<PAGE>

                                                                    Exhibit 10.3

           Confidential Materials omitted and filed separately with
      The Securities and Exchange Commission. Asterisks denote omissions.

                                   AGREEMENT

           This Agreement is entered into effective the 1/st/ day of January,
  2001, by and between Network Health Plan of Wisconsin, Inc. (hereinafter
  referred to as "NHP"), a Wisconsin insurance corporation, and Managed Health
  Services Insurance Corp. (hereinafter referred to as "MHSIC"), a Wisconsin
  insurance corporation.

          WHEREAS, NHP is a domestic insurance corporation organized under the
  laws of the State of Wisconsin and maintaining a health maintenance
  organization for its eligible members through contractual arrangements with
  various participating providers and other entities;

          WHEREAS, NHP has contracted with the Wisconsin Department of Health
  and Family Services (hereinafter referred to as "DHFS") to provide and pay for
  Medical Assistance/BadgerCare contract services to recipients enrolled in NHP
  under the State Medical Assistance Plan (hereinafter referred to as
  "ENROLLEES");

          WHEREAS, the DHFS contract for services permits NHP to subcontract its
  duties and functions subject to the right of DHFS to approve such
  subcontracts;

          WHEREAS, MHSIC desires to enter into a subcontract with NHP under the
terms and conditions set forth herein;

          WHEREAS, the parties desire to enter into this Agreement in order to
 facilitate the provision of cost effective, covered health care services to NHP
 ENROLLEES in Wisconsin;

          NOW, THEREFORE, in consideration of the premises set forth above and
 the terms, covenants and conditions set forth below, the parties mutually agree
 as follows:

          1. MHSIC agrees to be obligated to NHP for all functions and duties
 assumed by NHP in the Contract for Services between NHP and DHFS, as renewed.
 amended, or replaced (hereinafter referred to as the "CONTRACT FOR SERVICES"),
 with respect to all NHP ENROLLEES in Wisconsin, with the exception of those
 functions specified herein as the obligations of NHP. MHSIC shall be
 responsible to comply with the requirements of the CONTRACT FOR SERVICES to the
 same extent as NHP is responsible for such requirements to DHFS. Unless the
 contract clearly requires otherwise, words used in this Agreement shall have
 the meanings assigned to them by the CONTRACT FOR SERVICES. A copy of the
 CONTRACT FOR SERVICES is attached hereto as Exhibit 1.

          2. The parties agree that MHSIC may enter into written agreements or
 subcontracts in order to fulfill MHSIC's duties under this Agreement. Such
 subcontracts shall be in accord with the requirements set forth in the CONTRACT
 FOR SERVICES, Addendum I-Subcontracts. MHSIC affirms that it may terminate a
 subcontract agreement immediately whenever the MHSIC Quality Assurance
 Committee and MHSIC Board of Directors determine the health or safety of
 ENROLLEES utilizing such subcontractor is endangered by actions of the
 subcontractor.

          3. In consideration for the services to be provided hereunder. NHP
 agrees to pay MHSIC an amount equal to all premium payments, supplemental
 payments and any other form

                                       1

<PAGE>

of compensation received by NHP under the CONTRACT FOR SERVICES from the
State of Wisconsin or its agent or representative allocable to periods during
which this Agreement is in effect, less an amount equal to [****] per month per
member, plus an amount equal to the actual per member assessment for the Health
Insurance Risk Sharing Pool (HIRSP) that is allocable to all NHP ENROLLEES in
Wisconsin for the period during which this Agreement is in effect. NHP shall
give DHFS written authorization to issue directly to MHSIC monthly checks and
any and all other payments for the full amount of the compensation paid to NHP
by the State of Wisconsin. Within five (5) business days from the receipt of
such monthly compensation from the State of Wisconsin, MHSIC shall remit
directly to NHP on a monthly basis the amount specified above per NHP Enrollee
in Wisconsin.

          4. ENROLLEES shall be held harmless by MHSIC and/or its subcontracted
 providers for payment of monies owed by MHSIC. Neither MHSIC nor its
 subcontracted providers shall bill, collect from, or charge ENROLLEES for
 Covered Services or impose any surcharges for the provision of Covered
 Services. If MHSIC learns of any such unauthorized charge or surcharge, MHSIC
 shall take appropriate action to ensure a prompt refund. MHSIC and/or its
 subcontracted providers may bill ENROLLEES for noncovered services, or for
 services rendered after the ENROLLEES discontinue, or cease to be eligible for
 NHP membership. This section supersedes any present or future agreement to the
 contrary between an ENROLLEE or an ENROLLEE'S representative and MHSIC
 regarding payment for Covered Services.

