Document:

exv10w1

 

EXHIBIT 10.1 — Amendment to Employment Agreement

AMENDMENT TO

EMPLOYMENT AGREEMENT

     THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the “Agreement”), dated August 3, 2007,
effective as of July 31, 2007, is made and entered into to amend the Employment Agreement dated
effective June 30, 2003 (the “Employment Agreement”), by and between Peoples Education,
Inc. (f/k/a The Peoples Publishing Group, Inc.), a Delaware corporation (the “Company”),
and James J. Peoples, an individual resident of the State of New Jersey (the “Executive”).

WITNESSETH:

     WHEREAS, the Company and the Executive mutually desire to amend the Employment Agreement as
set forth in this Agreement.

     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements herein contained,
the Company and the Executive agree as follows:

     1. Amendment. The Employment Agreement shall be amended as provided in this
Agreement. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them
in the Employment Agreement.

     2. Compensation. The table at the end of Section 4.01 of the Employment Agreement
which specifies annual salary in the event the Executive is engaged in the “AP Senior Advisor” role
shall be amended such that for the contract year ending July 31, 2008, the salary shall be
$100,000.

     3. Incentive Compensation. Executive agrees that consistent with the change in the
Company’s fiscal year to periods ending May 31, that the table in Section 4.02 of the Employment
Agreement shall be amended in its entirety to provide that for the fiscal year ending May 31, 2008,
that the Executive’s incentive shall be equal to 30% of the amount paid to the CEO, and for the
portion of the fiscal year ending May 31, 2009 included in the contract period (the two months of
June 2008 and July 2008), that the incentive shall be 5% of the amount paid to the CEO.

     4. Miscellaneous.

           4.01 Governing Law. This Agreement is made under and shall be governed by and
construed in accordance with the laws of the State of New Jersey, without regard to New Jersey’s
conflicts of law rules.

 

 

           4.02 Prior Agreements. This Agreement and the Employment Agreement contain the entire
agreement of the parties relating to the subject matter hereof and supersede all prior agreements
and understandings with respect to such subject matter, and the parties hereto
have made no agreements, representations or warranties relating to the subject matter of this
Agreement which are not set forth herein.

           4.03 Amendments. No amendment or modification of this Agreement shall be deemed
effective unless made in writing signed and delivered by the parties hereto.

           4.04 Assignment. This Agreement shall not be assignable, in whole or in part, by
either party without the written consent of the other party.

           4.05 No Waiver. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel to enforce any provisions of this Agreement, except by a
statement in writing signed by the party against whom enforcement of the waiver or estoppel is
sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated,
shall operate only as to the specific term or condition waive and shall not constitute a waiver of
such term of condition for the future or as to any act other than that specifically waived.

           4.06 Counterparts. This Agreement may be signed in counterparts, each of which, when
executed and delivered, shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties have hereunto set their hands, intending to be legally bound,
as of the date first above written.

	 	 	 	 	 
	 	PEOPLES EDUCATION, INC.

 	 
	 	By:  	/s/ Brian T. Beckwith
 	 
	 	 	Brian T. Beckwith 	 
	 	 	Its:  President and Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	 	 
	 	                                                   /s/  James J Peoples
 	 
	 	James J. Peoples 	 
	 	 	 
	 

ACCEPTED AND AGREED TO

this 3rd day of August, 2007.

	 	 	 	 	 
	PEOPLES EDUCATIONAL HOLDINGS, INC.

 	 
	By:  	/s/ Brian T. Beckwith
 	 
	 	Brian T. Beckwith 	 
	 	Its:  President and Chief Executive Officer 	 

2Exhibit 10.1

 

EXHIBIT 10.1

Mindspeed Technologies, Inc.

Summary of Director Compensation Arrangements

      We currently pay our non-employee directors annual base compensation of $30,000, and our
non-employee chairman of the board, $80,000, both of which are paid quarterly. They each also
receive committee participation compensation for each committee on which they serve equal to $2,500
annually for the governance and board composition committee and the compensation and management
development committee ($7,500 if serving as chairman of such committee) and $5,000 annually for the
audit committee ($10,000 if serving as chairman of such committee). Each non-employee director
also receives $1,250 for each board or committee meeting attended in person or by telephone. Each
non-employee director has the option each year to receive all or a portion of his cash compensation
due via shares or restricted stock units valued at the closing price of our common stock on the
date each payment would otherwise be made. Directors who are our employees are not paid any
additional compensation for their service on our board of directors. Our board of directors may
from time to time appoint additional standing or ad hoc committees, and may compensate directors
who serve on them differently than we currently compensate members of our standing committees. We
reimburse each of our directors for reasonable out-of-pocket expenses that they incur in connection
with their service on our board of directors.

      Our non-employee directors are eligible to participate in our directors stock plan, which is
administered by our compensation and management development committee under authority delegated by
our board of directors. The directors stock plan provides that upon initial election to our board
of directors, each non-employee director is granted an option to purchase 40,000 shares of our
common stock at an exercise price per share equal to its fair market value on the date of grant.
The options become exercisable in four equal installments on each of the first, second, third and
fourth anniversaries of the date the options are granted. In addition, each non-employee director
is granted an option to purchase 20,000 shares of our common stock following each annual meeting of
stockholders.

      The directors stock plan also provides that, following each annual meeting of stockholders,
each non-employee director is granted restricted stock units in an amount equal to the lesser of:
(i) 15,000 restricted stock units, or (ii) the number of restricted stock units (rounded to nearest
whole unit) equal to $45,000 divided by the closing price of our common stock on the date of grant.
One share of our common stock is issuable upon settlement for each restricted stock unit awarded.
Other than the right to receive dividends, the recipients of restricted stock units will not have
the rights of a stockholder, such as the right to vote, until the restricted stock units are
settled by the issuance of shares of our common stock. The restricted stock units will not be
settled for shares of our common stock until ten days after: (i) the recipient retires from our
board of directors after attaining age 55 and completing at least five years of service as a
director, or (ii) the recipient resigns from our board of directors or ceases to be a director by
reason of antitrust laws, compliance with our conflict of interest policies, death, disability or
other circumstances, and our board of directors has not determined (prior to the expiration of such
ten day period) that such resignation or cessation of service as a director is adverse to the best
interests of our company.

      The directors stock plan also permits the board of directors or the compensation and
management development committee to grant one or more non-employee directors additional
compensation. Such additional compensation may be in the form of shares, restricted stock,
restricted stock units, options or a combination thereof. The directors stock plan is filed as
Exhibit 10.1 to our Current Report on Form 8-K filed dated May 17, 2007. The terms of each option
granted under the directors stock plan are substantially as set forth in Exhibit 10.8 to our
Quarterly Report on Form 10-Q that we filed with the SEC on August 9, 2005.

      The compensation arrangements we have with our directors are reviewed and may be modified from
time to time by our board of directors.Exhibit 10.3

 

EXHIBIT 10.3

Mindspeed Technologies, Inc. (the “Company”) has entered into an agreement with each of the
following persons, which is substantially identical, except as set forth below, to the Form of
Employment Agreement filed as Exhibit 10.8.1 to the Company’s Registration Statement on Form 10
(File No. 1-31650):

Simon Biddiscombe

Ron Cates

Jay E. Cormier

Raouf Y. Halim

Gerald J. Hamilton

Thomas J. Medrek

Wayne K. Nesbit

Thomas A. Stites

The multiple set forth in Section 6(i)(B) of the Employment Agreement for Mr. Halim is three and
the multiple set forth in Section 6(i)(B) of the Employment Agreement for the other persons is two.<PAGE>

                                                                    Exhibit 10.1

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                   OHIO DEPARTMENT OF JOB AND FAMILY SERVICES

                   OHIO MEDICAL ASSISTANCE PROVIDER AGREEMENT
                              FOR MANAGED CARE PLAN
                             CFC ELIGIBLE POPULATION

     This provider agreement is entered into this first day of July, 2007, at
Columbus, Franklin County, Ohio, between the State of Ohio, Department of Job
and Family Services, (hereinafter referred to as ODJFS) whose principal offices
are located in the City of Columbus, County of Franklin, State of Ohio, and
Molina Healthcare of Ohio, Inc., Managed Care Plan (hereinafter referred to as
MCP), an Ohio for-profit corporation, whose principal office is located in the
city of Columbus, County of Franklin, State of Ohio.

     MCP is licensed as a Health Insuring Corporation by the State of Ohio,
Department of Insurance (hereinafter referred to as ODI), pursuant to Chapter
1751. of the Ohio Revised Code and is organized and agrees to operate as
prescribed by Chapter 5101:3-26 of the Ohio Administrative Code (hereinafter
referred to as OAC), and other applicable portions of the OAC as amended from
time to time.

     MCP is an entity eligible to enter into a provider agreement in accordance
with 42 CFR 438.6 and is engaged in the business of providing prepaid
comprehensive health care services as defined in 42 CFR 438.2 through the
managed care program for the Covered Families and Children (CFC) eligible
population described in OAC rule 5101:3-26-02 (B).

     ODJFS, as the single state agency designated to administer the Medicaid
program under Section 5111.02 of the Ohio Revised Code and Title XIX of the
Social Security Act, desires to obtain MCP services for the benefit of certain
Medicaid recipients. In so doing, MCP has provided and will continue to provide
proof of MCP's capability to provide quality services, efficiently, effectively
and economically during the term of this agreement.

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This provider agreement is a contract between ODJFS and the undersigned Managed
Care Plan (MCP), provider of medical assistance, pursuant to the federal
contracting provisions of 42 CFR 434.6 and 438.6 in which the MCP agrees to
provide comprehensive medical services through the managed care program as
provided in Chapter 5101:3-26 of the Ohio Administrative Code, assuming the risk
of loss, and complying with applicable state statutes, Ohio Administrative Code,
and Federal statutes, rules, regulations and other requirements, including but
not limited to title VI of the Civil Rights Act of 1964; title IX of the
Education Amendments of 1972 (regarding education programs and activities); the
Age Discrimination Act of 1975; the Rehabilitation Act of 1973; and the
Americans with Disabilities Act.

ARTICLE I - GENERAL

A.   ODJFS enters into this Agreement in reliance upon MCP's representations
     that it has the necessary expertise and experience to perform its
     obligations hereunder, and MCP warrants that it does possess the necessary
     expertise and experience.

B.   MCP agrees to report to the Chief of Bureau of Managed Health Care
     (hereinafter referred to as BMHC) or his or her designee as necessary to
     assure understanding of the responsibilities and satisfactory compliance
     with this provider agreement.

C.   MCP agrees to furnish its support staff and services as necessary for the
     satisfactory performance of the services as enumerated in this provider
     agreement.

D.   ODJFS may, from time to time as it deems appropriate, communicate specific
     instructions and requests to MCP concerning the performance of the services
     described in this provider agreement. Upon such notice and within the
     designated time frame after receipt of instructions, MCP shall comply with
     such instructions and fulfill such requests to the satisfaction of the
     department. It is expressly understood by the parties that these
     instructions and requests are for the sole purpose of performing the
     specific tasks requested to ensure satisfactory completion of the services
     described in this provider agreement, and are not intended to amend or
     alter this provider agreement or any part thereof.

E.   If the MCP previously had a provider agreement with the ODJFS and the
     provider agreement terminated more than two years prior to the effective
     date of any new provider agreement, such MCP will be considered a new plan
     in its first year of operation with the Ohio Medicaid managed care program.

ARTICLE II - TIME OF PERFORMANCE

A.   Upon approval by the Director of ODJFS this provider agreement shall be in
     effect from the date entered through June 30, 2008, unless this provider
     agreement is suspended or terminated pursuant to Article VIII prior to the
     termination date, or otherwise amended pursuant to Article IX.

B.   It is expressly agreed by the parties that none of the rights, duties and
     obligations herein

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     shall be binding on either party if award of this Agreement would be
     contrary to the terms of Ohio Revised Code ("O.R.C.") Section 3517.13,
     O.R.C. Section 127.16, or O.R.C. Chapter 102.

ARTICLE III - REIMBURSEMENT

A.   ODJFS will reimburse MCP in accordance with rule 5101:3-26-09 of the Ohio
     Administrative Code and the appropriate appendices of this provider
     agreement.

ARTICLE IV - RELATIONSHIP OF PARTIES

A.   ODJFS and MCP agree that, during the term of this Agreement, MCP shall be
     engaged by ODJFS solely on an independent contractor basis, and neither MCP
     nor its personnel shall, at any time or for any purpose, be considered as
     agents, servants or employees of ODJFS or the State of Ohio. MCP shall
     therefore be responsible for all MCP's business expenses, including, but
     not limited to, employee's wages and salaries, insurance of every type and
     description, and all business and personal taxes, including income and
     Social Security taxes and contributions for Workers' Compensation and
     Unemployment Compensation coverage, if any.

B.   MCP agrees to comply with all applicable federal, state and local laws in
     the conduct of the work hereunder.

C.   While MCP shall be required to render services described hereunder for
     ODJFS during the term of this Agreement, nothing herein shall be construed
     to imply, by reason of MCP's engagement hereunder on an independent
     contractor basis, that ODJFS shall have or may exercise any right of
     control over MCP with regard to the manner or method of MCP's performance
     of services hereunder. The management of the work, including the exclusive
     right to control or direct the manner or means by which the work is
     performed, remains with MCP. ODJFS retains the right to ensure that MCP's
     work is in conformity with the terms and conditions of this Agreement.

D.   Except as expressly provided herein, neither party shall have the right to
     bind or obligate the other party in any manner without the other party's
     prior written consent.

ARTICLE V - CONFLICT OF INTEREST; ETHICS LAWS

A.   In accordance with the safeguards specified in section 27 of the Office of
     Federal Procurement Policy Act (41 U.S.C. 423) and other applicable federal
     requirements, no officer, member or employee of MCP, the Chief of BMHC, or
     other ODJFS employee who exercises any functions or responsibilities in
     connection with the review or approval of this provider agreement or
     provision of services under this provider agreement shall, prior to the
     completion of such services or reimbursement, acquire any interest,
     personal or otherwise, direct or indirect, which is incompatible or in
     conflict with, or would compromise in any manner or degree the discharge
     and fulfillment of his or her functions and responsibilities with respect
     to the carrying out of such services. For purposes of this

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     article, "members" does not include individuals whose sole connection with
     MCP is the receipt of services through a health care program offered by
     MCP.

B.   MCP represents, warrants, and certifies that it and its employees engaged
     in the administration or performance of this Agreement are knowledgeable of
     and understand the Ohio Ethics and Conflicts of Interest laws and Executive
     Order 2007-01S. MCP further represents, warrants, and certifies that
     neither MCP nor any of its employees will do any act that is inconsistent
     with such laws and Executive Order. The Governor's Executive Orders may be
     found by accessing the following website:
     http://governor.ohio.gov/GovernorsOffice/ExecutiveOrdersDirectives/tabid/
     105/Default.a spx.

C.   MCP hereby covenants that MCP, its officers, members and employees of the
     MCP, shall not, prior to the completion of the work under this Agreement,
     voluntarily acquire any interest, personal or otherwise, direct or
     indirect, which is incompatible or in conflict with or would compromise in
     any manner of degree the discharge and fulfillment of his or her functions
     and responsibilities under this provider agreement. MCP shall periodically
     inquire of its officers, members and employees concerning such interests.

D.   Any such person who acquires an incompatible, compromising or conflicting
     personal or business interest, on or after the effective date of this
     Agreement, or who involuntarily acquires any such incompatible or
     conflicting personal interest, shall immediately disclose his or her
     interest to ODJFS in writing. Thereafter, he or she shall not participate
     in any action affecting the services under this provider agreement, unless
     ODJFS shall determine in its sole discretion that, in the light of the
     personal interest disclosed, his or her participation in any such action
     would not be contrary to the public interest. The written disclosure of
     such interest shall be made to: Chief, Bureau of Managed Health Care,
     ODJFS.

E.   No officer, member or employee of MCP shall promise or give to any ODJFS
     employee anything of value that is of such a character as to manifest a
     substantial and improper influence upon the employee with respect to his or
     her duties. No officer, member or employee of MCP shall solicit an ODJFS
     employee to violate any ODJFS rule or policy relating to the conduct of the
     parties to this agreement or to violate sections 102.03, 102.04, 2921.42 or
     2921.43 of the Ohio Revised Code.

F.   MCP hereby covenants that MCP, its officers, members and employees are in
     compliance with section 102.04 of the Revised Code and that if MCP is
     required to file a statement pursuant to 102.04(D)(2) of the Revised Code,
     such statement has been filed with the ODJFS in addition to any other
     required filings.

ARTICLE VI - NONDISCRIMINATION OF EMPLOYMENT

A.   MCP agrees that in the performance of this provider agreement or in the
     hiring of any employees for the performance of services under this provider
     agreement, MCP shall not by reason of race, color, religion, gender, sexual
     orientation, age, disability, national

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     origin, veteran's status, health status, or ancestry, discriminate against
     any citizen of this state in the employment of a person qualified and
     available to perform the services to which the provider agreement relates.

B.   MCP agrees that it shall not, in any manner, discriminate against,
     intimidate, or retaliate against any employee hired for the performance or
     services under the provider agreement on account of race, color, religion,
     gender, sexual orientation, age, disability, national origin, veteran's
     status, health status, or ancestry.

C.   In addition to requirements imposed upon subcontractors in accordance with
     OAC Chapter 5101:3-26, MCP agrees to hold all subcontractors and persons
     acting on behalf of MCP in the performance of services under this provider
     agreement responsible for adhering to the requirements of paragraphs (A)
     and (B) above and shall include the requirements of paragraphs (A) and (B)
     above in all subcontracts for services performed under this provider
     agreement, in accordance with rule 5101:3-26-05 of the Ohio Administrative
     Code.

ARTICLE VII - RECORDS, DOCUMENTS AND INFORMATION

A.   MCP agrees that all records, documents, writings or other information
     produced by MCP under this provider agreement and all records, documents,
     writings or other information used by MCP in the performance of this
     provider agreement shall be treated in accordance with rule 5101:3-26-06 of
     the Ohio Administrative Code. MCP must maintain an appropriate record
     system for services provided to members. MCP must retain all records in
     accordance with 45 CFR Part 74.

B.   All information provided by MCP to ODJFS that is proprietary shall be held
     to be strictly confidential by ODJFS. Proprietary information is
     information which, if made public, would put MCP at a disadvantage in the
     market place and trade of which MCP is a part [see Ohio Revised Code
     Section 1333.61(D)]. MCP is responsible for notifying ODJFS of the nature
     of the information prior to its release to ODJFS. Failure to provide such
     prior notification is deemed to be a waiver of the proprietary nature of
     the information, and a waiver of any right of MCP to proceed against ODJFS
     for violation of this agreement or of any proprietary or trade secret laws.
     Such failure shall also be deemed a waiver of trade secret protection in
     that the MCP will have failed to make efforts that are reasonable under the
     circumstances to maintain the information's secrecy. ODJFS reserves the
     right to require reasonable evidence of MCP's assertion of the proprietary
     nature of any information to be provided and ODJFS will make the final
     determination of whether any or all of the information identified by the
     MCP is proprietary or a trade secret. The provisions of this Article are
     not self-executing.

C.   MCP shall not use any information, systems, or records made available to it
     for any purpose other than to fulfill the duties specified in this provider
     agreement. MCP agrees to be bound by the same standards of confidentiality
     that apply to the employees of the ODJFS and the State of Ohio. The terms
     of this section shall be included in any subcontracts executed by MCP for
     services under this provider agreement. MCP must

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     implement procedures to ensure that in the process of coordinating care,
     each enrollee's privacy is protected consistent with the confidentiality
     requirements in 45 CFR parts 160 and 164.

ARTICLE VIII - SUSPENSION AND TERMINATION

A.   This provider agreement may be suspended or terminated by the department or
     MCP upon written notice in accordance with the applicable rule(s) of the
     Ohio Administrative Code, with termination to occur at the end of the last
     day of a month.

B.   MCP, upon receipt of notice of suspension or termination, shall cease
     provision of services on the suspended or terminated activities under this
     provider agreement; suspend, or terminate all subcontracts relating to such
     suspended or terminated activities, take all necessary or appropriate steps
     to limit disbursements and minimize costs, and furnish a report, as of the
     date of receipt of notice of suspension or termination describing the
     status of all services under this provider agreement.

C.   In the event of suspension or termination under this Article, MCP shall be
     entitled to reconciliation of reimbursements through the end of the month
     for which services were provided under this provider agreement, in
     accordance with the reimbursement provisions of this provider agreement.
     MCP agrees to waive any right to, and shall make no claim for, additional
     compensation against ODJFS by reason of such suspension or termination.

