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                                                                   Exhibit 10.46



                              EMPLOYMENT AGREEMENT

         This Employment Agreement (the "Agreement") is made this 29th day of
September, 1997 (the "Effective Date") by and between QuadraMed Corporation, a
Delaware corporation ("QuadraMed" or the "Employer"), and Steven D. McCoy, an
individual resident of California (the "Employee").

         WHEREAS, concurrently with the execution and delivery of this
Agreement, the Employer is acquiring from the Employee and certain other
stockholders of Healthcare Revenue Management, Inc. (the "Company") in excess of
ninety percent (90%) of the issued shares of stock of the Company pursuant to
that certain Acquisition Agreement and Plan of Merger dated September 24, 1997
by and among QuadraMed, HRM Acquisition Corporation, the Company, the Employee
and certain other stockholders of the Company (the "Merger Agreement").

         WHEREAS, the Employer desires the Employee's employment with the
Employer, and the Employee wishes to accept such employment, upon the terms and
conditions set forth in this Agreement.

         NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:

         1.  Definitions. For the purposes of this Agreement, the following
terms have the meanings specified or referred to in this Section 1.

             1.1. "Agreement" shall mean this Employment Agreement, including
Exhibit "A" attached hereto and incorporated herein by this reference, as
amended from time to time.

             1.2. "Basic Compensation" shall mean Salary and Benefits.

             1.3. "Benefits" shall be as defined in Section 3.1(b).

             1.4. "Board of Directors" shall mean the board of directors of the
Employer.

             1.5. "Confidential Information" shall mean any and all:

                  (a)  trade secrets concerning the business and affairs of the
Employer, product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples, inventions
and ideas, past, current and planned research and development, current and
planned manufacturing or distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists, market studies,
business plans, computer software and programs (including object code and source
code), computer software and database technologies, systems, structures and
architectures (and related formulae, compositions, processes, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information, and any other information, however documented, that is a trade
secret within the meaning of applicable law;
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                  (b) information concerning the business and affairs of the
Employer (which includes historical financial statements, financial projections
and budgets, historical and projected sales, capital spending budgets and plans,
the names and backgrounds of key personnel and personnel training and techniques
and materials), however documented; and

                  (c) notes, analysis, compilations, studies, summaries and
other material prepared by or for the Employer containing or based, in whole or
in part, on any information included in the foregoing.

             1.6. "disability" shall be as defined in Section 6.2

             1.7. "Effective Date" shall mean the date stated in the first
paragraph of the Agreement.

             1.8. "Employee Invention" shall mean any idea, invention,
technique, modification, process or improvement (whether patentable or not), any
industrial design (whether registerable or not), any mask work, however fixed or
encoded, that is suitable to be fixed, embedded or programmed in a semiconductor
product (whether recordable or not), and any work of authorship (whether or not
copyright protection may be obtained for it) created, conceived or developed by
the Employee, either solely or in conjunction with others, during the Employment
Period, or a period that includes a portion of the Employment Period, that
relates in any way to, or is useful in any manner in, the business then being
conducted or proposed to be conducted by the Employer, and any such item created
by the Employee, either solely or in conjunction with others, following
termination of the Employee's employment with the Employer, that is based upon
or uses Confidential Information.

             1.9. "Employment Period" shall mean the term of the Employee's
employment under this Agreement.

             1.10. "Fiscal Year" shall mean the Employer's fiscal year, as it
exists on the Effective Date or as changed from time to time.

             1.11. "for cause" shall be as defined in Section 6.3.

             1.12. "person" shall mean any individual, corporation (including
any non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization or governmental
body.

             1.13. "Post-Employment Period" shall be as defined in Section 8.2.

             1.14. "Proprietary Items" shall be as defined in Section
7.2(a)(iv).

             1.15. "Salary" shall be as defined in Section 3.1(a).

      2.     Employment Terms and Duties.
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             2.1. Employment. The Employer hereby employs the Employee, and the
Employee hereby accepts employment by the Employer, upon the terms and
conditions set forth in this Agreement.