         5. NHP, or its designee, has the right, at reasonable times, on a
 concurrent and/or retrospective basis, to review and/or obtain copies at NHP's
 sole expense, of medical records of NHP ENROLLEES in order to determine
 compliance with quality assurance standards and utilization review standards,
 NHP's medical director, or his or her designee, shall have the right to attend,
 as an observer, any utilization review or quality assurance meeting at MHSIC at
 which care rendered to NHP ENROLLEES is discussed, if such attendance will not
 violate any Wisconsin law regarding confidentiality of peer review discussions
 and peer review documents. NHP agrees that the person designated to attend such
 meetings shall be a licensed, medical professional and shall agree in advance
 to abide by all requirements of confidentiality of peer review documents and
 peer review discussions in accordance with Wisconsin law.

         6. The parties agree that all information, records and data collected
 in connection with this Agreement shall be protected from unauthorized
 disclosure as provided in Chapter 19, Subchapter II of this Wisconsin Statutes,
 and 42 C.F.R. ch. 431 Subpart F. Except as otherwise required by law, access to
 such information shall be limited by MHSIC to persons who, or agencies that
 require the information in order to perform their duties related to the
 Agreement. These persons or agencies include, but are not limited to, NHP, the
 US Department of Health and Human Services, the Wisconsin Department of
 Health and Family Services, and the Wisconsin Office of the Commissioner of
 Insurance, as may be necessary for compliance by NHP with the provisions of
 certain federal and state regulations. MHSIC shall maintain such records in
 accordance with the CONTRACT FOR SERVICES.

         7. MHSIC shall maintain a process for Credentialing all physicians
listed as providers in the provider directory provided to NHP ENROLLEES by MHSIC
and shall verify

                                       2

<PAGE>

the Medicaid certification of all subcontracted providers pursuant to the
requirements of the CONTRACT FOR SERVICES.

          8.  MHSIC shall be responsible for prompt review and reconciliation of
ENROLLEE eligibility.

          9.  NHP, with reasonable cause, shall have the right to review and
provide oversight for all activities that have been questioned by Federal or
State agencies as non-compliant with the Federal HMO Act or the CONTRACT FOR
SERVICES and are performed by MHSIC. The method by which review and oversight
shall occur shall be subject to mutual written agreement of both parties.

          10. The effective date of this Agreement shall be January 1, 2001, and
shall have an initial term of six (6) years thereafter. This Agreement shall
thereafter be automatically renewed for successive five (5) year terms unless
terminated by mutual consent or pursuant to this Section. Either party may
terminate this Agreement upon notification to the other party two years prior to
the end of the original or any renewal term. In no case shall such termination
end the obligations of MHSIC and NHP to perform any remaining obligations either
party has pursuant to the CONTRACT FOR SERVICES or any remaining obligations of
either party as set forth in this Agreement. In addition, this Agreement may be
terminated during any initial or renewal term by MHSIC due to modifications
mandated by changes in the CONTRACT FOR SERVICES or in federal or state law,
regulations, or policies that materially affect MHSIC's rights or
responsibilities under this Agreement. In such case, MHSIC shall notify NHP. in
writing, at least ninety (90) days prior to the proposed date of termination of
its intent to terminate this Agreement pursuant to this Section.

          11. This Agreement shall terminate if the CONTRACT FOR SERVICES is
terminated. In the event of such termination, MHSIC shall be obligated to
perform the obligations set forth in Article X of the CONTRACT FOR SERVICES in
the paragraph entitled "Obligations of Contracting Parties" to the same extent
that NHP is obligated to DHFS and NHP agrees to fulfill any remaining
obligations it has to MHSIC pursuant to the terms of this Agreement.

          12. In the event that either party defaults in the performance of any
duties or obligations hereunder, including either party's inability or refusal
to provide services hereunder or either party's frustration of the purpose of
this Agreement so that the nondefaulting party is unable to perform its duties
hereunder, and the default or breach has not been cured within sixty (60) days
of the nondefaulting party's giving of written notice of the default, specifying
the nature of the alleged default or breach, the nondefaulting party may give
notice of intent to terminate this Agreement, and this Agreement will terminate
on the last day of the month in which the notice of intent to terminate is
received.

