1993 NON-QUALIFIED STOCK OPTION PLAN


         1. PURPOSE.  The purpose of this 1993 Non-Qualified Stock Plan ("Plan")
is to advance the interests of Mid Atlantic Medical Services, Inc. ("MAMSI") and
its  subsidiaries  (collectively  referred to as "Company") by  encouraging  and
providing  for the  acquisition  of an equity  interest  in the  Company  by key
employees  through the grant of stock options to purchase Common Stock of MAMSI.
Such Plan will enable the Company to retain the services of key  employees  upon
whose  judgment,  interest,  and special  effort the  successful  conduct of its
operations  is  largely   dependent  and  to  compete   effectively  with  other
enterprises for the services of key employees as may be needed for the continued
improvement of the business.

         2.  STOCK  SUBJECT  TO  PLAN.  The  stock  to  be  subject  to  options
("Options")  under the Plan shall be shares of Mid  Atlantic  Medical  Services,
Inc.  Common  Stock,  par  value  of $.01 per  share  ("Common  Stock"),  either
authorized and unissued or treasury  shares.  The aggregate  number of shares of
Common  Stock for which  Options may be granted  under the Plan shall not exceed
650,000  shares,  subject to  adjustment in  accordance  with the  provisions of
Section  7  hereof.  The  shares  subject  to  the  unexercised  portion  of any
terminated  or expired  Options  under the Plan may again be  available  for new
grants of Options under the Plan.

         3.  ADMINISTRATION.  The Plan shall be  administered  by the  Committee
referred to in Section 4.  Subject to the express  provisions  of the Plan,  the
Committee shall have complete authority,  in its discretion,  to determine those
key employees to whom Options shall be granted.  In making such  determinations,
the Committee  may take into account the nature of the services  rendered by the
respective  key  employees,  their  present and potential  contributions  to the
success  of the  Company,  and  such  other  factors  as the  Committee,  in its
discretion,  shall deem relevant. Subject to the express provisions of the Plan,
the  Committee  shall also have  complete  authority to interpret  the Plan,  to
prescribe,  amend,  and rescind rules and  regulations  relating to the Plan, to
determine the terms and provisions of the respective  Option  agreements  (which
need not be identical),  to determine whether the shares delivered upon exercise
of Options will be treasury shares or will be authorized but previously unissued
shares  and to make all other  determinations  necessary  or  advisable  for the
administration of the Plan; provided,  however,  that no action of the Committee
will be effective  if it  contravenes  or amends this Plan in any  respect.  The
Committee's determinations on the matters referred to in this paragraph shall be
conclusive.

         4. COMMITTEE.  The Committee shall consist of at least three members of
the Board of MAMSI.  No member of the Committee shall be or, during the one year
prior to service as a member,  have been  granted or awarded  equity  securities
pursuant to the Plan or any other plan of the  Company,  except as  permitted by
Rule 16b-3(c) (2) (i). The Committee  shall be appointed,  from time to time, by
the Board of  Directors,  which may, from time to time,  appoint  members of the
Committee  in  substitution  for  members  previously  appointed  and  may  fill
vacancies,  however  caused,  in the  Committee.  A majority of the  Committee's
members shall constitute a quorum. All determinations of the Committee shall


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be made by a majority vote of its members. Any decision or determination reduced
to writing and signed by all of the members shall be fully as effective as if it
had been  made by a  majority  vote at a  meeting  duly  called  and  held.  The
Committee shall also have express  authorization  to hold Committee  Meetings by
conference,  telephone, or similar communication equipment by means of which all
persons  participating in the meeting can hear each other. The Committee may, in
its sole discretion,  delegate all or any portion of its authority, with respect
to Options to be granted to eligible employees who are not officers or directors
of MAMSI, to the President of MAMSI, or any member of the Committee, as it deems
appropriate,  provided that the  Committee  shall  regularly  review all actions
taken pursuant to such delegation of authority.

         5.  ELIGIBILITY.  Options may be granted to such key  employees  of the
Company as the Committee  shall select from time to time. No director who is not
an employee of the Company shall be eligible to receive  Options under the Plan.
An individual may hold more than one Option.

