<PAGE>
 
EXHIBIT 10.12 
                         REGISTRATION RIGHTS AGREEMENT
                         -----------------------------
 
     THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and effective
     ----------------------------------
as of February 25, 1999, by and among Capital Z Financial Services Fund II,
L.P., a Bermuda limited partnership and exempted partnership (the "Investor"),
and United Payors & United Providers, Inc., a Delaware corporation (the
"Company").


                                   RECITALS
                                        
     A.   Upon the terms and subject to the conditions of a Securities Purchase
Agreement, dated as of February 2, 1999 (the "Securities Purchase Agreement"),
by and among Thomas L. Blair (the "Seller") and the Investor, the Investor has
agreed to purchase from the Seller an aggregate of 1,750,000 shares of the
common stock, $0.01 par value ("Common Stock"), of the Company (the "Purchase").

     B.   The Purchase facilitates an acquisition by the Seller of Common Stock,
which acquisition is a prerequisite to the Company's acquisition of a financial
institution;

     C.   The execution of this Agreement by the Company is a prerequisite to
the Purchase.

     D.   The Company considers this Agreement to be in the best interests of
the Company and its stockholders.


                                   AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements of the parties contained herein, and for other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:

     1.   Definitions. As used herein, the terms below shall have the following
          ------------
meanings. Any such term, unless the context otherwise requires, may be used in
the singular or plural, depending upon the reference.

          "Affiliate" shall have the meaning provided in the Exchange Act.

          "Agreement" shall mean this Registration Rights Agreement.

          "Closing Date" shall have the meaning provided in the Securities
Purchase Agreement.

          "Commission" shall mean the United States Securities and Exchange
Commission.
<PAGE>
 
          "Common Stock" shall have the meaning provided in Recital A.

          "Common Stock Equivalents" means, without duplication with any other
Common Stock or Common Stock Equivalents, any warrants, options, convertible
securities or indebtedness, exchangeable securities or indebtedness, or other
rights exercisable for or convertible or exchangeable into, directly or
indirectly, Common Stock, whether at the time of issuance or upon the passage of
time or the occurrence of some future event.

          "Company" shall mean United Payors & United Providers, Inc., a
Delaware corporation, and any successor thereto.

          "Demand Registration" shall mean a registration effected pursuant to
Section 2(a).

          "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor law, and the rules and regulations issued pursuant to
that Act or any successor law.

          "Holder" shall mean any holder of Shares listed on the signature pages
hereof and any direct or indirect transferee of any such holder that becomes a
party hereto by executing and delivering a Registration Rights Agreement Joinder
in the form attached hereto as Exhibit A.

          "Initiating Holders" shall have the meaning provided in Section 2(b).

          "Investor" shall have the meaning provided in the preamble of this
Agreement.

          "Person" shall mean an individual, partnership, limited liability
company, joint venture, corporation, trust or unincorporated organization or any
other similar entity.

          "Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document by the
Commission.

          "Registrable Shares" shall mean (a) the Shares owned by any Holder and
(b) any shares of Common Stock or other securities of the Company issued or
distributed to a Holder with respect to, in exchange for or in replacement of,
any of the Shares; provided, however, that such shares of Common Stock and other
securities shall be treated as Registrable Shares only if and so long as (i)
they have not been sold by the Investor pursuant to an effective Registration
Statement under the Securities Act, (ii) they have not been sold to the public
in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof or pursuant to
Rule 144 under the Securities Act or any similar provision), or (iii) they may
not immediately be resold by a Holder pursuant to Rule 144 (k) under the
Securities Act without any volume limitation.

                                      -2-
<PAGE>
 
          "Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor law, and the rules and regulations issued pursuant to that Act or
any successor law.

          "Securities Purchase Agreement" shall have the meaning provided in
Recital A.

          "Shares" shall mean the shares of Common Stock agreed to be sold on
the Closing Date to the Investor pursuant to the Securities Purchase Agreement.

          "Violation" shall have the meaning provided in Section 7(a).

          2.   Demand Registration.
               --------------------

               (a) General. If the Company shall receive, at any time after 180
                   -------- 
     days after the Closing Date (subject to Section 10 of this Agreement), a
     written request from Holders that the Company file a registration statement
     under the Securities Act covering the registration of at least 750,000
     Registrable Shares (adjusted for all stock splits or similar transactions),
     then the Company shall, within ten (10) days of the receipt thereof, give
     written notice of such request to all Holders and shall, subject to the
     limitations of this Section 2 file a registration statement with respect to
     that number of Registrable Shares specified in such written request (and
     such Registrable Shares as may be specified in the written notice of any
     other Holder delivered to the Company within twenty (20) days after the
     date on which the Company mailed notice of the initiating written request
     to such other Holder) within 90 days of its receipt of such written request
     (the "Required Filing Date") and use all commercially reasonable efforts to
     cause such registration statement to be declared effective by the
     Commission as promptly thereafter as is practicable.