          13. NHP and MHSIC are separate and independent entities and neither
NHP nor MHSIC, nor the employees, servants, agents or representatives of either
shall be considered to be the employees, servants, agents or representatives of
the other party. The parties further agree that this Agreement shall also not be
construed to create a partnership or joint venture between the parties.

                                       3

<PAGE>

     14.  MHSIC agrees that ENROLLEES shall not be discriminated against on the
basis of age, race, color, creed, religion, sex, sexual preference, national
origin, health status, or income level.

     15.  This Agreement may not be assigned by either party without the prior
written consent of the other party, except that NHP agrees that MHSIC may assign
this agreement to any one or more of its affiliates without the prior written
consent of NHP. MHSIC will notify NHP of any assignments in a timely manner.

     16.  Any controversy between the parties hereto not informally resolved by
appropriate representatives of the parties shall, upon the request of one (1)
party served on the other, be submitted to arbitration in accordance with the
following provision:

          If any claim, dispute or controversy shall arise among the parties
          hereto with respect to the making or termination of, construction of,
          the terms of, or the interpretation of this Agreement or the rights of
          any party hereto or with respect to any transaction involved, the
          claim, dispute or controversy shall be settled by arbitration by three
          (3) arbitrators in accordance with the then current Center for Public
          Resources Rules for Non-Administered Arbitration of Business Disputes.
          The arbitration shall be governed by the United States Arbitration
          Act, 9 U.S.C. (S)(S) 1-16, and judgment based on the arbitration award
          may be entered in any court having jurisdiction thereof. The place of
          the arbitration shall be Milwaukee, Wisconsin. The arbitrators are not
          empowered to award damages in excess of compensatory damages. Not
          withstanding the foregoing requirements, any party shall have the
          right to seek equitable relief, in a court of competent jurisdiction,
          to the extent that equitable relief is available to a person hereto.
          If a person chooses to pursue equitable relief, such conduct shall not
          constitute a waiver of or be deemed inconsistent with the arbitration
          provision set forth above.

     17.  MHSIC shall not use the name of Network Health Plan, or any derivative
thereof in any advertising or materials distributed to ENROLLEES, except for
normal operational correspondence with ENROLLEES.

     18.  Any notice, request, demand or other communication required or
permitted hereunder will be given in writing, by certified mail, to the party to
be notified. All communications will be deemed given upon delivery or attempted
delivery to the address specified herein. The addresses for the parties are as
follows:

     To NHP: Donald T. Schumann
             Director of Business Development
             Affinity Health System
             1570 Midway Place
             Menasha, WI 54952

                                       4

<PAGE>

     To MHS: Kathleen Crampton
             President & CEO
             Managed Health Services
             1205 South 70/th/ Street
             West Allis, WI 53214

     19.  MHSIC shall maintain general liability insurance and professional
liability insurance in accord with industry standards at all times during the
term of this Agreement. Upon request of NHP, MHSIC shall provide a certificate
of insurance evidencing such coverage. MHSIC further agrees to require that
physician members and subcontracted providers of MHSIC maintain such
professional liability insurance as required by Wisconsin law to participate in
the Wisconsin Patients Compensation Fund.

     20.  MHSIC shall indemnify and hold NHP, its shareholders, officers,
directors, employees, and agents harmless from and against any and all
liabilities, losses, settlements, claims, demands and expenses of any kind
(including, without limitation, reasonable attorneys fees), that may result from
any business dispute between MHSIC and any ENROLLEE in Wisconsin, or that may
arise as a result of any negligent act or intentional misconduct on the part of
MHSIC, its agents, employees or representatives, with respect to the performance
or failure to perform any duties assumed by MHSIC pursuant to this Agreement.
NHP shall, as a condition to such indemnification, notify MHSIC within ten (10)
business days after receipt of notice of any claim against NHP for which NHP
seeks indemnification hereunder, and MHSIC shall be entitled to make such
investigation, settlement, or defense of the claim as it deems prudent. This
provision shall survive the termination of this Agreement.

     21.  NHP shall indemnify and hold MHSIC, its officers, directors, employees
and representatives harmless from and against any and all liabilities, losses,
settlements, claims, demands, and expenses of any kind (including, without
limitation, reasonable attorneys fees) that may result from the contractual
relationship between NHP and the State of Wisconsin or NHP and any ENROLLEE in
Wisconsin or that may arise as a result of any negligent act or intentional
misconduct caused or alleged to have been caused by NHP or its agents, employees
or representatives in the performance or failure to perform any of the duties
assumed by NHP pursuant to this Agreement. MHSIC shall, as a condition to such
indemnification, notify NHP within ten (10) business days after receipt of
notice of any claim against MHSIC for which MHSIC seeks indemnification
hereunder, and NHP shall be entitled to make such investigation, settlement, or
defense of the claim as it deems prudent. This section shall survive the
termination of this Agreement.

