedies of LDSS and the Contractor provided
                expressly in this Article shall not be exclusive and are in
                addition to all other rights and remedies provided by law or
                under this Agreement.



                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                 AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 1999
                                       2-7

<PAGE>

        2.10    Notices

                All notices to be given under this Agreement shall be in writing
                and shall be deemed to have been given when mailed to, or, if
                personally delivered, when received by the Contractor, LDSS, and
                the SDOH at the following addresses:

                For LDSS:

                ----------------------------------

                ----------------------------------

                ----------------------------------

                ----------------------------------
                [Insert Name and Address]

                For SDOH:
                New York State Department of Health
                Empire State Plaza
                Corning Tower, Rm. 2074
                Albany, NY 12237-0065

                For the Contractor:

                --------------------------------

                --------------------------------

                --------------------------------

                --------------------------------
                [Insert Name and Address]

        2.11    Severability

                If this Agreement contains any unlawful provision that is not an
                essential part of this Agreement and that was not a controlling
                or material inducement to enter into this Agreement, the
                provision shall have no effect and, upon notice by either party,
                shall be deemed stricken from this Agreement without affecting
                the binding force of the remainder of this Agreement.




                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                 AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 1999
                                       2-8

<PAGE>

3.      COMPENSATION

        3.1     Capitation Payments

                Compensation to the Contractor shall consist of a monthly
                capitation payment for each Enrollee and the Supplemental
                Newborn Capitation Payment where applicable.

                a)      In no event shall monthly capitation payments to the
                        Contractor for the Benefit Package exceed the cost of
                        providing the Benefit Package on a fee-for-service basis
                        to an actuarially equivalent, non-enrolled population
                        group Upper Payment Limit (UPL) as determined by SDOH.

                b)      The monthly Capitation Rates are attached hereto as
                        Appendix L and shall be deemed incorporated into this
                        Agreement without further action by the parties.

                c)      The monthly capitation payments and the Supplemental
                        Newborn Capitation Payment to the Contractor shall
                        constitute full and complete payments to the Contractor
                        for all services that the Contractor provides pursuant
                        to this Agreement subject to stop-loss provisions set
                        forth in Section 3.10 and 3.11 of this Agreement.

                d)      Capitation Rates shall be effective for the entire
                        contract period, except as described in Section 3.2.

        3.2     Modification of Rates During Contract Period

                a)      Any technical modification to Capitation Rates during
                        the term of the Agreement as agreed to by the
                        Contractor, including but not limited to, changes in
                        reinsurance or the Benefit Package, shall be deemed
                        incorporated into this Agreement without further action
                        by the parties, upon approval by SDOH, and upon written
                        notice by SDOH to the LDSS.

                b)      Any other modification to Capitation Rates, as agreed to
                        by SDOH and the Contractor, during the term of the
                        Agreement shall be deemed incorporated into this
                        Agreement without further action by the parties upon
                        approval of such modifications by the SDOH and the State
                        Division of the Budget, and upon written notice by SDOH
                        to the LDSS.

                c)      In the event that SDOH and the Contractor fail to reach
                        agreement on modifications to the monthly Capitation
                        Rates, the SDOH will provide formal written notice to
                        the Contractor and LDSS of the amount and effective date
                        of the modified Capitation Rates approved by the State
                        Division of the Budget. The Contractor shall have the
                        option of terminating this Agreement if such



                                    SECTION 3
                                  COMPENSATION
                                 October 1, 1999
                                       3-1

<PAGE>

                        approved modified Capitation Rates are not acceptable.
                        In such case, the Contractor shall give written notice
                        to the SDOH and the LDSS within thirty (30) days of the
                        d ate of the formal written notice of the modified
                        Capitation Rates from SDOH specifying the reasons for
                        and effective date of termination. The effective date of
                        termination shall be ninety (90) days from the date of
                        the Contractor's written notice, unless the SDOH
                        determines that an orderly disenrollment to Medicaid
                        fee-for-service or transfer to another MCO can be
                        accomplished in fewer days. During the period commencing
                        with the effective date of the SDOH modified Capitation
                        Rates through the effective date of termination of the
                        Agreement, the Contractor shall have the option of
                        continuing to receive capitation payments at the expired
                        Capitation Rates or at the modified Capitation Rates
                        approved by SDOH and State Division of the Budget for
                        the rate period.

                        If the Contractor fails to exercise its right to
                        terminate in accordance with this Section, then the
                        modified Capitation Rates approved by SDOH and the State
                        Division of the Bud get shall be deemed incorporated
                        into this Agreement without further action by the
                        parties as of the effective date of the modified
                        Capitation Rates as established by SDOH and approved by
                        State Division of the Budget.

        3.3     Rate Setting Methodology

                Capitation Rates are determined using a prospective methodology
                whereby cost, utilization and other rate-setting data available
                for the time period prior to the time period covered by the
                rates are used to establish premiums. Capitation rates will not
                be retroactively adjusted to reflect actual fee-for-service data
                or plan experience for the time period covered by the rates.

        3.4     Payment of Capitation

                a)      The monthly Capitation payments for each Enrollee are
                        due to the Contractor from the Effective D ate of
                        Enrollment until the Effective Date of Disenrollment of
                        the Enrollee or termination of this Agreement, which
                        ever occurs first. The Contractor shall receive a full
                        month's capitation payment for the month in which
                        disenrollment occurs. The Roster generated by SDOH with
                        any modification communicated electronically or in
                        writing by the LDSS or the Enrollment Broker prior to
                        the end of the month in which the Roster is generated,
                        shall be the enrollment list for purposes of MMIS
                        premium billing and payment, as discussed in Section 6.9
                        and Appendix H.

                b)      Upon receipt by the Fiscal Agent of a properly completed
                        claim for monthly capitation payments submitted by the
                        Contractor pursuant to this Agreement, the Fiscal Agent
                        will promptly process such claim for payment through
                        MMIS and use its best efforts to complete such
                        processing within thirty (30) business



                                    SECTION 3
                                  COMPENSATION
                                 October 1, 1999
                                       3-2

<PAGE>

                        days from date of receipt of the claim by the Fiscal
                        Agent. Processing of Contractor claims shall be in
                        compliance with the requirements of 42 CF R 447.45. The
                        Fiscal Agent will also use its best efforts to resolve
                        any billing problem relating to the Contractor's claims
                        as soon as possible. In accordance with Section 41 of
                        the State Finance Law, the State and LDSS shall have no
                        liability under this Agreement to the Contractor or
                        anyone else beyond funds appropriated and available for
                        payment of Medical Assistance care, services and
                        supplies.

        3.5     Denial of Capitation Payments

                If the Health Care Financing Administration (HCFA) denies
                payment for new Enrollees, as authorized by Social Security Act
                (SSA) '1903(m)(5)and 42 CFR ' 434.67, or such other applicable
                federal statutes or regulations, based upon a determination that
                Contractor failed substantially to provide medically necessary
                items and services, imposed premium amounts or charges in excess
                of permitted payments, engaged in discriminatory practices as
                described in SSA         ' 1932(e)(1)(A)(iii), misrepresented or
                falsified information submitted to HCFA, SDOH, LDSS, the
                Enrollment Broker, or an Enrollee, potential Enrollee, or health
                care provider, or failed to comply with federal requirements (i.
                e. 42 CFR          ' 417.479 and 42 CFR '434.70) relating to the
                Physician Incentive Plans, SDOH and LDSS will deny capitation
                payments to the Contractor for the same Enrollees for the period
                of time for which HCFA denies such payment.

        3.6     SDOH Right to Recover Premiums

                The parties acknowledge and accept that the SDOH has a right to
                recover premiums paid to the Contractor for Enrollees listed on
                the monthly Roster who are later determined f or the entire
                applicable payment month, to have been in an institution; to
                have been incarcerated; to have moved out of the Contractor's
                service area subject to any time remaining in the Enrollee's
                Guaranteed Eligibility period; or to have died. In any event,
                the State may only recover premiums paid for Medicaid Enrollees
                listed on a Roster if it is determined by the SDOH that the
                Contractor was not at risk for provision of medical services
                for any portion of the payment period.

        3.7     Third Party Health Insurance Determination

                The Contractor and the LDSS will make diligent efforts to
                determine whether Enrollees have third party health insurance
                (TPHI). The LDSS shall use its best efforts to maintain third
                party information on the WMS/MMIS Third Party Resource System.
                The Contractor shall make good faith efforts to coordinate
                benefits with and collect TPHI recoveries from other insurers,
                and must inform the LDSS of any known changes in status of TPHI
                insurance eligibility within thirty (30) days of learning of a
                change in TPHI. The Contractor may use the Roster as



                                    SECTION 3
                                  COMPENSATION
                                 October 1, 1999
                                       3-3

<PAGE>

                one method to determine TPHI information. The Contractor will be
                permitted to retain 100 per cent of any reimbursement for
                Benefit Package services obtained from TPHI. Capitation Rates
                are net of TPHI recoveries. In no instances may an Enrollee be
                held responsible for disputes over these recoveries.

        3.8     Payment For Newborns

                a)      The Contractor shall be responsible for all costs and
                        services included in the Benefit Package associated with
                        the Enrollee's newborn, unless the child is excluded
                        from Medicaid Managed Care.

                b)      The Contractor shall receive a capitation payment from
                        the first day of the newborn's month of birth and, in
                        instances where the plan pays the hospital for the
                        newborn hospital stay, a Supplemental Newborn Capitation
                        Payment.

                c)      Capitation Rate and Supplemental Newborn Capitation
                        Payment for a newborn will beg in the month following
                        certification of the newborn's eligibility and
                        enrollment, retroactive to the first day of the month in
                        which the child was born.

                d)      The Contractor must maintain on file evidence of payment
                        to the hospital of the inpatient claim f or the newborn
                        hospital stay to be eligible to receive a Supplemental
                        Newborn Capitation Payment. Failure to have supporting
                        records may, upon an audit, result in recoupment of the
                        supplemental newborn payment by SDOH.

        3.9     Contractor Financial Liability

                Contractor shall not be financially liable for any services
                rendered to an Enrollee prior to his or her Effective Date of
                Enrollment in the Contractor's plan.

        3.10    Inpatient Hospital Stop-Loss Insurance

                The Contractor must obtain stop-loss coverage for inpatient
                hospital services. A Contractor may elect to purchase stop-loss
                cove rage from New York State. In such cases, the Capitation
                Rates paid to the Contractor shall be adjusted to reflect the
                cost of such stop-loss coverage. The cost of such coverage shall
                be determined by SDOH.

                Under NYS stop-loss coverage, if the hospital inpatient expenses
                incurred by the Contractor for an individual Enrollee during any
                calendar year reaches $50,000, the Contractor shall be
                compensated for 80% of the cost of hospital inpatient services
                in excess of this amount up to a maximum of $250,000. Above that
                amount, the Contractor will be compensated for 100% of cost. All
                compensation shall be based on the lower of the Contractor's
                negotiated hospital rate or Medicaid rates of payment.



                                    SECTION 3
                                  COMPENSATION
                                 October 1, 1999
                                       3-4

<PAGE>

                [ ]     The Contractor has elected to have NYS provide stop-loss
                        reinsurance.

                OR

                [ ]     Contractor has not elected to have NYS provide stop-loss
                        reinsurance.

        3.11    Mental Health and Alcohol/Substance Abuse Stop-Loss

                a)      The Contractor will be compensated for medically
                        necessary and clinically appropriate Medicaid
                        reimbursable mental health treatment outpatient visits
                        in excess of twenty (20) visits during any calendar year
                        at rates set forth in contracted fee schedules. Any
                        Court Ordered Services for mental health treatment
                        outpatient visits which specify the use of Non
                        Participating Providers shall be compensated at the
                        Medicaid rate of payment.

                b)      The Contractor will be compensated for medically
                        necessary and clinically appropriate Medicaid
                        reimbursable alcohol and substance abuse treatment
                        outpatient visits in excess of sixty (60) visits during
                        a calendar year at rates set forth in contracted fee
                        schedules. Any Court Ordered Services for alcohol and
                        substance abuse treatment outpatient visits, which
                        specify the use of Non-Participating Providers, shall be
                        compensated at the Medicaid rate of payment.

                c)      The Contractor will be compensated for medically
                        necessary and clinically appropriate Medicaid
                        reimbursable inpatient mental health services and/or
                        inpatient alcohol and substance abuse treatment services
                        as defined in Appendix K in excess of a combined total
                        of thirty (30) days during a calendar year at the lower
                        of the Contractor's negotiated inpatient rate or
                        Medicaid rate of payment. The stop-loss insurance does
                        not apply to inpatient detoxification services provided
                        in Article 28 hospitals.

        3.12    Enrollment Limitations

                a)      For purposes of this Agreement, enrollment shall not
                        exceed _________ Medicaid recipients. The upper limit
                        may be modified by mutual written agreement of the
                        Contractor, the LDSS, the SDOH and DHHS or HCFA.

                b)      LDSS shall have the right, upon consultation with and
                        notice to the SDOH, to limit, suspend, or terminate
                        enrollment activities by the Contractor and/or
                        enrollment into the Contractor's plan upon ten (10) days
                        written notice to the Contractor, specifying the actions
                        contemplated and



                                    SECTION 3
                                  COMPENSATION
                                 October 1, 1999
                                       3-5

<PAGE>

                the reason(s) for such action(s). Nothing in this paragraph
                limits other remedies available to the LDSS under this
                Agreement.

        3.13    Tracking Visits Provided by Indian Health Clinics

                The SDOH shall monitor all visits provided by tribal or Indian
                health clinics or urban Indian health facilities or centers to
                enrolled Native Americans, so that the SDOH can reconcile
                payment made for those services, should it be deemed necessary
                to do so.










                                    SECTION 3
                                  COMPENSATION
                                 October 1, 1999
                                       3-6

<PAGE>

4.      SERVICE AREA

        The Service Area described in Appendix M of this Agreement, which is
        hereby made a part of this Agreement as if set forth fully herein, is
        the specific geographic area within which Eligible Persons must reside
        to enroll in the Contractor's plan.















                                    SECTION 4
                                 (SERVICE AREA)
                                 October 1, 1999
                                       4-1

<PAGE>

5.      ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS

        5.1     Eligible Populations

                a)      Except as specified in Section 5.1(b) and 5.3 be low,
                        all persons in the following Medicaid-eligible
                        beneficiary categories who reside in the service area
                        shall be eligible for enrollment in the Contractor's
                        plan:

                        i)      Singles/Childless Couples -Cash and Medicaid
                                only

                        ii)     Low Income Families with Children -Cash and
                                Medicaid only

                        iii)    Aid to Families with Dependent Children
                                -Medicaid only

                        iv)     Pregnant women whose net available income is at
                                or below one hundred and eighty-five percent
                                (185 %) of the federal poverty level for the
                                applicable household size.

                        v)      Children aged one (1) year or below whose
                                family's net available income is at or below one
                                hundred and eighty-five percent (185%) of the
                                federal poverty level for the applicable
                                household size.

                        vi)     Children between ages one (1) and five (5),
                                whose family's net available income is at or
                                below one hundred and thirty-three percent
                                (133%) of the federal poverty level for the
                                applicable household size.

                        vii)    Children six (6) to nine teen (19), whose
                                family's net available income is at or below one
                                hundred percent (100%) of the federal poverty
                                level for the applicable household size.

                        viii)   Transitional Medical Assistance Beneficiaries

                        ix)     Supplemental Security Income (cash) and
                                Supplemental Security Income Related (Medicaid
                                only).

                b)      All Medicaid eligible individuals in the following
                        categories may be eligible for enrollment in the
                        Contractor 's plan at the LDSS' option, as indicated by
                        an X below.

                        i)      Foster care children in the direct care of LDSS.

                                YES______             NO_______

                        ii)     Homeless persons living in shelters outside
                                of New York City may be eligible for enrollment
                                if so determined by the LDSS.

                                YES______             NO_______

        5.2     Exempt Populations

                The following populations are exempt from mandatory enrollment
                in Medicaid managed care, but may enroll on a voluntary basis,
                if otherwise eligible.



                                   Section 5
                  (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                October 1, 1999
                                      5-1

<PAGE>

a)              Individuals who are HIV+ or have AIDS.

        b)      Individuals who are Seriously and Persistently Mentally Ill or
                Seriously Emotionally Disturbed.

        c)      Individuals for whom a Man aged Care Provider is not
                geographically accessible so as to reasonably provide services.
                To qualify for this exemption, an individual must demonstrate
                that no participating MCO has a provider located within thirty
                (30) minute s travel time /thirty (30) mile s travel distance
                from the individual's home, who is accepting new patients, and
                that there is a fee-for-service Medicaid provider available
                within the thirty (30) minutes travel time /thirty (30) miles
                travel distance.

        d)      Pregnant women who are already receiving prenatal care from a
                provider authorized to provide such care not participating in
                any Medicaid managed care plan. This status will last through a
                woman's pregnancy, extend through the sixty (60) day post-partum
                period and end at the end of the month in which the sixtieth
                (60th) day occurs.

        e)      Individuals with a chronic medical condition who, for at least
                six (6) months, have been under active treatment with a
                non-participating sub-specialist physician who is not a network
                provider for any MCO participating in the Medicaid managed care
                program service area. This status will last as long as the
                individual's chronic medical condition exists or until the
                physician joins a participating MCO's network. The SDOH 's
                Office of Managed Care, Medical Director will, upon the request
                of an individual or his/her guardian or legally authorized
                representative (health care agent authorized through a health
                care proxy), review cases of individuals with unusually severe
                chronic care needs for a possible exemption from mandatory
                enrollment in managed care if such individuals are not otherwise
                eligible for an exemption (i. e., meet one of the seventeen (17)
                criteria listed here). The SDOH's OMC Medical Director may also
                authorize a plan disenrollment for such individuals.
                Diserollment requests should be made in a manner consistent with
                the over all disenrollment request process for "good cause"
                disenrollment.

        f)      Individuals with End Stage Renal Disease (ESRD).

        g)      Individuals who are residents of Intermediate Care Facilities
                for the Mentally Retarded ("ICF/MR").

        h)      Individuals with characteristics and needs similar to those who
                are residents of ICF/MRs based on criteria cooperatively
                established by the State Office of Mental Retardation and
                Developmental Disabilities (OMRDD) and the SDOH.

        i)      Individuals already scheduled for a major surgical procedure
                (within thirty (30) days of scheduled enrollment) with a
                provider who is not a participant in the



                                    Section 5
                   (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                 October 1, 1999
                                       5-2



<PAGE>


                        network of a Medicaid MCO under contract with the LDSS.
                        This exemption will only apply until such time as the
                        individual's course of treatment is complete.

                j)      Individuals with a developmental or physical disability
                        who receive services through a Medicaid
                        Home-and-Community-Based Services Waiver or Medicaid
                        Model Waiver (care-at-home) through a Section 1915c
                        waiver, or individuals having characteristics and needs
                        similar to such individuals (including individuals on
                        the waiting list), based on criteria cooperatively
                        established by OMRDD and SDOH.

                k)      Individuals who are residents of Alcohol and Substance
                        Abuse Long Term Residential Treatment Programs.

                l)      In New York City, individuals who are homeless and do
                        not reside in a Department of Homeless Services (DHS)
                        shelter are exempt. Homeless individuals residing in a
                        NYC DHS shelter and already enrolled in a plan at the
                        time they enter the shelter may choose to remain
                        enrolled. In areas outside of NYC, exemption of homeless
                        individuals residing in the shelter system is at the
                        discretion of the LDSS -see Section 5.1b.

                m)      Native Americans

                n)      Individuals who cannot be served by a managed care
                        provider due to a language barrier which exists when the
                        individual is not capable of effectively communicating
                        his or her medical needs in English or in a secondary
                        language for which PCPs are available within the
                        Medicaid managed care pro gram. Individuals with a
                        language barrier will be deemed able to be served if
                        they have a choice of three (3) PCPs, at least one (1)
                        of which is able to communicate in the primary language
                        of the eligible individual or has a person on his/her
                        staff capable of translating medical terminology, and
                        the other two (2) PCPs have access to Language Line
                        Services as an alternative to communicating directly
                        with the eligible individual in his/her language.
                        Individuals will be eligible for an exemption when:

                I)      The individual has a relationship with a primary care
                        provider who:
                        A)      has the language capability to serve the
                                individual;
                        B)      does not participate in any of the Medicaid
                                managed care plans within a thirty (30) minute
                                /thirty (30) mile radius of the eligible
                                individual's residence; OR

                ii)     The three following circumstances exist:
                        A)      neither a fee-for-service provider nor the above
                                described three (3) participating PCPs are
                                available within the thirty (30) minute /thirty
                                (30) mile radius; and

                                    Section 5
                   (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                 October 1, 1999
                                       5-3


<PAGE>


                        B)      a fee-for-service provider with the language
                                capability to serve the individual is available
                                outside the thirty (30) minute/thirty (30) mile
                                radius; and
                        C)      the above described three (3) participating PCPs
                                are not available outside the thirty (30)
                                minute/thirty (30) mile radius.

                o)      Individuals temporarily residing out of district, (e.
                        g., college students) will be exempt until the last day
                        of the month in which the purpose of the absence is
                        accomplished. The definition of temporary absence is set
                        forth in Social Services regulations 18 NYCRR Section
                        360-1.4 (p).

                p)      SST and SS I-related beneficiaries are considered exempt
                        and may enroll on a voluntary basis.

        5.3     Excluded Populations

                The following populations are ineligible for enrollment in
Medicaid managed care.

                a)      Individuals who are Dually Eligible for
                        Medicare/Medicaid.

                b)      Individuals who become eligible for Medicaid only after
                        spending down a portion of their income (Spend-down).

                c)      Individuals who are residents of State-operated
                        psychiatric facilities or residential treatment
                        facilities for children and youth.

                d)      Individuals who are residents of Residential Health Care
                        Facilities ("RHCF") at the time of enrollment and
                        individuals who enter a RHCF subsequent to enrollment,
                        except for short term rehabilitative stays anticipated
                        to be no greater than thirty (30) days.

                e)      Individuals enrolled in managed long term care
                        demonstrations authorized under Article 4403-f of the
                        New York State P. H. L.

                f)      Medicaid-eligible infants living with incarcerated
                        mothers.

                g)      Infants weighing less than 1200 grams at birth and other
                        infants under six (6) months of age who meet the
                        criteria for the SSI or SSI related category (shall not
                        be enrolled or shall be disenrolled retroactive to date
                        of birth).

                h)      Individuals with access to comprehensive private health
                        care coverage including those already enrolled in an
                        MCO. Such health care coverage, purchased either
                        partially or in full, by or on behalf of the individual,
                        must be determined to be cost effective by the local
                        social services district.


                                    Section 5
                   (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                 October 1, 1999
                                       5-4


<PAGE>


                i)      Foster children in the placement of a voluntary agency.

                j)      Certified blind or disabled children living or expected
                        to b e living separate and apart from the parent for
                        thirty (30) days or more.

                k)      Individuals expected to be eligible for Medicaid for
                        less than six (6) months, except for pregnant women (e.
                        g., seasonal agricultural workers).

                l)      Foster children in direct care (unless LDSS opts to
                        enroll them see Section 5.1(b)).

                m)      Homeless individuals residing in a NYCDHS shelter and
                        not enrolled in a Managed Care plan at the time they
                        enter the shelter.

                n)      Individuals in receipt of institutional long-term care
                        services through Long Term Home Health Care programs, or
                        Child Care Facilities (except ICF services for the
                        Developmentally Disabled).

                o)      Individuals eligible for Medical assistance benefits
                        only with respect to TB related services.

                p)      Individuals placed in State Office of Mental Health
                        licensed family care homes pursuant to NYS Mental
                        Hygiene Law, Section 31.03.

                q)      Individuals enrolled in the Restricted Recipient
                        Program.

                r)      Individuals with a "County of Fiscal Responsibility"
                        code of 99.

                s)      Individuals admitted to a Hospice program a t the time
                        of enrollment (if an Enrollee enters a Hospice program
                        while enrolled in the Contractor's plan, he/she may
                        remain enrolled in the Contractor's plan to maintain
                        continuity of care with his/her PCP). Hospice services
                        are accessed through the fee-for-service Medicaid
                        Program.

                t)      Individuals with a "County of Fiscal Responsibility"
                        code of 97 (OMH in MMIS) or 98 (OMRDD in MMIS).


        5.4     Family Enrollment

Upon implementation of the 1115 waiver in a county, the Contractor agrees that
members of the same family (defined as mother and her child(ren), father and his
child(ren), a husband, wife and child(ren) or a husband and wife residing in the
same household, or persons included in the same case) will be required to enroll
in the same health plan, in accordance with Section 6.6 of this Agreement.


