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                                                                  EXHIBIT 10.12

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                    CONTRACT FOR FURNISHING HEALTH SERVICES
                                      BY A
                        HEALTH MAINTENANCE ORGANIZATION

                                  April 1, 2000

                        Illinois Department of Public Aid
                          Division of Medical Programs
                             Bureau of Managed Care
                           201 South Grand Avenue East
                        Springfield, Illinois 62763-0001

                                    Ann Patla
                                    Director

                           Matt Powers, Administrator
                          Division of Medical Programs

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attaching a contract that has been redlined against the version sent to you on
February 16, 2000.

      The Department will continue to work with you on Affirmative Choice and
guaranteed eligibility. As these are education and eligibility issues, it is not
necessary that they be specifically detailed in the contract. Should these
programs be approved, they can be implemented without an amendment to the
contract.

      Some of the MCOs have requested that at the contract contain a clause
regarding automatic rate parity when a fee-for-service rate increase is given.
The contract does not include this clause.

      The rates contained in the final contract reflect 98% of the
fee-for-service equivalent. Please note, however, due to the tight time frame
for executing the contract the capitation payments for April, 2000 will be at
the old rates. Once system changes have been made to reflect the new rates,
payment adjustments will be processed retroactive to April 1, 2000.

      I look forward to working with you in the future.

                                                  Sincerely

                                                  /s/ Ann Patla, Dr. HL
                                                  Ann Patla, Dr. HL
                                                  Director

E-mail: dpa_webmaster@state.il.us                                      Internet:
http://www.state.il.us/dpa/

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                     PAGE(s)
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<S>                                                                                                  <C>
Article I
    Definitions....................................................................................     2
Article II
    Terms and Conditions...........................................................................     8
    2.1      Specification.........................................................................     8
    2.2      Rules of Construction.................................................................     8
    2.3      Performance of Services and Duties....................................................     9
    2.4      Language Requirements.................................................................     9
             (a)      Key Oral Contacts............................................................     9
             (b)      Written Material.............................................................    10
    2.5      List of Individuals in an Administrative Capacity.....................................    10
    2.6      Certificate of Authority..............................................................    10
    2.7      Obligation to Comply with other Laws..................................................    10

Article III
    Eligibility....................................................................................    12
    3.1      Determination of Eligibility..........................................................    12
    3.2      Enrollment Generally..................................................................    12
    3.3      Enrollment Limits.....................................................................    12
    3.4      Expansion to Other Contracting Areas..................................................    13

Article IV
    Enrollment, Coverage and Termination of Coverage...............................................    14
    4.1      Enrollment Process....................................................................    14
    4.2      Initial Coverage......................................................................    16
    4.3      Period of Enrollment..................................................................    17
    4.4      Termination of Coverage...............................................................    17
    4.5      Preexisting Conditions and Treatment..................................................    19
    4.6      Continuity of Care....................................................................    19
    4.7      Change of Site and Primary Care Provider or Women's Health Care Provider..............    19

Article V
    Duties of Contractor...........................................................................    21
    5.1      Services..............................................................................    21
             (a)      Amount, Duration and scope of Coverage.......................................    21
             (b)      Enumerated Covered Services..................................................    21
             (c)      Behavioral Health Services...................................................    22
             (d)      Services to Prevent Illness and Promote Health...............................    23
             (e)      Exclusions from Covered Services.............................................    24
             (f)      Limitations on Covered Services..............................................    24
</TABLE>

                                        i

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<TABLE>
<S>                                                                                                    <C>
             (g)      Right of Conscience..........................................................    25
             (h)      Emergency Services...........................................................    25
             (i)      Post-Stabilization Services..................................................    26
             (j)      Additional Services or Benefits..............................................    26
             (k)      Telephone Access.............................................................    27
             (l)      Pharmacy Formulary...........................................................    27
    5.2      Certified Local Health Department Services............................................    28
    5.3      Marketing.............................................................................    29
    5.4      Inappropriate Activities..............................................................    34
    5.5      Obligation to Provide Information.....................................................    35
    5.6      Quality Assurance, Utilization Review and Peer Review.................................    36
    5.7      Physician Incentive Plan Regulations..................................................    37
    5.8      Prohibited Affiliations...............................................................    37
    5.9      Records...............................................................................    38
             (a)      Maintenance of Business Records..............................................    38
             (b)      Availability of Business Records.............................................    38
             (c)      Patient Records..............................................................    38
    5.10     Computer System Requirements..........................................................    39
    5.11    Regular Report and Submission Requirements.............................................    40
    5.12     Health Education......................................................................    45
    5.13    Required Minimum Standards of Care.....................................................    46
             (a)      Healthy Kids/EPSDT Services to Beneficiaries Under Twenty-One
                      (21) Years...................................................................    46
             (b)      Preventive Medicine Schedule (Services to Beneficiaries Twenty-
                      One (21) Years of Age and Over)..............................................    47
             (c)      Maternity Care...............................................................    50
             (d)      Complex and Serious Medical Conditions.......................................    51
             (el      Access Standards.............................................................    51
             (f)      Linkages to Other Services...................................................    52
    5.14     Choice of Physicians..................................................................    53
    5.15     Timely Payments to Providers..........................................................    53
    5.16     Grievance Procedure and Beneficiary Satisfaction Survey...............................    54
    5.17     Provider Agreements and Subcontracts..................................................    55
    5.18     Site Registration and Primary Care Provider/Women's Health Care Provider
             Approval and Credentialing............................................................    57
    5.19     Advance Directives....................................................................    58
    5.20     Fees to Beneficiaries Prohibited......................................................    58
    5.21     Fraud and Abuse Procedures............................................................    58
    5.22     Beneficiary-Provider Communications...................................................    59

Article VI
    Duties of the Department.......................................................................    61
    6.1      Enrollment............................................................................    61
    6.2      Payment...............................................................................    61
    6.3      Limitation of Payment by the Department...............................................    61
</TABLE>

                                       ii
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<TABLE>
<S>                                                                                                    <C>
    6.4      Department Review of Contractor Materials.............................................    61
    6.5      Eligible Enrollee Education Program...................................................    62

Article VII
    Payment and Funding............................................................................    63
    7.1     Payment Rates..........................................................................    63
    7.2      Adjustments...........................................................................    64
    7.3      Copayments under KidCare..............................................................    64
    7.4      Availability of Funds.................................................................    64
    7.5      Hold Harmless.........................................................................    65
    7.6      Payment in Full.......................................................................    65

Article VIII
    Term Renewal and Termination...................................................................    66
    8.1      Term..................................................................................    66
    8.2      Continuing Duties in the Event of Termination.........................................    66
    8.3      Termination With and With out Cause...................................................    66
    8.4      Automatic Termination.................................................................    67
    8.5      Reimbursement in the Event of Termination.............................................    67

Article IX
    General Terms..................................................................................    68
    9.1      Records Retention, Audits, and Reviews................................................    68
    9.7      Nondiscrimination.....................................................................    69
    9.3      Confidentiality of Information........................................................    69
    9.4      Notices...............................................................................    70
    9.5      Required Disclosures..................................................................    70
             (a)      Conflict of Interest.........................................................    70
             (b)      Disclosure of Interest.......................................................    71
    9.6      HCFA Prior Approval...................................................................    72
    9.7      Assignment............................................................................    72
    9.8      Similar Services......................................................................    72
    9.9      Amendments............................................................................    72
    9.10     Sanctions.............................................................................    73
             (a)      Failure to Report or Submit..................................................    73
             (b)      Failure to Submit Encounter Data.............................................    73
             (c)      Failure to Meet Minimum Standards of Care....................................    74
             (d)      Imposition of Prohibited Charges.............................................    74
             (e)      Misrepresentation or Falsification of Information............................    74
             (f)      Failure to Comply with the Physician Incentive Plan Requirements.............    74
             (e)      Failure to Meet Access Standards.............................................    75
             (h)      Failure to Provide Covered Services..........................................    75
             (i)      Discrimination Related to Pre-Existing Conditions............................    75
             (j)      Pattern of Marketing Failures................................................    75
             (k)      Other Failures...............................................................    75
</TABLE>

                                       iii
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<TABLE>
<S>                                                                                                    <C>
    9.11     Sale or Transfer......................................................................    76
    9.12     Coordination of Benefits for Beneficiaries............................................    76
    9.13     Agreement to Obey All Laws............................................................    77
    9.14     Severability..........................................................................    77
    9.15     Contractor's Disputes With Other Providers............................................    77
    9.16     Choice of Law.........................................................................    77
    9.17     Debarment Certification...............................................................    77
    9.18     Child Support, State Income Tax and Student Loan Requirements.........................    78
    9.19     Payment of Dues and Fees..............................................................    78
    9.20     Federal Taxpayer Identification.......................................................    78
    9.21     Drug Free Workplace...................................................................    7S
    9.22     Lobbying..............................................................................    78
    9.23     Early Retirement......................................................................    79
    9.24     Sexual Harassment.....................................................................    79
    9.25     Independent Contractor................................................................    79
    9.26     Solicitation of Employees.............................................................    8O
    9.27     Nonsolicitation.......................................................................    80
    9.28     Ownership of Work Product.............................................................    80
    9.29     Bribery Certification.................................................................    81
    9.30     Nonparticipation in International Boycott.............................................    81
    9.31     Computational Error...................................................................    81
    9.32     Survival of Obligations...............................................................    81
    9.33     Clean Air Act and Clean Water Act Certification.......................................    81
    9.34     Non-Waiver............................................................................    82
    9.35     Notice of Change in Circumstances.....................................................    82
    9.36     Public Release of Information.........................................................    82
    9.37     Payment in Absence of Federal Financial Participation.................................    82
    9.38     Employment Reporting..................................................................    82
    9.39     Certification of Participation........................................................    83
    9.40     Indemnification.......................................................................    83
    9.41     Gifts.................................................................................    83
    9.42     Business Enterprise for Minorities, Females and Persons with Disabilities.............    84
</TABLE>

Attachment I   -      Rate Sheets
Attachment II  -      KidCare Participation Option
Attachment III -      Drug Free Workplace Agreement
Attachment IV  -      Business Enterprise Program Contracting Goal
Exhibit A      -      Quality Assurance
Exhibit B      -      Utilization Review/Peer Review
Exhibit C      -      Summary of Required Reports
Exhibit D      -      Summary of Required Submissions
Exhibit E      -      Encounter Data Format Requirements

                                       iv
<PAGE>

                               STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                    CONTRACT FOR FURNISHING HEALTH SERVICES

      THIS CONTRACT FOR FURNISHING HEALTH SERVICES ("Contract") made, pursuant
to Section 5-11 of the Illinois Public Aid Code (305 ILCS 5/5-11), is by and
between the ILLINOIS DEPARTMENT OF PUBLIC AID ("Department"), acting by and
through its Director, and HARMONY HEALTH PLAN ("Contractor"), who certifies that
it is a Health Maintenance Organization and whose principal office is located at
125 South Wacker Drive, Suite 2900, Chicago, Illinois 60606.

                                    RECITALS

      WHEREAS, the Contractor is a Health Maintenance Organization operating
pursuant to a Certificate of Authority issued by the Illinois Department of
Insurance and wishes to provide Covered Services to Eligible Enrollees (as
defined herein);

      WHEREAS, the Department, pursuant to the laws of the State of Illinois,
provides for medical assistance under the Medical Assistance Program or KidCare
to Participants wherein Eligible Enrollees may enroll with the Contractor to
receive Covered Services; and

      WHEREAS, the Contractor warrants that it is able to provide and/or arrange
to provide the Covered Services set forth in this Contract to Beneficiaries
under the terms and conditions set forth herein;

      NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties agree as follows:

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

      The following terms as used in this Contract and the attachments, exhibits
and amendments hereto shall be construed and interpreted as follows, unless the
context otherwise expressly requires a different construction and
interpretation:

ABUSE means a manner of operation that results in excessive or unreasonable
costs to the Federal and/or State health care programs.

ADMINISTRATIVE RULES means the rules promulgated by the Department governing the
Medical Assistance Program or KidCare.

AFFILIATED means associated with another party for the purpose of providing
health care services under a Contractor's Plan pursuant to a contract or other
form of written agreement.

AUTHORIZED PERSON means a representative of the Office of Inspector General for
the Department, the Illinois Medicaid Fraud Control Unit, the United States
Department of Health and Human Services, a representative of other State and
federal agencies with monitoring authority related to the Medical Assistance
Program or KidCare, and a representative of any QAO under contract with the
Department.

BENEFICIARY means any Eligible Enrollee whose coverage under the Plan has begun
and remains in effect pursuant to this Contract.

CAPITATION means the reimbursement arrangement in which a fixed rate of payment
per Beneficiary per month is made to the Contract or for the performance of all
of the Contractor's duties and obligations pursuant to this Contract.

CASE means individuals who have been grouped together and assigned a common
identification number by the Department or the Department of Human Services of
which at least one individual in that grouping has been determined by the
Department to be an Eligible Enrollee. An individual is added to a Case when the
Client Information System maintained by the Illinois Department of Human
Services reflects the individual is in the Case.

CERTIFIED LOCAL HEALTH DEPARTMENT means local government agency that administers
health-related programs and services within its jurisdiction and that has been
certified by the Illinois Department of Public Health pursuant to 77 III. Adm.
Code 600.

CONTRACT means this document, inclusive of all attachments, exhibits, schedules
and any subsequent amendments hereto.

                                        2
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CONTRACTING AREA means the area(s) from which the Contractor may enroll Eligible
Enrollees as set forth in Attachment I.

COVERED SERVICES means those benefits and services described in Article V,
Section 5.1.

EARLY INTERVENTION means the program described at 325 ILCS 20/1 et seq., which
authorizes the provision of services to infants and toddlers, birth through two
years of age, who have a disability due to developmental delay or a physical or
mental condition that has a high probability of resulting in developmental delay
or being at risk of having substantial developmental delays due to a combination
of serious factors.

EFFECTIVE DATE shall be April 1, 2000.

ELIGIBLE ENROLLEE means a Participant, except one who:

      -     is receiving Medical Assistance under Aid to the Aged, Blind and
            Disabled; as provided by Title XIX of the Social Security Act (42
            U.S.C. Section 1383c) and 305 ILCS 5/3-1 et seq.

      -     is eligible only through the Transitional Assistance (305 ILCS
            5/6-11) or Refugee Assistance Programs under Title XIX of the Social
            Security Act (42 U.S.C. 1396 et seq.;

      -     is age 19 or older and eligible only through the State Family and
            Children Assistance Program (305 ILCS 5/6-11);

      -     Whose care is subsidized by the Department of Children and Family
            Services;

      -     is residing in a long term care facility including State of Illinois
            operated facilities;

      -     has Medicare coverage under Title XVIII of the Social Security Act
            (42 U.S.C. 1395 et seq.);

      -     has significant medical coverage through a third party for Medical
            Assistance Participants;

      -     is eligible only through the Medicaid Presumptive Eligibility for
            Pregnant Women program under Title XIX of the Social Security Act
            (42 U.S.C. 1396r-1);

      -     is eligible for Medical Assistance only through meeting a spend-down
            obligation;

      -     is a non-citizen receiving only emergency Medical Assistance; or

      -     is identified with an "R" in the eighth position of a Case
            identification number.

                                        3
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EMERGENCY SERVICES means the provision of those inpatient and outpatient health
care services that are Covered Services, including transportation, needed to
evaluate or stabilize an Emergency Medical Condition that are furnished by a
Provider qualified to furnish emergency services.

EMERGENCY MEDICAL CONDITION means a medical condition manifesting itself by
acute symptoms of sufficient severity (including, but not limited to, severe
pain) such that a prudent lay person, who possesses an average knowledge of
health and medicine, could reasonably expect the absence of immediate medical
attention to result in (i) placing the health of the individual (or, with
respect to a pregnant woman, the health of the woman or her unborn child) in
serious jeopardy, (ii) serious impairment to bodily functions, or (iii) serious
dysfunction of any bodily organ or part.

ENCOUNTER means an individual service or procedure provided to a Beneficiary
that would result in a claim if the service or procedure were to be reimbursed
fee-for-service under the Medical Assistance Program or KidCare.

ENCOUNTER DATA means the compilation of data elements, as specified by the
Department in written notice to the Contractor, identifying an Encounter that
includes information similar to that required in a claim for fee-for-service
payment under the Medical Assistance Program or KidCare.

ENROLLMENT means the completion and signing of any necessary Enrollment forms by
or on behalf of an Eligible Enrollee in accordance with Enrollment procedures
prescribed in this Contract and concurrent or subsequent entry of the Eligible
Enrollee's Site selection, by the Department, into its database.

FAMILY CASE MANAGEMENT PROVIDER means any agency contracting with the Illinois
Department of Human Services or its successor agency to provide Family Case
Management Services.

FAMILY CASE MANAGEMENT SERVICES means the program described at 77 III, Adm. Code
630.220.

FEDERALLY QUALIFIED_HEALTH CENTER or EQHO means a health center that meets the
requirements of 89 III. Adm. Code 140.461(d).

FRAUD means knowing and willful deception or misrepresentation, or a reckless
disregard of the facts, with the intent to receive an unauthorized benefit.

HCFA means the Health Care Financing Administration under the United States
Department of Health and Human Services.

                                       4
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HEALTHY KIDS/EPSDT means the Early and Periodic, Screening, Diagnostic and
Treatment services provided to, children under Title XIX of the Social
Security Act (42 U.S.C. Section 1396, et seq.).

INELIGIBLE PERSON means a Person which: (i) is or has been terminated, barred,
suspended or otherwise excluded from participation in or has voluntarily
withdrawn as the result of a settlement agreement in any program under federal
law including any program under Titles XVIII, XIX, XX or XXI of the Social
Security Act; (ii) has not been reinstated in the Medical Assistance Program or
Federal health care programs after a period of exclusion, suspension, debarment,
or ineligibility; or (iii) has been convicted of a criminal offense related to
the provision of health care items or services in the last ten (10) years.

KIDCARE means the program operated pursuant to the Children's Health Insurance
Program Act (215 ILCS 106/1 et seq.), but not including the program operated
pursuant to Subsection 25(a)(1) of the Children's Health Insurance Program Act
(215 ILCS 106/25(a)(1)).

MCO means a "managed care organization" that is a federally qualified HMO that
meets the advance directives requirements of subpart I of part 489 of 42 C.F.R.
or any public or private entity that meets the advance directives requirements
set forth in Article V, Section 5.19 and is determined to meet the following
conditions: i) is organized primarily for the purpose of providing health care
services, ii) makes the services it provides to its Medicaid beneficiaries as
accessible (in terms of timeliness, amount, duration and scope) as those
services are to other Medicaid participants within the area served by the entity
and iii) meets the solvency standards of regulations promulgated under 42 C.F.R.
Part 438.

MAG BENEFICIARY means any Participant who is an Eligible Enrollee with a Case
identification number in which the first two digits are 04 or 06.

MANG BENEFICIARY any means any Participant who is an Eligible Enrollee with a
Case identification number in which the first two digits are 94, 96 or 07.

MARKETING means any activities, procedures, materials, information or incentives
used to encourage or promote the Enrollment of Eligible Enrollees with the
Contractor.

MARKETING MATERIALS means materials that are produced in any medium, by or on
behalf of an MCO, are used by the MCO to communicate with Eligible Enrollees or
Beneficiaries, and can reasonably be interpreted as intended to influence them
to enroll in that particular MCO.

MEDICAL ASSISTANCE OR MEDICAL ASSISTANCE PROGRAM means the Illinois Medical
Assistance Program administered under Article V of the Illinois Public Aid Code
(305 ILCS 5/5-1 et seq.) or its successor program and Title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.) and Section 12-4.35 of the Illinois Public
Aid Code (305 ILCS 5/12-4.35).

OFFICE OF INSPECTOR GENERAL OR OIG means the Office of Inspector General for the
Illinois Department of Public Aid as set forth in 305 ICS 5/12-13.1.

                                        5
<PAGE>

PARTICIPANT means any individual receiving benefits under Medical Assistance or
KidCare.

PERSON means any individual, corporation, proprietorship, firm, partnership,
limited liability company, limited partnership, trust, association, governmental
authority or other entity, whether acting in an individual, fiduciary or other
capacity.

PERSON WITH AN OWNERSHIP OR CONTROLLING INTEREST means a Person that: has a
direct or indirect, singly or in combination, ownership interest equal to five
percent (5%) or more in the Contractor; owns an interest of five percent (5%)
or more in any mortgage, deed of trust, note or other obligations secured by the
Contractor if that interest equals at least five percent (5%) of the value of
the property or assets of the Contractor; is an officer or director of a
Contractor that is organized as a corporation, is a member of the Contractor
that is organized as a limited liability company or is a partner in the
Contractor that is organized as a partnership.

PHYSICIAN means a person licensed to practice medicine in all its branches under
the Medical Practice Act of 1987.

PLAN means the Contractor's program for providing Covered Services pursuant to
this Contract.

POST-STABILIZATION SERVICES means medically necessary non-emergency services
furnished to a Beneficiary after the Beneficiary is stabilized following an
Emergency Medical Condition.

PRELISTING REPORT means the information the the Department provides to the
Contractor prior to the first day of each month of coverage that reflects
changes in Enrollment subsequent to the last monthly payment and that applies to
coverage for the following month.

PRIMARY CARE PROVIDER means a Physician, specializing by certification or
training in obstetrics, gynecology, general practice, pediatrics, internal
medicine or family practice who agrees to be responsible for directing, tracking
and monitoring the health care needs of, and authorizing and coordinating care
for, Beneficiaries.

PROSPECTIVE BENEFICIARY means an Eligible Enrollee who has begun the process of
Enrollment with the Contractor but whose coverage under the Plan has not yet
begun.

PROVIDER means a Person who is approved by the Department to furnish medical,
educational or rehabilitative services to Participants under the Medical
Assistance Program.

QAO means a "Quality Assurance Organization" that is the Department's external
quality review organization under contract to perform quality oversight and
monitoring, medical record reviews and technical assistance for managed care.

REMITTANCE ADVICE means the list that will be supplied to the Contractor with
each monthly payment. The Remittance Advice will list each Beneficiary for whom
payment is being made.

                                        6
<PAGE>

SITE means any contracted Provider (IPA, PHO, FQHC, individual physician,
physician groups, etc.) through which the Contractor arranges the provision of
primary care to Beneficiaries.

STABILIZATION OR STABILIZED means, with respect to an Emergency Medical
Condition, to provide such medical treatment of the Emergency Medical Condition
as may be necessary to assure, with in reasonable medical probability, that no
material deterioration of the condition is likely to result upon discharge or
transfer to another facility.

STATE means the State of Illinois.

TITLE X FAMILY PLANNING PROVIDER means an agency that receives grants from the
Illinois Department of Human Services to provide comprehensive family planning
services pursuant to Title X of the Public Health Services Act, 42 U.S.C. 300
and 77 III. Adm. Code 635.

WOMEN'S HEALTH CARE PROVIDER means a Physician, specializing by certification or
training in obstetrics, gynecology or family practice.

                                        7
<PAGE>

                                   ARTICLE II

                              TERMS AND CONDITIONS

2.1   SPECIFICATION

      This Contract is for the delivery of Covered Services to Beneficiaries and
      the administrative responsibilities attendant thereto. The terms and
      conditions of this Contract, along with the applicable Administrative
      Rules and the Departmental materials described in this Article II, Section
      2.1 below, shall constitute the entire and present agreement between the
      parties. This Contract, including all attachments, exhibits and amendments
      constitutes a total integration of all rights, benefits and obligations
      of both parties for the performance of all duties and obligations
      hereunder including, but not limited to, the provision of, and payment for
      Covered Services under this Contract. This Contract is contingent upon
      receipt of approval from HCFA.

      There are no extrinsic conditions or collateral agreements or undertakings
      of any kind. It is the express intention of both the Department and the
      Contractor that any and all prior or contemporaneous agreements, promises,
      negotiations or representations, either oral or written, except as
      provided herein are to have no force, effect or legal consequences of any
      kind, nor shall any such agreements, promises, negotiations or
      representations, either oral or written, have any bearing upon this
      Contract or the duties or obligations hereunder. This Contract and any
      amendment hereto shall be deemed the full and final expression of the
      parties' agreement.

2.2   RULES OF CONSTRUCTION

      (a)   Unless the context otherwise requires:

            (1)   Provisions apply to successive events and transactions;

            (2)   "Or" is not exclusive;

            (3)   Unless otherwise specified, references to statutes,
                  regulations, and rules include subsequent amendments and
                  successors thereto;

            (4)   The various headings of this Contract are provided for
                  convenience only and shall not affect the meaning or
                  interpretation of this Contract or any provision hereof;

            (5)   If any payment or delivery hereunder between the Contractor
                  and the Department shall be due on any day that is not a
                  business day, such payment or delivery shall be made on the
                  next succeeding business day;

                                        8
<PAGE>

            (6)   Words in the plural that should be singular by context shall
                  be so read, and words in the singular shall be read as plural
                  where the context dictates;

            (7)   Days shall mean calender days unless otherwise designated by
                  the context; and

            (8)   References to masculine or feminine pronouns shall be
                  interchangeable where the context requires.

      (b)   References in the Contract to Eligible Enrollee, Prospective
            Beneficiary and Beneficiary shall include the parent, caretaker
            relative or guardian where such Eligible Enrollee, Prospective
            Beneficiary or Beneficiary is a minor child or an adult for whom a
            guardian has been named.

2.3   PERFORMANCE OF SERVICES AND DUTIES

      The Contractor shall perform all services and other duties as set forth in
      this Contract in accordance with, and subject to, the Administrative Rules
      and Departmental materials, including, but not limited to, Departmental
      policies, Department Provider Notices, Provider Handbooks and any other
      rules and regulations that may be issued or promulgated from time to time
      during the term of this Contract. The Department shall provide copies of
      such materials to the Contractor upon the Contractor's written request, if
      such are in existence upon the Effective Date, or upon issuance or
      promulgation if issued or promulgated after the Effective Date. Changes in
      such materials after the Effective Date shall be binding on the parties
      hereto but shall not be considered amendments to the Contract. To the
      extent the Department proposes a change in policy that may have a material
      impact on the Contractor's ability to perform under this Contract. The
      proposed change will be subject to good faith negotiations between both
      parties before it shall be binding pursuant to this Article II, Section
      2.3.

2.4   LANGUAGE REQUIREMENTS

      (a)   Key Oral Contacts

            The Contractor shall conduct Key oral contacts with Eligible
            Enrollees, Prospective Beneficiaries or Beneficiaries in a language
            the Eligible Enrollees, Prospective Beneficiaries and Beneficiaries
            understand. Where the language is other than English, the Contractor
            shall offer and, if accepted by the Eligible Enrollee, Prospective
            Beneficiary or Beneficiary, shall supply interpretive services. Such
            services may not be rendered by any individual who is under the age
            of eighteen (18). Key oral contacts include, but are not limited to:
            Marketing contacts; enrollment communications; explanations of
            benefits; Site, Primary Care and Women's Health Care Provider
            selection activity; educational information; telephone calls to the
            toll-free hotline(s) described in Article V, Section 5.1(k); and
            face-to-face encounters with Providers rendering care.

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<PAGE>

      (b)   Written Material

            Written materials described herein that are to be provided to
            Eligible Enrollees, Prospective Beneficiaries or Beneficiaries shall
            be easily understood by individuals who have a sixth grade reading
            level. If five percent (5%) or more (according to Census Bureau data
            as determined by the Department) of those low income households in
            the relevant Department of Human Services local office area are of a
            single-language minority, the Contractor's written materials
            provided to Eligible Enrollees, Prospective Beneficiaries or
            Beneficiaries must be available in that language as well as English.
            Translations of written material are subject to prior approval by
            the Department and must be accompanied by a certification that the
            translation is accurate and complete. Written materials, as
            described herein, shall mean Marketing Materials, Beneficiary
            Handbooks and any information or notices required to be distributed
            to Eligible Enrollees, Prospective Beneficiaries or Beneficiaries by
            the Department or regulations promulgated from time to time under 42
            C.F.R. Part 438.

2.5   LIST OF INDIVIDUALS IN AN ADMINISTRATIVE CAPACITY

      Upon execution of this Contract, the Contractor shall provide the
      Department with a list of individuals who have responsibility for
      monitoring and ensuring the performance of each of the duties and
      obligations under this Contract. This list shall be updated throughout the
      term of this Contract a necessary and as changes occur, and written notice
      of such changes shall be given to the Department within ten (10) business
      days of such changes occurring.

2.6   CERTIFICATE OF AUTHORITY

      The Contractor must obtain and maintain during the term of the Contract a
      valid Certificate of Authority as a Health Maintenance Organization under
      215 ILCS 125/1-1, et seq.

2.7   OBLIGATION TO COMPLY WITH OTHER LAWS

      No obligation imposed herein on the Contractor shall relieve the
      Contractor of any other obligation imposed by law or regulation,
      including, but not limited to, those imposed by The Managed Care Reform
      and Patient Rights Act (215 ILCS 134/1 et seq.); the federal Balanced
      Budget Act of 1997 (Public Law 105-33) and regulations promulgated by the
      Illinois Department of Insurance, the Illinois Department of Public Health
      or HCFA. The Department shall report all information it receives
      indicating a violation of a law or regulation to the appropriate agency.

      If the Contractor believes that it is impossible to comply with a
      provision of this Contract because of a contradictory provision of
      applicable State or federal law, the Contractor shall immediately notify
      the Department. The Department then will make a

                                       10
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determination of whether a contract a amendment is necessary. The fact that
either the Contract or an applicable law impose a more stringent standard than
the other does not, in and of itself, render it impossible to comply with both.

                                       11
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                                  ARTICLE III

                                  ELIGIBILITY

3.1   DETERMINATION OF ELIGIBILITY

      The State has the exclusive right to determine an individual's eligibility
      for the Medical Assistance Program and KidCare and eligibility to become a
      Beneficiary. Such determination shall be final and is not subject to
      review or appeal by the Contractor. Nothing in this Article III, Section
      3.1 prevents the Contractor from providing the Department with information
      the Contractor believes indicates that a Beneficiary's eligibility has
      changed.

3.2   ENROLLMENT GENERALLY

      Any Eligible Enrollee who resides, a the time of Enrollment, in the
      Contracting Area shall be eligible to become a Beneficiary except as
      described in Article IX, Section 9.12. However, an Eligible Enrollee who
      is a KidCare Participant is only eligible to become a Beneficiary if the
      Contractor has signed Attachment II indicating that the Contractor will
      accept KidCare Participants as Beneficiaries. Enrollment shall be
      voluntary, except as provided in Article IV, Section 4.1(b). Except as
      provided herein, Enrollment shall be open during the entire period of this
      Contract until the Enrollment limit of the Contractor, as set forth in
      Attachment I, is reached. The Contractor must continue to accept
      Enrollment until such Enrollment limit is reached. Such Enrollment shall
      be without restriction and in the order in which Eligible Enrollees apply.
      The Contractor shall not discriminate against Eligible Enrollees on the
      basis of such individuals' health status or need for health services. The
      Contractor shall accept each Beneficiary whose name appears on the
      Prelisting Report.

3.3   ENROLLMENT LIMITS

      The Department will limit the number of Beneficiaries enrolled with the
      Contractor by Contracting Area to a level that will not exceed its
      physical and professional capacity. In its determination of capacity, the
      Department will only consider Providers that are approved by the
      Department. When the capacity is reached, no further applications will be
      submitted for Enrollment unless termination or disenrollment of
      Beneficiaries create room for additions. The capacity limits for the
      Contractor are specified in Attachment I. Prior to the Contractor's
      reaching its capacity, the Department will perform a threshold review at
      the Enrollment level(s) set forth in Attachment I. Should the Department
      determine that the Contractor's operating or financial performance
      reasonably indicates a lack of additional Provider or administrative
      capacity, the review of capacity may be conducted prior to the Contractor
      reaching the threshold review enrollment level specified in Attachment I.
      This threshold review shall examine the Contractor's Provider and
      administrative capacity in each Contracting Area. The Department's
      standards for the review shall be reasonable and timely and be consistent
      with the terms of this

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<PAGE>

      Contract. The threshold review shall take place as determined by the
      Department based on the rate of Enrollment in the Contractor's Plan in
      each Contracting Area or upon the request of the Contractor and the
      subsequent agreement of the Department. The Department shall use its best
      efforts to complete the review before the Contractor reaches the threshold
      levels set forth in Attachment I. Should the Department determine that the
      Contractor does not have the necessary Provider and administrative
      capacity to service any additional Enrollments, the Department may freeze
      Enrollment until such time that the Plan's Provider and administrative
      capacity have increased to the Department's satisfaction. Nothing in this
      Contract shall be deemed to be a guarantee of any Eligible Enrollee's
      Enrollment in the Contractor's Plan.

      If the Contractor signs Attachment II indicating that it will accept
      KidCare Participants as Beneficiaries and later determines that it can no
      longer accept the rates, cost sharing, premium collection or other program
      provisions applicable only to KidCare, then upon written notice to the
      Department an amendment to this Contract shall be executed as soon as
      practicable that ends the Contractor's participation in KidCare. The
      amendment shall provide, at a minimum, 60 days for disenrollment. During
      the disenrollment process, the Contractor must assist the Department, as
      the Department requests, in disenrolling the Beneficiaries who are KidCare
      Participants and such assistance will be at no additional cost charged by
      the Contractor to the Department. The Contractor shall continue to provide
      Covered Services to Beneficiaries who are KidCare Participants until
      termination of coverage as a result of disenrollment or by operation of
      Article IV, Section 4.6, whichever is later.

3.4   EXPANSION TO OTHER CONTRACTING AREAS

      The Contractor may, during the term of this Contract and any renewal
      thereof, request of the Department the opportunity to offer Covered
      Services to Eligible Enrollees in areas other than the Contracting Area(s)
      specified in Attachment I. The Contractor must make this request in
      writing to the Department. To be considered by the Department, the written
      request must include a demonstration, by the Contractor, of a sufficient
      network of Providers to adequately provide Covered Services to Eligible
      Enrollees in the Contracting Area identified by the Contractor for
      expansion. The Department will provide a format and requirements for the
      written request. The Department shall review the Contractor's request in a
      timely manner and may at any time request additional information of the
      Contractor. It is in the sole discretion of the Department, upon review of
      the Contractor's written request, the needs of the Eligible Enrollee
      population and other factors as determined by the Department, as to
      whether the Contractor's request for expansion shall be granted. Should
      the Department agree to the expansion request, the Department and the
      Contractor shall agree to execute an amendment to Attachment I of the
      Contract to reflect the additional Contracting Areas in which the
      Contractor will provide Covered Services.

                                       13
<PAGE>

                                   ARTICLE IV

                            ENROLLMENT, COVERAGE AND
                            TERMINATION OF COVERAGE

4.1   ENROLLMENT PROCESS

      (a)   The Contractor and the Department, acting directly or through its
            agent, shall be responsible for the Enrollment of Eligible
            Enrollees.

            When the Contractor enrolls an Eligible Enrollee, the Contractor
            shall initiate the processing of the Enrollment by submitting a
            Managed Care Enrollment Form, Form No. DPA 2575A, completed in
            accordance with Department instructions for completing such forms,
            and signed by the individual who is recognized as the caretaker
            relative by the Department. This form will be supplied to the
            Contractor by the Department. The Contractor is responsible for
            submitting such forms to the Department or its agent, as directed.
            The Department agrees to act in good faith and use its best efforts
            to see that Managed Care Enrollment Forms submitted for Eligible
            Enrollees are processed within fifteen (15) business days of receipt
            by the Department or its agent.

            Only a caretaker relative may enroll another Eligible Enrollee. A
            caretaker relative may enroll all other Eligible Enrollees in his
            Case. An adult Eligible Enrollee, who is not a caretaker relative,
            may enroll himself only.

            A member of the Contractor's management staff may correct a Managed
            Care Enrollment Form only in accordance with Department
            instructions. The corrections must be initialed by the Contractor's
            manager or his designated staff person.

      (b)   The Department may enroll Eligible Enrollees with the Contractor by
            means of any process the Department uses for the Enrollment of
            Eligible Enrollees into managed care. This may include any program
            the Department implements during the term of this Contract whereby
            Eligible Enrollees who do not affirmatively choose between
            enrollment in an MCO or the alternative delivery system offered by
            the Department will be enrolled in MCOs.

      (c)   When the Department receives an Eligible Enrollee's selection
            directly, the Department will electronically communicate a request
            for Site assignment to the Contractor on the day after the
            Department enters the selection in its records. The Contractor shall
            subsequently contact the Eligible Enrollee, assist the Eligible
            Enrollee in selecting a Site, Primary Care Provider or Women's
            Health Care Provider and provide education in accordance with this
            Article IV, Section 4.1(d). Once selected, the Contractor shall
            electronically communicate the Site to the Department. Upon one
            hundred and twenty (120) days notice to Contractor, the

                                       14
<PAGE>

            Department may require that the Contractor electronically
            communicate the Primary Care Provider or Women's Health Care
            Provider selection to the Department. When the Site, and in the
            future the Provider, selection is received from the Contractor, the
            Department will enroll the Eligible Enrollee with the Contractor.

      (d)   The Contractor shall conduct Enrollment activities that include the
            information distribution requirements of Article V, Section 5.5
            hereof and are designed and implemented so as to maximize Eligible
            Enrollees' understanding of the following:

            (1)   that all Covered Services must be received from or through the
                  Plan with the exception of family planning and other Medical
                  Assistance services as described in Article V, Section 5.1(e)
                  with provisions made to clarify when such services may also be
                  obtained elsewhere;

            (2)   that once enrolled, the Beneficiaries will receive a card from
                  the Department which identifies such Beneficiaries as enrolled
                  in an MCO; and

            (3)   that the Contractor must inform Eligible Enrollees of any
                  Covered Services that will not be offered by the Contractor
                  due to the Contractor's exercise of a right of conscience.

      (e)   Upon the Contractor's request, the Department may refuse Enrollment
            for at least a six-month period to those former Beneficiaries
            previously terminated from coverage by the Contractor for "good
            cause," as specified in Article IV, Section 4.4(a)(1).

      (f)   When a Beneficiary, who is a caretaker relative, gives birth and the
            newborn is added to a Case before the newborn is forty-five (45)
            days old, coverage shall be retroactive to the date of birth.
            Coverage for all other newborns shall be prospective according to
            standard Enrollment terms of this Contract.

      (g)   From birth through age eighteen (18), Eligible Enrollees who are
            added to a Case in which all members of the Case are enrolled with
            the Contractor, will also be enrolled with the Contractor
            automatically. Coverage shall begin as designated by the Department
            on the first day of a calendar month no later than three (3)
            calendar months from the date the Eligible Enrollee was added to the
            Case.

      (h)   No later than ten (10) business days following receipt of the
            Prelisting Report, the Contractor must provide new Beneficiaries
            with an identification card bearing the name of the Contractor's
            Plan; the effective date of coverage; the twenty-four-hour telephone
            number to confirm eligibility for benefits and

                                       15
<PAGE>

            authorization for services and the name and phone number of the
            Primary Care Provider or Women's Health Care Provider. The
            identification of the Site must appear on the card until such time
            as the name and phone number of the Primary Care Provider and
            Women's Health Care Provider can be placed on the card.

            (1)   If the Contractor requires a female Beneficiary who wishes to
                  use a Women's Health Care Provider to designate a specific
                  Women's Health Care Provider and if a female Beneficiary does
                  so designate a Women's Health Care Provider, the name and
                  phone number of that Women's Health Care Provider must appear
                  on the identification card.

            (2)   Where the Contractor can make a compelling argument to the
                  Department that due to its Plan design it is unable to place
                  the name of the Primary Care Provider on the card, the
                  Department in its discretion may allow the Contractor to place
                  the name of a clinic or Site on the card.

            Samples of the identification cards described above shall be
            submitted for Department approval by the Contractor prior to use by
            the Contractor and as revised. The Contractor shall not be required
            to submit for prior approval format changes, provided there is no
            change in the information conveyed.

4.2   INITIAL COVERAGE

      Coverage shall begin as designated by the Department on the first day of a
      calendar month no later than three (3) calendar months from the date the
      Enrollment is entered into the Department's database. Enrollment can occur
      only upon the Prospective Beneficiary's selection of a Site and the
      communication of that Site by the Contractor to the Department.

      The Contractor shall provide reasonable coordination of care assistance to
      Prospective Beneficiaries to access a Primary Care Provider or Women's
      Health Care Provider before the Contractor's coverage becomes effective,
      if requested to do so by Prospective Beneficiaries or if the Contractor
      has knowledge of the need for such assistance. The Primary Care Provider
      or Women's Health Care Provider selected by the Prospective Beneficiary
      must provide necessary service including providing pregnant women with
      priority services in an expedient manner in order for such Prospective
      Beneficiaries to establish a relationship with the Primary Care Provider
      or Women's Health Care Provider, promoting and ensuring continuity of
      care, and determining any special needs as early in the pregnancy as
      possible. Any payment for those services rendered to Prospective
      Beneficiaries described herein shall be made directly by the Department to
      such Providers under the provisions of the Medical Assistance Program or
      KidCare.

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<PAGE>

4.3   PERIOD OF ENROLLMENT

      Every Beneficiary shall remain enrolled until the Beneficiary's coverage
      is ended pursuant to Article IV, Section 4.4.

4.4   TERMINATION OF COVERAGE

      (a)   A Beneficiary's coverage shall be terminated, subject to Department
            approval, upon the occurrence of any of the following conditions:

            (1)   dismissal from the Plan by the Contractor for "good cause"
                  shown may only occur upon receipt by the Contractor of written
                  approval of such termination by the Department. For purposes
                  of this paragraph, "good cause" may include, but is not
                  limited to fraud or other misrepresentation by a Beneficiary,
                  threats or physical acts constituting battery to the
                  Contractor, the Contractor's personnel or the Contractor's
                  participating Providers and staff, chronic abuse of emergency
                  rooms, theft of property from the Contractor's Affiliated
                  Sites, a Beneficiary's sustained noncompliance with the Plan
                  physician's treatment recommendations (excluding preventive
                  care recommendations) after repeated and aggressive outreach
                  attempts are made by the Plan or other acts of a Beneficiary
                  presented and documented to the Department by the Contractor
                  which the Department determines constitute "good cause."
                  Termination of coverage shall take effect at 11:59 p.m. on a
                  date specified by the Department, which shall be no later than
                  the last day of the third month after the Department
                  determines that good cause exists;

            (2)   when the Department determines that the Beneficiary no longer
                  qualifies as an Eligible Enrollee. Termination of coverage
                  shall take effect at 11:59 p.m. on the last day of the month
                  in which the Department determines that the Beneficiary no
                  longer is an Eligible Enrollee;

            (3)   upon the Beneficiary's death. Termination of coverage shall
                  take effect at 11:59 p.m. on the last day of the month in
                  which the Beneficiary dies;

            (4)   when a Beneficiary elects to terminate coverage by so
                  informing the Contractor or the Department, at the
                  Contractor's Sites, or at such other locations as designated
                  by the Department. Beneficiaries may elect to disenroll at any
                  time. The Contractor shall comply with the Department's policy
                  to promote and allow interaction between the Contractor and
                  the Beneficiary seeking disenrollment prior to the
                  disenrollment. The Contractor shall immediately make available
                  to the Beneficiaries the Managed Care Disenrollment Form, DPA
                  Form 2575B, upon request, and shall not delay the provision or
                  processing of this form for the purpose of arranging
                  informational interviews with the Beneficiaries, or for any
                  other

                                       17
<PAGE>

                  purpose. The Contractor shall forward to the Department
                  information concerning the disenrollment by the end of the
                  fifth (5th) business day following the Beneficiary's
                  completion of a Managed Care Disenrollment Form. Termination
                  of coverage shall take effect at 11:59 p.m. on a date
                  specified by the Department, which shall be no later than the
                  last day of the third month after the Department is notified
                  of the request for disenrollment;

            (5)   when a Beneficiary no longer resides in the Contractor's
                  Contracting Area, unless waiver of this subparagraph is
                  approved in writing by the Department and asserted to by the
                  Contractor and Beneficiary. If a Beneficiary is to be
                  disenrolled at the request of a Contractor, the Contractor
                  first must provide documentation satisfactory to the
                  Department that the Beneficiary no longer resides in the
                  Contractor's Contracting Area. Termination of coverage shall
                  take effect at 11:59 p.m. on the last day of the month prior
                  to the month in which the Department determines that the
                  Beneficiary no longer resides in the Contractor's Contracting
                  Area. This date may be retroactive if the Department can
                  determine the month in which the Beneficiary moved from the
                  Contractor's Contracting Area;

            (6)   when a KidCare Participant receives medical confirmation that
                  she is pregnant and the Department is so notified. Termination
                  of coverage shall take effect at 11:59 p.m. on the last day of
                  the month prior to the month in which the Beneficiary received
                  medical confirmation that she was pregnant; or

            (7)   when a Beneficiary has been determined eligible for Social
                  Security disability benefits (SSI) and the Department is so
                  notified. Termination of coverage shall take effect at 11:59
                  p.m. on the last day of the month prior to the month in which
                  SSI eligibility begins.

            (8)   when the Department determines, pursuant to Article IX, that a
                  Beneficiary has other significant insurance coverage. The
                  Contractor shall be notified by the Department of such
                  disenrollment on the monthly Prelisting Report. Termination of
                  coverage shall take effect at 11:59 p.m. on a date specified
                  by the Department, which shall be no later than the last day
                  of the third month after the Department determines that the
                  Beneficiary has other significant insurance.

      (b)   In conjunction with a request by the Contractor to disenroll a
            Beneficiary, the Contractor shall furnish to the Department all
            information requested regarding the basis for disenrollment and all
            information regarding the utilization of services by that
            Beneficiary.

                                       18
<PAGE>

      (c)   The Contractor will not seek to terminate Enrollment because of an
            adverse change in the Beneficiary's health or cost of medical care.
            Such attempts may be considered in violation of the terms of this
            Contract.

      (d)   Except as otherwise provided in this Article IV, Section 4.6, the
            termination of this Contract terminates coverage for all persons who
            become Beneficiaries under it. Termination of coverage under this
            provision will take effect at 11:59 p.m. on the last day of the last
            month for which the Contractor receives payment, unless otherwise
            agreed to, in writing, by the parties to this Contract.

4.5   PREEXISTING CONDITIONS AND TREATMENT

      The Contractor shall assume, upon the effective date of coverage, full
      responsibility for any medical conditions that may have been preexisting
      prior to Enrollment in the Contractor's Plan and for any existing
      treatment plans under which a Beneficiary is currently receiving medical
      care provided that the Beneficiary's current in-Plan physician determines
      that such treatment plan is medically necessary for the health and
      well-being of the Beneficiary.

4.6   CONTINUITY OF CARE

      If a Beneficiary is receiving medical care or treatment as an inpatient in
      an acute care hospital at the time coverage commences under this Contract,
      the Contractor shall assume responsibility for the management of such care
      as of the effective date of coverage and shall be liable for all claims
      for covered services from the effective date of coverage.

      If a Beneficiary is receiving medical care or treatment as an inpatient in
      an acute care hospital at the time coverage under this Contract is
      terminated, the Contractor shall arrange for the continuity of care or
      treatment for the current episode of illness until such medical care or
      treatment has been fully provided as evidenced by discharge from the
      hospital. The subsequent appropriate payor for the Beneficiary shall be
      liable for payment for any medical care or treatment provided after
      termination of coverage.

4.7   CHANGE OF SITE AND PRIMARY CARE PROVIDER OR WOMEN'S HEALTH CARE PROVIDER

      The Contractor shall permit a Beneficiary to change Site, Primary Care
      Provider and Women's Health Care Provider upon request. The Contractor
      shall process such changes within thirty (30) days of receipt of a
      Beneficiary's request.

      Within three (3) business days of processing such change, the Contractor
      shall electronically transmit a Site transfer record to the Department in
      a format designated by the Department. Such record shall contain the
      following data fields: Case name and identification number; Beneficiary
      name and identification number; old Site number; and, new Site number. The
      Department will provide the Contractor with no less than one hundred
      twenty (120) days advance notification prior to imposing a requirement
      that the

                                       19
<PAGE>

      Contractor electronically communicate old and new Primary Care Provider
      numbers and old and new Women's Health Care Provider numbers with this
      record.

                                       20
<PAGE>

                                    ARTICLE V

                              DUTIES OF CONTRACTOR

5.1   SERVICES

      (a)   Amount, Duration and Scope of Coverage

            The Contractor shall provide or arrange to have provided to all
            Beneficiaries all services described in 89 Ill. Adm. Code, Part 140
            as amended from time to time and not specifically excluded therein
            or in this Article V, Section 5.1 in accordance with the terms of
            this Contract Covered Services shall be provided in the amount,
            duration and scope as set forth in 89 Ill. Adm. Code, Part 140 and
            this Contract. This duty shall commence at the time of initial
            coverage as to each Beneficiary. The Contractor shall not refer
            Beneficiaries to publicly supported health care entities to receive
            Covered Services, for which the Contractor receives payment from the
            Department, unless such entities are Affiliated with the
            Contractor's Plan. Such publicly supported health care entities
            include, but are not limited to, Chicago Department of Public Health
            and its clinics, Cook County Bureau of Health Services, and local
            health departments.

      (b)   Enumerated Covered Services


            The following services and benefits shall be specifically included
            as Covered Services under this Contract and will be provided to
            Beneficiaries whenever medically necessary:

            -     Assistive, augmentative communication devices;

            -     Audiology services, physical therapy, occupational therapy and
                  speech therapy;

            -     Behavioral health services, including subacute alcohol and
                  substance abuse services and mental health services, in
                  accordance with subsection (c) hereof;

            -     Blood, blood components and the administration thereof;

            -     Certified hospice services;

            -     Chiropractic services;

            -     Clinic services (as described in 89 Ill. Adm. Code, Part
                  140.62);

            -     Diagnosis and treatment of medical conditions of the eye;*

            -     Durable and nondurable medical equipment and supplies;

            -     Emergency Services;

            -     Family planning services;

            -     Home health care services;

            -     Inpatient hospital services (including dental hospitalization
                  in case of trauma or when related to a medical condition and
                  acute medical detoxification);

            -     Inpatient psychiatric care;

                                       21
<PAGE>

            -     Laboratory and x-ray services; The drawing of blood for lead
                  screening shall take place within the Contractor's Affiliated
                  facilities or elsewhere at the Contractor's expense.**

            -     Medical procedures performed by a dentist;

            -     Nurse midwives services;

            -     Nursing facility services for the first ninety (90) days;***

            -     Orthotic/prosthetic devices, including prosthetic devices or
                  reconstructive surgery incident to a mastectomy;

            -     Outpatient hospital services;

            -     Pharmacy services (including drugs prescribed by a dentist
                  participating in the Medical Assistance Program provided they
                  are filled by an Affiliated pharmacy Provider);

            -     Physicians' services, including psychiatric care;

            -     Podiatric services;

            -     Routine care in conjunction with certain investigational
                  cancer treatments, as provided in Public Act 91-0406;

            -     Services required to treat a condition diagnosed as a result
                  of Healthy Kids/EPSDT services, in accordance with 89 Ill.
                  Adm. Code 140.485;

            -     Services to Prevent Illness and Promote Health in accordance
                  with subsection (d) hereof

            -     Transplants covered under 89 Ill. Adm. Code 140 (using
                  transplant providers certified by the Department, if the
                  procedure is performed in the State); and

            -     Transportation to secure medical services.

                  *     Covered Services may be provided by an optometrist
                        operating within the scope of his license.

                  **    All laboratory tests for children being screened for
                        lead must be sent to the Illinois Department of Public
                        Health's laboratory.

                  ***   Contractors will be responsible for covering up to a
                        maximum of ninety (90) days nursing facility care (or
                        equivalent care provided at home because a skilled
                        nursing facility is not available) annually per
                        Beneficiary. Periods in excess of ninety (90) days
                        annually will be paid by the Department according to its
                        prevailing reimbursement system.

      (c)   Behavioral Health Services

            The Contractor will provide behavioral health services that are
            Covered Services, including but not limited to inpatient hospital,
            pharmaceutical, laboratory, physician services, and outpatient
            services. If a Beneficiary presents himself to the Contractor for
            behavioral health services, or is referred through a third party,
            the Contractor will complete a behavioral health assessment.

                                       22
<PAGE>

            (1)   If the assessment indicates that all services needed are
                  within the scope of Covered Services, the Contractor will
                  arrange for the provision of all such Covered Services.

            (2)   If the assessment indicates that outpatient services are
                  needed beyond the scope of Covered Services, the Contractor
                  will explain to the Beneficiary the services needed and the
                  importance of obtaining them and provide the Beneficiary with
                  a list of Community Behavioral Health Providers (CBHP). The
                  Contractor will assist the Beneficiary in contacting a CBHP
                  chosen by the Beneficiary, unless the Beneficiary objects.

            (3)   If a Beneficiary obtains needed comprehensive services through
                  a CBHP, the Contractor will be responsible for payment for
                  drugs prescribed by a Physician and laboratory services in
                  connection with the comprehensive services provided by the
                  CBHP. The Contractor shall not be liable for other Covered
                  Service provided by the CBHP. The Contractor may require that
                  drugs and laboratory services are provided by Providers that
                  are Affiliated with the Contractor.

      (d)   Services to Prevent Illness and Promote Health

            The Contractor shall exercise reasonable efforts to provide initial
            health screenings and preventive care to all Beneficiaries. The
            Contractor shall provide, or arrange to provide, the following
            Covered Services to all Beneficiaries, as appropriate, to prevent
            illness and promote health:

            (1)   Healthy Kids/EPSDT services in accordance with 89 Ill. Adm.
                  Code 140.485 and described in this Article V, Section 5.13(a);

            (2)   Preventive Medicine Schedule which shall address preventive
                  health care issues for Beneficiaries twenty-one (21) years of
                  age or older (Article V, Section 5.13(b));

            (3)   Maternity care for pregnant Beneficiaries (Article V, Section
                  5.13(c)); and

            (4)   Family planning services and supplies, including physical
                  examination and counseling provided during the visit, annual
                  physical examination for family planning purposes, pregnancy
                  testing, voluntary sterilization, insertion or injection of
                  contraceptive drugs or devices, contraceptive drugs and
                  supplies, and related laboratory and diagnostic testing.

                                       23
<PAGE>

      (e)   Exclusions from Covered Services

            In addition to those services and benefits excluded from Covered
            Services by 89 Ill. Adm. Code, Part 140, as amended from time to
            time, the following services and benefits shall NOT be included as
            Covered Services:

            (1)   Dental services;

            (2)   Routine examinations to determine visual acuity and the
                  refractive state of the eye, eyeglasses, other devices to
                  correct vision, and any associated supplies and equipment. The
                  Contractor shall refer Beneficiaries needing such services to
                  Providers participating in the Medical Assistance Program able
                  to provide such services, or to a central referral entity that
                  maintains a list of such Providers;

            (3)   Nursing facility services beginning on the ninety-first (91st)
                  day;

            (4)   Services provided in an Intermediate Care Facility for the
                  Mentally Retarded/Developmentally Disabled and services
                  provided in a nursing facility to mentally retarded or
                  developmentally disabled Participants;

            (5)   Early intervention services, including case management,
                  provided pursuant to the Early Intervention Services System
                  Act (325 ILCS 20 et seq.);

            (6)   Services provided through school-based clinics as such clinics
                  are defined by the Department;

            (7)   Services provided through local education agencies under an
                  approved individual education plan (IEP);

            (8)   Services provided under Section 1915(c) home and
                  community-based waivers;

            (9)   Services funded through the Juvenile Rehabilitation Services
                  Medicaid Matching Fund; and

            (10)  Services that are experimental and or investigational in
                  nature.

      (f)   Limitations on Covered Services

            The following services and benefits shall be limited as Covered
            Services:

            (1)   Termination of pregnancy shall be provided only as allowed by
                  applicable State and federal law (42 C.F.R. Part 441, Subpart
                  E). In any such case,

                                       24
<PAGE>

                 the requirements of such laws must be fully complied with and
                 DPA Form 2390 must be completed and filed in the Beneficiary's
                 medical record. Termination of pregnancy shall not be provided
                 to KidCare Beneficiaries.

            (2)   Sterilization services may be provided only as allowed by
                  State and federal law (see 42 C.F.R. Part 441, Subpart F). In
                  any such case, the requirements of such laws must be fully
                  complied with and a DPA Form 2189 must be completed and filed
                  in the Beneficiary's medical record.

            (3)   If a hysterectomy is provided, a DPA Form 1977 must be
                  completed and filed in the Beneficiary's medical record.

      (g)   Right of Conscience

            The parties acknowledge that pursuant to 745 ILCS 70/1 et seq., a
            Contractor may choose to exercise a right of conscience by not
            rendering certain Covered Services. Should the Contractor choose to
            exercise this right, the Contractor must promptly notify the
            Department of its intent to exercise its right of conscience in
            writing. Such notification shall contain the services that the
            Contractor is unable to render pursuant to the exercise of the right
            of conscience. The parties agree that at that time the Department
            shall adjust the Capitation payment to the Contractor and amend the
            contract accordingly.

      (h)   Emergency Services

            (1)   The Contractor shall cover Emergency Services for all
                  Beneficiaries whether the Emergency Services are provided by
                  an Affiliated or non-Affiliated Provider.

            (2)   The Contractor shall not impose any requirements for prior
                  approval of Emergency Services. If a Beneficiary calls the
                  Contractor to request Emergency Services, such call shall
                  receive an immediate response.

            (3)   The Contractor shall cover Emergency Services for
                  Beneficiaries who are temporarily away from their residence
                  and outside the Contracting Area for all Emergency Services to
                  which they would be entitled within the Contracting Area.

            (4)   Elective care or care required as a result of circumstances
                  that could reasonably have been foreseen prior to the
                  Beneficiary's departure from the Contracting Area are not
                  covered. Payment shall be made for unexpected hospitalization
                  due to complications of pregnancy. Routine delivery at term
                  outside the Contracting Area, however, shall not be covered if
                  the Beneficiary is outside the Contracting Area against
                  medical

                                       25
<PAGE>

                  advice unless the Beneficiary is outside of the Contracting
                  Area due to circumstances beyond her control. The Contractor
                  must educate the Beneficiary of the medical and financial
                  implications of leaving the Contracting Area and the
                  importance of staying near the treating Provider throughout
                  the last month of pregnancy.

            (5)   The Contractor shall pay for all appropriate Emergency
                  Services rendered by a Provider with whom the Contractor does
                  not have arrangements within thirty (30) days of receipt of
                  a complete and correct claim. If the Contractor determines it
                  does not have sufficient information to make payment, the
                  Contractor shall request all necessary information from the
                  Provider within thirty (30) days of receiving the claim, and
                  shall pay the Provider within thirty (30) days after receiving
                  such information. Such payment shall be made at the same rate
                  the Department would pay for such services according to the
                  level of services provided. Within the time limitation stated
                  above the Contractor may review the need for, and the
                  intensity of, the services provided by Providers with whom
                  the Contractor does not have arrangements. Determination of
                  levels of service shall be based upon the symptoms and
                  condition of the Beneficiary at the time the Beneficiary is
                  initially examined by the Physician and not upon the final
                  determination of the Beneficiary's actual medical condition,
                  unless the actual medical condition is more severe.

            (6)   The Contractor shall provide ongoing education to
                  Beneficiaries regarding the appropriate use of Emergency
                  Services.

      (i)   Post-Stabilization Services

            (1)   Subject to the prior approval procedure described below, the
                  Contractor shall cover Post-Stabilization Services whether
                  such Services are provided by an Affiliated or non-Affiliated
                  Provider.

            (2)   The Contractor shall pay for all Post-Stabilization Services
                  as a Covered Service if the Contractor approved those services
                  or if the Provider of the services complied with all legal
                  requirements in attempting to contact the Contractor and the
                  Contractor could not be contacted or the Contractor did not
                  deny authorization within one hour of the request for
                  authorization.

      (j)   Additional Services or Benefits

            The Contractor shall obtain prior approval from the Department
            before offering any additional service or benefit not required under
            this Contract to all Beneficiaries. The Contractor shall notify
            Beneficiaries before discontinuing an additional service or benefit.
            The notice to Beneficiaries must be approved in

                                       26
<PAGE>

            advance by the Department. The Contractor shall continue any ongoing
            course of treatment for a Beneficiary then receiving such service or
            benefit.

      (k)   Telephone Access

            The Contractor shall establish a toll-free twenty-four (24) hour
            telephone number to confirm eligibility for benefits and seek prior
            approval for treatment where required under the Plan, and shall
            assure twenty-four (24) hour access, via telephone(s), to medical
            professionals, either to the Plan directly or to the Primary Care
            Providers, for consultation to obtain medical care. The Contractor
            must also make a toll-free number available, at a minimum during the
            business hours of 9:00 a.m. until 5:00 p.m. on regular business
            days. This number also will be used to confirm eligibility for
            benefits, for approval for non-emergency services and for
            Beneficiaries to call to request Site, Primary Care Provider, or
            Women's Health Care Provider changes, to make complaints or
            grievances, to request disenrollment and to ask questions. The
            Contractor may use one toll-free number for these purposes or may
            establish two separate numbers.

      (1)   Pharmacy Formulary

            The Contractor shall establish a pharmacy formulary that is no more
            restrictive than the Department's pharmaceutical program. In
            particular, the Contractor shall comply with the following
            requirements:

            (1)   For drugs included in the Department's formulary:

                  (A)   the Contractor may not require prior approval of any
                        drug product unless the Department has also placed such
                        drug product on prior approval under the fee-for-service
                        Medical Assistance Program;

                  (B)   the Contractor's formulary must include every single
                        source drug product covered by the Department under the
                        Medical Assistance Program; and

                  (C)   if the Contractor does not provide coverage for all
                        drugs from manufacturers having products listed in the
                        State of Illinois Drug Product Selection Program's
                        current formulary, the Contractor shall be considered in
                        compliance so long as the Contractor's formulary
                        provides coverage of at least one manufacturer's product
                        for each drug covered by the Department under the
                        Medical Assistance Program that is listed in the State
                        of Illinois Drug Product Selection Program's current
                        formulary.

            (2)   If the Contractor requires prior approval for drugs not
                  included in the Department's pharmacy formulary, decisions
                  must be based on medical

                                       27
<PAGE>

                  necessity without regard to cost, except for drugs identified
                  in Section 1927(d)(2) of Title XIX of the Social Security Act.

            (3)   The Contractor shall provide a mechanism whereby a prescribing
                  Provider may request approval If drugs requiring prior
                  approval or drugs not included on the Contractor's formulary.
                  The Contractor shall provide a response by telephone or other
                  telecommunication device within one (1) hour of receipt of the
                  request in the case of Emergency Services or
                  Post-Stabilization Services and, in other cases, within
                  twenty-four (24) hours of receipt of the request. The
                  Contractor's pharmacy formulary shall provide a process for
                  appealing denials of prescription drug coverage that is timely
                  and not unduly cumbersome.

            (4)   The Contractor shall not, without the prescriber's explicit
                  approval, require a pharmacist to substitute a drug that is
                  not strictly bioequivalent to the one prescribed.

            (5)   The Contractor shall in form its Providers of the pharmacy
                  formulary policy required in this Section.

            (6)   The Contractor shall not set a limit on the quantities of
                  drugs that a Beneficiary may obtain at one time with a
                  prescription unless that limit is applied uniformly to all
                  pharmacy providers in the Contractor's network.

5.2   CERTIFIED LOCAL HEALTH DEPARTMENT SERVICES

      (a)   The Contractor shall work in good faith to assist the Department to
            achieve its objective of supporting Certified Local Health
            Departments. To this end, the Contractor shall seek to negotiate and
            execute one of the following documents with each Certified Local
            Health Department serving a jurisdiction in which Beneficiaries
            reside:

            (1)   the Contractor shall subcontract with Certified Local Health
                  Departments to provide, at a minimum, the services listed in
                  this Article V, Section 5.2(b); or

            (2)   the Contractor shall enter into linkage agreements with
                  Certified Local Health Departments. Such linkage agreements
                  shall conform to the Department's model Certified Local Health
                  Department Linkage Agreement. Any variation in terms from the
                  model agreements is subject to the mutual agreement of the
                  Contractor and the Certified Local Health Department and prior
                  approval by the Department. A copy of all executed linkage
                  agreements shall be filed promptly by the Contractor with the
                  Department.

                                       28
<PAGE>

      (b)   The following services, at a minimum, shall be encompassed in the
            subcontracts or linkage agreements entered into by the Contractor
            pursuant to this Article V, Section 5.2(a) to the extent these
            services are within the Certified Local Health Department's scope of
            services as established by the appropriate board of health or other
            governing body:

            (1)   the following Healthy Kids/EPSDT Services: childhood
                  immunizations as recommended by the Advisory Committee on
                  Immunization Practices and adopted by the Illinois Department
                  of Public Health, well-child screening, blood draw for lead
                  testing, make-up visit, hearing screening, vision screening
                  and developmental screening;

            (2)   adult immunizations for disease outbreak control and those
                  determined necessary for public health protection;

            (3)   testing, screening and initial treatment for sexually
                  transmitted infections;

            (4)   tuberculosis screening and one month's initial treatment; and

            (5)   HIV screening and counseling.

      (c)   If the Contractor elects to execute a document described in this
            Article V, Section 5.2 (a)(l) with a Certified Local Health
            Department, the prospective add-on to the Capitation rates paid to
            the Contractor for Beneficiaries residing in areas covered by such
            Certified Local Health Department shall be agreed upon by the
            Contractor and the Department and reflected in an amendment to
            Attachment I and shall be implemented on a date designated by the
            Department.

      (d)   If the Contractor elects to execute a document described in this
            Article V, Section 5.2(a)(2) with a Certified Local Health
            Department, payment for the services listed in this Article V,
            Section 5.2(b) and provided by a Certified Local Health Department
            on behalf of Beneficiaries residing in areas covered by such
            Certified Local Health Department shall be the responsibility of the
            Department. These payments by the Department will be implemented on
            a date designated by the Department.

      (e)   The Contractor shall be considered to have satisfied the requirement
            set forth in this Article V, Section 5.2 if it has offered to enter
            into the model Certified Local Health Department Linkage Agreement,
            but the Certified Local Health Department has refused to enter into
            the model agreement.

5.3   MARKETING

      The Contractor shall, initially and as revised, submit to the Department
      for the Department's prior written approval all of the following
      materials: Certificate of

                                       29
<PAGE>

      Coverage or Document of Coverage; Beneficiary Handbooks; Marketing
      Materials, including Marketing brochures and fliers; Marketing plans,
      including descriptions of proposed Marketing approaches and Marketing
      procedures; training materials and training schedules relating to services
      under this Contract; and all other materials and procedures utilized by
      the Contractor in connection with Marketing and training. Any substantive
      revisions to the foregoing materials that will either directly or
      indirectly affect interpretation of benefits, the delivery of services or
      the administration of benefits are subject to the Department's prior
      written approval as set forth in this paragraph.