D.   ODJFS may, in its judgment, suspend, terminate or fail to renew this
     provider agreement if the MCP or MCP's subcontractors violate or fail to
     comply with the provisions of this agreement or other provisions of law or
     regulation governing the Medicaid program. Where ODJFS proposes to suspend,
     terminate or refuse to enter into a provider agreement, the provisions of
     applicable sections of the Ohio Administrative Code with respect to ODJFS'
     suspension, termination or refusal to enter into a provider agreement shall
     apply, including the MCP's right to request an adjudication hearing under
     Chapter 119. of the Revised Code.

E.   When initiated by MCP, termination of or failure to renew the provider
     agreement requires written notice to be received by ODJFS at least 75 days
     in advance of the termination or renewal date, provided, however, that
     termination or non-renewal must be effective at the end of the last day of
     a calendar month. In the event of non-renewal of the provider agreement
     with ODJFS, if MCP is unable to provide notice to ODJFS 75 days prior to
     the date when the provider agreement expires, and if, as a result of said
     lack of notice, ODJFS is unable to disenroll Medicaid enrollees prior to
     the expiration date, then the provider agreement shall be deemed extended
     for up to two calendar months beyond the expiration date and both parties
     shall, for that time, continue to fulfill their duties and obligations as
     set forth herein. If an MCP wishes to terminate or not renew their provider
     agreement for a specific region(s), ODJFS reserves the right to initiate a
     procurement process to select additional MCPs to serve Medicaid consumers
     in that region(s).

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ARTICLE IX - AMENDMENT AND RENEWAL

A.   This writing constitutes the entire agreement between the parties with
     respect to all matters herein. This provider agreement may be amended only
     by a writing signed by both parties. Any written amendments to this
     provider agreement shall be prospective in nature.

B.   This provider agreement may be renewed one or more times by a writing
     signed by both parties for a period of not more than twelve months for each
     renewal.

C.   In the event that changes in State or Federal law, regulations, an
     applicable waiver, or the terms and conditions of any applicable federal
     waiver, require ODJFS to modify this agreement, ODJFS shall notify MCP
     regarding such changes and this agreement shall be automatically amended to
     conform to such changes without the necessity for executing written
     amendments pursuant to this Article of this provider agreement.

D.   This Agreement supersedes any and all previous agreements, whether written
     or oral, between the parties.

E.   A waiver by any party of any breach or default by the other party under
     this Agreement shall not constitute a continuing waiver by such party of
     any subsequent act in breach of or in default hereunder.

ARTICLE X - LIMITATION OF LIABILITY

A.   MCP agrees to indemnify and to hold ODJFS and the State of Ohio harmless
     and immune from any and all claims for injury or damages resulting from the
     actions or omissions of MCP or its subcontractors in the fulfillment of
     this provider agreement or arising from this Agreement which are
     attributable to the MCP's own actions or omissions of those of its
     trustees, officers, employees, subcontractors, suppliers, third parties
     utilized by MCP, or joint venturers while acting under this Agreement. Such
     claims shall include any claims made under the Fair Labor Standards Act or
     under any other federal or state law involving wages, overtime, or
     employment matters and any claims involving patents, copyrights, and
     trademarks. MCP shall bear all costs associated with defending ODJFS and
     the State of Ohio against these claims.

B.   MCP hereby agrees to be liable for any loss of federal funds suffered by
     ODJFS for enrollees resulting from specific, negligent acts or omissions of
     the MCP or its subcontractors during the term of this agreement, including
     but not limited to the nonperformance of the duties and obligations to
     which MCP has agreed under this agreement.

C.   In the event that, due to circumstances not reasonably within the control
     of MCP or ODJFS, a major disaster, epidemic, complete or substantial
     destruction of facilities, war, riot or civil insurrection occurs, neither
     ODJFS nor MCP will have any liability or

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     obligation on account of reasonable delay in the provision or the
     arrangement of covered services; provided that so long as MCP's certificate
     of authority remains in full force and effect, MCP shall be liable for the
     covered services required to be provided or arranged for in accordance with
     this agreement.

D.   In no event shall either party be liable to the other party for indirect,
     consequential, incidental, special or punitive damages, or lost profits.

ARTICLE XI - ASSIGNMENT

A.   ODJFS will not allow the transfer of Medicaid members by one MCP to another
     MCP unless this membership has been obtained as a result of an MCP selling
     their entire Ohio corporation to another health plan. MCP shall not assign
     any interest in this provider agreement and shall not transfer any interest
     in the same (whether by assignment or novation) without the prior written
     approval of ODJFS and subject to such conditions and provisions as ODJFS
     may deem necessary. Any such assignments shall be submitted for ODJFS'
     review 120 days prior to the desired effective date. No such approval by
     ODJFS of any assignment shall be deemed in any event or in any manner to
     provide for the incurrence of any obligation by ODJFS in addition to the
     total agreed-upon reimbursement in accordance with this agreement.

B.   MCP shall not assign any interest in subcontracts of this provider
     agreement and shall not transfer any interest in the same (whether by
     assignment or novation) without the prior written approval of ODJFS and
     subject to such conditions and provisions as ODJFS may deem necessary. Any
     such assignments of subcontracts shall be submitted for ODJFS' review 30
     days prior to the desired effective date. No such approval by ODJFS of any
     assignment shall be deemed in any event or in any manner to provide for the
     incurrence of any obligation by ODJFS in addition to the total agreed-upon
     reimbursement in accordance with this agreement.

ARTICLE XII - CERTIFICATION MADE BY MCP

A.   This agreement is conditioned upon the full disclosure by MCP to ODJFS of
     all information required for compliance with federal regulations as
     requested by ODJFS.

B.   By executing this agreement, MCP certifies that no federal funds paid to
     MCP through this or any other agreement with ODJFS shall be or have been
     used to lobby Congress or any federal agency in connection with a
     particular contract, grant, cooperative agreement or loan. MCP further
     certifies compliance with the lobbying restrictions contained in Section
     1352, Title 31 of the U.S. Code, Section 319 of Public Law 101-121 and
     federal regulations issued pursuant thereto and contained in 45 CFR Part
     93, Federal Register, Vol. 55, No. 38, February 26, 1990, pages 6735-6756.
     If this provider agreement exceeds $100,000, MCP has executed the
     Disclosure of Lobbying Activities, Standard Form LLL, if required by
     federal regulations. This certification is material representation of fact
     upon which reliance was placed when this provider agreement was entered
     into.

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C.   By executing this agreement, MCP certifies that neither MCP nor any
     principals of MCP (i.e., a director, officer, partner, or person with
     beneficial ownership of more than 5% of the MCP's equity) is presently
     debarred, suspended, proposed for debarment, declared ineligible, or
     otherwise excluded from participation in transactions by any Federal
     agency. The MCP also certifies that it is not debarred from consideration
     for contract awards by the Director of the Department of Administrative
     Services, pursuant to either O.R.C. Section 153.02 or O.R.C. Section
     125.25. The MCP also certifies that the MCP has no employment, consulting
     or any other arrangement with any such debarred or suspended person for the
     provision of items or services or services that are significant and
     material to the MCP's contractual obligation with ODJFS. This certification
     is a material representation of fact upon which reliance was placed when
     this provider agreement was entered into. If it is ever determined that MCP
     knowingly executed this certification erroneously, then in addition to any
     other remedies, this provider agreement shall be terminated pursuant to
     Article VII, and ODJFS must advise the Secretary of the appropriate Federal
     agency of the knowingly erroneous certification.

D.   By executing this agreement, MCP certifies compliance with Article V as
     well as agreeing to future compliance with Article V. This certification is
     a material representation of fact upon which reliance was placed when this
     contract was entered into.

E.   By executing this agreement, MCP certifies compliance with the executive
     agency lobbying requirements of sections 121.60 to 121.69 of the Ohio
     Revised Code. This certification is a material representation of fact upon
     which reliance was placed when this provider agreement was entered into.

F.   By executing this agreement, MCP certifies that MCP is not on the most
     recent list established by the Secretary of State, pursuant to section
     121.23 of the Ohio Revised Code, which identifies MCP as having more than
     one unfair labor practice contempt of court finding. This certification is
     a material representation of fact upon which reliance was placed when this
     provider agreement was entered into.

G.   By executing this agreement MCP agrees not to discriminate against
     individuals who have or are participating in any work program administered
     by a county Department of Job and Family Services under Chapters 5101 or
     5107 of the Revised Code.

H.   By executing this agreement, MCP certifies and affirms that, as applicable
     to MCP, that no party listed or described in Division (I) or (J) of Section
     3517.13 of the Ohio Revised Code who was actually in a listed position at
     the time of the contribution, has made as an individual, within the two
     previous calendar years, one or more contributions in excess of One
     Thousand and 00/100 ($1,000.00) to the present Governor or to the
     governor's campaign committees during any time he/she was a candidate for
     office. This certification is a material representation of fact upon which
     reliance was placed when this provider agreement was entered into. If it is
     ever determined that MCP's certification of this requirement is false or
     misleading, and not withstanding any criminal or civil liabilities imposed
     by law, MCP shall return to ODJFS all monies paid to MCP under this

<PAGE>

Baseline
Covered Families and Children (CFC) Population
Page 10

     provider agreement. The provisions of this section shall survive the
     expiration or termination of this provider agreement.

I.   MCP agrees to refrain from promising or giving to any ODJFS employee
     anything of value that is of such a character as to manifest a substantial
     and improper influence upon the employee with respect to his or her duties.
     MCP also agrees that it will not solicit an ODJFS employee to violate any
     ODJFS rule or policy relating to the conduct of contracting parties or to
     violate sections 102.03, 102.04, 2921.42 or 2921.43 of the Ohio Revised
     Code.

J.   By executing this agreement, MCP certifies and affirms that HHS, US
     Comptroller General or representatives will have access to books,
     documents, etc. of MCP.

K.   By executing this agreement, MCP agrees to comply with the false claims
     recovery requirements of Section 6032 of The Deficit Reduction Act of 2005
     (also see Section 5111.101 of the Revised Code).

L.   MCP, its officers, employees, members, any subcontractors, and/or any
     independent contractors (including all field staff) associated with this
     agreement agree to comply with all applicable state and federal laws
     regarding a smoke-free and drug-free workplace. The MCP will make a good
     faith effort to ensure that all MCP officers, employees, members, and
     subcontractors will not purchase, transfer, use or possess illegal drugs or
     alcohol, or abuse prescription drugs in any way while performing their
     duties under this Agreement.

M.   MCP hereby represents and warrants to ODJFS that it has not provided any
     material assistance, as that term is defined in O.R.C. Section 2909.33(C),
     to any organization identified by and included on the United States
     Department of State Terrorist Exclusion List and that it has truthfully
     answered "no" to every question on the "Declaration Regarding Material
     Assistance/Non-assistance to a Terrorist Organization." MCP further
     represents and warrants that it has provided or will provide such to ODJFS
     prior to execution of this Agreement. If these representations and
     warranties are found to be false, this Agreement is void ab initio and MCP
     shall immediately repay to ODJFS any funds paid under this Agreement.

ARTICLE XIII - CONSTRUCTION

A.   This provider agreement shall be governed, construed and enforced in
     accordance with the laws and regulations of the State of Ohio and
     appropriate federal statutes and regulations. The provisions of this
     Agreement are severable and independent, and if any such provision shall be
     determined to be unenforceable, in whole or in part, the remaining
     provisions and any partially enforceable provision shall, to the extent
     enforceable in any jurisdiction, nevertheless be binding and enforceable.

ARTICLE XIV - INCORPORATION BY REFERENCE

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Covered Families and Children (CFC) Population
Page 11

A.   Ohio Administrative Code Chapter 5101:3-26 (Appendix A) is hereby
     incorporated by reference as part of this provider agreement having the
     full force and effect as if specifically restated herein.

B.   Appendices B through P and any additional appendices are hereby
     incorporated by reference as part of this provider agreement having the
     full force and effect as if specifically restated herein.

C.   In the event of inconsistence or ambiguity between the provisions of OAC
     Chapter 5101:3-26 and this provider agreement, the provisions of OAC
     Chapter 5101:3-26 shall be determinative of the obligations of the parties
     unless such inconsistency or ambiguity is the result of changes in federal
     or state law, as provided in Article IX of this provider agreement, in
     which case such federal or state law shall be determinative of the
     obligations of the parties. In the event OAC 5101:3-26 is silent with
     respect to any ambiguity or inconsistency, the provider agreement
     (including Appendices B through P and any additional appendices), shall be
     determinative of the obligations of the parties. In the event that a
     dispute arises which is not addressed in any of the aforementioned
     documents, the parties agree to make every reasonable effort to resolve the
     dispute, in keeping with the objectives of the provider agreement and the
     budgetary and statutory constraints of ODJFS.

ARTICLE XV - NOTICES

All notices, consents, and communications hereunder shall be given in writing,
shall be deemed to be given upon receipt thereof, and shall be sent to the
addresses first set forth above.

ARTICLE XVI - HEADINGS

The headings in this Agreement have been inserted for convenient reference only
and shall not be considered in any questions of interpretation or construction
of this Agreement.

<PAGE>

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Page 12

The parties have executed this agreement the date first written above. The
agreement is hereby accepted and considered binding in accordance with the terms
and conditions set forth in the preceding statements.

MOLINA HEALTHCARE OF OHIO, INC.:

BY: /s/ JESSE THOMAS                    DATE: June 11, 2007
    ---------------------------------
    JESSE THOMAS, PRESIDENT & CEO

OHIO DEPARTMENT OF JOB AND FAMILY
SERVICES:

BY: /s/ HELEN E. JONES-KELLY            DATE: June 25, 2007
    ---------------------------------
    HELEN E. JONES-KELLY, DIRECTOR

<PAGE>

                          CFC PROVIDER AGREEMENT INDEX
                                  JULY 1, 2007

<TABLE>
<CAPTION>
APPENDIX                        TITLE
--------     ------------------------------------------
<S>          <C>
APPENDIX A   OAC RULES 5101:3-26
APPENDIX B   SERVICE AREA SPECIFICATIONS - CFC ELIGIBLE
             POPULATION
APPENDIX C   MCP RESPONSIBILITIES - CFC ELIGIBLE
             POPULATION
APPENDIX D   ODJFS RESPONSIBILITIES - CFC ELIGIBLE
             POPULATION
APPENDIX E   RATE METHODOLOGY - CFC ELIGIBLE
             POPULATION
APPENDIX F   REGIONAL RATES - CFC ELIGIBLE
             POPULATION
APPENDIX G   COVERAGE AND SERVICES - CFC ELIGIBLE
             POPULATION
APPENDIX H   PROVIDER PANEL SPECIFICATIONS - CFC
             ELIGIBLE POPULATION
APPENDIX I   PROGRAM INTEGRITY- CFC ELIGIBLE
             POPULATION
APPENDIX J   FINANCIAL PERFORMANCE - CFC ELIGIBLE
             POPULATION
APPENDIX K   QUALITY ASSESSMENT AND
             PERFORMANCE IMPROVEMENT PROGRAM - CFC
             ELIGIBLE POPULATION
APPENDIX L   DATA QUALITY - CFC ELIGIBLE POPULATION
APPENDIX M   PERFORMANCE EVALUATION - CFC ELIGIBLE
             POPULATION
APPENDIX N   COMPLIANCE ASSESSMENT SYSTEM - CFC
             ELIGIBLE POPULATION
APPENDIX O   PAY-FOR-PERFORMANCE
             (P4P) - CFC ELIGIBLE POPULATION
APPENDIX P   MCP TERMINATIONS/NONRENEWALS/
             AMENDMENTS - CFC ELIGIBLE POPULATION
</TABLE>

<PAGE>

                                   APPENDIX A

                               OAC RULES 5101:3-26

The managed care program rules can be accessed electronically through the BMHC
page of the ODJFS website.

<PAGE>

                                   APPENDIX B

                           SERVICE AREA SPECIFICATIONS
                            CFC ELIGIBLE POPULATION

                      MCP : MOLINA HEALTHCARE OF OHIO, INC.

The MCP agrees to provide services to Covered Families and Children (CFC)
members residing in the following service area(s):

Service Area: Central Region - Crawford, Delaware, Fairfield, Fayette, Franklin,
Hocking, Knox, Licking, Logan, Madison, Marion, Montgomery, Morrow, Perry,
Pickaway, Pike, Ross, and Scioto counties.

Service Area: Southeast Region - Athens, Belmont, Coshocton, Gallia, Guernsey,
Harrison, Jackson, Jefferson, Lawrence, Meigs, Monroe, Morgan, Muskingum, Noble,
Vinton, and Washington counties.

Service Area: Southwest Region - Adams, Brown, Butler, Clermont, Clinton,
Hamilton, Highland, and Warren counties.

Service Area: West Central Region - Champaign, Clark, Darke, Greene, Miami,
Montgomery, Preble, and Shelby counties.

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 1

                                   APPENDIX C

                              MCP RESPONSIBILITIES
                            CFC ELIGIBLE POPULATION

The MCP must meet on an ongoing basis, all program requirements specified in
Chapter 5101:3-26 of the Ohio Administrative Code (OAC) and the Ohio Department
of Job and Family Services (ODJFS) - MCP Provider Agreement. The following are
MCP responsibilities that are not otherwise specifically stated in OAC rule
provisions or elsewhere in the MCP provider agreement, but are required by
ODJFS.

General Provisions

1.   The MCP agrees to implement program modifications as soon as reasonably
     possible or no later than the required effective date, in response to
     changes in applicable state and federal laws and regulations.

2.   The MCP must submit a current copy of their Certificate of Authority (COA)
     to ODJFS within 30 days of issuance by the Ohio Department of Insurance.

3.   The MCP must designate the following:

     a. A primary contact person (the Medicaid Coordinator) who will dedicate a
     majority of their time to the Medicaid product line and coordinate overall
     communication between ODJFS and the MCP. ODJFS may also require the MCP to
     designate contact staff for specific program areas. The Medicaid
     Coordinator will be responsible for ensuring the timeliness, accuracy,
     completeness and responsiveness of all MCP submissions to ODJFS.

     b. A provider relations representative for each service area included in
     their ODJFS provider agreement. This provider relations representative can
     serve in this capacity for only one service area (as specified in Appendix
     H).

     As long as the MCP serves both the CFC and ABD populations, they are not
     required to have separate provider relations representatives or Medicaid
     coordinators.

4.   All MCP employees are to direct all day-to-day submissions and
     communications to their ODJFS-designated Contract Administrator unless
     otherwise notified by ODJFS.

5.   The MCP must be represented at all meetings and events designated by ODJFS
     as requiring mandatory attendance.

6.   The MCP must have an administrative office located in Ohio.

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 2

7.   Upon request by ODJFS, the MCP must submit information on the current
     status of their company's operations not specifically covered under this
     provider agreement (for example, other product lines, Medicaid contracts in
     other states, NCQA accreditation, etc.) unless otherwise excluded by law.

8.   The MCP must have all new employees trained on applicable program
     requirements, and represent, warrant and certify to ODJFS that such
     training occurs, or has occurred.

9.   If an MCP determines that it does not wish to provide, reimburse, or cover
     a counseling service or referral service due to an objection to the service
     on moral or religious grounds, it must immediately notify ODJFS to
     coordinate the implementation of this change. MCPs will be required to
     notify their members of this change at least thirty (30) days prior to the
     effective date. The MCP's member handbook and provider directory, as well
     as all marketing materials, will need to include information specifying any
     such services that the MCP will not provide.

10.  For any data and/or documentation that MCPs are required to maintain, ODJFS
     may request that MCPs provide analysis of this data and/or documentation to
     ODJFS in an aggregate format, such format to be solely determined by ODJFS.

11.  The MCP is responsible for determining medical necessity for services and
     supplies requested for their members as specified in OAC rule 5101:3-26-03.
     Notwithstanding such responsibility, ODJFS retains the right to make the
     final determination on medical necessity in specific member situations.

12.  In addition to the timely submission of medical records at no cost for the
     annual external quality review as specified in OAC rule 5101:3-26-07, the
     MCP may be required for other purposes to submit medical records at no cost
     to ODJFS and/or designee upon request.

13.  The MCP must notify the BMHC of the termination of an MCP panel provider
     that is designated as the primary care physician for 500 or more of the
     MCP's CFC members. The MCP must provide notification within one working day
     of the MCP becoming aware of the termination.

14.  Upon request by ODJFS, MCPs may be required to provide written notice to
     members of any significant change(s) affecting contractual requirements,
     member services or access to providers.