     22.  Unless notice to terminate this Agreement for the next contract year
is given pursuant to Sections 10-12 above by either party, MHSIC shall be
responsible for preparation of any certification application renewals for
succeeding contract years for submission to DHFS with respect to the CONTRACT OF
SERVICES, unless otherwise agreed to by the parties in writing.

     23.  In the event that NHP should become insolvent, MHSIC agrees to provide
covered services as set forth in the CONTRACT FOR SERVICES for NHP ENROLLEES in
Wisconsin, provided that NHP continues to authorize DHFS to pay MHSIC directly,
until the sooner of

                                       5

<PAGE>

     (a)  the duration of the period for which MHSIC has received payments from
     DHFS and until the time of discharge for ENROLLEES confined in an inpatient
     facility according to the terms set forth in the CONTRACT FOR SERVICES; or

     (b)  the ENROLLEES become covered under another plan of health insurance
     and/or medical assistance plan with similar benefits.

     24.  No delay or failure by either party hereto in exercising any rights or
powers accruing upon noncompliance or default by the other party with respect to
any terms of this Agreement shall impair such right or power or be construed to
be a waiver of any succeeding breach thereof or of any other covenant, condition
or agreement herein contained.

     25.  If any part of this Agreement is found to be void or unenforceable,
such part shall be treated as severable, leaving valid the remainder of the
Agreement notwithstanding the part or parts found void or unenforceable.

     26.  The Agreement shall be exclusive on the part of NHP as regards
Wisconsin Medicaid recipients.

     27.  This Agreement shall be governed by the laws of the State of Wisconsin
notwithstanding any state's choice of law rules to the contrary.

     28.  This Agreement constitutes the entire understanding of the parties
hereto, and supersedes all previous agreements, whether oral or written, among
the parties or their affiliates on the subject matter hereof. No changes,
amendments or alterations shall be effective unless in writing signed by both
parties. This agreement supercedes all prior or contemporaneous agreements or
understandings between the parties, written or oral, all of which are merged
herein.

     29.  A waiver by either party of a breach or failure to perform shall not
constitute a waiver of any subsequent breach or failure. No term or condition of
this Agreement may be waived except in a writing by the party charged with the
waiver.

     30.  During the term of this Agreement, NHP shall use its best efforts to
obtain subsequent renewals and extensions of the existing CONTRACT FOR SERVICES
and/or new contracts with DHFS, subject in all cases however to the written
approval of the terms and conditions of such renewals, extensions or contracts
by MHSIC.

     31.  Each party hereto shall maintain any and all licenses, permits,
authorizations and contracts with DHFS, the State of Wisconsin and the Wisconsin
Office of the Commissioner of Insurance necessary to maintain the business
described herein and shall maintain compliance with all laws, regulations and
requirements necessary for such licenses, permits, authorizations, and/or
contracts.

                                       6

<PAGE>

     32.  As between NHP and MHSIC, MHSIC shall have the right to determine any
appropriate changes to the applicable county service area under the CONTRACT FOR
SERVICES, including, without limitation, the counties to be served.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
dates specified below.


NETWORK HEALTH PLAN

By: /s/ [ILLEGIBLE]             Date: 3/9/01
    ------------------------          ----------

Attest: [ILLEGIBLE]             Date: 3/9/01
        --------------------          ----------


MANAGED HEALTH SERVICES INSURANCE CORP.

By: /s/ Kathleen R. Crampton    Date: 03/9/01
    ------------------------          ----------

Attest: [ILLEGIBLE]             Date: 3/9/01
        --------------------          ----------

                                       7

<PAGE>

                                  ADDENDUM I

                  SUBCONTRACTS AND MEMORANDA OF UNDERSTANDING


     NOTE:    This Addendum does not apply to subcontracts between the
              Department and the HMO. The Department shall have sole authority
              to determine the conditions and terms of such subcontracts.