      Marketing by mail, mass media advertising and community oriented Marketing
      directed at Eligible Enrollees will be allowed subject to the Department's
      prior approval. The Contractor shall be responsible for all costs of
      mailing, including labor costs. The Department reserves the right to
      determine and set the sole process of, cost, and payment for Marketing by
      mail, using names and addresses of Participants supplied by the
      Department, including the right to limit Marketing by mail to a vendor
      under contract to the Department and the terms and conditions set forth in
      that vendor contract. The Contractor shall distribute Marketing materials
      to the entire Contracting Area, but to the extent permitted by law and
      approved by the Department, Contractors may market selectively by
      eligibility category, by Contracting Area, by county, by local Department
      of Human Services office area or by other geographic area.

      The Contractor agrees to be bound by the following requirements for
      Marketing:

      (a)   The Contractor shall not engage in Marketing practices that mislead,
            confuse or defraud either Eligible Enrollees or the Department;

      (b)   Marketing Materials must be clear and must include, at a minimum,
            the information required in Article V, Section 5.5;

      (c)   Eligible Enrollees shall be solicited from a geographic area that
            does not exceed the Contracting Area(s);

      (d)   All Eligible Enrollees must be considered as potential Beneficiaries
            and may not be discriminated against on the basis of health status
            or need for health care services or on any illegal basis

      (e)   The Contractor's Marketing shall be designed to reach a distribution
            of Eligible Enrollees across age and sex categories. as such
            categories are established for rates as set forth in Attachment I,
            in the Contracting Area(s). The Contractor's Marketing shall not be
            designed to achieve favorable reimbursement by enrolling a
            disproportionate percentage of Beneficiaries from a particular age
            and sex category or family income level;

                                       30
<PAGE>

      (f)   The Contractor shall not actively facilitate disenrollment of
            Beneficiaries from other plans, by providing Managed Care
            Disenrollment Forms or otherwise, including transporting
            Beneficiaries for the purpose of their disenrollment. The Contractor
            may educate Beneficiaries on the disenrollment process. The
            Contractor shall not offer gifts or incentives to Beneficiaries of
            other plans that are not offered to all Eligible Enrollees;

      (g)   Marketing personnel who engage in Marketing services under this
            Contract are considered the agents of the Contractor, whether they
            are employees, independent contractors, or independent insurance
            brokers. The Contractor shall be held responsible for any
            misrepresentation or inappropriate activities by such Marketing
            personnel. All Marketing personnel are required to participate in
            training sessions that may be developed and presented by the
            Department, and which sessions set forth the Department
            requirements, expectations and limitations on Marketing practices in
            which the Contractor's personnel will engage. The individual
            salaries, benefits or other compensation paid by the Contractor to
            each of its Marketing personnel shall consist of no less than
            seventy-five percent (75%) salary and benefits and no more than
            twenty-five percent (25%) commission in cash or kind. The salary,
            benefit and other compensation schedules for such personnel are
            subject to audits by the Department, Office of Inspector General and
            as set forth in Article IX, Section 9.1. All salary schedules shall
            be kept by the Contractor to enable the Department or any Authorized
            Persons to identify a specific enunciation of each Marketing
            personnel's total salary, benefit and other compensation, the
            percentage of that salary, benefits or other compensation that was
            based on commission and the basis for such commission. The
            Contractor shall hold the Department harmless for any and all
            claims, complaint's or causes of action that shall arise as a result
            of this contractually imposed salary, benefit and other compensation
            structure for Marketing personnel.

            Compensation of independent insurance brokers who hold a producers
            license issued by the State of Illinois Department of Insurance is
            not subject to the limitations on commission described in the above
            paragraph. All other provisions of the Contract regarding Marketing
            shall apply to the Contractor with respect to the activities of
            independent insurance brokers.

      (h)   It shall be the duty and obligation of the Contractor to credential
            and where necessary or appropriate, recredential all Marketing
            personnel, including trainers and field supervisors. Recredentialing
            shall be performed at the time the Department of Insurance renews
            the individual's license or certification. Recredentialing activity
            that changes the status of Marketing personnel shall be submitted to
            the Department as changes occur. No current or future personnel of
            the Contractor may engage in Marketing activities hereunder without
            first meeting all credentialing requirements set forth herein as
            well as in the regulations, guidelines or policies of the
            Department. At a minimum, all Marketing personnel

                                       31

<PAGE>

            of the Contractor, including independent insurance brokers, must
            meet the following credentialing requirements:

            (1)   must have been trained in all provisions of the Contractor's
                  Department approved training manual for marketers;

            (2)   must hold a valid license or certification as issued by the
                  State of Illinois, Department of Insurance, a copy of which
                  must be submitted to the Department prior to any Marketing
                  personnel's engaging in Marketing activities hereunder;

            (3)   may not engage in Marketing activities for any other MCO that
                  has a contract with the Department;

            (4)   may not also be Providers of medical services;

            (5)   may not have been convicted of any felony within the last ten
                  (10) years;

            (6)   may not have been terminated from employment in the previous
                  twelve (12) months by any MCO for engaging in any prohibited
                  Marketing practices or misconduct associated with or related
                  to Marketing activities. The Contractor shall obtain a written
                  consent from all Marketing personnel for prior employers to
                  release employment information to the Contractor concerning
                  any prior or current employment in which Marketing activities
                  were performed by any Marketing personnel and contact the
                  previous employer(s). The Contractor may use any other
                  employment practices it deems appropriate to obtain and meet
                  these credentialing requirements; and

            (7)   must not be an Ineligible Person.

      (i)   The Department may at any time, in its own discretion and without
            notification to the Contractor, attend any Marketing training
            session conducted by the Contractor.

      (j)   The Contractor must immediately notify the Department, in writing,
            of any individual who is hired by the Contractor who has
            previously been employed by an agent for the Department responsible
            for the education of Eligible Enrollees about managed care.

      (k)   The Contractor shall immediately notify the Department and the
            Office of Inspector General, in writing, of any inappropriate
            Marketing activities.

                                       32

<PAGE>

      (l)   Before any individual may engage in any Marketing activity under
            this Contract, the Contractor shall provide, in a format designated
            by the Department, the name and Social Security number and a copy of
            the Department of Insurance license or certification of that
            individual to the Department and certify to the Department that the
            individual meets the minimum credentialing requirements above. The
            Department must provide written approval of such individual before
            the individual may engage in any Marketing activity under this
            Contract.

            Thereafter, on a monthly basis, the Contractor shall report, in a
            format designated by the Department, the name and Social Security
            numbers of all Marketing personnel to the Department. It is the
            obligation of the Contractor to ensure that the Department has a
            current list of all Marketing personnel. The Contractor must
            immediately notify the Department, in writing, of any Marketing
            personnel who terminate employment with the Contractor either
            voluntarily or involuntarily. If termination is involuntary, the
            Contractor must notify the Department if the reason for termination
            is related to misconduct under this Contract.

      (m)   The Contractor shall not engage in any Marketing activities directed
            at enrolling Eligible Enrollees while they are admitted to any
            inpatient facilities.

      (n)   Marketing in or immediately outside of any Department or Department
            of Human Services field office is strictly prohibited.

      (o)   Marketing at Provider offices or facilities is permissible under the
            following circumstances:

            (1)   the Contractor must have a written agreement with the
                  Provider, signed by the Provider or his designee, a copy of
                  which shall be kept on file by the Contractor and submitted to
                  the Department upon request. Such written agreement shall set
                  forth specifically what Marketing may be conducted at that
                  Provider office or facility, the frequency with which those
                  Marketing activities may occur and a description of the
                  setting in which the Marketing activities will occur;

            (2)   no Marketing activities may be conducted in emergency room
                  waiting areas or in treatment areas at any Provider office or
                  facility; and

            (3)   at no time shall any Marketing personnel have access to an
                  Eligible Enrollee's medical records regardless of whether such
                  Marketing activity is conducted at the Provider office or
                  facility or another location.

      (p)   Direct or indirect door-to-door, telephonic, or other cold call
            Marketing is strictly prohibited. Door-to-door Marketing is direct
            or indirect "cold call" or unsolicited Marketing activities at an
            individual's residence. "Cold call" Marketing means any unsolicited
            personal contact by MCO personnel with the Eligible Enrollee at

                                       33

<PAGE>
            that individual's residence for the purpose of influencing the
            individual to enroll with that MCO and includes unsolicited
            telephone contact and any other type of contact made without the
            individual's written consent. Such written consent may be obtained
            at the initiation of a visit to an individual's residence as long as
            the Contractor has obtained the individual's oral consent prior to
            the visit and has documented such consent in a written form that
            identifies the person granting the consent and the person receiving
            the consent, as well as the date, time and place that the oral
            consent was given. Any contacts at the individual's residence must
            be made within thirty (30) days from the date the individual gave
            oral consent. Soliciting individuals to provide the names of other
            Eligible Enrollees is also strictly prohibited. Nothing in this
            section shall prohibit the Contractor from distributing unsolicited
            Marketing materials via the United States Postal Service or a
            commercial delivery service where such service is unrelated to the
            Contractor.

5.4   INAPPROPRIATE ACTIVITIES

      The Contractor shall not:

      (a)   provide cash to Eligible Enrollees, Prospective Beneficiaries or
            Beneficiaries, except for stipends, in an amount approved by the
            Department, and reimbursement of expenses provided to Beneficiaries
            for participation on committees or advisory groups;

      (b)   provide gifts or incentives to Eligible Enrollees or Prospective
            Beneficiaries unless such gifts or incentives: (1) are provided to
            meet the objectives of the Medical Assistance Program or KidCare;
            (2) are related to health care; (3) do not exceed a nominal value
            (i.e., an individual gift or incentive may not exceed ten dollars
            ($10)); and (4) have been pre-approved by the Department;

      (c)   provide gifts or incentives to Beneficiaries unless such gifts or
            incentives (1) are provided to promote preventive care; (2) are not
            in the form of cash or an instrument that may be converted to cash;
            and (3) have been pre-approved by the Department;

      (d)   seek to influence an Eligible Enrollee's Enrollment with the
            Contractor in conjunction with the sale of any other insurance;

      (e)   induce providers or employees of the Department or the Department of
            Human Services to reveal confidential information regarding
            Participants or otherwise use such confidential information in a
            fraudulent manner;

                                       34

<PAGE>

      (f)   threaten, coerce or make untruthful or misleading statements to
            Eligible Enrollees, Prospective Beneficiaries or Beneficiaries
            regarding the merits of Enrollment in the Contractor's Plan or any
            other plan; or

      (g)   present an incomplete Managed Care Enrollment Form to an Eligible
            Enrollee for his signature.

5.5   OBLIGATION TO PROVIDE INFORMATION

      The Contractor agrees to provide Basic Information to the individuals and
      at the times described below:

      (a)   to each Beneficiary or Prospective Beneficiary within a reasonable
            time after it receives notice of his enrollment;

      (b)   to any Eligible Enrollee who requests it; or

      (c)   once a year Contractor must notify its Beneficiaries of their right
            to request and obtain the Basic Information.

      (d)   "Basic Information" as used herein shall mean:

            (1)   kinds of benefits, and amount, duration and scope of benefits
                  available under the Plan. There must be sufficient detail to
                  ensure Beneficiaries receive the Covered Services to which
                  they are entitled, including Pharmaceuticals, mental health
                  and substance abuse services;

            (2)   procedures for obtaining Covered Services, including approval
                  requirements, if any;

            (3)   information, as provided by the Department, regarding any
                  benefits to which they may be entitled under the Medical
                  Assistance Program or KidCare that are not provided under the
                  Plan and specific instructions on where and how to obtain
                  those benefits, including how transportation is provided and
                  that family planning services may be obtained from an
                  Affiliated or non-Affiliated Provider;

            (4)   any restrictions on a Beneficiary's freedom of choice among
                  Affiliated Providers;

            (5)   the extent to which a Beneficiary may obtain Covered Services
                  from non-Affiliated Providers;

            (6)   the extent to which after-hours and emergency coverage are
                  provided;

                                       35

<PAGE>

            (7)   policy on referrals for specialty care and for Covered
                  Services not furnished by a Beneficiary's Primary Care
                  Provider;

            (8)   cost sharing, if any;

            (9)   the rights and responsibilities of a Beneficiary such as those
                  pertaining to enrollment and disenrollment and Beneficiary
                  rights under State and Federal law;

            (10)  complaint, grievance, and fair hearing procedures;

            (11)  appeal rights and procedures;

            (12)  names and locations of current Affiliated Providers, including
                  identification of those who are not accepting new patients;
                  and

            (13)  a copy of the Contractor's Certificate of Coverage or Document
                  of Coverage.

      (e)   The following additional information must be provided by Contractor
            upon request to any Beneficiary, Prospective Beneficiary, and
            Eligible Enrollee:

            (1)   MCO and health care facility licensure; and

            (2)   information about Affiliated Providers of health care
                  services, including education, Board certification and
                  recertification.

5.6   QUALITY ASSURANCE, UTILIZATION REVIEW AND PEER REVIEW

      (a)   All services provided by or arranged for by the Contractor to be
            provided shall be in accordance with prevailing community standards.
            The Contractor must have in effect a program consistent with the
            utilization control requirements of 42 C.F.R. Part 456. This program
            will include, when so required by the regulations, written plans of
            care and certifications of need of care.

      (b)   The Contractor agrees to comply with the quality assurance
            standards attached hereto as Exhibit A.

      (c)   The Contractor shall have a Utilization Review Program that includes
            a utilization review plan, a utilization review committee, and
            appropriate mechanisms covering preauthorization and review
            requirements.

                                       36

<PAGE>

      (d)   The Contractor shall establish and maintain a Peer Review Program
            approved by the Department to review the quality of care being
            offered by the Contractor, employees and subcontractors.

      (e)   The Contractor agrees to comply with the utilization review
            standards and peer review standards attached hereto as Exhibit B.

5.7   PHYSICIAN INCENTIVE PLAN REGULATIONS

      The Contractor shall comply with the provisions of 42 C.F.R. 434.70. This
      shall include submission to the Department, at required intervals, the
      information described in 42 C.F.R. 417.479(h) and (i). If, to conform with
      these regulations, the Contractor performs Beneficiary satisfaction
      surveys, such surveys may be combined with those required by the
      Department pursuant to Article V Section 5.16 of this Contract.

5.8   PROHIBITED AFFILIATIONS

      (a)   The Contractor shall assure that any Affiliated Provider, including
            out-of-State Providers, is enrolled in the Medical Assistance
            Program, if such enrollment is required for such Provider by
            Department rules or policy in order to submit claims for
            reimbursement or otherwise participate in the Medical Assistance
            Program. The Contractor shall assure that any non-Affiliated
            Illinois provider billing for services is enrolled in the Medical
            Assistance Program prior to paying claims.

      (b)   The Contractor shall not employ, subcontract with, or affiliate
            itself with or otherwise accept any Ineligible Person into its
            network.

      (c)   The Contractor shall screen all current and prospective employees,
            contractors, and sub-contractors, prior to engaging their services
            under this Contract by: (i) requiring them to disclose whether they
            are Ineligible Persons; (ii) reviewing the OIG's list of sanctioned
            persons (available on the World Wide Web at
            http:www.arnet.[ILLEGIBLE]) and the HHS/OIG List of Excluded
            Individuals/Entities (available on the World Wide Web at
            http://www.dhhs.gov/oig). The Contractor shall annually screen all
            current employees, contractors and sub-contractors providing
            services under this Contract. The Contractor shall screen
            out-of-State non-Affiliated Providers billing for Covered Services
            prior to payment and shall not pay such Providers who meet the
            definition of Ineligible Persons.

      (d)   The Contractor shall terminate its relations,with any Ineligible
            Person immediately upon learning that such Person or Provider meets
            the definition of an Ineligible Person and notify the OIG of the
            termination.

                                       37

<PAGE>

5.9   RECORDS

      (a)   Maintenance of Business Records

            The Contractor shall maintain all business and professional records
            that are required by the Department in accordance with generally
            accepted business and accounting principles. Such records shall
            contain all pertinent information about the Beneficiary including,
            but not limited to, the information required under this Article V,
            Section 5.9. Medical records reporting requirements shall be
            adequate to ensure acceptable continuity of care to Beneficiaries.

      (b)   Availability of Business Records

            Records shall be made available in Illinois to the Department and
            Authorized Persons for inspection, audit, and/or reproduction as
            required in Article IX, Section 9.1. These records will be
            maintained as required by 45 C.F.R. Part 74. As a part of these
            requirements, the Contractor will retain all records for at least
            five (5) years after final payment is made under the Contract. If an
            audit, litigation or other action involving the records is started
            before the end of the five-year (5 year) period, the records must be
            retained until all issues arising out of the action are resolved.

      (c)   Patient Records

            (1)   Treatment Plans

                  The Contractor must develop and use treatment plans for
                  chronic disease follow-up care that are tailored to the
                  individual Beneficiary. The purpose of the plan is to assure
                  appropriate ongoing treatment reflecting the prevailing
                  community standards of medical care designed to minimize
                  further deterioration and complications. Treatment plans shall
                  be on file with the permanent record for each Beneficiary with
                  a chronic disease and with sufficient information to explain
                  the progress of treatment.

            (2)   Permanent Records

                  A permanent medical record shall be maintained at the Primary
                  Care Site for every Beneficiary and be available to the
                  Primary Care Provider, Women's Health Care Provider and other
                  Providers. Copies of the medical record shall be sent to any
                  new Site to which the Beneficiary transfers, provided the
                  Beneficiary consents to the transfer. The Contractor shall
                  make good faith efforts to obtain such consent. Copies of
                  records shall be released only to Authorized Individuals.
                  Original medical records shall be released only in accordance
                  with Federal or State law, court orders, subpoenas, or a
                  valid records release form executed by a

                                       38

<PAGE>
                  Beneficiary. The Contractor shall ensure that Beneficiaries
                  have timely access to the records. The Contractor shall
                  protect the confidentiality and privacy of minors, and abide
                  by all Federal and State laws regarding the confidentiality
                  and disclosure of medical records, mental health records, and
                  any other information about Beneficiary. The Contractor shall
                  produce such records for the Department upon request. Medical
                  records must include Provider identification and Beneficiary
                  identification. All entries in the medical record must be
                  legible and dated, and the following, where applicable, shall
                  be included:

                  -     patient identification;

                  -     personal health, social history and family history, with
                        updates as needed;

                  -     obstetrical history (if any) and/or profile;

                  -     hospital admissions and discharges;

                  -     relevant history of current illness or injury (if any)
                        and physical findings;

                  -     diagnostic and therapeutic orders;

                  -     clinical observations, including results of treatment;

                  -     reports of procedure, tests and results;

                  -     diagnostic impressions;

                  -     patient disposition and pertinent instructions to
                        patient for follow-up care;

                  -     immunization record;

                  -     allergy history;

                  -     periodic exam record;

                  -     growth chart;

                  -     referral information, if any;

                  -     health education provided; and

                  -     family planning and/or counseling.

5.10  COMPUTER SYSTEM REQUIREMENTS

      (a)   The Contractor must establish and maintain a computer system
            compatible with the Department's system, and execute an electronic
            communication agreement provided by the Department. The system must
            be able to exchange data using Connect Direct, a product of Sterling
            Software, or other products as allowed by the Department.

      (b)   The Contractor shall pay for a line connection for communication
            between the Contractor and the Department that shall be established
            by the Department. A 56KB or faster dedicated telecommunication
            line or multiple 56KB or faster circuits will be necessary to
            interface directly with the State. All costs associated with
            interfacing with the Department shall be borne by the Contractor.

                                       39

<PAGE>

      (c)   The Contractor must provide staff with proficient knowledge in
            telecommunications to ensure communication connectivity is
            established and maintained.

5.11  REGULAR REPORT AND SUBMISSION REQUIREMENTS

      (a)   The Contractor shall submit to the Department regular reports and
            special reports as set forth in this Section. Reports shall be
            submitted in a format and medium designated by the Department.

            (1)   Quality Assurance, Utilization Review and Peer Review Report
                  (QA/UR/PR Report). This report shall provide a summary review
                  of the effectiveness of the Contractor's Quality Assurance
                  Plan, including that implemented in the area of behavioral
                  health. The summary review shall contain the Contractor's
                  processes for quality assurance, utilization review and peer
                  review. The report's content, as determined by the Department,
                  will include, but is not limited to: quality assurance,
                  utilization and peer review activities during the fiscal year;
                  quality indicators and methodology for measuring those
                  indicators; trending and comparison of clinical, including
                  behavioral health, and service indicators and health outcomes;
                  results of the medical record reviews and quality assurance
                  studies (focused medical studies); aggregate data on
                  utilization of services, including the Contractor's progress
                  toward meeting the Department's established preventive care
                  participation goals set forth in this Article V, Section
                  5.13(a), (b), and (c); summary of oversight activities and
                  outcomes; quality improvement strategies (including those
                  identified through the grievance process); implemented and
                  demonstrated improvements; summary of credentialing and peer
                  review activities; Beneficiary Satisfaction Survey analysis;
                  and changes in the Contractor's Quality Assurance, Utilization
                  Review or Peer Review program planned for the next fiscal
                  year. In the QA/UR/PR Report, the five (5) HEDIS indicators
                  mutually selected by the MCOs and the Department shall be
                  reported. In the second year of the Contract, an additional
                  set of mutually agreed upon common HEDIS indicators will be
                  added and reported in the QA/UR/PR Report.

            (2)   Summary of Grievances and Resolutions and External Independent
                  Reviews and Resolutions. This quarterly report shall provide a
                  summary of the grievances filed by Beneficiaries and the
                  resolution of such grievances as well as a summary of all
                  external independent reviews and the resolution of such
                  reviews. Such report shall include types of grievances and
                  external independent reviews by category and totals, the
                  number and levels at which the grievances/reviews were
                  resolved, the types of resolutions and the number pending
                  resolution by category.

                                       40

<PAGE>

            (3)   Behavioral Health Report. On a quarterly basis, the Contractor
                  shall submit to the Department behavioral health utilization
                  statistics and analysis as specified in Paragraph 12 of
                  Exhibit A.

            (4)   Marketer Training Schedule and Agenda. On a quarterly basis,
                  two weeks prior to the beginning of the report quarter, the
                  Contractor shall provide the Department with its; schedule for
                  training of Marketing personnel. The model agenda for each
                  type of training must accompany the schedule. The Contractor
                  shall provide the Department with written notice of any
                  changes to the quarterly schedule at least seventy-two (72)
                  hours prior to the scheduled training.

            (5)   Marketing Representative Listing. On a monthly basis, on the
                  first of day of the month for that month, the Contractor shall
                  provide the Department with a list of all Marketing personnel
                  who are active as well as any Marketing personnel for whom a
                  change of status has occurred since the last report month.

            (6)   Fraud and Abuse Report. The Contractor shall report all
                  allegations of Fraud, Abuse or misconduct of Providers,
                  Beneficiaries or Department employees to the OIG immediately
                  upon knowledge of such Fraud, Abuse or misconduct. If no
                  Fraud, Abuse or misconduct is reported to the OIG during a
                  quarter, the Contractor shall file a certification of such
                  with the OIG within thirty (30) days of the end of the
                  quarter.

      (b)   Submissions

            (1)   Encounter Data

                  (A)   Submission. The Contractor must report, in accordance
                        with Subsections (B) and (C) of this Article V, Section
                        5.11(b)(1), all services received by Beneficiaries. On
                        a monthly basis, the Contractor shall provide the
                        Department with files in the format and medium
                        designated by the Department, prepared with claims level
                        detail as required herein and in Exhibit E. attached
                        hereto, for all services received by Beneficiaries
                        during a given month. This data must be received by the
                        Department within one hundred twenty (120) days of the
                        last day of the service month. Any claims processed by
                        the Contractor for services provided in a given report
                        month subsequent to submission of the monthly Encounter
                        Data Report shall be reported on the next submission of
                        the monthly Encounter Data Report.

                  (B)   Testing. Upon receipt of each submitted data file, the
                        Department shall perform two distinct levels of review.
                        The first level of review

                                       41

<PAGE>

                        and edits performed by the Department shall check the
                        data file format. These edits shall include, but are not
                        limited to the following: check the data file for
                        completeness of records; correct sort order of records;
                        proper field length and composition; and correct file
                        length. The format of the file, to be accepted by the
                        Department, must be one hundred percent (100%) correct.

                        If the format is correct, the Department shall then
                        perform the second level of review. This second review
                        shall be for standard claims processing edits. These
                        edits shall include, but are not limited to the
                        following: correct Provider numbers; valid recipient
                        numbers; valid procedure and diagnosis codes; cross
                        checks to assure Provider and recipient numbers match
                        their names; and the procedures performed are correct
                        for the age and sex of the recipient. The acceptable
                        error rate of claims processing edits of the Illinois
                        Medicaid UB92 Billing Specification data file, the HCFA
                        National Standard Format for noninstitutional claims
                        data file, and the IDPA Direct Tape format for pharmacy
                        claims file shall be determined by the Department. Once
                        an acceptable error rate has been achieved, as
                        determined by the Department, the Contractor shall be
                        instructed that the testing phase is complete and that
                        data should be sent in production.

                  (C)   Production. Once the Contractor's testing of data
                        specified in (B) above is completed, the Contractor will
                        be certified for production. Once certified for
                        production, the data shall continue to be submitted in
                        accordance with (A) above. The data will continue to be
                        reviewed for correct format and quality. The Contractor
                        shall submit as many files as possible in a time frame
                        agreed upon by the Department and the Contractor, to
                        ensure all data is current.

                  (D)   Within thirty (30) days of the date of receipt by the
                        Department, records that fail the edits described above
                        in (B) or (C) will be returned to the Contractor for
                        correction. Corrected data must be returned to the
                        Department for re-processing.

            (2)   Provider Network Submissions. The Contractor shall submit to
                  the Department, in a format and medium designated by the
                  Department, Provider network reports that shall include the
                  following: monthly Provider Affiliation with Sites as set
                  forth in the format given to the Contractor by the Department;
                  monthly updating of all Providers who have either become a
                  Provider in the Contractor's network or who have left the
                  network since the last report; New Site Provider Affiliations
                  as new Sites are added; Site terminations immediately as they
                  occur; and Beneficiary Site Assignments/Site Transfers as
                  they occur. New Site/PCP information shall be reported in a
                  format and medium as required by the

                                       42

<PAGE>

                  Department. During the term of this Contract, this report
                  shall be converted to electronic data transmission. The
                  Department will give the Contractor no less than one hundred
                  twenty (120) days notice prior to conversion of this report to
                  electronic data transmission.

            (3)   Disclosure Statements. The Contractor shall submit disclosure
                  statements to the Department initially, annually, on request
                  and as changes occur.

            (4)   Beneficiary Materials:

                  (A)   Certificate or Document of Coverage and Any Changes or
                        Amendments. The Contractor shall submit these documents
                        to the Department for prior approval initially and as
                        revised.

                  (B)   Beneficiary Handbook. The Contractor shall submit the
                        handbook to the Department for prior approval
                        initially and as revised. The Contractor shall not be
                        required to submit for prior approval format changes,
                        provided there is no change in the information
                        conveyed.

                  (C)   Identification Card. The Contractor shall submit the
                        identification card to the Department for prior approval
                        initially and as revised. The Contractor shall not be
                        required to submit for prior approval format changes,
                        provided there is no change in the information conveyed.

            (5)   Subcontracts and Provider Agreements:

                  (A)   Model Subcontracts and Provider Agreements. The
                        Contractor shall provide copies of model subcontracts
                        and Provider agreements related to Covered Services,
                        assignment of risk and data reporting functions,
                        including the form of all proposed schedules or
                        exhibits, intended to be used therewith, and any
                        substantial deviations from these model subcontracts and
                        Provider agreements to the Department initially and as
                        revised.

                  (B)   Executed Subcontracts and Provider Agreements. The
                        Contractor shall provide copies of any subcontract and
                        Provider agreement to the Department upon request.

                  (C)   Executed Linkage Agreements. The Contractor shall
                        provide copies of executed linkage agreements to the
                        Department immediately upon execution by the Contractor.

            (6)   Marketing Materials. The Contractor shall submit all
                  Marketing Materials to the Department for prior approval
                  initially and as revised. The

                                       43

<PAGE>

                  Contractor shall not be required to submit for prior approval
                  format changes, provided there is no change in the information
                  conveyed.

            (7)   Marketing Representative Terminations. The Contractor shall
                  submit names of Marketing personnel who have terminated
                  employment or association with the Contractor as such
                  terminations occur. The submission shall indicate whether the
                  termination was voluntary or involuntary and, if involuntary,
                  shall state whether the reason for termination was related to
                  misconduct under this Contract.

            (8)   Quality Assurance/Medical:

                  (A)   Quality Assurance, Utilization Review, Peer Review and
                        Health Education Plans. The Contractor shall submit such
                        plans to the Department for prior approval initially and
                        as revised. The Contractor shall not be required to
                        submit for prior approval format changes, provided there
                        is no change in the information conveyed.

                  (B)   QA/UR/PR Committee Meeting Minutes. The Contractor
                        shall submit the minutes of these meetings to the
                        Department on a quarterly basis.

                  (C)   Grievance Procedures. The Contractor shall submit
                        Grievance Procedures to the Department for prior
                        approval initially and as revised. The Contractor shall
                        not be required to submit for prior approval format
                        changes, provided there is no change in the information
                        conveyed.

      (c)   Additional Reports. The Contractor shall submit to the Department
            additional reports or submissions at the frequency set forth in
            Exhibit C and Exhibit D and all other reports and information
            required by the provisions of this Contract.

      (d)   Unless otherwise specified, the Contractor shall submit all reports
            to the Department within thirty (30) days from the last day of the
            reporting period or as defined in Exhibit C and Exhibit D. All
            reports and submissions listed in this Article V, Section 5.11 must
            be submitted to the Department in a Department designated format and
            at the intervals set forth in Exhibit C and Exhibit D. The
            Department may require additional reports throughout the term of
            this Contract. The Department will provide adequate notice before
            requiring production of any new reports or information, and will
            consider concerns raised by Contractors about potential burdens
            associated with producing the proposed additional reports. The
            Department will provide the basis (reason) for any such request.
            Failure of the Contractor to follow reporting requirements shall
            subject the Contractor to the sanctions in Article IX, Section 9.10.

                                       44
<PAGE>
            A schedule of all reports and the reporting frequency required under
            this Contract is provided in Exhibit C. A schedule of all
            submissions and the submitting frequency required under this
            Contract is provided in Exhibit D. For purposes of this Article V,
            Section 5.11, the following terms shall have the following meanings:

            -     annual shall be defined by the State fiscal year beginning
                  July first of each year and ending on but including June
                  thirtieth of the following year; and

            -     quarter shall be defined as three consecutive calendar months
                  of the State's fiscal year.

      (e)   Unless otherwise stated, all reports required herein shall
            differentiate between MAG Beneficiaries, MANG Beneficiaries and
            KidCare Beneficiaries, where applicable, and insofar as
            Beneficiaries can be differentiated by an identifiable code
            available to the Contractor.

5.12  HEALTH EDUCATION

      The Contractor shall establish and maintain an ongoing program of health
      education as delineated in its written plan and submitted annually to the
      Department. The health education program will advise Beneficiaries
      concerning appropriate health care practices and the contributions they
      can make to the maintenance of their own health. All health education
      materials must be approved by the Contractor's medical director. Providing
      material during Marketing and Enrollment does not satisfy the requirements
      of this Article V, Section 5.12. The Contractor must make good faith
      efforts to ensure that Primary Care Providers are active participants in
      the health education program. The health education program shall provided,
      at a minimum, the following:

      (a)   Information on how to use the Plan, including information on how to
            receive Emergency Services in and out of the Contracting Area.

      (b)   Information on preventive care including the value and need for
            screening and preventive maintenance.

      (c)   Counseling and patient education as to the health risks of obesity,
            smoking, alcoholism, substance abuse and improper nutrition, and
            specific information for persons who have a specific disease.

      (d)   Information on disease states, that may affect the general
            population.

      (e)   Educational material in the form of printed, audio, visual or
            personal communication.

                                       45
<PAGE>

      (f)   Information will be provided in language that the Beneficiary
            understands and that meets the requirements set forth in Article II,
            Section 2.4.

      (g)   A single individual appointed by the Contractor to be responsible
            for the coordination and implementation of the program.

      The Contractor further agrees to review the health education program, at
      reasonable intervals, for the purpose of amending same, in order to
      improve said program. The Contractor further agrees to supply the
      Department or its designee with the information and reports prescribed in
      its approved health education program or the status of such program.

5.13  REQUIRED MINIMUM STANDARDS OF CARE

      The Contractor shall make a good faith effort to provide or arrange to
      provide to all Beneficiaries medical care consistent with prevailing
      community standards at locations serving the Contracting Area that assure
      reasonable availability and accessibility to Beneficiaries.

      The Contractor will provide a system to notify Beneficiaries on an ongoing
      basis of the need for and benefits of health screenings and physical
      examinations. The Contractor will exercise reasonable efforts to provide
      or arrange to provide such examinations to all its Beneficiaries.

      (a)   Healthy Kids/EPSDT Service to Beneficiaries Under Twenty-One (21)
            Years

            All Beneficiaries under twenty-one (21) years of age should receive
            screening examinations including appropriate childhood immunizations
            at intervals as specified by the Healthy Kids EPSDT Program as set
            forth in Sections 1902(a)(43)and 1905(a)(4)(B) of the Social
            Security Act and 89 Ill. Adm. Code 140.485. Any condition discovered
            during the screening examination or screening test requiring further
            diagnostic study or treatment must be provided if within the scope
            of Covered Services. The Contractor shall refer the Beneficiary to
            an appropriate source of care for any required services that are not
            Covered Services. If, as a result of Healthy Kids/EPSDT services,
            the Contractor determines a Beneficiary is in need of services that
            are not Covered Services but are services otherwise provided for
            under the Medical Assistance Program, the Contractor will ensure
            that the Beneficiary is referred to an appropriate source of care.
            The Contractor shall have no obligation to pay for services that are
            not Covered Services.

            At a minimum, the Contractor shall provide or arrange to provide all
            appropriate screening and vaccinations in accordance with OBRA 1989
            guidelines to eighty percent (80%) of Beneficiaries younger than
            twenty-one (21) years of age.

                                       46
<PAGE>

      (b)   Preventive Medicine Schedule (Services to Beneficiaries Twenty-One
            (21) Years of Age and Over)

            The following preventive medicine services and age schedule is the
            minimum acceptable range and scope of required services for adults.
            The Contractor may substitute an alternate schedule for adult
            preventive medicine services as long as such schedule is based upon
            recognized guidelines such as those recommended by the current U.S.
            Preventive services Task Force's "Guide to Clinical Preventive
            Services" and the Contractor submits the schedule to the Department
            and receives the Department's written approval for the alternate
            schedule prior to implementing it.

                                       47
<PAGE>

Service

<TABLE>
<S>                         <C>
1  Complete                 To be provided during first year of Enrollment,
   history/physical         plus complete physical exam when indicated, but
                            minimally at five (5) years when there are no other
                            indications.

2  Circulatory &            When indicated in any Beneficiary, but every year
   Fundoscopy               in diabetics, hypertensives, and those with prior
   Evaluation               history of circulatory and/or retinal disease.

3  Rectal Exam &            Minimally every year in any Beneficiaries with
   hemocult                 history of G.I. bleeding, disease of colon, history
                            of colon polyps and any history of prior carcinoma
                            of G.I. tract. An annual digital rectal exam for
                            asymptomatic men age fifty (50) and over,
                            African-American men age forty (40) and over; and
                            men age 40 and over with a family history of
                            prostate cancer.

4  Clinical Breast          1. Minimally, every year in any Beneficiary with
   Examination                 history of fibrocystic disease or other benign
                               lump in breast, and in those with prior carcinoma.

                            2. Every two (2) years in all females with no
                               other indications for exam.

                            3. For all females, patient instruction in
                               self-examination of breasts.

5  CBC                      When indicated by complaints, history or physical
                            findings.

6  Urinalysis               When indicated by complaints, history or physical
                            findings, at least annually in all diabetics,
                            hypertensives and those with history of renal or
                            prostatic disease. Should also document urine
                            culture and sensitivity in all recurrent or chronic
                            urinary or prostatic infections prior to any
                            long-term antibiotic therapy.
</TABLE>

                                       48
<PAGE>

<TABLE>
<S>                         <C>
7  Blood Chemistries,       When indicated by complaints, history or physical
   Enzymes, or other        findings, and as indicated by specific diagnosis
   Laboratory Profiles      and/or therapy as blood sugar in diabetics or
                            dilantin level in epileptics, and including annual
                            prostate-specific antigen test for males.

8  EKG                      Baseline, at age fifty (50), if not before; only
                            when indicated thereafter.

9  Mammography              1.  Baseline in females at age thirty-five (35) or
                                older;

                            2.  Every year for women age forty (40) and older;
                                and

                            3.  As indicated for women with personal or family
                                history.

10 Sigmoidoscopy            With each complete physical exam, whenever
                            indicated.

11 Respiratory Testing      In all patients with a chronic respiratory disease
                            diagnosis and, as baseline, in all patients who smoke.
                            (Recommendations made to this patient after
                            examination and testing should be documented).

12 Blood Pressure           Annually after age eighteen (18).
   Check

13 Papanicolaou Smear       Routine annual screening including a cervical
                            smear or Papanicolaou Smear and pelvic-exam for
                            females who are eighteen (18) years of age and
                            older, or at the onset of becoming sexually active,
                            whichever is earlier.

14 Prostate Specific        Annually for asymptomatic men age fifty (50) and
   Antigen Test             older, African American men age forty (40) and
                            older, and all men age forty (40) and older with a
                            family history of prostate cancer.
</TABLE>

                                     49
<PAGE>

      At a minimum, the Contractor shall make good faith efforts to provide or
      arrange to provide the initial history and physical examination to fifty
      percent (50%) of all Beneficiaries in their first twelve (12) months of
      coverage, to seventy percent (70%) of all Beneficiaries in their second
      twelve (12) months of coverage and eighty percent (80%) of all
      Beneficiaries in their third twelve (12) months of coverage or more. For
      purposes of this subsection, "twelve (12) months of coverage" may include
      up to forty-five (45) days interrupted coverage.

(c)   Maternity Care

      The Contractor shall provide or arrange to provide quality care for
      pregnant Beneficiaries. At a minimum the Contractor shall make good faith
      efforts to provide, or arrange to provide and document:

      (1)   A comprehensive prenatal evaluation and care in accordance with the
            latest standards published by the American College of Obstetrics and
            Gynecology or the American Academy of Family Physicians. The
            specific areas to be addressed in regard to the provision of care
            include, but are not limited to, the following items: content of the
            initial assessment, including history, physical, lab tests and risk
            assessment including HIV counseling and voluntary HIV testing;
            follow-up laboratory testing; nutritional assessment and counseling;
            frequency of visits; content of follow-up visits; anticipatory
            guidance and appropriate referral activities.

      (2)   At least seventy percent (70%) of all pregnant Beneficiaries shall
            receive the minimum level of prenatal visits adjusted for the date
            of coverage under the Plan. For the exclusive purpose of calculating
            this rate, women who deliver within sixty (60) days of the first day
            of coverage under the Plan shall be excluded

      (3)   The Contractor shall provide or arrange to provide nutritional
            assessment and counseling to all pregnant Beneficiaries.
            Individualized diet counseling is to be provided as indicated.

      (4)   The Contractor shall require its Primary Care Providers and Women's
            Health Care Providers to identify maternity cases presenting the
            potential for high-risk maternal or neonatal complications and
            arrange appropriate referral to physician specialist or transfer to
            Level III perinatal facilities as required. The Contractor shall
            utilize, for such high-risk consultation or referrals, the standards
            of care promulgated by the Statewide Perinatal Program of the
            Illinois Department of Human Services.

      (5)   The consulting physician at the perinatal center will determine the
            management of the Beneficiary at that point in time. Should
            transport be

                                       50
<PAGE>

            required, the consultant at the perinatal center will identify the
            most appropriate mode of transport for such a transfer. Should the
            perinatal center be unable to accept the Beneficiary due to bed
            unavailability, that center will arrange for admission of the
            Beneficiary to an alternate Level III perinatal center. All records
            required for appropriate management of the high-risk Beneficiary
            receiving consultation or referral to a perinatal center will be
            provided to the consulting physician as indicated. The Contractor
            will obtain from the consulting physician all necessary
            correspondence to enable the Primary Care Provider to provide, or
            arrange for the provision of, appropriate follow-up care for the
            mother or neonate following discharge.

(d)   Complex and Serious Medical Conditions

      (1)   The Contractor shall provide or arrange to provide quality care for
            Beneficiaries with complex and serious medical conditions. At a
            minimum, the Contractor shall provide and document the following:

            (A)   Timely identification of Beneficiaries with complex and
                  serious medical conditions.

            (B)   Assessment of such conditions and identification of
                  appropriate medical procedures for monitoring or treating
                  them.

            (C)   Implementation of a treatment plan in accordance with this
                  Article V, Section 5.9(c)(l).

(e)   Access Standards

      (1)   Appointments

            Time specific appointments for routine, preventive care shall be
            made available within five (5) weeks from the date of request for
            such care. Beneficiaries with more serious problems not deemed
            Emergency Medical Conditions shall be [ILLEGIBLE] and provided same
            day service, if necessary. Beneficiaries with problems or complaints
            that are not deemed serious shall be seen within three (3) weeks
            from the date of request for such care. The Contractor shall have an
            established policy that scheduled Beneficiaries shall not routinely
            wait for more than one (1) hour to be seen by a Provider and no more
            than six (6) scheduled appointments shall be made for each Primary
            Care Provider per hour. Notwithstanding this limit, the Department
            recognizes that physicians supervising other licensed health care
            Providers may routinely account for more than six (6) appointments
            per hour.

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      (2)   Services Requiring Prior Authorization

            The Contractor shall provide, or arrange for the provision of,
            Covered Services as expeditiously as the Beneficiary's health
            condition requires. Ordinarily, Covered Services shall be provided
            within fourteen (14) calendar days after receiving the request for
            service from a Provider, with a possible extension of up to fourteen
            (14) calendar days, if the Beneficiary requests the extension or the
            Contractor provides written justification to the Department that
            there is a need for additional information and the Beneficiary will
            not be harmed by the extension. If the Physician indicates, or the
            Contractor determines that following the ordinary time frame could
            seriously jeopardize the Beneficiary's life or health, the
            Contractor shall provide, or arrange for the provision of, the
            Covered Service no later than seventy-two(72) hours after
            receipt of the request for service, with a possible extension of up
            to fourteen (14) calendar days, if the Beneficiary requests the
            extension or the Contractor provides written justification to the
            Department that there is a need for additional information and the
            Beneficiary will not be harmed by the extension.

(f)   Linkages to Other Services

      (1)   The Contractor shall use reasonable efforts to encourage the Plan
            Providers and subcontractors to cooperate with and communicate with
            other service providers who serve Beneficiaries. Such other service
            providers may include CBHPs; Women-Infant and Children (WIC)
            programs; Head Start programs; Early Intervention programs; Public
            Health providers; school-based clinics; and school systems. Such
            cooperation may include performing annual physical examinations for
            school and the sharing of information (with the consent of the
            Beneficiary).

      (2)   The Contractor shall participate in the Family Case Management
            Program, which shall include, but is not limited to:

            (A)   Coordinating services and sharing information with existing.
                  Family Case Management Providers for its Beneficiaries;

            (B)   Developing internal policies, procedures, and protocols for
                  the organization and its provider network for use with Family
                  Case Management Providers serving Beneficiaries; and

            (C)   Conducting periodic meetings with Family Case Management
                  Providers performing problem resolution and handling of

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                  grievances and issues, including policy review and technical
                  assistance.

5.14  CHOICE OF PHYSICIANS

      The Contractor shall afford to each Beneficiary a Primary Care Provider
      and, where appropriate, a Women's Health Care Provider.

      In each Contracting Area, there shall be at least one (1) full-time
      equivalent Physician for each 1,200 Beneficiaries, including one (1)
      full-time equivalent Primary Care Provider for each 2,000 Beneficiaries.
      In each Contracting Area, there shall be at least one (1) Women's Health
      Care Provider for each 2,000 female Beneficiaries between the ages of
      eighteen (18) and forty-four (44), at least one (1) Physician specializing
      in obstetrics for each 300 pregnant female Beneficiaries and at least one
      (1) pediatrician for each 2,000 Beneficiaries under age seventeen (17).
      All Physicians providing services shall have and maintain admitting
      privileges and, as appropriate, delivery privileges at an Affiliated Plan
      hospital; or, in lieu of these admitting and delivery privileges, the
      Physicians shall have a written referral agreement with a Physician who is
      in the Contractor's network and who has such privileges at an Affiliated
      Plan hospital. The agreement must provide for the transfer of medical
      records and coordination of care between Physicians.

      In any Contracting Area in which the Contractor does not satisfy the
      full-time equivalent provider requirements set forth above, the Contractor
      may demonstrate compliance with these requirements by demonstrating that
      (i) the Contractor's full time equivalent Physician ratios exceed ninety
      percent (90%) of the requirements set forth above, and (ii) that Covered
      Services are being provided in such Contracting Area in a manner which is
      timely and otherwise satisfactory. The Contractor shall comply with
      Section 1932(b)(7) of the Social Security Act.

5.15  TIMELY PAYMENTS TO PROVIDERS

      The Contractor shall make payments to Providers for Covered Services on a
      timely basis consistent with the Claims Payment Procedure described at 42
      U.S.C. Section 1396a(a)(37)(A), unless the Provider and the Contractor
      agree to an alternate payment schedule. Complaints or disputes concerning
      payments for the provision of services as described in this paragraph
      shall be subject to the Contractor's Provider grievance resolution system.

      The Contractor shall pay for all appropriate Emergency Services rendered
      by a Provider with whom the Contractor does not have arrangements within
      thirty (30) days of receipt of a complete and correct claim. If the
      Contractor determines it does not have sufficient information to make
      payment, the Contractor shall request all necessary information from the
      Provider within thirty (30) days of receiving the claim, and shall pay the
      Provider within thirty (30) days after receiving such information. Such
      payment shall be made at the same rate the Department would pay for such
      services according to the level of services provided.

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      The Contractor shall pay for all authorized Post-Stabilization services
      rendered by a non-Affiliated hospital Provider at the same rate the
      Department would pay for such services unless a different rate was agreed
      upon by the Contractor and Provider. Authorized Post-Stabilization
      services include such services rendered under the circumstances described
      in Section 70(c)(2) of the Illinois Managed Care Reform and Patient Rights
      Act.

      The Contractor shall accept claims from non-Affiliated Providers for at
      least one (1) year after the date the services are provided. The
      Contractor shall not be required to pay for claims initially submitted by
      such Providers more than one (1) year after the date of service.

5.16  GRIEVANCE PROCEDURE AND BENEFICIARY SATISFACTION SURVEY

      (a)   The Contractor shall establish and maintain a procedure for
            reviewing complaints registered by Beneficiaries. The Contractor's
            procedures must: (1) be submitted to the Department in writing and
            approved in writing by the Department; (2) provide for prompt
            resolution, and (3) assure the participation of individuals with
            authority to require corrective action. The Contractor must have a
            Grievance Committee for reviewing administrative complaints
            registered by its Beneficiaries, and Beneficiaries must be
            represented on the Grievance Committee. At a minimum, the following
            elements must be included in the grievance process:

            (1)   An informal system, available internally, to attempt to
                  resolve all complaints;

            (2)   A formally structured system that is compliant with Section 45
                  of the Managed Care Reform and Patient Rights Act to handle
                  all complaints subject to the provisions of that section of
                  the Act:

            (3)   A formally structured Grievance Committee must be available
                  for Beneficiaries whose complaints cannot be handled
                  informally and are not appropriate for the procedures set up
                  under the Managed Care Reform and Patient Rights Act. All
                  Beneficiaries must be informed that such a system exists.
                  Complaints at this stage must be in writing and sent to the
                  Grievance Committee for review;

            (4)   The Grievance Committee must have at least twenty-five percent
                  (25%) representation by members of Contractor's prepaid plans,
                  with at least one (1) Beneficiary of Contractor's services
                  under this Contract on the Committee. The Department may
                  require that one (1) member of the Grievance Committee be a
                  representative of the Department;

            (5)   Final decisions under the Managed Care Reform and Patient
                  Rights Act procedures and those of the Grievance Committee may
                  be appealed by the Beneficiary to the Department under its
                  Fair Hearings system;

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<PAGE>

            (6)   A summary of all complaints heard by the Grievance Committee
                  and by independent external reviewers and the responses and
                  disposition of those matters must be submitted to the
                  Department quarterly;

            (7)   A Beneficiary may appoint a guardian, caretaker relative,
                  Primary Care Provider, Women's Health Care Provider, or other
                  Physician treating the Beneficiary to represent him throughout
                  the complaint and appeal process.

      (b)   The Contractor agrees to review its grievance procedures, at
            reasonable intervals, for the purpose of amending same when
            necessary. The Contractor shall amend the procedures only upon
            receiving the prior written consent of the Department. The
            Contractor further agrees to supply the Department and/or its
            designee with the information and reports prescribed in its approved
            procedure. This information shall be furnished to the Department
            upon its request.

      (c)   The Contractor shall annually conduct a uniform Beneficiary
            Satisfaction Survey. The Survey shall be administered in a manner
            consistent with the Department's required procedures and analyzed by
            the Contractor. The Department shall use reasonable efforts to
            assure that its required procedures comport with the accreditation
            requirements which the Contractor must follow when seeking
            accreditation from NCQA, JCAHO or other accrediting bodies; however,
            nothing in this Contract shall require such accreditation. The
            Contractor shall submit its findings and explain what actions it
            will take on its findings as part of the comprehensive QA/UR/PR
            Report.

5.17  PROVIDER AGREEMENTS AND SUBCONTRACTS

      (a)   The Contractor may provide or arrange to provide any Covered
            Services identified in Article V, Section 5.1 with Affiliated
            Providers or fulfill any other obligations under this Contract by
            means of subcontractual relationships.

            (1)   All Provider agreements and/or subcontracts entered into by
                  the Contractor must be in writing and are subject to the
                  following conditions:

                  (A)   The Affiliated Providers and subcontractors shall be
                        bound by the terms and conditions of this Contract that
                        are appropriate to the service or activity delegated
                        under the subcontract. Such requirements include, but
                        are not limited to, the record keeping and audit
                        provisions of this Contract, such that the Department or
                        Authorized Persons shall have the same rights to audit
                        and inspect subcontractors as they have to audit and
                        inspect the Contractor.

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<PAGE>

                  (B)   The Contractor shall remain responsible for the
                        performance of any of its responsibilities delegated to
                        Affiliated Providers or subcontractors.

                  (C)   No Provider agreement or subcontract can terminate the
                        legal responsibilities of the Contractor to the
                        Department to assure that all the activities under this
                        Contract will be carried out.

                  (D)   All Affiliated Providers providing Covered Services for
                        the Contractor under this Contract must currently be
                        enrolled as Providers in the Medical Assistance Program.
                        The Contractor shall not contract or subcontract with an
                        Ineligible Person or a Person who has voluntarily
                        withdrawn from the Medical Assistance Program as the
                        result of a settlement agreement.

                  (E)   All Provider agreements and subcontracts must comply
                        with the Lobbying Certification contained in Article IX,
                        Section 9.22 of this Contract.

      (b)   With respect to all Provider agreements and subcontracts made by the
            Contractor, the Contractor further warrants:

            (1)   That such Provider agreements and subcontracts are binding;

            (2)   That it will promptly terminate contracts with Providers who
                  are terminated, barred, suspended, or have voluntarily
                  withdrawn as a result of a settlement agreement in any program
                  under federal law including any program under Titles XVIII,
                  XIX, XX or XXI of the Social Security Act or are otherwise
                  excluded from participation in the Medical Assistance Program
                  or KidCare; and

            (3)   That all laboratory testing Sites providing services under
                  this Contract must possess a valid Clinical Laboratory
                  Improvement Amendments ("CLIA") certificate and comply with
                  the CLIA regulations found at 42 C.F.R. Part 493.

      (c)   The Contractor will submit to the Department copies of model
            Provider agreements and/or subcontracts, initially and revised, that
            relate to Covered Services, assignment of risk and data reporting
            functions and any substantial deviations from these model Provider
            agreements or subcontracts. The Contractor shall provide copies of
            any other model Provider agreement or subcontract or any actual
            Provider agreement or subcontract to the Department upon request.
            The Department reserves the right to require the Contractor to amend
            any Provider agreement or subcontract as necessary to conform with
            the Contractor's duties and obligations under this Contract.

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<PAGE>

            The Contractor may designate in writing certain information
            disclosed under this Article V, Section 5.17 as confidential and
            proprietary. If the Contractor makes such a designation, the
            Department shall consider said information exempt from copying and
            inspection under Section 7(1)(b) or (g) of the State Freedom of
            Information Act (5 ILCS 140/1 et seq.). If the Department receives a
            request for said information under the State Freedom of Information
            Act, however, it may require the Contractor to submit justification
            for asserting the exemption. Additionally, the Department may honor
            a criminal subpoena or civil subpoena for such documents without
            such being deemed a breach of this Contract or any subsequent
            amendment here to.

      (d)   Prior to entering into a Provider agreement or subcontract, the
            Contractor shall submit a disclosure statement to the Department
            specifying any Provider agreement or subcontract and Providers or
            subcontractors in which any of the following have a five percent
            (5%) or more financial interest:

            (1)   any Person also having a five percent (5%) or more financial
                  interest in the Contractor or its affiliates as defined by 42
                  C.F.R. 455.101;

            (2)   any director, officer, trustee, partner or employee of the
                  Contractor or its affiliates; or

            (3)   any member of the immediate family of any Person designated in
                  (1) or (2) above.

      (e)   Any contract or subcontract between the Contractor and a Federally
            Qualified Health Center ("FQHC") or a Rural Health Clinic ("RHC")
            shall be executed in accordance with 1902(a)(13) (C) and
            1903(m)(2)(A)(ix) of the Social Security Act, as amended by the
            Balanced Budget Act of 1997 and shall provide payment that is not
            less than the level and amount of payment which the Contractor would
            make for the Covered Services if the services were furnished by a
            Provider which is not an FQHC or a RHC.

5.18  SITE REGISTRATION AND PRIMARY CARE PROVIDER/WOMEN'S HEALTH CARE PROVIDER
      APPROVAL AND CREDENTIALING

      (a)   The Contractor shall register with the Department each Site prior to
            assigning Beneficiaries to that Site to receive primary care. A
            fully executed Provider agreement must be in place between the
            Contractor and the Site prior to registration of the Site. All FQHCs
            and RHCs must be registered as unique sites. The Contractor must
            give advance notice to the Department as soon as practicable of the
            anticipated closing of a Site. If it is not possible to give advance
            notice of a closing of a Site, the Contractor shall notify the
            Department immediately when a Site is closed.

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      (b)   The Contractor shall submit to the Department for approval the name,
            license numbers, and other information requested in a format
            designated by the Department of all proposed Primary Care Providers
            and Women's Health Care Providers, as such new Primary Care
            Providers and Women's Health Care Providers are added to the
            Contractor's network through executed Provider agreements. A Primary
            Care Provider or Women's Health Care Provider may not be offered to
            Beneficiaries until the Department has given its written approval of
            the Primary Care Provider or Women's Health Care Provider.

      (c)   All Primary Care Providers and Women's Health Care Providers must be
            credentialed by the Contractor. The credentialing process may be
            two-tiered, and the Contractor may assign Beneficiaries to the
            Primary Care Provider or Women's Health Care Provider following
            preliminary credentialing. Full credentialing must be completed
            within a reasonable time following the assignment of Beneficiaries
            to the Primary Care Provider or Women's Health Care Provider. The
            Contractor must notify the Department when the credentialing process
            is completed and the results of the process.

5.19  ADVANCE DIRECTIVES

      The Contractor shall comply with all rules concerning the maintenance of
      written policies and procedures with respect to advance directives as
      promulgated by HCFA as set forth in 42 C.F.R. 489, Subpart I and any
      amendments thereto. The Contractor shall provide adult Beneficiaries with
      oral and written information on advance directives policies, and include a
      description of applicable State law. Such information shall reflect
      changes in State law as soon as possible, but no later than ninety (90)
      days after the effective date of the change.

5.20  FEES TO BENEFICIARIES PROHIBITED

      Neither the Contractor nor its Affiliated Providers shall seek or obtain
      funding through fees or charges to any Beneficiary receiving Covered
      Services pursuant to this Contract, except as permitted or required by the
      Department in 89 Ill. Adm. Code 125. The Contractor acknowledges that
      imposing charges in excess of those permitted under this Contract is a
      violation of Section 1128B(d) of the Social Security Act and subjects the
      Contractor to criminal penalties. The Contractor shall have language in
      all of its Provider subcontracts reflecting this requirement.

5.21  FRAUD AND ABUSE PROCEDURES

      (a)   The Contractor shall have an affirmative duty to timely report
            suspected Fraud and/or Abuse in the Medical Assistance Program or
            KidCare by the Beneficiaries or others, suspected criminal acts by
            Providers or the Contractor's employees, or Fraud or misconduct of
            Department employees to the Public Aid Office of

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            Inspector General. To this end, the Contractor shall establish the
            following procedures, in writing:

            (1)   the Contractor shall appoint a single individual to serve as
                  liaison to the Department regarding the reporting of
                  allegations of Fraud, Abuse, or misconduct;

            (2)   the Contractor's procedure shall ensure that any of
                  Contractor's personnel or subcontractors who identify
                  suspected Fraud, Abuse, or misconduct shall make a report to
                  Contractor's liaison;

            (3)   the Contractor's procedure shall ensure that the Contractor's
                  liaison shall provide notice of any allegation to the OIG
                  immediately upon receiving such report. If no reports are
                  received in a quarter, the liaison shall certify, in writing,
                  to the OIG that no such reports were received. Reports shall
                  be considered timely if they are made as soon as the
                  Contractor knew or should have known of the suspected Fraud,
                  Abuse, or misconduct, or if no reports were filed, the
                  certification is received within thirty (30) days after the
                  end of the quarter [ILLEGIBLE] and

            (4)   the Contractor shall ensure that all its personnel and
                  subcontractors receive notice of these procedures.

      (b)   The Contractor shall not conduct any investigation of the suspected
            Fraud, Abuse, or misconduct of Department personnel, but shall
            report all incidents immediately to the OIG.

            The Contractor may conduct investigations of its personnel,
            Providers, subcontractors, or Beneficiaries. If the investigation
            discloses potential Fraud and Abuse, as defined in this Contract,
            the Contractor must immediately notify the OIG and, if so directed,
            cease its internal investigation. Should the allegation or
            investigation disclose potential criminal acts by the Contractor's
            personnel, Providers, subcontractors, or Beneficiaries, the
            Contractor shall cease its internal investigation and immediately
            notify the OIG.

      (c)   The Contractor shall cooperate with all investigations of suspected
            Fraud, Abuse, or Department employee misconduct.

5.22  BENEFICIARY-PROVIDER COMMUNICATIONS

      Subject to this Article V, Section 5.1(g), and in accordance with the
      Managed Care Reform and Patient Rights Act, the Contractor shall not
      prohibit or otherwise restrict a Provider from advising a Beneficiary
      about the health status of the Beneficiary or medical care or treatment
      for the Beneficiary's condition or disease regardless of whether benefits
      for such care or treatment are provided under this Contract, if the
      Provider is acting

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      within the lawful scope of practice, and shall not retaliate against a
      Provider for so advising a Beneficiary.

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                                   ARTICLE VI

                            DUTIES OF THE DEPARTMENT

6.1   ENROLLMENT

      Once the Department has determined that an individual is an Eligible
      Enrollee and after the Eligible Enrollee has selected the Contractor's
      Plan, such individual shall become a Prospective Beneficiary. A
      Prospective Beneficiary shall become a Beneficiary on the effective date
      of coverage. Coverage shall begin as designated by the Department no later
      than the first day of a calendar month no later than three (3) calendar
      months from the date the Enrollment is entered into the Department's
      database, after Site assignment, to ensure that Contractor's Plan is
      reflected on the Department-issued medical card. The Department shall
      transmit to the Contractor, prior to the first day of each month of
      coverage, a Prelisting Report.

6.2   PAYMENT

      The Department shall pay the Contractor for the performance of the
      Contractor's duties and obligations hereunder. Such payment amounts shall
      be as set forth in Article VII of this Contract and Attachment I hereto.
      Unless specifically provided herein, no payment shall be made by the
      Department for extra charges, supplies or expenses, including, but not
      limited to, Marketing costs incurred by the Contractor.

6.3   LIMITATION OF PAYMENT BY THE DEPARTMENT

      The payments made by the Department to the Contractor for services
      rendered pursuant to this Contract will not exceed the upper payment
      limits set forth in 42 C.F.R. 447.361, namely that "Medicaid payments to
      the Contractor, for a defined scope of services to be furnished to a
      defined number of recipients, may not exceed the cost to the agency of
      providing those same services on a fee-for-service basis to an actuarial
      equivalent nonenrolled population group." This payment limit has been
      utilized in determining the monthly Capitation rate specified in
      Attachment I.

6.4   DEPARTMENT REVIEW OF CONTRACTOR MATERIALS

      Review of all Marketing Materials required by this Contract to be
      submitted to the Department for prior approval shall be completed by the
      Department on a timely basis not to exceed thirty (30) days from the date
      of receipt by the Department. The date of receipt shall be as confirmed by
      the Department to the Contractor via facsimile. If the Department does not
      notify the Contractor of approval or disapproval of submitted materials
      within such thirty (30) days the Contractor may begin to use such
      materials. However, the Department, at any time, reserves the right to
      disapprove any materials that did not receive the Department's express
      written approval. In the event the Department

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      disapproved any materials, the Contractor immediately shall cease use
      and/or distribution of such materials.

6.5   ELIGIBLE ENROLLEE EDUCATION PROGRAM

      If the Department implements the enrollment process described in Article
      IV, Section 4.1(b), the Department will develop and implement, either
      internally or through a contractor, a program to educate Eligible
      Enrollees about their choice of health care delivery systems and the
      advantages of each, as well as other health care issues. The program will
      be designed to reach Eligible Enrollees early in the process of applying
      for Medical Assistance and KidCare.

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                                   ARTICLE VII

                               PAYMENT AND FUNDING

7.1   PAYMENT RATES

      (a)   The Department will pay the Contractor on a Capitation basis, based
            on the eligibility classification, age and gender categories of the
            Beneficiary as shown on the applicable tables in Attachment I, a sum
            equal to the product of the approved Capitation rate and the number
            of Beneficiaries enrolled in that category as of the first day of
            that month.

      (b)   The Capitation for Beneficiaries residing in areas served by a
            Certified Local Health Department with which the Contractor has
            executed a subcontract, pursuant to Article V, Section 5.2(c), shall
            be adjusted by the amount of the Certified Local Health Department
            add-on specified in Attachment I. Pursuant to Article V, Section
            5.2(c), this provision concerning Certified Local Health Departments
            shall be implemented on a date designated by the Department.

      (c)   Fee-for-service Equivalent

            The maximum which the Contractor's rate may not exceed is based on
            the fee-for-service experience of an equivalent population for an
            equivalent scope of benefits.

            (1)   Capitation

                  Specific geographic estimates of the maxima for the
                  eligibility classification, age and gender categories are
                  developed based on actual paid claims for a date of service
                  (DOS) period. In order to account for all claims related to
                  the DOS period, historical data are used and inflated forward
                  to the midpoint of the period for which the fee-for-service
                  equivalents are being calculated. The total dollars expended
                  for the DOS period are then aggregated by eligibility
                  classification, age and gender category of the fee-for-service
                  population eligible during the DOS period. (The age cohorts
                  utilized by the Department are listed in Attachment I.)

                  The total dollar amount expended for the DOS period is then
                  divided by the total number of eligible recipient months for
                  the DOS period, resulting in a per member per month
                  fee-for-service equivalent amount, based on the fee levels
                  paid by the Department to Providers, and anticipated levels of
                  service utilization.

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            (2)   Upper Payment Limit

                  This formula is the required calculation for the upper payment
                  limits for Capitation and other payments (the fee-for-service
                  equivalent). The sum of the Capitation and other rates set
                  forth in Attachment I do not exceed those limits and are the
                  rates agreed to by the parties hereto.

      (d)   The financial impact of any new services added to the Contractor's
            responsibilities will be [ILLEGIBLE] evaluated by the Department
            and, if material, this Contract shall be amended accordingly.

7.2   ADJUSTMENTS

      Monthly payments to the Contractor will be adjusted for retroactive
      disenrollments of Beneficiaries, retroactive Enrollments of newborns,
      changes to Beneficiary information that affect the monthly Capitation rate
      (i.e., region of residence, eligibility classification, age, gender),
      financial sanctions imposed in accordance with Article IX, Section 9.10,
      rate changes in accordance with amendments to Attachment I or third-party
      liability collections received by the Contractor, or other miscellaneous
      adjustments provided for herein.

7.3   COPAYMENTS UNDER KIDCARE

      The Contractor may charge copayments to KidCare Participants in a manner
      consistent with 89 Ill. Adm. Code, Part 125. If the Contractor desires to
      charge such copayments, the Contractor must provide written notice to the
      Department before charging such copayments. Such written notice to the
      Department shall include a copy of the policy the Contractor intends to
      give the Providers in its network. This policy must set forth the amount,
      manner, and circumstances in which copayments may be charged. Such policy
      is subject to the prior written approval of the Department. In the event
      the Contractor wishes to impose a charge for copayments after enrollment
      of a KidCare Participant, it must first provide at least sixty (60) days
      prior written notice to such KidCare Participant. The Contractor shall be
      responsible for promptly refunding to a KidCare Participant any copayment
      that, in the sole discretion of the Department, has been inappropriately
      collected for Covered Services. The Contractor shall not charge copayments
      to any Beneficiary who is an American Indian or Alaska Native. The
      Department will prospectively identify Beneficiaries who are American
      Indians or Alaska Natives.

7.4   AVAILABILITY OF FUNDS

      Payment of obligations of the Department under this Contract are subject
      to the availability of funds and the appropriation authority as provided
      by law. Obligations of the State will cease immediately without penalty of
      further payment being required if in any State fiscal year the Illinois
      General Assembly or federal funding source fails to

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      appropriate or otherwise make available sufficient funds for this Contract
      within thirty (30) days of the end of the State's fiscal year.

      (a)   If State funds become unavailable, as set forth herein, to meet the
            Department's obligations under this Contract in whole or in part,
            the Department will provide the Contractor with written notice
            thereof prior to the unavailability of such funds, or as soon
            thereafter as the Department can provide written notice.

      (b)   In the event that funds become unavailable to fund this Contract in
            whole, this Contract shall terminate in accordance with Article
            VIII, Section 8.4(c) of this Contract. In the event that funds
            become unavailable to fund this Contract in part, it is agreed by
            both parties that this Contract may be renegotiated (as to premium
            or scope of services) or amended in accordance with Article IX,
            Section 9.9(c). Should the Contractor be unable or unwilling to
            provide fewer Covered Services at a reduced Capitation rate, or
            otherwise be unwilling or unable to amend this Contract within ten
            (10) business days after receipt of a proposed amendment, the
            Contract shall be terminated on a date set by the Department not to
            exceed thirty (30) days from the date of such notice.