15.  MCPs may elect to provide services that are in addition to those covered
     under the Ohio Medicaid fee-for-service program. Before MCPs notify
     potential or current members of the availability of these services, they
     must first notify ODJFS and advise ODJFS of such

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 3

     planned services availability. If an MCP elects to provide additional
     services, the MCP must ensure to the satisfaction of ODJFS that the
     services are readily available and accessible to members who are eligible
     to receive them.

          a.   MCPs are REQUIRED to make transportation available to any member
               requesting transportation when they MUST travel (thirty) 30 miles
               or more from their home to receive a medically-necessary
               Medicaid-covered service. If the MCP offers transportation to
               their members as an additional benefit and this transportation
               benefit only covers a limited number of trips, the required
               transportation listed above may not be counted toward this trip
               limit.

          b.   Additional benefits may not vary by county within a region except
               out of necessity for transportation arrangements (e.g., bus
               versus cab). MCPs approved to serve consumers in more than one
               region may vary additional benefits between regions.

          c.   MCPs must give ODJFS and members (ninety) 90 days prior notice
               when decreasing or ceasing any additional benefit(s). When it is
               beyond the control of the MCP, as demonstrated to ODJFS'
               satisfaction, ODJFS must be notified within (one) 1 working day.

16.  MCPs must comply with any applicable Federal and State laws that pertain to
     member rights and ensure that its staff adhere to such laws when furnishing
     services to its members. MCPs shall include a requirement in its contracts
     with affiliated providers that such providers also adhere to applicable
     Federal and State laws when providing services to members.

17.  MCPs must comply with any other applicable Federal and State laws (such as
     Title VI of the Civil rights Act of 1964, etc.) and other laws regarding
     privacy and confidentiality, as such may be applicable to this Agreement.

18.  Upon request, the MCP will provide members and potential members with a
     copy of their practice guidelines.

19.  The MCP is responsible for promoting the delivery of services in a
     culturally competent manner, as solely determined by ODJFS, to all members,
     including those with limited English proficiency (LEP) and diverse cultural
     and ethnic backgrounds.

     All MCPs must comply with the requirements specified in OAC rules
     5101:3-26-03.1, 5101:3-26-05(D), 5101:3-26-05.1(A), 5101:3-26-08 and
     5101:3-26-08.2 for providing assistance to LEP members and eligible
     individuals. In addition, MCPs must provide written translations of certain
     MCP materials in the prevalent non-English languages of members and
     eligible individuals in accordance with the following:

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 4

          a.   When 10% or more of the CFC eligible individuals in the MCP's
               service area have a common primary language other than English,
               the MCP must translate all ODJFS-approved marketing materials
               into the primary language of that group. The MCP must monitor
               changes in the eligible population on an ongoing basis and
               conduct an assessment no less often than annually to determine
               which, if any, primary language groups meet the 10% threshold for
               the eligible individuals in each service area. When the 10%
               threshold is met, the MCP must report this information to ODJFS,
               in a format as requested by ODJFS, translate their marketing
               materials, and make these marketing materials available to
               eligible individuals. MCPs must submit to ODJFS, upon request,
               their prevalent non-English language analysis of eligible
               individuals and the results of this analysis.

          b.   When 10% or more of an MCP's CFC members in the MCP's service
               area have a common primary language other than English, the MCP
               must translate all ODJFS-approved member materials into the
               primary language of that group. The MCP must monitor their
               membership and conduct a quarterly assessment to determine which,
               if any, primary language groups meet the 10% threshold. When the
               10% threshold is met, the MCP must report this information to
               ODJFS, in a format as requested by ODJFS, translate their member
               materials, and make these materials available to their members.
               MCPs must submit to ODJFS, upon request, their prevalent
               non-English language member analysis and the results of this
               analysis.

20.  The MCP must utilize a centralized database which records the special
     communication needs of all MCP members (i.e., those with limited English
     proficiency, limited reading proficiency, visual impairment, and hearing
     impairment) and the provision of related services (i.e., MCP materials in
     alternate format, oral interpretation, oral translation services, written
     translations of MCP materials, and sign language services). This database
     must include all MCP member primary language information (PLI) as well as
     all other special communication needs information for MCP members, as
     indicated above, when identified by any source including but not limited to
     ODJFS, ODJFS selection services entity, MCP staff, providers, and members.
     This centralized database must be readily available to MCP staff and be
     used in coordinating communication and services to members, including the
     selection of a PCP who speaks the primary language of an LEP member, when
     such a provider is available. MCPs must share specific communication needs
     information with their providers [e.g., PCPs, Pharmacy Benefit Managers
     (PBMs), and Third Party Administrators (TPAs)], as applicable. MCPs must
     submit to ODJFS, upon request, detailed information regarding the MCP's
     members with special communication needs, which could include individual
     member names, their specific communication need, and any provision of
     special services to members

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 5

     (i.e., those special services arranged by the MCP as well as those services
     reported to the MCP which were arranged by the provider).

     Additional requirements specific to providing assistance to
     hearing-impaired, vision-impaired, limited reading proficient (LRP), and
     LEP members and eligible individuals are found in OAC rules 5101:3-26-03.1,
     5101:3-26-05(D), 5101:3-26-05.1(A), 5101:3-26-08, and 5101-3-26-08.2.

21.  The MCP is responsible for ensuring that all member materials use easily
     understood language and format. The determination of what materials comply
     with this requirement is in the sole discretion of ODJFS.

22.  Pursuant to OAC rules 5101:3-26-08 and 5101:3-26-08.2, the MCP is
     responsible for ensuring that all MCP marketing and member materials are
     prior approved by ODJFS before being used or shared with members. Marketing
     and member materials are defined as follows:

     a.   Marketing materials are those items produced in any medium, by or on
          behalf of an MCP, including gifts of nominal value (i.e., items worth
          no more than $15.00), which can reasonably be interpreted as intended
          to market to eligible individuals.

     b.   Member materials are those items developed, by or on behalf of an MCP,
          to fulfill MCP program requirements or to communicate to all members
          or a group of members. Member health education materials that are
          produced by a source other than the MCP and which do not include any
          reference to the MCP are not considered to be member materials.

     c.   All MCP marketing and member materials must represent the MCP in an
          honest and forthright manner and must not make statements which are
          inaccurate, misleading, confusing, or otherwise misrepresentative, or
          which defraud eligible individuals or ODJFS.

     d.   All MCP marketing cannot contain any assertion or statement (whether
          written or oral) that the MCP is endorsed by CMS, the Federal or State
          government or similar entity.

     e.   MCPs must establish positive working relationships with the CDJFS
          offices and must not aggressively solicit from local Directors, MCP
          County Coordinators, or or other staff. Furthermore, MCPs are
          prohibited from offering gifts of nominal value (i.e. clipboards,
          pens, coffee mugs, etc.) to CDJFS offices or managed care enrollment
          center (MCEC) staff, as these may influence an individual's decision
          to select a particular MCP.

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 6

23.  Advance Directives - All MCPs must comply with the requirements specified
     in 42 CFR 422.128. At a minimum, the MCP must:

     a.   Maintain written policies and procedures that meet the requirements
          for advance directives, as set forth in 42 CFR Subpart I of part 489.

     b.   Maintain written policies and procedures concerning advance directives
          with respect to all adult individuals receiving medical care by or
          through the MCP to ensure that the MCP:

          i.   Provides written information to all adult members concerning:

               a.   the member's rights under state law to make decisions
                    concerning their medical care, including the right to accept
                    or refuse medical or surgical treatment and the right to
                    formulate advance directives. (In meeting this requirement,
                    MCPs must utilize form JFS 08095 entitled You Have the
                    Right, or include the text from JFS 08095 in their
                    ODJFS-approved member handbook).

               b.   the MCP's policies concerning the implementation of those
                    rights including a clear and precise statement of any
                    limitation regarding the implementation of advance
                    directives as a matter of conscience;

               c.   any changes in state law regarding advance directives as
                    soon as possible but no later than (ninety) 90 days after
                    the proposed effective date of the change; and

               d.   the right to file complaints concerning noncompliance with
                    the advance directive requirements with the Ohio Department
                    of Health.

          ii.  Provides for education of staff concerning the MCP's policies and
               procedures on advance directives;

          iii. Provides for community education regarding advance directives
               directly or in concert with other providers or entities;

          iv.  Requires that the member's medical record document whether or not
               the member has executed an advance directive; and

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 7

          v.   Does not condition the provision of care, or otherwise
               discriminate against a member, based on whether the member has
               executed an advance directive.

24.  New Member Materials

     Pursuant to OAC rule 5101:3-26-08.2 (B)(3), MCPs must provide to each
     member or assistance group, as applicable, an MCP identification (ID) card,
     a new member letter, a member handbook, a provider directory, and
     information on advance directives.

     a. MCPs must use the model language specified by ODJFS for the new member
     letter.

     b. The ID card and new member letter must be mailed together to the member
     via a method that will ensure their receipt prior to the member's effective
     date of coverage.

     c. The member handbook, provider directory and advance directives
     information may be mailed to the member separately from the ID card and new
     member letter. MCPs will meet the timely receipt requirement for these
     materials if they are mailed to the member within (twenty-four) 24 hours of
     the MCP receiving the ODJFS produced monthly membership roster (MMR). This
     is provided the materials are mailed via a method with an expected delivery
     date of no more than five (5) days. If the member handbook, provider
     directory and advance directives information are mailed separately from the
     ID card and new member letter and the MCP is unable to mail the materials
     within twenty-four (24) hours, the member handbook, provider directory and
     advance directives information must be mailed via a method that will ensure
     receipt by no later than the effective date of coverage. If the MCP mails
     the ID card and new member letter with the other materials (e.g., member
     handbook, provider directory, and advance directives), the MCP must ensure
     that all materials are mailed via a method that will ensure their receipt
     prior to the member's effective date of coverage.

     d. MCPs must designate two (2) MCP staff members to receive a copy of the
     new member materials on a monthly basis in order to monitor the timely
     receipt of these materials. At least one of the staff members must receive
     the materials at their home address.

25.  Call Center Standards

     The MCP must provide assistance to members through a member services
     toll-free call-in system pursuant to OAC rule 5101:3-26-08.2(A)(1). MCP
     member services staff must be available nationwide to provide assistance to
     members through the toll-free call-in system every Monday through Friday,
     at all times during the hours of 7:00 am to 7:00 pm Eastern Time, except
     for the following major holidays:

          -    New Year's Day

          -    Martin Luther King's Birthday

          -    Memorial Day

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 8

          -    Independence Day

          -    Labor Day

          -    Thanksgiving Day

          -    Christmas Day

          -    2 optional closure days: These days can be used independently or
               in combination with any of the major holiday closures but cannot
               both be used within the same closure period.

               Before announcing any optional closure dates to members and/or
               staff, MCPs must receive ODJFS prior-approval which verifies that
               the optional closure days meet the specified criteria.

     If a major holiday falls on a Saturday, the MCP member services line may be
     closed on the preceding Friday. If a major holiday falls on a Sunday, the
     member services line may be closed on the following Monday. MCP member
     services closure days must be specified in the MCP's member handbook,
     member newsletter, or other some general issuance to the MCP's members at
     least (thirty) 30 days in advance of the closure.

     The MCP must also provide access to medical advice and direction through a
     centralized twenty-four-hour, seven day (24/7) toll-free call-in system,
     available nationwide, pursuant to OAC rule 5101:3-26-03.1(A)(6). The 24/7
     call-in system must be staffed by appropriately trained medical personnel.
     For the purposes of meeting this requirement, trained medical professionals
     are defined as physicians, physician assistants, licensed practical nurses,
     and registered nurses.

     MCPs must meet the current American Accreditation HealthCare
     Commission/URAC-designed Health Call Center Standards (HCC) for call center
     abandonment rate, blockage rate and average speed of answer. By the 10th of
     each month, MCPs must self-report their prior month performance in these
     three areas for their member services and 24/7 toll-free call-in systems to
     ODJFS. ODJFS will inform the MCPs of any changes/updates to these URAC call
     center standards.

     MCPs are not permitted to delegate grievance/appeal functions [Ohio
     Administrative Code (OAC) rule 5101:3-26-08.4(A)(9)]. Therefore, the member
     services call center requirement may not be met through the execution of a
     Medicaid Delegation Subcontract Addendum or Medicaid Combined Services
     Subcontract Addendum.

26.  Notification of Optional MCP Membership

     In order to comply with the terms of the ODJFS State Plan Amendment for the
     managed care program (i.e., 42 CFR 438.50), MCPs in mandatory membership
     service areas must inform new members that MCP membership is optional for
     certain populations. Specifically, MCPs must inform any applicable pending
     member or member that the following CFC populations are not required to
     select an MCP in order to receive their

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 9

     Medicaid healthcare benefit and what steps they need to take if they do not
     wish to be a member of an MCP:

          -    Indians who are members of federally-recognized tribes.

          -    Children under 19 years of age who are:

               -    Eligible for Supplemental Security Income under title XVI;

               -    In foster care or other out-of-home placement;

               -    Receiving foster care of adoption assistance;

               -    Receiving services through the Ohio Department of Health's
                    Bureau for Children with Medical Handicaps (BCMH) or any
                    other family-centered, community-based, coordinated care
                    system that receives grant funds under section 501(a)(1)(D)
                    of title V, and is defined by the State in terms of either
                    program participation or special health care needs.

27.  HIPAA Privacy Compliance Requirements

     The Health Insurance Portability and Accountability Act (HIPAA) Privacy
     Regulations at 45 CFR. Section 164.502(e) and Section 164.504(e) require
     ODJFS to have agreements with MCPs as a means of obtaining satisfactory
     assurance that the MCPs will appropriately safeguard all personal
     identified health information. Protected Health Information (PHI) is
     information received from or on behalf of ODJFS that meets the definition
     of PHI as defined by HIPAA and the regulations promulgated by the United
     States Department of Health and Human Services, specifically 45 CFR
     164.501, and any amendments thereto. MCPs must agree to the following:

     a.   MCPs shall not use or disclose PHI other than is permitted by this
          agreement or required by law.

     b.   MCPs shall use appropriate safeguards to prevent unauthorized use or
          disclosure of PHI.

     c.   MCPs shall report to ODJFS any unauthorized use or disclosure of PHI
          of which it becomes aware. Any breach by the MCP or its
          representatives of protected health information (PHI) standards shall
          be immediately reported to the State HIPAA Compliance Officer through
          the Bureau of Managed Health Care. MCPs must provide documentation of
          the breach and complete all actions ordered by the HIPAA Compliance
          Officer.

     d.   MCPs shall ensure that all its agents and subcontractors agree to
          these same PHI conditions and restrictions.

     e.   MCPs shall make PHI available for access as required by law.

     f.   MCP shall make PHI available for amendment, and incorporate amendments
          as

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          appropriate as required by law.

     g.   MCPs shall make PHI disclosure information available for accounting as
          required by law.

     h.   MCPs shall make its internal PHI practices, books and records
          available to the Secretary of Health and Human Services (HHS) to
          determine compliance.

     i.   Upon termination of their agreement with ODJFS, the MCPs, at ODJFS'
          option, shall return to ODJFS, or destroy, all PHI in its possession,
          and keep no copies of the information, except as requested by ODJFS or
          required by law.

     j.   ODJFS will propose termination of the MCP's provider agreement if
          ODJFS determines that the MCP has violated a material breach under
          this section of the agreement, unless inconsistent with statutory
          obligations of ODJFS or the MCP.

28.  Electronic Communications - MCPs are required to purchase/utilize Transport
     Layer Security (TLS) for all e-mail communication between ODJFS and the
     MCP. The MCP's e-mail gateway must be able to support the sending and
     receiving of e-mail using Transport Layer Security (TLS) and the MCP's
     gateway must be able to enforce the sending and receiving of email via TLS.

29.  MCP Membership acceptance, documentation and reconciliation

     a.   Selection Services Contractor: The MCP shall provide to the MCEC ODJFS
          prior-approved MCP materials and directories for distribution to
          eligible individuals who request additional information about the MCP.

     b.   Monthly Reconciliation of Membership and Premiums: The MCP shall
          reconcile member data as reported on the MCEC produced consumer
          contact record (CCR) with the ODJFS-produced monthly member roster
          (MMR) and report to the ODJFS any difficulties in interpreting or
          reconciling information received. Membership reconciliation questions
          must be identified and reported to the ODJFS prior to the first of the
          month to assure that no member is left without coverage. The MCP shall
          reconcile membership with premium payments and delivery payments as
          reported on the monthly remittance advice (RA).

          The MCP shall work directly with the ODJFS, or other ODJFS-identified
          entity, to resolve any difficulties in interpreting or reconciling
          premium information. Premium reconciliation questions must be
          identified within thirty (30) days of receipt of the RA.

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     c.   Monthly Premiums and Delivery Payments: The MCP must be able to
          receive monthly premiums and delivery payments in a method specified
          by ODJFS. (ODJFS monthly prospective premium and delivery payment
          issue dates are provided in advance to the MCPs.) Various retroactive
          premium payments (e.g., newborns), and recovery of premiums paid
          (e.g., retroactive terminations of membership for children in custody,
          deferments, etc.,) may occur via any ODJFS weekly remittance.

     d.   Hospital Deferment Requests: When an MCP learns of a current
          hospitalized member's intent to disenroll through the CCR or the 834,
          the disenrolling MCP must notify ODJFS within five (5) business days
          of receipt of the CCR or 834. When the MCP learns of a new member's
          hospitalization that is eligible for deferment prior to that member's
          discharge, the MCP shall notify the hospital and treating providers of
          the potential that the MCP may not be the payer. The MCP shall work
          with hospitals, providers and the ODJFS to assure that discharge
          planning assures continuity of care and accurate payment.
          Notwithstanding the MCP's right to request a hospital deferment up to
          six (6) months following the member's effective date, when the MCP
          learns of a deferment-eligible hospitalization, the MCP shall notify
          the ODJFS and request the deferment within five (5) business days of
          learning of the potential deferment. When the MCP is notified by ODJFS
          of a potential hospital deferment, the MCP must respond to ODJFS
          within five (5) business days of the receipt of the deferment
          information from ODJFS.

     e.   Just Cause Requests: The MCP shall follow procedures as specified by
          ODJFS in assisting the ODJFS in resolving member requests for
          member-initiated requests affecting membership.

     f.   Newborn Notifications: The MCP is required to submit newborn
          notifications to ODJFS in accordance with the ODJFS Newborn
          Notification File and Submissions Specifications.

     g.   Eligible Individuals: If an eligible individual contacts the MCP, the
          MCP must provide any MCP-specific managed care program information
          requested. The MCP must not attempt to assess the eligible
          individual's health care needs. However, if the eligible individual
          inquires about continuing/transitioning health care services, MCPs
          shall provide an assurance that all MCPs must cover all medically
          necessary Medicaid-covered health care services and assist members
          with transitioning their health care services.

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     h.   Pending Member

          If a pending member (i.e., an eligible individual subsequent to plan
          selection or assignment, but prior to their membership effective date)
          contacts the selected MCP, the MCP must provide any membership
          information requested, including but not limited to, assistance in
          determining whether the current medications require prior
          authorization. The MCP must also ensure that any care coordination
          (e.g., PCP selection, prescheduled services and transition of
          services) information provided by the pending member is logged in the
          MCP's system and forwarded to the appropriate MCP staff for processing
          as required. MCPs may confirm any information provided on the CCR at
          this time. Such communication does not constitute confirmation of
          membership. MCPs are prohibited from initiating contact with a pending
          member. Upon receipt of the 834, the MCP may contact a pending member
          to confirm information provided on the CCR or the 834, assist with
          care coordination and transition of care, and inquire if the pending
          member has any membership questions.

          i.   Transition of Fee-For-Service Members

          Providing care coordination for prescheduled health services and
          existing care treatment plans, is critical for members transitioning
          from Medicaid fee-for service (FFS) to managed care. Therefore, MCPs
          must:

          i.   Allow their new members that are transitioning from Medicaid
               fee-for-service to receive services from out-of-panel providers
               if the member or provider contacts the MCP to discuss the
               scheduled health services in advance of the service date and one
               of the following applies:

               a.   The member is in her third trimester of pregnancy and has an
                    established relationship with an obstetrician and/or
                    delivery hospital;

               b.   The member has been scheduled for an inpatient/outpatient
                    surgery and has been prior-approved and/or precertified
                    pursuant to OAC rule 5101:3-2-40 (surgical procedures would
                    also include follow-up care as appropriate);

               c.   The member has appointments within the initial month of MCP
                    membership with specialty physicians that were scheduled
                    prior to the effective date of membership; or

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               d.   The member is receiving ongoing chemotherapy or radiation
                    treatment.