     1.    Original Review and Approval for HMOs that did not have a
           Medicaid/BadgerCare HMO Contract in the Prior Contract Period, or
           that are going to accept enrollment of recipients in a new county.

           a.  The Department may approve, approve with modification, or deny
               subcontracts under this Contract at its sole discretion. The
               Department may, at its sole discretion and without the need to
               demonstrate cause, impose such conditions or limitations on its
               approval of a subcontract as it deems appropriate. The Department
               may consider such factors as it deems appropriate to protect the
               interests of the State and recipients, including but not limited
               to the proposed subcontractor's past performance. DHFS will give
               the HMO (1) 120 days to implement a change that requires the HMO
               to find a new subcontractor, and (2) 60 days to implement any
               other change required by DHFS. DHFS will acknowledge the approval
               or disapproval of a subcontract within 14 days after its receipt
               from the HMO.

           b.  The Department will review and approve or disapprove each
               subcontract before contract signing. Any disapproval of
               subcontracts may result in the application by the Department of
               remedies pursuant to Article IX of this Contract. The
               Department's subcontract review will assure that the HMO has
               inserted the following standard language in subcontracts (except
               for specific provisions that are inapplicable in a specific HMO
               management subcontract);

          c.   Subcontractor (hereafter identified as subcontractor) agrees to
               abide by all applicable provisions of the (HMO's NAME)'s contract
               with the Department of Health and Family Services, hereafter
               referred to as the Medicaid/BadgerCare HMO Contract.
               Subcontractor compliance with the Medicaid/HMO Contract
               specifically includes but is not limited to the following
               requirements:

               1.   Subcontractor uses only Medicaid-certified providers in
                    accordance with Article III. AA. of the Medicaid/BadgerCare
                    HMO Contract.

               2.   No terms of this subcontract are valid which terminate legal
                    liability of HMO in accordance with Article III. Z. of the
                    Medicaid/BadgerCare HMO Contract.


HMO Contract for January 1, 2000 - December 31, 2001

                                       109

<PAGE>

               3.   Subcontractor agrees to participate in and contribute
                    required data to HMO Quality Assessment/Performance
                    Improvement programs as required in Article III. W. of the
                    Medicaid/BadgerCare HMO Contract.

               4.   Subcontractor agrees to abide by the terms of the
                    Medicaid/BadgerCare HMO Contract (Article III. D.) for the
                    timely provision of emergency and urgent care. Where
                    applicable, subcontractors agrees to follow those procedures
                    for handling urgent and emergency care cases stipulated in
                    any required hospital/emergency room MOUs signed by HMO in
                    accordance with Article III. J. of the Medicaid/BadgerCare
                    HMO Contract.

               5.   Subcontractor agrees to submit HMO encounter data in the
                    format specified by the HMO, so the HMO can meet the
                    Department specifications required by Article VI and
                    Addendum IV of the Medicaid/BadgerCare HMO Contract. HMOs
                    will evaluate the credibility of data obtained from
                    subcontracted vendors' external databases to ensure that any
                    patient-reported information has been adequately verified.

               6.   Subcontractor agrees to comply with all non-discrimination
                    requirements in Article III. O. of the Medicaid/BadgerCare
                    HMO Contract.

               7.   Subcontractor agrees to comply with all record retention
                    requirements and, where applicable, the special reporting
                    requirements on abortions, sterilizations, hysterectomies,
                    and HealthCheck requirements.

               8.   Subcontractor agrees to provide representatives of the HMO,
                    as well as duly authorized agents or representatives of DHFS
                    and the Federal Department of Health and Human Services,
                    access to its premises and its contract and/or medical
                    records in accordance with Article III and Article IX of the
                    Medicaid/BadgerCare HMO Contract. Subcontractor agrees
                    otherwise to preserve the full confidentiality of medical
                    records in accordance with Article XII of the
                    Medicaid/BadgerCare HMO Contract.

               9.   Subcontractor agrees to the requirements for maintenance
                    and transfer of medical records stipulated in Article III.
                    W. of the Medicaid/BadgerCare HMO Contract.

              10.   Subcontractor agrees to ensure confidentiality of family
                    planning services in accordance with Article III. B. of the
                    Medicaid/BadgerCare HMO Contract.


HMO Contract for January 1, 2000 - December 31, 2001

                                       110

<PAGE>

              11.   Subcontractor agrees not to create barriers to access to
                    care by imposing requirements on recipients that are
                    inconsistent with the provision of medically necessary and
                    covered Medicaid benefits (e.g., COB recovery procedures
                    that delay or prevent care).

              12.   Subcontractor agrees to clearly specify referral approval
                    requirements to its providers and in any sub-subcontracts.

