UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended September 30, 1999

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                       For the transition period from to

                         Commission File Number 0-20905

                     UNITED PAYORS & UNITED PROVIDERS, INC.
             (Exact name of registrant as specified in its charter)

            Delaware                                    51-0374698
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification Number)

         2275 Research Boulevard, 6th Floor, Rockville, Maryland 20850
               (Address of principal executive offices, Zip Code)

                                 (301) 548-1000
                (Registrant's phone number, including area code)

                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.       Yes        X         No

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the last practicable date.

The number of shares of common stock,  par value $.01 per share,  outstanding on
November 8, 1999 was 19,078,177.


<PAGE>



                     United Payors & United Providers, Inc.
                                and Subsidiaries

                          Third Quarter 1999 Form 10-Q

                                TABLE OF CONTENTS


                                                                           Page
PART I FINANCIAL INFORMATION

    ITEM 1. FINANCIAL STATEMENTS

            Consolidated Balance Sheets as of September 30, 1999 (Unaudited)
            and December 31, 1998.............................................1

            Consolidated Statements of Operations for the Three and Nine Months
            Ended September 30, 1999 and 1998 (Unaudited).....................2

            Consolidated Statements of Cash Flows for the Nine Months Ended
            September 30, 1999 and 1998 (Unaudited)...........................3

            Notes to Consolidated Financial Statements........................4


    ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS.........................................7


    ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......14


PART II OTHER INFORMATION


SIGNATURES






<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  Financial Statements
                     UNITED PAYORS & UNITED PROVIDERS, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                 September 30,   December 31,
                                                     1999           1998
                                                ------------   -------------
<S>                                             <C>            <C>
                          ASSETS                (Unaudited)
HEALTH CARE SERVICES
Current Assets
  Cash and cash equivalents                     $ 36,255,496   $ 27,510,647
  Short-term investments                           6,759,168      3,855,195
  Accounts receivable                             20,815,905     12,729,631
  Other current assets                             3,286,474      2,442,075
                                                ------------   ------------
       Total current assets                       67,117,043     46,537,548

Fixed assets, net                                  4,106,536      4,301,944
Advances to contracting providers, net            36,037,530     24,414,030
Intangible and other assets, net                  42,750,084     40,691,477
                                                ------------   ------------
       Total assets HEALTH CARE SERVICES         150,011,193    115,944,999
                                                ------------   ------------

FINANCIAL SERVICES
Cash and cash equivalents                          9,133,653           --
Investment securities                                912,742           --
Secondary market funding receivable                1,762,704           --
Loans receivable, net                             15,492,388           --
Real estate owned, net                               562,129           --
Intangible and other assets                        7,538,885           --
                                                ------------   ------------
       Total assets - FINANCIAL SERVICES          35,402,501           --
                                                ------------   ------------
       Total assets                             $185,413,694   $115,944,999
                                                ============   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
HEALTH CARE SERVICES
Current liabilities:
  Accounts payable and accrued
   expenses                                     $ 10,326,223  $ 11,487,823
  Income and other taxes payable                   2,133,068     2,861,841
  Notes payable and capital leases,
   current portion                                 5,010,783     5,040,951
                                                 -----------   -----------
       Total current liabilities                  17,470,074    19,390,615
Non-current accrued expenses                         968,333     1,073,333
Notes payable and capital leases, less
 current portion                                  13,272,737    17,022,738
                                                 -----------   -----------
       Total liabilities -
       HEALTH CARE SERVICES                       31,711,144    37,486,686
                                                 -----------   -----------

FINANCIAL SERVICES
Savings and NOW deposits                           7,532,802           --
Other time deposits                               18,464,725           --
                                                 -----------   -----------
       Total deposits                             25,997,527           --
                                                 -----------   -----------

Other liabilities                                    969,082           --
                                                 -----------   -----------
       Total liabilities -
       FINANCIAL SERVICES                         26,966,609           --
                                                 -----------   -----------
       Total liabilities                          58,677,753    37,486,686
                                                 -----------   -----------

Stockholders' equity:
  Convertible preferred stock, $0.01
    par value, 5,000,000 shares
    authorized, none issued and
    outstanding
  Common stock, $0.01 par value,
    35,000,000 shares authorized,
    19,078,177 and 17,360,454 shares
    issued at September 30, 1999 and
  December 31, 1998, respectively                    190,782       173,605
Additional paid-in capital                        63,843,029    37,123,886
Treasury stock, no shares at
  September 30, 1999 and 273,151
  shares at December 31, 1998,
  at cost                                                 --    (2,634,490)
Retained earnings                                 63,275,560    44,491,012
Deferred compensation                               (573,430)     (695,700)
                                                 -----------   -----------
     Total stockholders' equity                  126,735,941    78,458,313
                                                 -----------   -----------

     Total liabilities and
     stockholders' equity                       $185,413,694  $115,944,999
                                                 ============  ============
</TABLE>

   The accompanying notes are an integral part of these financial statements


                                        1

<PAGE>

                     UNITED PAYORS & UNITED PROVIDERS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)



<TABLE>
<CAPTION>

                                           Three Months Ended               Nine Months Ended
                                              September 30,                  September 30,
                                        ---------------------------    ---------------------------
                                             1999          1998           1999           1998
                                        -------------  ------------    ------------   ------------
<S>                                     <C>            <C>             <C>            <C>
HEALTH CARE SERVICES
Revenue
  Provider network revenue              $ 21,281,206   $ 14,225,767    $ 61,421,749   $ 42,028,629
  Medical management
  outsourcing services                     6,756,136      5,289,683      17,491,894     15,182,007
                                        ------------   ------------    ------------   ------------
      Total revenue                       28,037,342     19,515,450      78,913,643     57,210,636
                                        ------------   ------------    ------------   ------------

Operating expenses:
  Direct contract expenses                13,277,347      7,972,713      37,295,522     24,724,037
  General and administrative               2,752,670      1,907,856       7,573,678      5,837,012
  Depreciation and amortization            1,141,444        680,294       3,168,659      1,969,480
                                        ------------   ------------    ------------   ------------
      Total operating expenses            17,171,461     10,560,863      48,037,859     32,530,529
                                        ------------   ------------    ------------   ------------

Other income (expense)                       196,495       (325,657)        361,945       (285,034)
                                        ------------   ------------    ------------   ------------

Income before income taxes -
HEALTH CARE SERVICES                      11,062,376      8,628,930      31,237,729     24,395,073
                                        ------------   ------------    ------------   ------------

FINANCIAL SERVICES
Interest income                              149,576             --         149,576             --
Interest expense                             104,066             --         104,066             --
                                        ------------   ------------    ------------   ------------
      Net interest income                     45,510             --          45,510             --

Provision for loan losses                      1,170             --           1,170             --
                                        ------------   ------------    ------------   ------------
      Net interest income
      after provision for loan
      losses                                  44,340             --          44,340             --
                                        ------------   ------------    ------------   ------------

Other income                                  47,749             --          47,749             --
                                        ------------   ------------    ------------   ------------

General and administrative expenses           88,970             --          88,970             --
                                        ------------   ------------    ------------   ------------
Amortization of goodwill                      24,000             --          24,000             --
                                        ------------   ------------    ------------   ------------
Income (loss) before income taxes
- FINANCIAL SERVICES                         (20,881)            --         (20,881)            --
                                        ------------   ------------    ------------   ------------

