Document:

<PAGE>

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT.
PORTIONS FOR WHICH CONFIDENTIAL TREATMENT IS REQUESTED ARE DENOTED BY "[*]".
CONFIDENTIAL INFORMATION OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

                                                                    EXHIBIT 10.4

                            UTAH DEPARTMENT OF HEALTH
                 288 North 1460 West, Salt Lake City, Utah 84116

                                    CONTRACT
    H9920205                                                   006146
---------------------                                 -------------------------
Department Log Number                                   State Contract Number

1.   CONTRACT NAME:
     The name of this Contract is HMO-AMERICAN FAMILY CARE.

2.   CONTRACTING PARTIES:
     This Contract is between the Utah Department of Health (DEPARTMENT), and
     American Family Care (CONTRACTOR).

3.   CONTRACT PERIOD:
     The service period of this Contract will be July 1, 1999 through June 30,
     2004, unless terminated or extended by agreement in accordance with the
     terms and conditions of this Contract.

4.   CONTRACT AMOUNT:
     The Contractor will be paid up to a maximum amount of $    [*]     for the
                                                            -----------
     Contract period in accordance with the provisions in this Contract. This
     Contract is funded with 71.61% Federal funds and with 28.39% State funds.
     The CFDA# is 93.778 and relates to the federal funds provided.

5.   CONTRACT INQUIRIES:
     Inquiries regarding this Contract shall be directed to the following
     individuals:

     CONTRACTOR:       AMERICAN FAMILY CARE      DEPARTMENT OF HEALTH
     Contact Person:   Brian Monsen
     Business Address: American Family Care      Program: Managed Health Care
                       2120 South 1300 East,     Contact Person: Ed Ewia
                       Suite 303
                       Salt Lake City, UT 84106  Phone Number: (801) 538-6505
     Phone Number:     (801) 524-2725

6.   REFERENCE TO ATTACHMENTS INCLUDED AS PART OF THIS CONTRACT:
     Attachment A:   Utah Department of Health General Provisions
     Attachment B:   Special Provisions
     Attachment C:   Covered Services
     Attachment D:   Quality Assurance & Utilization Management
     Attachment E:   Medicaid Enrollment (Table 1), Cost Data (Table 2),
                     Utilization Data (Table 3), Medicaid Malpractice
                     Information (Table 4)
     Attachment F:   Rates and Rate-Related Terms
     Attachment G:   Quality Assurance Monitoring Plan

7.   PROVISIONS INCORPORATED INTO THIS CONTRACT BY REFERENCE, BUT NOT ATTACHED
     HERETO:
     A. All other governmental laws, rules, regulations, or actions applicable
        to services provided herein.
     B. If the Contractor has provided the Department with Assurances, then the
        Department is entering into this agreement based upon the Assurances
        provided by the Contractor and the Assurances are incorporated by
        reference.

8.   If the Contractor is not a local public procurement unit as defined by the
     Utah Procurement Code (UCA Section 63-56-5), this Contract must be signed
     by a representative of the State Division of Finance and the State Division
     of Purchasing to bind the State and the Department to this Contract.

9.   This Contract, its attachments, and all documents incorporated by reference
     constitute the entire agreement between the parties and supercede all prior
     negotiations, representations, or agreements, either written or oral
     between the parties relating to the subject matter of this Contract.

IN WITNESS WHEREOF, the parties sign this Contract.

CONTRACTOR: AMERICAN FAMILY CARE            UTAH DEPARTMENT OF HEALTH

By: /s/                      26 Aug 99  By: /s/                      9/16/99
    ------------------------ ----------     ------------------------ -----------
    Signature of Authorized  Date           Shari A. Watkins, C.P.A. Date
    Individual                              Director
                                            Official of Fiscal
                                            Operations

Print Name:     Kirk Olsen
           ----------------------------

Title:     Chief Executive Officer           [SEAL]                  10/4/99
      ---------------------------------      ----------------------- -----------
                                             State Finance:          Date

           33-0617992
------------------------------------
Federal Tax Identification Number or         /s/                     SEP 24 1999
      Social Security Number                 ----------------------- -----------
                                             State Purchasing:       Date

                                     Page 1

<PAGE>

                                 ATTACHMENT "A"

                            UTAH DEPARTMENT OF HEALTH

                               GENERAL PROVISIONS

I.     CONTRACT DEFINITIONS ...................................  1

II.    AUTHORITY ..............................................  1

III.   MISCELLANEOUS PROVISIONS ...............................  2

IV.    UTAH INDOOR CLEAN AIR ACT ..............................  3

V.     RELATED PARTIES & CONFLICTS OF INTEREST ................  3

VI.    OTHER CONTRACTS ........................................  3

VII.   SUBCONTRACTS & ASSIGNMENTS .............................  4

VIII.  FURTHER WARRANTY .......................................  4

IX.    INFORMATION OWNERSHIP ..................................  4

X.     SOFTWARE OWNERSHIP .....................................  4

XI.    INFORMATION PRACTICES ..................................  5

XII.   INDEMNIFICATION ........................................  5

XIII.  SUBMISSION OF REPORTS ..................................  5

XIV.   PAYMENT ................................................  5

XV.    RECORD KEEPING, AUDITS, & INSPECTIONS ..................  6

XVI.   CONTRACT ADMINISTRATION REQUIREMENTS ...................  6

XVII.  DEFAULT, TERMINATION, & PAYMENT ADJUSTMENT .............  9

XVIII. FEDERAL REQUIREMENTS ...................................  9

                                        i

<PAGE>

                                 ATTACHMENT "A"

                  UTAH DEPARTMENT OF HEALTH GENERAL PROVISIONS

                             I. CONTRACT DEFINITIONS
The following definitions apply in these general provisions:
     "Assign" or "Assignment" means the transfer of all rights and delegation of
        all duties in the contract to another person.
     "Business" means any corporation, partnership, individual, sole
        proprietorship, joint stock company, joint venture, or any other private
        legal entity.
     "This Contract" means this agreement between the Department and the
        Contractor, including both the General Provisions and the Special
        Provisions.
     "The Contractor" means the person who delivers the services or goods
        described in this Contract, other than the state or the Department.
     "The Department" means the Utah Department of Health.
     "Director" means the Executive Director of the Department or authorized
        representative.
     "Equipment" means capital equipment which costs at least $1,000 and has a
        useful life of one year or more unless a different definition or amount
        is set forth in the Special Provisions or specific Department Program
        policy as described in writing to Contractor.
     "Federal law" means the constitution, orders, case law, statutes, rules,
        and regulations of the federal government.
     "General provisions" means those provisions of this Contract which are set
        forth under the heading "General Provisions."
     "Governmental entity" means a federal, state, local, or
        federally-recognized Indian tribal government, or any subdivision
        thereof.
     "Individual" means a living human being.
     "Local health department" means a local health department as defined
        in Section 26A-1-102, Utah Code Annotated, 1953 as amended (UCA.).
     "Non-governmental entity" means privately held non-profit or for profit
        organization not classified as a "Governmental entity."
     "Person" means any governmental entity, business, individual, union,
        committee, club, other organization, or group of individuals.
     "Recipient" means an individual who is eligible for services provided by
        the Department or by an authorized Contractor of the Department under
        the terms of this Contract.
     "Services" means the furnishing of labor, time, or effort by a Contractor,
        not involving the delivery of a specific end product other than reports
        which are merely incidental to the required performance.
     "Special provisions" means those provisions of this Contract which are in
        addition to the General Provisions and which more fully describe the
        goods or services covered by this Contract.
     "State" means the State of Utah.
     "State law" means the constitution, orders, case law, statutes, and rules,
        of the state.
     "Subcontract" means any signed agreement between the Contractor and a third
        party to provide goods or services for which the Contractor is
        obligated, except purchase orders for standard commercial equipment,
        products, or services.
     "Subcontractor" means the person who performs the services or delivers the
        goods described in a subcontract.

                                  II. AUTHORITY
1. The Department's authority to enter into this Contract is derived from
Chapter 56, Title 63, UCA; Titles 26 and 26A, UCA; and from related statutes.

                                  Page 1 of 13

<PAGE>

                                 ATTACHMENT "A"

2. The Contractor represents that it has the institutional, managerial, and
financial capability to ensure proper planning, management, and completion of
the project or services described in this Contract.

                          III. MISCELLANEOUS PROVISIONS
1. For reference clarity, as used in these general provisions: "ARTICLE" refers
to a major topic designated by capitalized roman numerals; "SECTION" refers to
the next lower numbered heading designated by arabic numerals, and "SUBSECTIONS"
refers to the next two lower headings designated by lower case letters and lower
case roman numerals.
2. If the general provisions and the special provisions of this Contract
conflict, the special provisions govern.
3. These provisions distinguish between two Contractor types: Governmental and
Non-governmental. Unspecified text applies to both types. Type-specific
statements appear in bold print (e.g., Non-governmental entities only).
4. Once signed by the Director and the State Division of Finance, when
applicable, and the State Division of Purchasing, when applicable, this Contract
becomes effective on the date specified in this Contract. Changes made to the
unsigned Contract document shall be initialed by both persons signing this
Contract on page one. Changes made to this Contract after the signatures are
made on page one may only be made by a separate written amendment signed by
persons authorized to amend this Contract.
5. Neither party may enlarge, modify, or reduce the terms, scope of work, or
dollar amount in this Contract, except by written amendment as provided in
section 4.
6. This Contract and the contracts that incorporate its provisions contain the
entire agreement between the Department and the Contractor. Any statements,
promises, or inducements made by either party or the agent of either party which
are not contained in the written Contract or other contracts are not valid or
binding.
7. The Contractor shall comply with all applicable laws regarding federal and
state taxes, unemployment insurance, disability insurance, and workers'
compensation.
8. The Contractor is an independent Contractor, having no authorization, express
or implied, to bind the Department to any agreement, settlement, liability, or
understanding whatsoever, and agrees not to perform any acts as agent for the
Department unless expressly set forth herein. Compensation stated herein shall
be the total amount payable to the Contractor by the Department. The Contractor
shall be responsible for the payment of all income tax and social security
amounts due as a result of payments received from the Department for these
contract services.
9. The Contractor shall maintain all licenses, permits, and authority required
to accomplish its obligations under this Contract.
10. The Contractor shall obtain prior written Department approval before
purchasing any equipment with contract funds.
11. Notice shall be in writing, directed to the contact person on page one of
this Contract, and delivered by certified mail or by hand to the other party's
most currently known address. The notice shall be effective when placed in the
U.S. mail or hand-delivered.
12. The Department and the Contractor shall attempt to resolve contract disputes
through available administrative remedies prior to initiating any court action.
13. This Contract shall be construed and governed by the laws of the State of
Utah. The Contractor submits to the jurisdiction of the courts of the State of
Utah for any dispute arising out of this Contract or the breach thereof. The
proper venue of any legal action arising under this contract shall be in Salt
Lake City, Utah.
14. Any court ruling or other binding legal declaration which declares that any
provision of this Contract is illegal or void, shall not affect the legality and
enforceability of any other provision of this Contract, unless the provisions
are mutually dependent.
15. The Contractor agrees to maintain the confidentiality of records that it
holds as agent for the Department as required by the Government Records Access
and Management Act, Title 63, Chapter 2, UCA and the confidentiality of records
requirements of Title 26, UCA.
16. The Contractor agrees to abide by the State of Utah's executive order, dated
June 30, 1989, which prohibits

                                  Page 2 of 13

<PAGE>

                                 ATTACHMENT "A"

sexual harassment in the workplace.
17. The waiver by either party of any provision, term, covenant or condition of
this Contract shall not be deemed to be a waiver of any other provision,
covenant or condition of this Contract nor any subsequent breach of the same or
any other provision, term, covenant or condition of this Contract.
18. The Contractor agrees to warrant and assume responsibility for each
hardware, firmware, and/or software product (hereafter called the product) that
it licenses, or sells, to the Department under this Contract. The Contractor
acknowledges that the Uniform Commercial Code applies to this Contract. In
general, the Contractor warrants that: (1) the product will do what the
salesperson said it would do, (2) the product will live up to all specific
claims that the manufacturer makes in their advertisements, (3) the product will
be suitable for the ordinary purposes for which such product is used, (4) the
product will be suitable for any special purposes that the Department has relied
on the Contractor's skill or judgement to consider when it advised the
Department about the product, especially to ensure year 2000 compatibility and
fitness, (5) the product has been properly designed and manufactured, and (6)
the product is free of significant defects or unusual problems about which the
Department has not been warned. In general, "year 2000 compatibility and
fitness" means: (1) the product warranted by the Contractor will not cease to
perform before, during, or after the calendar year 2000, (2) the product will
not produce abnormal, invalid, and/or incorrect results before, during, or after
the calendar year 2000, (3) will include, but not be limited to, date data
century recognition, calculations that accommodate same century and
multi-century formats, date data values that reflect century, and (4) accurately
process date data (including, but not limited to, calculating, comparing, and
sequencing) from, into, and between the twentieth and twenty-first centuries,
including leap year calculations.
     If problems arise, the Contractor will repair or replace (at no charge to
the Department) the product whose noncompliance is discovered and made known to
the Contractor in writing. If there is a Year 2000 problem, the Contractor
agrees to immediately assign senior engineering staff to work continuously until
the product problem is corrected, time being of the essence.
     The Contractor warrants that it is Year 2000 compliant with respect to all
aspects of performing this Contract. The Contractor bears the risk of loss for
Year 2000 failures on its behalf, its subcontractors, or agents relevant to the
performance of this Contract.
     Nothing in this warranty will be construed to limit any rights or remedies
the Department may otherwise have under this Contract with respect to defects
other than Year 2000 performance.
19. The State of Utah's sales and use tax exemption number is E33399. The
tangible personal property or services being purchased are being paid for from
State funds and used in the exercise of that entity's essential functions. If
the items purchased are construction materials, they will be converted into real
property by employees of this government entity, unless otherwise stated in the
contract.

                          IV. UTAH INDOOR CLEAN AIR ACT
The Contractor, for all personnel operating within the State of Utah, shall
comply with the Utah Indoor Clean Air Act, Title 26, Chapter 38, UCA, which
prohibits smoking in public places.

                   V. RELATED PARTIES & CONFLICTS OF INTEREST
1. The Contractor may not pay related parties for goods, services, facilities,
leases, salaries, wages, professional fees, or the like for contract expenses
without the prior written consent of the Department. The Department may consider
the payments to the related parties as disallowed expenditures and accordingly
adjust the Department's payment to the Contractor for all related party payments
made without the Department's consent. As used in this section, "related
parties" means any person related to the Contractor by blood, marriage,
partnership, common directors or officers, or 10% or greater direct or indirect
ownership in a common entity.
2. The Contractor shall comply with the Public Officers' and Employees' Ethics
Act, Section 67-16-10, UCA, which prohibits actions that may create or that are
actual or potential conflicts of interest. It also provides that "no person
shall induce or seek to induce any public officer or public employee to violate
any of the provisions of this act." The Contractor represents that none of its
officers or employees are officers or employees of the State of Utah,

                                  Page 3 of 13

<PAGE>

                                 ATTACHMENT "A"

unless disclosure has been made in accordance with Section 67-16-8, UCA.

                               VI. OTHER CONTRACTS
1. The Department may perform additional work related to this Contract or award
other contracts for such work. The Contractor shall cooperate fully with other
contractors, public officers, and public employees in scheduling and
coordinating contract work. The Contractor shall give other contractors
reasonable opportunity to execute their work and shall not interfere with the
scheduled work of other contractors, public officers, and public employees.
2. The Department shall not unreasonably interfere with the Contractor's
performance of its obligations under this Contract.

                         VII. SUBCONTRACTS & ASSIGNMENTS
The Contractor shall not assign this Agreement without the written consent of
the Department. The Department agrees that the Contractor may partially
subcontract services, provided that the Contractor retains ultimate
responsibility for performance of all terms, conditions and provisions of this
Agreement. When subcontracting, the Contractor agrees to use written
subcontracts that conform with Federal and State laws. The Contractor shall
request Department approval for any assignment at least 20 days prior to its
effective date.

                             VIII. FURTHER WARRANTY
The Contractor warrants that (a) all services shall be performed in conformity
with the requirements of this Contract by qualified personnel in accordance with
generally recognized standards; and (b) all goods or products furnished pursuant
to this Contract shall be free from defects and shall conform to contract
requirements. For any item that the Department determines does not conform with
the warranty, the Department may arrange to have the item repaired or replaced,
either by the Contractor or by a third party at the Department's option, at the
Contractor's expense.

                            IX. INFORMATION OWNERSHIP
Except for confidential medical records held by direct care providers, the
Department shall own exclusive title to all information gathered, reports
developed, and conclusions reached in performance of this Contract. The
Contractor may not use, except in meeting its obligations under this Contract,
information gathered, reports developed, or conclusions reached in performance
of this Contract without the express written consent of the Department.

                              X. SOFTWARE OWNERSHIP
1. If the Contractor develops or pays to have developed computer software
exclusively with funds or proceeds from this Contract to perform its obligations
under this Contract, or to perform computerized tasks that it was not previously
performing to meet its obligations under this Contract, the computer software
shall be exclusively owned by or licensed to the Department. In the case of
software owned by the Department, the Department grants to the Contractor a
nontransferable, nonexclusive license to use the software in the performance of
this Contract. In the case of software licensed to the Department, the
Department grants to the Contractor permission to use the software in the
performance of this Contract. This license or permission, as the case may be,
terminates when the Contractor has completed its work under this Contract.
2. If the Contractor develops or pays to have developed computer software which
is an addition to existing software owned by or licensed exclusively with funds
or proceeds from this Contract, or to modify software to perform computerized
tasks in a manner different than previously performed, to meet its obligations
under this Contract, the addition shall be exclusively owned by or licensed to
the Department. In the case of software owned by the Department, the Department
grants to the Contractor a nontransferable, nonexclusive license to use the
software in the performance of this Contract. In the case of software licensed
to the Department, the Department grants to the Contractor permission to use the
software in the performance of this Contract. This license or permission, as the
case may be, terminates when the Contractor has completed its work under this
Contract.

                                  Page 4 of 13

<PAGE>

                                 ATTACHMENT "A"

3. If the Contractor uses computer software licensed to it which it does not
modify or program to handle the specific tasks required by this Contract, then
to the extent allowed by the license agreement between the Contractor and the
owner of the software, the Contractor grants to the Department a continuing
nonexclusive license to use the software, either by the Department or by a
different Contractor, to perform work substantially identical to the work
performed by the Contractor under this Contract. If the Contractor cannot grant
the license as required by this section, then the Contractor shall reveal the
input screens, report formats, data structures, linkages, and relations used in
performing its obligations under this Contract in such a manner to allow the
Department or another contractor to continue the work performed by the
Contractor under this Contract.
4. The Contractor shall deliver to the Department a copy of the software or
information required by this Article within 90 days after the commencement of
this Contract and thereafter immediately upon making a modification to any of
the software which is the subject of this Contract.

                            XI. INFORMATION PRACTICES
1. (Governmental entities only) The Contractor shall establish, maintain, and
practice information procedures and controls that comply with Federal and State
law. The Contractor assures that any information about an individual that it
receives or requests from the Department pursuant to this Contract is necessary
to the performance of its duties and functions and that the information will be
used only for the purposes set forth in this Contract. The Department shall
inform the Contractor of any non-public designation of any information it
provides to the Contractor.
2. (Non-governmental entities only) The Contractor shall establish, maintain,
and practice information procedures and controls that comply with Federal and
State law. The Contractor may not release any information regarding any person
from any information provided by the Department, unless the Department first
consents in writing to the release.

                              XII. INDEMNIFICATION
1. (Governmental entities only) It is mutually agreed that each party assumes
liability for the negligent or wrongful acts committed by its own agents,
officials, or employees, regardless of the source of funding for this Contract.
Neither party waives any rights or defenses otherwise available under the
Governmental Immunity Act.
2. (Non-governmental entities only) To the extent authorized by law, the
Contractor shall indemnify and hold harmless the Department and any of its
agents, officers, and employees, from any claims, demands, suits, actions,
proceedings, loss, injury, death, and damages of every kind and description,
including any attorney's fees and litigation expenses, which may be brought,
made against, or incurred by that party on account of loss or damage to any
property, or for injuries to or death of any person, caused by, arising directly
or indirectly out of, or contributed to in whole or in part, by reason of any
alleged act, omission, professional error, fault, mistake, or negligence of the
Contractor or its employees, agents, or representatives, or subcontractors or
their employees, agents, or representatives, in connection with, incident to, or
arising directly or indirectly out of this Contract, or arising out of workers'
compensation claims, unemployment, or claims under similar such laws or
obligations.

                           XIII. SUBMISSION OF REPORTS
If the Contractor is a Local Health Department, it shall submit monthly
expenditure reports to the Department in a format approved by the Department.
All other Contractors shall submit monthly summarized billing statements to the
Department. Expenditure reports and billing statements must be submitted to the
Department within 20 days following the last day of the month in which the
expenditures were incurred or the services provided.

                                  XIV. PAYMENT
1. If a recipient, a recipient's insurance, or any third-party is responsible to
pay for services rendered pursuant to this Contract, the Contractor shall bill
and collect for the goods or services provided to the recipient. The Department
shall reimburse total actual expenditures, less amounts collected as required by
this section.
2. Under no circumstances shall the Department authorize payment to the
Contractor that exceeds the amount

                                  Page 5 of 13

<PAGE>

                                 ATTACHMENT "A"

specified in this Contract without an amendment to the Contract.
3. The Department agrees to make every effort to pay for completed services, and
payments are conditioned upon receipt of applicable, accurate, and completed
reports prepared by the Contractor and delivered to the Department. The
Department may delay or deny payment for final expenditure reports received more
than 20 days after the Contractor has satisfied all Contract requirements.

                    XV. RECORD KEEPING, AUDITS, & INSPECTIONS
1. The Contractor shall use an accrual or a modified accrual basis for reporting
annual fiscal data, as required by Generally Accepted Accounting Principles
(GAAP). Required monthly or quarterly reports may be reported using a cash
basis.
2. The Contractor and any subcontractors shall maintain financial and operation
records relating to contract services, requirements, collections, and
expenditures in sufficient detail to document all contract fund transactions.
The Contractor and any subcontractors shall maintain and make all records
necessary and reasonable for a full and complete audit available for audit or
inspection during normal business hours or by appointment, until all audits
initiated by federal and state auditors are completed, or for a period of four
years from the date of termination of this Contract, whichever is longer, or for
any period required elsewhere in this Contract.
3. The Contractor shall retain all records which relate to disputes,
litigations, claim settlements arising from contract performance, or
cost/expense exceptions initiated by the Director, until all disputes,
litigations, claims, or exceptions are resolved.
4. The Contractor shall comply with federal and state regulations concerning
cost principles, audit requirements, and grant administration requirements,
cited in Table 1. Unless specifically exempted in this Contract's special
provisions, the Contractor must comply with applicable federal cost principles
and grant administration requirements if state funds are received. The
Contractor shall also provide the Department with a copy of all reports required
by the State Legal Compliance Audit Guide (SLCAG) as defined in Chapter 2, Title
51, UCA. All federal and state principles and requirements cited in Table 1 are
available for inspection at the Utah Department of Health during normal business
hours. A Contractor who receives $50,000.00 or more in a year from all federal
or from all state sources may be subject to federal and state audit
requirements. A Contractor who receives $300,000.00 or more per year from
federal sources may be subject to the federal single audit requirement.
Counties, cities, towns, school districts, and all non-profit corporations that
receive 50% or more of their funds from federal, state or local governmental
entities are subject to the State of Utah Legal Compliance Audit Guide. Copies
of required audit reports shall be sent to the Utah Department of Health, Bureau
of Financial Audit, Box 144002, Salt Lake City, Utah 84114-4002.

                  FEDERAL AND STATE PRINCIPLES AND REQUIREMENTS

<TABLE>
<CAPTION>
                          Cost                Federal Audit        State Audit    Grant Admin.
Contractor                Principles          Requirements         Requirements   Requirements
-----------------------   -----------------   ------------------   ------------   ------------------
<S>                       <C>                 <C>                  <C>            <C>
State or Local Govt. &
Indian Tribal Govts.      OMB Circular A-87   OMB Circular A-133   SLCAG          OMB Common Rule

Hospitals                 45 CFR 74, App. E   OMB Circular A-133   SLCAG          OMB Common Rule or
                                                                                   Circular A-110

College or University     OMB Circular A-21   OMB Circular A-133   SLCAG          OMB Circular A-110

Non-Profit Organization   OMB Circular A-122  OMB Circular A-133   SLCAG          OMB Circular A-110

For-Profit Organization   48 CFR 31                   n/a           n/a           OMB Circular A-110
</TABLE>

Table 1

                                  Page 6 of 13

<PAGE>

                                 ATTACHMENT "A"

                    XVI. CONTRACT ADMINISTRATION REQUIREMENTS
The Contractor agrees to administer this Contract in compliance with either OMB
Common Rule or OMB Circular A-l10 depending upon the legal status of the
Contractor as shown in Table 1. Financial management, procurement, and
affirmative step requirements specify that:
1. the Contractor must have fiscal control and accounting procedures sufficient
to:
          a. permit preparation of reports required by this Contract, and
          b. permit the tracing of funds to a level of expenditures adequate to
          establish that such funds have not been used in violation of the
          restrictions and prohibitions of applicable statutes.
2. the Contractor's financial management systems must meet the following
standards:
          a. financial reporting. Accurate, current, and complete disclosure of
          the financial results of financially assisted activities must be made
          in accordance with the financial reporting requirements of this
          Contract.
          b. accounting records. The Contractor must maintain records which
          adequately identify the source and application of funds provided for
          federally financially-assisted activities. These records must contain
          information pertaining to the Contract's awards and authorizations,
          obligations, unobligated balances, assets, liabilities, outlays or
          expenditures, and income.
          c. internal control. Effective control and accountability must be
          maintained for all Contract cash, real and personal property, and
          other assets. The Contractor must adequately safeguard all such
          property and must assure that it is used solely for authorized
          purposes.
          d. budget control. Actual expenditures or outlays must be compared
          with budgeted amounts for the Contract. Financial information must be
          related to performance or productivity data, including the development
          of unit cost information whenever appropriate or specifically required
          in this Contract. If unit cost data are required, estimates based on
          available documentation will be accepted whenever possible.
3. Federal OMB cost principles, federal agency program regulations, and the
terms of grant and subgrant, and contract agreements will be followed in
determining the reasonableness, allowability, and allocability of costs.
          a. source documentation. Accounting records must be supported by such
          source documentation as canceled checks, paid bills, payrolls, time
          and attendance records, contract and subcontract award documents, etc.
          b. cash management. Procedures for minimizing the time elapsing
          between the transfer of funds from the U.S. Treasury and disbursement
          by the Department and the Contractor must be followed whenever advance
          payment procedures are used.
4. the Contractor shall use its own procurement procedures which reflect
applicable State and local laws, rules, and regulations, provided that the
procurements conform to applicable Federal law and the standards identified in
this Contract.
          a. The Contractor will maintain a contract administration system which
ensures that subcontractors perform in accordance with the terms, conditions,
and specifications of its contracts or purchase orders.
          b. The Contractor will maintain a written code of standards of conduct
governing the performance of its employees engaged in the award and
administration of contracts. No employee, officer or agent of the Department or
the Contractor shall participate in selection, or in the award or administration
of a contract supported by federal funds if a conflict of interest, real or
apparent, would be involved. Such a conflict would arise when:
                  i.   the employee, officer or agent,
                  ii.  any member of his immediate family,
                  iii. his or her partner; or
                  iv.  an organization which employs, or is about to employ, any
                  of the above, has a financial or other interest in the firm
                  selected for award. The Department's or the Contractor's
                  officer, employees or agents will neither solicit nor accept
                  gratuities, favors or anything of monetary value from
                  contractors, potential contractors, or parties to
                  subagreements. The Department and the Contractor may set
                  minimum rules where the financial interest is not substantial
                  or the gift is

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                                 ATTACHMENT "A"

                  an unsolicited item of nominal intrinsic value. To the extent
                  permitted by State or local law or regulations, such standards
                  or conduct will provide for penalties, sanctions, or other
                  disciplinary actions for violations of such standards by the
                  Department's or the Contractor's officers, employees, or
                  agents, or by subcontractors or their agents.
          c. The Contractor's procedures will provide for a review of proposed
procurements to avoid purchase of unnecessary or duplicative items.
Consideration should be given to consolidating or breaking out procurements to
obtain a more economical purchase. Where appropriate, an analysis will be made
of lease versus purchase alternatives, and any other appropriate analysis to
determine the most economical approach.
          d. To foster greater economy and efficiency, the Contractor, if a
governmental entity, is encouraged to enter into State and local
intergovernmental agreements for procurement or use of common goods and
services.
          e. If allowed by law, the Contractor is encouraged to use Federal
excess and surplus property in lieu of purchasing new equipment and property
whenever such use is feasible and reduces project costs.
          f. The Contractor may contract only with responsible contractors
possessing the ability to perform successfully under the terms and conditions of
a proposed procurement.
          g. The Contractor shall maintain records sufficient to detail the
significant history of a procurement. These records shall include, but are not
necessarily limited to the following:
                  i.   the rationale for the method of procurement,
                  ii.  selection of contract type,
                  iii. contractor selection or rejection, and
                  iv.  the basis for the contract price.
          h. The Contractor may use time and material type contracts only:
                  i.   after a determination that no other contract is suitable,
                       and
                  ii.  if the Contract includes a ceiling price that the
                       Contractor exceeds at its own risk.
          i. The Contractor alone will be responsible, in accordance with good
administrative practice and sound business judgment, for the settlement of all
contractual and administrative issues arising out of procurements. These issues
include, but are not limited to source evaluation, protests, disputes, and
claims. These standards do not relieve the Contractor of any contractual
responsibilities under its contracts.
          j. The Contractor shall have protest procedures to handle and resolve
disputes relating to its procurements and shall in all instances disclose
information regarding the protest to the federal funding agency. A protestor
must exhaust all administrative remedies with the Department and the Contractor
before pursuing a protest with the federal funding agency.
5. the Contractor shall take all necessary affirmative steps to assure that
minority firms, women's business enterprises, and labor surplus area firms are
used when possible. Affirmative steps shall include:
          a. placing qualified small and minority businesses and women's
          business enterprises on solicitation lists;
          b. assuring that small and minority businesses, and women's business
          enterprises are solicited whenever they are potential sources;
          c. dividing total requirements, when economically feasible, into
          smaller tasks or quantities to permit maximum participation by small
          and minority business, and women's business enterprises;
          d. establishing delivery schedules, where the requirement permits,
          which encourage participation by small and minority business, and
          women's business enterprises;
          e. using the services and assistance of the Small Business
          Administration, and the Minority Business Development Agency of the
          Department of Commerce; and
          f. requiring the prime contractor, if subcontracts are to be let, to
          take the affirmative steps listed in Article XVI, section 5,
          subsections a - e.

                XVII. DEFAULT, TERMINATION, & PAYMENT ADJUSTMENT
1. Each party may terminate this Contract with cause. If the cause for
termination is due to the default of a party, the non-defaulting party shall
send a notice, which meets the notice requirements of this Contract, citing the
default and giving notice to the defaulting party of its intent to terminate.
The defaulting party may cure the default within

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                                 ATTACHMENT "A"

fifteen days of the notice. If the default is not cured within the fifteen days,
the party giving notice may terminate this Contract 45 days from the date of the
initial notice of default or at a later date specified in the notice.
2. The Department may terminate this Contract without cause, in advance of the
specified termination date, upon 30 days written notice.
3. The Department agrees to use its best efforts to obtain funding for
multi-year contracts. If continued funding for this Contract is not appropriated
or budgeted at any time throughout the multi-year contract period, the
Department may terminate this Contract upon 30 days notice.
4. If funding to the Department is reduced due to an order by the Legislature or
the Governor, or is required by federal or state law, the Department may
terminate this Contract or proportionately reduce the services and goods due and
the amount due from the Department upon 30 days written notice. If the specific
funding source for the subject matter of this Contract is reduced, the
Department may terminate this Contract or proportionately reduce the services
and goods due and the amount due from the Department upon 30 written notice
being given to the Contractor.
5. If the Department terminates this Contract, the Department may procure
replacement goods or services upon terms and conditions necessary to replace the
Contractor's obligations. If the termination is due to the Contractor's failure
to perform, and the Department procures replacement goods or services, the
Contractor agrees to pay the excess costs associated with obtaining the
replacement goods or services.
6. If the Contractor terminates this Contract without cause, the Department may
treat the Contractor's action as a default under this Contract.
7. The Department may terminate this Contract if the Contractor becomes
debarred, insolvent, files bankruptcy or reorganization proceedings, sells 30%
or more of the company's assets or corporate stock, or gives notice of its
inability to perform its obligations under this Contract.
8. If the Contractor defaults in any manner in the performance of any obligation
under this Contract, or if audit exceptions are identified, the Department may,
at its option, either adjust the amount of payment or withhold payment until
satisfactory resolution of the default or exception. Default and audit
exceptions for which payment may be adjusted or withheld include disallowed
expenditures of federal or state funds as a result of the Contractor's failure
to comply with federal regulations or state rules. In addition, the Department
may withhold amounts due the Contractor under this Contract, any other current
contract between the Department and the Contractor, or any future payments due
the Contractor to recover the funds. The Department shall notify the Contractor
of the Department's action in adjusting the amount of payment or withholding
payment. This Contract is executory until such repayment is made.
9. The rights and remedies of the Department enumerated in this article are in
addition to any other rights or remedies provided in this Contract or available
in law or equity.

                           XVIII. FEDERAL REQUIREMENTS
The Contractor shall comply with all applicable federal requirements. To the
extent that the Department is able, the Department shall give further
clarification of federal requirements upon the Contractor's request. If the
Contractor is receiving federal funds under this Contract, certain federal
requirements apply. The Contractor agrees to comply with the federal
requirements to the extent that they are applicable to the subject matter of
this Contract and are required by the amount of federal funds involved in this
Contract.

1. CIVIL RIGHTS REQUIREMENTS:

          a. The Civil Rights Act of 1964, Title VI, provides that no person in
          the United States shall, on the grounds of race, color, or national
          origin, be excluded from participation in, be denied the benefits of,
          or be subjected to discrimination under any program or activity
          receiving federal financial assistance. The Health and Human Services
          regulation implementing this requirement is 45 CFR Part 80.
          b. The Civil Rights Act of 1964, Title VII, (P.L. 88-352 & 42 U.S.C.
          Section 2000e) prohibits employers from discriminating against
          employees on the basis of race, color, religion, national origin, and
          sex. Title VII applies to employers of fifteen or more employees, and
          prohibits all discriminatory employment

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                                 ATTACHMENT "A"

          practices.
          c. The Rehabilitation Act of 1973, as amended, section 504, provides
          that no otherwise qualified handicapped individual in the United
          States shall, solely by reason of the handicap, be excluded from
          participation in, be denied the benefits of, or be subjected to
          discrimination under any program or activity receiving federal
          financial assistance. The Health and Human Services regulation 45 CFR
          Part 84 implements this requirement.
          d. The Age Discrimination Act of 1975, as amended (42 U.S.C. Sections
          6101-6107), prohibits unreasonable discrimination on the basis of age
          in any program or activity receiving federal financial assistance. The
          Health and Human Services regulation implementing the provisions of
          the Age Discrimination Act is 45 CFR Part 91.
          e. The Education Amendments of 1972, Title IX, (20 U.S.C. Sections
          1681-1683 and 1685-1686), section 901, provides that no person in the
          United States shall, on the basis of sex, be excluded from
          participation in, be denied the benefits of, or be subjected to
          discrimination under any educational program or activity receiving
          federal financial assistance. Health and Human Services regulation 45
          CFR Part 86 implements this requirement.
          f. Executive Order No. 11246, as amended by Executive Order 11375
          relates to "Equal Employment Opportunity," (all construction contracts
          and subcontracts in excess of $10,000.00)
          g. Americans with Disabilities Act of 1990, (P.L. 101-336), section
          504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. Section
          794), prohibits discrimination on the basis of disability.
          h. The Public Health Service Act, as amended, Title VII, section 704
          and TITLE VIII, section 855, forbids the extension of federal support
          for health manpower and nurse training programs authorized under those
          titles to any entity that discriminates on the basis of sex in the
          admission of individuals to its training programs. Health and Human
          Services regulation implementing this requirement is 45 CFR Part 83.
          i. The Public Health Service Act, as amended, section 526, provides
          that drug abusers who are suffering from medical conditions shall not
          be discriminated against in admission or treatment because of their
          drug abuse or drug dependence, by any private or public general
          hospital that receives support in any form from any federally funded
          program. This prohibition is extended to all outpatient facilities
          receiving or benefitting from federal financial assistance by 45 CFR
          Part 84.
          j. The Public Health Service Act, as amended, section 522, provides
          that alcohol abusers and alcoholics who are suffering from medical
          conditions shall not be discriminated against in admission or
          treatment, solely because of their alcohol abuse or alcoholism, by any
          private or public general hospital that receives support in any form
          from any federally funded program. This prohibition is extended to all
          outpatient facilities receiving or benefitting from federal financial
          assistance by 45 CFR Part 84.
2. Confidentiality: The Public Health Service Act, as amended, sections 301(d)
and 543, require that certain records be kept confidential except under certain
specified circumstances and for specified purposes. Confidential records include
records of the identity, diagnosis, prognosis, or treatment of any patient that
are maintained in connection with the performance of any activity or program
relating to drug abuse prevention, i.e., drug abuse education, training,
treatment, or research, or alcoholism or alcohol abuse education, training,
treatment, rehabilitation, or research that is directly or indirectly assisted
by the federal government. Public Health Service regulations 42 CFR Parts 2 and
2a implement these requirements.
3. Lobbying Restrictions: Lobbying restrictions as required by 31 U.S.C. Section
1352, requires the Contractor to abide by this section and to place it's
language in all of it's contracts:
          a. No federal funds have been paid or will be paid, by or on behalf of
          the Contractor, to any person for influencing or attempting to
          influence an officer or employee of any federal agency, a member of
          Congress, an officer or employee of Congress, or an employee of a
          member of Congress in connection with the awarding of any federal
          contract, the making of any federal grant, the making of any federal
          loan, the entering into of any cooperative agreement, or the
          extension, continuation, renewal, amendment, or modification of any
          federal contract, grant, loan, or cooperative agreement.

                                  Page 10 of 13

<PAGE>

                                 ATTACHMENT "A"

          b. If any funds other than federal appropriated funds have been paid
          or will be paid to any person for influencing or attempting to
          influence an officer or employee of any federal agency, a member of
          Congress, an officer or employee of Congress, or an employee of a
          member of Congress in connection with the federal contract, grant,
          loan, or cooperative agreement, the Contractor shall complete and
          submit Federal Standard Form LLL, "Disclosure Form to report
          Lobbying," in accordance with its instructions.
          c. The Contractor shall require that the language of this article be
          included in the award documents for all subcontracts and that
          subcontractors shall certify and disclose accordingly.
4. Debarment, suspension or other ineligibility: The Contractor must notify the
Department in accordance with the notification requirements specified in Article
III, section 11 of this Contract if the Contractor has been debarred within the
contract period. Debarment regulations are stated in Health and Human Services
regulation 45 CFR Part 76.
5. Environmental Impact: The National Environmental Policy Act of 1969 (NEPA)
(Public Law 91-190) establishes national policy goals and procedures to protect
and enhance the environment. NEPA applies to all federal agencies and requires
them to consider the probable environmental consequences of any major federal
activity, including activities of other organizations operating with the
concurrence or support of a federal agency. This includes grant-supported
activities under this Contract if federal funds are involved. Additional
environmental requirements include:
          a. the institution of environmental quality control measures under the
          National Environmental Policy Act of 1969 (P.L. 91-190) and Executive
          Order 11514;
          b. the notification of violating facilities pursuant to Executive
          Order 11738 (all contracts, subcontracts, and subgrants in excess of
          $100,000.00);
          c. the protection of wetlands pursuant to Executive Order 11990;
          d. the evaluation of flood hazards in floodplains in accordance with
          Executive Order 11988;
          e. the assurance of project consistency with the approved State
          management program developed under the Coastal Zone Management Act of
          1972 (16 U.S.C. Sections 1451 et seq.);
          f. the conformity of Federal actions to State (Clear Air)
          Implementation Plans under Section 176(c) of the Clear Air Act of
          1955, as amended (42 U.S.C. Section 7401 et seq.);
          g. the protection of underground sources of drinking water under the
          Safe Drinking Water Act of 1974, as amended, (P.L. 93-523),
          h. the protection of endangered species under the Endangered Species
          Act of 1973, as amended, (P.L. 93-205) and;
          i. the protection of the national wild and scenic rivers system under
          the Wild and Scenic Rivers Act of 1968 (16 U.S.C. Sections 1271 et
          seq.).
6. Human Subjects: The Public Health Service Act, section 474(a), implemented by
45 CFR Part 46, requires basic protection for human subjects involved in Public
Health Service grant supported research activities. Human subject is defined in
the regulation as "a living individual about whom an investigator (whether
professional or student) conducting research obtains data through intervention
or interaction with the individual or identifiable private information." The
regulation extends to the use of human organs, tissues, and body fluids from
individually identifiable human subjects as well as to graphic, written, or
recorded information derived from individually identifiable human subjects. The
regulation also specifies additional protection for certain classes of human
research involving fetuses, pregnant women, human in vitro fertilization, and
prisoners. However, the regulation exempts certain categories of research
involving human subjects which normally involve little or no risk. The
exemptions are listed in 45 CFR Part 46.101(b). The protection of human subjects
involved in research, development, and related activities is found in P.L.
93-348.
7. Sterilization: Health and Human Services and Public Health Service have
established certain limitations on the performance of nonemergency
sterilizations by Public Health Service grant-supported programs or projects
that are otherwise authorized to perform such sterilizations. Public Health
Service has issued regulations that establish safeguards to ensure that such
sterilizations are performed on the basis of informed consent and that the

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<PAGE>

                                 ATTACHMENT "A"

solicitation of consent is not based on the withholding of benefits. These
regulations, published at 42 CFR Part 50, Subpart B, apply to the performance of
nonemergency sterilizations on persons legally capable of consenting to the
sterilization. Federal financial participation is not available for any
sterilization procedure performed on an individual who is under the age of 21,
legally incapable of consenting to the sterilization, declared mentally
incompetent, or is institutionalized.
8. Abortions and Related Medical Services: Federal financial participation is
generally not available for the performance of an abortion in a grant-supported
health services project. For further information on this subject, consult the
regulation at 42 CFR Part 50. Subpart C.
9. Recombinant DNA and Institutional Biosafety Committees: Each institution
where research involving recombinant DNA technology is being or will be
conducted must establish a standing Biosafety Committee. Requirements for the
composition of such a committee are given in Section IV of Guidelines for
Research Involving Recombinant DNA Molecules, (49 FR 46266 or latest revision),
which also discusses the roles and responsibilities of principal investigators
and grantee institutions. Guidelines for Research Involving Recombinant DNA
Molecules and Administrative Practices Supplement should be consulted for
complete requirements for the conduct of projects involving recombinant DNA
technology.
10. Animal Welfare: The Public Health Service Policy on Humane Care and Use of
Laboratory Animals By Awardee Institutions requires that applicant organizations
establish and maintain appropriate policies and procedures to ensure the humane
care and use of live vertebrate animals involved in research activities
supported by Public Health Service. This policy implements and supplements the
U.S. Government Principles for the Utilization and Care of Vertebrate Animals
Used in Testing, Research, and Training and requires that institutions use the
Guide for the Care and Use of Laboratory Animals as a basis for developing and
implementing an institutional animal care and use program. This policy does not
affect applicable State or local laws or regulations which impose more stringent
standards for the care and use of laboratory animals. All institutions are
required to comply, as applicable, with the Animal Welfare Act as amended (7
U.S.C. 2131 et seq.) and other federal statutes and regulations relating to
animals. These documents are available from the Office for Protection from
Research Risks (OPRR), National Institutes of Health, Bethesda, MD 20892, (301)
496-7005.
11. Contract Provisions: The Contractor must include the following provisions in
its contracts, as limited by the statements enclosed within the parentheses
following each provision:
          a. administrative, contractual, or legal remedies in instances where
          contractors violate or breach contract terms, and provides for such
          sanctions and penalties as may be appropriate. (Contracts other than
          small purchases. Small purchase involve relatively simple and informal
          procurement methods that do not cost more than $100,000 in aggregate.)
          b. termination for cause and for convenience by the grantee or
          subgrantee including the manner by which it will be effected and the
          basis for settlement. (All contracts in excess of $10,000)
          c. compliance with Executive Order 11246 of September 24, 1965
          entitled "Equal Employment Opportunity," as amended by Executive Order
          11375 of October 13, 1967 and as supplemented in Department of Labor
          regulations (41 CFR Chapter 60). (All construction contracts awarded
          in excess of $10,000 by the Contractor and its contractors or
          subgrantees)
          d. compliance with the Copeland "Anti-Kickback" Act (18 U.S.C. 874) as
          supplemented in Department of Labor regulations (29 CFR Part 3). (All
          contracts and subgrants for construction or repair)
          e. compliance with the Davis-Bacon Act (40 U.S.C. 276a to a-7) as
          supplemented by Department of Labor regulations (29 CFR Part 5).
          (Construction contracts in excess of $2,000 awarded when required by
          Federal grant program legislation)
          f. compliance with the Contract Work Hours and Safety Standards Act,
          sections 103 and 107, (40 U.S.C. 327-330) as supplemented by
          Department of Labor regulations (29 CFR Part 5). (Construction
          contracts awarded in excess of $2,000, and in excess of $2,500 for
          other contracts which involve the employment of mechanics or laborers)
          g. notice of the federal awarding agency requirements and regulations
          pertaining to reporting.
          h. notice of federal awarding agency requirements and regulations
          pertaining to patent rights with

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<PAGE>

                                 ATTACHMENT "A"

          respect to any discovery or invention which arises or is developed in
          the course of or under such contract.
          i. federal awarding agency requirements and regulations pertaining to
          copyrights and rights in data.
          j. access by the Department, the Contractor, the Federal funding
          agency, the Comptroller General of the United States, or any of their
          duly authorized representatives to any books, documents, papers, and
          records of the contractor which are directly pertinent to that
          specific contract for the purpose of making audit, examination,
          excerpts, and transcriptions.
          k. compliance with all applicable standards, orders, or requirements
          of the Clear Air Act, section 306, (42 U.S.C. 1857(h)), the Clean
          Water Act, section 508, (33 U.S.C. 1368), Executive Order 11738, and
          Environmental Protection Agency regulations (40 CFR Part 15).
          (Contracts, subcontracts, and subgrants of amounts in excess of
          $100,000)
          1. mandatory standards and policies relating to energy efficiency
          which are contained in the state energy conservation plan issued in
          compliance with the Energy Policy and Conservation Act (Pub. L.
          94-163).

12. (Governmental entities only) Merit System Standards: The Intergovernmental
Personnel Act of 1970 (42 U.S.C. Section 4728-4763), requires adherence to
prescribed standards for merit systems funded with federal funds.
13. Misconduct in Science: The United States Public Health Service requires
certain levels of ethical standards for all PHS grant-supported projects and
requires recipient institutions to inquire into, investigate and resolve all
instances of alleged or apparent misconduct in science. Issues involving
potential criminal violations must be promptly reported to the HHS Office of
Inspector General. (See regulations in 42 CFR Part 50, Subpart A)

                            END OF GENERAL PROVISIONS

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<PAGE>

                        ATTACHMENT B - SPECIAL PROVISIONS
<TABLE>
<S>                                                                                                                <C>
Article I - Definitions ........................................................................................   1
          Advance Directives ...................................................................................   1
          Balance Bill .........................................................................................   1
          CHEC Eligible ........................................................................................   1
          CHEC Program .........................................................................................   1
          Division of Health Care Financing ....................................................................   1
          Emergency Services ...................................................................................   1
          Enrollee .............................................................................................   1
          Enrollment Area ......................................................................................   2
          Family Member ........................................................................................   2
          Home and Community-Based Services ....................................................................   2
          Managed Care Organization or MCO .....................................................................   2
          Marketing Material ...................................................................................   2
          Medically Necessary ..................................................................................   2
          Member Services ......................................................................................   2
          Physician Incentive Plan .............................................................................   2
          Prepaid Mental Health Plan ...........................................................................   2
          Primary Care Provider ................................................................................   3
          Restriction Program ..................................................................................   3
          State Plan ...........................................................................................   3

Article II - Service Area ......................................................................................   3

Article III - Enrollment, Orientation, Marketing, and Disenrollment ............................................   3
          A.    Enrollment Process .............................................................................   3
                1.      Enrollee Choice ........................................................................   3
                2.      Period of Enrollment ...................................................................   3
                3.      Open Enrollment ........................................................................   4
                4.      No Health Screening ....................................................................   4
                5.      Independent Enrollment .................................................................   4
                6.      Representative Population ..............................................................   4
                7.      Eligibility Transmission ...............................................................   4
                        a.      In general .....................................................................   4
                        b.      New Enrollees ..................................................................   5
                        c.      Retroactive Enrollees ..........................................................   5
                        d.      Reinstated Enrollees ...........................................................   5
                        e.      Deleted Enrollees ..............................................................   5
                        f.      Advanced Notification Transmission .............................................   5
                8.      Change of Enrollment Procedures ........................................................   5
          B.    Member Orientation .............................................................................   6
                1.      Initial Contact - General Orientation ..................................................   6
                2.      Identification of Enrollees with Special Health Care Needs .............................   6
                3.      Inability to Contact Enrollee for Orientation ..........................................   7
                4.      Enrollees Receiving Out-of-Plan Care Prior to Orientation ..............................   7
          C.    Marketing and Member Education .................................................................   7
                1.      Approval of Marketing Materials ........................................................   7
                        a.      No Door-to-Door, Telephonic, or "Cold Call" Marketing ..........................   7
                        b.      Distribution of Marketing Materials ............................................   8
                2.      Enrollee Materials Must be Comprehensible ..............................................   8
                3.      Member Handbook ........................................................................   8
                4.      Plan Card ..............................................................................   9
                5.      Notification to Enrollees of Policies and Procedures ...................................   9
</TABLE>

                                        i

<PAGE>

<TABLE>
<S>                                                                                                               <C>
                        a.      Changes to Policies and Procedures..............................................   9
                        b.      Annual Education on Emergency Care and Grievance Procedures.....................   9
                6.      Monthly Notification to DEPARTMENT of Changes in Provider Network.......................   9
          D.    Disenrollment by Enrollee.......................................................................   9
                1.      Enrollee's Right to Disenroll...........................................................   9
                2.      Enrollee's in an Inpatient Hospital Setting.............................................  10
                3.      Annual Study of Enrollees who Disenrolled...............................................  10
          E.    Disenrollment by CONTRACTOR   ..................................................................  10
                1.      Cannot Disenroll for Adverse Change in Enrollee's Health................................  10
                2.      Valid Reasons for Disenrollment.........................................................  10
                3.      Approval by DEPARTMENT Required.........................................................  11
                4.      Enrollee's Right to File a Grievance....................................................  11
                5.      Refusal of Re-enrollment................................................................  11
          F.    Enrollee Transition Between MCOs/Health Plans...................................................  11
                1.      Must Accept Pre-enrollment Prior Authorizations.........................................  11
                2.      Must Provide Medical Records to Enrollee's New MCO......................................  11

Article IV - Benefits...........................................................................................  12
          A.    In General......................................................................................  12
          B.    Provider Services Function......................................................................  12
          C.    Scope of Services...............................................................................  12
                1.      Underwriting Risk.......................................................................  12
                2.      Responsible for all Benefits in Attachment C (Covered Services).........................  12
                3.      Changes to Benefits.....................................................................  12
          D.    Subcontracts....................................................................................  13
                1.      No Discrimination Based on License or Certification.....................................  13
                2.      Any Covered Service may be Subcontracted................................................  13
                3.      No Provisions to Reduce or Limit Medically Necessary Services...........................  13
                4.      Requirement of 60 Days Written Notice Prior to Termination of Contract..................  13
                5       Compliance with CONTRACTOR's Quality Assurance Plan.....................................  13
                6.      Unique Identifier Required..............................................................  14
                7.      Payment of Provider Claims..............................................................  14
          E.    Clarification of Covered Services...............................................................  14
                1.      Emergency Services......................................................................  14
                        a.      In General......................................................................  14
                        b.      Determining Liability for Emergency Services....................................  15
                        c.      Co-payments.....................................................................  16
                2.      Care Provided in Skilled Nursing Facilities.............................................  16
                        a.      In General: Stays Lasting 30 Days or Less.......................................  16
                        b.      Process for Stays Longer than 30 Days...........................................  16
                        c.      Process for Stays Less than 30 Days.............................................  17
                3.      Enrollees with Special Health Care Needs................................................  17
                        a.      In General......................................................................  17
                        b.      Identification..................................................................  18
                        c.      Choosing a Primary Care Provider................................................  18
                        d.      Referrals and Access to Specialty Providers.....................................  18
                        e.      Survey of Enrollees with Special Health Care Needs..............................  18
                        f.      Collaboration with Other Programs...............................................  19
                        g.      Required Elements of a Case Management System...................................  19
                        h.      Hospice.........................................................................  20
                4.      Inpatient Hospital Services.............................................................  20
                5.      Maternity Stays.........................................................................  20
                        a.      The Newborns' and Mothers' Health Protection Act (NMHPA)........................  20
                        b.      Early Discharges................................................................  20
                        c.      Post-Delivery Care..............................................................  21
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                               <C>
                        d.      Timely Post-Delivery Care.......................................................  21
                6.      Children in Custody of the Department of Human Services.................................  21
                        a.      In General......................................................................  21
                        b.      Schedule of Visits..............................................................  22
                7.      Organ Transplantations..................................................................  22
                        a.      In General......................................................................  22
                        b.      Specific Organ Transplantations Covered.........................................  23
                        c.      Psychosocial Assessment Required................................................  23
                        d.      Out-of-State Transplantations...................................................  23
                8.      Mental Health Services..................................................................  23
                9.      Developmental and Organic Disorders.....................................................  24
                        a.      Covered Services for Child Enrollees through Age 20.............................  24
                        b.      Covered Services for Adult Enrollees Age 21 and Older...........................  24
                        c.      Non-covered Services............................................................  24
                        d.      Responsibility of the Prepaid Mental Health Plan................................  24
                10.     Out-of-State Accessory Services.........................................................  25
                11.     Non-Contractor Prior Authorizations.....................................................  25
                        a.      Prior Authorizations - General..................................................  25
                        b.      When the CONTRACTOR has not Authorized the Service..............................  25
          F.    Clarification of Payment Responsibilities.......................................................  26
                1.      Covered Services Received Outside CONTRACTOR's Network but Paid by
                        CONTRACTOR..............................................................................  26
                2.      When Covered Services are not the CONTRACTOR's Responsibility...........................  26
                3.      The DEPARTMENT's Responsibility.........................................................  26
                4.      Covered Services Provided by the Department of Health, Division of Community
                        and Family Health Services..............................................................  26
                5.      Enrollee Transition Between MCOs, or Between Fee-For-Service and
                        CONTRACTOR..............................................................................  27
                        a.      Inpatient Hospital..............................................................  27
                        b.      Home Health Services............................................................  27
                        c.      Medical Equipment...............................................................  28
                6.      Surveys.................................................................................  28

Article V - Enrollee Rights/Services............................................................................  28
          A.    Member Services Function........................................................................  28
          B.    Enrollee Liability..............................................................................  29
          C.    General Information to be Provided to Enrollees.................................................  29
          D.    Access..........................................................................................  29
                1.      In General..............................................................................  29
                2.      Specific Provisions.....................................................................  30
                        a.      Elimination of Access Problems Caused by Geographic, Cultural and
                                Language Barriers and Physical Disabilities.....................................  30
                        b.      Interpretive Services...........................................................  30
                        c.      No Restrictions of Provider's Ability to Advise and Counsel.....................  29
                        d.      Waiting Time Benchmarks.........................................................  30
                        e.      No Delay While Coordinating Coverage with a Prepaid Mental Health
                                Plan............................................................................  31
          E.    Choice..........................................................................................  31
          F.    Coordination....................................................................................  31
                1.      In General..............................................................................  31
                2.      Prepaid Mental Health Plan..............................................................  31
          G.    Billing Enrollees...............................................................................  32
                1.      In General....... ......................................................................  32
                2.      Circumstances When an Enrollee May be Billed............................................  32
                3.      CONTRACTOR May Not Hold Enrollee's Medicaid Card........................................  33
                4.      Criminal Penalties......................................................................  33
</TABLE>

                                       iii

<PAGE>

<TABLE>
<S>                                                                                                               <C>
Article VI - Grievance Procedures...............................................................................  33
          A.    In General......................................................................................  33
          B.    Nondiscrimination...............................................................................  33
          C.    Minimum Requirements of Grievance Procedures....................................................  33
          D.    Final Review by DEPARTMENT......................................................................  34

Article VII - Other Requirements................................................................................  34
          A.    Compliance with Public Health Service Act.......................................................  34
          B.    Compliance with OBRA'90 Provision and 42 CFR 434.28.............................................  34
          C.    Fraud and Abuse Requirements....................................................................  35
          D.    Disclosure of Ownership and Control Information.................................................  36
          E.    Safeguarding Confidential Information on Enrollees..............................................  36
          F.    Disclosure of Provider Incentive Plans..........................................................  36
          G.    Debarred or Suspended Individuals...............................................................  37
          H.    HCFA Consent Required...........................................................................  37

Article VIII - Payments.........................................................................................  38
          A.    Risk Contract...................................................................................  38
          B.    Payment Amounts.................................................................................  38
                1.      Payment Schedule........................................................................  38
                2.      Calculation of Premiums.................................................................  38
                3.      Federally Qualified Health Centers (FQHCs)..............................................  38
                4.      Time Frame for Request of Delivery Payment..............................................  38
                5.      Contract Maximum........................................................................  38
          C.    Medicare........................................................................................  39
                1.      Payment of Medicare Part B Premiums.....................................................  39
                2.      Payment of Medicare Deductible and Coinsurance..........................................  39
                3.      Must Not Balance Bill Enrollees.........................................................  39
          D.    Third Party Liability (Coordination of Benefits)................................................  39
                1.      TPL Collections.........................................................................  39
                2.      Duplication of Benefits.................................................................  40
                3.      Reconciliation of Other TPL.............................................................  40
                4.      When TPL is Denied......................................................................  40
                5.      Notification of Personal Injury Cases...................................................  40
                6.      ORS to Pursue Collections...............................................................  41
                7.      Rebate of Duplicate Premiums............................................................  41
                8.      Insurance Buy-Out Program...............................................................  41
                9.      CONTRACTOR Must Pay Provider Administrative Fee for Immunizations.......................  42

          E.    Third Party Responsibility (Including Worker's Compensation)....................................  42
                1.      CONTRACTOR to Bill Usual and Customary Charges..........................................  42
                2.      Third Party's Obligation to Pay for Covered Services....................................  42
                3.      First Dollar Coverage for Accidents.....................................................  42
                4.      Notification of Stop-Loss...............................................................  42
          F.    Changes in Covered Services.....................................................................  42

Article IX - Records, Reports and Audits........................................................................  43
          A.    Federally Required Reports......................................................................  43
                1.      Financial Disclosure Report.............................................................  43
                2.      Disclosure of Ownership and Control Interest Statement..................................  43
                3.      CHEC/EPSDT Reports......................................................................  43
                        a.      CHEC/EPSDT Screenings...........................................................  43
                        b.      Immunization Data...............................................................  43
</TABLE>

                                       iv

<PAGE>

<TABLE>
<S>                                                                                                               <C>
          B.    Periodic Reports................................................................................  43
                1.      Enrollment, Cost and Utilization Reports (Attachment E).................................  43
                2.      Semi-Annual Reports.....................................................................  44
                        a.      Organ Transplants...............................................................  44
                        b.      Obstetrical Information.........................................................  44
                        c.      Complaints and Formal Grievances................................................  44
                        d.      Aberrant Physician Behavior.....................................................  44
                3.      Quality Assurance Activities............................................................  45
                4.      HEDIS...................................................................................  45
                5.      Encounter Data..........................................................................  45
                6.      Documents Due Prior to Quality Monitoring Reviews.......................................  45
                7.      Audit of Abortions, Sterilizations and Hysterectomies...................................  46
                8.      Development of New Reports..............................................................  46
          C.    Record System Requirements......................................................................  46
          D.    Medical Records.................................................................................  46
          E.    Audits..........................................................................................  46
                1.      Right of DEPARTMENT and HCFA to Audit...................................................  46
                2.      Information to Determine Allowable Costs................................................  47
                3.      Management and Utilization Audits.......................................................  47
          F.    Independent Quality Review......................................................................  47
                1.      In General..............................................................................  47
                2.      Specific Requirements...................................................................  48
                        a.      Liaison for Routine Communication...............................................  48
                        b.      Representative to Assist with Projects..........................................  48
                        c.      Copies and On-Site Access.......................................................  48
                        d.      Format of Enrollee Files........................................................  48
                        e.      Time-frame for Providing Data...................................................  48
                        f.      Work Space for On-Site Reviews..................................................  48
                        g.      Staff Assistance During On-Site Visits..........................................  49
                        h.      Confidentiality.................................................................  49

Article X - Sanctions...........................................................................................  49

Article XI - Termination of the Contract........................................................................  50
          A.    Automatic Termination...........................................................................  50
          B.    Optional Year-End Termination ..................................................................  50
          C.    Termination for Failure to Agree Upon Rates.....................................................  50
          D.    Effect of Termination...........................................................................  50
                1.      Coverage................................................................................  50
                2.      Enrollee Not Liable for Debts of CONTRACTOR or its Subcontractors.......................  50
                3.      Information for Claims Payment..........................................................  50
                4.      Changes in Enrollment Process...........................................................  50
                5.      Hearing Prior to Termination............................................................  51
          E.    Assignment......................................................................................  51

Article XII - Miscellaneous.....................................................................................  51
          A.    Integration.....................................................................................  51
          B.    Enrollees May Not Enforce Contract..............................................................  51
          C.    Interpretation of Laws and Regulations..........................................................  51
          D.    Adoption of Rules...............................................................................  52

Article XIII - Effect of General Provisions.....................................................................  52
</TABLE>

                                        v

<PAGE>

                         ATTACHMENT C - COVERED SERVICES
<TABLE>
<S>                                                                                                                <C>
A.        In General............................................................................................   1

B.        Hospital Services.....................................................................................   1
          1.    Inpatient Hospital..............................................................................   1
          2.    Outpatient Hospital.............................................................................   1
          3.    Emergency Department Services...................................................................   1

C.        Physician Services....................................................................................   1

D.        General Preventive Services...........................................................................   1

E.        Vision Care...........................................................................................   2

F.        Lab and Radiology Services............................................................................   2

G.        Physical and Occupational Therapy.....................................................................   2
          1.    Physical Therapy................................................................................   2
          2.    Occupational Therapy............................................................................   2

H.        Speech and Hearing Services...........................................................................   3

I.        Podiatry Services.....................................................................................   3

J.        End Stage Renal Disease - Dialysis....................................................................   3

K.        Home Health Services..................................................................................   3

L.        Hospice Services......................................................................................   3

M.        Private Duty Nursing..................................................................................   3

N.        Medical Supplies and Medical Equipment................................................................   3

O.        Abortions and Sterilizations..........................................................................   4

P.        Treatment for Substance Abuse and Dependency..........................................................   4

Q.        Organ Transplants.....................................................................................   4

R.        Other Outside Medical Services........................................................................   4

S.        Long Term Care........................................................................................   4

T.        Transportation Services...............................................................................   4

U.        Services to CHEC Enrollees............................................................................   5
          1.    CHEC Services...................................................................................   5
          2.    CHEC Policies and Procedures....................................................................   5

V.        Family Planning Services..............................................................................   5

W.        High-Risk Prenatal Services...........................................................................   6
          1.    In General - Ensure Service are Appropriate and Coordinated.....................................   6
</TABLE>

                                       vi

<PAGE>

<TABLE>
<S>                                                                                                               <C>
          2.    Risk Assessment.................................................................................   6
                a.      Criteria................................................................................   6
                b.      Recommended Prenatal Screening..........................................................   6
                c.      Classification..........................................................................   6
          3.    Prenatal Initiative Program.....................................................................   8

X.        Services for Children with Special Needs..............................................................   8
          1.    In General......................................................................................   8
          2.    Services Requiring Timely Access................................................................   9
          3.    Definition of Children with Special Health Care Needs...........................................   9

Y.        Medical and Surgical Services of a Dentist............................................................  10
          1.    Who May Provide Services........................................................................  10
          2.    Universe of Covered Services....................................................................  10
          3.    Services Specifically Covered...................................................................  10
          4.    Dental Services Not Covered.....................................................................  11

Z.        Diabetes Education....................................................................................  11

AA. HIV Prevention..............................................................................................  11
          1.    General Program.................................................................................  11
          2.    Focused Program for Women.......................................................................  11

            ATTACHMENT D - QUALITY ASSURANCE & UTILIZATION MANAGEMENT

A.        Quality of Care.......................................................................................   1
          1.    In General......................................................................................   1
          2.    Required Elements of Plans......................................................................   1

B.        Internal Monitoring...................................................................................   1
          1.    In General......................................................................................   1
          2     Elements of Internal Quality Assurance Plan.....................................................   2
          3.    Demonstration of High Quality Health Care.......................................................   2

C.        Quality Assurance Monitoring..........................................................................   3
          1.    Objective.......................................................................................   3
          2.    Monitoring of Providers and Recipients Necessary to Achieve Objective...........................   3

D.        The DEPARTMENT'S Quality Assurance Monitoring Plan....................................................   3

E.        Corrective Action.....................................................................................   3
          1.    When Corrective Actions are Necessary...........................................................   3
          2.    Initial Response by CONTRACTOR..................................................................   4
          3.    Submission of Corrective Action to DEPARTMENT...................................................   4
          4.    Initial Appeal of DEPARTMENT's Findings.........................................................   5
          5.    Formal Hearing..................................................................................   5
          6.    CONTRACTOR Unwilling or Unable to Implement Corrective Action Plan..............................   6
          7.    Collection of Financial Penalties...............................................................   6

F.        Federal Sanctions for Comprehensive Contracts.........................................................   6
</TABLE>

                                       vii

<PAGE>

For the purpose of the Contract all article, section, and subsection headings in
these Attachments B, C, and D are for convenience in referencing the provisions
of the Contract. They are not enforceable as part of the text of the Contract
and may not be used to interpret the meaning of the provisions that lie beneath
them.

                        ATTACHMENT B - SPECIAL PROVISIONS

                             ARTICLE I - DEFINITIONS

For the purpose of the Contract:

A.   "Advance Directives" means oral and written instructions about an
     individual's medical care, in the event the individual is unable to
     communicate. There are two types of Advance Directives: a living will and a
     medical power of attorney.

B.   "Balance Bill" means the practice of billing patients for charges that
     exceed the amount that the MCO will pay.

C.   "CHEC Eligible" means any Medicaid recipient under the age of 21 who is
     eligible to receive Early Periodic Screening Diagnostic and Treatment
     (EPSDT) services in accordance with 42 CFR Part 441, Subpart B.

D.   "CHEC Program" or Child Health Evaluation and Care program is Utah's
     version of the federally mandated Early Periodic Screening, Diagnosis and
     Treatment (EPSDT) program as defined in 42 CFR Part 441, Subpart B. (See
     Attachment C, Covered Services, 21.)

E.   "Division of Health Care Financing" or "DHCF" means the division within the
     Department of Health responsible for the administration of the Utah
     Medicaid program.

F.   "Emergency Services" means those services provided in a hospital, clinic,
     office, or other facility that is equipped to furnish the required care,
     after the sudden onset of a medical condition manifesting itself by acute
     symptoms of sufficient severity (including severe pain) such that a prudent
     layperson, who possesses an average knowledge of health and medicine, could
     reasonably expect that the absence of immediate medical attention to result
     in:

     1. Placing the health of the individual (or, with respect to a pregnant
        woman, the health of a woman or her unborn child) in serious jeopardy;

     2. Serious impairment to bodily functions; or

     3. Serious dysfunction of any bodily organ or part.

G.   "Enrollee" means any Medicaid eligible: (1) who, at the time of enrollment
     resides within the geographical limits of the CONTRACTOR's Service Area;
     (2) whose name appears on the DEPARTMENT's Eligibility Transmission as a
     new, reinstate, or retroactive Enrollee; and (3) who is accepted for
     enrollment by the CONTRACTOR according to the conditions set forth in this
     Contract excluding residents of the Utah State Hospital, Utah State
     Developmental Center, and long-term care facilities except as defined in
     Attachment C.

                                  Page 1 of 52

<PAGE>

H.   "Enrollment Area" or "Service Area" means the counties enumerated in
     Article II.

I.   "Family Member" means all Medicaid eligibles who are members of the same
     family living at home.

J.   "Home and Community-Based Services" means services, not otherwise furnished
     under the State's Medicaid plan, that are furnished under a waiver of
     statutory requirements granted under the provisions of CFR Part 441,
     subpart G. These services cover an array of Home and Community-Based
     Services that are cost-effective and necessary for an individual to avoid
     institutionalization.

K.   "Managed Care Organization" or "MCO" means an organization that meets the
     State Plan's definition of an HMO or prepaid health plan and which
     provides, either directly or through arrangement with other providers,
     comprehensive general medical services to Medicaid eligibles on a
     contractual prepayment basis.

L.   "Marketing Material" means materials in all mediums, including member
     handbooks, brochures and leaflets, newspaper, magazine, radio, television,
     billboard and yellow pages advertisements, and presentation materials used
     by marketing representatives. It includes materials mailed to, distributed
     to, or aimed at Medicaid clients specifically, and any material that
     mentions "Medicaid," "Medicaid Assistance," or "Title XIX."

M.   "Medically Necessary" means any medical service that (a) is reasonably
     calculated to prevent, diagnose, or cure conditions in the Enrollee that
     endanger life, cause suffering or pain, cause deformity or malfunction, or
     threaten to cause a handicap, and (b) there is no equally effective course
     of treatment available or suitable for the Enrollee requesting the service
     which is more conservative or substantially less costly. Medical services
     will be of a quality that meets professionally recognized standards of
     health care, and will be substantiated by records including evidence of
     such medical necessity and quality. Those records will be made available to
     the DEPARTMENT upon request. For CHEC enrollees, "Medically Necessary"
     means preventive screening services and other medical care, diagnostic
     services, treatment, and other measures necessary to correct or ameliorate
     defects and physical and mental illnesses and conditions, even if the
     services are not included in the Utah State Medicaid Plan.

N.   "Member Services" means a method of assisting Enrollees in understanding
     CONTRACTOR policies and procedures, facilitating referrals to participating
     specialists, and assisting in the resolution of problems and member
     complaints. The purpose of Member Services is to improve access to services
     and promote Enrollee satisfaction.

O.   "Physician Incentive Plan" means any compensation between a contracting
     organization and a physician group that may directly or indirectly have the
     effect of reducing or limiting services provided with respect to Enrollees
     in the organization.

P.   "Prepaid Mental Health Plan" means the mental health centers that contract
     with the DEPARTMENT to provide inpatient and outpatient mental health
     services to Medicaid clients living within each mental health center's
     jurisdiction.

                                  Page 2 of 52

<PAGE>

Q.   "Primary Care Provider" or "PCP" means a health care provider the majority
     of whose practice is devoted to internal medicine, family/general practice
     or pediatrics. The MCO may allow other specialists to be PCPs, when
     appropriate. PCPs are responsible for delivering primary care services,
     coordinating and managing Enrollees' overall health and, authorizing
     referrals for other necessary care.

R.   "Restriction Program" means the Federally mandated program (42 CFR
     431.54(e)) for Medicaid clients who over-utilize Medicaid services. If the
     DEPARTMENT in conjunction with the CONTRACTOR finds that an Enrollee has
     utilized Medicaid services at a frequency or amount that is not Medically
     Necessary, as determined in accordance with utilization guidelines adopted
     by the DEPARTMENT, the DEPARTMENT may place the Enrollee under the
     Restriction Program for a reasonable period of time to obtain Medicaid
     services from designated providers only.

S.   "State Plan" means the State Plan for organization and operation of the
     Medicaid program as defined pursuant to Section 1102 of the Social Security
     Act (42 U.S.C. 1302).

                            ARTICLE II - SERVICE AREA

The Service Area is limited to the urban counties of Davis, Salt Lake, Utah and
Weber.

       ARTICLE III - ENROLLMENT, ORIENTATION, MARKETING, AND DISENROLLMENT

A.   ENROLLMENT PROCESS

     1.   ENROLLEE CHOICE

          The DEPARTMENT will offer potential Enrollees a choice among all MCOs
          available in the Enrollment Area. The DEPARTMENT will inform potential
          Enrollees of Medicaid benefits. The Medicaid client's intent to enroll
          is established when the applicant selects The CONTRACTOR, either
          verbally or by signing a choice of health care delivery form or
          equivalent. This initiates the action to send an advance notification
          to the CONTRACTOR. Medicaid Enrollees made eligible for a retroactive
          period prior to the current month are not eligible for CONTRACTOR
          enrollment during the retroactive period.

     2.   PERIOD OF ENROLLMENT

          Each Enrollee will be enrolled for the period of the Contract or the
          period of Medicaid eligibility or until such person disenrolls or is
          disenrolled, whichever is earlier. Until the DEPARTMENT notifies the
          CONTRACTOR that an Enrollee is no longer Medicaid eligible, the
          CONTRACTOR may assume that the Enrollee continues to be eligible. Each
          Enrollee will be automatically re-enrolled at the end of each month
          unless that Enrollee notifies the DEPARTMENT's Health Program
          Representative of an intent not to re-enroll in the MCO prior to the
          benefit issuance date.

                                  Page 3 of 52

<PAGE>

     3.   OPEN ENROLLMENT

          The CONTRACTOR will have a continuous open enrollment period that
          meets the requirements of Section 1301(d) of the Public Health Service
          Act. The DEPARTMENT will certify, and the CONTRACTOR agrees to accept
          individuals who are eligible to be enrolled in the MCO under the
          provisions of this Contract:

          a. in the order in which they apply; and

          b. without restrictions unless authorized by the DEPARTMENT.

     4.   NO HEALTH SCREENING

          The DEPARTMENT and the CONTRACTOR agree that no potential Enrollee
          will be pre-screened or selected by either party for enrollment on the
          basis of pre-existing health problems or on the basis of race, color,
          national origin, disability or age.

     5.   INDEPENDENT ENROLLMENT

          Each Medicaid eligible can be enrolled or disenrolled in the MCO,
          independent of any other Family Member's enrollment or disenrollment.

     6.   REPRESENTATIVE POPULATION

          The CONTRACTOR will service a population representative of the
          categories of eligibility within the area it serves.

     7.   ELIGIBILITY TRANSMISSION

          a.   IN GENERAL

               Before the close of business of each day, the DEPARTMENT will
               provide to the CONTRACTOR an Eligibility Transmission which is an
               electronic file that includes individuals which the DEPARTMENT
               certifies as Medicaid eligible and who enrolled in the MCO.
               Eligibility transmissions include new Enrollees, reinstated
               Enrollees, retroactive Enrollees, deleted Enrollees and Enrollees
               whose eligibility information results in a change to a critical
               field. The Eligibility Transmission will be in accordance with
               the Utah Health Information Network (UHIN) standard. The
               DEPARTMENT represents and warrants to the CONTRACTOR that the
               appearance of an individual's name on the Eligibility
               Transmission, other than a deleted Enrollee, will be conclusive
               evidence for purposes of this Contract, that such person is
               enrolled in the program and qualifies for medical assistance
               under Medicaid Title XIX and that the DEPARTMENT agrees to pay
               premiums for such Enrollees.

                                  Page 4 of 52

<PAGE>

          b.   NEW ENROLLEES

               New Enrollees are enrolled in this MCO until otherwise specified;
               these Enrollees will not appear on future transmissions unless
               there is a change in a critical field. Critical fields are
               coverage dates, recipient name, date of birth, date of death,
               sex, social security number, case information, address, telephone
               number, payment code, coordination of benefits, and the
               Enrollee's provider under the Restriction Program. Enrollees with
               a spenddown requirement will appear on the eligibility
               transmission on a month by month basis after the spenddown is
               met.

          c.   RETROACTIVE ENROLLEES

               Retroactive Enrollees are those who were Enrollees previous to
               the current month. Retroactive Enrollees include newborn
               Enrollees or Enrollees who have been reported in one payment
               category in a previous month but have been changed to a new
               payment category for that previous month.

          d.   REINSTATED ENROLLEES

               Reinstated Enrollees are those who were enrolled for the previous
               month and also closed at the end of the previous month. These
               Enrollees are eligible retroactively to the beginning of the
               current month.

          e.   DELETED ENROLLEES

               Deleted Enrollees are those who are no longer eligible for
               Medicaid or who were disenrolled from the MCO.

          f.   ADVANCED NOTIFICATION TRANSMISSION

               An Advanced Notification Transmission is another electronic file
               (separate from the Eligibility Transmission) that will be sent to
               the CONTRACTOR when an individual has selected the MCO prior to
               becoming eligible for Medicaid. These individuals may or may not
               become eligible for Medicaid. Use of information about such
               individuals is restricted to providing the individual with an
               orientation to the MCO prior to the individual's eligibility for
               Medicaid. The CONTRACTOR is not required to orient individuals
               until they appear on the Eligibility Transmission.

     8.   CHANGE OF ENROLLMENT PROCEDURES

          The CONTRACTOR will be advised of anticipated changes in DEPARTMENT
          policies and procedures as they relate to the enrollment process and
          their comments will be solicited. The CONTRACTOR agrees to be bound by
          such changes in DEPARTMENT policies and procedures that are mutually
          agreed upon by the CONTRACTOR and the DEPARTMENT.

                                  Page 5 of 52

<PAGE>

B.   MEMBER ORIENTATION

     1.   INITIAL CONTACT - GENERAL ORIENTATION

          The CONTRACTOR will make a good faith effort to ensure that each
          Enrollee or Enrollee's family or guardian receives the CONTRACTOR's
          member handbook. The CONTRACTOR Representative will make a good faith
          effort, as evidenced in written or electronic records, to make an
          initial contact with the Enrollee within 10 working days after the
          CONTRACTOR has been notified through the Eligibility Transmission of
          the Enrollee's MCO enrollment. The initial contact will be in person
          or by telephone (or in writing, but only if reasonable attempts have
          been made to make the contact in person by telephone) and will inform
          the Enrollee of the MCO rules and policies. The CONTRACTOR must ensure
          that Enrollees are provided interpreters, Telecommunication Device for
          the Deaf (TDD), and other auxiliary aids to ensure that Enrollees
          understand their rights and responsibilities. During the initial
          contact the CONTRACTOR Representative will provide, at a minimum, the
          following information to the Enrollee or potential Enrollee:

          a.   specific written and oral instructions on the use of the
               CONTRACTOR's Covered Services and procedures;

          b.   availability and accessibility of all Covered Services, including
               the availability of family planning services and that the
               Enrollee may obtain family planning services from Medicaid
               providers other than providers affiliated with the CONTRACTOR;

          c.   the client's rights and responsibilities as an Enrollee of the
               Health Plan, including the right to file a grievance and how to
               file a grievance;

          d.   the right to terminate enrollment with the MCO; and

          e.   encouragement to make a medical appointment with a CONTRACTOR
               provider.

     2.   IDENTIFICATION OF ENROLLEES WITH SPECIAL HEALTH CARE NEEDS

          During the initial contact with each Enrollee the CONTRACTOR
          representative will use a process that will identify children and
          adults with special health care needs. The CONTRACTOR representative
          will clearly describe to each Enrollee during the initial contact the
          process for requesting specialist care. When an Enrollee is identified
          as having special health care needs, the CONTRACTOR Representative
          will forward this information to a CONTRACTOR individual with
          knowledge of coordination of care and services necessary for such
          Enrollees. The CONTRACTOR individual with knowledge of coordination of
          care for Enrollees with special health care needs will make a good
          faith effort to contact Enrollees within ten working days after
          identification to begin coordination of health care needs, if
          necessary. The CONTRACTOR will not discriminate on the basis of health
          status or the need for health care services.

                                  Page 6 of 52

<PAGE>

          The DEPARTMENT's Health Program Representatives are responsible to
          forward information, i.e., pink sheets identifying Enrollees with
          special health care needs and limited language proficiency needs to
          the CONTRACTOR in a timely way coinciding with the daily Eligibility
          Transmission as much as possible.

     3.   INABILITY TO CONTACT ENROLLEE FOR ORIENTATION

          If the CONTRACTOR Representative cannot contact the Enrollee within 10
          working days or at all, the CONTRACTOR Representative will document
          its efforts to contact the Enrollee.

     4.   ENROLLEES RECEIVING OUT-OF-PLAN CARE PRIOR TO ORIENTATION

          If the Enrollee receives Covered Services by an out-of-plan provider
          after the first day of the month in which the client's enrollment
          became effective, and if a CONTRACTOR orientation either in-person or
          by telephone (or in writing, but only if reasonable attempts have been
          made to make the contact in person or by telephone) has not taken
          place prior to receiving such services, the CONTRACTOR is responsible
          for payment of the services rendered provided the DEPARTMENT informs
          the CONTRACTOR by the 20th of any month prior to the month that MCO
          enrollment begins.

C.   MARKETING AND MEMBER EDUCATION

     1.   APPROVAL OF MARKETING MATERIALS

          The CONTRACTOR's marketing plans, procedures and materials will be
          accurate, and may not mislead, confuse, or defraud either Enrollees or
          the DEPARTMENT. All Medicaid marketing plans, procedures and materials
          will be reviewed and approved by the DEPARTMENT in consultation with
          the Medical Care Advisory Committee for Marketing Review before
          implemented or released by the CONTRACTOR. The DEPARTMENT will notify
          the CONTRACTOR of its approval or disapproval, in writing, of such
          materials within ten working days after receiving them unless the
          DEPARTMENT and the CONTRACTOR agree to another time frame. If the
          DEPARTMENT does not respond within the agreed upon time frame, the
          CONTRACTOR shall deem such materials approved. Marketing materials
          will not be approved if the DEPARTMENT determines that the material is
          materially inaccurate or misleading or otherwise makes material
          misrepresentations. Health education materials and newsletters not
          specifically related to Enrollees do not need to be approved by the
          DEPARTMENT.

          a.   NO DOOR-TO-DOOR, TELEPHONIC, OR "COLD CALL" MARKETING

               The Contractor cannot, either directly or indirectly, conduct
               door-to-door, telephonic or "cold call" marketing of enrollment.
               These three marketing practices are prohibited whether conducted
               by the Health Plan itself ("directly") or by an agent or
               independent contractor ("indirectly"). Cold call marketing is any
               unsolicited personal contact with a potential enrollee by an
               employee or agent of a managed care entity for the purpose of
               influencing the individual to

                                  Page 7 of 52

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               enroll with the Health Plan. The Contractor may not entice a
               potential enrollee to join the Health Plan by offering the sale
               of any other type of insurance as a bonus for enrollment. All
               other non-requested marketing approaches to Medicaid clients by
               the CONTRACTOR are also prohibited unless specifically approved
               in advance by the DEPARTMENT.

          b.   DISTRIBUTION OF MARKETING MATERIALS

               Marketing materials must be distributed to the entire Service
               Area.

     2.   ENROLLEE MATERIALS MUST BE COMPREHENSIBLE

          The CONTRACTOR will attempt to write all Enrollee and potential
          enrollee information, instructional and educational materials,
          including member handbooks, at no greater than a sixth grade reading
          level. If the MCO has more than 5% of its Enrollees who speak a
          language other than English as a first language, the CONTRACTOR must
          make available written material (e.g. member handbooks, educational
          newsletters) in that language. Marketing materials must include a
          statement that the CONTRACTOR does not discriminate against any
          Enrollee on the basis of race, color, national origin, disability, or
          age in admission, treatment, or participation in its programs,
          services and activities. In addition, the materials must include the
          phone number of the nondiscrimination coordinator for Enrollees to
          call if they have questions about the nondiscrimination policy or
          desire to file a complaint or grievance alleging violations of the
          nondiscrimination policy.

     3.   MEMBER HANDBOOK

          The CONTRACTOR will produce a member handbook that must be submitted
          to the DEPARTMENT for review and approval before distribution. The
          DEPARTMENT will notify the CONTRACTOR in writing of its approval or
          disapproval within ten working days after receiving the member
          handbook unless the DEPARTMENT and CONTRACTOR agree to another time
          frame. If the DEPARTMENT does not respond within the agreed upon time
          frame, the CONTRACTOR may deem such materials are approved. If there
          are changes to the content of the material in the handbook, the
          CONTRACTOR must update the member handbook and submit a draft to the
          DEPARTMENT for review and approval before distribution to its
          Enrollees. At a minimum, the member handbook must explain in clear
          terms the following information:

          a.   The scope of benefits provided by the MCO;
          b.   Instructions on where and how to obtain Covered Services,
               including referral requirements;
          c.   Instructions on what to do in an emergency or urgent medical
               situation, including emergency numbers;
          d.   Enrollee options on obtaining family planning services;
          e.   Instructions on how to choose a PCP and how to change PCPs;
          f.   Description on Enrollee cost-sharing requirements (if
               applicable);
          g.   Toll-free telephone number;
          h.   Description of Member Services function;

                                  Page 8 of 52

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          i.   How to register a complaint or grievance;
          j.   Information on Advance Directives;
          k.   Services covered by Medicaid, but not covered by the CONTRACTOR;
          1.   Clients' rights and responsibilities;
          m.   A statement that the Contractor does not discriminate against any
               Enrollee on the basis of race, color, national origin,
               disability, or age in admission, treatment, or participation in
               its programs, services and activities; and
          n.   The phone number of the nondiscrimination coordinator for
               Enrollees to call if they have questions about the
               nondiscrimination policy or desire to file a complaint or
               grievance alleging violations of the nondiscrimination policy.

     4.   PLAN CARD

          The CONTRACTOR must issue a generic plan card to all Enrollees
          listing, at a minimum, the name of the MCO and a toll-free number that
          is available to Enrollees twenty-four hours a day, seven days a week.
          The CONTRACTOR must issue the generic plan card to new enrollees
          within fifteen business days after the DEPARTMENT notifies the
          CONTRACTOR of the Medicaid client's enrollment.

     5.   NOTIFICATION TO ENROLLEES OF POLICIES AND PROCEDURES

          a.   CHANGES TO POLICIES AND PROCEDURES

               The CONTRACTOR must periodically notify Enrollees, in writing, of
               changes to its plan such as changes to its policies or procedures
               either through a newsletter or other means.

          b.   ANNUAL EDUCATION ON EMERGENCY CARE AND GRIEVANCE PROCEDURES

               The CONTRACTOR must annually reinforce, in writing, to Enrollees
               how to access emergency and urgent services and how to register a
               complaint or grievance.

     6.   MONTHLY NOTIFICATION TO DEPARTMENT OF CHANGES IN PROVIDER NETWORK

          The CONTRACTOR must notify the DEPARTMENT at least monthly of changes
          in its provider network so that the DEPARTMENT can ensure its listing
          of providers is accurate.

D.   DISENROLLMENT BY ENROLLEE

     1.   ENROLLEE'S RIGHT TO DISENROLL

          Enrollees will have the right to disenroll from this MCO at any time
          with or without cause. The disenrollment will be effective once the
          DEPARTMENT has been notified by the Enrollee and the DEPARTMENT issues
          a new Medicaid card and the disenrollment is indicated on the
          Eligibility Transmission.

                                  Page 9 of 52

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     2.   ENROLLEES IN AN INPATIENT HOSPITAL SETTING

          The DEPARTMENT agrees that if a new Enrollee is a patient in an
          inpatient hospital setting on the date the new Enrollee's name appears
          on the CONTRACTOR Eligibility Transmission, the obligation of the
          CONTRACTOR to provide Covered Services to such person will commence
          following discharge. If an Enrollee is a patient in an inpatient
          hospital setting on the date that his or her name appears as a deleted
          Enrollee on the CONTRACTOR Eligibility Transmission or he or she is
          otherwise disenrolled under this Contract, the CONTRACTOR will remain
          financially responsible for such care until discharge.

     3.   ANNUAL STUDY OF ENROLLEES WHO DISENROLLED

          Annually, the DEPARTMENT and CONTRACTOR will work cooperatively to
          conduct an analysis of Enrollees who have voluntarily disenrolled from
          this MCO. The results of the analysis will include explanations of
          patterns of disenrollments and strategies or a corrective action plan
          to address unusual rates or patterns of disenrollment. The DEPARTMENT
          will inform the CONTRACTOR of such disenrollments.

E.   DISENROLLMENT BY CONTRACTOR

     1.   CANNOT DISENROLL FOR ADVERSE CHANGE IN ENROLLEE'S HEALTH

          The CONTRACTOR may not terminate enrollment because of an adverse
          change in the Enrollee's health.

     2.   VALID REASONS FOR DISENROLLMENT

          The CONTRACTOR may initiate disenrollment of any Enrollee's
          participation in the MCO upon one or more of the following grounds:

          a.   For reasons specifically identified in the CONTRACTOR's member
               handbook.
          b.   When the Enrollee ceases to be eligible for medical assistance
               under the State Plan, in accordance with Title 42 USCA, 1396,
               et. seq., and as finally determined by the DEPARTMENT.
          c.   Upon termination or expiration of the Contract.
          d.   Death of the Enrollee.
          e.   Confinement of the Enrollee in an institution when confinement
               is not a Covered Service under this Contract.
          f.   Violation of enrollment requirements developed by the CONTRACTOR
               and approved by the DEPARTMENT but only after the CONTRACTOR
               and/or the Enrollee has exhausted the CONTRACTOR's applicable
               internal grievance procedure.

                                  Page 10 of 52

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     3.   APPROVAL BY DEPARTMENT REQUIRED

          To initiate disenrollment of an Enrollee's participation with this
          MCO, the CONTRACTOR will provide the DEPARTMENT with documentation
          justifying the proposed disenrollment. The DEPARTMENT will approve or
          deny the disenrollment request in writing within thirty (30) days of
          receipt of the request. Failure by the DEPARTMENT to deny a
          disenrollment request within such thirty (30) day period will
          constitute approval of such disenrollment requests.

     4.   ENROLLEE'S RIGHT TO FILE A GRIEVANCE

          If the DEPARTMENT approves the CONTRACTOR's disenrollment request, the
          CONTRACTOR will give the Enrollee thirty (30) days written notice of
          the proposed disenrollment, and will notify the Enrollee of his or her
          opportunity to invoke the internal grievance procedure and appeals
          process for a fair hearing. The CONTRACTOR will give a copy of the
          written notice to the DEPARTMENT at the time the notice is sent to the
          Enrollee.

     5.   REFUSAL OF RE-ENROLLMENT

          If a person is disenrolled because of violation of responsibilities
          included in the CONTRACTOR's member handbook, the CONTRACTOR may
          refuse re-enrollment of that Enrollee.

F.   ENROLLEE TRANSITION BETWEEN MCOS/HEALTH PLANS

     1.   MUST ACCEPT PRE-ENROLLMENT PRIOR AUTHORIZATIONS

          For Covered Services other than inpatient, home health services, and
          medical equipment, if authorization has been given for a Covered
          Service and an enrollee transitions between MCOs prior to the delivery
          of such Covered Service, the receiving MCO shall be bound by the
          relinquishing MCO's prior authorization until the receiving MCO has
          evaluated the Enrollee and a new plan of care is established with the
          MCO provider. (See Article IV, Benefits, Section F, Clarification of
          Payment Responsibilities, Subsection 5, for inpatient, home health
          services, and medical equipment explanations.)

     2.   MUST PROVIDE MEDICAL RECORDS TO ENROLLEE'S NEW MCO

          When enrollees are transitioned between MCOs the relinquishing MCO
          provider will submit, upon request of the new MCO provider, any
          critical medical information about the transitioning enrollee prior to
          the transition including, but not limited to, whether the member is
          hospitalized, pregnant, involved in the process of organ
          transplantation, scheduled for surgery or post-surgical follow-up on a
          date subsequent to transition, scheduled for prior-authorized
          procedures or therapies on a date subsequent to transition, receiving
          dialysis or is chronically ill (e.g. diabetic, hemophilic, HIV
          positive).

                                  Page 11 of 52

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                              ARTICLE IV - BENEFITS

A.   IN GENERAL

     The CONTRACTOR will provide to Enrollees under this Contract, directly or
     through arrangements with subcontractors, all Medically Necessary Covered
     Services described in Attachment C as promptly and continuously as is
     consistent with generally accepted standards of medical practice. The
     CONTRACTOR provider will follow generally accepted standards of medical
     care in diagnosing Enrollees who request services from the CONTRACTOR.

B.   PROVIDER SERVICES FUNCTION

     The CONTRACTOR must operate a Provider Services function during regular
     business hours. At a minimum, Provider Services staff must be responsible
     for the following:

     1.   Training, including ongoing training, of network providers and
          subcontracting providers in Medicaid rules and regulations that will
          enable providers to appropriately provide services to Enrollees;

     2.   Assisting providers to verify whether an individual is enrolled
          with the MCO;

     3.   Assisting providers with prior authorization and referral
          protocols;

     4.   Assisting providers with claims payment procedures;

     5.   Fielding and responding to provider questions and complaints and
          grievances.

C.   SCOPE OF SERVICES

     1.   UNDERWRITING RISK

          In consideration of the premiums paid by the DEPARTMENT, the
          CONTRACTOR will, for all Enrollees, assume underwriting risk for
          Covered Services in Attachment C.

     2.   RESPONSIBLE FOR ALL BENEFITS IN ATTACHMENT C (COVERED SERVICES)

          Except as otherwise provided for cases of Emergency Services, the
          CONTRACTOR has the exclusive right and responsibility to arrange for
          all benefits listed in Attachment C. The CONTRACTOR is responsible for
          payment of Emergency Services 24 hours a day and 7 days a week whether
          the service was provided by a network or out-of-network provider and
          whether the service was provided in or out of the CONTRACTOR's Service
          Area.

     3.   CHANGES TO BENEFITS

          Amendments, revisions, or additions to the State Plan or to State or
          Federal regulations, guidelines, or policies and court or
          administrative orders will, insofar as they affect the scope or nature
          of benefits available to Enrollees, be amendments to the Covered

                                  Page 12 of 52

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          Services under Attachment C. The DEPARTMENT will notify the
          CONTRACTOR, in writing, of any such changes and their effective date.
          Rate adjustments, when appropriate, will be negotiated between the
          DEPARTMENT and the CONTRACTOR.

D.   SUBCONTRACTS

     1.   NO DISCRIMINATION BASED ON LICENSE OR CERTIFICATION

          The CONTRACTOR shall not discriminate against providers with respect
          to participation, reimbursement, or indemnification as to any provider
          who is acting within the scope of that provider's license or
          certification under applicable State law solely on the basis of the
          provider's license or certification.

     2.   ANY COVERED SERVICE MAY BE SUBCONTRACTED.

          Any Covered Service may be subcontracted. All subcontracts will be in
          writing and will include the general requirements of this Contract
          that are appropriate to the service or activity including
          confidentiality requirements and will assure that all duties of the
          CONTRACTOR under this Contract are performed. No subcontract
          terminates the legal responsibility of the CONTRACTOR to the
          DEPARTMENT to assure that all activities under this Contract are
          carried out. The CONTRACTOR will make all subcontracts available upon
          request.

     3.   NO PROVISIONS TO REDUCE OR LIMIT MEDICALLY NECESSARY SERVICES

          The CONTRACTOR will ensure that subcontractors abide by the
          requirements of Section 1128(b) of the Social Security Act prohibiting
          the CONTRACTOR and other such providers from making payments directly
          or indirectly to a physician or other provider as an inducement to
          reduce or limit Medically Necessary services provided to Enrollees.

     4.   REQUIREMENT OF 60 DAYS WRITTEN NOTICE PRIOR TO TERMINATION OF
          CONTRACT

          All subcontracts and agreements will include a provision stating that
          if either party (the subcontractor or CONTRACTOR) wishes to terminate
          the subcontract or agreement, whichever party initiates the
          termination will give the other party written notice of termination at
          least 60 calendar days prior to the effective termination date. The
          CONTRACTOR will notify the DEPARTMENT of the termination on the same
          day that the CONTRACTOR either initiates termination or receives the
          notice of termination from the subcontractor.

