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Exhibit 10(b)




  MAGELLAN BEHAVIORAL HEALTH SHORT-TERM INCENTIVE PLAN
 (Effective October 1, 1999)  


Purpose


    The purpose of Magellan Behavioral Health Short-Term Incentive Plan (the "Plan") is to reward employees for attaining key measures of success during the fiscal
year and for contributing to the overall performance of Magellan Health Services, Inc. ("Magellan" or the "Company").



    Magellan
Behavioral Health's STIP is funded in part by the financial performance of Magellan Behavioral Health relative to its targets for the fiscal year, and in part by the
financial performance of Magellan Health Services relative to its earnings per share target.


    Any
cash distribution to Magellan Behavioral Health employees under the STIP is contingent upon the attainment of performance measures by both Magellan Health Services, Inc. and
Magellan Behavioral Health as outlined below.


Description of the Plan


    The Plan is designed to measure the success of Magellan Behavioral Health in achieving its financial targets as measured by cash flow. The STIP pool is funded
by a combination of (1) Magellan Behavior Health's performance against its cash flow target, and (2) a measure of corporate earnings per share (EPS). Distribution of STIP awards to
employees is determined by a combination of performance against corporate targets, business unit performance as applicable for non-corporate areas, the target bonus percentage assigned to the
position, and individual performance for the plan year. The Plan is driven by the budgeted financial measures (the "Targets") approved by the Company's board of Directors or by the Compensation
Committee of such Board of Directors. Any short-term incentive available, in whole or in part, will be based upon the following additive factors.




33.33%—Cash flows from operations defined as EBITDA, less working capital, less capital expenditures, excluding any unusual items


66.67%—Consolidated diluted EPS from continuing operations excluding any unusual items





    A
significant, unexpected change in the operations and cash flows of Magellan Behavioral Health (e.g., acquisitions and/or divestitures) may result in an adjustment to the Targets.
The Compensation Committee of the Board of Directors and CEO will determine which events, if any, should result in adjustments to the Targets.



Definitions



	•
	Unusual Items—charges to earnings or non-recurring gains or losses that the Company has
historically presented as non-operating charges in its consolidated statement of operations. Examples include gains or losses on asset sales, insurance or legal settlements, customer concessions
resulting in increased liquidity and/or contract extensions, office closure costs and related severance and asset impairments; charges to earnings related to mergers and acquisitions, including
severance cost, lease termination costs and outside consulting costs.



	•
	Capital Expenditures—payments to acquire property, plant and equipment or the costs of
developing internal-use software.






Plan Funding


    The Plan will be funded based on the level of actual results achieved compared to key financial targets. Magellan Health Services, Inc. must achieve 75% of the
target established for consolidated diluted EPS, and Magellan Behavioral Health must achieve 90% of the target established for Cash Flows before any cash funding of the Plan occurs.









    The
following tables detail the amount of the Pool payable based on budgeted Cash Flows and Consolidated Diluted EPS as described above:




  Cash Flows  



	Level of Achievement (% of target)
	 	 
	 	Incentive Pool Funding (Weighted 331/3%)

	<90%	 	=	 	0% Funded
	90% to 94%%	 	=	 	Fund at -6% for every 1% in this range
	<94% to 97%	 	=	 	Fund at -4% for every 1% in this range
	<97% to <100%	 	=	 	Fund at -2% for every 1% in this range
	100%	 	=	 	100% Funded
	<100% to 125%	 	=	 	100% Plus 1% for every 1% in this range






  Consolidated Diluted EPS  



	Level of Achievement (% of target)
	 	 
	 	Incentive Pool Funding (Weighted 661/3%)

	<75%	 	=	 	0% Funded
	75% to <81%	 	=	 	Fund at -1.5% for every 1% in this range
	81% to <91%	 	=	 	Fund at -1% for every 1% in this range
	91% to <100%	 	=	 	Fund at -0.5% for every 1% in this range
	100%	 	=	 	100% Funded
	<100% to 125%	 	=	 	100% Plus 1% for every 1% in this range



Allocation of Short-Term Incentive Pool


    Magellan Behavioral Health business unit and corporate departments will be allocated their respective portion of the STIP pool based on the factors and
criteria noted above.


Eligible Participants



	•
	Eligibility
for participation in the Plan is limited to regular full-time employees



	•
	Individual
target bonus percentages are based on position level within Magellan Behavioral Health.



	•
	Each
participant's individual target STIP award is based on a percentage of his/her salary as of September 30, 2000



	•
	Only
full-time active employees in a STIP eligible position hired by Magellan Behavioral Health prior to April 1, 2000 are eligible to participate
in the fiscal year 2000 plan. Employees hired between October 1, 1999 and March 31, 2000 will receive a pro-rata portion of their award for partial year participation (number of
semi-monthly pay periods of employment divided by twenty-four)



	•
	Non-management
employees have a separate and specific schedule for eligibility.






Condition of Payment


    No incentive compensation will be paid to any employee if employment is terminated, whether voluntary or involuntary, prior to the actual payment date, unless
otherwise provided for in an employment agreement. However, exceptions may be made to the foregoing policy in unusual cases including, but not limited to, the death of an employee during the fiscal
year or termination of employment due to total or partial disability or retirement with the consent of the Company by the President and COO of Magellan Health Services, or, in the case of the
President's compensation, the CEO of Magellan Health Services, Inc. by recommendation to the Compensation Committee of the
Board.








    Short-term
incentive awards are payable to employees during the second quarter of the fiscal year following the plan year, unless an executed Supplemental Accumulation Plan deferral
election is made prior to October 31, 2000 to defer this bonus payment.



Method of Calculation


    Each eligible participant must meet the goals established by management. In order to receive a bonus, each participant must be recommended for all, part, none,
or an amount greater than the bonus (up to 150% of target) based on individual performance, by his or her direct supervisor, with the approval of the President and COO, or in the case of the President
and COO, with the approval of the Compensation Committee of the Board. Each participant's assigned bonus percentage of base pay corresponds to established targets set by management. The various bonus
target percentages are:




  Target Bonus Percentage  



	Level in Organization
	 	Target Bonus % of Base Salary

	President and COO	 	40 to 50%
	EVP & Above	 	25 to 35%
	SVP	 	20 to 30%
	RVP/LOU President	 	20 to 30%
	VP	 	15 to 25%
	Director	 	10 to 20%
	Manager	 	5 to 10%
	Supervisor	 	5%
	Other Exempt	 	3%
	Nonexempt	 	2%



    Actual
payments under the Plan are at the sole discretion of the President and COO of Magellan Behavioral Health depending on the financial condition and future prospects of the
Company at the time payment is due.


    For
officer positions, a percentage of the short-term incentive may be replaced by a stock option grant.


Interpretation, Administration and Duration


    Any areas of question, interpretation, dispute, etc. concerning any area of this plan shall be governed by a Committee of Company officers. The Committee is
defined as the CEO, the Executive Vice President/CFO, and the SVP of Human Resources. This plan shall be effective for the 2000 fiscal year beginning October 1, 1999. The Committee and the
Board of Directors each retain the authority to
modify, repeal or discontinue the plan on a prospective or retrospective basis, for any reason.










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MAGELLAN BEHAVIORAL HEALTH SHORT-TERM INCENTIVE PLAN (Effective October 1, 1999)

Cash Flows

Consolidated Diluted EPS

Target Bonus Percentage