TOTAL COMPANY
  Income before income taxes              11,041,495      8,628,930      31,216,848     24,395,073
  Income tax provision                     4,362,000      3,592,000      12,432,300     10,149,704
                                        ------------   ------------    ------------   ------------

Net income                              $  6,679,495   $  5,036,930    $ 18,784,548   $ 14,245,369
                                        ============   ============    ============   ============

Net income per share - basic            $       0.35   $       0.29   $        1.03   $       0.84
                                        ============   ============   =============    ============

Weighted average shares
outstanding - basic                       19,054,836     17,074,745      18,298,118     17,059,691
                                        ============   ============   =============   ============

Net income per share - diluted          $       0.34   $       0.28   $        0.99   $       0.79
                                        ============   =============  =============   ============

Weighted average shares
outstanding - diluted                     19,693,870     18,060,640      19,028,181     17,972,358
                                        ============   =============   ============   ============
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                        2

<PAGE>
                     UNITED PAYORS & UNITED PROVIDERS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                     Nine Months Ended September 30,
                                                1999             1999          1998
                                           ------------    ------------    ------------
                                               HEALTH                           HEALTH
                                                CARE           FINANCIAL         CARE
                                              SERVICES         SERVICES        SERVICES
<S>                                        <C>             <C>             <C>
Operating activities
  Net income (loss)                        $ 18,797,429    $    (12,881)   $ 14,245,369
  Adjustment to reconcile net income
  to net cash provided by (used in)
  operations
     Depreciation and amortization            3,168,659          30,131       1,969,480
     Deferred income taxes and other
     non-cash items                             965,894            (194)      1,440,480
     Changes in assets and liabilities,
     net of effects of acquisitions:
       Accounts receivable                   (8,210,839)             --      (1,528,212)
       Origination of loans sold in
       secondary market                              --      (1,851,899)             --
       Proceeds from loans sold in
       secondary market                              --       2,467,634              --
       Accounts payable and accrued
       expenses                              (1,903,121)       (112,233)        520,817
       Current and other assets              (1,194,390)         (5,640)        695,163
       Income and other taxes payable          (728,773)             --         230,762
                                           ------------    ------------    ------------
  Net cash provided by operating
  activities                                 10,894,859         514,918      17,573,859
                                           ------------    ------------    ------------

Investing activities
     Purchases of fixed assets                 (984,965)         (2,452)       (853,120)
     Purchases of short-term investments     (9,480,880)             --      (7,617,830)
     Proceeds from sale of short-term
     investments                              6,603,428              --       9,458,767
     Advances to contracting providers      (11,800,500)             --      (7,337,300)
     Acquisition of Bank                     (3,586,055)             --              --
     Additional capitalization of Bank       (5,000,000)             --              --
     Net increase in loans                           --        (156,760)             --
     Other, net                              (3,491,680)             --      (1,232,925)
                                           ------------    ------------    ------------
  Net cash used in investing
  activities                                (27,740,652)       (159,212)     (7,582,408)
                                           ------------    ------------    ------------

Financing activities
     Purchases of treasury stock                     --              --        (207,574)
     Issuances of stock                      29,370,810              --         491,461
     Repayment of debt                       (3,780,168)             --      (2,365,814)
     Capital from parent                             --       5,000,000              --
     Increase in deposits                            --         581,026              --
                                           ------------    ------------    ------------
  Net cash provided by (used in)
  financing activities                       25,590,642       5,581,026      (2,081,927)
                                           ------------    ------------    ------------

Increase in cash and cash equivalents         8,744,849       5,936,732       7,909,524
Cash and cash equivalents
      Beginning of the period                27,510,647       3,196,921      14,456,069
                                           ------------    ------------    ------------
      End of the period                    $ 36,255,496    $  9,133,653    $ 22,365,593
                                           ============    ============    ============
</TABLE>

   The accompanying notes are an integral part of these financial statements
                                        3

<PAGE>



                     UNITED PAYORS & UNITED PROVIDERS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1. BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION

     United Payors & United Providers, Inc. ("UP&UP" or the "Company") is a
Delaware corporation which is the successor to an Iowa corporation organized in
February 1995 by its Chairman and Co-Chief Executive Officer, Thomas L. Blair,
and an affiliate of Principal Mutual Holding Company ("Principal Mutual"). UP&UP
has developed a network of providers ("Provider Network") offering nationwide
access to discounted health care services for payors of health care services who
contract with it. UP&UP enters into contractual arrangements with providers such
as hospitals, ancillary facilities and physicians who agree to provide services
on a discounted basis to its payor clients. The payor clients include
traditional indemnity insurance companies, self-insured entities, unions and
federal government health plans. UP&UP also provides management and
administrative services for payor clients with respect to their relationships
with provider networks. In addition, UP&UP offers medical management outsourcing
services, including a broad array of utilization review, case management and
claims payment services. UP&UP derives its revenues primarily from the receipt
of a percentage of the price concessions that payor clients receive from the
contracting providers in the provider network, a percentage of cost savings
realized by payor clients using its network management services, monthly
membership-based fees for utilization review services, and hourly fees for case
management services. On August 31, 1999 the Company acquired Baltimore American
Savings Bank, F.S.B., a federal savings bank, and its parent company Quantum
Financial Holdings, Inc.

     The consolidated financial statements for the three and nine months ended
September 30, 1999 and 1998 have not been audited but, in the opinion of
management, include all adjustments (consisting only of normal recurring
accruals) necessary to present fairly the information set forth therein. The
results of operations for the three and nine months ended September 30, 1999 are
not necessarily indicative of the results to be expected for the full year or in
the future.

2. LEGAL PROCEEDINGS

     On April 26, 1996, First Health Group Corporation (formerly known as
HealthCare COMPARE), a Delaware corporation and competitor of the Company, filed
a civil complaint against the Company in the United States District Court for
the Northern District of Illinois. The complaint, in its present amended form,
seeks permanent injunctive relief, an unspecified amount of damages and treble
damages based on alleged violations of the Lanham Act, 15 U.S.C. ss.ss.
1125(a)(1)(A) and (a)(1)(B), as well as common law claims of deceptive trade
practices, fraud, interference with contract, interference with prospective
economic relations and unfair competition. First Health contends that
representatives of the Company made false and misleading statements during
contract negotiations with health care providers in order to cause them to join
the Company's provider network. The Company denies the allegations in the
complaint and believes them to be without merit. The Company has asserted
counterclaims against First Health for violations of the Lanham Act, as well as
state law claims for unfair competition and commercial disparagement. In its
court filings and discovery responses, First Health asserts that it has suffered
damages in the range of $28.8 million to $37 million due primarily to its loss
of a single contract. First Health later attempted to significantly expand its
damages claim, but in an Order dated July 9, 1999, the Court struck all of those
new damages claims with the exception of one minor claim with a purported value
of approximately $31,500. Discovery in the action is completed and a tentative
trial date has been set by the Court. Based upon the available information,
management believes that its potential liability, if any, arising from the
litigation will not be material to the consolidated financial statements of the
Company.

     The Company is also a party to other legal actions arising in the ordinary
course of business. Management believes that damages arising from these actions,
if any, will not be material to the consolidated financial statements of the
Company.