     5.   COMPLIANCE WITH CONTRACTOR'S QUALITY ASSURANCE PLAN

          All CONTRACTOR providers must be aware of the CONTRACTOR's Quality
          Assurance Plan and activities. All subcontracts with the CONTRACTOR
          must include a requirement securing cooperation with the CONTRACTOR's
          Quality Assurance Plan and activities and must allow the CONTRACTOR
          access to the subcontractor's medical records of its Enrollees.

                                  Page 13 of 52

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     6.   UNIQUE IDENTIFIER REQUIRED

          All physicians who provide services under this Contract must have a
          unique identifier in accordance with the system established under
          section 1173(b) of the Social Security Act and in accordance with the
          Health Insurance Portability and Accountability Act.

     7.   PAYMENT OF PROVIDER CLAIMS

          The CONTRACTOR must pay its participating providers and subcontractors
          on a timely basis consistent with the claims payment procedures
          described in section 1902(a)(37)(A) of the Social Security Act and the
          implementing Federal regulation at 42 CFR 447.45, unless the health
          care provider and the Health Plan agree to an alternate payment
          schedule. The Contractor must ensure that 90 percent of claims for
          payment (for which no further written information or substantiation is
          required in order to make payment) made for Covered Services and
          furnished by subcontracting providers are paid within 30 days of
          receipt of such claims and that 99 percent of such claims are paid
          within 90 days of the date of receipt of such claims.

E.   CLARIFICATION OF COVERED SERVICES

     1.   EMERGENCY SERVICES

          a.   IN GENERAL

               The Health Plan must provide coverage for Emergency Services
               without regard to prior authorizations or the emergency care
               provider's contractual relationship with the MCO. MCOs must
               inform their enrollees that access to emergency services is not
               restricted and that if an enrollee experiences a medical
               emergency, he or she may obtain services from a non-plan
               physician or other qualified provider, without penalty. However,
               the MCO may require the enrollee to notify the MCO within a
               specified time after the Enrollee's condition is stabilized, and
               may require the enrollee to obtain prior authorization for any
               follow-up care delivered pursuant to the emergency. The
               CONTRACTOR must comply with Medicare guidelines for
               post-stabilization of care.

               The CONTRACTOR must pay for services where the presenting
               symptoms are of sufficient severity that a person with average
               knowledge of health and medicine would reasonably expect the
               absence of immediate medical attention to result in (I) placing
               the health of the individual (or, with respect to a pregnant
               woman, the health of a woman or her unborn child) in serious
               jeopardy; serious impairment to bodily functions; or serious
               dysfunction of any bodily organ or part.

               The CONTRACTOR may not retroactively deny a claim for an
               emergency screening examination because the condition, which
               appeared to be an emergency medical condition under the prudent
               layperson standard, turned out to be non-emergency in nature.

                                  Page 14 of 52

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          b.   DETERMINING LIABILITY FOR EMERGENCY SERVICES

               1)   Presence of a clinical emergency

                    If the screening examination leads to a clinical
                    determination by the examining physician that an actual
                    emergency medical condition exists, the CONTRACTOR must pay
                    for both the services involved in the screening examination
                    and the services required to stabilize the Enrollee.

               2)   Emergency services continue until the Enrollee can be safely
                    discharged or transferred

                    The CONTRACTOR must pay for all emergency services that are
                    Medically Necessary until the clinical emergency is
                    stabilized. This includes all treatment that may be
                    necessary to assure, within reasonable medical probability,
                    that no material deterioration of the Enrollee's condition
                    is likely to result from, or occur during, discharge of the
                    Enrollee or transfer of the Enrollee to another facility. If
                    there is a disagreement between a hospital and the
                    CONTRACTOR concerning whether the Enrollee is stable enough
                    for discharge or transfer, or whether the medical benefits
                    of an unstabilized transfer outweigh the risks, the
                    judgement of the attending physician(s) actually caring for
                    the Enrollee at the treating facility prevails and is
                    binding on the CONTRACTOR. The CONTRACTOR may establish
                    arrangements with hospitals whereby the CONTRACTOR may send
                    one of its own physicians with appropriate ER privileges to
                    assume the attending physician's responsibilities to
                    stabilize, treat, and transfer the Enrollee.

               3)   Absence of a clinical emergency

                    If the screening examination leads to a clinical
                    determination by the examining physician that an actual
                    emergency medical condition did not exist, then the
                    determining factor for payment liability should be whether
                    the Enrollee had acute symptoms of sufficient severity at
                    the time of presentation. In these cases, the CONTRACTOR
                    must review the presenting symptoms of the Enrollee and must
                    pay for all services involved in the screening examination
                    where the presenting symptoms (including severe pain) were
                    of sufficient severity to have warranted emergency attention
                    under the prudent layperson standard.

               4)   Referrals

                    When an Enrollee's Primary Care Physician or other plan
                    representative instructs the Enrollee to seek emergency care
                    in or out of network, the CONTRACTOR is responsible for
                    payment of the medical screening examination and for other
                    Medically Necessary emergency services, without regard to
                    whether the Enrollee meets the prudent layperson standard.

                                  Page 15 of 52

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          c.   CO-PAYMENTS

               The CONTRACTOR may impose a co-payment of $[*] (or the amount
               Medicaid imposes on fee-for-service Medicaid clients) on
               Enrollees for non-emergency use of the emergency room and who are
               not exempt from being charged a co-payment. Those Enrollees who
               are exempt from liability for a co-payment are children under the
               age of 18 and women who are pregnant.

     2.   CARE PROVIDED IN SKILLED NURSING FACILITIES

          a.   IN GENERAL: STAYS LASTING 30 DAYS OR LESS

               The CONTRACTOR may provide long term care for Enrollees in
               skilled nursing facilities and then reimburse such facilities
               when the plan of care includes a prognosis of recovery and
               discharge within 30 days. It is the responsibility of a
               CONTRACTOR physician to make the determination if the patient
               will require the services of a nursing facility for fewer or
               greater than 30 days.

          b.   PROCESS FOR STAYS LONGER THAN 30 DAYS

               When the prognosis of an Enrollee indicates that long term care
               greater than 30 days will be required, the following process will
               occur:

               1)   The CONTRACTOR will notify the Enrollee, hospital discharge
                    planner, and nursing facility that the CONTRACTOR will not
                    be responsible for the services provided for the Enrollee
                    during the stay at the skilled nursing facility.

               2)   The CONTRACTOR will notify the DHCF, Bureau of Managed
                    Health Care, of this determination to suspend premium
                    payment for that Enrollee.

               3)   If the CONTRACTOR incurs expenses, the Bureau of Managed
                    Health Care will determine if the CONTRACTOR will retain the
                    premium for the month during which the Enrollee is admitted
                    to the skilled nursing facility. If the CONTRACTOR does not
                    incur expenses during the month in which the Enrollee is
                    admitted to a skilled nursing facility, the Bureau of
                    Managed Health Care will retract from the CONTRACTOR the
                    premium for that Enrollee.

               4)   Retraction of the premium payment will be subject to "3"
                    above, but the Eligibility Transmission will indicate the
                    non-payment on the first day of the month following the
                    prognosis determination of greater than 30 days.
               5)   Premium payment to the CONTRACTOR will recommence beginning
                    the first full month that the Enrollee is no longer residing
                    in the nursing facility.

                                  Page l6 of 52

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          c.   PROCESS FOR STAYS LESS THAN 30 DAYS

               When the prognosis of skilled nursing facility services is
               anticipated to be less than 30 days, but during the 30-day period
               the CONTRACTOR determines that the Enrollee will require skilled
               nursing facility services for greater than 30 days, the following
               process will be in effect:

               1)   The CONTRACTOR will notify the nursing facility that a
                    determination has been made that the Enrollee will require
                    services for more than 30 days.

               2)   The CONTRACTOR will notify the DHCF, Bureau of Managed
                    Health Care, of the determination that the Enrollee will
                    require services in a nursing facility for more than 30
                    days.

               3)   If the CONTRACTOR incurs expenses for the Enrollee, the
                    Bureau of Managed Health Care will determine if the
                    CONTRACTOR will retain the premium for the month during
                    which the change in status was determined. If the CONTRACTOR
                    does not incur expenses during the month in which the change
                    in status is determined, the Bureau of Managed Health Care
                    will retract from the CONTRACTOR the premium for that
                    Enrollee.

               4)   Retraction of the premium payment will be subject to "3"
                    above, but the Recipient Subsystem will indicate the
                    non-payment on the first day of the month following the
                    prognosis determination of more than 30 days.

               5)   The CONTRACTOR will be responsible for payment for three
                    working days after the CONTRACTOR has notified the nursing
                    facility that skilled nursing care will be required for more
                    than 30 days.

               6)   Premium payment to the CONTRACTOR will recommence
                    beginning the first full month that the recipient is no
                    longer residing in the nursing facility.

     3.   ENROLLEES WITH SPECIAL HEALTH CARE NEEDS

          a.   IN GENERAL

               The CONTRACTOR will ensure there is access to all Medically
               Necessary Covered Services to meet the health needs of Enrollees
               with special health care needs. Individuals with special health
               care needs are those who have or are at increased risk for
               chronic physical, developmental, behavioral, or emotional
               conditions and who also require health and related services of a
               type or amount beyond that required by adults and children
               generally. Such health conditions limit physical functioning,
               activities of daily living, or social role in comparison to age
               peers.

                                  Page 17 of 52

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          b.   IDENTIFICATION

               The CONTRACTOR will identify Enrollees with special health care
               needs using a process at the initial contact made by the
               CONTRACTOR Representative to educate the client and will offer
               the client care coordination or case management services. Care
               coordination services are services to assist the client in
               obtaining Medically Necessary Covered Services from the
               CONTRACTOR or another entity if the medical service is not
               covered under the Contract.

          c.   CHOOSING A PRIMARY CARE PROVIDER

               The CONTRACTOR will have a mechanism to inform care givers and,
               when appropriate, Enrollees with special health care needs about
               primary care providers who have training in caring for such
               Enrollees so that an informed selection of a provider can be
               made. The CONTRACTOR will have primary care providers with skills
               and experience to meet the needs of Enrollees with special health
               care needs. The CONTRACTOR will allow an appropriate specialist
               to be the primary care provider but only if the specialist has
               the skills to monitor the Enrollee's preventive and primary care
               services.

          d.   REFERRALS AND ACCESS TO SPECIALTY PROVIDERS

               The CONTRACTOR will ensure there is access to appropriate
               specialty providers to provide Medically Necessary Covered
               Services for adults and children with special health care needs.
               If the CONTRACTOR does not employ or contract with a specialty
               provider to treat a special health care condition at the time the
               Enrollee needs such Covered Services, the CONTRACTOR will have a
               process to allow the Enrollee to receive Covered Services from a
               qualified specialist who may not be affiliated with the
               CONTRACTOR. The CONTRACTOR will reimburse the specialist for such
               care at no less than Medicaid's rate for the service when the
               service is rendered. The process for requesting specialist's care
               will be clearly described by the CONTRACTOR and explained to each
               Enrollee during the initial contact with the Enrollee.

               If the CONTRACTOR restricts the number of referrals to
               specialists, the CONTRACTOR will not penalize those providers who
               make such referrals for Enrollees with special health care needs.

          e.   SURVEY OF ENROLLEES WITH SPECIAL HEALTH CARE NEEDS

               At least bi-annually, the CONTRACTOR, in conjunction with the
               DEPARTMENT, will survey a sample of Enrollees with special health
               care needs using a national consumer assessment questionnaire, to
               evaluate their perceptions of services they have received. The
               survey process, including the survey instrument, will be a
               standardized and developed collaboratively between the DEPARTMENT
               and all contracting MCOs. The DEPARTMENT will analyze the results
               of the surveys. The results and analysis of the surveys will be
               reviewed by the CONTRACTOR's quality assurance committee for
               action.

                                  Page 18 of 52

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          f.   COLLABORATION WITH OTHER PROGRAMS

               If the individual with special health care needs is enrolled in
               the Prepaid Mental Health Plan or is enrolled in any of the
               Medicaid home and community-based waiver programs and is
               receiving case management services through that program, or is
               covered by one of the other Medicaid targeted case management
               programs, the CONTRACTOR care coordinator will collaborate with
               the appropriate program person, i.e., the targeted case manager,
               etc., for that program once the program person has contacted the
               CONTRACTOR care coordinator. When necessary, the CONTRACTOR care
               coordinator will make an effort to contact the program person of
               those Enrollees who have medical needs that require such
               coordination.

          g.   REQUIRED ELEMENTS OF A CASE MANAGEMENT SYSTEM

               A case management system includes but is not limited to:

               1)   procedures and the capacity to implement the provision of
                    individual needs assessment including the screening for
                    special needs (e.g. mental health, high risk health
                    problems, functional problems, language or comprehension
                    barriers); the development of an individual treatment plan
                    as necessary based on the needs assessment; the
                    establishment of treatment objectives, treatment follow-up,
                    the monitoring of outcomes, and a process to ensure that
                    treatment plans are revised as necessary. These procedures
                    will be designed to accommodate the specific cultural and
                    linguistic needs of the Enrollee;

               2)   procedures designed to address those Enrollees, including
                    children with special health care needs, who may require
                    services from multiple providers, facilities and agencies
                    and require complex coordination of benefits and services,
                    including social services and other community resources;

               3)   a strategy to ensure that all Enrollees and/or authorized
                    Family Members or guardians are involved in treatment
                    planning and consent to the medical treatment;

               4)   procedures and criteria for making referrals and
                    coordinating care by specialists and sub-specialists that
                    will promote continuity as well as cost-effectiveness of
                    care; and

               5)   procedures to provide continuity of care for new Enrollees
                    to prevent disruption in the provision of Covered Services
                    that include, but are not limited to, appropriate case
                    management staff able to evaluate and handle individual case
                    transition and care planning, internal mechanisms to
                    evaluate plan networks and special case needs.

                                  Page 19 of 52

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          h.   HOSPICE

               If an Enrollee is receiving hospice services at the time of
               enrollment in the MCO or if the Enrollee is already enrolled in
               the MCO and has less than six months to live, the Enrollee will
               be offered hospice services or the continuation of hospice
               services if he or she is already receiving such services prior to
               enrollment in the MCO.

     4.   INPATIENT HOSPITAL SERVICES

          If a CONTRACTOR provider admits an Enrollee for inpatient hospital
          care, the CONTRACTOR has the responsibility for all services needed by
          the Enrollee during the hospital stay that are ordered by the
          CONTRACTOR provider. Needed services include but are not limited to
          diagnostic tests, pharmacy, and physician services, including services
          provided by psychiatrists. If diagnostic tests conducted during the
          inpatient stay reveal that the Enrollee's condition is outside the
          scope of the CONTRACTOR's responsibility, the CONTRACTOR remains
          responsible for the Enrollee until the Enrollee is discharged or until
          responsibility is transferred to another appropriate entity and the
          appropriate entity agrees to take financial responsibility, including
          negotiating a payment for services. If the Enrollee is discharged and
          needs further services, the admitting CONTRACTOR will coordinate with
          the other appropriate entity to ensure continued care is provided. The
          CONTRACTOR and appropriate entity will work cooperatively in the best
          interest of the Enrollee. The appropriate entity includes, but is not
          limited to, a Prepaid Mental Health Plan or another MCO.

     5.   MATERNITY STAYS

          a.   THE NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT (NMHPA)

               The CONTRACTOR must meet the requirements of the Newborns' and
               Mothers' Health Protection Act (NMHPA). The CONTRACTOR must
               record early discharge information for monitoring, quality, and
               improvement purposes. The CONTRACTOR will ensure that coverage is
               provided with respect to a mother who is an Enrollee and her
               newborn child for a minimum of 48 hours of inpatient care
               following a normal vaginal delivery, and a minimum of 96 hours of
               inpatient care following a caesarean section, without requiring
               the attending provider to obtain authorization from the
               CONTRACTOR in order to keep a mother and her newborn child in the
               inpatient setting for such period of time.

          b.   EARLY DISCHARGES

               Notwithstanding the prior sentence, the CONTRACTOR will not be
               required to provide coverage for post-delivery inpatient care for
               a mother who is an Enrollee and her newborn child during such
               period of time if (1) a decision to discharge the mother and her
               newborn child prior to the expiration of such period is made by
               the attending provider in consultation with the mother; and (2)
               the CONTRACTOR provides coverage for timely post-delivery
               follow-up care.

                                  Page 20 of 52

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          c.   POST-DELIVERY CARE

               Post-delivery care will be provided to a mother and her newborn
               child by a registered nurse, physician, nurse practitioner, nurse
               midwife or physician assistant experienced in maternal and child
               health in (1) the home, a provider's office, a hospital, a
               federally qualified health center, a federally qualified rural
               health clinic, or a State health department maternity clinic; or
               (2) another setting determined appropriate under regulations
               promulgated by the Secretary of Health and Human Services,
               (including a birthing center or an intermediate care facility);
               except that such coverage will ensure that the mother has the
               option to be provided with such care in the home.

          d.   TIMELY POST-DELIVERY CARE

               "Timely post-delivery care" means health care that is provided
               (1) following the discharge of a mother and her newborn child
               from the inpatient setting; and (2) in a manner that meets the
               health needs of the mother and her newborn child, that provides
               for the appropriate monitoring of the conditions of the mother
               and child, and that occurs within the 24 to 72 hour period
               immediately following discharge.

     6.   CHILDREN IN CUSTODY OF THE DEPARTMENT OF HUMAN SERVICES

          a.   IN GENERAL

               The CONTRACTOR will work with the Division of Child and Family
               Services (DCFS) or the Division of Youth Corrections (DYC) in the
               Department of Human Services (DHS) to ensure systems are in place
               to meet the health needs of children in custody of the Department
               of Human Services. The CONTRACTOR will ensure these children
               receive timely access to appointments through coordination with
               DCFS or DYC. The CONTRACTOR must have available providers who
               have experience and training in abuse and neglect issues.

               The CONTRACTOR or subcontracting provider will make every
               reasonable effort to ensure that a child who is in custody of the
               Department of Human Services may continue to use the medical
               provider with whom the child has an established professional
               relationship when the medical provider is part of the
               CONTRACTOR's network. The CONTRACTOR will facilitate timely
               appointments with the provider of record to ensure continuity of
               care for the child.

               While it is the CONTRACTOR's responsibility to ensure Enrollees
               who are children in custody of DHS have access to needed
               services, DHS personnel are primarily responsible to assist
               children in custody in arranging for and getting to medical
               appointments and evaluations with the CONTRACTOR's network of
               providers. DHS staff are primarily responsible for contacting the
               CONTRACTOR to coordinate care for children in custody and
               informing the

                                  Page 21 of 52

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               CONTRACTOR of the special health care needs of these Enrollees.
               The Fostering Healthy Children staff may assist the DHS staff in
               performing these functions by communicating with the CONTRACTOR.

          b.   SCHEDULE OF VISITS

               1)   Where physical and/or sexual abuse is suspected

                    In cases where the child protection worker suspects physical
                    and/or sexual abuse the CONTRACTOR will ensure that the
                    child has access to an appropriate examination within 24
                    hours of notification that the child was removed from the
                    home. If the CONTRACTOR cannot provide an appropriate
                    examination, the CONTRACTOR will ensure the child has access
                    to a provider who can provide an appropriate examination
                    within the 24 hour period.

               2)   All other cases

                    In all other cases, the CONTRACTOR will ensure that the
                    child has access to an initial health screening within five
                    calendar days of notification that the child was removed
                    from the home. The CONTRACTOR will ensure this exam
                    identifies any health problems that might determine the
                    selection of a suitable placement, or require immediate
                    attention.

               3)   CHEC exams

                    In all cases, the CONTRACTOR will ensure that the child has
                    access to a Child Health Evaluation and Care (CHEC)
                    screening within 30 calendar days of notification that the
                    child was removed from the home. Whenever possible, the CHEC
                    screening should be completed within the five-day time
                    frame. Additionally, the CONTRACTOR will ensure the child
                    has access to a CHEC screening according to the CHEC
                    periodicity schedule until age six, then annually
                    thereafter.

     7.   ORGAN TRANSPLANTATIONS

          a.   IN GENERAL

               All organ transplantation services are the responsibility of the
               CONTRACTOR for all Enrollees in accordance with the criteria set
               forth in Rule R414-10A of the Utah Administrative Code, unless
               amended under the provisions of Attachment B, Article IV
               (Benefits), Section C, Subsection 3 of this Contract. The
               DEPARTMENT's criteria will be provided to the CONTRACTOR.

                                  Page 22 of 52

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          b.   SPECIFIC ORGAN TRANSPLANTATIONS COVERED

               The following transplantations are covered under Rule R414-10A:
               Kidney, liver, cornea, bone marrow, heart, intestine, lung,
               pancreas, small bowel, combination heart/lung, combination
               intestine/liver, combination kidney/pancreas, combination
               liver/kidney, multi visceral, and combination liver/small bowel.

          c.   PSYCHOSOCIAL ASSESSMENT REQUIRED

               Medicaid requires that Medicaid eligibles who have applied for
               organ transplantations undergo a psychosocial assessment to
               assist in determining the Enrollees'/families' mental stability,
               commitment and potential to be compliant with the treatment and
               follow-up care that will go on for the rest of the Enrollee's
               life. This psychosocial evaluation is a Covered Service under
               this Contract.

               If a request is made for a transplantation not listed above, the
               CONTRACTOR will contact the DEPARTMENT. Such requests will be
               addressed as set forth in R414-10A-23.

          d.   OUT-OF-STATE TRANSPLANTATIONS

               When the CONTRACTOR arranges the transplantation to be performed
               out-of-state, the CONTRACTOR is responsible for coverage of food,
               lodging, transportation and airfare expenses for the Enrollee and
               attendant. The CONTRACTOR will follow, at a minimum, the
               DEPARTMENT's criteria for coverage of food, lodging,
               transportation and airfare expenses.

     8.   MENTAL HEALTH SERVICES

          When an Enrollee presents with a possible mental health condition to
          his or her CONTRACTOR primary care physician, it is the responsibility
          of the primary care provider to determine whether the Enrollee should
          be referred to a psychologist, pediatric specialist, psychiatrist,
          neurologist, or other specialist. Mental health conditions may be
          handled by the CONTRACTOR primary care provider and referred to the
          Enrollee's Prepaid Mental Health Plan when more specialized services
          are required for the Enrollee. CONTRACTOR primary care providers may
          seek consultation from the Prepaid Mental Health Plan when the primary
          care provider chooses to manage the Enrollee's symptoms.

          An independent panel comprised of specialists appropriate to the
          concern will be established by the DEPARTMENT with representative from
          the CONTRACTOR and Prepaid Mental Health Plan to adjudicate disputes
          regarding which entity (the CONTRACTOR or Prepaid Mental Health Plan)
          is responsible for payment and/or treatment of a condition. The panel
          will be convened on a case-by-case basis. The CONTRACTOR and Prepaid
          Mental Health Plan will adhere to the final decision of the panel.

                                  Page 23 of 52

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     9.   DEVELOPMENTAL AND ORGANIC DISORDERS

          a.   COVERED SERVICES FOR CHILD ENROLLEES THROUGH AGE 20

               1)   The CONTRACTOR is responsible for all inpatient and
                    physician outpatient Covered Services for child Enrollees
                    with developmental (ICD-9 codes 299 through 299.8 and 317
                    through 319.9) or organic diagnoses (ICD-9 codes 290 through
                    294.9 and 310 through 310.9) including, but not limited to,
                    diagnostic work-ups and other medical care such as
                    medication management services related to the developmental
                    or organic disorder.

               2)   The CONTRACTOR is responsible for all psychological
                    evaluations and testing including neuropsychological
                    evaluations and testing for child Enrollees with
                    developmental or organic disorders such as brain tumors,
                    brain injuries, and seizure disorders.

          b.   COVERED SERVICES FOR ADULT ENROLLEES AGE 21 AND OLDER

               The CONTRACTOR is responsible for all inpatient and physician
               outpatient Covered Services for adult Enrollees with
               developmental (ICD-9 codes 299 through 299.8 and 317 through
               319.9) and organic diagnoses (ICD-9 codes 290 through 294.9 and
               310 through 310.9) including diagnostic work-ups and other
               medical care such as medication management services related to
               the developmental or organic disorder.

          c.   NON-COVERED SERVICES

               1)   Psychological evaluations and testing including
                    neuropsychological evaluations and testing for adult
                    Enrollees is not the responsibility of the CONTRACTOR.

               2)   Habilitative and behavioral management services are not
                    the responsibility of the CONTRACTOR. If habilitative
                    services are required, the Enrollee should be referred to
                    the Division of Services for People with Disabilities
                    (DSPD), the school system, the Early Intervention Program,
                    or similar support program or agency. The enrollee should
                    also be referred to DSPD for consideration of other benefits
                    and programs that may be available through DSPD.
                    Habilitative services are defined in Section 1915(c)(5)(a)
                    of the Social Security Act as "services designed to assist
                    individuals in acquiring, retaining and improving the
                    self-help, socialization and adaptive skills necessary to
                    reside successfully in home and community based settings."

          d.   RESPONSIBILITY OF THE PREPAID MENTAL HEALTH PLAN

               The Prepaid Mental Health Plan is responsible for needed mental
               health services to individuals with an organic and a psychiatric
               diagnosis or with a developmental and a psychiatric diagnosis..

                                  Page 24 of 52

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     10.  OUT-OF-STATE ACCESSORY SERVICES

          When the CONTRACTOR arranges a Covered Service to be performed
          out-of-state, the CONTRACTOR is responsible for coverage of airfare,
          food and lodging for the Enrollee and one attendant during the stay at
          the out-of-state facility and ground transportation costs to and from
          the medical facility at which the Enrollee is receiving services are
          also the responsibility of the CONTRACTOR. The CONTRACTOR will follow,
          at a minimum, the DEPARTMENT's criteria for coverage of food, lodging,
          transportation, and airfare expenses.

     11.  NON-CONTRACTOR PRIOR AUTHORIZATIONS

          a.   PRIOR AUTHORIZATIONS - GENERAL

               The CONTRACTOR shall honor prior authorizations for organ
               transplantations and any other ongoing services initiated by the
               DEPARTMENT while the Enrollee was covered under Medicaid
               fee-for-service until the Enrollee is evaluated by the CONTRACTOR
               and a new plan of care is established.

          b.   WHEN THE CONTRACTOR HAS NOT AUTHORIZED THE SERVICE

               For services that require a prior authorization, the CONTRACTOR
               will pay the provider of the service at the Medicaid rate, if the
               following conditions are met:

               1)   the servicing provider is not a participating provider under
                    contract with the CONTRACTOR; and

               2)   the DEPARTMENT issued a prior authorization for an
                    Enrollee to the servicing provider approving payment of the
                    service; and

               3)   the servicing provider has completed the CONTRACTOR's
                    hearing process without resolution of the claim, and has
                    requested a hearing with the State Formal Hearings Unit
                    requesting payment for the services rendered: and

               4)   in the hearing process it is determined that service
                    rendered was a Medically Necessary service covered under
                    this Contract, and that the CONTRACTOR will be responsible
                    for payment of the claim.

               The CONTRACTOR may elect to have payment of the servicing
               provider's claim made through the DEPARTMENT's MMIS system, with
               an equal reduction in the payments made to the CONTRACTOR

                                  Page 25 of 52

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F.   CLARIFICATION OF PAYMENT RESPONSIBILITIES

     1.   COVERED SERVICES RECEIVED OUTSIDE CONTRACTOR'S NETWORK BUT PAID BY
          CONTRACTOR

          The CONTRACTOR will not be required to pay for Covered Services,
          defined in Attachment C, which the Enrollee receives from sources
          outside The CONTRACTOR's network, not arranged for and not authorized
          by the CONTRACTOR except as follows:

          a.   Emergency Services;

          b.   Court ordered services that are Covered Services defined in
               Attachment C and which have been coordinated with the CONTRACTOR;
               or

          c.   Cases where the Enrollee demonstrates that such services are
               Medically Necessary Covered Services and were unavailable from
               the CONTRACTOR.

     2.   WHEN COVERED SERVICES ARE NOT THE CONTRACTOR'S RESPONSIBILITY

          a.   The CONTRACTOR is not responsible for payment when family
               planning services are obtained by an Enrollee from sources other
               than the CONTRACTOR.

          b.   The CONTRACTOR will not be required to provide, arrange for,
               or pay for Covered Services to Enrollees whose illness or injury
               results directly from a catastrophic occurrence or disaster,
               including, but not limited to, earthquakes or acts of war. The
               effective date of excluding such Covered Services will be the
               date specified by the Federal Government or the State of Utah
               that a Federal or State emergency exists or disaster has
               occurred.

     3.   THE DEPARTMENT'S RESPONSIBILITY

          Except as described in Attachment F (Rates and Rate-Related Terms) of
          this Contract, the DEPARTMENT will not be required to pay for any
          Covered Services under Attachment C which the Enrollee received from
          any sources outside the CONTRACTOR except for family planning
          services.

     4.   COVERED SERVICES PROVIDED BY THE DEPARTMENT OF HEALTH, DIVISION OF
          COMMUNITY AND FAMILY HEALTH SERVICES

          For Enrollees who qualify for special services offered by or through
          the Department of Health, Division of Community and Family Health
          Services (DCFHS), the CONTRACTOR agrees to reimburse DCFHS at the
          standard Medicaid rate in effect at the time of service for one
          outpatient team evaluation and one follow-up visit for each Enrollee
          upon each instance that the Enrollee both becomes Medicaid eligible
          and selects the CONTRACTOR as its provider. The CONTRACTOR agrees to
          waive any prior authorization requirement for one outpatient team
          evaluation and one follow-up visit. The services provided in the
          outpatient team evaluation and follow-up visit for

                                  Page 26 of 52

<PAGE>

          which the CONTRACTOR will reimburse DCFHS are limited to the services
          that the CONTRACTOR is otherwise obligated to provide under this
          Contract.

          If the CONTRACTOR desires a more detailed agreement for additional
          services to be provided by or through DCFHS for children with special
          health care needs, the CONTRACTOR may subcontract with DCFHS. The
          CONTRACTOR agrees that the subcontract with DCFHS will acknowledge and
          address the specific needs of DCFHS as a government provider.

     5.   ENROLLEE TRANSITION BETWEEN MCOS, OR BETWEEN FEE-FOR-SERVICE AND
          CONTRACTOR

          a.   INPATIENT HOSPITAL

               When an Enrollee is in an inpatient hospital setting and selects
               another MCO or becomes fee-for-service anytime prior to discharge
               from the hospital, the CONTRACTOR is financially responsible for
               the entire hospital stay including all services related to the
               hospital stay, i.e. physician, etc. The MCO in which the
               individual is enrolled at the time of discharge from the hospital
               is financially responsible for services provided during the
               remainder of the month when the individual was discharged. If
               such individual is fee-for-service at the time of discharge from
               the hospital, the DEPARTMENT is financially responsible for the
               remainder of the month when the individual was discharged. If a
               Medicaid eligible is in an inpatient hospital setting and selects
               the MCO anytime prior to discharge from the hospital, the
               DEPARTMENT is financially responsible for the entire hospital
               stay including all services related to the hospital stay, i.e.
               physician, etc. Enrollees who are in an inpatient hospital
               setting at the time the CONTRACTOR terminates this Contract and
               who have enrolled with another MCO are the responsibility of the
               receiving MCO beginning the day after the termination is
               effective.

          b.   HOME HEALTH SERVICES

               Medicaid clients who are under fee-for-service or are enrolled in
               an MCO other than this MCO and are receiving home health services
               from an agency not contracting with the CONTRACTOR will be
               transitioned to the CONTRACTOR's home health agency. The
               CONTRACTOR is responsible for payment, not to exceed Medicaid
               payment, for a period not to exceed seven calendar days, unless
               the CONTRACTOR and the home health agency agree to another time
               period in writing, after the CONTRACTOR notifies the
               non-participating home health agency of the change in status or
               the non-participating home health agency notifies the CONTRACTOR
               that services are being provided by its agency. The CONTRACTOR
               will assess the needs of the Enrollee at the time the CONTRACTOR
               provides the orientation to the Enrollee.

               The CONTRACTOR will include the Enrollee in developing the plan
               of care to be provided by the CONTRACTOR's home health agency
               before the transition is complete. The CONTRACTOR will address
               Enrollee's concerns regarding

                                  Page 27 of 52

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               Covered Services provided by the CONTRACTOR's home health agency
               before the new plan of care is implemented.

          c.   MEDICAL EQUIPMENT

               When medical equipment is ordered for an Enrollee by the
               CONTRACTOR and the Enrollee enrolls in a different MCO before
               receiving the equipment, the CONTRACTOR is responsible for
               payment for such equipment. Medical equipment includes
               specialized wheelchairs or attachments, prosthesis, and other
               equipment designed or modified for an individual client. Any
               attachments to the equipment, replacements, or new equipment is
               the responsibility of the MCO in which the client is enrolled at
               the time such equipment is ordered.

     6.   SURVEYS

          All surveys required under this Contract will be funded by the
          CONTRACTOR unless funded by another source such as the Utah Department
          of Health Office of Health Data Analysis. The surveys must be
          conducted by an independent vendor mutually agreed upon by the
          DEPARTMENT and CONTRACTOR. The DEPARTMENT or designee will analyze the
          results of the surveys. Before publishing articles, data, reports,
          etc. related to surveys the DEPARTMENT will provide drafts of such
          material to the CONTRACTOR for review and feedback. The CONTRACTOR
          will not be responsible for the costs incurred for such publishing by
          the DEPARTMENT.

                      ARTICLE V - ENROLLEE RIGHTS/SERVICES

A.   MEMBER SERVICES FUNCTION

     The CONTRACTOR must operate a Member Services function during regular
     business hours. Ongoing training, as necessary, shall be provided by the
     CONTRACTOR to ensure that the Member Services staff is conversant in the
     CONTRACTOR's policies and procedures as they relate to Enrollees. At a
     minimum, Member Services staff must be responsible for the following:

     1.   Explaining the CONTRACTOR's rules for obtaining services;

     2.   Assisting Enrollees to select or change primary care providers;

     3.   Fielding and responding to Enrollee questions and complaints and
          grievances.

     The CONTRACTOR shall conduct ongoing assessment of its orientation staff to
     determine staff member's understanding of the MCO and its Medicaid managed
     care policies and provide training, as needed.

                                  Page 28 of 52

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B.   ENROLLEE LIABILITY

     1.   The CONTRACTOR will not hold an Enrollee liable for the following:

          a.   The debts of the CONTRACTOR if it should become insolvent.

          b.   Payment for services provided by the CONTRACTOR if the CONTRACTOR
               has not received payment from the DEPARTMENT for the services, or
               if the provider, under contract with the CONTRACTOR, fails to
               receive payment from the CONTRACTOR.

          c.   The payments to providers that furnish Covered Services under a
               contract or other arrangement with the CONTRACTOR that are in
               excess of the amount that normally would be paid by the Enrollee
               if the service had been received directly from the CONTRACTOR.

C.   GENERAL INFORMATION TO BE PROVIDED TO ENROLLEES

     The CONTRACTOR will make the following information available to Enrollees
     and potential enrollees on request:

     1.   The identity, locations, qualification, and availability of
          participating providers (at a minimum, area of specialty, board
          certification, and any special areas of expertise must be available
          that would be helpful to individuals deciding whether to enroll with
          the CONTRACTOR);

     2.   The rights and responsibilities of Enrollees;

     3.   The procedures available to Enrollees and providers to challenge or
          appeal the failure of the CONTRACTOR to cover a services; and

     4.   All items and services that are available to Enrollees that are
          covered either directly or through a method of referral or prior
          authorization.

D.   ACCESS

     1.   IN GENERAL

          The CONTRACTOR shall provide the DEPARTMENT and the Health Care
          Financing Administration, adequate assurances that the CONTRACTOR,
          with respect to a service area, has the capacity to serve the expected
          enrollment in such service area, including assurances that the
          CONTRACTOR offers an appropriate range of services and access to
          preventive and primary care services for the population expected to
          enroll in such service area, and maintains a sufficient number, mix
          and geographic distribution of providers of services.

          The CONTRACTOR will provide services which are accessible to Enrollees
          and appropriate in terms of timeliness, amount, duration, and scope.

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     2.   SPECIFIC PROVISIONS

          a.   ELIMINATION OF ACCESS PROBLEMS CAUSED BY GEOGRAPHIC, CULTURAL AND
               LANGUAGE BARRIERS AND PHYSICAL DISABILITIES

               The CONTRACTOR will minimize, with a goal to eliminate,
               Enrollee's access problems due to geographic, cultural and
               language barriers, and physical disabilities. The CONTRACTOR will
               provide assistance to Enrollees who have communication
               impediments or impairments to facilitate proper diagnosis and
               treatment. The CONTRACTOR must guarantee equal access to services
               and benefits for all Enrollees by making available interpreters,
               Telecommunication Devices for the Deaf (TDD), and other auxiliary
               aids to all Enrollees as needed. The CONTRACTOR will accommodate
               Enrollees with physical and other disabilities in accordance with
               the American Disabilities Act of 1990 (ADA), as amended. If the
               CONTRACTOR's facilities are not accessible to Enrollees with
               physical disabilities, the CONTRACTOR will provide services in
               other accessible locations.

          b.   INTERPRETIVE SERVICES

               The CONTRACTOR will provide interpretive services for languages
               on an as needed basis. These requirements will extend to both
               in-person and telephone communications to ensure that Enrollees
               are able to communicate with the CONTRACTOR and CONTRACTOR
               providers and receive Covered Services. Professional interpreters
               will be used when needed where technical, medical, or treatment
               information is to be discussed, or where use of a Family Member
               or friend as interpreter is inappropriate. A family member or
               friend may be used as an interpreter if this method is requested
               by the patient, and the use of such a person would not compromise
               the effectiveness of services or violate the patient's
               confidentiality, and the patient is advised that a free
               interpreter is available.

          c.   NO RESTRICTIONS OF PROVIDER'S ABILITY TO ADVISE AND
               COUNSEL

               The CONTRACTOR may not restrict a health care provider's ability
               to advise and counsel Enrollees about Medically Necessary
               treatment options. All contracting providers acting within his or
               her scope of practice, must be permitted to freely advise an
               Enrollee about his or her health status and discuss appropriate
               medical care or treatment for that condition or disease
               regardless of whether the care or treatment is a Covered Service.

          d.   WAITING TIME BENCHMARKS

               The CONTRACTOR will adopt benchmarks for waiting times for
               physician appointments as follows:

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               Waiting Time for Appointments

               1)   Primary Care Providers:
                    .    within 30 days for routine, non-urgent appointments
                    .    within 60 days for school physicals
                    .    within 2 days for urgent, symptomatic, but not
                         life-threatening care (care that can be treated in the
                         doctor's office)

               2)   Specialists:
                    .    within 30 days for non-urgent
                    .    within 2 days for urgent, symptomatic, but not
                         life-threatening care (care that can be treated in a
                         doctor's office)

               These benchmarks do not apply to appointments for regularly
               scheduled visits to monitor a chronic medical condition if the
               schedule calls for visits less frequently than once every month.

          e.   NO DELAY WHILE COORDINATING COVERAGE WITH A PREPAID MENTAL HEALTH
               PLAN

               When an Enrollee is also enrolled in a Prepaid Mental Health
               Plan, the CONTRACTOR will not delay an Enrollee's access to
               needed services in disputes regarding responsibility for payment.
               Payment issues should be addressed only after needed services are
               rendered. As described in Attachment B, IV (Benefits), Section E
               (Clarification of Covered Services), Subsection 8 of this
               Contract, the independent panel established by the DEPARTMENT
               will assist in adjudicating such disputes when requested to do so
               by either party.

E.   CHOICE

     The CONTRACTOR must allow Enrollees the opportunity to select a
     participating Primary Care Provider. This excludes clients who are under
     the Restriction Program. If an Enrollee's Primary Care Provider ceases to
     participate in the CONTRACTOR's network, the CONTRACTOR must offer the
     Enrollee the opportunity to select a new Primary Care Provider.

F.   COORDINATION

     1.   IN GENERAL

          The CONTRACTOR will provide access to a coordinated, comprehensive and
          continuous array of needed services through coordination with other
          appropriate entities. The CONTRACTOR provider is not responsible for
          directly providing waiver services.

     2.   PREPAID MENTAL HEALTH PLAN

          a.   When an Enrollee is also enrolled in a Prepaid Mental Health
               Plan, the CONTRACTOR and Prepaid Mental Health Plan will share
               appropriate information regarding the Enrollee's health care to
               ensure coordination of physical and mental health care services.

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          b.   Clients enrolled in the MCO and a Prepaid Mental Health Plan
               who due to a psychiatric condition require lab, radiology and
               similar outpatient services covered under this Contract, but
               prescribed by the Prepaid Mental Health Plan physician, will have
               access to such services in a timely fashion. The CONTRACTOR and
               Prepaid Mental Health Plan will reduce or eliminate unnecessary
               barriers that may delay the Enrollee's access to these critical
               services.

G.   BILLING ENROLLEES

     1.   IN GENERAL

          Except as provided herein Attachment B, Article V (Enrollee
          Rights/Services), Section G (Billing Enrollees), no claim for payment
          will be made at any time by the CONTRACTOR or CONTRACTOR provider to
          an Enrollee accepted by that provider as a Medicaid Enrollee for any
          service covered under this Contract. When a provider accepts an
          Enrollee as a patient he or she will look solely to third party
          coverage or the CONTRACTOR for reimbursement. If the provider fails to
          receive payment from the CONTRACTOR, the Enrollee cannot be held
          responsible for these payments.

     2.   CIRCUMSTANCES WHEN AN ENROLLEE MAY BE BILLED

          An Enrollee may in certain circumstances be billed by the CONTRACTOR
          provider for non-Covered Services. A non-Covered Service is one that
          is not covered under this Contract, or includes special features or
          characteristics that are desired by the Enrollee, such as more
          expensive eyeglass frames, hearing aids, custom wheelchairs, etc., but
          do not meet the Medical Necessity criteria for amount, duration, and
          scope as set forth in the Utah State Plan. The DEPARTMENT will specify
          to the CONTRACTOR the extent of Covered Services and items under the
          Contract, as well as services not covered under the Contract but
          provided by Medicaid on a fee-for-service basis that would effect the
          CONTRACTOR's Covered Services. An Enrollee may be billed for a service
          not covered under this Contract only when the following conditions are
          met:

          a.   The CONTRACTOR has an established policy for billing all patients
               for services not covered by a third party. (Non-Covered Services
               cannot be billed only to Enrollees.)

          b.   The CONTRACTOR will inform Enrollees of its policy and the
               services and items that are non covered under this Contract and
               include this information in the Enrollee's member handbook.

          c.   The CONTRACTOR provider will advise the Enrollee prior to
               rendering the service that the service is not covered under this
               Contract and that the Enrollee will be personally responsible for
               making payment.
          d.   The Enrollee agrees to be personally responsible for the payment
               and an agreement is made in writing between the CONTRACTOR
               provider and the Enrollee which details the service and the
               amount to be paid by the Enrollee.

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     3.   CONTRACTOR MAY NOT HOLD ENROLLEE'S MEDICAID CARD

          The CONTRACTOR or CONTRACTOR provider will not hold the Enrollee's
          Medicaid card as guarantee of payment by the Enrollee, nor may any
          other restrictions be placed upon the Enrollee.

     4.   CRIMINAL PENALTIES

          Criminal penalties shall be imposed on MCO providers as authorized
          under section 1128B(d)(l)of the Social Security Act if the provider
          knowingly and willfully charges an Enrollee at a rate other than those
          allowed under this Contract.

                        ARTICLE VI - GRIEVANCE PROCEDURES

A.   IN GENERAL

     The CONTRACTOR will maintain a system for reviewing and adjudicating
     complaints and grievances by Enrollees, and providers. The CONTRACTOR's
     complaint and grievance procedures must permit an Enrollee, or provider on
     behalf of an Enrollee, to challenge the denials of coverage of medical
     assistance or denials of payment for Covered Services. The CONTRACTOR will
     submit such grievance plans and procedures to the DEPARTMENT for approval
     prior to instituting or changing such procedures. Such procedures will
     provide for expeditious resolution of complaints and grievances by the
     CONTRACTOR's personnel who have authority to correct problems.

B.   NONDISCRIMINATION

     The Contractor shall designate a nondiscrimination coordinator who will 1)
     ensure the Contractor complies with Federal Laws and Regulations regarding
     nondiscrimination, and 2) take complaints and grievances from Enrollees
     alleging nondiscrimination violations based on race, color, national
     origin, disability, or age. The nondiscrimination coordinator may also
     handle complaints regarding the violation of other civil rights (sex and
     religion) as other Federal laws and Regulations protect against these forms
     of discrimination. The Contractor will develop and implement a written
     method of administration to assure that the Contractor's programs,
     activities, services, and benefits are equally available to all persons
     without regard to race, color, national origin, disability, or age.

C.   MINIMUM REQUIREMENTS OF GRIEVANCE PROCEDURES

     1.   Definitions of complaints and grievance;
     2.   Details of how, when, where and with whom an Enrollee or provider
          may file a grievance;
     3.   Assurances of the participation of individuals with authority to take
          corrective action;
     4.   Responsibilities of the various components and staff of the
          organization;
     5.   Description of the process for timely review, prompt (45 days)
          resolution of complaints and grievances;
     6.   Details of an appeal process; and

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     7.   Provision stating that during the pendency of any grievance procedure
          or an appeal of such grievances, the Enrollee will remain enrolled
          except as otherwise stated in this Contract.

D.   FINAL REVIEW BY DEPARTMENT

     When an Enrollee or provider has exhausted the CONTRACTOR's grievance
     process and a final decision has been made, the CONTRACTOR must provide
     written notification to the party who initiated the grievance of the
     grievance's outcome and explain in clear terms a detailed reason for the
     denial.

     The CONTRACTOR must provide notification to Enrollees and providers that
     the final decision of the CONTRACTOR may be appealed to the DEPARTMENT and
     will give to the Enrollee or provider the DEPARTMENT's form to request a
     formal hearing with the DEPARTMENT. The MCO must inform the Enrollee or
     provider the time frame for filing an appeal with the DEPARTMENT. The
     formal hearing with the DEPARTMENT is a de novo hearing. If the Enrollee or
     provider request a formal hearing with the DEPARTMENT, all parties to the
     formal hearing agree to be bound by the DEPARTMENT's decision until any
     judicial reviews are completed and are in the Enrollee's or provider's
     favor. Any decision made by the DEPARTMENT pursuant to the hearing shall be
     subject to appeal rights as provided by State and Federal laws and rules.

                        ARTICLE VII - OTHER REQUIREMENTS

A.   COMPLIANCE WITH PUBLIC HEALTH SERVICE ACT

     The CONTRACTOR will comply with all requirements of Section 1301 to and
     including 1318 of the Public Health Service Act. The CONTRACTOR will
     provide verification of such compliance to the DEPARTMENT upon the
     DEPARTMENT's request. This Contract is a "prospective risk" contract which
     means that payment is made by means of a capitation rate offered each month
     as reimbursement in advance for services incurred that month regardless of
     the level of utilization actually experienced. Nothing herein will be
     construed or interpreted to mean that this is a cost reimbursement
     contract. Cost reimbursement means payment is made by means of a settlement
     based on cost incurred over a given period.

B.   COMPLIANCE WITH OBRA'90 PROVISION AND 42 CFR 434.28

     The CONTRACTOR will comply with the OBRA '90 provision which requires an
     MCO provide patients with information regarding their rights under State
     law to make decisions about their health care including the right to
     execute a living will or to grant power of attorney to another individual.

     The CONTRACTOR will comply with the requirements of 42 CFR 434.28 relating
     to maintaining written Advance Directives as outlined under Subpart I of
     489.100 through 489.102.

                                  Page 34 of 52

<PAGE>

C.   FRAUD AND ABUSE REQUIREMENTS

     The CONTRACTOR agrees to abide by Federal and/or State fraud and abuse
     requirements including, but not limited to, the following:

     1.   Refer in writing to the DEPARTMENT all detected incidents of potential
          fraud or abuse on the part of providers of services to Enrollees or to
          other patients.

     2.   Refer in writing to the DEPARTMENT all detected incidents of patient
          fraud or abuse involving Covered Services provided which are paid for
          in whole, or in part, by the DEPARTMENT.

     3.   Refer in writing to the DEPARTMENT the names and Medicaid ID numbers
          of those Enrollees that the CONTRACTOR suspects of inappropriate
          utilization of services, and the nature of the suspected inappropriate
          utilization.

     4.   Inform the DEPARTMENT in writing when a provider is removed from the
          CONTRACTOR's panel for reasons relating to suspected fraud, abuse or
          quality of care concerns.

     5.   The CONTRACTOR may not employ or subcontract with any sanctioned
          provider. The DEPARTMENT will inform the CONTRACTOR of any provider
          sanctioned by Medicaid or Medicare.

          The CONTRACTOR may not employ or subcontract with any provider who is
          an ineligible entity as defined under the State Medicaid Manual
          Section 2086.16. This section is available upon request. The
          CONTRACTOR will attest that the entities listed below are not involved
          with the CONTRACTOR. Ineligible organizations can be included in the
          following categories as referenced in the Social Security Act (the
          Act):

          a.   Entities which could be excluded under section 1128(b)(8) of
               the Act--these are entities in which a person who is an officer,
               director, agent, or managing employee of the entity, or a person
               who has a direct or indirect ownership or control interest of 5%
               or more in the entity and has been convicted of the following
               crimes:

               1)   any criminal offense related to the delivery of a Medicare
                    or Medicaid item or service (see section 1128(a)(l) of the
                    Act);

               2)   patient abuse (section 1128(a)(2));

               3)   fraud (1128(b)(l));

               4)   obstruction of an investigation (1128(b)(2)); or

               5)   offenses related to controlled substances (1128(b)(3)).

                                  Page 35 of 52

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          b.   Entities which have a direct or indirect substantial
               contractual relationship with an individual or entity listed in
               subsection "a" above-- a substantial contractual relationship is
               defined as any contractual relationship which provides for one or
               more of the following:

               1)   the administration, management, or provision of medical
                    services;

               2)   the establishment of policies pertaining to the
                    administration, management or provision of medical services;
                    or

               3)   the provision of operational support for the administration,
                    management, or provision of medical services.

          c.   Entities which employ, contract with, or contract through any
               individual or entity that is excluded from participation in
               Medicaid under Section 1128 or 1128A of the Act, for the
               provision of health care, utilization review, medical social work
               or administration services.

D.   DISCLOSURE OF OWNERSHIP AND CONTROL INFORMATION

     The CONTRACTOR agrees to meet the requirements of 42 CFR 455, Subpart B
     related to disclosure by the CONTRACTOR of ownership and control
     information.

E.   SAFEGUARDING CONFIDENTIAL INFORMATION ON ENROLLEES

     The CONTRACTOR agrees that information about Enrollees is confidential
     information and agrees to safeguard all confidential information and
     conform to the requirements set forth in 42CFR, Part 431, Subpart F as well
     as all other applicable Federal and State confidentiality requirements.

F.   DISCLOSURE OF PROVIDER INCENTIVE PLANS

     Per 42 CFR 417.749(a), no specific payment can be made directly or
     indirectly under a physician incentive plan to a physician or physician
     group as an inducement to reduce or limit Medically Necessary services
     furnished to an Enrollee.

     The CONTRACTOR may operate a physician incentive plan only if the stop-loss
     protection, Enrollee survey, and disclosure requirements are met. The
     CONTRACTOR must disclose to the DEPARTMENT the following information on
     provider incentive plans in sufficient detail to determine whether the
     incentive plan complies with the regulatory requirements. The disclosure
     must contain:

     1.   Whether services not furnished by the physician or physician group
          are covered by the incentive plan. If only the services furnished by
          the physician or physician group are covered by the incentive plan,
          disclosure of other aspects of the plan need not be made.

     2.   The type of incentive arrangement (i.e., withhold, bonus, capitation).

                                  Page 36 of 52

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     3.   If the incentive plan involves a withhold or bonus, the percent of
          the withhold or bonus.

     4.   Proof that the physician or physician group has adequate stop-loss
          protection, including the amount and type of stop-loss protection.

     5.   The panel size and, if patients are pooled; the method used.

     6.   To the extent provided for in HCFA implementation guidelines,
          capitation payments paid to primary care physicians for the most
          recent year broken down by percent for primary care services, referral
          services to specialists, and hospital and other types of provider
          services (i.e., nursing home and home health agency) for capitated
          physicians or physician groups.

     7.   In the case of those prepaid plans that are required to conduct
          beneficiary surveys, the survey results. (The Contractor must conduct
          a customer satisfaction of both Enrollees and disenrollees if any
          physicians or physicians groups contracting with the CONTRACTOR are
          placed at substantial financial risk for referral services. The survey
          must include either all current Enrollees and those who have
          disenrolled in the past twelve months, or a sample of these same
          Enrollees and disenrollees. Recognizing that different questions are
          asked of the disenrollees than those asked of Enrollees, the same
          survey cannot be used for both populations.)

     The CONTRACTOR must disclose this information to the DEPARTMENT (1) prior
     to approval of its contract or agreement and (2) upon the contract or
     agreements anniversary or renewal effective date. The CONTRACTOR must
     provide the capitation data required (see 6 above) for the previous
     contract year to the DEPARTMENT three months after the end of the contract
     year. The CONTRACTOR will provide to the Enrollee upon request whether the
     CONTRACTOR uses a physician incentive plan that affects the use of referral
     services, the type of incentive arrangement, whether stop-loss protection
     is provided, and the survey results of any enrollee/disenrollee surveys
     conducted.

G.   DEBARRED OR SUSPENDED INDIVIDUALS

     Under Section 1921(d)(1) of the Social Security Act, the CONTRACTOR may not
     knowingly have a director, officer, partner, or person with beneficial
     ownership of more than 5% of the CONTRACTOR's equity who has been debarred
     or suspended by any federal agency. The CONTRACTOR may not have an
     employment, consulting, or any other agreement with a debarred or suspended
     person for the provision of items or services that are significant and
     material to meeting the provisions under this Contract.

     The CONTRACTOR must certify to the DEPARTMENT that the requirements under
     Section 1921(d)(l) of the Social Security Act are met prior to the
     effective date of this Contract and at any time there is a change from the
     last such certification.

H.   HCFA CONSENT REQUIRED

     If HCFA directs the DEPARTMENT to terminate this Contract, the DEPARTMENT
     will not be permitted to renew this Contract without HCFA consent.

                                  Page 37 of 52

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                             ARTICLE VIII - PAYMENTS

A.   RISK CONTRACT

     This Contract is a risk contract as described in 42 CFR 447.361. Payments
     made to the CONTRACTOR may not exceed the cost to the DEPARTMENT of
     providing these same Covered Services on a fee-for-service basis, to an
     actuarially equivalent non-enrolled population.

B.   PAYMENT AMOUNTS

     1.   PAYMENT SCHEDULE

          On or before the 10th day of each month, the DEPARTMENT will pay to
          the CONTRACTOR the premiums due for each category shown for Enrollees
          for that month as determined by the DEPARTMENT from the Eligibility
          Transmission. Premiums shown in Attachment F-3 are based on rate
          negotiations between the CONTRACTOR and the DEPARTMENT.

     2.   CALCULATION OF PREMIUMS

          The premiums do not include payment for recoupment of any previous
          losses incurred by the CONTRACTOR. The premiums established in this
          Contract will be prospectively set so as not to exceed the cost of
          providing the same Covered Services to an actuarially equivalent
          non-enrolled Medicaid population. The actuarially set fee-for-service
          equivalents developed by the DEPARTMENT are prospectively determined
          and conform with Federal guidelines as defined in CFR 447.361.

     3.   FEDERALLY QUALIFIED HEALTH CENTERS (FQHCS)

          If the CONTRACTOR enters into a subcontract with a Federally Qualified
          Health Center (FQHC), the CONTRACTOR will reimburse the FQHC an amount
          equal to what the CONTRACTOR pays comparable providers that are not
          FQHCs. The FQHC may be entitled to additional reimbursement from the
          DEPARTMENT for the difference between CONTRACTOR payments to the FQHC
          and the FQHC's reasonable costs. The cost audits will be conducted by
          the DEPARTMENT. If the CONTRACTOR has a capitated arrangement with an
          FQHC, the DEPARTMENT is not responsible to either the CONTRACTOR or
          the FQHC for 100% of the FQHC's reasonable costs.

     4.   TIME FRAME FOR REQUEST OF DELIVERY PAYMENT

          The CONTRACTOR will submit a request for payment of the lump sum
          delivery amount within six months of the delivery date.

     5.   CONTRACT MAXIMUM

          In no event will the aggregate amount of payments to the Contractor
          exceed the Contract maximum amount. If payments to the CONTRACTOR
          approach or exceed the Contract amount before the renewal date of the
          Contract, the DEPARTMENT shall execute a

                                  Page 38 of 52

<PAGE>

          Contract amendment to increase the Contract amount within 30 calendar
          days of the date the Contract amount is exceeded.

C.   MEDICARE

     1.   PAYMENT OF MEDICARE PART B PREMIUMS

          The DEPARTMENT will pay the Medicare Part B premium for each Enrollee
          who is on Medicare. The Enrollee will assign to the CONTRACTOR his or
          her Medicare reimbursement for benefits received under Medicare. The
          Eligibility Transmission includes and identifies those Enrollees who
          are covered under Medicare.

     2.   PAYMENT OF MEDICARE DEDUCTIBLE AND COINSURANCE

          The DEPARTMENT's financial obligation under this Contract for
          Enrollees who are covered by both Medicare and the MCO is limited to
          the Medicare Part B premium and the CONTRACTOR premium. The CONTRACTOR
          is responsible for payment of the Medicare deductible and coinsurance
          for Enrollees when a service is paid for by Medicare. The CONTRACTOR
          is responsible for payment whether or not the Medicare covered service
          is rendered by a CONTRACTOR provider or has been authorized by the
          CONTRACTOR. If a Medicare covered service is rendered by an
          out-of-plan Medicare provider or a non-Medicare participating
          provider, the CONTRACTOR is responsible to pay for no more than the
          Medicare authorized amount. Attachment E, Table 2, will be used to
          identify the total cost to the CONTRACTOR of providing care for
          Enrollees who are also covered by Medicare.

     3.   MUST NOT BALANCE BILL ENROLLEES

          The CONTRACTOR and CONTRACTOR provider will not Balance Bill the
          Enrollee and will consider the reimbursement from Medicare and from
          the CONTRACTOR payment in full.

D.   THIRD PARTY LIABILITY (COORDINATION OF BENEFITS)

The DEPARTMENT will provide the CONTRACTOR a monthly listing of Enrollees
covered under the Buy-out Program, including the premium amount paid by the
DEPARTMENT.

     1.   TPL COLLECTIONS

          The CONTRACTOR will be responsible to coordinate benefits and collect
          third party liability (TPL). The CONTRACTOR will keep TPL collections.
          The DEPARTMENT will set rates net of expected TPL collections
          excluding the lump sum rate set for deliveries. The rate set for
          deliveries is the maximum amount the DEPARTMENT will pay the
          CONTRACTOR for each delivery. The CONTRACTOR must attempt to collect
          TPL before the DEPARTMENT will reimburse the CONTRACTOR the delivery
          rate less TPL. The DHCF audit staff will monitor collections to ensure
          the CONTRACTOR is making a good faith effort to pursue TPL. The
          DEPARTMENT will properly account for TPL in its rate structure.

                                  Page 39 of 52

<PAGE>

          The CONTRACTOR will provide a quarterly match of Enrollees to the
          CONTRACTOR's commercial insurance eligibility files. The Office of
          Recovery Services (ORS) will provide an electronic list of

     2.   DUPLICATION OF BENEFITS

          This provision applies when, under another health insurance plan such
          as a prepaid plan, insurance contract, mutual benefit association or
          employer's self-funded group health and welfare program, etc., an
          Enrollee is entitled to any benefits that would totally or partially
          duplicate the benefits that the CONTRACTOR is obligated to provide
          under this Contract. Duplication exists when (1) the CONTRACTOR has a
          duty to provide, arrange for or pay for the cost of Covered Services,
          and (2) another health insurance plan, pursuant to its own terms, has
          a duty to provide, arrange for or pay for the same type of Covered
          Services regardless of whether the duty of the CONTRACTOR is to
          provide the Covered Services and the duty of the other health
          insurance plan is only to pay for the Covered Services. Under State
          and Federal laws and regulations, Medicaid funds are the last dollar
          source and all other health insurance plans as referred to above are
          primarily responsible for the costs of providing Covered Services.

     3.   RECONCILIATION OF OTHER TPL

          In order to assist the CONTRACTOR in billing and collecting from other
          health insurance plans the DEPARTMENT will include on the Eligibility
          Transmission other health insurance plans of each Enrollee when it is
          known. The CONTRACTOR will review the Eligibility Transmission and
          will report to the Office of Recovery Services or the DEPARTMENT any
          TPL discrepancies identified within 30 working days of receipt of the
          Eligibility Transmission. The CONTRACTOR's report will include a
          listing of Enrollees that the CONTRACTOR has independently identified
          as being covered by another health insurance plan.

     4.   WHEN TPL IS DENIED

          On a monthly basis, the CONTRACTOR will report to the Office of
          Recovery Services (ORS) claims that have been billed to other health
          care plans but have been denied which will include the following
          information:

          a.   patient name and Medicaid identification number
          b.   ICD-9-CM code;
          c.   procedure codes; and
          d.   insurance company.

     5.   NOTIFICATION OF PERSONAL INJURY CASES

          The CONTRACTOR will be responsible to notify ORS of all personal
          injury cases, as defined by ORS and agreed to by the CONTRACTOR, no
          later than 30 days after the CONTRACTOR has received a "clean" claim.
          A clean claim is a claim that is ready to adjudicate. The following
          data elements will be provided by the CONTRACTOR to ORS:

                                  Page 40 of 52

<PAGE>

          a.   patient name and Medicaid identification number
          b.   date of accident;
          c.   specific type of injury by ICD-9-CM code;
          d.   procedure codes; and
          e.   insurance company, if known.

     6.   ORS TO PURSUE COLLECTIONS

          ORS will pursue collection on all claims described in Attachment B,
          Article VIII (Payments), Section D, Subsections 4 and 5 of this
          Contract. The DEPARTMENT will retain, for administrative costs, one
          third of the collections received for the period during which medical
          services were provided by the CONTRACTOR, and remit the balance to the
          CONTRACTOR.

     7.   REBATE OF DUPLICATE PREMIUMS

          The CONTRACTOR will rebate to the DEPARTMENT on a quarterly basis any
          duplicate premiums paid to the CONTRACTOR for Enrollees. Payments are
          deemed duplicate when the CONTRACTOR receives premium both from the
          DEPARTMENT and from another payment source for the same Enrollee or
          from the DEPARTMENT and from the Medicaid Buy-out Program for the same
          Enrollee.

     8.   INSURANCE BUY-OUT PROGRAM

          The Insurance Buy-out Program is an optional program in which the
          DEPARTMENT purchases group health insurance for a recipient who is
          eligible for Medicaid when it is determined cost-effective for the
          Medicaid program to do so. The insurance buy-out process will be
          coordinated by the DEPARTMENT in cooperation with the Office of
          Recovery Services, and Medicaid eligibility workers. The following
          procedures regarding the buy-out program are:

          a.   the CONTRACTOR will file claims against group MCOs first before
               claiming services against the CONTRACTOR or other MCOs.

          b.   The DEPARTMENT will pay the CONTRACTOR a Medicaid premium for
               every buy-out Enrollee.

          c.   The DEPARTMENT will provide the CONTRACTOR a monthly listing of
               Enrollees covered under the Buy-out Program for the upcoming
               month.

          d.   On a quarterly basis, the Buy-out Program will bill the
               CONTRACTOR the lower of the Buy-out premium or the premium paid
               under this Contract when the Buy-out premium was paid to an
               entity other than the CONTRACTOR, i.e., the Buy-out premium is
               not a duplicate premium as defined in this Article VIII,
               Section D., Item 7. The CONTRACTOR will remit to the Buy-out
               Program the amount billed within 60 days of receipt of the
               Buy-out bill.

                                  Page 41 of 52

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     9.   CONTRACTOR MUST PAY PROVIDER ADMINISTRATIVE FEE FOR IMMUNIZATIONS

          When an Enrollee has third party coverage for immunizations, the
          CONTRACTOR will pay the provider the administrative fee for providing
          the immunization and not require the provider to bill the third party
          as a cost avoidance method. The CONTRACTOR may choose to pursue the
          third party amount for the administrative fee after payment has been
          made to the provider.

E.   THIRD PARTY RESPONSIBILITY (INCLUDING WORKER'S COMPENSATION)

     1.   CONTRACTOR TO BILL USUAL AND CUSTOMARY CHARGES

          When a third party has an obligation to pay for Covered Services
          provided by the CONTRACTOR to an Enrollee pursuant to this Contract,
          the CONTRACTOR will bill the third party for the usual and customary
          charges for Covered Services provided and costs incurred. Should any
          sum be recovered by the Enrollee or otherwise, from or on behalf of
          the person responsible for payment for the service, the CONTRACTOR
          will be paid out of such recovery for the charges for service provided
          and costs incurred by the CONTRACTOR.

     2.   THIRD PARTY'S OBLIGATION TO PAY FOR COVERED SERVICES

          Examples of situations where a third party has an obligation to pay
          for Covered Services provided by the CONTRACTOR are when (a) the
          Enrollee is injured by a person due to the negligent or intentional
          acts (or omissions) of the person; or (b) the Enrollee is eligible to
          receive payment through Worker's Compensation Insurance. If the
          Enrollee does not diligently seek such recovery, the CONTRACTOR may
          institute such rights that it may have.

     3.   FIRST DOLLAR COVERAGE FOR ACCIDENTS

          In addition, both parties agree that the following will apply
          regarding first dollar coverage for accidents: If the injured party
          has additional insurance, primary coverage my be given to the motor
          insurance effective at the time of the accident. Once the motor
          vehicle policy is exhausted, the CONTRACTOR will be the secondary
          payer and pay for all of the Enrollee's Covered Services. If medical
          insurance does not exist, the CONTRACTOR will be the primary payer for
          all Covered Services.

     4.   NOTIFICATION OF STOP-LOSS

          The CONTRACTOR will provide ORS with quarterly updates of costs
          incurred by the CONTRACTOR when such costs exceed Stop Loss
          (reinsurance) provisions as defined in the contract between
          TransAmerica and the CONTRACTOR.

F.   CHANGES IN COVERED SERVICES

     If Covered Services are amended under the provisions of Attachment B,
     Article IV (Benefits), Section C, Subsection 3 of this Contract, rates may
     be renegotiated.

                                  Page 42 of 52

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                    ARTICLE IX - RECORDS, REPORTS AND AUDITS

A.   FEDERALLY REQUIRED REPORTS

     1.   FINANCIAL DISCLOSURE REPORT

          If this Contract is being renewed, the CONTRACTOR will complete the
          Section 1318 Financial Disclosure Report for transactions (all
          transactions, not just Medicaid) occurring during the prior contract
          period, and submit it to the DEPARTMENT prior to the renewal start
          date. If the Contract is being renewed and the CONTRACTOR has a
          Medicare MCO product, the CONTRACTOR will submit the Medicare report
          to the DEPARTMENT upon request by the DEPARTMENT.

     2.   DISCLOSURE OF OWNERSHIP AND CONTROL INTEREST STATEMENT

          The CONTRACTOR will submit to the DEPARTMENT a copy of the "Disclosure
          of Ownership and Control Interest Statement" (HCFA-1513) prior to the
          effective date of the Contract and by April 15 of each year
          thereafter.

     3.   CHEC/EPSDT REPORTS

          The CONTRACTOR agrees to act as a continuing care provider for the
          CHEC/EPSDT program in compliance with OBRA '89 and Social Security Act
          Sections 1902 (a)(43), 1905(a)(4)(B)and 1905 (r).

          a.   CHEC/EPSDT SCREENINGS

               Annually, the CONTRACTOR will submit to the DEPARTMENT
               information on CHEC/EPSDT screenings to meet the Federal EPSDT
               reporting requirements (Form HCFA-416). The data will be in a
               mutually agreed upon format. The CHEC/EPSDT information is due
               December 31 for the prior federal fiscal year's data (October 1
               through September 30).

          b.   IMMUNIZATION DATA

               The CONTRACTOR will submit immunization data as part of the
               CHEC/EPSDT reporting. Enrollee name, Medicaid ID, type of
               immunization identified by procedure code, and date of
               immunization will be reported in the same format as the
               CHEC/EPSDT data.

B.   PERIODIC REPORTS

     1.   ENROLLMENT, COST AND UTILIZATION REPORTS (ATTACHMENT E)

          Enrollment, cost and utilization reports will be submitted on
          diskettes in Excel or Lotus and in the format specified in Attachment
          E. A hard copy of the report must be submitted as well. The DEPARTMENT
          will send to the CONTRACTOR a template of the Attachment E format on a
          diskette. The CONTRACTOR may not customize or

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          change the report format. The financial information for these reports
          will be reported as defined in HCFA Publication 75, and if applicable,
          HCFA 15-1. The CONTRACTOR will certify in writing the accuracy and
          completeness, to the best of its knowledge, of all costs and
          utilization data provided to the DEPARTMENT on Attachment E.

          Two Attachment E reports will be submitted covering dates of service
          for each contract year.

          a.   Attachment E is due May 1 for the preceding six-month reporting
               period (July through December).

          b.   Attachment E is due November 1 for the preceding 12-month
               reporting period (July through June).

          If necessary, the CONTRACTOR may request, in writing, an extension of
          the due date up to 30 days beyond the required due date. The
          DEPARTMENT will approve or deny the extension request writing within
          seven calendar days of receiving the request.

     2.   SEMI-ANNUAL REPORTS

          The following semi-annual reports are due May 1 for the preceding
          six-month reporting period ending December 31 (July through December)
          and are due November 1 for the preceding six month period ending June
          30 (January through June).

          a.   ORGAN TRANSPLANTS

               A report of the total number of organ transplants by type of
               transplant.

          b.   OBSTETRICAL INFORMATION

               A report of obstetrical information including

               1)   total number of obstetrical deliveries by aid category
                    grouping
               2)   total number of caesarean sections and total number of
                    vaginal deliveries;
               3)   total number low birth weight infants; and
               4)   total number of Enrollees requiring prenatal hospital
                    admission.

          c.   COMPLAINTS AND FORMAL GRIEVANCES

               A summary of complaints and formal grievances, by type of
               complaint or grievance, received by the CONTRACTOR under this
               Contract and actions taken to resolve such complaints and
               grievances

          d.   ABERRANT PHYSICIAN BEHAVIOR

               Summary information of corrective actions taken on physicians who
               have been identified by the CONTRACTOR as exhibiting aberrant
               physician behavior and

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               the names of physicians who have been removed from the CONTRACTOR
               network due to quality concerns.

     3.   QUALITY ASSURANCE ACTIVITIES

          Annually, the CONTRACTOR will submit their written quality improvement
          plan and their quality improvement work plan within 30 days of
          approval by the CONTRACTOR's governing body.

          Annually, on November 1, the CONTRACTOR will submit a report that
          identifies the CONTRACTOR's internal quality assurance activities,
          results thereof, and corrective actions taken during the previous
          contract year ending (July through June).

     4.   HEDIS

          Audited Health Plan Employer Data and Information Set (HEDIS)
          performance measures will cover services rendered during each calendar
          year and will be reported as set forth in State rule by the Office of
          Health Data Analysis. For example, calendar year 1997 HEDIS measures
          will be reported in 1998.

     5.   ENCOUNTER DATA

          Encounter data, as defined in the DEPARTMENT's Encounter Data
          Technical Manual, is due (including all replacements) nine months
          after the end of the quarter being reported. Encounter data will be
          submitted in accordance with the instructions detailed in the
          Encounter Data User Manual for dates of service beginning July 1,
          1997.

     6.   DOCUMENTS DUE PRIOR TO QUALITY MONITORING REVIEWS

          The following documents are due on request or at least 60 days prior
          to the DEPARTMENT's quality assurance monitoring review unless the
          DEPARTMENT has already received documents that are in effect:

          a.   the CONTRACTOR's most current (may be in draft stage) written
               plan for quality improvement;
          b.   the CONTRACTOR's most current (may be in draft stage) annual
               quality improvement work plan;
          c.   the CONTRACTOR's reports that identify over and under utilization
               of covered services and efforts put in place to resolve
               inappropriate over utilization and under utilization;
          d.   the CONTRACTOR's process for identifying and correcting aberrant
               provider behavior; and
          e.   other information requested by the DEPARTMENT to facilitate the
               DEPARTMENT's review of the CONTRACTOR's compliance to standards
               defined in the Division of Health Care Financing's MCO Quality
               Assurance Monitoring Plan (Attachment G).

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          The above  documents  will show evidence of a well defined,  organized
          program designed to improve client care.

     7.   AUDIT OF ABORTIONS, STERILIZATIONS AND HYSTERECTOMIES

          The CONTRACTOR must conduct an annual audit of all abortions in
          addition to an audit of a sample of sterilizations and hysterectomies
          as set by the DEPARTMENT that the CONTRACTOR providers performed
          during each contract year to assure compliance of its providers with
          all Federal and State requirements related to Federal financial
          participation of abortions. On November 1 of each year, the CONTRACTOR
          will submit to the DEPARTMENT the results of the audit for the
          previous calendar year.

     8.   DEVELOPMENT OF NEW REPORTS

          Any new reports/data requirements mandated by the DEPARTMENT will be
          mutually developed by the DEPARTMENT and the CONTRACTOR.

C.   RECORD SYSTEM REQUIREMENTS

     In accordance with Section 4752 of OBRA '90 (amended section 1903 (m)(2)(A)
     of the Social Security Act), the CONTRACTOR agrees to maintain sufficient
     patient encounter data to identify the physician who delivers Covered
     Services to Enrollees. The CONTRACTOR agrees to provide this encounter
     data, upon request of the DEPARTMENT, within 30 days of the request.

D.   MEDICAL RECORDS

     The CONTRACTOR agrees that medical records are considered confidential
     information and agrees to follow Federal and State confidentiality
     requirements.

     The CONTRACTOR will require that subcontracting providers maintain a
     medical record keeping system through which all pertinent information
     relating to the medical management of the Enrollee is maintained,
     organized, and is readily available to appropriate professionals.
     Notwithstanding any other provision of this Contract to the contrary,
     medical records covering Enrollees will remain the property of the
     CONTRACTOR provider, and the CONTRACTOR provider will respect every
     Enrollee's privacy by restricting the use and disclosure of information in
     such records to purposes directly connected with the Enrollee's health care
     and administration of this Contract. The CONTRACTOR will use and disclose
     information pertaining to individual Enrollees and prospective Enrollees
     only for purposes directly connected with the administration of the
     Medicaid Program and this Contract.

E.   AUDITS

     1.   RIGHT OF DEPARTMENT AND HCFA TO AUDIT

          The DEPARTMENT and the Secretary of the Department of Health and Human
          Services within HCFA will have the right to audit and inspect any
          books and records of the CONTRACTOR and its subcontractors pertaining
          (I) to the ability of the

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          CONTRACTOR to bear the risk of potential financial losses, or (II) to
          evaluate services performed or determinations of amounts payable under
          the Contract.

     2.   INFORMATION TO DETERMINE ALLOWABLE COSTS

          The CONTRACTOR will make available to the DEPARTMENT all reasonable
          and related financial, statistical, clinical or other information
          needed for the determination of allowable costs to the Medicaid
          program for "related party/home office" transactions as defined in
          HCFA 15-1. These records are to be made available in Utah or the
          CONTRACTOR will pay the increased cost (incremental travel, per diem,
          etc.) of auditing at the out-of-state location. The cost to the
          CONTRACTOR will include round-trip travel and two days per
          diem/lodging. Additional travel costs of the site audit will be shared
          equally by the CONTRACTOR and the DEPARTMENT.

     3.   MANAGEMENT AND UTILIZATION AUDITS

          The MCO will allow the DEPARTMENT and the Department of Health and
          Human Services within HCFA to perform audits for identification and
          collection of management data, including Enrollee satisfaction data,
          quality of care data, patient outcome cost, and utilization data,
          which will include patient profiles, exception reports, etc. The
          CONTRACTOR will provide all data required by the DEPARTMENT or the
          independent quality review examiners in performance of these audits.
          Prior to beginning any audit, the DEPARTMENT will give the CONTRACTOR
          reasonable notice of audit, and the DEPARTMENT will be responsible for
          costs of its auditors or representatives.

F.   INDEPENDENT QUALITY REVIEW

     1.   IN GENERAL

          Pursuant to Section 1932(c)(2)(A) of the Social Security Act the
          DEPARTMENT will provide for an annual external independent review
          conducted by a qualified independent entity of the quality outcomes
          and timeliness of, and access to Covered Services. The CONTRACTOR will
          support the annual external independent review.

          The DEPARTMENT will choose an agency to perform an annual independent
          quality review pursuant to federal law and will pay for such review.
          The CONTRACTOR will maintain all clinical and administrative records
          for use by the quality review contractor.

          The CONTRACTOR agrees to support quality assurance reviews, focused
          studies and other projects performed for the DEPARTMENT by the
          external quality review organization (EQRO). The purpose of the
          reviews and studies are to comply with federal requirements for an
          annual independent audit of the quality outcomes and timeliness of,
          and access to Covered Services. The external independent reviews are
          conducted by the EQRO, with the advice, assistance, and cooperation of
          a planning team composed of representatives from the CONTRACTOR, the
          EQRO and the DEPARTMENT with final approval by the DEPARTMENT.

                                  Page 47 of 52

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     2.   SPECIFIC REQUIREMENTS

          a.   LIAISON FOR ROUTINE COMMUNICATION

               The CONTRACTOR will designate an individual to serve as liaison
               with the EQRO for routine communication with the EQRO.

          b.   REPRESENTATIVE TO ASSIST WITH PROJECTS

               The CONTRACTOR will designate a minimum of two representatives
               (unless one individual can service both functions) to serve on
               the planning team for each EQRO project. Representatives will
               include a quality improvement representative and a data
               representative. The planning team is a joint collaborative forum
               between DEPARTMENT staff, the EQRO and the CONTRACTOR. The role
               of the planning team is to participate in the process and
               completion of EQRO projects.

          c.   COPIES AND ON-SITE ACCESS

               The CONTRACTOR will be responsible for obtaining copies of
               Enrollee information and facilitating on-site access to Enrollee
               information as needed by the EQRO. Such information will be used
               to plan and conduct projects and to investigate complaints and
               grievances. Any associated copying costs are the responsibility
               of the CONTRACTOR. Enrollee information includes medical records,
               administrative data such as, but not limited to, enrollment
               information and claims, nurses' notes, medical logs, etc. of the
               CONTRACTOR or its providers.

          d.   FORMAT OF ENROLLEE FILES

               The CONTRACTOR will provide Enrollee information in a mutually
               agreed upon format compatible for the EQRO's use, and in a timely
               fashion to allow the EQRO to select cases for its review.

          e.   TIME-FRAME FOR PROVIDING DATA

               The CONTRACTOR will provide data requests to the EQRO within 15
               working days of the written request from the EQRO and will
               provide medical records within 30 working days of the written
               request from the EQRO. Requests for extensions of these time
               frames will be reviewed and approved or disapproved by the
               DEPARTMENT on a case-by-case basis.

          f.   WORK SPACE FOR ON-SITE REVIEWS

               The CONTRACTOR will assure that the EQRO staff and consultants
               have adequate work space, access to a telephone and copy machines
               at the time of review. The review will be performed during
               agreed-upon hours.

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          g.   STAFF ASSISTANCE DURING ON-SITE VISITS

               The CONTRACTOR will assign appropriate person(s) to assist the
               EQRO personnel conduct the reviews during on-site visits and to
               participate in an informal discussion of screening observations
               at the end of each on-site visit, if necessary.

          h.   CONFIDENTIALITY

               For information received from the EQRO, the CONTRACTOR will
               comply with the Department of Health and Human Services
               regulations relating to confidentiality of data and information
               (42 CFR Part 476.107 and 476.108).

                              ARTICLE X - SANCTIONS

     The DEPARTMENT may impose intermediate sanctions on the CONTRACTOR if the
     CONTRACTOR defaults in any manner in the performance of any obligation
     under this Contract including but not limited to the following situations:

     (1)  the CONTRACTOR fails to substantially provide Medically Necessary
          Covered Services to Enrollees;

     (2)  the CONTRACTOR imposes premiums or charges Enrollees in excess of the
          premiums or charges permitted under this Contract;

     (3)  the CONTRACTOR acts to discriminate among Enrollees on the basis of
          their health status or requirements for health care services,
          including expulsion or refusal to re-enroll an individual, except as
          permitted by Title XIX, or engaging in any practice that would
          reasonably be expected to have the effect of denying or discouraging
          enrollment with the MCO by potential enrollees whose medical condition
          or history indicates a need for substantial future medical services;

     (4)  the CONTRACTOR misrepresents or falsifies information furnished to the
          Health Care Financing Administration, the DEPARTMENT, an Enrollee,
          potential Enrollee or health care provider;

     (5)  the CONTRACTOR fails to comply with the physician incentive
          requirements under Section 1903(m)(2)(A)(x) of the Social Security
          Act.

     (6)  the CONTRACTOR distributed directly or through any agent or
          independent contractor marketing materials that contain false or
          misleading information.

     The DEPARTMENT must follow the 1997 Balance Budget Act guidelines on the
     types of intermediate sanctions the DEPARTMENT may impose, including civil
     monetary penalties, the appointment of temporary management, and suspension
     of payment.

                                  Page 49 of 52

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                    ARTICLE XI - TERMINATION OF THE CONTRACT

A.   AUTOMATIC TERMINATION

     This Contract will automatically terminate June 30, 2004.

B.   OPTIONAL YEAR-END TERMINATION

     At the end of each contract year, either party may terminate the Contract
     without cause for subsequent years by giving the other party written notice
     of termination at least 90 days prior to the end of the contract year (July
     1 through June 30).

C.   TERMINATION FOR FAILURE TO AGREE UPON RATES

     At least 60 days prior to the end of each contract year, the parties will
     meet and negotiate in good faith the rates (Attachment F) applicable to the
     upcoming year. If the parties cannot agree upon future rates by the end of
     the contract year, then either party may terminate the Contract for
     subsequent years by giving the other party written notice of termination
     and the termination will become effective 90 days after receipt of the
     written notice of termination.

D.   EFFECT OF TERMINATION

     1.   COVERAGE

          Inasmuch as the CONTRACTOR is paid on a monthly basis, the CONTRACTOR
          will continue providing the Covered Services required by this Contract
          until midnight of the last day of the calendar month in which the
          termination becomes effective. If an Enrollee is a patient in an
          inpatient hospital setting during the month in which termination
          becomes effective, the CONTRACTOR is responsible for the entire
          hospital stay including physician charges until discharge or thirty
          days following termination, whichever occurs first.

     2.   ENROLLEE NOT LIABLE FOR DEBTS OF CONTRACTOR OR ITS SUBCONTRACTORS

          If the CONTRACTOR or one of its subcontractors becomes insolvent or
          bankrupt, the Enrollees will not be liable for the debts of the
          CONTRACTOR or its subcontractor. The CONTRACTOR will include this term
          in all of its subcontracts.

     3.   INFORMATION FOR CLAIMS PAYMENT

          The CONTRACTOR will promptly supply to the DEPARTMENT all information
          necessary for the reimbursement of any Medicaid claims not paid by the
          CONTRACTOR.

     4.   CHANGES IN ENROLLMENT PROCESS

          The CONTRACTOR will be advised of anticipated changes in policies and
          procedures as they relate to the enrollment process and their comments
          will be solicited. The

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          CONTRACTOR agrees to be bound by such changes in policies and
          procedures unless they are not agreeable to the CONTRACTOR, in which
          case the CONTRACTOR may terminate the Contract in accordance with the
          Contract termination provisions.

     5.   HEARING PRIOR TO TERMINATION

          Regarding the General Provisions, Article XVII (Default, Termination,
          & Payment Adjustment), item 3, if the CONTRACTOR fails to meet the
          requirements of the Contract, the DEPARTMENT must give the CONTRACTOR
          a hearing prior to termination. Enrollees must be informed of the
          hearing and will be allowed to disenroll from the MCO without cause.

E.   ASSIGNMENT

     Assignment of any or all rights or obligations under this Contract without
     the prior written consent of the DEPARTMENT is prohibited. Sale of all or
     any part of the rights or obligations under this Contract will be deemed an
     assignment. Consent may be withheld in the DEPARTMENT's sole and absolute
     discretion.

                           ARTICLE XII - MISCELLANEOUS

A.   INTEGRATION

     This Contract contains the entire agreement between the parties with
     respect to the subject matter of this Contract. There are no
     representations, warranties, understandings, or agreements other than those
     expressly set forth herein. Previous contracts between the parties hereto
     and conduct between the parties which precedes the implementation of this
     Contract will not be used as a guide to the interpretation or enforcement
     of this Contract or any provision hereof.

B.   ENROLLEES MAY NOT ENFORCE CONTRACT

     Although this Contract relates to the provision of benefits for Enrollees
     and others, no Enrollee is entitled to enforce any provision of this
     Contract against the CONTRACTOR nor will any provision of this Contract be
     constructed to constitute a promise by the CONTRACTOR to any Enrollee or
     potential Enrollee.

C.   INTERPRETATION OF LAWS AND REGULATIONS

     The DEPARTMENT will be responsible for the interpretation of all federal
     and State laws and regulations governing or in any way affecting this
     Contract. When interpretations are required, the CONTRACTOR will submit
     written requests to the DEPARTMENT. The DEPARTMENT will retain full
     authority and responsibility for the administration of the Medicaid program
     in accordance with the requirements of Federal and State law.

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D.   ADOPTION OF RULES

     Adoption of rules by the DEPARTMENT, subsequent to this amendment, and
     which govern the Medicaid program, will be automatically incorporated into
     this Contract upon receipt by the CONTRACTOR of written notice thereof.

                   ARTICLE XIII - EFFECT OF GENERAL PROVISIONS

If there is a conflict between these Special Provisions (Attachment B) or the
General Provisions (Attachment A), then these Special Provisions will control.

                                  Page 52 of 52

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                         ATTACHMENT C - COVERED SERVICES

A.   IN GENERAL

     The CONTRACTOR will provide the following benefits to Enrollees in
     accordance with Medicaid benefits as defined in the Utah State Plan subject
     to the exception or limitations as noted below. The DEPARTMENT reserves the
     right to interpret what is in the State plan. Medicaid services can only be
     limited through utilization criteria based on Medical Necessity. The
     CONTRACTOR will provide at least the following benefits to Enrollees.

     The CONTRACTOR is responsible to provide or arrange for all Medically
     Necessary Covered Services on an emergency basis 24 hours each day, seven
     days a week. The CONTRACTOR is responsible for payment for all covered
     Emergency Services furnished by providers that do not have arrangements
     with the CONTRACTOR.

B.   HOSPITAL SERVICES

     1.   INPATIENT HOSPITAL

          Services furnished in a licensed, certified hospital.

     2.   OUTPATIENT HOSPITAL

          Services provided to Enrollees at a licensed, certified hospital who
          are not admitted to the hospital.

     3.   EMERGENCY DEPARTMENT SERVICES

          Emergency Services provided to Enrollees in designated hospital
          emergency departments.

C.   PHYSICIAN SERVICES

     Services provided directly by licensed physicians or osteopaths, or by
     other licensed professionals such as physician assistants, nurse
     practitioners, or nurse midwives under the physician's or osteopath's
     supervision.

D.   GENERAL PREVENTIVE SERVICES

     The CONTRACTOR must develop or adopt practice guidelines consistent with
     current standards of care, as recommended by professional groups such as
     the American Academy of Pediatric and the U.S. Task Force on Preventive
     Care.

     A minimum of three screening programs for prevention or early intervention
     (e.g. Pap Smear, diabetes, hypertension).

                                  Page 1 of 11

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E.   VISION CARE

     Services provided by licensed ophthalmologists or licensed optometrists,
     and opticians within their scope of practice. Eyeglasses will be provided
     to eligible recipients based on medical necessity. Services include, but
     are not limited to, the following:

     1.   Eye refractions, examinations
     2.   Laboratory work
     3.   Lenses
     4.   Eyeglass Frames
     5.   Repair of Frames
     6.   Repair or Replacement of Lenses
     7.   Contact Lenses (when Medically Necessary)

F.   LAB AND RADIOLOGY SERVICES

     Professional and technical laboratory and X-ray services furnished by
     licensed and certified providers. All laboratory testing sites, including
     physician office labs, providing services under this Contract will have
     either a Clinical Laboratory Improvement Amendments (CLIA) certificate of
     Waiver or a certificate of registration along with a CLIA identification
     number.

     Those laboratories with certificates of waiver will provide only the eight
     types of tests permitted under the terms of their waiver. Laboratories with
     certificates of registration may perform a full range of laboratory tests.

G.   PHYSICAL AND OCCUPATIONAL THERAPY

     1.   PHYSICAL THERAPY

          Treatment and services provided by a licensed physical therapist.
          Treatment and services must be authorized by a physician and include
          services prescribed by a physician or other licensed practitioner of
          the healing arts within the scope of his or her practice under State
          law and provided to an Enrollee by or under the direction of a
          qualified physical therapist. Necessary supplies and equipment will be
          reviewed for medical necessity and follow the criteria of the R414.12
          rule.

     2.   OCCUPATIONAL THERAPY

          Treatment of services provided by a licensed occupational therapist.
          Treatment and services must be authorized by a physician and include
          services prescribed by a physician or other licensed practitioner of
          the healing arts within the scope of his or her practice under State
          law and provided to an Enrollee by or under the direction of a
          qualified occupational therapist. Necessary supplies and equipment
          will be reviewed for medical necessity and follow the criteria of the
          R414.12 rule.

                                  Page 2 of 11

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H.   SPEECH AND HEARING SERVICES

     Services and appliances, including hearing aids and hearing aid batteries,
     provided by a licensed medical professional to test and treat speech
     defects and hearing loss.

I.   PODIATRY SERVICES

     Services provided by a licensed podiatrist.

J.   END STAGE RENAL DISEASE - DIALYSIS

     Treatment of end stage renal dialysis for kidney failure. Dialysis is to be
     rendered by a Medicare-certified Dialysis facility.

K.   HOME HEALTH SERVICES

     Home health services are defined as intermittent nursing care provided by
     certified nursing professionals (registered nurses, licensed practical
     nurses, and home health aides) in the client's home when the client is
     homebound or semi-homebound. Home health care must be rendered by a
     Medicare-certified Home Health Agency that has a surety bond.

     Personal care services as defined in the DEPARTMENT's Medicaid Personal
     Care Provider Manual are included in this Contract. Personal care services
     may be provided by a State licensed home health agency.

L.   HOSPICE SERVICES

     Services delivered to terminally ill patients (six months life expectancy)
     who elect palliative versus aggressive care. Hospice care is to be rendered
     by a Medicare-certified hospice.

M.   PRIVATE DUTY NURSING

     Services provided by licensed nurses for ventilator-dependent children and
     technology-dependent adults in their home in lieu of hospitalization if
     Medically Necessary, feasible, and safe to be provided in the patient's
     home. Requests for continuous care will be evaluated on a case by case
     basis and must be approved by the CONTRACTOR.

N.   MEDICAL SUPPLIES AND MEDICAL EQUIPMENT

     This Covered Service includes any necessary supplies and equipment used to
     assist the Enrollee's medical recovery, including both durable and
     non-durable medical supplies and equipment, and prosthetic devices. The
     objective of the medical supplies program is to provide supplies for
     maximum reduction of physical disability and restore the Enrollee to his or
     her best functional level. Medical supplies may include any necessary
     supplies and equipment recommended by a physical or occupational therapist,
     but should be ordered by a physician. Durable medical equipment includes,
     but is not limited to, prosthetic devices and specialized wheelchairs.
     Durable medical equipment and supplies must be provided by a durable
     medical

                                  Page 3 of 11

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     equipment supplier that has a surety bond. Necessary supplies and equipment
     will be reviewed for medical necessity and follow the criteria of the
     R414.12 of the Utah Administrative Code, with the exception of criteria
     concerning long term care since long term care services are not covered
     under the Contract.

O.   ABORTIONS AND STERILIZATIONS

     These services are provided to the extent permitted by Federal and State
     law and must meet the documentation requirement of 42 CFR 441, Subparts E
     and F. These requirements must be met regardless of whether Medicaid is
     primary or secondary payer.

P.   TREATMENT FOR SUBSTANCE ABUSE AND DEPENDENCY

     Treatment will cover medical detoxification for alcohol or substance abuse
     conditions. Medical services including hospital services will be provided
     for the medical non-psychiatric aspects of the conditions of alcohol/drug
     abuse.

Q.   ORGAN TRANSPLANTS

     The following transplantations are covered for all Enrollees: Kidney,
     liver, cornea, bone marrow, heart, intestine, lung, pancreas, small bowel,
     combination heart/lung, combination intestine/liver, combination
     kidney/pancreas, combination liver/kidney, multi visceral, and combination
     liver/small bowel unless amended under the provisions of Attachment B,
     Article IV (Benefits), Section C, Subsection 3 of this Contract.

R.   OTHER OUTSIDE MEDICAL SERVICES

     The CONTRACTOR, at its discretion and without compromising quality of care,
     may choose to provide services in Freestanding Emergency Centers, Surgical
     Centers and Birthing Centers.

S.   LONG TERM CARE

     The CONTRACTOR may provide long term care for Enrollees in skilled nursing
     facilities requiring such care as a continuum of a medical plan when the
     plan includes a prognosis of recovery and discharge within thirty (30) days
     or less. When the prognosis of an Enrollee indicates that long term care
     (over 30 days) will be required, the CONTRACTOR will notify the DEPARTMENT
     and the skilled nursing facility of the prognosis determination and will
     initiate disenrollment to be effective on the first day of the month
     following the prognosis determination. Skilled nursing care is to be
     rendered in a skilled nursing facility which meets federal regulations of
     participation.

T.   TRANSPORTATION SERVICES

     Ambulance (ground and air) service for medical emergencies. The CONTRACTOR
     is also responsible to pay for authorized emergency transportation for an
     illness or accident episode which, upon subsequent medical evaluation at
     the hospital, is determined to be psychiatric-related. The CONTRACTOR will
     submit its emergency transportation policy to the

                                  Page 4 of 11

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     DEPARTMENT for review. The CONTRACTOR is not responsible for transporting
     an Enrollee from an acute care facility to another acute care facility for
     a psychiatric admission. The CONTRACTOR's scope of coverage for emergency
     transportation services is limited to the same scope of coverage as defined
     in the transportation Medicaid provider manual.

U.   SERVICES TO CHEC ENROLLEES

     1.   CHEC SERVICES

          The CONTRACTOR will provide to CHEC Enrollees preventive screening
          services and other necessary medical care, diagnostic services,
          treatment, and other measures necessary to correct or ameliorate
          defects and physical and mental illnesses and conditions discovered by
          the screening services, whether or not such services are covered under
          the State Medicaid Plan. The CONTRACTOR is not responsible for home
          and community-based services available through Utah's Home and
          Community-Based waiver programs.

          The CONTRACTOR will provide the full early and periodic screening,
          diagnosis, and treatment services to all eligible children and young
          adults up to age 21 in accordance with the periodicity schedule as
          described in the Utah CHEC Provider Manual. All children between six
          months and 72 months must be screened for blood lead levels.

     2.   CHEC POLICIES AND PROCEDURES

          The CONTRACTOR agrees to have written policies and procedures for
          conducting tracking, follow-up, and outreach to ensure compliance with
          the CHEC periodicity schedules. These policies and procedures will
          emphasize outreach and compliance monitoring for children and young
          adults, taking into account the multi-lingual, multicultural nature as
          well as other unique characteristics of the CHEC Enrollees.

V.   FAMILY PLANNING SERVICES

     This service includes disseminating information, counseling, and treatments
     relating to family planning services. All services must be provided by or
     authorized by a physician, certified nurse midwife, or nurse practitioner.
     All services must be provided in concert with Utah law.