                                    Section 5
                   (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                 October 1, 1999
                                       5-5


<PAGE>


6.      ENROLLMENT

        6.1     Enrollment Guidelines

                a)      The LDSS may employ a variety of methods and programs
                        for enrollment of Eligible Persons including, but not
                        limited to enrollment assisted by the Contractor,
                        enrollment assisted by an Enrollment Broker, enrollment
                        by LDSS, or a combination of such. The policies and
                        procedural guidelines which will be used for enrollment
                        a reset forth in Appendix H, which is hereby made a part
                        of this Agreement as if set forth fully herein.

                b)      The LDSS and the Contractor agree to conduct enrollment
                        of eligible individuals in accordance with the
                        guidelines set forth in Appendix H.

                c)      The SDOH and LDSS, upon mutual agreement, may make
                        modifications to the guidelines set forth in Appendix H.
                        The parties further acknowledge that such modifications
                        shall be effective and made a part of t his Agreement
                        without further action by the parties upon sixty (60)
                        days written notice to the LDSS and the Contractor.

        6.2     Equality of Access to Enrollment

                Eligible Person's shall be enrolled in the Contractor's plan, in
                accordance with the requirements set forth in Appendix H,
                Section A. In those instances in which the Contractor is
                directly involved in enrolling eligible recipients, the
                Contractor shall accept enrollments in the order they are
                received without regard to the Eligible Person's age, sex, race,
                creed, physical or mental handicap/developmental disability,
                national origin, sexual orientation, type of illness or
                condition, need for health services or to the Capitation Rate
                that the Contractor will receive for such Eligible Person.

        6.3     Enrollment Decisions

                An Eligible Person's decision to enroll in the Contractor's plan
                shall be voluntary except as otherwise provided in Section 6.4
                of the Agreement.

        6.4     Auto Assignment

                Upon implementation of the 1115 Waiver, or other applicable
                waivers of federal requirements, an Eligible Person whose
                enrollment in a MCO is mandatory and who fails to select a MCO
                within sixty (60) days of receipt of notice of mandatory
                enrollment may be assigned by the LDSS to the Contractor's plan
                pursuant to NYS Social Services Law Section 364-j and in
                accordance with Appendix H.


                                    SECTION 6
                                  (ENROLLMENT)
                                 October 1, 1999
                                       6-1


<PAGE>


        6.5     Prohibition Against Conditions on Enrollment

                Unless otherwise required by law or this agreement, neither the
                Contractor nor LDSS shall condition any Eligible Person's
                enrollment upon the performance of any act or suggest in any way
                that failure to enroll may result in a loss of Medicaid
                benefits.

        6.6     Family Enrollment

                a)      Upon implementation of the 1115 Waiver, all eligible
                        members of the Eligible Person's Family shall be
                        enrolled into the same plan.

b)              Upon implementation of the 1115 Waiver, the LDSS must inform
                        Enrollees who have Family members enrolled in other MCOs
                        that if anyone in the Family wishes to change plans, all
                        members of the Family must enroll together in the
                        newly-selected plan. The LDSS shall also notify the
                        Enrollee that all members of the Family will be required
                        to enroll together in a single MCO at the time of their
                        next recertification for Medicaid eligibility unless
                        waiver of this requirement is approved by the LDSS.

                c)      Notwithstanding the foregoing, the LDSS may, on a
                        case-by-case basis, approve enrollment of Family
                        member(s) of an Enrollee in another MCO if one or more
                        members of the Family are receiving prenatal care and/or
                        continuing care for a complex/chronic medical condition
                        from Non Participating Providers.

        6.7     Newborn Enrollment

a)              All newborn children not in an excluded category shall be
                        enrolled in the MCO of the mother, effective from the
                        first day of the child's month of birth.

                b)      In addition to the responsibilities set forth in
                        Appendix H, the Contractor is responsible for doing all
                        of the following with respect to newborns:

                        i)      Coordinating with the LDSS the efforts to ensure
                                that all newborns are enrolled in the managed
                                care plan;

                        ii)     Issuing a letter informing parent(s) about
                                newborn child's enrollment or a member
                                identification card within 14 days of the date
                                on which the Contractor becomes aware of the
                                birth;

                        iii)    Assuring that enrolled pregnant women select a
                                PCP for an infant prior to


                                    SECTION 6
                                  (ENROLLMENT)
                                 October 1, 1999
                                       6-2


<PAGE>


                                birth and the mother to make an appointment with
                                the PCP immediately upon birth; and
                        iv)     Ensuring that the newborn is linked with a PCP
                                prior to discharge from the hospital, in those
                                instances in which the Contractor has received
                                appropriate notification of the birth prior to
                                discharge.

                c)      The LDSS shall be responsible for ensuring that timely
                        Medicaid Eligibility determination and enrollment of the
                        newborns is effected consistent with state laws,
                        regulations, and policy and with the newborn enrollment
                        guidelines set forth in Appendix H, Section B of this
                        Agreement.

        6.8     Effective Date of Enrollment

                a)      The Contractor and the LDSS must notify the Enrollee of
                        the expected Effective Date of Enrollment. This may be
                        accomplished through a "Welcome Letter". To the extent
                        practicable, such notification must precede the
                        Effective Date of Enrollment. In the event that the
                        actual Effective Date of Enrollment changes, the
                        Contractor and the LDSS must notify the Enrollee of the
                        change.

                b)      As of the Effective Date of Enrollment, and until the
                        Effective Date of Disenrollment from the Contractor's
                        plan, the Contractor shall be responsible for the
                        provision and cost of all care and services covered by
                        the Benefit Package and provided to Enrollees whose
                        names appear on the Prepaid Capitation Plan Roster,
                        except as hereinafter provided.

i)                      Contractor shall not be liable for the cost of any
                                services rendered to an Enrollee prior to his or
                                her Effective Date of Enrollment.
ii)                     Contractor shall not be liable for the cost of
                                hospitalization for an Eligible Person, who is
                                hospitalized after completing and submitting an
                                enrollment form to enroll in the Contractor's
                                plan, and who remains hospitalized on or after
                                the Effective Date of Enrollment.
                        iii)    Except for newborns, an Enrollee's Effective
                                Date of Enrollment shall be the first day of the
                                month on which the Enrollee's name appears on
                                the PCP roster for that month.

        6.9     Roster

a)              The first and second monthly Rosters generated by SDOH in
                        combination shall serve as the official Contractor
                        enrollment list for purposes of MMIS premium billing and
                        payment, subject to on going eligibility of the
                        Enrollees as of the first (1st) day of the enrollment
                        month. Modifications to the first (1st) Roster may be
                        made electronically or in writing by the LDSS


                                    SECTION 6
                                  (ENROLLMENT)
                                 October 1, 1999
                                       6-3


<PAGE>


                        or the Enrollment Broker prior to the end of the month
                        in which the Roster is generated.

                b)      The LDSS shall make data on eligibility determinations
                        available to the Contractor and SDOH to resolve
                        discrepancies that may arise between the Roster and the
                        Contractor's enrollment files in accordance with the
                        provisions in Appendix H, Section D.

c)              If LDSS or Enrollment Broker notifies the Contractor in writing
                        or electronically of changes in the first (1st ) Roster
                        and provides supporting information as necessary prior
                        to the effective date of the Roster, the Contractor will
                        accept that notification in the same manner as the
                        Roster. If the Contractor does not receive the Roster
                        before the last business day of the month prior to the
                        Roster effective date, the Contractor shall receive the
                        applicable monthly Capitation Rate for any individual
                        who is no longer on the Roster, was eligible the prior
                        month, and is inadvertently served by the Contractor
                        before receipt of the Roster.

                d)      All Contractors must have the ability to receive these
                        Rosters electronically.


        6.10    Automatic Re-Enrollment

                The Contractor agrees that Eligible Persons who are disenrolled
                from the Contractor's plan due to loss of Medicaid eligibility
                and who regain eligibility within three (3) months will
                automatically be prospectively re-enrolled with the Contractor's
                plan, subject to availability of enrollment capacity in the
                plan.








                                    SECTION 6
                                  (ENROLLMENT)
                                 October 1, 1999
                                       6-4


<PAGE>


7.      LOCK-IN PROVISIONS

        7.1     Lock-In Provisions in Voluntary Counties

                All Enrollees in local social service districts where enrollment
                in managed care is voluntary shall be subject to a Lock-In
                Period under this Agreement if so required by the LDSS as
                indicated by an x below:

                [ ]     Enrollees are subject to a twelve (12) month Lock-In
                        Period following the Effective Date of Enrollment in the
                        Contractor's plan with an initial ninety (90) day grace
                        period to disenroll from the Contractor's plan without
                        cause.

                [ ]     Enrollees are not subject to a Lock-In Period.

        7.2     Lock-In Provisions in Mandatory Counties

                All Enrollees in local social service districts, except New York
                City, where enrollment in managed care is mandatory, are subject
                to a twelve (12) month Lock-In period following the Effective
                Date of Enrollment in the Contractor's plan, with an initial
                thirty (30) day Grace period in which to disenroll from the
                Contractor's plan without cause, or a sixty (60) day grace
                period in which to disenroll from the Contractor's plan without
                cause, if the Enrollee was auto assigned by the LDSS to the
                Contractor's plan.

        7.3     Lock-In Provisions in New York City

                All Enrollees residing in New York City are subject to a twelve
                (12) month Lock-In Period following the Effective Date of
                Enrollment in the Contractor's plan with an initial ninety (90)
                day grace period in which to disenroll without cause from the
                Contractor 's Plan, regardless of zip code of residence, and
                regardless of whether the Enrollee selected or was auto-assigned
                to the Contractor's plan.

        7.4     Disenrollment During Lock-In Period

                An Enrollee, subject to Lock-In, may disenroll from the
                Contractor's plan during the Lock-In period for "good cause" as
                established in 18 NYCRR Section 360-10.13 or, if the Enrollee be
                comes eligible for an exemption or exclusion from Medicaid
                Managed Care as set forth in Sections 5.2 and 5.3 of this
                Agreement.

        7.5     Notification Regarding Lock-In and End of Lock-In Period

                LDSS, either directly or through the Enrollment Broker, shall
                notify Enrollees of their right to change MCOs in the enrollment
                confirmation notice sent to individuals after they have selected
                a CO or been auto-assigned (the latter being applicable to areas
                where the mandatory program is in effect). LDSS and the


                                    Section 7
                              (LOCK-IN PROVISIONS)
                                 October 1, 1999
                                       7-1


<PAGE>


                Enrollment Broker will be responsible for providing a notice of
                end of Lock-In and the right to change MCOs at least sixty (60)
                days prior to the first plan enrollment anniversary date.

















                                    Section 7
                              (LOCK-IN PROVISIONS)
                                 October 1, 1999
                                       7-2


<PAGE>


8.      DISENROLLMENT

        8.1     Disenrollment Guidelines

                a)      Disenrollment of an Enrollee from the Contractor's Plan
                        may be initiated by the Enrollee, LDSS, and/or the
                        Contractor under the conditions specified in Sections
                        8.7, 8.8 and 8.9 and as detailed in Appendix H, Section
                        E of this Agreement.

                b)      The LDSS and the Contractor agree to conduct
                        disenrollment in accordance with the guidelines set
                        forth in Appendix H, Section E.

                c)      The SDOH and LDSS, upon mutual agreement, may modify
                        Appendix H of this Agreement upon sixty (60) days prior
                        written notice to the Contractor and such modifications
                        shall become binding and incorporated into this
                        Agreement without further action by the parties.

                d)      LDSS shall make the final determination concerning
                        disenrollment, except for Contractor initiated
                        disenrollments and expedited disenrollments, which ma y
                        be subject to SDOH approval as specified elsewhere in
                        this Agreement.

        8.2     Disenrollment Prohibitions

                Disenrollment shall not be based in whole or in part on any of
the following reasons:

                a)      an existing condition or a change in the Enrollee's
                        health which would necessitate disenrollment pursuant to
                        the terms of this Agreement, unless the change
                        i)      results in the Enrollee being reclassified into
                                an excluded category for Medicaid managed care
                                as listed in Section 5.3 of this Agreement;
                        ii)     results in the Enrollee being reclassified into
                                an exempt category as listed in Section 5.2 of
                                this Agreement and the Enrollee wants to
                                disenroll from managed care.

                b)      any of the factors listed in Section 34 -
                        Non-Discrimination of this Agreement; or

                c)      on the Capitation Rate payable to the Contractor r
                        elated to the Enrollee's participation with the
                        Contractor.

        8.3     Reasons for Voluntary Disenrollment


                                    Section 8
                                 (Disenrollment)
                                 October 1, 1999
                                       8-1


<PAGE>



                The LDSS or the Contractor, as agreed upon between the LDSS and
                Contractor, shall provide Enrollees who disenroll voluntarily
                with an opportunity to identify, in writing, their reason(s) for
                disenrollment.

        8.4     Processing of Disenrollment Requests

                Unless otherwise specified in Appendix H, Section F
                disenrollment requests will be processed to take effect on the
                first (1st) day of the next month if the request is made before
                the date specified in Appendix H. In no event shall the
                Effective Date of Disenrollment be later than the first (1st)
                day of the second (2nd) month after the month in which an
                Enrollee requests a disenrollment.

        8.5     Contractor Notification of Disenrollments

                Notwithstanding anything herein to the contrary, the Roster,
                along with any changes sent by the LDSS to the Contractor in
                writing or electronically, shall serve as official notice to the
                Contractor of disenrollment of an Enrollee.

        8.6     Contractor's Liability

                The Contractor is not responsible for providing the Benefit
                Package under this Agreement after the Effective Date of
                Disenrollment unless the Enrollee is admitted to a hospital
                prior to the expected Effective Date of Disenrollment and is not
                discharged from the hospital until after the expected Effective
                Date of Disenrollment, in which case the Contractor is
                responsible for the entire hospital claim. The Contractor shall
                notify the LDSS that the Enrollee remains in the hospital and
                provide the LDSS with information regarding his or her medical
                status. The Contractor is required to cooperate with the
                Enrollee and the new MCO (if applicable) on a timely basis to
                ensure a smooth transition and continuity of care.

        8.7     Enrollee Initiated Disenrollment

                a)      Disenrollment For Good Cause

i)                      An Enrollee subject to Lock-In may initiate
                                disenrollment from the Contractor's plan for
                                "good cause" as defined in 18 NYCRR '360-10.13
                                at any time during the Lock-In period and may
                                disenroll for any reason at any time after the
                                twelfth (12th) month following the Effective
                                Date of Enrollment.

                        ii)     An Enrollee subject to Lock-In may initiate
                                disenrollment for "good cause" by filing a
                                written request with the LDSS or the Contractor.
                                The Contractor must notify the LDSS of the
                                request. The LDSS must respond with a
                                determination within thirty (30) days after
                                receipt of the request.


                                    Section 8
                                 (Disenrollment)
                                 October 1, 1999
                                       8-2


<PAGE>


                        iii)    Enrollees granted disenrollment for "good cause"
                                in a voluntary county may join another plan, if
                                one is available, or participate in Medicaid
                                fee-for-service program. In mandatory counties,
                                unless the Enrollee becomes exempt or excluded,
                                he/she may be required to enroll with another
                                MCO.

iv)                     In the event that the LDSS denies an Enrollee's request
                                for disenrollment for "good cause", the LDSS
                                must inform the Enrollee of the denial of the re
                                quest with a written notice which explains the
                                reason for the denial, states the facts upon
                                which denial is based, cites the statutory and
                                regulatory authority and advises the recipient
                                of his or her right to a fair hearing pursuant
                                to 18 NYCRR Part 358. In the event that the
                                Enrollee's request to disenroll is approved, the
                                notice must state the Effective Date of
                                Disenrollment.

                        v)      Once the Lock-In Period has expired, an Enrollee
                                may disenroll from the Contractor's plan at any
                                time, for any reason.

                b)      Expedited Disenrollment

                        i)      In cases where the Enrollee's request for
                                disenrollment includes an urgent medical need to
                                disenroll from the Contractor 's plan without
                                delay, the SDOH or the LDSS may approve an
                                expedited disenrollment as set forth in Chapter
                                23 of New York State 's 1115 Waiver Operational
                                Protocol, and as set forth in Appendix H. The
                                LDSS will make this decision unless the LDSS
                                delegates this responsibility to SDOH.

ii)                     In cases where an Enrollee's request for disenrollment
                                may include a complaint of non-consensual
                                enrollment, Enrollees may initiate a request for
                                an expedited disenrollment to the LDSS or the
                                SDOH. Substantiation of such a request by the
                                LDSS or the SDOH may result in an expedited
                                disenrollment as set forth in Chapter 23 of New
                                York State's 1115 Waiver Operational Protocol
                                and as set forth in Appendix H.

        8.8     Contractor Initiated Disenrollment

                a)      Contractor initiated disenrollment(s) will be limited to
                        circumstances wherein there is clear and consistent
                        documentation that the individual's behavior is verbally
                        or physically abusive and/or causes harm to other
                        Enrollees or to the plan providers and staff, or is
                        repeatedly non-compliant. Disenrollment may not be
                        initiated due to an Enrollee's refusal to accept a
                        specific treatment nor for behavior resulting from an
                        underlying medical condition, alcohol or substance
                        abuse, mental illness, mental retardation or other
                        developmental disability.

                b)      To request disenrollment of an Enrollee, the Contractor
                        must do the following if applicable:


                                    Section 8
                                 (Disenrollment)
                                 October 1, 1999
                                       8-3


<PAGE>


                        i)      show evidence of professional evaluation ruling
                                out an underlying medical condition, alcohol or
                                substance abuse, mental illness, mental
                                retardation or other developmental disability as
                                cause for Enrollee behavior.
                        ii)     document difficulty encountered with the
                                Enrollee; nature, extent and frequency of
                                abusive or harmful behavior, violence, inability
                                to treat or engage client.
                        iii)    identify and document unique issue s that may be
                                affecting the Contractor's ability to provide
                                treatment effectively to certain Enrollees as
                                well as the appropriateness of providers in
                                network.
                        iv)     document special training offered to providers
                                to improve their ability to deal with difficult,
                                non-compliant patients, or those having the
                                above mentioned conditions.

                c)      The Contractor must make a reasonable effort to identify
                        for the Enrollee, both verbally and in writing, those
                        actions of the Enrollee that have interfered with the
                        effective provision of covered services as well as
                        explain what actions or procedures are acceptable.

                d)      Prior to requesting disenrollment by the LDSS of an
                        Enrollee for whom an agency other than the LDSS provides
                        oversight, the Contractor must make reasonable efforts
                        to engage the Enrollee, directly or by working with such
                        agencies.

                e)      The Contractor shall give prior verbal and written
                        notice to the Enrollee, with a copy to the LDSS, of its
                        intent to request disenrollment. The notice shall advise
                        the Enrollee that the request has been forwarded to the
                        LDSS f or review and approval. The written notice must
                        include the mailing address and telephone number of the
                        LDSS.

                f)      The Contractor shall keep the LDSS informed of decisions
                        related to all complaints filed by an Enrollee as a
                        result of, or subsequent to, the notice of intent to
                        disenroll.

                g)      The SDOH or LDSS will review each Contractor initiated
                        disenrollment request in accordance with protocols
                        established by SDOH in conjunction with the applicable
                        over sight agency. Where applicable, as set out in those
                        protocols, the LDSS or the SDOH, through or with the
                        cooperation of the LDSS, shall consult with local mental
                        health and substance abuse authorities in the County
                        when making the determination to approve or disapprove a
                        Contractor initiated disenrollment request.

                h)      The LDSS will render a decision within thirty (30) days
                        of receipt of the final request. Final written
                        determination will be provided to the Enrollee and the
                        Contractor. If the LDSS determination upholds the
                        Contractor's request to disenroll, the LDSS's written
                        determination must inform the


                                    Section 8
                                 (Disenrollment)
                                 October 1, 1999
                                       8-4


<PAGE>



                        Enrollee of the Effective Date of Disenrollment and
                        include a notice of rights to a fair hearing. Should an
                        Enrollee request a fair hearing as a result of the LDSS
                        determination, the LDSS shall inform the Contractor of
                        the fair hearing request and the Enrollee will remain
                        enrolled in the Contractor's plan until disposition of
                        the fair hearing.

                i)      Once an Enrollee has been disenrolled at the
                        Contractor's request, he/she will not be re-enrolled
                        with the Contractor's plan unless the Contractor first
                        agrees to such re-enrollment.

                j)      In New York City, the Metropolitan Regional Office of
                        the SDOH will assume the LDSS responsibility for
                        reviewing and approving requests as set forth in
                        Sections 8.8(g) and (h) of this Agreement.

        8.9     LDSS Initiated Disenrollment

                a)      LDSS will promptly initiate disenrollment when:

                        i)      an Enrollee is no longer eligible for any
                                Medicaid benefits; or
                        ii)     the Guaranteed Eligibility period ends (See
                                Section 9) and an Enrollee is no longer eligible
                                for any Medicaid benefits; or
                        iii)    an Enrollee is no longer the financial
                                responsibility of the LDSS; or
                        iv)     an Enrollee becomes ineligible for enrollment
                                pursuant to Section 5.3 of this Agreement, as
                                appropriate; or
                        v)      an Enrollee resides out side the Service Area
                                covered by this Agreement, unless Contractor can
                                demonstrate that the Enrollee has made an
                                informed choice to continue enrollment with
                                Contractor and that Enrollee will have
                                sufficient access to Contractor's provider
                                network.











                                    Section 8
                                 (Disenrollment)
                                 October 1, 1999
                                       8-5


<PAGE>


9.      GUARANTEED ELIGIBILITY

        Except as may otherwise be required by law:

9.1     New Enrollees, other than those identified in Sections 9.2 who would
                otherwise lose Medicaid eligibility during the first six (6)
                months of enrollment will retain the right to remain enrolled in
                the Contractor's plan under this Agreement for a period of six
                (6) months from their Effective Date of Enrollment.

        9.2     Guaranteed eligibility is not available to Enrollees who lose
                Medicaid eligibility for one of the following reasons:

                a.      death, moving out of State, incarceration, or the LDSS
                        is unable to locate;

b.              engagement in fraudulent activities prior to the Effective Date
                        of Enrollment, which would render them ineligible for
                        Medicaid;

c.              commitment of an international program violation by a single
                        childless adult between the age of twenty-one (21) to
                        sixty-five (65 ) who is not pregnant o r disabled prior
                        to the Effective Date of Enrollment;

d.              being a woman with a net available income in excess of medically
                        necessary income but at or below 185% of the federal
                        poverty level who is only eligible for Medicaid while
                        she is pregnant and then through the end of the month in
                        which the sixtieth (60th) day following the end of the
                        pregnancy occurs.


9.3     If, during the first six (6) months of enrollment in the Contractor's
                plan, an Enrollee becomes eligible for Medicaid only as a
                spend-down, the Enrollee will be eligible to remain enrolled in
                the Contractor's plan for the remainder of the six (6) month
                guarantee period. During the six (6) month guarantee period, an
                Enrollee eligible for spend-down and in need of wraparound
                services has the option of spending down to gain full Medicaid
                eligibility for the wraparound services. In this situation, the
                LDSS will monitor the Enrollee's need for wrap around services
                and manually set coverage codes as appropriate.

        9.4     The services covered during the Guaranteed Eligibility period
                shall be those contained in the Benefit Package, as specified in
                Appendix K, including free access to family planning services as
                s et forth in Section 10.12 of this Agreement. During the
                Guaranteed Eligibility period Enrollees are also eligible for
                pharmacy services on a Medicaid fee-for service basis.

        9.5     An Enrollee-initiated disenrollment from the Contractor's plan
                terminates the Guaranteed Eligibility period.


                                    SECTION 9
                            (GUARANTEED ELIGIBILITY)
                                 October 1, 1999
                                       9-1


<PAGE>


9.6     Enrollees who lose and regain Medicaid eligibility within a three (3)
                month period will not be entitled to a new period of six (6)
                months Guaranteed Eligibility.

        9.7     During the guarantee period, an Enrollee may not change health
                plans. An Enrollee may choose to disenroll from the Contractor's
                Plan during the guarantee period but is not eligible to enroll
                in any other MCO because he/she has lost eligibility for
                Medicaid.













                                    SECTION 9
                            (GUARANTEED ELIGIBILITY)
                                 October 1, 1999
                                       9-2


<PAGE>


10.     BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES

        10.1    Contractor Responsibilities

                Contractor must provide all services set forth in the Benefit
                Package (Appendix K) that are cove red under the Medic aid fee
                for service program except for services specifically excluded by
                the contract, or enacted or affected by Federal or State Law
                during the period of this agreement. SDOH and LDSS shall assure
                the continued availability and accessibility of Medicaid
                services not covered in the Benefit Package.