7.5   HOLD HARMLESS

      The Contractor shall indemnify and hold the Department harmless from any
      and all claims, complaints or causes of action which arise as a result of
      the Contractor's failure to pay either any Provider for rendering Covered
      Services to Beneficiaries or any vendor, subcontractor, or the
      Department's mail vendor, either on a timely basis or at all, regardless
      of the reason or for any dispute arising between the Contractor and a
      vendor, mail vendor, Provider, or subcontractor; provided, however, that
      this provision will not nullify the Department's obligation under Article
      V, Sections 5.1 and 5.2 to cover services that are not Covered Services
      under this Contract, but that are eligible for payment by the Department.

      The Contractor warrants that Beneficiaries will not be liable for any of
      the Contractor's debts should the Contractor become insolvent or subject
      to insolvency proceedings as set forth in 215 ILCS 125 1-1 et seq.

7.6   PAYMENT IN FULL

      Acceptance of payment of the rates specified in this Article VII for any
      Beneficiary is payment in full for all Covered Services provided to that
      Beneficiary.

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                                  ARTICLE VIII

                          TERM RENEWAL AND TERMINATION

8.1   TERM

      This Contract shall take effect on April 1, 2000 and shall continue for a
      period of one calendar year. This Contract shall renew automatically for
      two consecutive one-year terms, unless either party gives the other party
      written notice ninety (90) days prior to the end of the then-current term.
      Once either party receives notice of the other party's intent not to
      renew, such nonrenewal shall be irrevocable.

8.2   CONTINUING DUTIES IN THE EVENT OF TERMINATION

      Upon termination of this Contract, the parties are obligated to perform
      those duties which remain under this Contract. Such duties include, but
      are not limited to, payment to Affiliated or non-Affiliated Providers
      completion of customer satisfaction surveys, cooperation with medical
      records review, all reports for periods of operation, including Encounter
      Data, and retention of records. Termination of this Contract does not
      eliminate the Contractor's responsibility to the Department for
      overpayments which the Department determines in a subsequent audit may
      have been made to the Contractor, nor does it eliminate any responsibility
      the Department may have for underpayments to the Contractor. The
      Contractor warrants that if this Contract is terminated, the Contractor
      shall promptly supply all information in its possession or that may be
      reasonably obtained, which is necessary for the orderly transition of
      Beneficiaries and completion of all Contract responsibilities.

8.3   TERMINATION WITH AND WITHOUT CASE

      (a)   This Contract may be terminated by the Department with cause upon,
            at least, fifteen (15) days written notice to the Contractor for any
            reason set forth in Section 1932(e)(4)(A) of the Social
            Security Act. In the event such notice is given, the Contractor may
            request in writing a hearing, in accordance with Section 1932 of the
            Balanced Budget Act of 1997 by the date specified in the notice. If
            such a request is made by the date specified, then a hearing under
            procedures determined by the Department will be provided prior to
            termination. The Department reserves the right to notify
            Beneficiaries of the hearing and its purpose, to inform them that
            they may disenroll, and to suspend further Enrollment with the
            Contractor during the pendency of the hearing and any related
            proceedings.

      (b)   This Contract may be terminated by the Department or the Contractor
            without cause upon ninety (90) days written notice to the other
            party. Any such date of termination established by the Contractor
            shall coincide with the last day of a coverage month.

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8.4   AUTOMATIC TERMINATION

      This Contract may, in the sole discretion of the Department, automatically
      terminate on a date set by the Department for any of the following
      reasons:

      (a)   refusal by the Contractor to sign an amendment to this Contract as
            described in Article IX, Section 9.9(c); or

      (b)   legislation or regulations are enacted or a court of competent
            jurisdiction interprets a law so as to prohibit the continuance of
            this Contract or the Medical Assistance Program; however this
            provision shall not apply should KidCare be terminated; or

      (c)   funds become unavailable as set forth in Article VII, Section
            7.4(b); or

      (d)   the Contractor fails to maintain a Certificate of Authority, as
            required by Article II, Section 2.6.

8.5   REIMBURSEMENT IN THE EVENT OF TERMINATION

      In the event of termination of this Contract, reimbursement for any and
      all claims for Covered Services rendered to Beneficiaries prior to the
      effective termination date shall be the Contractor's responsibility.

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                                   ARTICLE IX

                                  GENERAL TERMS

9.1   RECORDS RETENTION, AUDITS, AND REVIEWS

      The Contractor shall maintain all business, professional and other records
      in accordance with 45 C.F.R. Part 74 and the specific terms and conditions
      of this Contract and pursuant to generally accepted accounting and medical
      practice. The Contractor shall maintain, for a minimum of five (5) years
      after completion of the Contract and after final payment is made under the
      Contract, adequate books, records, and supporting documents to verify the
      amounts, recipients, and uses of all disbursements of funds passing in
      conjunction with the Contract. If an audit, litigation or other action
      involving the records is started before the end of the five (5) year
      period, the records must be retained until all issues arising out of the
      action are resolved.

      The Contract and all books, records, and supporting documents related to
      the Contract shall be made available, at no charge in Illinois, by the
      Contractor for review and audit by the Department, the Auditor General or
      other Authorized Persons. The Contractor agrees to cooperate fully with
      any audit conducted by the Department, the Auditor General or other
      Authorized Persons and to provide full access in Illinois to all relevant
      materials.

      Failure to maintain the books, records, and supporting documents required
      by this Section shall establish a presumption in favor of the State for
      the recovery of any funds paid by the State under the Contract for which
      adequate books, records, and supporting documentation are not available,
      in Illinois, to support their purported disbursement.

      The Contractor shall provide any information necessary to disclose the
      nature and extent of all expenditures made under this Contract. Such
      information must be sufficient to fully disclose all compensation of
      Marketing personnel pursuant to Article V, Section 5.3(g). The Department,
      the Auditor General or other Authorized Persons may inspect and audit any
      financial records of the Contractor or its subcontractors relating to the
      Contractor's capacity to bear the risk of financial losses.

      The Department, the Auditor General or other Authorized Persons may also
      evaluate, through inspection or other means, the quality, appropriateness,
      and timeliness of services performed under this Contract.

      The Department shall perform quality assurance reviews to determine
      whether the Contractor is providing quality and accessible health care to
      Beneficiaries under this Contract. The reviews may include, but are not
      limited to, a sample review of medical

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      records of Beneficiaries, Beneficiary surveys and examination by
      consultants. The specific points of quality assurance which will be
      reviewed include, but are not limited to:

            (1)   legibility of records

            (2)   completeness of records

            (3)   peer review and quality control

            (4)   utilization review

            (5)   availability, timeliness, and accessibility of care

            (6)   continuity of care

            (7)   utilization reporting

            (8)   use of services

            (9)   quality and outcomes of medical care

      The Department shall provide for an annual (as appropriate) external
      independent review of the above that is conducted by a qualified
      independent entity.

      The Department shall adjust future payments or final payments if the
      findings of a Department audit indicate underpayments or overpayments to
      the Contractor. If no payments are due and owing to the Contractor, the
      Contractor shall immediately refund all amounts which may be due the
      Department.

9.2   NONDISCRIMINATION

      (a)   The Contractor shall abide by all Federal and state laws,
            regulations, and orders that prohibit discrimination because of
            race, color, religion, sex, national origin, ancestry, age, physical
            or mental disability, including, but not limited to, the Federal
            Civil Rights Act of 1964, the Americans with Disabilities Act or
            1990, the Federal Rehabilitation Act of 1973, the Illinois Human
            Rights Act, and Executive Orders 11246 and 11375. The Contractor
            further agrees to take affirmative action to ensure that no unlawful
            discrimination is committed in any manner including, but not limited
            to, the delivery of services under this Contract.

      (b)   The Contractor will not discriminate against Eligible Enrollees,
            Prospective Beneficiaries, or Beneficiaries on the basis of health
            status or need for health services.

9.3   CONFIDENTIALITY OF INFORMATION

      All information, records, data and data elements collected and maintained
      for the operation of the Plan and pertaining to Providers, Beneficiaries,
      applicants for public assistance, facilities, and associations shall be
      protected by the Contractor and the Department from unauthorized
      disclosure, pursuant to 305 ILCS 5/11.9, 5/11.10, and 5/11.12; 42 U.S.C.
      654(2)(b); 42 C.F.R. Part 431, Subpart F; and 45 C.F.R. Part 303.21.

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9.4   NOTICES

      Notices required or desired to be given either party under this Contract,
      unless specifically required to be given by a specific method, may be
      given by any of the following methods: 1) United States mail, certified,
      return receipt requested; 2) a recognized overnight delivery service or 3)
      via facsimile. Notices shall be deemed given on the date sent and shall be
      addressed as follows:

            Contractor:  Harmony Health Plan of Illinois, Inc.
                         125 South Wacker Drive
                         Suite 2900
                         Chicago, IL 60606-4402
                         Attn: Ancelrno Lopes, President

            Department:  Illinois Department of Public Aid
                         Bureau of Managed Care
                         201 South Grand Avenue East
                         Springfield, Illinois 62763-0001
                         Facsimile: (217) 524-7535

9.5   REQUIRED DISCLOSURES

      (a)   Conflict of Interest

            (1)   The Contractor, by signing this Contract, covenants that the
                  Contractor is not prohibited from contracting with State on
                  any of the bases provided in 30 ILCS 500/50-13. The
                  Contractor further covenants that it neither has nor shall
                  acquire any interest, public or private, direct or indirect,
                  which conflicts in any manner with the performance of
                  Contractor's services and obligations under this Contract.
                  The Contractor further covenants that it shall not employ any
                  person having such an interest in connection with the
                  Contractors performance hereunder. The Contractor shall be
                  under a continuing obligation to disclose any conflicts to the
                  Department, which shall, in its good faith discretion,
                  determine whether any conflict is cause for the nonexecution
                  or termination of this Contract and any amendments hereto.

            (2)   The Contractor will provide information intended to identify
                  any potential conflicts of interest regarding its ability to
                  perform the duties of this Contract through the filing of a
                  disclosure statement upon the execution of this Contract,
                  annually on or before the anniversary date of this Contract,
                  and within thirty-five (35) days of any change occurring or of
                  any request by the Department. The disclosure statement shall
                  contain the following information:

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                  (A)   The identities of any Persons that directly or
                        indirectly provide service or supplies to the Medical
                        Assistance Program or KidCare with which the Contractor
                        has any type of business or financial relationship; and

                  (B)   A statement describing how the Contractor will avoid any
                        potential conflict of interest with such Persons related
                        to its duties under this Contract.

      (b)   Disclosure of Interest

            The Contractor shall comply with the disclosure requirements
            specified in 42 C.F.R. Part 455, including, but not limited to,
            filing with the Department upon the execution of this Contract and
            within thirty-five (35) days of a change occurring, a disclosure
            statement containing the following:

            (1)   The name, FEIN and address of each Person With An Ownership Or
                  Controlling Interest in the Contractor, and for individuals
                  include home address, work address, date of birth, Social
                  Security number and gender.

            (2)   Whether any of the individuals so identified are related to
                  another so identified as the individual's spouse, child,
                  brother, sister or parent.

            (3)   The name of any Person With an Ownership or Controlling
                  Interest in the Contractor who also is a Person With an
                  Ownership or Controlling Interest in another managed care
                  organization that has a contract with the Department to
                  furnish services under the Medical Assistance Program or
                  KidCare, and the name or names of the other managed care
                  organization.

            (4)   The name and address of any Person With an Ownership or
                  Controlling Interest in the Contractor or who is an agent or
                  employee of the Contractor who has been convicted of a
                  criminal offense related to that Person With an Ownership or
                  Controlling Interest's involvement in any program under
                  Federal law including any program under Titles XVIII, XIX, XX
                  or XXI of the Social Security Act, since the inception of such
                  programs.

            (5)   Whether any Person identified in subsections (1) through (4)
                  of this section, is currently terminated, suspended, barred or
                  otherwise excluded from participation, or has voluntarily
                  withdrawn as the result of a settlement agreement, in any
                  program under Federal law including any program under Titles
                  XVIII, XIX, XX or XXI of the Social Security Act or has within
                  the last five (5) years been reinstated to participation in
                  any program under Federal law including any program under
                  Titles XVIII, XIX, XX or XXI of the Social Security Act and
                  prior to said

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                  reinstatement had been terminated, suspended, barred or
                  otherwise excluded from participation or has voluntarily
                  withdrawn as the result to a settlement agreement in such
                  programs.

            (6)   Whether the Medical Director of the Plan is a Person With an
                  Ownership or Controlling Interest.

9.6   HCFA PRIOR APPROVAL

      The parties acknowledge that the terms of this Contract and any amendments
      must receive the prior approval of HCFA, and that failure of HCFA to
      approve any provision of this Contract will render that provision null and
      void. The parties understand and agree that the Department's duties and
      obligations under this Contract are contingent upon such approval.

9.7   ASSIGNMENT

      This Contract, including the rights, benefits and duties hereunder, shall
      not be assignable by either party without the prior written consent of the
      other party.

9.8   SIMILAR SERVICES

      Nothing in this Contract shall prevent the Contractor from performing
      similar services for other parties. However, the Contractor warrants that
      at no time will the compensation paid by the Department for services
      rendered under this Contract exceed the rate the Contractor charges for
      the rendering of a similar benefit package of services to others in the
      Contracting Area. The Contractor also warrants that the services it
      provides to its Beneficiaries will be as accessible to them (in terms of
      timeliness, amount, duration and scope) as those services are to
      nonenrolled Participants within the Contracting Area.

9.9   AMENDMENTS

      (a)   This Contract may be modified or amended by the mutual consent of
            both parties at any time during its term. Amendments to this
            Contract must be in writing and signed by authorized representatives
            of both parties.

      (b)   No change in, addition to or waiver of any term or condition of this
            Contract shall be binding on the Department or the Contractor unless
            approved in writing by authorized representatives of both parties.

      (c)   The Contractor shall, upon request by the Department and upon
            receipt of a proposed amendment to this Contract, amend this
            Contract, if and when required in the opinion of the Department, to
            comply with federal or State laws or regulations. If the Contractor
            refuses to sign such amendment by the date specified by the
            Department, which may not be less than ten (10) business days

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            after receipt, this Contract may terminate as provided in Article
            VIII, Section 8.4(a).

9.10  SANCTIONS

      In addition to termination for cause pursuant to Article VIII, Section
      8.3(a), the Department may impose sanctions on the Contractor for the
      Contractor's failure to substantially comply with the terms of this
      Contract. Monetary sanctions imposed pursuant to this section may be
      collected by deducting the amount of the sanction from any payments due to
      the Contractor or by demanding immediate payment by the Contractor. The
      Department, at its sole discretion, may establish an installment payment
      plan for payment of any sanction. The determination of the amount of any
      sanction shall be at the sole discretion of the Department, within the
      ranges set forth below. Self-reporting by the Contractor will be taken
      into consideration in determining the sanction amount.

      The Department shall not impose any sanction where the noncompliance is
      directly caused by the Department's action or failure to act or where an
      act of God delays performance by the Contractor. The Department, in its
      sole discretion, may waive the imposition of sanctions for failures that
      it judges to be minor or insignificant.

      Upon determination of substantial noncompliance, the Department shall give
      written notice to the Contractor describing the noncompliance, the
      opportunity to cure the noncompliance where a cure is allowed under this
      Contract and the sanction which the Department will impose hereunder.

      (a)   Failure to Report or Submit

            If the Contractor fails to submit any report or other material
            required by the Contract to be submitted to the Department, other
            than Encounter Data, by the date due, the Department will give
            notice to the Contractor of the late report or material and the
            Contractor must submit it within thirty (30) days following the
            notice. If the report or other material has not been submitted
            within thirty (30) days following the notice, the Department will
            give the Contractor notice of its continued failure to submit and
            the Contractor must submit the report or other material within
            thirty (30) days following the second notice. If the Contractor has
            not submitted the report or other material within (30) days
            following the second notice, the Department, without further notice,
            shall impose a sanction of $1,000.00 to $5,000.00 for the late
            report.

      (b)   Failure to Submit Encounter Data

            If the Department determines that the Contractor has not been making
            good faith efforts for a period of at least thirty (30) days to work
            with Department in making progress toward compliance with the
            requirement of Article V, Section 5.11(b)(1)

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            regarding Encounter Data, the Department will send the Contractor a
            notice of non-compliance. If the Contractor does not show good faith
            efforts to comply with these requirements by the end of the thirty
            day period following the notice, the Department, without further
            notice, may impose a sanction of $1,000.00 to $5,000.00. At the end
            of each subsequent period of thirty (30) days in which no good faith
            efforts are made toward compliance, the Department may, without
            further notice, impose a further sanction of $1,000.00 to $5,000.00.

      (c)   Failure to Meet Minimum Standards of Care

            If the Department determines that the Contractor has not been making
            good faith efforts to meet any of the minimum standards of care set
            forth in Article V, Section 5.13, the Department will send the
            Contractor a notice of noncompliance. If the Contractor does not
            show good faith efforts to establish an acceptable plan to meet the
            minimum standard of care referenced in the notice by the end of the
            thirty day period following the notice, the Department will send
            another notice of noncompliance. If the Contractor does not show
            good faith efforts to comply with these requirements by the end of
            the thirty (30) day period following the second notice the
            Department may, without further notice, impose a sanction of
            $1,000.00 to $5,000.00. At the end of each subsequent period of
            thirty (30) days in which no good faith efforts are made toward
            compliance, the Department may, without further notice, impose a
            further sanction of $1,000.00 to $5,000.00.

      (d)   Imposition of Prohibited Charges

            If the Department determines that the Contractor has imposed a
            charge on a Beneficiary that is prohibited by this Contract, the
            Department may impose a sanction of $1,000.00 to $5,000.00.

      (e)   Misrepresentation or Falsification of Information

            If the Department determines that the Contractor has misrepresented
            or falsified information furnished to an Eligible Enrollee,
            Prospective Beneficiary, Beneficiary, Provider, the Department or
            HCFA, the Department may impose a sanction of $1,000.00 to
            $5,000.00.

      (f)   Failure to Comply with the Physician Incentive Plan Requirements

            If the Department determines that the Contractor has failed to
            comply with the Physician Incentive Plan requirements of Article V,
            Section 5.7, the Department may impose a sanction of $1,000.00 to
            $5,000.00.

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      (g)   Failure to Meet Access Standards

            If the Department determines that the Contractor has not met the
            Provider to Beneficiary access standards established in Article V,
            Section 5.13(e) the Department will send the Contractor a notice of
            noncompliance. If the Contractor does not show good faith efforts to
            comply with these requirements by the end of the thirty day period
            following the notice the Department may impose a sanction of
            $1,000.00 to $5,000.00, the Department may, without further notice,
            suspend Enrollment of Eligible Enrollees with the Contractor or the
            Department may impose both sanctions.

      (h)   Failure to Provide Covered Services

            If the Department determines that the Contractor has failed to
            provide, or arrange to provide, a medically necessary service that
            the Contractor is required to provide under law or this Contract,
            the Department may impose a sanction of $5,000.00 to $25,000.00.

      (i)   Discrimination Related to Pre-Existing Conditions

            If the Department determines that discrimination related to
            pre-existing conditions has occurred, the Department may impose a
            sanction of $5,000.00 to $25,000.00, the Department may suspend
            Enrollment of Eligible Enrollees with the Contractor or the
            Department may impose both sanctions.

      (j)   Pattern of Marketing Failures

            Where the Department determines a pattern of Marketing failures, the
            Department may impose a sanction of $5,000.00 to $25,000.00, the
            Department may suspend Enrollment of Eligible Enrollees with the
            Contractor or the Department may impose both sanctions.

      (k)   Other Failures

            If the Department determines hat the Contractor is in substantial
            noncompliance with any material terms of this Contract not
            specifically enunciated herein and which the Department reasonably
            deems sanctionable, the Department shall provide written notice to
            the Contractor setting forth the specific failure or noncompliant
            activity. If the Contractor does not correct the noncompliance
            within thirty (30) days of the notice the Department, without
            further notice, may impose a sanction of $1,000.00 to $5,000.00.

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9.11  SALE OR TRANSFER

      The Contractor shall provide the Department with the earliest possible
      actual notice of any sale or transfer of the Contractor's business as it
      relates to this Contract. If the Contractor is otherwise subject to SEC
      rules and regulations, actual notice shall be given to the Department as
      soon as those SEC rules and regulations permit. The Department agrees that
      any such notice shall be held in the strictest confidence until such sale
      or transfer is publicly announced or consummated. The Department shall
      have the right to terminate the Contract and any amendments thereto,
      without cause, upon notification of such sale or transfer, in accordance
      with Article VIII, Section 8.3(b).

9.12  COORDINATION OF BENEFITS FOR BENEFICIARIES

      (a)   The Department is responsible for the identification of
            Beneficiaries with health insurance coverage provided by a third
            party and ascertaining whether third parties are liable for medical
            services provided to such Beneficiaries. Money which the Department
            receives as a result of these collection activities shall belong to
            the Department to the extent the Department has incurred any expense
            or paid any claim and thereafter any excess receipts shall belong to
            the Contractor, to the extent the Contractor has incurred any
            expense or paid any claim, to the extent permitted by law.

      (b)   The Contractor will conduct a data match for the Department to
            identify Illinois Medical Assistance Program and KidCare
            Participants with active private health insurance through the
            Contractor. The Department will assume the reasonable and customary
            costs of these semi-annual matches. The discovery of a third party
            liability match will prevent the Department from paying premiums for
            recipients already covered by the Contractor. The Contractor will
            further make available to the Department a contact person from whom
            the Department can request to make third party liability inquiries
            for the purpose of maintaining accurate eligibility information for
            these recipients.

      (c)   Upon the Department's verification that a Beneficiary has third
            party coverage for major medical benefits, the Department shall
            disenroll such Beneficiary from the Contractor's Plan. Such
            disenrollment shall be effective the first day of the calendar month
            no later than three (3) months from the date the disenrollment is
            entered into the Department's computer system. The monthly
            Capitation payments shall be adjusted accordingly on the first day
            of the month the disenrollment is effective. The Contractor shall be
            notified of the disenrollment on the Prelisting Report.

      (d)   The Contractor shall report with the reported Encounter Data any and
            all third party liability collections it receives so the Department
            can offset the next month's Capitation payment accordingly.

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      (e)   The Contractor shall report to the Department any health insurance
            coverage for Beneficiaries it discovers at any time.

9.13  AGREEMENT TO OBEY ALL LAWS

      The Contractor's obligations and services hereunder are hereby made and
      must be performed in compliance with all applicable federal and State
      laws, including, but not limited to, applicable provisions of 45 C.F.R.
      Part 74 not hereto specified.

9.14  SEVERABILITY

      Invalidity of any provision, term or condition of this Contract for any
      reason shall not render any other provision, term or condition of this
      Contract invalid or unenforceable.

9.15  CONTRACTOR'S DISPUTES WITH OTHER PROVIDERS

      All disputes between the Contractor and any Affiliated or non-Affiliated
      Provider, or between the Contractor and any other subcontractor, shall be
      solely between such Provider or subcontractor and the Contractor.

9.16  CHOICE OF LAW

      This Contract shall be governed and construed in accordance with the laws
      of the State of Illinois. Should any provision of this Contract require
      judicial interpretation, the parties agree and stipulate that the court
      interpreting or considering this Contract shall not apply any presumption
      that the terms of this Contract shall be more strictly construed against a
      party who itself or through its agents prepared this Contract. The parties
      acknowledge that all parties hereto have participated in the preparation
      of this Contract either through drafting or negotiation and that each
      party has had full opportunity to consult legal counsel of choice before
      execution of this Contract. Any claim against the Department arising out
      of this Contract must be filed exclusively with the Illinois Court of
      Claims (as defined in 705 ILCS 505/1) of, if jurisdiction is not accepted
      by that court, with the appropriate State or federal court located in
      Sangamon County, Illinois. The Stale does not waive sovereign immunity by
      entering into this Contract.

9.17  DEBARMENT CERTIFICATION

      The Contractor certifies that it is not barred from being awarded a
      contract or subcontract under Section 50-5 of the Illinois Procurement
      Code (30 ILCS 500/1-1).

      The Contractor certifies that it has not been barred from contracting with
      a unit of State or local government as a result of a violation of 720 ILCS
      5/33-E3 or 5/33-E4.

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9.18  CHILD SUPPORT, STATE INCOME TAX AND STUDENT LOAN REQUIREMENTS

      The Contractor certifies that its officers, directors and partners are not
      in default on an educational loan as provided in 5 ILCS 385/0.01 et seq.,
      and is in compliance with State income tax requirements and with child
      support payments imposed upon it pursuant to a court or administrative
      order of this [ILLEGIBLE] any state. The Contractor will not be considered
      out of compliance with this requirement if (a) the Contractor provides
      proof of payment of past due amounts in full or (b) the alleged obligation
      of past due amounts is being contested through appropriate court or
      administrative agency proceedings and the Contractor provides proof of the
      pendency of such proceedings or (c) the Contractor provides proof of entry
      into payment arrangements acceptable to the appropriate State agency are
      entered into. For purposes of this paragraph, a partnership shall be
      considered barred if any partner is in default.

9.19  PAYMENT OF DUES AND FEES

      The Contractor certifies that it is not prohibited from selling goods or
      services to the State because it pays dues or fees on behalf of its
      employees or agents or subsidizes or otherwise reimburses them for payment
      of dues or fees to any club which unlawfully discriminates (See 775 ILCS
      25/1--25/3).

9.20  FEDERAL TAXPAYER IDENTIFICATION

      Under penalties of perjury, the Contractor certifies that it has affixed
      its correct Federal Taxpayer Identification Number on the signature page
      of this Contract. The Contractor certifies that it is not: 1) a foreign
      corporation, partnership, limited liability company, estate, or trust; or
      2) a nonresident alien individual except for those corporations registered
      in Illinois as a foreign corporation.

9.21  DRUG FREE WORKPLACE

      The Contractor certifies that it is in compliance with the requirements of
      30 ILCS 580/1 et seq., and has completed Attachment III to this Contract.

9.22  LOBBYING

      The Contractor certifies to the best of his knowledge and belief, that:

      (a)   No federal appropriated funds have been paid or will be paid by or
            on behalf of the Contractor, to any Person for influencing or
            attempting to influence an officer or employee of any agency, a
            Member of Congress, an officer or employee of Congress, or an
            employee of a Member of Congress in connection with the awarding of
            any federal contract, the making of any federal loan or grant, the
            entering into of any cooperative agreement, or the extension,
            continuation,

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            renewal, amendment, or modification of any federal contract, grant,
            loan, or cooperative agreement.

      (b)   If any funds other than federal appropriated funds have been paid or
            will be paid to any Person for influencing or attempting to
            influence an officer or employee of any agency, a Member of
            Congress, an officer or employee of Congress, or an employee of a
            Member of Congress in connection with this federal contract, grant,
            loan, or cooperative agreement, the Contractor shall complete and
            submit a Federal Standard Form LLL, "Disclosure Form to Report
            Lobbying," in accordance with its instructions. Such Disclosure Form
            may be obtained by request from the Illinois Department of Public
            Aid, Bureau of Fiscal Operations.

      (c)   The Contractor shall require that the language of this certification
            be included in all subcontracts and shall ensure that such
            subcontracts disclose accordingly.

      This certification is a material representation of fact upon which
      reliance was placed when this transaction was made or entered into.
      Submission of this certification is a prerequisite for making or entering
      into the transaction imposed by 31 U.S.C. Section 1352. Any person who
      fails to file the required certification shall be subject to a civil
      penalty of not less than ten thousand dollars ($10,000.00) and not more
      than one hundred thousand dollars ($100,000.00) for each such failure.

9.23  EARLY RETIREMENT

      If the Contractor is an individual, the Contractor certifies it has
      informed the director of the Department in writing if it was formerly
      employed by that agency and has received an early retirement incentive
      under Section 14-108.3 or Section 16-133.3 of the Illinois Pension Code
      (40 ILCS 5/13 et seq.). Contractor acknowledges and agrees that if such
      early retirement incentive was received, this Contract is not valid unless
      the official executing the Contract has made the appropriate filing with
      the Auditor General prior to execution.

9.24  SEXUAL HARASSMENT

      The Contractor shall have written sexual harassment policies that shall
      comply with the requirements of 75 ILCS 5/2-105.

9.25  INDEPENDENT CONTRACTOR

      The Contractor is an independent contractor for all purposes under this
      Contract. The Contractor is not a Provider as defined by the Public Aid
      Code and the Administrative Rules. Employees of the Contractor are not
      employees of the State of Illinois, and are, therefore, not entitled to
      any benefits provided employees of the State under the Personnel Code and
      regulations or other laws of the State of Illinois. The Contractor

                                       79
<PAGE>
      shall be responsible for accounting for the reporting of State and Federal
      Income Tax and Social Security Taxes, if applicable.

9.26  SOLICITATION OF EMPLOYEES

      The Contractor and the Department agree that they shall not, during the
      term of this Contract and for a period of one (1) year after its
      termination, solicit for employment or employ, whether as employee or
      independent contractor, any person who is or has been employed by the
      other during the term of this Contract, in a managerial or policy-making
      role relating to the duties and obligations under this Contract, without
      written notice to the other. However, should an employee of the
      Contractor, without the prior knowledge of the management of the
      Department, take and pass all required employment examinations and meet
      all relevant employment qualifications, the Department may employ that
      individual and no breach of this Contract shall be deemed to have
      occurred. The Contractor shall immediately notify the Department's Ethics
      Officer in writing if the Contractor solicits or intends to solicit for
      employment any of the Department's employees during the term of this
      Contract. The Department will be responsible for keeping the Contractor
      informed as to the name and address of the Ethics Officer.

9.27  NONSOLICITATION

      The Contractor warrants that it has not employed or retained any company
      or person, other than a bonafide employee working solely for the
      Contractor, to solicit or secure this Contract, and that he has not paid
      or agreed to pay any company or person, other than a bonafide employee
      working solely for the Contractor, any fee, commission, percentage,
      brokerage fee, gifts or any other consideration contingent upon or
      resulting from the award or making of this Contract. For breach or
      violation of this warranty, the Department shall have the right to annul
      this Contract without liability, or in its discretion, to deduct from
      compensation otherwise due the Contractor the commission, percentage,
      brokerage fee, gift or contingent fee.

9.28  OWNERSHIP OF WORK PRODUCT

      Any documents prepared by the Contractor solely for the Department upon
      the Department's request or as required under this Contract, shall be the
      property of the Department, except that the Contractor is hereby granted
      permission to use, without payment, all such materials as it may desire.
      Standard documents and reports, claims processing data and Beneficiary
      files and information prepared or maintained by the Contractor in order to
      perform under this Contract are and shall remain the property of the
      Contractor, subject to applicable confidentiality statutes; however, the
      Department shall be entitled to copies of all such documents, reports or
      claims processing information which relate to Beneficiaries or services
      performed hereunder. In the event of any termination of the Contract, the
      Contractor shall cooperate with the Department in supplying any required
      data in order to ensure a smooth termination and provide for continuity of
      care of all Beneficiaries enrolled with the Contractor. Notwithstanding

                                       80

<PAGE>

      anything to the contrary contained in this Contract, all computer
      programs, electronic data bases, electronic data processing documentation
      and source materials collected, developed, purchased or used by the
      Contractor in order to perform its duties under this Contract, shall be
      and remain the sole property of the Contractor.

9.29  BRIBERY CERTIFICATION

      By signing this Contract, the Contractor certifies that neither it nor any
      of its officers, directors, partners, or subcontractors have been
      convicted of bribery or attempting to bribe an officer or employee of the
      State of Illinois, nor has the Contractor, its officers, directors, or
      partners made an admission of guilt of such conduct which is a matter of
      record, nor has an official, agent, or employee of the Contractor
      committed bribery or attempted bribery on behalf of the Contractor, its
      officers, directors, partners or subcontractors and pursuant to the
      direction or authorization of any responsible official of the Contractor.
      The Contractor further certifies that it will not subcontract with any
      subcontractors who have been convicted of bribery or attempted bribery.

9.30  NONPARTICIPATION IN INTERNATIONAL BOYCOTT

      The Contractor certifies that neither it nor any substantially owned
      Affiliated company is participating or shall participate in an
      international boycott in violation of the provisions of the U.S. Export
      Administration Act of 1979 or the regulations of the U.S. Department of
      Commerce promulgated under that Act.

9.31  COMPUTATIONAL ERROR

      The Department reserves the right to correct any mathematical or
      computational error in payment subtotals or total contractual obligation.
      The Department will notify the Contractor of any such corrections.

9.32  SURVIVAL OF OBLIGATIONS

      The Contractor's and the Department's obligations under this Contract that
      by their nature are intended to continue beyond the termination or
      expiration of this Contract will survive the termination or expiration of
      this Contract.

9.33  CLEAN AIR ACT AND CLEAN WATER ACT CERTIFICATION

      The Contractor certifies that it is in compliance with all applicable
      standards, orders or regulations issued pursuant to the Clean Air Act (42
      U.S.C. 7401 et seq) and the Federal Water Pollution Control Act, as
      amended (33 U.S.C. 1251 et seq). The Department shall report violations to
      the United States Department of Health and Human Services and the
      appropriate Regional Office of the United States Environmental Protection
      Agency.

                                       81

<PAGE>

9.34  NON-WAIVER

      Failure of either party to insist on performance of any term or condition
      of this Contract or to exercise any right or privilege hereunder shall not
      be construed as a continuing or future waiver of such term, condition,
      right, or privilege.

9.35  NOTICE OF CHANGE IN CIRCUMSTANCES

      In the event the Contractor, its parent or related corporate entity
      becomes a party to any litigation, investigation, or transaction that may
      reasonably be considered to have a material impact on the Contractor's
      ability to perform under this Contract, the Contractor will immediately
      notify the Department in writing.

9.36  PUBLIC RELEASE OF INFORMATION

      News releases directly pertaining to this Contract or the services or
      project to which it relates shall not be made without prior approval by,
      and in coordination with, the Department, subject however, to any
      disclosure obligations of the Contractor under applicable law, rule or
      regulation.

      The parties will cooperate in connection with media inquiries and in
      regard to media campaigns or media initiatives involving this project.

      The Contractor shall not disseminate any publication, presentation,
      technical paper or other information related to the Contractor's duties
      and obligations under this Contract unless such dissemination has been
      approved in writing by the Department.

9.37  PAYMENT IN ABSENCE OF FEDERAL FINANCIAL PARTICIPATION

      In addition to any assessment of sanctions, pursuit of actual damages, or
      termination or nonextension of this Contract, if any failure of the
      Contractor to meet the requirements, including time frames, of this
      Contract results in the deferring or disallowance of federal funds from
      the State, the Department will withhold and retain an equivalent amount
      from payments) to the Contractor until such federal funds are released to
      the State (at which time the Department will release to the Contractor
      such funds as the Department was retaining as a result thereof).

9.38  EMPLOYMENT REPORTING

      The Contractor certifies that it shall comply with the requirements of 820
      ILCS 405/1801.1, concerning newly hired employees.

                                       82

<PAGE>

9.39  CERTIFICATION OF PARTICIPATION

      (a)   The Contractor certifies that neither it, nor any employees,
            partners, officers or shareholders owning at least five percent (5%)
            of said Contractor is currently barred, suspended or terminated from
            participation in the Medicaid or Medicare or programs, nor are any
            of the above persons currently under sanction for, or serving a
            sentence for conviction of any Medicaid or Medicare program
            offenses.

      (b)   If Contractor, any employee, partner, officer or shareholder owning
            at least five percent (5%) was ever (but is lot currently) barred,
            suspended or terminated from participation in the Medicaid or
            Medicare programs or was ever sanctioned for or convicted of any
            Medicaid or Medicare program offenses, the Contractor must
            immediately report to the Department in writing, including for each
            offense, the date the offense occurred, the action causing the
            offense, the penalty or sentence assessed and the date the penalty
            was paid or the sentence completed.

9.40  INDEMNIFICATION

      To the extent allowed by law, the Contractor and the Department agree to
      indemnify, defend and hold harmless the other party, its officers, agents,
      designees, and employees from any and all claims and losses accruing or
      resulting in connection with the performance of this Agreement which are
      due to the negligent or willful acts or omission of the other party. In
      the event either party becomes involved as a party to litigation in
      connection with services or products provided under this Agreement, that
      party agrees to immediately give the other party written notice. The Party
      so notified, at its sole election and cost, may enter into such litigation
      to protect its interests.

      This indemnification is conditioned upon (1) the right of the Department
      or the Contractor when such party is the indemnifying party pursuant to
      this Article IX, Section 9.40 ("indemnifying party") to defend against any
      such action or claim and to settle, compromise or defend same in the sole
      discretion of the indemnifying party; (2) receipt of written notice by the
      indemnifying party as soon as practicable after the party seeking
      indemnification's first notice of an action or claim for which
      indemnification is sought hereunder; and (3) the full cooperation of the
      party seeking indemnification in defense or handling of any such action or
      claim.

9.41  GIFTS

      (a)   The Contractor and the Contractor's principals, employees, and
            subcontractors are prohibited from giving gifts to employees of the
            Department, and are prohibited from giving gifts to, or accepting
            gifts from, any Person who has a contemporaneous contract with the
            Department involving duties or obligations related to the Contract.

                                       83

<PAGE>

      (b)   The Contractor will provide the Department with advance notice of
            the Contractor's providing gifts, excluding charitable donations,
            given as incentives to community-based organizations in Illinois and
            Participants or KidCare Participants in Illinois to assist the
            Contractor in carrying out its responsibilities under this Contract.

9.42  BUSINESS ENTERPRISE FOR MINORITIES, FEMALES AND PERSONS WITH DISABILITIES.

      The Contractor certifies that it is in compliance with 30 ILCS 575/0.01 et
      seq., and has completed Attachment IV.

                                       84

<PAGE>

      IN WITNESS WHEREOF, the Department and the Contractor hereby execute and
deliver this Contract effective as of the Effective Date.

STATE OF ILLINOIS
DEPARTMENT OF PUBLIC AID

BY:___________________________________________
        Ann Patla

TITLE: Director

DATE:_________________________________________

CONTRACTOR

BY:___________________________________________

TITLE:________________________________________

DATE:_________________________________________

FEIN:_________________________________________

                                       85

<PAGE>

                                  ATTACHMENT I

                                   RATE SHEETS

(a)   Contractor Name:       Harmony Health Plan of Illinois, Inc

      Address:               125 South Wacker Drive
                             Suite 2900
                             Chicago, IL 60606-4402

(b)   Contracting Area(s) Covered by the Contractor and Enrollment Limit:

<TABLE>
<CAPTION>
Contracting Area                        Enrollment Limit
------------------------------------------------------------
<S>                                     <C>
  Region IV                                 100,000
------------------------------------------------------------

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

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

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

------------------------------------------------------------
</TABLE>

(c)   Total Enrollment Limit for all Contracting Areas:     100,000.

(d)   Threshold Review Levels:      80,000

                                      I-1

<PAGE>

(e)   Standard Capitation Rates for MAG Beneficiaries for each Region:

<TABLE>
<CAPTION>
                      Region I          Region II       Region III     Region IV      Region V
                        (N.W.           (Central        (Southern        (Cook         (Collar
                      Illinois)        Illinois)        Illinois)       County)       Counties)
 Age/Gender             PMPM              PMPM            PMPM           PMPM           PMPM
-------------------------------------------------------------------------------------------------
<S>                   <C>              <C>              <C>            <C>            <C>
  0-2 F                $214.19          $149.47          $206.08        $254.29        $181.15
  0-2 M                $242.48          $183.18          $263.92        $300.07        $183.68
 3-13 F                $ 39.63          $ 41.98          $ 47.02        $ 40.55        $ 32.21
 3-13 M                $ 47.40          $ 52.61          $ 55.95        $ 49.60        $ 40.28
 14-20 F               $209.65          $181.58          $204.84        $169.14        $167.32
 14-20 M               $ 74.37          $ 70.44          $ 75.51        $ 63.46        $ 46.99
 21-44 F               $201.77          $186.87          $206.99        $203.22        $181.66
 21-44 M               $100.41          $111.11          $132.34        $148.11        $102.05
  45+ F                $324.75          $292.50          $269.83        $245.81        $236.39
  45+ M                $195.92          $304.26          $291.83        $221.72        $177.78
</TABLE>



           Certified Local Health Department add-on: To be determined.

(f)   Standard Capitation Rates for MANC Beneficiaries for each Region:

<TABLE>
<CAPTION>
                      Region I          Region II       Region III     Region IV      Region V
                        (N.W.           (Central        (Southern        (Cook         (Collar
                      Illinois)        Illinois)        Illinois)       County)       Counties)
 Age/Gender             PMPM              PMPM            PMPM           PMPM           PMPM
-------------------------------------------------------------------------------------------------
<S>                   <C>              <C>              <C>            <C>            <C>
  0-2 F                $277.63          $270.73          $276.42        $221.95        $175.33
  0-2 M                $337.39          $320.77          $236.83        $259.94        $203.36
 3-13 F                $ 46.02          $ 44.62          $ 52.51        $ 43.55        $ 39.42
 3-13 M                $ 58.45          $ 63.44          $ 67.51        $ 55.10        $ 51.37
 14-20 F               $260.15          $234.40          $246.15        $238.15        $260.81
 14-20 M               $ 79.62          $119.09          $121.82        $ 82.31        $181.38
 21-44 F               $245.64          $245.57          $226.89        $266.25        $244.39
 21-44 M               $145.22          $107.80          $103.83        $ 98.85        $119.40
  45+ F                $279.44          $329.92          $300.30        $255.70        $270.54
  45+ M                $340.30          $205.30          $239.31        $247.28        $292.90
</TABLE>

          Certified Local Health Department add-on: To be determined.

                                      I-2

<PAGE>

(g)   Capitation Rates for KidCare Participants for each Region:

<TABLE>
<CAPTION>
                      Region I          Region II       Region III     Region IV      Region V
                        (N.W.           (Central        (Southern        (Cook         (Collar
                      Illinois)        Illinois)        Illinois)       County)       Counties)
 Age/Gender             PMPM              PMPM            PMPM           PMPM           PMPM
-------------------------------------------------------------------------------------------------
<S>                   <C>              <C>              <C>            <C>            <C>

  1-2 F                $66.34           $67.54           $73.13         $74.63         $60.58
  1-2 M                $92.26           $75.87           $96.90         $86.82         $73.08
 3-13 F                $39.25           $41.38           $46.47         $40.71         $32.31
 3-13 M                $47.00           $51.79           $55.68         $49.87         $40.63
 14-18 F               $87.57           $85.98           $99.19         $77.53         $73.22
 14-18 M               $73.14           $69.51           $75.56         $63.48         $46.69
</TABLE>

           Certified Local Health Department add-on: To be determined.

                                      I-3

<PAGE>


                                  ATTACHMENT II

                          KIDCARE PARTICIPATION OPTION

The Contractor shall indicate by signing the appropriate line below whether or
not it agrees to accept KidCare Participants as Beneficiaries in accordance with
the terms and conditions of this Contract.

KIDCARE PARTICIPATION

The Contractor agrees to accept KidCare Participants as Beneficiaries in
accordance with the terms of this Contract.

CONTRACTOR

By:______________________________________

Its:_____________________________________

Date:____________________________________

MEDICAL ASSISTANCE PARTICIPATION ONLY

The Contractor does not agree to accept KidCare Participants as Beneficiaries
under this Contract.

CONTRACTOR

By:_______________________________________

Its:______________________________________

Date:_____________________________________

                                      II-1

<PAGE>

                                 ATTACHMENT III

                         DRUG FREE WORKPLACE AGREEMENT

The contractor certifies that he/she/it will no engage in the unlawful
manufacture, distribution, dispensation, possession, or use of a controlled
substance in the performance of the Agreement.

CHECK THE BOX THAT APPLIES:

     [ ]    This business or corporation does not have twenty-five (25) or more
            employees.

     [ ]    This business or corporation has twenty-five (25) or more
            employees, and the contractor certifies and agrees that it will
            provide a drug free workplace by:

A)    Publishing a statement:

      1)    Notifying employees that the unlawful manufacture, distribution,
            dispensation, possession or use of a controlled substance, including
            cannabis, is prohibited in the grantee's or contractor's workplace.

      2)    Specifying the actions that will be taken against employees for
            violations of such prohibition.

      3)    Notifying the employees that as a condition of employment on such
            contract, the employee will:

            a)    abide by the terms of the statement; and

            b)    notify the employer of any criminal drug statute conviction
                  for a violation occurring in the workplace no later than five
                  (5) days after such conviction.

B)    Establishing a drug free awareness program to inform employees about:

      1)    the dangers of drug abuse in the workplace;

      2)    the contractor's policy of maintaining a drug free workplace;

      3)    any available drug counseling, rehabilitation, and employee
            assistance programs; and

      4)    the penalties that may be imposed upon an employee for drug
            violations.

C)    Providing a copy of the statement required by subparagraph (a) to each
      employee engaged in the performance of the contract or grant and to post
      the statement in a prominent place in the workplace.

                                     III-1

<PAGE>

D)    Notifying the contracting or granting agency within ten (10) days after
      receiving notice under part (B) or paragraph (3) of subsection (a) above
      from an employee or otherwise receiving actual notice of such conviction.

E)    Imposing a sanction on, or requiring the satisfactory participation in a
      drug abuse assistance or rehabilitation program by, any employee who is so
      convicted, as required by section 5 of the Drug Free Workplace Act, 1992
      Illinois Compiled Statute, 30 ILCS 580/5.

F)    Assisting employees in selecting a course of action in the event drug
      counseling, treatment, and rehabilitation is required and indicating that
      a trained referral team is in place.

G)    Making a good faith effort to continue to maintain a drug free workplace
      through implementation of the Drug Free Workplace Act, 1992 Illinois
      Compiled Statute, 30 ILCS 580/1 et seq.

THE UNDERSIGNED AFFIRMS, UNDER PENALTIES OF PERJURY, THAT HE OR SHE IS
AUTHORIZED TO EXECUTE THIS CERTIFICATION ON BEHALF OF THE DESIGNATED
ORGANIZATION.

________________________________________
Printed Name of Organization

________________________________________   _____________________________________
Signature of Authorized Representative     Requisition/Contract/Grant ID Number

________________________________________   _____________________________________
Printed Name and Title                     Date

                                     III-2

<PAGE>

                                  ATTACHMENT IV

                  BUSINESS ENTERPRISE PROGRAM CONTRACTING GOAL

The Business Enterprise Program Act for Minorities, Females and Persons with
Disabilities (30 ILCS 575/1) establishes a goal that not less than 12% of the
total dollar amount of State contracts be awarded to businesses owned and
controlled by persons who are minority, female or who have disabilities (the
percentages are 5%/5%/2% respectively) and have been certified as such ("BEPs").
This goal can be met by contracts let directly to such businesses by the State,
or indirectly by the State's contractor ordering goods or services from BEPs
when suppliers or subcontractors are needed to fulfill the contract. Call the
Business Enterprise Program at 312/814-4190 (Voice & TDD), 800/356-9206 (Toll
Free), or 800/526-0844 (Illinois Relay Center for Hearing Impaired) for a list
of certified businesses appropriate for the particular contract.

1.    If you are a BEP, please identify which agency certified the business and
      in what capacity by checking the applicable blanks:

<TABLE>
<CAPTION>
Certifying Agency:                                          Capacity:
------------------                                          ---------
<S>                                                         <C>
___ Department of Central Management Services               ___ Minority
___ Women's Business Development Center                     ___ Female
___ Chicago Minority Business Development Council           ___ Person with Disability
___ Illinois Department of Transportation                   ___ Disadvantaged
___ Other (identify)____________________________________
</TABLE>

2     If the "Capacity" blank is not checked, do you have a written policy or
      goal regarding contracting with BEPs?

      Yes______      No______

      -     If "Yes", please attach a copy

      -     If "No", will you make a commitment to contact BEPs and consider
            their proposals?

            Yes______       No______

3.    Do you plan on ordering supplies or services in furtherance of this
      project from BEPs?

      Yes______      No______

                                      IV-1

<PAGE>

      -     If "Yes", please identify what you plan to order, the estimated
            value as a percentage of your total proposal, and the names of the
            BEPs you plan to use.

This information is submitted on behalf of _____________________________________
                                           (Name of Vendor)

Name (printed):_______________________________ Title: __________________________

Signature:____________________________________ Date: ___________________________

                                      IV-2

<PAGE>

                                    EXHIBIT A

                             QUALITY ASSURANCE (QA)

1.    All services provided by or arranged by the Contractor to be provided
      shall be in accordance with prevailing professional community standards.
      The Contractor shall establish a program that systematically and routinely
      collects data to review that includes quality oversight and monitoring
      performance and patient results. The program shall include provision for
      the interpretation of such data to the Contractor's practitioners. The
      Contractor shall have in effect a program consistent with the utilization
      control requirements of 42 C.F.R. Part 456. This program will include,
      when required by the regulations, written plans of care and certifications
      of need of care.

2.    The Contractor shall establish procedures such that the Contractor shall
      be able to demonstrate that it meets the requirements of the HMO Federal
      qualification regulations (42 C.F.R. 417.106 and/or the Medicare HMO/CMP
      regulations (42 C.F.R. 417.418(c)). These regulations require that an
      HMO/CMP have an ongoing fully implemented Quality Assurance program for
      health services that:

      a.    monitors the health care services it provides or arranged to
            provide;

      b.    stresses health outcomes;

      c.    provides review by Physicians licensed to practice medicine in all
            its branches and other health professionals of the process followed
            in the provision of health services;

      d.    includes fraud control provisions;

      e.    establishes and monitors access standards;

      f.    uses systematic data collection of performance and patient results,
            provides interpretation of these data to its practitioners, and
            institutes needed changes; and

      g.    includes written procedures for taking appropriate remedial action
            whenever, as determined under the quality assurance program,
            inappropriate or substandard services have been furnished or
            services that should have been furnished have not been provided.

3.    The Contractor shall provide to the Department a written description of
      its Quality Assurance Plan (QAP) for the provision of clinical services
      (e.g., medical, medically related, and behavioral health services). This
      written description must meet federal and State requirements:

                                      A-1

<PAGE>

      a.    Goals and objectives - The written description shall contain a
            detailed set of QA objectives that are developed annually and
            include a timetable for implementation and accomplishment.

      b.    Scope - The scope of the QAP shall be comprehensive, addressing both
            the quality of clinical care and the quality of non-clinical aspects
            of service, such as and including: availability, accessibility,
            coordination, and continuity of care.

      c.    Methodology - The QAP methodology shall provide for review of the
            entire range of care provided, by assuring that all demographic
            groups, care settings, (e.g., inpatient, ambulatory, and home
            care), and types of services (e.g., preventive, primary, specialty
            care, behavioral health, and ancillary services) are included in the
            scope of the review. Documentation of the monitoring and evaluation
            plan shall be provided to Department.

      d.    Activities - The written description shall specify quality of care
            studies and other activities to be undertaken over a prescribed
            period of time, and methodologies and organizational arrangements to
            be used to accomplish them. Individuals responsible for the studies
            and other activities shall be clearly identified and shall be
            appropriate. The written description shall provide for continuous
            performance of the activities, including tracking of issues over
            time.

      e.    Provider review - The written description shall document how
            Physicians licensed to practice medicine in all its branches and
            other health professionals will be involved in reviewing quality of
            care and the provision of health services and how feedback to health
            professionals and the Contractor staff regarding performance and
            patient results will be provided.

      f.    Focus on health outcomes - The QAP methodology shall address health
            outcomes; a complete description of the methodology shall be fully
            documented and provided to Department.

      g.    Systematic process of quality assessment and improvement - The QAP
            shall objectively and systematically monitor and evaluate the
            quality and appropriateness of care and service to members, and
            pursue opportunities for improvement on an ongoing basis.
            Documentation of the monitoring activities and evaluation plan shall
            be provided to the Department.

4.    The Contractor shall provide the Department with the QAP written
      guidelines which delineate the QA process, specifying:

      a.    Clinical areas to be monitored:

                                      A-2

<PAGE>

            i.    The monitoring and evaluation of clinical care shall reflect
                  the population served by the Contractor in terms of age
                  groups, disease categories, and special risk status.

            ii.   The QAP shall, at a minimum, monitor and evaluate care and
                  services in certain priority clinical areas of interest
                  specified by the Department.

            iii.  At its discretion and/or as required by the Department, the
                  Contractor's QAP must monitor and evaluate other important
                  aspects of care and service.

            iv.   At a minimum, the following areas shall be monitored:

                  (a)   for pregnant women:

                        (1)   number of prenatal visits;

                        (2)   provision of ACOG recommended prenatal screening
                              tests;

                        (3)   neonatal deaths;

                        (4)   length of hospitalization for the mother; and

                        (5)   length of newborn hospital stay for the infant.

                  (b)   for children:

                        (1)   number of well-child visits appropriate for age;

                        (2)   immunization status;

                        (3)   number of hospitalizations;

                        (4)   length of hospitalizations; and

                        (5)   medical management for a limited number of
                              medically complicated conditions as agreed to by
                              the Contractor and Department.

                  (c)   for adults:

                        (1)   preventive health care (e.g., initial health
                              history and physical exam; mammography;
                              papanicolaou smear).

                  (d)   for behavioral health:

                        (1)   all area specified in Paragraph 12 of this Exhibit
                              A.

      b.    Use of Quality Indicators - Quality indicators are measurable
            variables relating to a specified clinical area, which are reviewed
            over a period of time to monitor the process of outcomes of care
            delivered in that clinical area:

                                      A-3

<PAGE>

            i.    The Contractor shall identify and use quality indicators that
                  are objective, measurable, and based on current knowledge
                  and clinical experience.

            ii.   The Contractor shall document that methods and frequency of
                  data collected are appropriate and sufficient to detect need
                  for program change.

            iii.  For the priority clinical areas specified by Department, the
                  Contractor shall monitor and evaluate quality of care through
                  studies which address, but are not limited to, the quality
                  indicators also specified by Department.

      c.    Analysis of clinical care and related services, including behavioral
            health services:

            i.    Appropriate clinicians shall monitor and evaluate quality
                  through review of individual cases where there are questions
                  about care, and through studies analyzing patterns of clinical
                  care and related service.

            ii.   Multi disciplinary teams shall be used, where indicated, to
                  analyze and address systems issues.

            iii.  Clinical and related service areas requiring improvement shall
                  be identified and documented with a corrective action plan
                  developed and monitored.

      d.    Implementation of Remedial/Corrective Actions - The QAP shall
            include written procedures for taking appropriate remedial action
            whenever, as determined under the QAP, inappropriate or substandard
            services are furnished, including in the area of behavioral health,
            or services that should have been furnished were not. Quality
            assurance actions that result in remedial or corrective actions
            shall be forwarded by the Contractor to the Department on a timely
            basis.

            Written remedial/corrective action procedures shall include:

            i.    specification of the types of problems requiring
                  remedial/corrective action;

            ii.   specification of the person(s) or body responsible for making
                  the final determinations regarding quality problems;

            iii.  specific actions to be taken;

            iv.   a provision for feedback to appropriate health professionals,
                  providers and staff;

            v.    the schedule and accountability for implementing corrective
                  actions;

                                      A-4

<PAGE>

            vi.   the approach to modifying the corrective action if
                  improvements do not occur; and

            vii.  procedures for notifying a Primary Care Provider group that a
                  particular Physician licensed to practice medicine in all its
                  branches is no longer eligible to provide services to
                  Beneficiaries.

      e.    Assessment of Effectiveness of Corrective Actions - The Contractor
            shall monitor and evaluate corrective actions taken to assure that
            appropriate changes have been made. The Contractor shall assure
            follow-up on identified issues to ensure that actions for
            improvement have been effective and provide documentation of same.

      f.    Evaluation of Continuity and Effectiveness of the QAP:

            i.    The Contractor shall conduct a regular (minimum annual)
                  examination of the scope and content of the QAP to ensure that
                  it covers all types of services, including behavioral health
                  services, in all settings, as required.

            ii.   At the end of each year a written report on the QAP shall be
                  prepared by the Contractor and submitted to the Department as
                  a component part of the QA/UR/PR Report identified in Exhibit
                  C, which report addresses:

                  (a)   QA studies, including quality indicators and
                        methodology, and other activities completed;

                  (b)   peer review (e.g., results of the medical records and
                        credentialing/recredentialing activities);

                  (c)   utilization data including progress toward meeting
                        preventive care participation goals and selected HEDIS
                        measures;

                  (d)   Beneficiary Satisfaction Survey analysis;

                  (e)   trending of clinical and service indicators and other
                        performance data;

                  (f)   demonstrated improvements in quality;

                  (g)   areas of deficiency and recommendations for corrective
                        action;

                  (h)   an evaluation of the overall effectiveness of the QAP;
                        and

                  (i)   changes implemented or to be implemented over the next
                        year.

5.    The Contractor shall have a governing body to which the QAP shall be held
      accountable ("Governing Body"). The Governing Body of the Contractor shall
      be the Board of Directors or, where the Board's participation with quality
      improvement issues is not direct, a designated committee of the senior
      management of the Contractor. This Board of Directors or Governing Body
      shall be ultimately responsible for the execution of the QAP. However,
      changes to the medical quality assurance program shall be by the chair of
      the QA Committee.

      Responsibilities of the Governing Body include:

                                      A-5

<PAGE>

      a.    Oversight of QAP - The Contractor shall document that the Governing
            Body has approved the overall QAP and an annual QA plan.

      b.    Oversight Entity - The Governing Body shall document that it has
            formally designated an accountable entity or entities within the
            organization to provide oversight of QA, or has formally decided to
            provide such oversight as a committee of the whole. Behavioral
            health shall be included in the QAP Report.

      c.    QAP Progress Reports - The Governing Body shall routinely receive
            written reports from the QAP describing actions taken, progress in
            meeting QA objectives, and improvements made.

      d.    Annual QAP Review - The Governing Body shall formally review on a
            periodic basis (but no less frequently than annually) a written
            report on the QAP which includes: studies undertaken, results,
            subsequent actions, and aggregate data on utilization and quantity
            of services rendered, to assess the QAP's continuity, effectiveness
            and current acceptability. Behavioral health shall be included in
            the Annual QAP Review.

      e.    Program Modification - Upon receipt of regular written reports from
            the QAP delineating actions taken and improvements made, the
            Governing Body shall take action when appropriate and direct that
            the operational QAP be modified on an ongoing basis to accommodate
            review findings and issues of concern within the Contractor. This
            activity shall be documented in the minutes of the meetings of the
            Governing Board in sufficient detail to demonstrate that it has
            directed and followed up on necessary actions pertaining to Quality
            Assurance.

6.    The QAP shall delineate an identifiable structure responsible for
      performing QA functions within the Contractor. This committee or other
      structure shall have:

      a.    Regular Meetings - The structure/committee shall meet on a regular
            basis with specified frequency to oversee QAP activities. This
            frequency shall be sufficient to demonstrate that the
            structure/committee is following-up on all findings and required
            actions, but in no case shall such meetings be held less frequently
            than quarterly. A copy of the meeting summaries/minutes shall be
            submitted to the Department no later than thirty (30) days after the
            close of the quarterly reporting period.

      b.    Established Parameters for Operating - The role, structure and
            function of the structure/committee shall be specified.

      c.    Documentation - There shall be records kept documenting the
            structure's/committee's activities, findings, recommendations and
            actions.

                                      A-6

<PAGE>

      d.    Accountability - The QAP committee shall be accountable to the
            Governing Body and report to it (or its designee) on a scheduled
            basis on activities, findings, recommendations and actions.

      e.    Membership - There shall be active participation in the QA committee
            from Plan Providers, who are representative of the composition of
            the Plan's Providers. There shall be a majority of
            Contractor-Affiliated practicing Physicians licensed to practice
            medicine in all its branches.

7.    There shall be a designated senior executive who will be responsible for
      program implementation. The Contractor's Medical Director shall have
      substantial involvement in QA activities and shall be responsible for the
      required reports.

      a.    Adequate Resources - The QAP shall have sufficient material
            resources, and staff with the necessary education, experience, or
            training, to effectively carry out its specified activities.

      b.    Provider Participation in the QAP --

            i.    Participating Physicians licensed to practice medicine in all
                  its branches and other Providers shall be kept informed about
                  the written QA plan.

            ii.   The Contractor shall include in all its Provider subcontracts
                  and employment agreements a requirement securing cooperation
                  with the QAP for both Physicians licensed to practice medicine
                  in all its branches and non-physician Providers.

            iii.  Contracts shall specify that hospitals and other
                  subcontractors will allow access to the medical records of its
                  Beneficiaries to the Contractor.

8.    The Contractor shall remain accountable for all QAP functions, even if
      certain functions are delegated to other entities. If the Contractor
      delegates any QA activities to subcontractors:

      a.    There shall be a written description of the following: the delegated
            activities; the delegate's accountability for these activities; and
            the frequency of reporting to the Contractor.

      b.    The Contractor shall have written procedures for monitoring and
            evaluating the implementation of the delegated functions and for
            verifying the actual quality of care being provided.

      c.    There shall be evidence of continuous and ongoing evaluation of
            delegated activities, including approval of quality improvement
            plans and regular specified reports.

                                      A-7

<PAGE>


9.    The QAP shall contain provisions to assure that Physicians licensed to
      practice medicine in all its branches and other health care professionals,
      who are licensed by the State and who are under contract with the
      Contractor, are qualified to perform their services and credentialed by
      the Contractor. Recredentialing shall occur at least once every two (2)
      years.

10.   The Contractor shall put a basic system in place which promotes continuity
      of care and case management. The Contractor shall provide documentation
      on:

      a.    Monitoring the quality of care across all services and all treatment
            modalities.

      b.    Studies, reports, protocols, standards, worksheets, minutes, or such
            other documentation as may be appropriate, concerning its QA
            activities and corrective actions and make such documentation
            available to the Department upon request.

11.   The findings, conclusions, recommendations, actions taken, and results of
      the actions taken as a result of QA activity, shall be documented and
      reported to appropriate individuals within the organization and through
      the established QA channels. The Contractor shall document coordination of
      QA activities and other management activities.

      a.    QA information shall be used in recredentialing, recontracting
            and/or annual performance evaluations.

      b.    QA activities shall be coordinated with other performance monitoring
            activities, including utilization management, risk management, and
            resolution and monitoring of member complaints and grievances.

      c.    There shall be a linkage between QA and the other management
            functions of the Plan such as:

            i.    network changes;

            ii.   benefits redesign;

            iii.  medical management systems (e.g., pre-certification);

            iv.   practice feedback to Physicians licensed to practice medicine
                  in all its branches; and

            v.    patient education.

      d.    In the aggregate, without reference to individual Physicians
            licensed to practice medicine in all its branches or Beneficiary
            identifying information, all Quality Assurance findings,
            conclusions, recommendations, actions taken, results or other

                                      A-8

<PAGE>

            documentation relative to QA shall be reported to Department on a
            quarterly basis or as requested by the Department. The Department
            shall be notified of any Physician licensed to practice medicine in
            all its branches terminated from a subcontract with the Contractor
            for a quality of care issue.

12.   The Contractor shall, through its behavioral health subcontractor and its
      internal QAP, monitor the quality of behavioral health services its
      subcontractor provides. Areas to be monitored include:

      a.    behavioral health network adequacy;

      b.    Beneficiary access to timely behavioral health services through
            self-referral, PCP/specialist referral, MCO referral, CBHP referral,
            or referral by other entities;

      c.    an individual plan or treatment and provision of appropriate level
            of care;

      d.    coordination of care between the CBHPs, MCO behavioral health
            subcontractor, and the Primary Care Provider;

      e.    provision of follow-up service and continuity of care;

      f.    involvement of the Primary Care Provider in aftercare to the extent
            possible, ensuring client confidentiality protections provided under
            law;

      g.    member satisfaction with access to and quality of behavioral health
            services; and

      h.    behavioral health service utilization, as set forth in the following
            chart.

                                      A-9

<PAGE>

The following behavioral health care utilization statistics shall be determined
and reported quarterly to the Department in a format agreed to by the MCOs and
Department:

  SUBSTANCE ABUSE/CHEMICAL DEPENDENCY:           MENTAL HEALTH:

  Inpatient (Rehab):                             Acute Inpatient Psychiatric
  Number of Admits                               Admission:
  Admits/1000 Beneficiaries                      Number of Admits
  Number of Days of Care                         Admits/1000 Beneficiaries
  Days/1000 Beneficiaries                        Number of Days of Care
  Average Length of Stay ("ALOS")                Days/1000 Beneficiaries
                                                 ALOS

 Inpatient (Detox):
 Number of Admits
 Admits/1000 Beneficiaries
 Number of Days of Care
 Days/1000 Beneficiaries
 ALOS

 Partial (Day/Night) Treatment:                  Partial (Day/Night) Treatment:
 Number of Admits                                Number of Admits
 Admits/1000 Beneficiaries                       Admits/1000 Beneficiaries
 Number of Days of Care                          Number of Days of Care
 Days/1000 Beneficiaries                         Days/1000 Beneficiaries
 ALOS                                            ALOS

 Intensive Outpatient Program:                   Intensive Outpatient Program:
 Number of Outpatients                           Number of Outpatients
 Outpatients/1000 Beneficiaries                  Outpatients/1000 Beneficiaries
 Number of Days of Care                          Number of Days of Care
 Days/1000 Beneficiaries                         Days/1000 Beneficiaries
 ALOS                                            ALOS

 Outpatient:                                     Outpatient:
 Number of Outpatients                           Number of Outpatients
 Outpatients/1000 Beneficiaries                  Outpatients/1000 Beneficiaries
 Number of Outpatient Sessions                   Number of Outpatient Sessions
 Average Number of Sessions                      Average Number of Sessions

 Follow-up:                                      Follow-up:
 Number of Discharges with Follow-up Care        Number of Discharges with
 Plan and Treatment                              Follow-up Care
                                                 Plan and Treatment

                                      A-10

<PAGE>

The provision of behavioral health services and appropriate risk assessment and
referral shall be included in the Contractor's medical record review processes
and considered for a clinical evaluation study as further described in Exhibit
B, Utilization Review/Peer Review, under (4).

                                      A-11

<PAGE>

                                   EXHIBIT B

                         UTILIZATION REVIEW/PEER REVIEW

1.    The Contractor shall have a utilization review and peer review
      committee(s) whose purpose will be to review data gathered and the
      appropriateness and quality of care. The committee(s) shall review and
      make recommendations for changes when problem areas are identified and
      report suspected Fraud and Abuse in the Medical Assistance Program or
      KidCare to the Department's Office of Inspector General. The committees
      shall keep minutes of all meetings, the results of each review and any
      appropriate action taken. A copy of the minutes shall be submitted to the
      Department no later than thirty (30) days after the close of the quarterly
      reporting period. At a minimum, these programs must meet all applicable
      federal and State requirements for utilization review. The Contractor and
      Department may further define these programs.

2.    The Contractor shall implement a Utilization Review Plan, including peer
      review. The Contractor shall provide the Department with documentation of
      its utilization review process. The process shall include:

      a.    Written program description - The Contractor shall have a written
            utilization management program description which includes, at a
            minimum, procedures to evaluate medical necessity criteria used and
            the process used to review and approve the provision of medical
            services.

      b.    Scope - The program shall have mechanisms to detect
            under-utilization as well as over-utilization.

      c.    Preauthorization and concurrent review requirements - For
            organizations with preauthorization and concurrent review
            programs:

            i.    review decisions shall be supervised by qualified medical
                  professionals;

            ii.   efforts shall be made to obtain all necessary information,
                  including pertinent clinical information, and consultation
                  with the treating Physician licensed to practice medicine in
                  all its branches as appropriate;

            iii.  the reasons for decisions shall be clearly documented and
                  available to the member;

            iv.   there shall be written well-publicized and readily available
                  appeals mechanisms for both Providers and patients;

                                       B-1

<PAGE>

            v.    decisions and appeals shall be made in a timely manner as
                  required by the circumstances of the situation;

            vi.   there shall be mechanisms to evaluate the effects of the
                  program using data on member satisfaction, provider
                  satisfaction or other appropriate measures;

            vii.  if the organization delegates responsibility for utilization
                  management, it shall have mechanisms to ensure that these
                  standards are met by the delegate.