     Birth control services include information and instructions related to the
     following:

     1.   Birth control pills;
     2.   Norplant;
     3.   Depo Provera;
     4.   IUDs;
     5.   Barrier methods including diaphragms, male and female condoms, and
          cervical caps;
     6.   Vasectomy or tubal ligations; and
     7.   Office calls, examinations or counseling related to contraceptive
          devices.

                                  Page 5 of 11

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W.   HIGH-RISK PRENATAL SERVICES

     1.   IN GENERAL - ENSURE SERVICE ARE APPROPRIATE AND COORDINATED

          The CONTRACTOR must ensure that high risk pregnant Enrollees receive
          an appropriate level of quality perinatal care that is coordinated,
          comprehensive and continuous either by direct service or referral to
          an appropriate provider or facility. In the determination of the
          provider and facility to which a high risk prenatal Enrollee will be
          referred, care must be taken to ensure that the provider and facility
          both have the appropriate training, expertise and capability to
          deliver the care needed by the Enrollee and her fetus/infant. Although
          many complications in perinatal health cannot be anticipated, most can
          be identified early in pregnancy. Ideally, preconceptional counseling
          and planned pregnancy are the best ways to assure successful pregnancy
          outcome, but this is often not possible. Provision of routine
          preconceptional counseling must be made available to those women who
          have conditions identified as impacting pregnancy outcome, i.e.,
          diabetes mellitus, medications which may result in fetal anomalies or
          poor pregnancy outcome, or previous severe anomalous fetus/infant,
          among others.

     2.   RISK ASSESSMENT

          a.   CRITERIA

               Enrollees who are pregnant should be risk assessed for medical
               and psychosocial conditions which may contribute to a poor birth
               outcome at their first prenatal visit, preferably in the first
               trimester. The patient who is determined not to be at high risk
               should be evaluated for change in risk status throughout her
               pregnancy. There are a number of complex systems to determine how
               to assess the risk of pregnancies. The DEPARTMENT has developed a
               risk assessment tool available through the Division of Community
               and Family Health Services which is available upon request.

          b.   RECOMMENDED PRENATAL SCREENING

               The DEPARTMENT recommends prenatal screening of every woman for
               hepatitis B surface antigen (HBsAg) to identify all those at high
               risk for transmitting the virus to their newborns. When a woman
               is found to be HBsAg-positive, the CONTRACTOR will provide HBIG
               and HB vaccine at birth. Initial treatments should be given
               during the first 12 hours of life.

          c.   CLASSIFICATION

               Upon identification of pregnancy or the development of a risk
               factor, each patient should be assigned a classification as
               outlined below.

               1)   Group I
                    Group I patients have no significant risk factors. They may
                    receive obstetrical care by an obstetrician/gynecologist
                    (OB/GYN), family

                                  Page 6 of 11

<PAGE>

                    practitioner or certified nurse midwife.

               2)   Group II
                    Group II patients have the following risk factors, and
                    require consultation (consultation may be either by
                    telephone or in person, as appropriate) with an OB/GYN:

                    i.      pregnancy beyond 42 weeks
                    ii.     preterm labor in the current pregnancy less than 34
                            weeks
                    iii.    fetal malpresentation at 37 weeks gestation and
                            beyond*
                    iv.     oxytocin or antepartum prostaglandin use is
                            contemplated*
                    v.      arrest of dilatation in labor, or arrest of descent
                            in labor*
                    vi.     bleeding in labor, beyond bloody show*
                    vii.    abnormal fetal heart rate pattern potentially
                            requiring specific intervention*
                    viii.   chorioamnionitis*
                    ix.     preeclampsia
                    x.      VBAC*

                    *Criteria do not apply if family physician has cesarean
                    privileges.

               3.   Group III
                    Group III patients have the following risk factors, and
                    require consultation by a Maternal Fetal Medicine (MFM)
                    specialist (board certified perinatologist)

                    i.      intrauterine growth restriction prior to 37 weeks
                    ii.     patient at increased risk for fetal anomaly
                            (including teratogen exposure)
                    iii.    patient has known fetal anomaly

                    iv.     preterm delivery (less than 36 weeks) in a prior
                            pregnancy

                    v.      abnormal serum screening

                    vi.     previous child with congenital anomaly
                    vii.    antibody sensitization
                    viii.   anemia, excluding iron deficiency
                    ix.     significant concurrent medical illness
                    x.      spontaneous premature rupture of the membranes, not
                            in labor (less than 34 weeks)
                    xi.     history of thromboembolic disease
                    xii.    thromboembolic disease in current pregnancy
                    xiii.   habitual pregnancy loss (3 or more consecutive
                            losses)
                    xiv.    two or more previous stillbirths or neonatal deaths

               4.   Group IV
                    Group IV patients have the following risk factors, and
                    require total obstetric care by an OB/GYN, or co-management
                    with an OB/GYN or MFM

                                  Page 7 of 11

<PAGE>

                    i.      any significant medical complication, including
                            patients with insulin dependent diabetes millitus,
                            chronic hypertension requiring medication, maternal
                            neoplastic disease
                    ii.     twins
                    iii.    known or suspected cervical incompetence
                    iv.     placenta previa beyond 28 week gestation
                    v.      severe preeclampsia

               5.   Group V
                    Group V patients have the following risk factors, and
                    require total obstetric care by a MFM (exceptions may be
                    made by a regional MFM specialist, on a case-by-case basis,
                    after MFM consultation)

                    i.      triplets and above
                    ii.     patient has an organ transplant (except cornea)
                    iii.    diabetes mellitus with severe renal impairment
                    iv.     cardiac disease, not functional class I, including
                            all pulmonary hypertension
                    v.      twin-twin transfusion syndrome
                    vi.     patient requires fetal surgical procedure

     3.   PRENATAL INITIATIVE PROGRAM

          Prenatal services provided directly or through agreements with
          appropriate providers includes those services covered under Medicaid's
          Prenatal Initiative Program which includes the following enhanced
          services for pregnant women:

          a.   perinatal care coordination
          b.   prenatal and postnatal home visits
          c.   group prenatal and postnatal education
          d.   nutritional assessment and counseling
          e.   prenatal and postnatal psychosocial counseling

          Psychosocial counseling is a service designed to benefit the pregnant
          client by helping her cope with the stress that may accompany her
          pregnancy. Enabling her to manage this stress improves the likelihood
          that she will have a healthy pregnancy. This counseling is intended to
          be short term and directly related to the pregnancy. However, pregnant
          women who are also suffering from a serious emotional or mental
          illness should be referred to an appropriate mental health care
          provider.

X.   SERVICES FOR CHILDREN WITH SPECIAL NEEDS

     1.   IN GENERAL

          In addition to primary care, children with chronic illnesses and
          disabilities need specialized care provided by trained experienced
          professionals. Since early diagnosis and intervention will prevent
          costly complications later on, the specialized care must be provided
          in a timely manner. The specialized care must comprehensively address
          all

                                  Page 8 of 11

<PAGE>

          areas of need to be most effective and must be coordinated with
          primary care and other services to be most efficient. The children's
          families must be involved in the planning and delivery of the care for
          it to be acceptable and successful.

     2.   SERVICES REQUIRING TIMELY ACCESS

          All children with special health care needs must have timely access to
          the following services:

          a.   Comprehensive evaluation for the condition.

          b.   Pediatric subspecialty consultation and care appropriate to the
               condition.

          c.   Rehabilitative services provided by professionals with pediatric
               training in areas such as physical therapy, occupational therapy
               and speech therapy.

          d.   Durable medical equipment appropriate for the condition.

          e.   Care coordination for linkage to early intervention, special
               education and family support services and for tracking progress.

          In addition, children with the conditions marked by * below must have
          timely access to coordinated multispecialty clinics, when Medically
          Necessary, for their disorder.

     3.   DEFINITION OF CHILDREN WITH SPECIAL HEALTH CARE NEEDS

          The definition of children with special health needs includes, but is
          not limited to, the following conditions:

          a.   Nervous System Defects such as
               Spina Bifida*
               Sacral Agenesis*
               Hydrocephalus

          b.   Craniofacial Defects such as
               Cleft Lip and Palate*
               Treacher - Collins Syndrome

          c.   Complex Skeletal Defects such as
               Arthrogryposis*
               Osteogenesis Imperfecta*
               Phocomelia*

          d.   Inborn Metabolic Disorders such as
               Phenylketonuria*
               Galactosemia*

                                  Page 9 of 11

<PAGE>

          e.   Neuromotor Disabilities such as
               Cerebral palsy*
               Muscular Dystrophy*
               Complex Seizure Disorders

          f.   Congenital Heart Defects

          g.   Genetic Disorders such as
               Chromosome Disorders
               Genetic Disorders

          h.   Chronic Illnesses such as
               Cystic Fibrosis
               Hemophilia
               Rheumatoid Arthritis
               Bronchopulmonary Dysplasia
               Cancer
               Diabetes
               Nephritis
               Immune Disorders

          i.   Developmental Disabilities with multiple or global delays in
               development such as Down Syndrome or other conditions associated
               with mental retardation.

          The CONTRACTOR agrees to cover all Medically Necessary services for
          children with special health care needs such as the ones listed above.
          The CONTRACTOR further agrees to cooperate with the DEPARTMENTS
          quality assurance monitoring for this population by providing
          requested information.

Y.   MEDICAL AND SURGICAL SERVICES OF A DENTIST

     1.   WHO MAY PROVIDE SERVICES

          Under Utah law, medical and surgical services of a dentist may be
          provided by either a physician or a doctor of dental medicine or
          dental surgery.

     2.   UNIVERSE OF COVERED SERVICES

          Medical and surgical services that under Utah law may be provided by a
          physician or a doctor of dental medicine or dental surgery, are
          covered under the Contract.

     3.   SERVICES SPECIFICALLY COVERED

          Palliative care and pain relief for severe mouth or tooth pain in an
          emergency room are covered services. The CONTRACTOR is responsible for
          authorized/approved medical services provided by oral surgeons
          consistent with injury, accident, or disease including, but not
          limited to, removal of tumors in the mouth, setting and wiring a
          fractured jaw. If

                                  Page 10 of 11

<PAGE>

          the emergency room physician determines that it is not an emergency
          and the client requires services at a lesser level, the provider
          should refer the client to a dentist for treatment. If the
          dental-related problem is serious enough for the client to be admitted
          to the hospital the CONTRACTOR is responsible for coverage of the
          inpatient hospital stay.

     4.   DENTAL SERVICES NOT COVERED

          The CONTRACTOR is not responsible for services that are usually
          considered dental such as fillings, pulling of teeth, treatment of
          abscess or infection, orthodontics, and pain relief when provided by a
          dentist in the office or in an outpatient setting such as surgical
          center or scheduled same day surgery in a hospital.

Z.   DIABETES EDUCATION

     The CONTRACTOR shall provide diabetes self-management education from a Utah
     certified or American Diabetes Association recognized program when an
     Enrollee:

     1.   has recently been diagnosed with diabetes, or

     2.   is determined by the health care professional to have experienced a
          significant change in symptoms, progression of the disease or health
          condition that warrants changes in the Enrollee's self-management
          plan, or

     3.   is determined by the health care professional to require re-education
          or refresher training.

AA. HIV PREVENTION

     The CONTRACTOR shall have in place the following:

     1.   GENERAL PROGRAM

          The CONTRACTOR must have educational methods for promoting HIV
          prevention to Enrollees. HIV prevention information, both primary
          (targeted to uninfected Enrollees), as well as secondary (targeted to
          those Enrollees with HIV) should must be culturally and linguistically
          appropriate. All Enrollees should be informed of the availability of
          both in-plan HIV counseling and testing services, as well as those
          available from Utah State-operated programs.

     2.   FOCUSED PROGRAM FOR WOMEN

          Special attention should be paid identifying HIV+ women and engaging
          them in routine care in order to promote treatment including, but not
          limited to, antiretroviral therapy during pregnancy.

                                  Page 11 of 11

<PAGE>

                      ATTACHMENT D - QUALITY ASSURANCE AND
                             UTILIZATION MANAGEMENT

A.   QUALITY OF CARE

     1.   IN GENERAL

          The CONTRACTOR will establish a written quality assurance plan, an
          annual quality improvement work plan, and a plan for utilization
          management for covered services. All plans should show evidence of a
          well defined, organized program designed to improve client care, to
          monitor over utilization and under utilization, and to identify and
          correct aberrant provider behavior. Prior to the effective date of the
          Contract, all plans must be reviewed by the DEPARTMENT.

     2.   REQUIRED ELEMENTS OF PLANS

          Together, all plans will:

          a.   Show systematic surveillance and assessment of all modes of
               delivery by appropriate health professionals;

          b.   Show mechanisms and/or designation of individuals with specific
               responsibility to resolve identified problems;

          c.   Provide for monitoring to assure that resolution is achieved and
               maintained with documentary evidence of same;

          d.   Require use of written, clinically sound criteria to enhance
               client services and assure sound clinical performance by health
               care deliveries;

          e.   Result in identification of important client service problems or
               potential problems including utilization of service patterns by
               provider and recipient;

          f.   Monitor the effectiveness of the client grievance process; and

          g.   Be in accordance with the Code of Federal Regulations, Title 42,
               and the Utah State Title XIX Plan. Adherence to the points and
               conditions of Attachment D will assure compliance with this
               requirement unless modified by addendum to this attachment for
               specific services.

B.   INTERNAL MONITORING

     1.   IN GENERAL
          In   order to assess medical necessity, appropriateness, quality of
          care, and timeliness of service, the CONTRACTOR will monitor
          services to all Enrollees in accordance with the CONTRACTOR's
          written quality assurance plans.

                                   Page 1 of 6

<PAGE>

     2.   ELEMENTS OF INTERNAL QUALITY ASSURANCE PLAN

          The CONTRACTOR will provide for an internal quality assurance plan
          that:

          a.   Is consistent with the utilization control requirement of part
               456 of 42 CFR;

          b.   Provides for review by appropriate health professionals of the
               process followed in providing health services;

          c.   Provides for systematic data collection of performance and
               patient results;

          d.   Provides for interpretation of this data to the practitioners;
               and

          e.   Provides for making needed changes.

     3.   DEMONSTRATION OF HIGH QUALITY HEALTH CARE

          Provision of high-quality health care services will be demonstrated
          by:

          a.   Adequate and appropriate diagnostic procedures;

          b.   Treatment necessary and relevant to the working diagnosis;

          c.   Appropriate consultation(s);

          d.   Patient compliance with treatment;

          e.   Continuity of care with adequate transfer of information between
               health care providers;

          f.   Appropriate, accurate, and complete client records;

          g.   Patient satisfaction;

          h.   Accessibility and availability of services including Emergency
               Services;

          i.   Patient instruction in self-care, prevention and the use of
               medications and therapies.

          j.   The utilization of the least invasive and most cost-effective
               resources when possible;

          k.   The use of ancillary services consistent with patients' needs;
               and

          l.   Conducting Enrollee satisfaction surveys at least annually.

                                   Page 2 of 6

<PAGE>

C.   QUALITY ASSURANCE MONITORING

     1.   OBJECTIVE

          The objective of the quality assurance monitoring process is to ensure
          compliance to State and Federal policies, rules and regulations;
          adherence to community standards; and integrity of Medicaid payments
          made for medical services provided to eligible recipients under the
          CONTRACTOR.

     2.   MONITORING OF PROVIDERS AND RECIPIENTS NECESSARY TO ACHIEVE OBJECTIVE

          a.   The CONTRACTOR will report all cases of program abuse or
               suspected abusive or fraudulent behavior by either providers or
               recipients.

          b.   The CONTRACTOR will inform the DEPARTMENT in writing when a
               provider is removed from the CONTRACTOR's panel for reasons
               relating to quality of care concerns.

          c.   The CONTRACTOR will take appropriate, effective and coordinated
               action on all such information.

          d.   The CONTRACTOR will make reasonable efforts, pursuant to the
               CONTRACTOR's standard procedures, to correct the behavior of
               providers or recipients violating program regulations or
               exhibiting inappropriate program utilization;

          e.   Report to the DEPARTMENT, in writing, any providers or recipients
               who fail to correct aberrant practices and continue to abuse the
               program;

          f.   Ensure that funds do not continue to be disbursed in the presence
               of evidence indicating such practices; and

          g.   Attempt to recover any funds improperly disbursed, as a result of
               such practices.

D.   THE DEPARTMENT'S QUALITY ASSURANCE MONITORING PLAN

     The DEPARTMENT will review the CONTRACTOR for compliance to standards
     defined in the Division of Health Care Financing's MCO Quality Assurance
     Monitoring Plan (Attachment G).

E.   CORRECTIVE ACTION

     1.   WHEN CORRECTIVE ACTIONS ARE NECESSARY

          The CONTRACTOR agrees to implement corrective action as specified by
          the DEPARTMENT when quality assurance monitoring including but not
          limited to site reviews, CONTRACTOR documentation reviews, data
          analysis, medical audits, or complaints/grievances, determines the
          need for such corrective action. In addition, if the

                                   Page 3 of 6

<PAGE>

          DEPARTMENT determines that the CONTRACTOR has not provided services in
          accordance with the Contract or within expected professional
          standards, the DEPARTMENT will request in writing that the CONTRACTOR
          correct deficiencies or identified problems by developing a corrective
          action plan.

     2.   INITIAL RESPONSE BY CONTRACTOR

          The CONTRACTOR has 20 working days from the date the DEPARTMENT mails,
          through certified mail, its written request for the CONTRACTOR to
          respond to the problems identified and will either

          a.   submit a corrective action plan,

          b.   submit a letter summarizing the CONTRACTOR's disagreements with
               the DEPARTMENT's findings, or

          c.   request, in writing, an extension of the 20-day time frame. The
               CONTRACTOR may only request an extension if it determines it will
               conduct a medical records review or there are other extenuating
               circumstances.

          If the CONTRACTOR fails to respond in one of the above ways, the
          CONTRACTOR will be subject the following sanction:

               A $500 penalty for each working day, beginning on the
               first day after the 20-day time period has expired, and
               continuing until the day a corrective action plan is
               submitted to the DEPARTMENT.

     3.   SUBMISSION OF CORRECTIVE ACTION TO DEPARTMENT

          a.   ACCEPTANCE OF CORRECTIVE ACTION PLAN

               If the CONTRACTOR submits a corrective action plan to the
               DEPARTMENT within 20 working days (or other agreed upon time
               frame) and the DEPARTMENT accepts the corrective action plan, the
               DEPARTMENT will send written notice to the CONTRACTOR officially
               approving the corrective action plan.

          b.   WHEN CORRECTIVE ACTION PLAN REQUIRES REVISIONS

               If the CONTRACTOR submits a corrective action plan, but the
               DEPARTMENT determines the corrective action plan requires
               revisions, the CONTRACTOR will have 20 working days to submit a
               revised plan from the date the DEPARTMENT mails, through
               certified mail, the request for a revised plan. The DEPARTMENT's
               letter will state the specific revisions to be made in the
               corrective action plan.

               If the CONTRACTOR is unable or unwilling to submit to the
               DEPARTMENT within the established time frame, a revised
               corrective action plan containing the

                                   Page 4 of 6

<PAGE>

               DEPARTMENT's requested revisions, the CONTRACTOR will be subject
               to the following sanction:

                    A $500 penalty for each working day, beginning on
                    the first day after the 20-day time period has
                    expired, and continuing until the day a corrective
                    action plan is submitted to the DEPARTMENT.

     4.   INITIAL APPEAL OF DEPARTMENT'S FINDINGS

          If the CONTRACTOR disagrees with the DEPARTMENT's findings and wishes
          to appeal those findings, the CONTRACTOR will submit in writing to the
          DEPARTMENT within the established time frame a detailed explanation of
          the disagreement. If the DEPARTMENT agrees with the CONTRACTOR, the
          DEPARTMENT will provide written notification of its decision and will
          withdraw the request for a corrective action plan.

          If the DEPARTMENT upholds its request for a corrective plan, the
          CONTRACTOR has 20 days from the date the DEPARTMENT mails, through
          certified mail, a letter upholding its request for a corrective action
          plan to submit a corrective action plan. If the CONTRACTOR does not
          submit a corrective action plan within that time frame, the CONTRACTOR
          will be subject to the following sanction:

               A $500 penalty for each working day, beginning on the
               first day after the 20-day time period has expired, and
               continuing until the day a corrective action plan is
               submitted.

     5.   FORMAL HEARING

          If the DEPARTMENT upholds its decision that a corrective action plan
          is required, the CONTRACTOR may file a request for a formal hearing
          with the DEPARTMENT within 30 days from the date the DEPARTMENT mails,
          through certified mail, a letter upholding its decision. If the $500
          penalty has begun, it will discontinue once the DEPARTMENT receives
          the formal hearing request from the CONTRACTOR.

          If the outcome of the formal hearing is in favor of the CONTRACTOR,
          the DEPARTMENT will provide the CONTRACTOR with written notification
          that a corrective action plan is no longer required. The DEPARTMENT
          will reimburse the CONTRACTOR any penalties the CONTRACTOR has paid to
          the DEPARTMENT that accrued beginning on day 21 from the date the
          DEPARTMENT mails, through certified mail, the request for a corrective
          action plan and ending on the day the request for a formal hearing is
          received by the DEPARTMENT.

          If the outcome of the formal hearing is in favor of the DEPARTMENT,
          the CONTRACTOR will submit a corrective action plan, as determined by
          the formal hearing decision, within 20 days of the date of the hearing
          decision, otherwise the CONTRACTOR will be subject to the following
          sanction:

                                   Page 5 of 6

<PAGE>

               A $500 penalty for each working day, beginning on the
               first day after the 20-day time period has expired, and
               continuing until the day a corrective action plan that
               complies with the formal hearing decision is submitted
               to the DEPARTMENT. If the DEPARTMENT determines that
               the corrective action plan requires revisions, the
               CONTRACTOR will again be subject to a S500 penalty for
               each working day beginning on the first day after the
               DEPARTMENT verbally notifies the CONTRACTOR that the
               corrective action plan requires revisions and
               continuing until the day the DEPARTMENT receives the
               corrective action plan containing the DEPARTMENT's
               required revisions.

     6.   CONTRACTOR UNWILLING OR UNABLE TO IMPLEMENT CORRECTIVE ACTION PLAN

          If the CONTRACTOR is unwilling or unable to implement the corrective
          action plan to the satisfaction of the DEPARTMENT, the CONTRACTOR will
          be subject to the following sanction:

               A $500 penalty for each working day, beginning on the
               first day after the DEPARTMENT verbally notifies the
               CONTRACTOR that the corrective action plan has not been
               implemented, and continuing until the day the
               CONTRACTOR successfully demonstrates to the DEPARTMENT
               that it has implemented the plan. Following the
               DEPARTMENT's verbal notification, the DEPARTMENT will
               mail, through certified mail, a letter stating the
               penalty has been invoked.

          The CONTRACTOR will be apprized of its right to request a formal
          hearing. If the CONTRACTOR decides to formally appeal the DEPARTMENT's
          decision that the corrective action plan has not been implemented,
          then the procedures detailed in number 2 above apply. If the outcome
          of the formal hearing is in favor of the DEPARTMENT, penalties will
          resume on the date of the formal hearing decision and continue until
          the CONTRACTOR complies with the decision of the formal hearing.

     7.   COLLECTION OF FINANCIAL PENALTIES

          The DEPARTMENT may deduct any financial penalties assessed by the
          DEPARTMENT from the monthly payment to the CONTRACTOR.

F.   FEDERAL SANCTIONS FOR COMPREHENSIVE CONTRACTS

     Per 42 CFR 434.22, payments made to the CONTRACTOR by the DEPARTMENT under
     this Contract will be denied for new Enrollees when, and for so long as,
     payment for those Enrollees are denied by the Health Care Financing
     Administration for the reasons and the manner specified under 42 CFR
     434.67(e).

                                   Page 6 of 6

<PAGE>

<TABLE>
<S>                         <C>                                                <C>                                    <C>
PROVIDER NAME:              ________________________________________________       ATTACHMENT E                       ATTACHMENT E
SERVICE REPORTING PERIOD:     BEGINNING_______________  ENDING  ____________    TABLE 1 PAGE 1 OF 1                        TABLE 1
PAYMENT DATES:                BEGINNING_______________  ENDING  ____________   MEDICAID ENROLLMENT                    Page 1 of 15
</TABLE>

<TABLE>
<CAPTION>
  1         2          3          4           5           6           7         8       9         10       11      12       13
----------------------------------------------------------------------------------------------------------------------------------
                                 AFDC                    AFDC
                                 MALE                   FEMALE
 LINE               INFANTS      LESS                    LESS
                                 THAN        AFDC        THAN
                                21 YEARS     MALE       21 YEARS                                                        NON AFDC
                                GREATER                  GREATER    AFDC                                  MED     MED   PREGNANT
                                 THAN                      THAN     FEMALE           DISABLED  DISABLED   NEEDY   NEEDY   FEMALE
  NO      MONTH     0-12 MOS    12 MOS    21 + YEARS     12 MOS   21 + YEARS   AGED    MALE     FEMALE    CHILD   OTHER  (SOBRA)
----------------------------------------------------------------------------------------------------------------------------------
 <S>    <C>                <C>         <C>         <C>         <C>         <C>    <C>       <C>       <C>     <C>     <C>       <C>
  1     JULY
----------------------------------------------------------------------------------------------------------------------------------
  2     AUGUST
----------------------------------------------------------------------------------------------------------------------------------
  3     SEPTEMBER
----------------------------------------------------------------------------------------------------------------------------------
  4     OCTOBER
----------------------------------------------------------------------------------------------------------------------------------
  5     NOVEMBER
----------------------------------------------------------------------------------------------------------------------------------
  6     DECEMBER
----------------------------------------------------------------------------------------------------------------------------------
  7     JANUARY
----------------------------------------------------------------------------------------------------------------------------------
  8     FEBRUARY
----------------------------------------------------------------------------------------------------------------------------------
  9     MARCH
----------------------------------------------------------------------------------------------------------------------------------
 10     APRIL
----------------------------------------------------------------------------------------------------------------------------------
 11     MAY
----------------------------------------------------------------------------------------------------------------------------------
 12     JUNE
----------------------------------------------------------------------------------------------------------------------------------
 13     TOTAL              0           0           0           0           0      0         0         0       0       0         0
----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
  1         2            14          15           16
------------------------------------------------------------
                                               MEDICAID
                                                 TOTAL
 LINE                RESTRICTION             (SUM OF COLS
  NO      MONTH        CLIENTS      AIDS       3 THRU 15)
------------------------------------------------------------
 <S>    <C>                    <C>     <C>               <C>
  1     JULY                                             0
------------------------------------------------------------
  2     AUGUST                                           0
------------------------------------------------------------
  3     SEPTEMBER                                        0
------------------------------------------------------------
  4     OCTOBER                                          0
------------------------------------------------------------
  5     NOVEMBER                                         0
------------------------------------------------------------
  6     DECEMBER                                         0
------------------------------------------------------------
  7     JANUARY                                          0
------------------------------------------------------------
  8     FEBRUARY                                         0
------------------------------------------------------------
  9     MARCH                                            0
------------------------------------------------------------
 10     APRIL                                            0
------------------------------------------------------------
 11     MAY                                              0
------------------------------------------------------------
 12     JUNE                                             0
------------------------------------------------------------
 13     TOTAL                  0       0                 0
------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<S>                         <C>                                                 <C>                                   <C>
PROVIDER NAME:              ________________________________________________       ATTACHMENT E                       ATTACHMENT E
SERVICE REPORTING PERIOD:     BEGINNING_______________  ENDING  ____________    TABLE 2 PAGE 1 OF 2                        TABLE 2
PAYMENT DATES:                BEGINNING_______________  ENDING  ____________    REVENUES AND COST                     Page 2 of 15
</TABLE>

<TABLE>
<CAPTION>
                                              ----------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-----------------
  1                  2                          3             4            5             6            7            8          9
------------------------------------------------------------------------------------------------------------------------------------
                                            TOTAL UTAH                     AFDC                      AFDC
                                            OPERATIONS                     MALE                     FEMALE
                                                                           LESS                      LESS
                                                                           THAN                      THAN
LINE                                        (INCLUDING     INFANTS      21 YEARS                   21 YEARS
                                                                         GREATER       AFDC         GREATER       AFDC
                                                                           THAN        MALE           THAN       FEMALE
 NO              DESCRIPTION               ALL MEDICAID)   0-12 MOS      12 MOS      21 + YEARS     12 MOS     21 + YEARS    AGED
------------------------------------------------------------------------------------------------------------------------------------
               REVENUES                                                  ROUND TO THE NEAREST DOLLAR
------------------------------------------------------------------------------------------------------------------------------------
 <S>  <C>                                            <C>         <C>           <C>          <C>          <C>          <C>      <C>
------------------------------------------------------------------------------------------------------------------------------------
 1    PREMIUMS
------------------------------------------------------------------------------------------------------------------------------------
 2    DELIVERY FEES (CHILD BIRTH)
------------------------------------------------------------------------------------------------------------------------------------
 3    REINSURANCE
------------------------------------------------------------------------------------------------------------------------------------
 4    STOP LOSS
------------------------------------------------------------------------------------------------------------------------------------
 5    TPL COLLECTIONS - MEDICARE
------------------------------------------------------------------------------------------------------------------------------------
 6    TPL COLLECTIONS - OTHER
------------------------------------------------------------------------------------------------------------------------------------
 7    OTHER (SPECIFY)
------------------------------------------------------------------------------------------------------------------------------------
 8    OTHER (SPECIFY)
------------------------------------------------------------------------------------------------------------------------------------
 9    TOTAL REVENUES                                 $ 0         $ 0           $ 0          $ 0          $ 0          $ 0      $ 0
------------------------------------------------------------------------------------------------------------------------------------
            MEDICAL COSTS                                                ROUND TO THE NEAREST DOLLAR
------------------------------------------------------------------------------------------------------------------------------------
 10   INPATIENT HOSPITAL SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 11   OUTPATIENT HOSPITAL SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 12   EMERGENCY DEPARTMENT SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 13   PRIMARY CARE PHYSICIAN SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 14   SPECIALTY CARE PHYSICIAN SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 15   ADULT SCREENING SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 16   VISION CARE - OPTOMETRIC SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 17   VISION CARE - OPTICAL SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 18   LABORATORY (PATHOLOGY) SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 19   RADIOLOGY SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 20   PHYSICAL AND OCCUPATIONAL THERAPY
------------------------------------------------------------------------------------------------------------------------------------
 21   SPEECH AND HEARING SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 22   PODIATRY SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 23   END STAGE RENAL DISEASE
       (ESRD) SERVICES-DIALYSIS
------------------------------------------------------------------------------------------------------------------------------------
 24   HOME HEALTH SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 25   HOSPICE SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 26   PRIVATE DUTY NURSING
------------------------------------------------------------------------------------------------------------------------------------
 27   MEDICAL SUPPLIES AND MEDICAL
       EQUIPMENT
------------------------------------------------------------------------------------------------------------------------------------
 28   ABORTIONS
------------------------------------------------------------------------------------------------------------------------------------
 29   STERILIZATIONS
------------------------------------------------------------------------------------------------------------------------------------
 30   DETOXIFICATION
------------------------------------------------------------------------------------------------------------------------------------
 31   ORGAN TRANSPLANTS
------------------------------------------------------------------------------------------------------------------------------------
 32   OTHER OUTSIDE MEDICAL SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 33   LONG TERM CARE
------------------------------------------------------------------------------------------------------------------------------------
 34   TRANSPORTATION SERVICES
------------------------------------------------------------------------------------------------------------------------------------
 35   OTHER (SPECIFY)
------------------------------------------------------------------------------------------------------------------------------------
 36   TOTAL MEDICAL COSTS                            $ 0         $ 0           $ 0          $ 0          $ 0          $ 0      $ 0
------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>

                                              ----------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-----------------
                                              10         11        12      13        14          15           16           17
----------------------------------------------------------------------------------------------------------------------------------
                                                                                  NON AFDC                              MEDICAID
                                                                   MED     MED    PREGNANT                                TOTAL
LINE                                        DISABLED   DISABLED   NEEDY   NEEDY    FEMALE    RESTRICTION              (SUM OF COLS
 NO              DESCRIPTION                  MALE      FEMALE    CHILD   OTHER   (SOBRA)      CLIENTS       AIDS       4 THRU 16)
----------------------------------------------------------------------------------------------------------------------------------
                 REVENUES                                                ROUND TO THE NEAREST DOLLAR
----------------------------------------------------------------------------------------------------------------------------------
 <S>  <C>                                        <C>        <C>     <C>     <C>        <C>            <C>      <C>             <C>
 1    PREMIUMS                                                                                                                 $ 0
----------------------------------------------------------------------------------------------------------------------------------
 2    DELIVERY FEES (CHILD BIRTH)                                                                                              $ 0
----------------------------------------------------------------------------------------------------------------------------------
 3    REINSURANCE                                                                                                              $ 0
----------------------------------------------------------------------------------------------------------------------------------
 4    STOP LOSS                                                                                                                $ 0
----------------------------------------------------------------------------------------------------------------------------------
 5    TPL COLLECTIONS - MEDICARE                                                                                               $ 0
----------------------------------------------------------------------------------------------------------------------------------
 6    TPL COLLECTIONS - OTHER                                                                                                  $ 0
----------------------------------------------------------------------------------------------------------------------------------
 7    OTHER (SPECIFY)                                                                                                          $ 0
----------------------------------------------------------------------------------------------------------------------------------
 8    OTHER (SPECIFY)                                                                                                          $ 0
----------------------------------------------------------------------------------------------------------------------------------
 9    TOTAL REVENUES                             $ 0        $ 0     $ 0     $ 0        $ 0            $ 0      $ 0             $ 0
----------------------------------------------------------------------------------------------------------------------------------
              MEDICAL COSTS                                              ROUND TO THE NEAREST DOLLAR
----------------------------------------------------------------------------------------------------------------------------------
 10   INPATIENT HOSPITAL SERVICES                                                                                              $ 0
----------------------------------------------------------------------------------------------------------------------------------
 11   OUTPATIENT HOSPITAL SERVICES                                                                                             $ 0
----------------------------------------------------------------------------------------------------------------------------------
 12   EMERGENCY DEPARTMENT SERVICES                                                                                            $ 0
----------------------------------------------------------------------------------------------------------------------------------
 13   PRIMARY CARE PHYSICIAN SERVICES                                                                                          $ 0
----------------------------------------------------------------------------------------------------------------------------------
 14   SPECIALTY CARE PHYSICIAN SERVICES                                                                                        $ 0
----------------------------------------------------------------------------------------------------------------------------------
 15   ADULT SCREENING SERVICES                                                                                                 $ 0
----------------------------------------------------------------------------------------------------------------------------------
 16   VISION CARE - OPTOMETRIC SERVICES                                                                                        $ 0
----------------------------------------------------------------------------------------------------------------------------------
 17   VISION CARE - OPTICAL SERVICES                                                                                           $ 0
----------------------------------------------------------------------------------------------------------------------------------
 18   LABORATORY (PATHOLOGY) SERVICES                                                                                          $ 0
----------------------------------------------------------------------------------------------------------------------------------
 19   RADIOLOGY SERVICES                                                                                                       $ 0
----------------------------------------------------------------------------------------------------------------------------------
 20   PHYSICAL AND OCCUPATIONAL THERAPY                                                                                        $ 0
----------------------------------------------------------------------------------------------------------------------------------
 21   SPEECH AND HEARING SERVICES                                                                                              $ 0
----------------------------------------------------------------------------------------------------------------------------------
 22   PODIATRY SERVICES                                                                                                        $ 0
----------------------------------------------------------------------------------------------------------------------------------
 23   END STAGE RENAL DISEASE
       (ESRD) SERVICES-DIALYSIS                                                                                                $ 0
----------------------------------------------------------------------------------------------------------------------------------
 24   HOME HEALTH SERVICES                                                                                                     $ 0
----------------------------------------------------------------------------------------------------------------------------------
 25   HOSPICE SERVICES                                                                                                         $ 0
----------------------------------------------------------------------------------------------------------------------------------
 26   PRIVATE DUTY NURSING                                                                                                     $ 0
----------------------------------------------------------------------------------------------------------------------------------
 27   MEDICAL SUPPLIES AND MEDICAL
       EQUIPMENT                                                                                                               $ 0
----------------------------------------------------------------------------------------------------------------------------------
 28   ABORTIONS                                                                                                                $ 0
----------------------------------------------------------------------------------------------------------------------------------
 29   STERILIZATIONS                                                                                                           $ 0
----------------------------------------------------------------------------------------------------------------------------------
 30   DETOXIFICATION                                                                                                           $ 0
----------------------------------------------------------------------------------------------------------------------------------
 31   ORGAN TRANSPLANTS                                                                                                        $ 0
----------------------------------------------------------------------------------------------------------------------------------
 32   OTHER OUTSIDE MEDICAL SERVICES                                                                                           $ 0
----------------------------------------------------------------------------------------------------------------------------------
 33   LONG TERM CARE                                                                                                           $ 0
----------------------------------------------------------------------------------------------------------------------------------
 34   TRANSPORTATION SERVICES                                                                                                  $ 0
----------------------------------------------------------------------------------------------------------------------------------
 35   OTHER (SPECIFY)                                                                                                          $ 0
----------------------------------------------------------------------------------------------------------------------------------
 36   TOTAL MEDICAL COSTS                        $ 0        $ 0     $ 0     $ 0        $ 0            $ 0      $ 0             $ 0
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<S>                                                                             <C>                                 <C>
PROVIDER NAME:                                                      ATTACHMENT E                                    ATTACHMENT E

SERVICE REPORTING PERIOD:                                        TABLE 2 PAGE 2 OF 2                                     TABLE 2

PAYMENT DATES:                                                   REVENUES AND COST                                  Page 3 of 15
</TABLE>

<TABLE>
<CAPTION>

                                              ----------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-----------------
  1                   2                         3             4            5             6            7            8          9
----------------------------------------------------------------------------------------------------------------------------------
                                            TOTAL UTAH                     AFDC                       AFDC
                                            OPERATIONS                     MALE                      FEMALE
                                                                           LESS                       LESS
                                                                           THAN                       THAN
LINE                                        (INCLUDING     INFANTS       21 YEARS                   21 YEARS
                                                                          GREATER       AFDC         GREATER      AFDC
                                                                            THAN        MALE           THAN      FEMALE
 NO              DESCRIPTION               ALL MEDICAID)   0-12 MOS       12 MOS     21 + YEARS      12 MOS     21 + YEARS    AGED
----------------------------------------------------------------------------------------------------------------------------------
            ADMINISTRATIVE COSTS                                         ROUND TO THE NEAREST DOLLAR
----------------------------------------------------------------------------------------------------------------------------------
 <S>                                                 <C>         <C>           <C>          <C>          <C>          <C>      <C>

----------------------------------------------------------------------------------------------------------------------------------
 37   ADMINISTRATION - ADVERTISING
----------------------------------------------------------------------------------------------------------------------------------
 38   HOME OFFICE INDIRECT COST
       ALLOCATIONS
----------------------------------------------------------------------------------------------------------------------------------
 39   UTILIZATION
----------------------------------------------------------------------------------------------------------------------------------
 40   ADMINISTRATION - OTHER
----------------------------------------------------------------------------------------------------------------------------------
 41   TOTAL ADMINISTRATIVE COSTS                     $ 0         $ 0           $ 0          $ 0          $ 0          $ 0      $ 0
----------------------------------------------------------------------------------------------------------------------------------
 42   TOTAL COSTS (MED & ADMIN)                      $ 0         $ 0           $ 0          $ 0          $ 0          $ 0      $ 0
----------------------------------------------------------------------------------------------------------------------------------
 43   NET INCOME [Gain or (Loss)]                    $ 0         $ 0           $ 0          $ 0          $ 0          $ 0      $ 0
----------------------------------------------------------------------------------------------------------------------------------
 44   ENROLLEE MONTHS                                              0             0            0            0            0        0
----------------------------------------------------------------------------------------------------------------------------------
 45   MEDICAL COST @ ENROLLEE MO
0----------------------------------------------------------------------------------------------------------------------------------
 46   ADMIN COST @ ENROLLEE MO
----------------------------------------------------------------------------------------------------------------------------------
 47   TOTAL COST @ ENROLLEE MO
----------------------------------------------------------------------------------------------------------------------------------
               OTHER DATA
------------------------------------------                ------------------------------------------------------------------------
 48   TPL SAVINGS - COST AVOIDANCE **
------------------------------------------                ------------------------------------------------------------------------
 49   DUPLICATE PREMIUMS ***
------------------------------------------                ------------------------------------------------------------------------
 50   NUMBER OF DELIVERIES ****
------------------------------------------                ------------------------------------------------------------------------
 51   FAMILY PLANNING SERVICES
------------------------------------------                ------------------------------------------------------------------------
 52   REINSURANCE PREMIUMS RECEIVED
------------------------------------------                ------------------------------------------------------------------------
 53   REINSURANCE PREMIUMS PAID
------------------------------------------                ------------------------------------------------------------------------
 54   ADMINISTRATIVE REVENUE
       RETAINED BY THE CONTRACTOR
------------------------------------------                ------------------------------------------------------------------------

<CAPTION>

                                              ----------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-----------------
                                              10         11        12      13        14          15           16           17
----------------------------------------------------------------------------------------------------------------------------------
                                                                                  NON AFDC                              MEDICAID
                                                                   MED     MED    PREGNANT                                TOTAL
LINE                                        DISABLED   DISABLED   NEEDY   NEEDY    FEMALE    RESTRICTION              (SUM OF COLS
 NO              DESCRIPTION                  MALE      FEMALE    CHILD   OTHER   (SOBRA)      CLIENTS       AIDS       4 THRU 16)
----------------------------------------------------------------------------------------------------------------------------------
            ADMINISTRATIVE COSTS                                         ROUND TO THE NEAREST DOLLAR
----------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>        <C>     <C>     <C>        <C>           <C>        <C>            <C>
 37   ADMINISTRATION - ADVERTISING                                                                                             $ 0
----------------------------------------------------------------------------------------------------------------------------------
 38   HOME OFFICE INDIRECT COST
       ALLOCATIONS                                                                                                             $ 0
----------------------------------------------------------------------------------------------------------------------------------
 39   UTILIZATION                                                                                                              $ 0
----------------------------------------------------------------------------------------------------------------------------------
 40   ADMINISTRATION - OTHER                                                                                                   $ 0
----------------------------------------------------------------------------------------------------------------------------------
 41   TOTAL ADMINISTRATIVE COSTS                 $ 0        $ 0     $ 0     $ 0        $ 0           $ 0        $ 0            $ 0
----------------------------------------------------------------------------------------------------------------------------------
 42   TOTAL COSTS (MED & ADMIN)                  $ 0        $ 0     $ 0     $ 0        $ 0           $ 0        $ 0            $ 0
----------------------------------------------------------------------------------------------------------------------------------
 43   NET INCOME [Gain or (Loss)]                $ 0        $ 0     $ 0     $ 0        $ 0           $ 0        $ 0            $ 0
----------------------------------------------------------------------------------------------------------------------------------
 44   ENROLLEE MONTHS                              0          0       0       0          0             0          0              0
----------------------------------------------------------------------------------------------------------------------------------
 45   MEDICAL COST @ ENROLLEE MO
----------------------------------------------------------------------------------------------------------------------------------
 46   ADMIN COST @ ENROLLEE MO
----------------------------------------------------------------------------------------------------------------------------------
 47   TOTAL COST @ ENROLLEE MO
----------------------------------------------------------------------------------------------------------------------------------
               OTHER DATA
----------------------------------------------------------------------------------------------------------------------------------
 48   TPL SAVINGS - COST AVOIDANCE **                                                                                          $ 0
----------------------------------------------------------------------------------------------------------------------------------
 49   DUPLICATE PREMIUMS ***                                                                                                   $ 0
----------------------------------------------------------------------------------------------------------------------------------
 50   NUMBER OF DELIVERIES ****                                                                                                  0
----------------------------------------------------------------------------------------------------------------------------------
 51   FAMILY PLANNING SERVICES                                                                                                 $ 0
----------------------------------------------------------------------------------------------------------------------------------
 52   REINSURANCE PREMIUMS RECEIVED                                                                                            $ 0
----------------------------------------------------------------------------------------------------------------------------------
 53   REINSURANCE PREMIUMS PAID                                                                                                $ 0
----------------------------------------------------------------------------------------------------------------------------------
 54   ADMINISTRATIVE REVENUE
       RETAINED BY THE CONTRACTOR                                                                                              $ 0
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

**   COST OF SERVICES PROVIDED TO HMO CLIENTS, NOT PAID FOR BY HMO,
     E.G."AVOIDED", BECAUSE OTHER INSURANCE PAID FOR IT.
***  CASH AMOUNT RETURNED TO MEDICAID BY HMO BECAUSE HMO CLIENT WAS
     COVERED IN THE SAME HMO BY ANOTHER CARRIER.
**** NUMBER OF CHILDREN DELIVERED. THIS NUMBER TIMES RATES SHOULD EQUAL
     DELIVERY REVENUE.

     In this Medicaid portion, include only costs for Medicaid clients under the
     capitation agreement - exclude revenue, costs & TPL categories per this
     form that do not apply to your organization or contract.

<PAGE>

                                                                    Attachment E
                                                                    Page 4 of 15

            MEDICAL SERVICES REVENUE AND COST DEFINITIONS FOR TABLE 2

REVENUES (Report all revenues received or receivable at the end-of-period date
on the form)

1.   Premiums

     Report premium payments received or receivable from the DEPARTMENT.

2.   Delivery Fees

     Report the delivery fee received or receivable from the DEPARTMENT.

3.   Reinsurance

     Report the reinsurance payments received or receivable from the REINSURANCE
     CARRIER (See Attachment F, Section D, Items 1 and 2).

4.   Stop Loss

     Report stop loss payments received or receivable from the DEPARTMENT (See
     Attachment F, Section D, Item 2).

5.   TPL Collections - Medicare

     Report all third party collections received from Medicare.

6.   TPL Collections - Other

     Report all third party collections received other than Medicare
     collections. (Report TPL savings because of cost avoidance as a memo amount
     on line 48).

7.   Other (specify)

8.   Other (specify)

     For lines seven and eight: Report all other revenue not included in lines
     one through six. (There may not be any amount to report; however, this line
     can be used to report revenue from total Utah operations that do not fit
     lines one through six.)

9.   TOTAL REVENUES

     Total lines one through eight.

NOTE: Duplicate premiums are not considered a cost or revenue as they are
collected by the CONTRACTOR and paid to the DEPARTMENT. Therefore, the payment
to the DEPARTMENT would reduce or offset the revenue recorded when the duplicate
premium was received. However, line 49 has been established for reporting
duplicate premiums as a memo amount.

<PAGE>

                                                                    Attachment E
                                                                    Page 5 of 15

MEDICAL COSTS: Report all costs accrued as of the ending date on the form. In
the first data column (column 3), report all costs for Utah operations per the
general ledger. In the 14 Medicaid data columns (columns 4 through 17), report
only costs for Medicaid Enrollees.

10.  Inpatient Hospital Services

     Costs incurred in providing inpatient hospital services to Enrollees
     confined to a hospital.

11.  Outpatient Hospital Services

     Costs incurred in providing outpatient hospital services to Enrollees, not
     including services provided in the emergency department.

12.  Emergency Department Services

     Costs incurred in providing outpatient hospital emergency room services to
     Enrollees.

13.  Primary Care Physician Services (Including EPSDT Services, Prenatal Care,
     and Family Planning Services)

     All costs incurred for Enrollees as a result of providing primary care
     physician, osteopath, physician assistant, nurse practitioner, and nurse
     midwife services, including payroll expenses, any capitation and/or
     contract payments, fee-for-service payments, fringe benefits, travel and
     office supplies.

14.  Specialty Care Physician Services (Including EPSDT Services, Prenatal Care,
     and Family Planning Services)

     All costs incurred as a result of providing specialty care physician,
     osteopath, physician assistant, nurse practitioner, and nurse midwife
     services to Enrollees, including payroll expenses, any capitation and/or
     contract payments, fee-for-service payments, fringe benefits, travel and
     office supplies.

15.  Adult Screening Services

     Expenses associated with providing screening services to Enrollees.

16.  Vision Care - Optometric Services

     Included are payroll costs, any capitation and/or contract payments, and
     fee-for-service payments for services and procedures performed by an
     optometrist and other non-payroll expenses directly related to providing
     optometric services for Enrollees.

17.  Vision Care - Optical Services

     Included are payroll costs, any capitation and/or contract payments and
     fee-for-service payments for services and procedures performed by an
     optician and other supportive staff, cost of eyeglass frames and lenses and
     other non-payroll expenses directly related to providing optical services
     for Enrollees.

<PAGE>

                                                                    Attachment E
                                                                    Page 6 of 15

18.  Laboratory (Pathology) Services

     Costs incurred as a result of providing pathological tests or services to
     Enrollees including payroll expenses, any capitation and/or contract
     payments, fee-for-service payments and other expenses directly related to
     in-house laboratory services. Excluded are costs associated with a hospital
     visit.

19.  Radiology Services

     Cost incurred in providing x-ray services to Enrollees, including x-ray
     payroll expenses, any capitation and/or contract payments, fee-for-service
     payments, and occupancy overhead costs. Excluded are costs associated with
     a hospital visit.

20.  Physical and Occupational Therapy

     Included are payroll costs, any capitation and/or contract payments,
     fee-for-service costs, and other non-payroll expenditures directly related
     to providing physical and occupational therapy services.

21.  Speech and Hearing Services

     Payroll costs, any capitation and/or contract payments, fee-for-service
     payments, and non-payroll costs directly related to providing speech and
     hearing services for Enrollees.

22.  Podiatry Services

     Salary expenses or outside claims, capitation and/or contract payments,
     fee-for-service payments, and non-payroll costs directly related to
     providing services rendered by a podiatrist to Enrollees.

23.  End Stage Renal Disease (ESRD) Services - Dialysis

     Costs incurred in providing renal dialysis (ESRD) services to Enrollees.

24.  Home Health Services

     Included are payroll costs, any capitation and/or contract payments,
     fee-for-service payments, and other non-payroll expenses directly related
     to providing home health services for Enrollees.

25.  Hospice Services

     Expenses related to hospice care for Enrollees including home care, general
     inpatient care for Enrollees suffering terminal illness and inpatient
     respite care for caregivers of Enrollees suffering terminal illness.

26.  Private Duty Nursing

     Expenses associated with private duty nursing for Enrollees.

<PAGE>

                                                                    Attachment E
                                                                    Page 7 of 15

27.  Medical Supplies and Medical Equipment

     This cost center contains fee-for-service cost for outside acquisition of
     medical requisites, special appliances as prescribed by the CONTRACTOR to
     Enrollees.

28.  Abortions

     Medical and hospital costs incurred in providing abortions for Enrollees.

29.  Sterilizations

     Medical and hospital costs incurred in providing sterilizations for
     Enrollees.

30.  Detoxification

     Medical and hospital costs incurred in providing treatment for substance
     abuse and dependency (detoxification) for Enrollees.

31.  Organ Transplants

     Medical and hospital costs incurred in providing transplants for Enrollees.

32.  Other Outside Medical Services

     The costs for specialized testing and outpatient surgical centers for
     Enrollees ordered by the CONTRACTOR.

33.  Long Term Care

     Costs incurred in providing long-term care for Enrollees required under
     Attachment C.

34.  Transportation Services

     Costs incurred in providing ambulance (ground and air) services for
     Enrollees.

35.  Other

     Report costs not otherwise reported.

36.  TOTAL MEDICAL COSTS

     Total lines 10 through 35.

<PAGE>

                                                                    Attachment E
                                                                    Page 8 of 15

ADMINISTRATIVE COSTS

Report payroll costs, any capitation and/or contract payments, non-payroll costs
and occupancy overhead costs for accounting services, claims processing
services, health plan services, data processing services, purchasing, personnel,
Medicaid marketing and regional administration.

Report the administration cost under four categories - advertising, home office
indirect cost allocation, utilization and all other administrative costs. If
there are no advertising costs or indirect home office cost allocations, report
a zero amount in the applicable lines.

37.  Administration - Advertising

38.  Home Office Indirect Cost Allocations

39.  Utilization

     Payroll cost and any capitation and/or contract payments for utilization
     staff and other non-payroll costs directly associated with controlling and
     monitoring outside physician referral and hospital admission and discharges
     of Enrollees.

40.  Administration - Other

41.  TOTAL ADMINISTRATIVE COSTS

     Total lines 37 through 40.

42.  TOTAL COSTS (Medical and Administrative)

     Total lines 36 and 41.

43.  NET INCOME (Gain or Loss)

     Line 9 minus line 42.

44.  ENROLLEE MONTHS

     Total Enrollee months for period of time being reported.

45.  MEDICAL COSTS PER ENROLLEE MONTH

     Line 36 divided by line 44.

46.  ADMINISTRATIVE COSTS PER ENROLLEE MONTH

     Line 41 divided by line 44.

47.  TOTAL COSTS PER ENROLLEE MONTH

     Line 42 divided by line 44.

<PAGE>

                                                                    Attachment E
                                                                    Page 9 of 15

OTHER DATA

48.  TPL Savings - Cost Avoidance

49.  Duplicate Premiums

     Include all premiums received for Enrollees from all sources other than
     Medicaid.

50.  Number of Deliveries

     Total number of Enrollee deliveries when the delivery occurred at 24 weeks
     or later.

51.  Family Planning Services

     Include costs associated with family planning services as defined in
     Attachment C (Covered Services, Section V, Family Planning Services).

52.  Reinsurance Premiums Received

     Include the reinsurance premiums received or receivable from the
     DEPARTMENT.

53.  Reinsurance Premiums Paid.

     Include reinsurance premiums paid to the REINSURANCE CARRIER.

54.  Administrative Revenue Retained by the CONTRACTOR

     Include the administrative revenue retained by the CONTRACTOR from the
     reinsurance premiums received or receivable from the DEPARTMENT.

<PAGE>

<TABLE>
<S>                         <C>                                                 <C>                                    <C>
PROVIDER NAME:              ______________________________________________        ATTACHMENT E                          ATTACHMENT E

SERVICE REPORTING PERIOD:   BEGINNING_______________  ENDING  ____________      TABLE 3 PAGE 1 OF 1                          TABLE 3

PAYMENT DATES:              BEGINNING_______________  ENDING  ____________         UTILIZATION                         Page 10 of 15
</TABLE>

<TABLE>
<CAPTION>
                                                     -----------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-------------
  1                   2                                    3             4            5           6            7          8
--------------------------------------------------------------------------------------------------------------------------------
                                                                                              AFDC
                                                                   AFDC MALE                  FEMALE
                                                                   LESS THAN                  LESS THAN
                   SERVICE                                         21 YEARS                   21 YEARS
                 DESCRIPTION                                       GREATER                    GREATER         AFDC
 LINE  (REFER TO THE UNIT OF SERVICE)                   INFANTS    THAN           AFDC MALE   THAN           FEMALE
  NO   DEFINITIONS IN THE INSTRUCTIONS)                 0-12 MOS   12 MOS        21 + YEARS   12 MOS        21 + YEARS   AGED
--------------------------------------------------------------------------------------------------------------------------------
 <S>   <C>
   1   HOSPITAL SERVICES - GENERAL DAYS
--------------------------------------------------------------------------------------------------------------------------------
   2   HOSPITAL SERVICES - DISCHARGES
--------------------------------------------------------------------------------------------------------------------------------
   3   HOSPITAL SERVICES - OUTPATIENT VISITS
--------------------------------------------------------------------------------------------------------------------------------
   4   EMERGENCY DEPARTMENT VISITS
--------------------------------------------------------------------------------------------------------------------------------
   5   PRIMARY CARE PHYSICIAN SERVICES
--------------------------------------------------------------------------------------------------------------------------------
   6   SPECIALTY CARE PHYSICIAN SERVICES
--------------------------------------------------------------------------------------------------------------------------------
   7   ADULT SCREENING SERVICES
--------------------------------------------------------------------------------------------------------------------------------
   8   VISION CARE - OPTOMETRIC SERVICES
--------------------------------------------------------------------------------------------------------------------------------
   9   VISION CARE - OPTICAL SERVICES
--------------------------------------------------------------------------------------------------------------------------------
  10   LABORATORY (PATHOLOGY) PROCEDURES
--------------------------------------------------------------------------------------------------------------------------------
  11   RADIOLOGY PROCEDURES
--------------------------------------------------------------------------------------------------------------------------------
  12   PHYSICAL AND OCCUPATIONAL THERAPY SERVICES
--------------------------------------------------------------------------------------------------------------------------------
  13   SPEECH AND HEARING SERVICES
--------------------------------------------------------------------------------------------------------------------------------
  14   PODIATRY SERVICES
--------------------------------------------------------------------------------------------------------------------------------
  15   END STAGE RENAL DISEASE (ESRD) SERVICES - DIALYSIS
--------------------------------------------------------------------------------------------------------------------------------
  16   HOME HEALTH SERVICES
--------------------------------------------------------------------------------------------------------------------------------
  17   HOSPICE DAYS
--------------------------------------------------------------------------------------------------------------------------------
  18   PRIVATE DUTY NURSING SERVICES
--------------------------------------------------------------------------------------------------------------------------------
  19   MEDICAL SUPPLIES AND MEDICAL EQUIPMENT
--------------------------------------------------------------------------------------------------------------------------------
  20   ABORTIONS PROCEDURES
--------------------------------------------------------------------------------------------------------------------------------
  21   STERILIZATION PROCEDURES
--------------------------------------------------------------------------------------------------------------------------------
  22   DETOXIFICATION DAYS
--------------------------------------------------------------------------------------------------------------------------------
  23   ORGAN TRANSPLANTS
--------------------------------------------------------------------------------------------------------------------------------
  24   OTHER OUTSIDE MEDICAL SERVICES
--------------------------------------------------------------------------------------------------------------------------------
  25   LONG TERM CARE FACILITY DAYS
--------------------------------------------------------------------------------------------------------------------------------
  26   TRANSPORTATION TRIPS
--------------------------------------------------------------------------------------------------------------------------------
  27   OTHER (SPECIFY)
--------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                     -----------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-------------
  1                   2                                  9          10        11     12      13         14        15        16
----------------------------------------------------------------------------------------------------------------------------------
                   SERVICE                                                                NON AFDC  RESTRICTION          MEDICAID
                 DESCRIPTION                                                 MED    MED   PREGNANT    CLIENTS             TOTAL
 LINE  (REFER TO THE UNIT OF SERVICE)                 DISABLED   DISABLED   NEEDY  NEEDY   FEMALE   RESTRICTION       (SUM OF COLS
  NO   DEFINITIONS IN THE INSTRUCTIONS)                 MALE      FEMALE    CHILD  OTHER   (SOBRA)    CLIENTS    AIDS   3 THRU 15)
----------------------------------------------------------------------------------------------------------------------------------
 <S>   <C>                                                                                                                       <C>
   1   HOSPITAL SERVICES - GENERAL DAYS                                                                                          0
----------------------------------------------------------------------------------------------------------------------------------
   2   HOSPITAL SERVICES - DISCHARGES                                                                                            0
----------------------------------------------------------------------------------------------------------------------------------
   3   HOSPITAL SERVICES - OUTPATIENT VISITS                                                                                     0
----------------------------------------------------------------------------------------------------------------------------------
   4   EMERGENCY DEPARTMENT VISITS                                                                                               0
----------------------------------------------------------------------------------------------------------------------------------
   5   PRIMARY CARE PHYSICIAN SERVICES                                                                                           0
----------------------------------------------------------------------------------------------------------------------------------
   6   SPECIALTY CARE PHYSICIAN SERVICES                                                                                         0
----------------------------------------------------------------------------------------------------------------------------------
   7   ADULT SCREENING SERVICES                                                                                                  0
----------------------------------------------------------------------------------------------------------------------------------
   8   VISION CARE - OPTOMETRIC SERVICES                                                                                         0
----------------------------------------------------------------------------------------------------------------------------------
   9   VISION CARE - OPTICAL SERVICES                                                                                            0
----------------------------------------------------------------------------------------------------------------------------------
  10   LABORATORY (PATHOLOGY) PROCEDURES                                                                                         0
----------------------------------------------------------------------------------------------------------------------------------
  11   RADIOLOGY PROCEDURES                                                                                                      0
----------------------------------------------------------------------------------------------------------------------------------
  12   PHYSICAL AND OCCUPATIONAL THERAPY SERVICES                                                                                0
----------------------------------------------------------------------------------------------------------------------------------
  13   SPEECH AND HEARING SERVICES                                                                                               0
----------------------------------------------------------------------------------------------------------------------------------
  14   PODIATRY SERVICES                                                                                                         0
----------------------------------------------------------------------------------------------------------------------------------
  15   END STAGE RENAL DISEASE (ESRD) SERVICES -
        DIALYSIS                                                                                                                 0
----------------------------------------------------------------------------------------------------------------------------------
  16   HOME HEALTH SERVICES                                                                                                      0
----------------------------------------------------------------------------------------------------------------------------------
  17   HOSPICE DAYS                                                                                                              0
----------------------------------------------------------------------------------------------------------------------------------
  18   PRIVATE DUTY NURSING SERVICES                                                                                             0
----------------------------------------------------------------------------------------------------------------------------------
  19   MEDICAL SUPPLIES AND MEDICAL EQUIPMENT                                                                                    0
----------------------------------------------------------------------------------------------------------------------------------
  20   ABORTIONS PROCEDURES                                                                                                      0
----------------------------------------------------------------------------------------------------------------------------------
  21   STERILIZATION PROCEDURES                                                                                                  0
----------------------------------------------------------------------------------------------------------------------------------
  22   DETOXIFICATION DAYS                                                                                                       0
----------------------------------------------------------------------------------------------------------------------------------
  23   ORGAN TRANSPLANTS                                                                                                         0
----------------------------------------------------------------------------------------------------------------------------------
  24   OTHER OUTSIDE MEDICAL SERVICES                                                                                            0
----------------------------------------------------------------------------------------------------------------------------------
  25   LONG TERM CARE FACILITY DAYS                                                                                              0
----------------------------------------------------------------------------------------------------------------------------------
  26   TRANSPORTATION TRIPS                                                                                                      0
----------------------------------------------------------------------------------------------------------------------------------
  27   OTHER (SPECIFY)                                                                                                           0
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE: MEDICAL REQUISITIONS HAS BEEN DITCHED!!

                                  ATTACHMENT E
                                     TABLE 3

                                  Page 10 of 15

<PAGE>

                                                                    Attachment E
                                                                   Page 11 of 15

              MEDICAL SERVICES UTILIZATION DEFINITIONS FOR TABLE 3

MEDICAL SERVICES

1.   Hospital Services - General Days

     Record total number of inpatient hospital days associated with inpatient
     medical care.

2.   Hospital Services - Discharges

     Record total number of inpatient hospital discharges.

3.   Hospital Services - Outpatient Visits

     Record total number of outpatient visits.

4.   Emergency Department Visits

     Record total number of emergency room visits

5.   Primary Care Physician Services

     Number of services and procedures defined by CPT-4 codes provided by
     primary care physicians or licensed physician extenders or assistants under
     direct supervision of a physician inclusive of all services except
     radiology, laboratory and injections/immunizations which should be reported
     in their appropriate section. The reporting of data under this category
     includes both outpatient and inpatient services.

6.   Specialty Care Physician Services

     Number of services and procedures defined by CPT-4 codes provided by
     specialty care physicians or licensed physician extenders or assistants
     under direct supervision of a physician inclusive of all services except
     radiology, laboratory and injections/immunizations which should be reported
     in their appropriate section. The reporting of data under this category
     includes both outpatient and inpatient services.

7.   Adult Screening Services

     Number of adult screenings performed.

8.   Vision Care - Optometric Services

     Number of optometric services and procedures performed by an optometrist.

9.   Vision Care - Optical Services

     Number of eye glasses and contact lenses dispensed.

<PAGE>

                                                                    Attachment E
                                                                   Page 12 of 15

10.  Laboratory (Pathology) Procedures

     Number of procedures defined by CPT-4 Codes under the Pathology and
     Laboratory section. Excluded are services performed in conjunction with a
     hospital outpatient or emergency department visit.

11.  Radiology Procedures

     Number of procedures defined by CPT-4 Codes under the Radiology section.
     Excluded are services performed in conjunction with a hospital outpatient
     or emergency department visit.

12.  Physical and Occupational Therapy Services

     Physical therapy refers to physical and occupational therapy services and
     procedures performed by a physician or physical therapist.

13.  Speech and Hearing Services

     Number of services and procedures.

14.  Podiatry Services

     Number of services and procedures.

15.  End Stage Renal Disease (ESRD) Services - Dialysis

     Number of ESRD procedures provided upon referral.

16.  Home Health Services

     Number of home health visits, such as skilled nursing, home health aide,
     and personal care aide visits.

17.  Hospice Days

     Number of days hospice care is provided, including respite care.

18.  Private Duty Nursing Services

     Hours of skilled care delivered.

19.  Medical Supplies and Medical Equipment

     Durable medical equipment such as wheelchairs, hearing aids, etc., and
     nondurable supplies such as oxygen etc.

20.  Abortion Procedures

     Number of procedures performed.

<PAGE>

                                                                    Attachment E
                                                                   Page 13 of 15

21.  Sterilization Procedures

     Number of procedures performed.

22.  Detoxification Days

     Days of inpatient detoxification.

23.  Organ Transplants

     Number of transplants.

24.  Other Outside Medical Services

     Specialized testing and outpatient surgical services ordered by IHC.

25.  Long Term Care Facility Days

     Total days associated with long-term care.

26.  Transportation Trips

     Number of ambulance trips.

27.  Other (specify)

<PAGE>

                                  ATTACHMENT E
                               TABLE 4 PAGE 1 OF 1
                        MEDICAID MALPRACTICE INFORMATION

PROVIDER NAME:            ______________________________________________________

SERVICE REPORTING PERIOD: BEGINNING ___________  ENDING ____________

ORGANIZATIONS NAMED IN THE MALPRACTICE CLAIM:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

MEDICAL PROFESSIONALS SPECIFIED:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

LOCATIONS WHERE CLAIMS ORIGINATED:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

MEDICAID CLIENT IDENTIFICATION:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

DATES OF SERVICE:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

AWARDS TO MEDICAID CLIENTS - AMOUNTS & DATES PAID

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

HMO'S DIRECT COSTS (IF ANY)

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

ATTACH A SUMMARY OF FACTS FOR EACH CASE, DESCRIBING THE CLAIM, THE CAUSES,
CIRCUMSTANCES, ETC.

                                  ATTACHMENT E
                                     TABLE 4

                                  Page 14 of 15

<PAGE>

                                                                    Attachment E
                                                                   Page 15 of 15

The information reported on this form should come from known malpractice cases
of the MCO providers. This may only be applicable if the MCO was named as a
participant in the malpractice suit. However, if suits against MCO providers are
known, provide us with information on the Medicaid client(s) involved and any
large settlements paid when the information is available.

<PAGE>

                   ATTACHMENT F - RATES AND RATE-RELATED TERMS

                             Effective July 1, 1999

                              AMERICAN FAMILY CARE

A.   PREMIUM RATES

     1.   MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS

------------------------------------------------------------------------------
    Age       TANF Male   TANF Male    TANF Female    TANF Female
   0 to1       1 to 21    21 & Over      1 to 21       21 & Over       Aged
==============================================================================
  $ [*]        $  [*]      $   [*]       $  [*]         $  [*]        $ [*]
------------------------------------------------------------------------------

------------------------------------------------------------------------------
  Disabled   Disabled   Medically     Medically       Non TANF     Restriction
    Male      Female   Needy Child   Needy Adult      Pregnant F     Program
==============================================================================
  $ [*]        $  [*]      $   [*]       $  [*]         $  [*]        $ [*]
------------------------------------------------------------------------------

     2.   SPECIAL RATE

          An AIDS rate of $[*] per month will be paid in addition to the regular
          monthly premium when the T-Cell count is below 200.

B.   PER DELIVERY REIMBURSEMENT SCHEDULE

     The DEPARTMENT shall reimburse the CONTRACTOR $[*] per delivery to cover
     all Medically Necessary antepartum care, delivery, and postpartum
     professional, facility and ancillary services. The monthly premium amount
     for the enrollee is in addition to the delivery fee. The delivery payment
     will be made when the delivery occurs at 22 weeks or later, regardless of
     viability.

C.   CHEC SCREENING INCENTIVE CLAUSE

     1.   CHEC SCREENING GOAL

          The CONTRACTOR will ensure that Medicaid children have access to
          appropriate well-child visits. The CONTRACTOR will follow the Utah
          EPSDT (CHEC) guidelines for the periodicity schedule for well-child
          protocol. The federal agency, Health Care Financing Administration,
          mandates that all states have 80% of all children screened. The
          DEPARTMENT and the CONTRACTOR will work toward that goal.

                                   Page 1 of 3

<PAGE>

     2.   CALCULATION OF CHEC INCENTIVE PAYMENT

          The DEPARTMENT will pay the CONTRACTOR $[*] for each percentage point
          over 60% achieved by the CONTRACTOR. The DEPARTMENT will calculate the
          CONTRACTOR's annual participation rate based on information supplied
          by the CONTRACTOR under the EPSDT (CHEC) reporting requirements at the
          same time each federal fiscal year's HCFA-416 is calculated. Payment
          will be based on the percentages determined at that time.

     3.   CONTRACTOR'S USE OF INCENTIVE PAYMENT

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the EPSDT (CHEC)
          participation rate.

D.   STOP-LOSS/REINSURANCE POLICY

     Stop-loss under item #1 below will be administered by a reinsurer,
     TransAmerica Occidental Life Insurance Company (TransAmerica). TransAmerica
     will partially administer stop-loss under item #2 below.

     1.   REINSURANCE (all services including kidney, liver, and cornea and
          excluding specific organ transplantations defined in D.2. below)

          Costs, net of TPL, for all inpatient and outpatient services listed in
          Attachment C (including kidney, liver, and cornea transplantations,
          but excluding bone marrow, heart, intestine, lung, pancreas, small
          bowel, combination heart/lung, combination intestine/liver,
          combination kidney/pancreas, multi visceral, combination liver/small
          bowel, any additional approved transplantations) that are covered on
          the date of service rendered and incurred from July 1, 1999 through
          June 30, 2000 by the MCO for an Enrollee shall be shared by
          Transamerica under the following conditions:

          a.   the date of service is from July 1, 1999 through June 30, 2000
               (based on date of discharge if inpatient hospital stay);

          b.   paid claims incurred by the MCO exceed $50,000; and

          c.   services shall have been incurred by the MCO during the time the
               client is enrolled with the MCO.

          If the above conditions are met, TransAmerica shall bear [*]% and the
          MCO shall bear [*]% of the amount that exceeds $50,000.

     2.   STOP-LOSS/REINSURANCE FOR SPECIFIC ORGAN TRANSPLANTATIONS

          Costs, net of TPL, for bone marrow, heart, intestine, lung, pancreas,
          small bowel, combination heart/lung, combination intestine/liver,
          combination kidney/pancreas, multi visceral, combination liver/small
          bowel, and any additional approved transplantations (other than
          kidney, liver, and cornea) that are covered on the date of service
          rendered and incurred from July 1, 1999 through June 30, 2000 by the

                                   Page 2 of 3

<PAGE>

          MCO for an Enrollee shall be shared by the DEPARTMENT, Transamerica
          and the MCO under the following conditions:

          a.   the date of service is from July 1, 1999 through June 30, 2000
               (based on date of discharge if inpatient hospital stay);

          b.   paid claims incurred by the MCO exceed $40,000; and

          c.   services shall have been incurred by the MCO during the time the
               client is enrolled with the MCO;

          d.   the stop-loss billings for the first $40,000 must be submitted to
               the DEPARTMENT in a format mutually agreed upon; and

          e.   stop-loss billings for the first $40,000 must be submitted to the
               DEPARTMENT within six months of the end of the Contract year.

          If the above conditions are met, the DEPARTMENT shall reimburse the
          MCO the first $40,000; TransAmerica, shall bear [*]% and the MCO shall
          bear [*]% of the amount that exceeds $40,000.

          Stop-loss/reinsurance provisions are normally based on services
          provided within the contract period ending June 30. However, for
          purposes of this stop-loss/ reinsurance provision the Contract period
          is extended for transplantations performed between April 1, 2000 and
          June 30, 2000. When the transplantation is performed between April 1,
          2000 and June 30, 2000 the payment for the first $40,000 of the
          transplantation costs and the costs that exceed $40,000 can be applied
          to this stop-loss/reinsurance provision for up to 90 days after the
          transplantation is performed.

E.   REIMBURSEMENT FOR REINSURANCE

     The CONTRACTOR agrees to purchase reinsurance from TransAmerica at the rate
     negotiated by the DEPARTMENT of $[*] per Enrollee per month. The DEPARTMENT
     will reimburse the CONTRACTOR for their premium payments to TransAmerica.
     In addition, the DEPARTMENT will pay the CONTRACTOR [*]% of the premium to
     cover reinsurance administrative costs.

     1.   INTERIM PAYMENTS

          Beginning July 1, 1999, the DEPARTMENT will make monthly interim
          payments to the CONTRACTOR based on the reinsurance premiums the
          CONTRACTOR pays to Insurance Strategies, an agent of TransAmerica. The
          reinsurance premiums will be calculated using the previous month's
          number of Enrollees.

     2.   FINAL SETTLEMENT

          The DEPARTMENT will calculate the actual reinsurance amount due to the
          CONTRACTOR one month after the end of each contract year. The
          settlement will be based on actual Enrollee months.

                                   Page 3 of 3

<PAGE>

                                                                    ATTACHMENT G

                   UTAH MCO QUALITY ASSURANCE MONITORING PLAN

                                     [SEAL]

                         Utah State Department of Health
                        Division of Health Care Financing
                         Bureau of Managed Health Care
                                  July 1, 1999

<PAGE>

                   UTAH MCO QUALITY ASSURANCE MONITORING PLAN
                          BUREAU OF MANAGED HEALTH CARE
                     UTAH DIVISION OF HEALTH CARE FINANCING

AUTHORITY

     The authority for the evaluation of care provided to Medicaid clients by
the Managed Care Organizations (MCOs) contracting with the State is found in CFR
417; and 443 Subpart C, D, and E.

PURPOSE

     The purpose of the Utah MCO Quality Assurance Monitoring Plan is to assure
quality care is received by the Medicaid client in a cost-effective manner and
to monitor that problems identified are addressed to continually improve the
quality of services delivered.

METHOD OF REVIEW

     A. Accreditation by a nationally recognized accreditation agency that is
        also recognized by the State will be accepted to fulfill some
        standards and requirements. The MCO will have to show proof of
        accreditation in that area.

     B. State staff and/or an external quality review organization (EQRO) or a
        combination of the two will monitor other standards and requirements.
        This will be done by an on-site review or by documentation submitted
        by the MCO.

DEFINITIONS AND ABBREVIATIONS

     A. Division of Health Care Financing (DHCF)

     B. External Quality Review Organization (EQRO)

     C. Health Maintenance Organization (HMO) - means a public or private
        organization operating under State law that is federally qualified or
        meets the State Plan's definition of an HMO. The HMO operates under a
        prepaid arrangement to provide specified services to a specific group
        of clients.

     D. Managed Care Organization (MCO) - means an organization that meets the
        State Plan's definition of an HMO or the State Plan's definition of a
        prepaid health plan and which provides, either directly or through
        arrangements with other providers, comprehensive general medical
        services to Medicaid eligibles on a contractual prepayment basis.

     E. Quality Assurance Plan (QAP)

     F. State Medicaid Agency - means Division of Health Care Financing (DHCF)

Utah division of health care financing                              Page 2 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

QUALITY ASSURANCE STANDARDS

     All MCOs contracting with the Utah Division of Health Care Financing will
be monitored for compliance of the following standards.

Standards I through IX, XV and XVI should be addressed in the MCO's Quality
Assurance Plan (QAP). The QAP should also address confidentiality of the
information gathered during quality assurance activities.

STANDARD I: WRITTEN QUALITY ASSURANCE PLAN DESCRIPTION. The organization must
have a written description of its QAP. The written description must meet the
following criteria.

     A. Goals and Objectives - The written description contains a detailed set
        of quality assurance objectives which are developed annually and include
        a timetable for implementation and accomplishment.

     B. Scope:

        1.   The scope of the QAP is comprehensive, addressing both the quality
             of clinical care and the quality of non-clinical aspects of
             service, such as and including: availability, accessibility,
             coordination, and continuity of care.

        2.   The QAP methodology provides for review of the entire range of care
             provided by the organization, by assuring that all demographic
             groups, care settings (e.g. inpatient, ambulatory [including care
             provided in private practice offices], and home care), and types of
             services (e.g., preventative, primary, specialty care, and
             ancillary) are included in the scope of the review.

             This review of the entire range of care is expected to be carried
             out over multiple review periods and not on a concurrent basis.

     C. Specific Activities: - The written description specifies quality of care
        studies and other activities to be undertaken over a prescribed period
        of time, and methodologies and organizational arrangements to be used to
        accomplish them. Individuals responsible for the studies and other
        activities are clearly identified and are appropriate.

     D. Continuous Activity - The written description provides for continuous
        performance of the activities, including tracking of issues over time.

     E. Provider Review - The QAP provides for:

        1.   Review by physicians and other health professionals of the process
             followed in the provision of health services; and

        2.   Feedback to health professionals and MCO staff regarding
             performance and patient results.

     F. Focus on health outcomes - The QAP methodology addresses health outcomes
        to the extent consistent with existing technology.

Utah division of health care financing                              Page 3 of 39

<PAGE>

Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

STANDARD II: SYSTEMATIC PROCESS OF QUALITY ASSESSMENT AND IMPROVEMENT. The QAP
objectively and systematically monitors and evaluates the quality and
appropriateness of care and service to members, through quality of care studies
and related activities, and pursues opportunities for improvement on an ongoing
basis. The QAP has written guidelines for its quality of care studies and
related activities which include:

     A. Specification of clinical or health services delivery areas to be
        monitored.

        1.   The monitoring and evaluation of care reflects the population
             served by the MCO in terms of age groups, disease categories, and
             special risk status.

        2.   For the Medicaid population, the QAP monitors and evaluates, at a
             minimum, care and services in certain priority areas of concern
             selected by the State. This would include studies specified in the
             Medicaid contract with each individual MCO.

     B. Use of Quality Indicators - Quality indicators are measurable variables
        relating to a specified clinical or health services delivery area, which
        are reviewed over a period of time to monitor the process of care
        delivered in that area.

        1.   The organization identifies and uses quality indicators that are
             objective, measurable, and based on current knowledge and clinical
             experience.

        2.   For the priority areas selected by the State from the HCFA Medicaid
             Bureau's list of priority clinical and health services delivery
             areas of concern, the organization monitors and evaluates quality
             of care through studies which include, but are not limited to those
             specified in Attachment A.

        3.   Methods and frequency of data collection are appropriate and
             sufficient to detect need for program change.

     C. Use of clinical care standards\practice guidelines.

        1.   The studies or other activities of the QAP specify the health
             service delivery standards or practice guidelines used to monitor
             the quality of care for each area identified in Standard II A.

        2.   The standards/guidelines are based on reasonable scientific
             evidence and are developed or reviewed by plan providers.

        3.   The standards/guidelines focus on the process and outcomes of
             health care delivery, as well as access to care.

        4.   A mechanism is in place for continuously updating the
             standard/guidelines.

        5.   The standards/guidelines shall be disseminated to providers as they
             are adopted.

        6.   The standards/guidelines address preventive health services.

        7.   Standards/guidelines are developed for the full spectrum of
             populations enrolled in the plan.

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

        8.   The QAP shall use these standards/guidelines to evaluate the
             quality of care provided by the MCO's providers.

     D. Analysis of clinical care and related services.

        1.   Appropriate clinicians monitor and evaluate quality through review
             of individual cases where there are questions about care, and
             through studies analyzing patterns of clinical care and related
             service. For quality issues identified in the QAP's targeted
             clinical areas, the analysis includes the identified quality
             indicators and uses clinical care standards or practice guidelines.

        2.   Multidisciplinary teams are used, where indicated, to analyze and
             address systems issues.

        3.   From 1 and 2, clinical and related service areas requiring
             improvement are identified.

     E. Implementation of remedial/corrective actions.

        The QAP includes written procedures for taking appropriate remedial
        action whenever services are furnished, or services that should have
        been furnished were not, as determined under the QAP as inappropriate or
        substandard. These written remedial/corrective action procedures
        include:

        1.   specification of the types of problems requiring
             remedial/corrective action;

        2.   specification of the person(s) or body responsible for making the
             final determinations regarding quality problems;

        3.   specific actions to be taken;

        4.   provision of feedback to appropriate health professionals,
             providers and staff;

        5.   the schedule and accountability for implementing corrective
             actions;

        6.   the approach to modifying the corrective action if improvements do
             not occur; and

        7.   procedures for terminating the affiliation with the physician, or
             other health professional or provider.

     F. Assess effectiveness of corrective actions.

        1.   As actions are taken to improve care, there is monitoring and
             evaluation of corrective actions to assure that appropriate changes
             have been made. In addition, changes in practice patterns are
             tracked.

        2.   The MCO assures follow-up on identified issues to ensure that
             actions for improvement have been effective.

     G. Evaluation of continuity and effectiveness of the QAP.

        1.   The MCO conducts a regular and periodic examination of the scope
             and content of the QAP to ensure it covers all types of services in
             all settings, as specified in STANDARD I-B-2.

Utah division of health care financing                              Page 5 of 39

<PAGE>

Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

        2.   At the end of each year, a written report on the QAP is prepared,
             which addresses: Quality assurance studies and other activities
             completed; trending of clinical and services indicators and other
             performance data; demonstrated improvements in quality; areas of
             deficiency and recommendations for corrective action, and an
             evaluation of the overall effectiveness of the QAP.

        3.   There is evidence that quality assurance activities have
             contributed to significant improvements in the care delivered to
             members.

STANDARD III: ACCOUNTABILITY TO THE GOVERNING BODY. The governing body of the
organization is the Board of Directors or, where the Board's participation with
quality improvement issues is not direct, a designated committee of the senior
management of the MCO. Responsibilities of the Governing Body for monitoring,
evaluation, and making improvements to care includes:

     A. Oversight of QAP - there is documentation that the Governing Body has
        approved the overall QAP and an annual QAP.

     B. Oversight - The Governing Body has formally designated an accountable
        entity or entities within the organization to provide oversight for
        quality assurance activities or has formally decided to provide such
        oversight as a committee of the whole.

     C. QAP progress reports - The Governing Body routinely receives written
        reports from the QAP describing actions taken, progress in meeting
        quality assurance objectives, and improvements made.

     D. Annual QAP review - The Governing Body formally reviews on a periodic
        basis (but no less frequently than annually) a written report on the QAP
        that includes: studies undertaken, results, subsequent actions, and
        aggregate data on utilization and quality of services rendered to assess
        the QAP's continuity, effectiveness and current acceptability.

     E. Program modification - Upon receipt of regular written reports from the
        QAP delineating actions taken and improvements made, the Governing Body
        takes action when appropriate and directs that the operational QAP be
        modified on an ongoing basis to accommodate review findings and issues
        of concern within the MCO. This activity is documented in the minutes of
        the meetings of the Governing Board in sufficient detail to demonstrate
        that it has directed and followed up on necessary actions pertaining to
        quality assurance.

STANDARD IV: ACTIVE QUALITY ASSURANCE COMMITTEE. The QAP delineates an
identifiable structure responsible for performing quality assurance functions
within the MCO. This committee has:

     A. Regular meetings -- The committee meets on a regular basis. The
        frequency of meetings is sufficient to demonstrate that the committee
        is following-up on all findings and required actions, but in no case
        are meeting less frequently than quarterly;

     B. Established parameters for operating - The role, structure and function
        of the committee are specified;

     C. Documentation -- There are records documenting the committee's
        activities, finding, recommendations and actions;

Utah division of health care financing                              Page 6 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

     D. Accountability -- The QAP committee is accountable to the Governing Body
        and reports to it (or its designee) on a scheduled basis on activities,
        findings, recommendations and actions; and

     E. Membership -- there is active participation on the Quality Assurance
        Committee from health plan providers, who are representative of the
        composition of the health plan's providers.

STANDARD V: QUALITY ASSURANCE PLAN SUPERVISION. There is a designated senior
executive who is responsible for QAP implementation. The organization's Medical
Director has substantial involvement in quality assurance activities.

STANDARD VI: ADEQUATE RESOURCES. The QAP has sufficient material resources; and
staff with the necessary education, experience, or training; to effectively
carry out its specified activities.

STANDARD VII: PROVIDER PARTICIPATION IN THE QUALITY ASSURANCE PLAN.

     A. Participating physicians and other providers are kept informed about the
        written QAP.

     B. The MCO includes in all its provider contracts and employment
        agreements, for both physicians and non-physician providers, a
        requirement securing cooperation with the QAP.

     C. Contracts specify that hospitals and other contractors will allow the
        MCO access to the medical records of its members.

STANDARD VIII: DELEGATION OF QAP. The MCO remains accountable for all QAP
functions, even if certain functions are delegated to other entities. If the MCO
delegates any quality assurance activities to contractors:

     A. There is a written description of: the delegated activities; the
        delegate's accountability for these activities; and the frequency of
        reporting to the MCO.

     B. The MCO has written procedures for monitoring and evaluating the
        implementation of the delegated functions and for verifying the actual
        quality of care being provided.

     C. There is evidence of continuous and ongoing evaluation of delegated
        activities, including approval of quality improvement plans and regular
        specified reports.

STANDARD IX: CREDENTIALING AND RECREDENTIALING. The QAP contains the following
provisions to determine whether physicians and other health care professionals,
who are licensed by the State and who are under contract to the MCO, are
qualified to perform their services.

     A. Written policies and procedures - The MCO has written policies and
        procedures for the credentialing process, which includes the
        organization's initial credentialing of practitioners, as well as its
        subsequent recredentialing, recertifying and/or reappointment of
        practitioners.

     B. Oversight by governing body - The Governing Body, or the group or
        individual to which the governing body has formally delegated the
        credentialing function, has reviewed and approved the credentialing
        policies and procedures.

     C. Credentialing entity - The plan designates a credentialing committee or
        other peer review body which makes recommendations regarding
        credentialing decision.

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

     D. Process - The initial credentialing process obtains and reviews
        verification of the following information, at a minimum:

        1.   the practitioner holds a current valid license to practice;

        2.   valid DEA (Drug Enforcement Agency) or CDS (Controlled Dangerous
             Substances) certificate, as applicable;

        3.   graduation from medical school and completion of a residency, or
             other post-graduate training, as applicable;

        4.   work history;

        5.   professional liability claims history;

        6.   good standing of clinical privileges at the hospital designated
             by the practitioner as the primary admitting facility (This
             requirement may be waived for practices which do not have or do
             not need access to hospital.);

        7.   the practitioner holds current, adequate malpractice insurance
             according to the plan's policy;

        8.   any revocation or suspension of a state license or DEA (Drug
             Enforcement Agency) number;

        9.   any curtailment or suspension of medical staff privileges (other
             than for incomplete medical records);

        10.  any sanctions imposed by Medicare and/or Medicaid; and

        11.  any censure by the State or local Medical Association.

        12.  The organization requests information on the practitioner from
             the National Practitioner Data Bank and the State Department of
             Professional Licensing.

        13.  The application process includes a statement by the applicant
             regarding;

                  a.   any physical or mental health problems that may affect
                       current ability to provide health care;

                  b.   history of loss of license and/or felony convictions;

                  c.   history of loss or limitation of privileges or
                       disciplinary activity; and

                  d.   an attestation to correctness/ completeness of the
                       application.

             This information should be used to evaluate the practitioners's
             current ability to practice.

     E. Recredentialing - A process for the periodic reverification of
        clinical credentials (recredentialing, reappointment, or
        recertification) is described in the organization's policies and
        procedures.

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

        1.   There is evidence that the procedure is implemented at least
             every two years.

        2.   The MCO conducts periodic review of information from the National
             Practitioner Data Bank, along with performance data, on all
             physicians, to decide whether to renew the participating physician
             agreement. At a minimum, the recredentialing, recertification or
             reappointment process is organized to verify current standing on
             items listed in "D-l" through "D-12", above.

        3.   The recredentialing, recertification or reappointment process also
             includes review of data from:

                  a.   member complaints;

                  b.   results of quality reviews;

                  c.   utilization management;

                  d.   member satisfaction surveys; and

                  e.   reverification of hospital privileges and current
                       licensure.

     F. Delegation of credentialing activities - If the MCO delegates
        credentialing (and recredentialing, recertification, or reappointment)
        activities, there is a written description of the delegated
        activities, and the delegate's accountability for these activities.
        There is also evidence that the delegate accomplished the
        credentialing activities. The MCO monitors the effectiveness of the
        delegate's credentialing and reappointment or recertification process.

     G. Retention of credentialing authority - The MCO retains the right to
        approve new providers and sites, and to terminate or suspend
        individual providers. The organization has policies and procedures for
        the suspension, reduction or termination of practitioner privileges.

     H. Reporting requirement - There is a mechanism for, and evidence of
        implementation of, the reporting of serious quality deficiencies
        resulting in suspension or termination of a practitioner, to the
        appropriate authorities.

     I. Appeals process - There is a provider appellate process for instances
        where the MCO chooses to reduce, suspend or terminate a practitioner's
        privileges with the organization.

STANDARD X: ENROLLEE RIGHTS AND RESPONSIBILITIES. The organization demonstrates
a commitment to treating members in a manner that acknowledges their rights and
responsibilities.

     A. Written policy and enrollee rights. The organization has a written
        policy that recognizes the following rights of members:

        1.   to be treated with respect, and recognition of their dignity and
             need for privacy;

        2.   to be provided with information about the organization, its
             services, the practitioners providing care, and members rights
             and responsibilities;

        3.   to be allowed to choose practitioners, within the limits of the
             plan network, including the right to refuse care from specific
             practitioners;

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

        4.   to participate in decision-making regarding their health care;

        5.   to voice grievances about the organization or care provided;

        6.   to formulate advance directives; and

        7.   to have access to his/her medical records in accordance with
             applicable federal and state laws.

     B. Written policy on enrollee responsibilities. The organization has a
        written policy that addresses members' responsibility for cooperating
        with those providing health care services. This written policy
        addresses members' responsibility for:

        1.   providing, to the extent possible, information needed by
             professional staff in caring for the member; and

        2.   following instructions and guidelines given by those providing
             health care services.

     C. Communication of policies to providers - A copy of the organization's
        policies on members' rights and responsibilities is provided to all
        participating providers.

     D. Communication of policies to enrollees/members - Upon enrollment,
        members are provided a written statement that includes information on
        the following:

        1.   rights and responsibilities of members;

        2.   benefits and services included and excluded as a condition of
             membership, and how to obtain them, including a description of:

                  a.   any special benefit provisions that may apply to
                       service obtained outside the system; and

                  b.   the procedures for obtaining out-of-area coverage.

        3.   provisions for after-hours and emergency coverage;

        4.   the organization's policy on referrals for specialty care;

        5.   procedures for notifying those members affected by the
             termination or change in any benefits, services, or service
             delivery office/site;

        6.   procedures for appealing decisions adversely affecting the
             members's coverage, benefits, or relationship to the
             organization;

        7.   procedures for changing practitioners;

        8.   procedures for disenrollment; and

        9.   procedures for voicing complaints and/or grievances and for
             recommending changes in policies and services.

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

     E. Enrollee/member grievance procedures. The organization has a system(s)
        for resolving members complaints and formal grievances. This system
        includes:

        1.   procedures for registering and responding to complaints and
             grievances in a timely fashion (organizations should establish
             and monitor standard for timeliness);

        2.   documentation of the substance of complaints or grievances, and
             actions taken;

        3.   procedures to ensure a resolution of the complaint or grievance;

        4.   aggregation and analysis of complaint and grievance data and use
             of the data for quality improvement; and

        5.   an appeal process for grievances.

     F. Enrollee/member suggestions. Opportunity is provided for members to
        offer suggestions for changes in policies and procedures.

     G. Steps to assure accessibility of services. The MCO takes steps to
        promote accessibility of services offered to members. These steps
        include:

        1.   points of access to primary care, specialty care, and hospital
             services are identified for members; and

        2.   at a minimum, members are given information about:

                  a.   how to obtain services during regular hours of
                       operations,

                  b.   how to obtain emergency and after-hours care, and

                  c.   how to obtain the names, qualifications, and titles of
                       the professionals providing and/or responsible for
                       their care.

     H. Cultural and ethnic sensitivity is shown to members when accessing and
        receiving care.

     I. Written information for members. Written information provided to
        members must:

        1.   be written in prose that is readable and easily understood (for
             example, subscriber brochures, announcements, handbooks); and

        2.   be available, as needed, in the languages of the major population
             groups served-- a "major" population group is one which
             represents at least 10% of a plan's membership.

     J. Confidentiality of patient information. The organization acts to
        ensure that the confidentiality of specific patient information and
        records is protected. The organization must:

        1.   establish in writing, and enforce, policies and procedures on
             confidentiality, including confidentiality of medical records;

        2.   ensure that patient care offices/sites have implemented
             mechanisms that guard against the unauthorized or inadvertent
             disclosure of confidential information to persons outside of

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

             the medical care organization;

        3.   shall hold confidential all information obtained by its personnel
             about enrollees related to their examination, care and treatment
             and should not divulge it without the enrollee's authorization,
             unless

                  a.   it is required by law;

                  b.   it is necessary to coordinate the patient's care with
                       physicians, hospitals, or other health care entities,
                       or to coordinate insurance or other matters pertaining
                       to payment; or

                  c.   it is necessary in compelling circumstances to protect
                       the health or safety of an individual.

        4.   report to the patient in a timely manner any release of
             information in response to a court order; and

        5.   ensure that when enrollee records may be disclosed, whether or
             not authorized by the enrollee, to qualified personnel for the
             purpose of conducting scientific research, these organizations
             and personnel may not identify, directly or indirectly, any
             individual enrollee in any report of the research or otherwise
             disclose participant identity in any manner.

     K. Treatment of minors. The organization has written policies regarding
        the appropriate treatment of minors.

     L. Assessment of member satisfaction. The organization conducts periodic
        surveys of member satisfaction with its services. The surveys:

        1.   include content on perceived problems in the quality,
             availability, and accessibility or care;

        2.   assess at least a sample of:

                  a.   Medicaid members,

                  b.   Medicaid member requests to change practitioners and/or
                       facilities, and

                  c.   disenrollment by Medicaid members;

        3.   and, as a result of the surveys, the organization:

                  a.   identifies and investigates sources of dissatisfaction,

                  b.   outlines action steps to follow-up on the findings, and

                  c.   informs practitioners and providers of assessment
                       results; and

        4.   the organization reevaluates the effects of the above activities.

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

STANDARD XI: STANDARD FOR AVAILABILITY AND ACCESSIBILITY. The MCO has
established standards for access (e.g., to routine, urgent and emergency care;
telephone appointments; advice; and member service lines). Performance on these
dimensions of access are assessed against the standards.

STANDARD XII: MEDICAL RECORD STANDARDS.

     A. Accessibility and availability of medical records.

        1.   The MCO shall include provisions in provider contracts for
             appropriate access to the medical records of its enrollees for
             purposes of quality review.

        2.   Records are available to health care practitioners at each
             encounter.

     B. Record keeping. Medical records may be on paper or electronic. The MCO
        takes steps to promote maintenance of medical records in a legible,
        current, detailed, organized and comprehensive manner that permits
        effective patient care and quality review.