             2.2. Term. Subject to the provisions of Section 6, the term of the
Employee's employment under this Agreement will be two (2) years, beginning on
the Effective Date and ending on the second (2nd) anniversary of the Effective
Date.

             2.3. Duties. The Employee will have such duties as are assigned or
delegated to the Employee by the Board of Directors or the Chief Executive
Officer, President or Chief Operating Officer of the Employer, and will
initially serve as a Senior Vice President of the Employer. The Employee will
devote his or her entire business time, attention, skill and energy exclusively
to the business of the Employer, will use his or her best efforts to promote the
success of the Employer's business and will cooperate fully with the Board of
Directors and the Employer's executive officers in the advancement of the best
interests of the Employer. Nothing in this Section 2.3, however, will prevent
the Employee from engaging in additional activities in connection with personal
investments and community affairs that are not inconsistent with the Employee's
duties under this Agreement.

      3.     Compensation.

             3.1. Basic Compensation.

                  (a) Salary. The Employee will be paid an annual salary of One
Hundred Seventy-Five Thousand Dollars ($175,000), subject to adjustment as
provided below (the "Salary"), which will be payable in equal periodic
installments according to the Employer's customary payroll practices, but no
less frequently than monthly. The Salary will not be adjusted for a period of
two (2) years from the Effective Date. If the Employee's employment with the
Employer is continued following the second (2nd) anniversary of the Effective
Date, the Salary will be reviewed by the Board of Directors or the Chief
Executive Officer, President or Chief Operating Officer of the Employer not less
frequently than annually, and may be adjusted upward or downward in the sole
discretion of the Board of Directors or the Chief Executive Officer, President
or Chief Operating Officer of the Employer.

                  (b) Bonus. Upon execution of this Agreement by both parties,
the Employee shall be entitled to receive from the Employer a one time, lump sum
bonus payment of Thirty Thousand Dollars ($30,000) in consideration of the
Employee's continued employment with the Employer.

                  (c) Withholdings. The Employer will deduct and withhold, from
the Salary and the Bonus payable to the Employee under Sections 3.1(a) and
3.1(b) above, any and all applicable federal, state and local income and
employment withholding taxes and any other amounts required to be deducted or
withheld by the Employer under applicable statute or regulation.
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                  (d) Benefits. The Employee will, during the Employment Period,
be permitted to participate in such pension, profit sharing, bonus, life
insurance, hospitalization, major medical and other employee benefit plans of
the Employer that may be in effect from time to time, to the extent the Employee
is eligible under the terms of those plans (collectively, the "Benefits").

      4.     Facilities and Expenses. The Employer will furnish the Employee
office space, equipment, supplies and such other facilities and personnel as the
Employer deems necessary or appropriate for the performance of the Employee's
duties under this Agreement. The Employer will pay the Employee's dues in such
professional societies and organizations as the Chairman of the Board, Chief
Executive Officer, President or Chief Operating Officer of the Employer deems
appropriate, and will pay on behalf of the Employee (or reimburse the Employee
for) reasonable expenses incurred by the Employee at the request of, or on
behalf of, the Employer in the performance of the Employee's duties pursuant to
this Agreement, and in accordance with the Employer's employment policies. The
Employee must file expense reports with respect to such expenses in accordance
with the Employer's policies.

      5.     Vacations and Holidays. The Employee will be entitled to four (4)
weeks paid vacation each Fiscal Year in accordance with the vacation policies of
the Employer in effect for its officers from time to time. Vacation must be
taken by the Employee at such time or times as approved by the Chairman of the
Board, Chief Executive Officer, President or Chief Operating Officer of the
Employer. The Employee will also be entitled to the paid holidays set forth in
the Employer's policies.

      6.     Termination.

             6.1. Events of Termination. The Employment Period, the Employee's
Basic Compensation and any and all other rights of the Employee under this
Agreement or otherwise as an employee of the Employer will terminate (except as
otherwise provided in this Section 6):

                  (a) upon the death of the Employee;

                  (b) upon the disability of the Employee (as defined in Section
6.2) immediately upon notice from either party to the other;

                  (c) upon termination by the Employer, without cause or for
cause (as defined in Section 6.3), immediately upon notice from the Employer to
the Employee, or at such later time as such notice may specify.