               (b) Underwriters Cut-back.  If the Holders initiating the
                   ---------------------- 
     registration request under Section 2(a) (the "Initiating Holders") intend
     to distribute the Registrable Shares covered by their request by means of
     an underwritten offering, they shall so advise the Company as a part of
     their request made pursuant to Section 2(a), and the Company shall include
     in the applicable registration statement such information with respect
     thereto as may be required or advisable. The selection of the managing
     underwriter of any underwritten offering under this Section 2 shall be made
     by a majority in interest of the Initiating Holders, with the consent of
     the Company (such consent not to be unreasonably withheld). In the case of
     an underwritten offering, the right of any Holder to include Registrable
     Shares in the related registration shall be conditioned upon the inclusion
     of such Holder's Registrable Shares in the underwritten offering (unless
     otherwise mutually agreed by a majority in interest of the Initiating
     Holders and such Holder). All Holders proposing to distribute their
     securities through such underwritten offering shall (together with the
     Company as provided in Section 4(e)) enter into an underwriting agreement
     with customary terms with the underwriter or underwriters selected for such
     underwritten offering. Notwithstanding any other provision of this
     Agreement, if the managing underwriter advises the Initiating Holders that
     marketing factors require or make advisable a limitation of the number of
     shares to be included in the underwritten offering, then the Initiating
     Holders shall so advise all other 

                                      -3-
<PAGE>
 
     participating Holders, and the number of Registrable Shares that may be
     included in the underwritten offering shall be allocated among all
     participating Holders, including the Initiating Holders, in proportion (as
     nearly as practicable) to the amount of Registrable Shares owned by each
     Holder; provided, however, that the number of Registrable Shares to be
     included in such underwritten offering shall not be reduced unless and
                                                      --   
     until all other securities shall have been excluded from the underwritten
           ---
     offering.

          (c) Limit on Demand Registrations.  The Company is obligated to effect
              ------------------------------
     only two (2) Demand Registrations pursuant to Section 2 for an aggregate of
     up to 1,750,000 shares of Common Stock (as adjusted for all stock splits or
     similar transactions).  For purposes of this Section 2(c), no such
     registration shall be deemed a Demand Registration unless and until the
     registration statement filed pursuant thereto has been declared effective
     by the Commission.

          (d) Deferral of Filing.  The Company may defer the filing (but not the
              -------------------  
     preparation) of any registration statement required by Section 2 for a
     period of up to: (i) forty-five (45) days in the event that the Company or
     any of its Subsidiaries is engaged in confidential negotiations or other
     confidential business activities, disclosure of which would be required in
     such registration statement (but would not be required if such registration
     statement were not filed), and the Board of Directors of the Company
     determines in good faith that such disclosure would be materially
     detrimental to the Company and its stockholders or would have a material
     adverse effect on any such confidential negotiations or other confidential
     business activities, or (ii)  120 days in the event that the Board of
     Directors of the Company determined to effect a registered underwritten
     public offering of the Company's securities for the Company's account and
     the Company takes substantial steps (including, but not limited to,
     selecting a managing underwriter for such offering) and proceeds with
     reasonable diligence to effect such offering; provided that if such
     determination is made by the Board of Directors after receipt of a Demand
     Registration request, the Board prior to such request shall have commenced
     negotiations with an underwriter with respect to such offering; and
     provided, further, however, that during any period of 360 consecutive days,
     Holders shall not be subject to deferrals pursuant to the Company's
     exercise of deferral rights for a period of at least 180 consecutive days.
     A deferral of the filing of a registration statement pursuant to this
     Section 2(d) shall be lifted, and the requested registration statement
     shall be filed forthwith, if, in the case of a deferral pursuant to clause
     (i) of the preceding sentence, the negotiations or other activities are
     terminated or the transaction contemplated by such negotiations or other
     activities are consummated, or, in the case of a deferral pursuant to
     clause (ii) of the preceding sentence, the proposed registration for the
     Company's account is abandoned.  In order to defer the filing of a
     registration statement pursuant to this Section 2(d), the Company shall
     promptly (but in any event within 10 days), upon determining to seek such
     deferral, deliver to each Initiating Holder a certificate signed by an
     executive officer of the Company stating that the Company is deferring such
     filing pursuant to this Section 2(d) and a general statement of the reason
     for such deferral and an approximation of the anticipated delay.  Within 20
     days after 

                                      -4-
<PAGE>
 
     receiving such certificate, the holders of a majority in interest of the
     Registrable Shares held by the Requesting Holders and for which
     registration was previously requested may withdraw their request by giving
     notice to the Company. If withdrawn, the such request shall be deemed not
     to have been made for all purposes of this Agreement.

          (e) Expenses of Demand Registration. All expenses of Demand
              --------------------------------
     Registrations shall be paid by the selling Holders; provided, however, that
     if any securities other than the Shares are included in a Demand
     Registration, any person on whose behalf such securities have been included
     shall pay that percentage of the total expenses which equals the percentage
     of the total proceeds received by such person, and the selling Holders
     shall have no responsibility for any such expenses.

     3.   Piggy-Back Registration.
          ------------------------

          (a) General.  If at any time after 180 days after the Closing Date,
              --------
     the Company proposes to register (including for this purpose a registration
     effected by the Company pursuant to Section 2 of this Agreement) any shares
     of its Common Stock under the Securities Act in connection with the public
     offering of such securities (other than a registration on Form S-4 or Form
     S-8 (or any successor forms)), the Company shall, at such time, promptly
     give each Holder written notice of such registration. Upon the written
     request of each Holder given within fifteen (15) days after mailing of such
     notice by the Company in accordance with Section 18 hereof, the Company
     shall cause to be registered under the Securities Act all of the
     Registrable Shares that each such Holder has requested to be registered,
     subject to the underwriter cutback and other provisions of Section 3(b)
     hereof.