3.    The Contractor further agrees to review the utilization review procedures,
      at reasonable intervals, for the purpose of amending same, as necessary in
      order to improve said procedures. All amendments must be approved by the
      Department. The Contractor further agrees to supply the Department and/or
      its designee with the utilization information and data, and reports
      prescribed in its approved utilization review system or the status of such
      system. This information shall be furnished upon request by the
      Department.

4     The Contractor shall establish and maintain a peer review program approved
      by the Department to review the quality of care being offered by the
      Contractor, employees and subcontractors. This program shall provide, at a
      minimum, the following:

      a.    A peer review committee comprised of Physicians licensed to practice
            medicine in all its branches, formed to organize and proceed with
            the required reviews for both the health professionals of the
            Contractor's staff and any contracted Providers which include:

            i.    A regular schedule for review;

            ii.   A system to evaluate the process and methods by which care is
                  given; and

            iii.  A medical record review process.

      b.    The Contractor shall maintain records of the actions taken by the
            peer review committee with respect to providers and those records
            shall be available to the Department upon request.

      c.    A system of internal medical review, including behavioral health
            services, medical evaluation studies, peer review, a system for
            evaluating the processes and outcomes of care, health education,
            systems for correcting deficiencies, and utilization review.

      d.    At least two medical evaluation studies must be completed yearly
            that analyze pressing problems identified by the Contractor, the
            results of such studies and

                                       B-2

<PAGE>

            appropriate action taken. One of the studies may address an
            administrative problem noted by the Contractor and one may address a
            clinical problem or diagnostic category. One brief follow-up study
            shall take place for each medical evaluation study in order to
            assess the actual effect of any action taken.

5.    The Contractor further agrees to review the peer review procedures, at
      reasonable intervals, for the purpose of amending same in order to improve
      said procedures. All amendments must be approved by the Department. The
      Contractor further agrees to supply the Department and/or its designee
      with the information and reports related to its peer review program upon
      request.

6.    The Department may request that peer review be initiated on specific
      providers.

7.    The Department will conduct its own peer reviews at its discretion.

                                       B-3

<PAGE>

                                    EXHIBIT C

                           Summary of Required Reports

Report names and reporting frequencies are listed herein. These shall be due to
the Department no later than thirty (30) days after the close of the reporting
period unless otherwise stated. Reports include hard copy reports and/or any
electronic medium as designated by the Department.

Report frequencies are defined as follows:

            Annually-   The State fiscal year of July 1 - June 30.
            Quarterly-  The last day of the fiscal quarter grouped as:
                        J/A/S (1st (qtr)), O/N/D (2nd (qtr)), J/F/M (3rd (qtr)),
                        and A/M/J (4th (qtr)).
            Monthly-    The last day of a calendar month.

<TABLE>
<CAPTION>
                    NAME OF REPORT                                   FREQUENCY
                    --------------                                   ---------
<S>                                                       <C>
 QUALITY- ASSURANCE/MEDICAL
 QA/UR/PR Report                                                          Annually

 Summary of Grievances and Resolutions and External                      Quarterly
 Independent Reviews and Resolutions

 Behavioral Health Report                                 Quarterly, 60 days after end of
                                                          quarter

 MARKETING
 Marketer Training Schedule and Agenda                    Quarterly, 2 weeks prior to the
                                                          beginning of each quarter, and as
                                                          revised

 Marketing Representative Listing                         Monthly on the first day of each
                                                          month for that month
</TABLE>

                                       C-1

<PAGE>

FRAUD/ABUSE                     IDAA Report goes to OIC, with Copy to Nelly Ryan

Fraud and Abuse Report          Immediately upon identification or
                                knowledge of suspected Fraud,
                                Abuse, or misconduct; or quarterly
                                certification, due 30 days after the
                                close of the quarter, that no Fraud,
                                Abuse, or misconduct was
                                identified during the quarter

                                       C-2

<PAGE>

                                    EXHIBIT D

                         Summary of Required Submissions

Submissions and submission frequencies are listed herein. These shall be due to
the Department no later than thirty (30) days after the close of the reporting
period unless otherwise stated. Submissions include hard copy reports and/or any
electronic medium as designated by the Department.

Submission frequencies are defined as follows:

            Annually-   The State fiscal year of July 1 - June 30
            Quarterly-  The last day of the fiscal year quarter grouped as:
                        J/A/S (1st qtr), O/N/D (2nd qtr), J/F/M (3rd qtr), and
                        A/M/J (4th qtr).
            Monthly-    The last day of a calendar month.

<TABLE>
<CAPTION>
                                                                         DPA PRIOR
              NAME OF SUBMISSION                   FREQUENCY             APPROVAL
              ------------------                   ---------             --------
<S>                                       <C>                            <C>
ADMINISTRATIVE
Disclosure Statements                     Initially, Annually, on           No
                                          request and as changes
                                          occur

Encounter Data Report                     Monthly no later than             No
                                          120 days after the close
                                          of the reporting period
BENEFICIARY MATERIALS
Certificate or Document of Coverage and   Initially and as revised          Yes
Any Changes or Amendments

Beneficiary Handbook                      Initially and as revised          Yes

Identification Card                       Initially and as revised          Yes
</TABLE>

                                       D-1

<PAGE>

<TABLE>
<CAPTION>
                                                                                       DPA PRIOR
               NAME OF SUBMISSION                             FREQUENCY                APPROVAL
               ------------------                             ---------                --------
  <S>                                                 <C>                              <C>
  SUBCONTRACTS
  Model Subcontractor Agreements                      Initially and as revised            No

  Linkage Agreements                                  As executed and updated             No

  Copies of Actual Executed Subcontracts              Upon Request                        No

  PROVIDER NETWORK                                    As new sites/PCPs are added         Yes

  New Site Provider Affiliation File
  (electronic)*

  Site/PCP Approvals (paper format-A&B                As new sites/PCPs are added         Yes
  forms)*

  Provider Affiliation with Site Report               Monthly on the first day of         No
                                                      each month for that month

  Beneficiary Site Assignment/Site Transfer           As they occur                       No

  Site Terminations                                   As they occur                       No

  MARKETING MATERIALS

  Marketing Plans and Procedures                      Initially and as revised            Yes

  Marketing Training Manuals                          Initially and as revised            Yes

  Marketing Materials and Information                 Initially and as revised            Yes

  Marketing Representative Terminations               As they occur                       No
</TABLE>
                                       D-2

<PAGE>

<TABLE>
<CAPTION>
                                                                                       DPA PRIOR
               NAME OF SUBMISSION                             FREQUENCY                APPROVAL
               ------------------                             ---------                --------
<S>                                                   <C>                              <C>
QUALITY ASSURANCE/MEDICAL
Quality Assurance, Utilization Review and             Initially and as revised            Yes
Peer Review Plan (includes health education
plan)

QA/UR/PR Committee Meeting Minutes                    Quarterly                           No

Grievance Procedures                                  Initially and as revised            Yes
</TABLE>

*The approval of Sites/PCPs will transition from paper to electronic format
during the course of this Contract. Both versions of the submission are listed.
The electronic format will not be required until such time as the Department
provides one-hundred twenty (120) days advance notice.

                                       D-3
<PAGE>

                                    EXHIBIT E

                       Encounter Data Format Requirements

Illinois Medicaid UB92 Billing Specification
      (Approved by the Illinois UB92 Billing Committee)

HCFA National Standard Format for non-institutional claims

IDPA Direct Tape format for pharmacy claims

<PAGE>

[ILLINOIS DEPARTMENT OF PUBLIC AID LOGO]       ILLINOIS DEPARTMENT OF PUBLIC AID

                                               201 South Grand Avenue East
                                               Springfield, Illinois 62763-0001

    GEORGE H. RYAN, GOVERNOR                   TELEPHONE: (217) 782-1200
       ANN PATLA, DIRECTOR                     TTY: (800) 526-5812

July 12, 2000

Ancelmo Lopes
Chief Executive Officer
Harmony Health Plan
125 South Wacker Drive, Suite 2900
Chicago, Illinois 60606

Dear Mr. Lopes,

Enclosed please find four originals of an amendment to the Contract for
Furnishing Health Services between Harmony Health Plan and the Department. As
discussed at the quarterly meeting, this amendment reflects a 2% rate increase,
makes various language changes requested by one health plan, and further
clarifies the Departments intent regarding compliance with prompt payment
provisions. For your information, I have attached the red-lined pages of the
contract that are affected by these amendments. The page numbers on the
red-lined pages may be slightly different from your contract page numbers, as
this red-line was done against a model contract, not each individual contract.

Please complete all four originals and return them to my attention as soon as
possible, but no later than Friday, July 21st. The 2% increase will then be
processed by the Department and will be effective for the September payment run.
An adjustment will be run for July and August.

If you have any questions on the above issues, please feel free to contact me
at (217) 524-7478.

Sincerely,

/s/ Nelly Ryan
-------------------
Nelly Ryan, Chief
Bureau of Managed Care

Attachments

E-MAIL: dpa_webmaster@state.il.us          INTERNET: http://www.state.il.us/dpa/

<PAGE>

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

             AMENDMENT #1 TO CONTRACT FOR FURNISHING HEALTH SERVICES
              BY A HEALTH MAINTENANCE ORGANIZATION (2001-24-006-KA)

      It is hereby agreed by and between the parties that the Contract for
Furnishing Health Services by a Health Maintenance Organization between the
State of Illinois, Department of Public Aid (Department), and Harmony Health
Plan, a health maintenance organization (Contractor), such Contract being
effective on April 1, 2000 is amended pursuant to Article IX as set forth
herein. This Amendment shall be effective April 1, 2000.

Article II, Section 2.2 (b) shall be amended by deleting the existing paragraph
in its entirety and inserting the following in its place:

      "References in the Contract to Eligible Enrollee, Prospective Beneficiary
      and Beneficiary shall include the parent, caretaker relative or guardian
      where such Eligible Enrollee, Prospective Beneficiary or Beneficiary is a
      minor child or an adult for whom a guardian has been named, provided that
      the Contractor is not obligated to cover services for any individual who
      is not enrolled as a Beneficiary with the Contractor."

Article II shall be amended by inserting the following new section immediately
after Section 2.7:

"2.8 PROVISION OF COVERED SERVICES THROUGH AFFILIATED PROVIDERS

      Where the Contractor does not employ Physicians or other Providers to
      provide direct health care services, every provision in this Contract by
      which the Contractor is obligated to provide Covered Services of any type
      to Beneficiaries, including but not limited to provisions stating that the
      Contractor will "provide Covered Services," "provide quality care," or
      provide a specific type of health care service, such as the enumerated
      Covered Services in Article V, Section 5.1, health screenings, prenatal
      care, or behavioral health assessments, shall be interpreted to mean that
      the Contractor arranges for the provision of those Covered Services
      through its network of Affiliated Providers."

Article V, Section 5.1(e)(9) shall be amended by deleting the word "and".

Article V, Section 5.1(e)(10) shall be amended by deleting the period (.) and
inserting a semicolon (;) in its place.

Article V, Section 5.1(e) shall be amended by inserting the following after
5.1(e)(10):

"11.  Services provided by a non-Affiliated Provider and not authorized by the
      Contractor, unless this Contract specifically requires that such services
      be covered; and

                                       -1-

<PAGE>

12.   Services that are provided without first obtaining a required referral or
      prior authorization as set forth in the Beneficiary handbook."

Article V, Section 5.13 shall be amended by adding the following new paragraph
after the second paragraph:

      "The Contractor shall not be in violation of this Contract if a particular
      Beneficiary or Beneficiaries do not receive one of the services listed in
      Section 5.1(d) or in this Section 5.13(a) through (d), so long as the
      Contractor has made good faith efforts to educate Beneficiaries about
      those services, as required by the Contract, and the availability of
      coverage for those services, and so long as the Contractor has required
      its Affiliated Providers to offer those services."

Article V, Section 5.15 shall be amended by deleting the first paragraph in its
entirety and inserting the following in its place:

      "The Contractor shall make payments to Providers for Covered Services on a
      timely basis consistent with the Claims Payment Procedure described at 42
      U.S.C. Section 1396a(a)(37)(A) and Illinois Public Act 91-0605. Complaints
      and disputes concerning payments for the provision of services described
      in this paragraph shall be subject to the Contractor's Provider grievance
      resolutions system."

Attachment I shall be deleted and replaced by the attached First Amended
Attachment I. Each reference to Attachment I in the Contract shall be replaced
with a reference to First Amended Attachment I.

IN WITNESS WHEREOF, the Department and the Contractor hereby execute and deliver
this Amendment, effective as of the date indicated above.

STATE OF ILLINOIS                                CONTRACTOR
DEPARTMENT OF PUBLIC AID

By: ______________________________________       By: ___________________________
                Ann Patla

Title: Director                                  Title: ________________________

Date: ____________________________________       Date: _________________________

                                                 FEIN: _________________________

                                       -2-

<PAGE>

                           FIRST AMENDED ATTACHMENT I

                                   RATE SHEETS

(a) Contractor Name: Harmony Health Plan of Illinois, Inc

    Address:                125 South Wacker Drive
                            Suite 2900
                            Chicago, IL 60606-4402

(b) Contracting Area(s) Covered by the Contractor and Enrollment Limit:

<TABLE>
<CAPTION>
Contracting Area                                 Enrollment Limit
<S>                                              <C>
   Region IV                                         100,000
</TABLE>

(c) Total Enrollment Limit for all Contracting Areas: 100,000

(d) Threshold Review Levels: 80,000

                                   Att. I - 1

<PAGE>

(e) Standard Capitation Rates for MAG Beneficiaries for each Region for April 1,
2000 through June 30, 2000:

<TABLE>
<CAPTION>
               Region I       Region II      Region III     Region IV      Region V
                 (N.W.        (Central       (Southern        (Cook         (Collar
               Illinois)      Illinois)      Illinois)       County)       Counties)
 Age/Gender      PMPM           PMPM           PMPM           PMPM           PMPM
 ----------    ---------      ---------      -----------    ---------      ---------
<S>            <C>            <C>            <C>            <C>            <C>
 0-2 F          $214.19        $149.47        $206.08        $254.29        $181.15
 0-2 M          $242.48        $183.18        $263.92        $300.07        $183.68
 3-13 F         $ 39.63        $ 41.98        $ 47.02        $ 40.55        $ 32.21
 3-13 M         $ 47.40        $ 52.61        $ 55.95        $ 49.60        $ 40.28
14-20 F         $209.65        $181.58        $204.84        $169.14        $167.32
14-20 M         $ 74.37        $ 70.44        $ 75.51        $ 63.46        $ 46.99
21-44 F         $201.77        $186.87        $206.99        $203.22        $181.66
21-44 M         $100.41        $111.11        $132.34        $148.11        $102.05
 45+ F          $324.75        $292.50        $269.83        $245.81        $236.39
 45+ M          $195.92        $304.26        $291.83        $221.72        $177.78
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for MAG Beneficiaries for each Region beginning July
1, 2000.

<TABLE>
<CAPTION>
               Region I       Region II      Region III     Region IV      Region V
                 (N.W.        (Central       (Southern        (Cook         (Collar
               Illinois)      Illinois)      Illinois)       County)       Counties)
 Age/Gender      PMPM           PMPM           PMPM           PMPM           PMPM
 ----------    ---------      ---------      -----------    ---------      ---------
<S>            <C>            <C>            <C>            <C>            <C>
 0-2 F          $218.47        $152.46        $210.20        $259.38        $184.77
 0-2 M          $247.33        $186.84        $269.20        $306.07        $187.35
 3-13 F         $ 40.42        $ 42.82        $ 47.96        $ 41.36        $ 32.85
 3-13 M         $ 48.35        $ 53.66        $ 57.07        $ 50.59        $ 41.09
14-20 F         $213.84        $185.21        $208.94        $172.52        $170.67
14-20 M         $ 75.86        $ 71.85        $ 77.02        $ 64.73        $ 47.93
21-44 F         $205.81        $190.61        $211.13        $207.28        $185.29
21-44 M         $102.42        $113.33        $134.99        $151.07        $104.09
 45+ F          $331.25        $298.35        $275.23        $250.73        $241.12
 45+ M          $199.84        $310.35        $297.67        $226.15        $181.34
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 2

<PAGE>

(f) Standard Capitation Rates for MANG Beneficiaries for each Region for April
1, 2000 through June 30, 2000:

<TABLE>
<CAPTION>
               Region I       Region II      Region III     Region IV      Region V
                 (N.W.        (Central       (Southern        (Cook         (Collar
               Illinois)      Illinois)      Illinois)       County)       Counties)
 Age/Gender      PMPM           PMPM           PMPM           PMPM           PMPM
 ----------    ---------      ---------      -----------    ---------      ---------
<S>            <C>            <C>            <C>            <C>            <C>
 0-2 F         $277.63        $270.73        $276.42        $221.95        $175.33
 0-2 M         $337.39        $320.77        $236.83        $259.94        $203.36
3-13 F         $ 46.02        $ 44.62        $ 52.51        $ 43.55        $ 39.42
3-13 M         $ 58.45        $ 63.44        $ 67.51        $ 55.10        $ 51.37
14-20 F        $260.15        $234.40        $246.15        $238.15        $260.81
14-20 M        $ 79.62        $119.09        $121.82        $ 82.31        $181.38
21-44 F        $245.64        $245.87        $226.89        $266.25        $244.39
21-44 M        $145.22        $107.80        $103.83        $ 98.85        $119.40
 45+ F         $279.44        $329.92        $300.30        $255.70        $270.54
 45+ M         $340.30        $205.30        $239.31        $247.28        $292.90
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for MANG Beneficiaries for each Region beginning July
1, 2000.

<TABLE>
<CAPTION>
               Region I       Region II      Region III     Region IV      Region V
                 (N.W.        (Central       (Southern        (Cook         (Collar
               Illinois)      Illinois)      Illinois)       County)       Counties)
 Age/Gender      PMPM           PMPM           PMPM           PMPM           PMPM
 ----------    ---------      ---------      -----------    ---------      ---------
<S>            <C>            <C>            <C>            <C>            <C>
 0-2 F          $283.18        $276.14        $281.95        $226.39        $178.84
 0-2 M          $344.14        $327.19        $241.57        $265.14        $207.43
 3-13 F         $ 46.94        $ 45.51        $ 53.56        $ 44.42        $ 40.21
 3-13 M         $ 59.62        $ 64.71        $ 68.86        $ 56.20        $ 52.40
14-20 F         $265.35        $239.09        $251.07        $242.91        $266.03
14-20 M         $ 81.21        $121.47        $124.26        $ 83.96        $185.01
21-44 F         $250.55        $250.79        $231.43        $271.58        $249.28
21-44 M         $148.12        $109.96        $105.91        $100.83        $121.79
 45+ F          $285.03        $336.52        $306.31        $260.81        $275.95
 45+ M          $347.11        $209.41        $244.10        $252.23        $298.76
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 3

<PAGE>

(g) Standard Capitation Rates for KidCare Participants for each Region for April
1, 2000 through June 30, 2000:

<TABLE>
<CAPTION>
               Region I       Region II    Region III    Region IV     Region V
                 (N.W.        (Central     (Southern       (Cook        (Collar
               Illinois)      Illinois)    Illinois)      County)      Counties)
 Age/Gender      PMPM           PMPM         PMPM          PMPM          PMPM
 ----------    ---------      ---------    ----------    ---------     ---------
<S>            <C>            <C>          <C>           <C>           <C>
 1-2 F          $66.34        $67.54        $73.13        $74.63        $60.58
 1-2 M          $92.26        $75.87        $96.90        $86.82        $73.08
 3-13 F         $39.25        $41.38        $46.47        $40.71        $32.31
 3-13 M         $47.00        $51.79        $55.68        $49.87        $40.63
14-18 F         $87.57        $85.98        $99.19        $77.53        $73.22
14-18 M         $73.14        $69.51        $75.56        $63.48        $46.69
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for KidCare Participants for each Region beginning
July 1, 2000.

<TABLE>
<CAPTION>
               Region I      Region II     Region III      Region IV      Region V
                 (N.W.       (Central      (Southern         (Cook         (Collar
               Illinois)     Illinois)     Illinois)        County)       Counties)
 Age/Gender      PMPM          PMPM          PMPM            PMPM           PMPM
 ----------    ---------     ---------     ----------      ---------      ---------
<S>            <C>           <C>           <C>             <C>            <C>
 1-2 F         $ 67.67        $ 68.89        $ 74.59        $ 76.12        $ 61.79
 1-2 M         $ 94.11        $ 77.39        $ 98.84        $ 88.56        $ 74.54
3-13 F         $ 40.04        $ 42.21        $ 47.40        $ 41.52        $ 32.96
3-13 M         $ 47.94        $ 52.83        $ 56.79        $ 50.87        $ 41.44
14-18 F        $ 89.32        $ 87.70        $101.17        $ 79.08        $ 74.68
14-18 M        $ 74.60        $ 70.90        $ 77.07        $ 64.75        $ 47.62
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 4
<PAGE>

                                               ILLINOIS DEPARTMENT OF PUBLIC AID

[ILLINOIS DEPARTMENT OF PUBLIC AID LOGO]       201 South Grand Avenue East
                                               Springfield, Illinois 62763-0001

GEORGE H. RYAN, GOVERNOR                       TELEPHONE: (217) 782-1200
   ANN PATLA, DIRECTOR                         TTY: (800) 526-5812

January 16, 2001

Kathy LaSpina-Morse
Director of Quality Improvement
Harmony Health Plan
125 South Wacker Drive, Suite 2900
Chicago, Illinois 60606

Dear Ms. LaSpina-Morse:

I am writing in response to your letter of November 29, 2000 concerning the
outstanding issues with Harmony's Application for Expansion into Region III.

In regard to OPTIONAL BENEFITS, you do not indicate members have been informed
benefits would be discontinued. In our preliminary discussions, were given
indications that a decision would be made by Harmony and NCP as to who (Harmony
or NCP, would send the notification. Throughout this process, there has been no
indication Harmony would not fulfill this requirement.

You have indicated all members have completed their course of treatment for the
added benefit. We agree it would be confusing to inform members, at this time,
the added benefit is no longer available through Harmony.

The Department is now, at this late stage in the process and as an exception,
waiving this contractual requirement. With this requirement waived, Harmony has
satisfied the Department's requirements for the expansion.

If you have any questions, please feel free to contact Yvonne Roth-Zumstein at
(217) 524-7478.

Sincerely,

/s/ Nelly Ryan,
Nelly Ryan, Chief
Bureau of Contract Management

cc: Ancelmo Lopes

E-MAIL: dpa_webmaster@state.il.us          INTERNET: http://www.state.il.us/dpa/

<PAGE>

[ILLINOIS DEPARTMENT OF PUBLIC HEALTH LOGO]

             George H. Ryan, Governor - John R. Lumpkin, M.D., M. P.H., Director

525-535 West Jefferson Street Springfield, Illinois 62761 - 0001

                                 August 16, 2000

Mr. Anselmo Lopes
President and CEO
Harmony Health Plan of IL, Inc.
125 South Wacker Drive, Suite 2900
Chicago, IL 60606-4402

Dear Mr. Lopes:

      We have reviewed and accepted Harmony Health Plan's request for a
geographic service area expansion to include St. Clair and Madison counties. A
copy of this approval will be placed in Harmony Health Plan's file. We also
notify the Illinois Department of Insurance so that they may revise the
information on their website.

      If you have any questions, please contact me at 217/782-7412. I apologize
for the slight delay. I have been on a temporary assignment with a special
project in addition to my regular duties. Normally, these requests are completed
the same week they are submitted. Please thank Kathy LaSpina for me for her
diligent follow-up of this issue.

                                 Sincerely,
                                 /s/ Karen Kabat, R.N., PAHM
                                 Karen Kabat, R.N., PAHM
                                 HMO Nurse Consultant
                                 Division of Health Care Facilities and Programs

 HarmonyHP081600

cc:   Dave Grant, IDOI                                               [ILLEGIBLE]
      Jeff Martin, IDOI       Post-Fax Note  - 7671    Date 8/16/00  OF PAGES
      Rebecca Turner, IDOI    To Kathy LaSpina         From Karen Kabat
                              Co/Dept.                 Co
                              Phone 312                Phone # 217/782 - 7412
                              Fax # 630/2022           Fax # 217/782 - 0382

[ILLEGIBLE]                                            [ILLEGIBLE]


<PAGE>

                                               ILLINOIS DEPARTMENT OF PUBLIC AID

[ILLINOIS DEPARTMENT OF PUBLIC AID LOGO]       201 South Grand Avenue East
                                               Springfield, Illinois 62763-0001

GEORGE H. RYAN, GOVERNOR                       TELEPHONE: (217) 782-1200
   JACKIE GARNER, DIRECTOR                     TTY: (800) 526-5812

February 19, 2002

Ancelmo Lopes, Chief Executive Officer
Harmony Health Plan
125 South Wacker Drive, Suite 2900
Chicago, IL 60606

Dear Mr. Lopes,

Enclosed please find four originals of an amendment to the Contract for
Furnishing Health Services between Harmony Health Plan and the Department. This
amendment reflects a 4.5% rate reduction to each age and gender cell, effective
January 1, 2002.

Please have all four originals completed and signed, and return them to my
attention as soon as possible.

If you have any questions, please feel free to contact me at (217) 924-7478.

Sincerely,

/s/ Nelly Ryan

Nelly Ryan, Deputy Administrator
Division of Medical Programs

Attachment

E-MAIL: dpa_webmaster@state.il.us          INTERNET: http://www.state.il.us/dpa/

<PAGE>

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                               AMENDMENT NO. 3 OF
                    CONTRACT FOR FURNISHING HEALTH SERVICES
                                      BY A
                        HEALTH MAINTENANCE ORGANIZATION
                                2001-24-006-KA2

WHEREAS, the parties to Contract for Furnishing Health Services by a Health
Maintenance Organization ("CONTRACT"), the ILLINOIS DEPARTMENT OF PUBLIC AID,
201 South Grand Avenue East, Springfield, Illinois 62763-0001 (herein referred
to as "Department"), acting by and through its Director, and HARMONY HEALTH PLAN
OF ILLINOIS, INC, (hereinafter referred to as "Contractor"), desire to amend the
CONTRACT; and

      WHEREAS, pursuant to Article 9, Section 9.9 (a) of the CONTRACT, the
CONTRACT may be modified or amended by the mutual consent of the parties;

      NOW THEREFORE, the CONTRACT shall be amended as follows:

      1.    First Amended Attachment I shall be deleted and replaced by the
            attached Second Amended Attachment I. Each reference to First
            Amended Attachment I in the CONTRACT shall be deemed to refer to
            Second Amended Attachment I.

      All other terms and conditions of the CONTRACT shall remain in full
force and effect.

      IN WITNESS WHEREOF, the parties have hereunto caused this agreement to
amend the CONTRACT to be executed by their duly authorized representatives,
effective January 1, 2002.

DEPARTMENT OF PUBLIC AID                    Harmony Health Plan of Illinois, Inc

By:                                         By: /s/ ANSELMO E. LOPES
       ------------------------                 --------------------------------
           Jackie Garner
                                            Printed Name: ANSELMO E. LOPES

Title:       Director                       Title: President

Date:                                       Date:   2/25/02
       ------------------------
                                            FEIN: 36.4050495


                                      -1-

<PAGE>

                           THIRD AMENDED ATTACHMENT I

                                  RATE SHEETS

(a)   Contractor Name:     Harmony Health Plan of Illinois, Inc

      Address:             125 South Wacker Drive
                           Suite 2900
                           Chicago, IL 60606-4402

(b)   Contracting Area(s) Covered by the Contractor and Enrollment Limit:

<TABLE>
<CAPTION>
Contracting Area                    Enrollment Limit
----------------                    ----------------
<S>                                 <C>
   Region III                            25,000
   Region IV                            100,000
</TABLE>

(c)   Total Enrollment Limit for all Contracting Areas: 125,000

(d)   Threshold Review Levels:
                   Region III     20,000
                   Region IV      80,000

                                   Att. I - 1

<PAGE>

(e) Standard Capitation Rates for MAG Beneficiaries for each Region for April 1,
2000 through June 30, 2000:

<TABLE>
<CAPTION>
             Region I       Region II    Region III      Region IV      Region V
               (N.W.        (Central      (Southern        (Cook         (Collar
             Illinois)      Illinois)     Illinois)       County)       Counties)
Age/Gender     PMPM           PMPM          PMPM            PMPM           PMPM
----------------------------------------------------------------------------------
<S>          <C>            <C>          <C>             <C>            <C>
 0-2 F       $ 214.19       $ 149.47       $ 206.08       $ 254.29       $ 181.15
 0-2 M       $ 242.48       $ 183.18       $ 263.92       $ 300.07       $ 183.68
 3-13 F      $  39.63       $  41.98       $  47.02       $  40.55       $  32.21
 3-13 M      $  47.40       $  52.61       $  55.95       $  49.60       $  40.28
14-20 F      $ 209.65       $ 181.58       $ 204.84       $ 169.14       $ 167.32
14-20 M      $  74.37       $  70.44       $  75.51       $  63.46       $  46.99
21-44 F      $ 201.77       $ 186.87       $ 206.99       $ 203.22       $ 181.66
21-44 M      $ 100.41       $ 111.11       $ 132.34       $ 148.11       $ 102.05
 45+ F       $ 324.75       $ 292.50       $ 269.83       $ 245.81       $ 236.39
 45+ M       $ 195.92       $ 304.26       $ 291.83       $ 221.72       $ 177.78
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for MAG Beneficiaries for each Region for July 1, 2000
through December 31, 2001

<TABLE>
<CAPTION>
             Region I       Region II    Region III      Region IV      Region V
               (N.W.        (Central      (Southern        (Cook         (Collar
             Illinois)      Illinois)     Illinois)       County)       Counties)
Age/Gender     PMPM           PMPM          PMPM            PMPM           PMPM
----------------------------------------------------------------------------------
<S>          <C>            <C>          <C>             <C>            <C>
 0-2 F       $ 218.47       $ 152.46      $ 210.20        $ 259.38       $ 184.77
 0-2 M       $ 247.33       $ 186.84      $ 269.20        $ 306.07       $ 187.35
 3-13 F      $  40.42       $  42.82      $  47.96        $  41.36       $  32.85
 3-13 M      $  48.35       $  53.66      $  57.07        $  50.59       $  41.09
14-20 F      $ 213.84       $ 185.21      $ 208.94        $ 172.52       $ 170.67
14-20 M      $  75.86       $  71.85      $  77.02        $  64.73       $  47.93
21-44 F      $ 205.81       $ 190.61      $ 211.13        $ 207.28       $ 185.29
21-44 M      $ 102.42       $ 113.33      $ 134.99        $ 151.07       $ 104.09
 45+ F       $ 331.25       $ 298.35      $ 275.23        $ 250.73       $ 241.12
 45+ M       $ 199.84       $ 310.35      $ 297.67        $ 226.15       $ 181.34
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 2

<PAGE>

Standard Capitation Rates for MAG Beneficiaries for each Region beginning
January 1, 2002.

<TABLE>
<CAPTION>
             Region I       Region II    Region III      Region IV      Region V
               (N.W.        (Central      (Southern        (Cook         (Collar
             Illinois)      Illinois)     Illinois)       County)       Counties)
Age/Gender     PMPM           PMPM          PMPM            PMPM           PMPM
----------------------------------------------------------------------------------
<S>          <C>            <C>          <C>             <C>            <C>
 0-2 F       $ 208.64       $ 145.60      $ 200.74        $ 247.71       $ 176.46
 0-2 M       $ 236.20       $ 178.43      $ 257.09        $ 292.30       $ 178.92
 3-13 F      $  38.60       $  40.89      $  45.80        $  39.50       $  31.37
 3-13 M      $  46.17       $  51.25      $  54.50        $  48.31       $  39.24
14-20 F      $ 204.22       $ 176.88      $ 199.54        $ 164.76       $ 162.99
14-20 M      $  72.45       $  68.62      $  73.55        $  61.82       $  45.77
21-44 F      $ 196.55       $ 182.03      $ 201.63        $ 197.95       $ 176.95
21-44 M      $  97.81       $ 108.23      $ 128.92        $ 144.27       $  99.41
 45+ F       $ 316.34       $ 284.92      $ 262.84        $ 239.45       $ 230.27
 45+ M       $ 190.85       $ 296.38      $ 284.27        $ 215.97       $ 173.18
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 3

<PAGE>

(f) Standard Capitation Rates for MANG Beneficiaries for each Region for April
1, 2000 through June 30, 2000:

<TABLE>
<CAPTION>
             Region I       Region II    Region III      Region IV      Region V
               (N.W.        (Central      (Southern        (Cook         (Collar
             Illinois)      Illinois)     Illinois)       County)       Counties)
Age/Gender     PMPM           PMPM          PMPM            PMPM           PMPM
----------------------------------------------------------------------------------
<S>          <C>            <C>          <C>             <C>            <C>
 0-2 F       $   277.63     $ 270.73     $   276.42      $  221.95      $  175.33
 0-2 M       $   337.39     $ 320.77     $   236.83      $  259.94      $  203.36
 3-13 F      $    46.02     $  44.62     $    52.51      $   43.55      $   39.42
 3-13 M      $    58.45     $  63.44     $    67.51      $   55.10      $   51.37
14-20 F      $   260.15     $ 234.40     $   246.15      $  238.15      $  260.81
14-20 M      $    79.62     $ 119.09     $   121.82      $   82.31      $  181.38
21-44 F      $   245.64     $ 245.87     $   226.89      $  266.25      $  244.39
21-44 M      $   145.22     $ 107.80     $   103.83      $   98.85      $  119.40
 45+ F       $   279.44     $ 329.92     $   300.30      $  255.70      $  270.54
 45+ M       $   340.30     $ 205.30     $   239.31      $  247.28      $  292.90
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for MANG Beneficiaries for each Region for July 1,
2000 through December 31, 2001.

<TABLE>
<CAPTION>
             Region I     Region II    Region III      Region IV      Region V
               (N.W.      (Central      (Southern        (Cook         (Collar
             Illinois)    Illinois)     Illinois)       County)       Counties)
Age/Gender     PMPM         PMPM          PMPM            PMPM           PMPM
--------------------------------------------------------------------------------
<S>          <C>          <C>          <C>             <C>            <C>
 0-2 F       $  283.18    $  276.14    $   281.95      $  226.39      $  178.84
 0-2 M       $  344.14    $  327.19    $   241.57      $  265.14      $  207.43
 3-13 F      $   46.94    $   45.51    $    53.56      $   44.42      $   40.21
 3-13 M      $   59.62    $   64.71    $    68.86      $   56.20      $   52.40
14-20 F      $  265.35    $  239.09    $   251.07      $  242.91      $  266.03
14-20 M      $   81.21    $  121.47    $   124.26      $   83.96      $  185.01
21-44 F      $  250.55    $  250.79    $   231.43      $  271.58      $  249.28
21-44 M      $  148.12    $  109.96    $   105.91      $  100.83      $  121.79
 45+ F       $  285.03    $  336.52    $   306.31      $  260.81      $  275.95
 45+ M       $  347.11    $  209.41    $   244.10      $  252.23      $  298.76
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 4

<PAGE>

Standard Capitation Rates for MANG Beneficiaries for each Region beginning
January 1, 2002.

<TABLE>
<CAPTION>
             Region I     Region II    Region III      Region IV      Region V
               (N.W.      (Central      (Southern        (Cook         (Collar
             Illinois)    Illinois)     Illinois)       County)       Counties)
Age/Gender     PMPM         PMPM          PMPM            PMPM           PMPM
--------------------------------------------------------------------------------
<S>          <C>          <C>          <C>             <C>            <C>
 0-2 F       $ 270.44     $  263.71    $  269.26       $  216.20      $  170.79
 0-2 M       $ 328.65     $  312.47    $  230.70       $  253.21      $  198.10
 3-13 F      $  44.83     $   43.46    $   51.15       $   42.42      $   38.40
 3-13 M      $  56.94     $   61.80    $   65.76       $   53.67      $   50.04
14-20 F      $ 253.41     $  228.33    $  239.77       $  231.98      $  254.06
14-20 M      $  77.56     $  116.00    $  118.67       $   80.18      $  176.68
21-44 F      $ 239.28     $  239.50    $  221.02       $  259.36      $  238.06
21-44 M      $ 141.45     $  105.01    $  101.14       $   96.29      $  116.31
 45+ F       $ 272.20     $  321.38    $  292.53       $  249.07      $  263.53
 45+ M       $ 331.49     $  199.99    $  233.12       $  240.88      $  285.32
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 5

<PAGE>

(g) Standard Capitation Rates for KidCare Participants for each Region for April
1, 2000 through June 30, 2000:

<TABLE>
<CAPTION>
             Region I     Region II    Region III      Region IV      Region V
               (N.W.      (Central      (Southern        (Cook         (Collar
             Illinois)    Illinois)     Illinois)       County)       Counties)
Age/Gender     PMPM         PMPM          PMPM            PMPM           PMPM
--------------------------------------------------------------------------------
<S>          <C>          <C>          <C>             <C>            <C>
  1-2 F      $   66.34    $   67.54    $   73.13       $   74.63      $   60.58
  1-2 M      $   92.26    $   75.87    $   96.90       $   86.82      $   73.08
 3-13 F      $   39.25    $   41.38    $   46.47       $   40.71      $   32.31
 3-13 M      $   47.00    $   51.79    $   55.68       $   49.87      $   40.63
14-18 F      $   87.57    $   85.98    $   99.19       $   77.53      $   73.22
14-18 M      $   73.14    $   69.51    $   75.56       $   63.48      $   46.69
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for KidCare Participants for each Region for July 1,
2000 through December 31, 2001.

<TABLE>
<CAPTION>
             Region I     Region II    Region III      Region IV      Region V
               (N.W.      (Central      (Southern        (Cook         (Collar
             Illinois)    Illinois)     Illinois)       County)       Counties)
Age/Gender     PMPM         PMPM          PMPM            PMPM           PMPM
--------------------------------------------------------------------------------
<S>          <C>          <C>          <C>             <C>            <C>
 1-2 F       $   67.67    $   68.89    $   74.59       $   76.12      $  61.79
 1-2 M       $   94.11    $   77.39    $   98.84       $   88.56      $  74.54
 3-13 F      $   40.04    $   42.21    $   47.40       $   41.52      $  32.96
 3-13 M      $   47.94    $   52.83    $   56.79       $   50.87      $  41.44
14-18 F      $   89.32    $   87.70    $  101.17       $   79.08      $  74.68
14-18 M      $   74.60    $   70.90    $   77.07       $   64.75      $  47.62
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for KidCare Participants for each Region beginning
January 1, 2002.

<TABLE>
<CAPTION>
             Region I     Region II    Region III      Region IV      Region V
               (N.W.      (Central      (Southern        (Cook         (Collar
             Illinois)    Illinois)     Illinois)       County)       Counties)
Age/Gender     PMPM         PMPM          PMPM            PMPM           PMPM
--------------------------------------------------------------------------------
<S>          <C>          <C>          <C>             <C>            <C>
  1-2 F      $   64.62    $   65.79    $   71.23       $   72.69      $   59.01
  1-2 M      $   89.88    $   73.91    $   94.39       $   84.57      $   71.19
 3-13 F      $   38.24    $   40.31    $   45.27       $   39.65      $   31.48
 3-13 M      $   45.78    $   50.45    $   54.23       $   48.58      $   39.58
14-18 F      $   85.30    $   83.75    $   96.62       $   75.52      $   71.32
14-18 M      $   71.24    $   67.71    $   73.60       $   61.84      $   45.48
</TABLE>

                                   Att. I - 6

<PAGE>

                                                            CC: DR. H. HOLLANDER
MAY 22 2002                                                     C. COUGHLIN

                                                ILLinois Department [ILLEGIBLE]

     [LOGO]                                     201 South Grand Avenue East
                                                Springfield, Illinois 62763-0001

GEORGE H. RYAN, GOVERNOR                        TELEPHONE: (217) 782-1200
JACKIE GARNER, DIRECTOR                         TTY: (800) 526-5812

May 15, 2002

John Blank, M.D.
President and CEO
Harmony Health Plan
125 South Wacker Drive, Suite 2900
Chicago, Illinois 60606

Dear Dr. Blank:

Enclosed for your files is one original signature copy of the amendment to the
Contract for Furnishing Health Services which permits the State to continue
paying the capitation for the MAG category of assistance when a participant
switches to the MANG category of Assistance. The effective date of this
amendment is March 11, 2002.

Sincerely,

/s/ Nelly Ryan

Nelly Ryan, Deputy Administrator
Division of Medical Programs

Enclosure

cc: Gary Fitzgerald, Director of Government Programs and Compliance

E-Mail: dpawebmaster@state.il.us           Internet: http://www.state.il.us/dpa/

<PAGE>

                                                            CC: DR. H. HOLLANDER
MAY 22 2002                                                     C. COUGHLIN

                                                ILLinois Department [ILLEGIBLE]

     [ILLINOIS DEPARTMENT LOGO]                 201 South Grand Avenue East
                                                Springfield, Illinois 62763-0001

GEORGE H. RYAN, GOVERNOR                        TELEPHONE: (217) 782-1200
JACKIE GARNER, DIRECTOR                         TTY: (800) 526-5812

May 15, 2002

John Blank, M.D.
President and CEO
Harmony Health Plan
125 South Wacker Drive, Suite 2900
Chicago, Illinois 60606

Dear Dr. Blank:

Enclosed for your files is one original signature copy of the amendment to the
Contract for Furnishing Health Services which permits the State to continue
paying the capitation for the MAG category of assistance when a participant
switches to the MANG category of Assistance. The effective date of this
amendment is March 1, 2002.

Sincerely,

/s/ Nelly Ryan

Nelly Ryan, Deputy Administrator
Division of Medical Programs

Enclosure

cc: Gary Fitzgerald, Director of Government Programs and Compliance

E-Mail: dpawebmaster@state.il.us           Internet: http://www.state.il.us/dpa/

<PAGE>

                                STATE OF ILLINOIS

                                AMENDMENT NO. 4
                                     TO THE
                     CONTRACT FOR FURNISHING HEALTH SERVICES
                                      BY A
                         HEALTH MAINTENANCE ORGANIZATION
                                2001-24-006-KA4

WHEREAS, the ILLINOIS DEPARTMENT OF PUBLIC AID, ("Department") and HARMONY
HEALTH PLAN OF ILLINOIS, INC. ("Contractor") entered into a Contract for
Furnishing Health Services by a Health Maintenance Organization, effective April
1, 2000; and

WHEREAS, the parties to the Contract have previously amended the Contract
pursuant to Article 9, Section 9.9 (a), and desire to further amend the
Contract;

NOW THEREFORE, the Contract between the parties as previously amended, is hereby
further amended as follows, effective March 1, 2002:

4.    SECTION 7.1, PAYMENT RATES, is amended by deleting the language of
      subsection (a) in its entirety, and replacing it with the following:

      7.1   Payment Rates

            (a)   Except as stated in 7.1 (a) (1) and 7.1 (a)(2), the Department
                  will pay the Contractor on a Capitation basis, based on the
                  eligibility classification, age and gender categories of the
                  Beneficiary as shown on the applicable tables in Attachment I,
                  a sum equal to the product of the approved Capitation rate and
                  the number of Beneficiaries enrolled in that category as of
                  the first day of that month.

                  1.    An individual who is a MAG Beneficiary of an MCO under
                        contract with the Department at any time on or after
                        June 1, 2001, who remains continuously eligible for
                        Medical Assistance, and whose eligibility classification
                        is changed by the Department but who remains an Eligible
                        Enrollee, shall continue to be considered a MAG
                        Beneficiary for the purposes of Capitation.

                  2.    If an individual in a Case is considered a MAG
                        Beneficiary for purpose of Capitation under any MCO
                        under contract with the Department, any other
                        Beneficiary in the Case shall be considered a MAG
                        Beneficiary for purpose of Capitation.

<PAGE>

All other terms and conditions of the Contract, as previously amended, shall
remain in full force and effect, unchanged except as amended hereby.

IN WITNESS WHEREOF, the Department and Contractor hereby duly execute and
deliver this Amendment Number 3, effective March 1, 2002.

ILLINOIS DEPARTMENT OF PUBLIC AID          HARMONY HEALTH PLAN OF ILLINOIS, INC.

By:    /s/ [ILLEGIBLE]                     By:    /s/ John P. Blank
       -----------------------------              ----------------------------
                                                         John P. Blank
                                                  ----------------------------
                                                         Printed Name

Title:       Director                      Title:           CEO

Date:        4/29/02                       Date:           4/1/02

                                           FEIN:        36-405 0495

<PAGE>

                                                 CC:
                                                 HENRY H., CAROL C., KATHLEEN B.

                                                 ILLinois Department [ILLEGIBLE]

     [ILLINOIS DEPARTMENT LOGO]                 201 South Grand Avenue East
                                                Springfield, Illinois 62763-0001

GEORGE H. RYAN, GOVERNOR                        TELEPHONE: (217) 782-1200
JACKIE GARNER, DIRECTOR                         TTY: (800) 526-5812

August 22, 2002

John Blank, M.D.
President and CEO
Harmony Health Plan
125 South Wacker Drive, Suite 2900
Chicago, Illinois 60606

Dear Dr. Blank:

Enclosed for your files is one original signature copy of the amendment to the
Contract for Furnishing Health Services which reflects a 1.5% rate reduction,
effective July 1, 2002.

Sincerely,

/s/ Nelly Ryan

Nelly Ryan, Deputy Administrator
Division of Medical Programs

Enclosure

cc: Gary Fitzgerald, Director of Government Programs and Compliance

E-Mail: dpawebmaster@state.il.us           Internet: http://www.state.il.us/dpa/

<PAGE>

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                             AMENDMENT NO. 5 TO THE
                    CONTRACT FOR FURNISHING HEALTH SERVICES
                                      BY A
                         HEALTH MAINTENANCE ORGANIZATION
                                 2001-24-006-KA5

WHEREAS, the parties to the Contract for Furnishing Health Services by a Health
Maintenance Organization ("CONTRACT"), the ILLINOIS DEPARTMENT OF PUBLIC AID,
201 South Grand Avenue East, Springfield, Illinois 62763-0001 (herein referred
to as "Department"), acting by and through its Director, and HARMONY HEALTH PLAN
OF ILLINOIS, INC, (hereinafter referred to as "Contractor"), desire to amend the
CONTRACT; and

WHEREAS, pursuant to Article 9, Section 9.9 (a) of the CONTRACT, the CONTRACT
may be modified or amended by the mutual consent of the parties; and

WHEREAS, pursuant to Article 9, Section 9.9 (c) of the CONTRACT, the CONTRACT
must be amended if and when required to comply with federal or state laws or
regulations and the Department has determined that the Contract must be amended
in order to insert the Non-Delinquency Certification clause required by 30 ILCS
500/50-11;

NOW THEREFORE, the CONTRACT shall be amended as follows:

      1.    Third Amended Attachment I shall be deleted and replaced by the
            attached Fourth Amended Attachment I. Each reference to Attachment
            I, First Amended Attachment I or Second Amended Attachment I in the
            CONTRACT shall be deemed to refer to Fourth Amended Attachment I.

      2.    Article 9 is amended by inserting a new section 9.43,
            Non-Delinquency Certification, to read as follows:

            9.43  NON-DELINQUENCY CERTIFICATION

            Contractor certifies that Contractor is not delinquent in the
            payment of any debt to the State and, therefore, is not barred from
            being awarded a contract under 30 ILCS 500/50-11. Contractor
            acknowledges that the Department may declare the contract void if
            this certification is false, or if Contractor is determined to be
            delinquent in the payment of any debt to the State during the term
            of the contract.

      All other terms and conditions of the CONTRACT shall remain in full force
      and effect.

                                      -1-

<PAGE>

      IN WITNESS WHEREOF, the parties have hereunto caused this agreement to
amend the CONTRACT to be executed by their duly authorized representatives,
effective July 1, 2002.

DEPARTMENT OF PUBLIC AID                    Harmony Health Plan of Illinois, Inc

 By: /s/  Jackie Garner                     By: /s/ John Blank
     -------------------                        ---------------------------
       Jackie Garner
                                            Printed Name: John Blank

Title:  Director                            Title:    CEO

Date:   8-18-02                             Date:     7/8/02

                                            FEIN:
                                                 __________________________

                                      -2-

<PAGE>

                          FOURTH AMENDED ATTACHMENT I

                                  RATE SHEETS

(a)   Contractor Name:       Harmony Health Plan of Illinois,  Inc

      Address:               125 South Wacker Drive
                             Suite 2900
                             Chicago, IL 60606-4402

(b)   Contracting Area(s) Covered by the Contractor and Enrollment Limit:

<TABLE>
<CAPTION>
Contracting Area                       Enrollment Limit
<S>                                    <C>
   Region III                                25,000
   Region IV                                100,000
</TABLE>

(C)   Total Enrolment Limit for all Contracting Areas: 125,000

(d)   Threshold Review Levels:

                   Region III    20,000
                   Region IV     80,000

                                   Att. I - 1
<PAGE>

(e) Standard Capitation Rates for MAG Beneficiaries for each Region for April 1,
2000 through June 30, 2000:

<TABLE>
<CAPTION>
             Region I   Region II   Region III   Region IV   Region V
              (N.W.     (Central    (Southern      (Cook     (Collar
            Illinois)   Illinois)   Illinois)     County     Counties)
Age/Gender    PMPM        PMPM         PMPM        PMPM        PMPM
----------    ----        ----         ----        ----        ----
<S>         <C>         <C>         <C>         <C>         <C>
  0-2 F     $  214.19   $  149.47   $   206.08  $   254.29  $   181.15
  0-2 M     $  242.48   $  183.18   $   263.92  $   300.07  $   183.68
 3-13 F     $   39.63   $   41.98   $    47.02  $    40.55  $    32.21
 3-13 M     $   47.40   $   52.61   $    55.95  $    49.60  $    40.28
 14-20 F    $  209.65   $  181.58   $   204.84  $   169.14  $   167.32
 14-20 M    $   74.37   $   70.44   $    75.51  $    69.46  $    46.99
 21-44 F    $  201.77   $  186.87   $   206.99  $    20.22  $   181.66
 21-44 M    $  100.41   $  111.11   $   132.34  $   148.11  $   102.05
  45+ F     $  324.75   $  292.50   $   269.83  $   245.81  $   236.39
  45+ M     $  195.92   $  304.26   $   291.83  $   221.72  $   177.78
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for MAG Beneficiaries for each Region for July 1, 2000
through December 31, 2001:

<TABLE>
<CAPTION>
            Region I    Region II   Region III  Region IV   Region V
              (N.W.     (Central    (Southern     (Cook       (Collar
            Illinois)   Illinois)   Illinois)    County)    Counties)
Age/Gender    PMPM        PMPM        PMPM         PMPM        PMPM
----------    ----        ----        ----         ----        ----
<S>         <C>         <C>         <C>         <C>         <C>
   0-2 F    $  218.47   $  152.46   $   210.20  $   259.38  $   184.77
   0-2 M    $  247.33   $  186.84   $   269.20  $   306.07  $   187.35
  3-13 F    $   40.42   $   42.82   $    47.96  $    41.36  $    32.85
  3-13 M    $   48.35   $   53.66   $    57.07  $    50.59  $    41.09
 14-20 F    $  213.84   $  185.21   $   208.94  $   172.52  $   170.67
 14-20 M    $   75.86   $   71.85   $    77.02  $    64.73  $    47.93
 21-44 F    $  205.81   $  190.61   $   211.13  $   207.28  $   185.29
 21-44 M    $  102.42   $  113.33   $   134.99  $   151.07  $   104.09
   45+ F    $  331.25   $  298.35   $   275.23  $   250.73  $   241.12
   45+ M    $  199.84   $  310.35   $   297.67  $   226.15  $   181.34
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 2

<PAGE>

Standard Capitation Rates for MAG Beneficiaries for each Region for January 1,
2002 through June 30, 2002:

<TABLE>
<CAPTION>
            Region I    Region II   Region III  Region IV   Region V
              (N.W.     (Central    (Southern     (Cook      (Collar
            Illinois)   Illinois)   Illinois)    County)    Counties)
Age/Gender    PMPM        PMPM         PMPM       PMPM        PMPM
----------    ----        ----         ----       ----        ----
<S>         <C>         <C>         <C>         <C>         <C>
  0-2 F     $  208.64   $  145.60   $   200.74  $  247.71   $  176.46
  0-2 M     $  236.20   $  178.43   $   257.09  $  292.30   $  178.92
 3-13 F     $   38.60   $   40.89   $    45.80  $   39.50   $   31.37
 3-13 M     $   46.17   $   51.25   $    54.50  $   48.31   $   39.24
 14-20 F    $  204.22   $  176.88   $   199.54  $  164.76   $  162.99
 14-20 M    $   72.45   $   68.62   $    73.55  $   61.82   $   45.77
 21-44 F    $  196.55   $  182.03   $   201.63  $  197.95   $  176.95
 21-44 M    $   97.81   $  108.23   $   128.92  $  144.27   $   99.41
  45+ F     $  316.34   $  284.92   $   262.84  $  239.45   $  230.27
  45+ M     $  190.85   $  296.38   $   284.27  $  215.97   $  173.18
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for MAG Beneficiaries for each Region beginning July
1, 2002:

<TABLE>
<CAPTION>
             Region I   Region II   Region III  Region IV   Region V
              (N.W.     (Central     (Southern    (Cook     (Collar
            Illinois)   Illinois)   Illinois)    County)    Counties)
Age/Gender    PMPM        PMPM         PMPM       PMPM        PMPM
----------    ----        ----         ----       ----        ----
<S>         <C>         <C>         <C>         <C>         <C>
  0-2 F     $  205.51   $  143.42   $   197.73  $  243.99   $  173.81
  0-2 M     $  232.66   $  175.75   $   253.23  $  287.92   $  176.24
 3-13 F     $   38.02   $   40.28   $    45.11  $   38.91   $   30.90
 3-13 M     $   45.48   $   50.48   $    53.68  $   47.59   $   38.65
 14-20 F    $  201.16   $  174.23   $   196.55  $  162.29   $  160.55
 14-20 M    $   71.36   $   67.59   $    72.45  $   60.89   $   45.08
 21-44 F    $  193.60   $  179.30   $   198.61  $  194.98   $  174.30
 21-44 M    $   96.34   $  106.61   $   126.99  $  142.11   $   97.92
  45+ F     $  311.59   $  280.65   $   258.90  $  235.86   $  226.82
  45+ M     $  187.99   $  291.93   $   280.01  $  212.73   $  170.58
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 3

<PAGE>

(f) Standard Capitation Rates for MANG Beneficiaries for each Region for April
1, 2000 through June 30, 2000:

<TABLE>
<CAPTION>
             Region I   Region II   Region III  Region IV   Region V
              (N.W.     (Central    (Southern     (Cook      (Collar
            Illinois)   Illinois)   Illinois)    County)    Counties)
Age/Gender    PMPM        PMPM         PMPM       PMPM        PMPM
----------    ----        ----         ----       ----        ----
<S>         <C>         <C>         <C>         <C>         <C>
  0-2 F     $  277.63   $  270.73   $   276.42  $  221.95   $  175.33
  0-2 M     $  337.39   $  320.77   $   236.83  $  259.94   $  203.36
 3-13 F     $   46.02   $   44.62   $    52.51  $   43.55   $   39.42
 3-13 M     $   58.45   $   63.44   $    67.51  $   55.10   $   51.37
14-20 F     $  260.15   $  234.40   $   246.15  $  238.15   $  260.81
14-20 M     $   79.62   $  119.09   $   121.82  $   82.31   $  181.38
21-44 F     $  245.64   $  245.87   $   226.89  $  266.25   $  244.39
21-44 M     $  145.22   $  107.80   $   103.83  $   98.85   $  119.40
  45+ F     $  279.44   $  329.92   $   300.30  $  255.70   $  270.54
  45+ M     $  340.30   $  205.30   $   239.31  $  247.28   $  292.90
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for MANG Beneficiaries for each Region for July 1,
2000 through December 31, 2001:

<TABLE>
<CAPTION>
             Region I   Region II   Region III  Region IV   Region V
              (N.W.     (Central    (Southern     (Cook      (Collar
            Illinois)   Illinois)   Illinois)    County)    Counties)
Age/Gender     PMPM        PMPM       PMPM        PMPM        PMPM
----------     ----        ----       ----        ----        ----
<S>         <C>         <C>         <C>         <C>         <C>
  0-2 F     $  283.18   $  276.14   $   281.95  $  226.39   $  178.84
  0-2 M     $  344.14   $  327.19   $   241.57  $  265.14   $  207.43
 3-13 F     $   46.94   $   45.51   $    53.56  $   44.42   $   40.21
 3-13 M     $   59.62   $   64.71   $    68.86  $   56.20   $   52.40
 14-20F     $  265.35   $  239.09   $   251.07  $  242.91   $  266.03
 14-20 M    $   81.21   $  121.47   $   124.26  $   83.96   $  185.01
 21-44 F    $  250.55   $  250.79   $   231.43  $  271.58   $  249.28
 21-44M     $  148.12   $  109.96   $   105.91  $  100.83   $  121.79
  45+ F     $  285.03   $  336.52   $   306.31  $  260.81   $  275.95
  45+ M     $  347.11   $  209.41   $   244.10  $  252.23   $  298.76
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 4
<PAGE>
Standard Capitation Rates for MANG Beneficiaries for each Region for January 1,
2002 through June 30, 2002:

<TABLE>
<CAPTION>
             Region I   Region II   Region III  Region IV    Region V
              (N.W.      (Central    (Southern    (Cook      (Collar
            Illinois)   Illinois)    Illinois)   County)    Counties)
Age/Gender     PMPM        PMPM        PMPM       PMPM         PMPM
----------     ----        ----        ----       ----         ----
<S>         <C>         <C>         <C>         <C>         <C>
  0-2 F     $  270.44   $  263.71   $   269.26  $  216.20   $  170.79
  0-2 M     $  328.65   $  312.47   $   230.70  $  253.21   $  198.10
 3-13 F     $   44.83   $   43.46   $    51.15  $   42.42   $   38.40
 3-13 M     $   56.94   $   61.80   $    65.76  $   53.67   $   50.04
 14-20 F    $  253.41   $  228.33   $   239.77  $  231.98   $  254.06
 14-20 M    $   77.56   $  116.00   $   118.67  $   80.18   $  176.68
 21-44 F    $  239.28   $  239.50   $   221.02  $  259.36   $  238.06
 21-44 M    $  141.45   $  105.01   $   101.14  $   96.29   $  116.31
  45+ F     $  272.20   $  321.38   $   292.53  $  249.07   $  263.53
  45+ M     $  331.49   $  199.99   $   233.12  $  240.88   $  285.32
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for MANG Beneficiaries for each Region beginning July
1, 2002:

<TABLE>
<CAPTION>
             Region I   Region II   Region III  Region IV    Region V
              (N.W.      (Central    (Southern    (Cook      (Collar
            Illinois)   Illinois)    Illinois)   County)    Counties)
Age/Gender     PMPM        PMPM        PMPM       PMPM         PMPM
----------     ----        ----        ----       ----         ----
<S>         <C>         <C>         <C>         <C>         <C>
  0-2 F     $  266.38   $  259.75   $   265.22  $  212.96   $  168.23
  0-2 M     $  323.72   $  307.78   $   227.24  $  249.41   $  195.13
 3-13 F     $   44.16   $   42.81   $    50.38  $   41.78   $   37.82
 3-13 M     $   56.09   $   60.87   $    64.77  $   52.86   $   49.29
 14-20 F    $  249.61   $  224.91   $   236.17  $  228.50   $  250.25
 14-20 M    $   76.40   $  114.26   $   116.89  $   78.98   $  174.03
 21-44 F    $  235.69   $  235.91   $   217.70  $  255.47   $  234.49
 21-44 M    $  139.33   $  103.43   $    99.62  $   94.85   $  114.57
  45+ F     $  268.12   $  316.56   $   288.14  $  245.33   $  259.58
  45+ M     $  326.52   $  196.99   $   229.62  $  237.27   $  281.04
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 5
<PAGE>

(g) Standard Capitation Rates for KidCare Participants for each Region for April
1, 2000 through June 30, 2000:

<TABLE>
<CAPTION>
             Region I   Region II   Region III  Region IV    Region V
              (N.W.      (Central    (Southern    (Cook      (Collar
            Illinois)   Illinois)    Illinois)   County)    Counties)
Age/Gender     PMPM        PMPM        PMPM       PMPM         PMPM
----------     ----        ----        ----       ----         ----
<S>         <C>         <C>         <C>         <C>         <C>
  1-2 F     $   66.34   $   67.54   $    73.13  $   74.63   $   60.58
  1-2 M     $   92.26   $   75.87   $    96.90  $   86.82   $   73.08
 3-13 F     $   39.25   $   41.38   $    46.47  $   40.71   $   32.31
 3-13 M     $   47.00   $   51.79   $    55.68  $   49.87   $   40.63
14-18 F     $   87.57   $   85.98   $    99.19  $   77.53   $   73.22
14-18 M     $   73.14   $   69.51   $    75.56  $   63.48   $   46.69
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for KidCare Participants for each Region for July
1, 2000 through December 31, 2001:

<TABLE>
<CAPTION>
             Region I   Region II   Region III  Region IV    Region V
              (N.W.      (Central    (Southern    (Cook      (Collar
            Illinois)   Illinois)    Illinois)   County)    Counties)
Age/Gender     PMPM        PMPM        PMPM       PMPM         PMPM
----------     ----        ----        ----       ----         ----
<S>         <C>         <C>         <C>         <C>         <C>
  1-2 F     $   67.67   $   68.89   $  74.59    $   76.12   $   61.79
  1-2 M     $   94.11   $   77.39   $  98.84    $   88.56   $   74.54
 3-13 F     $   40.04   $   42.21   $  47.40    $   41.52   $   32.96
 3-13 M     $   47.94   $   52.83   $  56.79    $   50.87   $   41.44
14-18 F     $   89.32   $   87.70   $ 101.17    $   79.08   $   74.68
14-18 M     $   74.60   $   70.90   $  77.07    $   64.75   $   47.62
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 6
<PAGE>

Standard Capitation Rates for KidCare Participants for each Region for January
1, 2002 through June 30, 2002:

<TABLE>
<CAPTION>
             Region I   Region II   Region III  Region IV    Region V
              (N.W.      (Central    (Southern    (Cook      (Collar
            Illinois)   Illinois)    Illinois)   County)    Counties)
Age/Gender     PMPM        PMPM        PMPM       PMPM         PMPM
----------     ----        ----        ----       ----         ----
<S>         <C>         <C>         <C>         <C>         <C>
  1-2 F     $   64.62   $   65.79   $    71.23  $   72.69   $   59.01
  1-2 M     $   89.88   $   73.91   $    94.39  $   84.57   $   71.19
 3-13 F     $   38.24   $   40.31   $    45.27  $   39.65   $   31.48
 3-13 M     $   45.78   $   50.45   $    54.23  $   48.58   $   39.58
14-18 F     $   85.30   $   83.75   $    96.62  $   75.52   $   71.32
14-18 M     $   71.24   $   67.71   $    73.60  $   61.84   $   45.48
</TABLE>

Certified Local Health Department add-on: To be determined.

Standard Capitation Rates for KidCare Participants for each Region beginning
July 1, 2002:

<TABLE>
<CAPTION>
             Region I   Region II   Region III  Region IV    Region V
              (N.W.      (Central    (Southern    (Cook      (Collar
            Illinois)   Illinois)    Illinois)   County)    Counties)
Age/Gender     PMPM        PMPM        PMPM       PMPM         PMPM
----------     ----        ----        ----       ----         ----
<S>         <C>         <C>         <C>         <C>         <C>
  1-2 F     $   63.65   $   64.80   $    70.16  $   71.60   $   58.12
  1-2 M     $   88.53   $   72.80   $    92.97  $   83.30   $   70.12
 3-13 F     $   37.67   $   39.71   $    44.59  $   39.06   $   31.01
 3-13 M     $   45.09   $   49.69   $    53.42  $   47.85   $   38.99
14-18 F     $   84.02   $   82.49   $    95.17  $   74.39   $   70.25
14-18 M     $   70.17   $   66.69   $    72.50  $   60.91   $   44.80
</TABLE>

Certified Local Health Department add-on: To be determined.

                                   Att. I - 7
<PAGE>
JAN 10 2003

    [ILLINOIS DEPARTMETN LOGO]                 Illinois Department of Public Aid
   ROD R. BLAGOJEVICH, GOVERNOR
A. GEORGE HOVANEC, ACTING DIRECTOR             201 South Grand Avenue East
                                               Springfield, Illinois 62763-0001

                                               TELEPHONE: (217) 524-7478
                                               TTY: (800) 526-5812

February 4, 2003

John Blank, M.D.
President and Chief Executive Officer
Harmony Health Plan
125 South Wacker Drive, Suite 2600
Chicago, Illinois 60606

Dear Dr. Blank:

Attached for your files is one original signature copy of Amendment Number 6 to
Harmony Health Plan's contract with the Department. This amendment reflects the
extension of the Contract term through June 30,2003.

Sincerely,

/s/ Kelly Carter
------------------------------
Kelly Carter, Chief
Bureau of Contract Management

cc: Gary Fitzgerald, Director-Government Programs and Compliance (w/o
    attachment)

Attachment: 1

E-Mail: dpawebmaster@state.il.us           Internet: http://www.state.il.us/dpa/

<PAGE>

                               STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                             AMENDMENT NO. 6 TO THE
                    CONTRACT FOR FURNISHING HEALTH SERVICES
                                      BY A
                        HEALTH MAINTENANCE ORGANIZATION
                                2001-24-006-KA6

WHEREAS, the parties to the Contract for Furnishing Health Services by a Health
Maintenance Organization ("CONTRACT"), the ILLINOIS DEPARTMENT OF PUBLIC AID,
201 South Grand Avenue East, Springfield, Illinois 62763-0001 (herein referred
to as "Department"), acting by and through its Director, and HARMONY HEALTH PLAN
OF ILLINOIS, INC., (hereinafter referred to as "Contractor"), desire to amend
the CONTRACT; and

WHEREAS, pursuant to Article 9, Section 9.9(a) of the CONTRACT, the CONTRACT may
be modified or amended by the mutual consent of the parties;

NOW THEREFORE, the CONTRACT shall be amended as follows:

1.    Article 8 is amended by adding the following language to the end of
      section 8.1, Term:

            "Notwithstanding the aforementioned language, this contract shall
            remain in effect through June 30, 2003."

      All other terms and conditions of the CONTRACT shall remain in full force
and effect.