             6.2. Definition of Disability. For purposes of Section 6.1, the
Employee will be deemed to have a "disability" if, he or she is disabled as
defined in the Employer's disability insurance policy applicable to the
Employee.
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             6.3. Definition of "for cause". For purposes of Section 6.1, the
phrase "for cause" means: (a) the Employee's breach of this Agreement; (b) the
Employee's negligence in attention to material affairs of the Employer or
failure to adhere to any written Employer policy if the Employee has been given
a reasonable opportunity to comply with such policy or cure his or her
negligence or failure to comply; (c) the appropriation (or attempted
appropriation) of a material business opportunity of the Employer, including
attempting to secure or securing any personal profit in connection with any
transaction entered into on behalf of the Employer; (d) the misappropriation (or
attempted misappropriation) of any of the Employer's funds or property; (e) the
Employee's commission of any crime or an act of dishonesty, fraud or moral
turpitude or knowingly making false or misleading statements in connection with
his or her employment; or (f) the conviction of, the indictment for (or its
procedural equivalent) or the entering of a guilty plea or plea of no contest
with respect to, a felony, the equivalent thereof, or any other crime with
respect to which imprisonment is a possible punishment.

             6.4. Termination Pay. Effective upon the termination of this
Agreement, the Employer will be obligated to pay the Employee (or, in the event
of his or her death, his or her designated beneficiary as defined below) only
such compensation as is provided in this Section 6.4, and in lieu of all other
amounts and in settlement and complete release of all claims the Employee may
have against the Employer. For purposes of this Section 6.4, the Employee's
designated beneficiary will be such individual beneficiary or trust, located at
such address, as the Employee may designate by notice to the Employer from time
to time or, if the Employee fails to give notice to the Employer of such a
beneficiary, the Employee's estate. Notwithstanding the preceding sentence, the
Employer will have no duty, in any circumstances, to attempt to open an estate
on behalf of the Employee, to determine whether any beneficiary designated by
the Employee is alive or to ascertain the address of any such beneficiary, to
determine the existence of any trust, to determine whether any person or entity
purporting to act as the Employee's personal representative (or the trustee of a
trust established by the Employee) is duly authorized to act in that capacity,
or to locate or attempt to locate any beneficiary, personal representative or
trustee.

                  (a) Termination by the Employer Without Cause. During the
first (1st) year of this Agreement, if the Employer terminates this Agreement
without cause, the Employer will pay the Employee the Employee's salary through
the first anniversary of the Effective Date and for four (4) consecutive
calendar months thereafter. During the second (2nd) year of this Agreement, if
the Employer terminates this Agreement without cause, the Employer will pay the
Employee the Employee's Salary for the remainder, if any, of the calendar month
in which such termination is effective and for four (4) consecutive calendar
months thereafter. Notwithstanding the preceding sentence, if the Employee
obtains other employment prior to the end of the period in which compensation is
being paid pursuant to this Section 6.4(a), he or she must promptly give notice
thereof to the Employer, and the Salary payments under this Agreement for any
period after the Employee obtains other employment will be reduced by the amount
of the cash compensation received and to be received by the Employee from the
Employee's other employment for services performed during such period. All
payments pursuant to this Section 6.4(a) will be payable in equal periodic
installments
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according to Employer's customary payroll practices, but no less frequently than
monthly. For purposes of this Section 6.4(a), termination by the Employer
without cause shall include a termination of the Employee's employment at his
initiative following the occurrence, without the Employee's prior written
consent, of one or more of the following events: (i) a reduction in the
Employee's Salary; (ii) a material diminution in the Employee's duties or the
assignment to the Employee of duties which are materially inconsistent with the
Employee's duties or which materially impair the Employee's ability to function
in his or her then-current position; or (iii) a relocation of the Employee's
principal place of employment by more than forty-five (45) miles.

                  (b) Termination by the Employer for Cause. If the Employer
terminates this Agreement for cause, the Employee will be entitled to receive
his or her Salary only through the date such termination is effective.