          (b) Underwriting Requirements. In connection with any underwritten
              --------------------------
     offering, the Company shall not be required under this Section 3 to include
     any Holder's Registrable Shares in such underwritten offering unless such
     Holder shall have agreed in writing to the terms of the underwriting as
     agreed upon among the Company and the underwriters selected by the Company
     or by selling stockholders, as the case may be, and then only in such
     quantity as the underwriters determine in their sole discretion will not
     materially and adversely affect the distribution of securities to be
     covered by such registration statement, such determination to be confirmed
     in writing upon the request of any Holder. If the total amount of
     Registrable Shares requested by Holders to be included in such offering
     pursuant to Section 3(a) exceeds the amount of securities that the
     underwriters determine in their sole discretion is compatible with the
     success of the offering, then the Company shall be required to include in
     the offering only that number of Registrable Shares and shares of Common
     Stock offered by other selling shareholders which the underwriters
     determine in their sole

                                      -5-

<PAGE>
 
     discretion will not have a material adverse effect on the offering (the
     securities so included to be apportioned among all selling Holders and
     other selling shareholders pro rata according to the total amount of shares
     of Common Stock proposed to the be sold by each selling holder.

          (c) Expenses of Company Registration. The Company shall bear and pay
              ---------------------------------
     all expenses incurred in connection with any registration, filing,
     qualification or sale of Registrable Shares pursuant to this Section 3,
     including (without limitation) all registration, filing, and qualification
     fees, and printers' fees, accounting fees and the fees and disbursements of
     counsel for the Company relating or apportionable thereto, but excluding
     underwriting discounts and commissions, stock transfer taxes and the fees
     and expenses of separate counsel, if any, retained by the selling Holders.

          4.  Obligations of the Company. Whenever required under this Agreement
              ---------------------------
     to effect the registration of any Registrable Shares, the Company shall, as
     expeditiously as reasonably possible, use reasonable commercial efforts to
     do the following:

                    (a) Commission Filing. Prepare and file with the Commission
                        ------------------
          a registration statement with respect to such Registrable Shares and
          to cause such registration statement to become effective, and, upon
          the request of the Holders of a majority of the Registrable Shares
          registered thereunder, keep such registration statement effective for
          up to 180 days or until all of the Shares registered thereunder are
          sold, whichever occurs sooner.

                    (b) Amendments. Prepare and file with the Commission such
                        -----------
          amendments and supplements to such registration statement and the
          prospectus used in connection with such registration statement as may
          be necessary to comply with the provisions of the Securities Act with
          respect to the disposition of all securities covered by such
          registration statement, and furnish such copies thereof to the Holders
          and any underwriters as they may reasonably request.

                    (c) Prospectus.  Furnish to the Holders and any underwriters
                        ----------- 
          such numbers of copies of a prospectus, including a preliminary
          prospectus, in conformity with the requirements of the Securities Act,
          and such other documents as they may reasonably request in order to
          facilitate the disposition of Registrable Shares owned by them, and
          cause all related filings to be made with the Commission as required
          by Rule 424 under the Securities Act.

                    (d) Blue Sky Qualification.  Register and qualify the
                        -----------------------
          Registrable Shares covered by such registration statement under such
          other securities or Blue Sky laws of such jurisdictions as shall be
          reasonably requested by the Holders and any underwriters; provided,
          however, that the Company shall not be required in connection
          therewith or as a condition thereto to qualify to do business or to
          file a 

                                      -6-
<PAGE>
 
          general consent to service of process in any such states or
          jurisdictions.

                    (e) Underwriting Agreement. In the event of any underwritten
                        ----------------------- 
          public offering, enter into and perform its obligations under an
          underwriting agreement, in usual and customary form, with the managing
          underwriter of such offering, including, without limitation,
          delivering opinions of counsel and "comfort letters" of accountants.
          Each Holder participating in such underwriting shall also enter into
          and perform its obligations under such an agreement.

                    (f) Prospectus Delivery. Promptly notify each Holder of
                        --------------------
          Registrable Shares covered by the registration statement at any time
          when the Company becomes aware of the happening of any event as a
          result of which the registration statement or the prospectus included
          in such registration statement or any supplement to the prospectus (as
          then in effect) contains any untrue statement of a material fact or
          omits to state a material fact necessary to make the statements
          therein (in the case of the prospectus, in light of the circumstances
          under which they were made) not misleading or, if for any other reason
          it shall be necessary during such time period to amend or supplement
          the registration statement or the prospectus in order to comply with
          the Securities Act, whereupon, in either case, each Holder shall
          immediately cease to use such registration statement or prospectus for
          any purpose and, as promptly as practicable thereafter, the Company
          shall prepare and file with the Commission, and furnish without charge
          to the appropriate Holders and managing underwriters, if any, a
          supplement or amendment to such registration statement or prospectus
          which will correct such statement or omission or effect such
          compliance and provide such copies thereof as the Holders and any
          underwriters may reasonably request.