              13.   Subcontractor agrees not to bill a Medicaid/BadgerCare
                    enrollee for medically necessary services covered under the
                    Medicaid/BadgerCare HMO Contract and provided during the
                    enrollee's period of HMO enrollment pursuant to Section 1128
                    B(d)(l) of the Social Security Act. This provision shall
                    continue to be in effect even if the HMO becomes insolvent.
                    However, if an enrollee agrees in writing to pay for a non-
                    Medicaid covered service, then the HMO, HMO provider, or HMO
                    subcontractor can bill.

                    The standard release form signed by the enrollee at the time
                    of services does not relieve the HMO and its providers and
                    subcontractors from the prohibition against billing a
                    Medicaid enrollee in the absence of a knowing assumption of
                    liability for a non-Medicaid covered service. The form or
                    other type of acknowledgment relevant to Medicaid/
                    BadgerCare enrollee liability must specifically state the
                    admissions, services, or procedures that are not covered by
                    Medicaid.

              14.   Subcontractors must forward to the HMO medical records
                    pursuant to grievances, within 15 working days of the HMO's
                    request. If the subcontractor does not meet the 15 day
                    requirement, the subcontractor must explain why and indicate
                    when the medical records will be provided.

              15.   Subcontractor agrees to abide by the terms of Article III.
                    H. regarding appeals to the HMO and to the Department for
                    HMO non-payment of service providers.

              16.   Subcontractor agrees to abide by the HMO marketing/informing
                    requirements. Subcontractor will forward to the HMO for
                    prior approval a11 flyers, brochures, letters, and pamphlets
                    the subcontractor intends to distribute to its
                    Medicaid/BadgerCare enrollees concerning its HMO
                    affiliation(s), changes in affiliation, or relates directly
                    to the Medicaid/BadgerCare population. Subcontractor will
                    not distribute any "marketing" or recipient informing
                    materials without the consent of the HMO and the
                    Department.


HMO Contract for January 1, 2000 - December 31, 2001

                                       111

<PAGE>

          2.  The Department will also review HMO management subcontracts to
              assure that rates are reasonable.

              a.  Subcontracts for HMO management must clearly describe the
                  services to be provided and the compensation to be paid.

              b.  Any potential bonus, profit-sharing, or other compensation not
                  directly related to costs of providing goods and services to
                  the HMO, shall be identified and clearly defined in terms of
                  potential magnitude and expected magnitude during the
                  Medicaid/BadgerCare HMO Contract period.

              c.  Any such bonus or profit-sharing shall be reasonable compared
                  to services performed. The HMO shall document reasonableness.

              d.  A maximum dollar amount for such bonus or profit-sharing shall
                  be specified for the contract period.

              e.  Requirements A through D do not have to relate to non-
                  Medicaid/BadgerCare enrollees if the HMO wishes to have
                  separate arrangements for these Medicaid enrollees.

          3.  Subcontract Review for HMOs that have had a Medicaid/BadgerCare
              HMO Contract in the Previous Contract Period and are Not Expanding
              into New Service Areas during the Current Contract Period.

              a.  The HMO, shall1 submit, and the Department shall review,
                  before signing this Contract, an affidavit that the contract
                  language required above in all Medicaid/BadgerCare HMO
                  subcontracts is included in all the HMO's subcontracts for
                  medical services (and dental care, if covered). The affidavit
                  shall specify the expiration date of all subcontracts.

              b.  These HMOs shall submit the HMO management subcontract for
                  review as specified for new contractors above.

          4.  Review and Approval of New Subcontracts and Changes in Approved
              Subcontracts During the Contract Period.

              a.  New subcontracts and changes in approved subcontracts shall be
                  reviewed and approved by the Department before taking effect.
                  This requirement will be considered met if the Department has
                  not responded within 15 consecutive days of the date of
                  Departmental receipt of request.

              b.  This review requirement applies to changes which affect the
                  amount, duration, scope. location, or quality of services. In
                  other words, technical changes do not have to be approved.