        1.   Medical record standards. The organization sets standards for
             medical records. The records reflect all aspects of patient care,
             including ancillary services. These standards shall, at a minimum
             include requirements for:

                  a.   patient identification information -- each page or
                       electronic file in the record contains the patient's
                       name or patient ID number;

                  b.   personal/biographical data -- including age, sex,
                       address, employer, home and work telephone numbers, and
                       marital status;

                  c.   entry date -- all entries are dated;

                  d.   provider identification -- all entries are identified
                       as to author;

                  e.   legibility -- the record is legible to someone other
                       than the writer. Any record judged illegible by one
                       physician reviewer should be evaluated by a second
                       reviewer.

                  f.   allergies -- medication allergies and adverse reactions
                       are prominently noted on the record absence of
                       allergies (no known allergies -- NKA) is noted in an
                       easily recognizable location;

                  g.   past medical history -- (for patients seen three or
                       more times) past medical history is easily identified
                       including serious accidents, operations, illnesses; for
                       children, past medical history relates to prenatal care
                       and birth;

                  h.   immunizations -- for pediatric records (ages 12 and
                       under) there is a completed immunization record or a
                       notation that immunizations are up-to-date;

                  i.   diagnostic information;

                  j.   medication information;

                  k.   identification of current problems-- significant
                       illnesses, medical conditions and health maintenance
                       concerns are identified in the medical record;

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                  l.   smoking/alcohol/substance abuse-- notation concerning
                       cigarettes and alcohol use and substance abuse is
                       present;

                  m.   consultations, referrals and specialist reports --
                       notes from any consultations are in the record;
                       consultation, lab, and x-ray reports filed in the chart
                       have the ordering physician's initials or other
                       documentation signifying review; consultation and
                       significantly abnormal lab and imaging study results
                       have an explicit notation in the record of follow-up
                       plans;

                  n.   emergency care;

                  o.   hospital discharge summaries-- discharge summaries are
                       included as part of the medical record for 1), all
                       hospital admission which occur while the patient is
                       enrolled in the MCO, and 2), prior admissions as
                       necessary;

                  p.   advance directive -- for medical records of adults, the
                       medical record documents whether or not the individual
                       has executed an advance directive which is a written
                       instruction such as a living will or durable power of
                       attorney for health care relating to the provision of
                       health care when the individual is incapacitated;

        2.   Patient visit data. Documentation of individual encounters must
             provide adequate evidence of, at a minimum:

                  a.   history and physical examination-- appropriate
                       subjective and objective information is obtained for
                       the presenting complaints;

                  b.   plan of treatment;

                  c.   diagnostic tests;

                  d.   therapies and other prescribed regimens;

                  e.   follow-up -- encounter forms or notes have a notation,
                       when indicated, concerning follow-up care, call or
                       visit and the specific time to return is noted in
                       weeks, months, or PRN, with unresolved problems from
                       previous visits being addressed in subsequent visits;

                  f.   referrals and results thereof; and

                  g.   all other aspects of patient care, including ancillary
                       services.

     C. Record review process. The MCO:

        1.   has a system (record review process) to assess the content of
             medical records for legibility, organization, completion and
             conformance to its standards; and

        2.   the record assessment system addresses documentation of the items
             listed in XII(B), above.

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STANDARD XIII: UTILIZATION REVIEW.

     A. Written program description. The organization has a written
        utilization management program description which includes, at a
        minimum, procedures to evaluate medical necessity, criteria used,
        information sources and the process used to review and approve the
        provision of medical services.

     B. Scope. The program has mechanisms to detect under utilization as well
        as over utilization.

     C. Preauthorization and concurrent review requirements. For organization
        with preauthorization or concurrent review programs:

        1.   preauthorization and concurrent review decisions are supervised
             by qualified medical professionals;

        2.   efforts are made to obtain all necessary information, including
             pertinent clinical information, and consult with the treating
             physician as appropriate;

        3.   the reasons for decisions are clearly documented and available to
             the member;

        4.   there are well-publicized and readily available appeals
             mechanisms for both providers and patients. Notification of a
             denial includes a description of how to file an appeal;

        5.   decisions and appeals are made in a timely manner as required by
             the exigencies of the situation;

        6.   here are mechanisms to evaluate the effects of the program using
             data on member satisfaction, provider satisfaction or other
             appropriate measures; and

        7.   the organization has mechanisms, if it delegates responsibility
             for utilization management, to ensure that these standards are
             met by the delegate.

STANDARD XIV: CONTINUITY OF CARE SYSTEM. The MCO has put a basic system in place
which promotes continuity of care and case management.

STANDARD XV: QUALITY ASSURANCE PLAN DOCUMENTATION.

     A. Scope. The MCO shall document that it is monitoring the quality of
        care across all services and all treatment modalities, according to
        its written QAP.

     B. Maintenance and availability of documentation. The MCO must maintain
        and make available to the State studies, reports, protocols,
        standards, worksheets, minutes, or such other documentation as may be
        appropriate, concerning its quality assurance activities and
        corrective actions.

STANDARD XVI: COORDINATION OF QUALITY ASSURANCE ACTIVITY WITH OTHER MANAGEMENT
ACTIVITY. The findings, conclusions, recommendations, actions taken, and results
of the actions taken as a result of quality assurance activity, are documented
and reported to appropriate individuals within the organization and through
established quality assurance channels.

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     A. Quality assurance information is used in recredentialing,
        recontracting and/or annual performance evaluations.

     B. Quality assurance activities are coordinated with other performance
        monitoring activities, including utilization management, risk
        management, and resolution and monitoring of member complaints and
        grievances.

     C. There is a linkage between quality assurance and the other management
        functions of the health plan such as:

        1.   network changes;

        2.   benefits redesign;

        3.   medical management systems (e.g. pre-certification);

        4.   practice feedback to physicians;

        5.   patient education; and

        6.   member services.

STANDARD XVII: DATA COLLECTION.

     A. The MCO will submit information to DHCF using HEDIS (Health Plan
        Employer Data and Information Set) performance measures and reports.
        Data for measures of quality, utilization, member satisfaction and
        access will be reported for the plan in general as well as Medicaid
        specific.

     B. Specific areas of study required will be stated in the contract with
        each individual MCO (See Attachment A).

     C. Data or studies required by the contract must be submitted timely, be
        accurate and complete.

     D. Studies involving grievance/complaint information, childhood
        immunization, prenatal and obstetrical care are required annually.

STANDARD XVIII: FINANCIAL SOLVENCY.

     A. The MCO will submit their annual report as submitted to the Utah
        Department of Insurance.

     B. The MCO will submit annually Measures of Financial Performance from
        the HEDIS report.

MONITORING ACCOUNTABILITY

  An annual review will be conducted for all contracting MCO's. In addition
DHCF will monitor and analyze complaints/grievances and periodically conduct
patient satisfaction surveys.

  If DHCF through quality assurance monitoring such as on-site reviews, MCO
documentation review, data analysis, medical audits, or complaints/grievances
determines that the MCO has not provided services in accordance with the
contract or within expected professional standards, DHCF will request in

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writing that the MCO correct the deficiencies or identified problems. The MCO
will be given 15 calendar days to respond to the problem and develop a
corrective action plan or appeal the DHCF findings. In complaint cases involving
the need for medical record review, the MCO may send a written request to DHCF
for extension of the time frames. If the MCO's plan requires revisions, as
determined by the DHCF, the MCO will have 15 calendar days from the date the
plan is returned by the DHCF to make revisions and resubmit the plan to the
DHCF. If the MCO is unable or unwilling to develop a plan within 15 calendar
days or to satisfactorily revise a plan within 15 calendar days, the MCO will be
subject to the following sanctions:

     $500 for each day, beginning on the first day after the 15 day
     time period has expired, and continuing until the day a
     corrective action plan is submitted or a revised corrective
     action plan containing DHCF recommendations for implementation by
     the MCO is submitted.

  If the MCO is unwilling or unable to implement a corrective action plan to
the satisfaction of the DHCF by the date(s) included in the DHCF approved plan,
the MCO will be subject to the following sanctions:

     $500 for each day, beginning on the first day after the DHCF
     determines that the MCO has not implemented the corrective action
     plan, and continuing until the day the MCO successfully
     demonstrates to the DHCF that it has implemented the plan; and
     other remedies included in the general provisions of the
     contract.

  Any financial sanctions assessed by the DHCF will be deducted from the
monthly payment to the MCO.

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

                                  ATTACHMENT A

                          Areas for Studies and Reviews

Required studies will be listed in the Managed Care Organization (MCO) contract
with the Utah Division of Health Care Finance (DHCF) as determined by the
Managed Health Care and MCO staff. Amendments to the contract may be made as
necessary during the contract period. Additional studies will be conducted by an
external quality review organization (EQRO). Determination of study subjects
will by made by the DHCF/Managed Health Care staff with input from the EQRO and
the contracting MCOs.

Clinical Areas of Concern:

      1.  Childhood Immunizations (Required)
      2.  Pregnancy (Required)
      3.  Breast Cancer/Mammography
      4.  Cervical Cancer/Pap Smears
      5.  Lead toxicity/Screening
      6.  Comprehensive Well Child Periodic Health Assessment
      7.  HIV Status
      8.  Asthma
      9.  Hysterectomies
     10.  Diabetes
     11.  Hypertension
     12.  Sexually Transmitted Diseases
     13.  Heritable Diseases (newborn screens)
     14.  Coronary Artery Disease
     15.  Motor Vehicle Accidents
     16.  Pregnancy prevention
     17.  Tuberculosis
     18.  Failure to thrive
     19.  Hepatitis B
     20.  Otitis Media
     21.  Prescription Drug Abuse
     22.  Hip Fractures
     23.  Cholesterol Screening and Management
     24.  Treatment of Myocardial Infarctions
     25.  Prevention of Influenza
     26.  Smoking Prevention and Cessation
     27.  Hearing and Vision Screening and Services for Individuals Less Than 21
          Years of Age
     28.  Dental Screening and Services for Individuals Less Than 21 Years of
          Age
     29.  Domestic Violence

Health Services Delivery Areas of Concern:

      1.  Access to care
      2.  Utilization of services
      3.  Coordination of care
      4.  Continuity of care

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      5.  Health Education
      6.  Emergency services

The EQRO may periodically conduct the following reviews at the request of
Managed Health Care Staff.

      1.  Sterilizations
      2.  Abortions
      3.  Children with multiple medical problems

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

                                  ATTACHMENT B

                             Quality Review Process

If the MCO is accredited by a nationally recognized accreditation board, DHCF
will accept that as compliance in the following standards.

     Standard III:      Accountability to the Governing Body
     Standard IV:       Active Quality Assurance Committee
     Standard V:        Quality Assurance Plan Supervision
     Standard VI:       Adequate Resources
     Standard VII:      Provider Participation in the Quality Assurance Plan
     Standard VIII:     Delegation of Quality Assurance Plan Activities
     Standard IX:       Credentialing and Recredentialing
     Standard XII:      Medical Records Standards
     Standard XIII:     Utilization Review
     Standard XIV:      Continuity of Care System
     Standard XVI:      Coordination of Quality Assurance Activity with
                        Other Management Activity

The following standards will be reviewed annually by DHCF staff:

     Standard I:        Written Quality Assurance Plan Description
     Standard II:       Systematic Process of Quality Assessment and Improvement
     Standard X:        Enrollee Rights and Responsibilities
     Standard XI:       Standard For Availability and Accessibility
     Standard XV:       Quality Assurance Plan Documentation
     Standard XVII:     Data Collection
     Standard XVIII:    Financial Solvency

If the MCO is not accredited by a nationally recognized accreditation board,
DHCF staff will monitor all standards.

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

                                  ATTACHMENT C

                              Monitoring Work Sheet

The ...[following] work sheets will be used to monitor all MCOs contracting with
the Utah Division of Health Care Finance. It is the responsibility of the MCO to
submit a plan of correction for any deficiencies identified. List of Work
Sheets:

<TABLE>
     <S>                <C>
     Standard I:        Written Quality Assurance Plan Description
     Standard II:       Systematic Process of Quality Assessment and Improvement
     Standard III:      Accountability to the Governing Body
     Standard IV:       Active Quality Assurance Committee
     Standard V:        Quality Assurance Plan Supervision and Standard VI: Adequate Resources
     Standard VII:      Provider Participation in the Quality Assurance Plan and Delegation of Quality
                        Assurance Plan Activities
     Standard VIII:     Delegation of Quality Assurance Plan Activities
     Standard IX:       Credentialing and Recredentialing
     Standard X:        Enrollee Rights and Responsibilities
     Standard XI:       Standard for Availability and Accessibility
     Standard XII:      Medical Records Standards
     Standard XIII:     Utilization Review
     Standard XIV:      Continuity of Care System and
     Standard XV:       Quality Assurance Plan Documentation
     Standard XVI:      Coordination of Quality Assurance Activity with Other Management Activity
     Standard XVII:     Data Collection
     Standard XVIII:    Financial Solvency
</TABLE>

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

STANDARD I -- WRITTEN QUALITY ASSURANCE PLAN DESCRIPTION

Contractor:_____________________ Review Date:_____________

Reviewer Signature:___________________________________

1.   MET  NOT MET   The QAP contains a detailed set of objectives that are
                    developed annually and include a timetable for
                    implementation and accomplishment.

2.   MET  NOT MET   The QAP is comprehensive in scope and provides for review
                    of the entire range of care (clinical as well as
                    non-clinical) provided under the contract. The needs of all
                    demographic groups are considered in the QAP.

3.   MET  NOT MET   The QAP specifies activities to be undertaken,
                    methodologies to be used and individuals responsible for
                    implementing them. The activities undertaken are on a
                    continuing basis with tracking of issues over time.

4.   MET  NOT MET   The QAP provides for review of the process followed by
                    health professionals and feedback to the health
                    professionals on the results of the review.

5.   MET  NOT MET   The QAP methodology addresses health outcomes to the extent
                    consistent with existing technology.

6.   MET  NOT MET   The contractor regularly monitors provider and
                    subcontractor performance/compliance with program policies
                    and contractual requirements.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD II -- SYSTEMATIC PROCESS OF QUALITY ASSESSMENT AND IMPROVEMENT

Contractor:___________________________ Date:_________

Reviewer Signature:____________________________________

1.   MET  NOT MET   The QAP specifies the clinical or health services delivery
                    areas to be monitored, which includes certain priority areas
                    of concern selected by the DHCF for Medicaid clients and
                    reflects the population served in terms of age groups,
                    disease categories and special risk status.

2.   MET  NOT MET   The QAP identifies and utilizes quality indicators that are
                    objective, measurable and based on current knowledge and
                    clinical experience.

3.   MET  NOT MET   Clinical care standards or practice guidelines are used to
                    monitor the quality of care provided. The standards used are
                    based upon reasonable scientific evidence and are included
                    in provider education materials.

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4.   MET  NOT MET   There is on-going analysis of care and services by
                    appropriate clinical and/or multidisciplinary teams. Areas
                    requiring improvement are identified.

5.   MET  NOT MET   Data from studies required in the contract with the Medicaid
                    Agency are submitted in the format and time frames specified
                    in the contract.

6.   MET  NOT MET   Standards/guidelines used focus on the process and outcomes
                    of health care delivery, as well as access to care.

7.   MET  NOT MET   Standards/guidelines address preventive health services.

8.   MET  NOT MET   There is a mechanism in place for continuously updating the
                    standard/guidelines.

9.   MET  NOT MET   The QAP includes procedures for remedial action when
                    deficiencies are identified. It specifies the types of
                    problem requiring corrective action, the individuals
                    responsible for making final determinations regarding
                    quality problems, the actions to be taken, provision for
                    providing feedback to appropriate individuals, the next
                    steps should improvement not occur and procedures and
                    conditions for terminating a provider.

10.  MET  NOT MET   The QAP includes provisions for monitoring and evaluation of
                    corrective actions to ensure that actions for improvement
                    have been effective.

11.  MET  NOT MET   The organization routinely evaluates the QAP and produces
                    quality assurance reports.

12.  MET  NOT MET   Written reports on the QAP are prepared that address:
                    Quality assurance studies and other activities completed;
                    trending of clinical and service indicators and other
                    performance data; demonstrated improvement in quality; areas
                    of deficiency and recommendations for corrective action; and
                    an evaluation of the overall effectiveness of the QAP.
                    Reports are submitted to the Medicaid Agency in accordance
                    with the contract.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD III -- ACCOUNTABILITY TO THE GOVERNING BODY;

Contractor:______________________ Date:__________ Met By Accreditation:___

Reviewer Signature:__________________________________

1.   MET  NOT MET   There is documentation that the Governing Body has approved
                    the overall QAP and an annual QAP.

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2.   MET  NOT MET   There is evidence that the Governing Body has formally
                    designated an accountable entity or entities to provide
                    oversight and quality assurance.

3.   MET  NOT MET   There is evidence that the Governing Body receives written
                    progress reports of the activities of the QAP and directs
                    that the operational QAP be modified on an ongoing basis to
                    accommodate review findings and issues of concern.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Standard IV -- ACTIVE QUALITY ASSURANCE COMMITTEE

Contractor:________________________ Date:________Met By Accreditation:____

Reviewer Signature:_________________________________

1.   MET  NOT MET   The QAP delineates an identifiable structure responsible for
                    performing quality assurance functions.

2.   MET  NOT MET   There is evidence that the committee or other structure has
                    regular meetings, established parameters for operating,
                    documentation of activities, and active participation of
                    providers who are representative of the composition of the
                    health plan's providers.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD V -- QUALITY ASSURANCE PLAN SUPERVISION

Contractor:____________________Date:___________ Met By Accreditation:________

Reviewer Signature:_________________________________

1.   MET  NOT MET   There is a designated senior executive who is responsible
                    for program implementation.

2.   MET  NOT MET   The medical director is actively involved in the
                    administration of the plan.

3.   MET  NOT MET   There is evidence that the medical director is actively
                    involved in peer review/education.

4.   MET  NOT MET   The medical director is readily available to staff to
                    provide daily consultation.

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Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD VI -- ADEQUATE RESOURCES

Contractor:_______________________ Date:_______Met By Accreditation:_________

Reviewer Signature:____________________________________

1.   MET  NOT MET   The QAP staffing conforms with usual and customary industry
                    practices.

2.   MET  NOT MET   The organization has established contingency plans to
                    fulfill the responsibilities of any vacant key positions.

3.   MET  NOT MET   There is evidence of open communication between divisions
                    within the plan such as: provider services, member services,
                    contracting, planning and management.

4.   MET  NOT MET   Managers/staff from the above specialty division participate
                    in planning and quality improvement activities.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD VII -- PROVIDER PARTICIPATION IN THE QUALITY ASSURANCE PLAN

Contractor:____________________ Date:________Met By Accreditation:________

Reviewer Signature:__________________________________

1.   MET  NOT MET   All providers both physician and non-physician are aware of
                    the QAP and kept apprised of quality assurance activities.

2.   MET  NOT MET   All provider contracts/agreements require cooperation with
                    the QAP.

3.   MET  NOT MET   All contracts/agreements require access to medical records
                    of enrollees.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

STANDARD VIII -- DELEGATION OF QUALITY ASSURANCE PLAN ACTIVITIES

Contractor:______________________ Date:______Met By Accreditation:_________

Reviewer Signature:___________________________________

1.   MET  NOT MET N/A  QAP activities delegated to contractors include a written
                       description of activities and the delegates
                       accountability for the activities.

2.   MET  NOT MET N/A  There is evidence that there is continuous and ongoing
                       evaluation of the delegated activities by the MCO.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD IX -- CREDENTIALING AND RECREDENTIALING

Contractor:_____________________Date:__________Met By Accreditation:________

Reviewer Signature:____________________________________

1.   MET  NOT MET   The contractor has written credentialing standards and/or
                    procedures.

2.   MET  NOT MET   The credentialing activities include the following:

                       Yes  No   Verification of licensure

                       Yes  No   Verification of board and specialty
                                 certification

                       Yes  No   Verification of acceptable levels of
                                 malpractice coverage

                       Yes  No   Evaluation of practice history, particularly
                                 related to participation in the Medicaid
                                 program

                       Yes  No   Verification of hospital admitting privileges

3.   MET  NOT MET   The contractor has an established recredentialing process.

4.   MET  NOT MET   The recredentialing process includes the same elements as
                    the initial credentialing process. (Note differences in
                    comment section)

5.   MET  NOT MET   Board certification or board admissibility is required for
                    specialists.

6.   MET  NOT MET   There are procedures in place to identify/address situations
                    where a participating physician loses licensure, admitting
                    privileges, or board certification.

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Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD X -- ENROLLEE RIGHTS AND RESPONSIBILITIES

Contractor:___________________Date:_________________

Reviewer Signature:_________________________________

 1.  MET  NOT MET   There is an established member services function.

 2.  MET  NOT MET   Member service representatives are qualified.

 3.  MET  NOT MET   Multilingual service representatives are available as
                    necessary.

 4.  MET  NOT MET   Members are informed of the availability/role of member
                    services.

 5.  MET  NOT MET   Members services handbooks are issued upon enrollment.

 6.  MET  NOT MET   Written materials are accurate and appropriate (e.g.
                    available in foreign languages and low reading levels when
                    necessary).

 7.  MET  NOT MET   Member services handbooks inform members of all relevant
                    policies and procedures and include information on obtaining
                    further explanations.

 8.  MET  NOT MET   Updated handbooks are regularly distributed to existing
                    members.

 9.  MET  NOT MET   If the contractor disseminates a newsletter to members, it
                    is distributed to Medicaid enrollees, also.

10.  MET  NOT MET   Members are presented written and oral information on
                    appropriate utilization of services, prior authorization
                    procedures, appropriate use of the emergency room, use of
                    out-of-plan services, and obtaining care when outside the
                    plan's service area.

11.  MET  NOT MET   Written materials that describe coverage and how to access
                    services include a contact person to call if the enrollee
                    has difficulty understanding the procedures.

12.  MET  NOT MET   Written policies/procedures are followed.

13.  MET  NOT MET   Changes in primary care providers are processed promptly and
                    in accordance with contractual requirements.

14.  MET  NOT MET   Member service representative appropriately address
                    inquiries from members.

Utah Division of Health Care Financing                             Page 27 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

15.  MET  NOT MET   The contractor offers health education programs for members
                    and these programs are based on a needs assessment of
                    Medicaid members.

16.  MET  NOT MET   Health education programs are accessible to Medicaid members
                    considering such factors as cost, location, child care, etc.

17.  MET  NOT MET   The contractor regularly evaluates the effectiveness of its
                    health promotion activities and such activities are
                    restructured as a result of such evaluations.

18.  MET  NOT MET   The contractor conducts out reach efforts to: 1) enhance
                    pediatric preventive care; 2) promote early access to
                    prenatal care services; 3) promote early diagnosis and
                    treatment for HIV disease; and 4) promote use of other
                    preventive services, such as family planning.

19.  MET  NOT MET   Protocols for non-compliant members are present.

20.  MET  NOT MET   The contractors written complaint/grievance procedures are
                    consistent with those approved by Medicaid. (Note
                    discrepancies in "comments" section)

21.  MET  NOT MET   Complaints and/or grievances filed within the past contract
                    year were handled in accordance with approved procedures.

22.  MET  NOT MET   Grievances are effectively tracked.

23.  MET  NOT MET   Grievances are handled in a timely manner

24.  MET  NOT MET   Unresolved grievances are promptly referred to Medicaid for
                    resolution.

25.  MET  NOT MET   Complaints and/or grievances are reported to the
                    contractor's quality assurance committee.

26.  MET  NOT MET   Member services representative actively participate in
                    complaint/grievance resolution.

27.  MET  NOT MET   Employees, providers, and subcontractors are aware of the
                    grievance policies and procedures.

28.  MET  NOT MET   Members have received written copies of the
                    complaint/grievance procedures.

29.  MET  NOT MET   Materials distributed to members include the following:

                       Yes  No   Titles and telephone numbers of individuals to
                                 whom a grievance should be directed;

                       Yes  No   Where and how to obtain any forms or
                                 documentation that may be necessary;

                       Yes  No   How and with whom a face-to-face meeting can be
                                 held to

Utah Division of Health Care Financing                             Page 28 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

                                 discuss the complaint/grievance;

                       Yes  No   The appeals process and options available in
                                 the event that the enrollee is not satisfied
                                 with contractor's response (including an appeal
                                 to the Medicaid agency and the right to a fair
                                 hearing) and the time frames to be followed in
                                 responding to the initial grievance and any
                                 appeals;

                       Yes  No   Titles of the personnel participating in the
                                 process who have the authority to require
                                 corrective action; and

                       Yes  No   An explanation of applicable time frames.

30.  MET  NOT MET   The member is advised in writing of the status/outcome of
                    the complaint or grievance and of the next step in the
                    process if the issue is not resolved.

31.  MET  NOT MET   The contractor regularly inform members about changes in the
                    grievance procedures.

32.  MET  NOT MET   There is evidence that the primary care providers understand
                    member complaint/grievance procedures.

33.  MET  NOT MET   Recorded grievances identify areas for improvement in the
                    contractor's policies and procedures, provider network,
                    benefits design, etc. When areas are identified, the
                    information is incorporated into the contractor's quality
                    assurance activities.

34.  MET  NOT MET   The quality assurance committee evaluates if there is a
                    correlation between complaint/grievances and disenrollment
                    from coordinated care.

35.  MET  NOT MET   The policies and procedures used by the contractor safeguard
                    client information including: name, address, medical
                    services provided, social and economic circumstances, agency
                    evaluation of personal information, medical data (including
                    diagnosis) and information related to medical assistance
                    eligibility and third party coverage.

36.  MET  NOT MET   The contractor has written policies/procedures that address
                    the use and disclosure of information concerning Medicaid
                    enrollees.

37.  MET  NOT MET   The types of information to be safeguarded and the
                    conditions for release of safeguarded information is clearly
                    defined.

38.  MET  NOT MET   There are procedures in place to protect against
                    unauthorized disclosure.

39.  MET  NOT MET   The records regarding family planning services are kept
                    confidential.

40.  MET  NOT MET   There are written policies regarding the appropriate
                    treatment of minors.

41.  MET  NOT MET   The plan conducts patient satisfaction surveys at least
                    yearly.

42.  MET  NOT MET   The results of the survey of Medicaid member satisfaction
                    compares

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

                    favorably with results of the survey of commercial members.

43.  MET  NOT MET   The survey results do not indicate critical areas for
                    further investigation/ action. If indications present
                    explain in comment section.

44.  MET  NOT MET   Enrollees change primary care providers at a frequency
                    comparable to other plans.

45.  MET  NOT MET   Enrollees disenroll from the plan at a rate comparable to
                    enrollees of other plans.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD XI -- STANDARD FOR AVAILABILITY AND ACCESSIBILITY

Contractor:__________________________Date:___________

Reviewer Signature:____________________________________

 1.  MET  NOT MET   There are established standards for access (e.g., to
                    routine, urgent and emergency care, telephone appointments;
                    advice; and member service lines).

 2.  MET  NOT MET   There is an effective system for authorizing care (prompt
                    and appropriate authorization).

 3.  MET  NOT MET   There is an effective system for monitoring follow-up care.

 4.  MET  NOT MET   Member service telephone calls are answered promptly.

 5.  MET  NOT MET   Non-English speaking members and hearing impaired members
                    can reach a member services representative by telephone.

 6.  MET  NOT MET   The availability of materials in languages other than
                    English is sufficient to meet the needs of the eligible
                    population.

 7.  MET  NOT MET   Staff is educated in ways to show cultural and ethnic
                    sensitivity to members.

 8.  MET  NOT MET   Member services representatives assist members in their
                    selection of primary care providers.

 9.  MET  NOT MET   The contractor has agreements in place with primary care
                    practitioners, specialists, hospitals, home health agencies,
                    pharmacies, and other providers of services offered to plan
                    members.

10.  MET  NOT MET   Special population groups are accessing needed services.

11.  MET  NOT MET   The contractor has appropriate linkages to social service
                    agencies to be used

Utah Division of Health Care Financing                             Page 30 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

                    with their case management services.

12.  MET  NOT MET   Providers are located near mass transportation (at least to
                    the extent that non-plan Medicaid providers are located
                    near transportation).

13.  MET  NOT MET   Provider facilities are accessible to individuals with
                    limited mobility and other disabilities.

14.  MET  NOT MET   The contractor accepts new enrollees in the order they apply
                    until reaching full capacity.

15.  MET  NOT MET   There is no evidence of discrimination in marketing
                    practices related to health status or health care needs
                    (i.e., use of a pre-enrollment "health screening" form).

16.  MET  NOT MET   Members have a choice of at least two primary care
                    physicians- -within a specified radius of their residence
                    (i.e., 40 miles/40 minutes).

17.  MET  NOT MET   The contractor has written standards for clinically
                    appropriate waiting times for medical appointments.

18.  MET  NOT MET   The contractor regularly monitors waiting times.

19.  MET  NOT MET   The contractor has a formal outreach effort targeted to
                    pregnant women.

20.  MET  NOT MET   The contractor has a mechanism to identify pregnant women
                    already enrolled in the plan and to help them enter prenatal
                    care.

21.  MET  NOT MET   The contractor has a mechanism established to track the
                    prenatal care that pregnant members receive.

22.  MET  NOT MET   The contractor has protocols established to follow up on
                    members who do not comply with prenatal care visits.

23.  MET  NOT MET   The contractor assigns an obstetrician or other qualified
                    provider to pregnant women on enrollment, or in a timely
                    manner as soon as the pregnancy is identified.

24.  MET  NOT MET   The contractor has mechanisms to ensure early entry to care
                    for pregnant women.

25.  MET  NOT MET   The plan's percentage of sick newborns relative to total
                    births have decreased. (Trend and not a single reporting
                    period phenomenon)

26.  MET  NOT MET   The contractor monitors provider compliance with CHEC/EPSDT
                    requirements.

27.  MET  NOT MET   The contractor provides training and education on CHEC/EPSDT
                    requirements to providers and their staff.

28.  MET  NOT MET   All members are notified of CHEC/EPSDT screening services
                    and notified in

Utah Division of Health Care Financing                            Page 31 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

                    writing when appointments need to be scheduled.

29.  MET  NOT MET   Referrals are tracked to ensure that members receive needed
                    care.

30.  MET  NOT MET   Follow-up tracking is done on members who do not make
                    appointments or keep appointments to investigate any low
                    penetration of CHEC/EPSDT services (i.e. outreach plans for
                    protocols for the age group which is not seeking services).

31.  MET  NOT MET   Outreach programs are being actively developed to encourage
                    eligible members to utilize available services.

32.  MET  NOT MET   A sufficient sample of CHEC/EPSDT charts are audited on
                    a regular basis.

33.  MET  NOT MET   System management reports and other utilization reports are
                    reviewed in the health plan's assessment of the
                    effectiveness and utilization of CHEC/EPSDT services.

34.  MET  NOT MET   The contractor enforces policies and procedures that protect
                    the client's freedom to choose any qualified provider of
                    family planning services.

35.  MET  NOT MET   Family planning services are geographically accessible to
                    each member in the health plan's service area.

36.  MET  NOT MET   The member's participation in family planning services
                    (utilization of services) are on a voluntary basis, and not
                    a prerequisite to eligibility or receipt of other services.

37.  MET  NOT MET   The medical care components of family planning services are
                    overseen by the plan's medical director.

38.  MET  NOT MET   The contractor's network contains physicians with special
                    training or experience in family planning services.

39.  MET  NOT MET   The contractor has developed written protocols that detail
                    specific procedures for the provision of each family
                    planning service offered.

40.  MET  NOT MET   Hysterectomies and sterilization procedures are conducted
                    according to Federal and State regulation.

41.  MET  NOT MET   The contractor has developed measures to monitor the
                    utilization of family planning services.

42.  MET  NOT MET   Utilization data regarding family planning services is
                    monitored by the contractor.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Utah Division of Health Care Financing                            Page 32 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

STANDARD XII -- MEDICAL RECORDS STANDARDS

Contractor:_____________________Date:________Met By Accreditation:________

Reviewer Signature:____________________________________

1.   MET  NOT MET   The contractor has written procedures for record keeping.

2.   MET  NOT MET   The medical records keeping system is designed to capture
                    the following information:

                       Yes  No   Enrollee identifiers (i.e. name, date of birth,
                                 and enrollee identification number)

                       Yes  No   Whether or not the patient has written an
                                 advance directive.

                       Yes  No   Patient background and medical history
                                 including allergies, immunizations, and
                                 medication information.

                       Yes  No   Date of service

                       Yes  No   Description of service

                       Yes  No   Place of service

                       Yes  No   Date of request/referral

                       Yes  No   Name of servicing provider(s)

                       Yes  No   Name of referring provider, if applicable

                       Yes  No   Diagnosis

                       Yes  No   The terms of any referrals/authorization made
                                 by the primary care physician (i.e. number of
                                 visits authorized, open ended referral vs.
                                 specified number of visits)

                       Yes  No   Documentation of emergency care, hospital
                                 discharge summaries, ancillary services

                       Yes  No   Clinical indicators

                       Yes  No   Outcome measures

3.   MET  NOT MET   All entries in the medical record are dated and all authors
                    identified.

4.   MET  NOT MET   Records are available to providers at each patient
                    encounter.

5.   MET  NOT MET   Records are maintained for the amount of time specified in
                    the contract.

Utah Division of Health Care Financing                             Page 33 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

6.   MET  NOT MET   Records (medical, financial, enrollment, disenrollment,
                    administrative, quality assurance and operating records) are
                    accessible to personnel and government authorities as
                    necessary and appropriate.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD XIII -- UTILIZATION REVIEW

Contractor:_________________ Date:______Met By Accreditation:_________

Reviewer Signature:_______________________________

 1.  MET  NOT MET   The contractor has written policies and procedures
                    describing its utilization review program.

 2.  MET  NOT MET   The contractor has a formally established utilization review
                    committee.

 3.  MET  NOT MET   Appropriate medical consultants participate in the UR
                    committee.

 4.  MET  NOT MET   The utilization review system include the following
                    components.

                       Yes  No   Prior approval review

                       Yes  No   Second opinion program

                       Yes  No   Concurrent review

                       Yes  No   Discharge planning

                       Yes  No   Physician profile reports

                       Yes  No   Trend reports

                       Yes  No   Identification of patterns of care

                       Yes  No   Tracking of clinical indicators

                       Yes  No   Referral tracking

 5.  MET  NOT MET   The UR program identifies both over and under utilization.

 6.  MET  NOT MET   The contractor's outreach activities are sufficient given
                    the size of the plan.

 7.  MET  NOT MET   The Contractor's utilization review program is effective.

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

 8.  MET  NOT MET   There are sufficient qualified personnel/resources devoted
                    to utilization review.

 9.  MET  NOT MET   The contractor regularly evaluate the effectiveness of the
                    utilization review program.

10.  MET  NOT MET   Members receive necessary and appropriate services.

11.  MET  NOT MET   Enrollees receive appropriate diagnostic test and specialty
                    referrals.

12.  MET  NOT MET   Preauthorization and concurrent review decisions are
                    supervised by qualified medical professionals.

13.  MET  NOT MET   Efforts are made to obtain all necessary information and
                    consult with the treating physician as appropriate during
                    preauthorization and concurrent review.

14.  MET  NOT MET   Reasons for decisions are clearly documented and available
                    to the member.

15.  MET  NOT MET   Providers and members are informed of the utilization review
                    appeals process.

16.  MET  NOT MET   Appeals are handled in a timely manner.

17.  MET  NOT MET   Analysis of data from the UR system is part of the quality
                    assurance process.

18.  MET  NOT MET   Utilization review activities reflect use of alternative
                    health care services in lieu of hospitalization.

19.  MET  NOT MET   Physician profiling is part of the utilization review
                    process.

20.  MET  NOT MET   The physician profile information is shared with plan
                    providers for educational purposes.

 Comments:______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD XIV -- CONTINUITY OF CARE SYSTEM

Contractor:____________________Date:_______Met By Accreditation:________

Reviewer Signature:___________________________________

1.   MET  NOT MET   There is a basic system in place to assure continuity of
                    care to all enrollees.

2.   MET  NOT MET   There is a case management system in place to assist
                    enrollees requiring these services.

Utah Division of Health Care Financing                             Page 35 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD XV -- QUALITY ASSURANCE PLAN DOCUMENTATION

Contractor:_________________________Date:____________

Reviewer Signature:____________________________________

1.   MET  NOT MET   There is documentation that the MCO is monitoring the
                    quality of care across all services and all treatment
                    modalities, according to its written QAP.

2.   MET  NOT MET   Documentation of QAP activities including corrective actions
                    is maintained and available for review by the State Agency
                    or its designee. (studies, protocols, standards, meeting
                    minutes, reports, worksheets, etc.)

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD XVI -- COORDINATION OF QUALITY ASSURANCE ACTIVITY WITH OTHER MANAGEMENT
                ACTIVITY

Contractor:___________________Date:_______Met By Accreditation:________

Reviewer Signature:_________________________________

1.   MET  NOT MET   The quality assurance activities are coordinated with other
                    performance monitoring activities.

2.   MET  NOT MET   There is linkage between quality assurance and the other
                    management functions of the health plan, such as network
                    changes, benefits redesign, medical management systems,
                    physician education and patient education.

3.   MET  NOT MET   Data from the utilization review system is used to educate
                    providers regarding norms and expected utilization patterns.

4.   MET  NOT MET   Utilization review findings are incorporated into quality
                    assurance activities, provider recredentialing activities
                    and long range planning.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Utah Division of Health Care Financing                             Page 36 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

STANDARD XVII -- DATA COLLECTION

Contractor:____________________ Date:___________

Reviewer Signature:__________

1.   MET  NOT MET   The data provided is in accordance with contract
                    requirements.

2.   MET  NOT MET   Membership reports are timely, accurate and complete:

                       Yes No    Enrollment data

                       Yes  No   Disenrollment summaries (reasons for leaving
                                 plan)

                       Yes  No   Outreach activities

                       Yes  No   Satisfaction surveys

                       Yes  No   Grievance reports

3.   MET  NOT MET   Quality assurance/access reports are timely, accurate and
                    complete.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

STANDARD XVIII -- FINANCIAL SOLVENCY

Contractor:________________________Date:___________

Reviewer Signature:_________________________________

1.   MET  NOT MET   The contractor complies with requirements to allow
                    inspection/audit of financial records.

2.   MET  NOT MET   The contractor is found to be financially solvent by the
                    Utah State Insurance Commission.

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Utah Division of Health Care Financing                             Page 37 of 39

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Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

                                WORK SHEET TOTALS

MET   NOT MET                   STANDARD

___     ____     Standard I     - Written Quality Assurance Plan Description

___     ____     Standard II    - Systematic Process of Quality Assessment and
                                  Improvement

___     ____     Standard III   - Accountability to the Governing Body

___     ____     Standard IV    - Active Quality Assurance Committee

___     ____     Standard V     - Quality Assurance Plan Supervision

___     ____     Standard VI    - Adequate Resources

___     ____     Standard VII   - Provider Participation and Delegation of
                                  Quality Assurance Plan Activities

___     ____     Standard VIII  - Delegation of Quality Assurance Plan
                                  Activities

___     ____     Standard IX    - Credentialing and Recredentialing

___     ____     Standard X     - Enrollee Rights and Responsibilities

___     ____     Standard XI    - Availability and Accessibility

___     ____     Standard XII   - Medical Records

___     ____     Standard XIII  - Utilization Review

___     ____     Standard XIV   - Continuity of Care System

___     ____     Standard XV    - Quality Assurance Plan Documentation

___     ____     Standard XVI   - Coordination of Quality Assurance Activity
                                  with other Management Activity

___     ____     Standard XVII  - Data Collection

___     ____     Standard XVIII - Financial Solvency

================================================================================

___     ____   TOTAL

Comments:_______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________

Utah Division of Health Care Financing                             Page 38 of 39

<PAGE>

Bureau of Managed Health Care         Utah MCO Quality Assurance Monitoring Plan

                                      NOTES

Utah Division of Health Care Financing                             Page 39 of 39

<PAGE>

                            UTAH DEPARTMENT OF HEALTH
                 288 North 1460 West, Salt Lake City, Utah 84116

                               CONTRACT AMENDMENT
    H9920205-01                                                   00-6146
---------------------                                      ---------------------
Department Log Number                                      State Contract Number

1.   CONTRACT NAME:
     The name of this Contract is HMO-AMERICAN FAMILY CARE the Contract number
     assigned by the State Division of Finance is 00-6146 the Department log
     number assigned by the Utah Department of Health is H9920205, and this
     Amendment is number 01.

2.   CONTRACTING PARTIES:
     This Contract Amendment is between the Utah Department of Health
     (DEPARTMENT), and American Family Care (CONTRACTOR).

3.   PURPOSE OF CONTRACT AMENDMENT:
     To add rural counties to the Contractor's service area effective January 1,
     2000; to establish rates specifically for the rural counties, and to
     increase the Contract amount from $ [*] to $ [*]

4.   CHANGES TO CONTRACT:

     A.   Under Page 1, Item 4, CONTRACT AMOUNT is changed to read:
          "The Contractor will be paid up to a maximum amount of $ [*]
          for the Contract period in accordance with the provisions in this
          Contract. This Contract is funded with 71.61% Federal funds and with
          28.39% State funds. The CFDA # is 93.778 and relates to the federal
          funds provided."

     B.   Under Page 1, Item 6, REFERENCE TO ATTACHMENTS INCLUDED AS PART OF
          THIS CONTRACT is amended by adding Attachment F-1, Rates and Rate
          Related Terms for the Rural counties.

     C.   Under Attachment B, Special Provisions, Article II, Service Area is
          changed to read:
          "The Service Area is limited to the urban counties of Davis, Salt
          Lake, Utah and Weber, and the rural counties of Box Elder, Cache,
          Beaver, Garfield, Iron, Kane, and Washington."

     D.   Attachment F-1, Rates and Rate-Related Terms for the Rural Counties is
          added to the Contract as attached to this Amendment.

     E.   All other provisions of the Contract remain unchanged.

5.   If the Contractor is not a local public procurement unit as defined by the
     Utah Procurement Code (UCA Section 63-56-5), this Contract Amendment must
     be signed by a representative of the State Division of Finance and the
     State Division of Purchasing to bind the State and the Department to this
     Contract Amendment.

6.   This Contract, its attachments, and all documents incorporated by reference
     constitute the entire agreement between the parties and supercede all prior
     negotiations, representations, or agreements, either written or oral
     between the parties relating to the subject matter of this Contract.

IN WITNESS WHEREOF, the parties sign this Contract Amendment.

CONTRACTOR: AMERICAN FAMILY CARE          UTAH DEPARTMENT OF HEALTH

By: /s/ Kirk Olsen            4 Jan 2000  By: /s/ Shari A. Watkins,   01/07/2000
   -------------------------  ----------     ------------------------ ----------
   Signature of Authorized    Date           Shari A. Watkins, C.P.A. Date
   Individual                                Director
                                             Official of Fiscal
                                             Operations

Print Name:     Kirk Olsen                [SEAL]                      1/7/00
            ----------------------------  -------------------------   ----------
                                          State Finance:              Date
Title:     Chief Executive Officer
      ----------------------------------  /s/ [ILLEGIBLE]             1/7/2000
                                          -------------------------   ----------
           33-0617992                     State Purchasing:           Date
------------------------------------
Federal Tax Identification Number or
      Social Security Number

                                     Page 1

<PAGE>

                ATTACHMENT F-1 RURAL RATES AND RATE-RELATED TERMS

                            Effective January 1, 2000

                              AMERICAN FAMILY CARE

 A.  PREMIUM RATES

     7.   MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
    Age         TANF Male        TANF Male       TANF Female       TANF Female
   0 to 1        1 to 21         21 & Over        1 to 21           21 & Over           Aged
====================================================================================================
 <S>            <C>              <C>             <C>                <C>                 <C>
 $   [*]         $ [*]            $ [*]           $    [*]         $     [*]            $ [*]
----------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
 Disabled         Disabled          Medically         Medically        Non TANF       Restriction
   Male            Female          Needy Child       Needy Adult      Pregnant F        Program
====================================================================================================
 <S>             <C>              <C>             <C>              <C>                  <C>
 $   [*]         $ [*]            $ [*]           $    [*]         $     [*]            $ [*]
----------------------------------------------------------------------------------------------------
</TABLE>

     8.   SPECIAL RATE

          An AIDS rate of $[*] per month will be paid in addition to the regular
          monthly premium when the T-Cell count is below 200.

B.   PER DELIVERY REIMBURSEMENT SCHEDULE

     The DEPARTMENT shall reimburse the CONTRACTOR $[*] per delivery to cover
     all Medically Necessary antepartum care, delivery, and postpartum
     professional, facility and ancillary services. The monthly premium amount
     for the enrollee is in addition to the delivery fee. The delivery payment
     will be made when the delivery occurs at 22 weeks or later, regardless of
     viability.

C.   CHEC SCREENING INCENTIVE CLAUSE

     1.   CHEC Screening Goal

          The CONTRACTOR will ensure that Medicaid children have access to
          appropriate well-child visits. The CONTRACTOR will follow the Utah
          EPSDT (CHEC) guidelines for the periodicity schedule for well-child
          protocol. The federal agency, Health Care Financing Administration,
          mandates that all states have 80% of all children screened. The
          DEPARTMENT and the CONTRACTOR will work toward that goal.

                                   Page 1 of 4

<PAGE>

     2.   Calculation of CHEC Incentive Payment

          The DEPARTMENT will pay the CONTRACTOR $ [*] for each percentage point
          over 60% achieved by the CONTRACTOR. The DEPARTMENT will calculate the
          CONTRACTOR'S annual participation rate based on information supplied
          by the CONTRACTOR under the EPSDT (CHEC) reporting requirements at the
          same time each federal fiscal year's HCFA-416 is calculated. Payment
          will be based on the percentages determined at that time.

     3.   CONTRACTOR's Use of Incentive Payment

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the EPSDT (CHEC)
          participation rate.

D.   STOP-LOSS/REINSURANCE POLICY

     Stop-loss under item #1 below will be administered by a reinsurer,
     TransAmerica Occidental Life Insurance Company (TransAmerica). TransAmerica
     will partially administer stop-loss under item #2 below.

     1.   REINSURANCE (all services including kidney, liver, and cornea and
          excluding specific organ transplantations defined in D.2. below)

          Costs, net of TPL, for all inpatient and outpatient services listed in
          Attachment C (including kidney, liver, and cornea transplantations,
          but excluding bone marrow, heart, intestine, lung, pancreas, small
          bowel, combination heart/lung, combination intestine/liver,
          combination kidney/pancreas, multi visceral, combination liver/small
          bowel, any additional approved transplantations) that are covered on
          the date of service rendered and incurred from July 1, 1999 through
          June 30, 2000 by the MCO for an Enrollee shall be shared by
          Transamerica under the following conditions:

          a.   the date of service is from July 1, 1999 through June 30, 2000
               (based on date of discharge if inpatient hospital stay);

          b.   paid claims incurred by the MCO exceed $50,000; and

          c.   services shall have been incurred by the MCO during the time the
               client is enrolled with the MCO.

          If the above conditions are met, TransAmerica shall bear [*]% and the
          MCO shall bear [*]% of the amount that exceeds $50,000.

                                   Page 2 of 4

<PAGE>

     2.   STOP-LOSS/REINSURANCE FOR SPECIFIC ORGAN TRANSPLANTATIONS

          Costs, net of TPL, for bone marrow, heart, intestine, lung, pancreas,
          small bowel, combination heart/lung, combination intestine/liver,
          combination kidney/pancreas, multi visceral, combination liver/small
          bowel, and any additional approved transplantations (other than
          kidney, liver, and cornea) that are covered on the date of service
          rendered and incurred from July 1, 1999 through June 30, 2000 by the
          MCO for an Enrollee shall be shared by the DEPARTMENT, Transamerica
          and the MCO under the following conditions:

          a.   the date of service is from July 1, 1999 through June 30, 2000
               (based on date of discharge if inpatient hospital stay);

          b.   paid claims incurred by the MCO exceed $40,000; and

          c.   services shall have been incurred by the MCO during the time the
               client is enrolled with the MCO;

          d.   the stop-loss billings for the first $40,000 must be submitted to
               the DEPARTMENT in a format mutually agreed upon; and

          e.   stop-loss billings for the first $40,000 must be submitted to the
               DEPARTMENT within six months of the end of the Contract year.

          If the above conditions are met, the DEPARTMENT shall reimburse the
          MCO the first $40,000; TransAmerica, shall bear [*]% and the MCO shall
          bear [*]% of the amount that exceeds $40,000.

          Stop-loss/reinsurance provisions are normally based on services
          provided within the contract period ending June 30. However, for
          purposes of this stop-loss/reinsurance provision the Contract period
          is extended for transplantations performed between April 1, 2000 and
          June 30, 2000. When the transplantation is performed between April 1,
          2000 and June 30, 2000 the payment for the first $40,000 of the
          transplantation costs and the costs that exceed $40,000 can be applied
          to this stop-loss/reinsurance provision for up to 90 days after the
          transplantation is performed.

E.   REIMBURSEMENT FOR REINSURANCE

     The CONTRACTOR agrees to purchase reinsurance from TransAmerica at the rate
     negotiated by the DEPARTMENT of $ [*] per Enrollee per month. The
     DEPARTMENT will reimburse the CONTRACTOR for their premium payments to
     TransAmerica.
        In addition, the DEPARTMENT will pay the CONTRACTOR [*]% of the premium
     to cover reinsurance administrative costs.

                                   Page 3 of 4

<PAGE>

     1.   INTERIM PAYMENTS

          Beginning July 1, 1999, the DEPARTMENT will make monthly interim
          payments to the CONTRACTOR based on the reinsurance premiums the
          CONTRACTOR pays to Insurance Strategies, an agent of TransAmerica. The
          reinsurance premiums will be calculated using the previous month's
          number of Enrollees.

     2.   FINAL SETTLEMENT

          The DEPARTMENT will calculate the actual reinsurance amount due to the
          CONTRACTOR one month after the end of each contract year. The
          settlement will be based on actual Enrollee months.

F.   RISK SHARING PROVISION

     The DEPARTMENT agrees to retroactively adjust annual payments made to the
     CONTRACTOR under this Contract for clients living in the rural counties of
     Box Elder, Cache, Iron, Kane, Washington, Garfield and Beauer.

     1.   CONTRACTOR'S CLAIM EXPENDITURES EXCEEDING PREMIUMS, ETC.

          If the CONTRACTOR'S claim expenditures exceed the premiums paid plus
          other contract payments, the DEPARTMENT will reimburse the CONTRACTOR
          for the unrecovered costs related to claim expenditures. Claim
          contract payments include stop-loss payments. Therefore, the paid
          claims expenditures will also include stop-loss claims paid by the
          CONTRACTOR.

     2.   CONTRACTOR'S CLAIM EXPENDITURES LESS THAN PREMIUMS, ETC.

          If the CONTRACTOR'S claim expenditures are less than the premiums paid
          plus other contract payments, the CONTRACTOR can retain up to [*]% of
          the excess premiums paid and other payments. If there are additional
          savings after the CONTRACTOR has recovered the 10%, the DEPARTMENT and
          CONTRACTOR will share these savings on a 50-50 basis. Claim contract
          payments include stop-loss payments. Therefore, the paid claims
          expenditures will also include stop-loss claims paid by the
          CONTRACTOR.

          A request for a risk sharing adjustment shall be submitted to the
          DEPARTMENT no later than six months after the close of the contract
          year. The CONTRACTOR agrees to use its Medicaid payment rates and fee
          schedules used to price their Medicaid product as a basis for the risk
          sharing calculation.

                                   Page 4 of 4

<PAGE>

                            UTAH DEPARTMENT OF HEALTH
                 288 North 1460 West, Salt Lake City, Utah 84116

                               CONTRACT AMENDMENT

    H9920205-02                                                  00-6146
---------------------                                     ---------------------
Department Log Number                                     State Contract Number

1. CONTRACT NAME:
   The name of this Contract is HMO-AMERICAN FAMILY CARE, the Contract number
   assigned by the State Division of Finance is 006146, the Department log
   number assigned by the Utah Department of Health is H9920205, and this
   Amendment is number 2.

2. CONTRACTING PARTIES:
   This Contract Amendment is between the Utah Department of Health
   (DEPARTMENT), and American Family Care of Utah, Inc. (CONTRACTOR).

3. PURPOSE OF CONTRACT AMENDMENT:
   To modify some of the provisions under Attachments B, C, and E; to add
   provisions under Attachment B; and to increase the rates effective July 1,
   2000.

4. CHANGES TO CONTRACT:
   A. Effective July 1, 2000, under Attachment B (Special Provisions), Article I
      - Definitions, item D. "CHEC Program," delete "(See Attachment C, Covered
      Services, 21.)."

   B. Effective July 1, 2000, under Attachment B (Special Provisions), Article
      IV - Benefits, Section C. Scope of Services, add Subsection "4" as
      follows:

      4.  MEDICAL NECESSITY DENIALS

          When the CONTRACTOR determines that a service will not be covered due
          to the lack of medical necessity, the CONTRACTOR must send all
          documentation supporting their decision to the DEPARTMENT for its
          review before the CONTRACTOR's determination is deemed final, when the
          following conditions are met:

          a.   there are no established national standards for determining
               medical necessity; and

          b.   the DEPARTMENT does not have medical necessity criteria for the
               service.

          The DEPARTMENT will review the documentation and determine what the
          DEPARTMENT's decision would be regarding coverage for the service. The
          DEPARTMENT and the CONTRACTOR will work collaboratively in making a
          final decision on whether the service is to be covered by the
          CONTRACTOR.

   C. Effective July 1, 2000, under Attachment B (Special Provisions), Article
      IV-Benefits, Section E. Clarification of Covered Services, Subsection 1
      Emergency Services, delete item "c."

   D. Effective July 1, 2000, under Attachment B (Special Provisions), Article
      V-Enrollee Rights/Services, Section F. Coordination, add Subsection "3"
      as follows:

      3.  DOMESTIC VIOLENCE

          The CONTRACTOR will ensure that providers are knowledgeable about
          methods to detect domestic violence and about resources in the
          community to which they can refer patients.

   E. Effective July 1, 2000, under Attachment B (Special Provisions), Article
      VII - Other Requirements, Section C. Fraud and Abuse Requirements, add the
      following language:

      "The CONTRACTOR must have a compliance program to identify and refer
      suspected fraud and abuse activities. The compliance program should
      outline the CONTRACTOR's internal processes for identifying fraud and
      abuse."

                                   Page 1 of 3

<PAGE>

   F. Effective July 1, 2000, under Attachment B (Special Provisions), Article
      IX - Record, Reports and Audits, Section B. Periodic Reports, add
      Subsection 2. Interpretive Services as follows and renumber subsequent
      sections "3" through "9":

      2.  INTERPRETIVE SERVICES

          Annually, the CONTRACTOR will submit to the DEPARTMENT information
          about the use of interpretive services as follows: all sources of
          interpreter services, the languages for which interpreter services
          were secured, the amount of time spent by language, the expenditures
          by language, the amount of time spent by clinical versus
          administrative purposes, and the expenditures by clinical versus
          administrative purposes.

   G. Effective July 1, 2000, under Attachment B (Special Provisions), Article
      IX - Records, Reports and Audits, Section B. Periodic Reports, Subsection
      5. Encounter Data, is changed to Subsection 6 and changed to read:

      "Encounter data, as defined in the DEPARTMENT's "Encounter Records
      Technical Manual," is due (including all replacements) six months after
      the end of the quarter being reported. Encounter data will be submitted in
      accordance with the instructions detailed in the Encounter Records
      Technical Manual for dates of service beginning July 1, 1996."

   H. Effective July 1, 2000, under Attachment C. Covered Services, Item Y.
      Medical and Surgical Services of a Dentist, number 3. Services
      Specifically Covered, is changed to read as follows:

      3.  SERVICES SPECIFICALLY COVERED

          The CONTRACTOR is responsible for palliative care and pain relief for
          severe mouth or tooth pain in an emergency room. If the emergency room
          physician determines that it is not an emergency and the client
          requires services at a lesser level, the provider should refer the
          client to a dentist for treatment. If the dental-related problem is
          serious enough for the client to be admitted to the hospital, the
          CONTRACTOR is responsible for coverage of the inpatient hospital stay.
          The CONTRACTOR is responsible for authorized/ approved medical
          services provided by oral surgeons consistent with injury, accident,
          or disease (excluding dental decay and periodontal disease) including,
          but not limited to, removal of tumors in the mouth, setting and wiring
          a fractured jaw. Also covered are injuries to sound natural teeth and
          associated bone and tissue resulting from accidents including services
          by dentists performed in facilities other than the emergency room or
          hospital.

   I. Effective July 1, 2000, under Attachment C. Covered Services, Item Y.
      Medical and Surgical Services of a Dentist, number 4. Dental Services Not
      Covered, is changed to read as follows:

      4.  DENTAL SERVICES NOT COVERED

          The CONTRACTOR is not responsible for routine dental services such as
          fillings, extractions, treatment of abscess or infection,
          orthodontics, and pain relief when provided by a dentist in the office
          or in an outpatient setting such as a surgical center or scheduled
          same day surgery in a hospital including the surgical facilities
          charges.

   J. Effective July 1, 2000, under Attachment E, replace Table 2 (Cost Data)
      with Table 2 (Cost Data) and MEDICAL SERVICES REVENUE AND COST DEFINITIONS
      FOR TABLE 2 as attached to this Amendment #1.

   K. Effective July 1, 2000, replace Attachment F - Rates and Rate-Related
      Terms with Attachment F - Urban Rates and Rate-Related Terms, Effective
      July 1, 2000, as attached to this Amendment #2.

   L. Effective July 1, 2000, replace Attachment F-1 Rural Rates and
      Rate-Related Terms with Attachment F-1 Rural Rates and Rate-Related Terms,
      Effective July 1, 2000, as attached to this Amendment #2.

   M. All other provisions of the Contract remain unchanged.

                                   Page 2 of 3

<PAGE>

5.   If the Contractor is not a local public procurement unit as defined by the
     Utah Procurement Code (UCA Section 63-56-5), this Contract Amendment must
     be signed by a representative of the State Division of Finance and the
     State Division of Purchasing to bind the State and the Department to this
     Contract Amendment.

6.   This Contract, its attachments, and all documents incorporated by reference
     constitute the entire agreement between the parties and supercede all prior
     negotiations, representations, or agreements, either written or oral
     between the parties relating to the subject matter of this Contract.

IN WITNESS WHEREOF, the parties sign this Contract Amendment.

CONTRACTOR: American Family Care of Utah,     UTAH DEPARTMENT OF HEALTH
Inc.

By: /s/ Kirk Olsen          5 September 2000 By:/s/ Shari A. Watkins 9/12/2000
    ----------------------- ----------------    -------------------- -----------
    Signature of Authorized Date                Shari A. Watkins,    Date
    Individual                                  C.P.A.
                                                Director
                                                Office of Fiscal
                                                Operations

Print Name: Kirk Olsen                          [SEAL]               9/26/2000
           --------------------------           -------------------- -----------
                                                State Finance:       Date
Title: Chief Executive Officer
       ------------------------------
                                                /s/ [ILLEGIBLE]      SEP 22 2000
              33-0617992                        -------------------- -----------
---------------------------------------         State Purchasing     Date
Federal Tax Identification Number or
       Social Security Number

                                   Page 3 of 3

<PAGE>

<TABLE>
<S>                              <C>                                            <C>                                  <C>
PROVIDER NAME:                   _________________________________________         ATTACHMENT E                      ATTACHMENT E
SERVICE REPORTING PERIOD:        BEGINNING____________  ENDING____________      TABLE 1 PAGE 1 OF 1                       TABLE 1
PAYMENT DATES:                   BEGINNING____________  ENDING____________      MEDICAID ENROLLMENT                  Page 1 of 15
</TABLE>

<TABLE>
<CAPTION>
   1           2             3          4             5             6          7          8        9         10        11      12
------------------------------------------------------------------------------------------------------------------------------------
                                        AFDC                       AFDC
                                        MALE         AFDC         FEMALE       AFDC                                    MED     MED
 LINE                     INFANTS    * 21 YEARS      MALE       * 21 YEARS    FEMALE            DISABLED   DISABLED   NEDDY   NEDDY
  NO         MONTH        0-12 MOS  ** 12 MOS     21 + YEARS   **12 MOS    21 + YEARS   AGED     MALE      FEMALE    CHILD   OTHER
------------------------------------------------------------------------------------------------------------------------------------
  <S>      <C>                   <C>         <C>           <C>         <C>          <C>   <C>        <C>        <C>     <C>     <C>
   1       JULY
------------------------------------------------------------------------------------------------------------------------------------
   2       AUGUST
------------------------------------------------------------------------------------------------------------------------------------
   3       SEPTEMBER
------------------------------------------------------------------------------------------------------------------------------------
   4       OCTOBER
------------------------------------------------------------------------------------------------------------------------------------
   5       NOVEMBER
------------------------------------------------------------------------------------------------------------------------------------
   6       DECEMBER
------------------------------------------------------------------------------------------------------------------------------------
   7       JANUARY
------------------------------------------------------------------------------------------------------------------------------------
   8       FEBRUARY
------------------------------------------------------------------------------------------------------------------------------------
   9       MARCH
------------------------------------------------------------------------------------------------------------------------------------
  10       APRIL
------------------------------------------------------------------------------------------------------------------------------------
  11       MAY
------------------------------------------------------------------------------------------------------------------------------------
  12       JUNE
------------------------------------------------------------------------------------------------------------------------------------
  13       TOTAL                 0           0             0           0            0     0          0          0       0       0
------------------------------------------------------------------------------------------------------------------------------------
* less than
** greater than

<CAPTION>
   1           2             13          14         15       16
----------------------------------------------------------------------
                          NON AFDC                          MEDICAID
                          PREGNANT                            TOTAL
 LINE                      FEMALE    RESTRICTION          (SUM OF COLS
  NO         MONTH        (SOBRA)      CLIENTS     AIDS     3 THRU 15)
----------------------------------------------------------------------
  <S>      <C>                   <C>           <C>    <C>            <C>
   1       JULY                                                      0
----------------------------------------------------------------------
   2       AUGUST                                                    0
----------------------------------------------------------------------
   3       SEPTEMBER                                                 0
----------------------------------------------------------------------
   4       OCTOBER                                                   0
----------------------------------------------------------------------
   5       NOVEMBER                                                  0
----------------------------------------------------------------------
   6       DECEMBER                                                  0
----------------------------------------------------------------------
   7       JANUARY                                                   0
----------------------------------------------------------------------
   8       FEBRUARY                                                  0
----------------------------------------------------------------------
   9       MARCH                                                     0
----------------------------------------------------------------------
  10       APRIL                                                     0
----------------------------------------------------------------------
  11       MAY                                                       0
----------------------------------------------------------------------
  12       JUNE                                                      0
----------------------------------------------------------------------
  13       TOTAL                 0             0      0              0
----------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<S>                             <C>                                             <C>                                     <C>
PROVIDER NAME:                  _________________________________________         ATTACHMENT E                          ATTACHMENT E
SERVICE REPORTING PERIOD:       BEGINNING____________  ENDING____________       TABLE 2 PAGE 1 OF 2                          TABLE 2
PAYMENT DATES:                  BEGINNING____________  ENDING____________       REVENUES AND COST                       PAGE 2 OF 15
</TABLE>

<TABLE>
<CAPTION>
                                        -------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)---------------
    1             2                     3              4        5            6           7          8
----------------------------------------------------------------------------------------------------------------------
                                     TOTAL UTAH                 AFDC                          AFDC
                                     OPERATIONS                 MALE           AFDC          FEMALE          AFDC
LINE                                 (INCLUDING     INFANTS    * 21 YEARS      MALE       * 21 YEARS        FEMALE
 NO          DESCRIPTION            ALL MEDICAID)   0-12 MOS  ** 12 MOS     21 + YEARS   ** 12 MOS        21 + YEARS
----------------------------------------------------------------------------------------------------------------------
               REVENUES                              ROUND TO THE NEAREST DOLLAR
----------------------------------------------------------------------------------------------------------------------
 <S> <C>                                     <C>         <C>           <C>         <C>            <C>            <C>
  1  PREMIUMS
----------------------------------------------------------------------------------------------------------------------
  2  DELIVERY FEES (CHILD BIRTH)
----------------------------------------------------------------------------------------------------------------------
  3  REINSURANCE
----------------------------------------------------------------------------------------------------------------------
  4  STOP LOSS
----------------------------------------------------------------------------------------------------------------------
  5  TPL COLLECTIONS - MEDICARE
----------------------------------------------------------------------------------------------------------------------
  6  TPL COLLECTIONS - OTHER
----------------------------------------------------------------------------------------------------------------------
  7  OTHER (SPECIFY)
----------------------------------------------------------------------------------------------------------------------
  8  OTHER (SPECIFY)
----------------------------------------------------------------------------------------------------------------------
  9  TOTAL REVENUES                          $ 0         $ 0           $ 0         $  0           $ 0            $  0
----------------------------------------------------------------------------------------------------------------------
             MEDICAL COSTS                           ROUND TO THE NEAREST DOLLAR
----------------------------------------------------------------------------------------------------------------------
 10  INPATIENT HOSPITAL SERVICES
----------------------------------------------------------------------------------------------------------------------
 11  OUTPATIENT HOSPITAL SERVICES
----------------------------------------------------------------------------------------------------------------------
 12  EMERGENCY DEPARTMENT SERVICES
----------------------------------------------------------------------------------------------------------------------
 13  PRIMARY CARE PHYSICIAN
      SERVICES
----------------------------------------------------------------------------------------------------------------------
 14  SPECIALTY CARE PHYSICIAN
      SERVICES
----------------------------------------------------------------------------------------------------------------------
 15  ADULT SCREENING SERVICES
----------------------------------------------------------------------------------------------------------------------
 16  VISION CARE - OPTOMETRIC
      SERVICES
----------------------------------------------------------------------------------------------------------------------
 17  VISION CARE - OPTICAL
      SERVICES
----------------------------------------------------------------------------------------------------------------------
 18  LABORATORY (PATHOLOGY)
      SERVICES
----------------------------------------------------------------------------------------------------------------------
 19  RADIOLOGY SERVICES
----------------------------------------------------------------------------------------------------------------------
 20  PHYSICAL AND OCCUPATIONAL
      THERAPY
----------------------------------------------------------------------------------------------------------------------
 21  SPEECH AND HEARING SERVICES
----------------------------------------------------------------------------------------------------------------------
 22  PODIATRY SERVICES
      END STAGE RENAL DISEASE
----------------------------------------------------------------------------------------------------------------------
 23  (ESRD) SERVICES - DIALYSIS
----------------------------------------------------------------------------------------------------------------------
 24  HOME HEALTH SERVICES
----------------------------------------------------------------------------------------------------------------------
 25  HOSPICE SERVICES
----------------------------------------------------------------------------------------------------------------------
 26  PRIVATE DUTY NURSING
----------------------------------------------------------------------------------------------------------------------
 27  MEDICAL SUPPLIES AND MEDICAL
      EQUIPMENT
----------------------------------------------------------------------------------------------------------------------
 28  ABORTIONS
----------------------------------------------------------------------------------------------------------------------
 29  STERILIZATIONS
----------------------------------------------------------------------------------------------------------------------
 30  DETOXIFICATION
----------------------------------------------------------------------------------------------------------------------
 31  ORGAN TRANSPLANTS
----------------------------------------------------------------------------------------------------------------------
 32  OTHER OUTSIDE MEDICAL
      SERVICES
----------------------------------------------------------------------------------------------------------------------
 33  LONG TERM CARE
----------------------------------------------------------------------------------------------------------------------
 34  TRANSPORTATION SERVICES
----------------------------------------------------------------------------------------------------------------------
 35  ACCRUED COSTS
----------------------------------------------------------------------------------------------------------------------
 36  OTHER (SPECIFY)
----------------------------------------------------------------------------------------------------------------------
 37  OTHER (SPECIFY)
----------------------------------------------------------------------------------------------------------------------
 38  TOTAL MEDICAL COSTS                     $ 0         $ 0           $ 0         $  0           $ 0            $  0
----------------------------------------------------------------------------------------------------------------------

* less than
** greater than

<CAPTION>
                                        -------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)---------------
    1             2                   9        10         11       12       13        14         15          16        17
-------------------------------------------------------------------------------------------------------------------------------
                                                                                  NON AFDC                           MEDICAID
                                                                  MED     MED     PREGNANT                             TOTAL
LINE                                       DISABLED   DISABLED   NEDDY   NEEDY     FEMALE    RESTRICTION           (SUM OF COLS
 NO          DESCRIPTION            AGED     MALE      FEMALE    CHILD   OTHER     (SOBRA)    CLIENTS      AIDS      4 THRU 16)
-------------------------------------------------------------------------------------------------------------------------------
             REVENUES                                ROUND TO THE NEAREST DOLLAR
-------------------------------------------------------------------------------------------------------------------------------
 <S> <C>                             <C>        <C>        <C>     <C>     <C>         <C>           <C>    <C>             <C>

  1  PREMIUMS
-------------------------------------------------------------------------------------------------------------------------------
  2  DELIVERY FEES (CHILD BIRTH)
-------------------------------------------------------------------------------------------------------------------------------
  3  REINSURANCE
-------------------------------------------------------------------------------------------------------------------------------
  4  STOP LOSS
-------------------------------------------------------------------------------------------------------------------------------
  5  TPL COLLECTIONS - MEDICARE
-------------------------------------------------------------------------------------------------------------------------------
  6  TPL COLLECTIONS - OTHER
-------------------------------------------------------------------------------------------------------------------------------
  7  OTHER (SPECIFY)
-------------------------------------------------------------------------------------------------------------------------------
  8  OTHER (SPECIFY)
-------------------------------------------------------------------------------------------------------------------------------
  9  TOTAL REVENUES                  $ 0        $ 0        $ 0     $ 0     $ 0         $ 0           $ 0    $ 0             $ 0
-------------------------------------------------------------------------------------------------------------------------------
             MEDICAL COSTS                           ROUND TO THE NEAREST DOLLAR
-------------------------------------------------------------------------------------------------------------------------------
 10  INPATIENT HOSPITAL SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 11  OUTPATIENT HOSPITAL SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 12  EMERGENCY DEPARTMENT SERVICE
-------------------------------------------------------------------------------------------------------------------------------
 13  PRIMARY CARE PHYSICIAN
      SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 14  SPECIALTY CARE PHYSICIAN
      SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 15  ADULT SCREENING SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 16  VISION CARE - OPTOMETRIC
      SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 17  VISION CARE - OPTICAL
      SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 18  LABORATORY (PATHOLOGY)
      SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 19  RADIOLOGY SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 20  PHYSICAL AND OCCUPATIONAL
      THERAPY
-------------------------------------------------------------------------------------------------------------------------------
 21  SPEECH AND HEARING SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 22  PODIATRY SERVICES
      END STAGE RENAL DISEASE
-------------------------------------------------------------------------------------------------------------------------------
 23  (ESRD) SERVICES - DIALYSIS
-------------------------------------------------------------------------------------------------------------------------------
 24  HOME HEALTH SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 25  HOSPICE SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 26  PRIVATE DUTY NURSING
-------------------------------------------------------------------------------------------------------------------------------
 27  MEDICAL SUPPLIES AND MEDICAL
      EQUIPMENT
-------------------------------------------------------------------------------------------------------------------------------
 28  ABORTIONS
-------------------------------------------------------------------------------------------------------------------------------
 29  STERILIZATIONS
-------------------------------------------------------------------------------------------------------------------------------
 30  DETOXIFICATION
-------------------------------------------------------------------------------------------------------------------------------
 31  ORGAN TRANSPLANTS
-------------------------------------------------------------------------------------------------------------------------------
 32  OTHER OUTSIDE MEDICAL
      SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 33  LONG TERM CARE
-------------------------------------------------------------------------------------------------------------------------------
 34  TRANSPORTATION SERVICES
-------------------------------------------------------------------------------------------------------------------------------
 35  ACCRUED COSTS
-------------------------------------------------------------------------------------------------------------------------------
 36  OTHER (SPECIFY)
-------------------------------------------------------------------------------------------------------------------------------
 37  OTHER (SPECIFY)
-------------------------------------------------------------------------------------------------------------------------------
 38  TOTAL MEDICAL COSTS             $ 0        $ 0        $ 0     $ 0     $ 0         $ 0           $ 0    $ 0             $ 0
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<S>                                                                             <C>                                <C>
PROVIDER NAME:                                                                    ATTACHMENT E                     ATTACHMENT E
SERVICE REPORTING PERIOD:                                                       TABLE 2 PAGE 1 OF 2                    TABLE 2
PAYMENT DATES:                                                                  REVENUES AND COST                  PAGE 3 OF 15
</TABLE>

<TABLE>
<CAPTION>
                                        -------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-------------------
 1                 2                     3              4              5              6              7              8
---------------------------------------------------------------------------------------------------------------------------
                                    TOTAL UTAH                       AFDC                          AFDC
                                    OPERATIONS                       MALE           AFDC          FEMALE         AFDC
LINE                                (INCLUDING       INFANTS      * 21 YEARS        MALE        * 21 YEARS      FEMALE
 NO           DESCRIPTION          ALL MEDICAID)     0-12 MOS    ** 12 MOS       21 + YEARS   ** 12 MOS      21 + YEARS
---------------------------------------------------------------------------------------------------------------------------
        ADMINISTRATIVE COSTS                                      ROUND TO THE NEAREST DOLLAR
---------------------------------------------------------------------------------------------------------------------------
 <S> <C>                                   <C>          <C>             <C>            <C>           <C>            <C>
 39  ADMINISTRATION - ADVERTISING
---------------------------------------------------------------------------------------------------------------------------
 40  HOME OFFICE INDIRECT COST
      ALLOCATIONS
---------------------------------------------------------------------------------------------------------------------------
 41  UTILIZATION
---------------------------------------------------------------------------------------------------------------------------
 42  ADMINISTRATION - OTHER
---------------------------------------------------------------------------------------------------------------------------
 43  TOTAL ADMINISTRATIVE COSTS            $ 0          $ 0             $ 0            $ 0           $ 0            $ 0
---------------------------------------------------------------------------------------------------------------------------
 44  TOTAL COSTS (MED & ADMIN)             $ 0          $ 0             $ 0            $ 0           $ 0            $ 0
---------------------------------------------------------------------------------------------------------------------------
 45  NET INCOME [Gain or (Loss)]           $ 0          $ 0             $ 0            $ 0           $ 0            $ 0
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
 46  ENROLLEE MONTHS                                      0               0              0             0              0
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
 47  MEDICAL COST @ ENROLLEE MO
---------------------------------------------------------------------------------------------------------------------------
 48  ADMIN COST @ ENROLLEE MO
---------------------------------------------------------------------------------------------------------------------------
 49  TOTAL COST @ ENROLLEE MO
---------------------------------------------------------------------------------------------------------------------------
            OTHER DATA
---------------------------------------------------------------------------------------------------------------------------
 50  TPL SAVINGS  COST AVOIDANCE"
----------------------------------                -------------------------------------------------------------------------
 51  DUPLICATE PREMIUMS ***
----------------------------------                -------------------------------------------------------------------------
 52  NUMBER OF DELIVERIES ****
----------------------------------                -------------------------------------------------------------------------
 53  FAMILY PLANNING SERVICES
----------------------------------                -------------------------------------------------------------------------
 54  REINSURANCE PREMIUMS RECEIVED
----------------------------------                -------------------------------------------------------------------------
 55  REINSURANCE PREMIUMS PAID
----------------------------------                -------------------------------------------------------------------------
 56  ADMINISTRATIVE REVENUE
      RETAINED BY THE CONTRACTOR
----------------------------------                -------------------------------------------------------------------------

* less than
** greater than

<CAPTION>
                                        -------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-------------------
  1                2                     9             10             11              12            13             14
---------------------------------------------------------------------------------------------------------------------------
                                                                                                                NON AFDC
                                                                                    MED             MED         PREGNANT
LINE                                                DISABLED       DISABLED        NEDDY           NEDDY         FEMALE
 NO           DESCRIPTION              AGED           MALE          FEMALE         CHILD           OTHER         (SOBRA)
---------------------------------------------------------------------------------------------------------------------------
        ADMINISTRATIVE COSTS                                      ROUND TO THE NEAREST DOLLAR
---------------------------------------------------------------------------------------------------------------------------
 <S> <C>                               <C>              <C>           <C>           <C>             <C>             <C>
---------------------------------------------------------------------------------------------------------------------------
 39  ADMINISTRATION -ADVERTISING
---------------------------------------------------------------------------------------------------------------------------
 40  HOME OFFICE INDIRECT COST
      ALLOCATIONS
---------------------------------------------------------------------------------------------------------------------------
 41  UTILIZATION
---------------------------------------------------------------------------------------------------------------------------
 42  ADMINISTRATION - OTHER
---------------------------------------------------------------------------------------------------------------------------
 43  TOTAL ADMINISTRATIVE COSTS        $ 0              $ 0           $  0          $ 0             $ 0             $ 0
---------------------------------------------------------------------------------------------------------------------------
 44  TOTAL COSTS (MED & ADMIN)         $ 0              $ 0           $  0          $ 0             $ 0             $ 0
---------------------------------------------------------------------------------------------------------------------------
 45  NET INCOME [Gain or (Loss)]       $ 0              $ 0           $  0          $ 0             $ 0             $ 0
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
 46  ENROLLEE MONTHS                     0                0              0            0               0               0
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
 47  MEDICAL COST @ ENROLLEE MO
---------------------------------------------------------------------------------------------------------------------------
 48  ADMIN COST @ ENROLLEE MO
---------------------------------------------------------------------------------------------------------------------------
 49  TOTAL COST @ ENROLLEE MO
---------------------------------------------------------------------------------------------------------------------------
            OTHER DATA
---------------------------------------------------------------------------------------------------------------------------
 50  TPL SAVINGS COST AVOIDANCE **
---------------------------------------------------------------------------------------------------------------------------
 51  DUPLICATE PREMIUMS ***
---------------------------------------------------------------------------------------------------------------------------
 52  NUMBER OF DELIVERIES ****
---------------------------------------------------------------------------------------------------------------------------
 53  FAMILY PLANNING SERVICES
---------------------------------------------------------------------------------------------------------------------------
 54  REINSURANCE PREMIUMS RECEIVED
---------------------------------------------------------------------------------------------------------------------------
 55  REINSURANCE PREMIUMS PAID
---------------------------------------------------------------------------------------------------------------------------
 56  ADMINISTRATIVE REVENUE
      RETAINED BY THE CONTRACTOR
---------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                -MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-
  1               2                     15             16             17
------------------------------------------------------------------------------
                                                                   MEDICAID
                                                                     TOTAL
LINE                                RESTRICTION                  (SUM OF COLS
 NO           DESCRIPTION             CLIENTS         AIDS         4 THRU 16)
------------------------------------------------------------------------------
        ADMINISTRATIVE COSTS            ROUND TO THE NEAREST DOLLAR
------------------------------------------------------------------------------
 <S> <C>                                   <C>         <C>               <C>
 39  ADMINISTRATION -ADVERTISING
------------------------------------------------------------------------------
 40  HOME OFFICE INDIRECT COST
      ALLOCATIONS
------------------------------------------------------------------------------
 41  UTILIZATION
------------------------------------------------------------------------------
 42  ADMINISTRATION - OTHER
------------------------------------------------------------------------------
 43  TOTAL ADMINISTRATIVE COSTS            $ 0         $ 0               $ 0
------------------------------------------------------------------------------
 44  TOTAL COSTS (MED & ADMIN)             $ 0         $ 0               $ 0
------------------------------------------------------------------------------
 45  NET INCOME [Gain or (Loss)]           $ 0         $ 0               $ 0
------------------------------------------------------------------------------

------------------------------------------------------------------------------
 46  ENROLLEE MONTHS                         0           0                 0
------------------------------------------------------------------------------

------------------------------------------------------------------------------
 47  MEDICAL COST @ ENROLLEE MO
------------------------------------------------------------------------------
 48  ADMIN COST @ ENROLLEE MO
------------------------------------------------------------------------------
 49  TOTAL COST @ ENROLLEE MO
------------------------------------------------------------------------------
            OTHER DATA
------------------------------------------------------------------------------
 50  TPL SAVINGS o COST AVOIDANCE"                                       $ 0
------------------------------------------------------------------------------
 51  DUPLICATE PREMIUMS ***                                              $ 0
------------------------------------------------------------------------------
 52  NUMBER OF DELIVERIES ****                                             0
------------------------------------------------------------------------------
 53  FAMILY PLANNING SERVICES                                            $ 0
------------------------------------------------------------------------------
 54  REINSURANCE PREMIUMS RECEIVED                                       $ 0
------------------------------------------------------------------------------
 55  REINSURANCE PREMIUMS PAID                                           $ 0
------------------------------------------------------------------------------
 56  ADMINISTRATIVE REVENUE
      RETAINED BY THE CONTRACTOR                                         $ 0
------------------------------------------------------------------------------
</TABLE>

**   COST OF SERVICES PROVIDED TO HMO CLIENTS. NOT PAID FOR BY HMO, E.G.
     "AVOIDED", BECAUSE OTHER INSURANCE PAID FOR IT.
***  CASH AMOUNT RETURNED TO MEDICAID BY HMO BECAUSE HMO CLIENT WAS COVERED IN
     THE SAME HMO BY ANOTHER CARRIER.
**** NUMBER OF CHILDREN DELIVERED. THIS NUMBER TIMES RATES SHOULD EQUAL DELIVERY
     REVENUE.

      In this Medicaid portion, include only costs for Medicaid clients under
      the capitation agreement - exclude revenue, costs & TPL categories per
      this form that do not apply to your organization or contract.

<PAGE>

                                                                    Attachment E
                                                                    Page 4 of 15

            MEDICAL SERVICES REVENUE AND COST DEFINITIONS FOR TABLE 2

REVENUES (Report all revenues received or receivable at the end-of-period date
on the form)

1.   Premiums

     Report premium payments received or receivable from the DEPARTMENT.

2.   Delivery Fees

     Report the delivery fee received or receivable from the DEPARTMENT.

3.   Reinsurance

     Report the reinsurance payments received or receivable from the REINSURANCE
     CARRIER (See Attachment F, Section D, Items 1 and 2).

4.   Stop Loss

     Report stop loss payments received or receivable from the DEPARTMENT (See
     Attachment F, Section D, Item 2).

5.   TPL Collections - Medicare

     Report all third party collections received from Medicare.

6.   TPL Collections - Other

     Report all third party collections received other than Medicare
     collections. (Report TPL savings because of cost avoidance as a memo amount
     on line 48).

7.   Other (specify)

8.   Other (specify)

     For lines seven and eight: Report all other revenue not included in lines
     one through six. (There may not be any amount to report; however, this line
     can be used to report revenue from total Utah operations that do not fit
     lines one through six.)

9.   TOTAL REVENUES

     Total lines one through eight.

NOTE: Duplicate premiums are not considered a cost or revenue as they are
collected by the CONTRACTOR and paid to the DEPARTMENT. Therefore, the payment
to the DEPARTMENT would reduce or offset the revenue recorded when the duplicate
premium was received. However, line 49 has been established for reporting
duplicate premiums as a memo amount.

<PAGE>

                                                                    Attachment E
                                                                    Page 5 of 15

MEDICAL COSTS: Report all costs accrued as of the ending date on the form. In
the first data column (column 3), report all costs for Utah operations per the
general ledger. In the 14 Medicaid data columns (columns 4 through 17), report
only costs for Medicaid Enrollees.

10.  Inpatient Hospital Services

     Costs incurred in providing inpatient hospital services to Enrollees
     confined to a hospital.

11.  Outpatient Hospital Services

     Costs incurred in providing outpatient hospital services to Enrollees, not
     including services provided in the emergency department.

12.  Emergency Department Services

     Costs incurred in providing outpatient hospital emergency room services to
     Enrollees.

13.  Primary Care Physician Services (Including EPSDT Services, Prenatal Care,
     and Family Planning Services)

     All costs incurred for Enrollees as a result of providing primary care
     physician, osteopath, physician assistant, nurse practitioner, and nurse
     midwife services, including payroll expenses, any capitation and/or
     contract payments, fee-for-service payments, fringe benefits, travel and
     office supplies.

14.  Specialty Care Physician Services (Including EPSDT Services, Prenatal Care,
     and Family Planning Services)

     All costs incurred as a result of providing specialty care physician,
     osteopath, physician assistant, nurse practitioner, and nurse midwife
     services to Enrollees, including payroll expenses, any capitation and/or
     contract payments, fee-for-service payments, fringe benefits, travel and
     office supplies.

15.  Adult Screening Services

     Expenses associated with providing screening services to Enrollees.

16.  Vision Care - Optometric Services

     Included are payroll costs, any capitation and/or contract payments, and
     fee-for-service payments for services and procedures performed by an
     optometrist and other non-payroll expenses directly related to providing
     optometric services for Enrollees.

17.  Vision Care - Optical Services

     Included are payroll costs, any capitation and/or contract payments and
     fee-for-service payments for services and procedures performed by an
     optician and other supportive staff, cost of eyeglass frames and lenses and
     other non-payroll expenses directly related to providing optical services
     for Enrollees.

<PAGE>

                                                                    Attachment E
                                                                    Page 6 of 15

18.  Laboratory (Pathology) Services

     Costs incurred as a result of providing pathological tests or services to
     Enrollees including payroll expenses, any capitation and/or contract
     payments, fee-for-service payments and other expenses directly related to
     in-house laboratory services. Excluded are costs associated with a hospital
     visit.

19.  Radiology Services

     Cost incurred in providing x-ray services to Enrollees, including x-ray
     payroll expenses, any capitation and/or contract payments, fee-for-service
     payments, and occupancy overhead costs. Excluded are costs associated with
     a hospital visit.

20.  Physical and Occupational Therapy

     Included are payroll costs, any capitation and/or contract payments,
     fee-for-service costs, and other non-payroll expenditures directly related
     to providing physical and occupational therapy services.

21.  Speech and Hearing Services

     Payroll costs, any capitation and/or contract payments, fee-for-service
     payments, and non-payroll costs directly related to providing speech and
     hearing services for Enrollees.

22.  Podiatry Services

     Salary expenses or outside claims, capitation and/or contract payments,
     fee-for-service payments, and non-payroll costs directly related to
     providing services rendered by a podiatrist to Enrollees.

23.  End Stage Renal Disease (ESRD) Services - Dialysis

     Costs incurred in providing renal dialysis (ESRD) services to Enrollees.

24.  Home Health Services

     Included are payroll costs, any capitation and/or contract payments,
     fee-for-service payments, and other non-payroll expenses directly related
     to providing home health services for Enrollees.

25.  Hospice Services

     Expenses related to hospice care for Enrollees including home care, general
     inpatient care for Enrollees suffering terminal illness and inpatient
     respite care for caregivers of Enrollees suffering terminal illness.

26.  Private Duty Nursing

     Expenses associated with private duty nursing for Enrollees.

<PAGE>

                                                                    Attachment E
                                                                    Page 7 of 15

27.  Medical Supplies and Medical Equipment

     This cost center contains fee-for-service cost for outside acquisition of
     medical requisites, special appliances as prescribed by the CONTRACTOR to
     Enrollees.

28.  Abortions

     Medical and hospital costs incurred in providing abortions for Enrollees.

29.  Sterilizations

     Medical and hospital costs incurred in providing sterilizations for
     Enrollees.

30.  Detoxification

     Medical and hospital costs incurred in providing treatment for substance
     abuse and dependency (detoxification) for Enrollees.

31.  Organ Transplants

     Medical and hospital costs incurred in providing transplants for Enrollees.

32.  Other Outside Medical Services

     The costs for specialized testing and outpatient surgical centers for
     Enrollees ordered by the CONTRACTOR.

33.  Long Term Care

     Costs incurred in providing long-term care for Enrollees required under
     Attachment C.

34.  Transportation Services

     Costs incurred in providing ambulance (ground and air) services for
     Enrollees.

35.  Accrued Costs

     Costs Incurred for services rendered to Enrollees but not yet billed.

36 & 37.   Other

     Report costs not otherwise reported.

38.  TOTAL MEDICAL COSTS

     Total lines 10 through 38.

<PAGE>

                                                                    Attachment E
                                                                    Page 8 of 15

ADMINISTRATIVE COSTS

Report payroll costs, any capitation and/or contract payments, non-payroll costs
and occupancy overhead costs for accounting services, claims processing
services, health plan services, data processing services, purchasing, personnel,
Medicaid marketing and regional administration.

Report the administration cost under four categories - advertising, home office
indirect cost allocation, utilization and all other administrative costs. If
there are no advertising costs or indirect home office cost allocations, report
a zero amount in the applicable lines.

39.  Administration - Advertising

40.  Home Office Indirect Cost Allocations

41.  Utilization

     Payroll cost and any capitation and/or contract payments for utilization
     staff and other non-payroll costs directly associated with controlling and
     monitoring outside physician referral and hospital admission and discharges
     of Enrollees.

42.  Administration - Other

43.  TOTAL ADMINISTRATIVE COSTS

     Total lines 39 through 43.

44.  TOTAL COSTS (MEDICAL AND ADMINISTRATIVE)

     Total lines 38 and 44.

45.  NET INCOME (GAIN OR LOSS)

     Line 9 minus line 44.

46.  ENROLLEE MONTHS

     Total Enrollee months for period of time being reported.

47.  MEDICAL COSTS PER ENROLLEE MONTH

     Line 38 divided by line 46.

48.  ADMINISTRATIVE COSTS PER ENROLLEE MONTH

     Line 43 divided by line 46.

49.  TOTAL COSTS PER ENROLLEE MONTH

     Line 44 divided by line 46.

<PAGE>

                                                                    Attachment E
                                                                    Page 9 of 15

OTHER DATA

50.  TPL Savings - Cost Avoidance

51.  Duplicate Premiums

     Include all premiums received for Enrollees from all sources other than
     Medicaid.

52.  Number of Deliveries

     Total number of Enrollee deliveries when the delivery occurred at 24 weeks
     or later.

53.  Family Planning Services

     Include costs associated with family planning services as defined in
     Attachment C (Covered Services, Section V, Family Planning Services).

54.  Reinsurance Premiums Received

     Include the reinsurance premiums received or receivable from the
     DEPARTMENT.

55.  Reinsurance Premiums Paid

     Include reinsurance premiums paid to the REINSURANCE CARRIER.

56.  Administrative Revenue Retained by the CONTRACTOR

     Include the administrative revenue retained by the CONTRACTOR from the
     reinsurance premiums received or receivable from the DEPARTMENT.

<PAGE>

<TABLE>
<S>                                <C>                                  <C>                                   <C>
PROVIDER NAME:                     _______________________________          ATTACHMENT E                       ATTACHMENT E

SERVICE REPORTING PERIOD:          BEGINNING________ENDING________      TABLE 3 PAGE 1 OF 1                         TABLE 3

PAYMENT DATES:                     BEGINNING________ENDING________          UTILIZATION                       PAGE 10 OF 15
</TABLE>

<TABLE>
<CAPTION>
                                        -------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-------------------
 1                 2                     3              4              5              6            7              8
---------------------------------------------------------------------------------------------------------------------------
                SERVICE
              DESCRIPTION                             AFDC                          AFDC
         (REFER TO THE UNIT FOR                       MALE           AFDC          FEMALE        AFDC
LINE   SERVICE DEFINITIONS IN THE     INFANTS      * 21 YEARS        MALE        * 21 YEARS     FEMALE
 NO          INSTRUCTIONS             0-12 MOS    ** 12 MOS       21 + YEARS    ** 12 MOS      21 + YEARS        AGED
---------------------------------------------------------------------------------------------------------------------------
 <S> <C>                                   <C>         <C>               <C>           <C>            <C>           <C>
  1  HOSPITAL SERVICES - GENERAL
      DAYS
---------------------------------------------------------------------------------------------------------------------------
  2  HOSPITAL SERVICES -
      DISCHARGES
---------------------------------------------------------------------------------------------------------------------------
  3  HOSPITAL SERVICES -
      OUTPATIENT VISITS
---------------------------------------------------------------------------------------------------------------------------
  4  EMERGENCY DEPARTMENT
      VISITS
---------------------------------------------------------------------------------------------------------------------------
  5  PRIMARY CARE PHYSICIAN
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
  6  SPECIALTY CARE PHYSICIAN
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
  7  ADULT SCREENING SERVICES
---------------------------------------------------------------------------------------------------------------------------
  8  VISION CARE - OPTOMETRIC
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
  9  VISION CARE - OPTICAL
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
 10  LABORATORY (PATHOLOGY)
      PROCEDURES
---------------------------------------------------------------------------------------------------------------------------
 11  RADIOLOGY PROCEDURES
---------------------------------------------------------------------------------------------------------------------------
 12  PHYSICAL AND OCCUPATIONAL
      THERAPY SERVICES
---------------------------------------------------------------------------------------------------------------------------
 13  SPEECH AND HEARING SERVICES
---------------------------------------------------------------------------------------------------------------------------
 14  PODIATRY SERVICES
---------------------------------------------------------------------------------------------------------------------------
 15  END STAGE RENAL DISEASE(ESRD)
      SERVICES - DIALYSIS
---------------------------------------------------------------------------------------------------------------------------
 16  HOME HEALTH SERVICES
---------------------------------------------------------------------------------------------------------------------------
 17  HOSPICE DAYS
---------------------------------------------------------------------------------------------------------------------------
 18  PRIVATE DUTY NURSING SERVICES
---------------------------------------------------------------------------------------------------------------------------
 19  MEDICAL SUPPLIES AND MEDICAL
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
 20  ABORTIONS PROCEDURES
---------------------------------------------------------------------------------------------------------------------------
 21  STERILIZATION PROCEDURES
---------------------------------------------------------------------------------------------------------------------------
 22  DETOXIFICATION DAYS
---------------------------------------------------------------------------------------------------------------------------
 23  ORGAN TRANSPLANTS
---------------------------------------------------------------------------------------------------------------------------
 24  OTHER OUTSIDE MEDICAL
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
 25  LONG TERM CARE FACILITY DAYS
---------------------------------------------------------------------------------------------------------------------------
 26  TRANSPORTATION TRIPS
---------------------------------------------------------------------------------------------------------------------------
 27  OTHER (SPECIFY)
---------------------------------------------------------------------------------------------------------------------------

* less than
** greater than

<CAPTION>
                                        -------------------MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)-------------------
 1                 2                     9             10             11             12             13             14
---------------------------------------------------------------------------------------------------------------------------
                SERVICE
              DESCRIPTION                                                                      NON AFDC
         (REFER TO THE UNIT FOR                                   MED            MED           PREGNANT
LINE   SERVICE DEFINITIONS IN THE     DISABLED     DISABLED      NEEDY          NEEDY           FEMALE          RESTRICTION
 NO          INSTRUCTIONS               MALE        FEMALE       CHILD          OTHER           (SOBRA)           CLIENTS
---------------------------------------------------------------------------------------------------------------------------
 <S> <C>                                 <C>           <C>            <C>            <C>            <C>             <C>
  1  HOSPITAL SERVICES - GENERAL
      DAYS
---------------------------------------------------------------------------------------------------------------------------
  2  HOSPITAL SERVICES -
      DISCHARGES
---------------------------------------------------------------------------------------------------------------------------
  3  HOSPITAL SERVICES -
      OUTPATIENT VISITS
---------------------------------------------------------------------------------------------------------------------------
  4  EMERGENCY DEPARTMENT
      VISITS
---------------------------------------------------------------------------------------------------------------------------
  5  PRIMARY CARE PHYSICIAN
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
  6  SPECIALTY CARE PHYSICIAN
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
  7  ADULT SCREENING SERVICES
---------------------------------------------------------------------------------------------------------------------------
  8  VISION CARE - OPTOMETRIC
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
  9  VISION CARE - OPTICAL
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
 10  LABORATORY (PATHOLOGY)
      PROCEDURES
---------------------------------------------------------------------------------------------------------------------------
 11  RADIOLOGY PROCEDURES
---------------------------------------------------------------------------------------------------------------------------
 12  PHYSICAL AND OCCUPATIONAL
      THERAPY SERVICES
---------------------------------------------------------------------------------------------------------------------------
 13  SPEECH AND HEARING SERVICES
---------------------------------------------------------------------------------------------------------------------------
 14  PODIATRY SERVICES
---------------------------------------------------------------------------------------------------------------------------
 15  END STAGE RENAL DISEASE(ESRD)
      SERVICES - DIALYSIS
---------------------------------------------------------------------------------------------------------------------------
 16  HOME HEALTH SERVICES
---------------------------------------------------------------------------------------------------------------------------
 17  HOSPICE DAYS
---------------------------------------------------------------------------------------------------------------------------
 18  PRIVATE DUTY NURSING SERVICES
---------------------------------------------------------------------------------------------------------------------------
 19  MEDICAL SUPPLIES AND MEDICAL
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
 20  ABORTIONS PROCEDURES
---------------------------------------------------------------------------------------------------------------------------
 21  STERILIZATION PROCEDURES
---------------------------------------------------------------------------------------------------------------------------
 22  DETOXIFICATION DAYS
---------------------------------------------------------------------------------------------------------------------------
 23  ORGAN TRANSPLANTS
---------------------------------------------------------------------------------------------------------------------------
 24  OTHER OUTSIDE MEDICAL
      SERVICES
---------------------------------------------------------------------------------------------------------------------------
 25  LONG TERM CARE FACILITY DAYS
---------------------------------------------------------------------------------------------------------------------------
 26  TRANSPORTATION TRIPS
---------------------------------------------------------------------------------------------------------------------------
 27  OTHER (SPECIFY)
---------------------------------------------------------------------------------------------------------------------------

<CAPTION>
                                 --MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)--
 1                 2                                      15             16
----------------------------------------------------------------------------------
                SERVICE
              DESCRIPTION                                              MEDICAID
         (REFER TO THE UNIT OF                                          TOTAL
LINE   SERVICE DEFINITIONS IN THE                                    (SUM OF COLS
 NO          INSTRUCTIONS                                 AIDS        3 THRU 15)
----------------------------------------------------------------------------------
 <S> <C>                                                                      <C>
  1  HOSPITAL SERVICES - GENERAL
      DAYS                                                                    0
----------------------------------------------------------------------------------
  2  HOSPITAL SERVICES -
      DISCHARGES                                                              0
----------------------------------------------------------------------------------
  3  HOSPITAL SERVICES -
      OUTPATIENT VISITS                                                       0
----------------------------------------------------------------------------------
  4  EMERGENCY DEPARTMENT
      VISITS                                                                  0
----------------------------------------------------------------------------------
  5  PRIMARY CARE PHYSICIAN
      SERVICES                                                                0
----------------------------------------------------------------------------------
  6  SPECIALTY CARE PHYSICIAN
      SERVICES                                                                0
----------------------------------------------------------------------------------
  7  ADULT SCREENING SERVICES                                                 0
----------------------------------------------------------------------------------
  8  VISION CARE - OPTOMETRIC
      SERVICES                                                                0
----------------------------------------------------------------------------------
  9  VISION CARE - OPTICAL
      SERVICES                                                                0
----------------------------------------------------------------------------------
 10  LABORATORY (PATHOLOGY)
      PROCEDURES                                                              0
----------------------------------------------------------------------------------
 11  RADIOLOGY PROCEDURES                                                     0
----------------------------------------------------------------------------------
 12  PHYSICAL AND OCCUPATIONAL
      THERAPY SERVICES                                                        0
----------------------------------------------------------------------------------
 13  SPEECH AND HEARING SERVICES                                              0
----------------------------------------------------------------------------------
 14  PODIATRY SERVICES                                                        0
----------------------------------------------------------------------------------
 15  END STAGE RENAL DISEASE(ESRD)
      SERVICES - DIALYSIS                                                     0
----------------------------------------------------------------------------------
 16  HOME HEALTH SERVICES                                                     0
----------------------------------------------------------------------------------
 17  HOSPICE DAYS                                                             0
----------------------------------------------------------------------------------
 18  PRIVATE DUTY NURSING SERVICES                                            0
----------------------------------------------------------------------------------
 19  MEDICAL SUPPLIES AND MEDICAL
      SERVICES                                                                0
----------------------------------------------------------------------------------
 20  ABORTIONS PROCEDURES                                                     0
----------------------------------------------------------------------------------
 21  STERILIZATION PROCEDURES                                                 0
----------------------------------------------------------------------------------
 22  DETOXIFICATION DAYS                                                      0
----------------------------------------------------------------------------------
 23  ORGAN TRANSPLANTS                                                        0
----------------------------------------------------------------------------------
 24  OTHER OUTSIDE MEDICAL
      SERVICES                                                                0
----------------------------------------------------------------------------------
 25  LONG TERM CARE FACILITY DAYS                                             0
----------------------------------------------------------------------------------
 26  TRANSPORTATION TRIPS                                                     0
----------------------------------------------------------------------------------
 27  OTHER (SPECIFY)                                                          0
----------------------------------------------------------------------------------
</TABLE>

NOTE: MEDICAL REQUISITIONS HAS BEEN DITCHED!!