               If contacted by the member, the MCP must contact the provider's
               office as expeditiously as the situation warrants to confirm that
               the service(s) meets the above criteria.

          ii.  Allow their new members that are transitioning from Medicaid
               fee-for-service to continue receiving home care services (i.e.,
               nursing, aide, and skilled therapy services) and private duty
               nursing (PDN) services if the member or provider contacts the MCP
               to discuss the health services in advance of the service date.
               These services must be covered from the date of the member or
               provider contact at the current service level, and with the
               current provider, whether a panel or out-of-panel provider, until
               the MCP conducts a medical necessity review and renders an
               authorization decision pursuant to OAC rule 5101:3-26-03.1. As
               soon as the MCP becomes aware of the member's current home care
               services, the MCP must initiate contact with the current provider
               and member as applicable to ensure continuity of care and
               coordinate a transfer of services to a panel provider, if
               appropriate.

          iii. Honor any current fee-for-service prior authorization to allow
               their new members that are transitioning from Medicaid
               fee-for-service to receive services from the authorized provider,
               whether a panel or out-of-panel provider, for the following
               approved services:

               a.   an organ, bone marrow, or hematapoietic stem cell transplant
                    pursuant to OAC rule 5101:3-2-07.1;

               b.   dental services that have not yet been received;

               c.   vision services that have not yet been received;

               d.   durable medical equipment (DME) that has not yet been
                    received. Ongoing DME services and supplies are to be
                    covered by the MCP as previously-authorized until the MCP
                    conducts a medical necessity review and renders an
                    authorization decision pursuant to OAC rule 5101:3-26-03.1.

               e.   private duty nursing (PDN) services. PDN services must be
                    covered at the previously-authorized service level until the
                    MCP conducts a medical necessity review and renders an
                    authorization decision pursuant to OAC rule 5101:3-26-03.1.

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               As soon as the MCP becomes aware of the member's current fee-for-
               service authorization approval, the MCP must initiate contact
               with the authorized provider and member as applicable to ensure
               continuity of care. The MCP must implement a plan to meet the
               member's immediate and ongoing medical needs and, with the
               exception of organ, bone marrow, or hematapoietic stem cell
               transplants, coordinate the transfer of services to a panel
               provider, if appropriate.

               When an MCP medical necessity review results in a decision to
               reduce, suspend, or terminate services previously authorized by
               fee-for-service Medicaid, the MCP must notify the member of their
               state hearing rights no less than 15 calendar days prior to the
               effective date of the MCP's proposed action, per rule
               5101:3-26-08.4 of the Administrative Code.

          iv.  Reimburse out-of-panel providers that agree to provide the
               transition services at 100% of the current Medicaid
               fee-for-service provider rate for the service(s) identified in
               Section 29.i. (i., ii., and iii.) of this appendix.

          v.   Document the provision of transition of services identified in
               Section 29.i. (i., ii., and iii.) of this appendix as follows:

               a.   For non-panel providers, notification to the provider
                    confirming the provider's agreement/disagreement to provide
                    the service and accept 100% of the current Medicaid
                    fee-for-service rate as payment. If the provider agrees, the
                    distribution of the MCP's materials as outlined in Appendix
                    G.3.e.

               b.   Notification to the member of the non-panel provider's
                    agreement /disagreement to provide the service. If the
                    provider disagrees, notification to the member of the MCP's
                    availability to assist with locating a provider as
                    expeditiously as the member's health condition warrants.

               c.   For panel providers, notification to the provider and member
                    confirming the MCP's responsibility to cover the service.

               MCPs must use the ODJFS-specified model language for the provider
               and member notices and maintain documentation of all member
               and/or provider contacts relating to such services.

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30.  Health Information System Requirements

     The ability to develop and maintain information management systems capacity
     is crucial to successful plan performance. ODJFS therefore requires MCPs to
     demonstrate their ongoing capacity in this area by meeting several related
     specifications.

     a.   Health Information System

          i.   As required by 42 CFR 438.242(a), each MCP must maintain a health
               information system that collects, analyzes, integrates, and
               reports data. The system must provide information on areas
               including, but not limited to, utilization, grievances and
               appeals, and MCP membership terminations for other than loss of
               Medicaid eligibility.

          ii.  As required by 42 CFR 438.242(b)(1), each MCP must collect data
               on member and provider characteristics and on services furnished
               to its members.

          iii. As required by 42 CFR 438.242(b)(2), each MCP must ensure that
               data received from providers is accurate and complete by
               verifying the accuracy and timeliness of reported data; screening
               the data for completeness, logic, and consistency; and collecting
               service information in standardized formats to the extent
               feasible and appropriate.

          iv.  As required by 42 CFR 438.242(b)(3), each MCP must make all
               collected data available upon request by ODJFS or the Center for
               Medicare and Medicaid Services (CMS).

          v.   Acceptance testing of any data that is electronically submitted
               to ODJFS is required:

               a.   Before an MCP may submit production files

               b.   Whenever an MCP changes the method or preparer of the
                    electronic media; and/or

               c.   When the ODJFS determines an MCP's data submissions have an
                    unacceptably high error rate.

               MCPs that change or modify information systems that are involved
               in producing any type of electronically submitted files, either
               internally or by changing vendors, are required to submit to
               ODJFS for review and approval a transition plan including the
               submission of test files in the

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               ODJFS-specified formats. Once an acceptable test file is
               submitted to ODJFS, as determined solely by ODJFS, the MCP can
               return to submitting production files. ODJFS will inform MCPs in
               writing when a test file is acceptable. Once an MCP's new or
               modified information system is operational, that MCP will have up
               to ninety (90) days to submit an acceptable test file and an
               acceptable production file.

               Submission of test files can start before the new or modified
               information system is in production. ODJFS reserves the right to
               verify any MCP's capability to report elements in the minimum
               data set prior to executing the provider agreement for the next
               contract period. Penalties for noncompliance with this
               requirement are specified in Appendix N, Compliance Assessment
               System of the Provider Agreement.

     b.   Electronic Data Interchange and Claims Adjudication Requirements

          Claims Adjudication

          The MCP must have the capacity to electronically accept and adjudicate
          all claims to final status (payment or denial). Information on claims
          submission procedures must be provided to non-contracting providers
          within thirty (30) days of a request. MCPs must inform providers of
          its ability to electronically process and adjudicate claims and the
          process for submission. Such information must be initiated by the MCP
          and not only in response to provider requests.

          The MCP must notify providers who have submitted claims of claims
          status [paid, denied, pended (suspended)] within one month of receipt.
          Such notification may be in the form of a claim payment/remittance
          advice produced on a routine monthly, or more frequent, basis.

          Electronic Data Interchange

          The MCP shall comply with all applicable provisions of HIPAA including
          electronic data interchange (EDI) standards for code sets and the
          following electronic transactions:

          Health care claims;
          Health care claim status request and response;
          Health care payment and remittance status;
          Standard code sets; and
          National Provider Identifier (NPI).

          Each EDI transaction processed by the MCP shall be implemented in
          conformance with the appropriate version of the transaction
          implementation guide, as specified by applicable federal rule or
          regulation.

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          The MCP must have the capacity to accept the following transactions
          from the Ohio Department of Job and Family services consistent with
          EDI processing specifications in the transaction implementation guides
          and in conformance with the 820 and 834 Transaction Companion Guides
          issued by ODJFS:

          ASC X12 820 - Payroll Deducted and Other Group Premium Payment for
          Insurance Products; and

          ASC X12 834 - Benefit Enrollment and Maintenance.

          The MCP shall comply with the HIPAA mandated EDI transaction standards
          and code sets no later than the required compliance dates as set forth
          in the federal regulations.

          Documentation of Compliance with Mandated EDI Standards

          The capacity of the MCP and/or applicable trading partners and
          business associates to electronically conduct claims processing and
          related transactions in compliance with standards and effective dates
          mandated by HIPAA must be demonstrated, to the satisfaction of ODJFS,
          as outlined below.

          Verification of Compliance with HIPAA (Health Insurance Portability
          and Accountability Act of 1995)

          MCPs shall comply with the transaction standards and code sets for
          sending and receiving applicable transactions as specified in 45 CFR
          Part 162 - Health Insurance Reform: Standards for Electronic
          Transactions (HIPAA regulations) In addition the MCP must enter into
          the appropriate trading partner agreement and implemented standard
          code sets. If the MCP has obtained third-party certification of HIPAA
          compliance for any of the items listed below, that certification may
          be submitted in lieu of the MCP's written verification for the
          applicable item(s).

          i.   Trading Partner Agreements

          ii.  Code Sets

          iii. Transactions

               a.   Health Care Claims or Equivalent Encounter Information (ASC
                    X12N 837 & NCPDP 5.1)

               b.   Eligibility for a Health Plan (ASC X12N 270/271)

               c.   Referral Certification and Authorization (ASC X12N 278)

               d.   Health Care Claim Status (ASC X12N 276/277)

               e.   Enrollment and Disenrollment in a Health Plan (ASC X12N 834)

               f.   Health Care Payment and Remittance Advice (ASC X12N 835)

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               g.   Health Plan Premium Payments (ASC X12N 820)

               h.   Coordination of Benefits

          Trading Partner Agreement with ODJFS

          MCPs must complete and submit an EDI trading partner agreement in a
          format specified by the ODJFS. Submission of the copy of the trading
          partner agreement prior to entering into this Agreement may be waived
          at the discretion of ODJFS; if submission prior to entering into this
          Agreement is waived, the trading partner agreement must be submitted
          at a subsequent date determined by ODJFS.

          Noncompliance with the EDI and claims adjudication requirements will
          result in the imposition of penalties, as outlined in Appendix N,
          Compliance Assessment System, of the Provider Agreement.

     c.   Encounter Data Submission Requirements

          General Requirements

          Each MCP must collect data on services furnished to members through an
          encounter data system and must report encounter data to the ODJFS.
          MCPs are required to submit this data electronically to ODJFS on a
          monthly basis in the following standard formats:

               -    Institutional Claims - UB92 flat file

               -    Noninstitutional Claims - National standard format

               -    Prescription Drug Claims - NCPDP

          ODJFS relies heavily on encounter data for monitoring MCP performance.
          The ODJFS uses encounter data to measure clinical performance, conduct
          access and utilization reviews, reimburse MCPs for newborn deliveries
          and aid in setting MCP capitation rates. For these reasons, it is
          important that encounter data is timely, accurate, and complete. Data
          quality, performance measures and standards are described in the
          Agreement.

          An encounter represents all of the services, including medical
          supplies and medications, provided to a member of the MCP by a
          particular provider, regardless of the payment arrangement between the
          MCP and the provider. For example, if a member had an emergency
          department visit and was examined by a physician, this would
          constitute two encounters, one related to the hospital provider and
          one related to the physician provider. However, for the purposes of
          calculating a utilization measure, this would be counted as a single
          emergency department visit. If a member visits their PCP and the PCP
          examines the member and has laboratory procedures done within the
          office, then this is one encounter between the member and their PCP.

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          If the PCP sends the member to a lab to have procedures performed,
          then this is two encounters; one with the PCP and another with the
          lab. For pharmacy encounters, each prescription filled is a separate
          encounter.

          Encounters include services paid for retrospectively through
          fee-for-service payment arrangements, and prospectively through
          capitated arrangements. Only encounters with services (line items)
          that are paid by the MCP, fully or in part, and for which no further
          payment is anticipated, are acceptable encounter data submissions,
          except for immunization services. Immunization services submitted to
          the MCP must be submitted to ODJFS if these services were paid for by
          another entity (e.g., free vaccine program).

          All other services that are unpaid or paid in part and for which the
          MCP anticipates further payment (e.g., unpaid services rendered during
          a delivery of a newborn) may not be submitted to ODJFS until they are
          paid. Penalties for noncompliance with this requirement are specified
          in Appendix N, Compliance Assessment System of the Agreement.

          Acceptance Testing

          The MCP must have the capability to report all elements in the Minimum
          Data Set as set forth in the ODJFS Encounter Data Specifications and
          must submit a test file in the ODJFS-specified medium in the required
          formats prior to contracting or prior to an information systems
          replacement or update.

          Acceptance testing of encounter data is required as specified in
          Section 29(a)(v) of this Appendix.

          Encounter Data File Submission Procedures

          A certification letter must accompany the submission of an encounter
          data file in the ODJFS-specified medium. The certification letter must
          be signed by the MCP's Chief Executive Officer (CEO), Chief Financial
          Officer (CFO), or an individual who has delegated authority to sign
          for, and who reports directly to, the MCP's CEO or CFO.

          Timing of Encounter Data Submissions

          ODJFS recommends that MCPs submit encounters no more than thirty-five
          (35) days after the end of the month in which they were paid. For
          example, claims paid in January are due March 5. ODJFS recommends that
          MCPs submit files in the ODJFS-specified medium by the 5th of each
          month. This will help to ensure that the encounters are included in
          the ODJFS master file in the same month in which they were submitted.

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     d.   Information Systems Review

          Every two (2) years, and before ODJFS enters into a provider agreement
          with a new MCP, ODJFS or designee may review the information system
          capabilities of each MCP. Each MCP must participate in the review,
          except as specified below. The review will assess the extent to which
          MCPs are capable of maintaining a health information system including
          producing valid encounter data, performance measures, and other data
          necessary to support quality assessment and improvement, as well as
          managing the care delivered to its members.

          The following activities, at a minimum, will be carried out during the
          review. ODJFS or its designee will:

          i.   Review the Information Systems Capabilities Assessment (ISCA)
               forms, as developed by CMS; which the MCP will be required to
               complete.

          ii.  Review the completed ISCA and accompanying documents;

          iii. Conduct interviews with MCP staff responsible for completing the
               ISCA, as well as staff responsible for aspects of the MCP's
               information systems function;

          iv.  Analyze the information obtained through the ISCA, conduct
               follow-up interviews with MCP staff, and write a statement of
               findings about the MCP's information system.

          v.   Assess the ability of the MCP to link data from multiple sources;

          vi.  Examine MCP processes for data transfers;

          vii. If an MCP has a data warehouse, evaluate its structure and
               reporting capabilities;

          viii. Review MCP processes, documentation, and data files to ensure
               that they comply with state specifications for encounter data
               submissions; and

          ix.  Assess the claims adjudication process and capabilities of the
               MCP.

          As noted above, the information system review may be performed every
          two years. However, if ODJFS or its designee identifies significant
          information

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          system problems, then ODJFS or its designee may conduct, and the MCP
          must participate in, a review the following year or in such a
          timeframe as ODJFS, in their sole discretion, deems appropriate to
          ensure accuracy and efficiency of the MCP health information system.

          If an MCP had an assessment performed of its information system
          through a private sector accreditation body or other independent
          entity within the two years preceding the time when ODJFS or its
          designee will be conducting its review, and has not made significant
          changes to its information system since that time, and the information
          gathered is the same as or consistent with the ODJFS or its designee's
          proposed review, as determined by the ODJFS, then the MCP will not
          required to undergo the IS review. The MCP must provide ODJFS or its
          designee with a copy of the review that was performed so that ODJFS
          can determine whether or not the MCP will be required to participate
          in the IS review. MCPs who are determined to be exempt from the IS
          review must participate in subsequent information system reviews, as
          determined by ODJFS.

31.  Delivery Payments

     MCPs will be reimbursed for paid deliveries that are identified in the
     submitted encounters using the methodology outlined in the ODJFS Methods
     for Reimbursing for Deliveries (as specified in Appendix L). The delivery
     payment represents the facility and professional service costs associated
     with the delivery event and postpartum care that is rendered in the
     hospital immediately following the delivery event; no prenatal or neonatal
     experience is included in the delivery payment.

     If a delivery occurred, but the MCP did not reimburse providers for any
     costs associated with the delivery, then the MCP shall not submit the
     delivery encounter to ODJFS and is not entitled to receive payment for the
     delivery. MCPs are required to submit all delivery encounters to ODJFS no
     later than one year after the date of the delivery. Delivery encounters
     which are submitted after this time will be denied payment. MCPs will
     receive notice of the payment denial on the remittance advice.

     If an MCP is denied payment through ODJFS' automated payment system because
     the delivery encounter was not submitted within a year of the delivery
     date, then it will be necessary for the MCP to contact BMHC staff to
     receive payment. Payment will be made for the delivery, at the discretion
     of ODJFS if a payment had not been made previously for the same delivery.

     To capture deliveries outside of institutions (e.g., hospitals) and
     deliveries in hospitals without an accompanying physician encounter, both
     the institutional encounters (UB-92) and the noninstitutional encounters
     (NSF) are searched for deliveries.
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     If a physician and a hospital encounter is found for the same delivery,
     only one payment will be made. The same is true for multiple births; if
     multiple delivery encounters are submitted, only one payment will be made.
     The method for reimbursing for deliveries includes the delivery of
     stillborns where the MCP incurred costs related to the delivery.

     Rejections

     If a delivery encounter is not submitted according to ODJFS specifications,
     it will be rejected and MCPs will receive this information on the exception
     report (or error report) that accompanies every file in the ODJFS-specified
     format. Tracking, correcting and resubmitting all rejected encounters is
     the responsibility of the MCP and is required by ODJFS.

     Timing of Delivery Payments

     MCPs will be paid monthly for deliveries. For example, payment for a
     delivery encounter submitted with the required encounter data submission in
     March, will be reimbursed in March. The delivery payment will cover any
     encounters submitted with the monthly encounter data submission regardless
     of the date of the encounter, but will not cover encounters that occurred
     over one year ago.

     This payment will be a part of the weekly update (adjustment payment) that
     is in place currently. The third weekly update of the month will include
     the delivery payment. The remittance advice is in the same format as the
     capitation remittance advice.

     Updating and Deleting Delivery Encounters

     The process for updating and deleting delivery encounters is handled
     differently from all other encounters. See the ODJFS Encounter Data
     Specifications for detailed instructions on updating and deleting delivery
     encounters.

     The process for deleting delivery encounters can be found on page 35 of the
     UB-92 technical specifications (record/field 20-7) and page III-47 of the
     NSF technical specifications (record/field CA0-31.0a).

     Auditing of Delivery Payments

     A delivery payment audit will be conducted periodically. If medical records
     do not substantiate that a delivery occurred related to the payment that
     was made, then ODJFS will recoup the delivery payment from the MCP. Also,
     if it is determined that the encounter which triggered the delivery payment
     was not a paid encounter, then ODJFS will recoup the delivery payment.

32.  If the MCP will be using the Internet functions that will allow approved
     users to access member information (e.g., eligibility verification), the
     MCP must receive prior approval from ODJFS that verifies that the proper
     safeguards, firewalls, etc., are in place to protect

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 23

     member data.

33.  MCPs must receive prior written approval from ODJFS before adding any
     information to their website that would require ODJFS prior approval in
     hard copy form (e.g., provider listings, member handbook information).

34.  Pursuant to 42 CFR 438.106(b), the MCP acknowledges that it is prohibited
     from holding a member liable for services provided to the member in the
     event that the ODJFS fails to make payment to the MCP.

35.  In the event of an insolvency of an MCP, the MCP, as directed by ODJFS,
     must cover the continued provision of services to members until the end of
     the month in which insolvency has occurred, as well as the continued
     provision of inpatient services until the date of discharge for a member
     who is institutionalized when insolvency occurs.

36.  Franchise Fee Assessment Requirements

     a.   Each MCP is required to pay a franchise permit fee to ODJFS for each
          calendar quarter as required by ORC Section 5111.176. The current fee
          to be paid is an amount equal to 4 1/2 percent of the managed care
          premiums, minus Medicare premiums that the MCP received from any payer
          in the quarter to which the fee applies. Any premiums the MCP returned
          or refunded to members or premium payers during that quarter are
          excluded from the fee.

     b.   The franchise fee is due to ODJFS in the ODJFS-specified format on or
          before the 30th day following the end of the calendar quarter to which
          the fee applies.

     c.   At the time the fee is submitted, the MCP must also submit to ODJFS a
          completed form and any supporting documentation pursuant to ODJFS
          specifications.

     d.   Penalties for noncompliance with this requirement are specified in
          Appendix N, Compliance Assessment System of the Provider Agreement and
          in ORC Section 5111.176.

37.  Information Required for MCP Websites

     a.   On-line Provider Directory - MCPs must have an internet-based provider
          directory available in the same format as their ODJFS-approved
          provider directory, that allows members to electronically search for
          the MCP panel providers based on name, provider type, geographic
          proximity, and population (as specified in Appendix H). MCP provider
          directories must include all MCP-contracted providers [except as
          specified by ODJFS] as well as certain

<PAGE>

Appendix C
Covered Families and Children (CFC) population
Page 24

          ODJFS non-contracted providers.

     b.   On-line Member Website - MCPs must have a secure internet-based
          website which is regularly updated to include the most current ODJFS
          approved materials. The website at a minimum must include: (1) a list
          of the counties that are covered in their service area; (2) the
          ODJFS-approved MCP member handbook, recent newsletters/announcements,
          MCP contact information including member services hours and closures;
          (3) the MCP provider directory as referenced in section 36(a) of this
          appendix; (4) the MCP's current preferred drug list (PDL), including
          an explanation of the list, which drugs require prior authorization
          (PA), and the PA process; (5) the MCP's current list of drugs covered
          only with PA, the PA process, and the MCP's policy for covering
          generic for brand-name drugs; and (6) the ability for members to
          submit questions/comments/grievances/appeals/etc. and receive a
          response (members must be given the option of a return e-mail or phone
          call) within one working day of receipt. MCPs must ensure that all
          member materials designated specifically for CFC and/or ABD consumers
          (i.e. the MCP member handbook) are clearly labeled as such. The MCP's
          member website cannot be used as the only means to notify members of
          new and/or revised MCP information (e.g., change in holiday closures,
          change in additional benefits, revisions to approved member materials
          etc.). ODJFS may require MCPs to include additional information on the
          member website, as needed.

     c.   On-line Provider Website - MCPs must have a secure internet-based
          website for contracting providers where they will be able to confirm a
          consumer's MCP enrollment and through this website (or through e-mail
          process) allow providers to electronically submit and receive
          responses to prior authorization requests. This website must also
          include: (1) a list of the counties that are covered in their service
          area; (2) the MCP's provider manual;(3) MCP contact information; (4) a
          link to the MCP's on-line provider directory as referenced in section
          37(a) of this appendix; (5) the MCP's current PDL list, including an
          explanation of the list, which drugs require PA, and the PA process;
          and (6) the MCP's current list of drugs covered only with PA, the PA
          process, and the MCP's policy for covering generic for brand-name
          drugs. MCPs must ensure that all provider materials designated
          specifically for CFC and/or ABD consumers (i.e. the MCP's provider
          manual) are clearly labeled as such. ODJFS may require MCPs to include
          additional information on the provider website, as needed.