         6. GRANT TERMS AND CONDITIONS OF OPTIONS. Options may be granted at any
time  after the  effective  date of the Plan and from time to time  prior to the
termination  of the  Plan.  Except  as  hereinafter  provided,  Options  granted
pursuant to the Plan shall be subject to the following terms and conditions:

                  a. Price. The purchase price of the shares of stock covered by
all Options granted  pursuant to this Plan shall be no less than the Fair Market
Value of the  Common  Stock of  MAMSI as of the date of grant of the  Option  as
determined by the  Committee.  In the event a public market for the Common Stock
exists,  Fair Market Value shall mean the most recent  closing price  quotation,
or, if none,  the average of the bid and asked prices,  as reported with respect
to  Common  Stock on the most  recent  available  date,  on any  national  stock
exchange on which the Common Stock is then listed,  or if not so listed,  on the
NASDAQ National Market System, or other consolidated  reporting system reporting
trades of the Common  Stock.  If the Common Stock is not so listed,  Fair Market
Value  shall mean the  average of the bid and the asked  prices as quoted by all
market makers in the Common Stock.  In the event that a market for the Company's
Common Stock does not exist, the Committee may determine,  in any case or cases,
that Fair Market Value shall be determined on the basis of the opinion of one or
more  independent and reputable  appraisers  qualified to value companies in the
Company's line of business.

                  b.  Payment Upon  Exercise.  Upon  exercise of an Option,  the
Option Price shall be payable to the Company in cash,  in shares of Common Stock
valued  at the  Fair  Market  Value  thereof  on the  date of  payment,  or in a
combination  of cash and  shares of Common  Stock.  However,  any stock used for
payment must have been held by the Option holder for at least six months.

                  c.  Duration and Exercise of Options.  The Committee may grant
Options for such term as it  determines,  provided  that the term of any Options
shall not exceed 5

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years after the date of the grant.  Each  Option  shall be  exercisable  in such
installments and at such times as designated by the Committee. To the extent not
exercised,  installments  shall  accumulate and be  exercisable,  in whole or in
part, at any time after  becoming  exercisable,  but not later than the date the
Option expires.  Except as hereafter  provided,  all Options granted pursuant to
the Plan shall be  nontransferable,  except by will or 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.

                  d. Exercise after  Termination  of Employment.  Subject to the
condition  that no Option  granted  under this Plan shall be  exercisable  after
expiration  of 5 years from the date of the  grant,  or such  shorter  period as
provided in any Option  agreement with an optionee,  the optionee shall have the
following rights upon death, disability or other termination of employment:

     (1) Death. If the optionee's  employment is terminated by death, his estate
or the person  who  acquired  the right to  exercise  such  Option by bequest or
inheritance  from the  optionee  shall  be  entitled,  for a period  of one year
following  the date of his death,  to exercise the Option with respect to all or
any part of the  shares  subject  thereto,  whether or not the Option had become
exercisable at the time of death.

     (2)  Disability.   If  the  optionee's  employment  terminates  because  of
disability  within the meaning of Section  22(e)(3) of the Internal Revenue Code
of 1986, as amended,  the optionee shall have the right for a period of one year
following  the date of such  termination  to exercise the Option with respect to
all or any part of the  shares  subject  thereto,  whether or not the Option had
become exercisable at the time of his disability or termination.

     (3) Other  Reasons.  If the  optionee's  employment is  terminated  for any
reason other than death or disability,  as provided above,  the optionee holding
an Option  under  the Plan  shall  have the  right for a period of three  months
following  such  termination  to exercise  any Option with respect to all or any
part of the  shares  subject  thereto,  to the  extent  the  Option  had  become
exercisable at the time of such termination.

                  e. Other Terms and  Conditions.  The Committee may provide for
such other terms and conditions which shall not be inconsistent  with any of the
terms herein with respect to any Option grant as it shall deem appropriate.  Any
award under the Plan shall be evidenced by an agreement,  which,  subject to the
provisions of the Plan, may contain such terms and conditions as may be approved
by the  Committee,  and shall be executed by an officer on behalf of the Company
and by the  recipient  of the  award.  The  Committee  may  use a  stock  option
agreement  substantially  in the form  attached  to this Plan or any other  form
approved by the Committee.



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                  f.  Restriction  on  Resale.   To  the  extent  the  Committee
determines that any  restrictions on a resale of the shares issued upon exercise
of an Option  is  required  under any rule  promulgated  by the  Securities  and
Exchange  Commission,  the Committee may include in any stock option agreement a
provision  requiring  that the stock  issued on exercise  of the Option  granted
under such agreement  cannot be resold for a specified  period of time after the
date of exercise.

                  g. Effect of Expiration,  Termination or Surrender of Options.
If an Option shall expire or  terminate  unexercised  as to any shares of Common
Stock  covered  thereby,  such shares of Common Stock shall not be deducted from
the number available under Section 2 hereof.

         7.  ADJUSTMENT OF AND CHANGES IN STOCK. In the event that the shares of
Common Stock, as presently constituted, shall be changed into or exchanged for a
different  number  or kind of shares  of stock of MAMSI or of  another  employer
corporation (whether by reason of corporate merger,  consolidation,  acquisition
of property or stock separation, reorganization or liquidation) or if the number
of such  shares of Common  Stock  shall be  changed  through  payment of a stock
dividend,  stock split,  or otherwise,  then there shall be  substituted  for or
added to each share of stock theretofore  appropriated or thereafter  subject or
which may become  subject to an Option  under this Plan,  the number and kind of
such shares of stock into which each outstanding  share of Common Stock shall be
so changed,  or for which each such shares shall be exchanged,  or to which such
shares shall be entitled,  as the case may be. Outstanding Options shall also be
appropriately amended as to price and other terms as may be necessary to reflect
the foregoing events.