                    (g) Make generally available to the Company's
          securityholders an earnings statement satisfying the provisions of
          Section 11(a) of the Securities Act no later than 30 days after the
          end of the 12-month period beginning with the first day of the
          Company's first fiscal quarter commencing after the effective date of
          a registration statement, which earnings statement shall cover said
          12-month period, and which requirement will be deemed to be satisfied
          if the Company timely files complete and accurate information on Forms
          10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with
          Rule 158 under the Securities Act;

                    (h) If requested by the managing underwriter or any seller,
          promptly incorporate in a prospectus supplement or post-effective
          amendment such information as the managing underwriter or any seller
          reasonably requests to be included therein, including, without
          limitation, with respect to the Registrable Shares being sold by such
          seller, the purchase price being paid therefor by the underwriters 

                                      -7-
<PAGE>
 
          and with respect to any other terms of the underwritten offering of
          the Registrable Shares to be sold in such offering, and promptly make
          all required filings of such prospectus supplement or post-effective
          amendment;

                    (i) As promptly as practicable after filing with the
          Commission of any document which is incorporated by reference into a
          registration statement, deliver a copy of each such document (in the
          form in which it was incorporated) to each seller;

                    (j) Cooperate with the sellers and the managing underwriter
          to facilitate the timely preparation and delivery of certificates
          (which shall not bear any restrictive legends unless required under
          applicable law) representing securities sold under any registration
          statement, to enable such securities to be in such denominations and
          registered in such names as the managing underwriter or such sellers
          may request and to make available to the Company's transfer agent
          prior to the effectiveness of such registration statement a
          satisfactory supply of such certificates;

                    (k) Promptly make available for inspection by any seller,
          any underwriter participating in any disposition pursuant to any
          registration statement, and any attorney, accountant or other agent or
          representative retained by any such seller or underwriter
          (collectively, the "Inspectors"), all financial and other records,
          pertinent corporate documents and properties of the Company
          (collectively, the "Records"), as shall be reasonably necessary to
          enable them to fulfill their due diligence responsibilities, and cause
          the Company's officers, directors and employees to supply all
          information requested by any such Inspector in connection with such
          registration statement; provided, however, that unless the disclosure
          of such Records is necessary to avoid or correct a misstatement or
          omission in the registration statement or the release of such Records
          is ordered pursuant to a subpoena or other order from a court of
          competent jurisdiction, the Company shall not be required to provide
          any information under this subparagraph (x) if (A) the Company's Board
          of Directors determines in good faith, after consultation with counsel
          for the Company, that to do so would cause the Company to forfeit an
          attorney-client privilege that was applicable to such information or
          (B) if either (1) the Company has requested and been granted from the
          SEC confidential treatment of such information contained in any filing
          with the SEC or documents provided supplementally or otherwise or (2)
          the Company reasonably determines in good faith that such Records are
          confidential and so notifies the Inspectors in writing unless prior to
          furnishing any such information with respect to (A) and (B) such
          Holder of Registrable Shares requesting such information agrees to
          enter into a confidentiality agreement in customary form and subject
          to customary exceptions; and provided further, however, that each
          Holder of Registrable Shares agrees that it will, upon learning that
          disclosure of such Records is sought in a court of competent
          jurisdiction, give notice to the Company 

                                      -8-
<PAGE>
 
          and allow the Company at its expense, to undertake appropriate action
          to prevent disclosure of the Records deemed confidential;

                    (l) Furnish to each seller and underwriter a signed
          counterpart of (A) an opinion or opinions of counsel to the Company
          and (B) a comfort letter or comfort letters from the Company's
          independent public accountants, each in customary form and covering
          such matters as are customarily covered by such opinions or comfort
          letters, as the case may be, as the sellers or managing underwriter
          reasonably requests;

                    (m) Cause the Registrable Shares included in any
          registration statement to be (A) listed on each securities exchange,
          if any, on which similar securities issued by the Company are then
          listed, or (B) authorized to be quoted and/or listed (to the extent
          applicable) on the National Association of Securities Dealers, Inc.
          Automated Quotation System or the National Market System of Nasdaq
          Stock Market if the Registrable Shares so qualify;


                    (n) Provide a CUSIP number for the Registrable Shares
          included in any registration statement not later than the effective
          date of such registration statement;

                    (o) Cooperate with each seller and each underwriter
          participating in the disposition of such Registrable Shares and their
          respective counsel in connection with any filings required to be made
          with the National Association of Securities Dealers, Inc.;

                    (p) During the period when a prospectus is required to be
          delivered under the Securities Act, promptly file all documents
          required to be filed with the Commission pursuant to Sections 13(a),
          13(c), 14 or 15(d) of the Exchange Act;

                    (q) Notify each seller of Registrable Shares promptly of any
          request by the Commission for the amending or supplementing of such
          registration statement or prospectus or for additional information;

                    (r) Prepare and file with the Commission promptly any
          amendments or supplements to such registration statement or prospectus
          which, in the opinion of counsel for the Company or the managing
          underwriter, is required in connection with the distribution of the
          Registrable Shares;

                    (s) Enter into such agreements (including underwriting
          agreements in the managing underwriter's customary form) as are
          customary in 

                                      -9-
<PAGE>
 
          connection with an underwritten offering;

                    (t) Advise each seller of such Registrable Shares, promptly
          after it shall receive notice or obtain knowledge thereof, of the
          issuance of any stop order issued by the Commission suspending the
          effectiveness of such registration statement or the initiation or
          threatening of any proceeding for such purpose and promptly use its
          best efforts to prevent the issuance of any stop order or to obtain
          its withdrawal at the earliest possible moment if such stop order
          should be issued;

                    (u) Cooperate in a reasonable manner, considering among
          other things operating responsibilities to the Company, with each
          seller and each underwriter participating in the disposition of
          Registrable Shares in connection with their selling efforts,
          including, without limitation, by making its officers and employees
          reasonably available for roadshow or other presentations; and

                    (v) Subsequent to the date hereof, not grant rights to more
          than four (4) Demand Registrations to any Person in connection with
          any transaction or series of related transactions, or Piggy-Back
          Registration rights having a priority over the Piggy-Back Registration
          rights granted under this Agreement.