                                  ATTACHMENT E
                                     TABLE 3
                                  Page 10 of 15

<PAGE>

                                                                    Attachment E
                                                                   Page 11 of 15

              MEDICAL SERVICES UTILIZATION DEFINITIONS FOR TABLE 3

MEDICAL SERVICES

1.   Hospital Services - General Days

     Record total number of inpatient hospital days associated with inpatient
     medical care.

2.   Hospital Services - Discharges

     Record total number of inpatient hospital discharges.

3.   Hospital Services - Outpatient Visits

     Record total number of outpatient visits.

4.   Emergency Department Visits

     Record total number of emergency room visits

5.   Primary Care Physician Services

     Number of services and procedures defined by CPT-4 codes provided by
     primary care physicians or licensed physician extenders or assistants under
     direct supervision of a physician inclusive of all services except
     radiology, laboratory and injections/immunizations which should be reported
     in their appropriate section. The reporting of data under this category
     includes both outpatient and inpatient services.

6.   Specialty Care Physician Services

     Number of services and procedures defined by CPT-4 codes provided by
     specialty care physicians or licensed physician extenders or assistants
     under direct supervision of a physician inclusive of all services except
     radiology, laboratory and injections/immunizations which should be reported
     in their appropriate section. The reporting of data under this category
     includes both outpatient and inpatient services.

7.   Adult Screening Services

     Number of adult screenings performed.

8.   Vision Care - Optometric Services

     Number of optometric services and procedures performed by an optometrist.

9.   Vision Care - Optical Services

     Number of eye glasses and contact lenses dispensed.

<PAGE>

                                                                    Attachment E
                                                                   Page 12 of 15

10.  Laboratory (Pathology) Procedures

     Number of procedures defined by CPT-4 Codes under the Pathology and
     Laboratory section. Excluded are services performed in conjunction with a
     hospital outpatient or emergency department visit.

11.  Radiology Procedures

     Number of procedures defined by CPT-4 Codes under the Radiology section.
     Excluded are services performed in conjunction with a hospital outpatient
     or emergency department visit.

12.  Physical and Occupational Therapy Services

     Physical therapy refers to physical and occupational therapy services and
     procedures performed by a physician or physical therapist.

13.  Speech and Hearing Services

     Number of services and procedures.

14.  Podiatry Services

     Number of services and procedures.

15.  End Stage Renal Disease (ESRD) Services - Dialysis

     Number of ESRD procedures provided upon referral.

16.  Home Health Services

     Number of home health visits, such as skilled nursing, home health aide,
     and personal care aide visits.

17.  Hospice Days

     Number of days hospice care is provided, including respite care.

18.  Private Duty Nursing Services

     Hours of skilled care delivered.

19.  Medical Supplies and Medical Equipment

     Durable medical equipment such as wheelchairs, hearing aids, etc., and
     nondurable supplies such as oxygen etc.

20.  Abortion Procedures

     Number of procedures performed.

<PAGE>

                                                                    Attachment E
                                                                   Page 13 of 15
21.  Sterilization Procedures

     Number of procedures performed.

22.  Detoxification Days

     Days of inpatient detoxification.

23.  Organ Transplants

     Number of transplants.

24.  Other Outside Medical Services

     Specialized testing and outpatient surgical services ordered by IHC.

25.  Long Term Care Facility Days

     Total days associated with long-term care.

26.  Transportation Trips

     Number of ambulance trips.

27.  Other (specify)

<PAGE>

                                  ATTACHMENT E
                               TABLE 4 PAGE 1 OF 1
                        MEDICAID MALPRACTICE INFORMATION

PROVIDER NAME:             _____________________________________________________

SERVICE REPORTING PERIOD:  BEGINNING __________ ENDING  ________________________

ORGANIZATIONS NAMED IN THE MALPRACTICE CLAIM:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

MEDICAL PROFESSIONALS SPECIFIED:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

LOCATIONS WHERE CLAIMS ORIGINATED:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

MEDICAID CLIENT IDENTIFICATION:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

DATES OF SERVICE:

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

AWARDS TO MEDICAID CLIENTS - AMOUNTS & DATES PAID

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

HMO'S DIRECT COSTS (IF ANY)

     CLAIM NUMBER 1 ____________________________________________________________

     CLAIM NUMBER 2 ____________________________________________________________

     CLAIM NUMBER 3 ____________________________________________________________

ATTACH A SUMMARY OF FACTS FOR EACH CASE, DESCRIBING THE CLAIM, THE CAUSES,
CIRCUMSTANCES, ETC.

                                  ATTACHMENT E
                                     TABLE 4
                                  Page 14 of 15

<PAGE>

                                                                    Attachment E
                                                                   Page 15 of 15

     The information reported on this form should come from known malpractice
     cases of the MCO providers. This may only be applicable if the MCO was
     named as a participant in the malpractice suit. However, if suits against
     MCO providers are known, provide us with information on the Medicaid
     client(s) involved and any large settlements paid when the information is
     available.

<PAGE>

                                                            Attachment F - Urban
                                                          Effective July 1, 2000

                ATTACHMENT F - URBAN RATES AND RATE-RELATED TERMS

                             Effective July 1, 2000

                       AMERICAN FAMILY CARE OF UTAH, INC.

A.   PREMIUM RATES

     1.   MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS

-----------------------------------------------------------------------------
   Age       TANF Male    TANF Male    TANF Female  TANF Female
  0 to 1      1 to 21     21 & Over      1 to 21     21 & Over      Aged
=============================================================================
  $ [*]       $ [*]        $ [*]         $ [*]        $ [*]         $ [*]
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
  Disabled     Disabled    Medically    Medically    Non TANF     Restriction
    Male        Female    Needy Child  Needy Adult  Pregnant F      Program
=============================================================================
  $ [*]        $ [*]       $ [*]        $ [*]        $ [*]          $ [*]
-----------------------------------------------------------------------------

     2.   SPECIAL RATE

          An AIDS rate of $ [*] per month will be paid in addition to the
          regular monthly premium when the T-Cell count is below 200.

B.   PER DELIVERY REIMBURSEMENT SCHEDULE

     The DEPARTMENT shall reimburse the CONTRACTOR $ [*] per delivery to cover
     all Medically Necessary antepartum care, delivery, and postpartum
     professional, facility and ancillary services. The monthly premium amount
     for the enrollee is in addition to the delivery fee. The delivery payment
     will be made when the delivery occurs at 22 weeks or later, regardless of
     viability.

C.   CHEC SCREENING INCENTIVE CLAUSE

     1.   CHEC Screening Goal

          The CONTRACTOR will ensure that Medicaid children have access to
          appropriate well- child visits. The CONTRACTOR will follow the Utah
          EPSDT (CHEC) guidelines for the periodicity schedule for well-child
          protocol. The federal agency, Health Care Financing Administration,
          mandates that all states have 80% of all children screened. The
          DEPARTMENT and the CONTRACTOR will work toward that goal.

                                   Page 1 of 2

<PAGE>

                                                            Attachment F - Urban
                                                          Effective July 1, 2000

     2.   Calculation of CHEC Incentive Payment

          The DEPARTMENT will pay the CONTRACTOR $ [*]    for each percentage
          point over 60% achieved by the CONTRACTOR. The DEPARTMENT will
          calculate the CONTRACTOR'S annual participation rate based on
          information supplied by the CONTRACTOR under the EPSDT (CHEC)
          reporting requirements at the same time each federal fiscal year's
          HCFA-416 is calculated. Payment will be based on the percentages
          determined at that time.

     3.   CONTRACTOR's Use of Incentive Payment

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the EPSDT (CHEC)
          participation rate.

D.   REINSURANCE POLICY

     Reinsurance will be administered by a reinsurer, Zurich Insurance.

     Costs, net of TPL, for all inpatient and outpatient services listed in
     Attachment C that are covered on the date of service rendered and incurred
     from July 1, 2000 through June 30, 2001 by the CONTRACTOR for an Enrollee
     shall be shared by Zurich Insurance under the following conditions:

     1.   the date of service is from July 1, 2000 through June 30, 2001 (based
          on the date of discharge if inpatient hospital stay);

     2.   paid claims incurred by the CONTRACTOR exceed $50,000.00; and

     3.   services shall have been incurred by the CONTRACTOR during the time
          the client is enrolled with the CONTRACTOR.

          If the above conditions are met, Zurich Insurance shall bear [*]% and
          the CONTRACTOR shall bear [*]% of the amount that exceeds $50,000.00.

E.   REIMBURSEMENT FOR REINSURANCE

     The CONTRACTOR agrees to purchase reinsurance from Zurich Insurance at the
     rate negotiated by the DEPARTMENT of $ [*] per Enrollee per month. The
     DEPARTMENT will reimburse the CONTRACTOR for their premium payments to
     Zurich Insurance. In addition, the DEPARTMENT will pay the CONTRACTOR
     $ [*] to cover reinsurance administrative costs.

     Beginning July 1, 2000, the DEPARTMENT will make monthly payments to the
     CONTRACTOR based on the reinsurance premiums the CONTRACTOR pays to Zurich
     Insurance. The DEPARTMENT will calculate the reinsurance premiums using the
     DEPARTMENT's data on the number of Enrollees.

                                   Page 2 of 2

<PAGE>

                                                            Attachment F-1 Rural
                                                          Effective July 1, 2000

               ATTACHMENT F-1 - RURAL RATES AND RATE-RELATED TERMS

                             Effective July 1, 2000

                       AMERICAN FAMILY CARE OF UTAH, INC.

A.   PREMIUM RATES

     1.   MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS

-----------------------------------------------------------------------------
   Age       TANF Male    TANF Male    TANF Female  TANF Female
  0 to 1      1 to 21     21 & Over      1 to 21     21 & Over      Aged
=============================================================================
  $  [*]      $ [*]        $ [*]        $  [*]       $  [*]        $ [*]
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
  Disabled    Disabled     Medically    Medically     Non TANF    Restriction
    Male       Female     Needy Child  Needy Adult   Pregnant F     Program
=============================================================================
  $  [*]      $ [*]        $ [*]        $  [*]       $  [*]        $ [*]
-----------------------------------------------------------------------------

     2.   SPECIAL RATE

          An AIDS rate of $ [*] per month will be paid in addition to the
          regular monthly premium when the T-Cell count is below 200.

B.   PER DELIVERY REIMBURSEMENT SCHEDULE

     The DEPARTMENT shall reimburse the CONTRACTOR $ [*] per delivery to cover
     all Medically Necessary antepartum care, delivery, and postpartum
     professional, facility and ancillary services. The monthly premium amount
     for the enrollee is in addition to the delivery fee. The delivery payment
     will be made when the delivery occurs at 22 weeks or later, regardless of
     viability.

C.   CHEC SCREENING INCENTIVE CLAUSE

     1.   CHEC SCREENING GOAL

          The CONTRACTOR will ensure that Medicaid children have access to
          appropriate well- child visits. The CONTRACTOR will follow the Utah
          EPSDT (CHEC) guidelines for the periodicity schedule for well-child
          protocol. The federal agency, Health Care Financing Administration,
          mandates that all states have 80% of all children screened. The
          DEPARTMENT and the CONTRACTOR will work toward that goal.

                                   Page 1 of 3

<PAGE>

                                                            Attachment F-1 Rural
                                                          Effective July 1, 2000

     2.   CALCULATION OF CHEC INCENTIVE PAYMENT

          The DEPARTMENT will pay the CONTRACTOR $ [*] for each percentage
          point over 60% achieved by the CONTRACTOR. The DEPARTMENT will
          calculate the CONTRACTOR's annual participation rate based on
          information supplied by the CONTRACTOR under the EPSDT (CHEC)
          reporting requirements at the same time each federal fiscal year's
          HCFA-416 is calculated. Payment will be based on the percentages
          determined at that time.

     3.   CONTRACTOR'S USE OF INCENTIVE PAYMENT

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the EPSDT (CHEC)
          participation rate.

D.   REINSURANCE POLICY

     Reinsurance will be administered by a reinsurer, Zurich Insurance.

     Costs, net of TPL, for all inpatient and outpatient services listed in
     Attachment C that are covered on the date of service rendered and incurred
     from July 1, 2000 through June 30, 2001 by the CONTRACTOR for an Enrollee
     shall be shared by Zurich Insurance under the following conditions:

     1.   The date of service is from July 1, 2000 through June 30, 2001 (based
          on the date of discharge if inpatient hospital stay);

     2.   paid claims incurred by the CONTRACTOR exceed $50,000.00; and

     3.   services shall have been incurred by the CONTRACTOR during the time
          the client is enrolled with the CONTRACTOR.

          If the above conditions are met, Zurich Insurance shall bear [*]% and
          the CONTRACTOR shall bear [*]% of the amount that exceeds $50,000.00.

E.   REIMBURSEMENT FOR REINSURANCE

     The CONTRACTOR agrees to purchase reinsurance from Zurich Insurance at the
     rate negotiated by the DEPARTMENT of $ [*] per Enrollee per month. The
     DEPARTMENT will reimburse the CONTRACTOR for their premium payments to
     Zurich Insurance. In addition, the DEPARTMENT will pay the CONTRACTOR
     $ [*] to cover reinsurance administrative costs.

     Beginning July 1, 2000, the DEPARTMENT will make monthly payments to the
     CONTRACTOR based on the reinsurance premiums the CONTRACTOR pays to Zurich
     Insurance. The DEPARTMENT will calculate the reinsurance premiums using the
     DEPARTMENT's data on the number of Enrollees.

                                   Page 2 of 3

<PAGE>

                                                            Attachment F-1 Rural
                                                          Effective July 1, 2000

F.   RISK SHARING PROVISION

     The DEPARTMENT agrees to retroactively adjust annual payments made to the
     CONTRACTOR under this Contract for clients living in the rural counties
     served by the CONTRACTOR.

     1.   CONTRACTOR's CLAIM EXPENDITURES EXCEEDING PREMIUMS, ETC.

          If the CONTRACTOR's claim expenditures exceed the premiums paid plus
          other Contract payments, the DEPARTMENT will reimburse the CONTRACTOR
          for the unrecovered costs related to claim expenditures. Claim
          contract payments include stop-loss payments. Therefore, the paid
          claims expenditures will also include stop-loss claims paid by the
          CONTRACTOR.

     2.   CONTRACTOR'S CLAIM EXPENDITURES LESS THAN PREMIUMS, ETC.

          If the CONTRACTOR's claim expenditures are less than the premiums paid
          plus other Contract payments, the CONTRACTOR can retain up to [*]% of
          the excess premiums paid and other payments. If there are additional
          savings after the CONTRACTOR has recovered the [*]%, the DEPARTMENT
          and the CONTRACTOR will share these savings on a [*] basis. Claim
          contract payments include stop-loss payments. Therefore, the paid
          claims expenditures will also include stop-loss claims paid by the
          CONTRACTOR.

     A request for a risk sharing adjustment shall be submitted to the
     DEPARTMENT no later than six months after the close of the Contract year.
     The CONTRACTOR agrees to use its Medicaid payment rates and fee schedules
     used to price their Medicaid product as a basis for the risk sharing
     calculation.

                                   Page 3 of 3

<PAGE>

                            UTAH DEPARTMENT OF HEALTH
                 288 North 1460 West, Salt Lake City, Utah 84116
                               CONTRACT AMENDMENT

   H992020205-03                                                 00-6146
---------------------                                      ---------------------
Department Log Number                                      State Contract Number

1.   CONTRACT NAME:
     The name of this Contract is HMO-AFC/MOLINA, the Department log number
     assigned by the Utah Department of Health is H992020205, and this Amendment
     is number 3.

2.   CONTRACTING PARTIES:
     This Contract Amendment is between the Utah Department of Health
     (DEPARTMENT), and Molina Healthcare of Utah (CONTRACTOR).

3.   PURPOSE OF CONTRACT AMENDMENT:
     To change the names of the Contract and CONTRACTOR, clarify some of the
     Contract provisions, add provisions, and to change the rates and
     rate-related provisions effective July 1, 2001.

4.   CHANGES TO CONTRACT:
     A.   On Page 1, item #1, CONTRACT NAME is changed to read "HMO-AFC/MOLINA."

     B.   On Page 1, item #2, CONTRACTOR is changed to read "Molina Healthcare
          of Utah."

     C.   Effective July 1, 2001, replace Attachment B with Attachment B as
          attached to this Amendment #3.

     D.   Effective July 1, 2001, replace Attachment F - Urban Rates and
          Rate-Related Terms and Attachment F-1 Rural Rates and Rate-Related
          Terms with Attachment F - Urban & Rural Rates and Rate-Related Terms
          as attached to this Amendment #3.

     E.   All other provisions of the Contract remain unchanged.

5.   If the Contractor is not a local public procurement unit as defined by the
     Utah Procurement Code (UCA Section 63-56-5), this Contract Amendment must
     be signed by a representative of the State Division of Finance and the
     State Division of Purchasing to bind the State and the Department to this
     Contract Amendment.

6.   This Contract, its attachments, and all documents incorporated by reference
     constitute the entire agreement between the parties and supercede all prior
     negotiations, representations, or agreements, either written or oral
     between the parties relating to the subject matter of this Contract.

IN WITNESS WHEREOF, the parties sign this Contract Amendment.

CONTRACTOR: Molina Healthcare of Utah       UTAH DEPARTMENT OF HEALTH

By: /s/ Kirk Olsen          30 Aug 2001   By: /s/ Shari A. Watkins     09/17/01
   -----------------------  -----------      ------------------------  --------
   Signature of Authorized  Date             Shari A. Watkins, C.P.A.  Date
   Individual                                Director
                                             Office of Fiscal
                                             Operations

Print Name: Kirk Olsen
            ---------------------------

Title: Chief Executive Officer            [SEAL]                       10-12-01
       ---------------------------------  ---------------              --------
                                          State Finance:               Date

       33-0617992
--------------------------                [ILLEGIBLE]
Federal Tax Identification                ---------------              --------
 Number or Social Security                State Purchasing:            Date
 Number

                                     Page 1

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

For the purpose of the Contract all article. section, and subsection headings in
these Attachments B, C, and D are for convenience in referencing the provisions
of the Contract. They are not enforceable as part of the text of the Contract
and may not be used to interpret the meaning of the provisions that lie beneath
them.

                        ATTACHMENT B - SPECIAL PROVISIONS
                              Effective July 1,2001

                             ARTICLE I - DEFINITIONS

For the purpose of the Contract:

A.   "Advance Directives" means oral and written instructions about an
     individual's medical care, in the event the individual is unable to
     communicate. There are two types of Advance Directives: a living will and a
     medical power of attorney.

B.   "Balance Bill" means the practice of billing patients for charges that
     exceed the amount that the MCO will pay.

C.   "CHEC Eligible" means any Medicaid recipient under the age of 21 who is
     eligible to receive Early Periodic Screening Diagnostic and Treatment
     (EPSDT) services in accordance with 42 CFR Part 441, Subpart B.

D.   "CHEC Program" or Child Health Evaluation and Care program is Utah's
     version of the federally mandated Early Periodic Screening, Diagnosis and
     Treatment (EPSDT) program as defined in 42 CFR Part 441, Subpart B. (See
     Attachment C, Covered Services, U.)

E.   "Child with Special Health Care Needs" means a child under 21 who has or is
     at increased risk for chronic physical, developmental, behavioral, or
     emotional conditions and requires health and related services of a type or
     amount beyond that required by children generally, including a child who,
     consistent with 1932(a)(2)(A) of the Social Security Act, 42 U.S.C.,
     Section 1396u-2(a)(2)(A):

     (1)  is blind or disabled or in a related population (eligible for SSI
     under title XVI of the Social Security Act);
     (2)  is in foster care or other out-of-home placement;
     (3)  is receiving foster care or adoption assistance; or
     (4)  is receiving services through a family-centered, community-based
     coordinated care system that receives grant funds described in section
     501(a)(l)(D) of title V.

F.   "Division of Health Care Financing" or "DHCF" means the division within the
     Department of Health responsible for the administration of the Utah
     Medicaid program.

G.   "Emergency Services" means those services provided in a hospital, clinic,
     office, or other facility that is equipped to furnish the required care,
     after the sudden onset of a medical condition manifesting itself by acute
     symptoms of sufficient severity (including severe pain) such that a

                                  Page 1 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     prudent layperson, who possesses an average knowledge of health and
     medicine, could reasonably expect that the absence of immediate medical
     attention to result in:

     1.   Placing the health of the individual (or, with respect to a pregnant
          woman, the health of a woman or her unborn child) in serious jeopardy;

     2.   Serious impairment to bodily functions; or

     3.   Serious dysfunction of any bodily organ or part.

H.   "Enrollee" means any Medicaid eligible: (1) who, at the time of enrollment
     resides within the geographical limits of the CONTRACTOR's Service Area;
     (2) whose name appears on the DEPARTMENT's Eligibility Transmission as a
     new, reinstate, or retroactive Enrollee; and (3) who is accepted for
     enrollment by the CONTRACTOR according to the conditions set forth in this
     Contract excluding residents of the Utah State Hospital, Utah State
     Developmental Center, and long-term care facilities except as defined in
     Attachment C.

I.   "Enrollees with Special Health Care Needs" means enrollees who have or are
     at increased risk for chronic physical, developmental, behavioral, or
     emotional conditions and who also require health and related services of a
     type or amount beyond that required by adults and children generally.

J.   "Enrollment Area" or "Service Area" means the counties enumerated in
     Article II.

K.   "Family Member" means all Medicaid eligibles who are members of the same
     family living at home.

L.   "Home and Community-Based Services" means services, not otherwise furnished
     under the State's Medicaid plan, that are furnished under a waiver of
     statutory requirements granted under the provisions of CFR Part 441,
     subpart G. These services cover an array of Home and Community-Based
     Services that are cost-effective and necessary for an individual to avoid
     institutionalization.

M.   "Managed Care Organization" or "MCO" means an organization that meets the
     State Plan's definition of an HMO or prepaid health plan and which
     provides, either directly or through arrangement with other providers,
     comprehensive general medical services to Medicaid eligibles on a
     contractual prepayment basis.

N.   "Marketing Material" means materials in all mediums, including member
     handbooks, brochures and leaflets, newspaper, magazine, radio, television,
     billboard and yellow pages advertisements, and presentation materials used
     by marketing representatives. It includes materials mailed to, distributed
     to, or aimed at Medicaid clients specifically, and any material that
     mentions "Medicaid," "Medicaid Assistance," or "Title XIX."

O.   "Medically Necessary" means any medical service that (a) is reasonably
     calculated to prevent,

                                  Page 2 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     diagnose, or cure conditions in the Enrollee that endanger life, cause
     suffering or pain, cause deformity or malfunction, or threaten to cause a
     handicap, and (b) there is no equally effective course of treatment
     available or suitable for the Enrollee requesting the service which is more
     conservative or substantially less costly. Medical services will be of a
     quality that meets professionally recognized standards of health care, and
     will be substantiated by records including evidence of such medical
     necessity and quality. Those records will be made available to the
     DEPARTMENT upon request. For CHEC Enrollees, "Medically Necessary" means
     preventive screening services and other medical care, diagnostic services,
     treatment, and other measures necessary to correct or ameliorate defects
     and physical and mental illnesses and conditions, even if the services are
     not included in the Utah State Medicaid Plan.

P.   "Member Services" means a method of assisting Enrollees in understanding
     CONTRACTOR policies and procedures, facilitating referrals to participating
     specialists, and assisting in the resolution of problems and member
     complaints. The purpose of Member Services is to improve access to services
     and promote Enrollee satisfaction.

Q.   "Physician Incentive Plan" means any compensation between a contracting
     organization and a physician group that may directly or indirectly have the
     effect of reducing or limiting services provided with respect to Enrollees
     in the organization.

R.   "Prepaid Mental Health Plan" means the mental health centers that contract
     with the DEPARTMENT to provide inpatient and outpatient mental health
     services to Medicaid clients living within each mental health center's
     jurisdiction.

S.   "Primary Care Provider" or "PCP" means a health care provider the majority
     of whose practice is devoted to internal medicine, family/general practice
     or pediatrics. The MCO may allow other specialists to be PCPs, when
     appropriate. PCPs are responsible for delivering primary care services,
     coordinating and managing Enrollees' overall health and, authorizing
     referrals for other necessary care.

T.   "Restriction Program" means the Federally mandated program (42 CFR
     431.54(e)) for Medicaid clients who over-utilize Medicaid services. If the
     DEPARTMENT in conjunction with the CONTRACTOR finds that an Enrollee has
     utilized Medicaid services at a frequency or amount that is not Medically
     Necessary, as determined in accordance with utilization guidelines adopted
     by the DEPARTMENT, the DEPARTMENT may place the Enrollee under the
     Restriction Program for a reasonable period of time to obtain Medicaid
     services from designated providers only.

U.   "State Plan" means the State Plan for organization and operation of the
     Medicaid program as defined pursuant to Section 1102 of the Social Security
     Act (42 U.S.C. 1302).

                                  Page 3 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

                            ARTICLE II - SERVICE AREA

The Service Area is limited to the urban counties of Cache, Davis, Iron, Salt
Lake, Utah, Washington and Weber.

       ARTICLE III - ENROLLMENT, ORIENTATION, MARKETING, AND DISENROLLMENT

A.   ENROLLMENT PROCESS

     1.   ENROLLEE CHOICE

          The DEPARTMENT will offer potential Enrollees a choice among all MCOs
          available in the Enrollment Area. The DEPARTMENT will inform potential
          Enrollees of Medicaid benefits. The Medicaid client's intent to enroll
          is established when the applicant selects The CONTRACTOR, either
          verbally or by signing a choice of health care delivery form or
          equivalent. This initiates the action to send an advance notification
          to the CONTRACTOR. Medicaid Enrollees made eligible for a retroactive
          period prior to the current month are not eligible for CONTRACTOR
          enrollment during the retroactive period.

     2.   PERIOD OF ENROLLMENT

          Each Enrollee will be enrolled for the period of the Contract or the
          period of Medicaid eligibility or until such person disenrolls or is
          disenrolled, whichever is earlier. Until the DEPARTMENT notifies the
          CONTRACTOR that an Enrollee is no longer Medicaid eligible, the
          CONTRACTOR may assume that the Enrollee continues to be eligible. Each
          Enrollee will be automatically re-enrolled at the end of each month
          unless that Enrollee notifies the DEPARTMENT'S Health Program
          Representative of an intent not to re-enroll in the MCO prior to the
          benefit issuance date.

     3.   OPEN ENROLLMENT

          The CONTRACTOR will have a continuous open enrollment period that
          meets the requirements of Section 1301(d) of the Public Health Service
          Act. The DEPARTMENT will certify, and the CONTRACTOR agrees to accept
          individuals who are eligible to be enrolled in the MCO under the
          provisions of this Contract:

          a.   in the order in which they apply; and

          b.   without restrictions unless authorized by the DEPARTMENT.

                                  Page 4 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     4.   NO HEALTH SCREENING

          The DEPARTMENT and the CONTRACTOR agree that no potential Enrollee
          will be pre-screened or selected by either party for enrollment on the
          basis of pre-existing  health problems or on the basis of race, color,
          national origin, disability or age.

     5.   INDEPENDENT ENROLLMENT

          Each Medicaid eligible can be enrolled or disenrolled in the MCO,
          independent of any other Family Member's enrollment or disenrollment.

     6.   REPRESENTATIVE POPULATION

          The CONTRACTOR will service a population representative of the
          categories of eligibility within the area it serves.

     7.   ELIGIBILITY TRANSMISSION

          a.   IN GENERAL

               Before the close of business of each day, the DEPARTMENT will
               provide to the CONTRACTOR an Eligibility Transmission which is an
               electronic file that includes individuals which the DEPARTMENT
               certifies as Medicaid eligible and who enrolled in the MCO.
               Eligibility transmissions include new Enrollees, reinstated
               Enrollees, retroactive Enrollees, deleted Enrollees and Enrollees
               whose eligibility information results in a change to a critical
               field. The Eligibility Transmission will be in accordance with
               the Utah Health Information Network (UHIN) standard. The
               DEPARTMENT represents and warrants to the CONTRACTOR that the
               appearance of an individual's name on the Eligibility
               Transmission, other than a deleted Enrollee, will be conclusive
               evidence for purposes of this Contract, that such person is
               enrolled in the program and qualifies for medical assistance
               under Medicaid Title XIX and that the DEPARTMENT agrees to pay
               premiums for such Enrollees.

          b.   NEW ENROLLEES

               New Enrollees are enrolled in this MCO until otherwise specified;
               these Enrollees will not appear on future transmissions unless
               there is a change in a critical field. Critical fields are
               coverage dates, recipient name, date of birth, date of death,
               sex, social security number, case information, address, telephone
               number, payment code, coordination of benefits, and the
               Enrollee's provider under the Restriction Program. Enrollees with
               a spenddown requirement will appear on the eligibility
               transmission on a month by month basis after the spenddown is
               met.

                                  Page 5 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          c.   RETROACTIVE ENROLLEES

               Retroactive Enrollees are those who were Enrollees previous to
               the current month. Retroactive Enrollees include newborn
               Enrollees or Enrollees who have been reported in one payment
               category in a previous month but have been changed to a new
               payment category for that previous month.

          d.   REINSTATED ENROLLEES

               Reinstated Enrollees are those who were enrolled for the previous
               month and also closed at the end of the previous month. These
               Enrollees are eligible retroactively to the beginning of the
               current month.

          e.   DELETED ENROLLEES

               Deleted Enrollees are those who are no longer eligible for
               Medicaid or who were disenrolled from the MCO.

          f.   ADVANCED NOTIFICATION TRANSMISSION

               An Advanced Notification Transmission is another electronic file
               (separate from the Eligibility Transmission) that will be sent to
               the CONTRACTOR when an individual has selected the MCO prior to
               becoming eligible for Medicaid. These individuals may or may not
               become eligible for Medicaid. Use of information about such
               individuals is restricted to providing the individual with an
               orientation to the MCO prior to the individual's eligibility for
               Medicaid. The CONTRACTOR is not required to orient individuals
               until they appear on the Eligibility Transmission.

     8.   CHANGE OF ENROLLMENT PROCEDURES

          The CONTRACTOR will be advised of anticipated changes in DEPARTMENT
          policies and procedures as they relate to the enrollment process and
          their comments will be solicited. The CONTRACTOR agrees to be bound by
          such changes in DEPARTMENT policies and procedures that are mutually
          agreed upon by the CONTRACTOR and the DEPARTMENT.

B.   MEMBER ORIENTATION

     1.   INITIAL CONTACT - GENERAL ORIENTATION

          The CONTRACTOR will make a good faith effort to ensure that each
          Enrollee or Enrollee's family or guardian receives the CONTRACTOR's
          member handbook. The CONTRACTOR representative will make a good faith
          effort, as evidenced in written or electronic records, to make an
          initial contact with the Enrollee within 10 working days

                                  Page 6 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July I, 2001

          after the CONTRACTOR has been notified through the Eligibility
          Transmission of the Enrollee's MCO enrollment. The initial contact
          will be in person or by telephone (or in writing, but only if
          reasonable attempts have been made to make the contact in person by
          telephone) and will inform the Enrollee of the MCO rules and policies.
          The CONTRACTOR must ensure that Enrollees are provided interpreters,
          Telecommunication Device for the Deaf (TDD), and other auxiliary aids
          to ensure that Enrollees understand their rights and responsibilities.
          During the initial contact the CONTRACTOR Representative will provide,
          at a minimum, the following information to the Enrollee or potential
          Enrollee:

          a.   specific written and oral instructions on the use of the
               CONTRACTOR's Covered Services and procedures;

          b.   availability and accessibility of all Covered Services, including
               the availability of family planning services and that the
               Enrollee may obtain family planning services from Medicaid
               providers other than providers affiliated with the CONTRACTOR;

          c.   the client's rights and responsibilities as an Enrollee of the
               Health Plan, including the right to file a grievance and how to
               file a grievance;

          d.   the right to terminate enrollment with the MCO; and

          e.   encouragement to make a medical appointment with a provider.

     2.   IDENTIFICATION OF ENROLLEES WITH SPECIAL HEALTH CARE NEEDS

          During the initial contact with each Enrollee, the CONTRACTOR
          representative will use a process that will identify children and
          adults with special health care needs. The CONTRACTOR representative
          will clearly describe to each Enrollee during the initial contact the
          process for requesting specialist care. When an Enrollee is identified
          as having special health care needs, the CONTRACTOR Representative
          will forward this information to a CONTRACTOR individual with
          knowledge of coordination of care and services necessary for such
          Enrollees. The CONTRACTOR individual with knowledge of coordination of
          care for Enrollees with special health care needs will make a good
          faith effort to contact Enrollees within ten working days after
          identification to begin coordination of health care needs, if
          necessary. The CONTRACTOR will not discriminate on the basis of health
          status or the need for health care services.

          The DEPARTMENT's Health Program Representatives are responsible to
          forward information, i.e., pink sheets identifying Enrollees with
          special health care needs and limited language proficiency needs to
          the CONTRACTOR in a timely way coinciding with the daily Eligibility
          Transmission as much as possible.

                                  Page 7 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     3.   INABILITY TO CONTACT ENROLLEE FOR ORIENTATION

          If the CONTRACTOR's representative cannot contact the Enrollee within
          10 working days or at all, the CONTRACTOR representative will document
          its efforts to contact the Enrollee.

     4.   ENROLLEES RECEIVING OUT-OF-PLAN CARE PRIOR TO ORIENTATION

          If the Enrollee receives Covered Services by an out-of-plan provider
          after the first day of the month in which the client's enrollment
          became effective, and if a CONTRACTOR orientation either in-person or
          by telephone (or in writing, but only if reasonable attempts have been
          made to make the contact in person or by telephone) has not taken
          place prior to receiving such services, the CONTRACTOR is responsible
          for payment of the services rendered provided the DEPARTMENT informs
          the CONTRACTOR by the 20th of any month prior to the month that MCO
          enrollment begins.

C.   MARKETING AND MEMBER EDUCATION

     1.   APPROVAL OF MARKETING MATERIALS

          The CONTRACTOR's marketing plans, procedures and materials will be
          accurate, and may not mislead, confuse, or defraud either Enrollees or
          the DEPARTMENT. All Medicaid marketing plans, procedures and materials
          will be reviewed and approved by the DEPARTMENT in consultation with
          the Medical Care Advisory Committee for Marketing Review before
          implemented or released by the CONTRACTOR. The DEPARTMENT will notify
          the CONTRACTOR of its approval or disapproval, in writing, of such
          materials within ten working days after receiving them unless the
          DEPARTMENT and the CONTRACTOR agree to another time frame. If the
          DEPARTMENT does not respond within the agreed upon time frame, the
          CONTRACTOR shall deem such materials approved. Marketing materials
          will not be approved if the DEPARTMENT determines that the material is
          materially inaccurate or misleading or otherwise makes material
          misrepresentations. Health education materials and newsletters not
          specifically related to Enrollees do not need to be approved by the
          DEPARTMENT.

          a.   NO DOOR-TO-DOOR, TELEPHONIC, OR "COLD CALL" MARKETING

               The CONTRACTOR cannot, either directly or indirectly, conduct
               door-to-door, telephonic or "cold call" marketing of enrollment.
               These three marketing practices are prohibited whether conducted
               by the Health Plan itself ("directly") or by an agent or
               independent contractor ("indirectly"). Cold call marketing is any
               unsolicited personal contact with a potential Enrollee by an
               employee or agent of a managed care entity for the purpose of
               influencing the individual to enroll with the Health Plan. The
               CONTRACTOR may not entice a potential Enrollee to join the Health
               Plan by offering the sale of any other type of

                                  Page 8 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               insurance as a bonus for enrollment. All other non-requested
               marketing approaches to Medicaid clients by the CONTRACTOR are
               also prohibited unless specifically approved in advance by the
               DEPARTMENT.

          b.   DISTRIBUTION OF MARKETING MATERIALS

               Marketing materials must be distributed to the entire Service
               Area.

     2.   ENROLLEE MATERIALS MUST BE COMPREHENSIBLE

          The CONTRACTOR will attempt to write all Enrollee and potential
          Enrollee information, instructional and educational materials,
          including member handbooks, at no greater than a sixth grade reading
          level. If the MCO has more than 5% of its Enrollees who speak a
          language other than English as a first language, the CONTRACTOR must
          make available written material (e.g. member handbooks, educational
          newsletters) in that language. Marketing materials must include a
          statement that the CONTRACTOR does not discriminate against any
          Enrollee on the basis of race, color, national origin, disability, or
          age in admission, treatment, or participation in its programs,
          services and activities. In addition, the materials must include the
          phone number of the nondiscrimination coordinator for Enrollees to
          call if they have questions about the nondiscrimination policy or
          desire to file a complaint or grievance alleging violations of the
          nondiscrimination policy.

     3.   MEMBER HANDBOOK

          The CONTRACTOR will produce a member handbook that must be submitted
          to the DEPARTMENT for review and approval before distribution. The
          DEPARTMENT will notify the CONTRACTOR in writing of its approval or
          disapproval within ten working days after receiving the member
          handbook unless the DEPARTMENT and CONTRACTOR agree to another time
          frame. If the DEPARTMENT does not respond within the agreed upon time
          frame, the CONTRACTOR may deem such materials are approved. If there
          are changes to the content of the material in the handbook, the
          CONTRACTOR must update the member handbook and submit a draft to the
          DEPARTMENT for review and approval before distribution to its
          Enrollees. At a minimum, the member handbook must explain in clear
          terms the following information:

          a.   The scope of benefits provided by the MCO;

          b.   Instructions on where and how to obtain Covered Services,
               including referral requirements;

          c.   Instructions on what to do in an emergency or urgent medical
               situation, including emergency numbers;

          d.   Enrollee options on obtaining family planning services;

                                  Page 9 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1. 2001

          e.   Instructions on how to choose a PCP and how to change PCPs;

          f.   Description on Enrollee cost-sharing requirements
               (if applicable);

          g.   Toll-free telephone number;

          h.   Description of Member Services function;

          i.   How to register a complaint or grievance;

          j.   Information on Advance Directives;

          k.   Services covered by Medicaid, but not covered by the CONTRACTOR;

          l.   Clients' rights and responsibilities;

          m.   A statement that the CONTRACTOR does not discriminate against any
               Enrollee on the basis of race, color, national origin,
               disability, or age in admission, treatment, or participation in
               its programs, services and activities; and

          n.   The phone number of the nondiscrimination coordinator for
               Enrollees to call if they have questions about the
               nondiscrimination policy or desire to file a complaint or
               grievance alleging violations of the nondiscrimination policy.

     4.   NOTIFICATION TO ENROLLEES OF POLICIES AND PROCEDURES

          a.   CHANGES TO POLICIES AND PROCEDURES

               The CONTRACTOR must periodically notify Enrollees, in writing, of
               changes to its plan such as changes to its policies or procedures
               either through a newsletter or other means.

          b.   ANNUAL EDUCATION ON EMERGENCY CARE AND GRIEVANCE PROCEDURES

               The CONTRACTOR must annually reinforce, in writing, to Enrollees
               how to access emergency and urgent services and how to register a
               complaint or grievance.

     5.   MONTHLY NOTIFICATION TO DEPARTMENT OF CHANGES IN PROVIDER NETWORK

          The CONTRACTOR must notify the DEPARTMENT at least monthly of changes
          in its provider network so that the DEPARTMENT can ensure its listing
          of providers is accurate.

                                  Page 10 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

D.   DISENROLLMENT BY ENROLLEE

     1.   ENROLLEE'S RIGHT TO DISENROLL

          Enrollees will have the right to disenroll from this MCO at any time
          with or without cause. The disenrollment will be effective once the
          DEPARTMENT has been notified by the Enrollee and the DEPARTMENT issues
          a new Medicaid card and the disenrollment is indicated on the
          Eligibility Transmission.

     2.   ENROLLEES IN AN INPATIENT HOSPITAL SETTING

          The DEPARTMENT agrees that if a new Enrollee is a patient in an
          inpatient hospital setting on the date the new Enrollee's name appears
          on the CONTRACTOR Eligibility Transmission, the obligation of the
          CONTRACTOR to provide Covered Services to such person will commence
          following discharge. If an Enrollee is a patient in an inpatient
          hospital setting on the date that his or her name appears as a deleted
          Enrollee on the CONTRACTOR Eligibility Transmission or he or she is
          otherwise disenrolled under this Contract, the CONTRACTOR will remain
          financially responsible for such care until discharge.

     3.   ANNUAL STUDY OF ENROLLEES WHO DISENROLLED

          Annually, the DEPARTMENT and CONTRACTOR will work cooperatively to
          conduct an analysis of Enrollees who have voluntarily disenrolled from
          this MCO. The results of the analysis will include explanations of
          patterns of disenrollments and strategies or a corrective action plan
          to address unusual rates or patterns of disenrollment. The DEPARTMENT
          will inform the CONTRACTOR of such disenrollments.

E.   DISENROLLMENT BY CONTRACTOR

     1.   CANNOT DISENROLL FOR ADVERSE CHANGE IN ENROLLEE'S HEALTH

          The CONTRACTOR may not terminate enrollment because of an adverse
          change in the Enrollee's health.

     2.   VALID REASONS FOR DISENROLLMENT

          The CONTRACTOR may initiate disenrollment of any Enrollee's
          participation in the MCO upon one or more of the following grounds:

          a.   For reasons specifically identified in the CONTRACTOR's member
               handbook.

          b.   When the Enrollee ceases to be eligible for medical assistance
               under the State Plan, in accordance with Title 42 USCA, 1396, et.
               seq., and as finally determined by the DEPARTMENT.

                                  Page 11 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          c.   Upon termination or expiration of the Contract.

          d.   Death of the Enrollee.

          e.   Confinement of the Enrollee in an institution when confinement is
               not a Covered Service under this Contract.

          f.   Violation of enrollment requirements developed by the CONTRACTOR
               and approved by the DEPARTMENT but only after the CONTRACTOR
               and/or the Enrollee has exhausted the CONTRACTOR's applicable
               internal grievance procedure.

     3.   APPROVAL BY DEPARTMENT REQUIRED

          To initiate disenrollment of an Enrollee's participation with this
          MCO, the CONTRACTOR will provide the DEPARTMENT with documentation
          justifying the proposed disenrollment. The DEPARTMENT will approve or
          deny the disenrollment request in writing within thirty (30) days of
          receipt of the request. Failure by the DEPARTMENT to deny a
          disenrollment request within such thirty (30) day period will
          constitute approval of such disenrollment requests.

     4.   ENROLLEE'S RIGHT TO FILE A GRIEVANCE

          If the DEPARTMENT approves the CONTRACTOR's disenrollment request, the
          CONTRACTOR will give the Enrollee thirty (30) days written notice of
          the proposed disenrollment, and will notify the Enrollee of his or her
          opportunity to invoke the internal grievance procedure and appeals
          process for a fair hearing. The CONTRACTOR will give a copy of the
          written notice to the DEPARTMENT at the time the notice is sent to the
          Enrollee.

     5.   REFUSAL OF RE-ENROLLMENT

          If a person is disenrolled because of violation of responsibilities
          included in the CONTRACTOR'S member handbook, the CONTRACTOR may
          refuse re-enrollment of that Enrollee.

F.   ENROLLEE TRANSITION BETWEEN MCOs/HEALTH PLANS

     1.   MUST ACCEPT PRE-ENROLLMENT PRIOR AUTHORIZATIONS

          For Covered Services other than inpatient, home health services, and
          medical equipment, if authorization has been given for a Covered
          Service and an enrollee transitions between MCOs prior to the delivery
          of such Covered Service, the receiving MCO shall be bound by the
          relinquishing MCO's prior authorization until the receiving MCO has
          evaluated the Enrollee and a new plan of care is established. (See
          Article IV, Benefits, Section F,

                                  Page 12 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          Clarification of Payment Responsibilities, Subsection 5, for
          inpatient, home health services, and medical equipment explanations.)

     2.   MUST PROVIDE MEDICAL RECORDS TO ENROLLEE'S NEW MCO

          When enrollees are transitioned between MCOs the relinquishing MCO's
          provider will submit, upon request of the new MCO's provider, any
          critical medical information about the transitioning enrollee prior to
          the transition including, but not limited to, whether the member is
          hospitalized, pregnant, involved in the process of organ
          transplantation, scheduled for surgery or post-surgical follow-up on a
          date subsequent to transition, scheduled for prior-authorized
          procedures or therapies on a date subsequent to transition, receiving
          dialysis or is chronically ill (e.g. diabetic, hemophilic, HIV
          positive).

                              ARTICLE IV - BENEFITS

A.   IN GENERAL

     The CONTRACTOR will provide to Enrollees under this Contract, directly or
     through arrangements with subcontractors, all Medically Necessary Covered
     Services described in Attachment C as promptly and continuously as is
     consistent with generally accepted standards of medical practice. The
     subcontractors will follow generally accepted standards of medical care in
     diagnosing Enrollees who request services from the CONTRACTOR.

B.   PROVIDER SERVICES FUNCTION

     The CONTRACTOR must operate a Provider Services function during regular
     business hours. At a minimum, Provider Services staff must be responsible
     for the following:

     1.   Training, including ongoing training, of the CONTRACTOR's providers on
          Medicaid rules and regulations that will enable providers to
          appropriately render services to Enrollees;

     2.   Assisting providers to verify whether an individual is enrolled with
          the MCO;

     3.   Assisting providers with prior authorization and referral protocols;

     4.   Assisting providers with claims payment procedures;

     5.   Fielding and responding to provider questions and complaints and
          grievances.

C.   SCOPE OF SERVICES

     1.   UNDERWRITING RISK

                                  Page 13 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          In consideration of the premiums paid by the DEPARTMENT, the
          CONTRACTOR will, for all Enrollees, assume underwriting risk for
          Covered Services in Attachment C.

     2.   RESPONSIBLE FOR ALL BENEFITS IN ATTACHMENT C (COVERED SERVICES)

          Except as otherwise provided for cases of Emergency Services, the
          CONTRACTOR has the exclusive right and responsibility to arrange for
          all benefits listed in Attachment C. The CONTRACTOR is responsible for
          payment of Emergency Services 24 hours a day and 7 days a week whether
          the service was provided by a network or out-of-network provider and
          whether the service was provided in or out of the CONTRACTOR's Service
          Area.

     3.   CHANGES TO BENEFITS

          Amendments, revisions, or additions to the State Plan or to State or
          Federal regulations, guidelines, or policies and court or
          administrative orders will, insofar as they affect the scope or nature
          of benefits available to Enrollees, be amendments to the Covered
          Services under Attachment C. The DEPARTMENT will notify the
          CONTRACTOR, in writing, of any such changes and their effective date.
          Rate adjustments, when appropriate, will be negotiated between the
          DEPARTMENT and the CONTRACTOR.

     4.   MEDICAL NECESSITY DENIALS

          When the CONTRACTOR determines that a service will not be covered due
          to the lack of medical necessity, the CONTRACTOR must send all
          documentation supporting their decision to the DEPARTMENT for its
          review before the CONTRACTOR's determination is deemed final, when the
          following conditions are met:

          a.   there are no established national standards for determining
               medical necessity; and

          b.   the DEPARTMENT does not have medical necessity criteria for the
               service.

          The DEPARTMENT will review the documentation and determine what the
          DEPARTMENT's decision would be regarding coverage for the service. The
          DEPARTMENT and the CONTRACTOR will work collaboratively in making a
          final decision on whether the service is to be covered by the
          CONTRACTOR.

D.   SUBCONTRACTS

     1.   NO DISCRIMINATION BASED ON LICENSE OR CERTIFICATION

          The CONTRACTOR shall not discriminate against providers with respect
          to participation, reimbursement, or indemnification as to any provider
          who is acting within the scope of that provider's license or
          certification under applicable State law solely on

                                  Page 14 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          the basis of the provider's license or certification.

     2.   ANY COVERED SERVICE MAY BE SUBCONTRACTED.

          Any Covered Service may be subcontracted. All subcontracts will be in
          writing and will include the general requirements of this Contract
          that are appropriate to the service or activity including
          confidentiality requirements and will assure that all duties of the
          CONTRACTOR under this Contract are performed. No subcontract
          terminates the legal responsibility of the CONTRACTOR to the
          DEPARTMENT to assure that all activities under this Contract are
          carried out. The CONTRACTOR will make all subcontracts available upon
          request.

     3.   NO PROVISIONS TO REDUCE OR LIMIT MEDICALLY NECESSARY SERVICES

          The CONTRACTOR will ensure that subcontractors abide by the
          requirements of Section 1128(b) of the Social Security Act prohibiting
          the CONTRACTOR and other such providers from making payments directly
          or indirectly to a physician or other provider as an inducement to
          reduce or limit Medically Necessary services provided to Enrollees.

     4.   REQUIREMENT OF 60 DAYS WRITTEN NOTICE PRIOR TO TERMINATION OF CONTRACT

          All subcontracts and agreements will include a provision stating that
          if either party (the subcontractor or CONTRACTOR) wishes to terminate
          the subcontract or agreement, whichever party initiates the
          termination will give the other party written notice of termination at
          least 60 calendar days prior to the effective termination date. The
          CONTRACTOR will notify the DEPARTMENT of the termination on the same
          day that the CONTRACTOR either initiates termination or receives the
          notice of termination from the subcontractor.

     5.   COMPLIANCE WITH CONTRACTOR's QUALITY ASSURANCE PLAN

          All of the CONTRACTOR's providers must be aware of the CONTRACTOR's
          Quality Assurance Plan and activities. All subcontracts with the
          CONTRACTOR must include a requirement securing cooperation with the
          CONTRACTOR's Quality Assurance Plan and activities and must allow the
          CONTRACTOR access to the subcontractor's medical records of its
          Enrollees.

     6.   UNIQUE IDENTIFIER REQUIRED

          All physicians who provide services under this Contract must have a
          unique identifier in accordance with the system established under
          section 1173(b) of the Social Security Act and in accordance with the
          Health Insurance Portability and Accountability Act.

                                  Page 15 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     7.   PAYMENT OF PROVIDER CLAIMS

          The CONTRACTOR must pay its providers on a timely basis consistent
          with the claims payment procedures described in section 1902(a)(37)(A)
          of the Social Security Act and the implementing Federal regulation at
          42 CFR 447.45, unless the provider and CONTRACTOR agree to an
          alternate payment schedule. The Contractor must ensure that 90 percent
          of claims for payment (for which no further written information or
          substantiation is required in order to make payment) made for Covered
          Services and furnished by its providers are paid within 30 days of
          receipt of such claims and that 99 percent of such claims are paid
          within 90 days of the date of receipt of such claims.

E.   CLARIFICATION OF COVERED SERVICES

     1.   EMERGENCY SERVICES

          a.   IN GENERAL

               The CONTRACTOR must provide coverage for Emergency Services
               without regard to prior authorizations or the emergency care
               provider's contractual relationship with the CONTRACTOR. The
               CONTRACTOR must inform their Enrollees that access to Emergency
               Services is not restricted and that if an Enrollee experiences a
               medical emergency, he or she may obtain services from a non-plan
               physician or other qualified provider, without penalty. However,
               the CONTRACTOR may require the Enrollee to notify the CONTRACTOR
               within a specified time after the Enrollee's condition is
               stabilized, and may require the Enrollee to obtain prior
               authorization for any follow-up care delivered pursuant to the
               emergency. The CONTRACTOR must comply with Medicare guidelines
               for post-stabilization of care.

               The CONTRACTOR must pay for services where the presenting
               symptoms are of sufficient severity that a person with average
               knowledge of health and medicine would reasonably expect the
               absence of immediate medical attention to result in placing the
               health of the individual (or, with respect to a pregnant woman,
               the health of a woman or her unborn child) in serious jeopardy;
               serious impairment to bodily functions; or serious dysfunction of
               any bodily organ or part.

               The CONTRACTOR may not retroactively deny a claim for an
               emergency screening examination because the condition, which
               appeared to be an emergency medical condition under the prudent
               layperson standard, turned out to be non-emergency in nature.

          b.   DETERMINING LIABILITY FOR EMERGENCY SERVICES

               1)   Presence of a clinical emergency

                                  Page 16 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

                    If the screening examination leads to a clinical
                    determination by the examining physician that an actual
                    emergency medical condition exists, the CONTRACTOR must pay
                    for both the services involved in the screening examination
                    and the services required to stabilize the Enrollee.

               2)   Emergency services continue until the Enrollee can be safely
                    discharged or transferred

                    The CONTRACTOR must pay for all Emergency Services that are
                    Medically Necessary until the clinical emergency is
                    stabilized. This includes all treatment that may be
                    necessary to assure, within reasonable medical probability,
                    that no material deterioration of the Enrollee's condition
                    is likely to result from, or occur during, discharge of the
                    Enrollee or transfer of the Enrollee to another facility. If
                    there is a disagreement between a hospital and the
                    CONTRACTOR concerning whether the Enrollee is stable enough
                    for discharge or transfer, or whether the medical benefits
                    of an unstabilized transfer outweigh the risks, the
                    judgement of the attending physician(s) actually caring for
                    the Enrollee at the treating facility prevails and is
                    binding on the CONTRACTOR. The CONTRACTOR may establish
                    arrangements with hospitals whereby the CONTRACTOR may send
                    one of its own physicians with appropriate ER privileges to
                    assume the attending physician's responsibilities to
                    stabilize, treat, and transfer the Enrollee.

               3)   Absence of a clinical emergency

                    If the screening examination leads to a clinical
                    determination by the examining physician that an actual
                    emergency medical condition did not exist, then the
                    determining factor for payment liability should be whether
                    the Enrollee had acute symptoms of sufficient severity at
                    the time of presentation. In these cases, the CONTRACTOR
                    must review the presenting symptoms of the Enrollee and must
                    pay for all services involved in the screening examination
                    where the presenting symptoms (including severe pain) were
                    of sufficient severity to have warranted emergency attention
                    under the prudent layperson standard.

               4)   Referrals

                    When an Enrollee's Primary Care Physician or other plan
                    representative instructs the Enrollee to seek emergency care
                    in or out of network, the CONTRACTOR is responsible for
                    payment of the medical screening examination and for other
                    Medically Necessary Emergency Services, without regard to
                    whether the Enrollee meets the prudent layperson standard.

                                  Page 17 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     2.   CARE PROVIDED IN SKILLED NURSING FACILITIES

          a.   IN GENERAL: STAYS LASTING 30 DAYS OR LESS

               The CONTRACTOR may provide long term care for Enrollees in
               skilled nursing facilities and then reimburse such facilities
               when the plan of care includes a prognosis of recovery and
               discharge within 30 days. It is the responsibility of a
               CONTRACTOR physician to make the determination if the patient
               will require the services of a nursing facility for fewer or
               greater than 30 days.

          b.   PROCESS FOR STAYS LONGER THAN 30 DAYS

               When the prognosis of an Enrollee indicates that long term care
               greater than 30 days will be required, the following process will
               occur:

               1)   The CONTRACTOR will notify the Enrollee, hospital discharge
                    planner, and nursing facility that the CONTRACTOR will not
                    be responsible for the services provided for the Enrollee
                    during the stay at the skilled nursing facility.

               2)   The CONTRACTOR will notify the DHCF, Bureau of Managed
                    Health Care, of this determination to suspend premium
                    payment for that Enrollee.

               3)   If the CONTRACTOR incurs expenses, the Bureau of Managed
                    Health Care will determine if the CONTRACTOR will retain the
                    premium for the month during which the Enrollee is admitted
                    to the skilled nursing facility. If the CONTRACTOR does not
                    incur expenses during the month in which the Enrollee is
                    admitted to a skilled nursing facility, the Bureau of
                    Managed Health Care will retract from the CONTRACTOR the
                    premium for that Enrollee.

               4)   Retraction of the premium payment will be subject to "3"
                    above, but the Eligibility Transmission will indicate the
                    non-payment on the first day of the month following the
                    prognosis determination of greater than 30 days.

               5)   Premium payment to the CONTRACTOR will recommence beginning
                    the first full month that the Enrollee is no longer residing
                    in the nursing facility.

          c.   PROCESS FOR STAYS LESS THAN 30 DAYS

               When the prognosis of skilled nursing facility services is
               anticipated to be less than 30 days, but during the 30-day period
               the CONTRACTOR determines that

                                  Page 18 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               the Enrollee will require skilled nursing facility services for
               greater than 30 days, the following process will be in effect:

               1)   The CONTRACTOR will notify the nursing facility that a
                    determination has been made that the Enrollee will require
                    services for more than 30 days.

               2)   The CONTRACTOR will notify the DHCF, Bureau of Managed
                    Health Care, of the determination that the Enrollee will
                    require services in a nursing facility for more than 30
                    days.

               3)   If the CONTRACTOR incurs expenses for the Enrollee, the
                    Bureau of Managed Health Care will determine if the
                    CONTRACTOR will retain the premium for the month during
                    which the change in status was determined. If the CONTRACTOR
                    does not incur expenses during the month in which the change
                    in status is determined, the Bureau of Managed Health Care
                    will retract from the CONTRACTOR the premium for that
                    Enrollee.

               4)   Retraction of the premium payment will be subject to "3"
                    above, but the Recipient Subsystem will indicate the
                    non-payment on the first day of the month following the
                    prognosis determination of more than 30 days.

               5)   The CONTRACTOR will be responsible for payment for three
                    working days after the CONTRACTOR has notified the nursing
                    facility that skilled nursing care will be required for more
                    than 30 days.

               6)   Premium payment to the CONTRACTOR will recommence beginning
                    the first full month that the recipient is no longer
                    residing in the nursing facility.

     3.   ENROLLEES WITH SPECIAL HEALTH CARE NEEDS

          a.   IN GENERAL

               The CONTRACTOR will ensure there is access to all Medically
               Necessary Covered Services to meet the health needs of Enrollees
               with special health care needs. Individuals with special health
               care needs are those who have or are at increased risk for
               chronic physical, developmental, behavioral, or emotional
               conditions and who also require health and related services of a
               type or amount beyond that required by adults and children
               generally.

          b.   IDENTIFICATION

               The CONTRACTOR will identify Enrollees with special health care
               needs using

                                  Page 19 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               a process at the initial contact made by the CONTRACTOR
               Representative to educate the client and will offer the client
               care coordination or case management services. Care coordination
               services are services to assist the client in obtaining Medically
               Necessary Covered Services from the CONTRACTOR or another entity
               if the medical service is not covered under the Contract.

          c.   CHOOSING A PRIMARY CARE PROVIDER

               The CONTRACTOR will have a mechanism to inform care givers and,
               when appropriate, Enrollees with special health care needs about
               primary care providers who have training in caring for such
               Enrollees so that an informed selection of a provider can be
               made. The CONTRACTOR will have primary care providers with skills
               and experience to meet the needs of Enrollees with special health
               care needs. The CONTRACTOR will allow an appropriate specialist
               to be the primary care provider but only if the specialist has
               the skills to monitor the Enrollee's preventive and primary care
               services.

          d.   REFERRALS AND ACCESS TO SPECIALTY PROVIDERS

               The CONTRACTOR will ensure there is access to appropriate
               specialty providers to provide Medically Necessary Covered
               Services for adults and children with special health care needs.
               If the CONTRACTOR does not employ or contract with a specialty
               provider to treat a special health care condition at the time the
               Enrollee needs such Covered Services, the CONTRACTOR will have a
               process to allow the Enrollee to receive Covered Services from a
               qualified specialist who may not be affiliated with the
               CONTRACTOR. The CONTRACTOR will reimburse the specialist for such
               care at no less than Medicaid's rate for the service when the
               service is rendered. The process for requesting specialist's care
               will be clearly described by the CONTRACTOR and explained to each
               Enrollee during the initial contact with the Enrollee.

               If the CONTRACTOR restricts the number of referrals to
               specialists, the CONTRACTOR will not penalize those providers who
               make such referrals for Enrollees with special health care needs.

          e.   SURVEY OF ENROLLEES WITH SPECIAL HEALTH CARE NEEDS

               At least every two years, the CONTRACTOR in conjunction with the
               DEPARTMENT will survey a sample of Enrollees with special health
               care needs using a national consumer assessment questionnaire. to
               evaluate their perceptions of services they have received. The
               survey process, including the survey instrument, will be
               standardized and developed collaboratively between the DEPARTMENT
               and all contracting MCOs. The DEPARTMENT will analyze the results
               of the surveys. The results and analysis of the surveys will be
               reviewed by the CONTRACTOR's quality assurance committee for
               action.

                                  Page 20 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          f.   COLLABORATION WITH OTHER PROGRAMS

               If the individual with special health care needs is enrolled in
               the Prepaid Mental Health Plan or is enrolled in any of the
               Medicaid home and community-based waiver programs and is
               receiving case management services through that program, or is
               covered by one of the other Medicaid targeted case management
               programs, the CONTRACTOR care coordinator will collaborate with
               the appropriate program person, i.e., the targeted case manager,
               etc., for that program once the program person has contacted the
               CONTRACTOR care coordinator. When necessary, the CONTRACTOR care
               coordinator will make an effort to contact the program person of
               those Enrollees who have medical needs that require such
               coordination.

               The CONTRACTOR must coordinate health care needs for children
               with special health care needs with the services of other
               agencies (e.g., mental and substance abuse, public health
               departments, transportation, home and community based care,
               developmental disabilities, Title V, local schools, IDA programs,
               and child welfare), and with families, caregivers, and advocates.

          g.   REQUIRED ELEMENTS OF A CASE MANAGEMENT SYSTEM

               A case management system includes but is not limited to:

               1)   procedures and the capacity to implement the provision of
                    individual needs assessment including the screening for
                    special needs (e.g. mental health, high risk health
                    problems, functional problems, language or comprehension
                    barriers); the development of an individual treatment plan
                    as necessary based on the needs assessment; the
                    establishment of treatment objectives, treatment follow-up,
                    the monitoring of outcomes, and a process to ensure that
                    treatment plans are revised as necessary. These procedures
                    will be designed to accommodate the specific cultural and
                    linguistic needs of the Enrollee;

               2)   procedures designed to address those Enrollees, including
                    children with special health care needs, who may require
                    services from multiple providers, facilities and agencies
                    and require complex coordination of benefits and services,
                    including social services and other community resources;

               3)   a strategy to ensure that all Enrollees and/or authorized
                    Family Members or guardians are involved in treatment
                    planning and consent to the medical treatment;

               4)   procedures and criteria for making referrals and
                    coordinating care by specialists and sub-specialists that
                    will promote continuity as well as

                                  Page 21 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

                    cost-effectiveness of care; and

               5)   procedures to provide continuity of care for new Enrollees
                    to prevent disruption in the provision of Covered Services
                    that include, but are not limited to, appropriate case
                    management staff able to evaluate and handle individual case
                    transition and care planning, internal mechanisms to
                    evaluate plan networks and special case needs.

          h.   HOSPICE

               If an Enrollee is receiving hospice services at the time of
               enrollment in the MCO or if the Enrollee is already enrolled in
               the MCO and has less than six months to live, the Enrollee will
               be offered hospice services or the continuation of hospice
               services if he or she is already receiving such services prior to
               enrollment in the MCO.

     4.   INPATIENT HOSPITAL SERVICES

          If a CONTRACTOR's provider admits an Enrollee for inpatient hospital
          care, the CONTRACTOR has the responsibility for all services needed by
          the Enrollee during the hospital stay that are ordered by the
          CONTRACTOR's provider. Needed services include but are not limited to
          diagnostic tests, pharmacy, and physician services, including services
          provided by psychiatrists. If diagnostic tests conducted during the
          inpatient stay reveal that the Enrollee's condition is outside the
          scope of the CONTRACTOR's responsibility, the CONTRACTOR remains
          responsible for the Enrollee until the Enrollee is discharged or until
          responsibility is transferred to another appropriate entity and the
          appropriate entity agrees to take financial responsibility, including
          negotiating a payment for services. If the Enrollee is discharged and
          needs further services, the admitting CONTRACTOR will coordinate with
          the other appropriate entity to ensure continued care is provided. The
          CONTRACTOR and appropriate entity will work cooperatively in the best
          interest of the Enrollee. The appropriate entity includes, but is not
          limited to, a Prepaid Mental Health Plan or another MCO.

     5.   MATERNITY STAYS

          a.   THE NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT (NMHPA)

               The CONTRACTOR must meet the requirements of the Newborns' and
               Mothers' Health Protection Act (NMHPA). The CONTRACTOR must
               record early discharge information for monitoring, quality, and
               improvement purposes. The CONTRACTOR will ensure that coverage is
               provided with respect to a mother who is an Enrollee and her
               newborn child for a minimum of 48 hours of inpatient care
               following a normal vaginal delivery, and a minimum of 96 hours of
               inpatient care following a caesarean section, without requiring
               the attending provider to obtain authorization from the
               CONTRACTOR in order to keep a

                                  Page 22 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               mother and her newborn child in the inpatient setting for such
               period of time.

          b.   EARLY DISCHARGES

               Notwithstanding the prior sentence, the CONTRACTOR will not be
               required to provide coverage for post-delivery inpatient care for
               a mother who is an Enrollee and her newborn child during such
               period of time if (1) a decision to discharge the mother and her
               newborn child prior to the expiration of such period is made by
               the attending provider in consultation with the mother; and (2)
               the CONTRACTOR provides coverage for timely post-delivery
               follow-up care.

          c.   POST-DELIVERY CARE

               Post-delivery care will be provided to a mother and her newborn
               child by a registered nurse, physician, nurse practitioner, nurse
               midwife or physician assistant experienced in maternal and child
               health in (1) the home, a provider's office, a hospital, a
               federally qualified health center, a federally qualified rural
               health clinic, or a State health department maternity clinic; or
               (2) another setting determined appropriate under regulations
               promulgated by the Secretary of Health and Human Services,
               (including a birthing center or an intermediate care facility);
               except that such coverage will ensure that the mother has the
               option to be provided with such care in the home.

          d.   TIMELY POST-DELIVERY CARE

               "Timely post-delivery care" means health care that is provided
               (1) following the discharge of a mother and her newborn child
               from the inpatient setting; and (2) in a manner that meets the
               health needs of the mother and her newborn child, that provides
               for the appropriate monitoring of the conditions of the mother
               and child, and that occurs within the 24 to 72 hour period
               immediately following discharge.

     6.   CHILDREN IN CUSTODY OF THE DEPARTMENT OF HUMAN SERVICES

          a.   IN GENERAL

               The CONTRACTOR will work with the Division of Child and Family
               Services (DCFS) or the Division of Youth Corrections (DYC) in the
               Department of Human Services (DHS) to ensure systems are in place
               to meet the health needs of children in custody of the Department
               of Human Services. The CONTRACTOR will ensure these children
               receive timely access to appointments through coordination with
               DCFS or DYC. The CONTRACTOR must have available providers who
               have experience and training in abuse and neglect issues.

               The CONTRACTOR or its providers will make every reasonable effort
               to ensure

                                  Page 23 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               that a child who is in custody of the Department of Human
               Services may continue to use the provider with whom the child has
               an established professional relationship when the provider is
               part of the CONTRACTOR's network. The CONTRACTOR will facilitate
               timely appointments with the provider of record to ensure
               continuity of care for the child.

               While it is the CONTRACTOR's responsibility to ensure Enrollees
               who are children in the custody of DHS have access to needed
               services, DHS personnel are primarily responsible to assist
               children in custody in arranging for and getting to medical
               appointments and evaluations with the CONTRACTOR's network of
               providers. DHS staff are primarily responsible for contacting the
               CONTRACTOR to coordinate care for children in custody and
               informing the CONTRACTOR of the special health care needs of
               these Enrollees. The Fostering Healthy Children staff may assist
               the DHS staff in performing these functions by communicating with
               the CONTRACTOR.

          b.   SCHEDULE OF VISITS

               1)   Where physical and/or sexual abuse is suspected

                    In cases where the child protection worker suspects physical
                    and/or sexual abuse, the CONTRACTOR will ensure that the
                    child has access to an appropriate examination within 24
                    hours of notification that the child was removed from the
                    home. If the CONTRACTOR cannot provide an appropriate
                    examination, the CONTRACTOR will ensure the child has access
                    to a provider who can provide an appropriate examination
                    within the 24 hour period.

               2)   All other cases

                    In all other cases, the CONTRACTOR will ensure that the
                    child has access to an initial health screening within five
                    calendar days of notification that the child was removed
                    from the home. The CONTRACTOR will ensure this exam
                    identifies any health problems that might determine the
                    selection of a suitable placement, or require immediate
                    attention.

               3)   CHEC exams

                    In all cases, the CONTRACTOR will ensure that the child has
                    access to a Child Health Evaluation and Care (CHEC)
                    screening within 30 calendar days of notification that the
                    child was removed from the home. Whenever possible, the CHEC
                    screening should be completed within the five-day time
                    frame. Additionally, the CONTRACTOR will ensure the child
                    has access to a CHEC screening according to the CHEC
                    periodicity

                                  Page 24 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

                    schedule until age six, then annually thereafter.

     7.   ORGAN TRANSPLANTATIONS

          a.   IN GENERAL

               All organ transplantation services are the responsibility of the
               CONTRACTOR for all Enrollees in accordance with the criteria set
               forth in Rule R414-10A of the Utah Administrative Code, unless
               amended under the provisions of Attachment B, Article IV
               (Benefits), Section C, Subsection 3 of this Contract. The
               DEPARTMENT's criteria will be provided to the CONTRACTOR.

          b.   SPECIFIC ORGAN TRANSPLANTATIONS COVERED

               The following transplantations are covered under Rule R414-10A:
               Kidney, liver, cornea, bone marrow, heart, intestine, lung,
               pancreas, small bowel, combination heart/lung, combination
               intestine/liver, combination kidney/pancreas, combination
               liver/kidney, multi visceral, and combination liver/small bowel.

          c.   PSYCHOSOCIAL EVALUATION REQUIRED

               Enrollees who have applied for organ transplantations, except
               cornea or kidney, must undergo a comprehensive psycho-social
               evaluation by a board-certified or board-eligible psychiatrist.
               The evaluation must include a comprehensive history regarding
               substance abuse and compliance with medical treatment. In
               addition, the parent(s) or guardian(s) of Enrollees who are less
               than 18 years of age must undergo a psycho-social evaluation that
               includes a comprehensive history regarding substance abuse, and
               past and present compliance with medical treatment.

               If a request is made for a transplantation not listed above, the
               CONTRACTOR will contact the DEPARTMENT. Such requests will be
               addressed as set forth in R414-10A-23.

          d.   OUT-OF-STATE TRANSPLANTATIONS

               When the CONTRACTOR arranges the transplantation to be performed
               out-of- state, the CONTRACTOR is responsible for coverage of
               food, lodging, transportation and airfare expenses for the
               Enrollee and attendant. The CONTRACTOR will follow, at a minimum,
               the DEPARTMENT's criteria for coverage of food, lodging,
               transportation and airfare expenses.

     8.   MENTAL HEALTH SERVICES

          When an Enrollee presents with a possible mental health condition to
          his or her

                                  Page 25 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          CONTRACTOR primary care physician, it is the responsibility of the
          primary care provider to determine whether the Enrollee should be
          referred to a psychologist, pediatric specialist, psychiatrist,
          neurologist, or other specialist. Mental health conditions may be
          handled by the CONTRACTOR primary care provider and referred to the
          Enrollee's Prepaid Mental Health Plan when more specialized services
          are required for the Enrollee. CONTRACTOR primary care providers may
          seek consultation from the Prepaid Mental Health Plan when the primary
          care provider chooses to manage the Enrollee's symptoms.

          An independent panel comprised of specialists appropriate to the
          concern will be established by the DEPARTMENT with representatives
          from the CONTRACTOR and Prepaid Mental Health Plan to adjudicate
          disputes regarding which entity (the CONTRACTOR or Prepaid Mental
          Health Plan) is responsible for payment and/or treatment of a
          condition. The panel will be convened on a case-by-case basis. The
          CONTRACTOR and Prepaid Mental Health Plan will adhere to the final
          decision of the panel.

     9.   DEVELOPMENTAL AND ORGANIC DISORDERS

          a.   COVERED SERVICES FOR CHILD ENROLLEES THROUGH AGE 20

               1)   The CONTRACTOR is responsible for all inpatient and
                    physician outpatient Covered Services for child Enrollees
                    with developmental (ICD-9 codes 299 through 299.8 and 317
                    through 319.9) or organic diagnoses (ICD-9 codes 290 through
                    294.9 and 310 through 310.9) including, but not limited to,
                    diagnostic work-ups and other medical care such as
                    medication management services related to the developmental
                    or organic disorder.

               2)   The CONTRACTOR is responsible for all psychological
                    evaluations and testing including neuropsychological
                    evaluations and testing for child Enrollees with
                    developmental or organic disorders such as brain tumors,
                    brain injuries, and seizure disorders.

          b.   COVERED SERVICES FOR ADULT ENROLLEES AGE 21 AND OLDER

               The CONTRACTOR is responsible for all inpatient and physician
               outpatient Covered Services for adult Enrollees with
               developmental (ICD-9 codes 299 through 299.8 and 317 through
               319.9) and organic diagnoses (ICD-9 codes 290 through 294.9 and
               310 through 310.9) including diagnostic work-ups and other
               medical care such as medication management services related to
               the developmental or organic disorder.

          c.   NON-COVERED SERVICES

               1)   Psychological evaluations and testing including
                    neuropsychological

                                  Page 26 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July I, 2001

                    evaluations and testing for adult Enrollees is not the
                    responsibility of the CONTRACTOR.

               2)   Habilitative and behavioral management services are not the
                    responsibility of the CONTRACTOR. If habilitative services
                    are required, the Enrollee should be referred to the
                    Division of Services for People with Disabilities (DSPD),
                    the school system, the Early Intervention Program, or
                    similar support program or agency. The Enrollee should also
                    be referred to DSPD for consideration of other benefits and
                    programs that may be available through DSPD. Habilitative
                    services are defined in Section 1915(c)(5)(a) of the Social
                    Security Act as "services designed to assist individuals in
                    acquiring, retaining and improving the self-help,
                    socialization and adaptive skills necessary to reside
                    successfully in home and community based settings."

          d.   RESPONSIBILITY OF THE PREPAID MENTAL HEALTH PLAN

               The Prepaid Mental Health Plan is responsible for needed mental
               health services to individuals with an organic and a psychiatric
               diagnosis or with a developmental and a psychiatric diagnosis.

     10.  OUT-OF-STATE ACCESSORY SERVICES

          When the CONTRACTOR arranges a Covered Service to be performed
          out-of-state, the CONTRACTOR is responsible for coverage of airfare,
          food and lodging for the Enrollee and one attendant during the stay at
          the out-of-state facility. Ground transportation costs only from the
          airport to the hotel or hospital and back to the airport, one time
          only are also the responsibility of the CONTRACTOR. The CONTRACTOR
          will follow, at a minimum, the DEPARTMENT's criteria for coverage of
          food, lodging, transportation, and airfare expenses.

     11.  NON-CONTRACTOR PRIOR AUTHORIZATIONS

          a.   PRIOR AUTHORIZATIONS - GENERAL

               The CONTRACTOR shall honor prior authorizations for organ
               transplantations and any other ongoing services initiated by the
               DEPARTMENT while the Enrollee was covered under Medicaid
               fee-for-service until the Enrollee is evaluated by the CONTRACTOR
               and a new plan of care is established.

          b.   WHEN THE CONTRACTOR HAS NOT AUTHORIZED THE SERVICE

               For services that require a prior authorization, the CONTRACTOR
               will pay the provider of the service at the Medicaid rate, if the
               following conditions are met:

                                  Page 27 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               1)   the servicing provider is not a participating provider under
                    contract with the CONTRACTOR; and

               2)   the DEPARTMENT issued a prior authorization for an Enrollee
                    to the servicing provider approving payment of the service;
                    and

               3)   the servicing provider has completed the CONTRACTOR's
                    hearing process without resolution of the claim, and has
                    requested a hearing with the State Formal Hearings Unit
                    requesting payment for the services rendered: and

               4)   in the hearing process it is determined that service
                    rendered was a Medically Necessary service covered under
                    this Contract, and that the CONTRACTOR will be responsible
                    for payment of the claim.

               The CONTRACTOR may elect to have payment of the servicing
               provider's claim made through the DEPARTMENT's MMIS system, with
               an equal reduction in the payments made to the CONTRACTOR

F.   CLARIFICATION OF PAYMENT RESPONSIBILITIES

     1.   COVERED SERVICES RECEIVED OUTSIDE CONTRACTOR's NETWORK BUT PAID BY
          CONTRACTOR

          The CONTRACTOR will not be required to pay for Covered Services,
          defined in Attachment C, which the Enrollee receives from sources
          outside The CONTRACTOR's network, not arranged for and not authorized
          by the CONTRACTOR except as follows:

          a.   Emergency Services;

          b.   Court ordered services that are Covered Services defined in
               Attachment C and which have been coordinated with the CONTRACTOR;
               or

          c.   Cases where the Enrollee demonstrates that such services are
               Medically Necessary Covered Services and were unavailable from
               the CONTRACTOR.

     2.   WHEN COVERED SERVICES ARE NOT THE CONTRACTOR's RESPONSIBILITY

          a.   The CONTRACTOR is not responsible for payment when family
               planning services are obtained by an Enrollee from sources other
               than the CONTRACTOR.

          b.   The CONTRACTOR will not be required to provide, arrange for, or
               pay for Covered Services to Enrollees whose illness or injury
               results directly from a catastrophic occurrence or disaster,
               including, but not limited to, earthquakes or

                                  Page 28 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               acts of war. The effective date of excluding such Covered
               Services will be the date specified by the Federal Government or
               the State of Utah that a Federal or State emergency exists or
               disaster has occurred.

     3.   THE DEPARTMENT'S RESPONSIBILITY

          Except as described in Attachment F (Rates and Rate-Related Terms) of
          this Contract, the DEPARTMENT will not be required to pay for any
          Covered Services under Attachment C which the Enrollee received from
          any sources outside the CONTRACTOR except for family planning
          services.

     4.   COVERED SERVICES PROVIDED BY THE DEPARTMENT OF HEALTH, DIVISION OF
          COMMUNITY AND FAMILY HEALTH SERVICES

          For Enrollees who qualify for special services offered by or through
          the Department of Health, Division of Community and Family Health
          Services (DCFHS), the CONTRACTOR agrees to reimburse DCFHS at the
          standard Medicaid rate in effect at the time of service for one
          outpatient team evaluation and one follow-up visit for each Enrollee
          upon each instance that the Enrollee both becomes Medicaid eligible
          and selects the CONTRACTOR as its provider. The CONTRACTOR agrees to
          waive any prior authorization requirement for one outpatient team
          evaluation and one follow-up visit. The services provided in the
          outpatient team evaluation and follow-up visit for which the
          CONTRACTOR will reimburse DCFHS are limited to the services that the
          CONTRACTOR is otherwise obligated to provide under this Contract.

          If the CONTRACTOR desires a more detailed agreement for additional
          services to be provided by or through DCFHS for children with special
          health care needs, the CONTRACTOR may subcontract with DCFHS. The
          CONTRACTOR agrees that the subcontract with DCFHS will acknowledge and
          address the specific needs of DCFHS as a government provider.

     5.   ENROLLEE TRANSITION BETWEEN MCOS, OR BETWEEN FEE-FOR-SERVICE AND
          CONTRACTOR

          a.   INPATIENT HOSPITAL

               When an Enrollee is in an inpatient hospital setting and selects
               another MCO or becomes fee-for-service anytime prior to discharge
               from the hospital, the CONTRACTOR is financially responsible for
               the entire hospital stay including all services related to the
               hospital stay, i.e. physician, etc. The MCO in which the
               individual is enrolled at the time of discharge from the hospital
               is financially responsible for services provided during the
               remainder of the month when the individual was discharged. If
               such individual is fee-for-service at the time of discharge from
               the hospital, the DEPARTMENT is financially responsible for the
               remainder of the month when the individual was discharged. If a
               Medicaid

                                  Page 29 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               eligible is in an inpatient hospital setting and selects the MCO
               anytime prior to discharge from the hospital, the DEPARTMENT is
               financially responsible for the entire hospital stay including
               all services related to the hospital stay, i.e. physician, etc.
               Enrollees who are in an inpatient hospital setting at the time
               the CONTRACTOR terminates this Contract and who have enrolled
               with another MCO are the responsibility of the receiving MCO
               beginning the day after the termination is effective.

          b.   HOME HEALTH SERVICES

               Medicaid clients who are under fee-for-service or are enrolled in
               an MCO other than this MCO and are receiving home health services
               from an agency not contracting with the CONTRACTOR will be
               transitioned to the CONTRACTOR's home health agency. The
               CONTRACTOR is responsible for payment, not to exceed Medicaid
               payment, for a period not to exceed seven calendar days, unless
               the CONTRACTOR and the home health agency agree to another time
               period in writing, after the CONTRACTOR notifies the non-
               participating home health agency of the change in status or the
               non-participating home health agency notifies the CONTRACTOR that
               services are being provided by its agency. The CONTRACTOR will
               assess the needs of the Enrollee at the time the CONTRACTOR
               provides the orientation to the Enrollee.

               The CONTRACTOR will include the Enrollee in developing the plan
               of care to be provided by the CONTRACTOR's home health agency
               before the transition is complete. The CONTRACTOR will address
               Enrollee's concerns regarding Covered Services provided by the
               CONTRACTOR's home health agency before the new plan of care is
               implemented.

          c.   MEDICAL EQUIPMENT

               When medical equipment is ordered for an Enrollee by the
               CONTRACTOR and the Enrollee enrolls in a different MCO before
               receiving the equipment, the CONTRACTOR is responsible for
               payment for such equipment. Medical equipment includes
               specialized wheelchairs or attachments, prosthesis, and other
               equipment designed or modified for an individual client. Any
               attachments to the equipment, replacements, or new equipment is
               the responsibility of the MCO in which the client is enrolled at
               the time such equipment is ordered.

     6.   SURVEYS

          All surveys required under this Contract will be funded by the
          CONTRACTOR unless funded by another source such as the Utah Department
          of Health, Office of Health Care Statistics. The surveys must be
          conducted by an independent vendor mutually agreed upon by the
          DEPARTMENT and CONTRACTOR. The DEPARTMENT or designee will analyze the
          results of the surveys. Before publishing articles, data, reports,
          etc.

                                  Page 30 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          related to surveys the DEPARTMENT will provide drafts of such material
          to the CONTRACTOR for review and feedback. The CONTRACTOR will not be
          responsible for the costs incurred for such publishing by the
          DEPARTMENT.

                      ARTICLE V - ENROLLEE RIGHTS/SERVICES

A.   MEMBER SERVICES FUNCTION

     The CONTRACTOR must operate a Member Services function during regular
     business hours. Ongoing training, as necessary, shall be provided by the
     CONTRACTOR to ensure that the Member Services staff is conversant in the
     CONTRACTOR's policies and procedures as they relate to Enrollees. At a
     minimum, Member Services staff must be responsible for the following:

     1.   Explaining the CONTRACTOR's rules for obtaining services;

     2.   Assisting Enrollees to select or change primary care providers;

     3.   Fielding and responding to Enrollee questions and complaints and
          grievances.

     The CONTRACTOR shall conduct ongoing assessment of its orientation staff to
     determine staff member's understanding of the MCO and its Medicaid managed
     care policies and provide training, as needed.

B.   ENROLLEE LIABILITY

     1.   The CONTRACTOR will not hold an Enrollee liable for the following:

          a.   The debts of the CONTRACTOR if it should become insolvent.

          b.   Payment for services provided by the CONTRACTOR if the CONTRACTOR
               has not received payment from the DEPARTMENT for the services, or
               if the provider, under contract with the CONTRACTOR, fails to
               receive payment from the CONTRACTOR.

          c.   The payments to providers that furnish Covered Services under a
               contract or other arrangement with the CONTRACTOR that are in
               excess of the amount that normally would be paid by the Enrollee
               if the service had been received directly from the CONTRACTOR.

C.   GENERAL INFORMATION TO BE PROVIDED TO ENROLLEES

     The CONTRACTOR will make the following information available to Enrollees
     and potential Enrollees on request:

     1.   The identity, locations, qualification, and availability of
          participating providers (at a

                                  Page 31 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          minimum, area of specialty, board certification, and any special areas
          of expertise must be available that would be helpful to individuals
          deciding whether to enroll with the CONTRACTOR);

     2.   The rights and responsibilities of Enrollees;

     3.   The procedures available to Enrollees and providers to challenge or
          appeal the failure of the CONTRACTOR to cover a services; and

     4.   All items and services that are available to Enrollees that are
          covered either directly or through a method of referral or prior
          authorization.

D.   ACCESS

     1.   IN GENERAL

          The CONTRACTOR shall provide the DEPARTMENT and the Department of
          Health and Human Services, Centers for Medicare and Medicaid, adequate
          assurances that the CONTRACTOR, with respect to a service area, has
          the capacity to serve the expected enrollment in such service area,
          including assurances that the CONTRACTOR offers an appropriate range
          of services and access to preventive and primary care services for the
          population expected to enroll in such service area, and maintains a
          sufficient number, mix and geographic distribution of providers of
          services.

          The CONTRACTOR will provide services which are accessible to Enrollees
          and appropriate in terms of timeliness, amount, duration, and scope.

     2.   SPECIFIC PROVISIONS

          a.   ELIMINATION OF ACCESS PROBLEMS CAUSED BY GEOGRAPHIC, CULTURAL AND
               LANGUAGE BARRIERS AND PHYSICAL DISABILITIES

               The CONTRACTOR will minimize, with a goal to eliminate,
               Enrollee's access problems due to geographic, cultural and
               language barriers, and physical disabilities. The CONTRACTOR will
               provide assistance to Enrollees who have communication
               impediments or impairments to facilitate proper diagnosis and
               treatment. The CONTRACTOR must guarantee equal access to services
               and benefits for all Enrollees by making available interpreters,
               Telecommunication Devices for the Deaf (TDD), and other auxiliary
               aids to all Enrollees as needed. The CONTRACTOR will accommodate
               Enrollees with physical and other disabilities in accordance with
               the American Disabilities Act of 1990 (ADA), as amended. If the
               CONTRACTOR's facilities are not accessible to Enrollees with
               physical disabilities, the CONTRACTOR will provide services in
               other accessible locations.

                                  Page 32 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          b.   INTERPRETIVE SERVICES

               The CONTRACTOR will provide interpretive services for languages
               on an as needed basis. These requirements will extend to both
               in-person and telephone communications to ensure that Enrollees
               are able to communicate with the CONTRACTOR and CONTRACTOR's
               providers and receive Covered Services. Professional interpreters
               will be used when needed where technical, medical, or treatment
               information is to be discussed, or where use of a Family Member
               or friend as interpreter is inappropriate. A family member or
               friend may be used as an interpreter if this method is requested
               by the patient, and the use of such a person would not compromise
               the effectiveness of services or violate the patient's
               confidentiality, and the patient is advised that a free
               interpreter is available.

          c.   CULTURAL COMPETENCE REQUIREMENTS

               The CONTRACTOR shall incorporate in its policies, administration,
               and delivery of services the values of honoring Enrollee's
               beliefs; being sensitive to cultural diversity; and promoting
               attitudes and interpersonal communication styles with staff and
               providers which respect Enrollees' cultural backgrounds. The
               CONTRACTOR must foster cultural competency among its providers.
               Culturally competent care is care given by a provider who can
               communicate with the Enrollee and provide care with sensitivity,
               understanding, and respect for the Enrollee's culture, background
               and beliefs. The CONTRACTOR shall strive to ensure its providers
               provide culturally sensitive services to Enrollees. These
               services shall include but are not limited to providing training
               to providers regarding how to promote the benefits of health care
               services as well as training about health care attitudes,
               beliefs, and practices that affect access to health care
               services.

          d.   NO RESTRICTIONS OF PROVIDER's ABILITY TO ADVISE AND COUNSEL

               The CONTRACTOR may not restrict a health care provider's ability
               to advise and counsel Enrollees about Medically Necessary
               treatment options. All contracting providers acting within his or
               her scope of practice, must be permitted to freely advise an
               Enrollee about his or her health status and discuss appropriate
               medical care or treatment for that condition or disease
               regardless of whether the care or treatment is a Covered Service.

          e.   WAITING TIME BENCHMARKS

               The CONTRACTOR will adopt benchmarks for waiting times for
               physician appointments as follows:

               Waiting Time for Appointments

                                  Page 33 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               1)   Primary Care Providers:
                    .    within 30 days for routine, non-urgent appointments
                    .    within 60 days for school physicals
                    .    within 2 days for urgent, symptomatic, but not
                         life-threatening care (care that can be treated in the
                         doctor's office)

               2)   Specialists:
                    .    within 30 days for non-urgent
                    .    within 2 days for urgent, symptomatic, but not
                         life-threatening care (care that can be treated in a
                         doctor's office)

               These benchmarks do not apply to appointments for regularly
               scheduled visits to monitor a chronic medical condition if the
               schedule calls for visits less frequently than once every month.

          f.   NO DELAY WHILE COORDINATING COVERAGE WITH A PREPAID MENTAL HEALTH
               PLAN

               When an Enrollee is also enrolled in a Prepaid Mental Health
               Plan, the CONTRACTOR will not delay an Enrollee's access to
               needed services in disputes regarding responsibility for payment.
               Payment issues should be addressed only after needed services are
               rendered. As described in Attachment B, IV (Benefits), Section E
               (Clarification of Covered Services), Subsection 8 of this
               Contract, the independent panel established by the DEPARTMENT
               will assist in adjudicating such disputes when requested to do so
               by either party.

E.   CHOICE

     The CONTRACTOR must allow Enrollees the opportunity to select a
     participating Primary Care Provider. This excludes clients who are under
     the Restriction Program. If an Enrollee's Primary Care Provider ceases to
     participate in the CONTRACTOR's network, the CONTRACTOR must offer the
     Enrollee the opportunity to select a new Primary Care Provider.

F.   COORDINATION

     1.   IN GENERAL

          The CONTRACTOR will ensure access to a coordinated, comprehensive and
          continuous array of needed services through coordination with other
          appropriate entities. The CONTRACTOR's providers are not responsible
          for rendering waiver services.

     2.   PREPAID MENTAL HEALTH PLAN

          a.   When an Enrollee is also enrolled in a Prepaid Mental Health
               Plan, the CONTRACTOR and Prepaid Mental Health Plan will share
               appropriate information regarding the Enrollee's health care to
               ensure coordination of physical and mental health care services.

                                  Page 34 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                           Effective July 1,2001

          b.   Clients enrolled in the MCO and a Prepaid Mental Health Plan who
               due to a psychiatric condition require lab, radiology and similar
               outpatient services covered under this Contract, but prescribed
               by the Prepaid Mental Health Plan physician, will have access to
               such services in a timely fashion. The CONTRACTOR and Prepaid
               Mental Health Plan will reduce or eliminate unnecessary barriers
               that may delay the Enrollee's access to these critical services.

     3.   DOMESTIC VIOLENCE

          The CONTRACTOR will ensure that providers are knowledgeable about
          methods to detect domestic violence and about resources in the
          community to which they can refer patients.

     4.   RESTRICTION PCP

          The CONTRACTOR will ensure that Enrollees who are on the Restriction
          Program are linked to a primary care physician (PCP). If the
          restricted Enrollee's PCP chooses to no longer serve as the Enrollee's
          PCP or the provider ceases participation with the CONTRACTOR, the
          CONTRACTOR must assist the Enrollee in finding a new PCP.

G.   BILLING ENROLLEES

     1.   IN GENERAL

          Except as provided herein Attachment B, Article V (Enrollee
          Rights/Services), Section G (Billing Enrollees), subsection 2, no
          claim for payment will be made at any time by the CONTRACTOR or its
          providers to an Enrollee accepted by that provider as an Enrollee for
          any Covered Service. When a provider accepts an Enrollee as a patient
          he or she will look solely to the CONTRACTOR and any third party
          coverage for reimbursement. If the provider fails to receive payment
          from the CONTRACTOR, the Enrollee cannot be held responsible for these
          payments.

     2.   CIRCUMSTANCES WHEN AN ENROLLEE MAY BE BILLED

          An Enrollee may in certain circumstances be billed by the provider for
          non-Covered Services. A non-Covered Service is one that is not covered
          under this Contract, or includes special features or characteristics
          that are desired by the Enrollee, such as more expensive eyeglass
          frames, hearing aids, custom wheelchairs, etc., but do not meet the
          Medical Necessity criteria for amount, duration, and scope as set
          forth in the Utah State Plan. The DEPARTMENT will specify to the
          CONTRACTOR the extent of Covered Services and items under the
          Contract, as well as services not covered under the Contract but
          provided by Medicaid on a fee-for-service basis that would effect the
          CONTRACTOR's Covered Services. An Enrollee may be billed for a service
          not covered under this Contract only when all of the following
          conditions are met:

                                  Page 35 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          a.   the provider has an established policy for billing all patients
               for services not covered by a third party (non-Covered Services
               cannot be billed only to Enrollees.);

          b.   the provider has informed the Enrollee of its policy and the
               services and items that are not covered under this Contract and
               included this information in the Enrollee's member handbook;

          c.   the provider has advised the Enrollee prior to rendering the
               service that the service is not covered under this Contract and
               that the Enrollee will be personally responsible for making
               payment; and

          d.   the Enrollee agrees to be personally responsible for the payment
               and an agreement is made in writing between the provider and the
               Enrollee which details the service and the amount to be paid by
               the Enrollee.