                                       4

<PAGE>



3. BUSINESS COMBINATIONS

     Effective December 1, 1998, the Company acquired ProAmerica Managed Care,
Inc. ("ProAmerica") for a purchase price of approximately $14.3 million,
consisting of $11.7 million in cash and the assumption of approximately $2.6
million in liabilities based on a preliminary determination of the liabilities
assumed. The acquisition has been accounted for as a purchase and, accordingly,
the results of operations of ProAmerica have been included in the accompanying
consolidated statements of operations since the effective date of the
acquisition. A preliminary allocation of the purchase price resulted in goodwill
of $12.6 million which is being amortized over 15 years. The unamortized portion
of goodwill at September 30, 1999 and December 31, 1998, is included in health
care services intangible and other assets in the accompanying consolidated
balance sheets.

     On August 31, 1999 the Company acquired Baltimore American Savings Bank,
F.S.B., a federal savings bank, and its parent company Quantum Financial
Holdings, Inc. (hereafter collectively referred to as the "Bank") for a purchase
price of approximately $30.0 million, consisting of $3.5 million in cash and the
assumption of approximately $26.5 million in liabilities based on a preliminary
determination of the liabilities assumed. The acquisition has been accounted for
as a purchase and, accordingly, the results of operations of the Bank have been
included in the accompanying consolidated statements of operations since the
date of the acquisition. A preliminary allocation of the purchase price resulted
in goodwill of $5.8 million which is being amortized over 20 years. The
unamortized portion of goodwill at September 30, 1999 is included in financial
services intangible and other assets in the accompanying consolidated balance
sheet.

4. STOCKHOLDERS' EQUITY AND EARNINGS PER SHARE

     In February 1999, holders of stock options to purchase 466,500 shares of
the Company's common stock at an aggregate exercise price of $3.1 million
exercised their options.

     During April and May 1999, the Company completed an offering of 2,747,300
shares of common stock at $19.00 per share consisting of 1,458,300 shares issued
by the Company, 1,250,000 shares sold by Principal Mutual and 39,000 shares sold
by two other selling shareholders. The issuance of the 1,458,300 shares resulted
in net proceeds to the Company (net of underwriters' commissions) of $26.3
million before offering expenses of approximately $0.7 million. The Company
intends to use the net proceeds for working capital and general corporate
purposes, including the funding of advances to contracting providers and for
potential acquisitions.

     A reconciliation of the numerators and denominators of the basic earnings
per share computations for the three and nine months ended September 30, 1999
and 1998 to the numerators and denominators of the diluted earnings per share
computations for the respective periods follows:

<TABLE>
<CAPTION>

                      Three Months Ended                     Three Months Ended
                      September 30, 1999                     September 30, 1999
               --------------------------------         --------------------------------
                                           Per                                      Per
                Net Income    Shares      Share          Net Income    Shares      Share
               -----------  ----------   ------         -----------  ----------   ------
<S>            <C>          <C>          <C>            <C>          <C>          <C>
Basic          $6,679,195   19,054,836   $ 0.35         $5,036,930   17,074,745   $ 0.29
Effect of
Dilutive
Securities             --      639,034    (0.01)                --      985,895    (0.01)
               ----------   ----------   ------         ----------   ----------   -------
Diluted        $6,679,195   19,693,870   $ 0.34         $5,036,930   18,060,640   $ 0.28
               ==========   ==========   ======         ==========   ==========   ======
</TABLE>




                                        5

<PAGE>




                                    * * * * *
<TABLE>
<CAPTION>

                      Nine Months Ended                      Nine Months Ended
                      September 30, 1999                     September 30, 1998
               --------------------------------         --------------------------------
                                           Per                                      Per
                Net Income    Shares      Share          Net Income    Shares      Share
               -----------  ----------   ------         -----------  ----------   ------
<S>            <C>          <C>          <C>             <C>          <C>          <C>
Basic          $18,784,548  18,298,118   $ 1.03          $14,245,369  17,059,691   $ 0.84
Effect of
Dilutive
Securities              --     730,063    (0.04)                  --     912,667    (0.05)
               -----------  ----------   -------         -----------  ----------   -------
Diluted        $18,784,548  19,028,181   $ 0.99          $14,245,369  17,972,358   $ 0.79
               ===========  ==========   ======          ===========  ==========   ======
</TABLE>




     Stock options to purchase 10,500 shares of common stock at a weighted
average exercise price of $25.25 were outstanding during the three months ended
September 30, 1999, but were not included in the computation of diluted earnings
per share because the exercise prices of the stock options were greater than the
average market price of the common shares and, therefore, were antidilutive.
These stock options have expiration dates ranging from January 2008 to January
2009.

     Stock options to purchase 6,000 shares of common stock at a weighted
average exercise price of $28.00 were outstanding during the nine months ended
September 30, 1999 but were not included in the computation of diluted earnings
per share because the exercise prices of the stock options were greater than the
average market price of the common shares and, therefore, were antidilutive.
These stock options have expiration dates ranging from January 2008 to January
2009.

5. COMMITMENTS AND CONTINGENCIES

     Upon the acquisition of the Bank, the Company became a unitary savings and
loan holding company, subject to supervision and examination by the Office of
Thrift Supervision (the "OTS"). The Bank is subject to extensive regulations,
supervision and examination by the OTS and the Federal Deposit Insurance
Corporation (the "FDIC"). As a unitary savings and loan holding company, UP&UP
generally will not be restricted under existing laws as to the type of business
activities in which it may engage, provided the Bank continues to meet the
standards as a qualified thrift lender.

     In connection with the Company's acquisition of the Bank and its parent
holding company, Principal Mutual, which, at December 31, 1998 owned 6,600,000
shares or approximately 38.6% of the Company's outstanding common stock, has
divested control of the Company within the meaning of the Savings and Loan
Holding Company Act ("Holding Company Act"). To accomplish such divestiture of
control, on February 25, 1999, Principal Mutual, sold 4,500,000 shares (the
"Principal Shares") of common stock of the Company, to a trust (the "Trust").
Principal Mutual received from the Trust $13,225,000 in cash and trust
certificates entitling it to the proceeds from the sale of the Principal Shares.
At the same time, the Trust agreed to sell the Principal Shares to Thomas L.
Blair, the Chairman and Co-Chief Executive Officer of the Company, on or before
four years from the date of the transfer of the Principal Shares to the Trust.
In addition, in April 1999 Principal Mutual sold an additional 1,250,000 shares
of common stock of the Company at $19.00 per share, thereby reducing its
ownership of shares of common stock of the Company to 850,000 shares or
approximately 4.5% of the outstanding shares at September 30, 1999.






                                       6

<PAGE>




ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     This Form 10-Q may contain forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve a number of risks and uncertainties. The
Company undertakes no obligation to revise any forward-looking statements in
order to reflect events or circumstances that may arise after the date of this
report. Readers are urged to carefully review and consider the various
disclosures made by the Company in this report and in the Company's other
filings with the Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that may affect the Company's
business.

GENERAL

     United Payors & United Providers, Inc. ("UP&UP" or the "Company") is a
Delaware corporation which is the successor to an Iowa corporation organized in
February 1995 by its Chairman and Co-Chief Executive Officer, Thomas L. Blair,
and an affiliate of Principal Mutual Holding Company ("Principal Mutual").