IN WITNESS WHEREOF, the parties have hereunto caused this agreement to amend the
CONTRACT to be executed by their duly authorized representatives, effective upon
execution by the Department.

DEPARTMENT OF PUBLIC AID                        HARMONY HEALTH PLAN OF
                                                ILLINOIS, INC.

By: /s/ [ILLEGIBLE]                             By: /s/ John Blank
    -----------------                               ---------------------
                                                Printed Name: John Blank

Title: Acting Director                          Title: CEO

Date: 1-3-03                                    Date:12/30/02

                                                FEIN:
                                                     --------------------

                                   Page 1 of 1
<PAGE>
APR 24 2003

     [ILLINOIS DEPARTMENT LOGO]                Illinois Department of Public Aid
    ROD R. BLAGOJEVICH, GOVERNOR
      BARRY S. MARAM, DIRECTOR                 201 South Grand Avenue East
                                               Springfield, Illinois 62763-0001

                                               TELEPHONE: (217) 524-7478
                                               TTY: (800) 526-5812

April 17,2003

John Blank, M.D.
President and CEO
Harmony Health Plan
125 South Wacker Drive, Suite 2600
Chicago, Illinois 60606

Dear Dr. Blank:

Enclosed for your files is one original signature copy of Amendment No. 7 to the
contract between IDPA and Harmony Health Plan. This amendment reflects language
necessary to comply with the terms and rules promulgated under the Federal
Health Insurance Portability and Accountability Act.

Sincerely,

/s/ Kelly Carter
-----------------------------
Kelly Carter, Chief
Bureau of Contract Management

cc: Gary Fitzgerald (without enclosure)

E-MAIL: dpawebmaster@mail.idpa.state.il.us INTERNET: http://www.state.il.us/dpa/

<PAGE>

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                               AMENDMENT 7 TO THE
                     CONTRACT FOR FURNISHING HEALTH SERVICES
                      BY A HEALTH MAINTENANCE ORGANIZATION

                                2001-24-006-KA7

WHEREAS, the State of Illinois acting by and through the ILLINOIS DEPARTMENT OF
PUBLIC AID, 201 South Grand Avenue East, Springfield, Illinois 62763-0001,
hereinafter referred to as Department, and HARMONY HEALTH PLAN, hereinafter
referred to as Contractor, parties to the Contract for Furnishing Health
Services by a Health Maintenance Organization, as amended (Contract), effective
April 1, 2000, desire to amend the Contract; and

WHEREAS, pursuant to section 9.9.(a) of the Contract, the Contract may be
modified or amended by the written consent of the parties; and

WHEREAS, pursuant to Section 9.9(c) of the Contract, the Contract shall be
amended if the Department determines the amendment is necessary to remain in
compliance with State or federal law or regulation; and

WHEREAS, the Department has determined that such an amendment is necessary to
comply with the terms of rules promulgated under the federal Health Insurance
Portability and Accountability Act (HIPAA);

NOW THEREFORE, the Contract shall be amended by adding the language set forth
herein to the Contract:

1.    Article I, Definitions:

            HIPAA means the federal Health Insurance Portability and
            Accountability Act, Public Law 104-191.

            INDIVIDUAL, as used in Section 5.3(q) and Attachment V, shall have
            the same meaning as the term "individual" in 45 CFR Section 164.501
            and shall include a Participant as defined in this Contract, and a
            person who qualifies as a personal representative in accordance with
            45 CFR section 164.502(g).

            PROTECTED HEALTH INFORMATION shall have the same meaning as the term
            "protected health information" in 45 CFR Section 164.501, limited to
            the

Contract for Furnishing Health Services by a Health Maintenance Organization
2001-24-006-KA6

                                                                     Page 1 of 8
<PAGE>

            information created or received by the Contractor from or on behalf
            of the Department.

2.    Section 5.3(q):

            HIPAA Marketing Requirements. Notwithstanding the above, the
            definition of Marketing shall apply to all marketing performed under
            this Contract, and the Contractor is subject to the following
            authorization requirement.

            (1)   Definition. Marketing is any communication by the Contractor
                  about a product or service that encourages the individual to
                  purchase or use the product or service, unless the
                  communication is limited to:

                  (a)   a description of health-related products or services (or
                        payment for such products or services) that are provided
                        by or included in a plan of benefits of the Department
                        or Contractor pursuant to this Contract, including
                        communications regarding the entities participating in a
                        health care provider network or health plan network,
                        replacement of or enhancements to a health plan, and
                        health-related products or services available only to an
                        enrollee that add value to but are not part of the plan
                        of benefits;

                  (b)   communications for treatment of the individual; or

                  (c)   communications for case management or care coordination
                        for the individual or to direct or recommend alternative
                        treatments, therapies, health care providers, or
                        settings of care to the individual.

            (2)   Authorization.

                  (a)   Contractor must obtain an authorization for any use or
                        disclosure of protected health information for
                        marketing, except if the communication is in the form
                        of: face to face communication made by the Contractor to
                        the individual, or a promotional gift of nominal value
                        provided by the Contractor.

                  (b)   If the marketing involves direct or indirect
                        remuneration to the Contractor from a third party, the
                        authorization shall state that such remuneration is
                        involved.

Contract for Furnishing Health Services by a Health Maintenance Organization
2001-24-006-KA6

                                                                     Page 2 of 8
<PAGE>

3.    Section 5.23:

            HIPAA Compliance. Contractor shall comply with the terms of Sections
            B and C of the HIPAA Compliance Obligations set forth in Attachment
            V.

4.    Section 6.6:

            HIPAA Compliance. The Department shall comply with the terms of
            Section D of the HIPAA Compliance Obligations set forth in
            Attachment V.

5.    Section 8.6:

            Termination for Breach of HIPAA Compliance Obligations. Upon the
            Department's learning of a material breach of the terms of the HIPAA
            Compliance Obligations, set forth in Attachment V, incorporated by
            reference and made a part hereof, the Department shall:

            (1)   provide Contractor with an opportunity to cure the breach or
                  end the violation, and terminate this Contract if Contractor
                  does not cure the breach or end the violation within the time
                  specified by the Department; or

            (2)   immediately terminate this Contract if Contractor has breached
                  a material term of the HIPAA Compliance Obligations and cure
                  is not possible; or

            (3)   report the violation to the Secretary of the U.S. Department
                  of Health and Human Services, if neither termination nor cure
                  by Contractor is feasible.

6.    Attachment V, which is attached to this Amendment.

FURTHER, the Contract shall be amended by replacing Section 9.1 in its entirety
with the following language:

      Section 9.1. Records Retention, Audits, and Reviews.

            The Contractor shall maintain all business, professional and other
      records in accordance with 45 CFR Part 74 and the specific terms and
      conditions of this Contract and pursuant to generally accepted accounting
      and medical practice. The Contractor shall maintain, for a minimum of six
      (6) years after completion of the Contract and after final payment is made
      under the Contract, adequate books, records, and supporting documents to
      verify the amounts, recipients, and

Contract for Furnishing Health Services by a Health Maintenance Organization
2001-24-006-KA6

                                                                     Page 3 of 8
<PAGE>

uses of all disbursements of funds passing in conjunction with the Contract. If
an audit, litigation or other action involving the records is started before the
end of the six (6) year period, the records must be retained until all issues
arising out of the action are resolved.

      The Contract and all books, records, and supporting documents related to
the Contract shall be made available, at no charge, in Illinois, by the
Contractor for review and audit by the Department, the Auditor General or other
Authorized Persons. The Contractor agrees to cooperate fully with any audit
conducted by the Department, the Auditor General or other Authorized Persons and
to provide full access in Illinois to all relevant materials.

      Failure to maintain the books records, and supporting documents required
by this Section shall establish a presumption in favor of the State for the
recovery of any funds paid by the State under the Contract for which adequate
books, records, and supporting documentation are not available, in Illinois, to
support their purported disbursement.

      The Contractor shall provide any information necessary to disclose the
nature and extent of all expenditures made under this Contract. Such information
must be sufficient to fully disclose all compensation of Marketing personnel
pursuant to Article V, Section 5.3(g). The Department, the Auditor General or
other Authorized Persons may inspect and audit any financial records of the
Contractor or its subcontractors relating to the Contractor's capacity to bear
the risk of financial losses.

      The Department, the Auditor General or other Authorized Persons may also
evaluate, through inspection or other means, the quality, appropriateness, and
timeliness of services performed under this Contract.

      The Department shall perform quality assurance reviews to determine
whether the Contractor is providing quality and accessible health care to
Beneficiaries under this Contract. The reviews may include, but are not limited
to, a sample review of medical records of Beneficiaries, Beneficiary surveys and
examination by consultants. The specific points of quality assurance which will
be reviewed include, but are not limited to:

      (1)   legibility of records

      (2)   completeness of records

      (3)   peer review and quality control

      (4)   utilization review

      (5)   availability, timeliness, and accessibility of care

      (6)   continuity of care

      (7)   utilization reporting

Contract for Furnishing Health Services by a Health Maintenance Organization
2001-24-006-KA6

                                                                     Page 4 of 8
<PAGE>

            (8)   use of services

            (9)   quality and outcomes of medical care

            The Department shall provide for an annual (as appropriate) external
      independent review of the above that is conducted by a qualified
      independent entity.

            The Department shall adjust future payments or final payments if the
      findings of a Department audit indicate underpayments or overpayments to
      the Contractor. If no payments are due and owing to the Contractor, the
      Contractor shall immediately refund all amounts which may be due the
      Department.

All other Contract terms and conditions shall remain in effect, except that in
the event this Amendment conflicts with the Contract, the terms of this
Amendment shall take precedence.

The effective date of this Amendment shall be the date it is fully executed by
the parties.

IN WITNESS WHEREOF, the Department and the Contractor have hereby caused this
Amendment to be executed on the dates shown below by their duly authorized
representatives.

HARMONY HEALTH PLAN                                     STATE OF ILLINOIS
                                                        DEPARTMENT OF PUBLIC AID

By: /s/ John Blank                                      By: /s/ Barry S. Maram
    --------------------                                    --------------------
                                                            Barry S. Maram
Title: CEO                                                  Director

Date:  3/3/03                                           Date: 4-10-03

FEIN: _____________________

Contract for Furnishing Health Services by a Health Maintenance Organization
2001-24-006-KA6

                                                                     Page 5 of 8
<PAGE>

ATTACHMENT V
HIPAA COMPLIANCE OBLIGATIONS

A.    Definitions.

      (1)   "Designated Record Set" shall have the same meaning as the term
            "designated record set" in 45 CFR section 164.501.

      (2)   "HIPAA" means the federal Health Insurance Portability and
            Accountability Act, Public Law 104-191.

      (3)   "Individual" shall have the same meaning as the term "individual" in
            45 CFR Section 164.501 and shall include a Participant as defined in
            this Contract, and a person who qualifies as a personal
            representative in accordance with 45 CFR section 164.502(g).

      (4)   "PHI" means Protected Health Information, which shall have the same
            meaning as the term "protected health information" in 45 CFR section
            164.501, limited to the information created or received by the
            Contractor from or on behalf of the Department.

      (5)   "Privacy Rule" shall mean the Standards for Privacy of Individually
            Identifiable Health Information at 45 CFR Part 160 and 45 CFR Part
            164 subparts A and E.

      (6)   "Required by law" shall have the same meaning as the term "required
            by law" in 45 CFR section 164.501.

B.    Contractor's Permitted Uses and Disclosures.

      (1)   Except as otherwise limited by this Contract, Contractor may use or
            disclose PHI to perform functions, activities, of services for, or
            on behalf of, the Department as specified in this Contract, provided
            that such use or disclosure would not violate the Privacy Rule if
            done by the Department.

      (2)   Except as otherwise limited by this Contract, Contractor may use PHI
            for the proper management and administration of Contractor or to
            carry out the legal responsibilities of Contractor.

      (3)   Except as otherwise limited by this Contract, Contractor may
            disclose PHI for the proper management and administration of
            Contractor, provided that the disclosures are required by law, or
            Contractor obtains reasonable assurances from the person to whom the
            PHI is disclosed that the PHI will remain confidential and used or
            further disclosed only as required by law or for the purpose for
            which it was disclosed to the person. Contractor shall require the
            person to whom the PHI was disclosed to notify Contractor of any
            instances of which the person is aware in which the confidentiality
            of the PHI has been breached;

      (4)   Except as otherwise limited by this Contract, Contractor may use PHI
            to provide

Contract for Furnishing Health Services by a Health Maintenance Organization
2001-24-006-KA6

                                                                     Page 6 of 8
<PAGE>

            data aggregation services to the Department as permitted by 45 CFR
            section 164.504(e)(2)(i)(B).

      (5)   Contractor may use PHI to report violations of law to appropriate
            federal and state authorities, consistent with 45 CFR section
            164.502(j)(1).

C.    Limitations on Contractor's Uses and Disclosures. Contractor shall:

      (1)   Not use or further disclose PHI other than as permitted or required
            by the Contract or as required by law;

      (2)   Use appropriate safeguards to prevent use or disclosure of PHI other
            than as provided for by this Contract;

      (3)   Mitigate, to the extent practicable, any harmful effect that is
            known to the Contractor of a use or disclosure of PHI by Contractor
            in violation of the requirements of this Contract;

      (4)   Report to the Department any use or disclosure of PHI not provided
            for by this Contract of which Contractor becomes aware;

      (5)   Ensure that any agents, including a subcontractor, to whom the
            Contractor provides PHI received from the Department or created or
            received by Contractor on behalf of the Department, agree to the
            same restrictions and conditions that apply through this Contract to
            Contractor with respect to such information;

      (6)   Provide access to PHI in a Designated Record Set to the Department
            or to another individual whom the Department names, in order to meet
            the requirements of 45 CFR section 64.524, at the Department's
            request, and in the time and manner specified by the Department;

      (7)   Make available PHI in a Designated Record Set for amendment and to
            incorporate any amendments to PHI in a Designated Record Set that
            the Department directs or that Contractor agrees to pursuant to 45
            CFR section 164.526 at the request of the Department or an
            individual, and in a time and manner specified by the Department;

      (8)   Make Contractor's internal practices, books, and records, including
            policies and procedures and PHI, relating to the use and disclosure
            of PHI received from the Department or created or received by
            Contractor on behalf of the Department available to the Department
            and to the Secretary of Health and Human Services for purposes of
            determining the Department's compliance with the Privacy Rule;

      (9)   Document disclosures of PHI and information related to disclosures
            of PHI as would be required for the Department to respond to a
            request by an individual for an accounting of disclosures of PHI in
            accordance with 45 CFR section 164.528;

      (10)  Provide to the Department or to an individual, in a time and manner
            specified by the Department, information collected in accordance
            with the terms of this

Contract for Furnishing Health Services by a Health Maintenance Organization
2001-24-006-KA6

                                                                     Page 7 of 8
<PAGE>

            Contract to permit the Department to respond to a request by an
            individual for an accounting of disclosures of PHI in accordance
            with 45 CFR section 164.528;

      (11)  Return or destroy all PHI received from the Department or created or
            received by Contractor on behalf of the Department that the
            Contractor still maintains in any form, and to retain no copies of
            such PHI, upon termination of this Contract for any reason. If such
            return or destruction is not feasible, Contractor shall provide the
            Department with notice of such purposes that make return or
            destruction infeasible, and upon the parties' written agreement that
            return or destruction is infeasible, Contractor shall extend the
            protections of the Contract to the PHI and limit further uses and
            disclosures to those purposes that make the return or destruction of
            the PHI infeasible. This provision shall apply equally to PHI that
            is in the possession of Contractor and to PHI that is in the
            possession of subcontractors or agents of Contractor.

D.    Department Obligations. The Department shall:

      (1)   Provide Contractor with the Department's Notice of Privacy Practices
            and notify Contractor of any changes to said Notice;

      (2)   Notify Contractor of any changes in or revocation of permission by
            an individual to use or disclose PHI, to the extent that such
            changes may affect Contractor's permitted or required uses and
            disclosures of PHI;

      (3)   Notify Contractor of any restriction to the use or disclosure of PHI
            that the Department had agreed to in accordance with 45 CFR section
            164.522, to the extent that such restriction may affect Contractor's
            use or disclosure of PHI;

      (4)   Not request that Contractor use or disclose PHI in any manner that
            would not be permissible under the Privacy Rule if done by the
            Department.

E.    Interpretation. Any ambiguity in this Contract shall be resolved in favor
      of a meaning that permits the Department to comply with the Privacy Rule.

Contract for Furnishing Health Services by a Health Maintenance Organization
2001-24-006-KA6

                                                                     Page 8 of 8
<PAGE>

            JUN 30 2003

    [ILLINOIS DEPARTMENT LOGO]                 Illinois Department of Public Aid
   ROD R. BLAGOJEVICH, GOVERNOR
     BARRY S. MARAM, DIRECTOR                  201 South Grand Avenue East
                                               Springfield, Illinois 62763-0001

                                               TELEPHONE: (217) 524-7478
                                               TTY: (800) 526-5812

June 23, 2003

John Blank, M.D.
President and CEO
Harmony Health Plan
125 South Wacker Drive, Suite 2600
Chicago, Illinois 60606

Dear Dr. Blank:

Enclosed for your files is one original signature copy of Amendment No. 8
between IDPA and Harmony Health Plan. This amendment extends the term of the
contract through July 31, 2003.

Sincerely,

/s/ Kelly Carter
-----------------------------
Kelly Carter, Chief
Bureau of Contract Management

Enclosure: 1

cc: Gary Fitzgerald (without enclosure)

E-Mail: dpawebmaster@state.il.us           Internet: http://www.state.il.us/dpa/

<PAGE>

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                             AMENDMENT NO. 8 TO THE
                    CONTRACT FOR FURNISHING HEALTH SERVICES
                                      BY A
                        HEALTH MAINTENANCE ORGANIZATION
                                 2001-24-006-KA8

WHEREAS, the parties to the Contract for Furnishing Health Services by a Health
Maintenance Organization ("CONTRACT"), the ILLINOIS DEPARTMENT OF PUBLIC AID,
201 South Grand Avenue East, Springfield, Illinois 62763-0001 (herein referred
to as "Department"), acting by and through its Director, and HARMONY HEALTH PLAN
OF ILLINOIS, INC., (hereinafter referred to as "Contractor"), desire to amend
the CONTRACT; and

WHEREAS, pursuant to Article 9, Section 9.9 (a) of the CONTRACT, the CONTRACT
may be modified or amended by the mutual consent of the parties;

NOW THEREFORE, the CONTRACT shall be amended as follows:

1.    Article 8 is amended by adding the following language to the end of
      section 8.1, Term:

            "Notwithstanding the aforementioned language, this contract shall
            remain in effect through July 31, 2003."

      All other terms and conditions of the CONTRACT shall remain in full force
      and effect.

IN WITNESS WHEREOF, the parties have hereunto caused this agreement to amend the
CONTRACT to be executed by their duly authorized representatives, effective upon
execution by the Department.

DEPARTMENT OF PUBLIC AID                                HARMONY HEALTH PLAN OF
                                                        ILLINOIS, INC.

By: /s/ Barry S. Maram                                  By: /s/ John Blank
    ---------------------                                   -------------------

                                                        Printed Name: John Blank

Title: Director                                         Title: CEO

Date:  6/12/03                                          Date: 5/12/03

                                                        FEIN: 36-4050495

                                  Page 1 of 1
<PAGE>

    [ILLINOIS DEPARTMENT LOGO]                 illinois Department of Public Aid
   ROD R. BLAGOJEVICH, GOVERNOR
     BARRY S. MARAM, DIRECTOR                  201 South Grand Avenue East
                                               Springfield, Illinois 62763-0001

                                               TELEPHONE: (217) 524-7478
                                               TTY: (800) 526-5812

September 23, 2003

John Blank, M.D.
President and CEO
Harmony Health Plan
125 South Wacker Drive, Suite 2600
Chicago, Illinois 60606

Dear Dr. Blank:

Enclosed for your files is one original signature copy of the Contract for
Furnishing Health Services between IDPA and Harmony Health Plan which was
effective August 1, 2003.

Sincerely,

/s/ Kelly Carter
-----------------------------
Kelly Carter, Chief
Bureau of Contract Management

Enclosure: 1

cc: Gary Fitzgerald (without enclosure)

E-Mail: dpawebmaster@state.il.us           Internet: http://www.state.il.us/dpa/
<PAGE>

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                     CONTRACT FOR FURNISHING HEALTH SERVICES
                                      BY A
                            MANAGED CARE ORGANIZATION

                                 AUGUST 1, 2003

                        ILLINOIS DEPARTMENT OF PUBLIC AID
                          DIVISION OF MEDICAL PROGRAMS
                          BUREAU OF CONTRACT MANAGEMENT
                           201 SOUTH GRAND AVENUE EAST
                        SPRINGFIELD, ILLINOIS 62763-0001

                                 BARRY S. MARAM
                                    DIRECTOR

                        ANNE MARIE MURPHY, ADMINISTRATOR
                          DIVISION OF MEDICAL PROGRAMS


<PAGE>


                               TABLE OF CONTENTS

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ARTICLE I   DEFINITIONS......................................................................         1
ARTICLE II  TERMS AND CONDITIONS.............................................................         8
    2.1  Specification.......................................................................         8
    2.2  Rules of Construction...............................................................         8
    2.3  Performance of Services and Duties..................................................         9
    2.4  Language Requirements...............................................................         9
         (a) Key Oral Contacts...............................................................         9
         (b) Written Material................................................................         9
         (c) Oral Interpretation.............................................................        10
    2.5  List of Individuals in Administrative Capacity......................................        10

    2.6  Certificate of Authority............................................................        10
    2.7  Obligation to Comply with other Laws................................................        10
    2.8  Provision of Covered Services Through Affiliated Providers..........................        10
ARTICLE III ELIGIBILITY......................................................................        11
    3.1  Determination of Eligibility........................................................        11
    3.2  Enrollment Generally................................................................        11
    3.3  Enrollment Limits...................................................................        11
    3.4  Expansion to Other Contracting Areas................................................        12
    3.5  Discontinuation of Services in One or More Contracting Area.........................        12
ARTICLE IV ENROLLMENT, COVERAGE AND TERMINATION OF COVERAGE..................................        13
    4.1  Enrollment Process..................................................................        13
    4.2  Initial Coverage....................................................................        14
    4.3  Period of Enrollment................................................................        15
    4.4  Termination of Coverage.............................................................        15
    4.5  Preexisting Conditions and Treatment................................................        17
    4.6  Continuity of Care..................................................................        17
    4.7  Change of Site and Primary Care Provider or Women's Health Care Provider............        19
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                               TABLE OF CONTENTS

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ARTICLE V DUTIES OF CONTRACTOR...............................................................        19
    5.1  Services............................................................................        19
         (a) Amount, Duration and Scope of Coverage..........................................        19
         (b) Enumerated Covered Services.....................................................        19
         (c) Behavioral Health Services......................................................        21
         (d) Services to Prevent Illness and Promote Health..................................        22
         (e) Exclusions from Covered Services................................................        22
         (f) Limitations on Covered  Services................................................        24
         (g) Right of Conscience.............................................................        24
         (h) Emergency Services..............................................................        24
         (i) Post-Stabilization Services.....................................................        25
         (j) Additional Services or Benefits.................................................        25
         (k) Telephone Access................................................................        25
         (l) Pharmacy Formulary..............................................................        26
    5.2  Marketing...........................................................................        27
    5.3  Inappropriate Activities............................................................        31
    5.4  Obligation to Provide Information...................................................        31
    5.5  Quality Assurance, Utilization Review and Peer Review...............................        33
    5.6  Physician Incentive Plan Regulations................................................        34
    5.7  Prohibited Affiliations.............................................................        34
    5.8  Records.............................................................................        35
         (a) Maintenance of Business Records.................................................        35
         (b) Availability of Business Records................................................        35
         (c) Patient Records.................................................................        35
    5.9  Computer System Requirements........................................................        36
    5.10 Regular Information Reporting Requirements..........................................        37
    5.11 Health Education....................................................................        43
    5.12 Required Minimum Standards of Care..................................................        44
         (a) EPSDT Services to Enrollees Under Twenty-One (21) Years.........................        44
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                                TABLE OF CONTENTS
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         (b) Preventive Medicine Schedule (Services to Enrollees Twenty-One (21) Years of
             Age and Over)...................................................................        44
         (c) Maternity Care..................................................................        46
         (d) Complex and Serious Medical Conditions..........................................        47
         (e) Access Standards................................................................        48
         (f) Coordination with Other Service Providers.......................................        48
    5.13 Authorization of Services...........................................................        49
    5.14 Choice of Physicians................................................................        49
    5.15 Timely Payments to Providers........................................................        50
    5.16 Grievance Procedure and Appeal Procedure............................................        51
    5.17 Enrollee Satisfaction Survey........................................................        52
    5.18 Provider Agreements and Subcontracts................................................        53
    5.19 Site Registration and Primary Care Provider/Women's Health Care Provider Approval
         and Credentialing...................................................................        55
    5.20 Advance Directives..................................................................        56
    5.21 Fees to Enrollees Prohibited........................................................        56
    5.22 Fraud and Abuse Procedures..........................................................        56
    5.23 Misrepresentation Procedures........................................................        57
    5.24 Enrollee-Provider Communications....................................................        57
    5.25 HIPAA Compliance....................................................................        57
ARTICLE VI  DUTIES OF THE DEPARTMENT.........................................................        58
    6.1  Enrollment..........................................................................        58
    6.2  Payment.............................................................................        58
    6.3  Department Review of Marketing Materials............................................        58
    6.4  HIPAA Compliance....................................................................        58
ARTICLE VII PAYMENT AND FUNDING..............................................................        59
    7.1  Capitation Payment..................................................................        59
    7.2  Hospital Delivery Case Rate Payment.................................................        59
    7.3  Actuarially Sound Rate Representation...............................................        59
    7.4  New Covered Services................................................................        59
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                                TABLE OF CONTENTS
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    7.5  Adjustments.........................................................................        59
    7.6  Copayments..........................................................................        59
    7.7  Availability of Funds...............................................................        60
    7.8  Denial of Payment Sanction by CMS...................................................        60
    7.9  Hold Harmless.......................................................................        60
    7.10 Payment in Full.....................................................................        61
    7.11 Remittance Advice...................................................................        61
ARTICLE VIII TERM RENEWAL AND TERMINATION....................................................        62
    8.1  Term................................................................................        62
    8.2  Continuing Duties in the Event of Termination.......................................        62
    8.3  Termination With and Without Cause..................................................        62
    8.4  Temporary Management................................................................        62
    8.5  Termination for Breach of HIPAA  Compliance Obligations.............................        62
    8.6  Automatic Termination...............................................................        63
    8.7  Reimbursement in the Event of Termination...........................................        63
ARTICLE IX   GENERAL TERMS...................................................................        64
    9.1  Records Retention, Audits, and Reviews..............................................        64
    9.2  Nondiscrimination...................................................................        65
    9.3  Confidentiality of Information......................................................        65
    9.4  Notices.............................................................................        68
    9.5  Required Disclosures................................................................        68
         (a) Conflict of Interest............................................................        68
         (b) Disclosure of Interest..........................................................        69
    9.6  CMS Prior Approval..................................................................        69
    9.7  Assignment..........................................................................        70
    9.8  Similar Services....................................................................        70
    9.9  Amendments..........................................................................        70
    9.10 Sanctions...........................................................................        70
         (a) Failure to Report or Submit.....................................................        71
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                                       iv
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                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
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         (b) Failure to Submit Encounter Data................................................        71
         (c) Failure to Meet Minimum Standards of Care.......................................        71
         (d) Imposition of Prohibited Charges................................................        71
         (e) Misrepresentation or Falsification of Information...............................        71
         (f) Failure to Comply with the Physician Incentive Plan Requirements................        71
         (g) Failure to Meet Access and Provider Ratio Standards.............................        71
         (h) Failure to Provide Covered Services.............................................        72
         (i) Discrimination Related to Pre-Existing Conditions and/or Medical History........        72
         (j) Pattern of Marketing Failures...................................................        72
         (k) Other Failures..................................................................        72
    9.11 Sale or Transfer....................................................................        72
    9.12 Coordination of Benefits for Enrollees..............................................        72
    9.13 Subrogation.........................................................................        73
    9.14 Agreement to Obey All Laws..........................................................        73
    9.15 Severability........................................................................        74
    9.16 Contractor's Disputes With Other Providers..........................................        74
    9.17 Choice of Law.......................................................................        74
    9.18 Debarment Certification.............................................................        74
    9.19 Child Support, State Income Tax and Student Loan Requirements.......................        74
    9.20 Payment of Dues and Fees............................................................        74
    9.21 Federal Taxpayer Identification.....................................................        74
    9.22 Drug Free Workplace.................................................................        75
    9.23 Lobbying............................................................................        75
    9.24 Early Retirement....................................................................        75
    9.25 Sexual Harassment...................................................................        75
    9.26 Independent Contractor..............................................................        75
    9.27 Solicitation of Employees...........................................................        76
    9.28 Nonsolicitation.....................................................................        76
    9.29 Ownership of Work Product...........................................................        76
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                                       v
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                                TABLE OF CONTENTS
                                  (continued)

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9.30     Bribery Certification...............................................................        77
9.31     Nonparticipation in International  Boycott..........................................        77
9.32     Computational Error.................................................................        77
9.33     Survival of Obligations.............................................................        77
9.34     Clean Air Act and Clean Water Act Certification.....................................        77
9.35     Non-Waiver..........................................................................        77
9.36     Notice of Change in Circumstances...................................................        77
9.37     Public Release of Information.......................................................        77
9.38     Payment in Absence of Federal Financial Participation...............................        78
9.39     Employment Reporting................................................................        78
9.40     Certification of Participation......................................................        78
9.41     Indemnification.....................................................................        78
9.42     Gifts...............................................................................        79
9.43     Business Enterprise for Minorities, Females and Persons with Disabilities...........        79
9.44     Non-Delinquency Certification.......................................................        79
</TABLE>

Attachment I    -   Rate Sheets
Attachment II   -   Drug Free Workplace Agreement
Attachment III  -   HIPAA Compliance Obligations
Attachment IV   -   Business Enterprise Program Contracting Goal
Exhibit A       -   Quality Assurance
Exhibit B       -   Utilization Review/Peer Review
Exhibit C       -   Summary of Required Reports and Submissions
Exhibit D       -   Encounter Data Format Requirements

                                       vi
<PAGE>


                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                     CONTRACT FOR FURNISHING HEALTH SERVICES

      THIS CONTRACT FOR FURNISHING HEALTH SERVICES ("Contract") made, pursuant
to Section 5-11 of the Illinois Public Aid Code (305 ILCS 5/5-11), is by and
between the ILLINOIS DEPARTMENT OF PUBLIC AID ("Department"), acting by and
through its Director, and HARMONY HEALTH PLAN OF ILLINOIS, INC. ("Contractor"),
who certifies that it is a managed care organization and whose principal office
is located at 125 South Wacker Drive, Suite 2600, Chicago, IL 60606.

                                    RECITALS

      WHEREAS, the Contractor is a health maintenance organization operating
pursuant to a Certificate of Authority issued by the Illinois Department of
Insurance and wishes to provide Covered Services to Potential Enrollees (as
defined herein);

      WHEREAS, the Department, pursuant to the laws of the State of Illinois,
provides for medical assistance under the Medical Assistance Program or KidCare
to Participants wherein Potential Enrollees may enroll with the Contractor to
receive Covered Services; and

      WHEREAS, the Contractor warrants that it is able to provide and/or arrange
to provide the Covered Services set forth in this Contract to Enrollees under
the terms and conditions set forth herein;

      NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

      The following terms as used in this Contract and the attachments, exhibits
and amendments hereto shall be construed and interpreted as follows, unless the
context otherwise expressly requires a different construction and
interpretation:

      ABUSE means a manner of operation that results in excessive or
unreasonable costs to the Federal and/or State health care programs.

      ACTION means a (i) denial or limitation of authorization of a requested
service; (ii) reduction, suspension, or termination of a previously authorized
service; (iii) denial of payment for a service; (iv) failure to provide services
in a timely manner; (v) failure to respond to an appeal in a timely manner; and
(vi) solely with respect to a MCO that is the only Contractor serving a rural
area, the denial of an Enrollee's request to obtain services outside of the
Contracting Area.

<PAGE>


      ADMINISTRATIVE RULES means the rules promulgated by the Department
governing the Medical Assistance Program or KidCare.

      AFFILIATED means associated with another party for the purpose of
providing health care services under a Contractor's Plan pursuant to a written
contract.

      APPEAL means a request for review of a decision made by the Contractor
with respect to an Action.

      AUTHORIZED PERSON means a representative of the Office of Inspector
General for the Department, the Illinois Medicaid Fraud Control Unit, the United
States Department of Health and Human Services, a representative of other State
and federal agencies with monitoring authority related to the Medical Assistance
Program or KidCare, and a representative of any QAO under contract with the
Department.

      CMS means the Centers for Medicare & Medicaid Services under the United
States Department of Health and Human Services.

      CAPITATION means the reimbursement arrangement in which a fixed rate of
payment per Enrollee per month is made to the Contractor for the performance of
all of the Contractor's duties and obligations pursuant to this Contract, except
that, if Contractor elects to receive payment of a Hospital Delivery Case Rate,
the fixed payment will not reflect the Contractor's performance of duties and
obligations related to the delivery of newborns.

      CASE means individuals who have been grouped together and assigned a
common identification number by the Department or the Department of Human
Services of which at least one individual in that grouping has been determined
by the Department to be a Potential Enrollee. An individual is added to a Case
when the Client Information System maintained by the Illinois Department of
Human Services reflects the individual is in the Case.

      CONTRACT means this document, inclusive of all attachments, exhibits,
schedules and any subsequent amendments hereto.

      CONTRACTING AREA means the area(s) from which the Contractor may enroll
Potential Enrollees as set forth in Attachment I.

      COVERED SERVICES means those benefits and services described in Article V,
Section 5.1.

      EPSDT means the Early and Periodic, Screening, Diagnostic and Treatment
services provided to children under Title XIX of the Social Security Act (42
U.S.C. Section 1396, et seq.). The preventive component of this program is
referred to as the "Healthy Kids" program.

      EQRO means an "External Quality Review Organization" that has a contract
with the Department to perform federally required oversight and monitoring of
the quality assurance component of managed care. Quality oversight and
monitoring shall include, but is not limited to, annual onsite review,
attendance at one of the quality assurance meetings, and ongoing monitoring of
quality outcomes and timeliness of, and access to, the Covered Services.

                                       2
<PAGE>


      EARLY INTERVENTION means the program described at 325 ILCS 20/1 et seq.,
which authorizes the provision of services to infants and toddlers, birth
through two years of age, who have a disability due to developmental delay or a
physical or mental condition that has a high probability of resulting in
developmental delay or being at risk of having substantial developmental delays
due to a combination of serious factors.

      EFFECTIVE DATE shall be August 1, 2003.

      EMERGENCY MEDICAL CONDITION means a medical condition manifesting itself
by acute symptoms of sufficient severity (including, but not limited to, severe
pain) such that a prudent lay person, who possesses an average knowledge of
health and medicine, could reasonably expect the absence of immediate medical
attention to result in (i) placing the health of the individual (or, with
respect to a pregnant woman, the health of the woman or her unborn child) in
serious jeopardy, (ii) serious impairment to bodily functions, or (iii) serious
dysfunction of any bodily organ or part.

      EMERGENCY SERVICES means those inpatient and outpatient health care
services that are Covered Services, including transportation, needed to evaluate
or stabilize an Emergency Medical Condition, which are furnished by a Provider
qualified to furnish emergency services.

      ENCOUNTER means an individual service or procedure provided to an Enrollee
that would result in a claim if the service or procedure were to be reimbursed
fee-for-service under the Medical Assistance Program or KidCare.

      ENCOUNTER DATA means the compilation of data elements, as specified by the
Department in written notice to the Contractor, identifying an Encounter that
includes information similar to that required in a claim for fee-for-service
payment under the Medical Assistance Program or KidCare.

      ENROLLEE means any Potential Enrollee whose coverage under the Plan has
begun and remains in effect pursuant to this Contract.

      ENROLLMENT means the completion and signing of any necessary Enrollment
forms by or on behalf of a Potential Enrollee in accordance with Enrollment
procedures prescribed in this Contract and concurrent or subsequent entry of
required information into the Department's database.

      FAMILY CASE MANAGEMENT PROVIDER means any agency contracting with the
Illinois Department of Human Services or its successor agency to provide Family
Case Management Services.

      FAMILY CASE MANAGEMENT SERVICES means the program described at 77 Ill.
Adm. Code 630.220.

      FEDERALLY QUALIFIED HMO means an HMO that CMS has determined to be a
qualified HMO under Section 1310(d) of the Public Health Service Act.

                                       3
<PAGE>

      FEDERALLY QUALIFIED HEALTH CENTER or FQHC means a health center that meets
the requirements of 89 Ill, Adm. Code 140.461(d).

      FRAUD means knowing and willful deception, or a reckless disregard of the
facts, with the intent to receive an unauthorized benefit.

      GRIEVANCE means an Enrollees expression of dissatisfaction about any
matter other than a matter that is properly the subject of an Appeal.

      HEAD OF CASE means the individual in whose name the Case is registered and
to whom the monthly medical card is mailed.

      HOSPITAL DELIVERY CASE RATE means a fixed payment made to the Contractor
for Physician and hospital services associated with an Enrollee's delivery of a
newborn in a hospital. The Hospital Delivery Case Rate will apply to deliveries
of stillborn infants if the procedure groups into the appropriate diagnosis
related grouping (DRG) code identified in this Contract.

      INELIGIBLE PERSON means a Person which: (i) under either Section 1128 or
Section 1128A of the Social Security Act, is or has been terminated, barred,
suspended or otherwise excluded from participation in or has voluntarily
withdrawn from participating in, as the result of a settlement agreement, any
program under federal law including any program under Titles XVIII, XIX, XX or
XXI of the Social Security Act; (ii) has not been reinstated in the Medical
Assistance Program or Federal health care programs after a period of exclusion,
suspension, debarment, or ineligibility; or (iii) has been convicted of a
criminal offense related to the provision of health care items or services in
the last ten (10) years.

      KIDCARE means the program operated pursuant to the Children's Health
Insurance Program Act (215 ILCS 106/1 et seq.), but not including the program
operated pursuant to Subsection 25(a)(1) of the Children's Health Insurance
Program Act (215 ILCS 106/25(a)(1)).

      MCO means a "managed care organization" that is: (i) a Federally Qualified
HMO which meets the advance directives requirements of subpart I of part 489 of
42 C.F.R. and set forth in Article V, Section 5.19 or (ii) any public or private
entity that meets the advance directives requirements of subpart I of part 489
of 42 C.F.R. and set forth in Article V, Section 5.19 and is determined to meet
the following conditions: (A) is organized primarily for the purpose of
providing health care services, (B) makes the services it provides to its
Medicaid Enrollees as accessible (in terms of timeliness, amount, duration and
scope) as those services are to other Medicaid participants within the area
served by the entity and (C) meets the solvency standards of regulations
promulgated under 42 C.F.R. Part 438.

      MARKETING means any activities, procedures, materials, information or
incentives used to encourage or promote the Enrollment of Potential Enrollees
with the Contractor.

      MARKETING MATERIALS means materials that are produced in any medium, by or
on behalf of a MCO, are used by the MCO to communicate with Potential Enrollees
or Enrollees, and can reasonably be interpreted as intended to influence them to
enroll with that particular MCO.

                                       4
<PAGE>

      MEDICAL ASSISTANCE OR MEDICAL ASSISTANCE PROGRAM means the Illinois
Medical Assistance Program administered under Article V of the Illinois Public
Aid Code (305 ILCS 5/5-1 et seq.) or its successor program and Titles XIX and
XXI of the Social Security Act (42 U.S.C. 1396 et seq.) and Section 12-4.35 of
the Illinois Public Aid Code (305 ILCS 5/12-4.35).

      MEDICALLY NECESSARY means that a service, supply or medicine is
appropriate and meets the standards of good medical practice in the medical
community for the diagnosis or treatment of a covered illness or injury, the
prevention of future disease, to assist in the Enrollee's ability to attain,
maintain, or regain functional capacity, or to achieve age-appropriate growth,
as determined by the Provider in accordance with the Contractor's guidelines,
policies and/or procedures.

      MISREPRESENTATION means a statement that an individual knows to be false
or misleading, or does not believe to be true and accurate, and makes with an
intent to deceive or be unfair to a Potential Enrollee or Enrollee.

      OFFICE OF INSPECTOR GENERAL OR OIG means the Office of Inspector General
for the Illinois Department of Public Aid as set forth in 305 ILCS 5/12-13.1.

      PARTICIPANT means any individual receiving benefits under Medical
Assistance or KidCare.

      PERSON means any individual, corporation, proprietorship, firm,
partnership, limited liability company, limited partnership, trust, association,
governmental authority or other entity, whether acting in an individual,
fiduciary or other capacity.

      PERSON WITH AN OWNERSHIP OR CONTROLLING INTEREST means a Person that: has
a direct or indirect, singly or in combination, ownership interest equal to five
percent (5%) or more in the Contractor; owns an interest of five percent (5% )
or more in any mortgage, deed of trust, note or other obligations secured by the
Contractor if that interest equals at least five percent (5%) of the value of
the property or assets of the Contractor; is an officer or director of a
Contractor that is organized as a corporation, is a member of the Contractor
that is organized as a limited liability company or is a partner in the
Contractor that is organized as a partnership.

      PHYSICIAN means a person licensed to practice medicine in all its branches
under the Medical Practice Act of 1987.

      PLAN means the Contractor's program for providing Covered Services
pursuant to this Contract.

      POST-STABILIZATION SERVICES means medically necessary non-emergency
services furnished to an Enrollee after the Enrollee is Stabilized, in order to
maintain such Stabilization, following an Emergency Medical Condition.

      POTENTIAL ENROLLEE means a Participant, except one who:

                                       5
<PAGE>


            -     is receiving Medical Assistance under Aid to the Aged, Blind
                  and Disabled; as provided by Title XIX of the Social Security
                  Act (42 U.S.C. Section 1383c) and 305 ILCS 5/3-1 et seq.

            -     is eligible only through the Transitional Assistance (305 ILCS
                  5/6-11) or Refugee Assistance Programs under Title XIX of the
                  Social Security Act (42 U.S.C. 1396 et seq.;

            -     is age 19 or older and eligible only through the State Family
                  and Children Assistance Program (305 IL CS 5/6-11);

            -     is receiving care that is subsidized by the Department of
                  Children and Family Services;

            -     is residing in a long term care facility including State of
                  Illinois operated facilities;

            -     has Medicare coverage under Title XVIII of the Social Security
                  Act (42 U.S.C. 1395 etseq.);

            -     has significant medical coverage through a third party for
                  Medical Assistance Participants;

            -     is eligible only through the Medicaid Presumptive Eligibility
                  for Pregnant Women program under Title XIX of the Social
                  Security Act (42 U.S.C. 1396r-1);

            -     is eligible for Medical Assistance only through meeting a
                  spend-down obligation;

            -     is a non-citizen receiving only emergency Medical Assistance;
                  or

            -     is identified with an "R" in the eighth position of a Case
                  identification number.

      PRELISTING REPORT means the information that the Contractor retrieves
electronically from the Department prior to the first day of each month of
coverage that reflects changes in Enrollment subsequent to the last monthly
payment and that applies to coverage for the following month. Upon notification
by the Department, but in no event later than October 16, 2003, the name of the
Prelisting Report shall change to "834 Benefit Enrollment and Maintenance," but
the definition shall remain the same. All references in this Contract to
Prelisting Report shall be deemed to refer to the "834 Benefit Enrollment and
Maintenance" after the Department notifies the Contractor of the change.

      PRIMARY CARE PROVIDER means a Physician, specializing by certification or
training in obstetrics, gynecology, general practice, pediatrics, internal
medicine or family practice who

                                       6


<PAGE>


agrees to be responsible for directing, tracking and monitoring the health care
needs of, and authorizing and coordinating care for, Enrollees.

      PROSPECTIVE ENROLLEE means a Potential Enrollee who has begun the process
of Enrollment with the Contractor but whose coverage under the Plan has not yet
begun.

      PROVIDER means a Person who is approved by the Department to furnish
medical, educational or rehabilitative services to Participants under the
Medical Assistance Program.

      REMITTANCE ADVICE means the list that is electronically retrieved by the
Contractor with each monthly payment. The Remittance Advice list will identify
each Enrollee for whom payment is being made. Upon notification by the
Department, but in no event later than October 16, 2003, the name of the
Remittance Advice list shall change to "820 Payroll Deducted and Other Group
Premium Payment for Insurance Products," but the definition shall remain the
same. All references in this Contract to Remittamce Advice shall be deemed to
refer to the "820 Payroll Deducted and Other Group Premium Payment for Insurance
Products" after the Department notifies the Contractor of the change.

      RURAL HEALTH CLINIC OR RHC means a Provider that has been designated by
the Public Health Service, the U.S. Department of Health and Human Services, or
the Governor of the State of Illinois, and approved by the Public Health
Service, in accordance with the Rural Health Clinics Act (see Public Law 95-210)
as a RHC.

      SERVICE AUTHORIZATION REQUEST means a request by an Enrollee for the
provision of a medical service.

      SITE means any contracted Provider (IPA, PHO, FQHC, individual physician,
physician groups, etc.) through which the Contractor arranges the provision of
primary care to Enrollees.

      STABILIZATION OR STABILIZED means, with respect to an Emergency Medical
Condition, and as determined by an attending emergency room Physician or other
treating Provider within reasonable medical probability, that no material
deterioration of the condition is likely to result upon discharge or transfer to
another facility.

      STATE means the State of Illinois.

      TERTIARY CARE means medical care requiring a setting outside of the
routine, community standard, which care shall be provided within a regional
medical center by highly specialized Providers (specialists and subspecialists)
who require complex technological, diagnostic, treatment and support facilities
to provide such care.

      TITLE X FAMILY PLANNING PROVIDER means an agency that receives grants from
the Illinois Department of Human Services to provide comprehensive family
planning services pursuant to Title X of the Public Health Services Act, 42
U.S.C. 300 and 77 Ill. Adm. Code 635.

      WOMEN'S HEALTH CARE PROVIDER means a Physician, specializing by
certification or training in obstetrics, gynecology or family practice.

                                       7
<PAGE>

                                   ARTICLE II

                              TERMS AND CONDITIONS

      2.1   SPECIFICATION. This Contract is for the delivery of Covered Services
to Enrollees and the administrative responsibilities attendant thereto. The
terms and conditions of this Contract, along with the applicable Administrative
Rules and the Departmental materials described in this Article II, Section 2.3
below, shall constitute the entire and present agreement between the parties.
This Contract, including all attachments, exhibits and amendments constitutes a
total integration of all rights, benefits and obligations of both parties for
the performance of all duties and obligations hereunder including, but not
limited to, the provision of, and payment for Covered Services under this
Contract. This Contract is contingent upon receipt of approval from CMS.

      There are no extrinsic conditions or collateral agreements or undertakings
of any kind with respect to matters addressed in this Contract. It is the
express intention of both the Department and the Contractor that any and all
prior or contemporaneous agreements, promises, negotiations or representations,
either oral or written, except as provided herein are to have no force, effect
or legal consequences of any kind, nor shall any such agreements, promises,
negotiations or representations, either oral or written, have any bearing upon
this Contract or the duties or obligations hereunder. This Contract and any
amendment hereto shall be deemed the full and final expression of the parties'
agreement.

      2.2   RULES OF CONSTRUCTION.

            (a)   Unless the context otherwise requires:

                  (1)   Provisions apply to successive events and transactions;

                  (2)   "Or" is not exclusive;

                  (3)   Unless otherwise specified, references to statutes,
      regulations, and rules include subsequent amendments and successors
      thereto;

                  (4)   The various headings of this Contract are provided for
      convenience only and shall not affect the meaning or interpretation of
      this Contract or any provision hereof;

                  (5)   If any payment or delivery hereunder between the
      Contractor and the Department shall be due on any day that is not a
      business day, such payment or delivery shall be made on the next
      succeeding business day;

                  (6)   Words in the plural that should be singular by context
      shall be so read, and words in the singular shall be read as plural where
      the context dictates;

                  (7)   Days shall mean calendar days unless otherwise
      designated by the context; and

                                       8
<PAGE>


                  (8)   References to masculine or feminine pronouns shall be
      interchangeable where the context requires.

            (b)   References in the Contract to Potential Enrollee, Prospective
Enrollee and Enrollee shall include the parent, caretaker relative or guardian
where such Potential Enrollee, Prospective Enrollee or Enrollee is a minor child
or an adult for whom a guardian has been named; provided, however, that the
Contractor is not obligated to cover services for any individual who is not
enrolled as an Enrollee with the Contractor.

      2.3   PERFORMANCE OF SERVICES AND DUTIES. The Contractor shall perform all
services and other duties as set forth in this Contract in accordance with, and
subject to, the Administrative Rules and Departmental materials, including, but
not limited to, Departmental policies, Department Provider Notices, Provider
Handbooks and any other rules and regulations that may be issued or promulgated
from time to time during the term of this Contract. The Department shall provide
copies of such materials to the Contractor upon the Contractor's written
request, if such are in existence upon the Effective Date, or upon issuance or
promulgation if issued or promulgated after the Effective Date. Changes in such
materials after the Effective Date shall be binding on the parties hereto but
shall not be considered amendments to the Contract. To the extent the Department
proposes a change in policy that may have a material impact on the Contractor's
ability to perform under this Contract, the proposed change will be subject to
good faith negotiations between both parties before it shall be binding pursuant
to this Article II, Section 2.3.

      2.4   LANGUAGE REQUIREMENTS.

            (a)   Key Oral Contacts. The Contractor shall conduct Key Oral
Contacts (as described below) with Potential Enrollees, Prospective Enrollees or
Enrollees in a language the Potential Enrollees, Prospective Enrollees and
Enrollees understand. Where the language is other than English, the Contractor
shall offer and, if accepted by the Potential Enrollee, Prospective Enrollee or
Enrollee, shall supply interpretive services. Such services may not be rendered
by any individual who is under the age of eighteen (18). "Key Oral Contacts"
include, but are not limited to: Marketing contacts; enrollment communications;
explanations of benefits; Site, Primary Care and Women's Health Care Provider
selection activity; educational information; telephone calls to the toll-free
hotline(s) described in Article V, Section 5.1(k); and face-to-face encounters
with Providers rendering care.

            (b)   Written Material. Marketing Materials, Enrollee Handbooks,
Basic Information, and any information or notices required to be distributed to
Potential Enrollees, Prospective Enrollees or Enrollees by the Department or
regulations promulgated from time to time under 42 C.F.R. Part 438
(collectively, "Written Materials") shall be easily understood by individuals
who have a sixth grade reading level. Such Written Materials shall be available
in alternative formats that take into account the special needs (e.g., vision
impairment) of Potential Enrollees, Prospective Enrollees or Enrollees. The
Contractor shall have in place a mechanism to help Potential Enrollees,
Prospective Enrollees and Enrollees understand the requirements and benefits of
the Plan. Where there is a prevalent single-language minority within the low
income households in the relevant Department of Human Services local office area
(which for purposes of this Contract shall exist when five percent (5%) or more
such families speak a language other

                                       9
<PAGE>

than English, as determined by the Department according to published Census
Bureau data), the Contractor's written materials provided to Potential
Enrollees, Prospective Enrollees or Enrollees must be available in that language
as well as English. Translations of written material are subject to prior
approval by the Department and must be accompanied by a certification that the
translation is accurate and complete.

            (c)   Oral Interpretation. The Contractor must make oral
interpretation services available free of charge in all languages to all
Potential Enrollees, Prospective Enrollees or Enrollees who need assistance
understanding Key Oral Contacts or Written Materials. The Contractor must
include in all Key Oral Contacts and Written Materials notification that such
oral interpretation services are available, and provide a telephone number that
can be used to obtain such services.

      2.5   LIST OF INDIVIDUALS IN AND ADMINISTRATIVE CAPACITY. Upon execution
of this Contract, the Contractor shall provide the Department with a list of
individuals who have responsibility for monitoring and ensuring the performance
of each of the duties and obligations under this Contract. This list shall be
updated throughout the term of this Contract as necessary and as changes occur,
and written notice of such changes shall be given to the Department within ten
(10) business days of such changes occurring.

      2.6   CERTIFICATE OF AUTHORITY. The Contractor must obtain and maintain
during the term of the Contract a valid Certificate of Authority as a health
maintenance organization under 215 ILCS 125/1-1. et seq.

      2.7   OBLIGATION TO COMPLY WITH OTHER LAWS. No obligation imposed herein
on the Contractor shall relieve the Contractor of any other obligation imposed
by law or regulation, including, but not limited to, those imposed by The
Managed Care Reform and Patient Rights Act (215 ILCS 134/1 et seq.), the federal
Balanced Budget Act of 1997 (Public Law 105-33) and regulations promulgated by
the Illinois Department of Insurance, the Illinois Department of Public Health
or CMS. The Department shall report all information it receives indicating a
violation of a law or regulation to the appropriate agency.

      (a)   If the Contractor believes that it is impossible to comply with a
provision of this Contract because of a contradictory provision of applicable
State or federal law, the Contractor shall immediately notify the Department.
The Department then will make a determination of whether a contract amendment is
necessary. The fact that either the Contract or an applicable law imposes a more
stringent standard than the other does not, in and of itself, render it
impossible to comply with both.

      2.8   PROVISION OF COVERED SERVICES THROUGH AFFILIATED PROVIDERS. Where
the Contractor does not employ Physicians or other Providers to provide direct
health care services, every provision in this Contract by which the Contractor
is obligated to provide Covered Services of any type to Enrollees, including but
not limited to provisions stating that the Contractor will "provide Covered
Services," "provide quality care," or provide a specific type of health care
service, such as the enumerated Covered Services in Article V, Section 5.1
(i.e., health screenings, prenatal care or behavioral health assessments) shall
be interpreted to mean

                                       10
<PAGE>

that the Contractor arranges for the provision of those Covered Services through
its network of Affiliated Providers.

                                       11
<PAGE>


                                   ARTICLE III

                                   ELIGIBILITY

      3.1   DETERMINATION OF ELIGIBILITY. The State has the exclusive right to
determine an individual's eligibility for the Medical Assistance Program and
KidCare and eligibility to become an Enrollee. Such determination shall be final
and is not subject to review or appeal by the Contractor. Nothing in this
Article III, Section 3.1 prevents the Contractor from providing the Department
with information the Contractor believes indicates that an Enrollee's
eligibility has changed.

      3.2   ENROLLMENT GENERALLY. Any Potential Enrollee who resides, at the
time of Enrollment, in the Contracting Area shall be eligible to become an
Enrollee except as described in Article IX, Section 9.12. Enrollment shall be
voluntary, except as provided in Article IV, Section 4.1(b). Except as provided
herein, Enrollment shall be open during the entire period of this Contract
until the Enrollment limit of the Contractor, as set forth in Attachment I, is
reached. The Contractor must continue to accept Enrollment until such Enrollment
limit is reached. Such Enrollment shall be without restriction and in the order
in which Potential Enrollees apply. The Contractor shall not discriminate
against Potential Enrollees on the basis of such individuals' health status or
need for health services. Similarly, Contractor will not discriminate against
Potential Enrollees on the basis of race, color, or national origin, and will
not use any policy or practice that has the effect of discriminating on the
basis of race, color, or national origin. The Contractor shall accept each
Enrollee whose names appears on the Prelisting Report.

      3.3   ENROLLMENT LIMITS. The Department will limit the number of Enrollees
enrolled with the Contractor by Contracting Area to a level that will not exceed
its physical and professional capacity. In its determination of capacity, the
Department will only consider Providers that are approved by the Department.
When the capacity is reached, no further applications will be submitted for
Enrollment unless termination or disenrollment of Enrollees create room for
additions. The capacity limits for the Contractor are specified in Attachment I.
Prior to the Contractor's reaching its capacity, the Department will perform a
threshold review at the Enrollment level(s) set forth in Attachment I. Should
the Department determine that the Contractor's operating or financial
performance reasonably indicates a lack of additional Provider or administrative
capacity, the review of capacity may be conducted prior to the Contractor
reaching the threshold review enrollment level specified in Attachment I. This
threshold review shall examine the Contractors Provider and administrative
capacity in each Contracting Area. The Department's standards for the review
shall be reasonable and timely and be consistent with the terms of this
Contract. The threshold review shall take place as determined by the Department
based on the rate of Enrollment in the Contractor's Plan in each Contracting
Area or upon the request of the Contractor and the subsequent agreement of the
Department. The Department shall use its best efforts to complete the review
before the Contractor reaches the threshold levels set forth in Attachment I.
Should the Department determine that the Contractor does not have the necessary
Provider and administrative capacity to service any additional Enrollments, the
Department may freeze Enrollment until such time that the Plan's Provider and
administrative capacity have increased to the Department's satisfaction. Nothing
in this Contract shall be deemed to be a guarantee of any Potential Enrollee's
Enrollment in the Contractor's Plan.

                                       12
<PAGE>


      3.4   EXPANSION TO OTHER CONTRACTING AREAS. The Contractor may, during the
term of this Contract and any renewal thereof, request of the Department the
opportunity to offer Covered Services to Potential Enrollees in areas other than
the Contracting Area(s) specified in Attachment I. The Contractor must make this
request in writing to the Department. The Department will provide an application
and instructions for completion within ten (10) business days after receipt of
written request. Upon receipt of a completed application from the Contractor,
the Department shall review the information in a timely manner and may, at any
time, request additional information of the Contractor. It is in the sole
discretion of the Department, upon review of the Contractor's application for
expansion and assessing the needs of the Potential Enrollee population and other
factors as determined by the Department, to grant the Contractor's request for
expansion. Should the Department agree to the expansion request, the Department
and the Contractor shall agree to execute an amendment to Attachment I of the
Contract to reflect the additional Contracting Areas in which the Contractor
will provide Covered Services.

      3.5   DISCONTINUATION OF SERVICES IN ONE OR MORE CONTRACTING AREA. The
Contractor may, during the term of this Contract and any renewal thereof,
request of the Department the opportunity to discontinue offering Covered
Services to Enrollees in one or more Contracting Area specified in Attachment I.
The Contractor must make this request in writing to the Department. The
Department will advise the Contractor of all information that must be submitted
to the Department. Upon receipt of such information from the Contractor, the
Department shall review the information in a timely manner and may, at any time,
request additional information of the Contractor. It is in the sole discretion
of the Department to grant the Contractor's request to discontinue offering
Covered Services in one or more Contracting Areas. Should the Department agree
to the request to discontinue offering Covered Services, the Department and the
Contractor shall agree to execute an amendment to Attachment I of the Contract
to reflect the appropriate Contracting Area(s) in which the Contractor will
provide Covered Services.

                                       13
<PAGE>

                                   ARTICLE IV

                ENROLLMENT, COVERAGE AND TERMINATION OF COVERAGE

      4.1   ENROLLMENT PROCESS.

            (a)   The Contractor and the Department, acting directly or through
its agent, shall be responsible for the Enrollment of Potential Enrollees.

                  (1)   When the Contractor enrolls a Potential Enrollee, the
      Contractor shall initiate the processing of the Enrollment by submitting a
      Managed Care Enrollment Form, Form No. DPA 2575A, completed in
      accordance with Department instructions for completing such forms, and
      signed by the individual who is recognized as the Head of Case by the
      Department. This form will be supplied to the Contractor by the
      Department. The Contractor is responsible for submitting such forms to the
      Department or its agent, as directed. The Department agrees to act in good
      faith and use its best efforts to see that Managed Care Enrollment Forms
      submitted for Potential Enrollees are processed within fifteen (15)
      business days of receipt by the Department or its agent. At some point
      during the term of this Contract, but in no event later than October 16,
      2003, the Contractor shall be required to submit all enrollment
      information electronically to the Department and retain the original forms
      for at least six (6) years. The Department shall provide the Contractor
      with specific file submission requirements.

                  (2)   Only a Head of Case may enroll another Potential
      Enrollee. A Head of Case may enroll all other Potential Enrollees in his
      Case. An adult Potential Enrollee, who is not a Head of Case, may enroll
      himself only.

                  (3)   A member of the Contractor's management staff may
      correct a Managed Care Enrollment Form only in accordance with Department
      instructions. The corrections must be initialed by the Contractor's
      manager or his designated staff person.

            (b)   The Department may enroll Potential Enrollees with the
Contractor by means of any process the Department uses for the Enrollment of
Potential Enrollees into managed care. This may include any program the
Department implements during the term of this Contract whereby Potential
Enrollees who do not affirmatively choose between enrollment in an MCO or the
alternative delivery system offered by the Department will be enrolled in MCOs.

            (c)   The Contractor shall conduct Enrollment activities that
include the information distribution requirements of Article V, Section 5.4
hereof and are designed and implemented so as to maximize Eligible Enrollees'
understanding of the following:

                  (1)   that all Covered Services must be received from or
      through the Plan with the exception of family planning and other Medical
      Assistance services as described in Article V, Section 5.1(e) with
      provisions made to clarify when such services may also be obtained
      elsewhere;

                                       14
<PAGE>

                  (2)   that once enrolled, the Enrollees will receive a card
      from the Department which identifies such Enrollees as enrolled in an MCO;
      and

                  (3)   that the Contractor must inform Potential Enrollees of
      any Covered Services that will not be offered by the Contractor due to the
      Contractor's exercise of a right of conscience.

            (d)   Upon the Contractor's request, the Department may refuse
Enrollment for at least a six-month period to those former Enrollees previously
terminated from coverage by the Contractor for "good cause," as specified in
Article IV, Section 4.4(a)(1).

            (e)   When an Enrollee, who is a Head of Case, gives birth and the
newborn is added to a Case before the newborn is forty-five (45) days old,
coverage shall be retroactive to the date of birth. Coverage for all other
newborns shall be prospective according to standard Enrollment terms of this
Contract.

            (f)   From birth through age eighteen (18), Potential Enrollees who
are added to a Case in which all members of the Case are enrolled with the
Contractor, will also be enrolled with the Contractor automatically. Coverage
shall begin as designated by the Department on the first day of a calendar month
no later than three (3) calendar months from the date the Potential Enrollee was
added to the Case.

            (g)   No later than ten (10) business days following receipt of the
Prelisting Report, the Contractor must send new Enrollees an identification
card bearing the name of the Contractor's Plan; the effective date of coverage;
the twenty-four-hour telephone number to confirm eligibility for benefits and
authorization for services and the name and phone number of the Primary Care
Provider and, if applicable, the Women's Health Care Provider. Samples of the
identification cards described herein shall be submitted for Department
approval by the Contractor prior to use by the Contractor and as revised. The
Contractor shall not be required to submit for prior approval format changes,
provided there is no change in the information conveyed.

                  (1)   If the Contractor requires a female Enrollee who wishes
      to use a Women's Health Care Provider to designate a specific Women's
      Health Care Provider and if a female Enrollee does so designate a Women's
      Health Care Provider, the name and phone number of that Women's Health
      Care Provider must appear on the identification card.

            (h)   Within three (3) business days following receipt of the
Prelisting Report, the Contractor must update the Enrollees' eligibility in all
electronic systems maintained by the Contractor.

      4.2   INITIAL COVERAGE. Coverage shall begin as designated by the
Department on the first day of a calendar month no later than three (3) calendar
months from the date the Enrollment is entered into the Department's database.
Enrollment can occur only upon the Prospective Enrollee's selection of a Site
and the communication of that Site by the Contractor to the Department.

                                       15
<PAGE>

            (a)   The Contractor shall provide coordination of care assistance
to Prospective Enrollees to access a Primary Care Provider or Women's Health
Care Provider before the Contractor's coverage becomes effective, if requested
to do so by Prospective Enrollees or if the Contractor has knowledge of the need
for such assistance. Any payment for those services rendered to Prospective
Enrollees described herein shall be made directly by the Department to such
Providers under the provisions of the Medical Assistance Program or KidCare.

      4.3   PERIOD OF ENROLLMENT. Every Enrollee shall remain enrolled until the
Enrollee's coverage is ended pursuant to Article IV, Section 4.4.

      4.4   TERMINATION OF COVERAGE.

            (a)   An Enrollee's coverage shall be terminated, subject to
Department approval, upon the occurrence of any of the following conditions:

                  (1)   dismissal from the Plan by the Contractor for "good
      cause" shown may only occur upon receipt by the Contractor of written
      approval of such termination by the Department. The Contractor shall give
      the Enrollee at least 10 days notice before termination of coverage for
      "good cause"; except the notice period is shortened to 5 days if probable,
      Enrollee fraud has been verified. For purposes of this paragraph, "good
      cause" may include, but is not limited to fraud or other misrepresentation
      by an Enrollee, threats or physical acts constituting battery to the
      Contractor, the Contractor's personnel or the Contractor's participating
      Providers and staff, chronic abuse of emergency rooms, theft of property
      from the Contractor's Affiliated Sites, an Enrollee's sustained
      noncompliance with the Plan physician's treatment recommendations
      (excluding preventive care recommendations) after repeated and aggressive
      outreach attempts are made by the Plan or other acts of an Enrollee
      presented and documented to the Department by the Contractor which the
      Department determines constitute "good cause." Termination of coverage
      shall take effect at 11:59 p.m. on a date specified by the Department,
      which shall be no later than the first day of the second month after the
      Department determines that "good cause" exists;

                  (2)   when the Department determines that the Enrollee no
      longer qualifies as a Potential Enrollee. Termination of coverage shall
      take effect at 11:59 p.m. on a date specified by the Department, which
      shall be no later than the first day of the second month after the
      Department makes the determination. If the Enrollee is receiving Medical
      Assistance under Aid to the Aged, Blind and Disabled (AABD), and the
      Contractor notifies the Department that the Enrollee is receiving Social
      Security disability benefits (SSI), the disenrollment shall be retroactive
      to the date of AABD eligibility;

                  (3)   upon the Enrollee's death. Termination of coverage shall
      take effect at 11:59 p.m. on the last day of the month in which the
      Enrollee dies;

                  (4)   when an Enrollee elects to terminate coverage by so
      informing the Contractor or the Department, at the Contractor's Sites, or
      at such other locations as

                                       16
<PAGE>

      designated by the Department. Enrollees may elect to disenroll at any
      time. The Contractor shall comply with any Department policies then in
      effect to promote and allow interaction between the Contractor and the
      Enrollee seeking disenrollment prior to the disenrollment. The Contractor
      shall, within three (3) business days of the request, send to the Enrollee
      the Managed Care Disenrollment Form, DPA Form 2575B, and shall not delay
      the provision or processing of this form for the purpose of arranging
      informational interviews with the Enrollees, or for any other purpose. The
      Contractor shall forward to the Department information concerning the
      disenrollment by the end of the fifth (5th) business day following the
      Contractor's receipt of a completed Managed Care Disenrollment Form.
      Termination of coverage shall take effect at 11:59 p.m. on a date
      specified by the Department; which shall be no later than the first day of
      the second month after the Department is notified of the request for
      disenrollment. At some point during the term of this Contract, but in no
      event later than October 16, 2003, the Contractor shall be required to
      submit all disenrollment information electronically to the Department and
      retain the original forms for at least six (6) years. The Department
      shall provide the Contractor with specific file submission requirements;

                  (5)   when an Enrollee no longer resides in the Contractor's
      Contracting Area, unless waiver of this subparagraph is approved in
      writing by the Department and assented to by the Contractor and Enrollee.
      If an Enrollee is to be disenrolled at the request of a Contractor, the
      Contractor first must provide documentation satisfactory to the Department
      that the Enrollee no longer resides in the Contractor's Contracting Area.
      Termination of coverage shall take effect at 11:59 p.m. on the last day of
      the month prior to the month in which the Department determines that the
      Enrollee no longer resides in the Contractor's Contracting Area. This date
      may be retroactive if the Department can determine the month in which the
      Enrollee moved from the Contractor's Contracting Area;

                  (6)   when the Department determines, pursuant to Article IX,
      that an Enrollee has other significant insurance coverage. The Contractor
      shall be notified by the Department of such disenrollment on the monthly
      Prelisting Report. Termination of coverage shall take effect at 11:59 p.m.
      on a date specified by the Department.