     3.   CONTRACTOR MAY NOT HOLD ENROLLEE'S MEDICAID CARD

          The CONTRACTOR or its providers will not hold the Enrollee's Medicaid
          card as guarantee of payment by the Enrollee, nor may any other
          restrictions be placed upon the Enrollee.

     4.   CRIMINAL PENALTIES

          Criminal penalties shall be imposed on MCO providers as authorized
          under section 1128B(d)(1)of the Social Security Act if the provider
          knowingly and willfully charges an Enrollee at a rate other than those
          allowed under this Contract.

H.   SURVEY REQUIREMENTS

     Surveys will be conducted of the CONTRACTOR's Enrollees that will include
     questions about Enrollees' perceptions of access to and the quality of care
     received through the CONTRACTOR. The survey process, including the survey
     instrument, will be standardized and developed collaboratively among the
     DEPARTMENT and all contracting MCOs. The DEPARTMENT will analyze the
     results of the surveys. The CONTRACTOR's quality assurance committee will
     review the results of the surveys, identify areas needing improvement,
     outline action steps to follow up on findings, and inform (at a minimum),
     subcontractors, and member and provider services staff, when applicable.

     1.   GENERAL POPULATION SURVEY

          At least every two years, the CONTRACTOR in conjunction with the
          DEPARTMENT will survey a sample of its general population Enrollees;
          i.e.,

                                  Page 36 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          Enrollees who do not meet the definition of those with special health
          care needs.

     2.   SPECIAL NEEDS SURVEY

          At least every two years, the CONTRACTOR in conjunction with the
          DEPARTMENT will survey a sample of Enrollees with special health care
          needs.

                        ARTICLE VI - GRIEVANCE PROCEDURES

A.   IN GENERAL

     The CONTRACTOR will maintain a system for reviewing and adjudicating
     complaints and grievances by Enrollees and providers. The CONTRACTOR's
     complaint and grievance procedures must permit an Enrollee, or provider on
     behalf of an Enrollee, to challenge the denials of coverage of medical
     assistance or denials of payment for Covered Services. The CONTRACTOR will
     submit such grievance plans and procedures to the DEPARTMENT for approval
     prior to instituting or changing such procedures. Such procedures will
     provide for expeditious resolution of complaints and grievances by the
     CONTRACTOR's personnel who have authority to correct problems. The
     CONTRACTOR shall ensure that each Enrollee with limited English proficiency
     shall have the right to receive oral interpreter services without charge to
     the Enrollee at each stage of the CONTRACTOR's complaint and grievance
     process, including final determination.

B.   NONDISCRIMINATION

     The CONTRACTOR shall designate a nondiscrimination coordinator who will 1)
     ensure the CONTRACTOR complies with Federal Laws and Regulations regarding
     nondiscrimination, and 2) take complaints and grievances from Enrollees
     alleging nondiscrimination violations based on race, color, national
     origin, disability, or age. The nondiscrimination coordinator may also
     handle complaints regarding the violation of other civil rights (sex and
     religion) as other Federal laws and Regulations protect against these forms
     of discrimination. The CONTRACTOR, will develop and implement a written
     method of administration to assure that the CONTRACTOR's programs,
     activities, services, and benefits are equally available to all persons
     without regard to race, color, national origin, disability, or age.

C.   MINIMUM REQUIREMENTS OF GRIEVANCE PROCEDURES

     At a minimum, the CONTRACTOR's complaint and grievance procedures must
     include

     1.   definitions of complaints and grievance;

     2.   details of how, when, where and with whom an Enrollee or provider may
          file a

                                  Page 37 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          grievance;

     3.   assurances of the participation of individuals with authority to take
          corrective action;

     4.   responsibilities of the various components and staff of the
          organization;

     5.   a description of the process for timely review, prompt (45 days)
          resolution of complaints and grievances;

     6.   details of an appeal process; and

     7.   a provision stating that during the pendency of any grievance
          procedure or an appeal of such grievances, the Enrollee will remain
          enrolled except as otherwise stated in this Contract.

D.   FINAL REVIEW BY DEPARTMENT

     When an Enrollee or provider has exhausted the CONTRACTOR's grievance
     process and a final decision has been made, the CONTRACTOR must provide
     written notification to the party who initiated the grievance of the
     grievance's outcome and explain in clear terms a detailed reason for the
     denial.

     The CONTRACTOR must provide notification to Enrollees and providers that
     the final decision of the CONTRACTOR may be appealed to the DEPARTMENT and
     will give to the Enrollee or provider the DEPARTMENT's form to request a
     formal hearing with the DEPARTMENT. The MCO must inform the Enrollee or
     provider the time frame for filing an appeal with the DEPARTMENT. The
     formal hearing with the DEPARTMENT is a de novo hearing. If the Enrollee or
     provider request a formal hearing with the DEPARTMENT, all parties to the
     formal hearing agree to be bound by the DEPARTMENT's decision until any
     judicial reviews are completed and are in the Enrollee's or provider's
     favor. Any decision made by the DEPARTMENT pursuant to the hearing shall be
     subject to appeal rights as provided by State and Federal laws and rules.

                        ARTICLE VII - OTHER REQUIREMENTS

A.   COMPLIANCE WITH PUBLIC HEALTH SERVICE ACT

     The CONTRACTOR will comply with all requirements of Section 1301 to and
     including 1318 of the Public Health Service Act. The CONTRACTOR will
     provide verification of such compliance to the DEPARTMENT upon the
     DEPARTMENT's request. This Contract is a "prospective risk" contract which
     means that payment is made by means of a capitation rate offered each month
     as reimbursement in advance for services incurred that month regardless of
     the level of utilization

                                  Page 38 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     actually experienced. Nothing herein will be construed or interpreted to
     mean that this is a cost reimbursement contract. Cost reimbursement means
     payment is made by means of a settlement based on cost incurred over a
     given period.

B.   COMPLIANCE WITH OBRA'90 PROVISION AND 42 CFR 434.28

     The CONTRACTOR will comply with the OBRA '90 provision which requires an
     MCO provide patients with information regarding their rights under State
     law to make decisions about their health care including the right to
     execute a living will or to grant power of attorney to another individual.

     The CONTRACTOR will comply with the requirements of 42 CFR 434.28 relating
     to maintaining written Advance Directives as outlined under Subpart I of
     489.100 through 489.102.

C.   FRAUD AND ABUSE REQUIREMENTS

     The CONTRACTOR must have a compliance program to identify and refer
     suspected fraud and abuse activities. The compliance program must outline
     the CONTRACTOR's internal processes for identifying fraud and abuse. The
     CONTRACTOR agrees to abide by Federal and/or State fraud and abuse
     requirements including, but not limited to, the following:

     1.   Refer in writing to the DEPARTMENT all detected incidents of potential
          fraud or abuse on the part of providers of services to Enrollees or to
          other patients.

     2.   Refer in writing to the DEPARTMENT all detected incidents of patient
          fraud or abuse involving Covered Services provided which are paid for
          in whole, or in part, by the DEPARTMENT.

     3.   Refer in writing to the DEPARTMENT the names and Medicaid ID numbers
          of those Enrollees that the CONTRACTOR suspects of inappropriate
          utilization of services, and the nature of the suspected inappropriate
          utilization.

     4.   Inform the DEPARTMENT in writing when a provider is removed from the
          CONTRACTOR's panel for reasons relating to suspected fraud, abuse or
          quality of care concerns.

     5.   The CONTRACTOR may not employ or subcontract with any sanctioned
          provider. The DEPARTMENT shall notify the CONTRACTOR how to access
          information on providers sanctioned by Medicaid or Medicare. It is the
          responsibility of the CONTRACTOR to keep apprized of sanctioned
          providers.

          The CONTRACTOR may not employ or subcontract with any provider who is
          an ineligible entity as defined under the State Medicaid Manual
          Section 2086.16. This

                                  Page 39 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          section is available upon request. The CONTRACTOR will attest that the
          entities listed below are not involved with the CONTRACTOR. Entities
          that must be excluded -

          a.   Entities that could be excluded under section 1128(b)(8) of the
               Social Security Act (the Act)--these are entities in which a
               person who is an officer, director, agent, or managing employee
               of the entity, or a person who has a direct or indirect ownership
               or control interest of 5% or more in the entity and has been
               convicted of the following crimes:

               1)   any criminal offense related to the delivery of a Medicare
                    or Medicaid item or service (see section 1128(a)(1) of the
                    Act);

               2)   patient abuse (section 1128(a)(2));

               3)   fraud (1128(b)(1));

               4)   obstruction of an investigation (1128(b)(2)); or

               5)   offenses related to controlled substances (1128(b)(3)).

          b.   Entities that have a direct or indirect substantial contractual
               relationship with an individual or entity listed in subsection
               "a" above--a substantial contractual relationship is defined as
               any contractual relationship which provides for one or more of
               the following:

               1)   the administration, management, or provision of medical
                    services;

               2)   the establishment of policies pertaining to the
                    administration, management or provision of medical
                    services; or

               3)   the provision of operational support for the
                    administration, management, or provision of medical
                    services.

          c.   Entities which employ, contract with, or contract through any
               individual or entity that is excluded from Medicaid participation
               under Section 1128 or Section 1128A of the Act, for the provision
               of health care, utilization review, medical social work or
               administration services.

D.   DISCLOSURE OF OWNERSHIP AND CONTROL INFORMATION

     The CONTRACTOR agrees to meet the requirements of 42 CFR 455, Subpart B
     related to disclosure by the CONTRACTOR of ownership and control
     information.

                                  Page 40 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

E.   SAFEGUARDING CONFIDENTIAL INFORMATION ON ENROLLEES

     The CONTRACTOR agrees that information about Enrollees is confidential
     information and agrees to safeguard all confidential information and
     conform to the requirements set forth in 42CFR, Part 431, Subpart F as well
     as all other applicable Federal and State confidentiality requirements.

F.   DISCLOSURE OF PROVIDER INCENTIVE PLANS

     The CONTRACTOR must submit to the DEPARTMENT information on its physician
     incentive plans as listed in 42 CFR 417.479(h)(1) and summarized in this
     Article VII, Section F, Subsections 1 through 5, by May 1 of each year. The
     CONTRACTOR must provide to the DEPARTMENT the enrollee/disenrollee survey
     results when beneficiary surveys are required as specified in 42 CFR
     417.479(g) and summarized in this Article VII, Section F, Subsection 7, by
     October 1 or three months after the end of the Contract year. The
     CONTRACTOR must submit to the DEPARTMENT information on capitation payments
     paid to primary care physicians as specified in 42 CFR 417.479(h)(1)(vi).

     Per 42 CFR 417.479(a), no specific payment may be made directly or
     indirectly under a physician incentive plan to a physician or physician
     group as an inducement to reduce or limit Medically Necessary services
     furnished to an Enrollee.

     The CONTRACTOR may operate a physician incentive plan only if the stop-loss
     protection, Enrollee survey, and disclosure requirements are met. The
     CONTRACTOR must disclose to the DEPARTMENT the following information on
     provider incentive plans in sufficient detail to determine whether the
     incentive plan complies with the regulatory requirements. The disclosure
     must contain:

     1.   Whether services not furnished by the physician or physician group are
          covered by the incentive plan. If only the services furnished by the
          physician or physician group are covered by the incentive plan,
          disclosure of other aspects of the plan need not be made.

     2.   The type of incentive arrangement (i.e., withhold, bonus, capitation).

     3.   If the incentive plan involves a withhold or bonus, the percent of the
          withhold or bonus.

     4.   Proof that the physician or physician group has adequate stop-loss
          protection, including the amount and type of stop-loss protection.

     5.   The panel size and, if patients are pooled; the method used.

     6.   To the extent provided for in the Department of Health and Human
          Services, Centers for Medicare and Medicaid Services' (CMS)
          implementation guidelines, capitation payments paid to primary care
          physicians for the most recent year broken down by percent for primary
          care services, referral services to specialists, and hospital and
          other types of

                                  Page 41 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          provider services (i.e., nursing home and home health agency) for
          capitated physicians or physician groups.

     7.   In the case of those prepaid plans that are required to conduct
          beneficiary surveys, the survey results. (The CONTRACTOR must conduct
          a customer satisfaction of both Enrollees and disenrollees if any
          physicians or physicians groups contracting with the CONTRACTOR are
          placed at substantial financial risk for referral services. The survey
          must include either all current Enrollees and those who have
          disenrolled in the past twelve months, or a sample of these same
          Enrollees and disenrollees. Recognizing that different questions are
          asked of the disenrollees than those asked of Enrollees, the same
          survey cannot be used for both populations.)

     The CONTRACTOR must disclose this information to the DEPARTMENT (1) prior
     to approval of its Contract or agreement and (2) upon the Contract or
     agreements anniversary or renewal effective date. The CONTRACTOR must
     provide the capitation data required (see 6 above) for the previous
     Contract year to the DEPARTMENT three months after the end of the Contract
     year. The CONTRACTOR will provide to the Enrollee upon request whether the
     CONTRACTOR uses a physician incentive plan that affects the use of referral
     services, the type of incentive arrangement, whether stop-loss protection
     is provided, and the survey results of any enrollee/disenrollee surveys
     conducted.

G.   DEBARRED OR SUSPENDED INDIVIDUALS

     Under Section 1921(d)(1) of the Social Security Act, the CONTRACTOR may
     not knowingly have a director, officer, partner, or person with beneficial
     ownership of more than 5% of the CONTRACTOR's equity who has been debarred
     or suspended by any federal agency. The CONTRACTOR may not have an
     employment, consulting, or any other agreement with a debarred or suspended
     person for the provision of items or services that are significant and
     material to meeting the provisions under this Contract.

     The CONTRACTOR must certify to the DEPARTMENT that the requirements under
     Section 1921(d)(1) of the Social Security Act are met prior to the
     effective date of this Contract and at any time there is a change from the
     last such certification.

H.   CMS CONSENT REQUIRED

     If the Department of Health and Human Services, Centers for Medicare and
     Medicaid (CMS) directs the DEPARTMENT to terminate this Contract, the
     DEPARTMENT will not be permitted to renew this Contract without CMS
     consent.

                             ARTICLE VIII - PAYMENTS

A.   RISK CONTRACT

                                  Page 42 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     This Contract is a risk contract as described in 42 CFR 447.361. Payments
     made to the CONTRACTOR may not exceed the cost to the DEPARTMENT of
     providing these same Covered Services on a fee-for-service basis, to an
     actuarially equivalent non-enrolled population.

B.   PAYMENT AMOUNTS

     1.   PAYMENT SCHEDULE

          On or before the 10th day of each month, the DEPARTMENT will pay to
          the CONTRACTOR the premiums due for each category shown for Enrollees
          for that month as determined by the DEPARTMENT from the Eligibility
          Transmission. Premiums shown in Attachment F-3 are based on rate
          negotiations between the CONTRACTOR and the DEPARTMENT.

     2.   CALCULATION OF PREMIUMS

          The premiums do not include payment for recoupment of any previous
          losses incurred by the CONTRACTOR. The premiums established in this
          Contract will be prospectively set so as not to exceed the cost of
          providing the same Covered Services to an actuarially equivalent
          non-enrolled Medicaid population. The actuarially set fee-for-service
          equivalents developed by the DEPARTMENT are prospectively determined
          and conform with Federal guidelines as defined in CFR 447.361.

     3.   FEDERALLY QUALIFIED HEALTH CENTERS (FQHCs)

          If the CONTRACTOR enters into a subcontract with a Federally Qualified
          Health Center (FQHC), the CONTRACTOR will reimburse the FQHC an amount
          not less than what the CONTRACTOR pays comparable providers that are
          not FQHCs.

     4.   TIME FRAME FOR REQUEST OF DELIVERY PAYMENT

          The CONTRACTOR will submit a request for payment of the lump sum
          delivery amount within six months of the delivery date.

     5.   CONTRACT MAXIMUM

          In no event will the aggregate amount of payments to the CONTRACTOR
          exceed the Contract maximum amount. If payments to the CONTRACTOR
          approach or exceed the Contract amount before the renewal date of the
          Contract, the DEPARTMENT shall execute a Contract amendment to
          increase the Contract amount within 30 calendar days of the date the
          Contract amount is exceeded.

C.   MEDICARE

     1.   PAYMENT OF MEDICARE PART B PREMIUMS

                                  Page 43 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          The DEPARTMENT's will pay the Medicare Part B premium for each
          Enrollee who is on Medicare. The Enrollee will assign to the
          CONTRACTOR his or her Medicare reimbursement for benefits received
          under Medicare. The Eligibility Transmission includes and identifies
          those Enrollees who are covered under Medicare.

     2.   PAYMENT OF MEDICARE DEDUCTIBLE AND COINSURANCE

          The DEPARTMENTs financial obligation under this Contract for Enrollees
          who are covered by both Medicare and the MCO is limited to the
          Medicare Part B premium and the CONTRACTOR premium. The CONTRACTOR is
          responsible for payment of the Medicare deductible and coinsurance for
          Enrollees when a service is paid for by Medicare whether or not the
          service is covered under this Contract. The CONTRACTOR is responsible
          for payment whether or not the Medicare covered service is rendered by
          a network provider or has been authorized by the CONTRACTOR. If a
          Medicare covered service is rendered by an out-of-network Medicare
          provider or a non-Medicare participating provider, the CONTRACTOR is
          responsible to pay for no more than the Medicare authorized amount.
          Attachment E, Table 2, will be used to identify the total cost to the
          CONTRACTOR of providing care for Enrollees who are also covered by
          Medicare.

     3.   MUST NOT BALANCE BILL ENROLLEES

          The CONTRACTOR or its providers will not Balance Bill the Enrollee and
          will consider reimbursement from Medicare and from the CONTRACTOR as
          payment in full.

D.   THIRD PARTY LIABILITY (COORDINATION OF BENEFITS)

     The DEPARTMENT will provide the CONTRACTOR a monthly listing of Enrollees
     covered under the Buy-out Program, including the premium amount paid by the
     DEPARTMENT.

     1.   TPL COLLECTIONS

          The CONTRACTOR will be responsible to coordinate benefits and collect
          third party liability (TPL). The CONTRACTOR will keep TPL collections.
          The DEPARTMENT will set rates net of expected TPL collections
          excluding the lump sum rate set for deliveries. The rate set for
          deliveries is the maximum amount the DEPARTMENT will pay the
          CONTRACTOR for each delivery. The CONTRACTOR must attempt to collect
          TPL before the DEPARTMENT will finalize payment for the lump sum
          delivery. The DHCF audit staff will monitor collections to ensure the
          CONTRACTOR is making a good faith effort to pursue TPL. The DEPARTMENT
          will properly account for TPL in its rate structure.

                                  Page 44 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

2.   DUPLICATION OF BENEFITS

     This provision applies when, under another health insurance plan such as a
     prepaid plan, insurance contract, mutual benefit association or employer's
     self-funded group health and welfare program, etc., an Enrollee is entitled
     to any benefits that would totally or partially duplicate the benefits that
     the CONTRACTOR is obligated to provide under this Contract. Duplication
     exists when (1) the CONTRACTOR has a duty to provide, arrange for or pay
     for the cost of Covered Services, and (2) another health insurance plan,
     pursuant to its own terms, has a duty to provide, arrange for or pay for
     the same type of Covered Services regardless of whether the duty of the
     CONTRACTOR is to provide the Covered Services and the duty of the other
     health insurance plan is only to pay for the Covered Services. Under State
     and Federal laws and regulations, Medicaid funds are the last dollar source
     and all other health insurance plans as referred to above are primarily
     responsible for the costs of providing Covered Services.

3.   RECONCILIATION OF OTHER TPL

     In order to assist the CONTRACTOR in billing and collecting from other
     health insurance plans the DEPARTMENT will include on the Eligibility
     Transmission other health insurance plans of each Enrollee when it is
     known. The CONTRACTOR will review the Eligibility Transmission and will
     report to the Office of Recovery Services or the DEPARTMENT any TPL
     discrepancies identified within 30 working days of receipt of the
     Eligibility Transmission. The CONTRACTOR's report will include a listing of
     Enrollees that the CONTRACTOR has independently identified as being covered
     by another health insurance plan.

4.   WHEN TPL IS DENIED

     On a monthly basis, the CONTRACTOR will report to the Office of Recovery
     Services (ORS) claims that have been billed to other health care plans but
     have been denied which will include the following information:

     a.   patient name and Medicaid identification number

     b.   ICD-9-CM code;

     c.   procedure codes; and

     d.   insurance company.

5.   NOTIFICATION OF PERSONAL INJURY CASES

     The CONTRACTOR will be responsible to notify ORS of all personal injury
     cases, as defined by ORS and agreed to by the CONTRACTOR, no later than 30
     days after the

                                  Page 45 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     CONTRACTOR has received a "clean" claim. A clean claim is a claim that is
     ready to adjudicate. The following data elements will be provided by the
     CONTRACTOR to ORS:

     a.   patient name and Medicaid identification number

     b.   date of accident;

     c.   specific type of injury by ICD-9-CM code;

     d.   procedure codes; and

     e.   insurance company, if known.

6.   ORS TO PURSUE COLLECTIONS

     ORS will pursue collection on all claims described in Attachment B, Article
     VIII (Payments), Section D, Subsections 4 and 5 of this Contract. The
     DEPARTMENT will retain, for administrative costs, one third of the
     collections received for the period during which medical services were
     provided by the CONTRACTOR, and remit the balance to the CONTRACTOR.

7.   INSURANCE BUY-OUT PROGRAM

     The Insurance Buy-out Program is an optional program in which the
     DEPARTMENT purchases group health insurance for a recipient who is eligible
     for Medicaid when it is determined cost-effective for the Medicaid program
     to do so. The insurance buy-out process will be coordinated by the
     DEPARTMENT in cooperation with the Office of Recovery Services, and
     Medicaid eligibility workers. The following procedures regarding the
     buy-out program are:

     a.   the CONTRACTOR will file claims against group MCOs first before
          claiming services against the CONTRACTOR or other MCOs.

     b.   The DEPARTMENT will pay the CONTRACTOR a Medicaid premium for every
          buy-out Enrollee.

     c.   The DEPARTMENT will provide the CONTRACTOR a monthly listing of
          Enrollees covered under the Buy-out Program for the upcoming month.

     d.   On a quarterly basis, the Buy-out Program will bill the CONTRACTOR the
          lower of the Buy-out premium or the premium paid under this Contract
          when the Buy-out premium was paid to an entity other than the
          CONTRACTOR, i.e., the Buy-out premium is not a duplicate premium as
          defined in this Article VIII,

                                  Page 46 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               Section D, Item 7. The CONTRACTOR will remit to the Buy-out
               Program the amount billed within 60 days of receipt of the
               Buy-out bill.

     8.   CONTRACTOR MUST PAY PROVIDER ADMINISTRATIVE FEE FOR IMMUNIZATIONS

          When an Enrollee has third party coverage for immunizations, the
          CONTRACTOR will pay the provider the administrative fee for providing
          the immunization and not require the provider to bill the third party
          as a cost avoidance method. The CONTRACTOR may choose to pursue the
          third party amount for the administrative fee after payment has been
          made to the provider.

E.   THIRD PARTY RESPONSIBILITY (INCLUDING WORKER'S COMPENSATION)

     1.   CONTRACTOR TO BILL USUAL AND CUSTOMARY CHARGES

          When a third party has an obligation to pay for Covered Services
          provided by the CONTRACTOR to an Enrollee pursuant to this Contract,
          the CONTRACTOR will bill the third party for the usual and customary
          charges for Covered Services provided and costs incurred. Should any
          sum be recovered by the Enrollee or otherwise, from or on behalf of
          the person responsible for payment for the service, the CONTRACTOR
          will be paid out of such recovery for the charges for service provided
          and costs incurred by the CONTRACTOR.

     2.   THIRD PARTY'S OBLIGATION TO PAY FOR COVERED SERVICES

          Examples of situations where a third party has an obligation to pay
          for Covered Services provided by the CONTRACTOR are when (a) the
          Enrollee is injured by a person due to the negligent or intentional
          acts (or omissions) of the person; or (b) the Enrollee is eligible to
          receive payment through Worker's Compensation Insurance. If the
          Enrollee does not diligently seek such recovery, the CONTRACTOR may
          institute such rights that it may have.

     3.   FIRST DOLLAR COVERAGE FOR ACCIDENTS

          In addition, both parties agree that the following will apply
          regarding first dollar coverage for accidents: if the injured party
          has additional insurance, primary coverage may be given to the motor
          insurance effective at the time of the accident. Once the motor
          vehicle policy is exhausted, the CONTRACTOR will be the secondary
          payer and pay for all of the Enrollee's Covered Services. If medical
          insurance does not exist, the CONTRACTOR will be the primary payer for
          all Covered Services.

                                  Page 47 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     4.   NOTIFICATION OF STOP-LOSS

          The CONTRACTOR will provide ORS with quarterly updates of costs
          incurred by the CONTRACTOR when such costs exceed Stop Loss
          (reinsurance) provisions as defined in the Contract between the
          reinsurer and the CONTRACTOR.

F.   CHANGES IN COVERED SERVICES

     If Covered Services are amended under the provisions of Attachment B,
     Article IV (Benefits), Section C, Subsection 3 of this Contract, rates may
     be renegotiated.

                    ARTICLE IX - RECORDS, REPORTS AND AUDITS

A.   FEDERALLY REQUIRED REPORTS

     1.   CHEC/EPSDT REPORTS

          The CONTRACTOR agrees to act as a continuing care provider for the
          CHEC/EPSDT program in compliance with OBRA '89 and Social Security Act
          Sections 1902(a)(43), 1905(a)(4)(B)and l905(r).

          a.   CHEC/EPSDT SCREENINGS

               Annually, the CONTRACTOR will submit to the DEPARTMENT
               information on CHEC/EPSDT screenings to meet the Federal EPSDT
               reporting requirements (Form HCFA-416). The data will be in a
               mutually agreed upon format. The CHEC/EPSDT information is due
               December 31 for the prior federal fiscal year's data (October 1
               through September 30).

          b.   IMMUNIZATION DATA

               The CONTRACTOR will submit immunization data as part of the
               CHEC/EPSDT reporting. Enrollee name, Medicaid ID, type of
               immunization identified by procedure code, and date of
               immunization will be reported in the same format as the
               CHEC/EPSDT data.

     2.   DISCLOSURE OF PHYSICIAN INCENTIVE PLANS

          The CONTRACTOR must submit to the DEPARTMENT information on its
          physician incentive plans as listed in 42 CFR 417.479(h)(1) [or
          Article VII - Other Requirements, F - Disclosure of Provider Incentive
          Plans, 1 through 5] by May 1 of each year. The CONTRACTOR must provide
          to the DEPARTMENT the enrollee/disenrollee survey

                                  Page 48 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          results when beneficiary surveys are required as specified in 42 CFR
          417.479(g) [or #7 under Article VII.F.] by October 1 or three months
          after the end of the Contract year. The CONTRACTOR must submit to the
          DEPARTMENT information on capitation payments paid to primary care
          physicians as specified in 42 CFR 417.479(h)(1)(vi).

B.   PERIODIC REPORTS

     1.   ENROLLMENT, COST AND UTILIZATION REPORTS (ATTACHMENT E)

          Enrollment, cost and utilization reports will be submitted on
          diskettes in Excel or Lotus and in the format specified in Attachment
          E. A hard copy of the report must be submitted as well. The DEPARTMENT
          will send to the CONTRACTOR a template of the Attachment E format on a
          diskette. The CONTRACTOR may not customize or change the report
          format. The financial information for these reports will be reported
          as defined in HCFA Publication 75, and if applicable, HCFA 15-1. The
          CONTRACTOR will certify in writing the accuracy and completeness, to
          the best of its knowledge, of all costs and utilization data provided
          to the DEPARTMENT on Attachment E.

          Two Attachment E reports will be submitted covering dates of service
          for each Contract year.

          a.   Attachment E is due May 1 for the preceding six-month reporting
               period (July through December).

          b.   Attachment E is due November 1 for the preceding 12-month
               reporting period (July through June).

          If necessary, the CONTRACTOR may request, in writing, an extension of
          the due date up to 30 days beyond the required due date. The
          DEPARTMENT will approve or deny the extension request writing within
          seven calendar days of receiving the request.

     2.   INTERPRETIVE SERVICES

          Annually, on November 1, the CONTRACTOR will submit summary
          information about the use of interpretive services during the previous
          Contract year (July 1 through June 30). The information must include
          the following, broken out by month and by county:

          a.   a list of all sources of interpreter services;

          b.   the total amount of time interpretive services were used broken
               out by clinical versus administrative;

          c.   total expenditures for each language;

                                  Page 49 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          d.   total expenditures for clinical versus administrative;

          e.   number of Enrollees who used interpretive services for each
               language;

          f.   number of services provided by type of service within clinical
               versus administrative.

     3.   SEMI-ANNUAL REPORTS

          The following semi-annual reports are due May 1 for the preceding
          six-month reporting period ending December 31 (July through December)
          and are due November 1 for the preceding six month period ending June
          30 (January through June).

          a.   ORGAN TRANSPLANTS

               A report of the total number of organ transplants by type of
               transplant.

          b.   OBSTETRICAL INFORMATION

               A report of obstetrical information including

               1)   total number of obstetrical deliveries by aid category
                    grouping;

               2)   total number of caesarean sections and total number of
                    vaginal deliveries;

               3)   total number low birth weight infants; and

               4)   total number of Enrollees requiring prenatal hospital
                    admission.

          c.   COMPLAINTS AND FORMAL GRIEVANCES

               A summary of complaints and formal grievances, by type of
               complaint or grievance, received by the CONTRACTOR under this
               Contract and actions taken to resolve such complaints and
               grievances

          d.   ABERRANT PHYSICIAN BEHAVIOR

               Summary information of corrective actions taken on physicians who
               have been identified by the CONTRACTOR as exhibiting aberrant
               physician behavior and the names of physicians who have been
               removed from the CONTRACTOR's network due to aberrant behavior.
               The summary shall include the reasons for the corrective action
               or removal.

                                  Page 50 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     4.   QUALITY ASSURANCE ACTIVITIES

          Annually, the CONTRACTOR will submit its written quality improvement
          plan, quality improvement work plan, and a report that identifies the
          CONTRACTOR's internal quality assurance activities, results thereof,
          and corrective actions taken during the previous year. These reports
          are due within three months of the CONTRACTOR's new year; i.e., by
          March 31 if on a calendar year.

     5.   HEDIS

          Audited Health Plan Employer Data and Information Set (HEDIS)
          performance measures will cover services rendered during each calendar
          year and will be reported as set forth in State rule by the Office of
          Health Data Analysis. For example, calendar year 1997 HEDIS measures
          will be reported in 1998.

          The CONTRACTOR must receive certification from an independent,
          credible vendor that its electronic submissions of encounter data are
          compliant with the Health Insurance Portability and Accountability Act
          (HIPAA) requirements. At a minimum, the CONTRACTOR must be
          HIPAA-compliant in the first four levels of HIPAA compliance: Level 1
          - Integrity Testing, Level 2 - Requirement Testing, Level 3 -
          Balancing, and Level 4 - Situation Testing.

     6.   ENCOUNTER DATA

          Encounter data, as defined in the DEPARTMENT's "Encounter Records
          Technical Manual," is due (including all replacements) six months
          after the end of the quarter being reported. Encounter data will be
          submitted in accordance with the instructions detailed in the
          Encounter Records Technical Manual for dates of service beginning July
          1, 1996. The CONTRACTOR must receive certification from an
          independent, credible vendor that their electronic submissions of
          encounter data are compliant with the Health Insurance Portability and
          Accountability Act (HIPAA) requirements. At a minimum, the CONTRACTOR
          must be HIPAA-compliant in the first four levels of HIPAA compliance:
          Level 1 - Integrity Testing, Level 2 - Requirement Testing, Level 3 -
          Balancing, and Level 4 - Situation Testing.

     7.   DOCUMENTS DUE PRIOR TO QUALITY MONITORING REVIEWS

          The following documents are due on request or at least 60 days prior
          to the DEPARTMENT's quality assurance monitoring review unless the
          DEPARTMENT has already received documents that are in effect:

          a.   the CONTRACTOR's most current (may be in draft stage) written
               plan for quality improvement;

                                  Page 51 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          b.   the CONTRACTOR's most current (may be in draft stage) annual
               quality improvement work plan;

          c.   the CONTRACTOR's reports that identify over and under utilization
               of covered services and efforts put in place to resolve
               inappropriate over utilization and under utilization;

          d.   the CONTRACTOR's process for identifying and correcting aberrant
               provider behavior; and

          e.   other information requested by the DEPARTMENT to facilitate the
               DEPARTMENT's review of the CONTRACTOR's compliance to standards
               defined in the Division of Health Care Financing's MCO Quality
               Assurance Monitoring Plan (Attachment G).

          The above documents must show evidence of a well defined, organized
          program designed to improve client care.

     8.   AUDIT OF ABORTIONS, STERILIZATIONS AND HYSTERECTOMIES

          The CONTRACTOR must conduct an annual audit of all abortions in
          addition to an audit of a sample of sterilizations and hysterectomies
          as set by the DEPARTMENT that the CONTRACTOR's providers performed
          during each Contract year to assure compliance of its providers with
          all federal and state requirements related to federal financial
          participation of abortions.

          On November 1 of each year, the CONTRACTOR will submit to the
          DEPARTMENT the following information on the results of the abortion,
          sterilization and hysterectomy audit for the previous calendar year.
          For the sterilization and hysterectomy audit, submit documentation of
          the methodology used to pull the sample of sterilization and
          hysterectomies and sampling proportions for each sample.

          In an Excel file, submit the following information for all abortions,
          the sample of sterilizations, and the sample of hysterectomies:

          .    client name
          .    Medicaid ID number
          .    procedure code
          .    date of service
          .    history/physical (yes/no)
          .    operative report (yes/no)
          .    pathology report (yes/no)
          .    consent form (yes/no)

                                  Page 52 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          .    medical necessity criteria - hysterectomies only

     9.   DEVELOPMENT OF NEW REPORTS

          Any new reports/data requirements mandated by the DEPARTMENT will be
          mutually developed by the DEPARTMENT and the CONTRACTOR.

C.   RECORD SYSTEM REQUIREMENTS

     In accordance with Section 4752 of OBRA '90 (amended section 1903 (m)(2)(A)
     of the Social Security Act), the CONTRACTOR agrees to maintain sufficient
     patient encounter data to identify the physician who delivers Covered
     Services to Enrollees. The CONTRACTOR agrees to provide this encounter
     data, upon request of the DEPARTMENT, within 30 days of the request.

D.   MEDICAL RECORDS

     The CONTRACTOR agrees that medical records are considered confidential
     information and agrees to follow Federal and State confidentiality
     requirements.

     The CONTRACTOR will require that its providers maintain a medical record
     keeping system through which all pertinent information relating to the
     medical management of the Enrollee is maintained, organized, and is readily
     available to appropriate professionals. Notwithstanding any other provision
     of this Contract to the contrary, medical records covering Enrollees will
     remain the property of the provider, and the provider will respect every
     Enrollee's privacy by restricting the use and disclosure of information in
     such records to purposes directly connected with the Enrollee's health care
     and administration of this Contract. The CONTRACTOR will use and disclose
     information pertaining to individual Enrollees and prospective Enrollees
     only for purposes directly connected with the administration of the
     Medicaid Program and this Contract.

E.   AUDITS

     1.   RIGHT OF DEPARTMENT AND CMS TO AUDIT

          The DEPARTMENT and the Department of Health and Human Services,
          Centers for Medicare and Medicaid Services may audit and inspect any
          financial records of the CONTRACTOR or its subcontractors relating (I)
          to the ability of the CONTRACTOR to bear the risk of potential
          financial losses, or (II) to evaluate services performed or
          determinations of amounts payable under the Contract.

     2.   INFORMATION TO DETERMINE ALLOWABLE COSTS

          The CONTRACTOR will make available to the DEPARTMENT all reasonable
          and related financial, statistical, clinical or other information
          needed for the determination of allowable costs to the Medicaid
          program for "related party/home office" transactions as

                                  Page 53 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          defined in HCFA 15-1. These records are to be made available in Utah
          or the CONTRACTOR will pay the increased cost (incremental travel, per
          diem, etc.) of auditing at the out-of-state location. The cost to the
          CONTRACTOR will include round-trip travel and two days per
          diem/lodging. Additional travel costs of the site audit will be shared
          equally by the CONTRACTOR and the DEPARTMENT.

     3.   MANAGEMENT AND UTILIZATION AUDITS

          The MCO will allow the DEPARTMENT and the Department of Health and
          Human Services, Centers for Medicare and Medicaid Services, to perform
          audits for identification and collection of management data, including
          Enrollee satisfaction data, quality of care data, fraud-related data,
          abuse-related data, patient outcome data, and cost and utilization
          data, which will include patient profiles, exception reports, etc. The
          CONTRACTOR will provide all data required by the DEPARTMENT or the
          independent quality review examiners in performance of these audits.
          Prior to beginning any audit, the DEPARTMENT will give the CONTRACTOR
          reasonable notice of audit, and the DEPARTMENT will be responsible for
          costs of its auditors or representatives.

F.   INDEPENDENT QUALITY REVIEW

     1.   IN GENERAL

          Pursuant to Section 1932(c)(2)(A) of the Social Security Act the
          DEPARTMENT will provide for an annual external independent review
          conducted by a qualified independent entity of the quality outcomes
          and timeliness of and access to Covered Services. The CONTRACTOR will
          support the annual external independent review.

          The DEPARTMENT will choose an agency to perform an annual independent
          quality review pursuant to federal law and will pay for such review.
          The CONTRACTOR will maintain all clinical and administrative records
          for use by the quality review contractor.

          The CONTRACTOR agrees to support quality assurance reviews, focused
          studies and other projects performed for the DEPARTMENT by the
          external quality review organization (EQRO). The purpose of the
          reviews and studies are to comply with federal requirements for an
          annual independent audit of the quality outcomes and timeliness of,
          and access to, Covered Services. The external independent reviews are
          conducted by the EQRO, with the advice, assistance, and cooperation of
          a planning team composed of representatives from the CONTRACTOR, the
          EQRO and the DEPARTMENT with final approval by the DEPARTMENT.

     2.   SPECIFIC REQUIREMENTS

          a.   LIAISON FOR ROUTINE COMMUNICATION

                                  Page 54 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

               The CONTRACTOR will designate an individual to serve as liaison
               with the EQRO for routine communication with the EQRO.

          b.   REPRESENTATIVE TO ASSIST WITH PROJECTS

               The CONTRACTOR will designate a minimum of two representatives
               (unless one individual can service both functions) to serve on
               the planning team for each EQRO project. Representatives will
               include a quality improvement representative and a data
               representative. The planning team is a joint collaborative forum
               between DEPARTMENT staff, the EQRO and the CONTRACTOR. The role
               of the planning team is to participate in the process and
               completion of EQRO projects.

          c.   COPIES AND ON-SITE ACCESS

               The CONTRACTOR will be responsible for obtaining copies of
               Enrollee information and facilitating on-site access to Enrollee
               information as needed by the EQRO. Such information will be used
               to plan and conduct projects and to investigate complaints and
               grievances. Any associated copying costs are the responsibility
               of the CONTRACTOR. Enrollee information includes medical records,
               administrative data such as, but not limited to, enrollment
               information and claims, nurses' notes, medical logs, etc. of the
               CONTRACTOR or its providers.

          d.   FORMAT OF ENROLLEE FILES

               The CONTRACTOR will provide Enrollee information in a mutually
               agreed upon format compatible for the EQRO's use, and in a timely
               fashion to allow the EQRO to select cases for its review.

          e.   TIME-FRAME FOR PROVIDING DATA

               The CONTRACTOR will provide data requests to the EQRO within 15
               Working days of the written request from the EQRO and will
               provide medical records within 30 working days of the written
               request from the EQRO. Requests for extensions of these time
               frames will be reviewed and approved or disapproved by the
               DEPARTMENT on a case-by-case basis.

          f.   WORK SPACE FOR ON-SITE REVIEWS

               The CONTRACTOR will assure that the EQRO staff and consultants
               have adequate work space, access to a telephone and copy machines
               at the time of review. The review will be performed during
               agreed-upon hours.

                                  Page 55 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

          g.   STAFF ASSISTANCE DURING ON-SITE VISITS

               The CONTRACTOR will assign appropriate person(s) to assist the
               EQRO personnel conduct the reviews during on-site visits and to
               participate in an informal discussion of screening observations
               at the end of each on-site visit, if necessary.

          h.   CONFIDENTIALITY

               For information received from the EQRO, the CONTRACTOR will
               comply with the Department of Health and Human Services
               regulations relating to confidentiality of data and information
               (42 CFR Part 476.107 and 476.108).

                              ARTICLE X - SANCTIONS

     The DEPARTMENT may impose intermediate sanctions on the CONTRACTOR if the
     CONTRACTOR defaults in any manner in the performance of any obligation
     under this Contract including but not limited to the following situations:

     (1)  the CONTRACTOR fails to substantially provide Medically Necessary
          Covered Services to Enrollees;

     (2)  the CONTRACTOR imposes premiums or charges Enrollees in excess of the
          premiums or charges permitted under this Contract;

     (3)  the CONTRACTOR acts to discriminate among Enrollees on the basis of
          their health status or requirements for health care services,
          including expulsion or refusal to re-enroll an individual, except as
          permitted by Title XIX, or engaging in any practice that would
          reasonably be expected to have the effect of denying or discouraging
          enrollment with the MCO by potential Enrollees whose medical condition
          or history indicates a need for substantial future medical services;

     (4)  the CONTRACTOR misrepresents or falsifies information furnished to the
          Department of Health and Human Services, Centers for Medicare and
          Medicaid Services, the DEPARTMENT, an Enrollee, potential Enrollee or
          health care provider;

     (5)  the CONTRACTOR fails to comply with the physician incentive
          requirements under Section 1903(m)(2)(A)(x) of the Social Security
          Act.

     (6)  the CONTRACTOR distributed directly or through any agent or
          independent contractor marketing materials that contain false or
          misleading information.

     The DEPARTMENT must follow the 1997 Balance Budget Act guidelines on the
     types of

                                  Page 56 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     intermediate sanctions the DEPARTMENT may impose, including civil monetary
     penalties, the appointment of temporary management, and suspension of
     payment.

                    ARTICLE XI - TERMINATION OF THE CONTRACT

A.   AUTOMATIC TERMINATION

     This Contract will automatically terminate June 30, 2004.

B.   OPTIONAL YEAR-END TERMINATION

     At the end of each Contract year, either party may terminate the Contract
     without cause for subsequent years by giving the other party written notice
     of termination at least 90 days prior to the end of the Contract year (July
     1 through June 30).

C.   TERMINATION FOR FAILURE TO AGREE UPON RATES

     At least 60 days prior to the end of each Contract year, the parties will
     meet and negotiate in good faith the rates (Attachment F) applicable to the
     upcoming year. If the parties cannot agree upon future rates by the end of
     the Contract year, then either party may terminate the Contract for
     subsequent years by giving the other party written notice of termination
     and the termination will become effective 90 days after receipt of the
     written notice of termination.

D.   EFFECT OF TERMINATION

     1.   COVERAGE

          In as much as the CONTRACTOR is paid on a monthly basis, the
          CONTRACTOR will continue providing the Covered Services required by
          this Contract until midnight of the last day of the calendar month in
          which the termination becomes effective. If an Enrollee is a patient
          in an inpatient hospital setting during the month in which termination
          becomes effective, the CONTRACTOR is responsible for the entire
          hospital stay including physician charges until discharge or thirty
          days following termination, whichever occurs first.

     2.   ENROLLEE NOT LIABLE FOR DEBTS OF CONTRACTOR OR ITS SUBCONTRACTORS

          If the CONTRACTOR or one of its subcontractors becomes insolvent or
          bankrupt, the Enrollees will not be liable for the debts of the
          CONTRACTOR or its subcontractor. The CONTRACTOR will include this term
          in all of its subcontracts.

                                  Page 57 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

     3.   INFORMATION FOR CLAIMS PAYMENT

          The CONTRACTOR will promptly supply to the DEPARTMENT all information
          necessary for the reimbursement of any Medicaid claims not paid by the
          CONTRACTOR.

     4.   CHANGES IN ENROLLMENT PROCESS

          The CONTRACTOR will be advised of anticipated changes in policies and
          procedures as they relate to the enrollment process and their comments
          will be solicited. The CONTRACTOR agrees to be bound by such changes
          in policies and procedures unless they are not agreeable to the
          CONTRACTOR, in which case the CONTRACTOR may terminate the Contract in
          accordance with the Contract termination provisions.

     5.   HEARING PRIOR TO TERMINATION

          Regarding the General Provisions, Article XVII (Default, Termination,
          & Payment Adjustment), item 3, if the CONTRACTOR fails to meet the
          requirements of the Contract, the DEPARTMENT must give the CONTRACTOR
          a hearing prior to termination. Enrollees must be informed of the
          hearing and will be allowed to disenroll from the MCO without cause.

E.   ASSIGNMENT

     Assignment of any or all rights or obligations under this Contract without
     the prior written consent of the DEPARTMENT is prohibited. Sale of all or
     any part of the rights or obligations under this Contract will be deemed an
     assignment. Consent may be withheld in the DEPARTMENT's sole and absolute
     discretion.

                           ARTICLE XII - MISCELLANEOUS

A.   INTEGRATION

     This Contract contains the entire agreement between the parties with
     respect to the subject matter of this Contract. There are no
     representations, warranties, understandings, or agreements other than those
     expressly set forth herein. Previous contracts between the parties hereto
     and conduct between the parties which precedes the implementation of this
     Contract will not be used as a guide to the interpretation or enforcement
     of this Contract or any provision hereof.

                                  Page 58 of 59

<PAGE>

                                                                    Attachment B
                                                       Molina Healthcare of Utah
                                                          Effective July 1, 2001

B.   ENROLLEES MAY NOT ENFORCE CONTRACT

     Although this Contract relates to the provision of benefits for Enrollees
     and others, no Enrollee is entitled to enforce any provision of this
     Contract against the CONTRACTOR nor will any provision of this Contract be
     constructed to constitute a promise by the CONTRACTOR to any Enrollee or
     potential Enrollee.

C.   INTERPRETATION OF LAWS AND REGULATIONS

     The DEPARTMENT will be responsible for the interpretation of all federal
     and State laws and regulations governing or in any way affecting this
     Contract. When interpretations are required, the CONTRACTOR will submit
     written requests to the DEPARTMENT. The DEPARTMENT will retain full
     authority and responsibility for the administration of the Medicaid program
     in accordance with the requirements of Federal and State law.

D.   ADOPTION OF RULES

     Adoption of rules by the DEPARTMENT, subsequent to this amendment, and
     which govern the Medicaid program, will be automatically incorporated into
     this Contract upon receipt by the CONTRACTOR of written notice thereof.

                   ARTICLE XIII - EFFECT OF GENERAL PROVISIONS

If there is a conflict between these Special Provisions (Attachment B) or the
General Provisions (Attachment A), then these Special Provisions will control.

                                  Page 59 of 59

<PAGE>

                                                  Attachment F - Urban and Rural
                                                          Effective July 1, 2001

                                   AFC/MOLINA

                   URBAN & RURAL RATES AND RATE-RELATED TERMS
                              Effective July 1,2001

A.   PREMIUM RATES

     1.   URBAN MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS

--------------------------------------------------------------------------------
   Age     TANF Male       TANF Male       TANF Female     TANF Female
  0 to l    1 to 21        21 & Over         1 to 21        21 & Over      Aged
================================================================================
  $  [*]   $ [*]           $ [*]           $  [*]          $  [*]          $ [*]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
  Disabled        Disabled         Medically         Medically           Non TANF                    Restriction
    Male           Female         Needy Child       Needy Adult         Pregnant F        BCC          Program
====================================================================================================================
  <S>             <C>             <C>               <C>                 <C>               <C>         <C>
  $ [*]           $ [*]           $ [*]             $ [*]               $ [*]             $  [*]      $ [*]
--------------------------------------------------------------------------------------------------------------------
</TABLE>

     2.   RURAL MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS

--------------------------------------------------------------------------------
  Age     TANF Male       TANF Male       TANF Female     TANF Female
 0 to l    1 to 21        21 & Over         1 to 21        21 & Over      Aged
================================================================================
 $  [*]   $ [*]           $ [*]           $  [*]          $  [*]          $ [*]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
  Disabled        Disabled         Medically         Medically          Non TANF                     Restriction
    Male           Female         Needy Child       Needy Adult        Pregnant F          BCC         Program
====================================================================================================================
  <S>             <C>             <C>               <C>                 <C>               <C>        <C>
  $ [*]           $ [*]           $ [*]             $ [*]               $ [*]             $  [*]      $ [*]
--------------------------------------------------------------------------------------------------------------------
</TABLE>

     3.   SPECIAL RATE

          An AIDS rate of $ [*]  per month will be paid in addition to the
          regular monthly premium when the T-Cell count is below 200.

                                   Page 1 of 5

<PAGE>

                                                  Attachment F - Urban and Rural
                                                          Effective July 1, 2001

B.   PER DELIVERY REIMBURSEMENT SCHEDULE

     The DEPARTMENT shall reimburse the CONTRACTOR $  [*]  per delivery to cover
     all Medically Necessary antepartum care, delivery, and postpartum
     professional, facility and ancillary services. The monthly premium amount
     for the enrollee is in addition to the delivery fee. The delivery payment
     will be made when the delivery occurs at 22 weeks or later, regardless of
     viability.

C.   CHEC SCREENING INCENTIVE CLAUSE

     1.   CHEC SCREENING GOAL

          The CONTRACTOR will ensure that Medicaid children have access to
          appropriate well-child visits. The CONTRACTOR will follow the Utah
          EPSDT (CHEC) guidelines for the periodicity schedule for well-child
          protocol. The federal agency, Health Care Financing Administration,
          mandates that all states have 80% of all children screened. The
          DEPARTMENT and the CONTRACTOR will work toward that goal.

     2.   CALCULATION OF CHEC INCENTIVE PAYMENT

          The DEPARTMENT will calculate the CONTRACTOR's annual participation
          rate based on information supplied by the CONTRACTOR under the
          HCFA-416 EPSDT (CHEC) reporting requirements. Based on the HCFA-416
          data, the CONTRACTOR's well-child participation rate was 100% for
          Federal Fiscal Year (FFY) 2000 (October 1999 through September 2000).
          The incentive payment for the contract year ending June 30, 2002 will
          be based on the CONTRACTOR's FFY 2001 (October 1, 2000 through
          September 30, 2001) HCFA-416 participation rate. The DEPARTMENT will
          pay the CONTRACTOR $ [*]  if a rate of 90% or higher is maintained
          during FFY 2001. The participation rate will be calculated no later
          than April 15, 2002; the CONTRACTOR will be notified of the incentive
          payment, if applicable, no later than April 30, 2002.

     3.   CONTRACTOR's USE OF INCENTIVE PAYMENT

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the EPSDT (CHEC)
          participation rate.

D.   IMMUNIZATION INCENTIVE CLAUSE

     The CONTRACTOR will ensure that Enrollees have access to recommended
     immunizations.
     The CONTRACTOR will follow the Advisory Committee on Immunization
     Practices'

                                   Page 2 of 5

<PAGE>

                                                  Attachment F - Urban and Rural
                                                          Effective July 1, 2001

     recommendations for immunizations for children.

     1.   IMMUNIZATIONS FOR TWO-YEAR-OLDS

          Utah has achieved a statewide immunization level of 76% for
          two-year-olds. The average Medicaid HMO rate was 53.2% for the 1999
          HEDIS Combination 1 immunization measure for two-year-olds.

          Based on the CONTRACTOR's 2000 HEDIS measure for the Combination I
          immunization for two-year-olds, the DEPARTMENT will pay the CONTRACTOR
          $ [*] for each full percentage point above 53.2%.

     2.   IMMUNIZATIONS FOR ADOLESCENTS

          The DEPARTMENT realizes it is important that adolescents are
          vaccinated according to schedule as recommended by the Advisory
          Committee on Immunization Practices. The average Medicaid HMO rate was
          3.7% for the 1999 HEDIS Combination I immunization measure for
          adolescents.

          Based on the CONTRACTOR's 2000 HEDIS measure for adolescent
          immunizations, the DEPARTMENT will pay the CONTRACTOR $ [*] for
          each full percentage point above 3.7% up to 53.7%.

     3.   IMMUNIZATIONS FOR ADULTS

          The HEDIS immunization measure for adults is not reported for Medicaid
          clients age 65 and older. The DEPARTMENT intends to expand this
          incentive clause to include improved immunization rates for influenza
          and pneumonia vaccines among Enrollees age 65 and older. The
          DEPARTMENT will work with contractors to collect this data during this
          Contract year (July 1, 2001 - June 30, 2002).

     4.   CONTRACTOR's USE OF INCENTIVE PAYMENT

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the HEDIS
          immunization measures.

E.   REINSURANCE POLICY

     Reinsurance will be administered by a reinsurer, Centre Insurance Company.

     Costs, net of TPL, for all inpatient and outpatient services listed in
     Attachment C that are covered on the date of service rendered and incurred
     from July 1, 2001 through June 30, 2002 by the

                                   Page 3 of 5

<PAGE>

                                                  Attachment F - Urban and Rural
                                                          Effective July 1, 2001

     MCO for an Enrollee shall be shared by Centre Insurance Company under the
     following conditions:

     1.   the date of service is from July 1, 2001 through June 30, 2002 (based
          on date of discharge if inpatient hospital stay);

     2.   paid claims incurred by the MCO exceed $50,000; and

     3.   services shall have been incurred by the MCO during the time the
          client is enrolled with the MCO.

          If the above conditions are met, Centre Insurance Company shall bear
          [*]% and the MCO shall bear [*]% of the amount that exceeds $50,000.

F.   REIMBURSEMENT FOR REINSURANCE

     The CONTRACTOR agrees to purchase reinsurance from Centre Insurance Company
     at the per Enrollee per month rate negotiated by the DEPARTMENT and the
     reinsurer. The DEPARTMENT will reimburse the CONTRACTOR for its premium
     payments to Centre Insurance Company. In addition, the DEPARTMENT will pay
     the CONTRACTOR $ [*] per Enrollee per month to cover reinsurance
     administrative costs.

     Beginning July 1, 2001, the DEPARTMENT will make monthly payments to the
     CONTRACTOR based on the reinsurance premiums the CONTRACTOR pays to Centre
     Insurance Company. The DEPARTMENT will calculate the reinsurance premiums
     using the DEPARTMENT's data on the number of Enrollees.

G.   RETROSPECTIVE ADJUSTMENT

     The DEPARTMENT agrees to retroactively adjust annual payments to the
     CONTRACTOR under this Contract for Enrollees who qualify for Medicaid due
     to a diagnosis of breast cancer or cervical cancer.

     If the CONTRACTOR's claim expenditures for Enrollees in the Breast/
     Cervical Cancer (BCC) rate cell exceed the premiums plus other BCC
     payments, the DEPARTMENT will reimburse the CONTRACTOR for the unrecovered
     costs related to BCC claim expenditures. Claim contract payments include
     reinsurance and TPL payments. Therefore, paid claim expenditures will also
     include reinsurance (stop-loss) claims paid by the CONTRACTOR for BCC
     Enrollees.

     If the CONTRACTOR's claim expenditures for BCC Enrollees are less than the
     BCC premiums paid plus other BCC contract payments, the CONTRACTOR can
     retain up to [*]% of the excess premiums and other payments paid for BCC
     Enrollees. If there are additional savings after the

                                   Page 4 of 5

<PAGE>

                                                  Attachment F - Urban and Rural
                                                          Effective July 1, 2001

CONTRACTOR has recovered the [*]%, the excess premium and other payment amounts
for BCC Enrollees will be reimbursed to the DEPARTMENT. Claim contract payments
include reinsurance and TPL payments. Therefore, paid claims expenditures will
also include reinsurance (stop-loss) claims paid by the CONTRACTOR for BCC
Enrollees.

The CONTRACTOR shall submit to the DEPARTMENT a request for this retrospective
adjustment no later than six months after the close of the contract year. agrees
to use its Medicaid payment rates and fee schedules used to price their Medicaid
product as a basis for the retrospective adjustment calculation.

                                   Page 5 of 5

<PAGE>

                            UTAH DEPARTMENT OF HEALTH
                 288 North 1460 West, Salt Lake City, Utah 84116

                               CONTRACT AMENDMENT

    H992020205-04                                                 006146
---------------------                                      ---------------------
Department Log Number                                      State Contract Number

1.   CONTRACT NAME:
     The name of this Contract is HMO-AFC/MOLINA, the Contract number assigned
     by the State Division of Finance is 006146, the Contract number assigned by
     the Utah Department of Health is H992020205, and this Amendment is number
     4.

2.   CONTRACTING PARTIES:
     This Contract Amendment is between the Utah Department of Health
     (DEPARTMENT), and Molina Healthcare of Utah (CONTRACTOR).

3.   PURPOSE OF CONTRACT AMENDMENT:
     To change the rates effective November 1, 2001 due to the co-payment
     policy; to change the rates effective February 1, 2002 due to the
     co-insurance policy; and to replace the reinsurance provision with
     stop-loss provision.

4.   CHANGES TO CONTRACT:
     A.   Effective July 1, 2001, under Attachment E, Medical Services Revenue
          and Cost Definitions for Table 2, replace the language in items 3, 4,
          54, 55, and 56 with the following:

          1.   On Page 4 of Attachment E, under Revenue, replace item 3,
               Reinsurance, as follows:
               "Report the reinsurance payments received or receivable from a
               reinsurance carrier other than the DEPARTMENT."
          2.   On Page 4 of Attachment E, under Revenue, replace item 4, Stop
               Loss, as follows:
               "Report stop loss payments received or receivable from the
               DEPARTMENT."
          3.   On Page 9 of Attachment E, under Other Data, replace item 54,
               Reinsurance Premiums Received, as follows:
               "Include the reinsurance premiums received or receivable that are
               not counted as revenue."
          4.   On Page 9 of Attachment E, under Other Data, replace item 55,
               Reinsurance Premiums Paid, as follows:
               "Include reinsurance premiums paid to a reinsurance carrier other
               than the DEPARTMENT."
          5.   On Page 9 of Attachment E, under Other Data, replace item 56,
               Administrative Revenue Retained by the CONTRACTOR, as follows:
               "Include the administrative revenue retained by the CONTRACTOR
               from the reinsurance premiums received or receivable."

     B.   Effective July 1, 2001, replace Attachment F - Urban and Rural Rates
          with Rate-Related Terms with Attachment F - Urban and Rural Rates and
          Rate-Related Terms as attached to this Amendment #4.

     C.   All other provisions of the Contract remain unchanged.

5.   If the Contractor is not a local public procurement unit as defined by the
     Utah Procurement Code (UCA Section 63-56-5), this Contract Amendment must
     be signed by a representative of the State Division of Finance and the
     State Division of Purchasing to bind the State and the Department to this
     Contract Amendment.

6.   This Contract, its attachments, and all documents incorporated by reference
     constitute the entire agreement between the parties and supercede all prior
     negotiations, representations, or agreements, either written or oral
     between the parties relating to the subject matter of this Contract.

                                   Page 1 of 2

<PAGE>

                            UTAH DEPARTMENT OF HEALTH
                 288 North 1460 West, Salt Lake City. Utah 84116

                               CONTRACT AMENDMENT

    H992020205-04                                                 00-6146
---------------------                                      ---------------------
Department Log Number                                      State Contract Number

IN WITNESS WHEREOF, the parties sign this Contract Amendment.

CONTRACTOR: Molina Healthcare of Utah     UTAH DEPARTMENT OF HEALTH

By: /s/ Kirk Olsen          13 Mar 2002 By: /s/ Shari A. Watkins     4/03/02
    ----------------------- -----------     ------------------------ -----------
    Signature of Authorized Date            Shari A. Watkins, C.P.A. Date
    Individual                              Director
                                            Office Of Fiscal
                                            Operations

Print Name: Kirk Olsen
           --------------------------

Title: Chief Executive Officer          [SEAL]                       4/17/02
       ------------------------------   ---------------------------- -----------
                                        State Finance:               Date

         33-0617992
------------------------------------    [ILLEGIBLE]                  APR 18 2002
Federal Tax Identification Number or    ---------------------------- -----------
   Social Security Number               State Purchasing:            Date

                                   Page 2 of 2

<PAGE>

                                                      Attachment F-Urban & Rural
                                                          Effective July 1, 2001

                                   AFC/MOLINA
                   URBAN & RURAL RATES AND RATE-RELATED TERMS

A.   PREMIUM RATES

     1.   URBAN MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS (EFFECTIVE
          JULY 1, 2001 THROUGH OCTOBER 31, 2001)

--------------------------------------------------------------------------------
     Age     TANF Male     TANF Male     TANF Female   TANF Female     Aged
    0 to 1    1 to 21      21 & Over       1 to 21      21 & Over
================================================================================
    $ [*]    $ [*]         $ [*]         $ [*]         $ [*]           $ [*]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
  Disabled        Disabled         Medically         Medically           Non TANF                     Restriction
    Male           Female         Needy Child       Needy Adult         Pregnant F         BCC          Program
====================================================================================================================
  <S>             <C>             <C>               <C>                 <C>                <C>        <C>
  $ [*]           $ [*]           $  [*]            $ [*]               $ [*]              $ [*]       $ [*]
--------------------------------------------------------------------------------------------------------------------
</TABLE>

     2.   URBAN MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS (EFFECTIVE
          NOVEMBER 1, 2001 THROUGH JANUARY 31, 2002)

--------------------------------------------------------------------------------
      Age     TANF Male     TANF Male    TANF Female    TANF Female    Aged
    0 to 1     1 to 21      21 & Over      1 to 21       21 & Over
================================================================================
    $ [*]     $ [*]         $ [*]        $ [*]          $ [*]          $ [*]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
  Disabled        Disabled         Medically          Medically          Non TANF                     Restriction
    Male           Female         Needy Child        Needy Adult        Pregnant F          BCC         Program
===================================================================================================================
  <S>             <C>             <C>                <C>                <C>                 <C>       <C>
  $ [*]           $ [*]           $ [*]              $ [*]              $ [*]               $ [*]     $  [*]
-------------------------------------------------------------------------------------------------------------------
</TABLE>

     3.   URBAN MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS (EFFECTIVE
          FEBRUARY 1, 2002 THROUGH JUNE 30, 2002)

--------------------------------------------------------------------------------
    Age      TANF Male    TANF Male     TANF Female    TANF Female    Aged
   0 to 1     1 to 21     21 & Over      1 to 21        21 & Over
================================================================================
   $ [*]     $ [*]        $ [*]         $ [*]          $ [*]          $ [*]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
  Disabled        Disabled         Medically          Medically          Non TANF                     Restriction
    Male           Female         Needy Child        Needy Adult        Pregnant F          BCC         Program
===================================================================================================================
  <S>             <C>             <C>                <C>                <C>                 <C>       <C>
  $ [*]           $ [*]           $ [*]              $ [*]              $ [*]               $ [*]     $ [*]
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                   Page 1 of 5

<PAGE>

     4.   RURAL MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS (EFFECTIVE
          JULY 1, 2001 THROUGH OCTOBER 31, 2001)

--------------------------------------------------------------------------------
    Age      TANF Male    TANF Male     TANF Female    TANF Female    Aged
   0 to 1     1 to 21     21 & Over      1 to 21        21 & Over
================================================================================
   $ [*]     $ [*]        $ [*]         $ [*]          $ [*]          $ [*]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
  Disabled        Disabled         Medically          Medically          Non TANF                     Restriction
    Male           Female         Needy Child        Needy Adult        Pregnant F          BCC         Program
===================================================================================================================
  <S>             <C>             <C>                <C>                <C>                 <C>       <C>
  $ [*]           $ [*]           $ [*]              $ [*]              $ [*]              $ [*]        $ [*]
-------------------------------------------------------------------------------------------------------------------
</TABLE>

     5.   RURAL MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS (EFFECTIVE
          NOVEMBER 1, 2001 THROUGH JANUARY 31, 2002)

--------------------------------------------------------------------------------
    Age      TANF Male    TANF Male     TANF Female    TANF Female    Aged
   0 to 1     1 to 21     21 & Over       1 to 21       21 & Over
================================================================================
   $ [*]     $ [*]        $ [*]         $ [*]          $ [*]          $ [*]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
  Disabled        Disabled         Medically          Medically          Non TANF                     Restriction
    Male           Female         Needy Child        Needy Adult        Pregnant F          BCC         Program
===================================================================================================================
  <S>             <C>             <C>                <C>                <C>                 <C>       <C>
  $ [*]           $ [*]           $ [*]              $ [*]             $ [*]               $ [*]       $ [*]
-------------------------------------------------------------------------------------------------------------------
</TABLE>

     6.   RURAL MONTHLY PREMIUM RATES BASED ON ENROLLEES' RATE CELLS (EFFECTIVE
          FEBRUARY 1, 2002 THROUGH JUNE 30, 2002)

--------------------------------------------------------------------------------
    Age      TANF Male    TANF Male     TANF Female    TANF Female
   0 to 1     1 to 21     21 & Over      1 to 21        21 & Over     Aged
================================================================================
   $ [*]      $ [*]        $ [*]         $ [*]          $ [*]         $ [*]
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
  Disabled        Disabled         Medically          Medically          Non TANF                     Restriction
    Male            Female         Needy Child        Needy Adult        Pregnant F          BCC         Program
===================================================================================================================
  <S>             <C>             <C>                <C>                <C>                 <C>       <C>
  $ [*]            $ [*]           $ [*]              $ [*]              $ [*]               $ [*]     $ [*]
-------------------------------------------------------------------------------------------------------------------
</TABLE>

     7.   SPECIAL RATE

          An AIDS rate of $ [*] per month will be paid in addition to the
          regular monthly premium when the T-Cell count is below 200.

                                   Page 2 of 5

<PAGE>

B.   PER DELIVERY REIMBURSEMENT SCHEDULE

     The DEPARTMENT shall reimburse the CONTRACTOR $ [*] per delivery to cover
     all Medically Necessary antepartum care, delivery, and postpartum
     professional, facility and ancillary services. The monthly premium amount
     for the enrollee is in addition to the delivery fee. The delivery payment
     will be made when the delivery occurs at 22 weeks or later, regardless of
     viability.

C.   CHEC SCREENING INCENTIVE CLAUSE

     1.   CHEC SCREENING GOAL

          The CONTRACTOR will ensure that Medicaid children have access to
          appropriate well-child visits. The CONTRACTOR will follow the Utah
          EPSDT (CHEC) guidelines for the periodicity schedule for well-child
          protocol. The federal agency, Centers for Medicare and Medicaid
          Services (CMS), mandates that all states have 80% of all children
          screened. The DEPARTMENT and the CONTRACTOR will work toward that
          goal.

     2.   CALCULATION OF CHEC INCENTIVE PAYMENT

          The DEPARTMENT will calculate the CONTRACTOR's annual participation
          rate based on information supplied by the CONTRACTOR under the CMS-416
          EPSDT (CHEC) reporting requirements. Based on the CMS-416 data, the
          CONTRACTOR's well-child participation rate was 100% for Federal Fiscal
          Year (FFY) 2000 (October 1999 through September 2000). The incentive
          payment for the Contract year ending June 30, 2002 will be based on
          the CONTRACTOR's FFY 2001 (October 1, 2000 through September 30, 2001)
          CMS-416 participation rate. The DEPARTMENT will pay the CONTRACTOR
          $ [*] if a rate of 90% or higher is maintained during FFY 2001. The
          participation rate will be calculated no later than April 15, 2002;
          the CONTRACTOR will be notified of the incentive payment, if
          applicable, no later than April 30, 2002.

     3.   CONTRACTOR's USE OF INCENTIVE PAYMENT

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the EPSDT (CHEC)
          participation rate.

D.   IMMUNIZATION INCENTIVE CLAUSE

     The CONTRACTOR will ensure that Enrollees have access to recommended
     immunizations. The CONTRACTOR will follow the Advisory Committee on
     Immunization Practices recommendations for immunizations for children.

     1.   IMMUNIZATIONS FOR TWO-YEAR-OLDS

          Utah has achieved a statewide immunization level of 76% for
          two-year-olds. The average Medicaid HMO rate was 53.2% for the 1999
          HEDIS Combination 1 immunization measure for two-year-olds.

                                   Page 3 of 5

<PAGE>

          Based on the CONTRACTOR's 2000 HEDIS measure for the Combination I
          immunization for two-year-olds, the DEPARTMENT will pay the CONTRACTOR
          $ [*]  for each full percentage point above 53.2%.

     2.   IMMUNIZATIONS FOR ADOLESCENTS

          The DEPARTMENT realizes it is important that adolescents are
          vaccinated according to schedule as recommended by the Advisory
          Committee on Immunization Practices. The average Medicaid HMO rate was
          3.7% for the 1999 HEDIS Combination I immunization measure for
          adolescents.

          Based on the CONTRACTOR's 2000 HEDIS measure for adolescent
          immunizations, the DEPARTMENT will pay the CONTRACTOR $  [*]  for each
          full percentage point above 3.7% up to 53.7%.

     3.   IMMUNIZATIONS FOR ADULTS

          The HEDIS immunization measure for adults is not reported for Medicaid
          clients age 65 and older. The DEPARTMENT intends to expand this
          incentive clause to include improved immunization rates for influenza
          and pneumonia vaccines among Enrollees age 65 and older. The
          DEPARTMENT will work with contractors to collect this data during this
          Contract year (July 1, 2001 - June 30, 2002).

     4.   CONTRACTOR's USE OF INCENTIVE PAYMENT

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the HEDIS
          immunization measures.

E.   STOP LOSS

     1.   Costs, net of TPL, for all inpatient and outpatient services listed in
          Attachment C that are covered on the date of service rendered and
          incurred from July 1, 2001 through June 30, 2002 by the MCO for an
          Enrollee shall be shared by the DEPARTMENT under the following
          conditions:

          a.   the date of service is from July 1, 2001 through June 30, 2002;

          b.   inpatient claims that overlap years will be prorated to each
               contract year, based on patient days:

          c.   paid claims incurred by the MCO exceed $50,000.00;

          d.   services shall have been incurred by the MCO during the time the
               client is enrolled with the MCO;

          e.   the stop-loss billing must be in a format mutually agreed upon
               and must include, at a minimum. Enrollee Medicaid identification
               number, date of birth, type of service, beginning date of
               service, ending date of service, billed charge. HMO payment,
               third party liability (TPL) collected, and primary diagnosis:

                                   Page 4 of 5

<PAGE>

          f.   stop-loss billing must be submitted to the DEPARTMENT within
               seven months of the end of the Contract year;

          If the above conditions are met, the DEPARTMENT shall bear 80% and the
          MCO shall bear 20% of the amount that exceeds $  [*]  The maximum
          amount the DEPARTMENT will reimburse the CONTRACTOR under the
          stop-loss  provision is $  [*]  per Enrollee per Contract year.

     2.   PAYMENT OF STOP-LOSS

          The DEPARTMENT will make interim payments to the CONTRACTOR equal to
          90% of the expected payment pending an audit of the stop-loss claims
          submitted by the CONTRACTOR.

          The DEPARTMENT will calculate the actual stop-loss amount due to the
          CONTRACTOR by July 1, 2003. The final settlement will be based on an
          audit conducted by the DEPARTMENT. The allowed payment for inpatient
          hospital stop-loss claims will be limited to 90% of the Medicaid fee
          schedule when the claim is from a related hospital as defined by CMS
          Pub. 15-I.

F.   RETROSPECTIVE ADJUSTMENT

     The DEPARTMENT agrees to retroactively adjust annual payments to the
     CONTRACTOR under this contract for Enrollees who qualify for Medicaid due
     to a diagnosis of breast cancer or cervical cancer.

     If the CONTRACTOR's claim expenditures for Enrollees in the Breast/
     Cervical Cancer (BCC) rate cell exceed the premiums plus other BCC
     payments, the DEPARTMENT will reimburse the CONTRACTOR for the unrecovered
     costs related to BCC claim expenditures. Claim contract payments include
     reinsurance and TPL payments.

     If the CONTRACTOR's claim expenditures for BCC Enrollees are less than the
     BCC premiums paid plus other BCC contract payments, the CONTRACTOR can
     retain up to 10% of the excess premiums and other payments paid for BCC
     Enrollees. If there are additional savings after the CONTRACTOR has
     recovered the 10%, the excess premium and other payment amounts for BCC
     Enrollees will be reimbursed to the DEPARTMENT. Claim contract payments
     include reinsurance and TPL payments.

     The CONTRACTOR shall submit to the DEPARTMENT a request for this
     retrospective adjustment no later than six months after the close of the
     Contract year. The CONTRACTOR agrees to use its Medicaid payment rates and
     fee schedules used to price their Medicaid product as a basis for the
     retrospective adjustment calculation.

                                   Page 5 of 5

<PAGE>

                            UTAH DEPARTMENT OF HEALTH
                 288 North 1460 West, Salt Lake City. Utah 84116

                               CONTRACT AMENDMENT

    H9920205-05                                                   006146
---------------------                                      ---------------------
Department Log Number                                      State Contract Number

1.   CONTRACT NAME:
     The name of this Contract is HMO-AFC/MOLINA, the Contract number assigned
     by the State Division of Finance is 006146, the Contract number assigned by
     the Utah Department of Health is H9920205, and this Amendment is number 5.

2.   CONTRACTING PARTIES:
     This Contract Amendment is between the Utah Department of Health
     (DEPARTMENT), and Molina Healthcare of Utah (CONTRACTOR).

3    PURPOSE OF CONTRACT AMENDMENT:
     The purpose is to increase the maximum Contract Amount.

4.   CHANGES TO CONTRACT:
     A. On Page 1, Paragraph 4, CONTRACT AMOUNT, is changed to read as follows:
        "The Contractor will be paid up to a maximum amount of $[*] for the
        Contract Period in accordance with the provisions in this Contract. This
        Contract is funded with 70% Federal funds and 30% State funds. The CFDA
        # is 93.778 and relates to the federal funds provided."
             ------

     B. All other provisions of the Contract remain unchanged.

5.   If the Contractor is not a local public procurement unit as defined by the
     Utah Procurement Code (UCA Section 63-56-5), this Contract Amendment must
     be signed by a representative of the State Division of Finance and the
     State Division of Purchasing to bind the State and the Department to this
     Contract Amendment.

6.   This Contract, its attachments, and all documents incorporated by reference
     constitute the entire agreement between the parties and supercede all prior
     negotiations, representations, or agreements, either written or oral
     between the parties relating to the subject matter of this Contract.

IN WITNESS WHEREOF, the parties sign this Contract Amendment.

CONTRACTOR:  Molina Healthcare of Utah   UTAH DEPARTMENT OF HEALTH
             -------------------------

By: /s/ G. K. Olsen           8-8-02   By: /s/                       8/9/02
    -----------------------   ------       ------------------------  ------
    Signature of Authorized   Date         Shari A. Watkins, C.P.A.   Date
    Individual                             Director
                                           Office of Fiscal
                                           Operations

Print Name:  Kirk Olsen                    CONTRACT RECEIVED AND
             -----------------------           PROCESSED BY
                                            DIVISION OF FINANCE      AUG 12 2002
                                           ------------------------  -----------
                                           State Finance:            Date

Title:  Chief Executive Officer
        ----------------------------

           33-0617992                      /s/ [ILLEGIBLE]           [ILLEGIBLE]
------------------------------------       ------------------------  -----------
Federal Tax identification Number or       State Purchasing:         Date
  Social Security Number

                                                    Doc # 98-001 amd Rev.5/18/98
                                                         hmo/molina am6 (8/7/02)

                                     Page 1

<PAGE>

                            UTAH DEPARTMENT OF HEALTH
                 288 North 1460 West, Salt Lake City. Utah 84116
                               CONTRACT AMENDMENT

    H9920205-06                                                   006146
---------------------                                      ---------------------
Department Log Number                                      State Contract Number

1.   CONTRACT NAME:
     The name of this Contract is HMO-AFC/MOLINA, the Contract number assigned
     by the State Division of Finance is 006146, the Department log number
     assigned by the Utah Department of Health is H9920205, and this Amendment
     is number 6.

2.   CONTRACTING PARTIES:
     This Contract Amendment is between the Utah Department of Health
     (DEPARTMENT), and Molina Healthcare of Utah (CONTRACTOR or MHU).

3.   PURPOSE OF CONTRACT AMENDMENT:
     Effective July 1, 2002 this contract amendment clarifies and adds some
     provisions; delineates the reduced benefit package for the Non-Traditional
     Medicaid population; changes the benefit package for the Traditional
     Medicaid group; outlines the co-payment and co-insurance requirements for
     both Traditional and Non-Traditional Medicaid populations; and sets forth
     the payment methodology.

4.   CHANGES TO CONTRACT:
     A. Effective July 1, 2002, replace Attachment B, Special Provisions, with
        Attachment B dated July 1, 2002, as attached to this Amendment #6.

     B. Effective July 1, 2002, replace Attachment C, Covered Services, with
        Attachment C dated July 1, 2002, as attached to this Amendment #6.

     C. Effective July 1, 2002, replace Attachment E (Tables 1, 2, 3, and
        revenue and cost definitions for Table 2) with Attachment E dated July
        1, 2002, as attached to this Amendment #6.

     D. Effective July 1, 2002, replace Attachment F, Rates and Rate-Related
        Terms with Attachment F-4 dated July 1, 2002, as attached to this
        Amendment #6.

     E. All other provisions of the Contract remain unchanged.

5.   If the Contractor is not a local public procurement unit as defined by the
     Utah Procurement Code (UCA Section 63-56-5), this Contract Amendment must
     be signed by a representative of the State Division of Finance and the
     State Division of Purchasing to bind the State and the Department to this
     Contract Amendment.

6.   This Contract, its attachments, and all documents incorporated by reference
     constitute the entire agreement between the parties and supercede all prior
     negotiations, representations, or agreements, either written or oral
     between the parties relating to the subject matter of this Contract.

IN WITNESS WHEREOF, the parties sign this Contract Amendment.

CONTRACTOR:  Molina Healthcare of Utah   UTAH DEPARTMENT OF HEALTH
             -------------------------

By: /s/ G. K. Olsen                    By: /s/                       10/10/02
    -----------------------   ------       ------------------------  --------
    Signature of Authorized   Date         Shari A. Watkins, C.P.A.   Date
    Individual                             Director
                                           Office of Fiscal
                                           Operations

Print Name:  Kirk Olsen
             -----------------------
                                           ------------------------  --------
                                           State Finance:            Date

Title:  Chief Executive Officer
        ----------------------------

           33-0617992                      /s/ [ILLEGIBLE]           10/17/02
------------------------------------       ------------------------  --------
Federal Tax identification Number or       State Purchasing:         Date
  Social Security Number

                                                    Doc # 98-001 amd Rev 5/18/98
                                                        hmo/molina am6 (9/05/02)

                                     Page 1

<PAGE>

                                TABLE OF CONTENTS

                                  ATTACHMENT B
                SPECIAL PROVISIONS FOR AMENDMENT 6 (JULY 1, 2002)

ARTICLE I.    DEFINITIONS......................................................1

ARTICLE II.   SERVICE AREA.....................................................4

ARTICLE III.  ENROLLMENT, ORIENTATION, MARKETING, AND DISENROLLMENT............4

        A.    Enrollment Process...............................................4
        B.    Member Orientation...............................................6
        C.    Marketing and Member Education...................................8
        D.    Disenrollment by Enrollee.......................................10
        E.    Disenrollment by Contractor.....................................10
        F.    Enrollee Transition Between MCOs ...............................11
        G.    Enrollee Transition from Fee-For-Service to MCO or from MCO to
              Fee-For-Service.................................................12

ARTICLE IV.   BENEFITS........................................................12

        A.    In General......................................................12
        B.    Provider Services Function......................................13
        C.    Scope of Services...............................................13
        D.    Subcontracts....................................................14
        E.    Clarification of Covered Services...............................15
        F.    Clarification of Payment Responsibilities.......................26

ARTICLE V.    ENROLLEE RIGHTS/SERVICES........................................29

        A.    Member Services Function........................................29
        B.    Enrollee Liability..............................................29
        C.    General Information to be Provided to Enrollees.................29
        D.    Access..........................................................30
        E.    Choice..........................................................32
        F.    Coordination....................................................32
        G.    Billing Enrollees...............................................33
        H.    Survey Requirements.............................................35

ARTICLE VI.   GRIEVANCE PROCEDURES............................................35

        A.    In General......................................................35

                                        i

<PAGE>

        B.    Nondiscrimination...............................................35
        C.    Minimum Requirements of Grievance Procedures....................36
        D.    Final Review by Department......................................36

ARTICLE VII.  OTHER REQUIREMENTS..............................................37

        A.    Compliance with Public Health Service Act.......................37
        B.    Compliance with OBRA '90 Provision and 42 CFR 434.28............37
        C.    Fraud and Abuse Requirements....................................37
        D.    Disclosure of Ownership and Control Information.................38
        E.    Safeguarding Confidential Information on Enrollees..............38
        F.    Disclosure of Provider Incentive Plans..........................38
        G.    Debarred or Suspended Individuals...............................40
        H.    CMS Consent Required............................................40

ARTICLE VIII. PAYMENTS........................................................40

        A.    Non-Risk Contract...............................................40
        B.    Payment Methodology.............................................40
        C.    Contract Maximum................................................40
        D.    Medicare........................................................40
        E.    Third Party Liability (Coordination of Benefits)................41
        F.    Third Party Responsibility (including Worker's
              Compensation)...................................................43
        G.    Changes in Covered Services.....................................44

ARTICLE IX.   RECORDS, REPORTS AND AUDITS.....................................44

        A.    Records, Reports and Audits.....................................44
        B.    Periodic Reports................................................45
        C.    Record System Requirements......................................48
        D.    Medical Records.................................................49
        E.    Audits..........................................................49
        F.    Independent Quality Review......................................50

ARTICLE X.    SANCTIONS.......................................................51

ARTICLE XI.   TERMINATION OF THE CONTRACT.....................................52

        A.    Automatic Termination...........................................52
        B.    Optional Year-End Termination...................................52
        C.    Termination for Failure to Agree Upon Rates.....................52
        D.    Effect of Termination...........................................52
        E.    Assignment......................................................53

                                       ii

<PAGE>

ARTICLE XII.  MISCELLANEOUS...................................................53

        A.    Integration.....................................................53
        B.    Enrollees May Not Enforce Contract..............................54
        C.    Interpretation of Laws and Regulations..........................54
        D.    Adoption of Rules...............................................54

ARTICLE XIII. EFFECT OF GENERAL PROVISIONS....................................54

                                       iii

<PAGE>

                                               Attachment B - Special Provisions
                                                                          Molina
                                                                    July 1, 2002

For the purpose of the Contract all article, section, and subsection headings in
these Attachments B, C, and D are for convenience in referencing the provisions
of the Contract. They are not enforceable as part of the text of the Contract
and may not be used to interpret the meaning of the provisions that lie beneath
them.

                        ATTACHMENT B - SPECIAL PROVISIONS
                             Effective July 1, 2002

                             ARTICLE I - DEFINITIONS

For the purpose of the Contract:

A.   "ADVANCE DIRECTIVES" means oral and written instructions about an
     individual's medical care, in the event the individual is unable to
     communicate. There are two types of Advance Directives: a living will and a
     medical power of attorney.

B.   "BALANCE BILL" means the practice of billing patients for charges that
     exceed the amount that the MCO will pay.

C.   "CHEC ELIGIBLE" means any Medicaid recipient under the age of 21 who is
     eligible to receive Early Periodic Screening Diagnostic and Treatment
     (EPSDT) services in accordance with 42 CFR Part 441, Subpart B.

D.   "CHEC PROGRAM" or Child Health Evaluation and Care program is Utah's
     version of the federally mandated Early Periodic Screening, Diagnosis and
     Treatment (EPSDT) program as defined in 42 CFR Part 441, Subpart B.
     Medicaid recipients who are eligible for the Non-Traditional Medicaid Plan
     are not eligible to receive EPSDT services. (See Attachment C, Covered
     Services, U.)

E.   "CHILD WITH SPECIAL HEALTH CARE NEEDS" means a child under 21 who has or is
     at increased risk for chronic physical, developmental, behavioral, or
     emotional conditions and requires health and related services of a type or
     amount beyond that required by children generally, including a child who,
     consistent with 1932(a)(2)(A) of the Social Security Act, 42 U.S.C.,
     Section 1396u- 2(a)(2)(A):
     (1) is blind or disabled or in a related population (eligible for SSI under
     title XVI of the Social Security Act);
     (2) is in foster care or other out-of-home placement;
     (3) is receiving foster care or adoption assistance; or
     (4) is receiving services through a family-centered, community-based
     coordinated care system that receives grant funds described in section
     501(a)(l)(D) of title V.

F.   "DIVISION OF HEALTH CARE FINANCING" or "DHCF" means the division within the
     Department of Health responsible for the administration of the Utah
     Medicaid program.

G.   "EMERGENCY SERVICES" means those services provided in a hospital, clinic,
     office, or other facility that is equipped to furnish the required care,
     after the sudden onset of a medical condition manifesting itself by acute
     symptoms of sufficient severity (including severe pain) such that a prudent
     layperson, who possesses an average knowledge of health and medicine, could
     reasonably expect that the absence of immediate medical attention to result
     in:

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     1.   Placing the health of the individual (or, with respect to a pregnant
          woman, the health of a woman or her unborn child) in serious jeopardy;
     2.   Serious impairment to bodily functions; or
     3.   Serious dysfunction of any bodily organ or part.

H.   "ENROLLEE" means any Medicaid eligible: (1) who, at the time of enrollment
     resides within the geographical limits of the CONTRACTOR's Service Area;
     (2) whose name appears on the DEPARTMENT's Eligibility Transmission as a
     new, reinstate, or retroactive Enrollee; and (3) who is accepted for
     enrollment by the CONTRACTOR according to the conditions set forth in this
     Contract excluding residents of the Utah State Hospital, Utah State
     Developmental Center, and long-term care facilities except as defined in
     Attachment C.

I.   "ENROLLEES WITH SPECIAL HEALTH CARE NEEDS" means enrollees who have or are
     at increased risk for chronic physical, developmental, behavioral, or
     emotional conditions and who also require health and related services of a
     type or amount beyond that required by adults and children generally.

J.   "ENROLLMENT AREA" or "Service Area" means the counties enumerated in
     Article II.

K.   "FAMILY MEMBER" means all Medicaid eligibles who are members of the same
     family living at home.

L.   "HOME AND COMMUNITY-BASED SERVICES" means services, not otherwise furnished
     under the State's Medicaid plan, that are furnished under a waiver of
     statutory requirements granted under the provisions of CFR Part 441,
     subpart G. These services cover an array of Home and Community-Based
     Services that are cost-effective and necessary for an individual to avoid
     institutionalization.

M.   "MANAGED CARE ORGANIZATION" or "MCO" means an organization that meets the
     State Plan's definition of an HMO or prepaid health plan and which
     provides, either directly or through arrangement with other providers,
     comprehensive general medical services to Medicaid eligibles on a
     contractual prepayment basis.

N.   "MARKETING MATERIAL" means materials in all mediums, including member
     handbooks, brochures and leaflets, newspaper, magazine, radio, television,
     billboard and yellow pages advertisements, and presentation materials used
     by marketing representatives. It includes materials mailed to, distributed
     to, or aimed at Medicaid clients specifically, and any material that
     mentions "Medicaid," "Medicaid Assistance," or "Title XIX."

O.   "MEDICALLY NECESSARY" means any medical service that (a) is reasonably
     calculated to prevent, diagnose, or cure conditions in the Enrollee that
     endanger life, cause suffering or pain, cause deformity or malfunction, or
     threaten to cause a handicap, and (b) there is no equally effective course
     of treatment available or suitable for the Enrollee requesting the service
     which is more conservative or substantially less costly. Medical services
     will be of a quality that meets professionally recognized standards of
     health care, and will be substantiated by records including evidence of
     such medical necessity and quality. Those records will be made available to
     the DEPARTMENT upon request. FOR CHEC ENROLLEES, "Medically Necessary"
     means preventive screening services and other medical care, diagnostic
     services, treatment, and other measures necessary to correct or ameliorate
     defects and physical and mental illnesses and conditions, even

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     if the services are not included in the Utah State Medicaid Plan.

P.   "MEMBER SERVICES" means a method of assisting Enrollees in understanding
     CONTRACTOR policies and procedures, facilitating referrals to participating
     specialists, and assisting in the resolution of problems and member
     complaints. The purpose of Member Services is to improve access to services
     and promote Enrollee satisfaction.

Q.   "NON-TRADITIONAL MEDICAID PLAN" means the reduced benefit plan provided to
     Medicaid eligibles age 19 through 64 who are in certain TANF, Medically
     Needy, and Transitional Medicaid aid categories. Services covered under the
     reduced benefit plan are similar to the Traditional Medicaid Plan with some
     limitations and exclusions.

R.   "PHYSICIAN INCENTIVE PLAN" means any compensation between a contracting
     organization and a physician group that may directly or indirectly have the
     effect of reducing or limiting services provided with respect to Enrollees
     in the organization.

S.   "PREPAID MENTAL HEALTH PLAN" means the mental health centers that contract
     with the DEPARTMENT to provide inpatient and outpatient mental health
     services to Medicaid clients living within each mental health center's
     jurisdiction.

T.   "PRIMARY CARE PROVIDER" or "PCP" means a health care provider the majority
     of whose practice is devoted to internal medicine, family/general practice
     or pediatrics. The MCO may allow other specialists to be PCPs, when
     appropriate. PCPs are responsible for delivering primary care services,
     coordinating and managing Enrollees' overall health and, authorizing
     referrals for other necessary care.

U.   "RESTRICTION PROGRAM" means the Federally mandated program (42 CFR
     431.54(e)) for Medicaid clients who over-utilize Medicaid services. If the
     DEPARTMENT in conjunction with the CONTRACTOR finds that an Enrollee has
     utilized Medicaid services at a frequency or amount that is not Medically
     Necessary, as determined in accordance with utilization guidelines adopted
     by the DEPARTMENT, the DEPARTMENT may place the Enrollee under the
     Restriction Program for a reasonable period of time to obtain Medicaid
     services from designated providers only.

V.   "STATE PLAN" means the State Plan for organization and operation of the
     Medicaid program as defined pursuant to Section 1102 of the Social Security
     Act (42 U.S.C. 1302).

W.   "TRADITIONAL MEDICAID PLAN" means the scope of services contained in the
     state plan provided to Medicaid eligibles who fall under one of the
     following eligibility groups:

     (1) Section 1931 children and related poverty level populations
         (TANF/AFDC);
     (2) Section 1931 pregnant women (TANF/AFDC);
     (3) Blind/disabled children and related populations (SSI);
     (4) Blind/disabled adults and related populations (SSI);
     (5) Aged and related populations (SSI, QMB and Medicaid, Medicare and
         Medicaid);
     (6) Foster care children;
     (7) Individuals who qualify for Medicaid by paying a spenddown and are
         under age 19 or are also aged or disabled;
     (8) Pregnant women (non-TANF/AFDC)

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

                            ARTICLE II - SERVICE AREA

The Service Area is limited to the counties of Cache, Davis, Iron, Salt Lake,
Utah, Washington, and Weber.

       ARTICLE III - ENROLLMENT, ORIENTATION, MARKETING, AND DISENROLLMENT

A.   ENROLLMENT PROCESS

     1.   ENROLLEE CHOICE

          The DEPARTMENT will offer potential Enrollees a choice among all MCOs
          available in the Enrollment Area. The DEPARTMENT will inform potential
          Enrollees of Medicaid benefits. The Medicaid client's intent to enroll
          is established when the applicant selects The CONTRACTOR, either
          verbally or by signing a choice of health care delivery form or
          equivalent. This initiates the action to send an advance notification
          to the CONTRACTOR. Medicaid Enrollees made eligible for a retroactive
          period prior to the current month are not eligible for CONTRACTOR
          enrollment during the retroactive period.

     2.   PERIOD OF ENROLLMENT

          Each Enrollee will be enrolled for the period of the Contract or the
          period of Medicaid eligibility or until such person disenrolls or is
          disenrolled, whichever is earlier. Until the DEPARTMENT notifies the
          CONTRACTOR that an Enrollee is no longer Medicaid eligible, the
          CONTRACTOR may assume that the Enrollee continues to be eligible. Each
          Enrollee will be automatically re-enrolled at the end of each month
          unless that Enrollee notifies the DEPARTMENT's Health Program
          Representative of an intent not to re-enroll in the MCO prior to the
          benefit issuance date.

     3.   OPEN ENROLLMENT

          The CONTRACTOR will have a continuous open enrollment period that
          meets the requirements of Section 1301(d) of the Public Health Service
          Act. The DEPARTMENT will certify, and the CONTRACTOR agrees to accept
          individuals who are eligible to be enrolled in the MCO under the
          provisions of this Contract:

          a.   in the order in which they apply; and
          b.   without restrictions unless authorized by the DEPARTMENT.

     4.   NO HEALTH SCREENING

          The DEPARTMENT and the CONTRACTOR agree that no potential Enrollee
          will be pre-screened or selected by either party for enrollment on the
          basis of pre-existing health problems or on the basis of race, color,
          national origin, disability or age.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     5.   INDEPENDENT ENROLLMENT

          Each Medicaid eligible can be enrolled or disenrolled in the MCO,
          independent of any other Family Member's enrollment or disenrollment.

     6.   REPRESENTATIVE POPULATION

          The CONTRACTOR will service a population representative of the
          categories of eligibility within the area it serves.

     7.   ELIGIBILITY TRANSMISSION

          a.   IN GENERAL

               Before the close of business of each day, the DEPARTMENT will
               provide to the CONTRACTOR an Eligibility Transmission which is an
               electronic file that includes individuals which the DEPARTMENT
               certifies as Medicaid eligible and who enrolled in the MCO.
               Eligibility transmissions include new Enrollees, reinstated
               Enrollees, retroactive Enrollees, deleted Enrollees and Enrollees
               whose eligibility information results in a change to a critical
               field. The Eligibility Transmission will be in accordance with
               the Utah Health Information Network (UHIN) standard. The
               DEPARTMENT represents and warrants to the CONTRACTOR that the
               appearance of an individual's name on the Eligibility
               Transmission, other than a deleted Enrollee, will be conclusive
               evidence for purposes of this Contract, that such person is
               enrolled in the program and qualifies for medical assistance
               under Medicaid Title XIX.

          b.   NEW ENROLLEES

               New Enrollees are enrolled in this MCO until otherwise specified;
               these Enrollees will not appear on future transmissions unless
               there is a change in a critical field. Critical fields are
               coverage dates, recipient name, date of birth, date of death,
               sex, social security number, case information, address, telephone
               number, payment code, coordination of benefits, and the
               Enrollee's provider under the Restriction Program. Enrollees with
               a spenddown requirement will appear on the eligibility
               transmission on a month by month basis after the spenddown is
               met.

          c.   RETROACTIVE ENROLLEES

               Retroactive Enrollees are those who were Enrollees previous to
               the current month. Retroactive Enrollees include newborn
               Enrollees or Enrollees who have been reported in one payment
               category in a previous month but have been changed to a new
               payment category for that previous month.

          d.   REINSTATED ENROLLEES

               Reinstated Enrollees are those who were enrolled for the previous
               month and also closed at the end of the previous month. These
               Enrollees are eligible

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

               retroactively to the beginning of the current month.

          e.   DELETED ENROLLEES

               Deleted Enrollees are those who are no longer eligible for
               Medicaid or who were disenrolled from the MCO.

          f.   ADVANCED NOTIFICATION TRANSMISSION

               An Advanced Notification Transmission is another electronic file
               (separate from the Eligibility Transmission) that will be sent to
               the CONTRACTOR when an individual has selected the MCO prior to
               becoming eligible for Medicaid. These individuals may or may not
               become eligible for Medicaid. Use of information about such
               individuals is restricted to providing the individual with an
               orientation to the MCO prior to the individual's eligibility for
               Medicaid. The CONTRACTOR is not required to orient individuals
               until they appear on the Eligibility Transmission.