          5.  Furnish Information. It shall be a condition precedent to the
              --------------------
     obligations of the Company to take any action pursuant to this Agreement
     with respect to the Registrable Shares of any selling Holder that such
     Holder shall furnish to the Company such information regarding itself, the
     Registrable Shares held by it, and the intended method of disposition of
     such securities as shall be required to effect the registration of such
     Holder's Registrable Shares.

          6.  Delay of Registration. No Holder shall have any right to obtain or
              ----------------------
     seek an injunction restraining or otherwise delaying any registration as
     the result of any controversy that might arise with respect to the
     interpretation or implementation of this Agreement.

          7.  Indemnification.  In the event (i) any Registrable Shares are
              ---------------- 
     included in a registration statement under this Agreement or (ii) any other
     shares of Common Stock held by the Investor are included in any
     registration statement:

               (a) Indemnification by the Company. To the fullest extent
                   ------------------------------- 
          permitted by law, the Company will indemnify and hold harmless each
          Holder, each of its directors, officers, partners, employees,
          advisors, agents and representatives, and each person, if any, who
          controls such Holder within the meaning of the Securities Act or the
          Exchange Act and any agent or investment advisor thereof, against any
          and all losses, claims, damages, expenses (including, without 
          limitation, attorneys' fees and disbursements) and liabilities (joint
          or several) to which they may become subject, insofar as such losses,
          claims, damages, expenses (including, without

                                      -10-
<PAGE>
 
          limitation, attorneys' fees and disbursements) and liabilities (or
          actions in respect thereof) arise out of, relate to, result from or
          are based upon any of the following (each a "Violation"): (i) any
          untrue statement or alleged untrue statement of a material fact
          contained in such registration statement, including any preliminary
          prospectus or final prospectus contained therein, or any amendments or
          supplements thereto, (ii) the omission or alleged omission to state
          therein a material fact required to be stated therein, or necessary to
          make the statements therein not misleading, or (iii) any violation or
          alleged violation by the Company of the Securities Act, the Exchange
          Act, or any state securities law or any rule or regulation promulgated
          under the Securities Act, the Exchange Act, or any state securities
          law, and the Company will pay to each such Holder or other person, as
          incurred, any legal or other expenses reasonably incurred by one law
          firm retained by them, plus appropriate local counsel in connection
          with investigating or defending any such loss, claim, damage, expense,
          liability, or action; provided, however, that the indemnity agreement
          contained in this Section 7(a) shall not apply to amounts paid in
          settlement of any such loss, claim, damage, expense, liability, or
          action if such settlement is effected without the consent of the
          Company, nor shall the Company be liable in any such case for any such
          loss, claim, damage, expense, liability, or action to which any Holder
          or other indemnifiable person may become subject to the extent that it
          arises out of or is based upon a Violation which occurs in reliance
          upon and in conformity with written information furnished expressly
          for use in connection with such registration by such Holder or other
          indemnifiable person. This right to indemnification shall remain in
          full force and effect notwithstanding any investigation made by or on
          behalf of such Holder or other indemnifiable person and shall survive
          the transfer of such securities by such Holder.

               (b) Indemnification by Selling Holder. To the fullest extent
                   ---------------------------------- 
          permitted by law, each selling Holder severally, but not jointly, will
          indemnify and hold harmless the Company, each of its directors, each
          of its officers, partners, employees, advisors, agents and
          representatives, who has signed the registration statement, each
          person, if any, who controls the Company within the meaning of the
          Securities Act or the Exchange Act, and any agent or investment
          advisor thereof, any other Holder selling securities registered in
          such registration statement and any controlling person of any such
          underwriter or other Holder against any and all losses, claims,
          damages, expenses (including, without limitation, attorney's fees and
          disbursements) and liabilities (joint or several) to which any of the
          foregoing persons may become subject, insofar as such losses, claims,
          damages,  expenses (including, without limitation, attorney's fees and
          disbursements) and liabilities (or actions in respect thereto) arise
          out of, relate to, result from or are based upon any Violation, in
          each case to the extent (and only to the extent) that such Violation
          occurs in reliance upon and in conformity with written information
          furnished by such Holder expressly for use in connection with such
          registration; provided, however, that the indemnity agreement
          contained in this Section 7(b) shall not apply to amounts paid in

                                      -11-
<PAGE>
 
          settlement of any such loss, claim, damage, liability or action if
          such settlement is effected without the consent of the Holder (which
          consent shall not be withheld unreasonably); provided, further, that
          in no event shall any indemnity under this Section 7 (b) exceed the
          net proceeds from the offering received by such Holder.