            (b)   In conjunction with a request by the Contractor to disenroll
an Enrollee, the Contractor shall furnish to the Department all information
requested regarding the basis for disenrollment and all information regarding
the utilization of services by that Enrollee.

            (c)   The Contractor shall not seek to terminate Enrollment because
of an adverse change in the Enrollee's health status or because of the
Enrollee's (i) utilization of Covered Services, (ii) diminished mental capacity,
(iii) uncooperative/disruptive behavior resulting from such Enrollee's special
needs (except to the extent such Enrollee's continued enrollment in the Plan
seriously impairs the Contractor's ability to furnish Covered Services to the
Enrollee or other Enrollees) or (iv) action in connection with exercising
his/her Appeal or Grievance rights. Such attempts to seek to terminate
Enrollment will be considered in violation of the terms of this Contract.

                                       17
<PAGE>

            (d)   Except as otherwise provided in this Article IV, Section 4.6,
the termination of this Contract terminates coverage for all persons who become
Enrollees under it. Termination of coverage under this provision will take
effect at 11:59 p.m. on the last day of the last month for which the Contractor
receives payment, unless otherwise agreed to, in writing, by the parties to this
Contract.

            (e)   Any Enrollee whose coverage has been terminated by the
Department solely because such Enrollee no longer qualifies as a Potential
Enrollee, who subsequently qualifies as a Potential Enrollee within a two (2)
month period following the date of termination, shall be automatically
re-enrolled with the Contractor.

      4.5   PREEXISTING CONDITIONS AND TREATMENT. The Contractor shall assume,
upon the effective date of coverage, full responsibility for any medical
conditions that may have been preexisting prior to Enrollment in the
Contractor's Plan and for any existing treatment plans under which an Enrollee
is currently receiving medical care provided that the Enrollee's current in-Plan
physician determines that such treatment plan is medically necessary for the
health and well-being of the Enrollee.

      4.6   CONTINUITY OF CARE. If an Enrollee is receiving medical care or
treatment as an inpatient in an acute care hospital at the time coverage
commences under this Contract, the Contractor shall assume responsibility for
the management of such care as of the effective date of coverage and shall be
liable for all claims for Covered Services from the effective date of coverage.

            (a)   If an Enrollee is receiving medical care or treatment as an
inpatient in an acute care hospital at the time coverage under this Contract is
terminated, the Contractor shall arrange for the continuity of care or treatment
for the current episode of illness until such medical care or treatment has been
fully transferred to a treating provider who has agreed to assume responsibility
for such medical care or treatment for the remainder of that hospital episode
and subsequent follow up care. The Contractor must maintain documentation of
such transfer of responsibility of medical care or treatment. The Contractor
shall not be liable for payment for any medical care or treatment provided to an
Enrollee after the responsibility for such medical care or treatment has been
transferred to a subsequent treating provider.

            (b)   If Contractor becomes insolvent or is subject to insolvency
proceedings as set forth in 215 ILCS 125/1-1 et seq., the Contractor shall be
liable for all claims for Covered Services for the duration of the period for
which payment has been made to the Contractor by the Department and shall remain
responsible for the management of care provided to all Enrollees who are
receiving medical care or treatment as an inpatient in an acute care hospital at
the time Contractor becomes insolvent or is subject to insolvency proceedings
until the earlier of the date on which such Enrollee is discharged or this
Contract is terminated (in the latter case the terms of subsection (a) of this
Section 4.6 shall control).

      4.7   CHANGE OF SITE AND PRIMARY CARE PROVIDER OR WOMEN'S HEALTH CARE
PROVIDER. The Contractor shall permit an Enrollee to change Site, Primary Care
Provider and

                                       18
<PAGE>

Women's Health Care Provider upon request. The Contractor shall process such
changes within thirty (30) days of receipt of an Enrollee's request.

            (a)   Within three (3) business days of processing such change, the
Contractor shall electronically transmit a Site transfer record to the
Department in a format designated by the Department. Such record shall contain
the following data fields: Case name and identification number; Enrollee name
and identification number; old Site number; and, new Site number. The Department
will provide the Contractor with no less than one hundred twenty (120) days
advance notification prior to imposing a requirement that the Contractor
electronically communicate old and new Primary Care Provider numbers and old and
new Women's Health Care Provider numbers with this record.

                                       19
<PAGE>

                                    ARTICLE V

                              DUTIES OF CONTRACTOR

      5.1   SERVICES.

            (a)   Amount, Duration and Scope of Coverage. The Contractor shall
comply with the terms of 42 C.F.R. Section 438.206(b) and provide or arrange to
have provided to all Enrollees all services described in 89 Ill. Adm. Code, Part
140 as amended from time to time and not specifically excluded therein or in
this Article V, Section 5.1 in accordance with the terms of this Contract.
Covered Services shall be provided in the amount, duration and scope as set
forth in 89 Ill. Adm. Code, Part 140 and this Contract, and shall be
sufficient to achieve the purposes for which such Covered Services are
furnished. This duty shall commence at the time of initial coverage as to each
Enrollee. The Contractor shall, at all times, cover the appropriate level of
service (i.e., triage, urgent) for all Emergency Services provided in an
emergency room setting. The Contractor shall notify the Department in writing
within five (5) days following a change in the Contractor's network of
Affiliated Providers that renders the Contractor unable to provide one (1) or
more Covered Service(s) in any Contracting Area. The Contractor shall not refer
Enrollees to publicly supported health care entities to receive Covered
Services, for which the Contractor receives payment from the Department, unless
such entities are Affiliated with the Contractor's Plan. Such publicly supported
health care entities include, but are not limited to, Chicago Department of
Public Health and its clinics, Cook County Bureau of Health Services, and local
health departments. The Contractor shall provide a mechanism for an Enrollee to
obtain a second opinion from a qualified Provider, whether Affiliated or
non-Affiliated, at no cost to the Enrollee.

            (b)   Enumerated Covered Services. The Contractor shall have a
sufficient number of Affiliated Providers (including Tertiary Care hospital(s)
and, where appropriate, advanced practice nurses) in place to provide all of
the following services and benefits (which shall be specifically included as
Covered Services under this Contract) to Enrollees at all times during the term
of this Contract, whenever Medically Necessary, except to the extent services
are identified as excluded services pursuant to subsection (e) of this Section
5.1:

            -     Assistive/augmentative communication devices;

            -     Audiology services, physical therapy, occupational therapy and
                  speech therapy;

            -     Behavioral health services, including subacute alcohol and
                  substance abuse services and mental health services, in
                  accordance with subsection (c) hereof;

            -     Blood, blood components and the administration thereof;

            -     Certified hospice services;

            -     Chiropractic services;

                                       20
<PAGE>

            -     Clinic services (as described in 89 Ill. Adm. Code, Part
                  140.460);

            -     Diagnosis and treatment of medical conditions of the eye;*

            -     Durable and nondurable medical equipment and supplies;

            -     Emergency Services;

            -     Family planning services;

            -     Home health care services;

            -     Inpatient hospital services (including dental hospitalization
                  in case of trauma or when related to a medical condition and
                  acute medical detoxification);

            -     Inpatient psychiatric care;

            -     Laboratory and x-ray services; The drawing of blood for lead
                  screening shall take place within the Contractor's Affiliated
                  facilities or elsewhere at the Contractor's expense.**

            -     Medical procedures performed by a dentist;

            -     Nurse midwives services;

            -     Nursing facility services for the first ninety (90) days;***

            -     Orthotic/prosthetic devices, including prosthetic devices or
                  reconstructive surgery incident to a mastectomy;

            -     Outpatient hospital services (excluding outpatient behavioral
                  health services);

            -     Pharmacy services (including drugs prescribed by a dentist or
                  behavioral health care provider participating in the Medical
                  Assistance Program provided such drugs are filled by an
                  Affiliated pharmacy Provider);

----------
*Covered Services may be provided by an optometrist operating within the scope
of his license.

** All laboratory tests for children being screened for lead must be sent for
analysis to the Illinois Department of Public Health's laboratory.

*** Contractors will be responsible for covering up to a maximum of ninety (90)
days nursing facility care (or equivalent care provided at home because a
skilled nursing facility is not available) annually per Enrollee. Periods in
excess of ninety (90) days annually will be paid by the Department according to
its prevailing reimbursement system.

                                       21
<PAGE>

            -     Physicians' services, including psychiatric care;

            -     Podiatric services;

            -     Routine care in conjunction with certain investigational
                  cancer treatments, as provided in Public Act 91-0406;

            -     Services required to treat a condition diagnosed as a result
                  of EPSDT services, in accordance with 89 Ill. Adm. Code
                  140.485;

            -     Services to Prevent Illness and Promote Health in accordance
                  with subsection (d) hereof

            -     Transplants covered under 89 Ill. Adm. Code 148.82 (using
                  transplant providers certified by the Department, if the
                  procedure is performed in the State); and

            -     Transportation to secure Covered Services.

            (c)   Behavioral Health Services.

                  (1)   The Contractor will provide the following behavioral
health services, which are Covered Services:

            -     Inpatient psychiatric or substance abuse services that are
                  provided in general hospital medical units;

            -     Inpatient psychiatric services provided in a hospital that is
                  a psychiatric hospital or a distinct psychiatric unit, as
                  defined in 89 Ill. Adm. Code 148.40(a)(1);

            -     Inpatient ACUTE alcoholism and substance abuse treatment
                  (detoxification);

            -     Hospital-based organized clinic services referred to as
                  outpatient treatment psychiatric services for Type A and Type
                  B Psychiatric Clinic Services, as defined in 89 Ill. Adm. Code
                  148.140(b)(1)(E); and

            -     Behavioral health services provided by Physicians, including
                  psychiatrists;

            -     Laboratory services provided on an outpatient basis for
                  behavioral health, even if ordered by a behavioral health
                  provider in connection with the provision of treatment that is
                  excluded from Covered Services; and

            -     Pharmaceutical services provided in accordance with the terms
                  of Section 5.1(b) of this Contract on an outpatient basis or
                  at the time of discharge from inpatient services, even if
                  ordered by a behavioral health provider in connection with the
                  provision of treatment that is excluded from Covered Services.

                                       22
<PAGE>

                  (2)   If an Enrollee presents himself to the Contractor for
      behavioral health services, or is referred through a third party, the
      Contractor will compete a behavioral health assessment.

            -     If the assessment indicates that all services needed are
                  within the scope of Covered Services, the Contractor will
                  arrange for the provision of all such Covered Services.

            -     If the assessment indicates that outpatient services are
                  needed beyond the scope of Covered Services, the Contractor
                  will explain to the Enrollee the services needed and the
                  importance of obtaining them and provide the Enrollee with a
                  list of Community Behavioral Health Providers (CBHP). The
                  Contractor will assist the Enrollee in contacting a CBHP
                  chosen by the Enrollee, unless the Enrollee objects.

            -     If a Enrollee obtains needed comprehensive services through a
                  CBHP, the Contractor will be responsible for payment for drugs
                  prescribed by a Physician and laboratory services in
                  connection with the comprehensive services provided by the
                  CBHP. The Contractor shall not be liable for other Covered
                  Services provided by the CBHP. The Contractor may require that
                  drugs and laboratory services are provided by Providers that
                  are Affiliated with Contractor.

            (d)   Services to Prevent Illness and Promote Health. The Contractor
shall make documented efforts to provide initial health screenings and
preventive care to all Enrollees. The Contractor shall provide, or arrange to
provide, the following Covered Services to all Enrollees, as appropriate, to
prevent illness and promote health:

                  (1)   EPSDT services in accordance with 89 Ill. Adm. Code
      140.485 and described in this Article V, Section 5.12(a);

                  (2)   Preventive Medicine Schedule which shall address
      preventive health care issues for Enrollees twenty-one (21) years of age
      or older (Article V, Section 5.12(b));

                  (3)   Maternity care for pregnant Enrollees (Article V,
      Section 5.12(c)); and

                  (4)   Family planning services and supplies, including
      physical examination and counseling provided during the visit, annual
      physical examination for family planning purposes, pregnancy testing,
      voluntary sterilization, insertion or injection of contraceptive drugs or
      devices, contraceptive drugs and supplies, and related laboratory and
      diagnostic testing (except to the extent an Enrollee has chosen to obtain
      such services and supplies from a non-Affiliated Provider, in which case
      the Department shall be responsible for providing payment for such
      services).

                                       23
<PAGE>

            (e)   Exclusions from Covered Services. In addition to those
services and benefits excluded from Covered Services by 89 Ill. Adm. Code, Part
140, as amended from time to time, the following services and benefits shall NOT
be included as Covered Services:

                  (1)   Dental services;

                  (2)   Mental health clinic services as provided through a
      community behavioral health provider as identified in 89 Ill. Adm. Code
      140.452 and 140.454 and further defined in 59 Ill. Adm. Code, Part 132
      "Medicaid Community Mental Health Services Program."

                  (3)   Subacute alcoholism and substance abuse treatment
      services as provided through a community behavioral health provider as
      identified in 89 111. Adm. Code 148.340(a) and further defined in 77 Ill.
      Adm. Code 2090.

                  (4)   Routine examinations to determine visual acuity and the
      refractive state of the eye, eyeglasses, other devices to correct vision,
      and any associated supplies and equipment. The Contractor shall refer
      Enrollees needing such services to Providers participating in the Medical
      Assistance Program able to provide such services, or to a central referral
      entity that maintains a list of such Providers;

                  (5)   Nursing facility services, or equivalent care provided
      at home because a skilled nursing facility is unavailable, beginning on
      the ninety-first (91st) day of service in a calendar year;

                  (6)   Services provided in an Intermediate Care Facility for
      the Mentally Retarded/Developmentally Disabled and services provided in a
      nursing facility to mentally retarded or developmentally disabled
      Participants;

                  (7)   Early intervention services, including case management,
      provided pursuant to the Early Intervention Services System Act (325 ILCS
      20 et seq.);

                  (8)   Services provided through school-based clinics as such
      clinics are defined by the Department;

                  (9)   Services provided through local education agencies that
      are enrolled with the Department under an approved individual education
      plan (IEP);

                  (10)  Services provided under Section 1915(c) home and
      community-based waivers;

                  (11)  Services funded through the Juvenile Rehabilitation
      Services Medicaid Matching Fund;

                  (12)  Services that are experimental and/or investigational in
      nature;

                  (13)  Services provided by a non-Affiliated Provider and not
      authorized by the Contractor, unless this Contract specifically requires
      that such services be covered;

                                       24
<PAGE>

                  (14)  Services that are provided without first obtaining a
      required referral or prior authorization as set forth in the Enrollee
      handbook;

                  (15)  Medical and/or surgical services provided solely for
      cosmetic purposes; and

                  (16)  Diagnostic and/or therapeutic procedures related to
      infertility/sterility.

            (f)   Limitations on Covered Services. The following services and
benefits shall be limited as Covered Services:

                  (1)   Termination of pregnancy shall be provided only as
      allowed by applicable State and federal law (42 C.F.R. Part 441, Subpart
      E). In any such case, the requirements of such laws must be fully complied
      with and DPA Form 2390 must be completed and filed in the Enrollee's
      medical record. Termination of pregnancy shall not be provided to KidCare
      Enrollees.

                  (2)   Sterilization services may be provided only as allowed
      by State and federal law (see 42 C.F.R. Part 441 Subpart F). In any such
      case, the requirements of such laws must be fully complied with and a DPA
      Form 2189 must be completed and filed in the Enrollee's medical record.

                  (3)   If a hysterectomy is provided, a DPA Form 1977 must be
      completed and filed in the Enrollee's medical record.

            (g)   Right of Conscience. The parties acknowledge that pursuant to
745 ILCS 70/1 et seq., a Contractor may choose to exercise a right of conscience
by not rendering certain Covered Services. Should the Contractor choose to
exercise this right, the Contractor must promptly notify the Department of its
intent to exercise its right of conscience in writing. Such notification shall
contain the services that the Contractor is unable to render pursuant to the
exercise of the right of conscience. The parties agree that at that time the
Department shall adjust the Capitation payment to the Contractor and amend the
contract accordingly.

            Should the Contractor choose to exercise this right, the Contractor
must notify Potential Enrollees, Prospective Enrollees and Enrollees that it has
chosen to not render certain Covered Services, as follows:

                  (1)   To Potential Enrollees, prior to Enrollment;

                  (2)   To Prospective Enrollees, during Enrollment; and

                  (3)   To Enrollees, within ninety (90) days after adopting a
      policy with respect to any particular service that previously was a
      Covered Service.

                                       25
<PAGE>

            (h)   Emergency Services.

                  (1)   The Contractor shall cover Emergency Services for all
      Enrollees whether the Emergency Services are provided by an Affiliated or
      non-Affiliated Provider.

                  (2)   The Contractor shall not impose any requirements for
      prior approval of Emergency Services. If an Enrollee calls the Contractor
      to request Emergency Services, such call shall receive an immediate
      response.

                  (3)   The Contractor shall cover Emergency Services for
      Enrollees who are temporarily away from their residence and outside the
      Contracting Area for all Emergency Services to which they would be
      entitled within the Contracting Area.

                  (4)   The Contractor shall have no obligation to cover medical
      services provided on an emergency basis that are not Covered Services
      under this Contract.

                  (5)   Elective care or care required as a result of
      circumstances that could reasonably have been foreseen prior to the
      Enrollee's departure from the Contracting Area are not covered. Unexpected
      hospitalization due to complications of pregnancy shall be covered.
      Routine delivery at term outside the Contracting Area, however, shall not
      be covered if the Enrollee is outside the Contracting Area against medical
      advice unless the Enrollee is outside of the Contracting Area due to
      circumstances beyond her control. The Contractor must educate the Enrollee
      of the medical and financial implications of leaving the Contracting Area
      and the importance of staying near the treating Provider throughout the
      last month of pregnancy.

                  (6)   The Contractor shall provide ongoing education to
      Enrollees regarding the appropriate use of Emergency Services.

                  (7)   The Contractor shall not condition coverage for
      Emergency Services on the treating Provider notifying the Contractor of
      the Enrollee's screening and treatment within ten (10) calendar days of
      presentation for Emergency Services.

                  (8)   The determination of whether or not an Enrollee is
      sufficiently Stabilized for discharge or transfer to another facility
      shall be binding on the Contractor.

                                       26
<PAGE>

            (i) Post-Stabilization Services. The Contractor shall cover
Post-Stabilization Services provided by an Affiliated or non-Affiliated Provider
in any the following situations: (a) the Contractor authorized such services;
(b) such services were administered to maintain the Enrollee's stabilized
condition within one (1) hour of a request to the Contractor for authorization
of further Post-Stabilization Services; or (c) the Contractor does not respond
to a request to authorize further Post-Stabilization Services within one (1)
hour, the Contractor could not be contacted, or the Contractor and the treating
Provider cannot reach an agreement concerning the Enrollee's care and an
Affiliated Provider is unavailable for a consultation, in which case the
treating Provider must be permitted to continue the care of the Enrollee until
an Affiliated Provider is reached and either concurs with the treating
Provider's plan of care or assumes responsibility for the Enrollee's care.

            (j)   Additional Services or Benefits. The Contractor shall obtain
prior approval from the Department before offering any additional service or
benefit not required under this Contract to all Enrollees. The Contractor shall
notify Enrollees before discontinuing an additional service or benefit. The
notice to Enrollees must be approved in advance by the Department. The
Contractor shall continue any ongoing course of treatment for an Enrollee then
receiving such service or benefit.

            (k)   Telephone Access. The Contractor shall establish a toll-free
twenty-four (24) hour telephone number to confirm eligibility for benefits and
seek prior approval for treatment where required under the Plan, and shall
assure twenty-four (24) hour access, via telephone(s), to medical professionals,
either to the Plan directly or to the Primary Care Providers, for consultation
to obtain medical care. The Contractor must also make a toll-free number
available, at a minimum during the business hours of 9:00 a.m. until 5:00 p.m.
on regular business days. This number also will be used to confirm eligibility
for benefits, for approval for non-emergency services and for Enrollees to call
to request Site, Primary Care Provider, or Women's Health Care Provider changes,
to make complaints or grievances, to request disenrollment and to ask questions.
The Contractor may use one toll-free number for these purposes or may establish
two separate numbers.

            (l)   Pharmacy Formulary. The Contractor shall establish a pharmacy
formulary that is no more restrictive than the Medical Assistance Program's
pharmaceutical program. In particular, the Contractor shall comply with the
following requirements:

                  (1)   For drugs included as a pharmaceutical benefit in the
      Medical Assistance Program:

                        (A)   the Contractor's formulary must include every
            single source drug product covered by the Department under the
            Medical Assistance Program;

                        (B)   the Contractor's formulary must cover at least one
            manufacturer's product for each multi-source drug product; and

                        (C)   the Contractor may develop a preferred drug list
            or otherwise require the prior approval for drugs. The Contractor
            shall submit to the

                                       27
<PAGE>

            Department any preferred drug list used, including an explanation of
            how it is to be implemented, and a list of all other drugs requiring
            prior approval. Any preferred drug list or prior approval
            requirement is subject to approval by the Department.

                  (2)   The Contractor shall provide a mechanism whereby a
      prescribing Provider may request approval of drugs requiring prior
      approval or drugs not included on the Contractor's formulary. The
      Contractor shall provide a response by telephone or other
      telecommunication device within one (1) hour of receipt of the request in
      the case of Emergency Services or Post-Stabilization Services and, in
      other cases, within twenty-four (24) hours of receipt of the request. The
      Contractor's pharmacy formulary shall provide a process for appealing
      denials of prescription drug coverage that is timely and not unduly
      cumbersome.

                  (3)   The Contractor shall not, without the prescriber's
      explicit approval, require a pharmacist to substitute a drug that is not
      strictly bioequivalent to the one prescribed.

                  (4)   The Contractor shall inform its Providers of the
      pharmacy formulary policy required in this Section.

                  (5)   The Contractor shall not set a limit on the quantities
      of drugs that an Enrollee may obtain at one time with a prescription
      unless that limit is applied uniformly to all pharmacy providers in the
      Contractor's network.

      5.2   MARKETING. The Contractor shall, initially and as revised, submit to
the Department for the Department's review and prior written approval all of
the following materials: Certificate of Coverage or Document of Coverage;
Enrollee Handbooks; Marketing Materials, including Marketing brochures and
fliers; Marketing plans, including descriptions of proposed Marketing approaches
and Marketing procedures; training materials and training schedules relating to
services under this Contract; and all other materials and procedures utilized by
the Contractor in connection with Marketing and training. Any substantive
revisions to the foregoing materials that will either directly or indirectly
affect interpretation of benefits, the delivery of services or the
administration of benefits are subject to the Department's prior written
approval as set forth in this paragraph.

      Marketing by mail, mass media advertising and community oriented Marketing
directed at Potential Enrollees will be allowed subject to the Department's
prior approval. The Contractor shall be responsible for all costs of mailing,
including labor costs. The Department reserves the right to determine and set
the sole process of, cost, and payment for Marketing by mail, using names and
addresses of Participants supplied by the Department, including the right to
limit Marketing by mail to a vendor under contract to the Department and the
terms and conditions set forth in that vendor contract. The Contractor shall
distribute Marketing materials to the entire Contracting Area, but to the extent
permitted by law and approved by the Department, Contractors may market
selectively by eligibility category, by Contracting Area, by county, by local
Department of Human Services office area or by other geographic area.

                                       28
<PAGE>

      The   Contractor agrees to be bound by the following requirements for
Marketing:

            (a)   The Contractor shall not engage in Marketing practices that
mislead, confuse or defraud either Potential Enrollees or the Department;

            (b)   Marketing Materials must be clear and must include, at a
minimum, the information required in Article V, Section 5.4;

            (c)   Marketing Materials shall not include any assertion or
statement that the Contractor is endorsed by CMS or the Department, and neither
the Contractor nor its Marketing personnel shall make such assertions or
statements, whether in writing or orally;

            (d)   Potential Enrollees shall be solicited from a geographic area
that does not exceed the Contracting Area(s);

            (e)   Potential Enrollees may not be discriminated against on the
basis of health status or need for health care services or on any illegal basis;

            (f)   The Contractor's Marketing shall be designed to reach a
distribution of Potential Enrollees across age and sex categories, as such
categories are established for rates as set forth in Attachment I, in the
Contracting Area(s). The Contractor's Marketing shall not be designed to achieve
favorable reimbursement by enrolling a disproportionate percentage of
individuals from a particular age and sex category or family income level;

            (g)   The Contractor shall not actively facilitate disenrollment of
Enrollees from other plans, by providing Managed Care Disenrollment Forms or
otherwise, including transporting Enrollees for the purpose of their
disenrollment. The Contractor may educate Enrollees on the disenrollment
process. The Contractor shall not offer gifts or incentives to Enrollees of
other plans that are not offered to all Potential Enrollees;

            (h)   Marketing personnel who engage in Marketing services under
this Contract are considered the agents of the Contractor, whether they are
employees, independent contractors, or independent insurance brokers. The
Contractor shall be held responsible for any misrepresentation or inappropriate
activities by such Marketing personnel. All Marketing personnel are required to
participate in training sessions that may be developed and presented by the
Department, and which sessions set forth the Department requirements,
expectations and limitations on Marketing practices in which the Contractor's
personnel will engage. The individual salaries, benefits or other compensation
paid by the Contractor to each of its Marketing personnel shall consist of no
less than seventy-five percent (75%) salary and benefits and no more than
twenty-five percent (25%) commission in cash or kind. The salary, benefit and
other compensation schedules for such personnel are subject to audits by the
Department, Office of Inspector General and as set forth in Article IX, Section
9.1. All salary schedules shall be kept by the Contractor to enable the
Department or any Authorized Persons to identify a specific enunciation of each
Marketing personnel's total salary, benefit and other compensation, the
percentage of that salary, benefits or other compensation that was based on
commission and the basis for such commission. The Contractor shall hold the
Department harmless for any and all claims, complaints or causes of action that
shall arise as a result of this contractually imposed salary, benefit and other
compensation structure for Marketing Personnel.

                                       29
<PAGE>

            Compensation of independent insurance brokers who hold a producers
license issued by the State of Illinois Department of Insurance is not subject
to the limitations on commission described in the above paragraph. All other
provisions of the Contract regarding Marketing shall apply to the Contractor
with respect to the activities of independent insurance brokers.

            (i)   It shall be the duty and obligation of the Contractor to
credential and where necessary or appropriate, recredential all Marketing
personnel, including trainers and field supervisors. Recredentialing shall be
performed at the time the Department of Insurance renews the individual's
license or certification. Recredentialing activity that changes the status of
Marketing personnel shall be submitted to the Department as changes occur. No
current or future personnel of the Contractor may engage in Marketing activities
hereunder without first meeting all credentialing requirements set forth herein
as well as in the regulations, guidelines or policies of the Department. At a
minimum, all Marketing personnel of the Contractor, including independent
insurance brokers, must meet the following credentialing requirements:

                  (1)   must have been trained in all provisions of the
      Contractor's Department approved training manual for marketers;

                  (2)   must hold a valid license or certification as issued by
      the State of Illinois, Department of Insurance, a copy of which must be
      submitted to the Department prior to any Marketing personnel's engaging in
      Marketing activities hereunder;

                  (3)   may not engage in Marketing activities for any other MCO
      that has a contract with the Department;

                  (4)   may not also be Providers of medical services;

                  (5)   may not have been convicted of any felony within the
      last ten (10) years;

                  (6)   may not have been terminated from employment in the
      previous twelve (12) months by any MCO for engaging in any prohibited
      Marketing practices or misconduct associated with or related to Marketing
      activities. The Contractor shall obtain a written consent from all
      Marketing personnel for prior employers to release employment information
      to the Contractor concerning any prior or current employment in which
      Marketing activities were performed by any Marketing personnel and contact
      the previous employer(s). The Contractor may use any other employment
      practices it deems appropriate to obtain and meet these credentialing
      requirements; and

                  (7)   must not be an Ineligible Person.

            (j)   The Department may at any time, in its own discretion and
without notification to the Contractor, attend any Marketing training session
conducted by the Contractor.

                                       30
<PAGE>

            (k)   The Contractor must immediately notify the Department, in
writing, of any individual who is hired by the Contractor who has previously
been employed by an agent for the Department responsible for the education of
Potential Enrollees about managed care.

            (l)   The Contractor shall immediately notify the Department and the
Office of Inspector General, in writing, of any inappropriate Marketing
activities.

            (m)   Before any individual may engage in any Marketing activity
under this Contract, the Contractor shall provide, in a format designated by the
Department, the name and Social Security number and a copy of the Department of
Insurance license or certification of that individual to the Department and
certify to the Department that the individual meets the minimum credentialing
requirements above. The Department must provide written approval of such
individual before the individual may engage in any Marketing activity under this
Contract.

            Thereafter, on a monthly basis, the Contractor shall report, in a
format designated by the Department, the name and Social Security numbers of all
Marketing personnel to the Department. It is the obligation of the Contractor to
ensure that the Department has a current list of all Marketing personnel. The
Contractor must immediately notify the Department, in writing, of any Marketing
personnel who terminate employment with the Contractor either voluntarily or
involuntarily. If termination is involuntary, the Contractor must notify the
Department if the reason for termination is related to misconduct under this
Contract.

            (n)   The Contractor shall not engage in any Marketing activities
directed at enrolling Potential Enrollees while they are admitted to any
inpatient facilities.

            (o)   Marketing in or immediately outside of any Department or
Department of Human Services field office is strictly prohibited.

            (p)   Marketing at Provider offices or facilities is permissible
under the following circumstances:

                  (1)   the Contractor must have a written agreement with the
      Provider, signed by the Provider or his designee a copy of which shall be
      kept on file by the Contractor and submitted to the Department annually
      and thereafter upon request. Such written agreement shall set forth
      specifically what Marketing may be conducted at that Provider office or
      facility, the frequency with which those Marketing activities may occur
      and a description of the setting in which the Marketing activities will
      occur;

                  (2)   no Marketing activities may be conducted in emergency
      room waiting areas or in treatment areas at any Provider office or
      facility; and

                  (3)   at no time shall any Marketing personnel have access to
      a Potential Enrollee's medical records regardless of whether such
      Marketing activity is conducted at the Provider office or facility or
      another location.

            (q)   Direct or indirect door-to-door, telephonic, or other cold
call Marketing is strictly prohibited. Door-to-door Marketing is direct or
indirect "cold call" or unsolicited Marketing activities at an
individual's-residence "Cold call" Marketing means any unsolicited

                                       31
<PAGE>

personal contact by MCO personnel with the Potential Enrollee at that
individual's residence for the purpose of influencing the individual to enroll
with that MCO and includes unsolicited telephone contact and any other type of
contact made without the individual's written consent. Such written consent may
be obtained at the initiation of a visit to an individual's residence as long as
the Contractor has obtained the individual's oral consent prior to the visit and
has documented such consent in a written form that identifies the person
granting the consent and the person receiving the consent, as well as the date,
time and place that the oral consent was given. Any contacts at the individual's
residence must be made within thirty (30) days from the date the individual gave
oral consent. Soliciting individuals to provide the names of other Potential
Enrollees is also strictly prohibited. Nothing in this section shall prohibit
the Contractor from distributing unsolicited Marketing materials via the United
States Postal Service or a commercial delivery service where such service is
unrelated to the Contractor.

            (r)   Prior to conducting any Marketing activities, the Contractor
must obtain an authorization to use or disclose an individual's "protected
health information" (as defined in Attachment IV to this Contract) for such
purposes. To the extent such Marketing activities involve direct or indirect
remuneration to the Contractor from a third-party, the authorization shall
clearly state the existence of such remuneration. The restrictions of this
Article V, Section 5.2 (q) shall not apply to Marketing activities that are
related to the following: (i) a description of medical services that are
included in the plan of benefits offered by the Contractor pursuant to this
Contract, including communications concerning the network of Providers,
replacement of or enhancements to the Contractor's plan of benefits, and
health-related products or services that are available only to Enrollee, which
add value but are not party of the plan of benefits; (ii) communications for
treatment of the individual; (iii) communications for case management or care
coordination for the individual or to direct or recommend alternative
treatments, therapies, Providers, or settings of care for an Enrollee; (iv)
in-person communications of any kind between the Contractor and a Potential
Enrollee, Prospective Enrollee, or Enrollee; or (v) the provision of a gift or
incentive that complies with Section 5.3 of this Contract.

      5.3   INAPPROPRIATE ACTIVITIES. The Contractor shall not:

            (a)   provide cash to Potential Enrollees, Prospective Enrollees or
Enrollees, except for stipends, in an amount approved by the Department, and
reimbursement of expenses provided to Enrollees for participation on committees
or advisory groups;

            (b)   provide gifts or incentives to Potential Enrollees or
Prospective Enrollees unless such gifts or incentives: (1) are provided to meet
the objectives of the Medical Assistance Program or KidCare; (2) do not exceed a
nominal value (i.e., an individual gift or incentive may not exceed ten dollars
($10)); and (3) have been pre-approved by the Department;

            (c)   provide gifts or incentives to Enrollees unless such gifts or
incentives (1) are provided to promote preventive care; (2) are not in the form
of cash or an instrument that may be converted to cash; and (3) have been
pre-approved by the Department;

            (d)   seek to influence a Potential Enrollee's Enrollment with the
Contractor in conjunction with the sale of any other insurance;

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<PAGE>

            (e)   induce providers or employees of the Department or the
Department of Human Services to reveal confidential information regarding
Participants or otherwise use such confidential information in a fraudulent
manner;

            (f)   threaten, coerce or make untruthful or misleading statements
to Potential Enrollees, Prospective Enrollees or Enrollees regarding the merits
of Enrollment in the Contractor's Plan or any other plan; or

            (g)   present an incomplete Managed Care Enrollment Form to a
Potential Enrollee for his signature.

      5.4   OBLIGATION TO PROVIDE INFORMATION. The Contractor agrees to have
written policies and to provide Basic Information to the individuals, and to
notify such individuals that translated materials are available and how to
obtain them, and at the times described below:

            (a)   to each Enrollee or Prospective Enrollee within thirty (30)
days after it receives notice of the individual's enrollment and within thirty
(30) days following a significant change;

            (b)   to any Potential Enrollee who requests it; or

            (c)   once a year Contractor must notify its Enrollees of their
right to request and obtain the Basic Information.

            (d)   "Basic Information" as used herein shall mean:

                  (1)   types of benefits, and amount, duration and scope of
      such benefits available under the Plan. There must be sufficient detail to
      ensure Enrollees understand the benefits that they are entitled to receive
      as Covered Services, including Pharmaceuticals and behavioral health
      services;

                  (2)   procedures for obtaining Covered Services, including
      authorization and approval requirements, if any;

                  (3)   information, as provided by the Department, regarding
      any benefits to which an Enrollee may be entitled under the Medical
      Assistance Program or KidCare that are not provided under the Plan and
      specific instructions on where and how to obtain those benefits, including
      how transportation is provided and that family planning services may be
      obtained from an Affiliated or non-Affiliated Provider;

                  (4)   any restrictions on an Enrollee's freedom of choice
      among Affiliated Providers;

                  (5)   the extent to which after-hours coverage and Emergency
      Services are provided, including the following specific information: (a)
      definitions of "Emergency Medical Condition," "Emergency Services," and
      "Post-Stabilization Services" that reference the definitions set forth
      herein; (b) the fact that prior authorization is not required for
      Emergency Services; (c) the fact that, subject to the provisions of this

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      Contract, an Enrollee has a right to use any hospital or other setting to
      receive Emergency Services; (d) the process and procedures for obtaining
      Emergency Services; and (e) the location of Emergency Services and/or
      Post-Stabilization Services Providers that are Affiliated Providers.

                  (6) the procedures for obtaining Post-Stabilization Services
      in accordance with the terms set forth Article V, Section 5.1(i);

                  (7) policy on referrals for specialty care and for Covered
      Services not furnished by an Enrollee's Primary Care Provider;

                  (8) cost sharing, if any;

                  (9) the rights, protections, and responsibilities of an
      Enrollee as specified in 42 C.F.R. Section 438.100, such as those
      pertaining to enrollment and disenrollment and those provided under State
      and Federal law;

                  (10) Grievance and fair hearing procedures and timeframes,
      provided that such information must be pre-approved before distribution;

                  (11) Appeal rights and procedures and timeframes, provided
      that such information must be pre-approved before distribution;

                  (12) names, locations, telephone numbers, and non-English
      languages spoken by current Affiliated Providers, including identification
      of those who are not accepting new patients; and

                  (13) a copy of the Contractor's Certificate of Coverage or
      Document of Coverage.

            (e) The following additional information must be provided by
Contractor upon request to any Enrollee, Prospective Enrollee, and Potential
Enrollee:

                  (1) MCO and health care facility licensure;

                  (2) practice guidelines maintained by the Contractor in
      accordance with Article V, Section 5.5; and

                  (3) information about Affiliated Providers of health care
      services, including education, Board certification and recertification, if
      appropriate.

            (f) The Contractor must make a good faith effort to give written
notice of termination of a Provider, within fifteen (15) days following such
termination, to each Enrollee who received his or her primary care from, or was
seen on a regular basis by, the terminated Provider.

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<PAGE>

      5.5 QUALITY ASSURANCE, UTILIZATION REVIEW AND PEER REVIEW.

            (a) All services provided by or arranged for by the Contractor to be
provided shall be in accordance with prevailing community standards. The
Contractor must have in effect a program consistent with the utilization control
requirements of 42 C.F.R. Part 456. This program will include, when so required
by the regulations, written plans of care and certifications of need of care.

            (b) The Contractor shall adopt practice guidelines that meet the
following criteria:

                  (1) Are based on valid and reliable clinical evidence or a
      consensus of health care professionals in a particular field;

                  (2) Consider the needs of the Enrollees;

                  (3) Are adopted in consultation with Affiliated Providers;

                  (4) Are reviewed and updated periodically, as appropriate; and

                  (5) Are disseminated to all affected Affiliated Providers and,
      upon request, to Enrollees and Potential Enrollees.

            (c) The Contractor shall have a Utilization Review Program that
includes a utilization review plan, a utilization review committee, and
appropriate mechanisms covering preauthorization and review requirements.

            (d) The Contractor shall establish and maintain a Peer Review
Program approved by the Department to review the quality of care being offered
by the Contractor, employees and subcontractors.

            (e) The Contractor agrees to comply with the quality assurance
standards attached hereto as Exhibit A.

            (f) The Contractor agrees to comply with the utilization review
standards and peer review standards attached hereto as Exhibit B.

            (g) The Contractor agrees to conduct a program of ongoing review
that evaluates the effectiveness of its quality assurance and performance
improvement strategies designed in accordance with the terms of this Article V,
Section 5.5, and to report to the Department the results of such review as
provided in Article V, Section 5.10 herein.

            (h) The Contractor shall not compensate individuals or entities that
conduct utilization review activities on its behalf in a manner that is
structure to provide incentives for the individuals or entities to deny, limit,
or discontinue Covered Services that are Medically Necessary for any Enrollee.

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<PAGE>

      5.6 PHYSICIAN INCENTIVE PLAN REGULATIONS. The Contractor shall comply with
the provisions of 42 C.F.R. 422.208 and 422.210. If, to conform with these
regulations, the Contractor performs Enrollee satisfaction surveys, such surveys
may be combined with those required by the Department pursuant to Article V,
Section 5.17 of this Contract.

      5.7 PROHIBITED AFFILIATIONS.

            (a) The Contractor shall assure that all Affiliated Providers,
including out-of-State Providers, are enrolled in the Medical Assistance
Program, if such enrollment is required for such Provider by Department rules or
policy in order to submit claims for reimbursement or otherwise participate in
the Medical Assistance Program. The Contractor shall assure that any
non-Affiliated Provider billing for services rendered in Illinois is enrolled in
the Medical Assistance Program prior to paying claims.

            (b) The Contractor shall not employ, subcontract with, or affiliate
itself with or otherwise accept any Ineligible Person into its network.

            (c) The Contractor shall screen all current and prospective
employees, contractors, and sub-contractors, prior to engaging their services
under this Contract by: (i) requiring them to disclose whether they are
Ineligible Persons; (ii) reviewing the OIG's list of sanctioned persons
(available on the World Wide Web at http://www.arnet.gov/epls) and the HHS/OIG
List of Excluded Individuals/Entities (available on the World Wide Web at
http://www.dhhs.gov/oig). The Contractor shall annually screen all current
employees, contractors and sub-contractors providing services under this
Contract. The Contractor shall screen out-of-State non-Affiliated Providers
billing for Covered Services prior to payment and shall not pay such Providers
who meet the definition of Ineligible Persons.

            (d) The Contractor shall terminate its relations with any Ineligible
Person immediately upon learning that such Person or Provider meets the
definition of an Ineligible Person and notify the OIG of the termination.

      5.8 RECORDS.

            (a) Maintenance of Business Records. The Contractor shall maintain
all business and professional records that are required by the Department in
accordance with generally accepted business and accounting principles. Such
records shall contain all pertinent information about the Enrollee including,
but not limited to, the information required under this Article V, Section 5.8.
Medical records reporting requirements shall be adequate to ensure acceptable
continuity of care to Enrollees.

            (b) Availability of Business Records. Records shall be made
available in Illinois to the Department and Authorized Persons for inspection,
audit, and/or reproduction as required in Article IX, Section 9.1. These records
will be maintained as required by 45 C.F.R. Part 74. As a part of these
requirements, the Contractor will retain all records for at least six (6) years
after final payment is made under the Contract. If an audit, litigation or other
action involving the records is started before the end of the six-year (6 year)
period, the records must be retained until all issues arising out of the action
are resolved.

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<PAGE>

            (c) Patient Records.

                  (1) Treatment Plans. The Contractor must develop and use
      treatment plans for chronic disease follow-up care that are tailored to
      the individual Enrollee. The purpose of the plan is to assure appropriate
      ongoing treatment reflecting the prevailing community standards of medical
      care designed to minimize further deterioration and complications.
      Treatment plans shall be on file with the permanent record for each
      Enrollee with a chronic disease and with sufficient information to explain
      the progress of treatment.

                  (2) Permanent Records. Immediately upon notification of an
      Enrollee's Enrollment with the Contractor, the Contractor shall create and
      maintain at the Enrollee's Primary Care Site an Enrollee file containing
      biographical and enrollment information relating to the Enrollee,
      including copies of all materials pertaining to the Enrollee provided by
      the Department. A permanent medical record shall be maintained at the
      Primary Care Site for every Enrollee and be available to the Primary Care
      Provider, Women's Health Care Provider and other Providers. Copies of the
      medical record shall be sent to any new Site to which the Enrollee
      transfers. The Contractor shall make documented efforts to obtain such
      consent. Copies of records shall be released only to Authorized
      Individuals. Original medical records shall be released only in accordance
      with Federal or State law, court orders, subpoenas, or a valid records
      release form executed by an Enrollee. The Contractor shall ensure that
      Enrollees have timely access to the records. The Contractor shall protect
      the confidentiality and privacy of minors, and abide by all Federal and
      State laws regarding the confidentiality and disclosure of medical
      records, mental health records, and any other information about Enrollee.
      The Contractor shall produce such records for the Department upon request.
      Medical records must include Provider identification and Enrollee
      identification. All entries in the medical record must be legible and
      dated, and the following, where applicable, shall be included:

            -     patient identification;

            -     personal health, social history and family history, with
                  updates as needed;

            -     risk assessment;

            -     obstetrical history (if any) and/or profile;

            -     hospital admissions and discharges;

            -     relevant history of current illness or injury (if any) and
                  physical findings;

            -     diagnostic and therapeutic orders;

            -     clinical observations, including results of treatment;

            -     reports of procedure, tests and results;

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<PAGE>

            -     diagnostic impressions;

            -     patient disposition and pertinent instructions to patient for
                  follow-up care;

            -     immunization record;

            -     allergy history;

            -     periodic exam record;

            -     weight and height information and, as appropriate, growth
                  chart;

            -     referral information, if any;

            -     health education and anticipatory guidance provided; and

            -     family planning and/or counseling.

      5.9 COMPUTER SYSTEM REQUIREMENTS.

            (a) The Contractor must establish and maintain a computer system
compatible with the Department's system, and execute an electronic communication
agreement provided by the Department. The system must be able to exchange data
using a mutually agreed-upon transfer method. Suitable software products for
data exchange can include but are not limited to a version of Connect Direct
that is supported by Sterling Commerce, FTP, or other products to be determined
by the Department. All costs associated with the data exchange software shall be
borne by the Contractor.

            (b) The Contractor shall pay for a line connection for communication
between the Contractor and the Department that shall be established by the
Department. A 56KB or faster dedicated telecommunication line(s) will be
necessary to interface directly with the State. All costs associated with
interfacing with the Department shall be borne by the Contractor. The connection
method will be a Frame Relay connection between the Contractor's production
location and the Illinois Central Management Services HOST system utilizing
TCP/IP. The Contractor must provide access and space for the installation of a
Cisco Router and modem for the Frame Relay connection. The Contractor shall be
responsible for providing the connection from the Frame Relay router to the
Contractor's system. The Department shall place the order for this communication
link with Illinois Central Management Services for the Contractor. The
Contractor shall be responsible for providing the Department with all required
information for the placement of the Frame Relay order with Illinois Central
Management Services. There may be up to a sixty (60) day processing period
between placement of the order and installation.

            (c) The Contractor must provide staff with proficient knowledge in
telecommunications to ensure communication connectivity is established and
maintained. In addition, the Contractor shall be responsible for the
installation of any firewall devices required for the data communication link.
The Contractor shall be responsible for performing Network

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Address Translation ("NAT") to facilitate connectivity and security protecting
the Contractor's network.

            (d) The Contractor shall work with the Department to implement
changes in technology as they become available to the Department. Any costs
associated with the Contractor's side of processing, connectivity and/or changes
to the manner in which the Contractor processes data for the Department shall be
borne solely by the Contractor. The Contractor will work with the Department to
resolve any issues related to these changes.

      5.10 REGULAR INFORMATION REPORTING REQUIREMENTS.

            (a) The Contractor shall submit to the Department regular reports
and additional information as set forth in this Section. The Contractor shall
ensure that data received from Providers and included in reports is accurate and
complete by (1) verifying the accuracy and timeliness of reported data; (2)
screening the data for completeness, logic, and consistency; and (3) collecting
service information in standardized formats to the extent feasible and
appropriate. All data collected by the Contractor shall be available to the
Department and, upon request, to CMS. Such reports and information shall be
submitted in a format and medium designated by the Department. A schedule of all
reports and information submissions and the frequency required for each under
this Contract is provided in Exhibit C. For purposes of this Article V, Section
5.10, the following terms shall have the following meanings: "annual" shall be
defined by the State fiscal year beginning July first of each year and ending on
but including June thirtieth of the following year; and "quarter" shall be
defined as three consecutive calendar months of the State's fiscal year. The
Department shall advise the Contractor of the appropriate format for such
reports and information submissions in a written communication.

                  (1) ADMINISTRATIVE

                        (A) Disclosure Statements. The Contractor shall submit
            disclosure statements to the Department initially, annually, on
            request and as changes occur.

                        (B) Encounter Data.

                              1. Submission. The Contractor must report, in
                        accordance with Subsections (2) and (3) of this Article
                        V, Section 5.10(a)(1)(B), all services received by
                        Enrollees. On a monthly basis, the Contractor shall
                        provide the Department with files in the format and
                        medium designated by the Department, prepared with
                        claims level detail as required herein and in Exhibit D
                        attached hereto, for all services received by Enrollees
                        during a given month. This data must be received by the
                        Department within one hundred twenty (120) days of the
                        last day of the service month. Any claims processed by
                        the Contractor for services provided in a given report
                        month subsequent to submission of the monthly Encounter
                        Data Report shall be reported on the next submission of
                        the monthly Encounter Data Report. Encounter Data
                        submitted for any claims

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<PAGE>

                        where the payment is later recouped from the Provider
                        should be voided in the manner described by the
                        Department.

                              2. Testing. Upon receipt of each submitted data
                        file, the Department shall perform two distinct levels
                        of review:

                                    a. The first level of review and edits
                              performed by the Department shall check the data
                              file format. These edits shall include, but are
                              not limited to the following: check the data file
                              for completeness of records; correct sort order of
                              records; proper field length and composition; and
                              correct file length. The format of the file, to be
                              accepted by the Department, must be one hundred
                              percent (100%) correct.

                                    b. If the format is correct, the Department
                              shall then perform the second level of review.
                              This second review shall be for standard claims
                              processing edits. These edits shall include, but
                              are not limited to the following: correct Provider
                              numbers; valid recipient numbers; valid procedure
                              and diagnosis codes; cross checks to assure
                              Provider and recipient numbers match their names;
                              and the procedures performed are correct for the
                              age and sex of the recipient. The acceptable error
                              rate of claims processing edits of the encounter
                              data provided by the Contractor in accordance with
                              Exhibit D shall be determined by the Department.
                              Once an acceptable error rate has been achieved,
                              as determined by the Department, the Contractor
                              shall be instructed that the testing phase is
                              complete and that data should be sent in
                              production.

                              3. Production. Once the Contractor's testing of
                        data specified in (B) above is completed, the Contractor
                        will be certified for production. Once certified for
                        production, the data shall continue to be submitted in
                        accordance with (A) above. The data will continue to be
                        reviewed for correct format and quality. The Contractor
                        shall submit as many files as possible in a time frame
                        agreed upon by the Department and the Contractor, to
                        ensure all data is current.

                              4. Records that fail the edits described above in
                        (2) or (3) will be returned to the Contractor for
                        correction. Corrected data must be returned to the
                        Department for re-processing.

                        (C) Financial Reports. The Contractor shall provide the
            Department with copies of all financial reports the Contractor is
            required to file with the Department of Insurance.

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<PAGE>

                        (D) Report of Transactions with Parties of Interest. The
            Contractor shall report to the Department all "transactions" with a
            "party of interest" (as such terms are defined in Section
            1903(m)(4)(A) of the Social Security Act and SMM 2087.6(A-B)), as
            required by Section 1903(m)(4)(A) of the Social Security Act.

                  (2) ENROLLEE MATERIALS. (In addition to the submission
      requirements described below, the Contractor must maintain documentation
      verifying that the information conveyed in the following categories of
      Enrollee materials are reviewed on an ongoing basis for accuracy and
      updated at least annually)

                        (A) Certificate or Document of Coverage and Any Changes
            or Amendments. The Contractor shall submit these documents to the
            Department for prior approval initially and as revised.

                        (B) Enrollee Handbook. The Contractor shall submit the
            handbook to the Department for prior approval initially and as
            revised. The Contractor shall not be required to submit for prior
            approval format changes, provided there is no change in the
            information conveyed.

                        (C) Identification Card. The Contractor shall submit the
            identification card to the Department for prior approval initially
            and as revised. The Contractor shall not be required to submit for
            prior approval format changes, provided there is no change in the
            information conveyed.

                        (D) Provider Directory. The Contractor shall submit the
            Provider Directory applicable to Enrollees to the Department for
            review initially, and annually thereafter.

                  (3) FRAUD/ABUSE

                        (A) Fraud and Abuse Report. The Contractor shall report
            all allegations of Fraud, Abuse or misconduct of Providers,
            Enrollees or Department employees to the OIG immediately upon
            knowledge of such Fraud, Abuse or misconduct. If no Fraud, Abuse or
            misconduct is reported to the OIG during a quarter, the Contractor
            shall file a certification of such with the OIG within thirty (30)
            days of the end of the quarter.

                  (4) MARKETING

                        (A) Marketing Allegation Investigations. On a monthly
            basis, the Contractor shall complete and submit the
            Department-approved Investigation Results Form summarizing the
            results of investigations of marketing allegations conducted by the
            Contractor.

                        (B) Marketing Allegation Notification. On a weekly
            basis, the Contractor shall complete and submit the
            Department-approved Marketing

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<PAGE>

            Allegation Notification Form identifying current marketing
            allegations originating through the Contractor.

                        (C) Marketing Materials. The Contractor shall submit all
            Marketing Materials to the Department for prior approval initially
            and as revised. The Contractor shall not be required to submit for
            prior approval format changes, provided there is no change in the
            information conveyed.

                        (D) Marketing Plans and Procedures. The Contractor shall
            submit descriptions of proposed Marketing concepts, strategies, and
            procedures for approval initially and as revised.

                        (E) Marketing Representative Listing. On a monthly
            basis, on the first day of the month for that month, the Contractor
            shall provide the Department with a list of all Marketing personnel
            who are active as well as any Marketing personnel for whom a change
            of status has occurred since the last report month.

                        (F) Marketing Representative Terminations. The
            Contractor shall submit names of Marketing personnel who have
            terminated employment or association with the Contractor as such
            terminations occur. The submission shall indicate whether the
            termination was voluntary or involuntary and, if involuntary, shall
            state whether the reason for termination was related to misconduct
            under this Contract.

                        (G) Marketing at Sites:

                              1. Written Statement. To the extent the Contractor
                        conducts marketing activities at one or more Sites, the
                        Contractor shall submit, on an annual basis and
                        throughout the year as Sites are included or deleted
                        from the Contractor's marketing schedule, a written
                        statement or letter from each Site setting forth in
                        detail the understanding between the parties including,
                        but not limited to, the following information: what
                        marketing activities may be conducted at the Site; the
                        frequency with which those marketing activities may
                        occur; and a description of the setting in which the
                        marketing activities will occur.

                              2. Schedule. To the extent the Contractor conducts
                        marketing activities at one or more Sites, the
                        Contractor shall submit, on a monthly basis, a schedule
                        that reflects which of the Contractor's marketing
                        representatives will market at such Site(s) and the
                        dates and times when such activities will occur.

                        (H) Marketing Training Materials. The Contractor shall
            submit Marketing training materials relating to Marketing activities
            performed by the Contractor's marketing representatives under this
            Contract, including Marketing

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<PAGE>

            trainer scripts and marketing representative presentations scripts,
            to the Department for prior approval initially and as revised.

                        (I) Marketer Training Schedule and Agenda. On a
            quarterly basis, two weeks prior to the beginning of the report
            quarter, the Contractor shall provide the Department with its
            schedule for training of Marketing personnel. The model agenda for
            each type of training must accompany the schedule. The Contractor
            shall provide the Department with written notice of any changes to
            the quarterly schedule at least seventy-two (72) hours prior to the
            scheduled training.

                  (5) PROVIDER NETWORK

                        (A) Provider Network Submissions. The Contractor shall
            submit to the Department, in a format and medium designated by the
            Department, Provider network reports that shall include, without
            limitation, the following: monthly Provider Affiliation with Sites
            as set forth in the format given to the Contractor by the
            Department; monthly updating of all Providers who have either become
            a Provider in the Contractor's network or who have left the network
            since the last report; New Site Provider Affiliations as new Sites
            are added; Site terminations immediately as they occur; and Enrollee
            Site Transfers as they occur. New Site/PCP information shall be
            reported in a format and medium as required by the Department.
            During the term of this Contract, this report may be converted to
            electronic data transmission. The Department will give the
            Contractor no less than one hundred twenty (120) days notice prior
            to conversion of this report to electronic data transmission. Such
            notice shall advise the Contractor of the submission requirements.

                  (6) QUALITY ASSURANCE/MEDICAL

                        (A) Grievance Procedures. The Contractor shall submit
            Grievance Procedures to the Department for prior approval initially
            and as revised. The Contractor shall not be required to submit for
            prior approval format changes, provided there is no change in the
            information conveyed.

                        (B) Network/Provider Ratio Report. The Contractor shall
            submit a quarterly report that provides the ratio of Primary Care
            Providers and Women's Health Care Provider (by Site) to Enrollees in
            a format provided by the Department.

                        (C) Quality Assurance, Utilization Review and Peer
            Review Annual Report (OA/UR/PR Annual Report). The Contractor shall
            submit a QA/UR/PR Annual Report on a yearly basis, no later than
            sixty (60) days following the close of the Contractor's reporting
            period. This report shall provide a summary review of the
            effectiveness of the Contractor's Quality Assurance Plan. The
            summary review shall contain the Contractor's processes for quality
            assurance, utilization review and peer review. Included with this
            report shall be a comprehensive description of the Contractor's
            network and an annual workplan

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<PAGE>

            outlining the Contractor's intended activities relating to quality
            assurance, utilization review, peer review and health education. The
            report's content, as determined by the Department is detailed in
            Exhibit A.

                        (D) QA/UR/PR Committee Meeting Minutes. The Contractor
            shall submit the minutes of these meetings to the Department on a
            quarterly basis.

                        (E) Behavioral Health Report. On a quarterly basis, the
            Contractor shall submit to the Department behavioral health
            utilization statistics and analysis as specified in Paragraph 13 of
            Exhibit A.

                        (F) Quality Assurance, Utilization Review, Peer Review
            and Health Education Plans. The Contractor shall submit such plans
            to the Department for prior approval initially and as revised. The
            Contractor shall not be required to submit for prior approval format
            changes, provided there is no change in the information conveyed.

                        (G) Summary of Grievances and Resolutions and External
            Independent Reviews and Resolutions. This quarterly report shall
            provide a summary of the grievances filed by Enrollees and the
            resolution of such grievances as well as a summary of all external
            independent reviews and the resolution of such reviews. Such report
            shall include types of grievances and external independent reviews
            by category and totals, the number and levels at which the
            grievances/reviews were resolved, the types of resolutions and the
            number pending resolution by category.

                  (7) SUBCONTRACTS AND PROVIDER AGREEMENTS

                        (A) Executed Subcontracts and Provider Agreements. The
            Contractor shall provide copies of any subcontract and Provider
            agreement to the Department upon request.

                        (B) Model Subcontracts and Provider Agreements. The
            Contractor shall provide copies of model subcontracts and Provider
            agreements related to Covered Services, assignment of risk and data
            reporting functions, including the form of all proposed schedules or
            exhibits, intended to be used therewith, and any substantial
            deviations from these model subcontracts and Provider agreements to
            the Department initially and as revised.

            (b) Additional Reports. The Contractor shall submit to the
Department additional reports or submissions at the frequency set forth in
Exhibit C and all other reports and information required by the provisions of
this Contract.

            (c) Unless otherwise specified, the Contractor shall submit all
reports to the Department within thirty (30) days from the last day of the
reporting period or as defined in Exhibit C. All reports and submissions listed
in this Article V, Section 5.10 must be submitted to the Department in a
Department designated format and at the intervals set forth in Exhibit C. The
Department may require additional reports throughout the term of this Contract.
The

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Department will provide adequate notice before requiring production of any new
reports or information, and will consider concerns raised by Contractors about
potential burdens associated with producing the proposed additional reports. The
Department will provide the basis (reason) for any such request. Failure of the
Contractor to follow reporting requirements shall subject the Contractor to the
sanctions in Article IX, Section 9.10.

      5.11 HEALTH EDUCATION. The Contractor shall establish and maintain an
ongoing program of health education as delineated in its written plan and
submitted annually to the Department. The health education program will advise
Enrollees concerning appropriate health care practices and the contributions
they can make to the maintenance of their own health. All health education
materials must be approved by the Contractor's medical director. Providing
material during Marketing and Enrollment does not satisfy the requirements of
this Article V, Section 5.11. The Contractor must make documented efforts to
educate Primary Care Providers on the importance of being active participants in
the health education program and to ensure that such Primary Care Providers
participate in the health education program. The health education program shall
provide, at a minimum, the following:

            (a) Information on how to use the Plan, including information on how
to receive Emergency Services in and out of the Contracting Area.

            (b) Information on preventive care including the value and need for
screening and preventive maintenance.

            (c) Counseling and patient education as to the health risks of
obesity, smoking, alcoholism, substance abuse and improper nutrition, and
specific information for persons who have a specific disease.

            (d) Information on disease states, that may affect the general
population.

            (e) Educational material in he form of printed, audio, visual or
personal communication.

            (f) Information will be provided in language that the Enrollee
understands and that meets the requirements set forth in Article II, Section
2.4.

            (g) A single individual appointed by the Contractor to be
responsible for the coordination and implementation of the program.

            The Contractor further agrees to review the health education
program, at regular intervals, for the purpose of amending same, in order to
improve said program. The Contractor further agrees to supply the Department or
its designee with the information and reports prescribed in its approved health
education program or the status of such program.

      5.12 REQUIRED MINIMUM STANDARDS OF CARE. The Contractor shall provide or
arrange to provide to all Enrollees medical care consistent with prevailing
community standards at locations serving the Contracting Area that assure
availability and accessibility to Enrollees.

                                       45
<PAGE>

      The Contractor will provide a system to notify Enrollees on an ongoing
basis of the need for and benefits of health screenings and physical
examinations. The Contractor will provide or arrange to provide such
examinations to all of its Enrollees.

      The Contractor shall not be in violation of this Contract if a particular
Enrollee or group of Enrollees do not receive one of the services listed in
Section 5.1(d) or in this Section 5.12(a) through (d) if Contractor requires its
Affiliated Providers to offer those services and has documented its efforts to
educate Enrollees about the availability of coverage for such services.

            (a) EPSDT Services to Enrollees Under Twenty-One (21) Years. All
Enrollees under twenty-one (21) years of age should receive screening
examinations including appropriate childhood immunizations at intervals as
specified by the EPSDT Program as set forth in Sections 1902(a)(43)and
1905(a)(4)(B) of the Social Security Act and 89 I11. Adm. Code 140.485. Any
condition discovered during the screening examination or screening test
requiring further diagnostic study or treatment must be provided if within the
scope of Covered Services. The Contractor shall refer the Enrollee to an
appropriate source of care for any required services that are not Covered
Services. If, as a result of EPSDT services, the Contractor determines an
Enrollee is in need of services that are not Covered Services but are services
otherwise provided for under the Medical Assistance Program, the Contractor will
ensure that the Enrollee is referred to an appropriate source of care. The
Contractor shall have no obligation to pay for services that are not Covered
Services.

            At a minimum, the Contractor shall provide or arrange to provide all
appropriate screening and vaccinations in accordance with OBRA 1989 guidelines
to eighty percent (80%) of Enrollees younger than twenty-one (21) years of age.
The Contractor shall track and monitor this provision on an ongoing basis and
shall have in place a quality improvement initiative addressing compliance until
such time as this performance goal is achieved and maintained.

            (b) Preventive Medicine Schedule (Services to Enrollees Twenty-One
(21) Years of Age and Over) The following preventive medicine services and age
schedule is the minimum acceptable range and scope of required services for
adults. The Contractor may substitute an alternate schedule for adult preventive
medicine services as long as such schedule is based upon recognized guidelines
such as those recommended by the current U.S. Preventive Services Task Force's
"Guide to Clinical Preventive Services" and the Contractor submits the schedule
to the Department and receives the Department's written approval for the
alternate schedule prior to implementing it.

      The Contractor shall ensure that a complete health history and physical
examination is provided to each Enrollee initially within the first twelve (12)
months of enrollment. Thereafter, for Enrollees between ages Twenty-One (21) and
Sixty-Four (64), the Contractor shall ensure that a complete health history and
physical examination is conducted every 1-3 years, as indicated by Enrollee need
and clinical care guidelines. For Enrollees aged Sixty-Five (65) and older, the
Contractor shall ensure that a complete health history and physical examination
is conducted annually.

                                       46
<PAGE>

      For purposes of this Section 5.12(b), a "complete health history and
physical examination" shall include, at a minimum, the following health services
as appropriate for the age and gender of each Enrollee:

            -     Appropriate initial and interval history

            -     Height and weight measurement

            -     Nutrition assessment and counseling

            -     Appropriate lifestyle and risk counseling

            -     Health education and anticipatory guidance (including, without
                  limitation, education on the need to monitor visual acuity for
                  Enrollees ages 65 and older)

            -     Blood pressure

            -     Hearing evaluation (ages 65 and older)

            -     Annual Papanicolaou (Pap) smear test or cervical smear and
                  pelvic exam for female Enrollees (after three (3) or more
                  consecutive satisfactory normal annual examinations, the Pap
                  smear may be performed at the Physician's discretion based
                  upon the Enrollee's risk assessment, but no less frequently
                  than every three (3) years)

            -     Clinical breast examination for female Enrollees

            -     Baseline mammogram for female Enrollees (ages 35-39) and
                  annually for female Enrollees ages 40 and older (or earlier,
                  as indicated for female Enrollees with a personal of family
                  history of breast disease)

            -     Rectal occult blood testing (ages 50 and older); sigmoidoscopy
                  or colonoscopy should be considered every 5-10 years

            -     Digital rectal examination and a prostate-specific antigen
                  test annually based upon the Physician's recommendation for
                  male Enrollees as follows:

                        -     African-American male Enrollees (ages 40 and
                              older)

                        -     Male Enrollees of national origin other than
                              African-American with a family history of prostate
                              cancer (ages 40 and older)

                        -     Asymptomatic male Enrollees of national origin
                              other than African-American ages 50 and older)

            -     Non-fasting or fasting total blood cholesterol test, at least
                  every 5 years

                                       47
<PAGE>

            -     Dipstick urinalysis (ages 65 and older)

            -     Thyroid function tests for female Enrollees (ages 65 and
                  older)

            -     Tetanus-diptheria (Td) booster shot every 10 years, unless
                  contraindicated

            -     Pneumococcal vaccine (ages 65 and older), unless
                  contraindicated

            -     Influenza vaccine annually (ages 65 and older), unless
                  contraindicated

            Any known condition or condition discovered during the complete
health history and physical examination requiring further Medically Necessary
diagnostic study or treatment must be provided if within the scope of Covered
Services.

            At a minimum, the Contractor shall provide or arrange to provide the
initial history and physical examination to fifty percent (50%) of all Enrollees
in their first twelve (12) months of coverage, to seventy percent (70%) of all
Enrollees in their second twelve (12) months of coverage and eighty percent
(80%) of all Enrollees in their third twelve (12) months of coverage or more.
For purposes of this subsection, "twelve (12) months of coverage" may include up
to forty-five (45) days interrupted coverage. The Contractor shall track and
monitor this provision on an ongoing basis and shall have in place a quality
improvement initiative addressing compliance until such time as this performance
goal is achieved and maintained.

            (c) Maternity Care. The Contractor shall provide or arrange to
provide quality care for pregnant Enrollees. At a minimum, the Contractor shall
provide, or arrange to provide, and document:

                  (1) A comprehensive prenatal evaluation and care in accordance
      with the latest standards published by the American College of Obstetrics
      and Gynecology or the American Academy of Family Physicians. The specific
      areas to be addressed in regard to the provision of care include, but are
      not limited to, the following items: content of the initial assessment,
      including history, physical, lab tests and risk assessment including HIV
      counseling and voluntary HIV testing; follow-up laboratory testing;
      nutritional assessment and counseling; frequency of visits; content of
      follow-up visits; anticipatory guidance and appropriate referral
      activities.