                  (c) Termination upon Disability. If this Agreement is
terminated by either party as a result of the Employee's disability, as
determined under Section 6.2, the Employer will pay the Employee his or her
Salary for the lesser of (i) four (4) consecutive calendar months or (ii) the
period until disability insurance benefits commence under the disability
insurance coverage furnished by the Employer to the Employee.

                  (d) Termination upon Death. If this Agreement is terminated
because of the Employee's death, the Employee will be entitled to receive his or
her Salary through the end of the calendar month in which his or her death
occurs.

                  (e) Benefits. The Employee's accrual of, or participation in
plans providing for, the Benefits will cease at the effective date of the
termination of this Agreement, and the Employee will be entitled to accrued
Benefits pursuant to such plans only as provided in such plans.

      7.     Non-Disclosure Covenant; Employee Inventions.

             7.1. Acknowledgments by the Employee. The Employee acknowledges
that (a) during the Employment Period and as a part of his or her employment,
the Employee will be afforded access to Confidential Information; (b) public
disclosure of such Confidential Information could have an adverse effect on the
Employer and its business; (c) because the Employee possesses substantial
technical expertise and skill with respect to the Employer's business, the
Employer desires to obtain exclusive ownership of each Employee Invention, and
the Employer will be at a substantial competitive disadvantage if it fails to
acquire exclusive ownership of each Employee Invention; (d) the Employer has
required that the Employee make the covenants in this Section 7 as a condition
to its acquisition of the Employee's stock in the Company; and (e) the
provisions of this Section 7 are reasonable and necessary to prevent the
improper use or disclosure of Confidential Information and to provide the
Employer with exclusive ownership of all Employee Inventions.

             7.2. Agreements of the Employee. In consideration of the
compensation and
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benefits to be paid or provided to the Employee by the Employer under this
Agreement, the Employee covenants as follows:

                  (a)  Confidentiality.

                       (i)   During and following the Employment Period, the
Employee will hold in confidence the Confidential Information and will not
disclose it to any person except with the specific prior written consent of the
Employer or except as otherwise expressly permitted by the terms of this
Agreement.

                       (ii)  Any trade secrets of the Employer will be entitled
to all of the protections and benefits under any applicable law. If any
information that the Employer deems to be a trade secret is found by a court of
competent jurisdiction not to be a trade secret for purposes of this Agreement,
such information will, nevertheless, be considered Confidential Information for
purposes of this Agreement. The Employee hereby waives any requirement that the
Employer submit proof of the economic value of any trade secret or post a bond
or other security.

                       (iii) None of the foregoing obligations and restrictions
applies to any part of the Confidential Information that the Employee
demonstrates was or became generally available to the public other than as a
result of a disclosure by the Employee.

                       (iv)  The Employee will not remove from the Employer's
premises (except to the extent such removal is for purposes of the performance
of the Employee's duties at home or while traveling, or except as otherwise
specifically authorized by the Employer) any document, record, notebook, plan,
model, component, device or computer software or code, whether embodied in a
disk or in any other form (collectively, the "Proprietary Items"). The Employee
recognizes that, as between the Employer and the Employee, all of the
Proprietary Items, whether or not developed by the Employee, are the exclusive
property of the Employer. Upon termination of this Agreement by either party, or
upon the request of the Employer during the Employment Period, the Employee will
return to the Employer all of the Proprietary Items in the Employee's possession
or subject to the Employee's control, and the Employee shall not retain any
copies, abstracts, sketches or other physical embodiment of any of the
Proprietary Items.

                  (b) Employee Inventions. Each Employee Invention will belong
exclusively to the Employer. The Employee acknowledges that all Employee
Inventions are works made for hire and the property of the Employer, including
any copyrights, patents or other intellectual property rights pertaining
thereto. If it is determined that any such works are not works made for hire,
the Employee hereby assigns to the Employer all of the Employee's right, title
and interest, including all rights of copyright, patent and other intellectual
property rights, to or in such Employee Inventions. The Employee covenants that
he or she will promptly:

                       (i)   disclose to the Employer in writing any Employee
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Invention;

                       (ii)  assign to the Employer or to a party designated by
the Employer, at the Employer's request and without additional compensation, all
of the Employee's right to the Employee Invention for the United States and all
foreign jurisdictions;

                       (iii) execute and deliver to the Employer such
applications, assignments and other documents as the Employer may request in
order to apply for and obtain patents or other registrations with respect to any
Employee Invention in the United States and any foreign jurisdictions;

                       (iv)  sign all other papers necessary to carry out the
above obligations; and

                       (v)   give testimony and render any other assistance in
support of the Employer's rights to any Employee Invention.