     UP&UP has developed a network of providers ("Provider Network") offering
nationwide access to discounted health care services for payors of health care
services who contract with it ("Payor Clients"). UP&UP enters into contractual
arrangements with providers such as hospitals, ancillary facilities and
physicians ("Contracting Providers") who agree to provide services on a
discounted basis to its Payor Clients. The Payor Clients include traditional
indemnity insurance companies, self-insured entities, unions and federal
government health plans. UP&UP also provides management and administrative
services for Payor Clients with respect to their relationships with provider
networks. In addition, UP&UP offers medical management outsourcing services,
including a broad array of utilization review, case management and claims
payment services.

     UP&UP derives its revenues primarily from the receipt of a percentage of
the price concessions that Payor Clients receive from the Contracting Providers
in the Provider Network, a percentage of cost savings realized by Payor Clients
using its network management services, monthly membership-based fees for
utilization review services, and hourly fees for case management services.
UP&UP's contracts do not assume obligations to Contracting Providers for payment
of medical claims or to beneficiaries of Payor Clients for health care services.
Consequently, UP&UP is not subject to health care underwriting risks.

     Effective December 1, 1998, the Company acquired ProAmerica Managed Care,
Inc. ("ProAmerica"), a national preferred provider network that operates a
network of health care providers. The acquisition of ProAmerica has been
accounted for as a purchase and, accordingly, the results of operations for
ProAmerica have been included in the consolidated financial statements since the
effective date of the acquisition.

     On August 31, 1999 the Company acquired Baltimore American Savings Bank
F.S.B., a federal savings bank and its parent company, Quantum Financial
Holdings, Inc. (hereinafter collectively referred to as the "Bank"). The
acquisition has been accounted for as a purchase, and, accordingly, the results
of operations of the Bank have been included in the consolidated financial
statements since the date of the acquisition.

     Period-to-period comparisons are not necessarily meaningful due to the
impact of acquisitions.

DIRECT CONTRACT EXPENSES

     Direct contract expenses include direct costs of services, such as
personnel, related to the repricing of claims, client services, and other costs
incurred in connection with the generation of revenues and the development of
the Company's Provider Network, including access fees paid by the Company for
the utilization of other provider networks and marketing commissions. Direct
contract expenses also include the costs of medical personnel (nurses and
doctors) and other expenses related to its medical management outsourcing
services.




                                       7

<PAGE>



GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses include salaries and related costs for
personnel involved in the administration of the Company and other costs, such as
professional services and general overhead expenses.

RESULTS OF OPERATIONS

Three Months Ended September 30, 1999 Compared to Three Months Ended September
30, 1998

HEALTH CARE SERVICES

     Total revenues increased by $8.5 million, from $19.5 million in 1998 to
$28.0 million in 1999. Provider network revenues increased by $7.1 million, from
$14.2 million in 1998 to $ 21.3 million in 1999. This increase was attributable
to the acquisition of ProAmerica, the addition of new Payor Clients, the growth
in the overall claims volume from existing Payor Clients and the expansion of
the Company's Provider Network. At September 30, 1999, the Provider Network
consisted of direct contracts with approximately 20,300 medical facilities and
approximately 182,000 physicians compared to approximately 14,000 medical
facilities and approximately 140,000 physicians at September 30, 1998. Medical
management outsourcing services revenues increased by approximately $1.5
million, from $5.3 million in 1998 to $6.8 million in 1999.

     Direct contract expenses increased by $5.3 million, from $8.0 million in
1998 to $13.3 million in 1999. Access fees to other provider networks as a
percentage of provider network revenues increased by 2.8% from 5.3% ($0.8
million) in 1998 to 8.1% ($1.7 million) in 1999. The percentage increase was
attributable to the net effect of an increase in access fees due to the
inclusion in 1999 of the access fees of ProAmerica, which incurs a higher level
of access fees as a percentage of its provider network revenues than UP&UP, and
a reduction in the access fees of UP&UP due to growth in the number of providers
contacting directly with UP&UP and Payor Clients accessing more direct
contracts. Other direct costs of services increased by approximately $4.4
million, from $7.2 million in 1998 to $11.6 million in 1999. The increase was
primarily attributable to the acquisition of ProAmerica and, to a lesser extent,
higher expenses directly related to the increase in both provider network and
medical management outsourcing services revenues.

     General and administrative expenses increased by approximately $0.8
million, from approximately $1.9 million in 1998 to approximately $2.8 million
in 1999. The increase was primarily attributable to the acquisition of
ProAmerica and an overall increase in expenses of UP&UP resulting from an
increase in the number of employees in the administrative and executive areas
and an increase in professional fees for accounting and legal services.

     Depreciation and amortization increased by approximately $0.4 million, from
approximately $0.7 million in 1998 to approximately $1.1 million in 1999. The
increase was primarily attributable to the amortization of goodwill of
ProAmerica and other intangible assets and the depreciation of investments made
to achieve the consolidation of the provider network operations and to enhance
the information technology infrastructure in order to allow for future growth
and capabilities.

FINANCIAL SERVICES

     Results of operations of the Bank for the month of September were not
significant in relation to the consolidated financial statements of the Company.

Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
1998

HEALTH CARE SERVICES

     Total revenues increased by $21.7 million, from $57.2 million in 1998 to
$78.9 million in 1999. Provider network revenues increased by $19.4 million,
from $42.0 million in 1998 to $61.4 million in 1999. This increase was
attributable to the acquisition of ProAmerica, the addition of new Payor
Clients, the growth in the overall claims volume from existing Payor Clients and
the expansion of the Company's Provider Network. At September 30, 1999, the
Provider Network consisted of direct contracts with approximately 20,300 medical
facilities and approximately

                                       8

<PAGE>



182,000 physicians compared to approximately 14,000 medical facilities and
approximately 140,000 physicians at September 30, 1998. Medical management
outsourcing services revenues increased by approximately $2.3 million, from
$15.2 million in 1998 to $17.5 million in 1999.

     Direct contract expenses increased by $12.6 million, from $24.7 million in
1998 to $37.3 million in 1999. Access fees to other provider networks as a
percentage of provider network revenues increased by 1.4% from 6.9% ($2.9
million) in 1998 to 8.3% ($5.1 million) in 1999. The percentage increase was
attributable to the net effect of an increase in access fees due to the
inclusion in 1999 of the access fees of ProAmerica, which incurs a higher level
of access fees as a percentage of its provider network revenues than UP&UP, and
a reduction in the access fees of UP&UP due to growth in the number of providers
contacting directly with UP&UP and Payor Clients accessing more direct
contracts. Other direct costs of services increased by approximately $10.4
million, from $21.8 million in 1998 to $32.2 million in 1999. The increase was
primarily attributable to the acquisition of ProAmerica and to a lesser extent
higher expenses directly related to the increase in both provider network and
medical management outsourcing services revenues.

     General and administrative expenses increased by approximately $1.7
million, from approximately $5.8 million in 1998 to approximately $7.5 million
in 1999. The increase was primarily attributable to the acquisition of
ProAmerica and an overall increase in expenses of UP&UP resulting from an
increase in the number of employees in the administrative and executive areas
and an increase in professional fees for accounting and legal services.