     8.   CHANGE OF ENROLLMENT PROCEDURES

          The CONTRACTOR will be advised of anticipated changes in DEPARTMENT
          policies and procedures as they relate to the enrollment process and
          their comments will be solicited. The CONTRACTOR agrees to be bound by
          such changes in DEPARTMENT policies and procedures that are mutually
          agreed upon by the CONTRACTOR and the DEPARTMENT.

B.   MEMBER ORIENTATION

     1.   INITIAL CONTACT - GENERAL ORIENTATION

          The CONTRACTOR will make a good faith effort to ensure that each
          Enrollee or Enrollee's family or guardian receives the CONTRACTOR's
          member handbook. The CONTRACTOR representative will make a good faith
          effort, as evidenced in written or electronic records, to make an
          initial contact with the Enrollee within 10 working days after the
          CONTRACTOR has been notified through the Eligibility Transmission of
          the Enrollee's MCO enrollment. The initial contact will be in person
          or by telephone (or in writing, but only if reasonable attempts have
          been made to make the contact in person by telephone) and will inform
          the Enrollee of the MCO rules and policies. The CONTRACTOR must ensure
          that Enrollees are provided interpreters, Telecommunication Device for
          the Deaf (TDD), and other auxiliary aids to ensure that Enrollees
          understand their rights and responsibilities. During the initial
          contact the CONTRACTOR Representative will provide, at a minimum, the
          following information to the Enrollee or potential Enrollee
          appropriate to the Enrollee's eligibility (Traditional versus
          Non-Traditional Medicaid):

          a.   specific written and oral instructions on the use of the
               CONTRACTOR's Covered Services and procedures;
          b.   availability and accessibility of all Covered Services, including
               the availability of family planning services and that the
               Enrollee may obtain family planning

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

               services from Medicaid providers other than providers affiliated
               with the CONTRACTOR;
          c.   the client's rights and responsibilities as an Enrollee of the
               MCO, including the right to file a grievance and how to file a
               grievance;
          d.   the right to terminate enrollment with the MCO; and
          e.   encouragement to make a medical appointment with a provider.

     2.   IDENTIFICATION OF ENROLLEES WITH SPECIAL HEALTH CARE NEEDS

          During the initial contact with each Enrollee, the CONTRACTOR
          representative will use a process that will identify children and
          adults with special health care needs. The CONTRACTOR representative
          will clearly describe to each Enrollee during the initial contact the
          process for requesting specialist care. When an Enrollee is identified
          as having special health care needs, the CONTRACTOR Representative
          will forward this information to a CONTRACTOR individual with
          knowledge of coordination of care and services necessary for such
          Enrollees. The CONTRACTOR individual with knowledge of coordination of
          care for Enrollees with special health care needs will make a good
          faith effort to contact Enrollees within ten working days after
          identification to begin coordination of health care needs, if
          necessary. The CONTRACTOR will not discriminate on the basis of health
          status or the need for health care services.

          The DEPARTMENT's Health Program Representatives are responsible to
          forward information, i.e., pink sheets identifying Enrollees with
          special health care needs and limited language proficiency needs to
          the CONTRACTOR in a timely way coinciding with the daily Eligibility
          Transmission as much as possible.

     3.   INABILITY TO CONTACT ENROLLEE FOR ORIENTATION

          If the CONTRACTOR's representative cannot contact the Enrollee within
          10 working days or at all, the CONTRACTOR representative will document
          its efforts to contact the Enrollee.

     4.   ENROLLEES RECEIVING OUT-OF-PLAN CARE PRIOR TO ORIENTATION

          If the Enrollee receives Covered Services by an out-of-plan provider
          after the first day of the month in which the client's enrollment
          became effective, and if a CONTRACTOR orientation either in-person or
          by telephone (or in writing, but only if reasonable attempts have been
          made to make the contact in person or by telephone) has not taken
          place prior to receiving such services, the CONTRACTOR is responsible
          for payment of the services rendered provided the DEPARTMENT informs
          the CONTRACTOR by the 20th of any month prior to the month that MCO
          enrollment begins.

C.   MARKETING AND MEMBER EDUCATION

     1.   APPROVAL OF MARKETING MATERIALS

          The CONTRACTOR's marketing plans, procedures and materials will be
          accurate, and may not mislead, confuse, or defraud either Enrollees or
          the DEPARTMENT. All Medicaid marketing plans, procedures and materials
          will be reviewed and approved by

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          the DEPARTMENT in consultation with the Medical Care Advisory
          Committee for Marketing Review before implemented or released by the
          CONTRACTOR. The DEPARTMENT will notify the CONTRACTOR of its approval
          or disapproval, in writing, of such materials within ten working days
          after receiving them unless the DEPARTMENT and the CONTRACTOR agree to
          another time frame. If the DEPARTMENT does not respond within the
          agreed upon time frame, the CONTRACTOR shall deem such materials
          approved. Marketing materials will not be approved if the DEPARTMENT
          determines that the material is materially inaccurate or misleading or
          otherwise makes material misrepresentations. Health education
          materials and newsletters not specifically related to Enrollees do not
          need to be approved by the DEPARTMENT.

          a.   NO DOOR-TO-DOOR, TELEPHONIC, OR "COLD CALL" MARKETING

               The CONTRACTOR cannot, either directly or indirectly, conduct
               door-to-door, telephonic or "cold call" marketing of enrollment.
               These three marketing practices are prohibited whether conducted
               by the CONTRACTOR itself ("directly") or by an agent or
               independent contractor ("indirectly"). Cold call marketing is any
               unsolicited personal contact with a potential Enrollee by an
               employee or agent of a managed care entity for the purpose of
               influencing the individual to enroll with the CONTRACTOR's health
               plan. The CONTRACTOR may not entice a potential Enrollee to join
               its health plan by offering the sale of any other type of
               insurance as a bonus for enrollment. All other non-requested
               marketing approaches to Medicaid clients by the CONTRACTOR are
               also prohibited unless specifically approved in advance by the
               DEPARTMENT.

          b.   DISTRIBUTION OF MARKETING MATERIALS

               Marketing materials must be distributed to the entire Service
               Area.

     2.   ENROLLEE MATERIALS MUST BE COMPREHENSIBLE

          The CONTRACTOR will attempt to write all Enrollee and potential
          Enrollee information, instructional and educational materials,
          including member handbooks, at no greater than a sixth grade reading
          level. If the MCO has more than 5% of its Enrollees who speak a
          language other than English as a first language, the CONTRACTOR must
          make available written material (e.g. member handbooks, educational
          newsletters) in that language. Marketing materials must include a
          statement that the CONTRACTOR does not discriminate against any
          Enrollee on the basis of race, color, national origin, disability, or
          age in admission, treatment, or participation in its programs,
          services and activities. In addition, the materials must include the
          phone number of the nondiscrimination coordinator for Enrollees to
          call if they have questions about the nondiscrimination policy or
          desire to file a complaint or grievance alleging violations of the
          nondiscrimination policy.

     3.   MEMBER HANDBOOK

          The CONTRACTOR will produce a member handbook that must be submitted
          to the

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          DEPARTMENT for review and approval before distribution. The DEPARTMENT
          will notify the CONTRACTOR in writing of its approval or disapproval
          within ten working days after receiving the member handbook unless the
          DEPARTMENT and CONTRACTOR agree to another time frame. If the
          DEPARTMENT does not respond within the agreed upon time frame, the
          CONTRACTOR may deem such materials are approved. If there are changes
          to the content of the material in the handbook, the CONTRACTOR must
          update the member handbook and submit a draft to the DEPARTMENT for
          review and approval before distribution to its Enrollees. At a
          minimum, the member handbook must explain in clear terms the following
          information:

          a.   The scope of benefits provided by the CONTRACTOR delineating
               Traditional versus Non-Traditional Medicaid scopes of service;
          b.   Instructions on where and how to obtain Covered Services,
               including referral requirements;
          c.   Instructions on what to do in an emergency or urgent medical
               situation, including emergency numbers;
          d.   Enrollee options on obtaining family planning services;
          e.   Instructions on how to choose a PCP and how to change PCPs;
          f.   Description on Enrollee cost-sharing requirements (if
               applicable);
          g.   Toll-free telephone number;
          h.   Description of Member Services function;
          i.   How to register a complaint or grievance;
          j.   Information on Advance Directives;
          k.   Services covered by Medicaid, but not covered by the CONTRACTOR;
          1.   Clients' rights and responsibilities;
          m.   A statement that the CONTRACTOR does not discriminate against any
               Enrollee on the basis of race, color, national origin,
               disability, or age in admission, treatment, or participation in
               its programs, services and activities; and
          n.   The phone number of the nondiscrimination coordinator for
               Enrollees to call if they have questions about the
               nondiscrimination policy or desire to file a complaint or
               grievance alleging violations of the nondiscrimination policy.

     4.   NOTIFICATION TO ENROLLEES OF POLICIES AND PROCEDURES

          a.   CHANGES TO POLICIES AND PROCEDURES

               The CONTRACTOR must periodically notify Enrollees, in writing, of
               changes to its plan such as changes to its policies or procedures
               either through a newsletter or other means.

          b.   ANNUAL EDUCATION ON EMERGENCY CARE AND GRIEVANCE PROCEDURES

               The CONTRACTOR must annually reinforce, in writing, to Enrollees
               how to access emergency and urgent services and how to register a
               complaint or grievance.

     5.   MONTHLY NOTIFICATION TO DEPARTMENT OF CHANGES IN PROVIDER NETWORK

          The CONTRACTOR must notify the DEPARTMENT at least monthly of changes
          in its

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          provider network so that the DEPARTMENT can ensure its listing of
          providers is accurate.

D.   DISENROLLMENT BY ENROLLEE

     1.   ENROLLEE's RIGHT TO DISENROLL

          Enrollees will have the right to disenroll from this MCO at any time
          with or without cause. The disenrollment will be effective once the
          DEPARTMENT has been notified by the Enrollee and the DEPARTMENT issues
          a new Medicaid card and the disenrollment is indicated on the
          Eligibility Transmission.

     2.   ENROLLEES IN AN INPATIENT HOSPITAL SETTING

          The DEPARTMENT agrees that if a new Enrollee is a patient in an
          inpatient hospital setting on the date the new Enrollee's name appears
          on the CONTRACTOR Eligibility Transmission, the obligation of the
          CONTRACTOR to provide Covered Services to such person will commence
          following discharge. If an Enrollee is a patient in an inpatient
          hospital setting on the date that his or her name appears as a deleted
          Enrollee on the CONTRACTOR Eligibility Transmission or he or she is
          otherwise disenrolled under this Contract, the CONTRACTOR will remain
          financially responsible for such care until discharge.

     3.   ANNUAL STUDY OF ENROLLEES WHO DISENROLLED

          Annually, the DEPARTMENT and CONTRACTOR will work cooperatively to
          conduct an analysis of Enrollees who have voluntarily disenrolled from
          this MCO. The results of the analysis will include explanations of
          patterns of disenrollments and strategies or a corrective action plan
          to address unusual rates or patterns of disenrollment. The DEPARTMENT
          will inform the CONTRACTOR of such disenrollments.

E.   DISENROLLMENT BY CONTRACTOR

     1.   CANNOT DISENROLL FOR ADVERSE CHANGE IN ENROLLEE's HEALTH

          The CONTRACTOR may not terminate enrollment because of an adverse
          change in the Enrollee's health.

     2.   VALID REASONS FOR DISENROLLMENT

          The CONTRACTOR may initiate disenrollment of any Enrollee's
          participation in the MCO upon one or more of the following grounds:

          a.   For reasons specifically identified in the CONTRACTOR's member
               handbook.
          b.   When the Enrollee ceases to be eligible for medical assistance
               under the State Plan, in accordance with Title 42 USCA, 1396, et.
               seq., and as finally determined by the DEPARTMENT.
          c.   Upon termination or expiration of the Contract.
          d.   Death of the Enrollee.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          e.   Confinement of the Enrollee in an institution when confinement is
               not a Covered Service under this Contract.
          f.   Violation of enrollment requirements developed by the CONTRACTOR
               and approved by the DEPARTMENT but only after the CONTRACTOR
               and/or the Enrollee has exhausted the CONTRACTOR's applicable
               internal grievance procedure.

     3.   APPROVAL BY DEPARTMENT REQUIRED

          To initiate disenrollment of an Enrollee's participation with this
          MCO, the CONTRACTOR will provide the DEPARTMENT with documentation
          justifying the proposed disenrollment. The DEPARTMENT will approve or
          deny the disenrollment request in writing within thirty (30) days of
          receipt of the request. Failure by the DEPARTMENT to deny a
          disenrollment request within such thirty (30) day period will
          constitute approval of such disenrollment requests.

     4.   ENROLLEE's RIGHT TO FILE A GRIEVANCE

          If the DEPARTMENT approves the CONTRACTOR's disenrollment request, the
          CONTRACTOR will give the Enrollee thirty (30) days written notice of
          the proposed disenrollment, and will notify the Enrollee of his or her
          opportunity to invoke the internal grievance procedure and appeals
          process for a fair hearing. The CONTRACTOR will give a copy of the
          written notice to the DEPARTMENT at the time the notice is sent to the
          Enrollee.

     5.   REFUSAL OF RE-ENROLLMENT

          If a person is disenrolled because of violation of responsibilities
          included in the CONTRACTOR's member handbook, the CONTRACTOR may
          refuse re-enrollment of that Enrollee.

F.   ENROLLEE TRANSITION BETWEEN MCOs

     1.   MUST ACCEPT PRE-ENROLLMENT PRIOR AUTHORIZATIONS

          For Covered Services other than inpatient, home health services, and
          medical equipment, if authorization has been given for a Covered
          Service and an enrollee transitions between MCOs prior to the delivery
          of such Covered Service, the receiving MCO shall be bound by the
          relinquishing MCO's prior authorization until the receiving MCO has
          evaluated the medical necessity of the service and agrees with the
          relinquishing MCO's prior authorization or has made a different
          determination. (See Article IV, Benefits, Section F, Clarification of
          Payment Responsibilities, Subsection 5, for inpatient, home health
          services, and medical equipment explanations.)

     2.   MUST PROVIDE MEDICAL RECORDS TO ENROLLEE's NEW MCO

          When enrollees are transitioned between MCOs the relinquishing MCO's
          provider will submit, upon request of the new MCO's provider, any
          critical medical information about the transitioning enrollee prior to
          the transition including, but not limited to, whether the

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          member is hospitalized, pregnant, involved in the process of organ
          transplantation, scheduled for surgery or post-surgical follow-up on a
          date subsequent to transition, scheduled for prior-authorized
          procedures or therapies on a date subsequent to transition, receiving
          dialysis or is chronically ill (e.g. diabetic, hemophilic, HIV
          positive).

G.   ENROLLEE TRANSITION FROM FEE-FOR-SERVICE TO MCO OR FROM MCO TO
     FEE-FOR-SERVICE

     1.   CONTRACTOR MUST ACCEPT PRE-ENROLLMENT PRIOR AUTHORIZATIONS

          For Covered Services other than inpatient, home health services, and
          medical equipment, if authorization has been given for a Covered
          Service and a Medicaid client transitions from Medicaid
          fee-for-service to enrollment with the CONTRACTOR's health plan prior
          to the delivery of such Covered Service, the CONTRACTOR shall be bound
          by the DEPARTMENT's fee-for-service prior authorization until the
          CONTRACTOR has evaluated the medical necessity of the service and
          agrees with the DEPARTMENT's fee-for-service prior authorization or
          has made a different determination. (See Article IV, Benefits, Section
          F, Clarification of Payment Responsibilities, Subsection 5, for
          inpatient, home health services, and medical equipment explanations.)

     2.   DEPARTMENT MUST ACCEPT CONTRACTOR's PRIOR AUTHORIZATION

          For Covered Services other than inpatient, home health services, and
          medical equipment, if authorization has been given for a Covered
          Service and an Enrollee transitions to Medicaid fee-for-service prior
          to the delivery of such Covered Service, the DEPARTMENT shall be bound
          by the CONTRACTOR's prior authorization until the DEPARTMENT has
          evaluated the medical necessity of the service and agrees with the
          CONTRACTOR's fee-for-service prior authorization or has made a
          different determination. (See Article IV, Benefits, Section F,
          Clarification of Payment Responsibilities, Subsection 5, for
          inpatient, home health services, and medical equipment explanations.)

     3.   MUST PROVIDE MEDICAL RECORDS TO ENROLLEE's MCO OR TO THE DEPARTMENT

          When enrollees are transitioned from MCO to fee-for-service or from
          fee-for-service to MCO, the relinquishing entity (MCO or DEPARTMENT)
          will submit, upon request of the new entity, any critical medical
          information about the transitioning Medicaid client prior to the
          transition including, but not limited to, whether the member is
          hospitalized, pregnant, involved in the process of organ
          transplantation, scheduled for surgery or post-surgical follow-up on a
          date subsequent to transition, scheduled for prior-authorized
          procedures or therapies on a date subsequent to transition, receiving
          dialysis or is chronically ill (e.g. diabetic, hemophilic, HIV
          positive).

                              ARTICLE IV - BENEFITS

A.   IN GENERAL

     The CONTRACTOR will provide to Enrollees under this Contract, directly or
     through arrangements with subcontractors, all Medically Necessary Covered
     Services described in

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     Attachment C as promptly and continuously as is consistent with generally
     accepted standards of medical practice. The subcontractors will follow
     generally accepted standards of medical care in diagnosing Enrollees who
     request services from the CONTRACTOR.

B.   PROVIDER SERVICES FUNCTION

     The CONTRACTOR must operate a Provider Services function during regular
     business hours. At a minimum, Provider Services staff must be responsible
     for the following:

     1.   Training, including ongoing training, of the CONTRACTOR's providers on
          Medicaid rules and regulations that will enable providers to
          appropriately render services to Enrollees;
     2.   Assisting providers to verify whether an individual is enrolled with
          the MCO;
     3.   Assisting providers with prior authorization and referral protocols;
     4.   Assisting providers with claims payment procedures;
     5.   Fielding and responding to provider questions and complaints and
          grievances.

C.   SCOPE OF SERVICES

     1.   RESPONSIBLE FOR ALL BENEFITS IN ATTACHMENT C (COVERED SERVICES)

          Except as otherwise provided for cases of Emergency Services, the
          CONTRACTOR has the exclusive right and responsibility to arrange for
          all benefits listed in Attachment C. The CONTRACTOR is responsible for
          payment of Emergency Services 24 hours a day and 7 days a week whether
          the service was provided by a network or out-of-network provider and
          whether the service was provided in or out of the CONTRACTOR's Service
          Area.

     2.   CHANGES TO BENEFITS

          Amendments, revisions, or additions to the State Plan or to State or
          Federal regulations, guidelines, or policies and court or
          administrative orders will, insofar as they affect the scope or nature
          of benefits available to Enrollees, be amendments to the Covered
          Services under Attachment C. The DEPARTMENT will notify the
          CONTRACTOR, in writing, of any such changes and their effective date.
          Rate adjustments, when appropriate, will be negotiated between the
          DEPARTMENT and the CONTRACTOR.

     3.   MEDICAL NECESSITY DENIALS

          When the CONTRACTOR determines that a service will not be covered due
          to the lack of medical necessity, the CONTRACTOR must send all
          documentation supporting their decision to the DEPARTMENT for its
          review before the CONTRACTOR's determination is deemed final, when the
          following conditions are met:

          a.   there are no established national standards for determining
               medical necessity and
          b.   the DEPARTMENT does not have medical necessity criteria for the
               service.

          The  DEPARTMENT will review the documentation and determine what the

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          DEPARTMENT's decision would be regarding coverage for the service. The
          DEPARTMENT and the CONTRACTOR will work collaboratively in making a
          final decision on whether the service is to be covered by the
          CONTRACTOR.

D.   SUBCONTRACTS

     1.   NO DISCRIMINATION BASED ON LICENSE OR CERTIFICATION

          The CONTRACTOR shall not discriminate against providers with respect
          to participation, reimbursement, or indemnification as to any provider
          who is acting within the scope of that provider's license or
          certification under applicable State law solely on the basis of the
          provider's license or certification.

     2.   ANY COVERED SERVICE MAY BE SUBCONTRACTED.

          Any Covered Service may be subcontracted. All subcontracts will be in
          writing and will include the general requirements of this Contract
          that are appropriate to the service or activity including
          confidentiality requirements and will assure that all duties of the
          CONTRACTOR under this Contract are performed. No subcontract
          terminates the legal responsibility of the CONTRACTOR to the
          DEPARTMENT to assure that all activities under this Contract are
          carried out. The CONTRACTOR will make all subcontracts available upon
          request.

     3.   NO PROVISIONS TO REDUCE OR LIMIT MEDICALLY NECESSARY SERVICES

          The CONTRACTOR will ensure that subcontractors abide by the
          requirements of Section 1128(b) of the Social Security Act prohibiting
          the CONTRACTOR and other such providers from making payments directly
          or indirectly to a physician or other provider as an inducement to
          reduce or limit Medically Necessary services provided to Enrollees.

     4.   REQUIREMENT OF 60 DAYS WRITTEN NOTICE PRIOR TO TERMINATION OF CONTRACT

          All subcontracts and agreements will include a provision stating that
          if either party (the subcontractor or CONTRACTOR) wishes to terminate
          the subcontract or agreement, whichever party initiates the
          termination will give the other party written notice of termination at
          least 60 calendar days prior to the effective termination date. The
          CONTRACTOR will notify the DEPARTMENT of the termination on the same
          day that the CONTRACTOR either initiates termination or receives the
          notice of termination from the subcontractor.

     5.   COMPLIANCE WITH CONTRACTOR's QUALITY ASSURANCE PLAN

          All of the CONTRACTOR's providers must be aware of the CONTRACTOR's
          Quality Assurance Plan and activities. All subcontracts with the
          CONTRACTOR must include a requirement securing cooperation with the
          CONTRACTOR's Quality Assurance Plan and activities and must allow the
          CONTRACTOR access to the subcontractor's medical records of its
          Enrollees.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     6.   UNIQUE IDENTIFIER REQUIRED

          All physicians who provide services under this Contract must have a
          unique identifier in accordance with the system established under
          section 1173(b) of the Social Security Act and in accordance with the
          Health Insurance Portability and Accountability Act.

     7.   PAYMENT OF PROVIDER CLAIMS

          The CONTRACTOR must pay its providers on a timely basis consistent
          with the claims payment procedures described in section 1902(a)(37)(A)
          of the Social Security Act and the implementing Federal regulation at
          42 CFR 447.45, unless the provider and CONTRACTOR agree to an
          alternate payment schedule. The Contractor must ensure that 90 percent
          of claims for payment (for which no further written information or
          substantiation is required in order to make payment) made for Covered
          Services and furnished by its providers are paid within 30 days of
          receipt of such claims and that 99 percent of such claims are paid
          within 90 days of the date of receipt of such claims.

     8.   FEDERALLY QUALIFIED HEALTH CENTERS (FQHCs)

          If the CONTRACTOR enters into a subcontract with a Federally Qualified
          Health Center (FQHC), the CONTRACTOR will reimburse the FQHC an amount
          not less than what the CONTRACTOR pays comparable providers that are
          not FQHCs.

E.   CLARIFICATION OF COVERED SERVICES

     1.   EMERGENCY SERVICES

          a.   IN GENERAL

               The CONTRACTOR must provide coverage for Emergency Services
               without regard to prior authorizations or the emergency care
               provider's contractual relationship with the CONTRACTOR. The
               CONTRACTOR must inform their Enrollees that access to Emergency
               Services is not restricted and that if an Enrollee experiences a
               medical emergency, he or she may obtain services from a non-plan
               physician or other qualified provider, without penalty. However,
               the CONTRACTOR may require the Enrollee to notify the CONTRACTOR
               within a specified time after the Enrollee's condition is
               stabilized, and may require the Enrollee to obtain prior
               authorization for any follow-up care delivered pursuant to the
               emergency. The CONTRACTOR must comply with Medicare guidelines
               for post-stabilization of care.

               The CONTRACTOR must pay for services where the presenting
               symptoms are of sufficient severity that a person with average
               knowledge of health and medicine would reasonably expect the
               absence of immediate medical attention to result in placing the
               health of the individual (or, with respect to a pregnant woman,
               the health of a woman or her unborn child) in serious jeopardy;
               serious impairment to bodily functions; or serious dysfunction of
               any bodily organ or part.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

               The CONTRACTOR may not retroactively deny a claim for an
               emergency screening examination because the condition, which
               appeared to be an emergency medical condition under the prudent
               layperson standard, turned out to be non-emergency in nature.

          b.   DETERMINING LIABILITY FOR EMERGENCY SERVICES

               1)   Presence of a clinical emergency

                    If the screening examination leads to a clinical
                    determination by the examining physician that an actual
                    emergency medical condition exists, the CONTRACTOR must pay
                    for both the services involved in the screening examination
                    and the services required to stabilize the Enrollee.

               2)   Emergency services continue until the Enrollee can be safely
                    discharged or transferred

                    The CONTRACTOR must pay for all Emergency Services that are
                    Medically Necessary until the clinical emergency is
                    stabilized. This includes all treatment that may be
                    necessary to assure, within reasonable medical probability,
                    that no material deterioration of the Enrollee's condition
                    is likely to result from, or occur during, discharge of the
                    Enrollee or transfer of the Enrollee to another facility. If
                    there is a disagreement between a hospital and the
                    CONTRACTOR concerning whether the Enrollee is stable enough
                    for discharge or transfer, or whether the medical benefits
                    of an unstabilized transfer outweigh the risks, the
                    judgement of the attending physician(s) actually caring for
                    the Enrollee at the treating facility prevails and is
                    binding on the CONTRACTOR. The CONTRACTOR may establish
                    arrangements with hospitals whereby the CONTRACTOR may send
                    one of its own physicians with appropriate ER privileges to
                    assume the attending physician's responsibilities to
                    stabilize, treat, and transfer the Enrollee.

               3)   Absence of a clinical emergency

                    If the screening examination leads to a clinical
                    determination by the examining physician that an actual
                    emergency medical condition did not exist, then the
                    determining factor for payment liability should be whether
                    the Enrollee had acute symptoms of sufficient severity at
                    the time of presentation. In these cases, the CONTRACTOR
                    must review the presenting symptoms of the Enrollee and must
                    pay for all services involved in the screening examination
                    where the presenting symptoms (including severe pain) were
                    of sufficient severity to have warranted emergency attention
                    under the prudent layperson standard.

               4)   Referrals

                    When an Enrollee's Primary Care Physician or other plan
                    representative instructs the Enrollee to seek emergency care
                    in or out of network, the

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

                    CONTRACTOR is responsible for payment of the medical
                    screening examination and for other Medically Necessary
                    Emergency Services, without regard to whether the Enrollee
                    meets the prudent layperson standard.

     2.   CARE PROVIDED IN SKILLED NURSING FACILITIES

          a.   IN GENERAL: STAYS LASTING 30 DAYS OR LESS

               The CONTRACTOR may provide long term care for Enrollees in
               skilled nursing facilities and then reimburse such facilities
               when the plan of care includes a prognosis of recovery and
               discharge within 30 days. It is the responsibility of a
               CONTRACTOR physician to make the determination if the patient
               will require the services of a nursing facility for fewer or
               greater than 30 days.

          b.   PROCESS FOR STAYS LONGER THAN 30 DAYS

               When the prognosis of an Enrollee indicates that long term care
               greater than 30 days will be required, the following process will
               occur:

               1)   The CONTRACTOR will notify the Enrollee, hospital discharge
                    planner, and nursing facility that the CONTRACTOR will not
                    be responsible for the services provided for the Enrollee
                    during the stay at the skilled nursing facility.

               2)   The CONTRACTOR will notify the DHCF, Bureau of Managed
                    Health Care (BMHC) of this determination and the BMHC will
                    change the status of the Enrollee to fee-for-service.

          c.   PROCESS FOR STAYS LESS THAN 30 DAYS

               When the prognosis of skilled nursing facility services is
               anticipated to be less than 30 days, but during the 30-day period
               the CONTRACTOR determines that the Enrollee will require skilled
               nursing facility services for greater than 30 days, the following
               process will be in effect:

               1)   The CONTRACTOR will notify the nursing facility that a
                    determination has been made that the Enrollee will require
                    services for more than 30 days.

               2)   The CONTRACTOR will notify the DHCF, Bureau of Managed
                    Health Care, of the determination that the Enrollee will
                    require services in a nursing facility for more than 30
                    days.

               3)   The CONTRACTOR will be responsible for payment for three
                    working days after the CONTRACTOR has notified the nursing
                    facility that skilled nursing care will be required for more
                    than 30 days.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     3.   ENROLLEES WITH SPECIAL HEALTH CARE NEEDS

          a.   IN GENERAL

               The CONTRACTOR will ensure there is access to all Medically
               Necessary Covered Services to meet the health needs of Enrollees
               with special health care needs. Individuals with special health
               care needs are those who have or are at increased risk for
               chronic physical, developmental, behavioral, or emotional
               conditions and who also require health and related services of a
               type or amount beyond that required by adults and children
               generally.

          b.   IDENTIFICATION

               The CONTRACTOR will identify Enrollees with special health care
               needs using a process at the initial contact made by the
               CONTRACTOR Representative to educate the client and will offer
               the client care coordination or case management services. Care
               coordination services are services to assist the client in
               obtaining Medically Necessary Covered Services from the
               CONTRACTOR or another entity if the medical service is not
               covered under the Contract.

          c.   CHOOSING A PRIMARY CARE PROVIDER

               The CONTRACTOR will have a mechanism to inform care givers and,
               when appropriate, Enrollees with special health care needs about
               primary care providers who have training in caring for such
               Enrollees so that an informed selection of a provider can be
               made. The CONTRACTOR will have primary care providers with skills
               and experience to meet the needs of Enrollees with special health
               care needs. The CONTRACTOR will allow an appropriate specialist
               to be the primary care provider but only if the specialist has
               the skills to monitor the Enrollee's preventive and primary care
               services.

          d.   REFERRALS AND ACCESS TO SPECIALTY PROVIDERS

               The CONTRACTOR will ensure there is access to appropriate
               specialty providers to provide Medically Necessary Covered
               Services for adults and children with special health care needs.
               If the CONTRACTOR does not employ or contract with a specialty
               provider to treat a special health care condition at the time the
               Enrollee needs such Covered Services, the CONTRACTOR will have a
               process to allow the Enrollee to receive Covered Services from a
               qualified specialist who may not be affiliated with the
               CONTRACTOR. The CONTRACTOR will reimburse the specialist for such
               care at no less than Medicaid's rate for the service when the
               service is rendered. The process for requesting specialist's care
               will be clearly described by the CONTRACTOR and explained to each
               Enrollee during the initial contact with the Enrollee.

               If the CONTRACTOR restricts the number of referrals to
               specialists, the CONTRACTOR will not penalize those providers who
               make such referrals for Enrollees with special health care needs.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          e.   SURVEY OF ENROLLEES WITH SPECIAL HEALTH CARE NEEDS

               At least every two years, the CONTRACTOR in conjunction with the
               DEPARTMENT will survey a sample of Enrollees with special health
               care needs using a national consumer assessment questionnaire, to
               evaluate their perceptions of services they have received. The
               survey process, including the survey instrument, will be
               standardized and developed collaboratively between the DEPARTMENT
               and all contracting MCOs. The DEPARTMENT will analyze the results
               of the surveys. The results and analysis of the surveys will be
               reviewed by the CONTRACTOR's quality assurance committee for
               action.

          f.   COLLABORATION WITH OTHER PROGRAMS

               If the individual with special health care needs is enrolled in
               the Prepaid Mental Health Plan or is enrolled in any of the
               Medicaid home and community-based waiver programs and is
               receiving case management services through that program, or is
               covered by one of the other Medicaid targeted case management
               programs, the CONTRACTOR care coordinator will collaborate with
               the appropriate program person, i.e., the targeted case manager,
               etc., for that program once the program person has contacted the
               CONTRACTOR care coordinator. When necessary, the CONTRACTOR care
               coordinator will make an effort to contact the program person of
               those Enrollees who have medical needs that require such
               coordination.

               The CONTRACTOR must coordinate health care needs for children
               with special health care needs with the services of other
               agencies (e.g., mental and substance abuse, public health
               departments, transportation, home and community based care,
               developmental disabilities, Title V, local schools, IDA programs,
               and child welfare), and with families, caregivers, and advocates.

          g.   REQUIRED ELEMENTS OF A CASE MANAGEMENT SYSTEM

               A case management system includes but is not limited to:

               1)   procedures and the capacity to implement the provision of
                    individual needs assessment including the screening for
                    special needs (e.g. mental health, high risk health
                    problems, functional problems, language or comprehension
                    barriers); the development of an individual treatment plan
                    as necessary based on the needs assessment; the
                    establishment of treatment objectives, treatment follow-up,
                    the monitoring of outcomes, and a process to ensure that
                    treatment plans are revised as necessary. These procedures
                    will be designed to accommodate the specific cultural and
                    linguistic needs of the Enrollee;

               2)   procedures designed to address those Enrollees, including
                    children with special health care needs, who may require
                    services from multiple providers, facilities and agencies
                    and require complex coordination of benefits and services,
                    including social services and other community resources;

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

               3)   a strategy to ensure that all Enrollees and/or authorized
                    Family Members or guardians are involved in treatment
                    planning and consent to the medical treatment;

               4)   procedures and criteria for making referrals and
                    coordinating care by specialists and sub-specialists that
                    will promote continuity as well as cost-effectiveness of
                    care; and

               5)   procedures to provide continuity of care for new Enrollees
                    to prevent disruption in the provision of Covered Services
                    that include, but are not limited to, appropriate case
                    management staff able to evaluate and handle individual case
                    transition and care planning, internal mechanisms to
                    evaluate plan networks and special case needs.

          h.   HOSPICE

               If an Enrollee is receiving hospice services at the time of
               enrollment in the MCO or if the Enrollee is already enrolled in
               the MCO and has less than six months to live, the Enrollee will
               be offered hospice services or the continuation of hospice
               services if he or she is already receiving such services prior to
               enrollment in the MCO.

     4.   INPATIENT HOSPITAL SERVICES

          If a CONTRACTOR's provider admits an Enrollee for inpatient hospital
          care, the CONTRACTOR has the responsibility for all services needed by
          the Enrollee during the hospital stay that are ordered by the
          CONTRACTOR's provider. Needed services include but are not limited to
          diagnostic tests, pharmacy, and physician services, including services
          provided by psychiatrists. If diagnostic tests conducted during the
          inpatient stay reveal that the Enrollee's condition is outside the
          scope of the CONTRACTOR's responsibility, the CONTRACTOR remains
          responsible for the Enrollee until the Enrollee is discharged or until
          responsibility is transferred to another appropriate entity and the
          entity agrees to take financial responsibility, including negotiating
          a payment for services. If the Enrollee is discharged and needs
          further services, the admitting CONTRACTOR will coordinate with the
          other appropriate entity to ensure continued care is provided. The
          CONTRACTOR and appropriate entity will work cooperatively in the best
          interest of the Enrollee. The appropriate entity includes, but is not
          limited to, a Prepaid Mental Health Plan or another MCO.

     5.   MATERNITY STAYS

          a.   THE NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT (NMHPA)

               The CONTRACTOR must meet the requirements of the Newborns' and
               Mothers' Health Protection Act (NMHPA). The CONTRACTOR must
               record early discharge information for monitoring, quality, and
               improvement purposes. The CONTRACTOR will ensure that coverage is
               provided with respect to a mother who is an Enrollee and her
               newborn child for a minimum of 48 hours of inpatient care
               following a normal vaginal delivery, and a minimum of 96 hours

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                                  Page 20 of 54

<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

               of inpatient care following a caesarean section, without
               requiring the attending provider to obtain authorization from the
               CONTRACTOR in order to keep a mother and her newborn child in the
               inpatient setting for such period of time.

          b.   EARLY DISCHARGES

               Notwithstanding the prior sentence, the CONTRACTOR will not be
               required to provide coverage for post-delivery inpatient care for
               a mother who is an Enrollee and her newborn child during such
               period of time if (1) a decision to discharge the mother and her
               newborn child prior to the expiration of such period is made by
               the attending provider in consultation with the mother; and (2)
               the CONTRACTOR provides coverage for timely post-delivery
               follow-up care.

          c.   POST-DELIVERY CARE

               Post-delivery care will be provided to a mother and her newborn
               child by a registered nurse, physician, nurse practitioner, nurse
               midwife or physician assistant experienced in maternal and child
               health in (1) the home, a provider's office, a hospital, a
               federally qualified health center, a federally qualified rural
               health clinic, or a State health department maternity clinic; or
               (2) another setting determined appropriate under regulations
               promulgated by the Secretary of Health and Human Services,
               (including a birthing center or an intermediate care facility);
               except that such coverage will ensure that the mother has the
               option to be provided with such care in the home.

          d.   TIMELY POST-DELIVERY CARE

               "Timely post-delivery care" means health care that is provided
               (1) following the discharge of a mother and her newborn child
               from the inpatient setting; and (2) in a manner that meets the
               health needs of the mother and her newborn child, that provides
               for the appropriate monitoring of the conditions of the mother
               and child, and that occurs within the 24 to 72 hour period
               immediately following discharge.

     6.   CHILDREN IN CUSTODY OF THE DEPARTMENT OF HUMAN SERVICES

          a.   IN GENERAL

               The CONTRACTOR will work with the Division of Child and Family
               Services (DCFS) or the Division of Youth Corrections (DYC) in the
               Department of Human Services (DHS) to ensure systems are in place
               to meet the health needs of children in custody of the Department
               of Human Services. The CONTRACTOR will ensure these children
               receive timely access to appointments through coordination with
               DCFS or DYC. The CONTRACTOR must have available providers who
               have experience and training in abuse and neglect issues.

               The CONTRACTOR or its providers will make every reasonable effort
               to ensure that a child who is in custody of the Department of
               Human Services may

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

               continue to use the provider with whom the child has an
               established professional relationship when the provider is part
               of the CONTRACTOR's network. The CONTRACTOR will facilitate
               timely appointments with the provider of record to ensure
               continuity of care for the child.

               While it is the CONTRACTOR's responsibility to ensure Enrollees
               who are children in the custody of DHS have access to needed
               services, DHS personnel are primarily responsible to assist
               children in custody in arranging for and getting to medical
               appointments and evaluations with the CONTRACTOR's network of
               providers. DHS staff are primarily responsible for contacting the
               CONTRACTOR to coordinate care for children in custody and
               informing the CONTRACTOR of the special health care needs of
               these Enrollees. The Fostering Healthy Children staff may assist
               the DHS staff in performing these functions by communicating with
               the CONTRACTOR.

          b.   SCHEDULE OF VISITS

               1)   Where physical and/or sexual abuse is suspected

                    In cases where the child protection worker suspects physical
                    and/or sexual abuse, the CONTRACTOR will ensure that the
                    child has access to an appropriate examination within 24
                    hours of notification that the child was removed from the
                    home. If the CONTRACTOR cannot provide an appropriate
                    examination, the CONTRACTOR will ensure the child has access
                    to a provider who can provide an appropriate examination
                    within the 24 hour period.

               2)   All other cases

                    In all other cases, the CONTRACTOR will ensure that the
                    child has access to an initial health screening within five
                    calendar days of notification that the child was removed
                    from the home. The CONTRACTOR will ensure this exam
                    identifies any health problems that might determine the
                    selection of a suitable placement, or require immediate
                    attention.

               3)   CHEC exams

                    In all cases, the CONTRACTOR will ensure that the child has
                    access to a Child Health Evaluation and Care (CHEC)
                    screening within 30 calendar days of notification that the
                    child was removed from the home. Whenever possible, the CHEC
                    screening should be completed within the five-day time
                    frame. Additionally, the CONTRACTOR will ensure the child
                    has access to a CHEC screening according to the CHEC
                    periodicity schedule until age six, then annually
                    thereafter.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     7.   ORGAN TRANSPLANTATIONS

          a.   IN GENERAL

               All organ transplantation services are the responsibility of the
               CONTRACTOR for all Enrollees in accordance with the criteria set
               forth in Rule R414-10A of the Utah Administrative Code, unless
               amended under the provisions of Attachment B, Article IV
               (Benefits), Section C, Subsection 3 of this Contract. The
               DEPARTMENT's criteria will be provided to the CONTRACTOR.

          b.   SPECIFIC ORGAN TRANSPLANTATIONS COVERED

               The following transplantations are covered for Enrollees under
               the Traditional Medicaid Plan as described in Rule R414-10A:
               Kidney, liver, cornea, bone marrow, stem cell, heart, intestine,
               lung, pancreas, small bowel, combination heart/lung, combination
               intestine/liver, combination kidney/pancreas, combination
               liver/kidney, multi visceral, and combination liver/small bowel.
               Transplantations for Enrollees under the Non-Traditional Medicaid
               Plan are limited to kidney, liver, cornea, bone marrow, stem
               cell, heart, and lung.

          c.   PSYCHOSOCIAL EVALUATION REQUIRED

               Enrollees who have applied for organ transplantations, except
               cornea or kidney, must undergo a comprehensive psycho-social
               evaluation by a board-certified or board-eligible psychiatrist.
               The evaluation must include a comprehensive history regarding
               substance abuse and compliance with medical treatment. In
               addition, the parent(s) or guardian(s) of Enrollees who are less
               than 18 years of age must undergo a psycho-social evaluation that
               includes a comprehensive history regarding substance abuse, and
               past and present compliance with medical treatment.

               If a request is made for a transplantation not listed above, the
               CONTRACTOR will contact the DEPARTMENT. Such requests will be
               addressed as set forth in R414-10A-23.

          d.   OUT-OF-STATE TRANSPLANTATIONS

               When the CONTRACTOR arranges the transplantation to be performed
               out-of-state, the CONTRACTOR is responsible for coverage of food,
               lodging, transportation and airfare expenses for the Enrollee and
               attendant. The CONTRACTOR will follow, at a minimum, the
               DEPARTMENT's criteria for coverage of food, lodging,
               transportation and airfare expenses.

     8.   MENTAL HEALTH SERVICES

          When an Enrollee presents with a possible mental health condition to
          his or her CONTRACTOR primary care physician, it is the responsibility
          of the primary care provider to determine whether the Enrollee should
          be referred to a psychologist, pediatric specialist, psychiatrist,
          neurologist, or other specialist. Mental health

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          conditions may be handled by the CONTRACTOR primary care provider and
          referred to the Enrollee's Prepaid Mental Health Plan when more
          specialized services are required for the Enrollee. CONTRACTOR primary
          care providers may seek consultation from the Prepaid Mental Health
          Plan when the primary care provider chooses to manage the Enrollee's
          symptoms.

          An independent panel comprised of specialists appropriate to the
          concern will be established by the DEPARTMENT with representatives
          from the CONTRACTOR and Prepaid Mental Health Plan to adjudicate
          disputes regarding which entity (the CONTRACTOR or Prepaid Mental
          Health Plan) is responsible for payment and/or treatment of a
          condition. The panel will be convened on a case-by-case basis. The
          CONTRACTOR and Prepaid Mental Health Plan will adhere to the final
          decision of the panel.

     9.   DEVELOPMENTAL AND ORGANIC DISORDERS

          a.   COVERED SERVICES FOR CHILD ENROLLEES THROUGH AGE 20

               1)   The CONTRACTOR is responsible for all inpatient and
                    physician outpatient Covered Services for child Enrollees
                    with developmental (ICD-9 codes 299 through 299.8 and 317
                    through 319.9) or organic diagnoses (ICD-9 codes 290 through
                    294.9 and 310 through 310.9) including, but not limited to,
                    diagnostic work-ups and other medical care such as
                    medication management services related to the developmental
                    or organic disorder.

               2)   The CONTRACTOR is responsible for all psychological
                    evaluations and testing including neuropsychological
                    evaluations and testing for child Enrollees with
                    developmental or organic disorders such as brain tumors,
                    brain injuries, and seizure disorders.

          b.   COVERED SERVICES FOR ADULT ENROLLEES AGE 21 AND OLDER

               The CONTRACTOR is responsible for all inpatient and physician
               outpatient Covered Services for adult Enrollees with
               developmental (ICD-9 codes 299 through 299.8 and 317 through
               319.9) and organic diagnoses (ICD-9 codes 290 through 294.9 and
               310 through 310.9) including diagnostic work-ups and other
               medical care such as medication management services related to
               the developmental or organic disorder.

          c.   NON-COVERED SERVICES

               1)   Psychological evaluations and testing including
                    neuropsychological evaluations and testing for adult
                    Enrollees is not the responsibility of the CONTRACTOR.

               2)   Habilitative and behavioral management services are not the
                    responsibility of the CONTRACTOR. If habilitative services
                    are required, the Enrollee should be referred to the
                    Division of Services for

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

                    People with Disabilities (DSPD), the school system, the
                    Early Intervention Program, or similar support program or
                    agency. The Enrollee should also be referred to DSPD for
                    consideration of other benefits and programs that may be
                    available through DSPD. Habilitative services are defined in
                    Section 1915(c)(5)(a) of the Social Security Act as
                    "services designed to assist individuals in acquiring,
                    retaining and improving the self-help, socialization and
                    adaptive skills necessary to reside successfully in home and
                    community based settings."

          d.   RESPONSIBILITY OF THE PREPAID MENTAL HEALTH PLAN

               The Prepaid Mental Health Plan is responsible for the treatment
               of the mental illness to individuals with both an organic and a
               psychiatric diagnosis or with both a developmental and a
               psychiatric diagnosis.

     10.  OUT-OF-STATE ACCESSORY SERVICES

          When the CONTRACTOR arranges a Covered Service to be performed
          out-of-state, the CONTRACTOR is responsible for coverage of airfare,
          food and lodging for the Enrollee and one attendant during the stay at
          the out-of-state facility. Ground transportation costs only from the
          airport to the hotel or hospital and back to the airport, one time
          only are also the responsibility of the CONTRACTOR. The CONTRACTOR
          will follow, at a minimum, the DEPARTMENT's criteria for coverage of
          food, lodging, transportation, and airfare expenses.

     11.  NON-CONTRACTOR PRIOR AUTHORIZATIONS

          a.   PRIOR AUTHORIZATIONS - GENERAL

               The CONTRACTOR shall honor prior authorizations for organ
               transplantations and any other ongoing services initiated by the
               DEPARTMENT while the Enrollee was covered under Medicaid
               fee-for-service until the Enrollee is evaluated by the CONTRACTOR
               and a new plan of care is established.

          b.   WHEN THE CONTRACTOR HAS NOT AUTHORIZED THE SERVICE AND THE
               PROVIDER IS NOT A PARTICIPATING PROVIDER

               For services that require a prior authorization, the CONTRACTOR
               will pay the provider of the service at the Medicaid rate, if all
               of the following conditions are met:

               1)   the servicing provider is not a participating provider under
                    contract with the CONTRACTOR; and

               2)   the DEPARTMENT issued a prior authorization for an Enrollee
                    to the servicing provider; and

               3)   the servicing provider has completed the CONTRACTOR's
                    appeals process without resolution of the claim, and has
                    requested a hearing with

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

                    the State Formal Hearings Unit requesting payment for the
                    services rendered; and

               4)   in the hearing process it is determined that the service
                    rendered was a Medically Necessary service covered under
                    this Contract, and that the CONTRACTOR will be responsible
                    for payment of the claim.

F.   CLARIFICATION OF PAYMENT RESPONSIBILITIES

     1.   COVERED SERVICES RECEIVED OUTSIDE CONTRACTOR's NETWORK BUT PAID BY
          CONTRACTOR

          The CONTRACTOR will not be required to pay for Covered Services,
          defined in Attachment C, which the Enrollee receives from sources
          outside The CONTRACTOR's network, not arranged for and not authorized
          by the CONTRACTOR except as follows:

          a.   Emergency Services;
          b.   Court ordered services that are Covered Services defined in
               Attachment C and which have been coordinated with the CONTRACTOR;
               or
          c.   Cases where the Enrollee demonstrates that such services are
               Medically Necessary Covered Services and were unavailable from
               the CONTRACTOR.

     2.   PAYMENT TO NON-NETWORK PROVIDERS AND TO PROVIDERS OUT OF THE SERVICE
          AREA

          Payment by the CONTRACTOR to an out-of-network provider for emergency
          services and/or to a provider out of the Service Area for services
          that are approved for payment by the CONTRACTOR shall not exceed the
          lower of the following rates applicable at the time the services were
          rendered to an Enrollee, unless there is a negotiated arrangement:

          a.   The usual charges made to the general public by the provider;
          b.   The rate equal to the applicable Medicaid fee-for-service rate;
               or
          c.   The rate agreed to by the CONTRACTOR and the provider.

     3.   WHEN COVERED SERVICES ARE NOT THE CONTRACTOR's RESPONSIBILITY

          a.   The CONTRACTOR is not responsible for payment when family
               planning services are obtained by an Enrollee from sources other
               than the CONTRACTOR.

          b.   The CONTRACTOR will not be required to provide, arrange for, or
               pay for Covered Services to Enrollees whose illness or injury
               results directly from a catastrophic occurrence or disaster,
               including, but not limited to, earthquakes or acts of war. The
               effective date of excluding such Covered Services will be the
               date specified by the Federal Government or the State of Utah
               that a Federal or State emergency exists or disaster has
               occurred.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     4.   THE DEPARTMENT's RESPONSIBILITY

          Except as described in Attachment F (Rates and Rate-Related Terms) of
          this Contract, the DEPARTMENT will not be required to pay for any
          Covered Services under Attachment C which the Enrollee received from
          any sources outside the CONTRACTOR except for family planning
          services.

     5.   COVERED SERVICES PROVIDED BY THE DEPARTMENT OF HEALTH, DIVISION OF
          COMMUNITY AND FAMILY HEALTH SERVICES

          For Enrollees who qualify for special services offered by or through
          the Department of Health, Division of Community and Family Health
          Services (DCFHS), the CONTRACTOR agrees to reimburse DCFHS at the
          standard Medicaid rate in effect at the time of service for one
          outpatient team evaluation and one follow-up visit for each Enrollee
          upon each instance that the Enrollee both becomes Medicaid eligible
          and selects the CONTRACTOR as its provider. The CONTRACTOR agrees to
          waive any prior authorization requirement for one outpatient team
          evaluation and one follow-up visit. The services provided in the
          outpatient team evaluation and follow-up visit for which the
          CONTRACTOR will reimburse DCFHS are limited to the services that the
          CONTRACTOR is otherwise obligated to provide under this Contract.

          If the CONTRACTOR desires a more detailed agreement for additional
          services to be provided by or through DCFHS for children with special
          health care needs, the CONTRACTOR may subcontract with DCFHS. The
          CONTRACTOR agrees that the subcontract with DCFHS will acknowledge and
          address the specific needs of DCFHS as a government provider.

     6.   ENROLLEE TRANSITION BETWEEN MCOs, OR BETWEEN FEE-FOR-SERVICE AND
          CONTRACTOR

          a.   INPATIENT HOSPITAL

               When an Enrollee is in an inpatient hospital setting and selects
               another MCO or becomes fee-for-service anytime prior to discharge
               from the hospital, the CONTRACTOR is financially responsible for
               the entire hospital stay including all services related to the
               hospital stay, i.e. physician, etc. The MCO in which the
               individual is enrolled when discharged from the hospital is
               financially responsible for services provided during the
               remainder of the month when the individual was discharged. If
               such individual is fee-for-service when discharged from the
               hospital, the DEPARTMENT is financially responsible for the
               remainder of the month when the individual was discharged. If a
               Medicaid eligible is fee-for-service when admitted to the
               hospital and selects an MCO anytime prior to discharge from the
               hospital, the DEPARTMENT is financially responsible for the
               entire hospital stay including all services related to the
               hospital stay, i.e. physician, etc. The MCO in which the
               individual is enrolled when discharged from the hospital is
               financially responsible for services provided during the
               remainder of the month when the individual was discharged. When
               an Enrollee is in an inpatient hospital setting at the time the
               CONTRACTOR terminates this Contract and the Enrollee selects
               another MCO

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

               anytime prior to discharge from the hospital, the receiving MCO
               is financially responsible for the hospital stay beginning 30
               days after termination of the Contract.

          b.   HOME HEALTH SERVICES

               Medicaid clients who are under fee-for-service or are enrolled in
               an MCO other than this MCO and are receiving home health services
               from an agency not contracting with the CONTRACTOR will be
               transitioned to the CONTRACTOR's home health agency. The
               CONTRACTOR is responsible for payment, not to exceed Medicaid
               payment, for a period not to exceed seven calendar days, unless
               the CONTRACTOR and the home health agency agree to another time
               period in writing, after the CONTRACTOR notifies the
               non-participating home health agency of the change in status or
               the non-participating home health agency notifies the CONTRACTOR
               that services are being provided by its agency. The CONTRACTOR
               will assess the needs of the Enrollee at the time the CONTRACTOR
               provides the orientation to the Enrollee.

               The CONTRACTOR will include the Enrollee in developing the plan
               of care to be provided by the CONTRACTOR's home health agency
               before the transition is complete. The CONTRACTOR will address
               Enrollee's concerns regarding Covered Services provided by the
               CONTRACTOR's home health agency before the new plan of care is
               implemented.

          c.   MEDICAL EQUIPMENT

               When medical equipment is ordered for an Enrollee by the
               CONTRACTOR and the Enrollee enrolls in a different MCO or becomes
               fee-for-service before receiving the equipment, the CONTRACTOR is
               responsible for payment of such equipment. When medical equipment
               is ordered for a Medicaid eligible by the DEPARTMENT and the
               Enrollee selects an MCO, the DEPARTMENT is responsible for
               payment of such equipment. Medical equipment includes, but is not
               limited to, specialized wheelchairs or attachments, prostheses,
               and other equipment designed or modified for an individual
               client. Any attachments to the equipment, replacements, or new
               equipment is the responsibility of the MCO in which the client is
               enrolled at the time such equipment is ordered.

     7.   SURVEYS

          All surveys required under this Contract will be funded by the
          CONTRACTOR unless funded by another source such as the Utah Department
          of Health, Office of Health Care Statistics. The surveys must be
          conducted by an independent vendor mutually agreed upon by the
          DEPARTMENT and CONTRACTOR. The DEPARTMENT or designee will analyze the
          results of the surveys. Before publishing articles, data, reports,
          etc. related to surveys the DEPARTMENT will provide drafts of such
          material to the CONTRACTOR for review and feedback. The CONTRACTOR
          will not be responsible for the costs incurred for such publishing by
          the DEPARTMENT.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

                      ARTICLE V - ENROLLEE RIGHTS/SERVICES

A.   MEMBER SERVICES FUNCTION

     The CONTRACTOR must operate a Member Services function during regular
     business hours. Ongoing training, as necessary, shall be provided by the
     CONTRACTOR to ensure that the Member Services staff is conversant in the
     CONTRACTOR's policies and procedures as they relate to Enrollees. At a
     minimum, Member Services staff must be responsible for the following:

     1.   Explaining the CONTRACTOR's rules for obtaining services;

     2.   Assisting Enrollees to select or change primary care providers;

     3.   Fielding and responding to Enrollee questions and complaints and
          grievances.

     The CONTRACTOR shall conduct ongoing assessment of its orientation staff to
     determine staff member's understanding of the MCO and its Medicaid managed
     care policies and provide training, as needed.

B.   ENROLLEE LIABILITY

     1.   The CONTRACTOR will not hold an Enrollee liable for the following:

          a.   The debts of the CONTRACTOR if it should become insolvent.

          b.   Payment for services provided by the CONTRACTOR if the CONTRACTOR
               has not received payment from the DEPARTMENT for the services, or
               if the provider, under contract with the CONTRACTOR, fails to
               receive payment from the CONTRACTOR.

          c.   The payments to providers that furnish Covered Services under a
               contract or other arrangement with the CONTRACTOR that are in
               excess of the amount that normally would be paid by the Enrollee
               if the service had been received directly from the CONTRACTOR.

C.   GENERAL INFORMATION TO BE PROVIDED TO ENROLLEES

     The CONTRACTOR will make the following information available to Enrollees
     and potential Enrollees on request:

     1.   The identity, locations, qualification, and availability of
          participating providers (at a minimum, area of specialty, board
          certification, and any special areas of expertise must be available
          that would be helpful to individuals deciding whether to enroll with
          the CONTRACTOR);

     2.   The rights and responsibilities of Enrollees;

     3.   The procedures available to Enrollees and providers to challenge or
          appeal the failure of

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          the CONTRACTOR to cover a services; and

     4.   All items and services that are available to Enrollees that are
          covered either directly or through a method of referral or prior
          authorization.

D.   ACCESS

     1.   IN GENERAL

          The CONTRACTOR shall provide the DEPARTMENT and the Department of
          Health and Human Services, Centers for Medicare and Medicaid, adequate
          assurances that the CONTRACTOR, with respect to a service area, has
          the capacity to serve the expected enrollment in such service area,
          including assurances that the CONTRACTOR offers an appropriate range
          of services and access to preventive and primary care services for the
          population expected to enroll in such service area, and maintains a
          sufficient number, mix and geographic distribution of providers of
          services.

          The CONTRACTOR will provide services which are accessible to Enrollees
          and appropriate in terms of timeliness, amount, duration, and scope.

     2.   SPECIFIC PROVISIONS

          a.   ELIMINATION OF ACCESS PROBLEMS CAUSED BY GEOGRAPHIC, CULTURAL AND
               LANGUAGE BARRIERS AND PHYSICAL DISABILITIES

               The CONTRACTOR will minimize, with a goal to eliminate,
               Enrollee's access problems due to geographic, cultural and
               language barriers, and physical disabilities. The CONTRACTOR will
               provide assistance to Enrollees who have communication
               impediments or impairments to facilitate proper diagnosis and
               treatment. The CONTRACTOR must guarantee equal access to services
               and benefits for all Enrollees by making available interpreters,
               Telecommunication Devices for the Deaf (TDD), and other auxiliary
               aids to all Enrollees as needed. The CONTRACTOR will accommodate
               Enrollees with physical and other disabilities in accordance with
               the American Disabilities Act of 1990 (ADA), as amended. If the
               CONTRACTOR's facilities are not accessible to Enrollees with
               physical disabilities, the CONTRACTOR will provide services in
               other accessible locations.

          b.   INTERPRETIVE SERVICES

               The CONTRACTOR will provide interpretive services for languages
               on an as needed basis. These requirements will extend to both
               in-person and telephone communications to ensure that Enrollees
               are able to communicate with the CONTRACTOR and CONTRACTOR's
               providers and receive Covered Services. Professional interpreters
               will be used when needed where technical, medical, or treatment
               information is to be discussed, or where use of a Family Member
               or friend as interpreter is inappropriate. A family member or
               friend may be used as an interpreter if this method is requested
               by the patient, and the use of such a

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

               person would not compromise the effectiveness of services or
               violate the patient's confidentiality, and the patient is advised
               that a free interpreter is available.

          c.   CULTURAL COMPETENCE REQUIREMENTS

               The CONTRACTOR shall incorporate in its policies, administration,
               and delivery of services the values of honoring Enrollee's
               beliefs; being sensitive to cultural diversity; and promoting
               attitudes and interpersonal communication styles with staff and
               providers which respect Enrollees' cultural backgrounds. The
               CONTRACTOR must foster cultural competency among its providers.
               Culturally competent care is care given by a provider who can
               communicate with the Enrollee and provide care with sensitivity,
               understanding, and respect for the Enrollee's culture, background
               and beliefs. The CONTRACTOR shall strive to ensure its providers
               provide culturally sensitive services to Enrollees. These
               services shall include but are not limited to providing training
               to providers regarding how to promote the benefits of health care
               services as well as training about health care attitudes,
               beliefs, and practices that affect access to health care
               services.

          d.   NO RESTRICTIONS OF PROVIDER's ABILITY TO ADVISE AND COUNSEL

               The CONTRACTOR may not restrict a health care provider's ability
               to advise and counsel Enrollees about Medically Necessary
               treatment options. All contracting providers acting within his or
               her scope of practice, must be permitted to freely advise an
               Enrollee about his or her health status and discuss appropriate
               medical care or treatment for that condition or disease
               regardless of whether the care or treatment is a Covered Service.

          e.   WAITING TIME BENCHMARKS

               The CONTRACTOR will adopt benchmarks for waiting times for
               physician appointments as follows:

               Waiting Time for Appointments
               1)   Primary Care Providers:
                    .      within 30 days for routine, non-urgent appointments
                    .      within 60 days for school physicals
                    .      within 2 days for urgent, symptomatic, but not
                           life-threatening care (care that can be treated in
                           the doctor's office)

               2)   Specialists:
                    .      within 30 days for non-urgent
                    .      within 2 days for urgent, symptomatic, but not
                           life-threatening care (care that can be treated in a
                           doctor's office)

               These benchmarks do not apply to appointments for regularly
               scheduled visits to monitor a chronic medical condition if the
               schedule calls for visits less frequently than once every month.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

E.   CHOICE

     The CONTRACTOR must allow Enrollees the opportunity to select a
     participating Primary Care Provider. This excludes clients who are under
     the Restriction Program. If an Enrollee's Primary Care Provider ceases to
     participate in the CONTRACTOR's network, the CONTRACTOR must offer the
     Enrollee the opportunity to select a new Primary Care Provider.

F.   COORDINATION

     1.   IN GENERAL

          The CONTRACTOR will ensure access to a coordinated, comprehensive and
          continuous array of needed services through coordination with other
          appropriate entities. The CONTRACTOR's providers are not responsible
          for rendering waiver services.

     2.   PREPAID MENTAL HEALTH PLAN

          a.   When an Enrollee is also enrolled in a Prepaid Mental Health
               Plan, the CONTRACTOR and Prepaid Mental Health Plan will share
               appropriate information regarding the Enrollee's health care to
               ensure coordination of physical and mental health care services.

          b.   The CONTRACTOR will educate its subcontracted providers regarding
               an effective model of coordination such as the model developed by
               the PMHP/MCO Coordination of Care Committee. The CONTRACTOR will
               ensure its subcontracted providers coordinate the provision of
               physical health care services with mental health care services as
               appropriate.

          c.   When an Enrollee is also enrolled in a Prepaid Mental Health
               Plan, the CONTRACTOR will not delay an Enrollee's access to
               needed services in disputes regarding responsibility for payment.
               Payment issues should be addressed only after needed services are
               rendered. As described in Attachment B, IV (Benefits), Section E
               (Clarification of Covered Services), Subsection 8 of this
               Contract, the independent panel established by the DEPARTMENT
               will assist in adjudicating such disputes when requested to do so
               by either party.

          d.   Clients enrolled in the MCO and a Prepaid Mental Health Plan who
               due to a psychiatric condition require lab, radiology and similar
               outpatient services covered under this Contract, but prescribed
               by the Prepaid Mental Health Plan physician, will have access to
               such services in a timely fashion. The CONTRACTOR and Prepaid
               Mental Health Plan will reduce or eliminate unnecessary barriers
               that may delay the Enrollee's access to these critical services.

     3.   DOMESTIC VIOLENCE

          The CONTRACTOR will ensure that providers are knowledgeable about
          methods to detect domestic violence and about resources in the
          community to which they can refer patients.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     4.   RESTRICTION PCP

          The CONTRACTOR will ensure that Enrollees who are on the Restriction
          Program are linked to a primary care physician (PCP) who agrees to
          serve as a Restriction PCP. The Restriction PCP must agree to the
          following:

          a.   manage all of the Enrollee's medical care;

          b.   educate the Enrollee regarding appropriate use of medical
               services;

          c.   provide a referral to another physician when needed care is not
               within the PCP's field of expertise, or when for some other
               reason the care cannot be provided by the PCP;

          d.   must be telephonically available 24 hours a day, seven days a
               week (or make certain a provider of comparable specialty is
               available) for urgent/emergent medical situations to assure the
               availability of prompt, quality, medical services and continuity
               of care;

          e.   manage acute and/or chronic long term pain through a variety of
               services or treatment options including office calls, medication
               administration, physical therapy, counseling and mental health
               referral with emphasis on teaching Enrollees to manage their pain
               by adapting actions and behaviors;

          f.   approve or deny drugs prescribed by other providers when
               contacted by the pharmacy to which the Enrollee is restricted;

          g.   work with the Restriction pharmacy, specialists, dentists, etc.
               sharing pertinent information regarding the Enrollee; and

          h.   provide information to the DEPARTMENT's Restriction staff that
               will help assess Restriction Enrollees' progress and that may
               include periodic written or telephonic evaluations when requested
               by the Restriction staff.

          If the Restricted Enrollee's PCP chooses to no longer serve as the
          Enrollee's PCP, the CONTRACTOR must assist the Enrollee in finding a
          new PCP and coordinate with the DEPARTMENT's Restriction staff.

          If a Restriction PCP ceases participation with the CONTRACTOR, the
          CONTRACTOR must communicate this immediately to the DEPARTMENT's
          Restriction staff. The CONTRACTOR must assist all affected Enrollees
          in finding a new PCP and notify the DEPARTMENT when the new PCP is
          selected.

G.   BILLING ENROLLEES

     1.   IN GENERAL

          Except as provided herein Attachment B. Article V (Enrollee
          Rights/Services), Section G (Billing Enrollees). subsection 2, no
          claim for payment will be made at any time by the

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          CONTRACTOR or its providers to an Enrollee accepted by that provider
          as an Enrollee for any Covered Service. When a provider accepts an
          Enrollee as a patient he or she will look solely to the CONTRACTOR and
          any third party coverage for reimbursement. If the provider fails to
          receive payment from the CONTRACTOR, the Enrollee cannot be held
          responsible for these payments.

     2.   CIRCUMSTANCES WHEN AN ENROLLEE MAY BE BILLED

          An Enrollee may in certain circumstances be billed by the provider for
          non-Covered Services and/or for unpaid Medicaid co-payments or
          Medicaid co-insurance. A non-Covered Service is one that is not
          covered under this Contract, or includes special features or
          characteristics that are desired by the Enrollee, such as more
          expensive eyeglass frames, hearing aids, custom wheelchairs, etc., but
          do not meet the Medical Necessity criteria for amount, duration, and
          scope as set forth in the Utah State Plan. The DEPARTMENT will specify
          to the CONTRACTOR the extent of Covered Services and items under the
          Contract, as well as services not covered under the Contract but
          provided by Medicaid on a fee-for-service basis that would effect the
          CONTRACTOR's Covered Services. An Enrollee may be billed for a service
          not covered under this Contract and/or for unpaid Medicaid co-payment
          or co-insurance only when all of the following conditions are met:

          a.   the provider has an established policy for billing all patients
               for services not covered by a third party and/or for billing all
               patients for unpaid co-payment or co-insurance (non-Covered
               Services cannot be billed only to Enrollees.);

          b.   the provider has informed the Enrollee of its policy and the
               services and items that are not covered under this Contract
               and/or Medicaid co-payment or co insurance requirements and
               included this information in the Enrollee's member handbook;

          c.   the provider has advised the Enrollee prior to rendering the
               service that the service is not covered under this Contract
               and/or that a Medicaid co-payment or co-insurance is required and
               that the Enrollee will be personally responsible for making
               payment; and

          d.   in the case of non-Covered Services, the Enrollee agrees to be
               personally responsible for the payment of the non-Covered Service
               and an agreement is made in writing between the provider and the
               Enrollee which details the service and the amount to be paid by
               the Enrollee.

     3.   CONTRACTOR MAY NOT HOLD ENROLLEE's MEDICAID CARD

          The CONTRACTOR or its providers will not hold the Enrollee's Medicaid
          card as guarantee of payment by the Enrollee. nor may any other
          restrictions be placed upon the Enrollee.

     4.   CRIMINAL PENALTIES

          Criminal penalties shall be imposed on MCO providers as authorized
          under section

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          1128B(d)(1)of the Social Security Act if the provider knowingly and
          willfully charges an Enrollee at a rate other than those allowed under
          this Contract.

H.   SURVEY REQUIREMENTS

     Surveys will be conducted of the CONTRACTOR's Enrollees that will include
     questions about Enrollees' perceptions of access to and the quality of care
     received through the CONTRACTOR. The survey process, including the survey
     instrument, will be standardized and developed collaboratively among the
     DEPARTMENT and all contracting MCOs. The DEPARTMENT will analyze the
     results of the surveys. The CONTRACTOR's quality assurance committee will
     review the results of the surveys, identify areas needing improvement,
     outline action steps to follow up on findings, and inform (at a minimum),
     subcontractors, and member and provider services staff, when applicable.

     1.   GENERAL POPULATION SURVEY

          At least every two years, the CONTRACTOR in conjunction with the
          DEPARTMENT will survey a sample of its general population Enrollees;
          i.e., Enrollees who do not meet the definition of those with special
          health care needs.

     2.   SPECIAL NEEDS SURVEY

          At least every two years, the CONTRACTOR in conjunction with the
          DEPARTMENT will survey a sample of Enrollees with special health care
          needs.

                        ARTICLE VI - GRIEVANCE PROCEDURES

A.   IN GENERAL

     The CONTRACTOR will maintain a system for reviewing and adjudicating
     complaints and grievances by Enrollees and providers. The CONTRACTOR's
     complaint and grievance procedures must permit an Enrollee, or provider on
     behalf of an Enrollee, to challenge the denials of coverage of medical
     assistance or denials of payment for Covered Services. The CONTRACTOR will
     submit such grievance plans and procedures to the DEPARTMENT for approval
     prior to instituting or changing such procedures. Such procedures will
     provide for expeditious resolution of complaints and grievances by the
     CONTRACTOR's personnel who have authority to correct problems. The
     CONTRACTOR shall ensure that each Enrollee with limited English proficiency
     shall have the right to receive oral interpreter services without charge to
     the Enrollee at each stage of the CONTRACTOR's complaint and grievance
     process, including final determination. The CONTRACTOR shall separately
     track complaints and grievances that are related to Children with Special
     Health Care Needs and those related to Non-Traditional Medicaid Enrollees.

B.   NONDISCRIMINATION

     The CONTRACTOR shall designate a nondiscrimination coordinator who will 1)
     ensure the CONTRACTOR complies with Federal Laws and Regulations regarding
     nondiscrimination, and 2) take complaints and grievances from Enrollees
     alleging nondiscrimination violations based on

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     race, color, national origin, disability, or age. The nondiscrimination
     coordinator may also handle complaints regarding the violation of other
     civil rights (sex and religion) as other Federal laws and Regulations
     protect against these forms of discrimination. The CONTRACTOR will develop
     and implement a written method of administration to assure that the
     CONTRACTOR's programs, activities, services, and benefits are equally
     available to all persons without regard to race, color, national origin,
     disability, or age.

C.   MINIMUM REQUIREMENTS OF GRIEVANCE PROCEDURES

     At a minimum, the CONTRACTOR's complaint and grievance procedures must
     include

     1.   definitions of complaints and grievance;

     2.   details of how, when, where and with whom an Enrollee or provider may
          file a grievance;

     3.   assurances of the participation of individuals with authority to take
          corrective action;

     4.   responsibilities of the various components and staff of the
          organization;

     5.   a description of the process for timely review, prompt (45 days)
          resolution of complaints and grievances;

     6.   details of an appeal process; and

     7.   a provision stating that during the pendency of any grievance
          procedure or an appeal of such grievances, the Enrollee will remain
          enrolled except as otherwise stated in this Contract.

D.   FINAL REVIEW BY DEPARTMENT

     When an Enrollee or provider has exhausted the CONTRACTOR's grievance
     process and a final decision has been made, the CONTRACTOR must provide
     written notification to the party who initiated the grievance of the
     grievance's outcome and explain in clear terms a detailed reason for the
     denial.

     The CONTRACTOR must provide notification to Enrollees and providers that
     the final decision of the CONTRACTOR may be appealed to the DEPARTMENT and
     will give to the Enrollee or provider the DEPARTMENT's form to request a
     formal hearing with the DEPARTMENT. The MCO must inform the Enrollee or
     provider the time frame for filing an appeal with the DEPARTMENT. The
     formal hearing with the DEPARTMENT is a de novo hearing. If the Enrollee or
     provider request a formal hearing with the DEPARTMENT, all parties to the
     formal hearing agree to be bound by the DEPARTMENT's decision until any
     judicial reviews are completed and are in the Enrollee's or provider's
     favor. Any decision made by the DEPARTMENT pursuant to the hearing shall be
     subject to appeal rights as provided by State and Federal laws and rules.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

                        ARTICLE VII - OTHER REQUIREMENTS

A.   COMPLIANCE WITH PUBLIC HEALTH SERVICE ACT

     The CONTRACTOR will comply with all requirements of Section 1301 to and
     including 1318 of the Public Health Service Act, as applicable. The
     CONTRACTOR will provide verification of such compliance to the DEPARTMENT
     upon the DEPARTMENT's request.

B.   COMPLIANCE WITH OBRA'90 PROVISION AND 42 CFR 434.28

     The CONTRACTOR will comply with the OBRA '90 provision which requires an
     MCO provide patients with information regarding their rights under State
     law to make decisions about their health care including the right to
     execute a living will or to grant power of attorney to another individual.

     The CONTRACTOR will comply with the requirements of 42 CFR 434.28 relating
     to maintaining written Advance Directives as outlined under Subpart I of
     489.100 through 489.102.

C.   FRAUD AND ABUSE REQUIREMENTS

     The CONTRACTOR must have a compliance program to identify and refer
     suspected fraud and abuse activities. The compliance program must outline
     the CONTRACTOR's internal processes for identifying fraud and abuse. The
     CONTRACTOR agrees to abide by Federal and/or State fraud and abuse
     requirements including, but not limited to, the following:

     1.   Refer in writing to the DEPARTMENT all detected incidents of potential
          fraud or abuse on the part of providers of services to Enrollees or to
          other patients.

     2.   Refer in writing to the DEPARTMENT all detected incidents of patient
          fraud or abuse involving Covered Services provided which are paid for
          in whole, or in part, by the DEPARTMENT.

     3.   Refer in writing to the DEPARTMENT the names and Medicaid ID numbers
          of those Enrollees that the CONTRACTOR suspects of inappropriate
          utilization of services, and the nature of the suspected inappropriate
          utilization.

     4.   Inform the DEPARTMENT in writing when a provider is removed from the
          CONTRACTOR's panel for reasons relating to suspected fraud, abuse or
          quality of care concerns.

     5.   The CONTRACTOR may not employ or subcontract with any sanctioned
          provider. The DEPARTMENT shall notify the CONTRACTOR how to access
          information on providers sanctioned by Medicaid or Medicare. It is the
          responsibility of the CONTRACTOR to keep apprized of sanctioned
          providers. The CONTRACTOR may not employ or subcontract with any
          provider who is an ineligible entity as defined under the State
          Medicaid Manual Section 2086.16. This section is available upon
          request. The CONTRACTOR will attest that the entities listed below are
          not involved with the CONTRACTOR. Entities that must be excluded -

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          a.   Entities that could be excluded under section 1128(b)(8) of the
               Social Security Act (the Act)~these are entities in which a
               person who is an officer, director, agent, or managing employee
               of the entity, or a person who has a direct or indirect ownership
               or control interest of 5% or more in the entity and has been
               convicted of the following crimes:

               1)   any criminal offense related to the delivery of a Medicare
                    or Medicaid item or service (see section 1128(a)(l) of the
                    Act);
               2)   patient abuse (section 1128(a)(2));
               3)   fraud (1128(b)(l));
               4)   obstruction of an investigation (1128(b)(2)); or
               5)   offenses related to controlled substances (1128(b)(3)).

          b.   Entities that have a direct or indirect substantial contractual
               relationship with an individual or entity listed in subsection
               "a" above-- a substantial contractual relationship is defined as
               any contractual relationship which provides for one or more of
               the following:

               1)   the administration, management, or provision of medical
                    services;
               2)   the establishment of policies pertaining to the
                    administration, management or provision of medical services;
                    or
               3)   the provision of operational support for the administration,
                    management, or provision of medical services.

          c.   Entities which employ, contract with, or contract through any
               individual or entity that is excluded from Medicaid participation
               under Section 1128 or Section 1128A of the Act, for the provision
               of health care, utilization review, medical social work or
               administration services.

D.   DISCLOSURE OF OWNERSHIP AND CONTROL INFORMATION

     The CONTRACTOR agrees to meet the requirements of 42 CFR 455, Subpart B
     related to disclosure by the CONTRACTOR of ownership and control
     information.

E.   SAFEGUARDING CONFIDENTIAL INFORMATION ON ENROLLEES

     The CONTRACTOR agrees that information about Enrollees is confidential
     information and agrees to safeguard all confidential information and
     conform to the requirements set forth in 42CFR, Part 431, Subpart F as well
     as all other applicable Federal and State confidentiality requirements. The
     CONTRACTOR must be in compliance with the privacy regulations issued under
     the Health Insurance Portability and Accountability Act (HIPAA) of 1996
     when they go into effect.

F.   DISCLOSURE OF PROVIDER INCENTIVE PLANS

     The CONTRACTOR must submit to the DEPARTMENT information on its physician
     incentive plans as listed in 42 CFR 417.479(h)(l) and summarized in this
     Article VII, Section F, Subsections 1 through 5, by May 1 of each year. The
     CONTRACTOR must provide to the

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

     DEPARTMENT the enrollee/disenrollee survey results when beneficiary surveys
     are required as specified in 42 CFR 417.479(g) and summarized in this
     Article VII, Section F, Subsection 7, by October 1 or three months after
     the end of the Contract year. The CONTRACTOR must submit to the DEPARTMENT
     information on capitation payments paid to primary care physicians as
     specified in 42 CFR 417.479(h)(l)(vi).

     Per 42 CFR 417.479(a), no specific payment may be made directly or
     indirectly under a physician incentive plan to a physician or physician
     group as an inducement to reduce or limit Medically Necessary services
     furnished to an Enrollee.

     The CONTRACTOR may operate a physician incentive plan only if the stop-loss
     protection, Enrollee survey, and disclosure requirements are met. The
     CONTRACTOR must disclose to the DEPARTMENT the following information on
     provider incentive plans in sufficient detail to determine whether the
     incentive plan complies with the regulatory requirements. The disclosure
     must contain:

     1.   Whether services not furnished by the physician or physician group are
          covered by the incentive plan. If only the services furnished by the
          physician or physician group are covered by the incentive plan,
          disclosure of other aspects of the plan need not be made.

     2.   The type of incentive arrangement (i.e., withhold, bonus, capitation).

     3.   If the incentive plan involves a withhold or bonus, the percent of the
          withhold or bonus.

     4.   Proof that the physician or physician group has adequate stop-loss
          protection, including the amount and type of stop-loss protection.

     5.   The panel size and, if patients are pooled; the method used.

     6.   To the extent provided for in the Department of Health and Human
          Services, Centers for Medicare and Medicaid Services' (CMS)
          implementation guidelines, capitation payments paid to primary care
          physicians for the most recent year broken down by percent for primary
          care services, referral services to specialists, and hospital and
          other types of provider services (i.e., nursing home and home health
          agency) for capitated physicians or physician groups.

     7.   In the case of those prepaid plans that are required to conduct
          beneficiary surveys, the survey results. (The CONTRACTOR must conduct
          a customer satisfaction of both Enrollees and disenrollees if any
          physicians or physicians groups contracting with the CONTRACTOR are
          placed at substantial financial risk for referral services. The survey
          must include either all current Enrollees and those who have
          disenrolled in the past twelve months, or a sample of these same
          Enrollees and disenrollees. Recognizing that different questions are
          asked of the disenrollees than those asked of Enrollees, the same
          survey cannot be used for both populations.)
          The CONTRACTOR must disclose this information to the DEPARTMENT (1)
          prior to approval of its Contract or agreement and (2) upon the
          Contract or agreements anniversary or renewal effective date. The
          CONTRACTOR must provide the capitation data required (see 6 above) for
          the previous Contract year to the DEPARTMENT three months after the
          end of the Contract year. The CONTRACTOR will provide to the

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          Enrollee upon request whether the CONTRACTOR uses a physician
          incentive plan that affects the use of referral services, the type of
          incentive arrangement, whether stop-loss protection is provided, and
          the survey results of any enrollee/disenrollee surveys conducted.

G.   DEBARRED OR SUSPENDED INDIVIDUALS

     Under Section 1921(d)(l) of the Social Security Act, the CONTRACTOR may not
     knowingly have a director, officer, partner, or person with beneficial
     ownership of more than 5% of the CONTRACTOR's equity who has been debarred
     or suspended by any federal agency. The CONTRACTOR may not have an
     employment, consulting, or any other agreement with a debarred or suspended
     person for the provision of items or services that are significant and
     material to meeting the provisions under this Contract.

     The CONTRACTOR must certify to the DEPARTMENT that the requirements under
     Section 1921(d)(l) of the Social Security Act are met prior to the
     effective date of this Contract and at any time there is a change from the
     last such certification.

H.   CMS CONSENT REQUIRED

     If the Department of Health and Human Services, Centers for Medicare and
     Medicaid (CMS) directs the DEPARTMENT to terminate this Contract, the
     DEPARTMENT will not be permitted to renew this Contract without CMS
     consent.

                             ARTICLE VIII - PAYMENTS

A.   NON-RISK CONTRACT

     This Contract is a non-risk contract as described in 42 CFR 447.362.
     Aggregate payments made to the CONTRACTOR may not exceed what the
     DEPARTMENT would have paid, on a fee-for-service basis, for the services
     actually furnished to recipients. The DEPARTMENT will reimburse the
     CONTRACTOR based on their paid claims plus 9% of paid claims for
     administration.

B.   PAYMENT METHODOLOGY

     The payment methodology is described in Attachment F of this Contract.

C.   CONTRACT MAXIMUM

     In no event will the aggregate amount of payments to the CONTRACTOR exceed
     the Contract maximum amount. If payments to the CONTRACTOR approach or
     exceed the Contract amount before the renewal date of the Contract, the
     DEPARTMENT shall execute a Contract amendment to increase the Contract
     amount within 30 calendar days of the date the Contract amount is exceeded.

D.   MEDICARE

     1.   PAYMENT OF MEDICARE PART B PREMIUMS

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          The DEPARTMENT will pay the Medicare Part B premium for each Enrollee
          who is on Medicare. The Enrollee will assign to the CONTRACTOR his or
          her Medicare reimbursement for benefits received under Medicare. The
          Eligibility Transmission includes and identifies those Enrollees who
          are covered under Medicare.

     2.   PAYMENT OF MEDICARE DEDUCTIBLE AND COINSURANCE

          The DEPARTMENT's financial obligation under this Contract for
          Enrollees who are covered by both Medicare and the MCO is limited to
          the Medicare Part B premium and the CONTRACTOR premium. The CONTRACTOR
          is responsible for payment of the Medicare deductible and coinsurance
          up to the CONTRACTOR's allowed amount for Enrollees when a service is
          paid for by Medicare whether or not the service is covered under this
          Contract. The CONTRACTOR is responsible for payment whether or not the
          Medicare covered service is rendered by a network provider or has been
          authorized by the CONTRACTOR. If a Medicare covered service is
          rendered by an out-of-network Medicare provider or a non-Medicare
          participating provider, the CONTRACTOR is responsible to pay the lower
          of the coinsurance/deductible and the CONTRACTOR's allowed amount.
          Attachment E, Table 2, will be used to identify the total cost to the
          CONTRACTOR of providing care for Enrollees who are also covered by
          Medicare.

     3.   MUST NOT BALANCE BILL ENROLLEES

          The CONTRACTOR or its providers will not Balance Bill the Enrollee and
          will consider reimbursement from Medicare and from the CONTRACTOR as
          payment in full.

D.   THIRD PARTY LIABILITY (COORDINATION OF BENEFITS)

     The DEPARTMENT will provide the CONTRACTOR a monthly listing of Enrollees
     covered under the Buy-out Program, including the premium amount paid by the
     DEPARTMENT.

     1.   TPL COLLECTIONS

          The CONTRACTOR will be responsible to coordinate benefits and collect
          third party liability (TPL). The CONTRACTOR will keep TPL collections.
          The DEPARTMENT will set rates net of expected TPL collections
          excluding the lump sum rate set for deliveries. The rate set for
          deliveries is the maximum amount the DEPARTMENT will pay the
          CONTRACTOR for each delivery. The CONTRACTOR must attempt to collect
          TPL before the DEPARTMENT will finalize payment for the lump sum
          delivery. The DHCF audit staff will monitor collections to ensure the
          CONTRACTOR is making a good faith effort to pursue TPL. The DEPARTMENT
          will properly account for TPL in its rate structure.

     2.   DUPLICATION OF BENEFITS

          This provision applies when, under another health insurance plan such
          as a prepaid plan, insurance contract, mutual benefit association or
          employer's self-funded group health and welfare program, etc., an
          Enrollee is entitled to any benefits that would totally or partially
          duplicate the benefits that the CONTRACTOR is obligated to provide
          under this Contract. Duplication exists when (I) the CONTRACTOR has a
          duty to provide,

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          arrange for or pay for the cost of Covered Services, and (2) another
          health insurance plan, pursuant to its own terms, has a duty to
          provide, arrange for or pay for the same type of Covered Services
          regardless of whether the duty of the CONTRACTOR is to provide the
          Covered Services and the duty of the other health insurance plan is
          only to pay for the Covered Services. Under State and Federal laws and
          regulations, Medicaid funds are the last dollar source and all other
          health insurance plans as referred to above are primarily responsible
          for the costs of providing Covered Services.

     3.   RECONCILIATION OF OTHER TPL

          In order to assist the CONTRACTOR in billing and collecting from other
          health insurance plans the DEPARTMENT will include on the Eligibility
          Transmission other health insurance plans of each Enrollee when it is
          known. The CONTRACTOR will review the Eligibility Transmission and
          will report to the Office of Recovery Services or the DEPARTMENT any
          TPL discrepancies identified within 30 working days of receipt of the
          Eligibility Transmission. The CONTRACTOR's report will include a
          listing of Enrollees that the CONTRACTOR has independently identified
          as being covered by another health insurance plan.

     4.   WHEN TPL IS DENIED

          On a monthly basis, the CONTRACTOR will report to the Office of
          Recovery Services (ORS) claims that have been billed to other health
          care plans but have been denied which will include the following
          information:

          a.   patient name and Medicaid identification number
          b.   ICD-9-CM code;
          c.   procedure codes; and
          d.   insurance company.

     5.   NOTIFICATION OF PERSONAL INJURY CASES

          The CONTRACTOR will be responsible to notify ORS of all personal
          injury cases, as defined by ORS and agreed to by the CONTRACTOR, no
          later than 30 days after the CONTRACTOR has received a "clean" claim.
          A clean claim is a claim that is ready to adjudicate. The following
          data elements will be provided by the CONTRACTOR to ORS:

          a.   patient name and Medicaid identification number
          b.   date of accident;
          c.   specific type of injury by ICD-9-CM code;
          d.   procedure codes; and
          e.   insurance company, if known.

     6.   ORS TO PURSUE COLLECTIONS

          ORS will pursue collection on all claims described in Attachment B,
          Article VIII (Payments), Section D, Subsections 4 and 5 of this
          Contract. The DEPARTMENT will retain, for administrative costs, one
          third of the collections received for the period during

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          which medical services were provided by the CONTRACTOR, and remit the
          balance to the CONTRACTOR.

     7.   INSURANCE BUY-OUT PROGRAM

          The Insurance Buy-out Program is an optional program in which the
          DEPARTMENT purchases group health insurance for a recipient who is
          eligible for Medicaid when it is determined cost-effective for the
          Medicaid program to do so. The insurance buy-out process will be
          coordinated by the DEPARTMENT in cooperation with the Office of
          Recovery Services, and Medicaid eligibility workers. The CONTRACTOR
          will file claims against group MCOs first before claiming services
          against the CONTRACTOR or other MCOs.

     8.   CONTRACTOR MUST PAY PROVIDER ADMINISTRATIVE FEE FOR IMMUNIZATIONS

          When an Enrollee has third party coverage for immunizations, the
          CONTRACTOR will pay the provider the administrative fee for providing
          the immunization and not require the provider to bill the third party
          as a cost avoidance method. The CONTRACTOR may choose to pursue the
          third party amount for the administrative fee after payment has been
          made to the provider.

E.   THIRD PARTY RESPONSIBILITY (INCLUDING WORKER's COMPENSATION)

     1.   CONTRACTOR TO BILL USUAL AND CUSTOMARY CHARGES

          When a third party has an obligation to pay for Covered Services
          provided by the CONTRACTOR to an Enrollee pursuant to this Contract,
          the CONTRACTOR will bill the third party for the usual and customary
          charges for Covered Services provided and costs incurred. Should any
          sum be recovered by the Enrollee or otherwise, from or on behalf of
          the person responsible for payment for the service, the CONTRACTOR
          will be paid out of such recovery for the charges for service provided
          and costs incurred by the CONTRACTOR.

     2.   THIRD PARTY's OBLIGATION TO PAY FOR COVERED SERVICES

          Examples of situations where a third party has an obligation to pay
          for Covered Services provided by the CONTRACTOR are when (a) the
          Enrollee is injured by a person due to the negligent or intentional
          acts (or omissions) of the person; or (b) the Enrollee is eligible to
          receive payment through Worker's Compensation Insurance. If the
          Enrollee does not diligently seek such recovery, the CONTRACTOR may
          institute such rights that it may have.

     3.   FIRST DOLLAR COVERAGE FOR ACCIDENTS

          In addition, both parties agree that the following will apply
          regarding first dollar coverage for accidents: if the injured party
          has additional insurance, primary coverage may be given to the motor
          insurance effective at the time of the accident. Once the motor
          vehicle policy is exhausted, the CONTRACTOR will be the secondary
          payer and pay for all of the Enrollee's Covered Services. If medical
          insurance does not exist, the

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          CONTRACTOR will be the primary payer for all Covered Services.

     4.   NOTIFICATION OF STOP-LOSS

          The CONTRACTOR will provide ORS with quarterly updates of costs
          incurred by the CONTRACTOR when such costs exceed Stop Loss
          (reinsurance) provisions as defined in the Contract between the
          reinsurer and the CONTRACTOR.

F.   CHANGES IN COVERED SERVICES

     If Covered Services are amended under the provisions of Attachment B,
     Article IV (Benefits), Section C, Subsection 3 of this Contract, rates may
     be renegotiated.

                    ARTICLE IX - RECORDS, REPORTS AND AUDITS

A.   FEDERALLY REQUIRED REPORTS

     1.   CHEC/EPSDT REPORTS

          The CONTRACTOR agrees to act as a continuing care provider for the
          CHEC/EPSDT program in compliance with OBRA '89 and Social Security Act
          Sections 1902 (a)(43), 1905(a)(4)(B)and 1905 (r).

          a.   CHEC/EPSDT SCREENINGS

               Annually, the CONTRACTOR will submit to the DEPARTMENT
               information on CHEC/EPSDT screenings to meet the Federal EPSDT
               reporting requirements (Form HCFA-416). The data will be in a
               mutually agreed upon format. The CHEC/EPSDT information is due
               December 31 for the prior federal fiscal year's data (October 1
               through September 30).

          b.   IMMUNIZATION DATA

               The CONTRACTOR will submit immunization data as part of the
               CHEC/EPSDT reporting. Enrollee name, Medicaid ID, type of
               immunization identified by procedure code, and date of
               immunization will be reported in the same format as the
               CHEC/EPSDT data.

     2.   DISCLOSURE OF PHYSICIAN INCENTIVE PLANS

          The CONTRACTOR must submit to the DEPARTMENT information on its
          physician incentive plans as listed in 42 CFR 417.479(h)(l) [or
          Article VII - Other Requirements, F - Disclosure of Provider Incentive
          Plans, 1 through 5] by May 1 of each year. The CONTRACTOR must provide
          to the DEPARTMENT the enrollee/disenrollee survey results when
          beneficiary surveys are required as specified in 42 CFR 417.479(g) [or
          #7 under Article VII.F.] by October 1 or three months after the end of
          the Contract year. The CONTRACTOR must submit to the DEPARTMENT
          information on capitation payments paid to primary care physicians as
          specified in 42 CFR 417.479(h)(l)(vi).

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

B.   PERIODIC REPORTS

     1.   ENROLLMENT, COST AND UTILIZATION REPORTS (ATTACHMENT E)

          Enrollment, cost and utilization reports will be submitted on
          diskettes in Excel or Lotus and in the format specified in Attachment
          E. A hard copy of the report must be submitted as well. The DEPARTMENT
          will send to the CONTRACTOR a template of the Attachment E format on a
          diskette. The CONTRACTOR may not customize or change the report
          format. The financial information for these reports will be reported
          as defined in HCFA Publication 75, and if applicable, HCFA 15-1. The
          CONTRACTOR will certify in writing the accuracy and completeness, to
          the best of its knowledge, of all costs and utilization data provided
          to the DEPARTMENT on Attachment E.

          Two Attachment E reports will be submitted covering dates of service
          for each Contract year.

          a.   Attachment E is due May 1 for the preceding six-month reporting
               period (July through December).

          b.   Attachment E is due November 1 for the preceding 12-month
               reporting period (July through June).

          If necessary, the CONTRACTOR may request, in writing, an extension of
          the due date up to 30 days beyond the required due date. The
          DEPARTMENT will approve or deny the extension request writing within
          seven calendar days of receiving the request.

     2.   INTERPRETIVE SERVICES

          Annually, on November 1, the CONTRACTOR will submit summary
          information about the use of interpretive services during the previous
          Contract year (July 1 through June 30). The information must include
          the following:

          a.   a list of all sources of interpreter services;
          b.   total expenditures for each language;
          c.   total expenditures for clinical versus administrative;
          d.   number of Enrollees who used interpretive services for each
               language;
          e.   number of services provided categorized by clinical versus
               administrative.

     3.   SEMI-ANNUAL REPORTS

          The following semi-annual reports are due May 1 for the preceding
          six-month reporting period ending December 31 (July through December)
          and are due November 1 for the preceding six month period ending June
          30 (January through June).

          a.   Organ Transplants: Report the total number of organ transplants
               by type of transplant.

          b.   Obstetrical Information: Report obstetrical information including

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

               1)   total number of obstetrical deliveries by aid category
                    grouping;
               2)   total number of caesarean sections and total number of
                    vaginal deliveries;
               3)   total number low birth weight infants; and
               4)   total number of Enrollees requiring prenatal hospital
                    admission.

          c.   COMPLAINTS AND FORMAL GRIEVANCES

               Separate reports of complaints/grievances are required for adults
               and children; and for Traditional Medicaid Plan Enrollees and
               Non-Traditional Plan Enrollees. Each report must distinguish
               between those Enrollees with special health care needs and the
               general population of children. Report summary information on the
               number of complaints/grievances by type of complaint/grievance
               and indicate the number that have been resolved. Include an
               analysis of the type and number of complaints/grievances received
               by the CONTRACTOR.

          d.   ABERRANT PHYSICIAN BEHAVIOR

               Report summary information of corrective actions taken on
               physicians who have been identified by the CONTRACTOR as
               exhibiting aberrant physician behavior and the names of
               physicians who have been removed from the CONTRACTOR's network
               due to aberrant behavior. The summary shall include the reasons
               for the corrective action or removal.

     4.   ANNUAL QUALITY IMPROVEMENT PROGRAM DOCUMENTATION

          Annually, the CONTRACTOR will submit to the DEPARTMENT the following
          documents:

          a.   the CONTRACTOR's quality improvement program description;
          b.   the CONTRACTOR's quality improvement work plan;
          c.   the CONTRACTOR's quality improvement work plan evaluation for
               previous calendar year.

          These reports must be in the format developed by the DEPARTMENT and
          include signature(s) of approval by the CONTRACTOR's designated
          authorizing authority. Reports for each calendar year are due no later
          than March 31st of each year.