38.  MCPs must provide members with a printed version of their PDL and PA lists,
     upon request.

39.  MCPs must not use, or propose to use, any offshore programming or call
     center services in fulfilling the program requirements.

<PAGE>

Appendix D
Covered Families and Children (CFC) population
Page 1

                                   APPENDIX D

                             ODJFS RESPONSIBILITIES
                             CFC ELIGIBLE POPULATION

The following are ODJFS responsibilities or clarifications that are not
otherwise specifically stated in OAC Chapter 5101: 3-26 or elsewhere in the
ODJFS-MCP provider agreement.

General Provisions

1.   ODJFS will provide MCPs with an opportunity to review and comment on the
     rate-setting time line and proposed rates, and proposed changes to the OAC
     program rules or the provider agreement.

2.   ODJFS will notify MCPs of managed care program policy and procedural
     changes and, whenever possible, offer sufficient time for comment and
     implementation.

3.   ODJFS will provide regular opportunities for MCPs to receive program
     updates and discuss program issues with ODJFS staff.

4.   ODJFS will provide technical assistance sessions where MCP attendance and
     participation is required. ODJFS will also provide optional technical
     assistance sessions to MCPs, individually or as a group.

5.   ODJFS will provide MCPs with an annual MCP Calendar of Submissions
     outlining major submissions and due dates.

6.   ODJFS will identify contact staff, including the Contract Administrator,
     selected for each MCP.

7.   ODJFS will recalculate the minimum provider panel specifications if ODJFS
     determines that significant changes have occurred in the availability of
     specific provider types and the number and composition of the eligible
     population.

8.   ODJFS will recalculate the geographic accessibility standards, using the
     geographic information systems (GIS) software, if ODJFS determines that
     significant changes have occurred in the availability of specific provider
     types and the number and composition of the eligible population and/or the
     ODJFS provider panel specifications.

9.   On a monthly basis, ODJFS will provide MCPs with an electronic file
     containing their MCP's provider panel as reflected in the ODJFS Provider
     Verification System (PVS) database.

<PAGE>

Appendix D
Covered Families and Children (CFC) population
Page 2

10.  On a monthly basis, ODJFS will provide MCPs with an electronic Master
     Provider File containing all the Ohio Medicaid fee-for-service providers,
     which includes their Medicaid Provider Number, as well as all providers who
     have been assigned a provider reporting number for current encounter data
     purposes.

11.  It is the intent of ODJFS to utilize electronic commerce for many processes
     and procedures that are now limited by HIPAA privacy concerns to FAX,
     telephone, or hard copy. The use of TLS will mean that private health
     information (PHI) and the identification of consumers as Medicaid
     recipients can be shared between ODJFS and the contracting MCPs via e-mail
     such as reports, copies of letters, forms, hospital claims, discharge
     records, general discussions of member-specific information, etc. ODJFS may
     revise data/information exchange policies and procedures for many functions
     that are now restricted to FAX, telephone, and hard copy, including, but
     not limited to, monthly membership and premium payment reconciliation
     requests, newborn reporting, Just Cause disenrollment requests, information
     requests etc. (as specified in Appendix C).

12.  ODJFS will immediately report to Center for Medicare and Medicaid Services
     (CMS) any breach in privacy or security that compromises protected health
     information (PHI), when reported by the MCP or ODJFS staff.

13.  Service Area Designation

     Membership in a service area is mandatory unless ODJFS approves membership
     in the service area for consumer initiated selections only. It is
     ODJFS'current intention to implement a mandatory managed care program in
     service areas wherever choice and capacity allow and the criteria in 42 CFR
     438.50(a) are met.

14.  Consumer information

     a.   ODJFS or its delegated entity will provide membership notices,
          informational materials, and instructional materials relating to
          members and eligible individuals in a manner and format that may be
          easily understood. At least annually, ODJFS will provide MCP eligible
          individuals, including current MCP members, with a Consumer Guide. The
          Consumer Guide will describe the managed care program and include
          information on the MCP options in the service area and other
          information regarding the managed care program as specified in 42 CFR
          438.10.

     b.   ODJFS will notify members or ask MCPs to notify members about
          significant changes affecting contractual requirements, member
          services or access to providers.

     c.   If an MCP elects not to provide, reimburse, or cover a counseling
          service or referral service due to an objection to the service on
          moral or religious grounds, ODJFS will provide coverage and
          reimbursement for these services for the MCP's members.

<PAGE>

Appendix D
Covered Families and Children (CFC) population
Page 3

          ODJFS will provide information on what services the MCP will not cover
          and how and where the MCP's members may obtain these services in the
          applicable Consumer Guides.

15.  Membership Selection and Premium Payment

     a.   The managed care enrollment center (MCEC): The ODJFS-contracted MCEC
          will provide unbiased education, selection services, and community
          outreach for the Medicaid managed care program. The MCEC shall operate
          a statewide toll-free telephone center to assist eligible individuals
          in selecting an MCP or choosing a health care delivery option.

          The MCEC shall distribute the most current Consumer Guide that
          includes the managed care program information as specified in 42 CFR
          438.10, as well as ODJFS prior-approved MCP materials, such as
          solicitation brochures and provider directories, to consumers who
          request additional materials.

     b.   Auto-Assignment Limitations - In order to ensure market and program
          stability, ODJFS may limit an MCP's auto-assignments if they meet any
          of the following enrollment thresholds:

               -    40% of STATEWIDE Covered Families and Children (CFC)
                    eligible population; and/or

               -    60% of the CFC eligibles in ANY REGION WITH TWO MCPS; and/or

               -    40% of the CFC eligibles in ANY REGION WITH THREE MCPS.

          Once an MCP meets one of these enrollment thresholds, the MCP will
          only be permitted to receive the additional new membership (in the
          region or statewide, as applicable) through: (1) consumer-initiated
          enrollment; and (2) auto-assignments which are based on previous
          enrollment in that MCP or an historical provider relationship with a
          provider who is not on the panel of any other MCP in that region. In
          the event that an MCP in a region meets one or more of these
          enrollment thresholds, ODJFS, in their sole discretion, may not impose
          the auto-assignment limitation and auto-assign members to the MCPs in
          that region as ODJFS deems appropriate.

     c.   Consumer Contact Record (CCR): ODJFS or their designated entity shall
          forward CCRs to MCPs on no less than a weekly basis. The CCRs are a
          record of each consumer-initiated MCP enrollment, change, or
          termination, and each MCEC initiated MCP assignment processed through
          the MCEC. The CCR contains information that is not included on the
          monthly member roster.

<PAGE>

Appendix D
Covered Families and Children (CFC) population
Page 4

     d.   Monthly member roster (MR): ODJFS verifies managed care plan
          enrollment on a monthly basis via the monthly membership roster. ODJFS
          or its designated entity provides a full member roster (F) and a
          change roster (C) via HIPAA 834 compliant transactions.

     e.   Monthly Premiums and Delivery Payments: ODJFS will remit payment to
          the MCPs via an electronic funds transfer (EFT), or at the discretion
          of ODJFS, by paper warrant.

     f.   Remittance Advice: ODJFS will confirm all premium payments and
          delivery payments paid to the MCP during the month via a monthly
          remittance advice (RA), which is sent to the MCP the week following
          state cut-off. ODJFS or its designated entity provides a record of
          each payment via HIPAA 820 compliant transactions.

     g.   MCP Reconciliation Assistance: ODJFS will work with an MCP-designated
          contact(s) to resolve the MCP's member and newborn eligibility
          inquiries, premium and delivery payment inquiries/discrepancies and to
          review/approve hospital deferment requests.

16.  ODJFS will make available a website which includes current program
     information.

17.  ODJFS will regularly provide information to MCPs regarding different
     aspects of MCP performance including, but not limited to, information on
     MCP-specific and statewide external quality review organization surveys,
     focused clinical quality of care studies, consumer satisfaction surveys and
     provider profiles.

18.  ODJFS will periodically review a random sample of online and printed
     directories to assess whether MCP information is both accessible and
     updated.

19.  Communications

     a.   ODJFS/BMHC: The Bureau of Managed Health Care (BMHC) is responsible
          for the oversight of the MCPs' provider agreements with ODJFS. Within
          the BMHC, a specific Contract Administrator (CA) has been assigned to
          each MCP. Unless expressly directed otherwise, MCPs shall first
          contact their designated CA for questions/assistance related to
          Medicaid and/or the MCP's program requirements /responsibilities. If
          their CA is not available and the MCP needs immediate assistance, MCP
          staff should request to speak to a supervisor within the Contract
          Administration Section. MCPs should take all necessary and appropriate
          steps to

<PAGE>

Appendix D
Covered Families and Children (CFC) population
Page 5

          ensure all MCP staff are aware of, and follow, this communication
          process.

     b.   ODJFS contracting-entities: ODJFS-contracting entities should never be
          contacted by the MCPs unless the MCPs have been specifically
          instructed to contact the ODJFS contracting entity directly.

     c.   MCP delegated entities: In that MCPs are ultimately responsible for
          meeting program requirements, the BMHC will not discuss MCP issues
          with the MCPs' delegated entities unless the applicable MCP is also
          participating in the discussion. MCP delegated entities, with the
          applicable MCP participating, should only communicate with the
          specific CA assigned to that MCP.

<PAGE>

                                   APPENDIX E

                                RATE METHODOLOGY
                             CFC ELIGIBLE POPULATION
<PAGE>

(MERCER LOGO)
Government Human Services Consulting            333 South 7th Street, Suite 1600
                                                Minneapolis, MN 55402-2427
                                                www.mercerHR.com

October 20, 2006

Mr. Jon Barley
State of Ohio
Bureau of Managed Health Care
Ohio Department of Job and Family Services
255 East Main Street, 2nd Floor
Columbus, OH 43215-5222

Subject:

CALENDAR YEAR 2007 RATE-SETTING METHODOLOGY: HEALTHY FAMILIES AND HEALTHY START

Dear Jon:

The Ohio Department of Job and Family Services (State) contracted with Mercer
Government Human Services Consulting (Mercer) to develop actuarially sound
capitation rates for Calendar Year (CY) 2007 for the Healthy Families and
Healthy Start (CFC) managed care populations. Mercer developed CY 2007
capitation rates for the following seven managed care regions: Central, East
Central, Northeast, Northwest, Southeast, Southwest, and West Central. At this
time, Mercer has not developed rates for the eighth region, Northeast Central,
because managed care implementation has been put on hold for this region. Once
the implementation date is determined for Northeast Central, a supplemental
certification with the Northeast Central rates will be provided.

The basic rate-setting methodology is similar to the county-specific rate
methodology used in previous years. This methodology letter outlines the
rate-setting process, provides information on data adjustments, and includes a
final rate summary.

The key components in the CY 2007 rate-setting process are:

-    Base data development,

-    Managed care rate development, and

-    Centers for Medicare and Medicaid Services (CMS) documentation
     requirements.

Each of these components is described further throughout the document and is
depicted in the flowchart included as Appendix A.

                                           (MMC LOGO) Marsh & McLennan Companies

<PAGE>

(MERCER LOGO)
Government Human Services Consulting

Page 2
October 20, 2006
Mr. Jon Barley
Ohio Department of Job and Family Services

BASE DATA DEVELOPMENT

The major steps in the development of the base data are similar to previous
years. Mercer and the State have discussed the available data sources for rate
development and the applicability of these data sources for each region.

The data sources used for CY 2007 rate setting were:

-    Ohio historical FFS data,

-    MCP encounter data, and

-    MCP financial cost report data.

Validation Process

As part of the rate-setting process, Mercer validated each of the data sources
that were used to develop rates. The validations included a review of the data
to be used in the rate setting process. During the validation process, Mercer
adjusted the data for any data miscodes (e.g., males in the delivery rate
cohort) that were found.

Data Sources

As Ohio's Medicaid program matures, the rate-setting methodology for those
counties within each region with stable managed care programs can focus more on
plan-reported managed care data, including encounter data and cost reports. For
counties within each region without established managed care programs, Mercer
continued to use the FFS data as a direct data source. The data sources used in
each region depended on the most credible data sources available within the
region. In regions where there are stable managed care programs, managed care
data for those counties was combined with the FFS data for those counties
without established managed care programs. The process to prepare these three
data sources for rate-setting is detailed below.

Appendix B includes a chart detailing how each region's counties have been
bucketed into mandatory, Preferred Option, voluntary, or new based on the
delivery system in place during the base period. This determined which data
sources were used in determining regional CY 2007 rates. Also included in
Appendix B is a map that shows the counties included within each region.

Other sources of information that were used, as necessary, included state
enrollment reports, state financial reports, projected managed care penetration
rates, information from prior MCP surveys, encounter data issues log, and other
ad hoc sources.

                                           (MMC LOGO) Marsh & McLennan Companies

<PAGE>

(MERCER LOGO)
Government Human Services Consulting

Page 3
October 20, 2006
Mr. Jon Barley
Ohio Department of Job and Family Services

FEE-FOR-SERVICE DATA

FFS experience from the base time period of State Fiscal Year (SFY) 2004 (July
1, 2003-June 30, 2004) and SFY 2005 (July 1, 2004-June 30, 2005) was used as a
direct data source for the counties described below:

-    Those that had a voluntary managed care program during the base time
     period, and

-    Those that did not have a managed care program during the base time period.

In addition to the SFY 2004 and SFY 2005 data, SFY 2003 data supplemented the
FFS base data development as a reasonability measure. For the above counties,
the FFS data was considered the most credible data source and, in some cases,
was the only data available for rate setting.

As in previous years, adjustments were applied to the FFS data to reflect the
actuarially equivalent claims experience for the population that will be
enrolled in the managed care program. The State Medicaid Management Information
System (MMIS) includes data for populations and/or services excluded from
managed care and the actual FFS paid claims may be net or gross of certain
factors (e.g., gross adjustments or third party liability (TPL)). As a result,
it is necessary to make adjustments to the FFS base data as documented in
Appendix C and outlined in Appendix A.

ENCOUNTER DATA

MCP encounter experience from the base time period of SFY 2004 and SFY 2005 was
used as a direct data source for the counties described below:

-    Those that had a mandatory managed care program during the base time
     period, and

-    Those that had a Preferred Option managed care program during the base time
     period.

For the above counties, the encounter data was considered a credible data source
and was used along with the financial cost report data as a direct data source.

Although encounter data is generally reflective of the populations and services
that are the responsibility of the MCPs, adjustments were applied to the
encounter data, as appropriate. Those adjustments, and other considerations,
include the following items:

-    Claims completion factors,

                                           (MMC LOGO) Marsh & McLennan Companies

<PAGE>

(MERCER LOGO)
Government Human Services Consulting

Page 4
October 20, 2006
Mr. Jon Barley
Ohio Department of Job and Family Services

-    Program changes in the historical base time period (SFY 2004-SFY 2005), and

-    Other actuarially appropriate adjustments, as needed, and according to the
     State's direction to reflect such things as incomplete encounter reporting
     or other known data issues.

The adjustments to the encounter data are further documented in Appendix C and
outlined in Appendix A.

During the rate setting process, shadow pricing was used to assign unit costs to
the encounter data. This process was necessary since, during the base period,
paid amounts were not a required field for reporting encounters. Additional
information on shadow pricing is presented on page six of this letter.

FINANCIAL COST REPORTS

MCP-submitted financial cost reports from the base time period CY 2004 and CY
2005 were used as a direct data source for the counties described below:

-    Those that had a mandatory managed care program during the base time
     period, and

-    Those that had a Preferred Option managed care program during the base time
     period.

For all of the above counties, except Mahoning and Trumbull who entered into
managed care on October 1, 2005, the cost reports were considered a credible
data source. In addition, for counties with voluntary managed care programs
during the base time period, the cost reports were taken into consideration when
setting rates, although not used as a direct data source.

As with the encounter data, the cost report data typically reflects the
populations and services that are the responsibility of the MCPs. However,
adjustments were applied to the cost report data, as appropriate. Those
adjustments, and other considerations, include the following items:

-    Program changes in the historical base time period (CY 2004-CY 2005),

-    Incurred claims estimates based on review of claims lag triangles, and

-    Other actuarially appropriate adjustments, as needed, to reflect such
     things as incomplete reporting or other known data issues.

Mercer considered the CY 2004 and CY 2005 cost reports both in the development
of completion factors for the base time period (CY 2004-CY 2005) and in the
development of the final rate.

                                           (MMC LOGO) Marsh & McLennan Companies

<PAGE>

(MERCER LOGO)
Government Human Services Consulting

Page 5
October 20, 2006
Mr. Jon Barley
Ohio Department of Job and Family Services

The adjustments for the cost report data are further documented in Appendix C
and outlined in Appendix A.

MANAGED CARE RATE DEVELOPMENT

This section explains how Mercer developed the final capitation rates paid to
contracted MCPs after the base data was developed and multiple years of data
were blended for each data source. First, Mercer applied trend, programmatic
changes and other adjustments to each data source to project the program cost
into the contract year. Next, the various data sources were blended into a
single managed care rate and an administrative component was applied. Finally,
relational modeling was used to smooth the results within each region. Appendix
A outlines the managed care rate development process. Appendix D provides more
detail behind each of the following adjustments.

Blending Multiple Years of Data

As the programs have matured, we have collected multiple years of FFS and
managed care data. In order to utilize all available current information, Mercer
combined the yearly data within each data source using a weighted average
methodology similar to that used in previous years. Prior to blending these
years of data, the base time period experience was trended to a common time
period of CY 2005. Mercer applied greater credibility on the most recent year of
data to reflect the expectation that the most recent year may be more reflective
of future experience and to reflect that fewer adjustments are needed to bring
the data to the effective contract period.

Managed Care Assumptions for the FFS Data Source

In developing managed care savings assumptions, Mercer applied generally
accepted actuarial principles that reflect the impact of MCP programs on FFS
experience. Mercer reviewed Ohio's historical FFS experience, CY 2004 and CY
2005 cost report data, SFY 2004 and SFY 2005 encounter data, and other state
Medicaid managed care experience to develop managed care savings assumptions.
These assumptions have been applied to the FFS data to derive managed care cost
levels. The assumptions are consistent with an economic and efficiently operated
Medicaid managed care plan. The managed care savings assumptions vary by region,
rate cohort and category of service (COS).

Specific adjustments were made in this step to reflect the differences between
pharmacy contracting for the State and contracting obtained by the MCPs. Mercer
reviewed information

                                           (MMC LOGO) Marsh & McLennan Companies

<PAGE>

(MERCER LOGO)
Government Human Services Consulting

Page 6
October 20, 2006
Mr. Jon Barley
Ohio Department of Job and Family Services

related to discount rates, dispensing fees, rebates, encounter data and MCP cost
report data to make these adjustments. The rates are reflective of MCP
contracting for these services.

Shadow Pricing

During our base period, MCPs were not required to report the amount paid for a
particular service in their encounter submissions. Therefore, Mercer developed
assumed unit costs that were applied to encounter utilization data. For the
inpatient category of service, unit costs were calculated by region based on the
average daily cost for each hospital peer group. Unit costs for other COSs were
calculated based on Ohio Medicaid FFS reimbursement levels. The unit costs were
then adjusted by rate cohort to reflect the age/sex unit cost differential
apparent in the statewide FFS data. In addition, a unit cost managed care
assumption was applied in the shadow pricing step for the pharmacy COS.

Prospective Policy Changes

CMS also requires that the rate-setting methodology incorporates the impact of
any programmatic changes that have taken place, or are anticipated to take
place, between the base period (CY 2005) and the contract period (CY 2007).