        10.2    Compliance with State Medicaid Plan and Applicable Laws

                Benefit Package services provided by the Contractor under this
                Agreement shall comply with all standards of the State Medicaid
                Plan established pursuant to Section 363-a of the State Social
                Services Law and shall satisfy all applicable requirements of
                the State Public Health and Social Services Laws.

        10.3    Definitions

                Benefit Package and Non-Covered Service definitions agreed to by
                the Contractor and the LDSS are contained in Appendix K, which
                is hereby made a part of this contract as if set forth fully
                herein.

        10.4    Provision of Services Through Participating and
                Non-Participating Providers

                With the exception of Emergency services described in Section
                10.14 of this Agreement, Family Planning Services described in
                Section 10.11 of this Agreement, and services for which
                Enrollees can self refer as described in Section 10.16 of this
                Agreement, the Benefit Package must be provided and authorized
                by the Contractor through Provider Agreements with Participating
                Providers, a s specified in Section 22 of this Agreement. A plan
                may also arrange for specialty or other services for Enrollees
                with Non -Participating Providers, in accordance with Section
                21.1(b) of this Agreement.

        10.5    Child Teen Health Program/Adolescent Preventive Services

                a)      The Contractor and its Participating Providers are
                        required to provide the Child Teen Health Program C/THP
                        services outlined in Appendix K (Benefit Package) and
                        comply with applicable EPSDT requirements specified in
                        42 CFR, Part 441, sub-part B, 18NYCRR, Part 508 and the
                        New York State Department of Health C/THP manual. The
                        Contractor and its Participating Providers are required
                        to provide C/THP services to Medicaid Enrollees under 21
                        years of age when:


                                   Section 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 1999
                                      10-1


<PAGE>


                        i)      The care or services are essential to prevent,
                                diagnose, prevent the worsening of , alleviate
                                or a meliorate the effects of an illness,
                                injury, disability, disorder or condition.
                        ii)     The care or services are essential to the
                                overall physical, cognitive and mental growth
                                and developmental needs of the child.
                        iii)    The care or service will assist the individual
                                to achieve or maintain maximum functional
                                capacity in performing daily activities, taking
                                into account both the functional capacity of the
                                individual and those functional capacities that
                                are appropriate for individuals of the same age.

                The Contractor shall base its determination on medical and other
                relevant information provided by the Enrollee's PCP, other
                health care providers, school, local social services, and/or
                local public health officials that have evaluated the child.

                b)      The Contractor and its Participating Providers must
                        comply with the C/THP program standards and must do at
                        least the following with respect to all Enrollees under
                        age 21:

                        i)      Educate pregnant women and families with under
                                age 21 Enrollees about the program and its
                                importance to a child's or adolescent's health.

                        ii)     Educate network providers about the pro gram and
                                their responsibilities under it.

                        iii)    Conduct outreach, including by mail, telephone,
                                and through home visits (where appropriate), to
                                ensure children are kept cur rent with respect t
                                o their periodicity schedules.

                        iv)     Schedule appointments for children and
                                adolescents pursuant to the periodicity
                                schedule, assist with referrals, and conduct
                                follow-up with children and adolescents who miss
                                or cancel appointments.

                        v)      Ensure that all appropriate diagnostic and
                                treatment services, including specialist
                                referrals, are furnished pursuant to findings
                                from a C/THP screen.

                        vi)     Achieve and maintain an acceptable compliance
                                rate for screening schedules during the contract
                                period.

                c)              In addition to C/THP requirements, the
                                Contractor and its Participating Providers are
                                required to comply with the American Medical
                                Association's Guidelines for Adolescent
                                Preventive Services which require annual well
                                adolescent preventive visits which focus on
                                health guidance, immunizations, and screening
                                for physical, emotional, and behavioral
                                conditions.



10.6    Foster Care Children


                                   Section 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 1999
                                      10-2


<PAGE>


                The Contractor shall comply with the health requirements for
                foster children specified in 18 NYCRR Section 441.22 and Part
                507 and any subsequent amendments thereto. These requirements
                include thirty (30) day obligations for a comprehensive physical
                and behavioral health assessment and assessment of the risk that
                the child may be HIV+ and should be tested.

        10.7    Child Protective Services

                The Contractor shall comply with the requirements specified for
                child protective examinations, provision of medical information
                to the child protective services investigation and court ordered
                services as specified in 18 NYCRR Section 432, and any
                subsequent amendments thereto. Medically necessary services,
                whether provided in or out of plan, must be provided. Out of
                plan providers will be reimbursed at the Medicaid fee schedule
                by the Contractor.

        10.8    Welfare Reform

                a)      The LDSS must determine whether each public assistance
                        or combined public assistance/Medicaid applicant is
                        incapacitated or can participate in work activities. As
                        part of this work determination process, the LDSS may
                        require medical documentation and/or an initial mental
                        and/or physical examination to determine whether an
                        individual has a mental or physical impairment that
                        limits his/her ability to engage in work (12 NYCRR
                        Section 1300.2(d)(13)(i)). The LDSS may not require the
                        Contractor to provide the initial district mandated or
                        requested medical examination necessary for an Enrollee
                        to meet welfare reform work participation requirements.

                b)      The Contractor shall arrange for the provision of
                        medical documentation and health, mental health and
                        alcohol and substance abuse assessments as follows:

                        i)      Within ten (10) days of a request of an Enrollee
                                or a former Enrollee, currently receiving public
                                assistance or who is applying for public
                                assistance, the Enrollee's or former Enrollee's
                                PCP or specialist provider, as appropriate,
                                shall provide medical documentation concerning
                                the Enrollee or former Enrollee's health or
                                mental health status to the LDSS or to the LDSS'
                                designee. Medical documentation includes but is
                                not limited to drug prescriptions and reports
                                from the Enrollee's PCP or specialist provider.
                                The Contractor shall include the foregoing as a
                                responsibility of the PCP and specialist
                                provider in its provider contracts or in their
                                provider manuals.

                        ii)     Within ten (10) days of a request of an
                                Enrollee, who has already undergone, or is
                                scheduled to under go, an initial LDSS required
                                mental and/or physical examination, the
                                Enrollee's PCP shall provide a health,


                                   Section 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 1999
                                      10-3


<PAGE>


                        or mental health and/or alcohol and substance abuse
                        assessment, mental and/or medical examination or other
                        services as appropriate to identify or quantify an
                        Enrollee's level of incapacitation. Such assessment must
                        contain a specific diagnosis resulting from any
                        medically appropriate tests and specify any work
                        limitations. The LDSS, may, upon written notice to the
                        Contractor, specify the format and instructions for such
                        an assessment.

                c)      The Contractor is not responsible for the provision and
                        payment of alcohol and substance abuse treatment
                        services mandated by the LDSS for Enrollees as a
                        condition of eligibility for Public Assistance or
                        Medicaid. Public Assistance or Medicaid recipients who
                        are mandated into alcohol and substance abuse treatment
                        will be identified by the LDSS by the use of Welfare
                        Reform Exception Code 83 except:
                        i)      The Contractor will continue to be responsible
                                for a base Benefit Package of Alcohol and
                                Substance Abuse Services (ASA) and for the
                                provision and payment of ASA services to
                                Enrollees when such treatment is underway and
                                the LDSS is satisfied with the health care and
                                treatment plan.
                        ii)     The Contractor will continue to be responsible
                                for the provision and payment of inpatient
                                detoxification services in acute settings.
                        iii)    The Contractor will continue to be responsible
                                for Court Ordered Services as specified in
                                Section 10.10 of this Agreement.
                        (iv)    The Contractor will continue to be responsible
                                for Alcohol and Substance Abuse Services
                                specified in Section 10.16(a) of this Agreement.
                        (v)     The Contractor will continue to be responsible
                                for Alcohol and Substance Abuse Services
                                specified in Section 10.24 of this Agreement.
                        (vi)    The Contractor will continue to be responsible
                                for evaluation and treatment services when the
                                PCP or other designated Participating Provider
                                refers the patient to a Participating Provider
                                for evaluation and/or treatment.


        10.9    Adult Protective Services

                The Contractor shall cooperate with LDSS in the implementation
                of 18 NYCRR Part 457 and any subsequent amendments thereto with
                regard to medically necessary health and mental health services
                and all Court Ordered Services for adults. These services are to
                be provided in or out of plan. Out of plan providers will be
                reimbursed at the Medicaid fee schedule.

        10.10   Court-Ordered Services

                a)      The Contractor shall provide any Benefit Package
                        services to Enrollees as ordered by a court of competent
                        jurisdiction, regardless of whether such services are
                        provided by Participating Providers within the plan or
                        by a


                                   Section 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 1999
                                      10-4


<PAGE>


                        Non-Participating Provider in compliance with such court
                        order. The Non-Participating Provider shall be
                        reimbursed by the Contractor at the Medicaid fee
                        schedule.

                b)      Court Ordered Services are those services ordered by the
                        court performed by, or under the supervision of a
                        physician, dentist, or other provider qualified under
                        State Law to furnish medical, dental, behavior al health
                        (including treatment f or mental health and/or alcohol
                        and/or substance abuse or dependence), or other Medicaid
                        covered services. The plan is responsible f or payment
                        of those Medicaid services as covered by the Benefit
                        Package.

                c)      Court Ordered Services are not covered if they are
                        ordered for the purpose of determining some legal
                        disposition, e. g., custody or visitation
                        determinations.

        10.11   Family Planning and Reproductive Health Services

                a)      Nothing in this Agreement shall restrict the right of
                        Enrollees to receive Family Planning and Reproductive
                        Health Services from any qualified Medicaid provider,
                        regardless of whether the provider is a participating
                        provider or a non-participating provider, without
                        referral from the Enrollee's PCP and without approval
                        from the Contractor.

                b)      The Contractor agrees to permit Enrollees to exercise
                        their right to obtain Family Planning and Reproductive
                        Health Services as defined in Part C-1 of Appendix C,
                        which is hereby made a part of this contract as if s et
                        forth fully herein, from either the Contractor, if
                        family planning is a part of the Contractor's Benefit
                        Package, or from any appropriate Medicaid enrolled
                        Non-Participating Family Planning Provider without a
                        referral from the Enrollee's PCP and without approval by
                        the Contractor.

                c)      The Contractor agrees to permit Enrollees to obtain pre
                        and post-test HIV counseling and blood testing when
                        performed as part of a Family Planning encounter from
                        the Contractor, if Family Planning is a part of the
                        Contractor's Benefit Package, or from any appropriate
                        Medicaid enrolled Non-Participating family planning
                        Provider without a referral from the Enrollee's PCP and
                        without approval by the Contractor.

                d)      The Contractor will inform Enrollees about the
                        availability of in-plan HIV counseling and testing
                        services, out-of-plan HIV counseling and testing
                        services when performed as part of a Family Planning
                        encounter and anonymous counseling and testing services
                        available from SDOH, Local Public Health Agency clinics
                        and other county programs. Counseling and testing
                        rendered outside of a Family Planning encounter, as well
                        as services provided as the result of an HIV+ diagnosis,
                        will be furnished by the Contractor in accordance with
                        standards of care.


                                   Section 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 1999
                                      10-5


<PAGE>


                e)      Contractor must comply with federal, state, and local
                        laws, regulations and policies regarding informed
                        consent and confidentiality. Providers who are employed
                        by the Contractor may share patient information with
                        appropriate Contractor personnel for the purposes of
                        claims payment, utilization review and quality
                        assurance. Providers who have a contract with the
                        Contractor, with a n appropriate consent, may share
                        patient information with the Contractor for purposes of
                        claims payment, utilization review and quality
                        assurance. Contractor must ensure that a n individual's
                        use of family planning services remains confidential and
                        is not disclosed to family members or other unauthorized
                        parties.

                f)      Contractor must inform its practitioners and
                        administrative personnel about policies concerning free
                        access to family planning services, HIV counseling and
                        testing, reimbursement, enrollee education and
                        confidentiality. Contractor must inform its providers
                        that they must comply with professional medical
                        standards of practice, the Contractor 's practice
                        guidelines, and all applicable federal, state, and local
                        laws. These include but are not limited to, standards
                        established by the American College of Obstetricians and
                        Gynecologists, the American Academy of Family
                        Physicians, the U. S. Task Force on Preventive Services
                        and the New York State Child/Teen Health Program. These
                        standards and laws indicate that family planning
                        counseling is an integral part of primary and preventive
                        care.

                g)      The Contractor agrees that if Family Planning is part of
                        the Contractor's Benefit Package, the Contractor will be
                        charged for the services of out of network providers at
                        the applicable Medicaid rate or fee. In such instances,
                        out of network providers will bill Medicaid and the SDOH
                        will issue a confidential charge back to the Contractor.
                        Such charge back mechanism will comply with all
                        applicable patient confidentiality requirements.

                h)      If Contractor includes family planning and reproductive
                        health services in its benefits package, the Contractor
                        shall comply with the requirements for informing
                        Enrollees about family planning and reproductive health
                        services set forth in Part C-2 of Appendix C, which is
                        hereby made a part of this contract as if set forth
                        herein.

                i)      If Contractor does not include family planning and
                        reproductive health services in its Benefit Package,
                        within ninety (90) days of signing this Agreement,
                        Contractor must submit to the SDOH and LDSS a statement
                        of the policy and procedure that the Contractor will use
                        to ensure that its Enrollees are fully informed of their
                        rights to access a full range of family planning and
                        reproductive health services. Refer to Part C-3 of
                        Appendix C for the SDOH Guidelines for Plans That Do Not
                        Provide Family


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                        Planning Services in their Capitation. Contractor shall
                        ensure that prospective Enrollees and Enrollees are
                        advised of the family planning services which are not
                        provided by the Contractor and of their right of access
                        to such services in accordance with the provisions of P
                        art C -3 of Appendix C, which is hereby made a p art of
                        this contract as if set forth fully herein.

                j)      SDOH with DHHS approval may issue modifications to
                        Appendix (C) consistent with relevant provisions of
                        federal and state statutes and regulations. Once issued
                        and upon sixty (60) days notice to the LDSS and
                        Contractor, such modifications shall be deemed
                        incorporated into t his Agreement without further action
                        by the parties.

        10.12   Prenatal Care

                Contractors are responsible for the provision of comprehensive
                Prenatal Care Services to all pregnant woman including all
                services enumerated in Subdivision 1, Section 2522 of the Public
                Health Law in accordance with 10 NYCRR Part 85.40 (Prenatal Care
                Assistance Program).

        10.13   Direct Access

                The Contractor shall offer female Enrollees direct access to
                primary and preventive obstetrics and gynecology services,
                follow-up care as a result of a primary and preventive visit,
                and any care related to pregnancy from the Contractor's network
                providers without referral from the PCP as set forth in Public
                Health Law Section 4406-b(1).

        10.14   Emergency Services

                a)      The Contractor shall maintain coverage utilizing a toll
                        free telephone number twenty-four (24) hours per day
                        seven (7) days per week, answered by a live voice, to
                        advise Enrollees of procedures for accessing Emergency
                        Health Care Services and Urgent Health Care Services.
                        Emergency mental health calls must be triaged via
                        telephone by a trained mental health professional.

                b)      The Contractor agrees that it will not require prior
                        authorization for services in a medical or behavioral
                        health emergency. The Contractor agrees to inform its
                        Enrollees that access to Emergency Services is not
                        restricted and Emergency Services may be obtained from a
                        Non-Participating Provider without penalty. The
                        Contractor must pay for Emergency Medical Services. The
                        Contractor also may require Enrollees to notify the plan
                        or their PCP within a specified time after receiving
                        emergency care and to obtain prior authorization for any
                        follow-up care delivered pursuant to the emergency, as
                        stated in Appendix G.


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                c)      Emergency Services rendered by Non-Participating
                        Providers: The Contractor shall advise its Enrollees how
                        to obtain Emergency Services when it is not feasible for
                        Enrollees to receive Emergency Services from or through
                        a Participating Provider. The Contractor shall bear the
                        cost of providing Emergency Services through
                        Non-Participating Providers.

                d)      The Contractor agrees to abide by guidelines for the
                        provision and payment of Emergency Care and Services
                        which are specified in Appendix G, which is hereby made
                        a part of this contract as if set forth fully herein.

                e)      When emergency transportation is included in the
                        Contractor's Benefit Package, the Contractor shall
                        reimburse for all emergency ambulance services without
                        regard to final diagnosis or prudent layperson
                        standards.

        10.15   Medical Utilization Thresholds (MUTS)

                The Contractors Enrollees are not subject to Medicaid
                Utilization Thresholds (MUTS), limitations on, or copayments for
                services included in the Benefit Package. Enrollees may be
                subject to MUTS for outpatient pharmacy services which are
                billed Medicaid fee-for-service.

        10.16   Services for Which Enrollees Can Self-Refer

                a)      Mental Health and Alcohol/Substance Abuse

                        The Contractor will allow Enrollees or LDSS officials on
                        the Enrollee's behalf to make self referral or referral
                        for one mental health and one alcohol/substance abuse
                        assessment from a Participating Provider in any calendar
                        year period without requiring preauthorization or
                        referral from the Enrollee's Primary Care Provider. In
                        the case of children, such self-referrals may originate
                        at the request of a school guidance counselor (with
                        parental or guardian consent, or pursuant to procedures
                        set forth in Section 33.21 of the Mental Hygiene Law),
                        LDSS Official, Judicial Official, Probation Officer,
                        parent or similar source.

                        i)      The Contractor shall make available to all
                                Enrollees a complete listing of their
                                participating mental health and
                                alcohol/substance abuse providers. The listing
                                should specify which provider groups or
                                practitioners specialize in children's mental
                                health services.
                        ii)     The Contractor will also ensure that its
                                Participating Providers have available and use
                                formal assessment instruments to identify
                                Enrollees requiring mental health and
                                alcohol/substance abuse services, and to
                                determine the types of services that should be
                                furnished.
                        iii)    The Contractor will implement policies and
                                procedures to ensure that Enrollees receive
                                follow-up services from appropriate providers
                                based on the findings of their assessment.


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                b)      Vision Services

                        The Contractor will allow its Enrollees to self-refer to
                        any participating provider of vision services
                        (optometrist or opthalmologist) for refractive vision
                        services. (See Appendix K).

                c)      Diagnosis and Treatment of Tuberculosis

                        Enrollees may self-refer to public health agency
                        facilities for the diagnosis and/or treatment of TB.

                d)      Family Planning and Reproductive Health Services.

                        Enrollees may self-refer to family planning and
                        reproductive health services as described in this
                        Section and Appendix C of this Agreement.

                e)      Sexually Transmitted Disease (STD) Services

                        Enrollees may self refer to any qualified Medicaid
                        provider for STD services as described in Section
                        10.19(c) of this Agreement.

        10.17   Second Opinions for Medical or Surgical Care

                The Contractor will allow Enrollees to obtain a second opinion
                within the Contractor's network of providers for diagnosis of a
                condition, treatment or surgical procedure.

        10.18   Coordination with Local Public Health Agencies

                The Contractor will coordinate its public health-related
                activities with the Local Public Health Agency. Coordination
                mechanisms and operational protocols for addressing public
                health issues will be negotiated with the Local Public Health
                and Social Services Departments and be customized to reflect
                County public health priorities. Negotiations must result in
                agreements regarding required health plan activities related to
                public health. The outcome of negotiations may take the form of
                an informal agreement among the parties which may include memos;
                a separate memorandum of understanding signed by the Local
                Public Health Agency, LDSS , and the Contractor; or an appendix
                to the contract between the LDSS and the Contractor which shall
                be included in Appendix N as if set forth fully herein.


        10.19   Public Health Services

                a)      Tuberculosis Screening, Diagnosis and Treatment;
                        Directly Observed


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                        Therapy(TB\DOT):

                        i)      Consistent with New York State law, public
                                health clinics are required to provide or
                                arrange for treatment to individuals presenting
                                with tuberculosis, regardless of the person's
                                insurance or enrollment status. It is the
                                State's preference that the Contractor's
                                Enrollees receive TB diagnosis and treatment
                                through the Contractor's plan, to the extent
                                that providers experienced in this type of care
                                are available in the Contractor's network of
                                Participating Providers, although Enrollees may
                                self-refer to public health agency facilities
                                for the diagnosis and/or treatment of TB. The
                                Contractor agrees to reimburse public health
                                clinics when physician visit and patient
                                management or laboratory and radiology services
                                are rendered to their Enrollees, within the
                                context of TB diagnosis and treatment.
                        ii)     The Contractor's Participating Providers must
                                report T B cases to the Local Public Health
                                Agency. The LDSS will have the Local Public
                                Health Agency review the tuberculosis treatment
                                protocols and networks of Participating
                                Providers of the Contractor, to verify their
                                readiness to treat Tuberculosis patients. The
                                Contractor's protocols will be evaluated against
                                State and local guidelines. State and local
                                departments of health also will be available to
                                offer technical assistance to the Contractor in
                                establishing TB policies and procedures.
                        iii)    The Contractor may require the Local Public
                                Health Agency to give notification before
                                delivering services, unless these services are
                                ordered by a court of competent jurisdiction.
                                The Local Public Health Agency will: 1) make
                                reasonable efforts to verify with the Enrollee's
                                PCP that he/she has not already provided TB care
                                and treatment, and 2) provide documentation of
                                services rendered along with the claim.
                        iv)     The Contractor may use locally negotiated fees.
                                In addition, SDOH will establish fee schedules
                                for these services, which the Contractor may use
                                in the absence of locally negotiated fees.
                        v)      Contractors may require prior authorization for
                                non-emergency inpatient hospital admissions,
                                except that prior authorization will not be
                                required for an admission pursuant to a court
                                order or an order of detention issued by the
                                Local Commissioner or Director of Public Health.
                        vi)     The Contractor shall provide the Local Public
                                Health Agency with access to health care
                                practitioners on a twenty-four (24) hour a day,
                                seven (7) day a week basis who can authorize
                                inpatient hospital admissions. The Contractor
                                shall respond to the Local Public Health
                                Agency's request for authorization within the
                                same day.
                        vii)    The Contractor Will not be capitated or
                                financially liable for Directly Observed Therapy
                                (DOT) costs. The Contractor also will not be
                                financially liable for treatments rendered to
                                Enrollees who have been institutionalized due to
                                non-compliance with TB care regimens. The
                                Contractor agrees to make all reasonable efforts
                                to ensure coordination with DOT providers
                                regarding clinical care and services. HIV
                                counseling


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                                and testing during a TB related visit at a
                                public health clinic will be covered by Medicaid
                                Fee-For-Service (FFS) at a rate established by
                                the State.
                        viii)   While all other clinical management of
                                tuberculosis is covered by the Contractor,
                                TB/DOT where applicable, can be billed directly
                                to Medicaid by any SDOH approved fee-for-service
                                Medicaid TB/DOT provider. The Contractor remains
                                responsible for communicating, cooperating, and
                                coordinating clinic management of TB with the TB
                                /DOT provider. The Enrollee reserves the right
                                to use any fee-for-service DOT provider because
                                TB/DOT is a non-covered benefit.

                b)      Immunizations

                        i)      Immunizations for adults and administration of
                                immunizations for children will be included in
                                the Benefit Package and the Contractor will be
                                required to reimburse the Local Public Health
                                Agency when Enrollees self-refer.
                        ii)     In order to be eligible for reimbursement, a
                                Local Public Health Agency must make reasonable
                                efforts to (1) determine the Enrollee's managed
                                care membership status; and (2) ascertain the
                                Enrollee's immunization status. Such efforts
                                shall consist of client interviews and, when
                                available, access to the Immunization Registry.
                                When an Enrollee presents a membership card with
                                a PCP's name, the Local Public Health Agency
                                shall all the PCP. If the agency is unable to
                                verify the immunization status from the PCP or
                                learns that immunization is needed, the agency
                                shall proceed to deliver the service as
                                appropriate, and the Contractor will reimburse
                                the Local Public Health Agency at the negotiated
                                rate or at a fee schedule to be used in the
                                absence of a negotiated rate. Upon
                                implementation of the immunization registry, the
                                Local Public Health Agency shall not be required
                                to contact the PCP.
                        iii)    If the immunization is administered by the PCP,
                                immunization materials for children should be
                                obtained free of charge from the "Vaccine For
                                Children Program". The Contractor will be
                                reimbursed only for administering the vaccine to
                                children.

                c)      Prevention and Treatment of Sexually Transmitted
                        Diseases

                        The Contractor will be responsible for ensuring that its
                        Participating Providers educate their Enrollees about
                        the risk and prevention of sexually transmitted disease
                        (STD). The Contractor also will be responsible for
                        ensuring that its Participating Providers screen and
                        treat Enrollees for STDs and report cases of STD to
                        Local Public Health Agency and cooperate in contact
                        investigation, in accordance with existing state and
                        local laws and regulations. HIV counseling and testing
                        provided during a STD related visit at a public health
                        clinic will be covered by Medicaid FFS at a rate
                        established by the State. Nothing in this Agreement
                        shall restrict the right of Enrollees to receive STD
                        services from any qualified Medicaid provider,
                        regardless of whether the provider is a


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                        Participating Provider or a Non-Participating Provider,
                        without referral from the Enrollee's PCP and without
                        approval from the Contractor

                d)      Lead Poisoning

                        The Contractor will be responsible for carrying out and
                        ensuring that its Participating Providers comply with
                        lead poisoning screening and follow-up as specified in
                        10 NYCRR, Sub-part 67.1. The Contractor shall coordinate
                        the care of such children with Local Public Health
                        Agencies to assure appropriate follow-up in terms of
                        environmental investigation, risk management and
                        reporting requirements.