            During the first year of this Contract, at least seventy percent
(70%) of all pregnant Enrollees shall receive the minimum level of prenatal
visits adjusted for the date of coverage under the Plan. During the second year
of this Contract, the percentage in the preceding sentence shall increase to at
least eighty percent (80%). For the exclusive purpose of calculating these
rates, women who deliver within sixty (60) days of the first day of coverage
under the Plan shall be excluded. The Contractor shall track and monitor this
provision on an ongoing basis and shall have in place a quality improvement
initiative addressing compliance until such time as this performance goal is
achieved and maintained.

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<PAGE>

                  (2) The Contractor shall provide or arrange to provide
      nutritional assessment and counseling to all pregnant Enrollees.
      Individualized diet counseling is to be provided as indicated.

                  (3) The Contractor shall require its Primary Care Providers
      and Women's Health Care Providers to identify maternity cases presenting
      the potential for high-risk maternal or neonatal complications and arrange
      appropriate referral to physician specialist or transfer to Level III
      perinatal facilities as required. The Contractor shall utilize, for such
      high-risk consultation or referrals, the standards of care promulgated by
      the Statewide Perinatal Program of the Illinois Department of Human
      Services.

                  (4) The consulting physician at the perinatal center will
      determine the management of the Enrollee at that point in time. Should
      transport be required, the consultant at the perinatal center will
      identify the most appropriate mode of transport for such a transfer.
      Should the perinatal center be unable to accept the Enrollee due to bed
      unavailability, that center will arrange for admission of the Enrollee to
      an alternate Level III perinatal center. All records required for
      appropriate management of the high-risk Enrollee receiving consultation
      or referral to a perinatal center will be provided to the consulting
      physician as indicated. The Contractor will obtain from the consulting
      physician all necessary correspondence to enable the Primary Care Provider
      to provide, or arrange for the provision of, appropriate follow-up care
      for the mother or neonate following discharge.

            (d) Complex and Serious Medical Conditions.

                  (1) The Contractor shall provide or arrange to provide quality
      care for Enrollees with complex and serious medical conditions. At a
      minimum, the Contractor shall provide and document the following:

                        (A) Timely identification of Enrollees with complex and
            serious medical conditions.

                        (B) Assessment of such conditions and identification of
            appropriate medical procedures for monitoring or treating them.

                        (C) Implementation of a treatment plan in accordance
            with this Article V, Section 5.8(c)(1).

                  (2) The Contractor shall have procedures in place to identify
      Enrollees with special health care needs in order to identify any ongoing
      special conditions of the Enrollee that require a course of treatment or
      regular care monitoring. Appropriate health care professionals shall make
      such assessments. Such procedures must be delineated in the Contractor's
      Quality Assurance Plan, and ongoing monitoring shall occur in compliance
      with Exhibit A. Section 4.a.iv(d)(2).

                  (3) The Contractor shall have a mechanism in place to allow
      Enrollees with special health care needs as defined by the Contractor to
      have direct access to a specialist as appropriate for each Enrollee's
      condition and identified needs.

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<PAGE>

            (e) Access Standards.

                  (1) Appointments. Time specific appointments for routine,
      preventive care shall be made available within five (5) weeks from the
      date of request for such care. Enrollees with more serious problems not
      deemed Emergency Medical Conditions shall be triaged and provided same day
      service, if necessary. Enrollees with problems or complaints that are not
      deemed serious shall be seen within three (3) weeks from the date of
      request for such care. The Contractor shall have an established policy
      that scheduled Enrollees shall not routinely wait for more than one (1)
      hour to be seen by a Provider and no more than six (6) scheduled
      appointments shall be made for each Primary Care Provider per hour.
      Notwithstanding this limit, the Department recognizes that physicians
      supervising other licensed health care Providers may routinely account for
      more than six (6) appointments per hour.

                  (2) Services Requiring Prior Authorization. The Contractor
      shall provide, or arrange for the provision of, Covered Services as
      expeditiously as the Enrollee's health condition requires. Ordinarily,
      Covered Services shall be provided within fourteen (14) calendar days
      after receiving the request for service from a Provider, with a possible
      extension of up to fourteen (14) calendar days, if the Enrollee requests
      the extension or the Contractor provides written justification to the
      Department that there is a need for additional information and the
      Enrollee will not be harmed by the extension. If the Physician indicates,
      or the Contractor determines that following the ordinary time frame could
      seriously jeopardize the Enrollee's life or health, the Contractor shall
      provide, or arrange for the provision of, the Covered Service no later
      than seventy-two (72) hours after receipt of the request for service,
      with a possible extension of up to fourteen (14) calendar days, if the
      Enrollee requests the extension or the Contractor provides written
      justification to the Department that there is a need for additional
      information and the Enrollee will not be harmed by the extension.

            (f) Coordination with Other Service Providers.

                  (1) The Contractor shall encourage the Plan Providers and
      subcontractors to cooperate and communicate with other service providers
      who serve Enrollees. Such other service providers may include: Community
      Behavioral Health Providers; Special Supplemental Nutrition Programs for
      Women, Infants, and Children (commonly referred to as "WIC" programs);
      Head Start programs; Early Intervention programs; Public Health providers;
      local health departments; school-based clinics; and school systems. Such
      cooperation may include performing annual physical examinations for school
      and the sharing of information (with the consent of the Enrollee).

                  (2) The Contractor shall participate in the Family Case
      Management Program, which shall include, but is not limited to:

                        (A) Coordinating services and sharing information with
            existing Family Case Management Providers for its Enrollees;

                                       50
<PAGE>

                        (B) Developing internal policies, procedures, and
            protocols for the organization and its provide network for use with
            Family Case Management Providers serving Enrollees; and

                        (C) Conducting periodic meetings with Family Case
            Management Providers performing problem resolution and handling of
            grievances and issues, including policy review and technical
            assistance.

      5.13 AUTHORIZATION OF SERVICES. The Contractor shall have in place and
follow written policies and procedures when processing requests for initial and
continuing authorizations of Covered Services. Such policies and procedures
shall ensure consistent application of review criteria for authorization
decisions by a health care professional or professionals with expertise in
treating the Enrollee's condition or disease and provide that the Contractor
shall consult with the Provider requesting such authorization when appropriate.
If the Contractor declines to authorize Covered Services that are requested by a
Provider or authorizes one or more services in an amount, scope, or duration
that are less than that requested, the Contractor shall notify the Provider
orally or in writing and shall furnish the Enrollee with written notice of such
decision. Such notice shall meet the requirements set fort in 42 C.F.R. 438.404.

      5.14 CHOICE OF PHYSICIANS. The Contractor shall afford to each Enrollee a
choice of Primary Care Provider and, where appropriate, a Women's Health Care
Provider.

      In each Contracting Area, there shall be at least one (1) full-time
equivalent Physician for each 1,200 Enrollees, including one (1) full-time
equivalent Primary Care Provider for each 2,000 Enrollees. In each Contracting
Area, there shall be at least one (1) Women's Health Care Provider for each
2,000 female Enrollees between the ages of eighteen (18) and forty-four (44), at
least one (1) Physician specializing in obstetrics for each 300 pregnant female
Enrollees and at least one (1) pediatrician for each 2,000 Enrollees under age
seventeen (17). All Physicians providing services shall have and maintain
admitting privileges and, as appropriate, delivery privileges at an Affiliated
Plan hospital; or, in lieu of these admitting and delivery privileges, the
Physicians shall have a written referral agreement with a Physician who is in
the Contractor's network and who has such privileges at an Affiliated Plan
hospital. The agreement must provide for the transfer of medical records and
coordination of care between Physicians.

      In any Contracting Area in which the Contractor does not satisfy the
full-time equivalent provider requirements set forth above, the Contractor may
demonstrate compliance with these requirements by demonstrating that (i) the
Contractor's full time equivalent Physician ratios exceed ninety percent (90%)
of the requirements set forth above, and (ii) that Covered Services are being
provided in such Contracting Area in a manner which is timely and otherwise
satisfactory. The Contractor shall comply with Section 1932(b)(7) of the Social
Security Act.

      5.15 TIMELY PAYMENTS TO PROVIDERS. The Contractor shall make payments to
Providers for Covered Services on a timely basis consistent with the Claims
Payment Procedure described at 42 U.S.C. Section 1396a(a)(37)(A) and Illinois
Public Act 91-0605. Complaints and/or disputes concerning payments for the
provision of services as described in this paragraph shall be subject to the
Contractor's Provider grievance resolution system. In particular, the Contractor
must pay 90 percent (90%) of all "clean claims" from Providers within thirty
(30) days following

                                       51
<PAGE>

receipt. Further, the Contractor must pay 99 percent (99%) of all "clean claims"
from Physicians within ninety (90) days following receipt. For purposes of this
Section 5.15, a "clean claim" means one that can be processed without obtaining
additional information from the Physician who provided the service or from a
third party, except that it shall not mean a claim submitted by or on behalf of
a Physician who is under investigation for fraud or abuse, or a claim that is
under review for medical necessity.

      The Contractor shall pay for all appropriate Emergency Services rendered
by a non-Affiliated Provider within thirty (30) days of receipt of a complete
and correct claim. If the Contractor determines it does not have sufficient
information to make payment, the Contractor shall request all necessary
information from the non-Affiliated Provider within thirty (30) days of
receiving the claim, and shall pay the non-Affiliated Provider within thirty
(30) days after receiving such information. Such payment shall be made at the
same rate the Department would pay for such services according to the level of
services provided. Determination of appropriate levels of service for payment
shall be based upon the symptoms and condition of the Enrollee at the time the
Enrollee is initially examined by the non-Affiliated Provider and not upon the
final determination of the Enrollee's actual medical condition, unless the
actual medical condition is more severe. Within the time limitation stated
above, the Contractor may review the need for, and the intensity of, the
services provided by non-Affiliated Providers.

      The Contractor shall pay for all Post-Stabilization Services as a Covered
Service in any the following situations: (a) the Contractor authorized such
services; (b) such services were administered to maintain the Enrollee's
stabilized condition within one (1) hour of a request to the Contractor for
authorization of further Post-Stabilization Services; or (c) the Contractor did
not respond to a request to authorize such services within one (1) hour, the
Contractor could not be contacted, or, if the treating Provider is a
non-Affiliated Provider, the Contractor and the treating Provider could not
reach an agreement concerning the Enrollee's care and an Affiliated Provider was
unavailable for a consultation, in which case the Contractor must pay for such
services rendered by the treating non-Affiliated Provider until an Affiliated
Provider was reached and either concurred with the treating non-Affiliated
Provider's plan of care or assumed responsibility for the Enrollee's care.

      The Contractor shall pay for all Emergency Services and Post-Stabilization
Services rendered by a non-Affiliated Provider, for which the Contractor would
pay if rendered by an Affiliated Provider, at the same rate the Department would
pay for such services, unless a different rate was agreed upon by the Contractor
and non-Affiliated Provider.

      The Contractor shall accept claims from non-Affiliated Providers for at
least one (1) year after the date the services are provided. The Contractor
shall not be required to pay for claims initially submitted by such
non-Affiliated Providers more than one (1) year after the date of service.

      5.16 GRIEVANCE PROCEDURE AND APPEAL PROCEDURE.

            (a) Grievance. The Contractor shall establish and maintain a
procedure for reviewing Grievances registered by Enrollees. All Grievances shall
be registered initially with the Contractor and may later be appealed to the
Department. The Contractor's procedures must:

                                       52
<PAGE>

(1) be submitted to the Department in writing and approved in writing by the
Department; (2) provide for prompt resolution, and (3) assure the participation
of individuals with authority to require corrective action. The Contractor must
have a Grievance Committee for reviewing Grievances registered by its Enrollees,
and Enrollees must be represented on the Grievance Committee. At a minimum, the
following elements must be included in the Grievance process:

                  (1) An informal system, available internally, to attempt to
      resolve all Grievances;

                  (2) A formally structured Grievance system that is compliant
      with Section 45 of the Managed Care Reform and Patient Rights Act and 42
      C.F.R. Part 438 Subpart F to handle all Grievances subject to the
      provisions of such sections of the Act and regulations (including, without
      limitation, procedures to ensure expedited decision making when an
      Enrollee's health so necessitates);

                  (3) A formally structured Grievance Committee must be
      available for Enrollees whose Grievances cannot be handled informally and
      are not appropriate for the procedures set up under the Managed Care
      Reform and Patient Rights Act. All Enrollees must be informed that such a
      system exists. Grievances at this stage must be in writing and sent to the
      Grievance Committee for review;

                  (4) The Grievance Committee must have at least twenty-five
      percent (25%) representation by members of Contractor's prepaid plans,
      with at least one (1) Enrollee of Contractor's services under this
      Contract on the Committee. The Department may require that one (1) member
      of the Grievance Committee be a representative of the Department;

                  (5) Final decisions under the Managed Care Reform and Patient
      Rights Act procedures and those of the Grievance Committee may be appealed
      by the Enrollee to the Department under its Fair Hearings system;

                  (6) A summary of all Grievances heard by the Grievance
      Committee and by independent external reviewers and the responses and
      disposition of those matters must be submitted to the Department
      quarterly;

                  (7) An Enrollee may appoint a guardian, caretaker relative,
      Primary Care Provider, Women's Health Care Provider, or other Physician
      treating the Enrollee to represent him throughout the Grievance process.

            (b) Appeals. The Contractor shall establish and maintain a procedure
for reviewing Appeals made by Enrollees or Providers. All Appeals shall be
registered initially with the Contractor and may later be appealed to the
Department. The Contractor's procedures must: (1) be submitted to the Department
in writing and approved in writing by the Department; (2) provide for prompt
resolution, and (3) assure the participation of individuals with authority to
require corrective action. The Contractor must have a committee in place for
reviewing Appeals made by its Enrollees. At a minimum, the following elements
must be included in the Appeal process:

                                       53
<PAGE>

                  (1) A system that allows an Enrollee or Provider to file an
      Appeal either orally or in writing, within a reasonable period of time
      following the date of the notice of action that generates such Appeal,
      which reasonable period of time shall not be less than twenty (20) days
      nor more than ninety (90) days; provided that the Contractor may require
      an Enrollee or Provider to follow an oral Appeal with a written, signed
      Appeal unless the Enrollee or Provider has requested review on an
      expedited basis;

                  (2) A formally structured Appeals system that is compliant
      with Section 45 of the Managed Care Reform and Patient Rights Act and
      Subpart F of Section 438 of the Code of Federal Regulations to handle all
      Appeals subject to the provisions of such sections of the Act and C.F.R.
      (including, without limitation, procedures to ensure expedited decision
      making when an Enrollee's health so necessitates and procedures allowing
      for an external independent review of Appeals that are denied by the
      Contractor);

                  (3) Final decisions of Appeals not resolved wholly in favor of
      the Enrollee may be appealed by the Enrollee to the Department under its
      Fair Hearings system;

                  (4) A summary of all Appeals filed by Enrollees and the
      responses and disposition of those matters (including decisions made
      following an external independent review) must be submitted to the
      Department quarterly;

                  (5) An Enrollee may appoint a guardian, caretaker relative,
      Primary Care Provider, Women's Health Care Provider, or other Physician
      treating the Enrollee to represent him throughout the Appeal process.

            (c) The Contractor agrees to review its Grievance and Appeal
procedures, at regular intervals, for the purpose of amending same when
necessary. The Contractor shall amend the procedures only upon receiving the
prior written consent of the Department. The Contractor further agrees to supply
the Department and/or its designee with the information and reports prescribed
in its approved procedure. This information shall be furnished to the Department
upon its request.

      5.17 ENROLLEE SATISFACTION SURVEY. The Contractor shall annually conduct a
uniform Enrollee Satisfaction Survey as approved by the Department. The Survey
shall be administered in a manner consistent with the Department's required
procedures and analyzed by the Contractor. The Department shall use reasonable
efforts to assure that its required procedures comport with the accreditation
requirements which the Contractor must follow when seeking accreditation from
NCQA, JCAHO or other accrediting bodies; however, nothing in this Contract shall
require such accreditation. The Contractor shall submit its findings and explain
what actions it will take on its findings as part of the comprehensive Annual
QA/UR/PR Report.

      5.18 PROVIDER AGREEMENTS AND SUBCONTRACTS.

           (a) The Contractor may provide or arrange to provide any Covered
Services identified in Article V, Section 5.1 with Affiliated Providers or
fulfill any other obligations under this Contract by means of subcontractual
relationships.

                                       54

<PAGE>



                  (1) All Provider agreements and/or subcontracts entered into
      by the Contractor must be in writing and are subject to the following
      conditions:

                       (A) The Affiliated Providers and subcontractors shall be
            bound by the terms and conditions of his Contract that are
            appropriate to the service or activity delegated under the
            subcontract. Such requirements include, but are not limited to, the
            record keeping and audit provisions of this Contract, such that the
            Department or Authorized Persons shall have the same rights to audit
            and inspect subcontractors as they have to audit and inspect the
            Contractor.

                       (B) The Contractor shall remain responsible for the
            performance of any of its responsibilities delegated to Affiliated
            Providers or subcontractors.

                       (C) No Provider agreement or subcontract can terminate
            the legal responsibilities of the Contractor to the Department to
            assure that all the activities under this Contract will be carried
            out.

                       (D) All Affiliated Providers providing Covered Services
            for the Contractor under this Contract must currently be enrolled as
            Providers in the Medical Assistance Program. The Contractor shall
            not contract or subcontract with an Ineligible Person or a Person
            who has voluntarily withdrawn from the Medical Assistance Program as
            the result of a settlement agreement.

                       (E) All Provider agreements and subcontracts must comply
            with the Lobbying Certification contained in Article IX, Section
            9.22 of this Contract.

                       (F) All Affiliated Providers shall be furnished with
            information about the Contractor's Grievance and Appeal procedures
            at the time the Provider enters into an agreement with the
            Contractor and within fifteen (15) days following any substantive
            change to such procedures.

                       (G) The Contractor must retain the right to terminate any
            Provider agreement and/or subcontract, or impose other sanctions, if
            the performance of the Affiliated Provider or subcontractor is
            inadequate.

            (b) With respect to all Provider agreements and subcontracts made by
the Contractor, the Contractor further warrants:

                (1) That such Provider agreements and subcontracts are binding;

                (2) That it will promptly terminate all contracts with
      Providers and/or subcontractors, or impose other sanctions, if the
      performance of the Affiliated Provider or subcontractor is inadequate;

                (3) That it will promptly terminate contracts with Providers
      who are terminated, barred, suspended, or have voluntarily withdrawn as a
      result of a settlement

                                       55


<PAGE>


      agreement, under either Section 1128 or Section 1128A of the Social
      Security Act, from participating in any program under federal law
      including any program under Titles XVIII, XIX, XX or XXI of the Social
      Security Act or are otherwise excluded from participation in the Medical
      Assistance Program or KidCare;

                  (4) That all laboratory testing Sites providing services under
      this Contract must possess a valid Clinical Laboratory Improvement
      Amendments ("CLIA") certificate and comply with the CLIA regulations found
      at 42 C.F.R. Part 493; and

                  (5) That it will monitor the performance of all Affiliated
      Providers and subcontractors on an ongoing basis subject each Affiliated
      Provider and subcontractor to formal review on a triennial basis, and, to
      the extent deficiencies or areas for improvement are identified during an
      informal or formal review, require that the Affiliated Provider or
      subcontractor take appropriate corrective action.

            (c) The Contractor will submit to the Department copies of model
Provider agreements and/or subcontracts, initially and revised, that relate to
Covered Services, assignment of risk and data reporting functions and any
substantial deviations from these model Provider agreements or subcontracts. The
Contractor shall provide copies of any other model Provider agreement or
subcontract or any actual Provider agreement or subcontract to the Department
upon request. The Department reserves the right to require the Contractor to
amend any Provider agreement or subcontract as necessary to conform with the
Contractor's duties and obligations under this Contract.

            The Contractor may designate in writing certain information
disclosed under this Article V, Section 5.18 as confidential and proprietary. If
the Contractor makes such a designation, the Department shall consider said
information exempt from copying and inspection under Section 7(1)(b) or (g) of
the State Freedom of Information Act (5 ILCS 140/1 et seq.). If the Department
receives a request for said information under the State Freedom of Information
Act, however, it may require the Contractor to submit justification for
asserting the exemption. Additionally, the Department may honor a properly
executed criminal or civil subpoena for such documents without such being deemed
a breach of this Contract or any subsequent amendment hereto.

            (d) Prior to entering into a Provider agreement or subcontract, the
Contractor shall submit a disclosure statement to the Department specifying any
Provider agreement or subcontract and Providers or subcontractors in which any
of the following have a five percent (5%) or more financial interest:

                (1) any Person also having a five percent (5%) or more
      financial interest in the Contractor or its affiliates as defined by 42
      C.F.R. 455.101;

                (2) any director, officer, trustee, partner or employee of the
      Contractor or its affiliates; or

                (3) any member of the immediate family of any Person
      designated in (1) or (2) above.

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            (e) Any contract or subcontract between the Contractor and a FQHC or
a RHC shall be executed in accordance with 1902(a)(13)(C) and 1903(m)(2)(A)(ix)
of the Social Security Act, as amended by the Balanced Budget Act of 1997 and
shall provide payment that is not less than the level and amount of payment
which the Contractor would make for the Covered Services if the services were
furnished by a Provider which is not an FQHC or a RHC.

      5.19 SITE REGISTRATION AND PRIMARY CARE PROVIDER/WOMEN'S HEALTH CARE
PROVIDER APPROVAL AND CREDENTIALING.

           (a) The Contractor shall register with the Department each Site prior
to assigning Enrollees to that Site to receive primary care. A fully executed
Provider agreement must be in place between the Contractor and the Site prior to
registration of the Site. All FQHCs and RHCs must be registered as unique sites,
and all Enrollees receiving Covered Services at those unique sites must be
reflected in those Sites in the Department's system. The Contractor must give
advance notice to the Department as soon as practicable of the anticipated
closing of a Site. If it is not possible to give advance notice of a closing of
a Site, the Contractor shall notify the Department immediately when a Site is
closed.

           (b) The Contractor shall submit to the Department for approval the
name, license numbers, and other information requested in a format designated by
the Department of all proposed Primary Care Providers and Women's Health Care
Providers, as such new Primary Care Providers and Women's Health Care Providers
are added to the Contractor's network through executed Provider agreements. A
Primary Care Provider or Women's Health Care Provider may not be offered to
Enrollees until the Department has given its written approval of the Primary
Care Provider or Women's Health Care Provider.

           (c) All Primary Care Providers and Women's Health Care Providers must
be credentialed by the Contractor. The credentialing process may be two-tiered,
and the Contractor may assign Enrollees to a Primary Care Provider or Women's
Health Care Provider following preliminary credentialing, provided that full
credentialing is completed within a reasonable time following the assignment of
Enrollees to the Primary Care Provider or Women's Health Care Provider. The
Contractor must notify the Department when the credentialing process is
completed and the results of the process. If the Contractor utilizes a single
tiered credentialing process, the Contractor shall not assign Enrollees to a
Primary Care Provider or Women's Health Care Provider until such Provider has
been fully credentialed.

           (d) The Contractor's Provider selection policies and procedures shall
not discriminate against particular Providers that serve high-risk populations
or specialize in conditions that require costly treatment.

           (e) The Department, at its sole discretion, may eliminate the
requirement for Site reporting at any time during the term of this Contract.

      5.20 ADVANCE DIRECTIVES. The Contractor shall comply with all rules
concerning the maintenance of written policies and procedures with respect to
advance directives as promulgated by CMS as set forth in 42 C.F.R. Section
422.128. The Contractor shall provide adult Enrollees with oral and written
information on advance directives policies, and include a

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<PAGE>


description of applicable State law. Such information shall reflect changes in
State law as soon as possible, but no later than ninety (90) days after the
effective date of the change.

      5.21 FEES TO ENROLLEES PROHIBITED. Neither the Contractor, its Affiliated
Providers, or non-Affiliated Providers shall seek or obtain funding through fees
or charges to any Enrollee receiving Covered Services pursuant to this Contract,
except as permitted or required by the Department in 89 Ill. Adm. Code 125
and/or the Department's fee-for-service copayment policy then in effect. The
Contractor acknowledges that imposing charges in excess of those permitted under
this Contract is a violation of Section 1128B(d) of the Social Security Act and
subjects the Contractor to criminal penalties. The Contractor shall have
language in all of its Provider subcontracts reflecting this requirement.

      5.22 FRAUD AND ABUSE PROCEDURES.

           (a) The Contractor shall have an affirmative duty to timely report
suspected Fraud and/or Abuse in the Medical Assistance Program or KidCare by the
Enrollees or others, suspected criminal acts by Providers or the Contractor's
employees, or Fraud or misconduct of Department employees to the Public Aid
Office of Inspector General. To this end, the Contractor shall establish the
following procedures, in writing:

            (1) the Contractor shall form a compliance committee and appoint a
      single individual to serve as liaison to the Department regarding the
      reporting of allegations of Fraud, Abuse, or misconduct;

            (2) the Contractor's procedure shall ensure that any of Contractor's
      personnel or subcontractors who identify suspected Fraud, Abuse, or
      misconduct shall make a report to Contractor's liaison;

            (3) the Contractor's procedure shall ensure that the Contractor's
      liaison shall provide notice of any allegation to the OIG immediately upon
      receiving such report. If no reports are received in a quarter, the
      liaison shall certify, in writing, to the OIG that no such reports were
      received. Reports shall be considered timely if they are made as soon as
      the Contractor knew or should have known of the suspected Fraud, Abuse, or
      misconduct, or if no reports were filed, the certification is received
      within thirty (30) days after the end of the quarter; and

            (4) the Contractor shall ensure that all its personnel and
      subcontractors receive notice of these procedures.

            (b) The Contractor shall not conduct any investigation of the
suspected Fraud, Abuse, or misconduct of Department personnel, but shall report
all incidents immediately to the OIG.

            The Contractor may conduct investigations of its personnel,
Providers, subcontractors, or Enrollees. If the investigation discloses
potential Fraud and Abuse, as defined in this Contract, the Contractor must
immediately notify the OIG and, if so directed, cease its internal
investigation. Should the allegation or investigation disclose potential
criminal acts by

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the Contractor's personnel, Providers, subcontractors, or Enrollees, the
Contractor shall cease its internal investigation and immediately notify the
OIG.

        (c) The Contractor shall cooperate with all investigations of suspected
Fraud, Abuse, or Department employee misconduct.

      5.23 MISREPRESENTATION PROCEDURES. If an Enrollee states that one of the
Contractor's marketing representatives has made a Misrepresentation, the
Contractor shall conduct a retention interview with the Enrollee either at the
time the allegation is made, if the Enrollee is on the telephone, or as soon as
possible thereafter, if the Enrollee must be contacted. If, during the retention
interview, the Enrollee requests disenrollment from the Contractor, the
Contractor shall send a disenrollment form to the Enrollee within three (3)
business days following the date of the request. The Contractor shall notify the
Department weekly of all alleged misrepresentations by submitting a Marketing
Allegation Notifications Form, in accordance with the terms of this Article V,
Section 5.13(a)(15). After investigating such allegations of Misrepresentations,
the Contractor shall notify the Department of its findings on a monthly basis by
submitting a Marketing Allegation Investigation Results Form, in accordance with
the terms of this Article V, Section 5.13(a)(16).

      5.24 ENROLLEE-PROVIDER COMMUNICATIONS. Subject to this Article V, Section
5.1(g), and in accordance with the Managed Care Reform and Patient Rights Act,
the Contractor shall not prohibit or otherwise restrict a Provider from advising
an Enrollee about the health status of the Enrollee or medical care or treatment
for the Enrollee's condition or disease regardless of whether benefits for such
care or treatment are provided under this Contract, if the Provider is acting
within the lawful scope of practice, and shall not retaliate against a Provider
for so advising an Enrollee.

      5.25 HIPAA COMPLIANCE. Contractor shall comply with the terms of Sections
B and C of the HIPAA Compliance Obligations set forth in Attachment III.

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                                   ARTICLE VI

                            DUTIES OF THE DEPARTMENT

      6.1 ENROLLMENT. Once the Department has determined that an individual is a
Potential Enrollee and after the Potential Enrollee has selected the
Contractor's Plan, such individual shall become a Prospective Enrollee. A
Prospective Enrollee shall become an Enrollee on the effective date of coverage.
Coverage shall begin as designated by the Department no later than the first day
of a calendar month no later than three (3) calendar months from the date the
Enrollment is entered into the Department's database, after Site assignment, to
ensure that Contractor's Plan is reflected on the Department-issued medical
card. The Department shall transmit to the Contractor, prior to the first day of
each month of coverage, a Prelisting Report.

      6.2 PAYMENT. The Department shall pay the Contractor for the performance
of the Contractor's duties and obligations hereunder. Such payment amounts shall
be as set forth in Article VII of this Contract and Attachment I hereto. Unless
specifically provided herein, no payment shall be made by the Department for
extra charges, supplies or expenses, including, but not limited to, Marketing
costs incurred by the Contractor.

      6.3 DEPARTMENT REVIEW OF MARKETING MATERIALS. Review of all Marketing
Materials required by this Contract to be submitted to the Department for prior
approval shall be completed by the Department on a timely basis not to exceed
thirty (30) days from the date of receipt by the Department; provided, however,
that if the Department fails to notify the Contractor of approval or disapproval
of submitted materials within thirty (30) days after receiving such materials,
the Contractor may begin to use such materials. The Department, at any time,
reserves the right to disapprove any materials that the Contractor used and/or
distributed prior to receiving the Departments express written approval. In the
event the Department disapproves any materials, the Contractor immediately shall
cease use and/or distribution of such materials.

      6.4 HIPAA COMPLIANCE. The Department shall comply with the terms of
Section D of the HIPAA Compliance Obligations set forth in Attachment III.

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                                   ARTICLE VII

                               PAYMENT AND FUNDING

      7.1 CAPITATION PAYMENT. The Department shall pay the Contractor on a
Capitation basis, based on age and gender categories of the Enrollee as shown on
the table in Attachment I, a sum equal to the product of the approved Capitation
rate and the number of Enrollees enrolled in that category as of the first day
of that month. Rates reflected in Attachment I are for the period August 1, 2003
through July 31, 2005. At the end of the two year period, the Department will
develop an update to the rates which will be offered to the Contractor through
an amendment to the Contract.

      7.2 HOSPITAL DELIVERY CASE RATE PAYMENT. The Department shall pay the
Contractor a Hospital Delivery Case Rate as shown in Attachment I for each
hospital delivery. This payment will be generated upon receipt of the hospital
Encounter Data that groups to a diagnostic related grouping (DRG) of 370, 371
372, 373, 374 or 375. These payments will be generated on a monthly basis only
for the Encounter Data that is accepted by the Department.

      7.3 ACTUARIALLY SOUND RATE REPRESENTATION. The Department represents that
actuarially sound Capitation rates and Hospital Delivery Case Rates were
developed by the Department's contracted actuarial firm. The rates were
developed from the fee-for-service equivalent values to be consistent with the
Federal regulations promulgated pursuant to the Balanced Budget Act of 1997. The
fee-for-service equivalent values were modified to reflect the following
adjustments: projection of future medical cost increases for the two-year rate
period beginning August 1, 2003, managed care utilization and cost adjustments,
and an administration allowance for compliance with CMS rate setting guidelines
and actuarial principles.

      7.4 NEW COVERED SERVICES. The financial impact of any new Covered Services
added to the Contractor's responsibilities under this Contract will be evaluated
from an actuarial perspective by the Department and, if deemed material, in the
Department's sole opinion, the rates set forth in this Contract shall be amended
accordingly.

      7.5 ADJUSTMENTS. Monthly payments to the Contractor will be adjusted for
retroactive disenrollments of Enrollees, retroactive Enrollments of newborns,
changes to Enrollee information that affect the monthly Capitation rate (i.e.,
region of residence, eligibility classification, age, gender), financial
sanctions imposed in accordance with Article IX, Section 9.10, rate changes in
accordance with amendments to Attachment I or third-party liability collections
received by the Contractor, or other miscellaneous adjustments provided for
herein. Adjustments shall be retroactive only to eighteen (18) months, unless
otherwise provided for in writing by the Department.

      7.6 COPAYMENTS. The Contractor may charge copayments to Enrollees in a
manner consistent with 89 I11. Adm. Code, Part 125 and/or the Department's
fee-for-service copayment policy then in effect. If the Contractor desires to
charge such copayments, the Contractor must provide written notice to the
Department before charging such copayments. Such written notice to the
Department shall include a copy of the policy the Contractor intends to give the
Providers

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in its network. This policy must set forth the amount, manner, and circumstances
in which copayments may be charged. Such policy is subject to the prior written
approval of the Department. In the event the Contractor wishes to impose a
charge for copayments after enrollment of a Participant, it must first provide
at least sixty (60) days prior written notice to such Participant. The
Contractor shall be responsible for promptly refunding to a Participant any
copayment that, in the sole discretion of the Department, has been
inappropriately collected for Covered Services. The Contractor shall not charge
copayments to any Enrollee who is an American Indian or Alaska Native. The
Department will prospectively identify Enrollees who are American Indians or
Alaska Natives.

      7.7 AVAILABILITY OF FUNDS. Payment of obligations of the Department under
this Contract are subject to the availability of funds and the appropriation
authority as provided by law. Obligations of the State will cease immediately
without penalty of further payment being required if in any State fiscal year
the Illinois General Assembly or federal funding source fails to appropriate or
otherwise make available sufficient funds for this Contract within thirty (30)
days of the end of the State's fiscal year.

          (a) If State funds become unavailable, as set forth herein, to meet
the Department's obligations under this Contract in whole or in part, the
Department will provide the Contractor with written notice thereof prior to the
unavailability of such funds, or as soon thereafter as the Department can
provide written notice.

          (b) In the event that funds become unavailable to fund this Contract
in whole, this Contract shall terminate in accordance with Article VIII, Section
8.5(c) of this Contract. In the event that funds become unavailable to fund this
Contract in part, it is agreed by both parties that this Contract may be
renegotiated (as to premium or scope of services) or amended in accordance with
Article IX, Section 9.9(c). Should the Contractor be unable or unwilling to
provide fewer Covered Services at a reduced Capitation rate, or otherwise be
unwilling or unable to amend this Contract within ten (10) business days after
receipt of a proposed amendment, the Contract shall be terminated on a date set
by the Department not to exceed thirty (30) days from the date of such notice.

      7.8 DENIAL OF PAYMENT SANCTION BY CMS. The Department shall deny payments
otherwise provided for under this Contract for new Enrollees when, and for so
long as, payment or those Enrollees is denied by CMS under 42 C.F.R. Section
438.726.

      7.9 HOLD HARMLESS. The Contractor shall indemnify and hold the Department
harmless from any and all claims, complaints or causes of action which arise as
a result of the Contractor's failure to pay either any Provider for rendering
Covered Services to Enrollees or any vendor, subcontractor, or the Department's
mail vendor, either on a timely basis or at all, regardless of the reason or for
any dispute arising between the Contractor and a vendor, mail vendor, Provider,
or subcontractor; provided, however, that this provision will not nullify the
Department's obligation under Article V, Sections 5.1 to cover services that
are not Covered Services under this Contract, but that are eligible for payment
by the Department.

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      The Contractor warrants that Enrollees will not be liable for any of the
Contractor's debts should the Contractor become insolvent or subject to
insolvency proceedings as set forth in 215 ILCS 125/1-1 et seq.

      7.10 PAYMENT IN FULL. Acceptance of payment of the rates specified in this
Article VII for any Enrollee is payment in full for all Covered Services
provided to that Enrollee, except to the extent the Contractor charges such
Enrollee a copayment as permitted in this Contract.

      7.11 REMITTANCE ADVICE. Each month, the Department will create an
electronic Remittance Advice file. This file will include, but is not limited
to, identification of each Enrollee for whom payment is being made. This file
is to be electronically retrieved by the Contractor.

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                                  ARTICLE VIII

                          TERM RENEWAL AND TERMINATION

      8.1 TERM. This Contract shall take effect on August 1, 2003 and shall
continue for a period of one year. THIS CONTRACT SHALL RENEW AUTOMATICALLY FOR
TWO CONSECUTIVE ONE-YEAR TERMS, UNLESS EITHER PARTY GIVES THE OTHER PARTY
WRITTEN NOTICE NINETY (90) DAYS PRIOR TO THE END OF THE THEN-CURRENT TERM. Once
either party receives notice of the other party's intent not to renew, such
nonrenewal shall be irrevocable.

      8.2 CONTINUING DUTIES IN THE EVENT OF TERMINATION. Upon termination of
this Contract, the parties are obligated to perform those duties which remain
under this Contract. Such duties include, but are not limited to, payment to
Affiliated or non-Affiliated Providers, completion of customer satisfaction
surveys, cooperation with medical records review, all reports for periods of
operation, including Encounter Data, and retention of records. Termination of
this Contract does not eliminate the Contractor's responsibility to the
Department for overpayments which the Department determines in a subsequent
audit may have been made to the Contractor, nor does it eliminate any
responsibility the Department may have for underpayments to the Contractor. The
Contractor warrants that if this Contract is terminated, the Contractor shall
promptly supply all information in its possession or that may be reasonably
obtained, which is necessary for the orderly transition of Enrollees and
completion of all Contract responsibilities.

      8.3 TERMINATION WITH AND WITHOUT CAUSE.

          (a) This Contract may be terminated by the Department with cause upon,
at least, fifteen (15) days written notice to the Contractor for any reason set
forth in Section 1932(e)(4)(A) of the Social Security Act. In the event such
notice is given, the Contractor may request in writing a hearing, in accordance
with Section 1932 of the Social Security Act by the date specified in the
notice. If such a request is made by the date specified, then a hearing under
procedures determined by the Department will be provided prior to termination.
The Department reserves the right to notify Enrollees of the hearing and its
purpose, to inform them that they may disenroll, and to suspend further
Enrollment with the Contractor during the pendency of the hearing and any
related proceedings.

          (b) This Contract may be terminated by the Department or the
Contractor without cause upon sixty (60) days written notice to the other party.
Any such date of termination established by the Contractor shall coincide with
the last day of a coverage month.

      8.4 TEMPORARY MANAGEMENT. While one or more agencies within the State of
Illinois have the authority and retain the power to impose temporary management
upon Contractor for repeated violations of the Contract, the Department will
exercise its option to terminate the Contract prior to imposing temporary
management. This does not preclude other state agencies from exercising such
power at their discretion.

      8.5 TERMINATION FOR BREACH OF HIPAA COMPLIANCE OBLIGATIONS. Upon the
Department's learning of a material breach of the terms of the HIPAA Compliance
Obligations,

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set forth in Attachment III ("HIPAA Compliance Obligations"), incorporated by
reference and made a part hereof, the Department shall:

                  (1) provide the Contractor with an opportunity to cure the
      breach or end the violation, and terminate this Contract if the Contractor
      does not cure the breach or end the violation within the time specified by
      the Department; or

                  (2) immediately terminate this Contract if the Contractor has
      breached a material term of the HIPAA Compliance Obligations and cure is
      not possible; or

                  (3) report the violation to the Secretary of the U.S.
      Department of Health and Human Services, if neither termination nor cure
      by the Contractor is feasible.

      8.6 AUTOMATIC TERMINATION. This Contract may, in the sole discretion of
the Department, automatically terminate on a date set by the Department for any
of the following reasons:

          (a) refusal by the Contractor to sign an amendment to this Contract
as described in Article IX, Section 9.9(c); or

          (b) legislation or regulations are enacted or a court of competent
jurisdiction interprets a law so as to prohibit the continuance of this Contract
or the Medical Assistance Program; however, this provision shall not apply
should KidCare be terminated; or

          (c) funds become unavailable as set forth in Article VII, Section
7.4(b); or

          (d) the Contractor fails to maintain a Certificate of Authority, as
required by Article II, Section 2.6.

      8.7 REIMBURSEMENT IN THE EVENT OF TERMINATION. In the event of
termination of this Contract, reimbursement for any and all claims for Covered
Services rendered to Enrollees prior to the effective termination date shall be
the Contractor's responsibility.

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                                   ARTICLE IX

                                  GENERAL TERMS

      9.1 RECORDS RETENTION, AUDITS, AND REVIEWS. The Contractor shall maintain
all business, professional and other records in accordance with 45 C.F.R. Part
74, 45 C.F.R. Part 160 and 45 C.F.R. Part 164 subparts A and E, the specific
terms and conditions of this Contract, and pursuant to generally accepted
accounting and medical practice. The Contractor shall maintain, for a minimum of
six (6) years after completion of the Contract and after final payment is made
under the Contract, adequate books, records, and supporting documents to verify
the amounts, recipients, and uses of all disbursements of funds passing in
conjunction with the Contract. If an audit, litigation or other action involving
the records is started before the end of the six (6) year period, the records
must be retained until all issues arising out of the action are resolved.
Failure to maintain the books, records, and supporting documents required by
this Section shall establish a presumption in favor of the State for the
recovery of any funds paid by the State under the Contract for which adequate
books, records, and supporting documentation are not available, in Illinois, to
support their purported disbursement.

      The Contract and all books, records, and supporting documents related to
the Contract shall be made available, at no charge, in Illinois, by the
Contractor for review and audit by the Department, the United States Department
of Health and Human Services, the Auditor General or other Authorized Persons.
The Contractor agrees to cooperate fully with any such review or audit and to
provide full access in Illinois to all relevant materials.

      The Contractor shall provide any information necessary to disclose the
nature and extent of all expenditures made under this Contract. Such information
must be sufficient to fully disclose all compensation of Marketing personnel
pursuant to Article V, Section 5.2(g). The Department, the Auditor General or
other Authorized Persons may inspect and audit any financial records of the
Contractor or its subcontractors relating to the Contractor's capacity to bear
the risk of financial losses.

      The Department, the Auditor General or other Authorized Persons may also
evaluate, through inspection or other means, the quality, appropriateness, and
timeliness of services performed under this Contract.

      The Department shall perform quality assurance reviews to determine
whether the Contractor is providing quality and accessible health care to
Enrollees under this Contract. The reviews may include, but are not limited to,
a sample review of medical records of Enrollees, Enrollee surveys and
examination by consultants or reviews and assessments performed by the
Contractor. The specific points of quality assurance which will be reviewed
include, but are not limited to:

                  (1) legibility of records

                  (2) completeness of records

                  (3) peer review and quality control provisions

                  (4) utilization review

                  (5) availability, timeliness, and accessibility of care

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                  (6) continuity of care

                  (7) utilization reporting

                  (8) use of services

                  (9) quality and outcomes of medical care

                  (10) quality improvement initiatives

      The Department shall provide for an annual (as appropriate) external
independent review of the above that is conducted by a qualified independent
entity, such as the Department's EQRO.

      The Department shall adjust future payments or final payments if the
findings of a Department audit indicate underpayments or overpayments to the
Contractor. If no payments are due and owing to the Contractor, or if the
overpayment(s) exceed the amount otherwise due to the Contractor, the Contractor
shall immediately refund all amounts which may be due the Department.

      9.2 NONDISCRIMINATION.

          (a) The Contractor shall abide by all Federal and state laws,
regulations, and orders that prohibit discrimination because of race, color,
religion, sex, national origin, ancestry, age, physical or mental disability,
including, but not limited to, the Federal Civil Rights Act of 1964, the
Americans with Disabilities Act of 1990, the Federal Rehabilitation Act of 1973,
Title IX of the Education Amendments of 1972 (regarding education programs and
activities), the Age Discrimination Act of 1975, the Illinois Human Rights Act,
and Executive Orders 11246 and 11375. The Contractor further agrees to take
affirmative action to ensure that no unlawful discrimination is committed in any
manner including, but not limited to, the delivery of services under this
Contract.

          (b) The Contractor will not discriminate against Potential Enrollees,
Prospective Enrollees, or Enrollees on the basis of health status or need for
health services.

          (c) The Contractor may not discriminate against any Provider who is
acting within the scope of his/her licensure solely on the basis of that
licensure or certification.

          (d) The Contractor will provide each Provider or group of Providers
whom it declines to include in its network written notice of the reason for its
decision.

          (e) Nothing in subparagraph (c) or (d), above, may be construed to
require the Contractor to contract with Providers beyond the number necessary to
meet the needs of its enrollees; preclude the Contractor from using different
reimbursement amounts for different specialties or for different practitioners
in the same specialty; or preclude the Contractor from establishing measures
that are designed to maintain quality of services and control costs and are
consistent with its responsibilities to enrollees.

      9.3 CONFIDENTIALITY OF INFORMATION. All information, records, data and
data elements collected and maintained for the operation of the Plan and
pertaining to Providers, Enrollees, applicants for public assistance,
facilities, and associations shall be protected by the


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Contractor and the Department from unauthorized disclosure, pursuant to 305 ILCS
5/11.9, 55/11.10, and 5/11.12; 42 U.S.C. 654(2)(b); 42 C.F.R. Part 431, Subpart
F; and 45 C.F.R. Part 303.21.

      9.4 NOTICES. Notices required or desired to be given either party under
this Contract, unless specifically required to be given by a specific method,
may be given by any of the following methods: 1) United States mail, certified,
return receipt requested; 2) a recognized overnight delivery service; or 3) via
facsimile. Notices shall be deemed given on the date sent and shall be addressed
as follows:

          Contractor:     John Blank, M.D.
                          President and Chief Executive Officer
                          Harmony Health Plan of Illinois Inc.
                          125 South Wacker  Drive, Suite 2600
                          Chicago, IL 60606

          Department:     Illinois Department of Public Aid
                          Kelly Carter, Chief
                          Bureau of Managed Care
                          201 South Grand Avenue East
                          Springfield, Illinois 62763-0001
                          Facsimile: (217) 524-7535

      9.5 REQUIRED DISCLOSURES.

          (a) Conflict of Interest.

              (1) The Contractor, by signing this Contract, covenants that the
      Contractor is not prohibited from contracting with State on any of the
      bases provided in 30 ILCS 500/50-13. The Contractor further covenants that
      it neither has nor shall acquire any interest, public or private, direct
      or indirect, which conflicts in any manner with the performance of
      Contractor's services and obligations under this Contract. The Contractor
      further covenants that it shall not employ any person having such an
      interest in connection with the Contractors performance hereunder. The
      Contractor shall be under a continuing obligation to disclose any
      conflicts to the Department, which shall, in its discretion, determine
      whether any conflict is cause for the nonexecution or termination of this
      Contract and any amendments hereto.

              (2) The Contractor will provide information intended to identify
      any potential conflicts of interest regarding its ability to perform the
      duties of this Contract through the filing of a disclosure statement upon
      the execution of this Contract, annually on or before the anniversary date
      of this Contract, and within thirty-five (35) days of any change occurring
      or of any request by the Department. The disclosure statement shall
      contain the following information:

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                  (A) The identities of any Persons that directly or indirectly
            provide service or supplies to the Medical Assistance Program or
            KidCare with which the Contractor has any type of business or
            financial relationship; and

                  (B) A statement describing how the Contractor will avoid any
            potential conflict of interest with such Persons related to its
            duties under this Contract.

            (b) Disclosure of Interest. The Contractor shall comply with the
disclosure requirements specified in 42 C.F.R. Part 455 including, but not
limited to, filing with the Department upon the execution of this Contract and
within thirty-five (35) days of a change occurring, a disclosure statement
containing the following:

               (1) The name, FEIN and address of each Person With An Ownership
      Or Controlling Interest in the Contractor and for individuals include home
      address, work address, date of birth, Social Security number and gender.

               (2) Whether any of the individuals so identified are related to
      another so identified as the individual's spouse, child, brother, sister
      or parent.

               (3) The name of any Person With an Ownership or Controlling
      Interest in the Contractor who also is a Person With an Ownership or
      Controlling Interest in another managed care organization that has a
      contract with the Department to furnish services under the Medical
      Assistance Program or KidCare, and the name or names of the other managed
      care organization.

               (4) The name and address of any Person With an Ownership or
      Controlling Interest in the Contractor or who is an agent or employee of
      the Contractor who has been convicted of a criminal offense related to
      that Person With an Ownership or Controlling Interest's involvement in any
      program under Federal law including any program under Titles XVIII, XIX,
      X or XXI of the Social Security Act, since the inception of such
      programs.

               (5) Whether any Person identified in subsections (1) through (4)
      of this section, is currently terminated, suspended, barred or otherwise
      excluded from participation, or has voluntarily withdrawn as the result of
      a settlement agreement, in any program under Federal law including any
      program under Titles XVIII, XIX, XX or XXI of the Social Security Act or
      has within the last five (5) years been reinstated to participation in any
      program under Federal law including any program under Titles XVIII, XIX,
      XX or XXI of the Social Security Act and prior to said reinstatement had
      been terminated, suspended, barred or otherwise excluded from
      participation or has voluntarily withdrawn as the result to a settlement
      agreement in such programs.

               (6) Whether the Medical Director of the Plan is a Person With an
      Ownership or Controlling Interest.

      9.6 CMS PRIOR APPROVAL. The parties acknowledge that the terms of this
Contract and any amendments must receive the prior approval of CMS, and that
failure of CMS to

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approve any provision of this Contract will render that provision null and void.
The parties understand and agree that the Department's duties and obligations
under this Contract are contingent upon such approval.

      9.7 ASSIGNMENT. This Contract, including the rights, benefits and duties
hereunder, shall not be assignable by either party without the prior written
consent of the other party.

      9.8 SIMILAR SERVICES. Nothing in this Contract shall prevent the
Contractor from performing similar services for other parties. However, the
Contractor warrants that at no time will the compensation paid by the Department
for services rendered under this Contract exceed the rate the Contractor charges
for the rendering of a similar benefit package of services to others in the
Contracting Area. The Contractor also warrants that the services it provides to
its Enrollees will be as accessible to them (in terms of timeliness, amount,
duration and scope) as those services are to nonenrolled Participants within the
Contracting Area.

      9.9 AMENDMENTS.

          (a) This Contract may be modified or amended by the mutual consent of
both parties at any time during its term. Amendments to this Contract must be in
writing and signed by authorized representatives of both parties.

          (b) No change in, addition to or waiver of any term or condition of
this Contract shall be binding on the Department or the Contractor unless
approved in writing by authorized representatives of both parties.

          (c) The Contractor shall, upon request by the Department and upon
receipt of a proposed amendment to this Contract, amend this Contract, if and
when required in the opinion of the Department, to comply with federal or State
laws or regulations. If the Contractor refuses to sign such amendment by the
date specified by the Department, which may not be less than ten (10) business
days after receipt, this Contract may terminate as provided in Article VIII,
Section 8.5(a).

      9.10 SANCTIONS. In addition to termination for cause pursuant to Article
VIII, Section 8.3(a), the Department may impose sanctions on the Contractor for
the Contractor's failure to substantially comply with the terms of this
Contract. Monetary sanctions imposed pursuant to this section may be collected
by deducting the amount of the sanction from any payments due to the Contractor
or by demanding immediate payment by the Contractor. The Department, at its sole
discretion, may establish an installment payment plan for payment of any
sanction. The determination of the amount of any sanction shall be at the sole
discretion of the Department, within the ranges set forth below. Self-reporting
by the Contractor will be taken into consideration in determining the sanction
amount.

         The Department shall not impose any sanction where the noncompliance is
directly caused by the Department's action or failure to act or where a force
majeure delays performance by the Contractor. The Department, in its sole
discretion, may waive the imposition of sanctions for failures that it judges to
be minor or insignificant.

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      Upon determination of substantial non compliance, the Department shall
give written notice to the Contractor describing the noncompliance, the
opportunity to cure the noncompliance where a cure is allowed under this
Contract and the sanction which the Department will impose hereunder.

          (a) Failure to Report or Submit. If the Contractor fails to submit any
report or other material required by the Contract to be submitted to the
Department, other than Encounter Data, by the date due, the Department will give
notice to the Contractor of the late report or material and the Contractor must
submit it within thirty (30) days following the notice. If the report or other
material has not been submitted within thirty (30) days following the notice,
the Department may, at its sole discretion, impose a sanction of $1,000.00 to
$5,000.00 for the late report.

          (b) Failure to Submit Encounter Data. If the Department determines
that the Contractor has not demonstrated progress towards compliance with the
requirements of Article V, Section 5.10(b)(1) regarding Encounter Data, the
Department will send the Contractor a notice of non-compliance. If the
Contractor does not demonstrate progress towards compliance with these
requirements by the end of the thirty (30) day period following the notice, the
Department, without further notice, may impose a sanction of $1,000.00 to
$5,000.00. At the end of each subsequent period of thirty (30) days in which no
demonstrated progress is made towards compliance, the Department may, without
further notice, impose an additional sanction of $1,000.00 to $5,000.00.

          (c) Failure to Meet Minimum Standards of Care. If the Department
determines that the Contractor has not demonstrated progress towards compliance
with the requirements of Article V, Section 5.12 regarding minimum standards of
care, the Department will send the Contractor a notice of noncompliance. If the
Contractor does not demonstrate progress towards compliance with these
requirements by the end of the thirty (30) day period following the notice, the
Department, without further notice, may impose a sanction of $1,000.00 to
$5,000.00. At the end of each subsequent period of thirty (30) days in which no
demonstrated progress is made towards compliance, the Department may, without
further notice, impose an additional sanction of $1,000.00 to $5,000.00.

          (d) Imposition of Prohibited Charges. If the Department determines
that the Contractor has imposed a charge on an Enrollee that is prohibited by
this Contract, the Department may impose a sanction of $1,000.00 to $5,000.00.

          (e) Misrepresentation or Falsification of Information. If the
Department determines that the Contractor has misrepresented or falsified
information furnished to a Potential Enrollee, Prospective Enrollee, Enrollee,
Provider, the Department or CMS, the Department may impose a sanction of
$1,000.00 to $5,000.00.

          (f) Failure to Comply with the Physician Incentive Plan Requirements.
If the Department determines that the Contractor has failed to comply with the
Physician Incentive Plan requirements of Article V, Section 5.6, the Department
may impose a sanction of $1,000.00 to $5,000.00.

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          (g) Failure to Meet Access and Provider Ratio Standards. If the
Department determines that the Contractor has not met the Provider to Enrollee
access standards established in Article V, Sections 5.12(e) and/or 5.14 the
Department will send the Contractor a notice of noncompliance. If the Contractor
has not met these requirements by the end of the thirty (30) day period
following the notice the Department may, without further notice, (i) impose a
sanction of $1,000.00 to $5,000.00, (ii) suspend Enrollment of Potential
Enrollees with the Contractor, or (iii) impose both sanctions. At the end of
each subsequent period of thirty (30) days in which no demonstrated progress is
made towards compliance, the Department may, without further notice, impose
additional sanctions of $1,000.00 to $5,000.00.

          (h) Failure to Provide Covered Services. If the Department determines
that the Contractor has failed to provide, or arrange to provide, a medically
necessary service that the Contractor is required to provide under law on this
Contract, the Department may (i) impose a sanction of $5,000.00 to $25,000.00,
(ii) suspend Enrollment of Potential Enrollees with the Contractor, or (iii)
impose both sanctions.

          (i) Discrimination Related to Pre-Existing Conditions and/or Medical
History. If the Department determines that discrimination has occurred in
relation to an Enrollee's pre-existing condition or medical history indicating a
probable need for substantial medical services in the future has occurred, the
Department may (i) impose a sanction of $5,000.00 to $25,000.00, (ii) suspend
Enrollment of Potential Enrollees with the Contractor or (iii) impose both
sanctions.

          (j) Pattern of Marketing Failures. Where the Department determines a
pattern of Marketing failures, the Department may (i) impose a sanction of
$5,000.00 to $25,000.00, (ii) suspend Enrollment of Potential Enrollees with the
Contractor, or (iii) impose both sanctions.

          (k) Other Failures. If the Department determines that the Contractor
is in substantial noncompliance with any material terms of this Contract or any
state or federal laws affecting the Contractors conduct under this Contract,
which are not specifically enunciated in this Article IX but which the
Department reasonably deems sanctionable, the Department shall provide written
notice to the Contractor setting forth the specific failure or noncompliant
activity. If the Contractor does not correct the noncompliance within thirty
(30) days of the notice the Department, without further notice, may (i) impose a
sanction of $1,000.00 to $5,000.00, (ii) suspend Enrollment of Potential
Enrollees with the Contractor, or (iii) impose both sanctions.

      9.11 SALE OR TRANSFER. The Contractor shall provide the Department with
the earliest possible actual notice of any sale or transfer of the Contractor's
business as it relates to this Contract. If the Contractor is otherwise subject
to SEC rules and regulations, actual notice shall be given to the Department as
soon as those SEC rules and regulations permit. The Department agrees that any
such notice shall be held in the strictest confidence until such sale or
transfer is publicly announced or consummated. The Department shall have the
right to terminate the Contract and any amendments thereto, without cause, upon
notification of such sale or transfer, in accordance with Article VIII, Section
8.3(b).

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\

      9.12 COORDINATION OF BENEFITS FOR ENROLLEES.

          (a) The Department is responsible for the identification of Enrollees
with health insurance coverage provided by a third party and ascertaining
whether third parties are liable for medical services provided to such
Enrollees. Money which the Department receives as a result of these collection
activities shall belong to the Department to the extent the Department has
incurred any expense or paid any claim and thereafter any excess receipts shall
belong to the Contractor, to the extent the Contractor has incurred any expense
or paid any claim, as permitted by law.

          (b) The Contractor will conduct a data match for the Department to
identify Medical Assistance Program and KidCare Participants with active private
health insurance through the Contractor. The Department will assume the
reasonable and customary costs of these semi-annual matches. The discovery of a
third party liability match will prevent the Department from paying premiums for
recipients already covered by the Contractor. The Contractor will further make
available to the Department a contact person from whom the Department can
request to make third party liability inquiries for the purpose of maintaining
accurate eligibility information for these recipients.

          (c) Upon the Department's verification that an Enrollee has third
party coverage for major medical benefits, the Department shall disenroll such
Enrollee from the Contractor's Plan. Such disenrollment shall be effective the
first day of the calendar month no later than three (3) months from the date the
disenrollment is entered into the Department's computer system. The monthly
Capitation payments shall be adjusted accordingly on the first day of the month
the disenrollment is effective. The Contractor shall be notified of the
disenrollment on the Prelisting Report.

          (d) The Contractor shall report with the reported Encounter Data any
and all third party liability collections it receives so the Department can
offset the next month's Capitation payment accordingly.

          (e) The Contractor shall report to the Department any health insurance
coverage for Enrollees it discovers at any time.

      9.13 SUBROGATION. In the event an Enrollee is injured by the act or
omission of a third party, the Contractor shall have the right to pursue
subrogation and recover reimbursement from third parties for all Covered
Services the Contractor provided for Enrollee in exchange for the Capitation
paid hereunder. Upon receiving payment from the responsible party, the
Contractor shall refund to the Department the Capitation payment(s) received on
behalf of the Enrollee for the Covered Services involved, and shall be entitled
to retain any payments received in excess of that amount.

      9.14 AGREEMENT TO OBEY ALL LAWS. The Contractor's obligations and services
hereunder are hereby made and must be performed in compliance with all
applicable federal and State laws, including, but not limited to, applicable
provisions of 45 C.F.R. Part 74 not hereto specified. In the provision of
services under this Contract, the Contractor and its subcontractors shall comply
with all applicable Federal and state statutes and regulations, and all
amendments

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thereto, that are in effect when this Contract is signed, or that come into
effect during the term of this Contract. This includes, but is not limited to
Title XIX of the Social Security Act and Title 42 of the Code of Federal
Regulations.

      9.15 SEVERABILITY. Invalidity of any provision, term or condition of this
Contract for any reason shall not render any other provision, term or condition
of this Contract invalid or unenforceable.

      9.16 CONTRACTOR'S DISPUTES WITH OTHER PROVIDERS. All disputes between the
Contractor and any Affiliated or non-Affiliated Provider, or between the
Contractor and any other subcontractor, shall be solely between such Provider or
subcontractor and the Contractor.

      9.17 CHOICE OF LAW. This Contract shall be governed and construed in
accordance with the laws of the State of Illinois. Should any provision of this
Contract require judicial interpretation, the parties agree and stipulate that
the court interpreting or considering this Contract shall not apply any
presumption that the terms of this Contract shall be more strictly construed
against a party who itself or through its agents prepared this Contract. The
parties acknowledge that all parties hereto have participated in the preparation
of this Contract either through drafting or negotiation and that each party has
had full opportunity to consult legal counsel of choice before execution of this
Contract. Any claim against the Department arising out of this Contract must be
filed exclusively with the Illinois Court of Claims (as defined in 705 ILCS
505/1) of, if jurisdiction is not accepted by that court, with the appropriate
State or federal court located in Sangamon County, Illinois. The State does not
waive sovereign immunity by entering into this Contract.

      9.18 DEBARMENT CERTIFICATION. The Contractor certifies that it is not
barred from being awarded a contract or subcontract under Section 50-5 of the
Illinois Procurement Code (30 ILCS 500/1-1).

      The Contractor certifies that it has not been barred from contracting with
a unit of State or local government as a result of a violation of 720 ILCS
5/33-E3 or 5/33-E4.

      9.19 CHILD SUPPORT, STATE INCOME TAX AND STUDENT LOAN REQUIREMENTS. The
Contractor certifies that its officers, directors and partners are not in
default on an educational loan as provided in 5 ILCS 385/0.01 et seq., and is in
compliance with State income tax requirements and with child support payments
imposed upon it pursuant to a court or administrative order of this or any
state. The Contractor will not be considered out of compliance with this
requirement if (a) the Contractor provides proof of payment of past due amounts
in full or (b) the alleged obligation of past due amounts is being contested
through appropriate court or administrative agency proceedings and the
Contractor provides proof of the pendency of such proceedings or (c) the
Contractor provides proof of entry into payment arrangements acceptable to the
appropriate State agency are entered into. For purposes of this paragraph, a
partnership shall be considered barred if any partner is in default.

      9.20 PAYMENT OF DUES AND FEES. The Contractor certifies that it is not
prohibited from selling goods or services to the State because it pays dues or
fees on behalf of its employees

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or agents or subsidizes or otherwise reimburses them for payment of dues or fees
to any club which unlawfully discriminates (see 775 ILCS 25/1 -- 25/3).

      9.21 FEDERAL TAXPAYER IDENTIFICATION. Under penalties of perjury, the
Contractor certifies that it has affixed its correct Federal Taxpayer
Identification Number on the signature page of this Contract. The Contractor
certifies that it is not: 1) a foreign corporation, partnership, limited
liability company, estate, or trust; or 2) a nonresident alien individual
except for those corporations registered in Illinois as a foreign corporation.

      9.22 DRUG FREE WORKPLACE. The Contractor certifies that it is in
compliance with the requirements of 30 ILCS 580/1 et seq., and has completed
Attachment II to this Contract.

      9.23 LOBBYING. The Contractor certifies to the best of his knowledge and
belief, that:

            (a) No federal appropriated funds have been paid or will be paid by
or on behalf of the Contractor, to any Person for influencing or attempting to
influence an officer or employee of any agency, a Member of Congress, an officer
or employee of Congress, or an employee of a Member of Congress in connection
with the awarding of any federal contract, the making of any federal loan or
grant, the entering into of any cooperative agreement, or the extension,
continuation, renewal, amendment, or modification of any federal contract,
grant, loan, or cooperative agreement.

            (b) If any funds other than Federally appropriated funds have been
paid or will be paid to any Person for influencing or attempting to influence an
officer or employee of any agency, a Member of Congress, an officer or employee
of Congress, or an employee of a Member of Congress in connection with this
Federal contract, grant, loan, or cooperative agreement, the Contractor shall
complete and submit a Federal Standard Form LLL, "Disclosure Form to Report
Lobbying," in accordance with its instructions. Such Disclosure Form may be
obtained by request from the Illinois Department of Public Aid, Bureau of Fiscal
Operations.

            (c) The Contractor shall require that the language of this
certification be included in all subcontracts and shall ensure that such
subcontracts disclose accordingly.

            This certification is a material representation of fact upon which
reliance was placed when this Contract was entered into. Submission of this
certification is a prerequisite for making or entering into the transaction
imposed by 31 U.S.C. Section 1352. Any person who fails to file the required
certification shall be subject to a civil penalty of not less than ten thousand
dollars ($10,000.00) and not more than one hundred thousand dollars
($100,000.00) for each such failure.

      9.24 EARLY RETIREMENT. If the Contractor is an individual, the Contractor
certifies that he has informed the director of the Department in writing if he
was formerly employed by the Department and received an early retirement
incentive under Section 14-108.3 or Section 16-133.3 of the Illinois Pension
Code (40 ILCS 5/18 et seq.). Contractor acknowledges and agrees that if such
early retirement incentive was received, this Contract is not valid unless the
official executing the Contract has made the appropriate filing with the Auditor
General prior to execution, pursuant to 30 ILCS 105/15a.

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      9.25 SEXUAL HARASSMENT. The Contractor shall have written sexual
harassment policies that shall comply with the requirements of 75 ILCS 5/2-105.

      9.26 INDEPENDENT CONTRACTOR. The Contractor is an independent contractor
for all purposes under this Contract and is not a Provider as defined by the
Public Aid Code and the Administrative Rules. Employees of the Contractor are
not employees of the State of Illinois, and are, therefore, not entitled to any
benefits provided employees of the State under the Personnel Code and
regulations or other laws of the State of Illinois nor are they eligible for
indemnity under the State Employee Indemnity Act (5 ILCS 350/1 et seq.) The
Contractor shall be responsible for accounting for the reporting of State and
Federal Income Tax and Social Security Taxes, if applicable.

      9.27 SOLICITATION OF EMPLOYEES. The Contractor and the Department agree
that they shall not, during the term of this Contract and for a period of one
(1) year after its termination, solicit for employment or employ, whether as
employee or independent contractor, any person who is or has been employed by
the other during the term of this Contract, in a managerial or policy-making
role relating to the duties and obligations under this Contract, without written
notice to the other. However, should an employee of the Contractor, without the
prior knowledge of the management of the Department, take and pass all required
employment examinations and meet all relevant employment qualifications, the
Department may employ that individual and no breach of this Contract shall be
deemed to have occurred. The Contractor shall immediately notify the
Department's Ethics Officer in writing if the Contractor solicits or intends to
solicit for employment any of the Department's employees during the term of this
Contract. The Department will be responsible for keeping the Contractor informed
as to the name and address of the Ethics Officer.

      9.28 NONSOLICITATION. The Contractor warrants that it has not employed or
retained any company or person, other than a bona fide employee working solely
for the Contractor, to solicit or secure this Contract, and that he has not
paid or agreed to pay any company or person, other than a bona fide employee
working solely for the Contractor, any fee, commission, percentage, brokerage
fee, gifts or any other consideration contingent upon or resulting from the
award or making of this Contract. For breach or violation of this warranty, the
Department shall have the right to annul this Contract without liability, or in
its discretion, to deduct from compensation otherwise due the Contractor the
commission, percentage, brokerage fee, gift or contingent fee.