               (c) Procedures.  Promptly after receipt by an indemnified party
                   -----------
          under this Section 7 of notice of the commencement of any action
          (including any governmental action), such indemnified party will, if a
          claim in respect thereof is to be made against any indemnifying party
          under this Section 7, deliver to the indemnifying party a written
          notice of the commencement thereof in accordance with Section 18
          hereof and the indemnifying party shall have the right to participate
          in, and, to the extent the indemnifying party so desires, jointly with
          any other indemnifying party similarly noticed, to assume the defense
          thereof with counsel mutually satisfactory to the parties; provided,
          however, that an indemnified party (together with all other
          indemnified parties which may be represented without conflict by one
          counsel) shall have the right to retain one separate counsel (plus
          appropriate local counsel), with the reasonable fees and expenses to
          be paid by the indemnifying party, if representation of such
          indemnified party by the counsel retained by the indemnifying party
          would be inappropriate due to actual or potential differing interests
          between such indemnified party and any other party represented by such
          counsel in such proceeding. The failure to deliver written notice to
          the indemnifying party within a reasonable time of the commencement of
          any such action, if prejudicial in any material respect to its ability
          to defend such action, shall to the extent prejudicial relieve such
          indemnifying party of any liability to the indemnified party under
          this Section 7, but the omission so to deliver written notice to the
          indemnifying party will not relieve it of any liability that it may
          have to any indemnified party otherwise than under this Section 7.

               (d) Contribution.  If the indemnification provided for in this
                   -------------
          Section 7 from the indemnifying party is unavailable to an indemnified
          party hereunder in respect of any losses, claims, damages, liabilities
          or expenses referred to therein, then the indemnifying party, in lieu
          of indemnifying such indemnified party, shall contribute to the amount
          paid or payable by such indemnified party as a result of such losses,
          claims, damages, liabilities or expenses in such proportion as is
          appropriate to reflect the relative fault of the indemnifying party on
          the one hand and the indemnified parties on the other in connection
          with the actions which resulted in such losses, claims, damages,
          liabilities or expenses, as well as any other relevant equitable
          considerations. The relative fault of such indemnifying party and
          indemnified parties shall be determined by reference to, among other
          things, whether any action in question, including any untrue or
          alleged untrue statement of a material fact or omission or alleged
          omission to state a material fact, has been made by, or related to
          information supplied by, such indemnifying party or indemnified
          parties, and the parties' relative intent, knowledge, access to
          information and opportunity to 

                                      -12-
<PAGE>
 
          correct or prevent such action; provided, however, that in no event
          shall the liability of any selling Holder hereunder be greater in
          amount than the difference between the dollar amount of the proceeds
          received by such Holder upon the sale of the Registrable Shares giving
          rise to such contribution obligation and all amounts previously
          contributed by such Holder with respect to such losses, claims,
          damages, liabilities and expenses. The amount paid or payable to a
          party as a result of the losses, claims damages, liabilities and
          expenses referred to above shall be deemed to include any legal or
          other fees or expenses reasonably incurred by such party in connection
          with any investigation or proceeding.

          The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.

               (e) Survival. The obligations of the Company and Holders under
                   ---------
          this Section 7 shall survive the completion of any offering of
          Registrable Shares in a registration statement under this Agreement,
          and otherwise.

               8.  Reports Under Exchange Act. With a view to making available
                   --------------------------- 
     to the Holders the benefits of Rule 144 promulgated under the Securities
     Act and any other rule or regulation of the Commission that may at any time
     permit a Holder to sell securities of the Company to the public without
     registration, the Company agrees to use commercially reasonable efforts to:

               (a) make and keep public information available, as those terms
     are defined in Rule 144;

               (b) file with the Commission in a timely manner all reports and
     other documents required to be filed by the Company under the Securities
     Act and the Exchange Act; and

               (c) furnish to any Holder, so long as the Holder owns any
     Registrable Shares, promptly upon request (i) a written statement by the
     Company that it has complied with the reporting requirements of Rule 144,
     the Securities Act and the Exchange Act, (ii) a copy of the most recent
     annual and/or quarterly report of the Company and such other reports and
     documents so filed by the Company, and (iii) such other information as may
     be reasonably requested in availing any Holder of any rule or regulation of
     the Commission which permits the selling of any Registrable Shares without
     registration.

               9.  "Market Stand-Off" Agreement.  Each Holder hereby agrees that
                   ----------------------------- 
     for a period of 180 days, or such shorter period required by the
     underwriters, following the effective date of any registration effected
     pursuant to Section 2, or if Holders participate in the sale of securities
     effected pursuant to Section 3 hereof, such Holder, if requested by the
     managing underwriter, shall not, directly or indirectly sell, offer to
     sell, contract to sell 

                                      -13-
<PAGE>
 
     (including, without limitation, any short sale), grant any option to
     purchase or otherwise transfer or dispose of (other than to donees and
     Affiliates who agree to be similarly bound) any securities of the Company
     held by it at any time during such period, except shares of Common Stock
     included in such registration. In addition, each Holder agrees, if
     applicable, to acknowledge the undertaking provided for in this Section 9
     by entering into customary written "lock-up" agreements with the managers
     of the relevant underwriting. The requirements of this Section 9 shall not
     apply to any Holder that (together with its Affiliates), at the time of
     receipt of the referenced notice from the Company, (i) beneficially owns
     less than 5% of the outstanding shares of Common Stock, (ii) is not an
     Affiliate or an employee of the Company and (iii) waives any further
     benefits of this Agreement for it or any subsequent assignee or transferee
     of its Registrable Shares.