     5.   DOCUMENTS DUE PRIOR TO QUALITY MONITORING REVIEWS

          The following documents are due at least 60 days prior to the
          DEPARTMENT's quality assurance monitoring review, or earlier on
          request, unless the DEPARTMENT has already received documents that are
          in effect:

          a.   the CONTRACTOR's most current (may be in draft stage) written
               quality improvement program description;

          b.   the CONTRACTOR's most current (may be in draft stage) annual
               quality improvement work plan;

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          c.   the CONTRACTOR's most current (may be in draft stage) quality
               improvement work plan evaluation for the previous calendar year;

          d.   documentation of the CONTRACTOR's compliance to standards defined
               in the defined in the Utah MCO Quality Assurance Monitoring Plan
               (Attachment G).

          e.   all other information requested by the DEPARTMENT to facilitate
               the DEPARTMENT's review of the CONTRACTOR's compliance to
               standards defined in the Utah MCO Quality Assurance Monitoring
               Plan (Attachment G).

          The above documents must show evidence of a well defined, organized
          program designed to improve client care.

     6.   IMPACT OF CO-PAYMENTS

          The following semi-annual report is due May 1 for the preceding
          six-month reporting period ending April 30 (November of previous year
          through April of current year) and November 1 for the preceding
          six-month period ending October 31 (May through October of the current
          year):

          Report shall document all instances when Enrollees have contacted the
          CONTRACTOR with a complaint about being denied services because they
          did not pay their Medicaid co-payment or co-insurance. For each
          instance, report the Enrollee's name, Medicaid ID, provider, and the
          service the Enrollee was scheduled to receive.

     7.   HEDIS

          Audited Health Plan Employer Data and Information Set (HEDIS)
          performance measures will cover services rendered to Enrollees and
          will be reported as set forth in State rule by the Office of Health
          Data Analysis. For example, calendar year 1997 HEDIS measures will be
          reported in 1998.

     8.   ENCOUNTER DATA

          Encounter data, as defined in the DEPARTMENT's "Encounter Records
          Technical Manual," is due (including all replacements) six months
          after the end of the quarter being reported. Encounter data will be
          submitted in accordance with the instructions detailed in the
          Encounter Records Technical Manual for dates of service beginning July
          1, 1996. The CONTRACTOR must receive certification from an
          independent, credible vendor that their electronic submissions of
          encounter data are compliant with the Health Insurance Portability and
          Accountability Act (HIPAA) requirements. At a minimum, the CONTRACTOR
          must be HIPAA-compliant in the first four levels of HIPAA compliance:
          Level 1 - Integrity Testing, Level 2 - Requirement Testing, Level 3 -
          Balancing, and Level 4 - Situation Testing.

     9.   AUDIT OF ABORTIONS, STERILIZATIONS AND HYSTERECTOMIES

          The CONTRACTOR must conduct an annual audit of abortion, hysterectomy
          and sterilization procedures performed by the CONTRACTOR's providers.
          The purpose of

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          the audit is to monitor compliance with federal and state requirements
          for the reimbursement of these procedures under Medicaid. The
          CONTRACTOR must audit all abortions and a sample of hysterectomy and
          sterilization procedures as defined by the DEPARTMENT.

          On November 1 of each year, the CONTRACTOR will submit to the
          DEPARTMENT the following information on the results of the abortion,
          sterilization and hysterectomy audit for the previous calendar year.

          For the sterilization and hysterectomy audit, submit documentation of
          the methodology used to pull the sample of sterilization and
          hysterectomies and include the sampling proportions.

          In an Excel file, submit the following information for all abortions,
          the sample of sterilizations, and the sample of hysterectomies:

          .    client name
          .    Medicaid ID number
          .    procedure code
          .    date of service
          .    history/physical (yes/no)
          .    operative report (yes/no)
          .    pathology report (yes/no)
          .    consent form (yes/no)
          .    medical necessity criteria - hysterectomies only

          When information is submitted electronically, the CONTRACTOR must use
          a secured electronic transmission process.

          The DEPARTMENT will evaluate the results of the CONTRACTOR's audit and
          identify the cases that will require medical record submission.
          Medical record submission will be required for all abortions and a
          random sample of hysterectomy and sterilization cases. The DEPARTMENT
          will notify the CONTRACTOR in writing of the cases that will require
          medical record submission and the time line for the medical record
          submissions.

     10.  DEVELOPMENT OF NEW REPORTS

          Any new reports/data requirements mandated by the DEPARTMENT will be
          mutually developed by the DEPARTMENT and the CONTRACTOR.

C.   RECORD SYSTEM REQUIREMENTS

     In accordance with Section 4752 of OBRA '90 (amended section 1903 (m)(2)(A)
     of the Social Security Act), the CONTRACTOR agrees to maintain sufficient
     patient encounter data to identify the physician who delivers Covered
     Services to Enrollees. The CONTRACTOR agrees to provide this encounter
     data, upon request of the DEPARTMENT, within 30 days of the request.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

D.   MEDICAL RECORDS

     The CONTRACTOR agrees that medical records are considered confidential
     information and agrees to follow Federal and State confidentiality
     requirements.

     The CONTRACTOR will require that its providers maintain a medical record
     keeping system through which all pertinent information relating to the
     medical management of the Enrollee is maintained, organized, and is readily
     available to appropriate professionals. Notwithstanding any other provision
     of this Contract to the contrary, medical records covering Enrollees will
     remain the property of the provider, and the provider will respect every
     Enrollee's privacy by restricting the use and disclosure of information in
     such records to purposes directly connected with the Enrollee's health care
     and administration of this Contract. The CONTRACTOR will use and disclose
     information pertaining to individual Enrollees and prospective Enrollees
     only for purposes directly connected with the administration of the
     Medicaid Program and this Contract.

E.   AUDITS

     1.   RIGHT OF DEPARTMENT AND CMS TO AUDIT

          The DEPARTMENT and the Department of Health and Human Services,
          Centers for Medicare and Medicaid Services may audit and inspect any
          financial records of the CONTRACTOR or its subcontractors relating (I)
          to the ability of the CONTRACTOR to bear the risk of potential
          financial losses, or (II) to evaluate services performed or
          determinations of amounts payable under the Contract.

     2.   INFORMATION TO DETERMINE ALLOWABLE COSTS

          The CONTRACTOR will make available to the DEPARTMENT all reasonable
          and related financial, statistical, clinical or other information
          needed for the determination of allowable costs to the Medicaid
          program for "related party/home office" transactions as defined in
          HCFA 15-1. These records are to be made available in Utah or the
          CONTRACTOR will pay the increased cost (incremental travel, per diem,
          etc.) of auditing at the out-of-state location. The cost to the
          CONTRACTOR will include round-trip travel and two days per
          diem/lodging. Additional travel costs of the site audit will be shared
          equally by the CONTRACTOR and the DEPARTMENT.

     3.   MANAGEMENT AND UTILIZATION AUDITS

          The MCO will allow the DEPARTMENT and the Department of Health and
          Human Services, Centers for Medicare and Medicaid Services, to perform
          audits for identification and collection of management data, including
          Enrollee satisfaction data, quality of care data, fraud-related data,
          abuse-related data, patient outcome data, and cost and utilization
          data, which will include patient profiles, exception reports, etc. The
          CONTRACTOR will provide all data required by the DEPARTMENT or the
          independent quality review examiners in performance of these audits.
          Prior to beginning any audit, the DEPARTMENT will give the CONTRACTOR
          reasonable notice of audit, and the DEPARTMENT will be responsible for
          costs of its auditors or representatives.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

F.   INDEPENDENT QUALITY REVIEW

     1.   IN GENERAL

          Pursuant to Section 1932(c)(2)(A) of the Social Security Act the
          DEPARTMENT may provide for an annual external independent review
          conducted by a qualified independent entity of the quality outcomes
          and timeliness of and access to Covered Services. The CONTRACTOR will
          support the annual external independent review.

          The DEPARTMENT will choose an agency to perform an annual independent
          quality review pursuant to federal law and will pay for such review.
          The CONTRACTOR will maintain all clinical and administrative records
          for use by the quality review contractor. The CONTRACTOR agrees to
          support quality assurance reviews, focused studies and other projects
          performed for the DEPARTMENT by the external quality review
          organization (EQRO). The purpose of the reviews and studies are to
          comply with federal requirements for an annual independent audit of
          the quality outcomes and timeliness of, and access to, Covered
          Services. The external independent reviews are conducted by the EQRO,
          with the advice, assistance, and cooperation of a planning team
          composed of representatives from the CONTRACTOR, the EQRO and the
          DEPARTMENT with final approval by the DEPARTMENT.

     2.   SPECIFIC REQUIREMENTS

          a.   LIAISON FOR ROUTINE COMMUNICATION

               The CONTRACTOR will designate an individual to serve as liaison
               with the EQRO for routine communication with the EQRO.

          b.   REPRESENTATIVE TO ASSIST WITH PROJECTS

               The CONTRACTOR will designate a minimum of two representatives
               (unless one individual can service both functions) to serve on
               the planning team for each EQRO project. Representatives will
               include a quality improvement representative and a data
               representative. The planning team is a joint collaborative forum
               between DEPARTMENT staff, the EQRO and the CONTRACTOR. The role
               of the planning team is to participate in the process and
               completion of EQRO projects.

          c.   COPIES AND ON-SITE ACCESS

               The CONTRACTOR will be responsible for obtaining copies of
               Enrollee information and facilitating on-site access to Enrollee
               information as needed by the EQRO. Such information will be used
               to plan and conduct projects and to investigate complaints and
               grievances. Any associated copying costs are the responsibility
               of the CONTRACTOR. Enrollee information includes medical records,
               administrative data such as, but not limited to, enrollment
               information and claims, nurses' notes, medical logs, etc. of the
               CONTRACTOR or its providers.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          d.   FORMAT OF ENROLLEE FILES

               The CONTRACTOR will provide Enrollee information in a mutually
               agreed upon format compatible for the EQRO's use, and in a timely
               fashion to allow the EQRO to select cases for its review.

          e.   TIME-FRAME FOR PROVIDING DATA

               The CONTRACTOR will provide data requests to the EQRO within 15
               working days of the written request from the EQRO and will
               provide medical records within 30 working days of the written
               request from the EQRO. Requests for extensions of these time
               frames will be reviewed and approved or disapproved by the
               DEPARTMENT on a case-by-case basis.

          f.   WORK SPACE FOR ON-SITE REVIEWS

               The CONTRACTOR will assure that the EQRO staff and consultants
               have adequate work space, access to a telephone and copy machines
               at the time of review. The review will be performed during
               agreed-upon hours.

          g.   STAFF ASSISTANCE DURING ON-SITE VISITS

               The CONTRACTOR will assign appropriate person(s) to assist the
               EQRO personnel conduct the reviews during on-site visits and to
               participate in an informal discussion of screening observations
               at the end of each on-site visit, if necessary.

          h.   CONFIDENTIALITY

               For information received from the EQRO, the CONTRACTOR will
               comply with the Department of Health and Human Services
               regulations relating to confidentiality of data and information
               (42 CFR Part 476.107 and 476.108).

                              ARTICLE X - SANCTIONS

     The DEPARTMENT may impose intermediate sanctions on the CONTRACTOR if the
     CONTRACTOR defaults in any manner in the performance of any obligation
     under this Contract including but not limited to the following situations:

     (1)  the CONTRACTOR fails to substantially provide Medically Necessary
          Covered Services to Enrollees;

     (2)  the CONTRACTOR imposes premiums or charges Enrollees in excess of the
          premiums or charges permitted under this Contract;

     (3)  the CONTRACTOR acts to discriminate among Enrollees on the basis of
          their health status or requirements for health care services,
          including expulsion or refusal to re-enroll an individual, except as
          permitted by Title XIX, or engaging in any practice that would

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          reasonably be expected to have the effect of denying or discouraging
          enrollment with the MCO by potential Enrollees whose medical condition
          or history indicates a need for substantial future medical services;

     (4)  the CONTRACTOR misrepresents or falsifies information furnished to the
          Department of Health and Human Services, Centers for Medicare and
          Medicaid Services, the DEPARTMENT, an Enrollee, potential Enrollee or
          health care provider;

     (5)  the CONTRACTOR fails to comply with the physician incentive
          requirements under Section 1903(m)(2)(A)(x) of the Social Security
          Act.

     (6)  the CONTRACTOR distributed directly or through any agent or
          independent contractor marketing materials that contain false or
          misleading information.

     The DEPARTMENT must follow the 1997 Balance Budget Act guidelines on the
     types of intermediate sanctions the DEPARTMENT may impose, including civil
     monetary penalties, the appointment of temporary management, and suspension
     of payment.

                    ARTICLE XI - TERMINATION OF THE CONTRACT

A.   AUTOMATIC TERMINATION

     This Contract will automatically terminate June 30, 2004.

B.   OPTIONAL YEAR-END TERMINATION

     At the end of each Contract year, either party may terminate the Contract
     without cause for subsequent years by giving the other party written notice
     of termination at least 90 days prior to the end of the Contract year (July
     1 through June 30).

C.   TERMINATION FOR FAILURE TO AGREE UPON RATES

     At least 60 days prior to the end of each Contract year, the parties will
     meet and negotiate in good faith the rates (Attachment F) applicable to the
     upcoming year. If the parties cannot agree upon future rates by the end of
     the Contract year, then either party may terminate the Contract for
     subsequent years by giving the other party written notice of termination
     and the termination will become effective 90 days after receipt of the
     written notice of termination.

D.   EFFECT OF TERMINATION

     1.   COVERAGE

          Inasmuch as the CONTRACTOR is paid on a monthly basis, the CONTRACTOR
          will continue providing the Covered Services required by this Contract
          until midnight of the last day of the calendar month in which the
          termination becomes effective. If an Enrollee is a patient in an
          inpatient hospital setting during the month in which termination
          becomes effective, the CONTRACTOR is responsible for the entire
          hospital

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

          stay including physician charges until discharge or thirty days
          following termination, whichever occurs first.

     2.   ENROLLEE NOT LIABLE FOR DEBTS OF CONTRACTOR OR ITS SUBCONTRACTORS

          If the CONTRACTOR or one of its subcontractors becomes insolvent or
          bankrupt, the Enrollees will not be liable for the debts of the
          CONTRACTOR or its subcontractor. The CONTRACTOR will include this term
          in all of its subcontracts.

     3.   INFORMATION FOR CLAIMS PAYMENT

          The CONTRACTOR will promptly supply to the DEPARTMENT all information
          necessary for the reimbursement of any Medicaid claims not paid by the
          CONTRACTOR.

     4.   CHANGES IN ENROLLMENT PROCESS

          The CONTRACTOR will be advised of anticipated changes in policies and
          procedures as they relate to the enrollment process and their comments
          will be solicited. The CONTRACTOR agrees to be bound by such changes
          in policies and procedures unless they are not agreeable to the
          CONTRACTOR, in which case the CONTRACTOR may terminate the Contract in
          accordance with the Contract termination provisions.

     5.   HEARING PRIOR TO TERMINATION

          Regarding the General Provisions, Article XVII (Default, Termination,
          & Payment Adjustment), item 3, if the CONTRACTOR fails to meet the
          requirements of the Contract, the DEPARTMENT must give the CONTRACTOR
          a hearing prior to termination. Enrollees must be informed of the
          hearing and will be allowed to disenroll from the MCO without cause.

E.   ASSIGNMENT

     Assignment of any or all rights or obligations under this Contract without
     the prior written consent of the DEPARTMENT is prohibited. Sale of all or
     any part of the rights or obligations under this Contract will be deemed an
     assignment. Consent may be withheld in the DEPARTMENT's sole and absolute
     discretion.

                           ARTICLE XII - MISCELLANEOUS

A.   INTEGRATION

     This Contract contains the entire agreement between the parties with
     respect to the subject matter of this Contract. There are no
     representations, warranties, understandings, or agreements other than those
     expressly set forth herein. Previous contracts between the parties hereto
     and conduct between the parties which precedes the implementation of this
     Contract will not be used as a guide to the interpretation or enforcement
     of this Contract or any provision hereof.

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<PAGE>

                                                                    Attachment B
                                                          Effective July 1, 2002

B.   ENROLLEES MAY NOT ENFORCE CONTRACT

     Although this Contract relates to the provision of benefits for Enrollees
     and others, no Enrollee is entitled to enforce any provision of this
     Contract against the CONTRACTOR nor will any provision of this Contract be
     constructed to constitute a promise by the CONTRACTOR to any Enrollee or
     potential Enrollee.

C.   INTERPRETATION OF LAWS AND REGULATIONS

     The DEPARTMENT will be responsible for the interpretation of all federal
     and State laws and regulations governing or in any way affecting this
     Contract. When interpretations are required, the CONTRACTOR will submit
     written requests to the DEPARTMENT. The DEPARTMENT will retain full
     authority and responsibility for the administration of the Medicaid program
     in accordance with the requirements of Federal and State law.

D.   ADOPTION OF RULES

     Adoption of rules by the DEPARTMENT, subsequent to this amendment, and
     which govern the Medicaid program, will be automatically incorporated into
     this Contract upon receipt by the CONTRACTOR of written notice thereof.

                   ARTICLE XIII - EFFECT OF GENERAL PROVISIONS

If there is a conflict between these Special Provisions (Attachment B) or the
General Provisions (Attachment A), then these Special Provisions will control.

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<PAGE>

                                TABLE OF CONTENTS

                                  ATTACHMENT C
                                COVERED SERVICES
                           LIMITATIONS AND EXCLUSIONS
                    CO-PAYMENT AND CO-INSURANCE REQUIREMENTS

A.      In General...........................................................  1

B.      Hospital Services....................................................  1

C.      Physician Services...................................................  2

D.      General Preventive Services..........................................  3

E.      Vision Care..........................................................  3

F.      Lab and Radiology....................................................  3

G.      Physical and Occupational Therapy....................................  4

H.      Speech and Hearing Services..........................................  4

I.      Podiatry Services....................................................  5

J.      End Stage Renal Disease - Dialysis...................................  5

K.      Home Health Services.................................................  5

L.      Hospice Services.....................................................  5

M.      Private Duty Nursing.................................................  6

N.      Medical Supplies and Medical Equipment...............................  6

O.      Abortions and Sterilizations.........................................  6

P.      Treatment for Substance Abuse and Dependency.........................  6

Q.      Organ Transplants....................................................  6

R.      Other Outside Medical Services.......................................  7

S.      Long Term Care.......................................................  7

T.      Transportation Services..............................................  7

U.      Services to CHEC Enrollees...........................................  8

                                        i

<PAGE>

                                TABLE OF CONTENTS

V.      Family Planning Services.............................................  8

W.      High Risk Prenatal Services..........................................  9

X.      Services for Children with Special Needs   .......................... 12

Y.      Medical and Surgical Services of a Dentist  ......................... 14

Z.      Diabetes Education   ................................................ 15

AA.     HIV Prevention....................................................... 15

Summary of Co-Payment and Co-Insurance Requirements.......................... 16

                                       ii

<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

                         ATTACHMENT C - COVERED SERVICES
                            LIMITATIONS & EXCLUSIONS
                     CO-PAYMENT & CO-INSURANCE REQUIREMENTS

Covered Services are the same under both the Traditional and Non-Traditional
Medicaid Plans unless otherwise indicated. Co-payments and co-insurances are
listed if required. Pregnant women and children under age 18 are exempt from all
co-payment and co-insurance requirements. Services related to family planning
are excluded from all co-payment and co-insurance requirements. Medicaid
Provider Manuals provide detailed information regarding covered services and are
available to the CONTRACTOR upon request.

A.   IN GENERAL

     The CONTRACTOR will provide the following benefits to Enrollees in
     accordance with Medicaid benefits as defined in the Utah State Plan subject
     to the exception or limitations as noted below. The DEPARTMENT reserves the
     right to interpret what is in the State plan. Medicaid services can only be
     limited through utilization criteria based on Medical Necessity. The
     CONTRACTOR will provide at least the following benefits to Enrollees.

     The CONTRACTOR is responsible to provide or arrange for all Medically
     Necessary Covered Services on an emergency basis 24 hours each day, seven
     days a week. The CONTRACTOR is responsible for payment for all covered
     Emergency Services furnished by providers that do not have arrangements
     with the CONTRACTOR.

B.   HOSPITAL SERVICES

     1.   INPATIENT HOSPITAL

          Services furnished in a licensed, certified hospital.

          Non-Traditional Medicaid Plan excludes the following revenue
          codes:
          430 - 439 (Occupational Therapy)
          380 - 382, and 391 (Whole Blood)
          390 and 399 (Autologous or self blood storage for future use)
          811 - 813 (Organ Donor charges)

          CO-INSURANCE
          Traditional Medicaid: $[*] for non-emergency admissions.
          Limited to $[*] per Enrollee per calender year.
          Non-Traditional Medicaid: $[*] for each non-emergency admission per
          Enrollee. Counts toward total maximum co-payment and co-insurance of
          $[*] per Enrollee per calendar year.

                                  Page 1 of 16

<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

     2.   OUTPATIENT HOSPITAL

          Services provided to Enrollees at a licensed, certified hospital who
          are not admitted to the hospital.

          CO-PAYMENT
          Traditional Medicaid: $[*] co-payment per visit. Limited to one
          co-payment per date of service per provider. The facility fees
          associated with services provided in an outpatient hospital or
          free-standing ambulatory surgical centers are subject to $[*]
          co-payment per date of service per provider. Annual calendar year
          maximum for any combination of physician, podiatry, outpatient
          hospital, and surgical centers is $[*] per Enrollee.
          Non-Traditional Medicaid: $[*] co-payment per visit. Limited to one
          co-payment per date of service per provider. The facility fees
          associated with services provided in an outpatient hospital or a free
          standing ambulatory surgical centers are subject to $[*] co-payment
          per date of service per provider. Counts toward total maximum
          co-payment and co-insurance of $[*] per Enrollee per calendar year.

     3.   EMERGENCY DEPARTMENT SERVICES

          Emergency Services provided to Enrollees in designated hospital
          emergency departments.

          CO-PAYMENT
          Traditional Medicaid: $[*] co-payment for non-emergency use of the
          emergency room.
          Non-Traditional Medicaid: $[*] co-payment for non-emergency use of the
          emergency room. Counts toward total maximum co-payment and
          co-insurance of $[*] per Enrollee per calendar year.

C.   PHYSICIAN SERVICES

     Services provided directly by licensed physicians or osteopaths, or by
     other licensed professionals such as physician assistants, nurse
     practitioners, or nurse midwives under the physician's or osteopath's
     supervision.

     Non-Traditional Medicaid Excludes office visits in conjunction with allergy
     injections (CPT codes 95115 through 95134 and 95144 through 95199).

     CO-PAYMENT
     Traditional Medicaid: $[*] co-payment per visit. Limited to one co-payment
     per date of service per provider. Annual calendar year maximum is $[*] per
     Enrollee for any combination of physician, podiatry, outpatient hospital,
     freestanding emergency centers,

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

     and surgical centers. Co-payment required for preventive services and
     immunizations.
     Non-Traditional Medicaid: $[*] co-payment per visit. Limited to one
     co-payment per date of service per provider. No co-payment for preventive
     services and immunizations. Counts toward total maximum co-payment and
     co-insurance of $[*] per Enrollee per calendar year.

D.   GENERAL PREVENTIVE SERVICES

     The CONTRACTOR must develop or adopt practice guidelines consistent with
     current standards of care, as recommended by professional groups such as
     the American Academy of Pediatric and the U.S. Task Force on Preventive
     Care.

     A minimum of three screening programs for prevention or early intervention
     (e.g. Pap Smear, diabetes, hypertension).

E.   VISION CARE

     Services provided by licensed ophthalmologists or licensed optometrists,
     and opticians within their scope of practice. Eyeglasses will be provided
     to eligible recipients based on medical necessity. Services include, but
     are not limited to, the following:

     1.   Eye refractions, examinations
     2.   Laboratory work
     3.   Lenses
     4.   Eyeglass Frames
     5.   Repair of Frames
     6.   Repair or Replacement of Lenses
     7.   Contact Lenses (when Medically Necessary)

     Non-Traditional Medicaid Plan is limited to the following service and
     limitation: Eye refraction/examination is limited to one eye examination
     every 12 months. Annual coverage limited to $[*]. All amounts over $[*]
     paid by Enrollee. No coverage for eyeglasses.

F.   LAB AND RADIOLOGY SERVICES

     Professional and technical laboratory and X-ray services furnished by
     licensed and certified providers. All laboratory testing sites, including
     physician office labs, providing services under this Contract will have
     either a Clinical Laboratory Improvement Amendments (CLIA) certificate of
     Waiver or a certificate of registration along with a CLIA identification
     number.

     Those laboratories with certificates of waiver will provide only the eight
     types of tests permitted under the terms of their waiver. Laboratories with
     certificates of registration

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

     may perform a full range of laboratory tests.

G.   PHYSICAL AND OCCUPATIONAL THERAPY

     1.   PHYSICAL THERAPY

          Treatment and services provided by a licensed physical therapist.
          Treatment and services must be authorized by a physician and include
          services prescribed by a physician or other licensed practitioner of
          the healing arts within the scope of his or her practice under State
          law and provided to an Enrollee by or under the direction of a
          qualified physical therapist. Necessary supplies and equipment will be
          reviewed for medical necessity and follow the criteria of the R414.12
          rule.

     2.   OCCUPATIONAL THERAPY

          Treatment of services provided by a licensed occupational therapist.
          Treatment and services must be authorized by a physician and include
          services prescribed by a physician or other licensed practitioner of
          the healing arts within the scope of his or her practice under State
          law and provided to an Enrollee by or under the direction of a
          qualified occupational therapist. Necessary supplies and equipment
          will be reviewed for medical necessity and follow the criteria of the
          R414.12 rule.

          Non-Traditional Medicaid Plan is limited by the number of services:
          Visits to a licensed physical therapist, licensed occupational
          therapist and chiropractor are limited to a combination of 16 visits
          per calendar year. Chiropractic services are covered under
          fee-for-service and are not the responsibility of the CONTRACTOR.

          CO-PAYMENT
          Non-Traditional Medicaid: $[*] co-payment per visit. Limited to one
          co-payment per date of service per provider. Counts toward total
          maximum co-payment and co-insurance of $[*] per Enrollee per calendar
          year.

H.   SPEECH AND HEARING SERVICES

     Services and appliances, including hearing aids and hearing aid batteries,
     provided by a licensed medical professional to test and treat speech
     defects and hearing loss.

     Traditional Medicaid Plan: Coverage is limited to children up to age 21 and
     pregnant women.

     Non-Traditional Medicaid Plan: Not covered.

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

I.   PODIATRY SERVICES

     Services provided by a licensed podiatrist.

     Traditional Medicaid Plan: Full coverage is limited to children up to age
     21 and pregnant women. Effective October 1, 2002, limited podiatry benefits
     are covered for adults.

     Non-Traditional Medicaid Plan: Effective October 1, 2002, limited podiatry
     benefits are covered.

     CO-PAYMENT
     Traditional Medicaid: $[*] co-payment per visit. Limited to one co-payment
     per date of service per provider. Annual calendar year maximum is $[*] per
     Enrollee for any combination of physician, podiatry, outpatient hospital,
     freestanding emergency centers, and surgical centers. Co-payment required
     for preventive services and immunizations.
     Non-Traditional Medicaid: $[*] co-payment per visit. Limited to one
     co-payment per date of service per provider. Counts toward total maximum
     co-payment and co-insurance of $[*] per Enrollee per calendar year.

J.   END STAGE RENAL DISEASE - DIALYSIS

     Treatment of end stage renal dialysis for kidney failure. Dialysis is to be
     rendered by a Medicare-certified Dialysis facility.

K.   HOME HEALTH SERVICES

     Home health services are defined as intermittent nursing care provided by
     certified nursing professionals (registered nurses, licensed practical
     nurses, and home health aides) in the client's home when the client is
     homebound or semi-homebound. Home health care must be rendered by a
     Medicare-certified Home Health Agency that has a surety bond.

     Personal care services as defined in the DEPARTMENT's Medicaid Personal
     Care Provider Manual are included in this Contract. Personal care services
     may be provided by a State licensed home health agency.

L.   HOSPICE SERVICES

     Services delivered to terminally ill patients (six months life expectancy)
     who elect palliative versus aggressive care. Hospice care must be rendered
     by a Medicare-certified hospice.

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

M.   PRIVATE DUTY NURSING

     Services provided by licensed nurses for ventilator-dependent children and
     technology-dependent adults in their home in lieu of hospitalization if
     Medically Necessary, feasible, and safe to be provided in the patient's
     home. Requests for continuous care will be evaluated on a case by case
     basis and must be approved by the CONTRACTOR.

     Non-Traditional Medicaid Plan: Private Duty Nursing is not a covered
     service.

N.   MEDICAL SUPPLIES AND MEDICAL EQUIPMENT

     This Covered Service includes any necessary supplies and equipment used to
     assist the Enrollee's medical recovery, including both durable and
     non-durable medical supplies and equipment, and prosthetic devices. The
     objective of the medical supplies program is to provide supplies for
     maximum reduction of physical disability and restore the Enrollee to his or
     her best functional level. Medical supplies may include any necessary
     supplies and equipment recommended by a physical or occupational therapist,
     but should be ordered by a physician. Durable medical equipment (DME)
     includes, but is not limited to, prosthetic devices and specialized
     wheelchairs. Durable medical equipment and supplies must be provided by a
     DME supplier that has a surety bond. Necessary supplies and equipment will
     be reviewed for medical necessity and follow the criteria of the R414.12 of
     the Utah Administrative Code, with the exception of criteria concerning
     long term care since long term care services are not covered under the
     Contract.

     Non-Traditional Medicaid Plan excludes blood pressure monitors, and
     replacement of lost, damaged, or stolen durable medical equipment or
     prosthesis.

O.   ABORTIONS AND STERILIZATIONS

     These services are provided to the extent permitted by Federal and State
     law and must meet the documentation requirement of 42 CFR 441, Subparts E
     and F. These requirements must be met regardless of whether Medicaid is
     primary or secondary payer.

P.   TREATMENT FOR SUBSTANCE ABUSE AND DEPENDENCY

     Treatment will cover medical detoxification for alcohol or substance abuse
     conditions. Medical services including hospital services will be provided
     for the medical non-psychiatric aspects of the conditions of alcohol/drug
     abuse.

Q.   ORGAN TRANSPLANTS

     The following transplantations are covered for all Enrollees: Kidney,
     liver, cornea, bone marrow, stem cell, heart, intestine, lung, pancreas,
     small bowel, combination heart/lung, combination intestine/liver,
     combination kidney/pancreas, combination liver/kidney,

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

     multi visceral, and combination liver/small bowel unless amended under the
     provisions of Attachment B, Article IV (Benefits), Section C, Subsection 2
     of this Contract.

     Non-Traditional Medicaid Plan is limited to kidney, liver, cornea, bone
     marrow, stem cell, heart, and lung transplantations.

R.   OTHER OUTSIDE MEDICAL SERVICES

     The CONTRACTOR, at its discretion and without compromising quality of care,
     may choose to provide services in Freestanding Emergency Centers, Surgical
     Centers and Birthing Centers.

     CO-PAYMENT
     Traditional Medicaid: $[*] co-payment per visit. Limited to one co-payment
     per date of service per provider. Annual calendar year maximum is $[*] per
     Enrollee for any combination of physician, podiatry, outpatient hospital,
     freestanding emergency centers, and surgical centers. (Co-payment does not
     apply to birthing centers.)
     Non-Traditional Medicaid: $[*] co-payment per visit. Limited to one
     co-payment per date of service per provider. Counts toward total maximum
     co-payment and co-insurance of $[*] per Enrollee per calendar year.

S.   LONG TERM CARE

     The CONTRACTOR may provide long term care for Enrollees in skilled nursing
     facilities requiring such care as a continuum of a medical plan when the
     plan includes a prognosis of recovery and discharge within thirty (30) days
     or less. When the prognosis of an Enrollee indicates that long term care
     (over 30 days) will be required, the CONTRACTOR will notify the DEPARTMENT
     and the skilled nursing facility of the prognosis determination and will
     initiate disenrollment to be effective on the first day of the month
     following the prognosis determination. Skilled nursing care is to be
     rendered in a skilled nursing facility which meets federal regulations of
     participation.

T.   TRANSPORTATION SERVICES

     Ambulance (ground and air) service for medical emergencies. The CONTRACTOR
     is also responsible to pay for authorized emergency transportation for an
     illness or accident episode which, upon subsequent medical evaluation at
     the hospital, is determined to be psychiatric-related. The CONTRACTOR will
     submit its emergency transportation policy to the DEPARTMENT for review.
     The CONTRACTOR is not responsible for transporting an Enrollee from an
     acute care facility to another acute care facility for a psychiatric
     admission. The CONTRACTOR's scope of coverage for emergency transportation
     services is limited to the same scope of coverage as defined in the
     transportation Medicaid provider manual.

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

     Effective September 1, 2002 the CONTRACTOR is not responsible for ambulance
     (ground and air) services.

U.   SERVICES TO CHEC ENROLLEES

     1.   CHEC SERVICES

          The CONTRACTOR will provide to CHEC Enrollees preventive screening
          services and other necessary medical care, diagnostic services,
          treatment, and other measures necessary to correct or ameliorate
          defects and physical and mental illnesses and conditions discovered by
          the screening services, whether or not such services are covered under
          the State Medicaid Plan. The CONTRACTOR is not responsible for home
          and community-based services available through Utah's Home and
          Community-Based waiver programs.

          The CONTRACTOR will provide the full early and periodic screening,
          diagnosis, and treatment services to all eligible children and young
          adults up to age 21 in accordance with the periodicity schedule as
          described in the Utah CHEC Provider Manual. All children between six
          months and 72 months must be screened for blood lead levels.

          Non-Traditional Medicaid: CHEC services are not covered. Enrollees who
          are 19 or 20 years of age receive the adult scope of services.

     2.   CHEC POLICIES AND PROCEDURES

          The CONTRACTOR agrees to have written policies and procedures for
          conducting tracking, follow-up, and outreach to ensure compliance with
          the CHEC periodicity schedules. These policies and procedures will
          emphasize outreach and compliance monitoring for children and young
          adults, taking into account the multi-lingual, multi-cultural nature
          as well as other unique characteristics of the CHEC Enrollees.

V.   FAMILY PLANNING SERVICES

     This service includes disseminating information, counseling, and treatments
     relating to family planning services. All services must be provided by or
     authorized by a physician, certified nurse midwife, or nurse practitioner.
     All services must be provided in concert with Utah law.

     Birth control services include information and instructions related to the
     following:

     1.   Birth control pills;
     2.   Norplant;

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

     3.   Depo Provera;
     4.   IUDs;
     5.   Barrier methods including diaphragms, male and female condoms, and
          cervical caps;
     6.   Vasectomy or tubal ligations; and
     7.   Office calls, examinations or counseling related to contraceptive
          devices.

     Non-Traditional Medicaid: Norplant is not a covered service.

W.   HIGH-RISK PRENATAL SERVICES

     1.   IN GENERAL - ENSURE SERVICE ARE APPROPRIATE AND COORDINATED

          The CONTRACTOR must ensure that high risk pregnant Enrollees receive
          an appropriate level of quality perinatal care that is coordinated,
          comprehensive and continuous either by direct service or referral to
          an appropriate provider or facility. In the determination of the
          provider and facility to which a high risk prenatal Enrollee will be
          referred, care must be taken to ensure that the provider and facility
          both have the appropriate training, expertise and capability to
          deliver the care needed by the Enrollee and her fetus/infant. Although
          many complications in perinatal health cannot be anticipated, most can
          be identified early in pregnancy. Ideally, preconceptional counseling
          and planned pregnancy are the best ways to assure successful pregnancy
          outcome, but this is often not possible. Provision of routine
          preconceptional counseling must be made available to those women who
          have conditions identified as impacting pregnancy outcome, i.e.,
          diabetes mellitus, medications which may result in fetal anomalies or
          poor pregnancy outcome, or previous severe anomalous fetus/infant,
          among others.

     2.   RISK ASSESSMENT

          a.   CRITERIA

               Enrollees who are pregnant should be risk assessed for medical
               and psychosocial conditions which may contribute to a poor birth
               outcome at their first prenatal visit, preferably in the first
               trimester. The patient who is determined not to be at high risk
               should be evaluated for change in risk status throughout her
               pregnancy. There are a number of complex systems to determine how
               to assess the risk of pregnancies. The DEPARTMENT has developed a
               risk assessment tool available through the Division of Community
               and Family Health Services which is available upon request.

          b.   RECOMMENDED PRENATAL SCREENING

               The DEPARTMENT recommends prenatal screening of every woman for

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

               hepatitis B surface antigen (HBsAg) to identify all those at high
               risk for transmitting the virus to their newborns. When a woman
               is found to be HBsAg-positive, the CONTRACTOR will provide HBIG
               and HB vaccine at birth. Initial treatments should be given
               during the first 12 hours of life.

          c.   CLASSIFICATION

               Upon identification of pregnancy or the development of a risk
               factor, each patient should be assigned a classification as
               outlined below.
               1)   Group I
                    Group I patients have no significant risk factors. They may
                    receive obstetrical care by an obstetrician/gynecologist
                    (OB/GYN), family practitioner or certified nurse midwife.

               2)   Group II
                    Group II patients have the following risk factors, and
                    require consultation (consultation may be either by
                    telephone or in person, as appropriate) with an OB/GYN:

                    i.     pregnancy beyond 42 weeks
                    ii.    preterm labor in the current pregnancy less than 34
                           weeks
                    iii.   fetal malpresentation at 37 weeks gestation and
                           beyond*
                    iv.    oxytocin or antepartum prostaglandin use is
                           contemplated*
                    v.     arrest of dilatation in labor, or arrest of descent
                           in labor*
                    vi.    bleeding in labor, beyond bloody show*
                    vii.   abnormal fetal heart rate pattern potentially
                           requiring specific intervention*
                    viii.  chorioamnionitis*
                    ix.    preeclampsia
                    x.     VBAC*

                    *Criteria do not apply if family physician has cesarean
                    privileges.

               3)   Group III
                    Group III patients have the following risk factors, and
                    require consultation by a Maternal Fetal Medicine (MFM)
                    specialist (board certified perinatologist)

                    i.     intrauterine growth restriction prior to 37 weeks
                    ii.    patient at increased risk for fetal anomaly
                           (including teratogen exposure)
                    iii.   patient has known fetal anomaly
                    iv.    preterm delivery (<36 weeks) in a prior pregnancy
                    v.     abnormal serum screening
                    vi.    previous child with congenital anomaly
                    vii.   antibody sensitization

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

                    viii.  anemia, excluding iron deficiency
                    ix.    significant concurrent medical illness
                    x.     spontaneous premature rupture of the membranes, not
                           in labor (<34 weeks)
                    xi.    history of thromboembolic disease
                    xii.   thromboembolic disease in current pregnancy
                    xiii.  habitual pregnancy loss (3 or more consecutive
                           losses)
                    xiv.   two or more previous stillbirths or neonatal deaths

               4)   Group IV

                    Group IV patients have the following risk factors, and
                    require total obstetric care by an OB/GYN, or co-management
                    with an OB/GYN or MFM

                    i.     any significant medical complication, including
                           patients with insulin dependent diabetes millitus,
                           chronic hypertension requiring medication, maternal
                           neoplastic disease
                    ii.    twins
                    iii.   known or suspected cervical incompetence
                    iv.    placenta previa beyond 28 week gestation
                    v.     severe preeclampsia

               5)   Group V
                    Group V patients have the following risk factors, and
                    require total obstetric care by a MFM (exceptions may be
                    made by a regional MFM specialist, on a case-by-case basis,
                    after MFM consultation)

                    i.     triplets and above
                    ii.    patient has an organ transplant (except cornea)
                    iii.   diabetes mellitus with severe renal impairment
                    iv.    cardiac disease, not functional class I, including
                           all pulmonary hypertension
                    v.     twin-twin transfusion syndrome
                    vi.    patient requires fetal surgical procedure

     3.   PRENATAL INITIATIVE PROGRAM

          Prenatal services provided directly or through agreements with
          appropriate providers includes those services covered under Medicaid's
          Prenatal Initiative Program which includes the following enhanced
          services for pregnant women:

          a.   perinatal care coordination
          b.   prenatal and postnatal home visits

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

          c.   group prenatal and postnatal education
          d.   nutritional assessment and counseling
          e.   prenatal and postnatal psychosocial counseling

          Psychosocial counseling is a service designed to benefit the pregnant
          client by helping her cope with the stress that may accompany her
          pregnancy. Enabling her to manage this stress improves the likelihood
          that she will have a healthy pregnancy. This counseling is intended to
          be short term and directly related to the pregnancy. However, pregnant
          women who are also suffering from a serious emotional or mental
          illness should be referred to an appropriate mental health care
          provider.

X.   SERVICES FOR CHILDREN WITH SPECIAL NEEDS

     1.   IN GENERAL

          In addition to primary care, children with chronic illnesses and
          disabilities need specialized care provided by trained experienced
          professionals. Since early diagnosis and intervention will prevent
          costly complications later on, the specialized care must be provided
          in a timely manner. The specialized care must comprehensively address
          all areas of need to be most effective and must be coordinated with
          primary care and other services to be most efficient. The children's
          families must be involved in the planning and delivery of the care for
          it to be acceptable and successful.

     2.   SERVICES REQUIRING TIMELY ACCESS

          All children with special health care needs must have timely access to
          the following services:

          a.   Comprehensive evaluation for the condition.

          b.   Pediatric subspecialty consultation and care appropriate to the
               condition.

          c.   Rehabilitative services provided by professionals with pediatric
               training in areas such as physical therapy, occupational therapy
               and speech therapy.

          d.   Durable medical equipment appropriate for the condition.

          e.   Care coordination for linkage to early intervention, special
               education and family support services and for tracking progress.

          In addition, children with the conditions marked by * below must have
          timely access to coordinated multispecialty clinics, when Medically
          Necessary, for their disorder.

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

     3.   DEFINITION OF CHILDREN WITH SPECIAL HEALTH CARE NEEDS

          The definition of children with special health needs includes, but is
          not limited to, the following conditions:

          a.   Nervous System Defects such as
               Spina Bifida*
               Sacral Agenesis*
               Hydrocephalus

          b.   Craniofacial Defects such as
               Cleft Lip and Palate*
               Treacher - Collins Syndrome

          c.   Complex Skeletal Defects such as
               Arthrogryposis*
               Osteogenesis Imperfecta*
               Phocomelia*

          d.   Inborn Metabolic Disorders such as
               Phenylketonuria*
               Galactosemia*

          e.   Neuromotor Disabilities such as
               Cerebral palsy*
               Muscular Dystrophy*
               Complex Seizure Disorders

          f.   Congenital Heart Defects

          g.   Genetic Disorders such as
               Chromosome Disorders
               Genetic Disorders

          h.   Chronic Illnesses such as
               Cystic Fibrosis
               Hemophilia
               Rheumatoid Arthritis
               Bronchopulmonary Dysplasia
               Cancer
               Diabetes
               Nephritis
               Immune Disorders

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

          i.   Developmental Disabilities with multiple or global delays in
               development such as Down Syndrome or other conditions associated
               with mental retardation.

          The CONTRACTOR agrees to cover all Medically Necessary services for
          children with special health care needs such as the ones listed above.
          The CONTRACTOR further agrees to cooperate with the DEPARTMENT's
          quality assurance monitoring for this population by providing
          requested information.

Y.   MEDICAL AND SURGICAL SERVICES OF A DENTIST

     1.   WHO MAY PROVIDE SERVICES

          Under Utah law, medical and surgical services of a dentist may be
          provided by either a physician or a doctor of dental medicine or
          dental surgery.

     2.   UNIVERSE OF COVERED SERVICES

          Medical and surgical services that under Utah law may be provided by a
          physician or a doctor of dental medicine or dental surgery, are
          covered under the Contract.

     3.   SERVICES SPECIFICALLY COVERED

          The CONTRACTOR is responsible for palliative care and pain relief for
          severe mouth or tooth pain in an emergency room. If the emergency room
          physician determines that it is not an emergency and the client
          requires services at a lesser level, the provider should refer the
          client to a dentist for treatment. If the dental-related problem is
          serious enough for the client to be admitted to the hospital, the
          CONTRACTOR is responsible for coverage of the inpatient hospital stay.
          The CONTRACTOR is responsible for authorized/approved medical services
          provided by oral surgeons consistent with injury, accident, or disease
          (excluding dental decay and periodontal disease) including, but not
          limited to, removal of tumors in the mouth, setting and wiring a
          fractured jaw. Also covered are injuries to sound natural teeth and
          associated bone and tissue resulting from accidents including services
          by dentists performed in facilities other than the emergency room or
          hospital.

     4.   DENTAL SERVICES NOT COVERED

          The CONTRACTOR is not responsible for routine dental services such as
          fillings, extractions, treatment of abscess or infection,
          orthodontics, and pain relief when provided by a dentist in the office
          or in an outpatient setting such as a surgical center or scheduled
          same day surgery in a hospital including the surgical facilities
          charges.

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

Z.   DIABETES EDUCATION

     The CONTRACTOR shall provide diabetes self-management education from a Utah
     certified or American Diabetes Association recognized program when an
     Enrollee:

     1.   has recently been diagnosed with diabetes, or

     2.   is determined by the health care professional to have experienced a
          significant change in symptoms, progression of the disease or health
          condition that warrants changes in the Enrollee's self-management
          plan, or

     3.   is determined by the health care professional to require re-education
          or refresher training.

AA.  HIV PREVENTION

     The CONTRACTOR shall have in place the following:

     1.   GENERAL PROGRAM

          The CONTRACTOR must have educational methods for promoting HIV
          prevention to Enrollees. HIV prevention information, both primary
          (targeted to uninfected Enrollees), as well as secondary (targeted to
          those Enrollees with HIV) should must be culturally and linguistically
          appropriate. All Enrollees should be informed of the availability of
          both in-plan HIV counseling and testing services, as well as those
          available from Utah State-operated programs.

     2.   FOCUSED PROGRAM FOR WOMEN

          Special attention should be paid identifying HIV+ women and engaging
          them in routine care in order to promote treatment including, but not
          limited to, antiretroviral therapy during pregnancy.

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<PAGE>

                                                  Attachment C - Covered Service
                                                                          Molina
                                                                    July 1, 2002

                            SUMMARY OF CO-PAYMENT AND
                            CO-INSURANCE REQUIREMENTS

Pregnant women and children under age 18 are exempt from all co-payment and
co-insurance requirements. Services related to family planning are excluded from
all co-payment and co-insurance requirements.

A.   TRADITIONAL MEDICAID PLAN
     -------------------------

1.   Inpatient hospital: Each Enrollee must pay a $[*] co-insurance for
     non-emergency inpatient hospital admissions. The maximum co-payment per
     Enrollee per calendar year is $[*] for non-emergency inpatient hospital
     admissions.

2.   Emergency Department: Each enrollee must pay a $[*] co-payment for non-
     emergency use of the emergency room.

3.   Physician, osteopath, podiatrist, outpatient hospital, freestanding
     emergency centers, and surgical centers: Each Enrollee must pay a $[*]
     co-payment per provider per day. The maximum co-payment per Enrollee per
     calendar year is $[*] for any combination of the services provided by the
     above providers.

4.   Prescription Drugs: Each Enrollee must pay a co-payment of $[*] per
     prescription. The maximum co-payment is $[*] per Enrollee per month.*

There is no overall out-of-pocket maximum for the above services.

B.   NON-TRADITIONAL MEDICAID PLAN
     -----------------------------

1.   Inpatient hospital: Each Enrollee must pay a $[*] co-insurance for each
     non-emergency inpatient hospital admissions.

2.   Emergency Department: Each enrollee must pay a $[*] co-payment for non-
     emergency use of the emergency room.

3.   Physician, osteopath, podiatrist, physical therapist, occupational
     therapist, chiropractor*, freestanding emergency centers, surgical centers:
     Each Enrollee must pay a $[*] co-payment per provider per day.

4.   Prescription Drugs: Each Enrollee must pay a co-payment of $[*] per
     prescription.*

The out-of-pocket maximum for each Enrollee is $[*] for any combination of the
above co-payments and co-insurance.

* Pharmacy services and chiropractic services are not the responsibility of the
  CONTRACTOR.

                                                        hmo/molina am6 (9/05/02)

                                  Page 16 of 16

<PAGE>
<TABLE>
<CAPTION>
PROVIDER NAME:                                                                                                     ATTACHMENT E
              ---------------------------------------------------                                               TABLE 1 PAGE 1 OF 15
SERVICE REPORTING PERIOD:  BEGINNING            ENDING                                                          MEDICAID ENROLLMENT
                                     ----------        ----------
PAYMENT DATES:             BEGINNING            ENDING
                                     ----------        ----------
Effective Date: July 1, 2002

                                      TRADITIONAL MEDICAID RATE CELLS                          NON-TRADITIONAL MEDICAID RATE CELLS
               -----------------------------------------------------------------------------  --------------------------------------
 1       2      3     4      5     6     7      8       9       10        11      12     13    14     15     16       17       18
---- --------- ----  ----  ------ ---- -----  ------  -----  --------  -------- ------- ----  ----  ------  -----  -------- --------
                                                                                                                   RESTRIC-
                                                      MED                       RESTRIC-      TANF  TANF    MED    TION     MEDICAID
               AGE   TANF  TANF        DIS-   DIS-    NEEDY  NON TANF  BREAST/  TION          MALE  FEMALE  NEEDY  PROGRAM  TOTAL
LINE           0-12  MALE  FEMALE      ABLED  ABLED   CHILD  PREGNANT  CERVICAL PROGRAM       19 &  19 &    19 &   19 &     (SUM OF
NO   MONTH     Mos.  1-18  1-18   AGED MALE   FEMALE  1-18   FEMALE    CANCER   0-18    AIDS  OVER  OVER    OVER   OVER     COLS)
---- --------- ----  ----  ------ ---- -----  ------  -----  --------  -------- ------- ----  ----  ------  -----  -------- --------
<S>  <C>       <C>   <C>   <C>    <C>  <C>    <C>     <C>    <C>       <C>      <C>     <C>   <C>   <C>     <C>    <C>      <C>
 1   JULY                                                                                                                          0
 2   AUGUST                                                                                                                        0
 3   SEPTEMBER                                                                                                                     0
 4   OCTOBER                                                                                                                       0
 5   NOVEMBER                                                                                                                      0
 6   DECEMBER                                                                                                                      0
 7   JANUARY                                                                                                                       0
 8   FEBRUARY                                                                                                                      0
 9   MARCH                                                                                                                         0
10   APRIL                                                                                                                         0
11   MAY                                                                                                                           0
12   JUNE                                                                                                                          0
13   TOTAL        0     0       0    0     0       0      0         0         0       0    0     0       0      0         0        0
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
PROVIDER NAME:                                                        ATTACHMENT E                                   ATTACHMENT E
              -------------------------------------------------    TABLE 2 PAGE 1 OF 2                                  TABLE 2
SERVICE REPORTING PERIOD: BEGINNING            ENDING               REVENUES AND COST                                Page 2 of 15
                                    ---------        ----------
PAYMENT DATES:            BEGINNING            ENDING
                                    ---------        ----------

                                                 MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)
                                ---------------------------------------------------------------------------------
                                                                                                          NON-TRADITIONAL
                                                 TRADITIONAL MEDICAID RATE CELLS                        MEDICAID RATE CELLS
                                ----------------------------------------------------------------------- -------------------
 1            2             3    4    5    6     7     8     9     10     11      12      13     14   15   16   17     18     19
---- ------------------- ----- ---- ---- ------ ---- ----- ------ ----- ------ -------- ------- ---- ---- ---- ----- ------ --------
                         TOTAL
                         UTAH
                         OPERA-
                         TIONS                                                                                       RESTRIC-
                         (INCLUD-                                       NON                               TANF       TION   MEDICAID
                         ING                                      MED   TANF            RESTRIC-     TANF FE-  MED   PRO-   TOTAL
                         ALL   AGE  TANF TANF        DIS-  DIS-   NEEDY PREG-  BREAST/  TION         MALE MALE NEEDY GRAM   (SUM OF
LINE                     MEDI- 0-12 MALE FEMALE      ABLED ABLED  CHILD NANT   CERVICAL PROGRAM      19 & 19 & 19 &  19 &   COLS 4
NO   DESCRIPTION         CAID) MOS. 1-18 1-18   AGED MALE  FEMALE 1-18  FEMALE CANCER   0-18    AIDS OVER OVER OVER  OVER   THRU 16
---- ------------------- ----- ---- ---- ------ ---- ----- ------ ----- ------ -------- ------- ---- ---- ---- ----- ------ --------
<S>  <C>                 <C>   <C>  <C>  <C>    <C>  <C>   <C>    <C>   <C>      <C>      <C>     <C>  <C>  <C>  <C>   <C>  <C>
         REVENUES                                           ROUND TO THE NEAREST DOLLAR

  1  PREMIUMS                                                                                                                     $0
  2  DELIVERY FEES
      (CHILD BIRTHS)                                                                                                              $0
  3  REINSURANCE                                                                                                                  $0
  4  STOP LOSS                                                                                                                    $0
  5  TFL COLLECTIONS -
      MEDICARE                                                                                                                    $0
  6  TFL COLLECTIONS -
      OTHER                                                                                                                       $0
  7  OTHER (SPECIFY)                                                                                                              $0
  8  OTHER (SPECIFY)                                                                                                              $0
  9  TOTAL REVENUES         $0   $0   $0     $0   $0    $0     $0    $0     $0       $0      $0   $0   $0   $0    $0     $0       $0

       MEDICAL COSTS                                        ROUND TO THE NEAREST DOLLAR

 10  INPATIENT HOSPITAL
      SERVICES                                                                                                                    $0
 11  OUTPATIENT HOSPI-
      TAL SERVICES                                                                                                                $0
 12  EMERGENCY DEPARTMENT
      SERVICES                                                                                                                    $0
 13  PRIMARY CARE
      PHYSICIAN SERVICES                                                                                                          $0
 14  SPECIALTY CARE
      PHYSICIAN SERVICES                                                                                                          $0
 15  ADULT SCREENING
      SERVICES                                                                                                                    $0
 16  VISION CARE - OPTO-
      METRIC SERVICES                                                                                                             $0
 17  VISION CARE -
      OPTICAL SERVICES                                                                                                            $0
 18  LABORATORY (PATH-
      OLOGY) SERVICES                                                                                                             $0
 19  RADIOLOGY SERVICES                                                                                                           $0
 20  PHYSICAL AND
      OCCUPATIONAL
      THERAPY                                                                                                                     $0
 21  SPEECH AND HEARING
      SERVICES                                                                                                                    $0
 22  PODIATRY SERVICES                                                                                                            $0
 23  END STAGE RENAL DISEASE
      (ESRD) SERVICES -
      DIALYSIS                                                                                                                    $0
 24  HOME HEALTH
      SERVICES                                                                                                                    $0
 25  HOSPICE SERVICES                                                                                                             $0
 26  PRIVATE DUTY NURSING                                                                                                         $0
 27  MEDICAL SUPPLIES AND
      MEDICAL EQUIPMENT                                                                                                           $0
 28  ABORTIONS                                                                                                                    $0
 29  STERILIZATIONS                                                                                                               $0
 30  DETOXIFICATION                                                                                                               $0
 31  ORGAN TRANSPLANTS                                                                                                            $0
 32  OTHER OUTSIDE
      MEDICAL SERVICES                                                                                                            $0
 33  LONG TERM CARE                                                                                                               $0
 34  TRANSPORTATION
      SERVICES                                                                                                                    $0
 35  ACCRUED COSTS                                                                                                                $0
 36  OTHER (SPECIFY)                                                                                                              $0
 37  OTHER (SPECIFY)                                                                                                              $0
 38  TOTAL MEDICAL COST     $0   $0   $0     $0   $0    $0     $0    $0     $0       $0      $0   $0   $0   $0    $0     $0       $0
</TABLE>

<PAGE>

<TABLE>
PROVIDER NAME:                                               ATTACHMENT 3                                               ATTACHMENT E

SERVICE REPORTING PERIOD:                                 TABLE 3 PAGE 2 OF 2                                                TABLE 2

PAYMENT DATES:                                             REVENUES AND COST                                            Page 3 of 15

<CAPTION>
                                                                  MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)
                                           -----------------------------------------------------------------------------------------
                                                                         TRADITIONAL MEDICAID RATE CELLS
                                           -----------------------------------------------------------------------------------------
 1               2                 3           4      5     6     7      8        9        10        11       12        13       14
---- ----------------------- ------------- --------- ---- ------ ---- -------- -------- --------- -------- -------- ----------- ----
                              TOTAL UTAH
                              OPERATIONS             TANF  TANF                         MED NEEDY NON TANF  BREAST/ RESTRICTION
LINE                          (INCLUDING     AGE     MALE FEMALE      DISABLED DISABLED   CHILD   PREGNANT CERVICAL   PROGRAM
 NO         DESCRIPTION      ALL MEDICAID) 0-12 Mos. 1-18  1-18  AGED   MALE    FEMALE    1-18     FEMALE   CANCER     0-18     AIDS
---- ----------------------- ------------- --------- ---- ------ ---- -------- -------- --------- -------- -------- ----------- ----
<C>  <S>                     <C>           <C>       <C>  <C>    <C>  <C>      <C>      <C>       <C>      <C>      <C>         <C>
      ADMINISTRATIVE COSTS                                       ROUND TO THE NEAREST DOLLAR

 39  ADMINISTRATION -
     ADVERTISING
 40  HOME OFFICE INDIRECT
     COST ALLOCATIONS
 41  UTILIZATION
 42  ADMINISTRATION - OTHER
 43  TOTAL ADMINISTRATIVE
     COSTS                         $0         $0      $0    $0    $0     $0       $0        $0       $0       $0         $0      $0
 44  TOTAL COSTS [MED &
     ADMIN]                        $0         $0      $0    $0    $0     $0       $0        $0       $0       $0         $0      $0
 45  NET INCOME [GAIN OR
     (LOSS)]                       $0         $0      $0    $0    $0     $0       $0        $0       $0       $0         $0      $0
 46  ENROLLEE MONTHS                           0       0     0     0      0        0         0        0        0          0       0
 47  MEDICAL COST @ ENROLLEE
     MO
 48  ADMIN COST @
     ENROLLEE MO
 49  TOTAL COST @ ENROLLEE
     MO

           OTHER DATA

 50  TPL SAVINGS -
     COST AVOIDANCE**
 51  DUPLICATE PREMIUMS***
 52  NUMBER OF
     DELIVERIES****
 53  FAMILY PLANNING
     SERVICES
 54  REINSURANCE PREMIUMS
     RECEIVED
 55  REINSURANCE PREMIUMS
     PAID
 56  ADMINISTRATIVE REVENUE
     RETAINED BY THE
     CONTRACTOR

<CAPTION>
                              MEDICAID (CAPITATED
                               ONLY, NO FEE FOR
                                    SERVICE)
                              --------------------
                                         NON-TRADITIONAL MEDICAID RATE CELLS
                              ----------------------------------------------------------
 1               2               15         16         17          18            19
---- -----------------------  ---------  ---------  ---------  -----------  ------------
                                                                               MEDICAID
                                TANF       TANF        MED     RESTRICTION     TOTAL
LINE                            MALE      FEMALE      NEEDY      PROGRAM    (SUM OF COLS
 NO         DESCRIPTION       19 & OVER  19 & OVER  19 & OVER   19 & OVER    4 THRU 16)
---- -----------------------  ---------  ---------  ---------  -----------  ------------
<C>  <S>                      <C>        <C>        <C>        <C>          <C>
      ADMINISTRATIVE COSTS                   ROUND TO THE NEAREST DOLLAR

 39  ADMINISTRATION -
     ADVERTISING                                                                 $0
 40  HOME OFFICE INDIRECT
     COST ALLOCATIONS                                                            $0
 41  UTILIZATION                                                                 $0
 42  ADMINISTRATION - OTHER                                                      $0
 43  TOTAL ADMINISTRATIVE
     COSTS                       $0          $0         $0          $0           $0
 44  TOTAL COSTS [MED &
     ADMIN]                      $0          $0         $0          $0           $0
 45  NET INCOME [GAIN OR
     (LOSS)]                     $0          $0         $0          $0           $0
 46  ENROLLEE MONTHS              0           0          0           0            0
 47  MEDICAL COST @ ENROLLEE
     MO                                                                          $0
 48  ADMIN COST @
     ENROLLEE MO                                                                 $0
 49  TOTAL COST @ ENROLLEE
     MO                                                                          $0

           OTHER DATA

 50  TPL SAVINGS -
     COST AVOIDANCE**                                                            $0
 51  DUPLICATE PREMIUMS***                                                       $0
 52  NUMBER OF
     DELIVERIES****                                                              $0
 53  FAMILY PLANNING
     SERVICES                                                                    $0
 54  REINSURANCE PREMIUMS
     RECEIVED                                                                    $0
 55  REINSURANCE PREMIUMS
     PAID                                                                        $0
 56  ADMINISTRATIVE REVENUE
     RETAINED BY THE
     CONTRACTOR                                                                  $0
</TABLE>

  **  COST OF SERVICES PROVIDED TO HMO CLIENTS, NOT PAID FOR BY HMO, E.G.
      "AVOIDED", BECAUSE OTHER INSURANCE PAID FOR IT.
 ***  CASH AMOUNT RETURNED TO MEDICAID BY HMO BECAUSE HMO CLIENT WAS COVERED IN
      THE SAME HMO BY ANOTHER CARRIER.
****  NUMBER OF CHILDREN DELIVERED. THIS NUMBER TIMES RATES SHOULD EQUAL
      DELIVERY REVENUE.

     In this Medicaid portion, include only costs for Medicaid clients under the
capitation agreement - exclude revenue, costs & TPL categories per this form
that do not apply to your organization or contract.

<PAGE>

                                                                    Attachment E
                                                          Effective July 1, 2002
                                                                    Page 4 of 15

            MEDICAL SERVICES REVENUE AND COST DEFINITIONS FOR TABLE 2

REVENUES (Report all revenues received or receivable at the end-of-period date
on the form)

1.     Premiums
       --------

       Report premium payments received or receivable from the DEPARTMENT.

2.     Delivery Fees
       -------------

       Report the delivery fee received or receivable from the DEPARTMENT.

3.     Reinsurance
       -----------

       Report the reinsurance payments received or receivable from a reinsurance
       carrier other than the DEPARTMENT.

4.     Stop Loss
       ---------

       Report stop loss payments received or receivable from the DEPARTMENT.

5.     TPL Collections - Medicare
       --------------------------

       Report all third party collections received from Medicare.

6.     TPL Collections - Other
       -----------------------

       Report all third party collections received other than Medicare
       collections. (Report TPL savings because of cost avoidance as a memo
       amount on line 48).

7.     Other (specify)
       -----

8.     Other (specify)
       -----

       For lines seven and eight: Report all other revenue not included in lines
       one through six. (There may not be any amount to report; however, this
       line can be used to report revenue from total Utah operations that do not
       fit lines one through six.)

9.     TOTAL REVENUES

       Total lines one through eight.

NOTE: Duplicate premiums are not considered a cost or revenue as they are
collected by the CONTRACTOR and paid to the DEPARTMENT. Therefore, the payment
to the DEPARTMENT would reduce or offset the revenue recorded when the duplicate
premium was received. However, line 49 has been established for reporting
duplicate premiums as a memo amount.

                                                               hmo-attach E 7/02

<PAGE>

                                                                    Attachment E
                                                          Effective July 1, 2002
                                                                    Page 5 of 15

MEDICAL COSTS: Report all costs accrued as of the ending date on the form. In
the first data column (column 3), report all costs for Utah operations per the
general ledger. In the 15 Medicaid data columns (columns 4 through 18), report
only costs for Medicaid Enrollees.

10.    Inpatient Hospital Services
       ---------------------------

       Costs incurred in providing inpatient hospital services to Enrollees
       confined to a hospital.

11.    Outpatient Hospital Services
       ----------------------------

       Costs incurred in providing outpatient hospital services to Enrollees,
       not including services provided in the emergency department.

12.    Emergency Department Services
       -----------------------------

       Costs incurred in providing outpatient hospital emergency room services
       to Enrollees.

13.    Primary Care Physician Services (Including EPSDT Services, Prenatal Care,
       -------------------------------------------------------------------------
       and Family Planning Services)
       -----------------------------

       All costs incurred for Enrollees as a result of providing primary care
       physician, osteopath, physician assistant, nurse practitioner, and nurse
       midwife services, including payroll expenses, any capitation and/or
       contract payments, fee-for-service payments, fringe benefits, travel and
       office supplies.

14.    Specialty Care Physician Services (Including EPSDT Services, Prenatal
       ---------------------------------------------------------------------
       Care, and Family Planning Services)
       -----------------------------------

       All costs incurred as a result of providing specialty care physician,
       osteopath, physician assistant, nurse practitioner, and nurse midwife
       services to Enrollees, including payroll expenses, any capitation and/or
       contract payments, fee-for-service payments, fringe benefits, travel and
       office supplies.

15.    Adult Screening Services
       ------------------------

       Expenses associated with providing screening services to Enrollees.

16.    Vision Care - Optometric Services
       ---------------------------------

       Included are payroll costs, any capitation and/or contract payments, and
       fee-for-service payments for services and procedures performed by an
       optometrist and other non-payroll expenses directly related to providing
       optometric services for Enrollees.

17.    Vision Care - Optical Services
       ------------------------------

       Included are payroll costs, any capitation and/or contract payments and
       fee-for-service payments for services and procedures performed by an
       optician and other supportive staff, cost of eyeglass frames and lenses
       and other non-payroll expenses directly related to providing optical
       services for Enrollees.

18.    Laboratory (Pathology) Services
       -------------------------------

       Costs incurred as a result of providing pathological tests or services to
       Enrollees including payroll

                                                               hmo-attach E 7/02

<PAGE>

                                                                    Attachment E
                                                          Effective July 1, 2002
                                                                    Page 6 of 15

       expenses, any capitation and/or contract payments, fee-for-service
       payments and other expenses directly related to in-house laboratory
       services. Excluded are costs associated with a hospital visit.

19.    Radiology Services
       ------------------

       Cost incurred in providing x-ray services to Enrollees, including x-ray
       payroll expenses, any capitation and/or contract payments,
       fee-for-service payments, and occupancy overhead costs. Excluded are
       costs associated with a hospital visit.

20.    Physical and Occupational Therapy
       ---------------------------------

       Included are payroll costs, any capitation and/or contract payments,
       fee-for-service costs, and other non-payroll expenditures directly
       related to providing physical and occupational therapy services.

21.    Speech and Hearing Services
       ---------------------------

       Payroll costs, any capitation and/or contract payments, fee-for-service
       payments, and non-payroll costs directly related to providing speech and
       hearing services for Enrollees.

22.    Podiatry Services
       -----------------

       Salary expenses or outside claims, capitation and/or contract payments,
       fee-for-service payments, and non-payroll costs directly related to
       providing services rendered by a podiatrist to Enrollees.

23.    End Stage Renal Disease (ESRD) Services - Dialysis
       --------------------------------------------------

       Costs incurred in providing renal dialysis (ESRD) services to Enrollees.

24.    Home Health Services
       --------------------

       Included are payroll costs, any capitation and/or contract payments,
       fee-for-service payments, and other non-payroll expenses directly related
       to providing home health services for Enrollees.

25.    Hospice Services
       ----------------

       Expenses related to hospice care for Enrollees including home care,
       general inpatient care for Enrollees suffering terminal illness and
       inpatient respite care for caregivers of Enrollees suffering terminal
       illness.

26.    Private Duty Nursing
       --------------------

       Expenses associated with private duty nursing for Enrollees.

27.    Medical Supplies and Medical Equipment
       --------------------------------------

       This cost center contains fee-for-service cost for outside acquisition of
       medical requisites, special appliances as prescribed by the CONTRACTOR to
       Enrollees.

                                                               hmo-attach E 7/02

<PAGE>

                                                                    Attachment E
                                                          Effective July 1, 2002
                                                                    Page 7 of 15

28.    Abortions
       ---------

       Medical and hospital costs incurred in providing abortions for Enrollees.

29.    Sterilizations
       --------------

       Medical and hospital costs incurred in providing sterilizations for
       Enrollees.

30.    Detoxification
       --------------

       Medical and hospital costs incurred in providing treatment for substance
       abuse and dependency (detoxification) for Enrollees.

31.    Organ Transplants
       -----------------

       Medical and hospital costs incurred in providing transplants for
       Enrollees.

32.    Other Outside Medical Services
       ------------------------------

       The costs for specialized testing and outpatient surgical centers for
       Enrollees ordered by the CONTRACTOR.

33.    Long Term Care
       --------------

       Costs incurred in providing long-term care for Enrollees required under
       Attachment C.

34.    Transportation Services
       -----------------------

       Costs incurred in providing ambulance (ground and air) services for
       Enrollees.

35.    Accrued Costs
       -------------

       Costs Incurred for services rendered to Enrollees but not yet billed.

36/37  Other
       -----

       Report costs not otherwise reported.

38.    TOTAL MEDICAL COSTS

       Total lines 10 through 37.

ADMINISTRATIVE COSTS

Report payroll costs, any capitation and/or contract payments, non-payroll costs
and occupancy overhead costs for accounting services, claims processing
services, health plan services, data processing services, purchasing, personnel,
Medicaid marketing and regional administration.

Report the administration cost under four categories - advertising, home office
indirect cost allocation, utilization and all other administrative costs. If
there are no advertising costs or indirect home office cost allocations, report
a zero amount in the applicable lines.

                                                               hmo-attach E 7/02

<PAGE>

                                                                    Attachment E
                                                          Effective July 1, 2002
                                                                    Page 8 of 15

39.    Administration - Advertising
       ----------------------------

40.    Home Office Indirect Cost Allocations
       -------------------------------------

41.    Utilization
       -----------

       Payroll cost and any capitation and/or contract payments for utilization
       staff and other non-payroll costs directly associated with controlling
       and monitoring outside physician referral and hospital admission and
       discharges of Enrollees.

42.    Administration - Other
       ----------------------

43.    TOTAL ADMINISTRATIVE COSTS

       Total lines 39 through 42.

44.    TOTAL COSTS (MEDICAL AND ADMINISTRATIVE)

       Total lines 38 and 43.

45.    NET INCOME (GAIN OR LOSS)

       Line 9 minus line 44.

46.    ENROLLEE MONTHS

       Total Enrollee months for period of time being reported.

47.    MEDICAL COSTS PER ENROLLEE MONTH

       Line 38 divided by line 46.

48.    ADMINISTRATIVE COSTS PER ENROLLEE MONTH

       Line 43 divided by line 46.

49.    TOTAL COSTS PER ENROLLEE MONTH

       Line 44 divided by line 46.

OTHER DATA

50.    TPL Savings - Cost Avoidance
       ----------------------------

51.    Duplicate Premiums
       ------------------

       Include all premiums received for Enrollees from all sources other than
       Medicaid.

52.    Number of Deliveries
       --------------------

       Total number of Enrollee deliveries when the delivery occurred at 24
       weeks or later.

                                                               hmo-attach E 7/02

<PAGE>

                                                                    Attachment E
                                                          Effective July 1, 2002
                                                                    Page 9 of 15

53.    Family Planning Services
       ------------------------

       Include costs associated with family planning services as defined in
       Attachment C (Covered Services, Section V, Family Planning Services).

54.    Reinsurance Premiums Received
       -----------------------------

       Include the reinsurance premiums received or receivable that are not
       counted as revenue.

55.    Reinsurance Premiums Paid
       -------------------------

       Include reinsurance premiums paid to a reinsurance carrier other than the
       DEPARTMENT.

56.    Administrative Revenue Retained by the CONTRACTOR
       -------------------------------------------------

       Include the administrative revenue retained by the CONTRACTOR from the
       reinsurance premiums received or receivable.

                                                               hmo-attach E 7/02

<PAGE>

<TABLE>
<CAPTION>
PROVIDER NAME:                                                           ATTACHMENT E                            ATTACHMENT E
                            --------------------------------------
SERVICE REPORTING PERIOD:   BEGINNING            ENDING               TABLE 3 PAGE 1 OF 1                             TABLE 3
                                      ----------        ----------
PAYMENT DATES:              BEGINNING            ENDING                   UTILIZATION                           Page 10 of 15
                                      ----------        ----------
EFFECTIVE DATE: JULY 1, 2002

                                                         MEDICAID (CAPITATED ONLY, NO FEE FOR SERVICE)
                                           ------------------------------------------------------------------------
                                                                         TRADITIONAL MEDICAID RATE CELLS
                                           -----------------------------------------------------------------------------------------
 1                     2                       3      4     5     6      7        8         9        10       11         12      13
---- ------------------------------------- --------- ---- ------ ---- -------- -------- --------- -------- -------- ----------- ----
                    SERVICE
                  DESCRIPTION                        TANF  TANF                         MED NEEDY NON TANF  BREAST/ RESTRICTION
LINE     (REFER TO THE UNIT OF SERVICE        AGE    MALE FEMALE      DISABLED DISABLED   CHILD   PREGNANT CERVICAL   PROGRAM
 NO     DEFINITIONS IN THE INSTRUCTIONS)   0-12 Mos. 1-18  1-18  AGED   MALE    FEMALE    1-18     FEMALE   CANCER      0-18    AIDS
---- ------------------------------------- --------- ---- ------ ---- -------- -------- --------- -------- -------- ----------- ----
<C>  <S>                                   <C>       <C>  <C>    <C>  <C>      <C>      <C>       <C>      <C>      <C>         <C>
  1  HOSPITAL SERVICES - GENERAL DAYS
  2  HOSPITAL SERVICES - DISCHARGES
  3  HOSPITAL SERVICES - OUTPATIENT VISITS
  4  EMERGENCY DEPARTMENT VISITS
  5  PRIMARY CARE PHYSICIAN SERVICES
  6  SPECIALTY CARE PHYSICIAN SERVICES
  7  ADULT SCREENING SERVICES
  8  VISION CARE - OPTOMETRIC SERVICES
  9  VISION CARE - OPTICAL SERVICES
 10  LABORATORY (PATHOLOGY) PROCEDURES
 11  RADIOLOGY PROCEDURES
 12  PHYSICAL AND OCCUPATIONAL THERAPY
     SERVICES
 13  SPEECH AND HEARING SERVICES
 14  PODIATRY SERVICES
 15  RENAL DISEASE (ESRD) SERVICES -
     DIALYSIS
 16  HOME HEALTH SERVICES
 17  HOSPICE DAYS
 18  PRIVATE DUTY NURSING SERVICES
 19  MEDICAL SUPPLIES AND MEDICAL
     EQUIPMENT
 20  ABORTIONS PROCEDURES
 21  STERILIZATION PROCEDURES
 22  DETOXIFICATION DAYS
 23  ORGAN TRANSPLANTS
 24  OTHER OUTSIDE MEDICAL SERVICES
 25  LONG TERM CARE FACILITY DAYS
 26  TRANSPORTATION TRIPS
 27  OTHER (SPECIFY)

<CAPTION>
                                                NON-TRADITIONAL MEDICAID RATE CELLS
                                            --------------------------------------------
 1                     2                       14         15         16          17            18
---- -------------------------------------  ---------  ---------  ---------  -----------  -------------
                    SERVICE                                                                  MEDICAID
                  DESCRIPTION                 TANF       TANF        MED     RESTRICTION      TOTAL
LINE     (REFER TO THE UNIT OF SERVICE        MALE      FEMALE      NEEDY      PROGRAM    (SUM OF COLS)
 NO     DEFINITIONS IN THE INSTRUCTIONS)    19 & OVER  19 & OVER  19 & OVER   19 & OVER     3 THRU 15
---- -------------------------------------  ---------  ---------  ---------  -----------  -------------
<C>  <S>                                    <C>        <C>        <C>        <C>          <C>
  1  HOSPITAL SERVICES - GENERAL DAYS
  2  HOSPITAL SERVICES - DISCHARGES
  3  HOSPITAL SERVICES - OUTPATIENT VISITS
  4  EMERGENCY DEPARTMENT VISITS
  5  PRIMARY CARE PHYSICIAN SERVICES
  6  SPECIALTY CARE PHYSICIAN SERVICES
  7  ADULT SCREENING SERVICES
  8  VISION CARE - OPTOMETRIC SERVICES
  9  VISION CARE - OPTICAL SERVICES
 10  LABORATORY (PATHOLOGY) PROCEDURES
 11  RADIOLOGY PROCEDURES
 12  PHYSICAL AND OCCUPATIONAL THERAPY
     SERVICES
 13  SPEECH AND HEARING SERVICES
 14  PODIATRY SERVICES
 15  RENAL DISEASE (ESRD) SERVICES -
     DIALYSIS
 16  HOME HEALTH SERVICES
 17  HOSPICE DAYS
 18  PRIVATE DUTY NURSING SERVICES
 19  MEDICAL SUPPLIES AND MEDICAL
     EQUIPMENT
 20  ABORTIONS PROCEDURES
 21  STERILIZATION PROCEDURES
 22  DETOXIFICATION DAYS
 23  ORGAN TRANSPLANTS
 24  OTHER OUTSIDE MEDICAL SERVICES
 25  LONG TERM CARE FACILITY DAYS
 26  TRANSPORTATION TRIPS
 27  OTHER (SPECIFY)
</TABLE>

                                  ATTACHMENT E
                                     TABLE 3
                                  Page 10 of 15

<PAGE>

                                                                    Attachment E
                                                                   Page 11 of 15

              MEDICAL SERVICES UTILIZATION DEFINITIONS FOR TABLE 3

MEDICAL SERVICES

1.     Hospital Services - General Days
       --------------------------------

       Record total number of inpatient hospital days associated with inpatient
       medical care.

2.     Hospital Services - Discharges
       ------------------------------

       Record total number of inpatient hospital discharges.

3.     Hospital Services - Outpatient Visits
       -------------------------------------

       Record total number of outpatient visits.

4.     Emergency Department Visits
       ---------------------------

       Record total number of emergency room visits

5.     Primary Care Physician Services
       -------------------------------

       Number of services and procedures defined by CPT-4 codes provided by
       primary care physicians or licensed physician extenders or assistants
       under direct supervision of a physician inclusive of all services except
       radiology, laboratory and injections/immunizations which should be
       reported in their appropriate section. The reporting of data under this
       category includes both outpatient and inpatient services.

6.     Specialty Care Physician Services
       ---------------------------------

       Number of services and procedures defined by CPT-4 codes provided by
       specialty care physicians or licensed physician extenders or assistants
       under direct supervision of a physician inclusive of all services except
       radiology, laboratory and injections/immunizations which should be
       reported in their appropriate section. The reporting of data under this
       category includes both outpatient and inpatient services.

7.     Adult Screening Services
       ------------------------

       Number of adult screenings performed.

8.     Vision Care - Optometric Services
       ---------------------------------

       Number of optometric services and procedures performed by an optometrist.

9.     Vision Care - Optical Services
       ------------------------------

       Number of eye glasses and contact lenses dispensed.

<PAGE>

                                                                    Attachment E
                                                                   Page 12 of 15

10.    Laboratory (Pathology) Procedures
       ---------------------------------

       Number of procedures defined by CPT-4 Codes under the Pathology and
       Laboratory section. Excluded are services performed in conjunction with a
       hospital outpatient or emergency department visit.

11.    Radiology Procedures
       --------------------

       Number of procedures defined by CPT-4 Codes under the Radiology section.
       Excluded are services performed in conjunction with a hospital outpatient
       or emergency department visit.

12.    Physical and Occupational Therapy Services
       ------------------------------------------

       Physical therapy refers to physical and occupational therapy services and
       procedures performed by a physician or physical therapist.

13.    Speech and Hearing Services
       ---------------------------

       Number of services and procedures.

14.    Podiatry Services
       -----------------

       Number of services and procedures.

15.    End Stage Renal Disease (ESRD) Services - Dialysis
       --------------------------------------------------

       Number of ESRD procedures provided upon referral.

16.    Home Health Services
       --------------------

       Number of home health visits, such as skilled nursing, home health aide,
       and personal care aide visits.

17.    Hospice Days
       ------------

       Number of days hospice care is provided, including respite care.

18.    Private Duty Nursing Services
       -----------------------------

       Hours of skilled care delivered.

19.    Medical Supplies and Medical Equipment
       --------------------------------------

       Durable medical equipment such as wheelchairs, hearing aids, etc., and
       nondurable supplies such as oxygen etc.

20.    Abortion Procedures
       -------------------

       Number of procedures performed.

<PAGE>

                                                                    Attachment E
                                                                   Page 13 of 15

21.    Sterilization Procedures
       ------------------------

       Number of procedures performed.

22.    Detoxification Days
       -------------------

       Days of inpatient detoxification.

23.    Organ Transplants
       -----------------

       Number of transplants.

24.    Other Outside Medical Services
       ------------------------------

       Specialized testing and outpatient surgical services ordered by IHC.

25.    Long Term Care Facility Days
       ----------------------------

       Total days associated with long-term care.

26.    Transportation Trips
       --------------------

       Number of ambulance trips.

27.    Other (specify)
       ---------------

<PAGE>

                                  ATTACHMENT E
                               TABLE 4 PAGE 1 OF 1
                        MEDICAID MALPRACTICE INFORMATION

PROVIDER NAME:                 _________________________________________________

SERVICE REPORTING PERIOD:      BEGINNING ________    ENDING __________

ORGANIZATIONS NAMED IN THE MALPRACTICE CLAIM:
        CLAIM NUMBER 1  ________________________________________________________
        CLAIM NUMBER 2  ________________________________________________________
        CLAIM NUMBER 3  ________________________________________________________

MEDICAL PROFESSIONALS SPECIFIED:
        CLAIM NUMBER 1  ________________________________________________________
        CLAIM NUMBER 2  ________________________________________________________
        CLAIM NUMBER 3  ________________________________________________________

LOCATIONS WHERE CLAIMS ORIGINATED:
        CLAIM NUMBER 1  ________________________________________________________
        CLAIM NUMBER 2  ________________________________________________________
        CLAIM NUMBER 3  ________________________________________________________

MEDICAID CLIENT IDENTIFICATION:
        CLAIM NUMBER 1  ________________________________________________________
        CLAIM NUMBER 2  ________________________________________________________
        CLAIM NUMBER 3  ________________________________________________________

DATES OF SERVICE:
        CLAIM NUMBER 1  ________________________________________________________
        CLAIM NUMBER 2  ________________________________________________________
        CLAIM NUMBER 3  ________________________________________________________

AWARDS TO MEDICAID CLIENTS - AMOUNTS & DATES PAID
        CLAIM NUMBER 1  ________________________________________________________
        CLAIM NUMBER 2  ________________________________________________________
        CLAIM NUMBER 3  ________________________________________________________

HMO'S DIRECT COSTS (IF ANY)
        CLAIM NUMBER 1  ________________________________________________________
        CLAIM NUMBER 2  ________________________________________________________
        CLAIM NUMBER 3  ________________________________________________________

ATTACH A SUMMARY OF FACTS FOR EACH CASE, DESCRIBING THE CLAIM, THE CAUSES,
CIRCUMSTANCES, ETC.

                                  ATTACHMENT E
                                     TABLE 4
                                  Page 14 of 15

<PAGE>

                                                                    Attachment E
                                                                   Page 15 of 15

The information reported on this form should come from known malpractice cases
of the MCO providers. This may only be applicable if the MCO was named as a
participant in the malpractice suit. However, if suits against MCO providers are
known, provide us with information on the Medicaid client(s) involved and any
large settlements paid when the information is available.

<PAGE>

                                                                  Attachment F-4
                                                                          Molina
                                                                    July 1, 2002

                                   AFC/MOLINA

                      ATTACHMENT F-4 - PAYMENT METHODOLOGY

The DEPARTMENT agrees to provide a no-loss guarantee to MHU by underwriting any
financial losses sustained by MHU for a period of twelve months, beginning July
1, 2002. No later than April 1, 2003, MHU will submit to the DEPARTMENT all paid
claims from July 1 through December 31, 2002. The parties will conduct a
financial review of MHU's paid claims history from July 1 through December 31,
2002 to determine if the Contract should revert to a risk-based contract
effective July 1, 2003.

A.   PAYMENT METHODOLOGY

     1.   EFFECTIVE JULY 1, 2002 THROUGH DECEMBER 31, 2002

          The DEPARTMENT shall make interim payments for the months of July 2002
          through December 2002 based on the premium methodology in effect on
          June 30, 2002. MHU must submit to the DEPARTMENT a summary of paid
          claims on a monthly basis with no more than two months delay after the
          month being reported. No later then April 1, 2003, MHU will submit to
          the DEPARTMENT all paid claims from July 1 through December 31, 2002.
          The payment made to MHU by the DEPARTMENT will be retrospectively
          adjusted to reflect MHU's actual claim expenditures under this
          Contract plus 9% of actual claim expenditures to cover administrative
          costs.

     2.   EFFECTIVE JANUARY 1, 2003 THROUGH JUNE 30, 2003

          The DEPARTMENT will reimburse MHU within 60 days of the month in which
          MHU paid claims for services rendered under this Contract and will be
          based on a summary of paid claims data received from MHU. In addition,
          9% of actual claim expenditures will be added to the payment for
          administrative services and patient management expenses incurred by
          MHU. MHU must submit to the DEPARTMENT the summary of paid claims
          within 30 days of the month in which MHU paid the claims.

     3.   RETROSPECTIVE ADJUSTMENT FOR COSTS INCURRED FROM JULY 1, 2002 THROUGH
          JUNE 30, 2003

          Profit sharing occurs if MHU's costs plus 9% administration fee are
          less than MHU's revenues under this Contract. Revenues are defined as
          the amount the DEPARTMENT would have paid had this Contract remained a
          risk contract as

                                                        hmo-molina am6 (9/09/02)

                                   Page 1 of 4

<PAGE>

                                                                  Attachment F-4
                                                                          Molina
                                                                    July 1, 2002

          described in 42 CFR 447.361. MHU may retain the savings as follows: if
          the difference between MHU's costs plus administration and total
          revenues is 5% or less of total revenues, MHU may retain the entire
          amount. The portion of savings greater than the 5% shall be shared
          50/50 with the DEPARTMENT.

          On or before October 1, 2002, MHU will provide to the DEPARTMENT their
          payment schedule in effect from July 1 through September 30, 2002. Any
          changes made to MHU's payment schedule must maintain cost neutrality
          to the DEPARTMENT and are subject to approval by the DEPARTMENT. A
          final settlement between the parties shall be reconciled within six
          months of the end of the Contract year.

B.   PHARMACY MANAGEMENT INCENTIVE

     The DEPARTMENT will establish a target for pharmacy costs for the Contract
     year. The target will be the historical average cost per member per month
     (PMPM) for Medicaid client enrolled in MCOs in the previous Contract year.
     The average cost will be determined for each rate cell. An overall weighted
     average PMPM pharmacy cost will be established based on MHU's monthly
     enrollment during the Contract year. The 2002 Contract year's history will
     be adjusted by the inflation indices published by the US Department of
     Labor. If actual pharmacy costs for MHU's enrollees are below the target
     for the Contract year, the savings will be shared [*] with the DEPARTMENT
     and MHU.

C.   CHEC SCREENING INCENTIVE CLAUSE

     1.   CHEC SCREENING GOAL

          The CONTRACTOR will ensure that Medicaid children have access to
          appropriate well-child visits. The CONTRACTOR will follow the Utah
          EPSDT (CHEC) guidelines for the periodicity schedule for well-child
          protocol. The federal agency, Centers for Medicare and Medicaid
          Services (CMS), mandates that all states have 80% of all children
          screened. The DEPARTMENT and the CONTRACTOR will work toward that
          goal.

     2.   CALCULATION OF CHEC INCENTIVE PAYMENT

          The DEPARTMENT will calculate the CONTRACTOR's annual participation
          rate based on information supplied by the CONTRACTOR under the CMS-416
          EPSDT (CHEC) reporting requirements. Based on the CMS-416 data, the
          CONTRACTOR's well-child participation rate was 97% for Federal Fiscal
          Year (FFY) 2001 (October 1, 2000 through September 30, 2001). The
          incentive

                                                    hmo-afc/molina am6 (9/09/02)

                                   Page 2 of 4

<PAGE>

                                                                  Attachment F-4
                                                                          Molina
                                                                    July 1, 2002

          payment for the Contract year ending June 30, 2003 will be based on
          the CONTRACTOR's FFY 2002 (October 1, 2001 through September 30, 2002)
          CMS-416 participation rate. The DEPARTMENT will pay the CONTRACTOR
          $[*] if a rate of 90% or higher is maintained during FFY2002. The
          participation rate will be calculated no later than April 15, 2003;
          the CONTRACTOR will be notified of the incentive payment, if
          applicable, no later than April 30, 2003.

     3.   CONTRACTOR's USE OF INCENTIVE PAYMENT

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the EPSDT (CHEC)
          participation rate.

D.   IMMUNIZATION INCENTIVE CLAUSE

     The CONTRACTOR will ensure that Enrollees have access to recommended
     immunizations. The CONTRACTOR will follow the Advisory Committee on
     Immunization Practices' recommendations for immunizations for children.

     1.   IMMUNIZATIONS FOR TWO-YEAR-OLDS

          Utah has achieved a statewide immunization level of 77.4% for
          two-year-olds. The CONTRACTOR's 2000 HEDIS rate was 46.4% for the
          Combination 1 immunization measure for two-year olds. Based on the
          CONTRACTOR's 2001 HEDIS measure for the Combination 1 immunization
          measure, the DEPARTMENT will pay the CONTRACTOR $[*] for each full
          percentage point above 46.4% up to 96.4%.

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the HEDIS rate.

     2.   IMMUNIZATIONS FOR ADOLESCENTS

          The DEPARTMENT realizes it is important that adolescents are
          vaccinated according to schedule as recommended by the Advisory
          Committee on Immunization Practices and other professional groups. The
          CONTRACTOR's 2000 HEDIS rate was 6.8% for the Combination 1
          immunization measure for adolescents. Based on the CONTRACTOR's 2001
          HEDIS measure for adolescent immunizations, the DEPARTMENT will pay
          the CONTRACTOR $[*] for each full percentage point above 6.8% up to
          56.8%.

                                                    hmo-afc/molina am6 (9/09/02)

                                   Page 3 of 4

<PAGE>

                                                                  Attachment F-4
                                                                          Molina
                                                                    July 1, 2002

          The CONTRACTOR agrees to use this incentive payment to reward the
          CONTRACTOR's employees responsible for improving the HEDIS rate.

     3.   IMMUNIZATIONS FOR ADULTS

          The HEDIS immunization measure for adults is not reported for Medicaid
          clients age 65 and older. The DEPARTMENT intends to expand this
          incentive clause to include improved immunization rates for influenza
          and pneumonia vaccines among Enrollees age 65 and older. The
          DEPARTMENT will work with contractors to collect this data during this
          Contract year (July 1, 2002 - June 30, 2003).

                                                    hmo-afc/molina am6 (9/09/02)

                                   Page 4 of 4<PAGE>

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT.
PORTIONS FOR WHICH CONFIDENTIAL TREATMENT IS REQUESTED ARE DENOTED BY "[*]".
CONFIDENTIAL INFORMATION OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.

                                                                    EXHIBIT 10.5

                           MEMORANDUM OF UNDERSTANDING

     This MEMORANDUM OF UNDERSTANDING is made by and between the Utah Department
of Health (DEPARTMENT) and Molina Healthcare of Utah, Inc. (MHU), effective July
1, 2002.

                                    RECITALS

A.   MHU currently provides services to Medicaid beneficiaries through its
     Medicaid HMO Contract with the DEPARTMENT.

B.   The DEPARTMENT desires to increase the number of Medicaid beneficiaries
     that receive services through MHU's Medicaid HMO Contract.

C.   Following the Utah Legislature's reduction of MHU's rate increase, the
     DEPARTMENT desires to ensure MHU's financial viability in its role as a
     Medicaid Managed Care Contractor.

D.   The DEPARTMENT requires additional time to draft a formal amendment to the
     MHU Medicaid HMO Contract, the parties agree to use their best efforts to
     develop and execute a formal amendment by August 30, 2002.

     NOW THEREFORE, the parties enter into this Memorandum of Understanding to
set forth their intent and understanding until a formal amendment is developed
and executed. Terms not otherwise defined herein shall have the meaning ascribed
to them in the MHU Medicaid HMO Contract.

I.   MEDICAID HMO

     1.   MHU will continue to provide necessary covered HMO benefits to those
          Medicaid beneficiaries enrolled under its Medicaid HMO Contract.
     2.   The DEPARTMENT agrees to provide a no-loss guarantee to MHU by
          underwriting any financial losses sustained by MHU for period of
          twelve (12) months, beginning July 1, 2002. The parties will conduct a
          financial review, following the first nine (9) months, to determine
          whether the no-loss guarantee needs to remain in effect beyond the
          twelve-(12) month period.
     3.   MHU's Administrative Costs shall not exceed  [*] , of Total Medical
          Costs associated with its Medicaid HMO Contract.
     4.   If MHU's costs are less than the Total Revenues received from the
          DEPARTMENT for its Medicaid HMO Contract, including but not limited to
          Premiums, MHU may retain up to 5% of its profits. Any additional
          profits above 5%, will be shared with the DEPARTMENT on a 50-50 basis.
     5.   Pharmacy Management Incentive. The State will establish a "target" for
          pharmacy costs for FY 2003. The target will be the historical average
          cost per member per month for clients enrolled in HMOs for FY 2002.
          The average cost will be

                                        1

<PAGE>

          determined for each rate cell. An overall weight average PMPM pharmacy
          cost will be established based on MHU's enrollment for FY 2003. The
          pharmacy history will be adjusted for the estimate shift for pharmacy
          supplies for diabetes. FY 2002 history will be inflated forward by
          inflation indices published by the US Department of Labor. If actual
          pharmacy costs are below the target for the year, the savings will be
          shared 50 - 50.
     6.   Retroactive Reimbursement. The State will retroactively reimburse
          actual Medical Costs incurred by Molina for FY 2003 within 60 days of
          the date of service, nine percent (9%) of Medical Costs incurred will
          be added to the payment to cover patient management and administrative
          services. The State will make payment each month based on a summary of
          paid claims data. An interim payment will be made for the month of
          July 2002 based on estimated claims expense. After 120 days, the
          interim payment may be returned at the request of State based on the
          objective of establishing a 60-day delay between the date of service
          and the date of payment. A Final Settlement between the parties of
          Total Revenues shall be reconciled within six months of the completion
          of this agreement.

II.  MEDICAID PPO

     1.   Once enrollment under the HMO contract reaches 40,000 any additional
          Medicaid beneficiaries enrolled in the MHU Medicaid HMO Contract will
          be designated as Medicaid PPO members, governed by the provisions of
          this section II. If HMO membership falls below 40,000, any new
          Medicaid enrollees assigned to MHU will be enrolled as HMO enrollees.
          Once the 40,000 membership level is reached, new Medicaid enrollees
          assigned to MHU will be enrolled as PPO enrollees.
     2.   MHU will arrange for the provision of healthcare services, through its
          HMO contract, for those Medicaid beneficiaries enrolled on a Medicaid
          PPO basis. The healthcare services will be the same as the Covered
          Services set forth in MHU's Medicaid HMO Contract.
     3.   MHU will provide all Administrative Services to its Medicaid PPO
          enrollees as currently provided under its Medicaid HMO product line,
          including but not limited to:
               .Utilization and case management
               .Claims processing
               .Member orientations, education and customer services
               .Provider network development and maintenance.
     4.   MHU does not assume any financial risk associated with healthcare
          services provided to its Medicaid PPO enrollees.
     5.   The DEPARTMENT shall reimburse MHU, all Medical Costs provided to
          those beneficiaries enrolled in MHU's Medicaid PPO product.
     6.   The DEPARTMENT will compensate MHU an amount equal to $ [*] per PPO
          member per month for Administrative Services.

                                        2

<PAGE>

     7.   Pharmacy Management Incentive. The State will establish a "target" for
          pharmacy costs for FY 2003. The target will be the historical average
          cost per member per month for clients enrolled in HMOs for FY 2002.
          The average cost will be determined for each rate cell. An overall
          weight average PMPM pharmacy cost will be established based on MHU's
          enrollment for FY 2003. The pharmacy history will be adjusted for the
          estimate shift for pharmacy supplies for diabetes. FY 2002 history
          will be inflated forward by inflation indices published by the US
          Department of Labor. If actual pharmacy costs are below the target for
          the year, the savings will be shared 50 - 50.

IN WITNESS WHEREOF, the parties sign this Memorandum of Understanding.

/s/                                      /s/
---------------------------              ---------------------------------------
Rod Betit                                G. Kirk Olsen
Executive Director                       CEO
Utah Department of Health                Molina Healthcare of Utah
30 July 2002                             30 July 2002

                                        3

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