        10.20   Adults with Chronic Illnesses and Physical or Developmental
                Disabilities

                The Contractor will implement all of the following to meet the
                needs of their adult Enrollees with chronic illnesses and
                physical or developmental disabilities:

                a)      Satisfactory methods for ensuring that the Contractor
                        and it Participating Providers are in compliance with
                        the Americans with Disabilities Act ("ADA") and with the
                        SDOH Guidelines for Medicaid MCO Compliance with the ADA
                        which are set forth in Appendix J, which is hereby made
                        a part of this Agreement as if set forth fully herein,
                        and in accordance with Section 24 of this Agreement.
                        (see Section 24).

                b)      Satisfactory methods/guidelines for identifying persons
                        at risk of, or having, chronic diseases and disabilities
                        and determining their specific needs in terms of
                        specialist physician referrals, durable medical
                        equipment, home health services, etc.

                c)      Satisfactory case management systems.

                d)      Satisfactory systems for coordinating service delivery
                        with out-of-network providers, including behavioral
                        health providers for all Enrollees.

                e)      Policies and procedures to allow for the continuation of
                        existing relationships with out-of-network providers,
                        consistent with P. H. L. 4403 6(e ) and Section 15.5 of
                        this Agreement.

        10.21   Children with Special Health Care Needs

                Children with special health care needs are those who have or
                are suspected of having a serious or chronic physical,
                developmental, behavioral, or emotional condition and who also
                require health and related services of a type or amount beyond
                that required by children generally. The Contractor will be
                responsible


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                for performing all of the same activities for this population as
                for adults. In addition, the Contractor will implement the
                following for these children:

                a)      Satisfactory methods for interacting with school
                        districts, preschool services, child protective service
                        agencies, early intervention officials, behavioral
                        health, and developmental disabilities service
                        organizations for the purpose of coordinating and
                        assuring appropriate service delivery.

                b)      An adequate network of pediatric providers and
                        sub-specialists, contractual relationships with tertiary
                        institutions, to meet their medical needs.

                c)      Satisfactory methods for assuring that children with
                        serious, chronic, and rare disorders receive appropriate
                        diagnostic work-ups on a timely basis.

                d)      Satisfactory arrangements for assuring access to
                        specialty centers in and out of New York State for
                        diagnosis and treatment of rare disorders.

                e)      A satisfactory approach for assuring access to allied
                        health professionals (Physical Therapists, Occupational
                        Therapists, Speech Therapists, and Audiologists)
                        experienced in dealing with children and families.

        10.22   Persons Requiring Ongoing Mental Health Services

                These individuals, while not diagnosed as SPMI or SED, may have
                relatively significant needs for mental health services.
                Accordingly, the Contractor will implement all of the following
                for its Enrollees with chronic or ongoing mental health service
                needs:

                a)      Inclusion of all of the required provider types listed
                        in Section 21 of this Contract.

                b)      Satisfactory methods for identifying persons requiring
                        such services and encouraging self-referral and early
                        entry into treatment.

                c)      Satisfactory case management system.

                d)      Satisfactory systems for coordinating service delivery
                        between physical health, alcohol/substance abuse, and
                        mental health providers, and coordinating services with
                        other available services, including Social Services.

                The Contractor agrees to participate in the local planning
                process for serving persons with mental health needs to the
                extent requested by the LDSS. At the LDSS' discretion, the
                Contractor will develop linkages with local governmental units
                on coordination, procedures and standards related to mental
                health services and related activities.


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        10.23   Member Needs Relating to HIV

                HIV positive (+) persons will be permitted to enroll voluntarily
                into health plans at the start of this program, and plans must
                inform newly diagnosed HIV (+) Enrollees known to the plan of
                their enrollment options due to such exemption status.

                The Contractor agrees that anonymous testing may be furnished
                without prior approval by the Contractor and may be conducted at
                anonymous testing sites available to clients. Services provided
                for HIV treatment may only be obtained from the Contractor if
                the individual chooses to enroll and stay enrolled in the
                Contractor's plan.

                To adequately address the HIV prevention needs of uninfected
                Enrollees, as well as the special needs of HIV positive (+)
                individuals who do enroll in managed care, the Contractor shall
                have in place all of the following:

                a)      Methods for promoting HIV prevention to all Plan
                        Enrollees. H IV prevention information, both primary
                        (targeted to uninfected Enrollees ), as well as
                        secondary (targeted to those Enrollees with HIV
                        infection) should be tailored to the Enrollee's age,
                        sex, and risk factor(s), including sexual orientation
                        and injection drug use, and must be culturally and
                        linguistically appropriate. All plan Enrollees should be
                        informed of the availability of both in-plan HIV
                        counseling and testing services, out-of-plan HIV
                        counseling and testing services when performed as part
                        of a family planning encounter, as well as HIV
                        counseling and testing services available through SDOH,
                        local health units and Anonymous Counseling and Testing
                        Programs.

                b)      Satisfactory methods for assuring the performance of
                        risk assessments, risk reduction counseling, diagnosis
                        and early entry into treatment.

                c)      The Contractor shall comply with the requirements in
                        Title 10 NYCRR which mandate that HIV counseling with
                        testing , presented as a clinical recommendation, be
                        provided to all women in prenatal care and their
                        newborns.

                d)      Satisfactory case management system linkages must be
                        established with traditional HIV providers, including
                        Designated AIDS Center Hospitals, HIV primary care
                        providers, providers funded under the Ryan White CARE
                        Act and clinical education providers, as available.

                e)      The Contractor shall assure that its Participating
                        Providers shall report positive HIV results to the Local
                        Public Health Agency and assist in contact
                        investigation.

        10.24   Persons Requiring Alcohol/Substance Abuse Services


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                The Contractor will have in place all of the following for its
                Enrollees requiring alcohol/substance abuse services:

                a)      Participating Provider networks consisting of licensed
                        providers, as defined in Section 21.17 of this contract.

                b)      Satisfactory methods for identifying persons requiring
                        such services and encouraging self-referral and early
                        entry into treatment. In the case of pregnant women,
                        having methods for referring to OASAS for appropriate
                        services beyond the Contractor's Benefit Package (e. g.,
                        halfway houses).

                c)      Satisfactory systems of care (provider networks and
                        referral processes sufficient to ensure that emergency
                        services can be provided in a timely manner), including
                        crisis services.

                d)      Satisfactory case management systems.

                e)      Satisfactory systems for coordinating service delivery
                        between physical health, alcohol/substance abuse, and
                        mental health providers, and coordinating in-plan
                        services with other services, including Social Services.

                The Contractor agrees to also participate in the local planning
                process for serving persons with alcohol and substance
                addictions, to the extent requested by the LDSS. At the LDSS's
                discretion, the Contractor will develop linkages with local
                governmental units on coordination procedures and standards
                related to Alcohol/Substance Abuse Services and related
                activities.

        10.25   Native Americans

                If the Contractor 's Enrollee is a Native American and the
                Enrollee chooses to access primary care services through their
                tribal health center, the PCP authorized by the Contractor to
                refer the Enrollee for plan benefits must develop a relationship
                with the Enrollee's PCP at the tribal health center to
                coordinate services for said Native American Enrollee.

        10.26   Women, Infants, and Children (WIC)

                The Contractor shall develop linkage agreements or other
                mechanisms to ensure women and children enrollees are referred
                to W IC services if qualified to receive such services. The
                Contractor shall refer pregnant women and children, five (5)
                years of age or younger, to W IC local agencies for nutritional
                assessments and supplements.


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        10.27   Coordination of Services

                The Contractor shall coordinate care for Enrollees with:

                a)      the court system (for court ordered evaluations and
                        treatment);

                b)      specialized providers of health care for the homeless,
                        and other providers of services for victims of domestic
                        violence;

                c)      family planning clinics, community health centers,
                        migrant health centers, rural health centers;

                d)      WIC, Head Start, Early Intervention;

                e)      special needs plans;

                f)      programs funded through the Ryan White CARE Act;

                g)      other pertinent entities that provide services out of
                        network;

                h)      Prenatal Care Assistance Program (PCAP) Providers;

                i)      local governmental units responsible for public health,
                        mental health, mental retardation or alcohol and
                        substance abuse services; and

                j)      specialized providers of long term care for people with
                        developmental disabilities.

        Coordination may involve contracts or linkage agreements (if entities
        are willing to enter into such agreement), or other mechanisms to ensure
        coordinated care for Enrollees.







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11.     MARKETING

        11.1    Marketing Plan

                The Contractor shall have a Marketing Plan, that has been
                prior-approved by the SDOH and/or LDSS, that describes the
                Marketing activities the Contractor will undertake within the
                local district during the term of this Agreement.

                The Marketing Plan and all marketing activities must be
                consistent with the Marketing Guidelines which are set forth in
                Appendix D, which is hereby made a part of this Agreement as if
                set forth fully herein.

                The Marketing Plan shall be kept on file in the offices of the
                Contractor, LDSS, and the SDOH. The Marketing Plan may be
                modified by the Contractor subject to prior written approval by
                the SDOH and/or the LDSS. The LDSS or SDOH must take action on
                the changes submitted within sixty (60) calendar days of
                submission or the Contractor may deem the changes approved.

        11.2    Marketing Activities

                Marketing activities by the Contractor shall conform to the
                approved Marketing Plan.

        11.3    Prior Approval of Marketing Materials, Procedures,
                Subcontractors

                The Contractor shall submit all subcontracts, procedures, and
                materials related to Marketing to Eligible Persons to the SDOH
                and/or LDSS for prior written approval. The Contractor shall not
                enter into any subcontracts or use any marketing subcontractors,
                procedures, or materials that the SDOH and/or LDSS has not
                approved.

        11.4    Marketing Infractions

                Infractions of the Marketing Guidelines may result in the
                following actions being taken by the LDSS to protect the
                interests of the program and its clients. These actions shall be
                taken at the sole discretion of the LDSS.

                a)      If an MCO or its representative commits a first time
                        infraction of marketing guidelines and the LDSS deems
                        the infraction to be minor or unintentional in nature,
                        the LDSS may issue a warning letter to the MCO.

                b)      For subsequent or more serious infractions, the LDSS may
                        impose liquidated damages of $2,000 or other appropriate
                        non-monetary sanction for each infraction.

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                c)      The LDSS may require the MCO to prepare a corrective
                        action plan with a specified deadline for
                        implementation.

                d)      If the MCO commits further infractions, fails to pay
                        liquidated damages within the specified timeframe, fails
                        to implement a corrective action plan in a timely manner
                        or commits an egregious first-time infraction, the LDSS
                        may:

                        i)      prohibit the plan from conducting any marketing
                                activities for a period up to the end of the
                                contract period;
                        ii)     suspend new enrollments, other than newborns,
                                for a period up to the remainder of the
                                contract; or
                        iii)    terminate the contract pursuant to termination
                                procedures described therein.

        11.5    LDSS Option to Adopt Additional Marketing Guidelines

                The LDSS may adopt, subject to SDOH approval, additional and/or
                more restrictive terms in the Marketing Guidelines to the extent
                appropriate to local conditions and circumstances, which shall
                be appended to Appendix D, Section E.












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                                      11-2

<PAGE>
12.     MEMBER SERVICES

        12.1    General Functions

                The Contractor shall operate a Member Services function during
                regular business hours, which must be accessible to Enrollees
                via a toll-free telephone line. Personnel must also be available
                via a toll-free telephone line (which can be the member services
                toll-free line or separate toll-free lines) not less than during
                regular business hours to address complaints and utilization
                review inquiries. In addition, the Contractor must have a
                telephone system capable of accepting, recording or providing
                instruction to incoming calls regarding complaints and
                utilization review during other than normal business hours and
                measures in place to ensure a response to those calls the next
                business day after the call was received. At a minimum, the
                Member Services Department must be staffed at a ratio of at
                least one (1) full time equivalent Member Service Representative
                for every 4,000 or fewer Enrollees. Member Services staff must
                be responsible for the following:

                a)      Explaining the Contractor's rules for obtaining services
                        and assisting Enrollees in making appointments.

                b)      Assisting Enrollees to select or change Primary Care
                        Providers.

                c)      Fielding and responding to Enrollee questions and
                        complaints, and advising Enrollees of the prerogative to
                        complain to the SDOH and LDSS at any time.

                d)      Clarifying information in the member handbook for
                        Enrollees.

                e)      Advising Enrollees of the Contractor's complaint and
                        appeals program, the utilization review process, and
                        Enrollee's rights to a fair hearing or external review.

                f)      Clarifying for potential Enrollees current categories of
                        exemptions and/or exclusions the Contractor may refer to
                        the LDSS or the Enrollment Broker, where one is in
                        place, if necessary, for more information on exemptions
                        and exclusions.

        12.2    Translation and Oral Interpretation

                a)      The Contractor must make available written marketing and
                        other informational materials (e. g., member handbooks)
                        in a language other than English whenever at least five
                        percent (5 %) of the potential Enrollees of the
                        Contractor in any county of the service area speak that
                        particular language and do not speak English as a first
                        language.

                                   SECTION 12
                                (MEMBER SERVICES)
                                 October 1, 1999
                                      12-1
<PAGE>

                b)      In addition, verbal interpretation services must be made
                        available to Enrollees who speak a language other than
                        English as a primary language. Interpreter services must
                        be offered in person where practical, but otherwise may
                        be offered by telephone.

                c)      The SDOH will determine the need for other than English
                        translations based on County-specific census data or
                        other available measures.

        12.3    Communicating With The Visually, Hearing and Cognitively
                Impaired

                The Contractor also must have in place appropriate alternative
                mechanisms for communicating effectively with persons with
                visual, hearing, speech, physical or developmental disabilities.
                These alternative mechanisms include Braille or audio tapes for
                the visually impaired, TTY access for those with certified
                speech or hearing disabilities, and use of American Sign
                Language and/or integrative technologies.

                                   SECTION 12
                                (MEMBER SERVICES)
                                 October 1, 1999
                                      12-2

<PAGE>

13.     ENROLLEE NOTIFICATION

        13.1    Provider Directories/Office Hours for Participating Providers

                a)      The Contractor will provide the following information to
                        each Enrollee, and upon request, to each prospective
                        Enrollee a list of Participating Providers by specialty
                        and a list of facilities, for the county/borough in
                        which the Enrollee or prospective Enrollee resides. Such
                        list shall include names, office addresses, telephone
                        numbers, board certification for physicians, and
                        information on language capabilities and wheelchair
                        accessibility of Participating Providers. This
                        information ma y be provided in the form of a Provider
                        Directory and must be updated by the Contractor
                        annually, or twice a year at the option of the LDSS. Mid
                        year updates may be accomplished through an insert which
                        lists additions or deletions of Participating Providers.

                b)      In addition, the Contractor must make available to the
                        LDSS the office hours for Participating Providers. This
                        requirement may be satisfied by providing a copy of the
                        list or Provider Directory described in this Section
                        with the addition of office hours or by providing a
                        separate listing of office hours for Participating
                        Providers

        13.2    Member ID Cards

                a)      The Contractor must issue an identification card to the
                        Enrollee containing the following information:

                        i)      the name of the Enrollee's clinic (if
                                applicable);

                        ii)     the name of the Enrollee's PCP and the PCP's
                                telephone number;

                        iii)    the member services toll free telephone number;
                                and

                        iv)     the twenty-four (24) hour toll free telephone
                                number that Enrollees may use to access
                                information on obtaining services when his/her
                                PCP is not available.

                b)      If an Enrollee is being served by a PCP team, the name
                        of the individual shown on the card should be the lead
                        provider. PCP information may be embossed on the card or
                        affixed to the card by a sticker.

                c)      The Contractor shall issue an identification card within
                        fourteen (14) days of an Enrollees Effective Date of
                        Enrollment. If unforeseen circumstances, such as the
                        lack of identification of a PCP, prevent the MCO from
                        forwarding the official identification card to new
                        Enrollees within the fourteen (14) day period,
                        alternative measures by which Enrollees may identify
                        themselves such as use of a Welcome Letter or a
                        temporary identification card shall be deemed acceptable
                        until such time as a PCP is either chosen by the
                        Enrollee or auto assigned by the Contractor. The
                        Contractor agrees to implement an alternative method by
                        which individuals may identify themselves as Enrollees
                        prior to receiving the card (e.g., using a "welcome
                        letter" from the plan) and to

                                   Section 13
                             (ENROLLEE NOTIFICATION)
                                 October 1, 1999
                                      13-1

<PAGE>

                        update PCP information on the identification card.
                        Newborns of Enrollees need not present ID cards in order
                        to be seen by the MCO and its Participating Providers.

        13.3    Member Handbooks

                The Contractor shall issue to a new Enrollee within fourteen
                (14) days of the Effective Date of Enrollment a Member Handbook,
                which is consistent with the SDOH guidelines described in
                Appendix E, which is hereby made a part of this Agreement as if
                set forth fully herein.

        13.4    Notification of Effective Date of Enrollment

                The Contractor shall inform each Enrollee in writing within
                fourteen (14) days of the Effective Date of Enrollment of any
                restriction on the Enrollee's right to terminate enrollment. The
                initial enrollment information and the Member Handbook shall be
                adequate to convey this notice.

        13.5    Notification of Enrollee Rights

                The Contractor agrees to make all reasonable efforts to contact
                new Enrollees, in person, by telephone, or by mail, within
                thirty (30) days of their Effective Date of Enrollment.
                "Reasonable efforts" are defined to me an at least three (3)
                attempts, with more than one method of contact being employed.
                Upon contacting the new Enrollee(s), the Contractor agrees to do
                at least the following:

                a)      Inform the Enrollee about the Contractor's policies with
                        respect to obtaining medical services, including
                        services for which the Enrollee may self-refer, and what
                        to do in an emergency.

                b)      Conduct a brief health screening to assess the
                        Enrollee's need for any special health care (e.g.,
                        prenatal or behavioral health services) or
                        language/communication needs. If a special need is
                        identified, the Contractor shall assist the Enrollee in
                        arranging for an appointment with his/her PCP or other
                        appropriate provider.

                c)      Offer assistance in arranging an initial visit to the
                        Enrollee's PCP for a baseline physical and other
                        preventive services, including an assessment of the
                        Enrollee's potential risk, if any, for specific diseases
                        or conditions.

                d)      Inform new Enrollees about their rights for continuation
                        of certain existing services.

                e)      Provide the Enrollee with the Contractor's toll free
                        telephone number that may be called twenty-four (24)
                        hours a day, seven (7) days a week if the Enrollee has
                        questions about obtaining services and cannot reach
                        his/her PCP (this

                                   Section 13
                             (ENROLLEE NOTIFICATION)
                                 October 1, 1999
                                      13-2

<PAGE>

                        telephone number need not be the Member Services line
                        and need not be staffed to respond to Member
                        Services-related inquiries). The Contractor must have
                        appropriate mechanisms in place to accommodate Enrollees
                        who do not have telephones and therefore cannot readily
                        receive a Call back.

                f)      Advise Enrollee about opportunities available to learn
                        about MCO policies and benefits in greater detail (e.g.,
                        welcome meeting, Enrollee orientation and education
                        sessions).

                g)      Provide the Enrollee with a complete list of network
                        providers that may be accessed directly, without
                        referral. The list should group providers by service
                        type and must include addresses and telephone numbers.

                h)      Assist the Enrollee in selecting a primary care provider
                        if one has not already been chosen.

        13.6    Enrollee's Rights to Advance Directives

                The Contractor shall, in compliance with the requirements of 42
                FR 434.28, maintain written policies and procedures regarding
                advance directives and inform each Enrollee in writing at the
                time of enrollment of an individual 's rights under State law to
                formulate advance directives and of the Contractor's policies
                regarding the implementation of such rights. The Contractor
                shall include in such written notice to the Enrollee materials
                relating to advance directives and health care proxies as
                specified in 10 NYCRR Sections 98.14(f) and 700.5.

        13.7    Approval of Written Notices

                The Contractor shall submit the format and content of all
                written notifications described in this Section to LDSS for
                review and prior approval by LDSS or SDOH. All written
                notifications must be written at a fourth (4th) to sixth (6th)
                grade level and in at least ten (10) point print.

        13.8    Contractor's Duty to Report Lack of Contact

                The Contractor must inform the LDSS of any Enrollee they are
                unable to contact within ninety (90) days of enrollment using
                reasonable efforts as defined in Section 13.5 of the Agreement
                and who have not presented for any health care services through
                the Contractor or its Participating Providers.

        13.9    Contractor Responsibility to Notify Enrollee of Expected
                Effective Date of Enrollment

                The Contractor must notify the Enrollee of the expected
                Effective Date of Enrollment. In the event that the actual
                Effective Date of Enrollment is different

                                   Section 13
                             (ENROLLEE NOTIFICATION)
                                 October 1, 1999
                                      13-3
<PAGE>

                from that given to the Enrollee the Contractor must notify the
                Enrollee of the actual date of enrollment. This ma y be
                accomplished through a Welcome Letter. To the extent
                practicable, such notification must precede the Effective Date
                of Enrollment.

        13.10   LDSS Notification of Enrollee's Change in Address

                The LDSS must notify the Contractor of any known change in
                address of Enrollees in the Contractor's plan.

                                   Section 13
                             (ENROLLEE NOTIFICATION)
                                 October 1, 1999
                                      13-4

<PAGE>

14.     COMPLAINT AND APPEAL PROCEDURE

        14.1    Contractor's Program to Address Complaints

                a)      The Contractor shall establish and maintain a
                        comprehensive program designed to address clinical and
                        other complaints, and appeals of complaint
                        determinations, which may be brought by Enrollees,
                        consistent with Articles 44 and 49 of the New York State
                        P. H. L.

                b)      The program must include methods for prompt internal
                        adjudication of Enrollee complaints and appeals and
                        provide for the maintenance of a written record of all
                        complaints and appeals received and reviewed and their
                        disposition.

                c)      The Contractor shall ensure that persons with authority
                        to require corrective action participate in the
                        complaint and appeal process.

        14.2    Notification of Complaint and Appeal Program

                a)      The Contractor's specific complaint and appeal program
                        shall be described in the Contractor's member handbook
                        and shall be made available to all Enrollees.

                b)      The Contractor will advise Enrollees of their right to a
                        fair hearing as appropriate and comply with the
                        procedures established by SDOH for the Contractor to
                        participate in the fair hearing process, asset forth in
                        Section 25 of this Agreement. The Contractor will also
                        advise Enrollees of their right to an external appeal,
                        in accordance with Section 26 of this Agreement.

        14.3    Guidelines for Complaint and Appeal Program

                a)      The Contractor's complaint and appeal program will
                        comply with the Managed Care Complaint and Appeals
                        Program Guidelines described in Appendix F, which is
                        hereby made apart of this Agreement as if set forth
                        fully herein. The SDOH and LDSS may modify Appendix F of
                        this Agreement upon sixty (60) days prior written notice
                        to the Contractor and such modifications shall become
                        binding and incorporated into this Agreement without
                        further action by the parties.

                b)      The Contractor's complaint and appeal procedures shall
                        be approved by the SDOH and LDSS and kept on file with
                        the Contractor, LDSS and SDOH.

                c)      The Contractor shall not modify its complaint and
                        appeals procedure without the prior written approval of
                        SDOH, in consultation with LDSS, and shall provide LDSS
                        and SDOH with a copy of the approved modification within
                        fifteen (15) days after its approval.

                                   Section 14
                        (COMPLAINT AND APPEAL PROCEDURE)
                                 October 1, 1999
                                      14-1

<PAGE>

        14.4    Complaint Investigation Determinations

                The MCO must adhere to determinations resulting from complaint
                investigations conducted by SDOH.