               In order to enforce the foregoing covenant, the Company may
     impose stop transfer instructions with respect to the Registrable Shares of
     each Holder (and the shares or securities of every other person subject to
     the foregoing restriction) until the end of such period.

               10.  "Lock-up" Agreements.  Each Holder agrees to enter into a
                    ---------------------
     customary written "lock-up" agreement with respect to the Registrable
     Shares with the managers of any underwritten public offering by the Company
     of shares of its equity securities for cash, which offering is completed on
     or before August 31, 1999; provided, however, that the aggregate of such
     "lock-up" period together with any deferral period pursuant to Section 2(d)
     shall not exceed the deferral period permitted under Section 2(d).
 
               11.  Right of First Offer.
                    ---------------------

               (a) Notice of Proposed Transaction; Election.  In the event that
                   -----------------------------------------
     the Investor, any Holder or any holder of Common Stock Equivalents or
     shares of common stock received upon exercise of such Common Stock
     Equivalents who is a direct or indirect transferee of the Investor (the
     "Selling Holder") desires to effect a sale, within the meaning of Section
     2(3) of the Securities Act of 1933 , as amended, of any or all of its
     shares of Common Stock or any Common Stock Equivalents (collectively, the
     "Subject Shares"), the Selling Holder shall first give written notice (a
     "Right of First Offer Notice") of such desire to the Company setting forth
     the terms and conditions of sale and the price at which the Selling Holder
     desires to sell.  The Company shall thereupon, within twenty (20) business
     days following its receipt of the Right of First Offer Notice (the "Right
     of First Offer Election Period"), notify the Selling Holder in writing of
     the number, if any, of Subject Shares that the Company or its designee, as
     the case may be, desires to subscribe to purchase (the "Right of First
     Offer Subscription").  Failure to respond to the Selling Holder with regard
     to the Right of First Offer Notice prior to the expiration of the Right of
     First Offer Election Period shall be deemed to be an election not to
     subscribe for any of the Subject Shares.  If the Selling Holder satisfies
     all of the foregoing conditions and the Company and its designees, as the
     case may be, do not collectively subscribe for all of the Subject Shares,
     then the Selling Holder may, upon the expiration of the Right of First
     Offer Election Period, sell the Subject Shares not subscribed for by the
     Company or its designees, as the case may be, to any other person at a
     purchase price equal to or higher than the price set forth in the Right of
     First Offer Notice; provided, however, that the Selling Holder shall again
                         --------  -------                   
     become 

                                      -14-
<PAGE>
 
     subject to the above restrictions on transfer if a definitive agreement for
     the proposed transfer is not entered into within ninety (90) days after the
     expiration of Right of First Offer Election Period. This Section 11(a)
     shall not apply to any Transfer by any Holder to any Affiliate of such
     Holder.

               (b) Procedure for Sale.  If all the Subject Shares are subscribed
                   -------------------
     for by the Company or its designees, as the case may be, the closing of the
     purchase of the Subject Shares shall take place at the principal offices of
     the Company no later than thirty (30) days after the date of the expiration
     of the Right of First Offer Election Period (subject to the last sentence
     of this Section 11(b)).  At the closing, the Company or its designees, as
     the case may be, will pay the purchase price for the Subject Shares to be
     purchased by it to the Selling Holder by wire transfer of immediately
     available funds upon the Selling Holder's delivery of valid certificates
     evidencing the Subject Shares.  Such certificates will be duly endorsed
     (with signatures guaranteed, if appropriate) for transfer to the Company or
     its designees, as the case may be, and upon delivery of such  certificates
     to the Company or its designees, as the case may be, the Selling Holder
     will be deemed to represent and warrant to the Company or its designees, as
     the case may be, that the Subject Shares are owned by the Selling Holder
     free and clear of all liens, adverse claims and other encumbrances (other
     than as provided in this Registration Rights Agreement), and that the
     Selling Holder has all requisite power and authority to sell the Subject
     Shares.  The parties shall take all such actions as may be necessary to
     comply as promptly as practicable with the Hart-Scott-Rodino Antitrust
     Improvements Act of 1976, as amended, in connection with the sale of the
     Subject Shares.

               12.  Amendment.  This  Agreement may be amended and the
                    ----------
     observance of any provision of this Agreement may be waived (either
     generally or in a particular instance and either retroactively or
     prospectively) only with the written consent of the Company and Holders of
     at least sixty-six percent (66%) of the Registrable Shares. Any amendment
     or waiver effected in accordance with this Section 12 shall be binding upon
     each Holder, each transferee thereof  and the Company.

               13.  Termination.  The rights provided in this Agreement shall
                    ------------
     terminate on the tenth anniversary of the effective date of this Agreement.

               14.  Governing Law. THIS AGREEMENT SHALL BE CONSTRUED,
                    --------------
     INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE
     LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS
     PROVISIONS THEREOF).

               15.  Counterparts. This Agreement may be executed in two or more
                    -------------
     counterparts, each of which shall be deemed an original, but all of which
     together shall constitute one and the same instrument.