     Depreciation and amortization increased by approximately $1.2 million, from
approximately $2.0 million in 1998 to approximately $3.2 million in 1999. The
increase was primarily attributable to the amortization of goodwill of
ProAmerica and other intangible assets and the depreciation of investments made
to achieve the consolidation of the provider network operations and to enhance
the information technology infrastructure in order to allow for future growth
and capabilities.

FINANCIAL SERVICES

     Results of operations of the Bank for the month of September were not
significant in relation to the consolidated financial statements of the Company.

LIQUIDITY AND CAPITAL RESOURCES

     At September 30, 1999 and December 31, 1998, the Company had working
capital of approximately $49.6 million and $27.1 million, respectively. The
Company's primary capital resources commitments are to fund advances to
Contracting Providers upon exercise of the prepayment option ("Prepayment
Option") granted to Contracting Providers. Depending on increases in claims
volume and in the number of Payor Clients and Contracting Provider hospitals
electing to accept the Prepayment Option, the Company estimates that $2.5
million to $5.0 million could be required to fund the Prepayment Options during
the remainder of 1999. Upon the acquisition of the Bank, the Company funded the
Bank with $5.0 million in additional capital.

     In 1997, the Board of Directors of the Company approved a common stock
repurchase program of up to $5 million. The Company canceled the common stock
repurchase program as of February 1, 1998. As of December 31, 1998, the Company
had repurchased 389,625 shares of its outstanding common stock under the
program, at an aggregate purchase price of $3.5 million, and reissued 116,474 of
the shares for an aggregate consideration of $0.9 million. During the three
months ended March 31, 1999, the Company reissued the remainder of the shares in
connection with the exercise of stock options with an aggregate exercise price
of $3.1 million. During April and May 1999, the Company completed an offering of
2,747,300 shares of common stock at $19.00 per share consisting of 1,458,300
shares issued by the Company, 1,250,000 shares sold by Principal Mutual and
39,000 shares sold by two other selling shareholders. The issuance of the
1,458,300 shares resulted in net proceeds to the Company (net of underwriters'
commissions) of $26.3 million before offering expenses of approximately $0.7
million. The Company intends to use the net proceeds for working capital and
general corporate purposes, including the funding of advances to contracting
providers and for potential acquisitions.


                                       9

<PAGE>



     The Company believes that its existing liquidity sources, anticipated funds
from operations, and credit arrangements will satisfy cash requirements for its
operations for the next twenty-four months. However, in the event that: (1)
additional acquisitions are made, and; (2) the advances for the Prepayment
Option exceed the Company's currently anticipated estimates and/or other
available sources of liquidity to fund such payments are not as great as
anticipated, and (3) the Bank requires additional funding to maintain its
capital requirements or to expand its business, the Company could be required to
borrow additional funds or issue additional equity securities to fund the
balance of such advances. There can be no assurances that the Company will be
able to effect any such additional borrowings or issue additional equity
securities on acceptable terms.

INTEREST RATE SENSITIVITY

     The Company is subject to interest rate risk on its short-term investments
portfolio and its outstanding bank loans. The Company has determined that a 10%
move in the current weighted average interest rates of its short-term
investments and its outstanding bank loans would not have a material effect on
the Company's financial position, results of operations and cash flows over the
next year.

IMPACT OF INFLATION

Since the Company's revenues are based on medical costs, the impact of
inflation on operating costs and expenses should be offset by the impact of
inflation of medical costs.

CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS OR STOCK PRICES

     A significant portion of UP&UP's revenues are derived from a small number
of Payor Clients. In 1998, three Payor Clients accounted for approximately 37%
of revenues. The loss of a contract with a major Payor Client and the inability
to replace any such client with significant new clients could have a material
adverse effect on UP&UP.

     UP&UP's contracts with its Payor Clients for access to the Provider Network
generally permit the annual renegotiation of terms and permit either party to
terminate the contract at any time upon satisfaction of notice requirements.
Also, those contracts do not prohibit Payor Clients from entering into contracts
with or utilizing other provider networks or developing their own provider
networks. Therefore, even if a Payor Client does not terminate its contract with
UP&UP, UP&UP could experience a decrease in claims from that Payor Client as a
result of the use of their own provider networks, other provider networks, or
other managed care systems. The Company's contract with the State of Kentucky is
terminable for the convenience of the government.

     Furthermore, the health insurance industry has been experiencing
significant consolidation, particularly consolidation designed to promote an
increase in managed health care insurance programs, as opposed to the indemnity
style programs for which the UP&UP Provider Network is most attractive. UP&UP
believes these consolidation trends have in the past reduced utilization of the
UP&UP Provider Network by particular health insurance programs, and, in the
future, could further reduce utilization of the UP&UP Provider Network, as a
result of both a decrease in the number of Payor Clients and a decrease in the
need for Payor Clients to utilize the UP&UP Provider Network.

YEAR 2000 READINESS DISCLOSURE

     The Company is aware of the issues associated with the programming code in
existing computer and software systems regarding the Year 2000. The Company,
like other organizations, is in the process of assessing and modifying or
replacing its information technology and non-information technology to ensure,
to the extent within the control of the Company, their functionality with
respect to the "Year 2000" millennium change and to identify and evaluate
potential risks to the Company to the extent that Year 2000 problems not within
the Company's control could impact the Company. The Company's primary computer
systems operate from an IBM platform and were designed in the 1990's, generally
with four digit year capability. With respect to non-information technology, all
of the Company's facilities are relatively modern, post-1990, and are believed,
based on the evaluation to date, not to have any significant Year 2000 problems.
The Company has budgeted $1 million, as a conservative estimate of the maximum
cost to it, to address "Year 2000" problems, and has presently spent
approximately $600,000. The Company anticipates that it will be Year 2000
compliant by December 1, 1999 and will spend the remainder of 1999 testing.
While there can be no guarantee, the Company believes that Year 2000 issues with
respect to both the information technology and

                                       10

<PAGE>



non-information technology systems within its control will be adequately
addressed by it and will not cause material disruption to the Company's
operations. The Company intends to monitor its progress towards addressing its
Year 2000 issues successfully and intends to develop contingency plans if
necessary.

     However, the Company's operations are dependent to a substantial extent on
the ability of its Payor Clients, and to a lesser extent, possibly its
Contracting Providers, to address successfully their Year 2000 issues in
connection with their claims processing. The Company has no guarantee that its
Payor Clients or Contracting Providers will be able to resolve all of their own
Year 2000 problems in a timely manner. The Company has had discussions with its
major Payor Clients and the Company believes, based on the discussions and other
information available to it, that its major Payor Clients are aware of the Year
2000 issue and are expending significant resources to identify and resolve all
of their Year 2000 problems. The Company could be materially and adversely
affected as a result of Year 2000 problems incurred by Payor Clients or
Contracting Providers or their inability to interface with the Company's
systems, or as a result of unforeseen problems regarding the Company's own
system. The Company intends to continue to monitor to the best of its ability
the likelihood of significant problems experienced by such entities which could
materially affect the Company or its operations.