The State provided Mercer with a detailed list of program changes that may have
a material impact on the cost, utilization, or demographic structure of the
program prior to, or within, the contract period and whose impact was not
included within the base period data. In addition, other potential program
changes are being discussed in the current legislative session. Final
programmatic changes approved for SFY 2007 are reflected in the CY 2007 rates,
as appropriate. Please refer to Appendix D for more information on these
programmatic changes.

Clinical Measures/Incentives

Per Appendix M of the Provider Agreement, the State expects the MCPs to reach
certain performance levels for selected clinical measures. Mercer reviewed the
impact of these standards and incentives on the managed care rates and developed
a set of adjustments based upon the State's expected improvement rates. These
utilization targets were built into the capitation rates. The individual
measures/incentives are outlined in Appendix D.

Caseload

Historically, the State has experienced significant changes in its Medicaid
caseload. These shifts in caseload have affected the demographics of the
remaining Medicaid population. Mercer

                                           (MMC LOGO) Marsh & McLennan Companies

<PAGE>

(MERCER LOGO)
Government Human Services Consulting

Page 7
October 20, 2006
Mr. Jon Barley
Ohio Department of Job and Family Services

evaluated recent and expected caseload variations to determine if an adjustment
was necessary to account for demographic changes. Based on the data provided by
the State, Mercer determined no adjustments were necessary for either the
non-delivery or delivery rate cells.

Selection Issues

There are two selection adjustments that were made in the development of the
rates. The first is adverse selection, which accounts for the "missing" managed
care data and is applied to historical FFS data. This adjustment is explained in
more detail in Appendix C.

The second selection adjustment is voluntary selection, which accounts for the
fact that costs associated with individuals who elect to participate in managed
care are generally lower than the remaining FFS population. Therefore, the
voluntary selection adjustment adjusts for the risk of only those members
selecting managed care.

Both selection adjustments are reductions to paid claims and utilization for
non-delivery data. Appendix D provides more detail around the voluntary
selection adjustment.

Non-State Plan Services

According to the CMS Final Medicaid Managed Care Rule that was implemented
August 13, 2003, non-state plan services may not be included in the base data
for rate-setting. The CY 2004 and 2005 cost reports contain information from the
MCPs that was used to adjust the base data for non-state plan services reported
in the cost reports and the encounter data. Please refer to Appendix D for more
information concerning this adjustment.

Prospective Trend Development

Trend is an estimate of the change in the overall cost of providing a specific
benefit service over a finite period of time. A trend factor is necessary to
estimate the expenses of providing health care services in some future year,
based on expenses incurred in prior years. Trend was applied by COS to the
blended base data costs for CY 2005 to project the data forward to the CY 2007
contract period.

Cost report data was reviewed for overall per member per month (PMPM) trend
levels while the FFS data continued to be a primary source in projecting trend.
Because of its role in the rate-setting process, the encounter data was
available to study utilization trend drivers. Mercer integrated the specific
data sources' trend analysis with a broader analysis of other trend resources.
These resources included health care economic factors (e.g., as Consumer Price
Index

                                           (MMC LOGO) Marsh & McLennan Companies

<PAGE>

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Page 8
October 20, 2006
Mr. Jon Barley
Ohio Department of Job and Family Services

(CPI) and Data Resource Inc. (DRI)), trends in neighboring states, the State FFS
trend expectations and any Ohio market changes. Moreover, the trend component
was comprised of both unit cost and utilization components.

As in the past, Mercer discussed all trend recommendations with the State. We
reviewed the potential impact of initiatives targeted to slow or otherwise
affect the trends in the program. Final trend amounts were determined from the
many trend resources and this additional program information. Appendix D
provides more information on trend.

Credibility Assignment

For regions composed of only new and voluntary counties, 100% credibility was
placed on the FFS data. For regions with available FFS and managed care data,
the FFS, encounter and cost report data was blended together.

Cesarean Delivery Rate

Mercer reviewed historical FFS delivery data, recent MCP delivery data, and
other program experience to determine an expected cesarean delivery rate under
the managed care program. Please refer to Appendix D for additional information
on cesarean delivery rates.

Relational Modeling

Relational modeling was used to adjust the premiums by rate cohort to produce a
relatively consistent age/sex slope among the regions. The relational modeling
adjustments shift dollars across rate cohorts within a region but do not change
the composite results by region or in aggregate. Through the use of the
adjustments, the range of variances among the regions and rate cohorts was
reduced while maintaining budget neutrality.

The relational modeling adjustments were applied to the net medical rates in the
Capitation Rate Calculation Sheets (CRCS) to develop new adjusted medical rates.
An administration load factor was then applied as a percent of premium.

Administration/Contingencies

Mercer reviewed the components of the administration/contingencies allowance and
evaluated the administration/contingencies rates paid to the MCPs. Factors that
were taken into consideration in determining the final
administration/contingencies percentages included the State's expectations, Ohio
health plan experience, other Medicaid program

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Page 9
October 20, 2006
Mr. Jon Barley
Ohio Department of Job and Family Services

administration/contingencies allowances, and Ohio health plans' lengths of
participation in the program. In addition, the MCP franchise fee of 4.5% was
incorporated into the final capitation rate.

CERTIFICATION OF FINAL RATES

The following capitation rates were developed for each of the seven regions for
the CY 2007 contract period:

-    Healthy Families/Healthy Start, Less Than 1, Male & Female,

-    Healthy Families/Healthy Start, 1 Year Old, Male & Female,

-    Healthy Families/Healthy Start, 2-13 Years Old, Male & Female,

-    Healthy Families/Healthy Start, 14-18 Years Old, Female,

-    Healthy Families/Healthy Start, 14-18 Years Old, Male,

-    Healthy Families, 19-44 Years Old, Female,

-    Healthy Families, 19-44 Years Old, Male,

-    Healthy Families, 45 and Over, Male & Female,

-    Healthy Start, 19-64 Years Old, Female, and

-    Delivery Payment.

A summary of the rates is included in Appendix E.

Mercer certifies the above rates were developed in accordance with generally
accepted actuarial practices and principles by actuaries meeting the
qualification standards of the American Academy of Actuaries for the populations
and services covered under the managed care contract. Rates developed by Mercer
are actuarial projections of future contingent events. Actual MCP costs will
differ from these projections. Mercer developed these rates on behalf of the
State to demonstrate compliance with the CMS requirements under 42 CFR 438.6(c)
and to demonstrate that rates are in accordance with applicable law and
regulations.

MCPs are advised that the use of these rates may not be appropriate for their
particular circumstance and Mercer disclaims any responsibility for the use of
these rates by MCPs for any purpose. Mercer recommends any MCP considering
contracting with the State should analyze its own projected medical expense,
administrative expense, and any other premium needs for comparison to these
rates before deciding whether to contract with the State. Use of these rates for
purposes beyond those stated may not be appropriate.

                                           (MMC LOGO) Marsh & McLennan Companies

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Page 10
October 20, 2006
Mr. Jon Barley
Ohio Department of Job and Family Services

Sincerely,

/s/ Angela WasDyke                      /s/ Wendy Radunz
-------------------------------------   ----------------------------------------
Angela WasDyke, MAAA, ASA               Wendy Radunz, MAAA, FSA

Copy:
Chuck Betley, Mitali Ghatak, Tracy Williams - State of Ohio
Katie Olecik, Jon Rasmussen - Mercer

                                           (MMC LOGO) Marsh & McLennan Companies
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APPENDIX A - CY 2007 RATE-SETTING METHODOLOGY

                                  (FLOWCHART)

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APPENDIX B - REGIONAL DELIVERY SYSTEM DEFINITION

Regional Delivery System Definitions

For regional rate development, counties were bucketed into mandatory, Preferred
Option, voluntary, or new as outlined below. The data for all counties within
the region was used to develop the regional rate. Please see page B-2 for a map
defining the counties within each region.

Mandatory and Preferred Option Counties

Encounter and cost report data was used for counties that were either mandatory
or Preferred Option during the base data period*. These counties include:

MANDATORY:

Cuyahoga
Lucas
Stark
Summit

PREFERRED OPTION:

Butler
Clark
Franklin
Hamilton
Lorain
Montgomery

*    Please note Mahoning and Trumbull are not included in the above table due
     to a lack of credible data. Both counties entered into managed care in
     October of 2005.

Voluntary Counties

FFS data was used for voluntary counties during the base period and new counties
entering the managed care program since the time of the base data. The voluntary
counties include:

VOLUNTARY:

Clermont
Greene
Pickaway
Warren
Wood

New counties include all counties that were not mandatory, Preferred Option or
voluntary during the base data period.

                                       B-1
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                          MEDICAID MANAGED CARE PROGRAM
                         REGIONS FOR THE CFC POPULATION

                                      (MAP)

                                       B-2

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APPENDIX C - FFS DATA ADJUSTMENTS

This section lists adjustments made to the FFS claims and eligibility
information received from the State.

Completion Factors

The claims data was adjusted to account for the value of claims incurred but
unpaid on a COS basis. Mercer used claims for SFY 2004 and SFY 2005 that reflect
payments through the dates included in the following table.

<TABLE>
<CAPTION>
SFY    PAID THROUGH
---    ------------
<S>    <C>
2004     03/31/05
2005     12/31/05
</TABLE>

The value of the claims incurred during each of these years, but unpaid, was
estimated using completion factor analysis.

Gross Adjustment File (GAF)

To account for gross debit and credit amounts not reflected in the FFS data,
adjustments were applied to the FFS paid claims.

Historical Policy Changes

As part of the rate-setting process, Mercer must account for policy changes that
occurred during the base data time period. Changes only reflected in a portion
of the data must be applied to the remaining data so that all base data reflects
the policy changes. All policy changes implemented during SFY 2004 and SFY 2005
were applied to the FFS data.

The following table shows the specific policy changes for which Mercer adjusted
the SFY 2004 and SFY 2005 delivery (where applicable) and non-delivery data.
Mercer calculated the adjustments based on information supplied by the State.

<TABLE>
<CAPTION>
                                                                     CATEGORY OF
POLICY CHANGES                                   EFFECTIVE DATE   SERVICE AFFECTED   RATE COHORTS AFFECTED
--------------                                   --------------   ----------------   ---------------------
<S>                                              <C>              <C>                <C>
Independently-practicing psychologist services      1/1/2004       PCP, OB/GYN and    Ages 19+, including
eliminated for adults (>21) and pregnant women                       Specialists            delivery

All chiropractic services eliminated                1/1/2004            Other           HF, Age 19-44, M
for adults (>21) and pregnant women                                                     HF, Age 19-44, F
                                                                                       HF, Age 45+, M & F
                                                                                        HST, Age 19-64, F

Implementation of $3.00 Copay on                    1/1/2004          Pharmacy                All
Prior-Authorized Drugs
</TABLE>

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Third Party Liability Recoveries

TPL can be identified with two components: "cost-avoidance" and "pay and chase"
type actions. "Cost-avoidance" occurs when the State initially denies paying a
claim because another payer is the primary payer. The State may then pay a
residual portion of the charged amount. Only the residual portion of the claim
will be included in the FFS data. The portion of the claim paid by another payer
has been avoided and not included in reported claim payments. Participating MCPs
are expected to pay in a similar fashion and therefore, no adjustment to the FFS
data will be required.

In a "pay and chase" scenario, the State pays the claim as though it were the
primary payer. Subsequent to payment, the State makes recovery from a third
party. These TPL recoveries are not reflected in the FFS MMIS data. Since MCPs
are also expected to take similar recovery actions, the FFS experience was
adjusted to reflect "pay and chase" recoveries. Mercer made adjustments to both
the paid claims and utilization for all non-delivery and delivery COS. Since
MCPs do not collect tort recoveries, the data excludes tort collections.

Hospital Cost Settlements

The State provided Mercer with SFY 2004 and SFY 2005 interim cost settlements
for Diagnosis Related Group (DRG) and DRG-exempt hospitals. The DRG-exempt
hospital information included inpatient and outpatient settlements. However, the
DRG hospitals only include capital settlements, which were incorporated into the
adjustment. Therefore, an adjustment has been applied to non-delivery and
delivery inpatient, outpatient, and emergency room (ER) claims to remove these
additional costs.

Fraud and Abuse

The State does pursue recoveries from fraud and abuse cases. The dollars
recovered are accounted for outside of the State's MMIS system and are not
included in the FFS data. Since the MCPs are required to pursue fraud and abuse
cases, an adjustment was applied to the FFS claims and utilization in both the
delivery and non-delivery data.

Excluded Time Periods

The capitation rates paid to the MCPs reflect the risk of serving the eligible
enrollees from the date of health plan enrollment forward. Therefore, the
non-delivery FFS data has been adjusted to reflect only the time periods for
which the MCPs are at risk. Since newborns are automatically eligible for the
Medicaid program and are enrolled into their mother's MCP at birth, no
adjustment will be applied to the "Less Than 1" age group.

Adverse Selection

An adverse selection adjustment was applied to the historical FFS data to
account for the "missing" managed care data. The adverse selection factor
adjusts the associated risk of the FFS members to the entire Medicaid
population's risk by accounting for the cost of the managed care population.
This adjustment varies by historical managed care penetration and includes a

                                       C-2

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credibility factor which accounts for differences in State enrollment patterns
and data sources. It has been applied to the paid claims and utilization for
non-delivery FFS base data.

Dual Eligibles

Dual eligible persons are not enrolled in managed care and, therefore, are not
included in the managed care rates. Their experience has been excluded from the
base FFS data used to develop the rates.

Catastrophic Claims

Since the State does not provide reinsurance to the MCPs, the MCPs are expected
to purchase reinsurance on their own. To reflect these costs, all claims,
including claims above the reinsurance threshold, were included in the base FFS
data. The final rates Mercer calculated reflect the total risk associated with
the covered population and are expected to be sufficient to cover the cost of
the required stop-loss provision.

DSH Payments

DSH payments are made by the State to providers and are not the responsibility
of the MCPs; therefore, the information for these payments was excluded from the
FFS data used to develop the rates. No rate adjustment was necessary.

Spend Down

Persons Medicaid eligible due to spend down are not enrolled in managed care and
therefore not included in the managed care rates. The base FFS data is net of
recipient spend down. Therefore, no additional adjustment was needed for the
rate computations.

Graduate Medical Education (GME)

The State does not make supplemental GME payments for services delivered to
individuals covered under the managed care program. Rather, the MCPs negotiate
specific rates with the individual teaching hospitals for the daily cost of
care. Therefore, the GME payments are included in the capitation rates paid to
the MCPs.

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APPENDIX C - ENCOUNTER DATA ADJUSTMENTS

Claims Completion

Mercer used CY 2005 cost report lag triangles to complete the MCP encounter
utilization data.

Historical Policy Changes

As part of the rate-setting process, the data must reflect any policy changes
that occurred during the base data time period. Changes only reflected in a
portion of the base data must be applied to the remaining base data to keep the
data similar. Mercer made adjustments to the encounter data to include
consideration for the following policy changes.

<TABLE>
<CAPTION>
                                                                     CATEGORY OF
POLICY CHANGE                                    EFFECTIVE DATE   SERVICE AFFECTED   RATE COHORTS AFFECTED
-------------                                    --------------   ----------------   ---------------------
<S>                                              <C>              <C>                <C>
Independently-practicing psychologist services      1/1/2004       PCP, OB/GYN and    Ages 19+, including
eliminated for adults (>21) and pregnant women                       Specialists           delivery

All chiropractic services eliminated for            1/1/2004            Other           HF, Age 19-44, M
adults (>21) and pregnant women                                                         HF, Age 19-44, F
                                                                                       HF, Age 45+, M & F
                                                                                       HST, Age 19-64, F
</TABLE>

The adjustment for the $3.00 copay on Prior-Authorization Drugs cannot be
directly applied to the encounter data because it only contains utilization. The
unit cost reduction was, however, reflected in the encounter data shadow prices.

Data Anomaly Corrections

As directed by the State, Mercer made adjustments to the encounter data to
account for incomplete reporting or other known data issues.

Non-State Plan Services

Mercer reviewed NSPS information included in the MCP cost reports. This
information was used to calculate an adjustment for NSPS, including eye
examinations, chiropractic and psychological services, and routine
transportation. The adjustment was applied to the Specialists, Dental and Other
categories of service in the encounter data, as appropriate.

Third Party Liability Recoveries

Mercer reviewed TPL recoveries information contained in Report I of the cost
reports to remove these from the encounters reported by each health plan. Mercer
made MCP specific adjustments to the data.

                                       C-4

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APPENDIX C - COST REPORT DATA ADJUSTMENTS

IBNR Review/Adjustment

Mercer used CY 2005 cost report claims restatement Report IV and lag triangles
to adjust the MCP IBNR estimates in the CY 2004 and CY 2005 financial
experience.

Historical Policy Changes

As part of the rate-setting process, the data must reflect any policy changes
that occurred during the base data time period. Changes only reflected in a
portion of the base data must be applied to the remaining base data to keep the
data similar. There were no rate-impacting policy changes implemented after
1/1/2004 and before 12/31/05. Therefore, no policy change adjustments were
applied to the cost report data.

Data Anomaly Corrections

Mercer made cost-neutral adjustments to the CY 2004 cost report data to account
for recoding of expenses by category of service. For example, the delivery costs
associated with the "Other" COS in report III-A were shifted to the non-delivery
"Other" COS.

Non-State Plan Services

Mercer reviewed NSPS information included in the MCP cost reports. This
information was used to calculate an adjustment for NSPS, including eye
examinations, chiropractic and psychological services, and routine
transportation. The adjustment was applied to the Specialists, Dental and Other
categories of service in the cost report data, as appropriate.

Third Party Liability Recoveries

Mercer reviewed TPL recoveries information contained in Report I of the cost
reports to remove these from the medical costs reported by each health plan.

                                       C-5

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APPENDIX D - CALENDAR YEAR 2007 CFC RATE DEVELOPMENT

Credibility By Year

Mercer placed more credibility on the most recent year of data for each data
source.

FFS Historical and Managed Care Historical/Prospective Trend

Historical FFS trend assumptions were used to trend SFY 2004 and SFY 2005 FFS
data to the base period (CY 2005) for voluntary and new counties. Credibility
was then applied to blend together the trended SFY 2004 and the SFY 2005 FFS
data.

Managed care historical trend was used to trend SFY 2004 and SFY 2005 encounter
data and CY 2004 cost report data to the base period (CY 2005) for Preferred
Option and mandatory counties. Credibility was then applied to blend together
the trended SFY 2004 and the SFY 2005 encounter data and the trended CY 2004 and
CY 2005 cost report data.

Prospective managed care trend assumptions were then applied to the blended FFS,
cost report, and encounter data to develop the CY 2007 regional rates.

Prospective Policy Changes

The following items are considered prospective policy changes. These changes
were not reflected in the base data, but were implemented prior to the contract
period. Therefore, Mercer made rate-setting adjustments for each item in the
following table.

ADJUSTMENTS AFFECTING UNIT COST

<TABLE>
<CAPTION>
                                                                     CATEGORY OF
POLICY CHANGE                                    EFFECTIVE DATE   SERVICE AFFECTED   RATE COHORTS AFFECTED
-------------                                    --------------   ----------------   ---------------------
<S>                                              <C>              <C>                <C>
Implementation of $2 copay for trade-name           1/1/2006          Pharmacy          HF, Age 19-44, F
preferred drugs for adults (> or = 21)                                                  HF, Age 19-44, M
                                                                                       HF, Age 45+, M & F
                                                                                        HF, Age 19-44, F

Implementation of $3 copay for each dental          1/1/2006           Dental           HF, Age 19-44, M
date of service for adults (> or = 21)                                                 HF, Age 45+, M & F
                                                                                        HF, Age 19-44, F
                                                                                        HF, Age 19-44, M

Implementation of $2 copay for vision exams         1/1/2006            Other           HF, Age 45+, M&F
and $1 copay for dispensing services for                                               HST, Age 19-64, F
adults (> or = 21)

Inpatient recalibration and outlier policies        1/1/2006          Inpatient               All

Inpatient rate freeze                               1/1/2006          Inpatient               All
</TABLE>

                                       D-1

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ADJUSTMENTS AFFECTING UTILIZATION

<TABLE>
<CAPTION>
                                                                     CATEGORY OF
POLICY CHANGE                                    EFFECTIVE DATE   SERVICE AFFECTED   RATE COHORTS AFFECTED
-------------                                    --------------   ----------------   ---------------------
<S>                                              <C>              <C>                <C>
Reduction in coverage of dental services for        1/1/2006           Dental           HF, Age 19-44, F
adults (> or = 21)                                                                      HF, Age 19-44, M
                                                                                       HF, Age 45+, M & F
                                                                                       HST, Age 19-64, F
</TABLE>

The 1/1/2006 policy change in the Federal Poverty Level (FPL) from 100% to 90%
did not have an impact on the rates.