                                      -15-
<PAGE>
 
               16.  Titles and Subtitles. The titles and subtitles used in this
                    ---------------------
     Agreement are used for convenience only and are not to be considered in
     construing or interpreting this Agreement.

               17.  Negotiation of Agreement. Each of the parties acknowledges
                    -------------------------
     that it has been represented by independent counsel of its choice
     throughout all negotiations that have preceded the execution of this
     Agreement and that it has executed the same with consent and upon the
     advice of said independent counsel. Each party and its counsel cooperated
     in the drafting and preparation of this Agreement and the documents
     referred to herein, and any and all drafts relating thereto shall be deemed
     the work product of the parties and may not be construed against any party
     by reason of its preparation. Accordingly, any rule of law or any legal
     decision that would require interpretation of any ambiguities in this
     Agreement against the party that drafted it is of no application and is
     hereby expressly waived. The provisions of this Agreement shall be
     interpreted in a reasonable manner to effect the intentions of the parties
     and this Agreement.

               18.  Notices. Any notice, request, instruction or other document
                    --------
     to be given hereunder by any party hereto to another party hereto shall be
     in writing, shall be deemed to have been duly given or delivered when
     delivered personally or telecopied (receipt confirmed, with a copy sent by
     reputable overnight courier), or one business day after delivery to a
     reputable overnight courier, postage prepaid, to the address of the party
     set forth below such party's signature on this Agreement or to such address
     as the party to whom notice is to be given may provide in a written notice
     to each of the other parties to this Agreement, a copy of which written
     notice shall be on file with the Secretary of the Company.

               19.  Severability. If one or more provisions of this Agreement
                    -------------
     are held to be unenforceable under applicable law, such provision shall be
     excluded from this Agreement and the balance of the Agreement shall be
     interpreted as if such provision were so excluded and shall be enforceable
     in accordance with its terms to the fullest extent permitted by law.

               20.  Further Assurances. Each of the parties shall, without
                    -------------------
     further consideration, execute and deliver such additional documents and
     take such other action as the other parties, or any of them, may reasonably
     request to carry out the intent of this Agreement and the transactions
     contemplated hereby.

               21.  Successors and Assigns. This Agreement shall be binding
                    -----------------------
     upon, and all rights hereto shall inure to the benefit of, the parties
     hereto, and their respective successors and assigns.

               22.  Entire Agreement. This Agreement embodies the entire
                    -----------------
     agreement and understanding of the parties hereto in respect of the actions
     and transactions contemplated by this Agreement. There are no restrictions
     promises, inducements, representations, warranties, covenants or
     undertakings with regard to the registration of the Shares pursuant to the
     Securities Act, other than those expressly set forth or referred to in this
     Agreement.

                                      -16-
<PAGE>
 
               23.  Recapitalization, etc. The provisions of this Agreement
                    ----------------------
     (including any calculation of share ownership) shall apply, to the full
     extent set forth herein with respect to the Registrable Shares, to any and
     all shares of capital stock of the Company or any capital stock,
     partnership units or, any other security evidencing ownership interests in
     any successor or assign of the Company (whether by merger, consolidation,
     sale of assets or otherwise) that may be issued in respect of, in exchange
     for, or in substitution of the Registrable Shares by reason of any stock
     dividend, split, combination, recapitalization, liquidation,
     reclassification, merger, consolidation or otherwise.

 
                              UNITED PAYORS & UNITED PROVIDERS, INC.


                                   /s/ Edward S. Civera
                              By:  ____________________________________
                                    Edward S. Civera
                                    President and Chief Operating Officer

                              Address:
                                    2275 Research Boulevard, Sixth Floor
                                    Rockville, Maryland 20850
                                    Attention:  Edward S. Civera
                                    Telecopier:  (301) 548-8828


                              CAPITAL Z FINANCIAL SERVICES FUND II, L.P.


                                   /s/ Paul H. Warren
                              By:  _________________________________

                              Address:
                                    c/o Capital Z Partners, Ltd.
                                    One Chase Manhattan Plaza, 44th Floor
                                    New York, New York 10005
                                    Attention:  Paul Warren
                                                David Spuria
                                    Telecopier: (212) 898-8720
 

                                      -17-
<PAGE>
 
 
                                                                       EXHIBIT A


                     REGISTRATION RIGHTS AGREEMENT JOINDER

     The undersigned, a Bermuda exempt and limited partnership, joins in the
execution of that certain Registration Rights Agreement ("Agreement"), dated
February 25, 1999, by and between Capital Z Financial Services Fund II, L.P., a
Bermuda exempt and limited partnership, and United Payors & United Providers,
Inc., a Delaware corporation, for the purpose of accepting the benefits
conferred, and assuming the obligations and liabilities imposed, upon Holders
(as such term is defined in the Agreement) pursuant to the Agreement, with
respect to 7,518 of the Shares (as such term is defined in the Agreement).

                                           CAPITAL Z FINANCIAL SERVICES
                                           PRIVATE FUND II, L.P.       
                                         
February 25, 1999                          By:  Capital Z Partners, L.P.,
___________________                             its General Partner
Date                                     
                                                By: Capital Z Partners, Ltd.,
                                                    its General Partner

                                                By: /s/ Paul H. Warren
                                                   ----------------------------
                                                   Name: Paul H. Warren
                                                   Title: Senior Vice President


                                      -18-