No assignment of this Agreement shall extend to Employee Inventions, the
assignment of which is prohibited by California Labor Code Section 2870, a copy
of which is attached hereto as Exhibit "A" and incorporated herein by this
reference.

             7.3. Disputes or Controversies. The Employee recognizes that should
a dispute or controversy arising from or relating to this Agreement be submitted
for adjudication to any court, arbitration panel or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized. All
pleadings, documents, testimony and records relating to any such adjudication
will be maintained in secrecy and will be available for inspection by the
Employer, the Employee and their respective attorneys and experts, who will
agree, in advance and in writing, to receive and maintain all such information
in secrecy, except as may be limited by them in writing.

      8.     Non-Competition and Non-Interference.

             8.1. Acknowledgments by the Employee. The Employee acknowledges
that: (a) the services to be performed by him or her under this Agreement are of
a special, unique, unusual, extraordinary and intellectual character; (b) the
Employer's business is national in scope and its products are marketed
throughout the United States; (c) the Employer competes with other businesses
that are or could be located in any part of the United States; (d) the Employer
has required that the Employee make the covenants set forth in this Section 8 as
a condition to the its acquisition of the Employee's stock in the Company; and
(e) the provisions of this Section 8 are reasonable and necessary to protect the
Employer's business.

             8.2. Covenants of the Employee. In consideration of the
acknowledgments by the Employee, and in consideration of the compensation and
benefits to be paid or provided to the Employee by the Employer, the Employee
covenants that he or she will not, directly or indirectly:
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                  (a) during the Employment Period, except in the course of his
or her employment hereunder, engage or invest in, own, manage, operate, finance,
control or participate in the ownership, management, operation, financing or
control of, be employed by, associated with or in any manner connected with,
lend the Employee's name or any similar name to or lend Employee's credit to or
render services or advice to, any business whose products or activities compete
in whole or in part with the products or activities of the Employer anywhere
within the United States; provided, however, that the Employee may purchase or
otherwise acquire up to (but not more than) one percent (1%) of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended;

                  (b) whether for the Employee's own account or for the account
of any other person, at any time during the Employment Period and the
Post-Employment Period, solicit business of the same or similar type being
carried on by the Employer, from any customer, client, vendor or other business
source of the Employer, whether or not the Employee had personal contact with
such person during and by reason of the Employee's employment with the Employer;

                  (c) whether for the Employee's own account or the account of
any other person (i) at any time during the Employment Period and the
Post-Employment Period, solicit, employ or otherwise engage as an employee,
independent contractor or otherwise, any person who is or was an employee of the
Employer at any time during the Employment Period or in any manner induce or
attempt to induce any employee of the Employer to terminate his or her
employment with the Employer or (ii) at any time during the Employment Period
and for two (2) years thereafter, interfere with the Employer's relationship
with any person, including any person who at any time during the Employment
Period was an employee, contractor, supplier or customer of the Employer; or

                  (d) at any time during or after the Employment Period,
disparage the Employer or any of its stockholders, directors, officers,
employees or agents. For purposes of this Section 8.2, the term "Post-Employment
Period" means the two (2) year period beginning on the date of termination of
the Employee's employment with the Employer. If any covenant in this Section 8.2
is held to be unreasonable, arbitrary or against public policy, such covenant
will be considered to be divisible with respect to scope, time and geographic
area, and such lesser scope, time or geographic area, or all of them, as a court
of competent jurisdiction may determine to be reasonable, not arbitrary, and not
against public policy, will be effective, binding, and enforceable against the
Employee. The period of time applicable to any covenant in this Section 8.2 will
be extended by the duration of any violation by the Employee of such covenant.
The Employee will, while the covenant under this Section 8.2 is in effect, give
notice to the Employer, within ten (10) days after accepting any other
employment, of the identity of the Employee's employer. The Employer may notify
such employer that the Employee is bound by this Agreement and, at the
Employer's election, furnish such employer with a copy of this Agreement or
relevant portions thereof.
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      9.     General Provisions.