          HMO Contract for January 1, 2000 - December 31, 2001

                                       112

<PAGE>

              c.  Changes in rates paid do not have to be approved, with the
                  exception of changes in the amounts paid to HMO management
                  services subcontractors.

              d.  The HMO shall submit notice within 10 days to the Department
                  of addition or deletion of subcontracts involving: (i) a
                  clinic or group of physicians, (ii) an individual physician.

              e.  The HMO shall notify the Department's enrollment broker within
                  10 days of additions to, and deletions from the provider
                  network.

              f.  The HMO shall submit to the enrollment broker an electronic
                  listing of all network Medicaid providers, facilities and
                  pharmacies within the first 10 days of each calendar quarter
                  in a mutually agreed upon format approved by the Department.
                  This listing will include, but is not limited to, provider
                  name, provider number, address, phone number, and specialty as
                  well as indicators designating whether a provider can be
                  selected as a PCP, and whether the PCP is accepting new
                  patients. The listing shall include only Medicaid certified
                  providers who are contracted with the HMO to provide contract
                  services to Medicaid/BadgerCare enrollees.

              g.  The HMO must send timely written notification to enrollees
                  whose PCP, mental health provider, gatekeeper or dental clinic
                  terminates a contract with the HMO. The Department must
                  approve notifications before they are sent to enrollees.

              h.  The HMO shall be required to submit transition plans when a
                  primary care provider(s), mental health provider(s),
                  gatekeeper or dental clinic terminates their contractual
                  relationship with the HMO. The transition plan will address
                  continuity of care issues, enrollee notification and any other
                  information required by the Department to assure adequate
                  enrollee access. The Department will either approve, deny, or
                  modify the transition plan prior to the effective date of the
                  subcontract change.

          5.  Disclosure Statements

              Ownership

              The HMO agrees to submit to the Department within 30 days of
              contract signing full and complete information as to the identity
              of each person or corporation with an ownership or controlling
              interest in the HMO, or any subcontractor in which the HMO has a 5
              percent or more ownership interest.

              a.  Definition of "Person with an Ownership or Controlling
                  Interest." --A "person with an ownership or controlling
                  interest" means a person or corporation that:

                  1.   Owns directly or indirectly, 5 percent or more of the
                       HMO's capital or stock or receives 5 percent or more of
                       its profits (see subsection B);


HMO Contract for January 1. 2O00 - December 31, 2001

                                       113

<PAGE>

                  2 .  Has an interest in any mortgage, deed of trust, note, or
                       other obligation secured in whole or in part by the HMO
                       or by its property or assets, and that interest is equal
                       to or exceeds 5 percent of the total property and assets
                       of the HMO; or

                  3.   Is an officer or director of the HMO (if it is organized
                       as a corporation) or is a partner in the HMO (if it is
                       organized as a partnership).

          b.      Calculation of 5 percent Ownership or Receipt of Profits.-The
                  percentage of direct ownership or control is calculated by
                  multiplying the percent of interest which a person owns by the
                  percent of the HMO's assets used to secure the obligation.
                  Thus, if a person owns 10 percent of a note secured by 60
                  percent of the HMO's assets, the person owns 6 percent of the
                  HMO.

                  The percentage of indirect ownership or control is calculated
                  by multiplying the percentages of ownership in each
                  organization. Thus, if a person owns 10 percent of the stock
                  in a corporation which owns 80 percent of the stock of the
                  HMO, the person owns 8 percent of the HMO.

          c.      Information to be Disclosed - The following information must
                  be disclosed:

                  1.   The name and address of each person with an ownership or
                       controlling interest of 5 percent or more in the HMO or
                       in any subcontractor in which the HMO has direct or
                       indirect ownership of 5 percent or more;

                  2.   A statement as to whether any of the persons with
                       ownership or controlling interest is related to any other
                       of the persons with ownership or controlling interest as
                       spouse, parent, child, or sibling; and

                  3.   The name of any other organization in which the person
                       also has ownership or controlling interest. This is
                       required to the extent that the HMO can obtain this
                       information by requesting it in writing. The HMO must
                       keep copies of all of these requests and responses to
                       them, make them available upon request, and advise the
                       Department when there is no response to a request.

          d.      Potential Sources of Disclosure Information - This information
                  may already have been reported on Form HCFA-1513.  "Disclosure
                  of Ownership and Controlling Interest Statement." Form HCFA-
                  1513 is likely to have been completed in two different cases.
                  First, if an HMO is Federally qualified and has a Medicare
                  contract, it is required to file Form HCFA-1513 with HCFA
                  within 120 days of the HMO's fiscal year end. Secondly. if the
                  HMO is owned by or has subcontracts with Medicaid providers
                  which are reviewed by the State survey agency these providers
                  may have completed Form HCFA-1513 as part of the survey
                  process. If Form HCFA-15 13 has not been completed, the HMO


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               may supply the ownership and,controlling information on a
               separate report or submit reports filed with the State's
               insurance or health regulators as long as these reports provide
               the necessary information for the prior 12 month period.