         8. CHANGES IN CONTROL.  Upon dissolution or liquidation of the Company,
or upon a  reorganization,  merger or  consolidation in which the Company is not
the surviving corporation, or upon the sale of substantially all of the property
of the  Company  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 adjustment 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 Company is sold either through a tender offer or
otherwise  to a party or an  affiliated  group of parties.  For purposes of this
Section 8, Company refers to MAMSI,  MD-Individual  Practice Association,  Inc.,
Optimum Choice,  Inc., and/or Physicians Health Plan of Maryland,  Inc., jointly
and/or separately.

         9. AMENDMENT, MODIFICATION, AND TERMINATION OF THE PLAN. The Committee,
without further approval of the stockholders, but with the approval of the Board
of Directors,  may at any time  terminate  this Plan or any part thereof and may
from time to time amend this Plan as it may deem  advisable.  The termination or
amendment of

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the Plan shall not, without the consent of the employee,  affect such employee's
rights under an award previously granted.

         10. TERM OF THE PLAN.  The Plan shall become  effective on May 1, 1993.
The Plan shall  terminate 5 years after its  effective  date, or on such earlier
date as may be determined by the Board of  Directors.  Termination  of the Plan,
however,  shall not affect the right of the optionees  under Options  previously
granted to them, and all unexpired Options shall continue in force and operation
after termination of the Plan except as they may lapse or be terminated by their
own terms and conditions.

         11.      MISCELLANEOUS PROVISIONS.

     a. Right to Awards.  No  employee or other  person  shall have any claim or
right to be granted any award under the Plan.

     b. Rights as Stockholders.  An optionee shall have no rights as a holder of
Common  Stock by reason of  Options  granted  under the Plan,  unless  and until
certificates for shares of Common Stock are issued to the optionee.

     c. No  Assurance  of  Employment.  Neither  the Plan nor any  action  taken
thereunder shall be construed as giving any employee any right to be retained in
the employ of the Company or any subsidiary.

     d. Costs and Expenses. All costs and expenses incurred in administering the
Plan shall be borne by the Company.

     e.  Unfunded  Plan.  The Plan shall be unfunded.  The Company  shall not be
required  to  establish  any  special  or  separate  fund nor to make any  other
segregation of assets to assure the payment of any award under the Plan.

     f. Withholding  Taxes. Each optionee shall arrange with the Company a means
of paying any federal,  state,  local or foreign  withholding tax as required by
law upon the exercise of an Option under the Plan.  Amounts to which the Company
is entitled  pursuant to  Paragraph  11(f) may be paid,  at the  election of the
optionee,  either  (i) in cash  withheld  from the  employee's  salary  or other
compensation payable by the Company, (ii) with the approval of the Committee, in
shares of Common Stock  otherwise  issuable to the employee  upon exercise of an
Option that have a Fair  Market  Value on the date on which the amount of tax to
be withheld is determined ("Tax Date") equal to the amount of tax the Company is
entitled  to  withhold,  or (iii) cash paid to the Company by the  optionee.  An
optionee's  election to have withheld  shares of Common Stock that are otherwise
issuable  shall  be in  writing,  shall  be  irrevocable  upon  approval  by the
Committee,  and shall be  delivered  to the  Company  prior to the Tax Date with
respect to the exercise of an Option.



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     g.  Assignment or Transfer.  Options or other awards granted under the Plan
or any rights or interests  therein shall not be assignable or  transferable  by
the recipient  thereof except by will or 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.

     h. Investment Representation.  The Committee may, in its discretion, demand
that any employee  awarded an Option shall  deliver to the Committee at the time
of exercise of such  Option a written  representation  that the shares of Common
Stock to be acquired upon exercise are to be acquired for investment and not for
resale or with a view to the distribution thereof. Upon such demand, delivery of
such written  representation by the employee prior to the delivery of any shares
of Common  Stock  pursuant to the  exercise  of his Option  shall be a condition
precedent to the employee's  right to purchase or otherwise  acquire such shares
of Common Stock by such exercise. The Company is not legally obligated hereunder
if fulfillment of its obligations  under the Plan would violate federal or state
securities laws.

     i. Nature of Benefits.  Awards under the Plan,  and payments  made pursuant
thereto,  are not a part  of  salary  or  base  compensation,  and  will  not be
considered in  determining  an employee's  benefits or  contributions  under any
retirement plan.

     j.  Registration.  Management is directed to register stock issued pursuant
to this plan with the Securities and Exchange Commission.

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