             9.1. Injunctive Relief and Additional Remedy. The Employee
acknowledges that the injury that would be suffered by the Employer as a result
of a breach of the provisions of this Agreement (including any provision of
Sections 7 and 8) would be irreparable and that an award of monetary damages to
the Employer for such a breach would be an inadequate remedy. Consequently, the
Employer will have the right, in addition to any other rights it may have, to
obtain injunctive relief to restrain any breach or threatened breach or
otherwise to specifically enforce any provision of this Agreement, and the
Employer will not be obligated to post bond or other security in seeking such
relief. Without limiting the Employer's rights under this Section 9 or any other
remedies of the Employer, if the Employee breaches any of the provisions of
Section 7 or 8, the Employer will have the right to cease making any payments
otherwise due to the Employee under this Agreement.

             9.2. Covenants of Sections 7 and 8 are Essential and Independent
Covenants. The covenants by the Employee in Sections 7 and 8 are essential
elements of this Agreement, and without the Employee's agreement to comply with
such covenants, the Employer would not have acquired the Employee's stock under
the Merger Agreement and the Employer would not have entered into this Agreement
or employed or continued the employment of the Employee. The Employer and the
Employee have independently consulted their respective counsel and have been
advised in all respects concerning the reasonableness and propriety of such
covenants, with specific regard to the nature of the business conducted by the
Employer. The Employee's covenants in Sections 7 and 8 are independent covenants
and the existence of any claim by the Employee against the Employer under this
Agreement or otherwise will not excuse the Employee's breach of any covenant in
Section 7 or 8. If the Employee's employment hereunder expires or is terminated,
this Agreement will continue in full force and effect as is necessary or
appropriate to enforce the covenants and agreements of the Employee in Sections
7 and 8.

             9.3. Representations and Warranties by the Employee. The Employee
represents and warrants to the Employer that the execution and delivery by the
Employee of this Agreement do not, and the performance by the Employee of the
Employee's obligations hereunder will not, with or without the giving of notice
or the passage of time, or both: (a) violate any judgment, writ, injunction or
order of any court, arbitrator or governmental agency applicable to the
Employee; or (b) conflict with, result in the breach of any provisions of or the
termination of or constitute a default under, any agreement to which the
Employee is a party or by which the Employee is or may be bound.

             9.4. Obligations Contingent on Performance. The obligations of the
Employer hereunder, including its obligation to pay the compensation provided
for herein, are contingent upon the Employee's performance of the Employee's
obligations hereunder.

             9.5. Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by either party in exercising any right, power or privilege under this Agreement
will operate as a waiver of such right,
<PAGE>   11
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party,
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement.

             9.6. Binding Effect; Delegation of Duties Prohibited. This
Agreement shall inure to the benefit of, and shall be binding upon, the parties
hereto and their respective successors, assigns, heirs and legal
representatives, including any entity with which the Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred. The duties and covenants of the Employee under this Agreement,
being personal, may not be delegated.

             9.7. Notices. All notices, consents, waivers and other
communications under this Agreement must be in writing and will be deemed to
have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by facsimile (with written confirmation of receipt), provided
that a copy is mailed by registered mail, return receipt requested or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):

If to Employer:             QuadraMed Corporation
                            80 East Sir Francis Drake Boulevard, Suite 2A
                            Larkspur, California 94939
                            Attention: James D. Durham
                            Facsimile: (415) 461-3953

With a required copy to:    Zevnik Horton Guibord & McGovern, L.L.P.
                            101 West Broadway, 17th Floor
                            San Diego, California 92101
                            Attention: Steven G. Rowles, Esq.
                            Facsimile: (619) 515-9629

If to the Employee:         Healthcare Revenue Management, Inc.
                            301 Mission Street, 5th Floor
                            San Francisco, California 94105
                            Attention: Steven D. McCoy
                            Facsimile: (415) 227-4677