          e.   As directed by the HCFA Regional Office (RO), this Department
               must provide documentation of this disclosure information as part
               of the prior approval process for contracts. This documentation
               must be submitted to the Department and the RO prior to each
               contract period. If an HMO has not supplied the information that
               must be disclosed, a contract with the HMO is not considered
               approvable for this period of time and no FFP is available for
               the period of time preceding the disclosure.

         f.    A managed care entity may not knowingly have a person who is
               debarred, suspended, or otherwise excluded from participating in
               procurement activities under the Federal Acquisition Regulation
               or from participating in non-procurement activities as a
               director, officer, partner, or person with beneficial ownership
               of more than 5 percent of the entity's equity, or have an
               employment, consulting, or other agreement for the provision of
               items and services that are significant and material to the
               entity's obligations under irs contract with the State.

          g.   Business Transactions

               All HMOs which are not Federally qualified must disclose to the
               Department information on certain types of transactions they have
               with a "party in interest" as defined in the Public Health
               Service Act. (See Sections 1903(m)(2)(A)(viii) and 1903(m)(4) of
               the Act.):

               1.   Definition of a Party in Interest - As defined in Section
                    1318(b) of the Public Health Service Act, a party in
                    interest is:

                    a)   Any director, officer, partner, or employee responsible
                         for Management or administration of an HMO and HIO; any
                         person who is directly or indirectly the beneficial
                         owner of more than 5 percent of the equity of the HMO:
                         any person who is the beneficial owner of more than 5
                         percent of the HMO; or, in the case of an HMO organized
                         as a nonprofit corporation, an incorporator or member
                         of such corporation under applicable State corporation
                         law;

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                    b)   Any organization in which a person described in
                         subsection 1 is director, officer or partner; has,
                         directly or indirectly a beneficial interest of more
                         than 5 percent of the equity of the HMO; or has a
                         mortgage, deed of trust, note, or other interest
                         valuing more than 5 percent of the assets of the HMO,

                    c)   Any person directly or indirectly controlling,
                         controlled by, or under common control with an HMO; or

                    d)   Any spouse, child, or parent of an individual described
                         in subsections 1, 2, or 3.

               2.   Types of Transactions Which Must Be Disclosed--Business
                    transactions which must be disclosed include:

                    a)   Any sale, exchange or lease of any property between the
                         HMO and a party in interest;

                    b)   Any lending of money or other extension of credit
                         between the HMO and a party in interest; and

                    c)   Any furnishing for consideration of goods, services
                         (including management services) or facilities between
                         the HMO and the party in interest. This does not
                         include salaries paid to employees for services
                         provided in the normal course of their employment.

               3.   The information which must be disclosed in the transactions
                    listed in subsection b, between an HMO and a party in
                    interest includes:

                    a)   The name of the party in interest for each transaction;

                    b)   A description of each transaction and the quantity or
                         units involved;

                    c)   The accrued dollar value of each transaction during the
                         fiscal year; and

                    d)   Justification of the reasonableness of each
                         transaction.

               4.   If this Medicaid/BadgerCare HMO Contract is being renewed or
                    extended, the HMO must disclose information on these
                    business transactions which occurred during the prior
                    contract period. If the Contract is an initial contract with
                    Medicaid, but the HMO has operated previously in the
                    commercial or Medicare markets, information on business
                    transactions for the entire year preceding the initial
                    contract

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<PAGE>

                    period must be disclosed. The business transactions which
                    must be reported are not limited to transactions related to
                    serving the Medicaid enrollment. All of these HMO business
                    transactions must be reported.

     6.   The HMO shall notify Department within seven days of any notice by the
          HMO to a subcontractor, or any notice to the HMO from a subcontractor,
          of a subcontract termination, a pending subcontract termination, or a
          pending modification in subcontract terms, that could reduce
          Medicaid/BadgerCare enrollee access to care.

          a. If the Department determines that a pending subcontract termination
          or pending modification in subcontract terms will jeopardize enrollee
          access to care, then the Department may invoke the remedies provided
          for in Article IX and Article X of this Contract. These remedies
          include contract termination (notice to HMO and opportunity to correct
          are provided for), suspension of new enrollment, and giving enrollees
          an opportunity to enroll in a different HMO.

     7.   The HMO shall submit MOUs referred to in this Contract to the
          Department upon the Department's request.

     8.   The HMO shall submit to the Department copies of new MOUs, or changes
          in existing MOUs within 15 days of signing.

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