                                   Section 14
                        (COMPLAINT AND APPEAL PROCEDURE)
                                 October 1, 1999
                                      14-2

<PAGE>

15.     ACCESS REQUIREMENTS

        15.1    Appointment Availability Standards

                The Contractor shall comply with the following appointment
                availability standards.(1)

                a)      For emergency care: immediately upon presentation at a
                        service delivery site.

                b)      For urgent care: within twenty-four (24) hours of
                        request.

                c)      Non-urgent "sick" visit: within forty-eight (48) to
                        seventy-two (72) hours of request, as clinically
                        indicated.

                d)      Routine non-urgent, preventive appointments: within four
                        (4) weeks of request.

                e)      Specialist referrals (not urgent): within four (4) to
                        six (6) weeks of request.

                f)      Initial prenatal visit: within three (3) weeks during
                        first trimester, within two (2) weeks during the second
                        trimester and within one (1) week during the third
                        trimester.

                g)      Adult Baseline and routine physicals: within twelve (12)
                        weeks from enrollment. (Adults >21).

                h)      Well child care: within four (4) weeks of request.

                i)      Initial family planning visits: within two (2) weeks of
                        request.

                j)      In-plan mental health or substance abuse follow-up
                        visits (pursuant to an emergency or hospital discharge):
                        within five (5 ) days of request, or as clinically
                        indicated.

                k)      In-plan, non-urgent mental health or substance abuse
                        visits: within two (2) weeks of request.

                l)      Initial PCP office visit for newborns: within two (2)
                        weeks of hospital discharge.

                m)      Provider visits to make health, mental health and
                        substance abuse assessments for the purpose of making
                        recommendations regarding a recipient's ability to
                        perform work when requested by a LDSS: within ten (10)
                        days of request by an Enrollee, in accordance with
                        Section 10.8 of this Agreement.

        15.2    Twenty-Four (24) Hour Access

                a)      The Contractor must provide access to medical services
                        and coverage to Enrollees, either directly or through
                        their PCPs, on a twenty-four (24) hour a day, seven (7)
                        day a week basis. The Contractor must instruct Enrollees
                        on what to do to obtain services after business hours
                        and on weekends.

                                   Section 15
                        (EQUALITY OF ACCESS AND TREATMENT
                                 October 1, 1999
                                      15-1

--------------------
(1) These are general standards and are not intended to supersede sound clinical
judgement as to the necessity for care and services on a more expedient basis,
when judged clinically necessary and appropriate.
<PAGE>

                b)      The Contractor may satisfy the requirement in Section
                        15.2(a) by requiring their PCPs to have primary
                        responsibility for serving as an after hours "on-call"
                        telephone resource to members with medical problems.
                        Under no circumstances may the Contractor routinely
                        refer calls to an emergency room.

        15.3    Appointment Waiting Times

                Enrollees with appointments shall not routinely be made to wait
                longer than one hour.

        15.4    Travel Time Standards

                The Contractor will maintain a network that is geographically
                accessible to the population to be served.

                a)      Primary Care

                        Travel time/distance to primary care sites shall not
                        exceed 30 minutes in Metropolitan areas or 30 minutes/30
                        miles in non-metropolitan areas, except in rural areas
                        where the State has granted the Contractor an exemption
                        from this requirement based on community standards.

                        Enrollees may, at their discretion, select participating
                        PCPs located farther from their homes as long as they
                        are able to arrange and pay for transportation to the
                        PCP themselves.

                b)      Other Providers

                        Travel time/distance to specialty care, hospitals,
                        mental health, lab and x-ray providers shall not exceed
                        30 minutes/30 miles, except in rural areas where the
                        SDOH has granted the Contractor an exemption from this
                        requirement based on community standards.

        15.5    Service Continuation

                a)      New Enrollees

                        If a new Enrollee has an existing relationship with a
                        health care provider who is not a member of the
                        Contractor's provider network, the contractor shall
                        permit the Enrollee to continue an on going course of
                        treatment by the Non-Participating Provider during a
                        transitional period of up to sixty (60) days from the
                        Effective Date of Enrollment, if, (1) the Enrollee has a
                        life-threatening disease or condition or a degenerative
                        and disabling disease or condition, or (2) the Enrollee
                        has entered the second trimester of pregnancy at the
                        Effective Date of Enrollment, in which case the
                        transitional period shall

                                   Section 15
                        (EQUALITY OF ACCESS AND TREATMENT
                                 October 1, 1999
                                      15-2

<PAGE>

                        include the provision of post-partum care directly
                        related to the delivery up until sixty (60) days post
                        partum. If the Enrollee elects to continue to receive
                        care from such Non-Participating Provider, such care
                        shall be authorized by the Contractor for the
                        transitional period only if the Non-Participating
                        Provider agrees to:

                        i)      accept reimbursement from the Contractor at
                                rates established by the Contractor as payment
                                in full, which rates shall be no more than the
                                level of reimbursement applicable to similar
                                providers within the Contractor's network for
                                such services; and

                        ii)     adhere to the Contractor's quality assurance
                                requirements and agrees to provide to the
                                Contractor necessary medical information related
                                to such care; and

                        iii)    otherwise adhere to the Contractor's policies
                                and procedures including, but not limited to
                                procedures regarding referrals and obtaining
                                preauthorization in a treatment plan approved by
                                the Contractor.

                In no event shall this requirement be construed to require the
                Contractor to provide coverage for benefits not otherwise
                covered.

                b)      Enrollees Whose Health Care Provider Leaves Network

                        The Contractor shall permit an Enrollee, whose health
                        care provider has left the Contractor's network of
                        providers, for reasons other than imminent harm to
                        patient care, a determination of fraud or a final
                        disciplinary action by a state licensing board that
                        impairs the health professional's ability to practice,
                        to continue an ongoing course of treatment with the
                        Enrollee's current health care provider during a
                        transitional period, consistent with New York State P.
                        H. L. Section 4403(6)(e).

                        The transitional period shall continue up to ninety (90)
                        days from the date of notice to the Enrollee of the
                        provider's disaffiliation from the network; or, if the
                        Enrollee has entered the second trimester of pregnancy,
                        for a transitional period that includes the provision of
                        post-partum care directly related to the delivery
                        through sixty (60) days post partum. If the Enrollee
                        elects to continue to receive care from such
                        Non-Participating Provider, such care shall be
                        authorized by the Contractor for the transitional period
                        only if the Non Participating Provider agrees to:

                        i)      accept reimbursement from the Contractor at
                                rates established by the Contractor as payment
                                in full, which rates shall be no more than the
                                level of reimbursement applicable to similar
                                providers within the Contractor's network for
                                such services;

                        ii)     adhere to the Contractor's quality assurance
                                requirements and agrees to provide to the
                                Contractor necessary medical information related
                                to such care; and

                                   Section 15
                        (EQUALITY OF ACCESS AND TREATMENT
                                 October 1, 1999
                                      15-3
<PAGE>

                        iii)    otherwise adhere to the Contractor's policies
                                and procedures including, but not limited to
                                procedures regarding referrals and obtaining
                                preauthorization in a treatment plan approved by
                                the Contractor.

                In no event shall this requirement be construed to require the
                Contractor to provide coverage for benefits not otherwise
                covered.

        15.6    Standing Referrals

                The Contractor will implement policies and procedures to allow
                for standing referrals to specialist physicians for Enrollees
                who have ongoing needs for care from such specialists,
                consistent with P. H. L. Section 4403(6)(b).

        15.7    Specialist as a Coordinator of Primary Care

                The Contractor will implement policies and procedures to allow
                Enrollees with a life-threatening or degenerative and disabling
                disease or condition, which requires prolonged specialized
                medical care, to receive a referral to a specialist, who will
                then function as the coordinator of primary and specialty care
                for that Enrollee, consistent with P. H. L. Section 4403(6)(c).

        15.8    Specialty Care Centers

                The Contractor will implement policies and procedures to allow
                Enrollees with a life-threatening or a degenerative and
                disabling condition or disease, which requires prolonged
                specialized medical care to receive a referral to an accredited
                or designated specialty care center with expertise in treating
                the life-threatening or degenerative and disabling disease or
                condition, consistent with New York State P. H. L. Section
                4403(6)(d).

                                   Section 15
                        (EQUALITY OF ACCESS AND TREATMENT
                                 October 1, 1999
                                      15-4

<PAGE>

16.     QUALITY ASSURANCE

        16.1    Internal Quality Assurance Program

                a)      Contractor must operate a quality assurance program
                        which is approved by SDOH and which includes methods and
                        procedures to control the utilization of Medicaid
                        services consistent with P H.L. Article 49 and 42 CFR
                        Part 456. Recipients records must include information
                        needed to perform utilization review as specified in 42
                        CFR "456.111 and 456.211. The Contractor's approved
                        quality assurance program must be kept on file by the
                        Contractor and the LDSS. The Contractor shall not modify
                        the quality assurance program without the prior written
                        approval of the SDOH, and notice to the LDSS.

                b)      The Contractor shall incorporate the findings from
                        reports in Section 18 of this Agreement into its quality
                        assurance program. Where performance is less than the
                        statewide average or another standard as defined by the
                        SDOH and developed in consultation with plans and
                        appropriate clinical experts, the Contractor will be
                        required to develop a plan for improving performance
                        that is approved by the SDOH and LDSS. The Contractor
                        agrees to me et with the SDOH and LDSS up to twice a
                        year to review improvement plans and quality
                        performance.

        16.2    Standards of Care

                The Contractor must adopt practice guidelines consistent with
                current standards of care, complying with recommendations of
                professional specialty groups such as the American Academy of
                Pediatrics, the American Academy of Family Physicians, the U.S.
                Task Force on Preventive C are, the New York State Child/Teen
                Health Program (C/THP) standards for provision of care to
                individuals under age 21, the American Medical Association's
                Guidelines for Adolescent and Preventive Services, the US
                Department of Health and Human Services Center for Substance
                Abuse Treatment, the American College of Obstetricians and
                Gynecologists and the AIDS Institute Clinical Standards for
                Adult and Pediatric Care.

                                   Section 16
                               (QUALITY ASSURANCE)
                                 October 1, 1999
                                      16-1

<PAGE>

17.     MONITORING AND EVALUATION

        17.1    Right to Monitor Contractor Performance

                The SDOH, LDSS, and DHHS shall each have the right, during the
                Contractor's normal operating hours, and at any other time a
                Contractor function or activity is being conducted, to monitor
                and evaluate, through inspection or other means, the
                Contractor's performance, including, but not limited to, the
                quality, appropriateness, and timeliness of services provided
                under this Agreement.

        17.2    Cooperation During Monitoring and Evaluation

                The Contractor shall cooperate with and provide reasonable
                assistance to the SDOH, LDSS, and DHHS in the monitoring and
                evaluation of the services provided under this Agreement.

        17.3    Cooperation During Annual On-Site Review

                The Contractor shall cooperate with SDOH and LDSS in an annual
                on-site review of the MCO's operations. SDOH shall give the
                Contractor notification of the annual review and survey format
                at least forty-five (45) days prior to the annual site visit.
                This requirement shall not preclude LDSS or SDOH from site
                visits upon shorter notice for other monitoring purposes.

        17.4    Cooperation During Review of Services by External Review Agency

                The Contractor shall comply with all requirements associated
                with the annual review of the quality of services rendered to
                its Enrollees to be performed by an external review agent
                selected by the SDOH.

                                   Section 17
                           (MONITORING AND EVALUATION)
                                 October 1, 1999
                                      17-1

<PAGE>

18.     CONTRACTOR REPORTING REQUIREMENTS

        18.1    Time Frames for Report Submissions

                Except as otherwise specified herein, the Contractor shall
                prepare and submit to SDOH and the LDSS the reports required
                under this Agreement in an agreed media format within sixty (60)
                days of the close of the applicable semi-annual or annual
                reporting period, and within fifteen (15) business days of the
                close of the applicable quarterly reporting period.

        18.2    SDOH Instructions for Report Submissions

                SDOH, with prior notice to the LDSS, will provide Contractor
                with instructions for submitting the reports required by Section
                18.5 (a) through (n), including time frames, and requisite
                formats. The instructions, time frames and formats may be
                modified by SDOH with prior notice to the LDSS, and thereafter
                upon sixty (60) days written notice to the Contractor. The LDSS,
                with prior notice to SDOH, shall provide the Contractor with
                instructions for submitting the reports, required by Section
                18.5(o) including time frames and requisite formats.

        18.3    Liquidated Damages

                The Contractor shall pay liquidated damages of $2,500 if any
                report required pursuant to this Section is materially
                incomplete, contains material misstatements or inaccurate
                information, or is not submitted on time in the requested
                format. The Contractor shall pay liquidated damages of $2,500 to
                the LDSS if its monthly encounter data submission is not
                received by the Fiscal Agent by the due date specified in
                Section 18.5(d). The Contractor shall pay liquidated damages of
                $500 to the LDSS for each day other reports required by this
                Section are late. The LDSS shall not impose liquidated damages
                for a first time infraction by the Contractor unless the LDSS
                deems the infraction to be a material misrepresentation of fact
                or the Contractor fails to cure the first infraction within a
                reasonable period of time upon notice from the LDSS. Liquidated
                damages may be waived at the sole discretion of LDSS. Nothing in
                this Section shall limit other remedies or rights available to
                LDSS and SDOH relating to the timeliness, completeness and/or
                accuracy of Contractor's reporting submission.

        18.4    Notification of Changes in Report Due Dates Requirements or
                Formats

                SDOH or LDSS may extend due dates, or modify report requirements
                or formats upon a written request by the Contractor to the SDOH
                or LDSS with a copy of the request to the other agency, where
                the Contractor has demonstrated a good and compelling reason for
                the extension or modification. The determination to grant a
                modification or, extension of time shall be made by SDOH with
                regard to annual and quarterly statements, complaint reports,
                audits, encounter data, change of ownership, clinical studies,
                QARR, and provider network reports. The

                                   SECTION 18
                       (CONTRACTOR REPORTING REQUIREMENTS)
                                 October 1, 1999
                                      18-1
<PAGE>

                determination to grant a modification or extension of time shall
                be made by the LDSS with respect to No-Contact, PCP auto
                assignment, and reports required by Sections 18.5 (n) and (o) of
                the Agreement.

        18.5    Reporting Requirements

                The Contractor shall submit the following reports to SDOH and to
                the LDSS except in those instances in which t his Agreement
                specifies the reports shall be submitted solely to SDOH:

                a)      Annual Financial Statements:

                        The due date for annual statements shall be April 1
                        following the report closing date.

                b)      Quarterly Financial Statements:

                        The due date for quarterly reports shall be forty-five
                        (45) days after the end of the calendar quarter.

                c)      Other Financial Reports:

                        Contractor shall submit financial reports, including
                        certified annual financial statements, and make
                        available documents relevant to its financial condition
                        to SDOH and the State Insurance Department (SID) in a
                        timely manner as required by State laws and regulations
                        including but not limited to PHL' '4403-a, 4404 and
                        4409, Title 10 NYCRR "98.11, 98.16 and 98.17 and
                        applicable Insurance Law "304, 305, 306, and 310. The
                        LDSS reserves the right to require Contractor to submit
                        such relevant financial reports and documents related to
                        the financial condition of the MCO to the LDSS, as set
                        forth in Section 18.5(o) of this Agreement.

                d)      Encounter Data:

                        The Contractor shall prepare and submit encounter data
                        on a monthly basis to SDOH through its designated Fiscal
                        Agent. Each provider is required to have a unique
                        identifier. Submissions shall be comprised of encounter
                        records, or adjustments to previously submitted records,
                        which the Contractor has received and processed from
                        provider encounter or claim records of any contracted
                        services rendered to the Enrollee in the current or any
                        preceding months. Monthly submissions must be received
                        by the Fiscal Agent by the Tuesday before the last
                        Monday of the month to assure the submission is included
                        in the Fiscal Agent's monthly production processing.

                e)      Quality of Care Performance Measures:

                                   SECTION 18
                       (CONTRACTOR REPORTING REQUIREMENTS)
                                 October 1, 1999
                                      18-2

<PAGE>

                        The Contractor shall prepare and submit reports to SDOH,
                        as specified in the Quality Assurance Reporting
                        Requirements (QARR). The Contractor must arrange for an
                        NCQA-certified entity to audit the QARR data prior to
                        its submission to the SDOH, unless this requirement is
                        specifically waived by the SDOH. The SDOH will select
                        the measures which will be audited

                f)      Complaint Reports:

                        The Contractor must provide the SDOH on a quarterly
                        basis, and within fifteen (15) business days of the
                        close of the quarter, a summary of all complaints
                        received during the preceding quarter on the Health
                        Provider Network ("HPN").

                        The Contractor also agrees to provide on a quarterly
                        basis, via the HPN, the total number of complaints that
                        have been unresolved for more than forty-five (45) days.
                        The Contractor shall maintain records on these and other
                        complaints which shall include all correspondence
                        related to the complaint, and an explanation of
                        disposition. These records shall be readily available
                        for review by the SDOH or LDSS upon request.

                        Nothing in this Section is intended to limit the rig ht
                        of the SDOH and the LDSS to obtain information
                        immediately from a Contractor pursuant to investigating
                        a particular Enrollee or provider complaint.

                        The LDSS reserves the right to require the Contractor to
                        submit a hardcopy of complaint reports in Section
                        18.5(o) of this Agreement.

                g)      Fraud and Abuse Reporting Requirements

                        i)      The Contractor must submit quarterly, via the
                                HPN complaint reporting format, the number of
                                complaints of fraud or abuse made to the
                                Contractor that warrant preliminary
                                investigation by the Contractor.

                        ii)     The Contractor must also submit to the SDOH the
                                following on an ongoing basis for each confirmed
                                case of fraud and abuse it identifies through
                                complaints, organizational monitoring,
                                contractors, subcontractors, providers,
                                beneficiaries, Enrollees, etc:

                                        A)      The name of the individual or
                                                entity that committed the fraud
                                                or abuse;

                                        B)      The source that identified the
                                                fraud or abuse;

                                        C)      The type of provider, entity or
                                                organization that committed the
                                                fraud or abuse;

                                        D)      A description of the fraud or
                                                abuse;

                                        E)      The approximate range of dollars
                                                involved;

                                   SECTION 18
                       (CONTRACTOR REPORTING REQUIREMENTS)
                                 October 1, 1999
                                      18-3
<PAGE>

                                        F)      The legal and administrative
                                                disposition of the case
                                                including actions taken by law
                                                enforcement officials to whom
                                                the case has been referred; and

                                        G)      Other data/information as
                                                prescribed by SDOH.

                        iii)    Such report shall be submitted when cases of
                                fraud and abuse are confirmed, and shall be
                                reviewed and signed by an executive officer of
                                the Contractor.

                h)      Participating Provider Network Reports:

                        The Contractor shall submit electronically, to the HPN,
                        an updated provider network report on a quarterly basis.
                        The Contractor shall submit an annual notarized
                        attestation that the providers listed in each submission
                        have executed an agreement with the Contractor to serve
                        Contractor's Medicaid Enrollees. The report submission
                        must comply with the Managed Care Provider Network Data
                        Dictionary. Networks must be reported separately for
                        each county in which the Contractor operates.

                i)      Appointment Availability/Twenty-four (24) Hour/Access
                        and Availability Surveys:

                        The Contractor will conduct a county specific (or
                        service area if appropriate) review of appointment
                        availability and twenty-four (24) hour access and
                        availability surveys annually. Results of such surveys
                        must be kept on file and be readily available for review
                        by the SDOH or LDSS, upon request. Guidelines for such
                        studies may be obtained by contacting the SDOH, Office
                        of Managed Care, Bureau of Certification and
                        Surveillance.

                        The LDSS reserves the right to require the Contractor to
                        conduct appointment availability and twenty-four (24)
                        hour access studies twice a year, and to submit these
                        reports to the LDSS, as stated in Section 18.5(o) of
                        this Agreement.

                j)      Clinical Studies:

                        The Contractor will participate in up to four (4) SDOH
                        sponsored focused clinical studies annually. The purpose
                        of these studies will be to promote quality improvement
                        within the MCO.

                        The Contractor will be required to conduct at least one
                        (1) internal focused clinical study each year in a
                        priority topic area of its choosing, from a list to be
                        generated through the mutual agreement of the SDOH and
                        the Contractor's Medical Director. The purpose of these
                        studies will be to promote quality improvement within
                        the MCO. SDOH will provide

                                   SECTION 18
                       (CONTRACTOR REPORTING REQUIREMENTS)
                                 October 1, 1999
                                      18-4
<PAGE>

                        guidelines for the studies' structure. Results of these
                        studies will be provided to the SDOH and the LDSS.

                k)      Independent Audits:

                        The Contractor must submit copies of all certified
                        financial statements and a QARR validation audit by
                        independent auditors of their plan to the SDOH and the
                        LDSS within thirty (30) days of receipt by the
                        Contractor.

                l)      PCP Auto Assignments:

                        The Contractor shall submit semi-annually to the SDOH
                        and the LDSS a report showing the percentage of PCP
                        assignments for Enrollees which were made automatically
                        by the Contractor, rather than by the Enrollee.

                m)      No Contact Report:

                        The Contractor shall submit a monthly report within
                        thirty (30) days of the close of the reporting period to
                        the LDSS of any Enrollee it is unable to contact,
                        through reasonable means, including by mail, and by
                        telephone, using methods described in Section 13.5,
                        and/or of any Enrollees who have not utilized any health
                        care services through the Contractor or its
                        Participating Providers, within ninety (90) days of the
                        Effective Date of Enrollment.

                n)      Additional Reports:

                        Upon request by the SDOH and/or the LDSS, the Contractor
                        shall prepare and submit other operational data reports.
                        Such requests will be limited to situations in which the
                        desired data is considered essential and cannot be
                        obtained through existing Contractor reports. Whenever
                        possible, the Contractor will be provided with ninety
                        (90) days notice and the opportunity to discuss and
                        comment on the proposed requirements before work is
                        begun. However, the SDOH and the LDSS reserve the right
                        to give thirty (30) days notice in circumstances where
                        time is of the essence.

                o)      LDSS Specific Reports:

                        {INSERT LDSS SPECIFIC REPORTS AS APPLICABLE}

        18.6    Ownership and Related Information Disclosure

                The Contractor shall report ownership and related information to
                SDOH and the LDSS, and upon request to the Secretary of
                Department of Health and Human Services and the Inspector
                General of Health and Human Services, in accordance with 42 U.
                S. C. Section 1320a-3 and 1396b(m)(4) (Sections 1124 and
                1903(m)(4) of the Federal Social Security Act).

                                   SECTION 18
                       (CONTRACTOR REPORTING REQUIREMENTS)
                                 October 1, 1999
                                      18-5

<PAGE>

        18.7    Revision of Certificate of Authority

                The Contractor shall give prompt written notice to LDSS of any
                revisions of its Certificate of Authority issued pursuant to
                Article 44 of the State Public Health Law.

        18.8    Public Access to Reports

                Any data, information, or reports collected and prepared by the
                Contractor and submitted to NYS authorities in the course of
                performing their duties and obligation under this program will
                be deemed to be owned by the State of New York subject to and
                consistent with the requirements of Freedom of Information Law.
                This provision is made in consideration of the Contractor's use
                of public funds in collecting and preparing such data,
                information, and reports.

        18.9    Professional Discipline

                a)      Pursuant to P. H. L. Section 4405-b, the Contractor
                        shall have in place policies and procedures to report to
                        the appropriate professional disciplinary agency within
                        thirty (30) days of occurrence, any of the following:

                        i)      the termination of a health care provider
                                contract pursuant to Section 4406-d of the
                                Public Health Law for reasons relating to
                                alleged mental and physical impairment,
                                misconduct or impairment of patient safety or
                                welfare;

                        ii)     the voluntary or involuntary termination of a
                                contract or employment or other affiliation with
                                such Contractor to avoid the imposition of
                                disciplinary measures; or

                        iii)    the termination of a health care provider
                                contract in the case of a determination of fraud
                                or in a case of imminent harm to patient health.

                b)      The Contractor shall make a report to the appropriate
                        professional disciplinary agency within sixty (60) days
                        of obtaining knowledge of any information that
                        reasonably appears to show that a health professional is
                        guilty of professional misconduct as defined in Articles
                        130 and 131(a) of the State Education Law.

        18.10   Certification Regarding Individuals Who Have Been Debarred Or
                Suspended By Federal or State Government

                Contractor will certify to the SDOH and LDSS initially and
                immediately upon changed circumstances from the last such
                certification that it does not knowingly have an individual who
                has been debarred or suspended by the federal or state
                government, or otherwise excluded from participating in
                procurement activities:

                                   SECTION 18
                       (CONTRACTOR REPORTING REQUIREMENTS)
                                 October 1, 1999
                                      18-6

<PAGE>

                a)      as a director, officer, partner or person with
                        beneficial ownership of more than 5% of the Contractor's
                        equity; or

                b)      as a party to an employment, consulting or other
                        agreement with the Contractor for the provision of items
                        and services that are significant and material to the
                        Contractors obligations in the Medicaid managed care
                        program, consistent with requirements of SSA '1932
                        (d)(1).