With a required copy to:    Foley McIntosh & Foley
<PAGE>   12
                            3675 Mt. Diablo Boulevard, Suite 250
                            Lafayette, California 94549
                            Attention: Jay Richard Strauss
                            Facsimile: (510) 284-3029

             9.8. Entire Agreement; Amendments. This Agreement, the Merger
Agreement and the documents executed in connection with the Merger Agreement
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, between the parties hereto with respect to the subject matter hereof.
This Agreement may not be amended orally, but only by an agreement in writing
signed by the parties hereto.

             9.9. Governing Law. This Agreement will be governed by the laws of
the State of Delaware without regard to conflicts of laws principles.

             9.10. Jurisdiction. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against either of the parties in the courts of the State of California,
County of Marin, or, if it has or can acquire jurisdiction, in the United States
District Court for the Northern District of California, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on either party anywhere in the world.

             9.11. Section Headings, Construction. The headings of sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding section or sections of this Agreement unless otherwise
specified. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.

             9.12. Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.

             9.13. Counterparts; Facsimile. This Agreement may be executed in
one or more counterparts, all of which when fully-executed and delivered by all
parties hereto and taken together shall constitute a single agreement, binding
against each of the parties. To the maximum extent permitted by law or by any
applicable governmental authority, any document may be signed and transmitted by
facsimile with the same validity as if it were an ink-signed document. Each
signatory below represents and warrants by his or her signature that he or she
is duly authorized (on behalf of the respective entity for which such signatory
has acted) to execute and deliver this instrument and any other document related
to this transaction, thereby
<PAGE>   13
fully binding each such respective entity.

             9.14. Resolution of Disputes. Any controversy arising out of this
Agreement or breach thereof shall be settled by arbitration in San Francisco,
California, in accordance with the rules of the American Arbitration
Association, and judgment entered upon the award rendered by arbitrator may be
enforced by appropriate judicial action pursuant to the California Code of Civil
Procedure. The arbitration panel shall consist of one (1) member, which shall be
a person agreed to by each party to dispute within thirty (30) days following
notice by one party that desires the matter to be arbitrated. If the parties are
unable within such thirty (30) day period to agree upon an arbitrator, than the
panel shall be one (1) arbitrator selected by the San Francisco office of the
American Arbitration Association, which arbitrator shall be experienced in
commercial law and acquisition transactions and knowledgeable with respect to
the subject matter of the dispute. The losing party shall bear any fees and
expenses of the arbitrator, other tribunal fees and expense and reasonable
attorneys fees of both parties, and the cost of such witness and other
reasonable costs or expenses incurred by him or the prevailing party. The
arbitrator shall render a decision within thirty (30) days following the close
of presentation by the parties to their cases and any rebuttal. The parties
shall agree within thirty (30) days following the selection of the arbitrator to
any pre-hearing procedures or further procedures necessary for the arbitration
to proceed, including, interrogatories or other discovery, provided, in any
event, each party shall be entitled to discovery in accordance with California
Code of Civil Procedures Section 1283.05.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>   14
         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date above first written above.

                                 QUADRAMED CORPORATION


                                 By:/s/ James D. Durham
                                        James D. Durham, Chief Executive Officer



                                 /s/ Steven D. McCoy

                    [SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
<PAGE>   15
                                   EXHIBIT "A"

                       CALIFORNIA LABOR CODE SECTION 2870

         Section 2870. Application of provision providing that employee will
assign or offer to assign rights in invention to employer.

         (a)  Any provision in an employment agreement which provides that an
employee will assign, or offer to assign, any of his or her rights in an
invention to his or her employer will not apply to an invention that the
employee developed entirely on his or her own time without using the employer's
equipment, supplies, facilities, or trade secret information except for those
inventions that either:

              (1)  Relate at the time of conception or reduction to practice of
the invention to the employer's business, or actual or demonstrably anticipated
research or development of the employer.

              (2)  Result from any work performed by the employee for his
employer.

         (b)  To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under subdivision (a), the provision is against the
public policy of this state and is unenforceable.