DEPENDENCE ON CONTRACTING PROVIDERS

     UP&UP's growth depends on its ability to retain existing Contracting
Providers, to attract additional Contracting Providers, and to retain or improve
the price concessions granted by Contracting Providers. The termination of a
significant number of contracts with Contracting Providers having a high volume
of claims with UP&UP's Payor Clients, the inability to replace those contracts
with similar Contracting Providers and/or the renegotiation of contracts
resulting in reduced price concessions could have a material adverse effect on
UP&UP. UP&UP's contracts with Contracting Providers typically have a one-year
term, renewable automatically for successive one-year terms unless either party
gives notice of intent not to renew, and may be terminated at any time, for any
reason, upon satisfaction of the notification requirements. Also the contracts
do not prohibit the Contracting Providers from entering into discounted
arrangements with others.

POSSIBILITY OF CHANGES IN INDUSTRY PRACTICES AND GOVERNMENT REGULATION ADVERSE
TO UP&UP

     UP&UP's business is dependent in significant part on its ability to enter
into contracts with payors and providers on terms attractive to all parties and
the absence of substantial changes in the health care industry that would
decrease the need for the services offered by it. UP&UP's ability to continue
conducting business in its current manner could be seriously jeopardized if,
among other things, a significant number of payors, such as insurance companies,
were to seek price concessions directly from providers. In addition, UP&UP's
opportunities to maintain or expand its existing operations could be limited by
substantial changes in the health care industry, such as further adoption of
capitation payment systems, which have become more prevalent in recent years, or
the enactment of legislation or the adoption of regulations unfavorable to UP&UP
and/or its relationships with payors or providers. Any of these developments
could have a material adverse effect on UP&UP and could cause it to alter
substantially its business objectives and methods of operation.

     During the past several years, the United States health care industry has
been subject to changing and increasing government regulation. A number of
proposals for health care reform have been made at the federal and state levels,
including proposals to provide greater government control of health care
spending, to reduce fraud and abuse, to broaden access to health care services
and to change the operating environment for health care providers and payors.
UP&UP cannot predict what impact, if any, these activities, which include
efforts to effect reform through legislation and changes in the administration
or interpretation of government health care programs, laws, regulations or
policies, might have on it. Any of these activities could have a material
adverse effect on UP&UP.

RISKS RELATED TO GROWTH

     UP&UP's strategy is to continue to grow aggressively, both internally and
through acquisitions. Since its initial Public Offering in July 1996, UP&UP has
made four significant acquisitions, most recently the Bank acquisition in August
1999. This strategy is likely to place significant demands on UP&UP's financial,
operational and management resources, and to expose it to a variety of risks,
including the risk that UP&UP will be unable to attract and retain the personnel
or obtain the financial and other resources necessary to pursue and manage its
growth. UP&UP's growth

                                       11

<PAGE>



makes for greater demands on the time and attention of its key personnel.
Expenses arising from UP&UP's efforts to complete acquisitions, develop new
products or increase its existing market penetration could have a material
adverse effect on it. Furthermore, UP&UP may not be able to identify, acquire or
integrate acquisition candidates successfully or manage profitably any
additional products and services resulting from acquisitions. Acquired
businesses, products and services may not contribute to UP&UP's overall strategy
or produce returns that justify the related investment or implementation by
UP&UP. In addition, UP&UP may acquire companies or seek to develop products or
services in areas in which it does not currently operate or have meaningful
experience. These acquisitions or developments may require UP&UP's management to
develop expertise in new areas and to attract a new customer base and could have
a material adverse effect on UP&UP. UP&UP may not be able to implement its
growth strategy successfully or, if successful in consummating acquisitions, be
able to manage its expanded operations effectively and profitably.

RISKS OF INTEGRATING ACQUIRED OPERATIONS

     UP&UP must successfully combine and integrate the operations of acquired
entities in order to realize the anticipated benefits of acquisitions.
Integrating management services, administrative organizations, facilities,
management information systems and other operational aspects of acquired
businesses, products or services can be time consuming and costly and may
distract management from day-to-day operations. Challenges in coordinating
geographically separated organizations, integrating personnel with disparate
business backgrounds and combining different corporate cultures could magnify
integration problems. UP&UP cannot guarantee that its integration processes will
be successful or that the anticipated benefits of any past or future
acquisitions will be realized. Furthermore, UP&UP may experience substantial
unanticipated costs or liabilities or other material adverse effects associated
with past or future acquisitions and integration activities conducted by it.

SUBSTANTIAL COMPETITION

     The market for UP&UP's services is highly competitive. UP&UP competes (or
may in the future have to compete) for clients with national, regional and local
provider networks, managed care organizations and health care information
companies. Several of UP&UP's competitors have significantly greater financial,
technical and marketing resources than UP&UP, which could put UP&UP at a
significant competitive disadvantage. UP&UP may not be able to compete
effectively with any of these parties in attracting and retaining clients.

EXPOSURE TO PROFESSIONAL LIABILITY

     UP&UP, through its subsidiary, National Health Services, applies medical
treatment guidelines in its utilization review and case management services. As
a result, National Health Services could become subject to claims related to
adverse medical consequences as a result of, or for the costs of, services
denied, and claims, such as malpractice, arising from the errors or omissions of
health care professionals. A successful claim against UP&UP or a subsidiary
could have a material adverse effect on it. Furthermore, UP&UP may incur
substantial costs in defending against claims, regardless of their merit or
eventual outcome. Procedures implemented by UP&UP may not limit its liability or
be effective, and litigation to which UP&UP is or may become subject could have
a material adverse effect on it. UP&UP maintains insurance coverage that it
believes is reasonable in light of its experience to date. However, this
insurance may be insufficient to protect UP&UP from liability and may not
continue to be available to it at reasonable cost or at all.

SIGNIFICANT UNCERTAINTY REGARDING POSSIBLE FUTURE SALES OF SIGNIFICANT BLOCKS OF
UP&UP COMMON STOCK; POSSIBLE EFFECT ON THE TRADING MARKET FOR UP&UP COMMON STOCK
AND THE CONTROL OF UP&UP

     Thomas L. Blair, Chairman of the Board and Co-Chief Executive Officer of
UP&UP beneficially owns an aggregate of 7,183,150 shares, or approximately 37.7%
of the Company's outstanding shares at September 30, 1999. This beneficial
ownership includes 4,500,000 shares, or approximately 23.6% of the outstanding
shares, which Mr. Blair has committed to purchase on or prior to February 25,
2003. These 4,500,000 shares currently are held by Independent Divestment Trust,
which acquired them from Principal Mutual. In addition, Capital Z Financial
Services Fund II, L.P. recently purchased 1,750,000 shares from officers and
employees of UP&UP and an option to purchase from Mr. Blair an additional
2,250,000 shares of common stock on or prior to February 25, 2003.


                                       12

<PAGE>




Effect on Trading Market For UP&UP Common Stock

     If the 4,500,000 shares of UP&UP common stock are not purchased by February
25, 2003 by Mr. Blair, as he is obligated to do, those shares would have to be
sold by the trust in which they have been placed. Further, Mr. Blair likely
would seek to sell shares to pay the purchase price of at least some of the
shares he purchases from the trust. Also, Capital Z Financial Services Fund II
could seek to sell shares it has purchased, and/or shares it purchases from Mr.
Blair upon the exercise of the option. Registration rights held by Capital Z
Financial Services Fund II would facilitate public resales of its shares of
UP&UP common stock. Thus, it is likely that a significant number of shares of
UP&UP common stock would be resold during the next four years. The possibility
of a sale of those shares could have an adverse effect on the trading market for
UP&UP's common stock. A private sale of a significant number of shares could
effect a change in control of UP&UP.