Clinical Measures/Incentives

Since the State requires the plans to reach, at minimum, the performance
standard for each of the indicators from Appendix M of the SFY 2007 Provider
Agreement, Mercer built this expectation into the capitation rates. To calculate
the adjustments, Mercer reviewed MCP clinical measures percentages for the CY
2005 base year and projected these rates forward by building in the State's
expected improvement rate for counties in managed care as of January 1, 2006.
Mercer then calculated the percent change from base year to the rating period,
and applied the adjustment as a portion of COS. The following chart provides
additional detail on each clinical measure.

                                      D-2
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<TABLE>
<CAPTION>
                                                            CATEGORY OF
CLINICAL MEASURE                         RATE COHORT     SERVICE AFFECTED
----------------                      ----------------   ----------------
<S>                                   <C>                <C>
PRENATAL CARE - FREQUENCY OF
ONGOING PRENATAL CARE

Target: 80% of eligible population     HF/HST, 14-18 F        OB/GYN
must receive 81% or more of               HST, 19-64 F       Physician
expected number of prenatal visits.        HF, 19-44 F

PRENATAL CARE - POST PARTUM
VISITS

Target: 80% of the eligible            HF/HST, 14-18 F
population must receive a post            HST, 19-64 F        OB/GYN
partum visit.                              HF, 19-44 F

PREVENTIVE CARE FOR CHILDREN -
WELL-CHILD VISITS

Target: 80% of children receive         HF/HST, <1 M&F
expected number of visits:               HF/HST, 1 M&F
Children who turn 15 mos. old; 6+     HF/HST, 2-13 M&F       Physician
visits. Children who were 3-6          HF/HST, 14-18 M
years old; 1+ visit. Children who      HF/HST, 14-18 F
were 12-21 years old; 1+ visit.

USE OF APPROPRIATE MEDICATIONS
FOR PEOPLE WITH ASTHMA

Target: 95% of eligible Asthma        HF/HST, 2-13 M&F
members receive prescribed             HF/HST, 14-18 M
medications acceptable as primary      HF/HST, 14-18 F
therapy for long-term control of           HF, 19-44 M       Pharmacy
asthma.                                    HF, 19-44 F
                                           HF, 45+ M&F
                                          HST, 19-64 F

ANNUAL DENTAL VISITS

Target: 60% of enrolled children      HF/HST, 2-13 M&F
age 4-21 receive 1 dental visit.       HF/HST, 14-18 M        Dental
                                       HF/HST, 14-18 F

LEAD SCREENING

Target: 80% of children age 1-2          HF/HST, 1 M&F
receive a blood lead screening.       HF/HST, 2-13 M&F       Physician
</TABLE>

Voluntary Selection

As a result of the adverse selection adjustment that was applied in the FFS Data
Summaries, the FFS data already reflects the risk of the entire Medicaid program
(i.e., FFS and managed care individuals). To solely reflect the risk of the
managed care program, Mercer modified the FFS data based on the projected
managed care penetration levels for CY 2007. This voluntary selection adjustment
modifies the FFS data to reflect the risk to the MCPs (i.e., only those
individuals who enroll in a health plan).

For the encounter and cost report data, the original base data reflects the
historical penetration levels in SFY 2004-SFY 2005 and CY 2004-CY 2005,
respectively. Where projected managed

                                      D-3

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care penetration levels differ from the historical values, the data was brought
back to reflect the risk of the entire Medicaid program, and then adjusted
forward (as the FFS data was) to reflect projected managed care levels.

Credibility by Data Source

For regions composed of only new and voluntary counties, 100% credibility was
placed on the FFS data. For regions with available FFS and managed care data,
the FFS data was used for the new and voluntary counties within the region,
while the encounter and cost report data were used for the mandatory and
Preferred Option counties within the region.

C-Section/Vaginal Percent

Mercer received MCP cesarean and vaginal rates from CY 2005 encounter data.
Based on the analysis for all MCPs combined, Mercer determined C-section and
vaginal rate assumptions.

MCP Administration/Contingencies

Based on a review of MCP reported administration expenses, the MCP
administration/ contingencies allowance will remain at 12% of premium prior to
the franchise fee. For existing health plans, 1% of the pre-franchise fee
capitation rate will be put at risk, contingent upon MCPs meeting performance
requirements for counties with managed care enrollment as of January 1, 2006.
The at-risk amount for counties entering managed care after January 1, 2006 will
be 0% for the first two plan years.

For plans new to managed care in Ohio, the administration schedule will be as
follows.

<TABLE>
<CAPTION>
                             ADMIN   AT-RISK
                             -----   -------
<S>                          <C>     <C>
Plan Year 1 (months 1-12)     13%       0%
Plan Year 2 (months 13-24)    12%       0%
Plan Year 3 (months 25-36)    12%       1%
</TABLE>

For plans entering Ohio through the acquisition of another Ohio health plan's
membership, the administration schedule will continue as outlined above based on
the plan year of the acquired health plan membership. The administration
schedule will not revert back to the Plan Year 1 schedule due to the membership
acquisition.

In addition, the total capitation rate was adjusted to incorporate the 4.5% MCP
franchise fee requirement.

                                       D-4

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APPENDIX E - CALENDAR YEAR 2007 CFC REGIONAL RATE SUMMARY

<PAGE>

State of Ohio

                                   APPENDIX E
                  CALENDAR YEAR 2007 CFC REGIONAL RATE SUMMARY

<TABLE>
<CAPTION>
                                          Annualized April                  CY 2007       CY 2007 Rate    CY 2007
   Region            Rate Cohort         2006 MM/Deliveries   % of MM   Guaranteed Rate      At Risk        Rate
   ------      -----------------------   ------------------   -------   ---------------   ------------   ---------
<S>            <C>                       <C>                  <C>       <C>               <C>            <C>
Central        HF/HST, Age 0, M & F             171,818          6.0%      $  564.92         $ 5.45      $  570.36
Central        HF/HST, Age 1, M & F             146,106          5.1%      $  149.56         $ 1.44      $  151.01
Central        HF/HST, Age 2-13, M & F        1,335,641         46.6%      $   99.74         $ 0.96      $  100.70
Central        HF/HST, Age 14-18, M             191,907          6.7%      $  118.11         $ 1.14      $  119.25
Central        HF/HST, Age 14-18, F             208,187          7.3%      $  166.07         $ 1.60      $  167.68
Central        HF, Age 19-44, M                 172,314          6.0%      $  206.93         $ 2.00      $  208.92
Central        HF, Age 19-44, F                 531,797         18.5%      $  299.33         $ 2.89      $  302.21
Central        HF, Age 45+, M & F                59,319          2.1%      $  487.07         $ 4.70      $  491.77
Central        HST, Age 19-64, F                 50,975          1.8%      $  340.59         $ 3.28      $  343.87
                                             ----------        -----       ---------         ------      ---------
Central        Subtotal                       2,868,064        100.0%      $  191.93         $ 1.85      $  193.78
                                             ----------        -----       ---------         ------      ---------
Central        Delivery Payment                   9,465          0.3%      $4,023.39         $38.79      $4,062.19
                                             ----------        -----       ---------         ------      ---------
Central        Total                          2,868,064        100.0%      $  205.21         $ 1.98      $  207.19
                                             ==========        =====       =========         ======      =========
East-Central   HF/HST, Age 0, M & F              95,509          5.6%      $  554.55         $ 5.35      $  559.90
East-Central   HF/HST, Age 1, M & F              78,227          4.6%      $  145.80         $ 1.41      $  147.21
East-Central   HF/HST, Age 2-13, M & F          786,577         46.4%      $   98.24         $ 0.95      $   99.19
East-Central   HF/HST, Age 14-18, M             122,231          7.2%      $  114.36         $ 1.10      $  115.47
East-Central   HF/HST, Age 14-18, F             126,757          7.5%      $  158.66         $ 1.53      $  160.19
East-Central   HF, Age 19-44, M                  98,371          5.8%      $  200.66         $ 1.93      $  202.59
East-Central   HF, Age 19-44, F                 320,557         18.9%      $  290.72         $ 2.80      $  293.52
East-Central   HF, Age 45+, M & F                38,258          2.3%      $  470.93         $ 4.54      $  475.47
East-Central   HST, Age 19-64, F                 29,264          1.7%      $  331.03         $ 3.19      $  334.22
                                             ----------        -----       ---------         ------      ---------
East-Central   Subtotal                       1,695,750        100.0%      $  186.57         $ 1.80      $  188.37
                                             ----------        -----       ---------         ------      ---------
East-Central   Delivery Payment                   5,596          0.3%      $4,132.16         $39.84      $4,172.00
                                             ----------        -----       ---------         ------      ---------
East-Central   Total                          1,695,750        100.0%      $  200.20         $ 1.93      $  202.13
                                             ==========        =====       =========         ======      =========
Northeast      HF/HST, Age 0, M & F             152,915          5.2%      $  529.07         $ 5.10      $  534.17
Northeast      HF/HST, Age 1, M & F             133,744          4.5%      $  140.45         $ 1.35      $  141.80
Northeast      HF/HST, Age 2-13, M & F        1,381,832         46.7%      $   94.02         $ 0.91      $   94.93
Northeast      HF/HST, Age 14-18, M             223,275          7.5%      $  111.31         $ 1.07      $  112.38
Northeast      HF/HST, Age 14-18, F             236,299          8.0%      $  153.26         $ 1.48      $  154.74
Northeast      HF, Age 19-44, M                 136,730          4.6%      $  193.74         $ 1.87      $  195.61
Northeast      HF, Age 19-44, F                 576,329         19.5%      $  279.38         $ 2.69      $  282.08
Northeast      HF, Age 45+, M & F                75,738          2.6%      $  453.99         $ 4.38      $  458.37
Northeast      HST, Age 19-64, F                 41,229          1.4%      $  318.02         $ 3.07      $  321.09
                                             ----------        -----       ---------         ------      ---------
Northeast      Subtotal                       2,958,090        100.0%      $  177.71         $ 1.71      $  179.42
                                             ----------        -----       ---------         ------      ---------
Northeast      Delivery Payment                   9,762          0.3%      $4,620.33         $44.55      $4,664.87
                                             ----------        -----       ---------         ------      ---------
Northeast      Total                          2,958,090        100.0%      $  192.96         $ 1.86      $  194.82
                                             ==========        =====       =========         ======      =========
Northwest      HF/HST, Age 0, M & F              95,817          6.3%      $  559.84         $ 5.40      $  565.23
Northwest      HF/HST, Age 1, M & F              77,885          5.1%      $  148.68         $ 1.43      $  150.11
Northwest      HF/HST, Age 2-13, M & F          703,072         45.9%      $   97.75         $ 0.94      $   98.69
Northwest      HF/HST, Age 14-18, M             102,361          6.7%      $  115.24         $ 1.11      $  116.35
Northwest      HF/HST, Age 14-18, F             111,868          7.3%      $  162.33         $ 1.57      $  163.89
Northwest      HF, Age 19-44, M                  91,211          6.0%      $  202.82         $ 1.96      $  204.77
Northwest      HF, Age 19-44, F                 289,036         18.9%      $  299.30         $ 2.89      $  302.18
Northwest      HF, Age 45+, M & F                29,822          1.9%      $  483.93         $ 4.67      $  488.60
Northwest      HST, Age 19-64, F                 30,803          2.0%      $  338.79         $ 3.27      $  342.06
                                             ----------        -----       ---------         ------      ---------
Northwest      Subtotal                       1,531,875        100.0%      $  191.78         $ 1.85      $  193.63
                                             ----------        -----       ---------         ------      ---------
Northwest      Delivery Payment                   5,055          0.3%      $4,254.97         $41.03      $4,295.99
                                             ----------        -----       ---------         ------      ---------
Northwest      Total                          1,531,875        100.0%      $  205.82         $ 1.98      $  207.80
                                             ==========        =====       =========         ======      =========
</TABLE>

Mercer Government Human Services Consulting

                                      E-1

<PAGE>

State of Ohio

                                   APPENDIX E
                  CALENDAR YEAR 2007 CFC REGIONAL RATE SUMMARY

<TABLE>
<CAPTION>
                                          Annualized April                  CY 2007       CY 2007 Rate    CY 2007
   Region            Rate Cohort         2006 MM/Deliveries   % of MM   Guaranteed Rate      At Risk        Rate
   ------      -----------------------   ------------------   -------   ---------------   ------------   ---------
<S>            <C>                       <C>                  <C>       <C>               <C>            <C>
Southeast      HF/HST, Age 0, M & F              54,686          4.9%      $  523.86         $ 5.05      $  528.91
Southeast      HF/HST, Age 1, M & F              47,093          4.2%      $  138.49         $ 1.34      $  139.82
Southeast      HF/HST, Age 2-13, M & F          487,601         43.9%      $   93.56         $ 0.90      $   94.46
Southeast      HF/HST, Age 14-18, M              82,844          7.5%      $  109.68         $ 1.06      $  110.74
Southeast      HF/HST, Age 14-18, F              84,280          7.6%      $  153.88         $ 1.48      $  155.37
Southeast      HF, Age 19-44, M                  98,747          8.9%      $  195.17         $ 1.88      $  197.06
Southeast      HF, Age 19-44, F                 211,664         19.0%      $  281.12         $ 2.71      $  283.83
Southeast      HF, Age 45+, M & F                27,930          2.5%      $  458.74         $ 4.42      $  463.16
Southeast      HST, Age 19=64, F                 16,667          1.5%      $  320.31         $ 3.09      $  323.40
                                             ----------        -----       ---------         ------      ---------
Southeast      Subtotal                       1,111,511        100.0%      $  179.73         $ 1.73      $  181.46
                                             ----------        -----       ---------         ------      ---------
Southeast      Delivery Payment                   3,668          0.3%      $4,128.68         $39.81      $4,168.49
                                             ----------        -----       ---------         ------      ---------
Southeast      Total                          1,111,511        100.0%      $  193.36         $ 1.86      $  195.22
                                             ==========        =====       =========         ======      =========
Southwest      HF/HST, Age 0, M & F             121,364          6.5%      $  570.51         $ 5.50      $  576.01
Southwest      HF/HST, Age 1, M & F              97,721          5.3%      $  148.69         $ 1.43      $  150.13
Southwest      HF/HST, Age 2-13, M & F          876,398         47.1%      $   99.74         $ 0.96      $  100.70
Southwest      HF/HST, Age 14-18, M             126,346          6.8%      $  116.29         $ 1.12      $  117.41
Southwest      HF/HST, Age 14-18, F             140,619          7.6%      $  163.87         $ 1.58      $  165.45
Southwest      HF, Age 19-44, M                  91,907          4.9%      $  206.77         $ 1.99      $  208.77
Southwest      HF, Age 19-44, F                 335,867         18.0%      $  298.60         $ 2.88      $  301.48
Southwest      HF, Age 45+, M & F                35,032          1.9%      $  485.99         $ 4.69      $  490.68
Southwest      HST, Age 19-64, F                 35,739          1.9%      $  340.78         $ 3.29      $  344.06
                                             ----------        -----       ---------         ------      ---------
Southwest      Subtotal                       1,860,993        100.0%      $  192.06         $ 1.85      $  193.91
                                             ----------        -----       ---------         ------      ---------
Southwest      Delivery Payment                   6,141          0.3%      $4,690.50         $45.23      $4,735.73
                                             ----------        -----       ---------         ------      ---------
Southwest      Total                          1,860,993        100.0%      $  207.53         $ 2.00      $  209.54
                                             ==========        =====       =========         ======      =========
West-Central   HF/HST, Age 0, M & F              81,065          6.3%      $  580.47         $ 5.60      $  586.06
West-Central   HF/HST, Age 1, M & F              64,022          5.0%      $  155.39         $ 1.50      $  156.89
West-Central   HF/HST, Age 2-13, M & F          599,936         46.5%      $  102.85         $ 0.99      $  103.85
West-Central   HF/HST, Age 14-18, M              86,948          6.7%      $  122.06         $ 1.18      $  123.24
West-Central   HF/HST, Age 14-18, F              95,920          7.4%      $  169.37         $ 1.63      $  171.01
West-Central   HF, Age 19-44, M                  68,617          5.3%      $  211.40         $ 2.04      $  213.43
West-Central   HF, Age 19-44, F                 244,883         19.0%      $  310.07         $ 2.99      $  313.06
West-Central   HF, Age 45+, M & F                24,806          1.9%      $  505.52         $ 4.87      $  510.40
West-Central   HST, Age 19-64, F                 23,655          1.8%      $  352.42         $ 3.40      $  355.82
                                             ----------        -----       ---------         ------      ---------
West-Central   Subtotal                       1,289,853        100.0%      $  199.16         $ 1.92      $  201.08
                                             ----------        -----       ---------         ------      ---------
West-Central   Delivery Payment                   4,257          0.3%      $4,509.84         $43.48      $4,553.32
                                             ----------        -----       ---------         ------      ---------
West-Central   Total                          1,289,853        100.0%      $  214.04         $ 2.06      $  216.10
                                             ==========        =====       =========         ======      =========
All Regions    HF/HST, Age 0, M & F             773,175          5.8%      $  555.52         $ 5.36      $  560.88
All Regions    HF/HST, Age 1, M & F             644,798          4.8%      $  146.75         $ 1.41      $  148.16
All Regions    HF/HST, Age 2-13, M & F        6,171,057         46.3%      $   97.86         $ 0.94      $   98.80
All Regions    HF/HST, Age 14-18, M             935,911          7.0%      $  115.06         $ 1.11      $  116.17
All Regions    HF/HST, Age 14-18, F           1,003,930          7.5%      $  160.69         $ 1.55      $  162.24
All Regions    HF, Age 19-44, M                 757,896          5.7%      $  202.09         $ 1.95      $  204.04
All Regions    HF, Age 19-44, F               2,510,133         18.9%      $  293.06         $ 2.83      $  295.89
All Regions    HF, Age 45+, M & F               290,906          2.2%      $  474.74         $ 4.58      $  479.32
All Regions    HST, Age 19-64, F                228,331          1.7%      $  334.82         $ 3.23      $  338.05
                                             ----------        -----       ---------         ------      ---------
All Regions    Subtotal                      13,316,137        100.0%      $  187.77         $ 1.81      $  189.58
                                             ----------        -----       ---------         ------      ---------
All Regions    Delivery Payment                  43,943          0.3%      $4,345.63         $41.90      $4,387.53
                                             ----------        -----       ---------         ------      ---------
All Regions    Total                         13,316,137        100.0%      $  202.11         $ 1.95      $  204.06
                                             ==========        =====       =========         ======      =========
</TABLE>

Mercer Government Human Services Consulting

                                      E-2
<PAGE>

                                   APPENDIX F
                                 REGIONAL RATES

     1. PREMIUM RATES WITHOUT THE AT-RISK PAYMENT AMOUNTS FOR 07/01/07 THROUGH
11/30/07 SHALL BE AS FOLLOWS:

MCP: MOLINA HEALTHCARE OF OHIO, INC.

<TABLE>
<CAPTION>
  SERVICE                                              HF/HST     HF/HST       HF         HF        HF        HST
 ENROLLMENT    REGIONAL   HF/HST   HF/HST   HF/HST   AGE 14-18  AGE 14-18  AGE 19-44  AGE 19-44   AGE 45   AGE 19-64   DELIVERY
    AREA        STATUS   AGE < 1   AGE 1   AGE 2-13     MALE      FEMALE      MALE      FEMALE   AND OVER    FEMALE    PAYMENT
------------  ---------  -------  -------  --------  ---------  ---------  ---------  ---------  --------  ---------  ---------
<S>           <C>        <C>      <C>      <C>       <C>        <C>        <C>        <C>        <C>       <C>        <C>
CENTRAL       MANDATORY  $570.36  $151.01   $100.70   $119.25    $167.68    $208.92   $302.21    $491.77     $343.87  $4,062.19
SOUTHEAST     MANDATORY  $528.91  $139.82   $ 94.46   $110.74    $155.37    $197.06   $283.83    $463.16     $323.40  $4,168.49
SOUTHWEST     MANDATORY  $576.01  $150.13   $100.70   $117.41    $165.45    $208.77   $301.48    $490.68     $344.06  $4,735.73
WEST CENTRAL  MANDATORY  $586.06  $156.89   $103.85   $123.24    $171.01    $213.43   $313.06    $510.40     $355.82  $4,553.32
</TABLE>

LIST OF ELIGIBLE ASSISTANCE GROUPS (AGS)

Healthy Families: - MA-C Categorically eligible due to TANF cash
                  - MA-T Children under 21
                  - MA-Y Transitional Medicaid

Healthy Start:    - MA-P Pregnant Women and Children

Per Appendix E, Rate Methodology, MCPs in the first two years of operation of
the MC program are not subject to an at-risk recovery amount.

For the SFY 2008 contract period, MCPs will be put-at risk for a portion of the
premiums received for members in counties they served as of January 1, 2006,
provided the MCP has participated in the program for more than twenty-four
months.