        18.11   Conflict of Interest Disclosure

                Contractor shall report to SDOH, in a format specified by SDOH,
                documentation, including but not limited to the identity of and
                financial statements of, person(s) or corporation(s) with an
                ownership or contract interest in the managed care plan, or with
                any subcontract(s) in which the managed care plan has a 5% or
                more ownership interest, consistent with requirements of SSA
                '1903 (m)(2)(a)(viii) and 42 CFR "455.100 B 455.104.

        18.12   Physician Incentive Plan Reporting

                The Contractor shall submit to SDOH annual reports containing
                the information on all of its Physician Incentive Plan
                arrangements in accordance with 42 CFR Section 434.70 or, if no
                such arrangements are in place, attest to that. The contents and
                time frame of such reports shall comply with the requirements of
                42 CFR Section 417.479 and be in a format provided by SDOH.

                                   SECTION 18
                       (CONTRACTOR REPORTING REQUIREMENTS)
                                 October 1, 1999
                                      18-7

<PAGE>

19.     RECORDS MAINTENANCE AND AUDIT RIGHTS

        19.1    Maintenance of Contractor Performance Records

                The Contractor shall maintain and shall require its
                subcontractors, including its Participating Providers, to
                maintain appropriate records relating to Contractor performance
                under this Agreement, including:

                a)      records related to services provided to Enrollees,
                        including a separate Medical Record for each Enrollee;

                b)      all financial records and statistical data that LDSS,
                        SDOH and any other authorized governmental agency may
                        require including books, accounts, journals, ledgers,
                        and all financial records relating to capitation
                        payments, third party health insurance recovery, and
                        other revenue received and expenses incurred under this
                        Agreement;

                c)      appropriate financial records to document fiscal
                        activities and expenditures, including records relating
                        to the sources and application of funds and to the
                        capacity of the Contractor or its subcontractors,
                        including its Participating Providers, if relevant, to
                        bear the risk of potential financial losses.

        19.2    Maintenance of Financial Records and Statistical Data

                The Contractor shall maintain all financial records and
                statistical data according to generally accepted accounting
                principles.

        19.3    Access to Contractor Records

                The Contractor shall provide LDSS, SDOH, the Comptroller of the
                State of New York, DHHS, the Comptroller General of the United
                States, and their authorized representatives with access to all
                records relating to Contractor performance under this Agreement
                for the purposes of examination, audit, and copying (at
                reasonable cost to the requesting party) of such records. The
                Contractor shall give access to such records on two (2) business
                days prior written notice, during normal business hours, unless
                otherwise provided or permitted by applicable laws, rules, or
                regulations.

        19.4    Retention Periods

                The Contractor shall preserve and retain all records relating to
                Contractor performance under this Agreement in readily
                accessible form during the term of this Agreement and for a
                period of six (6) years thereafter. All provisions of this
                Agreement relating to record maintenance and audit access shall
                survive the termination of this Agreement and shall bind the
                Contractor until the expiration of

                                   Section 19
                     (RECORDS MAINTENANCE AND AUDIT RIGHTS)
                                 October 1, 1999
                                      19-1

<PAGE>

                a period of six (6) years commencing with termination of this
                Agreement or if an audit is commenced, until the completion of
                the audit, whichever occurs later.

                                   Section 19
                     (RECORDS MAINTENANCE AND AUDIT RIGHTS)
                                 October 1, 1999
                                      19-2

<PAGE>

20.     CONFIDENTIALITY

        20.1    Confidentiality of Identifying Information about Medicaid
                Recipients and Applicants

                All information relating to services to Medicaid recipients and
                applicants which is obtained by the Contractor shall be
                confidential pursuant to the New York State P. H. L. including
                P. H. L. Article 27 F, the provisions of Section 369(4) of the
                NYS Social Services Law, 42 U .S. C. Section 1396a(a)(7)
                (Section 1902(a)(7) of the Federal Social Security Act), Section
                33.13 of the Mental Hygiene Law, and regulations promulgated
                under such laws including 42 CFR Part 2 pertaining to Alcohol
                and Substance Abuse Services. Such information including
                information relating to services to Medicaid recipients and
                applicants as these relate to the provision of services to the
                recipient or applicant under this Agreement shall be used or
                disclosed by the Contractor only for a purpose directly
                connected with performance of the Contractor's obligations. It
                shall be the responsibility of the Contractor to inform its
                employees and contractors of the confidential nature of Medicaid
                information.

        20.2    Medical Records of Foster Children

                Medical records of enrolled Medicaid recipients enrolled in
                foster care programs shall be disclosed to local social service
                officials in accordance with State Social Services Law including
                Sections 358-a, 384-a and 392 and 18 NYCRR Section 507.1.

        20.3    Confidentiality of Medical Records

                Medical records of Medicaid recipients enrolled pursuant to this
                Agreement shall be confidential and shall be disclosed to and by
                other persons within the Contractor's organization including
                Participating Providers, only as necessary to provide medical
                care, to conduct quality assurance functions and peer review
                functions, or as necessary to respond to a complaint and appeal
                under the terms of this Agreement.

        20.4    Length of Confidentiality Requirements

                The provisions of this Section shall survive the termination of
                this Agreement and shall bind the Contractor so long as the
                Contractor maintains any individually identifiable information
                relating to Medicaid recipients and applicants.

                                   Section 20
                                (CONFIDENTIALITY)
                                 October 1, 1999
                                      20-1

<PAGE>

21.     PARTICIPATING PROVIDERS

        21.1    Network Requirements

                a)      Sufficient Number

                        i)      The Contractor will establish and maintain a
                                network of Participating Providers.

                        ii)     The Contractor's network must contain all of the
                                provider types necessary to furnish the prepaid
                                Benefit Package, including but not limited to:
                                hospitals, physicians (primary care and
                                specialists), mental health and substance abuse
                                providers, allied health professionals,
                                ancillary providers, DME providers and home
                                health providers.

                        iii)    To be considered accessible, the network must
                                contain a sufficient number and array of
                                providers to meet the diverse needs of the
                                Enrollee population. This includes being
                                geographically accessible (meeting time/distance
                                standards) and being accessible for the
                                disabled.

                        iv)     The Contractor shall not include in its network
                                any provider who has been sanctioned or
                                prohibited from serving Medicaid recipients or
                                receiving Medical Assistance payments.

                b)      Absence of Appropriate Network Provider

                        In the event that the Contractor determines that it does
                        not have a Participating Provider with appropriate
                        training and experience to meet the particular health
                        care needs of an Enrollee, the Contractor shall make a
                        referral to an appropriate Non-Participating Provider,
                        pursuant to a treatment plan approved by the Contractor
                        in consultation with the Primary Care Provider, the
                        Non-Participating Provider and the Enrollee or the
                        Enrollee's designee. The Contractor shall pay for the
                        cost of the services in the treatment plan provided by
                        the Non-Participating Provider.

                c)      Suspension of Enrollee Assignments To Providers

                        The Contractor shall ensure that there is sufficient
                        capacity, consistent with SDOH standards, to serve
                        Enrollees under this Agreement. In the event any of the
                        Contractor's Participating Providers are no longer able
                        to accept assignment of new Enrollees due to capacity
                        limitations, as determined by the SDOH and the LDSS, the
                        Contractor will suspend assignment of any additional
                        Enrollees to such Participating Provider until it is
                        capable of further accepting Enrollees. When a
                        Participating Provider has more than one (1) site, the
                        suspension will be made by site.

                d)      Notice of Provider Termination

                                   Section 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 1999
                                      21-1
<PAGE>

                        At least thirty (30 ) days prior to termination, of any
                        Provider Agreement that substantially alters or limits
                        Enrollees access to the Contractor's services, as
                        determined by the LDSS, the Contractor shall notify the
                        LDSS and SDOH and specify how services previously
                        furnished by the Participating Provider will be
                        provided. In the event a Provider Agreement is
                        terminated effective immediately or with less than
                        thirty (30) days notice, the Contractor shall notify
                        LDSS and SDOH promptly and in no event in more than
                        seventy-two (72) hours after the termination becomes
                        effective.

        21.2    Credentialing

                a)      Licensure

                        The Contractor shall ensure, in accordance with Article
                        44 of the Public Health Law, that persons and entities
                        providing care and services for the Contractor in the
                        capacity of physician, dentist, physician's assistant,
                        registered nurse, other medical professional or
                        paraprofessional, or other such person or entity satisfy
                        all applicable licensing, certification, or
                        qualification requirements under New York law and that
                        the functions and responsibilities of such persons and
                        entities in providing Benefit Package services under
                        this Agreement do not exceed those permissible under New
                        York law.

                b)      Minimum Standards

                        The Contractor agrees that all network physicians will
                        meet at least one (1) of the following standards, except
                        as specified in Section 21.13(b) and Appendix I of this
                        agreement:

                        i)      Be board-certified or -eligible in their area of
                                specialty;

                        ii)     Have completed an accredited residency program;
                                or

                        iii)    Have admitting privileges at one (1) or more
                                hospitals participating in the Contractor's
                                network.

                c)      Credentialing/Recredentialing Process

                        The Contractor shall have in place a formal process for
                        credentialing Participating Providers on a periodic
                        basis (not less than once every two (2) years) and for
                        monitoring Participating Providers performance.

                d)      Application Procedure

                        The Contractor shall establish a written application
                        procedure to be used by a health care professional
                        interested in serving as a Participating Provider with
                        the Contractor. The criteria for selecting providers,
                        including the minimum qualification requirements that a
                        health care professional must meet to be considered by
                        the Contractor, must be defined in writing and developed
                        in consultation with appropriately qualified health care
                        professionals. Upon

                                   Section 21
                        PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 1999
                                      21-2

<PAGE>

                        request, the application procedures and minimum
                        qualification requirements must be made available to
                        health care professionals.

        21.3    SDOH Exclusion or Termination of Providers

                If SDOH excludes or terminates a provider from its Medicaid
                Program, the Contractor shall, upon learning of such exclusion
                or termination, immediately terminate the provider agreement
                with the Participating Provider as it pertains to the
                Contractor's Medicaid program, and agrees to no longer utilize
                the services of the subject provider, as applicable. The
                Contractor will receive a paper listing of currently excluded
                Medic aid providers mailed monthly to their correspondence
                address, that the Contractor specified to SDOH during the
                initial provider enrollment process. Such paper shall be deemed
                to constitute constructive notice. This notification should not
                be the sole basis for identifying current exclusions or
                termination of previously approved providers. Should the
                Contractor become aware, through any source, of an SDOH
                exclusion or termination, the Contractor shall validate this
                information with the Office of Medicaid Management, Bureau of
                Enforcement Activities and comply with the provisions of this
                Section.

        21.4    Evaluation Information

                The Contractor shall develop and implement policies and
                procedures to ensure that health care professionals are
                regularly advised of information maintained by the Contractor to
                evaluate the performance or practice of health care
                professionals. The Contractor shall consult with health care
                professionals in developing methodologies to collect and analyze
                health care professional profiling data. The Contractor shall
                provide any such information and profiling data and analysis to
                health care professionals. Such information, data or analysis
                shall be provided on a periodic basis appropriate to the nature
                and amount of data and the volume and scope of services
                provided. Any profiling data used to evaluate the performance or
                practice of a health care professional shall be measured against
                stated criteria and an appropriate group of health care
                professionals using similar treatment modalities serving a
                comparable patient population. Upon presentation of such
                information or data, each health care professional shall be
                given the opportunity to discuss the unique nature of the health
                care professional's patient population which ma y have a bearing
                on the health care professional's profile and to work
                cooperatively with the Contractor to improve performance.

        21.5    Payment In Full

                Contractor must limit participation to providers who agree that
                payment received from the Contractor for services included in
                the Benefit Package is payment in full for services provided to
                Enrollees.

                                   Section 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 1999
                                      21-3

<PAGE>

        21.6    Choice/Assignment of PCP's

                a)      The Contractor shall offer each Enrollee the choice of
                        no fewer than three (3) Primary Care Providers within
                        program distance/travel time standards. Contractor must
                        assign a PCP to individuals that fail to select a PCP.
                        The assignment of a PCP by the Contractor may occur
                        after written notification of Contractor by LDSS of the
                        enrollment (through Roster or other method) and after
                        written notification of the Enrollee by the Contractor
                        but in no event later than thirty (30) days after
                        notification of enrollment, and only after the
                        Contractor has made reasonable efforts as set forth in
                        Section 13.5 of this Agreement to contact the Enrollee
                        and inform him/her of his/her right to choose a PCP.

                b)      PCP assignments should be made taking into consideration
                        the following:

                        i)      Enrollee's geographic location;

                        ii)     any special health care needs, if known by the
                                Contractor; and

                        iii)    any special language needs, if known by the
                                Contractor.

                c)      In circumstances where the Contractor operates or
                        contracts with a multiprovider clinic to deliver primary
                        care services, the Enrollee must choose or be assigned a
                        specific provider or provider team within the clinic to
                        serve as his/her PCP. This " lead" provider will be held
                        accountable for performing the PCP duties.

        21.7    PCP Changes

                a)      The Contractor must allow Enrollees the freedom to
                        change PCPs, without cause, within thirty (30) days of
                        the Enrollee's first appointment with the PCP. After the
                        first thirty (30) days PCP may be changed once every six
                        (6) months without cause.

                b)      The Contractor must process a request to change PCPs and
                        advise the Enrollee of the effective date of the change
                        within forty-five (45) days of receipt of the request.
                        The change must be effective no later than the first
                        (1st) day of the second (2nd) month following the month
                        in which the request is made.

                c)      The Contractor will provide Enrollees with an
                        opportunity to select a new PCP in the event that the
                        Enrollee's current PCP leaves the network or otherwise
                        becomes unavailable. Such changes shall not be
                        considered in the calculation of changes for cause
                        allowed within a six (6) month period.

                d)      In the event that an assignment of a new PCP is
                        necessary due to the unavailability of the Enrollee's
                        former PCP, such assignment shall be made in accordance
                        with the requirements of Section 21.7 of this Agreement.

                                   Section 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 1999
                                      21-4

<PAGE>

                e)      In addition to those conditions and circumstances under
                        which the Contractor may assign an Enrollee a PCP when
                        the Enrollee fails to make an affirmative choice of a
                        PCP, the Contractor may initiate a PCP change for an
                        Enrollee under the following circumstances:

                        i)      The Enrollee requires specialized care for an
                                acute or chronic condition and the Enrollee and
                                Contractor agree that reassignment to a
                                different PCP is in the Enrollee's interest.

                        ii)     The Enrollee's place of residence has changed
                                such that he/she has moved beyond the PCP travel
                                time/distance standard.

                        iii)    The Enrollee's PCP ceases to participate in the
                                Contractor's network.

                        iv)     The Enrollee's behavior toward the PCP is
                                disruptive and the PCP has made all reasonable
                                efforts to accommodate the Enrollee.

                        v)      The Enrollee has taken legal action against the
                                PCP.

                f)      Whenever initiating a change, the Contractor must offer
                        affected Enrollees the opportunity to select a new PCP
                        in the manner described in this Section.

        21.8    PCP Status Changes

                The Contractor agrees to notify its Enrollees of any of the
                following PCP changes:

                a)      Enrollees will be notified within three (3) business
                        days from the date on which the Contractor becomes aware
                        of the change if:

                        i)      Office address/telephone number change.

                        ii)     Office hours change.

                b)      Enrollees will be notified within fifteen (15) days from
                        the date on which the Contractor became aware of the
                        change if:

                        i)      An Enrollee's PCP ceases participation with the
                                Contractor (in such cases, the Contractor must
                                ensure that a new PCP is assigned within thirty
                                (30) days of the date of notice to the
                                Enrollee).

                        ii)     An Enrollee is in an on going course of
                                treatment with another Participating Provider
                                who becomes unavailable to continue to provide
                                services to such Enrollee. In such cases, the
                                notice shall also describe the procedures for
                                continuing care.

        21.9    PCP Responsibilities

                In conformance with the Benefit Package, the PCP shall provide
                health counseling and advice; conduct baseline and periodic
                health examinations; diagnose and treat conditions not requiring
                the services of a specialist; arrange inpatient care,
                consultation with specialists, and laboratory and radiological
                services when medically necessary; coordinate the findings of
                consultants and

                                   Section 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 1999
                                      21-5
<PAGE>

                laboratories; and interpret such findings to the Enrollee and
                the Enrollee's family, subject to the confidentiality provisions
                of Section 20 of this Agreement, and maintain a current medical
                record for the Enrollee. The PCP shall also be responsible for
                determining the urgency of a consultation with a specialist and
                shall arrange for all consultation appointments within
                appropriate time frames.

        21.10   Member to Provider Ratios

                The Contractor agrees to adhere to the member -to-PCP ratios
                shown below. These ratios are for Medicaid Enrollees only, are
                Contractor-specific, and assume the practitioner is a full time
                equivalent (FTE)(defined as a provider practicing forty (40)
                hours per week for the Contractor):

                i)      No more than 1,500 Medic aid Enrollees for each
                        physician, o r 2,400 for a physician practicing in
                        combination with a physician assistant or a nurse
                        practitioner.

                ii)     No more than 1,000 Medicaid Enrollees for each nurse
                        practitioner.

                The Contractor agrees that these ratios will be prorated for
                Participating Providers who represent less than a FTE to the
                Contractor.

        21.11   Minimum Office Hours

                a)      General Requirements

                        A PCP must practice a minimum of sixteen (16) hours a
                        week at each primary care site.

                b)      The minimum office hours requirement may be waived under
                        certain circumstances. A request for a waiver must be
                        submitted by the MCO to the Medical Director of the
                        Office of Managed Care for review and approval; and the
                        physician must be available at least eight hours/week;
                        and the physician must be practicing in a Health
                        Provider Shortage Area (HAPS) or other similarly
                        determined shortage area; and the physician must be able
                        to fulfill the other responsibilities of a PCP (as
                        described in this Section); and the waiver request must
                        demonstrate there are systems in place to guarantee
                        continuity of care and to meet all access and
                        availability standards, (24-hr/7 day week cover age,
                        appointment availability, et c.). SDOH shall notify the
                        LDSS when a waiver has been granted.

        21.12   Primary Care Practitioners

                a)      General Limitations

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                        The Contractor agrees to limit its PCPs to the following
                        primary care specialties: Family Practice, General
                        Practice, General Pediatrics, General Internal Medicine,
                        except as specified in (b), (c), (d)and (e) of this
                        Section.

                b)      Specialist and Sub-specialist as PCPs

                        The Contractor is permitted to use specialist and
                        sub-specialist physicians as PCPs when such an action is
                        considered by the Contractor to be medically appropriate
                        and cost-effective. As an alternative, the Contractor
                        may restrict it's PCP network to primary care
                        specialties only, while relying on standing referrals to
                        specialists and sub-specialists for Enrollees who
                        require regular visits to such physicians.

                c)      OB/GYN Providers as PCPs

                        The Contractor, at its option, is permitted to use OB
                        /GYN providers as PCPs, subject to SDOH qualifications.

                d)      Nurse Practitioners as PCPs

                        The Contractor is permitted to use nurse practitioners
                        as PCPs, subject to their scope of practice limitations
                        under New York State Law.

                e)      Physician's Assistants as Physician Extenders

                        The Contractor is permitted to use physician's
                        assistants as physician-extenders, subject to their
                        scope of practice limitations under New York State Law.

        21.13   PCP Teams

                a)      General Requirements

                        The Contractor may designate teams of physicians/nurse
                        practitioners to serve as PCPs for Enrollees. Such teams
                        may include no more than four (4) physicians/nurse
                        practitioners and, when an Enrollee chooses or is
                        assigned to a team, one of the practitioners must be
                        designated as "lead provider" for that Enrollee. In the
                        case of teams comprised of medical residents under the
                        supervision of an attending physician, the attending
                        physician must be designated as the lead physician.

                b)      Medical Residents

                        The Contractor shall comply with SDOH Guidelines for use
                        of Medical Residents as found in Appendix I, which is
                        hereby made a part of this Agreement as if set forth
                        fully herein.

                                   Section 21
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                                      21-7

<PAGE>

        21.14   Hospitals

                a)      Tertiary Services

                        The Contractor will establish hospital networks capable
                        of furnishing the full range of tertiary services to
                        Enrollees. Contractors shall ensure that all Enrollees
                        have access to at least one (1) general a cute care
                        hospital within thirty (30) minutes/thirty (30) Miles
                        travel time (by car or public transportation) from the
                        Enrollee's residence, unless none are located within
                        such a distance. If none are located within thirty (30)
                        minutes travel time/ thirty (30) miles travel distance,
                        the Contractor must include the next closest site in its
                        network.

                b)      Emergency Services

                        The Contractor shall ensure and demonstrate that it
                        maintains relationships with hospital emergency
                        facilities, including comprehensive psychiatric
                        emergency programs (where available) within and around
                        its Service Area to provide Emergency Services.

        21.15   Dental Networks

                If the Contractor includes dental services in it's Benefit
                Package, the Contractor's dental network shall include
                geographically accessible general dentists sufficient to offer
                each Enrollee a choice of two (2) primary care dentists in their
                Service Area and to achieve a ratio of at least one (1) primary
                care dentist for each 2,000 Enrollees. Networks must also
                include at least one (1) pediatric dentist and one (1) oral
                surgeon. Orthognathic surgery, temporal mandibular disorders
                (TMD) and oral/maxillofacial prosthodontics must be provided
                through any qualified dentist, either in-network or by referral.
                Periodontists and endodontists must also be available by
                referral. The network should include dentists with expertise in
                serving special needs populations (e.g., HIV+ and
                developmentally disabled patients).

                Dental surgery performed in an ambulatory or inpatient setting
                is the responsibility of the Contractor whether dental services
                are a covered benefit or not, as set forth in Appendix K-II
                -B-Optional Service, Dental Services.

        21.16   Presumptive Eligibility Providers

                Contractors must offer Presumptive Eligibility Providers the
                opportunity to contract at terms which are at least as favorable
                as the terms offered to other providers performing equivalent
                services (prenatal care). Contractors need not contract with
                every Presumptive Eligibility Provider in their County, but must

                                   Section 21
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                                 October 1, 1999
                                      21-8
<PAGE>


                include a sufficient number in their networks of Participating
                Providers to meet the distance/travel time standards defined for
                primary care.

        21.17   Mental Health, Alcohol and Substance Abuse Providers

                The Contractor will include a full array of mental health and
                substance abuse providers in its networks, in sufficient numbers
                to assure accessibility to services on the part of both children
                and adults, using either individual, appropriately licensed
                practitioners or New York State Office of Mental Health (OMH)
                and Office of Alcohol and Substance Abuse Services (OASAS)
                licensed programs and clinics, or both.

                The State defines mental health and substance abuse providers to
                include the following: Individual Practitioners, Psychiatrists,
                Psychologists, Psychiatric Nurse Practitioners, Psychiatric
                Clinical Nurse Specialists, Licensed Certified Social Workers,
                OMH and OASAS Programs and Clinics, and Providers of mental
                health and/or alcoholism/substance abuse services certified or
                licensed pursuant to Article 23 or 31 of Mental Hygiene Law, as
                appropriate. OASAS programs include Certified Drug and Alcohol
                Counselors, employed only by OASAS licensed programs.

        21.18   Laboratory Procedures

                The Contractor agrees to restrict its laboratory provider
                network to entities having either a CLIA certificate of
                registration or a CLIA certificate of waiver.

        21.19   School-Based Health Centers

                a)      By January 1, 2000, the Contractor must develop, in
                        collaboration with school-based health centers in their
                        Service Areas, protocols for reciprocal referral and
                        communication of data and clinical information on MCO
                        Enrollees enrolled in school-based health centers.

                b)      By March 31, 2000, the Contractor must enter into
                        contractual and payment arrangements with school-based
                        health centers in their Service Area consistent with
                        SDOH clinical coordination guidelines and the protocols
                        referred to in (a) above.

        21.20   Federally Qualified Health Centers (FQHCs)

                In voluntary counties, the Contractor is not required to
                contract with FQHCs.

                However, when an FQHC is part of the provider network (voluntary
                or mandatory counties) the Provider Agreement must include a
                provision whereby the Contractor agrees to compensate the FQHC
                for services provided to Enrollees at a

                                   Section 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 1999
                                      21-9


<PAGE>


                payment rate that is not less than the level and amount for a
                similar set of services which the Contractor would make to a
                provider that is not an FQHC.

                In mandatory counties, the Contractor shall contract with FQHCs
                operating in its Service Area. However, the Contractor has the
                option to make a written request to the SDOH for an exemption
                from the FQHC contracting requirement, if the Contractor can
                demonstrate, with supporting documentation, that it has adequate
                capacity and will provide a comparable level of clinical and
                enabling services (e. g., outreach, referral services, social
                support services, culturally sensitive services such as training
                for medical and administrative staff, medical and non-medical
                and case management services) to vulnerable populations in lieu
                of contracting with an FQHC in its Service Area. Written
                requests for exemption from this requirement are subject to
                approval by HCFA.