Effect on Control of UP&UP

     The controlling influence Mr. Blair has with respect to UP&UP is enhanced
by his agreement to purchase the 4,500,000 shares of common stock. However, Mr.
Blair has no right to vote those 4,500,000 shares until he actually purchases
them from the trust. The trust is required to vote the UP&UP shares it holds in
the same proportion as all other UP&UP stockholders vote their shares. In
effect, the voting power held by all other stockholders is increased while the
trust holds these shares. Mr. Blair's power to vote 2,683,150 shares, giving
effect to the trust voting arrangement, would mean that he has approximately
14.1% of the voting power of the outstanding shares at September 30, 1999.

     In addition, at the annual meeting of the stockholders of the Company held
on June 15, 1999 two designees of Capital Z Financial Services Fund II were
elected as directors. Thus, Capital Z Financial Services Fund II could exert a
significant influence in the business of the Company.

REGULATION OF UP&UP AS A SAVINGS AND LOAN HOLDING COMPANY

     UP&UP has acquired a savings and loan holding company and its wholly owned,
federal savings bank subsidiary. The bank is subject to extensive regulation,
supervision and examination by the Office of Thrift Supervision and the Federal
Deposit Insurance Corporation. Upon the acquisition of the Bank, UP&UP became a
unitary savings and loan holding company, subject to supervision and examination
by the Office of Thrift Supervision of the U.S. Department of Treasury. As a
unitary savings and loan holding company, UP&UP generally will not be restricted
under existing laws as to the type of business activities in which it may
engage, provided the bank continues to meet the standards as a qualified thrift
lender. Nevertheless, the Office of Thrift Supervision will have enforcement
authority over UP&UP and its non-savings association subsidiaries. Among other
things, this authority permits the Office of Thrift Supervision to restrict or
prohibit activities that are determined to be a serious risk to the subsidiary
savings bank. In addition, legislation recently enacted by Congress provides
that unitary thrift holding companies can only be acquired by financial holding
companies, as defined in the legislation.

DEPENDENCE ON KEY PERSONNEL

     UP&UP depends to a significant extent on its Chairman and Co-Chief
Executive Officer, Thomas L. Blair, its Co-Chief Executive Officer and
President, Edward S. Civera, its Vice President of Operations, Spiro A.
Karadimas and its Vice President and Chief Financial Officer, S. Joseph Bruno.
UP&UP's growth and future success will depend in large part on its ability to
retain and attract highly qualified personnel. UP&UP has entered into a
five-year employment agreement with Mr. Civera extending to January, 2004, and
has entered into two-year employment agreements with Messrs. Karadimas, Blair
and Bruno, extending to January, 2001. If UP&UP were to lose any of its key
personnel, particularly any of its executive officers, or be unable to retain or
hire qualified personnel, then it could be potentially and adversely affected.

POTENTIAL IMPEDIMENTS TO TAKEOVER

     The concentration of ownership of its common stock could also impede any
effort by a third party to effect a change of control of UP&UP. In addition,
UP&UP's certificate of incorporation and bylaws contain a number of

                                       13

<PAGE>



provisions that could inhibit a change of control by means of a tender offer,
merger, proxy contest or otherwise, including advance notice and supermajority
provisions, provisions that establish a classified board of directors and
provisions that enable UP&UP to issue "blank check" preferred stock. These
provision could reduce or eliminate any takeover premium in the market price for
UP&UP's common stock or otherwise limit the price certain investors might be
willing to pay for UP&UP's common stock.

     Also, upon the acquisition of the Bank, UP&UP became subject to regulation
by the Office of Thrift Supervision as a savings and loan holding company. The
regulatory approval or notice requirements applicable to persons seeking to
acquire control of a savings and loan holding company could inhibit or delay
possible acquisition of UP&UP, even acquisitions desired by UP&UP's
stockholders. For regulatory purposes, presumptions of control can arise once a
person's beneficial ownership, together with that of persons acting in concert,
of outstanding voting stock exceeds 10%.

UP&UP'S ANNUAL AND QUARTERLY OPERATING RESULTS ARE SUBJECT TO FLUCTUATION

     UP&UP's annual and quarterly operating results could fluctuate in the
future as a result of a number of factors, including:

     o    the expiration or termination of contracts with significant Payor
          Clients or Contracting Providers;
     o    the timing of new product and service introductions;
     o    changes in pricing or reduced price concessions;
     o    increases in operating expenses;
     o    increases in selling, general and administrative expenses;
     o    increased competition;
     o    the impact of acquisitions;
     o    regulatory changes; and
     o    conditions in the health care industry and the economy generally.

     Historical annual or quarter-to-quarter comparisons of UP&UP's results of
operations may not be an indication of future performance. It is possible that
in some future periods UP&UP's results of operations may be below the
expectations of public market analysts and investors. If this were to occur, the
price of UP&UP's common stock may decline.

LACK OF DIVIDENDS

     UP&UP does not plan to pay any dividends on its common stock for the
foreseeable future.

THE MARKET PRICE OF UP&UP'S COMMON STOCK COULD BE ADVERSELY AFFECTED BY THE
RISKS TO UP&UP AND OTHER FACTORS

     The potential impact of all of the above risk factors is difficult for
UP&UP to forecast. Nevertheless, these or other factors, such as fluctuations in
UP&UP's earnings, changes in estimates of those earnings by security analysts
and sales of substantial amounts of UP&UP's common stock in the public market,
may materially adversely affect UP&UP's operating results and/or the trading
price of the common stock. Recently, the stock market has experienced extreme
price and volume fluctuations that have particularly affected the market prices
of securities of many companies, for reasons frequently unrelated to the
performance of the specific companies. These fluctuations, as well as general
economic, political and market conditions, may materially adversely affect the
market price of UP&UP's common stock. UP&UP does not guarantee that the trading
price for the common stock will remain at or above the public offering price in
this offering.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        (Included in Management's Discussion and Analysis of Financial Condition
        and Results of Operations)




                                       14

<PAGE>



PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Neither the Company nor its subsidiaries are involved in any pending legal
proceedings, other than routine legal matters occurring in the ordinary course
of business, which in the aggregate involve amounts which are believed by
management to be immaterial to the consolidated financial condition or results
of operations of the Company, except as discussed in Note 2 to the Consolidated
Financial Statements for the quarter ended September 30, 1999.