      9.29 OWNERSHIP OF WORK PRODUCT. Any documents prepared by the Contractor
solely for the Department upon the Department's request or as required under
this Contract, shall be the property of the Department, except that the
Contractor is hereby granted permission to use, without payment, all such
materials as it may desire. Standard documents and reports, claims processing
data and Enrollee files and information prepared or maintained by the Contractor
in order to perform under this Contract are and shall remain the property of the
Contractor, subject to applicable confidentiality statutes; however, the
Department shall be entitled to copies of all such documents, reports or claims
processing information which relate to Enrollees or services performed
hereunder. In the event of any termination of the Contract, the Contractor shall
cooperate with the Department in supplying any required data in order to ensure
a smooth termination and provide for continuity of care of all Enrollees
enrolled with the Contractor.

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Notwithstanding anything to the contrary contained in this Contract, all
computer programs, electronic data bases, electronic data processing
documentation and source materials collected, developed, purchased or used by
the Contractor in order to perform its duties under this Contract, shall be and
remain the sole property of the Contractor.

      9.30 BRIBERY CERTIFICATION. By signing this Contract, the Contractor
certifies that neither it nor any of its officers, directors, partners, or
subcontractors have been convicted of bribery or attempting to bribe an officer
or employee of the State of Illinois, nor has the Contractor, its officers,
directors, or partners made an admission of guilt of such conduct which is a
matter of record, nor has an official, agent, or employee of the Contractor
committed bribery or attempted bribery on behalf of the Contractor, its
officers, directors, partners or subcontractors and pursuant to the direction or
authorization of any responsible official of the Contractor. The Contractor
further certifies that it will not subcontract with any subcontractors who have
been convicted of bribery or attempted bribery.

      9.31 NONPARTICIPATION IN INTERNATIONAL BOYCOTT. The Contractor certifies
that neither it nor any substantially owned Affiliated company is participating
or shall participate in an international boycott in violation of the provisions
of the U.S. Export Administration Act of 1979 or the regulations of the U.S.
Department of Commerce promulgated under that Act.

      9.32 COMPUTATIONAL ERROR. The Department reserves the right to correct any
mathematical or computational error in payment subtotals or total contractual
obligation. The Department will notify the Contractor of any such corrections.

      9.33 SURVIVAL OF OBLIGATIONS. The Contractor's and the Department's
obligations under this Contract that by their nature are intended to continue
beyond the termination or expiration of this Contract will survive the
termination or expiration of this Contract.

      9.34 CLEAN AIR ACT AND CLEAN WATER ACT CERTIFICATION. The Contractor
certifies that it is in compliance with all applicable standards, orders or
regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.) and
the Federal Water Pollution Control Act, as amended (33 U.S.C. 1251 et seq.).
The Department shall report violations to the United States Department of Health
and Human Services and the appropriate Regional Office of the United States
Environmental Protection Agency.

      9.35 NON-WAIVER. Failure of either party to insist on performance of any
term or condition of this Contract or to exercise any right or privilege
hereunder shall not be construed as a continuing or future waiver of such term,
condition, right, or privilege.

      9.36 NOTICE OF CHANGE IN CIRCUMSTANCES. In the event the Contractor, its
parent or related corporate entity becomes a party to any litigation,
investigation, or transaction that may reasonably be considered to have a
material impact on the Contractor's ability to perform under this Contract, the
Contractor will immediately notify the Department in writing.

      9.37 PUBLIC RELEASE OF INFORMATION. News releases directly pertaining to
this Contract or the services or project to which it relates shall not be made
without prior approval by, and in coordination with, the Department, subject
however, to any disclosure obligations of the Contractor under applicable law,
rule or regulation.

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      The parties will cooperate in connection with media inquiries and in
regard to media campaigns or media initiatives involving this project.

      The Contractor shall not disseminate any publication, presentation,
technical paper or other information related to the Contractor's duties and
obligations under this Contract unless such dissemination has been approved in
writing by the Department.

      9.38 PAYMENT IN ABSENCE OF FEDERAL FINANCIAL PARTICIPATION. In addition to
any assessment of sanctions, pursuit of actual damages, or termination or
nonextension of this Contract, if any failure of the Contractor to meet the
requirements, including time frames, of this Contract results in the deferring
or disallowance of federal funds from the State, the Department will withhold
and retain an equivalent amount from payment(s) to the Contractor until such
federal funds are released to the State (at which time the Department will
release to the Contractor such funds as the Department was retaining as a result
thereof).

      9.39 EMPLOYMENT REPORTING. The Contractor certifies that it shall comply
with the requirements of 820 ILCS 405/1801.1, concerning newly hired employees.

      9.40 CERTIFICATION OF PARTICIPATION.

            (a) The Contractor certifies that neither it, nor any employees,
partners, officers or shareholders owning at least five percent (5%) of said
Contractor is currently barred, suspended or terminated from participation in
the Medicaid or Medicare programs, nor are any of the above persons currently
under sanction for, or serving a sentence for conviction of any Medicaid or
Medicare program offenses.

            (b) If Contractor, any employee, partner, officer or shareholder
owning at least five percent (5%) was ever (but is not currently) barred,
suspended or terminated from participation in the Medicaid or Medicare programs,
or was ever sanctioned for or convicted of any Medicaid or Medicare program
offenses, the Contractor must immediately report to the Department in writing,
including for each offense, the date the offense occurred, the action causing
the offense, the penalty or sentence assessed and the date the penalty was paid
or the sentence completed.

      9.41 INDEMNIFICATION. To the extent allowed by law, the Contractor and the
Department agree to indemnify, defend and hold harmless the other party, its
officers, agents, designees, and employees from any and all claims and losses
accruing or resulting in connection with the performance of this Contract which
are due to the negligent or willful acts or omission of the other party. In the
event either party becomes involved as a party to litigation in connection with
services or products provided under this Contract, that party agrees to
immediately give the other party written notice. The Party so notified, at its
sole election and cost, may enter into such litigation to protect its interests.

      This indemnification is conditioned upon (1) the right of the Department
or the Contractor when such party is the indemnifying party pursuant to this
Article IX, Section 9.40 ("indemnifying party") to defend against any such
action or claim and to settle, compromise or defend same in the sole discretion
of the indemnifying party; (2) receipt of written notice by the indemnifying
party as soon as practicable after the party seeking indemnification's first
notice of

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an action or claim for which indemnification is sought hereunder; and (3) the
full cooperation of the party seeking indemnification in defense or handling of
any such action or claim.

      9.42 GIFTS.

            (a) The Contractor and the Contractor's principals, employees, and
subcontractors are prohibited from giving gifts to employees of the Department,
and are prohibited from giving gifts to, or accepting gifts from, any Person who
has a contemporaneous contract with the Department involving duties or
obligations related to the Contract.

            (b) The Contractor will provide the Department with advance notice
of the Contractor's providing gifts, excluding charitable donations, given as
incentives to community-based organizations in Illinois and Participants or
KidCare Participants in Illinois to assist the Contractor in carrying out its
responsibilities under this Contract.

      9.43 BUSINESS ENTERPRISE FOR MINORITIES, FEMALES AND PERSONS WITH
DISABILITIES. The Contractor certifies that it is in compliance with 30 ILCS
575/0.01 et seq., and has completed Attachment IV.

      9.44 NON-DELINQUENCY CERTIFICATION. Contractor certifies that Contractor
is not delinquent in the payment of any debt to the State and, therefore, is not
barred from being awarded a contract under 30 ILCS 500/50-11. Contractor
acknowledges that the Department may declare the Contract void if this
certification is false, or if Contractor is determined to be delinquent in the
payment of any debt to the State during the term of the Contract.

      IN WITNESS WHEREOF, the Department and the Contractor hereby execute and
deliver this Contract effective as of the Effective Date.

                                                        STATE OF ILLINOIS
                                                        DEPARTMENT OF PUBLIC AID

                                                        By: /s/ Barry S. Maram
                                                            --------------------
                                                               Barry S. Maram
                                                                  Director
                                                        Date: 9/11/03

                                                        HARMONY HEALTH PLAN OF
                                                        ILLINOIS, INC.

                                                        BY: /s/ John P. Blank
                                                            --------------------
                                                        Title: President & CEO
                                                        Date: 4/2/03
                                                        FEIN: 36 4050495

                                       79
<PAGE>

                                  ATTACHMENT I

                                   RATE SHEETS

(a)   Contractor Name:    Harmony Health Plan of Illinois, Inc.
      Address:            125 South Wacker Drive, Suite 2600
                          Chicago, IL 60606

(b)    Contracting Area(s) Covered by the Contractor and Enrollment Limit:

<TABLE>
<CAPTION>
        CONTRACTING AREA                             ENROLLMENT LIMIT
        ----------------                             ----------------
<S>                                                  <C>
St. Clair County, Madison County                         25,000
           Region IV                                    100,000
</TABLE>

(c)   Total Enrollment Limit for all Contracting Areas: 125,000

(d)   Threshold Review Levels: St. Clair County, Madison County 20,000

                               Region IV 80,000

(e)   Standard Capitation Rates for Enrollees, effective AUGUST 1, 2003 through
      JULY 31, 2005:

<TABLE>
<CAPTION>
AGE/GENDER MO = MONTH     REGION I (N.W.     REGION II (CENTRAL    REGION III (SOUTHERN      REGION IV (COOK     REGION V (COLLAR
     YR = YEAR            ILLINOIS) PMPM      ILLINOIS) PMPM          ILLINOIS) PMPM          COUNTY) PMPM        COUNTIES) PMPM
     ---------            --------------      ---------------         --------------          ------------        --------------
<S>                       <C>                <C>                   <C>                       <C>                 <C>
0-3Mo                       $1,152.25           $1,178.77               $1,242.71               $1,244.64             $854.58
4Mo-1Yr                        127.81              117.63                  165.94                  125.04              108.35
2Yr-5Yr                         63.77               67.81                   71.74                   58.67               56.28
6Yr-13Yr                        72.08               79.78                   75.18                   58.18               57.47
14Yr-20Yr, Male                115.93               35.96                  131.18                   90.67              142.60
14Yr-20Y, Female               148.51               57.40                  155.15                  112.48              119.82
21Yr-44Yr, Male                161.79              216.53                  201.90                  164.23              159.43
21Yr-44Yr, Female              217.61              228.14                  237.13                  185.81              184.20
45Yr+ Male and Female          437.86              486.40                  476.29                  359.61              409.17
</TABLE>

(f)   Hospital Delivery Case Rate, effective August 1, 2003 through July 31,
      2005:

<TABLE>
<S>                                   <C>                 <C>                 <C>                 <C>                 <C>
Hospital Delivery Case Rate           $3,196.12           $3,104.66           $3,281.22           $3,748.33           $3,276.03
      (per delivery)
</TABLE>

                                       I-1
<PAGE>

                                  ATTACHMENT II

                          DRUG FREE WORKPLACE AGREEMENT

      The Contractor certifies that he/she/it will not engage in the unlawful
manufacture, distribution, dispensation, possession, or use of a controlled
substance in the performance of the Contract.

CHECK THE BOX THAT APPLIES:

      [ ]   This business or corporation does not have twenty-five (25) or more
            employees.

      [ ]   This business or corporation has twenty-five (25) or more employees,
            and the Contractor certifies and agrees that it will provide a drug
            free workplace by:

A)    Publishing a statement:

      1)    Notifying employees that the unlawful manufacture, distribution,
            dispensation, possession or use of a controlled substance, including
            cannabis, is prohibited in the grantee's or Contractor's workplace.

      2)    Specifying the actions that will be taken against employees for
            violations of such prohibition.

      3)    Notifying the employees that, as a condition of employment on such
            contract, the employee will:

            a)    abide by the terms of the statement; and

            b)    notify the employer of any criminal drug statute conviction
                  for a violation occurring in the workplace no later than five
                  (5) days after such conviction.

B)    Establishing a drug free awareness program to inform employees about:

      1)    the dangers of drug abuse in the workplace;

      2)    the Contractor's policy of maintaining a drug free workplace;

      3)    any available drug counseling, rehabilitation, and employee
            assistance programs; and

      4)    the penalties that may be imposed upon an employee for drug
            violations.

C)    Providing a copy of the statement required by subparagraph (a) to each
      employee engaged in the performance of the contract or grant and to post
      the statement in a prominent place in the workplace.

                                      II-1
<PAGE>

D)    Notifying the contracting or granting agency within ten (10) days after
      receiving notice under part (B) or paragraph (3) of subsection (a) above
      from an employee or otherwise receiving actual notice of such conviction.

E)    Imposing a sanction on, or requiring the satisfactory participation in a
      drug abuse assistance or rehabilitation program by, any employee who is so
      convicted, as required by section 5 of the Drug Free Workplace Act, 1992
      Illinois Compiled Statute, 30 ILCS 580/5.

F)    Assisting employees in selecting a course of action in the event drug
      counseling, treatment, and rehabilitation is required and indicating that
      a trained referral team is in place.

G)    Making a good faith effort to continue to maintain a drug free workplace
      through implementation of the Drug Free Workplace Act, 1992 Illinois
      Compiled Statute, 30 ILCS 580/1 et seq.

      THE UNDERSIGNED AFFIRMS, UNDER PENALTIES OF PERJURY, THAT HE OR SHE IS
AUTHORIZED TO EXECUTE THIS CERTIFICATION ON BEHALF OF THE DESIGNATED
ORGANIZATION.

                                          HARMONY HEALTH PLAN OF ILLINOIS
                                          --------------------------------------
                                          Printed Name of Organization

                                          /s/ John P. Blank
                                          --------------------------------------
                                          Signature of Authorized Representative

                                          ______________________________________
                                          Requisition/Contract/Grant ID Number

                                          JOHN P. BLANK CEO
                                          --------------------------------------
                                          Printed Name and Title

                                          7/29/03
                                          --------------------------------------
                                          Date

                                      II-2
<PAGE>

                                 ATTACHMENT III

                          HIPAA COMPLIANCE OBLIGATIONS

      A.    Definitions.

            (1) "Designated Record Set" shall have the same meaning as the term
      "designated record set" in 45 C.F.R. 164.501.

            (2) "HIPAA" means the federal Health Insurance Portability and
      Accountability Act, Public Law 104-191.

            (3) "Individual" shall have the same meaning as the term
      "individual" in 45 C.F.R. 164.501 and shall include a person who qualifies
      as a personal representative in accordance with 45 C.F.R. 164.502(g).

            (4) "PHI" means Protected Health Information, which shall have the
      same meaning as the term "protected health information" in 45 C.F.R.
      164.501, limited to the information created or received by the
      Contractor/Provider from or on behalf of the Department.

            (5) "Privacy Rule" shall mean the Standards for Privacy of
      Individually Identifiable Health Information at 45 C.F.R. Part 160 and 45
      C.F.R. Part 164 subparts A and E.

            (6) "Required by law" shall Have the same meaning as the term
      "required by law" in 45 C.F.R. 164.501.

      B.    Contractor's Permitted Uses and Disclosures.

            (1) Except as otherwise limited by this Contract, the Contractor may
      use or disclose PHI to perform functions, activities, or services for, or
      on behalf of, the Department as specified in this Contract provided that
      such use or disclosure would not violate the Privacy Rule if done by the
      Department.

            (2) Except as otherwise limited by this Contract, the Contractor may
      use PHI for the proper management and administration of the Contractor or
      to carry out the legal responsibilities of the Contractor.

            (3) Except as otherwise limited by this Contract, the Contractor may
      disclose PHI for the proper management and administration of Contractor,
      provided that the disclosures are required by law, or the Contractor
      obtains reasonable assurances from the person to whom the PHI is disclosed
      that the PHI will remain confidential and used or further disclosed only
      as required by law or for the purpose for which it was disclosed to the
      person. The Contractor shall require the person to whom the PHI was
      disclosed to notify the Contractor of any instances of which the person is
      aware in which the confidentiality of the PHI has been breached.

                                      III-1
<PAGE>

            (4) Except as otherwise limited by this Contract, the Contractor may
      use PHI to provide data aggregation services to the Department as
      permitted by 45 C.F.R. 164.504(e)(2)(i)(B).

            (5) The Contractor may use PHI to report violations of law to
      appropriate federal and state authorities, consistent with 45 C.F.R.
      164.502(j)(1).

      C.    Limitations on the Contractor's Uses and Disclosures. The Contractor
shall:

            (6) Not use or further disclose PHI other than as permitted or
      required by the Contract or as required by law;

            (7) Use appropriate safeguards to prevent use or disclosure of PHI
      other than as provided for by this Contract;

            (8) Mitigate, to the extent practicable, any harmful effect that is
      known to the Contractor of a use or disclosure of PHI by the Contractor in
      violation of the requirements of this Contract;

            (9) Report to the Department any use or disclosure of PHI not
      provided for by this Contract of which the Contractor becomes aware;

            (10) Ensure that any agents, including a subcontractor, to whom the
      Contractor provides PHI received from the Department or created or
      received by the Contractor on behalf of the Department, agree to the same
      restrictions and conditions that apply through this Contract to the
      Contractor with respect to such information;

            (11) Provide access to PHI in a Designated Record Set to the
      Department or to another individual whom the Department names, in order to
      meet the requirements of 45 C.F.R. 164.524, at the Department's request,
      and in the time and manner specified by the Department.

            (12) Make available PHI in a Designated Record Set for amendment and
      to incorporate any amendments to PHI in a Designated Record Set that the
      Department directs or that the Contractor agrees to pursuant to 45 C.F.R.
      164.526 at the request of the Department or an individual, and in a time
      and manner specified by the Department;

            (13) Make the Contractor's internal practices, books, and records,
      including policies and procedures and PHI, relating to the use and
      disclosure of PHI received from the Department or created or received by
      the Contractor on behalf of the Department available to the Department and
      to the Secretary of Health and Human Services for purposes of determining
      the Department's compliance with the Privacy Rule;

            (14) Document disclosures of PHI and information related to
      disclosures of PHI as would be required for the Department to respond to a
      request by an individual for an accounting of disclosures of PHI in
      accordance with 45 C.F.R. 165.528;

                                      III-2
<PAGE>
            (15) Provide to the Department or to an individual, in a time and
      manner specified by the Department, information collected in accordance
      with the terms of this Contract to permit the Department to respond to a
      request by an individual for an accounting of disclosures of PHI in
      accordance with 45 C.F.R. 165.528;

            (16) Return or destroy all PHI received from the Department or
      created or received by the Contractor on behalf of the Department that the
      Contractor still maintains in any form, and to retain no copies of such
      PHI, upon termination of this Contract for any reason. If such return or
      destruction is not feasible, the Contractor shall provide the Department
      with notice of such purposes that make return or destruction infeasible,
      and upon the parties' written agreement that return or destruction is
      infeasible, the Contractor shall extend the protections of the Contracts
      to the PHI and limit further uses and disclosures to those purposes that
      make the return or destruction of the PHI infeasible. This provision shall
      apply equally to PHI that is in the possession of the Contractor and to
      PHI that is in the possession of subcontractors or agents of the
      Contractors.

      D.    Department Obligations. The Department shall:

            (17) Provide the Contractor with the Department's Notice of Privacy
      Practices and notify the Contractor of any changes to said Notice;

            (18) Notify the Contractor of any changes in or revocation of
      permission by an individual to use or disclose PHI, to the extent that
      such changes may affect the Contractor's permitted or required uses and
      disclosures of PHI;

            (19) Notify the Contractor of any restriction to the use or
      disclosure of PHI that the Department had agreed to in accordance with 45
      C.F.R. 165.522, to the extent that such restriction may affect the
      Contractor's use or disclosure of PHI;

            (20) Not request that the Contractor use or disclose PHI in any
      manner that would not be permissible under the Privacy Rule if done by the
      Department.

     E.    Interpretation. Any ambiguity in this Contract shall be resolved in
favor of a meaning that permits the Department to comply with the Privacy Rule.

                                      III-3
<PAGE>

                                  ATTACHMENT IV

                  BUSINESS ENTERPRISE PROGRAM CONTRACTING GOAL

      The Business Enterprise Program Act for Minorities, Females and Persons
with Disabilities (30 ILCS 575/1) establishes a goal that not less than 12% of
the total dollar amount of State contracts be awarded to businesses owned and
controlled by persons who are minority, female or who have disabilities (the
percentages are 5%/5%/2% respectively) and have been certified as such ("BEPs").
This goal can be met by contracts let directly to such businesses by the State,
or indirectly by the State's contractor ordering goods or services from BEPs
when suppliers or subcontractors are needed to fulfill the contract. Call the
Business Enterprise Program at 312/814-4190 (Voice & TDD), 800/356-9206 (Toll
Free), or 800/526-0844 (Illinois Relay Center for Hearing Impaired) for a list
of certified businesses appropriate for the particular contract.

1.    If you are a BEP, please identify which agency certified the business and
      in what capacity by checking the applicable blanks:

<TABLE>
<CAPTION>
    CERTIFYING AGENCY:                                CAPACITY:
    ------------------                                ---------
<S>                                                   <C>
[ ] Department of Central Management Services         [ ] Minority
[ ] Women's Business Development Center               [ ] Female
[ ] Chicago Minority Business Development Council     [ ] Person with Disability
[ ] Illinois Department of Transportation             [ ] Disadvantaged
[ ] Other (identify)
</TABLE>

2.    If the "Capacity" blank is not checked, do you have a written policy or
      goal regarding contracting with BEPs?

      Yes [ ]       No [X]

      -     If "Yes", please attach a copy.

      -     If "No", will you make a commitment to contact BEPs and consider
            their proposals?

                   Yes [X]       No [ ]

      Will Consider Proposal

3.    Do you plan on ordering supplies or services in furtherance of this
      project from BEPs?

      Yes [ ]        No [X]

      -     If "Yes", please identify what you plan to order, the estimated
            value as a percentage of your total proposal, and the names of the
            BEPs you plan to use.

      This information is submitted on behalf of HARMONY HEALTH PLAN OF ILLINOIS
                                                 -------------------------------
                                                         (Name of Vendor)

                                                   Name (printed): JOHN P. BLANK
                                                   Title: CEO
                                                   Signature: /s/ John P. Blank
                                                              ------------------
                                                   Date:
                                                         -----------------------

                                      IV-1
<PAGE>

                                  ATTACHMENT V

                      TAXPAYER IDENTIFICATION CERTIFICATION

A.    Contractor certifies that:

      1.    The number shown on this form is Contractor's correct taxpayer
            identification number (or Contractor is waiting for a number to be
            issued to Contractor); and

      2.    Contractor is not subject to backup withholding because:

            (a)   Contractor is exempt from backup withholding, or

            (b)   Contractor has not been notified by the Internal Revenue
                  Service (IRS) that Contractor is subject to backup withholding
                  as a result of a failure to report all interest or dividends,
                  or

            (c)   The IRS has notified Contractor that Contractor is no longer
                  subject to backup withholding, and

      3.    Contractor is a U.S. person (including a U.S. resident alien).

B.    Contractor's Name: HARMONY HEALTH PLAN OF ILLINOIS INC.

C.    Contractor's Taxpayer Identification Number:

                  Social Security Number (SSN):________________________________
                                   or
                  Employer Identification Number (EIN): 36.4050495

                  (If Contractor is an individual, enter Contractor's name
                  and SSN as it appears on Contractor's Social Security
                  Card. If Contractor is completing this certification for a
                  sole proprietorship, enter the owner's name followed by
                  the name of the business and the owner's SSN or EIN. For
                  all other entities, enter the name of the entity as used
                  to apply for the entity's EIN and the EIN.)

D.    Contractor's Legal Status (check one):

     [ ] Individual                                   [ ] Governmental
     [ ] Sole Proprietor                              [ ] Nonresident alien
     [ ] Partnership/Legal Corporation                [ ] Estate or trust
     [ ] Tax-exempt                                   [ ] Pharmacy (Non-Corp.)
     [ ] Corporation providing or billing             [ ] Pharmacy/Funeral
     [ ] medical or health care services              [ ] Home/Cemetery (Corp)

     [X] Corporation NOT providing or                 [ ] Other:
         billing medical or health care services

THE UNDERSIGNED AFFIRMS, UNDER PENALTIES OF PERJURY, THAT THE OR SHE IS
AUTHORIZED TO EXECUTE THIS CERTIFICATION ON BEHALF OF HARMONY HEALTH PLAN.

/s/ John P. Blank
----------------------
Signature of Authorized Representative

JOHN P. BLANK, M.D.                                       9/2/03
----------------------                                    ------
Printed Name and Title                                    Date
President & CEO

<PAGE>

                                    EXHIBIT A

                             QUALITY ASSURANCE (QA)

      1. All services provided by or arranged by the Contractor to be provided
shall be in accordance with prevailing professional community standards. The
Contractor shall establish a program that systematically and routinely collects
data to review that includes quality oversight and monitoring performance and
patient results. The program shall include provision for the interpretation of
such data to the Contractor's practitioners. The program shall be designed to
perform quantitative and qualitative analytical activities to assess
opportunities to improve efficiency, effectiveness, appropriate health care
utilization and health status and shall be updated no less frequently than
annually. The Contractor shall ensure that data received from Providers and
included in reports is accurate and complete by (1) verifying the accuracy and
timeliness of reported data; (2) screening the data for completeness, logic, and
consistency; and (3) collecting service information in standardized formats to
the extent feasible and appropriate. The Contractor shall have in effect a
program consistent with the utilization control requirements of 42 C.F.R. Part
456. This program will include, when required by the regulations, written plans
of care and certifications of need of care.

      2. The Contractor shall establish procedures such that the Contractor
shall be able to demonstrate that it meets the requirements of the HMO Federal
qualification regulations (42 C.F.R. 417.106) and/or the Medicare HMO/CMP
regulations (42 C.F.R. 417.418(c)), as well as the regulations promulgated
pursuant to the Balanced Budget Act of 1997 (42 C.F.R. 438.200 et seq.). These
regulations require that the Contractor have an ongoing fully implemented
Quality Assurance program for health services that:

            a. incorporates practice guidelines that meet the following
criteria, and are distributed to Affiliated Providers, as appropriate, and to
Enrollees and Potential Enrollees, upon request:

               i.    are based on valid and reliable clinical evidence or a
                     consensus of Providers in the particular field;

               ii.   consider the needs of Enrollees;

               iii.  are adopted in consultation with Affiliated Providers; and

               iv.   are reviewed and updated periodically as appropriate.

            b. Monitors the health care services the Contractor provides,
including assessing the appropriateness and quality of care;

            c. stresses health outcomes;

            d. provides review by Physicians and other health professionals of
the process followed in the provision of health services;

            e. includes fraud control provisions;

                                       A-1
<PAGE>

            f. establishes and monitors access standards;

            g. uses systematic data collection of performance and patient
results, provides interpretation of these data to its practitioners (including,
without limitation, patient-specific and aggregate data provided by the
Department, such as childhood immunization data, pregnancy status and/or child
profile information), and institutes needed changes; and

            h. includes written procedures for taking appropriate remedial
action whenever, as determined under the quality assurance program,
inappropriate or substandard services have been furnished or services that
should have been furnished have not been provided.

      3. The Contractor shall provide to the Department a written description of
its Quality Assurance Plan (QAP) for the provision of clinical services (e.g.,
medical, medically related services and behavioral health services). This
written description must meet federal and State requirements:

            a. Goals and objectives -- The written description shall contain a
detailed set of QA objectives that are developed annually and include a workplan
and timetable for implementation and accomplishment.

            b. Scope -- The scope of the QAP shall be comprehensive, addressing
both the quality of clinical care and the quality of non-clinical aspects of
service, such as and including: availability, accessibility, coordination, and
continuity of care.

            c. Methodology -- The QAP methodology shall provide for review of
the entire range of care provided, by assuring that all demographic groups, care
settings, (e.g., inpatient, ambulatory, and home care), and types of services
(e.g., preventive, primary, specialty care, behavioral health and ancillary
services) are included in the scope of the review. Documentation of the
monitoring and evaluation plan shall be provided to Department.

            d. Activities -- The written description shall specify quality of
care studies and other activities to be undertaken over a prescribed period of
time, and methodologies and organizational arrangements to be used to accomplish
them. Individuals responsible for the studies and other activities shall be
clearly identified in the written workplan and shall be appropriately skilled or
trained to undertake such tasks. The written description shall provide for
continuous performance of the activities, including tracking of issues over
time.

            e. Provider review -- The written description shall document how
Physicians licensed to practice medicine in all its branches and other health
professionals will be involved in reviewing quality of care and the provision of
health services and how feedback to health professionals and the Contractor
staff regarding performance and patient results will be provided.

            f. Focus on health outcomes -- The QAP methodology shall address
health outcomes; a complete description of the methodology shall be fully
documented and provided to Department.

                                       A-2
<PAGE>

            g. Systematic process of quality assessment and improvement -- The
QAP shall objectively and systematically monitor and evaluate the quality,
appropriateness of, and timely access to, care and service to members, and
pursue opportunities for improvement on an ongoing basis. Documentation of the
monitoring activities and evaluation plan shall be provided to the Department.

      4. The Contractor shall provide the Department with the QAP written
guidelines which delineate the QA process, specifying:

            a. Clinical areas to be monitored:

                  i. The monitoring and evaluation of clinical care shall
      reflect the population served by the Contractor in terms of age groups,
      disease categories, and special risk status, and shall include quality
      improvement initiatives, as determined appropriate by the Contractor or as
      required by the Department.

                  ii. The QAP shall, at a minimum, monitor and evaluate care and
      services in certain priority clinical areas of interest specified by the
      Department.

                  iii. At its discretion and/or as required by the Department,
      the Contractor's QAP must monitor and evaluate other important aspects of
      care and service.

                  iv. At a minimum, the following areas shall be monitored:

                  (a)   for pregnant women:

                        (1)   number of prenatal visits;

                        (2)   provision of ACOG recommended prenatal screening
                              tests;

                        (3)   neonatal deaths;

                        (4)   birth outcomes;

                        (5)   length of hospitalization for the mother; and

                        (6)   length of newborn hospital stay for the infant.

                  (b)   for children:

                        (1)   number of well-child visits appropriate for age;

                        (2)   immunization status;

                        (3)   lead screening status;

                        (4)   number of hospitalizations;

                        (5)   length of hospitalizations; and

                        (6)   medical management for a limited number of
                              medically complicated conditions as agreed to by
                              the Contractor and Department.

                  (c)   for adults:

                        (1)   preventive health care (e.g., initial health
                              history and physical exam; mammography;
                              papanicolaou smear).

                                       A-3
<PAGE>

                  (d)   for medically complicated conditions/chronic care (such
                        conditions specifically including, without limitation,
                        diabetes and asthma):

                        (1)   appropriate treatment, follow-up care, and
                              coordination of care for Enrollees of all ages;
                              and

                        (2)   identification of Enrollees with special health
                              care needs and processes in place to assure
                              adequate, ongoing assessments, treatment plans
                              developed with the Enrollee's participation in
                              consultation with any specialists caring for the
                              Enrollee, the appropriateness and quality of care,
                              and if approval is required, such approval occurs
                              in a timely manner.

                  (e)   for behavioral health:

                        (1)   all areas specified in Paragraph 13 of this
                              Exhibit A.

            b. Use of Quality Indicators -- Quality indicators are measurable
variables relating to a specified clinical area, which are reviewed over a
period of time to monitor the process of outcomes of care delivered in that
clinical area:

                  i. The Contractor shall identify and use quality indicators
      that are objective, measurable, and based on current knowledge and
      clinical experience.

                  ii. The Contractor shall document that methods and frequency
      of data collected are appropriate and sufficient to detect need for
      program change.

                  iii. For the priority clinical areas specified by Department,
      the Contractor shall monitor and evaluate quality of care through studies
      which address, but are not limited to, the quality indicators also
      specified by Department.

            c. Analysis of clinical care and related services, including
behavioral health  services:

                  i. Appropriate clinicians shall monitor and evaluate quality
      through review of individual cases where there are questions about care,
      and through studies analyzing patterns of clinical care and related
      service.

                  ii. Multi disciplinary teams shall be used, where indicated,
      to analyze and address systems issues.

                  iii. Clinical and related service areas requiring improvement
      shall be identified and documented with a corrective action plan developed
      and monitored.

            d. Conduct Quality Improvement Projects - Quality Improvement
Projects shall be designed to achieve, through ongoing measurements and
intervention, significant improvement of the quality of care rendered, sustained
over time, and resulting in a favorable effect on health outcome and Enrollee
satisfaction. Performance measurements and

                                       A-4
<PAGE>

interventions shall be submitted to the Department annually as part of the
QA/UR/PR Annual Report and at other times throughout the year upon request by
the Department. If the Contractor implements a Quality Improvement Project that
spans more than one (1) year, the Contractor shall report annually the status of
such project and the results thus far.

            e. Implementation of Remedial/Corrective Actions -- The QAP shall
include written procedures for taking appropriate remedial action whenever, as
determined under the QAP, inappropriate or substandard services are furnished,
including in the area of behavioral health, or services that should have been
furnished were not. Quality assurance actions that result in remedial or
corrective actions shall be forwarded by the Contractor to the Department on a
timely basis.

            Written remedial/corrective action procedures shall include:

                  i. specification of the types of problems requiring
      remedial/corrective action;

                  ii. specification of the person(s) or body responsible for
      making the final determinations regarding quality problems;

                  iii. specific actions to be taken;

                  iv. a provision for feedback to appropriate health
      professionals, providers and staff;

                  v. the schedule and accountability for implementing
      corrective actions;

                  vi. the approach to modifying the corrective action if
      improvements do not occur; and

                  vii. procedures for notifying a Primary Care Provider group
      that a particular Physician licensed to practice medicine in all its
      branches is no longer eligible to provide services to Enrollees.

            f. Assessment of Effectiveness of Corrective Actions -- The
Contractor shall monitor and evaluate corrective actions taken to assure that
appropriate changes have been made. The Contractor shall assure follow-up on
identified issues to ensure that actions for improvement have been effective and
provide documentation of same.

            g. Evaluation of Continuity and Effectiveness of the QAP:

                  i. The Contractor shall conduct a regular (minimum annual)
      examination of the scope and content of the QAP to ensure that it covers
      all types of services, including behavioral health services, in all
      settings, as required.

                  ii. At the end of each year, a written report on the QAP shall
      be prepared by the Contractor and submitted to the Department as a
      component part of the

                                       A-5
<PAGE>

QA/UR/PR Annual Report identified in Exhibit C, which report shall include,
without limitation:

                  (a)   QA/UR/PR Plan

                        (1)   Summary of Quality Assurance, Utilization Review,
                              and Peer Review (QA/UR/PR) activities during the
                              fiscal year;

                        (2)   Summary of changes in QA/UR/PR Plan that will be
                              reflected in the next fiscal year;

                        (3)   Areas of deficiency and recommendations for
                              corrective action;

                        (4)   Evaluation of the overall effectiveness of the
                              QAP; and

                        (5)   Detailed Workplan for the next fiscal year

                  (b)   Provider Network Adequacy - Application of a
                        geographical mapping software that has been approved by
                        the Department, and identifies and evaluates network:

                        (1)   PCPs;

                        (2)   WHCPs;

                        (3)   Specialists;

                        (4)   Pharmacies;

                        (5)   Tertiary care facilities (i.e., perinatal and
                              children's hospitals);

                        (6)   Ancillary services; and

                        (7)   Behavioral health network

                        The report shall include all Providers and each
                        Provider's admitting and, as appropriate, delivery
                        privileges at Affiliated hospitals or, in the
                        alternative, if the Provider does not have such
                        admitting and/or delivery privileges, a detailed
                        description of the written referral agreement with a
                        Provider who is in the Contractor's network and who has
                        such privileges at an Affiliated hospital. The report
                        shall also include the updated Provider Directory and a
                        summary of credentialing/recredentialing and peer review
                        activities.

                  (c)   Outreach and Health Education

                        (1)   Summary and outcomes of outreach activities; and

                        (2)   Description of health education initiatives during
                              fiscal year

                  (d)   Coordination with Other Service Providers and Care
                        Coordination Activities

                                       A-6
<PAGE>

                        (1)   Description of coordination with other service
                              providers; and

                        (2)   Description of care coordination initiatives and
                              outcomes

                  (e)   Studies, Outcomes, and Relevant Statistics

                        (1)   Results of medical record reviews and quality
                              studies;

                        (2)   Contractor's progress toward meeting the
                              Department's preventive care participation goals
                              as set forth in Article V, Section 5.12 (a), (b),
                              and (c) of the Contract;

                        (3)   Aggregated data on utilization of services;

                        (4)   HEDIS or Department-defined reporting;

                        (5)   Trending and comparison of health outcomes;

                        (6)   Outcomes of A-3 iv(a), A-3 iv(b), A-3 iv(c), A-3
                              iv(d), and A-3 iv(e);

                        (7)   Enrollee Satisfaction Survey analysis; and

                        (8)   Description of the way in which
                              Department-generated data supplied to the
                              Contractor was utilized, accurate, and effective
                              in developing ongoing quality improvement
                              strategies.

                  (f)   Summary of Quality Improvement Activities

                        (1)   Quality indicators and methodologies for measuring
                              quality indicators;

                        (2)   Quality improvement activities implemented; and

                        (3)   Results and demonstrated improvements

                  (g)   Monitoring of Delegated Activities

                        (1)   Description of the Contractor's oversight and
                              monitoring activities, including a summary of
                              findings relative to each subcontractor's ability
                              to perform the required functions;

                        (2)   Summary of deficiencies and quality improvement
                              activities developed as a result of the ongoing
                              monitoring and periodic formal reviews, including
                              the workplan for implementation of the QI
                              activities;

                        (3)   Workplan for MCO monitoring of its subcontractors,
                              including schedule for formal reviews

      5. The Contractor shall have a governing body to which the QAP shall be
held accountable ("Governing Body"). The Governing Body of the Contractor shall
be the Board of Directors or, where the Board's participation with quality
improvement issues is not direct, a designated committee of the senior
management of the Contractor. This Board of Directors or

                                       A-7
<PAGE>

Governing Body shall be ultimately responsible for the execution of the QAP.
However, changes to the medical quality assurance program shall be made by the
chair of the QA Committee.

      Responsibilities of the Governing Body include:

            a. Oversight of QAP -- The Contractor shall document that the
Governing Body has approved the overall QAP and an annual QA plan.

            b. Oversight Entity -- The Governing Body shall document that it has
formally designated an accountable entity or entities within the organization to
provide oversight of QA, or has formally decided to provide such oversight as a
committee of the whole.

            c. QAP Progress Reports -- The Governing Body shall routinely
receive written reports from the QAP describing actions taken, progress in
meeting QA objectives, and improvements made.

            d. Annual QAP Review -- The Governing Body shall formally review on
a periodic basis (but no less frequently than annually) a written report on the
QAP which includes: studies undertaken, results, subsequent actions, and
aggregate data on utilization and quantity of services rendered, to assess the
QAP's continuity, effectiveness and current acceptability. Behavioral health
shall be included in the Annual QAP Review.

            e. Program Modification -- Upon receipt of regular written reports
from the QAP delineating actions taken and improvements made, the Governing Body
shall take action when appropriate and direct that the operational QAP be
modified on an ongoing basis to accommodate review findings and issues of
concern within the Contractor. This activity shall be documented in the minutes
of the meetings of the Governing Board in sufficient detail to demonstrate that
it has directed and followed up on necessary actions pertaining to Quality
Assurance.

      6. The QAP shall delineate an identifiable structure responsible for
performing QA functions within the Contractor. This committee or other structure
shall have:

            a. Regular Meetings -- The structure/committee shall meet on a
regular basis with specified frequency to oversee QAP activities. This frequency
shall be sufficient to demonstrate that the structure/committee is following-up
on all findings and required actions, but in no case shall such meetings be held
less frequently than quarterly. A copy of the meeting summaries/minutes shall be
submitted to the Department no later than thirty (30) days after the close of
the quarterly reporting period.

            b. Established Parameters for Operating -- The role, structure and
function of the structure/committee shall be specified.

            c. Documentation -- There shall be records kept documenting the
structure's/committee's activities, findings, recommendations and actions.

                                       A-8
<PAGE>

            d. Accountability -- The QAP committee shall be accountable to the
Governing Body and report to it (or its designee) on a scheduled basis on
activities, findings, recommendations and actions.

            e. Membership -- There shall be active participation in the QA
committee from Plan Providers, who are representative of the composition of the
Plan's Providers. There shall be a majority of Contractor-Affiliated practicing
Physicians licensed to practice medicine in all its branches.

      7. There shall be a designated senior executive who will be responsible
for program implementation. The Contractor's Medical Director shall have
substantial involvement in QA activities and shall be responsible for the
required reports.

            a. Adequate Resources -- The QAP shall have sufficient material
resources, and staff with the necessary education, experience, or training, to
effectively carry out its specified activities.

            b. Provider Participation in the QAP --

                  i. Participating Physicians licensed to practice medicine in
      all its branches and other Providers shall be kept informed about the
      written QA plan.

                  ii. The Contractor shall include in all its Provider
      subcontracts and employment agreements a requirement securing cooperation
      with the QAP for both Physicians licensed to practice medicine in all its
      branches and non-physician Providers.

                  iii. Contracts shall specify that hospitals and other
      subcontractors will allow access to the medical records of its Enrollees
      to the Contractor.

      8. The Contractor shall remain accountable for all QAP functions, even if
certain functions are delegated to other entities. If the Contractor delegates
any QA activities to subcontractors:

            a. There shall be a written description of the following: the
delegated activities; the delegate's accountability for these activities; and
the frequency of reporting to the Contractor.

            b. The Contractor shall have written procedures for monitoring and
evaluating the implementation of the delegated functions and for verifying the
actual quality of care being provided.

            c. There shall be evidence of continuous and ongoing evaluation of
delegated activities, including approval of quality improvement plans and
regular specified reports, as well as a formal review of such activities
conducted on no less than an annual basis.

            d. If the Contractor or subcontractor identifies deficiencies or
areas requiring improvement, the Contractor and subcontractor shall take
corrective action and implement a quality improvement initiative, as
appropriate.

                                       A-9
<PAGE>

      9. The QAP shall contain provisions to assure that Physicians licensed to
practice medicine in all its branches and other health care professionals, who
are licensed by the State and who are under contract with the Contractor, are
qualified to perform their services and credentialed by the Contractor.
Recredentialing shall occur at least once every three (3) years. The
Contractor's written policies shall include procedures for selection and
retention of Physicians and other Providers.

      10. The Contractor shall put a basic system in place which promotes
continuity of care and case management. The Contractor shall provide
documentation on:

            a. Monitoring the quality of care across all services and all
treatment modalities.

            b. Studies, reports, protocols, standards, worksheets, minutes, or
such other documentation as may be appropriate, concerning its QA activities and
corrective actions and make such documentation available to the Department upon
request.

      11. The findings, conclusions, recommendations, actions taken, and results
of the actions taken as a result of QA activity, shall be documented and
reported to appropriate individuals within the organization and through the
established QA channels. The Contractor shall document coordination of QA
activities and other management activities.

            a. QA information shall be used in recredentialing, recontracting
and/or annual performance evaluations.

            b. QA activities shall be coordinated with other performance
monitoring activities, including utilization management, risk management, and
resolution and monitoring of member complaints and grievances.

            c. There shall be a linkage between QA and the other management
functions of the Plan such as:

                  i. network changes;

                  ii. benefits redesign;

                  iii. medical management systems (e.g., pre-certification);

                  iv. practice feedback to Physicians licensed to practice
      medicine in all its branches; and

                  v. patient education.

            d. In the aggregate, without reference to individual Physicians
licensed to practice medicine in all its branches or Enrollee identifying
information, all Quality Assurance findings, conclusions, recommendations,
actions taken, results or other documentation relative to QA shall be reported
to Department on a quarterly basis or as requested by the Department. The

                                      A-10
<PAGE>

Department shall be notified of any Physician licensed to practice medicine in
all its branches terminated from a subcontract with the Contractor for a quality
of care issue.

      12. The Contractor shall, at the direction of the Department, cooperate
with the external, independent quality review process conducted by the EQRO. The
Contractor shall address the findings of the external review through its Quality
Assurance program by developing and implementing performance improvement goals,
objectives and activities, which shall be documented in the next quarterly
report submitted by the Contractor following the EQRO's findings.

      13. The Contractor shall, through its behavioral health subcontractor or
program and its internal QAP, monitor the quality of behavioral health services
it provides. Areas to be monitored include:

            a. behavioral health network adequacy;

            b. Enrollee access to timely behavioral health services through
self-referral, PCP/specialist referral, MCO referral, CBHP referral, or referral
by other entities;

            c. an individual plan or treatment and provision of appropriate
level of care;

            d. coordination of care between the CBHPs, MCO behavioral health
subcontractor, and the Primary Care Provider

            e. provision of follow-up services and continuity of care;

            f. involvement of the Primary Care Provider in aftercare to the
extent possible, ensuring client confidentiality protections provided under law;

            g. member satisfaction with access to and quality of behavioral
health services; and

            h. behavioral health service utilization, as set forth in the
following chart, reported quarterly to the Department in a format agreed to by
the MCOs and Department:

<TABLE>
<CAPTION>
SUBSTANCE ABUSE/CHEMICAL DEPENDENCY:            MENTAL HEALTH:
------------------------------------            --------------
<S>                                             <C>
Inpatient (Rehab):                              Acute Inpatient Psychiatric Admission:
Number of Admits                                Number of Admits
Admits/1000 Beneficiaries                       Admits/1000 Beneficiaries
Number of Days of Care                          Number of Days of Care
Days/1000 Beneficiaries                         Days/1000 Beneficiaries
Average Length of Stay (ALOS)                   ALOS

Inpatient (Detox):
Number of Admits
Admits/1000 Beneficiaries
</TABLE>

                                      A-11
<PAGE>

<TABLE>
<S>                                             <C>
Number of Days of Care
Days/1000 Beneficiaries
ALOS

Partial (Day/Night) Treatment:                  Partial (Day/Night) Treatment:
Number of Admits                                Number of Admits
Admits/1000 Beneficiaries                       Admits/1000 Beneficiaries
Number of Days of Care                          Number of Days of Care
Days/1000 Beneficiaries                         Days/1 000 Beneficiaries
ALOS                                            ALOS

Intensive Outpatient Program:                   Intensive Outpatient Program:
Number of Outpatients                           Number of Outpatients
Outpatients/1000 Beneficiaries                  Outpatients/1000 Beneficiaries
Number of Days of Care                          Number of Days of Care
Days/1000 Beneficiaries                         Days/1000 Beneficiaries
ALOS                                            ALOS

Outpatient:                                     Outpatient:
Number of Outpatients                           Number of Outpatients
Outpatients/ 1000 Beneficiaries                 Outpatients/1000 Beneficiaries
Number of Outpatient Sessions                   Number of Outpatient Sessions
Average Number of Sessions                      Average Number of Sessions

Follow-up:                                      Follow-up:
Number of Discharges with Follow-up Care        Number of Discharges with Follow-up Care
Plan and Treatment                              Plan and Treatment

</TABLE>

The provision of behavioral health services and appropriate risk assessment and
referral shall be included in the Contractor's medical record review processes
and considered for a clinical evaluation study as further described in Exhibit
B, Utilization Review/Peer Review.

      14. The Contractor shall perform and report the quality and utilization
measures identified in the following chart, as directed by the Department. The
Contractor shall not modify the reporting methodology prescribed by the
Department without first obtaining the Department's written approval.

<TABLE>
<CAPTION>
BEGINNING CONTRACT YEAR   INDICATOR                                                                  METHODOLOGY
-----------------------   ---------                                                                  -----------
<S>                       <C>                                                                        <C>
Year 1                    Effectiveness of Care: Childhood Immunization Status                       HEDIS or Department-defined
Year 1                    Effectiveness of Care: Breast Cancer Screen                                HEDIS
Year 1                    Effectiveness of Care: Cervical Cancer Screening                           HEDIS
Year 1                    Access/Availability of Care: Adult access to Preventive/Ambulatory         HEDIS
                          Health Services
</TABLE>

                                      A-12
<PAGE>

<TABLE>
<S>                       <C>                                                                        <C>
Year 1                    Use of Services: Well Child Visits during first 15 months of life          HEDIS or Department-defined
Year 1                    Use of Services: Well Child Visits in the Third, Fourth, Fifth, and        HEDIS or Department-defined
                          Sixth years of lift
Year 1                    Use of Services: Adolescent Well Care Visits                               HEDIS or Department-defined
Year 1                    Use of Services: Mental Health Utilization (percentage of                  HEDIS or Department-defined
                          Enrollees receiving inpatient, day/night, and ambulatory
                          services)
Year 1                    Use of Services: Mental Health Utilization (inpatient discharges and       HEDIS or Department-defined
                          average length of stay)
Year 1                    Effectiveness of Care: Follow-up after hospitalization                     HEDIS or Department-defined
                          for mental illness
Year 1                    Use of Services: Chemical Dependency Utilization (percentage of            HEDIS or Department-defined
                          Enrollees receiving inpatient, day/night ambulator services)
Year 1                    Use of Services: Chemical Dependency Utilization (inpatient                Department-defined
                          discharges and average length of stay)
Year 1                    Chemical Dependency Follow up                                              HEDIS or Department-defined
Year 1                    Enrollee Satisfaction Survey                                               HEDIS CAHPS-like, or Department
                                                                                                     prior-approved alternative
                                                                                                     survey tool and methodology
Year 2                    Use of Services: Frequency of Ongoing Prenatal Care                        HEDIS
Year 2                    Access/Availability of Care: Prenatal and Postpartum Care                  HEDIS
Year 2                    Use of Services: Births and Average Length of Stay, Newborns               HEDIS
Year 2                    Use of Services: Discharges and Average Length of Stay - Maternity Care    HEDIS
Year 2                    Effectiveness of Care: Use of Appropriate Medications for                  HEDIS
                          Enrollees with Asthma
Year 2                    Effectiveness of Care: Comprehensive Diabetes Care                         HEDIS
Year 3                    Effectiveness of Care: Advising Smokers to Quit                            HEDIS
Year 3                    Effectiveness of Care: Controlling High Blood Pressure                     HEDIS
Year 3                    Effectiveness of Care: Chlamydia Screening in Women                        HEDIS
</TABLE>

      15. The Contractor shall monitor other performance measures as required by
CMS in accordance with notification by the Department

                                      A-13
<PAGE>

                                    EXHIBIT B

                         UTILIZATION REVIEW/PEER REVIEW

      1. The Contractor shall have a utilization review and peer review
committee(s) whose purpose will be to review data gathered and the
appropriateness and quality of care. The committee(s) shall review and make
recommendations for changes when problem areas are identified and report
suspected Fraud and Abuse in the Medical Assistance Program to the Department's
Office of Inspector General. The committees shall keep minutes of all meetings,
the results of each review and any appropriate action taken. A copy of the
minutes shall be submitted to the Department no later than thirty (30) days
after the close of the quarterly reporting period. At a minimum, these programs
must meet all applicable federal and State requirements for utilization review.
The Contractor and Department may further define these programs.

      2. The Contractor shall implement a Utilization Review Plan, including
peer review. The Contractor shall provide the Department with documentation of
its utilization review process. The process shall include:

            a. Written program description -- The Contractor shall have a
written utilization management program description which includes, at a minimum,
procedures to evaluate medical necessity criteria used and the process used to
review and approve the provision of medical services.

            b. Scope -- The program shall have mechanisms to detect
under-utilization as well as over-utilization.

            c. Preauthorization and concurrent review requirements -- For
organizations with preauthorization and concurrent review programs:

                  i. Have in effect mechanisms to ensure consistent application
      of review criteria for authorization decisions;

                  ii. Utilize practice guidelines that have been adopted,
      pursuant to

      Exhibit A

                  iii. review decisions shall be supervised by qualified medical
      professionals and any decision to deny a service authorization request or
      to authorize a service in an amount, duration or scope that is less than
      requested must be made by a health care professional who has appropriate
      clinical expertise in treating the Enrollee's condition or disease;

                  iv. efforts shall be made to obtain all necessary information,
      including pertinent clinical information, and consultation with the
      treating Physician licensed to practice medicine in all its branches as
      appropriate;

                  v. the reasons for decisions shall be clearly documented and
      available to the Enrollee and the requesting Provider, provided, however,
      that any decision to deny

                                       B-1
<PAGE>

      a service request or to authorize a service in an amount, duration or
      scope that is less than requested shall be furnished in writing to the
      Enrollee;

                  vi. there shall be written well-publicized and readily
      available appeals mechanisms for both Providers and patients;

                  vii. decisions and appeals shall be made in a timely manner as
      required by the circumstances of the situation and shall be made in
      accordance with the timeframes specified in the Contract for standard and
      expedited authorizations;

                  viii. there shall be mechanisms to evaluate the effects of the
      program using data on member satisfaction, provider satisfaction or other
      appropriate measures;

                  ix. if the organization delegates responsibility for
      utilization management, it shall have mechanisms to ensure that these
      standards are met by the delegate.

      3. The Contractor further agrees to review the utilization review
procedures, at regular intervals, but no less frequently than annually, for the
purpose of amending same, as necessary in order to improve said procedures. All
amendments must be approved by the Department. The Contractor further agrees to
supply the Department and/or its designee with the utilization information and
data, and reports prescribed in its approved utilization review system or the
status of such system. This information shall be furnished upon request by the
Department.

      4. The Contractor shall establish and maintain a peer review program
approved by the Department to review the quality of care being offered by the
Contractor, employees and subcontractors. This program shall provide, at a
minimum, the following:

            a. A peer review committee comprised of Physicians licensed to
practice medicine in all its branches, formed to organize and proceed with the
required reviews for both the health professionals of the Contractor's staff and
any contracted Providers which include:

                  i. A regular schedule for review;

                  ii. A system to evaluate the process and methods by which care
      is given; and

                  iii. A medical record review process.

            b. The Contractor shall maintain records of the actions taken by the
peer review committee with respect to providers and those records shall be
available to the Department upon request.

            c. A system of internal medical review, including behavioral health
services, medical evaluation studies, peer review, a system for evaluating the
processes and outcomes of care, health education, systems for correcting
deficiencies, and utilization review.

                                       B-2
<PAGE>

            d. At least two medical evaluation studies must be completed yearly
that analyze pressing problems identified by the Contractor, the results of such
studies and appropriate action taken. One of the studies may address an
administrative problem noted by the Contractor and one may address a clinical
problem or diagnostic category. One brief follow-up study shall take place for
each medical evaluation study in order to assess the actual effect of any action
taken.

      5. The Contractor further agrees to review the peer review procedures, at
regular intervals, but no less frequently than annually, for the purpose of
amending same in order to improve said procedures. All amendments must be
approved by the Department. The Contractor further agrees to supply the
Department and/or its designee with the information and reports related to its
peer review program upon request.

      6. The Department may request that peer review be initiated on specific
providers.

      7. The Department will conduct its own peer reviews at its discretion.

                                       B-3
<PAGE>

                                    EXHIBIT C

                   SUMMARY OF REQUIRED REPORTS AND SUBMISSIONS

      Report names, information submission requirements and corresponding
frequencies are listed herein. These shall be due to the Department no later
than thirty (30) days after the close of the reporting period unless otherwise
stated. Reports and submissions include hard copy reports and/or any electronic
medium as designated by the Department.

      Report frequencies are defined as follows:

      Annually   -  The State fiscal year of July 1 - June 30.
      Quarterly  -  The last day of the fiscal quarter grouped as: J/A/S
                    (1st (qtr)), 0/N/D (2nd (qtr)), J/F/M (3rd (qtr)), and A/M/J
                    (4th (qtr)).
      Monthly    -  The last day of a calendar month.

<TABLE>
<CAPTION>
                                                                                                     DPA PRIOR
NAME OF REPORT/SUBMISSION                          FREQUENCY                                         APPROVAL
-------------------------                          ---------                                         --------
<S>                                                <C>                                               <C>
ADMINISTRATIVE

Disclosure Statements                              Initially, Annually, on request and as changes       No
                                                   occur

Encounter Data Report                              Monthly, no later than 120 days after the            No
                                                   close of the reporting period

Financial Reports                                  Concurrent with submissions to Department of         No
                                                   Insurance

Report of Transactions with Parties of Interest    Annually                                             No

ENROLLEE MATERIALS

Certificate or Document of Coverage and            Initially and as revised                             Yes
Any Changes or Amendments

Enrollee Handbook                                  Initially and as revised                             Yes

Identification Card                                Initially and as revised                             Yes

Provider Directory                                 Initially and annually                               Yes (only
                                                                                                        initially)
</TABLE>

                        [Remainder of table on next page]

                                       C-1
<PAGE>

<TABLE>
<S>                                                <C>                                                   <C>
FRAUD/ABUSE

Fraud and Abuse Report                             Immediately upon identification or knowledge of       N/A
                                                   suspected Fraud, Abuse, or misconduct; or
                                                   quarterly certification, due 30 days after the
                                                   close of the quarter, that no Fraud, Abuse, or
                                                   misconduct was identified during the quarter

MARKETING

Marketing Allegation Investigation Disclosure      Monthly, on the first day of each month               No

Marketing Allegation Notification                  Weekly                                                No

Marketing Materials and Information                Initially and as revised                              Yes

Marketing Plans and Procedures                     Initially and as revised                              Yes

Marketing Representative Listing                   Monthly, on the first day of each month               No

Marketing Representative Termination Notification  As they occur                                         No

Marketing at Site Permission Statement             Annually                                              No

Marketing at Site Schedule                         Monthly, on the first day of each month               No

Marketing Training Manuals                         Initially and as revised                              Yes

Marketing Training Schedule and Agenda             Quarterly, 2 weeks prior to the beginning of each     No
                                                   quarter, and as revised
</TABLE>

                        [Remainder of table on next page]

                                       C-2
<PAGE>

<TABLE>
<S>                                                <C>                                                   <C>
PROVIDER NETWORK

Enrollee Site Transfer                             As each occurs                                        No

New Site Provider Affiliation File (electronic)    Initially, and as new sites/PCPs are added            Yes

Provider Affiliation with Site Report              Monthly, on the first day of each month               No

Site/PCP Approvals (paper format-A&B forms)        Initially, and as new sites/PCPs are added            Yes

Site Terminations                                  As each occurs                                        No

QUALITY ASSURANCE/MEDICAL

Grievance Procedures                               Initially and as revised                              Yes

Network/Provider Ratio Report                      Quarterly                                             N/A

QA/UR/PR Annual Report                             Annually, no later than 60 days after close of        N/A
                                                   reporting period

Behavioral Health Report                           Quarterly, no later than 60 days after close          N/A
                                                   of reporting period

QA/UR/PR Committee Meeting Minutes                 Quarterly                                             No

Quality Assurance, Utilization Review and Peer     Initially and as revised                              Yes
Review Plan (includes health education plan)

Summary of Grievances and Resolutions and          Quarterly                                             N/A
External Independent Reviews and Resolutions

SUBCONTRACTS AND PROVIDER AGREEMENTS

Copies of Executed Subcontractor Agreements        Upon request                                          N/A

Model Subcontractor Agreements                     Initially and as revised                              N/A
</TABLE>

                                       C-3
<PAGE>

                                    EXHIBIT D

                 ENCOUNTER DATA FORMAT REQUIREMENTS

REQUIREMENTS PRIOR TO HIPAA IMPLEMENTATION (BEFORE OCTOBER 16,2003)

Illinois Medicaid UB92 Billing Specification

      (Approved by the Illinois UB92 Billing Committee)

CMS National Standard Format for non-institutional claims

IDPA Direct Tape format for pharmacy claims

REQUIREMENTS AFTER HIPAA IMPLEMENTATION (ON AND AFTER OCTOBER 16,2003)

837I - Health Care Claim: Institutional

837P - Health Care Claim: Professional

NCPDP 1.1 Batch - Pharmacy

835 - Health Care Claim Payment/Advice

                                       D-1
<PAGE>

        [ILLINOIS DEPARTMENT LOGO]         Illinois Department of Public Aid

                                           201 South Grand Avenue East
                                           Springfield, Illinois 62763-0001

      ROD R. BLAGOJEVICH, GOVERNOR         TELEPHONE: (217) 524-7478
            BARRY S. MARAM, DIRECTOR       TTY: (800) 526-5812

June 30, 2004

John Blank, M.D.
President and CEO
Harmony Health Plan
125 South Wacker Drive, Suite 2600
Chicago, Illinois 60606

Dear Dr. Blank:

Please find attached for your files one original executed copy of Amendment #1
to the August 1, 2004 Contract for Furnishing Health Services by a Health
Maintenance Organization. This amendment is effective September 1, 2003.

If you have any questions, please feel free to contact me at (217) 524-7478.

Sincerely,

/s/ Kelly Carter
-----------------------------
Kelly Carter, Chief
Bureau of Contract Management

Attachment

E-Mail: dpawebmaster@state.il.us            Internet:http://www.state.il.us/dpa/
<PAGE>

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

             AMENDMENT #1 TO CONTRACT FOR FURNISHING HEALTH SERVICES
                         BY A MANAGED CARE ORGANIZATION

                                2004-024-001-KA1

      It is hereby agreed by and between the parties that the Contract for
Furnishing Health Services by a Managed Care Organization between the State of
Illinois, Department of Public Aid (Department), and Harmony Health Plan, a
health maintenance organization (Contractor), such Contract being effective on
August 1, 2003 is amended pursuant to Article IX as set forth herein. This
Amendment shall be effective September 1, 2003.

Attachment I shall be deleted and replaced by the attached First Amended
Attachment I. Each reference to Attachment I in the Contract shall be replaced
with a reference to First Amended Attachment I.

IN WITNESS WHEREOF, the Department and the Contractor hereby execute and deliver
this Amendment, effective as of the date indicated above.

STATE OF ILLINOIS                                  CONTRACTOR
DEPARTMENT OF PUBLIC AID
                                                   By: [ILLEGIBLE]
By: /s/ Barry S. Maram                                 -------------------------
    ----------------------
    Barry Maram

Title: Director
                                                   Title: CEO
Date: 6/4/04
                                                   Date: [ILLEGIBLE]

                                                   FEIN: 36-4050495
<PAGE>

                           FIRST AMENDED ATTACHMENT I

                                   RATE SHEETS

(a)   Contractor Name:    Harmony Health Plan of Illinois, Inc.
      Address:            125 South Wacker Drive, Suite 2600
                          Chicago, IL   60606

(b)   Contracting Area(s) Covered by the Contractor and Enrollment Limit:

<TABLE>
<CAPTION>
            CONTRACTING AREA                       ENROLLMENT LIMIT
            ----------------                       ----------------
<S>                                                <C>
The following counties in Region III:                     50,000
Jackson (effective 09/01/03)
Madison
Perry (effective 09/01/03)
Randolph (effective 09/01/03)
St. Clair
Washington (effective 09/01/03)
Williamson (effective 09/01/03)
Region IV                                                100,000
</TABLE>

(c)   Total Enrollment Limit for all Contracting Areas: 150,000

(d)   Threshold Review Levels:     Counties listed above in Region III   40,000

                                   Region IV                             80,000

(e)   Standard Capitation Rates for Enrollees, effective AUGUST 1, 2003 through
      JULY 31,2005:

<TABLE>
<CAPTION>
     AGE/GENDER
     MO = MONTH           REGION I (N.W.     REGION II (CENTRAL    REGION III (SOUTHERN      REGION IV (COOK     REGION V (COLLAR
     YR = YEAR            ILLINOIS) PMPM      ILLINOIS) PMPM          ILLINOIS) PMPM          COUNTY) PMPM        COUNTIES) PMPM
     ---------            --------------      ---------------         --------------          ------------        --------------
<S>                       <C>                <C>                   <C>                       <C>                 <C>
0-3 Mo                    $ 1,152.25           $ 1,178.77              $ 1,242.71             $ 1,244.64             $ 854.58
4Mo-l Yr                      127.81               117.63                  165.94                 125.04               108.35
2Yr-5Yr                        63.77                67.81                   71.74                  58.67                56.28
6Yr-13Yr                       72.08                79.78                   75.18                  58.18                57.47
14Yr-20Yr, Male               115.93               135.96                  131.18                  90.67               142.60
14Yr-20Y, Female              148.51               157.40                  155.15                 112.48               119.82
21Yr-44Yr, Male               161.79               216.53                  201.90                 164.23               159.43
2lYr-44Yr, Female             217.61               228.14                  237.13                 185.81               184.20
45Yr+ Male and Female         437.86               486.40                  476.29                 359.61               409.17
</TABLE>

(f)   Hospital Delivery Case Rate, effective AUGUST 1, 2003 through JULY 31,
      2005:

<TABLE>
<S>                                  <C>                   <C>               <C>                 <C>            <C>
Hospital Delivery Case Rate          $3,196.12             $3,104.66         $3,281.22           $3,748.33      $3,276.03
       (per delivery)
</TABLE>

<PAGE>

        [ILLINOIS DEPARTMENT LOGO]         Illinois Department of Public Aid

                                           201 South Grand Avenue East
                                           Springfield, Illinois 62763-0001

      ROD R. BLAGOJEVICH, GOVERNOR         TELEPHONE: (217) 524-7478
            BARRY S. MARAM, DIRECTOR       TTY: (800) 526-5812

July 16, 2004

John Blank, M.D.
President and CEO
Harmony Health Plan
125 South Wacker Drive, Suite 2600
Chicago, Illinois 60606

Dear Dr. Blank:

Please find attached for your files one original executed copy of Amendment #2
to the August 1, 2004 Contract for Furnishing Health Services by a Health
Maintenance Organization. This amendment is effective March 15, 2004.

If you have any questions, please feel free to contact me at (217) 524-7478.

Sincerely,

/s/ Kelly Carter
-----------------------------
Kelly Carter, Chief
Bureau of Contract Management

Attachment

Email:dpawebmaster@state.il.us              Internet:http://www.state.il.us/dpa/
<PAGE>

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                             AMENDMENT NO. 2 TO THE
                     CONTRACT FOR FURNISHING HEALTH SERVICES
                                      BY A
                            MANAGED CARE ORGANIZATION
                                 2004-24-001-KA2

WHEREAS, the parties to the Contract for Furnishing Health Services by a Managed
Care Organization ("CONTRACT"), the ILLINOIS DEPARTMENT OF PUBLIC AID, 201 South
Grand Avenue East, Springfield, Illinois 62763-0001 (herein referred to as
"Department"), acting by and through its Director, and HARMONY HEALTH PLAN, 125
South Wacker Drive, Chicago, Illinois 60606 (hereinafter referred to as
"Contractor"), desire to amend the CONTRACT; and

WHEREAS, pursuant to Article 9, Section 9.9 (a) of the CONTRACT, the CONTRACT
may be modified or amended by the mutual consent of the parties;

NOW THEREFORE, the CONTRACT shall be amended as follows:

      1.    Article 3, is amended by replacing the last sentence of paragraph
            3.4 with the following sentence.

            Should the Department agree in writing to the expansion request, the
            Department's approval letter including an amended Attachment I shall
            be incorporated in and become part of the Contract.

      All other terms and conditions of the CONTRACT shall remain in full force
and effect.

      IN WITNESS WHEREOF, the parties have hereunto caused this agreement to
amend the CONTRACT to be executed by their duly authorized representatives,
effective March 15, 2004.

DEPARTMENT OF PUBLIC AID                           CONTRACTOR

By: /s/ Barry S. Maram                             By: /s/ John Blank
    ----------------------                             -------------------------
    Barry S. Maram

                                                   Printed Name: John Blank

Title: Director                                    Title: CEO

Date: 6/17/04                                      Date: 4/6/04

                                                   FEIN: 36-4050495