                When the Contractor is participating in a county where an MCO
                that is sponsored, owned and/or operated by one or more FQHCs
                exists, the Contractor is not required to include any FQHCs
                within its network in that county.

        21.21   Provider Services Function

                The Contractor will operate a Provider Services function during
                regular business hours. At a minimum, the Contractor's Provider
                Services staff must be responsible for the following:

                a)      Assisting providers with prior authorization and
                        referral protocols.
                b)      Assisting providers with claims payment procedures.
                c)      Fielding and responding to provider questions and
                        complaints.
















                                   Section 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 1999
                                      21-10


<PAGE>


22.     SUBCONTRACTS AND PROVIDER AGREEMENTS

        22.1    Written Subcontracts

                Contractor may not enter into any subcontracts related to the
                delivery of services to Enrollees, except by a written
                agreement.

        22.2    Permissible Subcontracts

                Contractor may subcontract for provider services as set forth in
                Section 2.6 and 21 of this contract and management services
                including, but not limited to, marketing, quality assurance and
                utilization review activities and such other services as are
                acceptable to the LDSS.

        22.3    Provisions of Services through Provider Agreements

                All medical care and/or services covered under this Agreement,
                with the exception of seldom used subspecialty and Emergency
                Services, Family Planning Services, and services for which
                Enrollees can self refer, shall be provided through Provider
                Agreements with Participating Providers.

        22.4    Approvals

                a)      Provider Agreements shall require the approval of SDOH
                        as set forth in P.H.L. 4402 and 10 NYCRR Part 98.

                b)      If a subcontract is for management services under 10
                        NYCRR Section 98.11, it must be approved by SDOH prior
                        to its becoming effective.

                c)      LDSS may require that the Contractor submit any
                        subcontracts, including Provider Agreements with
                        Participating Providers, and including material
                        amendments to and renewals of such sub-contracts to
                        LDSS.

                d)      The Contractor shall notify SDOH of any material
                        amendments to any Provider Agreement as set forth in 10
                        NYCRR 98.8. The Contractor shall provide LDSS with a
                        copy of any such amendment within fifteen (15) days
                        after its approval by SDOH, unless LDSS notifies the
                        Contractor otherwise.

        22.5    Required Components

                a)      The Contractor shall impose obligations and duties on
                        its subcontractors, including its Participating
                        Providers, that are consistent with this Agreement, and
                        that do not impair any rights accorded to LDSS, SDOH, or
                        DHHS.

                                   Section 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 1999
                                      22-1


<PAGE>


                b)      No subcontract, including any Provider Agreement shall
                        limit or terminate the Contractor's duties and
                        obligations under this Agreement.

                c)      Nothing contained in this Agreement between LDSS and the
                        Contractor shall create any contractual relationship
                        between any subcontractor of the Contractor, including
                        Participating Providers, and the County or LDSS.

                d)      Any sub contract entered into by the Contractor shall
                        fulfill the requirements of 42 C FR Part 434 that are
                        appropriate to the service or activity delegated under
                        such subcontract.

                e)      The Contractor shall also ensure that, in the event the
                        Contractor fails t o pay any subcontractor, including
                        any Participating Provider in accordance with the
                        subcontract or Provider Agreement, the subcontractor or
                        Participating Provider will not seek payment from the
                        LDSS, the Enrollees, or their eligible dependents.

                f)      The Contractor shall include in every Provider Agreement
                        a procedure for the resolution of disputes between the
                        Contractor and its Participating Providers.

                g)      The Contractor shall ensure that all Provider Agreements
                        entered into with Providers require acceptance of a
                        woman's enrollment in the MCO as sufficient to provide
                        services to her newborn, unless the newborn is excluded
                        from participating in Medicaid managed care.

        22.6    Timely Payment

                Contractor shall make payments to affiliated health care
                providers for items and services covered under this Agreement on
                a timely basis, consistent with the claims payment procedures
                described in NYS Insurance Law Section 3224-a.

        22.7    Restrictions on Disclosure

                The Contractor shall not by contract or written policy o r
                written procedure prohibit or restrict any health care provider
                from the following:

                a)      disclosing to any subscriber, Enrollee, patient,
                        designated representative or, where appropriate,
                        prospective Enrollee any information that such provider
                        deems appropriate regarding:
                        i)      a condition or a course of treatment with such
                                subscriber, Enrollee, patient, designated
                                representative or prospective Enrollee,
                                including the availability of other therapies,
                                consultations, or tests; or
                        ii)     The provisions, terms, or requirements of the
                                Contractor's products as they relate to the
                                Enrollee, where applicable.

                                   Section 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 1999
                                      22-2


<PAGE>


                b)      filing a complaint, making a report or comment to an
                        appropriate governmental body regarding the policies or
                        practices of the Contractor when they believe that the
                        policies or practices negatively impact upon the quality
                        of, or access to, patient care.

                c)      advocating to the Contractor on behalf of the Enrollee
                        for approval or coverage of a particular treatment or
                        for the provision of health care services.

        22.8    Transfer of Liability

                No contract or agreement between the Contractor and a health
                care provider shall contain any clause purporting to transfer to
                the health care provider, other than a medical group, by
                indemnification or otherwise, any liability relating to
                activities, actions or omissions of the Contractor as opposed to
                those of the health care provider.

        22.9    Termination of Health Care Professional Agreements

                The Contractor shall not terminate a contract with a health care
                professional unless the Contractor provides to the health care
                professional a written explanation of the reasons for the
                proposed termination and an opportunity for a review or hearing
                as hereinafter provided. For purposes of this Section a health
                care professional is an individual licensed, registered or
                certified pursuant to Title 8 of the Education Law.

                These requirements shall not apply in cases involving imminent
                harm to patient care, a determination of fraud, or a final
                disciplinary action by a state licensing board or other
                governmental agency that impairs the health care professional's
                ability to practice.

                When the Contractor desires to terminate a contract with a
                health care professional, the notification of the proposed
                termination by the Contractor to the health care professional
                shall include:

                a)      the reasons for the proposed action;

                b)      notice that the health care professional has the right
                        to request a hearing or review, at the provider's
                        discretion, before a panel appointed by the Contractor;

                c)      a time limit of not less than thirty (30) days within
                        which a health care professional may request a hearing;
                        and

                d)      a time limit for a hearing date which must be held
                        within thirty (30) days after the date of receipt of a
                        request for a hearing.

                                   Section 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 1999
                                      22-3


<PAGE>


                        No contract or agreement between the Contractor and a
                        health care professional shall contain any provision
                        which shall supersede or impair a health care
                        professional's right to notice of reasons for
                        termination and the opportunity for a hearing or review
                        concerning such termination.

        22.10   Health Care Professional Hearings

                A health care professional that has been notified of his or her
                proposed termination must be allowed a hearing. The procedures
                for this hearing must meet the following standards:

                a)      The hearing panel shall be comprised of at least three
                        persons appointed by the Contractor. At least one person
                        on such panel shall be a clinical peer in the same
                        discipline and the same or similar specialty as the
                        health care professional under review. The hearing panel
                        may consist of more than three persons, provided how
                        ever that the number of clinical peers on such panel
                        shall constitute one-third or more of the total
                        membership of the panel.

                b)      The hearing panel shall render a decision on the
                        proposed action in a timely manner. Such decision shall
                        include reinstatement of the health care professional by
                        the Contractor, provisional reinstatement subject to
                        conditions set forth by the Contractor or termination of
                        the health care professional. Such decision shall be
                        provided in writing to the health care professional.

                c)      A decision by the hearing panel to terminate a health
                        care professional shall be effective not less than
                        thirty (30) days after the receipt by the health care
                        professional of the hearing panel's decision.
                        Notwithstanding the termination of a health care
                        professional for cause or pursuant to a hearing, a plan
                        shall permit an Enrollee to continue an on-going course
                        of treatment for a transition period of up to ninety
                        (90) days, and post-partum care, subject to provider
                        agreement, pursuant to P. H. L. Section 4406(6)(e).

                d)      In no event shall termination be effective earlier than
                        sixty (60) days from the receipt of the notice of
                        termination.

        22.11   Non-Renewal of Provider Agreements

                Either party to a contract may exercise a right of non-renewal
                at the expiration of the contract period set forth therein or,
                for a contract without a specific expiration date, on each
                January first occurring after the contract has been in effect
                for at least one year, upon sixty (60) days notice to the other
                party; provided, however, that any non -renewal shall not
                constitute a termination for the purposes of this Section.


                                   Section 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 1999
                                      22-4


<PAGE>


        22.12   Physician Incentive Plan

                If Contractor elects t o operate a Physician Incentive Plan,
                Contractor agrees that no specific payment will be made directly
                or indirectly under the plan to a physician or physician group
                as an inducement to reduce or limit medically necessary services
                furnished to an Enrollee. Contractor agrees to submit to SDOH
                annual reports containing the information on its physician
                incentive plan in accordance with 42 CFR Section 434.70. The
                contents of such reports shall comply with the requirements of
                42 CFR Section 417.479 and be in a format to be provided by
                SDOH.

                The Contractor must ensure that any agreements for contracted
                services covered by this Agreement, such as agreements between
                the Contractor and other entities or between the Contractor's
                subcontracted entities and their contractors, at all levels
                including the physician level, include language requiring that
                the physician incentive plan information be provided by the
                sub-contractor in an accurate and timely manner to the
                Contractor, in the format requested by SDOH.

                In the event that the incentive arrangements place the physician
                or physician group at risk for services beyond those provided
                directly by the physician or physician group for an amount
                beyond the risk threshold of 25% of potential payments for
                covered services (substantial financial risk), the Contractor
                must comply with all additional requirements listed in
                regulation, such as: conduct enrollee/disenrollee satisfaction
                surveys; disclose the requirements for the physician incentive
                plans to its beneficiaries upon request; and ensure that all
                physicians and physician groups at substantial financial risk
                have adequate stop-loss protection. Any of these additional
                requirements that are passed on to the subcontractors must be
                clearly stated in their Agreement.















                                   Section 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 1999
                                      22-5


<PAGE>


23.     FRAUD AND ABUSE PREVENTION PLAN

                A Fraud and Abuse Prevention Plan for the detection,
                investigation and prevention of fraudulent activities must be
                filed by the Contractor with the Commissioner of Health to the
                extent required by SDOH regulations. A copy of this plan must be
                submitted to the LDSS, upon request of the LDSS.

24.     AMERICANS WITH DISABILITIES ACT COMPLIANCE PLAN

        Contractor must comply with the Americans with Disabilities Act (ADA)
        and Section 504 of the Rehabilitation Act of 1973 for program
        accessibility, and must develop an ADA Compliance Plan consistent with
        the guidelines in Appendix J of this Agreement. Said plan must be
        approved by the SDOH and/or the LDSS, and filed with the Contractor,
        SDOH and the LDSS.

25.     FAIR HEARINGS

        25.1    Enrollee Access To Fair Hearing Process

                Enrollees may access the fair hearing process in accordance with
                applicable federal and state laws and regulations. Contractors
                must abide by and participate in New York State's Fair Hearing
                Process and comply with determinations made by a fair hearing
                officer.

        25.2    Enrollee Rights to a Fair Hearing

                Enrollees may request a fair hearing regarding adverse LDSS
                determinations concerning enrollment, disenrollment and
                eligibility, and regarding the denial, termination, suspension
                or reduction of a clinical treatment or other Benefit Package
                services by the Contractor. For issues related to disputed
                services, Enrollees must have received an adverse determination
                from the Contractor or its approved utilization review agent
                either overriding are commendation to provide services by a
                Participating Provider or confirming the decision of a
                Participating Provider to deny those services. An Enrollee may
                also seek a fair hearing for a failure by the Contractor to act
                with reasonable promptness with respect to such services.
                Reasonable promptness shall mean compliance with the time frames
                established for review of grievances and utilization review in
                Sections 44 and 49 of the Public Health Law.

        25.3    Contractor Notice to Enrollees

                a)      Contractor must issue a written Notice of Adverse
                        Determination and Fair Hearing Rights to any Enrollee:

                             Section 23 --Section 39
                                 October 1, 1999
                                       -1


<PAGE>


                        i)      When Contractor or its utilization review a gent
                                ha s denied a request to approve a Benefit
                                Package service ordered by an MCO provider; or
                        ii)     When an Enrollee is denied a requested service
                                or benefit by an MCO provider and has exhausted
                                the Contractor's approved internal complaint and
                                appeal procedures or utilization review
                                processes; or
                        iii)    At least 10 days before the effective date of
                                Contractor's termination, suspension or
                                reduction of a benefit or treatment already in
                                progress for that Enrollee.

                b)      Contractor agrees to serve notice on affected Enrollees
                        by mail and must maintain documentation of such.

                c)      Contractor's Notice of Adverse Determination and Notice
                        of a Right to Request a Fair Hearing shall include the
                        following:

                        i)      A description of the action Contractor intends
                                to take;
                        ii)     Contractor's reasons for the intended action;
                        iii)    The circumstances under which expedited
                                complaint or utilization review is available and
                                how to request it;
                        iv)     Notice of Enrollee's right to file a complaint
                                with the Contractor, a complaint with SDOH,
                                and/or to request a State fair hearing through
                                the Office of Administrative Hearings (OAH);
                        v)      Instructions to the Enrollee regarding how the
                                Enrollee may file complaints, utilization
                                appeals and State fair hearing requests,
                                including use of the Notice of Right to Request
                                a Fair Hearing which will inform Enrollees of
                                their possible right to aid continuing and that
                                such aid can be accessed only if the Enrollee
                                requests a State fair hearing.

        25.4    Aid Continuing

                Contractor shall be required to continue the provision of the
                Benefit Package services that are the subject of the fair
                hearing to an Enrollee (hereafter referred to as "aid
                continuing") if so ordered by the OAH under the following
                circumstances:

                        i)      Contractor has or is seeking to reduce, suspend
                                or terminate a treatment or Benefit Package
                                service currently being provided;
                        ii)     Enrollee has filed a timely request for a fair
                                hearing with OAH; and
                        iii)    There is a valid order for the treatment or
                                service from a participating provider.
                                Contractor shall provide aid continuing until
                                the matter has been resolved to the Enrollee's
                                satisfaction or until the administrative process
                                is completed and there is a determination from
                                OAH that Enrollee is not entitled to receive the
                                service, the Enrollee withdraws the request for
                                aid continuing and/or the fair hearing in
                                writing, or the treatment or service originally
                                ordered by the provider has been completed,
                                whichever occurs first.


                             Section 23 --Section 39
                                 October 1, 1999
                                       -2


<PAGE>


                        iv)     If the services and/or benefits in dispute have
                                been terminated, suspended or reduced and the
                                Enrollee timely requests a fair hearing,
                                Contractor shall, at the direction of either
                                SDOH or LDSS, restore the disputed services
                                and/or benefits consistent with the provisions
                                of Section 25.4(iii) of this Agreement.

        25.5    Responsibilities of SDOH

                SDOH will make every reasonable effort to ensure that the
                Contractor receives timely notice in writing by fax, or e-mail,
                of all requests, schedules and directives regarding fair
                hearings.

        25.6    Contractor's Obligations

                a)      Contractor shall appear at all scheduled fair hearings
                        concerning its clinical determinations and/or
                        Contractor-initiated disenrollments to present evidence
                        as justification for its determination or submit written
                        evidence as justification for its determination
                        regarding the disputed benefits and/or services. If
                        Contractor will not be making a personal appearance at
                        the fair hearing, the written material must be submitted
                        to OAH and Enrollee or Enrollee's representative at
                        least three (3) business days prior to the scheduled
                        hearing. If the hearing is scheduled fewer than three
                        (3) business days after the request, Contractor must
                        deliver the evidence to the hearing site no later than
                        one (1) business day prior to the hearing, otherwise
                        Contractor must appear in person. Notwithstanding the
                        above provisions, Contractor may be required to make a
                        personal appearance at the discretion of the hearing
                        officer and/or SDOH.

                b)      Despite an Enrollee's request for a State fair hearing
                        in any given dispute, Contractor is required to maintain
                        and operate in good faith its own internal complaint and
                        appeal process as required under state and federal laws
                        and by Section 14 and Appendix F of this Agreement.
                        Enrollees may seek redress of adverse determinations
                        simultaneously through Contractor's internal process and
                        the State fair hearing process. If Contractor has
                        reversed its initial determination and provided the
                        service to the Enrollee, Contractor may request a waiver
                        from appearing at the hearing and, in submitted papers,
                        explain that it has withdrawn its initial determination
                        and is providing the service or treatment formerly in
                        dispute.

                c)      Contractor shall comply with all determinations rendered
                        by OAH at fair hearings. Contractor shall cooperate with
                        SDOH efforts to ensure that Contractor is in compliance
                        with fair hearing determinations. Failure by Contractor
                        to maintain such compliance shall constitute breach of
                        this Agreement. Nothing in this Section shall limit the
                        remedies available to SDOH, LDSS or the federal
                        government relating to any non-compliance by Contractor
                        with a fair hearing determination or Contractor's
                        refusal to provide disputed services.

                             Section 23 --Section 39
                                 October 1, 1999
                                       -3


<PAGE>


                d)      If SDOH investigates a complaint that has as its basis
                        the same dispute that is the subject of a pending fair
                        hearing and, as a result of its investigation, concludes
                        that the disputed services and/or benefits should be
                        provided to the Enrollee, Contractor shall comply with
                        SDOH's directive to provide those services and/or
                        benefits and provide notice to OAH and Enrollee as
                        required by Section 25.6(b) of this Agreement.

                e)      If S DOH, through its complaint investigation process,
                        or OAH, by a determination after a fair hearing, directs
                        Contractor to provide a service that was initially
                        denied by Contractor, Contractor may either directly
                        provide the service, arrange for the provision of that
                        service or pay for the provision of that service by a
                        Non-Participating Provider.

                f)      Contractor agrees to abide by changes made to this
                        Section of the Agreement with respect to the fair
                        hearing, grievance and complaint processes by SDOH in
                        order to comply with any amendments to applicable state
                        or federal statutes or regulations. Such changes shall
                        become effective without need for any further action by
                        the parties to this Agreement.

                g)      Contractor agrees to identify a contact person within
                        its organization who will serve as a liaison to SDOH for
                        the purpose of receiving fair hearing requests,
                        scheduled fair hearing dates and adjourned fair hearing
                        dates and compliance with State directives. Such
                        individual: shall be accessible to the State by e-mail;
                        shall monitor e-mail for correspondence from the State
                        at least once every business day; and shall agree, on
                        behalf of Contractor, to accept notices to Contractor
                        transmitted via e-mail as legally valid.

                h)      The information describing fair hearing rights, aid
                        continuing, complaint procedures and utilization review
                        appeals shall be included in all Medicaid managed care
                        member handbooks and shall comply with SDOH's member
                        handbook guidelines.

                i)      Contractor shall bear the burden of proof at hearings
                        regarding the reduction, suspension or termination of
                        ongoing services. In the event that Contractor 's
                        initial adverse determination is upheld as a result of a
                        fair hearing, any aid continuing provided pursuant to
                        that hearing request, may be recouped by Contractor.

26.     EXTERNAL APPEAL

        26.1    Basis for External Appeal

                Effective July 1, 1999, managed care Enrollees will be able to
                request an external appeal when one or more covered health care
                services have been denied by the


                             Section 23 --Section 39
                                 October 1, 1999
                                       -4


<PAGE>


                Contractor on the basis that the service(s) is not medically
                necessary or is experimental or investigational.

        26.2    Eligibility for External Appeal

                An Enrollee is eligible for an external appeal when the Enrollee
                has exhausted the Contractor's internal utilization review
                procedure or both the Enrollee and the Contractor have agreed to
                waive internal appeal procedures in accordance with New York
                State P. H. L. Section 4914(2)2(a). A provider is also eligible
                for an external appeal of retrospective denials.

        26.3    External Appeal Determination

                The external appeal determination is binding on the Contractor,
                how ever, a fair hearing determination supercedes an external
                appeal determination for Medicaid Enrollees.

        26.4    Compliance with External Appeal Laws and Regulations

                MCOs must comply with the provisions of New York State P. H. L.
                Sections 4910-4914 and Title 10 of NYCRR Subpart 98-1 regarding
                the external appeal program.

27.     INTERMEDIATE SANCTIONS

        Contractor is subject to the imposition of sanctions as authorized by
        State law including the SDOH's right to impose sanctions for
        unacceptable practices as set forth in Title 18 of the Official
        Compilation of Codes, Rules and Regulations of the State of New York
        (NYCRR) Part 515 and civil and monetary penalties pursuant to 18 NYCRR
        Part 516 and such other sanctions and penalties as are authorized by
        local laws and ordinances and resultant administrative c odes, rules and
        regulations related to the Medical Assistance Program or to the delivery
        of the contracted for services.

28.     ENVIRONMENTAL COMPLIANCE

        The Contractor shall comply with all applicable standards, orders, or
        requirements issued under Section 306 of the Clean Air Act 42 U. S. C.
        Section 1857(h), Section 508 of the Clean Water Act (33 U. S. C. Section
        1368), Executive Order 11738, and the Environmental Protection Agency ("
        EPA") regulations (40 C FR, Part 15) that prohibit the use of the
        facilities included on the EPA List of Violating Facilities. The
        Contractor shall report violations to SDOH and to the Assistant
        Administrator for Enforcement of the EPA.



                             Section 23 --Section 39
                                 October 1, 1999
                                       -5


<PAGE>


29.     ENERGY CONSERVATION

        The Contractor shall comply with any applicable mandatory standards and
        policies relating to energy efficiency that are contained in the State
        Energy Conservation regulation issued in compliance with the Energy
        Policy and Conservation Act of 1975 (Pub. L. 94-165) and any amendment
        to the Act.

30.     INDEPENDENT CAPACITY OF CONTRACTOR

        The parties agree that the Contractor is an independent Contractor, and
        that the Contractor, its a gents, officers, and employees act in an
        independent capacity and not as officers or employees of LDSS, DHHS or
        the SDOH.

31.     NO THIRD PARTY BENEFICIARIES

        Only the parties to this Agreement and their successors in interest and
        assigns have any rights or remedies under or by reason of this
        Agreement.

32.     INDEMNIFICATION

        32.1    Indemnification by Contractor

                The Contractor shall indemnify, defend, and hold harmless the
                LDSS, its officers, agents, and employees and the Enrollees and
                their eligible dependents from:

                a)      any and all claims and losses accruing or resulting to
                        any and all Contractors, subcontractors, materialmen,
                        laborers, and any other person, firm, or corporation
                        furnishing or supplying work, services, materials, or
                        supplies in connection with the performance of this
                        Agreement;

                b)      any and all claims and losses accruing or resulting to
                        any person, firm, or corporation that may be injured or
                        damaged by the Contractor, its officers, agents,
                        employees, or subcontractors, including Participating
                        Providers, in connection with the performance of this
                        Agreement;

                c)      any liability, including costs and expenses, for
                        violation of proprietary rights, copyrights, or rights
                        of privacy, arising out of the publication, translation,
                        reproduction, delivery, performance, use, or disposition
                        of any data furnished under this Agreement, or based on
                        any libelous or otherwise unlawful matter contained in
                        such data.

                        i)      The LDSS will provide the Contractor with prompt
                                written notice of any claim made against the
                                LDSS, and the Contractor, at its sole option,
                                shall defend or settle said claim. The LDSS
                                shall cooperate with the Contractor to the
                                extent necessary for the Contractor to discharge
                                its obligation under Section 32.1.

                             Section 23 --Section 39
                                 October 1, 1999
                                       -6


<PAGE>


                        ii)     The Contractor shall have no obligation under
                                this section with respect to any claim or cause
                                of action for damages to persons or property
                                solely caused by the negligence of LDSS, its
                                employees, or agents.

        32.2    Indemnification by LDSS

                The LDSS shall indemnify and hold h armless the Contractor and
                its officers, agents, and employees from any and all claims for
                damages resulting from actions by the LDSS or their Contractors
                in connection with their performance under this Agreement,
                except for such damages, costs, and expenses resulting from the
                negligence or culpable act of the Contractor, its officers,
                agents, employees, or subcontractors, including Participating
                Providers.

33.     PROHIBITION ON USE OF FEDERAL FUNDS FOR LOBBYING

        33.1    Prohibition of Use of Federal Funds for Lobbying

                The Contractor agrees, pursuant to 31 U. S. C. Section 1352 and
                45 CF R Part 93, that no Federally appropriated funds have been
                paid or will be paid to any person by or on behalf of the
                Contractor for the purpose of influencing or attempting to
                influence an officer o r 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 award of any Federal
                contract, the making of any federal grant, the making of any
                Federal loan, the entering into of any cooperative agreement, or
                the extension, continuation, renewal, amendment, or modification
                of any Federal contract, grant, loan, or cooperative agreement.
                The Contractor agrees to complete and submit the " Certification
                Regarding Lobbying", Appendix B attached hereto and incorporated
                herein, if this Agreement exceeds $100,000.