ITEM 2.   CHANGES IN SECURITIEs (Not Applicable)

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES (Not Applicable)

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The annual meeting of the stockholders of the Company was held on June 15,
1999. The following matters were submitted to a vote of the stockholders:

1.   The following individuals were elected to the Board of Directors for a
     three-year term with the indicated votes:

<TABLE>
<CAPTION>

                                                          Abstained and
                            For        Withheld         Broker Non-Votes
<S>                      <C>           <C>                    <C>
Thomas L. Blair          18,414,889    383,290                17,982
Thomas J. Graf           18,414,889    383,290                17,982
Frederick H. Graefe      18,414,889    383,290                17,982
</TABLE>

2.   The following individuals were elected to the Board of Directors for a
     two-year term with the indicated votes:

                                                          Abstained and
<TABLE>
<CAPTION>
                            For        Withheld         Broker Non-Votes
<S>                      <C>           <C>                    <C>
Steven M. Gluckstern     18,414,889    383,290                17,982
Paul H. Warren           18,414,889    383,290                17,982
</TABLE>

3.   The Company's Certificate of Incorporation was amended by (i) repealing
     Article FIFTH, Section C, which prohibits stockholders from taking action
     by written consent (ii) repealing Article EIGHTH, which imposes
     restrictions on certain transactions with "interested stockholders", (iii)
     repealing Article NINTH, which authorizes the Board of Directors to
     consider the impact of certain business transactions on constituencies
     other than stockholders, and (iv) amending Article SIXTH, Section D,
     Article SEVENTH and Article TWELFTH to lower from 80% to 662/3% the
     stockholder vote required to remove directors for cause and to amend the
     Certificate of Incorporation and Bylaws by the following vote:

                                            Abstained and
              For        Against          Broker Non-Votes
           15,737,229    289,733             2,789,199

4.   The appointment of PricewaterhouseCoopers LLP as the Company's independent
     certified public accountants was ratified by the following vote:

                                            Abstained and
              For        Against          Broker Non-Votes
           18,791,865      2,109                22,189


ITEM 5. OTHER INFORMATION (NONE)


                                       15

<PAGE>



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

1.   The following exhibits are filed as part of this report unless noted
     otherwise:

   Exhibit No.                          Description
   -----------                          -----------

     2.1       Agreement with America's Health Plan, Inc. (1)
     2.2       Plan and Agreement of Merger of IM&I, Inc. into PB Newco (1)
     2.3       Plan and Agreement of Merger of PB Newco, Inc. into United Payors
               & United Providers, Inc. (1)
     3.1       Certificate of Incorporation of United Payors & United Providers,
               Inc. (1)
     3.2       Bylaws of United Payors & United Providers, Inc. (1)
     3.3       Amended Certificate of Incorporation of United Payors & United
               Providers, Inc. (filed herewith)
     4.1       Specimen Stock Certificate of United Payors & United Providers,
               Inc. (1)
     4.2       Shareholder Agreement (1)
     10.1      Form of Indemnification Agreement (1)
     10.2      Stock Purchase Agreement between Preferred Health Choice and
               United Payors & United Providers, Inc., dated October 22, 1996(2)
     10.3      Warrants to Purchase 150,000 Shares of Common Stock of United
               Payors & United Providers, Inc. Issued to Preferred Health
               Choice, Inc., dated October 23, 1996 (3)
     10.4      Warrants to Purchase 168,000 Shares of Common Stock of United
               Payors & United Providers, Inc. Issued to Preferred Health
               Choice, Inc., dated October 27, 1996 (3)
     10.5      Stock Purchase Agreement between United Payors & United
               Providers, Inc. and Principal Holding Company, a wholly owned
               subsidiary of Principal Mutual Life Insurance Company, dated
               September 29, 1997 (4)
     10.6      Stock Purchase Agreement by and among United Payors & United
               Providers, Inc. and The MetraHealth Employee Benefits Company,
               Inc., dated December 17, 1998(5)
     10.7      Employment Agreement by and between United Payors & United
               Providers, Inc., Thomas L. Blair, Chairman of the Board and Chief
               Executive Officer of United Payors & United Providers, Inc., and
               Edward S. Civera (6)
     10.8      First Amendment to the Employment Agreement by and between United
               Payors & United Providers, Inc., Thomas L. Blair, Chairman of the
               Board and Chief Executive Officer of United Payors & United
               Providers, Inc., and Edward S. Civera (7)
     10.9      Employment Agreement by and between United Payors & United
               Providers, Inc. and Thomas L. Blair(7)
     10.10     Employment Agreement by and between United Payors & United
               Providers, Inc. and S. Joseph Bruno(7)
     10.11     Employment Agreement by and between United Payors & United
               Providers, Inc. and Spiro A. Karadimas (7)
     10.12     Registration Rights Agreement by and among Capital Z Financial
               Services Fund II, L.P. and United Payors & United Providers,
               Inc., dated February 25, 1999 (7)
     10.13     Registration Rights Agreement by and among Thomas L. Blair and
               United Payors & United Providers, Inc., dated February 25, 1999
               (7)
     10.14     Stockholders Agreement by and between Capital Z Financial
               Services Fund II, L.P., Thomas L. Blair and United Payors &
               United Providers, Inc., dated February 25, 1999 (7)
     10.15     Royalty Agreement between United Payors & United Providers, Inc.
               and HealthExtras, LLC (7)
     10.16     Agreement and Plan Reorganization by and between Quantum
               Financial Holdings, Inc. and United Payors & United Providers,
               Inc. dated as of October 16, 1998.(8)
     10.17     First Amendment to Agreement and Plan of Reorganization by and
               between Quantum Financial Holdings, Inc. and United Payors &
               United Providers, Inc. dated as of June 23, 1999. (8)
     27.1      Financial Data Schedule As Of and For the Nine Months Ended
               September 30, 1999 (filed herewith)
--------------
(1)  Incorporated herein by reference into this document from the Exhibits to
     the Form S-1 Registration Statement, as amended, Registration No. 333-
     3814, initially filed on April 19, 1996.
(2)  Incorporated herein by reference into this document from the Exhibits to
     the Form 10-Q for the quarter ended September 30, 1996.
(3)  Incorporated herein by reference into this document from the Exhibits A-1
     and A-2 to the Stock Purchase Agreement filed as Exhibit 10.4 to the Form
     10-Q for the quarter ended September 30, 1996.
(4)  Incorporated herein by reference into this document from the Exhibits to
     the Form 8-K dated October 13, 1997.

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(5)  Incorporated herein by reference into this document from the Exhibits to
     the Form 8-K dated December 31, 1998.
(6)  Incorporated herein by reference into this document from Exhibit 10.8 to
     the Form 10-K for the year ended December 31, 1997.
(7)  Incorporated herein by reference into this document from the Exhibits to
     the Form 10-K for the year ended December 31, 1998.
(8)  Incorporated herein by reference into this document from the Exhibits to
     the Form 8-K dated September 15, 1999

2. REPORTS ON FORM 8-K

     The Company filed a Current Report on Form 8-K on September 15, 1999
reporting Item 2 in connection with the acquisition of Quantum Financial
Holdings, Inc. and its wholly-owned subsidiary, Baltimore American Savings Bank,
F.S.B., a federal savings bank in Maryland.





                                                    SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                      UNITED PAYORS & UNITED PROVIDERS, INC.
                                                    (Registrant)

Date: November 15, 1999            By:    /s/   THOMAS L. BLAIR
                                        ----------------------------------
                                                Thomas L. Blair
                                        Chairman and Co-Chief Executive Officer


Date: November 15, 1999            By:    /s/   EDWARD S. CIVERA
                                        ---------------------------------------
                                                 Edward S. Civera
                                        Co-Chief Executive Officer and President


Date: November 15, 1999            By:    /s/   S. JOSEPH BRUNO
                                        ----------------------------------------
                                                S. Joseph Bruno
                                        Vice President and Chief Financial
                                        Officer


Date: November 15, 1999            By:    /s/   EDUARDO V. FEITO
                                        ----------------------------------------
                                                Eduardo V. Feito
                                        Controller and Chief Accounting Officer



                                       17

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