1993 Non-Qualifed Stock Option Letter sent to Key Employees

                                                   _______, 1993


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4 Taft Court
Rockville, MD  20850

Re:      1993 Non-Qualified Stock Option Plan

Dear ________:

         Mid Atlantic Medical Services, Inc. (the "Corporation") has adopted the
1993  Non-Qualified  Stock Option Plan (the "Plan") which provides for the grant
of options to purchase  shares of the  Corporation's  common stock  ("stock") to
certain key employees of the  Corporation  and its  subsidiaries.  Since you are
considered a key employee,  and since the Corporation desires you to remain, you
are  being  provided  with a means to  acquire  a  proprietary  interest  in the
Corporation's success. You have been granted, subject to the following terms and
conditions,  the right to acquire shares of the Corporation's stock. The date of
grant will be _______,  1993. The terms and  conditions  governing this grant to
you are set forth below.

1.       Subject to the terms and conditions of the Plan (a copy of
         which is attached hereto and made a part hereof) and this
         letter, the Corporation grants to you the option to purchase
         from the Corporation all or any part of an aggregate number
         of two thousand one hundred (2,100) shares of stock
         (hereinafter such shares of stock are referred to as the
         "optioned shares" and the option to purchase the optioned
         shares is referred to as the "option").

2.       The price to be paid for the optioned  shares shall be 100% of the fair
         market value of the stock as of ______, 1993.

3.       Subject to the terms and  conditions  of the Plan and this letter,  the
         options may be exercised by you while in the employ of the Corporation,
         in whole or in part, from time to time. You can exercise options for up
         to seven hundred (___) shares  beginning  June 1, 1994, for up to seven
         hundred (___) shares beginning June 1, 1995 and for up to seven hundred
         (___) shares beginning June 1, 1996. The


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         Corporation  will use its best  efforts to  register  option  shares of
         stock under the  Securities  Act of 1933, as amended,  using a Form S-8
         registration statement.


         Optioned  shares  must be  purchased  within  5 years  from the date of
         grant,  _______,  1993.  That is,  all  options  must be  exercised  by
         _______,  1998,  provided you remain an employee.  Upon  termination of
         your  employment,  option  shares must be  purchased as provided for in
         Section  6d of the  Plan  for any  shares  which  you  have a right  to
         purchase as of the date of termination.

4.       In the event that the shares of the  Corporation's  stock, as presently
         constituted,  shall be  changed,  as  provided  for in Section 7 of the
         Plan, the number of options issued to you will be adjusted accordingly.

5.        The options may be  exercised  only by written  notice,  delivered  or
          mailed by registered or certified  mail  addressed to the Treasurer of
          the Corporation at the Corporation's  principal business office.  Such
          notice shall be  accompanied  by payment of the entire option price of
          the  optioned  shares  being  purchased  either  (i)  in  cash  or its
          equivalent,  (ii) by  tendering  previously  acquired  shares of stock
          valued at their Fair  Market  Value at the time of exercise as long as
          the tendered shares have been held by you for at least six months,  or
          (iii) by any  combination of (i) and (ii).  Fair Market Value shall be
          determined  as provided  in  Paragraph  6a of the Plan.  Any shares of
          stock  tendered in payment for optioned  shares shall be duly endorsed
          in blank or accompanied  by stock powers duly endorsed in blank.  Upon
          receipt of the payment of the entire price of the  optioned  shares so
          purchased,  certificates  representing  such optioned  shares shall be
          issued to you.  The optioned  shares so purchased  shall be fully paid
          and nonassessable except insofar as statutory liability may be imposed
          under any applicable law.

6.       Upon  dissolution  or  liquidation  of  the  Corporation,   or  upon  a
         reorganization, merger or consolidation in which the Corporation is not
         the surviving corporation, or upon the


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         sale of substantially all of the property of the Corporation to another
         corporation,   the  Plan  and  the  options  issued   thereunder  shall
         terminate,   unless   provisions  are  made  in  connection  with  such
         transaction for the assumption of options  theretofore  granted, or for
         the  substitution  for such  options of new  options  of the  successor
         employer   corporation  or  a  parent  or  subsidiary   thereof,   with
         appropriate  adjustments  as to the  number and kinds of shares and the
         per  share  exercise  prices.  In the  event of such  termination,  all
         outstanding  options shall be  exercisable in full for at least 30 days
         prior to the termination  date whether or not  exercisable  during such
         period.  This  acceleration for vesting will also occur if at least 50%
         or more of the voting stock of the Corporation is sold either through a
         tender offer or otherwise to a party or an affiliated group of parties.
         For purposes of this  Paragraph 6,  Corporation  refers to Mid Atlantic
         Medical  Services,  Inc.,  MD-Individual  Practice  Association,  Inc.,
         and/or  Physicians  Health  Plan  of  Maryland,  Inc.,  jointly  and/or
         separately.


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                                                        -3-

7.       You shall not be deemed for any  purposes  to be a  stockholder  of the
         Corporation with respect to any shares which may be acquired  hereunder
         except to the extent that the options shall have been exercised and the
         stock certificate issued with respect thereto.

8.       The options herein granted shall not be  transferable  by you otherwise
         than by will, by the laws of descent and  distribution or pursuant to a
         qualified  domestic  relations order as defined by the Internal Revenue
         Code of 1986, as amended,  or Title I of the Employee Retirement Income
         Security Act, or the rules thereunder.

9.       You agree for yourself and your heirs, legatees, and legal
         representatives, with respect to all shares of stock
         acquired pursuant to the terms and conditions of the Plan
         and this letter (or any other shares of stock issued
         pursuant to a stock dividend or stock split thereon or any
         securities issued in lieu thereof or in substitution or
         exchange therefore), that you and your heirs, legatees and
         legal representatives will not sell or otherwise dispose of
         these shares except pursuant to an effective registration
         statement under the Securities Act of 1933, as amended ("the
         Act"), or except in a transaction which, in the opinion of
         counsel for the Corporation, is exempt from registration
         under the Act.  Further, the Corporation shall not be
         required to sell or issue any shares under an outstanding
         option if, in the opinion of the Corporation, (a) the
         issuance of such shares would constitute a violation by you
         or the Corporation of any applicable law of regulation of
         any government authority or (b) the consent or approval of
         any governmental body is necessary or desirable as
         condition of, or in connection with, the issuance of such
         shares.

10.      The existence of the options herein granted shall not affect
         in any way the right or power of the Corporation or its
         directors or stockholders to make or authorize any or all
         adjustments, recapitalizations, reorganizations, or other
         changes in the Corporation's capital structure or its
         business, or any merger or consolidation of the Corporation,
         or any issuance of bonds, debentures, preferred or prior
         preferences stock ahead of or affecting the stock or the
         rights thereof, or dissolution or liquidation of the
         Corporation, or any sale or transfer of all or any part of
         its assets or business, or any other corporation act or


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         proceeding, whether of a similar character or otherwise.

11.      As a condition of granting the options to you, you agree,
         for yourself and your legal representatives, that any
         dispute or disagreement which may arise under or as a result
         of or pursuant to the Plan and this letter shall be
         determined by the Stock Option Committee in its sole
         discretion, and any interpretation by the Committee of the
         terms of the Plan and this letter shall be final, binding
         and conclusive.


                                                    Very truly yours,




                                                     George T. Jochum
                                                     Chairmen, President and
                                                     Chief Executive Officer of
                                                     MAMSI




                                                     Peter L. Flaherty, Jr. M.D.
                                                     Vice Chairman of MAMSI



Seen and Accepted:


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Signature


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Date