        33.2    Disclosure Form to Report Lobbying

                If any funds other than Federally appropriated funds have been
                paid or will be paid to any person for the purpose of
                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 M ember of Congress in connection
                with the award of any Federal contract, the making of any
                Federal grant, the making of any Federal loan, the entering into
                of any cooperative agreement, or the extension, continuation,
                renewal, amendment, or modification of any Federal contract,
                grant, loan, or cooperative agreement, and the Agreement exceeds
                $100,000, the Contractor shall complete and submit Standard Form
                LLL. "Disclosure Form to Report Lobbying," in accordance with
                its instructions.

        33.3    The Contractor shall include the provisions of this section in
                its subcontracts, including its Provider Agreements. For all
                subcontracts, including Provider

                             Section 23 --Section 39
                                 October 1, 1999
                                       -7


<PAGE>


                Agreements, that exceed $100,000, the Contractor shall require
                the subcontractor, including any Participating Provider to
                certify and disclose accordingly to the Contractor.

34.     NON-DISCRIMINATION

        34.1    Equal Access to Benefit Package

                Except as otherwise provided in applicable sections of this
                Agreement the Contractor shall provide the Benefit Package to
                all Enrollees in the same manner, in accordance with the same
                standards, and with the same priority as Enrollees of the
                Contractor under any other contracts.

        34.2    Non-Discrimination

                The Contractor shall not discriminate against Eligible Persons
                or Enrollees on the basis of age, sex , race, creed, physical or
                mental handicap/developmental disability, national origin,
                sexual orientation or type of illness or condition.

        34.3    Equal Employment Opportunity

                Contractor must comply with Executive Order 11246, entitled
                "Equal Employment Opportunity," as amended by Executive Order
                11375, and as supplemented in Department of Labor regulations.

        34.4    Native Americans Access to Services From Tribal or Urban Indian
                Health Facility

                The Contractor shall not prohibit, restrict or discourage
                enrolled Native Americans from receiving care from or accessing
                Medicaid reimbursed health services from or through a tribal
                health or Urban Indian health facility or center.

35.     COMPLIANCE WITH APPLICABLE LAWS

        35.1    Contractor and LDSS Compliance With Applicable Laws

                The Contractor and L DDSs shall comply with all applicable
                requirements of the State Public Health Law; the State Social
                Services Law; Title IX of the Social Security Act; Title V I of
                the Civil Rights Act of 1964 and 45 C. F .R. Part 80, as
                amended; Section 504 of the Rehabilitation Act of 1973 and 45 C.
                F. R. Part 84, as amended; Age Discrimination Act of 1975 and 45
                C. F. R. Part 91, as amended; and the Americans with
                Disabilities Act; and Title X III of the Federal Public Health
                Services Act, 42 U.S.C. Section 300e et seq., regulations
                promulgated thereunder; and all other applicable legal and
                regulatory requirements in effect at the time that this
                Agreement is signed and as adopted or amended during the term of
                this Agreement. The parties agree that this Agreement shall be
                interpreted according to the laws of the State of New York.

                             Section 23 --Section 39
                                 October 1, 1999
                                       -8


<PAGE>


        35.2    Nullification of Illegal, Unenforceable, Ineffective or Void
                Contract Provisions

                Should any provision of this Agreement be declared or found to
                be illegal or unenforceable, ineffective or void, then each
                party shall be relieved of any obligation arising from such
                provision; the balance of this Agreement, if capable of
                performance, shall remain in full force and effect.

        35.3    Certificate of Authority Requirements

                The Contractor must satisfy conditions for issuance of a
                certificate of authority, including proof of financial solvency,
                as specified in 10 NYCRR, '98.6.

        35.4    Notification of Changes in Certificate to Incorporation

                The Contractor shall notify LDSS of any amendment t o its
                Certificate of Incorporation in the same manner as and
                simultaneously with the notice given to SDOH pursuant to 10
                NYCRR Section 98.4(a).

        35.5    Contractor's Financial Solvency Requirements

                The Contractor, for the duration of this Agreement, shall remain
                in compliance with all applicable state requirements for
                financial solvency for MCOs participating in the Medicaid
                Program. The Contractor shall continue to be financially
                responsible as defined in PHL '4403(1)(c) and shall comply with
                the contingent reserve fund and escrow deposit requirements of
                10 NYCRR " 98.11(d) and 98.11(e), respectively, and must meet
                minimum net worth requirements established by SDOH and the State
                Insurance Department. The Contractor shall make provision,
                satisfactory to SDOH, for protections for SDOH, LDSS and the
                Enrollees in the event of HMO or sub contractor insolvency,
                including but not limited to, hold harmless and continuation of
                treatment provisions in all provider agreements which protect
                SDOH, LDSS and Enrollees from costs of treatment and assures
                continued access to care for Enrollees.

        35.6    Compliance With Care for Maternity Patients

                Contractor must comply with '2803-n of the Public Health Law and
                '3216 (i) (10)(a) of the State Insurance Law related to hospital
                care for maternity patients.

        35.7    Informed Consent Procedures for Hysterectomy and Sterilization

                The Contractor is required and shall require Participating
                Providers to comply with the informed consent procedures for
                Hysterectomy and Sterilization specified in 42 CFR, Part 441,
                sub-part F, and 18 NYCRR Section 505.13.


                             Section 23 --Section 39
                                 October 1, 1999
                                       -9


<PAGE>




        35.8    Non-Liability of Enrollees for Contractor's Debts

                Contractor agrees that in no event shall the Enrollee become
                liable for the Contractor's debts as set forth in SSA
                '1932(b)(6).

        35.9    LDSS Compliance With Conflict of Interest Laws

                LDSS and its employees shall comply with General Municipal Law
                Article 18 and all other appropriate provisions of New York
                State law, local laws and ordinances and all resultant codes,
                rules and regulations pertaining to conflicts of interest.

        35.10   Compliance With PHL Regarding External Appeals

                Contractor must comply with Article 49 Title II of the Public
                Health Law regarding external appeal of adverse determinations.


36.     NEW YORK STATE STANDARD CONTRACT CLAUSES

        The parties agree to be bound by the standard clauses for all New York
        State contracts and standard clauses, if any, for local government
        contracts contained in Appendix A, attached to and incorporated as if
        set forth fully herein, and any amendment thereto.

37.     INSURANCE REQUIREMENTS

        MODEL CON TRACT NOTE: The LDSS may propose insurance requirements based
        on the contract practices of its Count y. Such requirements must be
        reasonable and consistent with the attainment of managed care program
        objectives.

        [ ]     The LDSS has insurance requirements (attached) as Section 37 of
                this Agreement.

        [ ]     The LDSS does not have insurance requirements.












                             Section 23 --Section 39
                                 October 1, 1999
                                       -10


<PAGE>




        [MODEL CON TRACT NOTE: Format of signature pages is established by the
        LDSS. However, the "Term of Agreement" should be specified on the
        signature pages.]


        In Witness Whereof, the parties have duly executed this Agreement on the
        date set opposite their respective signatures.


By: /s/                                    By: /s/
   ------------------------------             ---------------------------------
   AmeriChoice of New York, Inc.                City of New York

































                                 Signature Page
                               September 10, 1999




<PAGE>



                            Second Contract Amendment
                                     Between
                                City of New York
                                       And
                          AmeriChoice of New York, Inc.



                This Amendment, effective April 1, 2002, amends the Medicaid
                Managed Care Model Contract (hereinafter referred to as the
                "Agreement") made by and between the City of New York
                (hereinafter referred to as "CDOH") and AmeriChoice of New York,
                Inc. (hereinafter referred to as "MCO" or "Contractor").

                WHEREAS, the parties entered into an Agreement effective October
                1, 1999, amended October 1, 2001, for the purpose of providing
                prepaid case managed health services to Medical Assistance
                recipients residing in the City of New York;

                WHEREAS, the parties desire to amend said Agreement to modify
                certain provisions to reflect current circumstances and
                intentions;

                NOW THEREFORE, effective April 1, 2002, it is mutually agreed by
                the parties to amend this Agreement as follows:

                The attached "Table of Contents for Model Contract" is
                substituted for the period beginning April 1, 2002.

                Delete from Section 1, Definitions, the definition for "Alcohol
                and Substance Abuse Services."

                Amend Section 1, Definitions, the definition for "Behavioral
                Health Service," to read as follows:

                "BEHAVIORAL HEALTH SERVICE" means services to address mental
                health disorders and/or chemical dependence.

                Add to Section 1, Definitions, a definition for "Chemical
                Dependence Services," to read as follows:

                "CHEMICAL DEPENDENCE SERVICES" means examination, diagnosis,
                level of care determination, treatment, rehabilitation, or
                habilitation of persons suffering from chemical abuse or
                dependence, and includes the provision of alcohol and/or
                substance abuse services.

                Add to Section 1, Definitions, a new definition for
                "Detoxification Services," to read as follows:

                "DETOXIFICATION SERVICES" means Medically Managed Detoxification
                Services; and Medically Supervised Inpatient and Outpatient
                Withdrawal Services as defined in Appendix K.

                Rename Section 3.11, "Mental Health and Chemical Dependence Stop
                Loss," and delete



<PAGE>

                Section 3.11 b).

                Renumber Section 3.11 c), "Mental Health and Chemical
                Dependence," as 3.11 b), and amend to read as follows:

                b)      The Contractor will be compensated for medically
                        necessary and clinically appropriate inpatient mental
                        health services and/or Chemical Dependence Inpatient
                        Rehabilitation and Treatment Services as defined in
                        Appendix K in excess of a combined total of thirty (30)
                        days during a calendar year at the lower of the
                        Contractor's negotiated inpatient rate or Medicaid rate
                        of payment.

                Add a new Section 3.11 c), "Mental Health and Chemical
                Dependence," to read as follows:

                c)      Detoxification Services in Article 28 inpatient hospital
                        facilities are subject to the stop-loss provisions
                        specified in Section 3.10 of this Agreement.

                Amend Section 5.1 a) v), "Eligible Populations," to read as
                follows:

                v)      Children age one (1) year or below whose family's net
                        available income is at or below two hundred percent
                        (200%) of the federal poverty level for the applicable
                        household size.

                Amend Section 5.1 a) vii), "Eligible Populations," to read as
                follows:

                vii)    Children age six (6) up to age nineteen (19), whose
                        family's net available income is at or below one hundred
                        and thirty-three percent (133%) of the federal poverty
                        level for the applicable household size.

                Amend Section 5.2 k) "Exempt Populations," to read as follows:

                k)      Individuals who are residents of Alcohol and Substance
                        Abuse or Chemical Dependence Long Term Residential
                        Treatment Programs.

                Add Section 5.2 r), "Exempt Populations," to read as follows:

                r)      Effective April 1, 2003, individuals who are eligible
                        for Medical Assistance pursuant to the "Medicaid buy-in
                        for the working disabled" (subparagraphs twelve or
                        thirteen of paragraph (a) of subdivision one of Section
                        366 of the Social Services Law), and who, pursuant to
                        subdivision 12 of Section 367-a of the Social Services
                        Law, are not required to pay a premium.

                Add Sections 5.3 w) and 5.3x), "Excluded Populations," to read
                as follows:

                w)      Effective April 1, 2003, individuals who are eligible
                        for Medical Assistance pursuant to the "Medicaid buy-in
                        for the working disabled" (subparagraphs twelve or
                        thirteen of paragraph (a) of subdivision one of Section
                        366 of the Social Services Law), and who, pursuant to
                        subdivision 12 of Section 367-a of the Social Services
                        Law, are required to pay a premium.

                x)      Effective October 1, 2002, individuals who are eligible
                        for Medical Assistance


                             April 1, 2002 Amendment
                                       119

<PAGE>


                        pursuant to paragraph (v) of
                        subdivision four of Section 366 of the Social Services
                        Law (persons who are under 65 years of age, have been
                        screened for breast and/or cervical cancer under the
                        Centers for Disease Control and Prevention Breast and
                        Cervical Cancer Early Detection Program and need
                        treatment for breast or cervical cancer, and are not
                        otherwise covered under creditable coverage as defined
                        in the Federal Public Health Service Act).

                Amend Section 6.6, "Family Enrollment," to read as follows:

                6.6     Family Enrollment

                a)      Upon implementation of the 1115 Waiver, all eligible
                        members of the Eligible Person's Family shall be
                        enrolled into the same plan.

                b)      Upon implementation of the 1115 Waiver, the LDSS must
                        inform Enrollees who have Family members enrolled in
                        other MCOs that if anyone in the Family wishes to change
                        plans, all members of the Family must enroll together in
                        the newly-selected plan. The LDSS shall also notify the
                        Enrollee that all members of the Family will be required
                        to enroll together in a single MCO at the time of their
                        next recertification for Medicaid eligibility unless
                        waiver of this requirement is approved by the LDSS.

                c)      Notwithstanding the forgoing,

                i) the LDSS may, on a case-by-case basis, waive the same family
                rule specified in Sections 6.6 (a) and (b) to preserve
                continuity of care:

                1) if one or more members of the Family are receiving prenatal
                care and/or continuing care for a complex chronic medical
                condition from Non-Participating Providers; or
                2) if one or more members of the Family transition from one
                government-sponsored insurance program to another.

                ii) the LDSS must allow HIV SNP-eligible individuals within a
                family to enroll in an HIV SNP, in Service Areas in which an HIV
                SNP exists.

                Amend Section 7.2, Lock-In Provisions in Mandatory Counties," to
                read as follows:

                7.2     Lock-In Provisions in Mandatory Counties and New York
                        City

                        All Enrollees in local social service districts where
                        enrollment in managed care is mandatory and in New York
                        City are subject to a twelve (12) month Lock-In period
                        following the Effective Date of Enrollment in the
                        Contractor's plan, with an initial ninety (90) day grace
                        period in which to disenroll from the Contractor's plan
                        without cause, regardless of whether the Enrollee
                        selected or was auto- assigned to the Contractor's plan.

                Delete Section 7.3, "Lock-In Provisions in New York City," and
                renumber Sections 7.4, "Disenrollment During Lock-In Period" and
                7.5 "Notification Regarding Lock-In and End of Lock-In Period,"
                as Sections 7.3 and 7.4 respectively.

                Amend Section 10.8 b), "Welfare Reform," to read as follows:


                             April 1, 2002 Amendment
                                       120

<PAGE>

                b)      The Contractor shall require that its Participating
                Providers, upon Enrollee consent, provide medical documentation
                and health, mental health and chemical dependence assessments as
                follows:

                i)      Within ten (10) days of a request of an Enrollee or a
                        former Enrollee, currently receiving public assistance
                        or who is applying for public assistance, the Enrollee's
                        or former Enrollee's PCP or specialist provider, as
                        appropriate, shall provide medical documentation
                        concerning the Enrollee or former Enrollee's health or
                        mental health status to the LDSS or to the LDSS'
                        designee. Medical documentation includes but is not
                        limited to drug prescriptions and reports from the
                        Enrollee's PCP or specialist provider. The Contractor
                        shall include the foregoing as a responsibility of the
                        PCP and specialist provider in its provider contracts or
                        in their provider manuals.

                ii)     Within ten (10) days of a request of an Enrollee, who
                        has already undergone, or is scheduled to undergo, an
                        initial LDSS required mental and/or physical
                        examination, the Enrollee's PCP shall provide a health,
                        or mental health and/or chemical dependence assessment,
                        examination or other services as appropriate to identify
                        or quantify an Enrollee's level of incapacitation. Such
                        assessment must contain a specific diagnosis resulting
                        from any medically appropriate tests and specify any
                        work limitations. The LDSS, may, upon written notice to
                        the Contractor, specify the format and instructions for
                        such an assessment

                Amend Section 10.8 c),"Welfare Reform," and add Sections 10.8 d)
                through 10.8 g), to read as follows:

                c)      The Contractor will continue to be responsible for the
                        provision and payment of Chemical Dependence Services in
                        the Benefit Package for Enrollees mandated by the LDSS
                        under Welfare Reform if such services are already
                        underway and the LDSS is satisfied with the level of
                        care and services.

                d)      The Contractor is not responsible for the provision and
                        payment of Chemical Dependence Inpatient Rehabilitation
                        and Treatment Services for Enrollees mandated by the
                        LDSS as a condition of eligibility for Public Assistance
                        or Medicaid under Welfare Reform (as indicated by Code
                        83) unless such services are already under way as
                        described in (c) above.

                e)      The Contractor is not responsible for the provision and
                        payment of Medically Supervised Inpatient and Outpatient
                        Withdrawal Services for Enrollees mandated by the LDSS
                        under Welfare Reform (as indicated by Code 83) unless
                        such services are already under way as described in (c)
                        above.

                f)      The Contractor is responsible for the provision and
                        payment of Medically Managed Detoxification Services
                        ordered by the LDSS under Welfare Reform.

                g)      The Contractor is responsible for the provisions of
                        Sections 10.10, 10.16 (a) and 10.24 of this Agreement
                        for Enrollees requiring LDSS mandated Chemical
                        Dependence Services.

                Amend Section 10.10 b), "Court-Ordered Services," to read as
                follows:


                             April 1, 2002 Amendment
                                       121

<PAGE>

                b)      Court Ordered Services are those services ordered by the
                        court performed by, or under the supervision of a
                        physician, dentist, or other provider qualified under
                        State Law to furnish medical, dental, behavioral health
                        (including mental health and/or Chemical Dependence), or
                        other Medicaid covered services. The Contractor is
                        responsible for payment of those Medicaid services as
                        covered by the Benefit Package, even when the providers
                        are not in the Contractor's provider network.

                Amend Section 10.16 a), "Services for Which Enrollees Can
                Self-Refer," to read as follows:

                a)      Mental Health and Chemical Dependence Services

                        The Contractor will allow Enrollees or LDSS officials on
                        the Enrollee's behalf to make self-referral or referral
                        for one mental health assessment from a Participating
                        Provider and one chemical dependence assessment from a
                        Detoxification or Chemical Dependence Inpatient
                        Rehabilitation and Treatment Participating Provider in
                        any calendar year period without requiring pre-
                        authorization or referral from the Enrollee's Primary
                        Care Provider. In the case of children, such
                        self-referrals may originate at the request of a school
                        guidance counselor (with parental or guardian consent,
                        or pursuant to procedures set forth in Section 33.21 of
                        the Mental Hygiene Law), LDSS Official, Judicial
                        Official, Probation Officer, parent or similar source.

                        i)      The Contractor shall make available to all
                        Enrollees a complete listing of their participating
                        mental health and Chemical Dependence Services
                        providers. The listing should specify which provider
                        groups or practitioners specialize in children's mental
                        health services.

                        ii)     The Contractor will also ensure that its
                        Participating Providers have available and use formal
                        assessment instruments to identify Enrollees requiring
                        mental health and Chemical Dependence Services, and to
                        determine the types of services that should be
                        furnished.

                        iii)    The Contractor will implement policies and
                        procedures to ensure that Enrollees receive follow-up
                        Benefit Package services from appropriate providers
                        based on the findings of their mental health and/or
                        Detoxification or Chemical Dependence Inpatient
                        Rehabilitation and Treatment assessment(s).

                        iv)     The Contractor will implement policies and
                        procedures to ensure that Enrollees are referred to
                        appropriate Chemical Dependence outpatient
                        rehabilitation and treatment providers based on the
                        findings of the Chemical Dependence assessment by the
                        Contractor's Participating Provider.

                Amend Section 10.22 d), "Persons Requiring Ongoing Mental Health
                Services," to read as follows:

                d)      Satisfactory systems for coordinating service delivery
                        between physical health, chemical dependence, and mental
                        health providers, and coordinating services with other
                        available services, including Social Services.


                             April 1, 2002 Amendment
                                       122


<PAGE>

                Amend Section 10.24, title, leader language, 10.24 e), and last
                paragraph of 10.24, "Persons Requiring Alcohol/Substance Abuse
                Services," to read as follows:

                10.24   Persons Requiring Chemical Dependence Services

                        The Contractor will have in place all of the following
                        for its Enrollees requiring Chemical Dependence
                        Services:

                e)      Satisfactory systems for coordinating service delivery
                        between physical health, chemical dependence, and mental
                        health providers, and coordinating in-plan services with
                        other services, including Social Services.

                        The Contractor agrees to also participate in the local
                        planning process for serving persons with chemical
                        dependence, to the extent requested by the LDSS. At the
                        LDSS's discretion, the Contractor will develop linkages
                        with local governmental units on coordination procedures
                        and standards related to Chemical Dependence Services
                        and related activities.

                Amend Section 10.27 i), "Coordination of Services," to read as
                follows:

                i)      local governmental units responsible for public health,
                        mental health, mental retardation or Chemical Dependence
                        Services; and

                Amend Section 18.5(m), "No Contact Report" to read as follows:

                18.5(m) No Contact Report:

                        The Contractor shall submit a quarterly report within
                        thirty (30) days of the close of the reporting period to
                        the CDOH of any Enrollee it is unable to contact,
                        through reasonable means, including by mail, and by
                        telephone, using methods and performing the activities
                        described in Section 13.5, within thirty days of their
                        effective date of enrollment.

                Amend Section 21.17, "Mental Health, Alcohol and Substance Abuse
                Providers," to read as follows:

                21.17   Mental Health and Chemical Dependence Services Providers

                The Contractor will include a full array of mental health and
                Chemical Dependence Services providers in its networks, in
                sufficient numbers to assure accessibility to Benefit Package
                services on the part of both children and adults, using either
                individual, appropriately licensed practitioners or New York
                State Office of Mental Health (OMH) and Office of Alcohol and
                Substance Abuse Services (OASAS) licensed programs and clinics,
                or both.

                The State defines mental health and Chemical Dependence Services
                providers to include the following: Individual Practitioners,
                Psychiatrists, Psychologists, Psychiatric Nurse Practitioners,
                Psychiatric Clinical Nurse Specialists, Licensed Certified
                Social Workers, OMH and OASAS Programs and Clinics, and
                providers of mental health and/or Chemical Dependence Services
                certified or licensed pursuant to Article 31 or 32 of the


                             April 1, 2002 Amendment
                                       123

<PAGE>

                Mental Hygiene Law, as appropriate.

                Amend Section 21.19, "School-Based Health Centers," to read as
                follows:

                21.19 School-Based Health Centers

                a)      The Contractor must develop, in collaboration with
                        school-based health centers in their Service Areas,
                        protocols for reciprocal referral and communication of
                        data and clinical information on MCO Enrollees enrolled
                        in school-based health centers.

                b)      By March 31, 2003, the Contractor must enter into
                        contractual and payment arrangements with school-based
                        health centers in their Service Area, consistent with
                        the protocols referred to in (a) above.

                The attached Appendix K, "Prepaid Benefit Package Definitions of
                Covered and Non-Covered Services," is substituted for the period
                beginning April 1, 2002.

                        This Amendment is effective April 1, 2002, and the
                        Agreement, including the modifications made by this
                        Amendment, shall remain in effect until September 30,
                        2003 or until the execution of an extension, renewal or
                        successor agreement as provided for in the Agreement.


                             April 1, 2002 Amendment
                                       124
<PAGE>



                In Witness Whereof, the parties have duly executed this
                Amendment to the Agreement on the dates appearing below their
                respective signatures below.




                By /s/                               By /s/
                  --------------------------          --------------------------
                AmeriChoice of New York,  Inc.                  City of New York


                Date
                    --------------------------
                        Date
                            --------------------------












                             April 1, 2002 Amendment
                                       125

<PAGE>


                STATE OF NEW YORK)
                                        SS:
                COUNTY OF _________



                        On this _____ day of ____, 200__, _________________ came
                before me, to me known and known to be the
                ______________________________ of ________________________, who
                is duly authorized to execute the foregoing instrument on behalf
                of said corporation and s/he acknowledged to me that s/he
                executed the same for the purpose therein mentioned.


                                                       /s/
                                                      --------------------------
                                                            NOTARY PUBLIC





                STATE OF NEW YORK)
                              SS:
                COUNTY OF NEW YORK


                        On this ______ day of ______, 20____, _________ came
                before me, to me known and known to be the
                ___________________________ in the New York City Department of
                Health, who is duly authorized to execute the foregoing
                instrument on behalf of the City and/he acknowledged to me that
                s/he executed the same for the purpose therein mentioned.



                                                       /s/
                                                      --------------------------
                                                            NOTARY PUBLIC





                             April 1, 2002 Amendment
                                       126