MCPs will be put at-risk for a portion of the premiums received for members in
counties they began serving after January 1, 2006, beginning with the MCP's
twenty-fifth month of membership in each county's region.

                                                                     Page 4 of 6

<PAGE>

                                   APPENDIX F
                                 REGIONAL RATES

     2. AT-RISK AMOUNTS FOR 07/01/07 THROUGH 11/30/07 SHALL BE AS FOLLOWS: MCP:

MOLINA HEALTHCARE OF OHIO, INC.

<TABLE>
<CAPTION>
  SERVICE                                              HF/HST     HF/HST       HF         HF        HF        HST
 ENROLLMENT    REGIONAL   HF/HST   HF/HST   HF/HST   AGE 14-18  AGE 14-18  AGE 19-44  AGE 19-44   AGE 45   AGE 19-64  DELIVERY
    AREA        STATUS   AGE < 1   AGE 1   AGE 2-13     MALE      FEMALE      MALE      FEMALE   AND OVER    FEMALE    PAYMENT
------------  ---------  -------  -------  --------  ---------  ---------  ---------  ---------  --------  ---------  --------
<S>           <C>        <C>      <C>      <C>       <C>        <C>        <C>        <C>        <C>       <C>        <C>
CENTRAL       MANDATORY   $0.00    $0.00     $0.00     $0.00      $0.00      $0.00      $0.00      $0.00     $0.00      $0.00
SOUTHEAST     MANDATORY   $0.00    $0.00     $0.00     $0.00      $0.00      $0.00      $0.00      $0.00     $0.00      $0.00
SOUTHWEST     MANDATORY   $0.00    $0.00     $0.00     $0.00      $0.00      $0.00      $0.00      $0.00     $0.00      $0.00
WEST CENTRAL  MANDATORY   $0.00    $0.00     $0.00     $0.00      $0.00      $0.00      $0.00      $0.00     $0.00      $0.00
</TABLE>

LIST OF ELIGIBLE ASSISTANCE GROUPS (AGS)

Healthy Families: - MA-C Categorically eligible due to TANF cash
                  - MA-T Children under 21
                  - MA-Y Transitional Medicaid

Healthy Start:    - MA-P Pregnant Women and Children

Per Appendix E, Rate Methodology, MCPs in the first two years of operation in
the MC program are not subject ot an at-risk recovery amount.

For the SFY 2008 contract period, MCPs will be put-at risk for a portion of the
premiums received for members in counties they served as of January 1, 2006,
provided the MCP has participated in the program for more than twenty-four
months.

MCPs will be put at-risk for a portion of the premiums received for members in
counties they began serving after January 1, 2006, beginning with the MCP's
twenty-fifth month of membership in each county's region.

                                                                     Page 5 of 6

<PAGE>

                                   APPENDIX F
                                 REGIONAL RATES

     3. PREMIUM RATES FOR 07/01/07 THROUGH 11/30/07 SHALL BE AS FOLLOWS: MCP:

MOLINA HEALTHCARE OF OHIO, INC.

<TABLE>
<CAPTION>
  SERVICE                                              HF/HST     HF/HST       HF         HF        HF        HST
 ENROLLMENT    REGIONAL   HF/HST   HF/HST   HF/HST   AGE 14-18  AGE 14-18  AGE 19-44  AGE 19-44   AGE 45   AGE 19-64   DELIVERY
    AREA        STATUS   AGE < 1   AGE 1   AGE 2-13     MALE      FEMALE      MALE      FEMALE   AND OVER    FEMALE    PAYMENT
------------  ---------  -------  -------  --------  ---------  ---------  ---------  ---------  --------  ---------  ---------
<S>           <C>        <C>      <C>      <C>       <C>        <C>        <C>        <C>        <C>       <C>        <C>
CENTRAL       MANDATORY  $570.36  $151.01   $100.70   $119.25    $167.68    $208.92    $302.21    $491.77   $343.87   $4,062.19
SOUTHEAST     MANDATORY  $528.91  $139.82   $ 94.46   $110.74    $155.37    $197.06    $283.83    $463.16   $323.40   $4,168.49
SOUTHWEST     MANDATORY  $576.01  $150.13   $100.70   $117.41    $165.45    $208.77    $301.48    $490.68   $344.06   $4,735.73
WEST CENTRAL  MANDATORY  $586.06  $156.89   $103.85   $123.24    $171.01    $213.43    $313.06    $510.40   $355.82   $4,553.32
</TABLE>

LIST OF ELIGIBLE ASSISTANCE GROUPS (AGS)

Healthy Families: - MA-C Categorically eligible due to TANF cash
                  - MA-T Children under 21
                  - MA-Y Transitional Medicaid

Healthy Start:    - MA-P Pregnant Women and Children

Per Appendix E, Rate Methodology, MCPs in the first two years of operaton in the
MC program are not subject to an at-risk recovery amount.

For the SFY 2008 contract period, MCPs will be put-at risk for a portion of the
premiums received for members in counties they served as of January 1, 2006,
provided the MCP has participated in the program for more than twenty-four
months.

MCPs will be put at-risk for a portion of the premiums received for members in
counties they began serving after January 1, 2006, beginning with the MCP's
twenty-fifth month of membership in each county's region.

                                                                     Page 6 of 6

<PAGE>

                                   APPENDIX F
                                 REGIONAL RATES

     1. PREMIUM RATES WITHOUT THE AT-RISK PAYMENT AMOUNTS FOR 12/01/07 THROUGH
12/31/07 SHALL BE AS FOLLOWS:

MCP: MOLINA HEALTHCARE OF OHIO, INC.

<TABLE>
<CAPTION>
  SERVICE                                              HF/HST     HF/HST       HF         HF        HF        HST
 ENROLLMENT    REGIONAL   HF/HST   HF/HST   HF/HST   AGE 14-18  AGE 14-18  AGE 19-44  AGE 19-44   AGE 45   AGE 19-64   DELIVERY
    AREA        STATUS   AGE < 1   AGE 1   AGE 2-13     MALE      FEMALE      MALE      FEMALE   AND OVER    FEMALE    PAYMENT
------------  ---------  -------  -------  --------  ---------  ---------  ---------  ---------  --------  ---------  ---------
<S>           <C>        <C>      <C>      <C>       <C>        <C>        <C>        <C>        <C>       <C>        <C>
CENTRAL       MANDATORY  $564.92  $149.56   $ 99.74   $118.11    $166.07    $206.93    $299.33    $487.07   $340.59   $4,023.39
SOUTHEAST     MANDATORY  $528.91  $139.82   $ 94.46   $110.74    $155.37    $197.06    $283.83    $463.16   $323.40   $4,168.49
SOUTHWEST     MANDATORY  $576.01  $150.13   $100.70   $117.41    $165.45    $208.77    $301.48    $490.68   $344.06   $4,735.73
WEST CENTRAL  MANDATORY  $580.47  $155.39   $102.85   $122.06    $169.37    $211.40    $310.07    $505.52   $352.42   $4,509.84
</TABLE>

LIST OF ELIGIBLE ASSISTANCE GROUPS (AGS)

Healthy Families: - MA-C Categorically eligible due to TANF cash
                  - MA-T Children under 21
                  - MA-Y Transitional Medicaid

Healthy Start:    - MA-P Pregnant Women and Children

Per Appendix E, Rate Methodology, MCPs in the first two years of operation of
the MC program are not subject to an at-risk recovery amount.

For the SFY 2008 contract period, MCPs will be put-at risk for a portion of the
premiums received for members in counties they served as of January 1, 2006,
provided the MCP has participated in the program for more than twenty-four
months.

MCPs will be put at-risk for a portion of the premiums received for members in
counties they began serving after January 1, 2006, beginning with the MCP's
twenty-fifth month of membership in each county's region.

Molina's regional counties at-risk: Clark, Franklin, Montgomery.

                                                                     Page 4 of 6

<PAGE>

                                   APPENDIX F
                                 REGIONAL RATES

     2. AT-RISK AMOUNTS FOR 12/01/07 THROUGH 12/31/07 SHALL BE AS FOLLOWS:

MCP: MOLINA HEALTHCARE OF OHIO, INC.

<TABLE>
<CAPTION>
  SERVICE                                              HF/HST     HF/HST       HF         HF        HF        HST
 ENROLLMENT    REGIONAL   HF/HST   HF/HST   HF/HST   AGE 14-18  AGE 14-18  AGE 19-44  AGE 19-44   AGE 45   AGE 19-64   DELIVERY
    AREA        STATUS   AGE < 1   AGE 1   AGE 2-13     MALE      FEMALE      MALE      FEMALE   AND OVER    FEMALE    PAYMENT
------------  ---------  -------  -------  --------  ---------  ---------  ---------  ---------  --------  ---------  ---------
<S>           <C>        <C>      <C>      <C>       <C>        <C>        <C>        <C>        <C>       <C>        <C>
CENTRAL       MANDATORY   $5.45    $1.44     $0.96     $1.14      $1.60      $2.00      $2.89      $4.70     $3.28      $38.79
SOUTHEAST     MANDATORY   $0.00    $0.00     $0.00     $0.00      $0.00      $0.00      $0.00      $0.00     $0.00      $ 0.00
SOUTHWEST     MANDATORY   $0.00    $0.00     $0.00     $0.00      $0.00      $0.00      $0.00      $0.00     $0.00      $ 0.00
WEST CENTRAL  MANDATORY   $5.60    $1.50     $0.99     $1.18      $1.63      $2.04      $2.99      $4.87     $3.40      $43.48
</TABLE>

LIST OF ELIGIBLE ASSISTANCE GROUPS (AGS)

Healthy Families: - MA-C Categorically eligible due to TANF cash
                  - MA-T Children under 21
                  - MA-Y Transitional Medicaid

Healthy Start:    - MA-P Pregnant Women and Children

Per Appendix E, Rate Methodology, MCPs in the first two years of operation in
the MC program are not subject ot an at-risk recovery amount.

For the SFY 2008 contract period, MCPs will be put-at risk for a portion of the
premiums received for members in counties they served as of January 1, 2006,
provided the MCP has participated in the program for more than twenty-four
months.

MCPs will be put at-risk for a portion of the premiums received for members in
counties they began serving after January 1, 2006, beginning with the MCP's
twenty-fifth month of membership in each county's region.

Molina's regional counties at-risk: Clark, Franklin, Montgomery.

                                                                     Page 5 of 6

<PAGE>

                                   APPENDIX F
                                 REGIONAL RATES

     3. PREMIUM RATES FOR 12/01/07 THROUGH 12/31/07 SHALL BE AS FOLLOWS:

MCP: MOLINA HEALTHCARE OF OHIO, INC.

<TABLE>
<CAPTION>
  SERVICE                                              HF/HST     HF/HST       HF         HF        HF        HST
 ENROLLMENT    REGIONAL   HF/HST   HF/HST   HF/HST   AGE 14-18  AGE 14-18  AGE 19-44  AGE 19-44   AGE 45   AGE 19-64   DELIVERY
    AREA        STATUS   AGE < 1   AGE 1   AGE 2-13     MALE      FEMALE      MALE      FEMALE   AND OVER    FEMALE    PAYMENT
------------  ---------  -------  -------  --------  ---------  ---------  ---------  ---------  --------  ---------  ---------
<S>           <C>        <C>      <C>      <C>       <C>        <C>        <C>        <C>        <C>       <C>        <C>
CENTRAL       MANDATORY  $570.36  $151.01   $100.70   $119.25    $167.68    $208.92    $302.21    $491.77   $343.87   $4,062.19
SOUTHEAST     MANDATORY  $528.91  $139.82   $ 94.46   $110.74    $155.37    $197.06    $283.83    $463.16   $323.40   $4,168.49
SOUTHWEST     MANDATORY  $576.01  $150.13   $100.70   $117.41    $165.45    $208.77    $301.48    $490.68   $344.06   $4,735.73
WEST CENTRAL  MANDATORY  $586.06  $156.89   $103.85   $123.24    $171.01    $213.43    $313.06    $510.40   $355.82   $4,553.32
</TABLE>

LIST OF ELIGIBLE ASSISTANCE GROUPS (AGS)

Healthy Families: - MA-C Categorically eligible due to TANF cash
                  - MA-T Children under 21
                  - MA-Y Transitional Medicaid

Healthy Start:    - MA-P Pregnant Women and Children

Per Appendix E, Rate Methodology, MCPs in the first two years of operaton in the
MC program are not subject to an at-risk recovery amount.

For the SFY 2008 contract period, MCPs will be put-at risk for a portion of the
premiums received for members in counties they served as of January 1, 2006,
provided the MCP has participated in the program for more than twenty-four
months.

MCPs will be put at-risk for a portion of the premiums received for members in
counties they began serving after January 1, 2006, beginning with the MCP's
twenty-fifth month of membership in each county's region.

Molina's regional counties at-risk: Clark, Franklin, Montgomery.

                                                                     Page 6 of 6
<PAGE>

Appendix G
Page 1

                                   APPENDIX G

                              COVERAGE AND SERVICES
                             CFC ELIGIBLE POPULATION

1.   Basic Benefit Package

     Pursuant to OAC rule 5101:3-26-03(A), with limited exclusions (see section
     G.2 of this appendix), MCPs must ensure that members have access to
     medically-necessary services covered by the Ohio Medicaid fee-for-service
     (FFS) program. For information on Medicaid-covered services, MCPs must
     refer to the ODJFS website. The following is a general list of the benefits
     covered by the Ohio Medicaid fee-for-service program:

          -    Inpatient hospital services

          -    Outpatient hospital services

          -    Rural health clinics (RHCs) and Federally qualified health
               centers (FQHCs)

          -    Physician services whether furnished in the physician's office,
               the covered person's home, a hospital, or elsewhere

          -    Laboratory and x-ray services

          -    Screening, diagnosis, and treatment services to children under
               the age of twenty-one (21) under the HealthChek (EPSDT) program

          -    Family planning services and supplies

          -    Home health and private duty nursing services

          -    Podiatry

          -    Chiropractic services [not covered for adults age twenty-one (21)
               and older]

          -    Physical therapy, occupational therapy, and speech therapy

          -    Nurse-midwife, certified family nurse practitioner, and certified
               pediatric nurse practitioner services

          -    Prescription drugs

          -    Ambulance and ambulette services

          -    Dental services

<PAGE>

Appendix G
Page 2

          -    Durable medical equipment and medical supplies

          -    Vision care services, including eyeglasses

          -    Short-term rehabilitative stays in a nursing facility as
               specified in OAC rule 5101:3-26-03

          -    Hospice care

          -    Behavioral health services (see section G.2.b.iii of this
               appendix). Note: Independent psychologist services not covered
               for adults age twenty-one (21) and older.

2.   Exclusions, Limitations and Clarifications

          a.   Exclusions

               MCPs are not required to pay for Ohio Medicaid FFS program
               (Medicaid) non-covered services. For information regarding
               Medicaid noncovered services, MCPs must refer to the ODJFS
               website. The following is a general list of the services not
               covered by the Ohio Medicaid fee-for-service program:

                    -    Services or supplies that are not medically necessary

                    -    Experimental services and procedures, including drugs
                         and equipment, not covered by Medicaid

                    -    Organ transplants that are not covered by Medicaid

                    -    Abortions, except in the case of a reported rape,
                         incest, or when medically necessary to save the life of
                         the mother

                    -    Infertility services for males or females

                    -    Voluntary sterilization if under 21 years of age or
                         legally incapable of consenting to the procedure

                    -    Reversal of voluntary sterilization procedures

                    -    Plastic or cosmetic surgery that is not medically
                         necessary*

                    -    Immunizations for travel outside of the United States

                    -    Services for the treatment of obesity unless medically
                         necessary*

<PAGE>

Appendix G
Page 3

                    -    Custodial or supportive care not covered by Medicaid

                    -    Sex change surgery and related services

                    -    Sexual or marriage counseling

                    -    Court ordered testing

                    -    Acupuncture and biofeedback services

                    -    Services to find cause of death (autopsy)

                    -    Comfort items in the hospital (e.g., TV or phone)

                    -    Paternity testing

               MCPs are also not required to pay for non-emergency services or
               supplies received without members following the directions in
               their MCP member handbook, unless otherwise directed by ODJFS.

               *    These services could be deemed medically necessary if
                    medical complications/conditions in addition to the obesity
                    or physical imperfection are present.

          b.   Limitations & Clarifications

               i.   Member Cost-Sharing

                    As specified in OAC rules 5101:3-26-05(D) and 5101:3-26-12,
                    MCPs are permitted to impose the applicable member
                    co-payment amount(s) for dental services, vision services,
                    non-emergency emergency department services, or prescription
                    drugs, other than generic drugs. MCPs must notify ODJFS if
                    they intend to impose a co-payment. ODJFS must approve the
                    notice to be sent to the MCP's members and the timing of
                    when the co-payments will begin to be imposed. If ODJFS
                    determines that an MCP's decision to impose a particular
                    co-payment on their members would constitute a significant
                    change for those members, ODJFS may require the effective
                    date of the co-payment to coincide with the "Open
                    Enrollment" month.

                    Notwithstanding the preceding paragraph, MCPs must provide
                    an ODJFS-approved notice to all their members 90 days in
                    advance of the date that the MCP will impose the co-payment.
                    With the exception of member co-payments the MCP has elected
                    to implement in accordance with OAC rules 5101:3-26-05(D)
                    and 5101:3-26-12, the MCP's payment constitutes payment in
                    full for

<PAGE>

Appendix G
Page 4

                    any covered services and their subcontractors must not
                    charge members or ODJFS any additional co-payment, cost
                    sharing, down-payment, or similar charge, refundable or
                    otherwise.

               ii.  Abortion and Sterilization

                    The use of federal funds to pay for abortion and
                    sterilization services is prohibited unless the specific
                    criteria found in 42 CFR 441 and OAC rules 5101:3-17-01 and
                    5101:3-21-01 are met. MCPs must verify that all of the
                    information on the required forms (JFS 03197, 03198, and
                    03199) is provided and that the service meets the required
                    criteria before any such claim is paid.

                    Additionally, payment must not be made for associated
                    services such as anesthesia, laboratory tests, or hospital
                    services if the abortion or sterilization itself does not
                    qualify for payment. MCPs are responsible for educating
                    their providers on the requirements; implementing internal
                    procedures including systems edits to ensure that claims are
                    only paid once the MCP has determined if the applicable
                    forms are completed and the required criteria are met, as
                    confirmed by the appropriate certification/consent forms;
                    and for maintaining documentation to justify any such claim
                    payments.

               iii. Behavioral Health Services

                    Coordination of Services: MCPs must have a process to
                    coordinate benefits of and referrals to the publicly funded
                    community behavioral health system. MCPs must ensure that
                    members have access to all medically-necessary behavioral
                    health services covered by the Ohio Medicaid FFS program and
                    are responsible for coordinating those services with other
                    medical and support services. MCPs must notify members via
                    the member handbook and provider directory of where and how
                    to access behavioral health services, including the ability
                    to self-refer to mental health services offered through ODMH
                    community mental health centers (CMHCs) as well as substance
                    abuse services offered through Ohio Department of Alcohol
                    and Drug Addiction Services (ODADAS)-certified Medicaid
                    providers. Pursuant to ORC Section 5111.16, alcohol, drug
                    addiction and mental health services covered by Medicaid are
                    not to be paid by the managed care program when the
                    nonfederal share of the cost of those services is provided
                    by a board of alcohol, drug addiction, and mental health
                    services or a state agency other than ODJFS. MCPs are also
                    not responsible for providing mental health services to
                    persons between 22 and 64 years of age while residing in
                    private or public free-standing psychiatric hospitals.

<PAGE>

Appendix G
Page 5

                    MCPs must provide Medicaid-covered behavioral health
                    services for members who are unable to timely access
                    services or are unwilling to access services through
                    community providers.

                    Mental Health Services: There are a number of
                    Medicaid-covered mental health (MH) services available
                    through ODMH CMHCs.

                    Where an MCP is responsible for providing MH services for
                    their members, the MCP is responsible for ensuring access to
                    counseling and psychotherapy,
                    physician/psychologist/psychiatrist services, outpatient
                    clinic services, general hospital outpatient psychiatric
                    services, pre-hospitalization screening, diagnostic
                    assessment (clinical evaluation), crisis intervention,
                    psychiatric hospitalization in general hospitals (for all
                    ages), and Medicaid-covered prescription drugs and
                    laboratory services. MCPs are not required to cover partial
                    hospitalization, or inpatient psychiatric care in a private
                    or public free-standing psychiatric hospital. However, MCPs
                    are required to cover the payment of physician services in a
                    private or public free-standing psychiatric hospital when
                    such services are billed independent of the hospital.

                    Substance Abuse Services: There are a number of
                    Medicaid-covered substance abuse services available through
                    ODADAS-certified Medicaid providers.

                    Where an MCP is responsible for providing substance abuse
                    services for their members, the MCP is responsible for
                    ensuring access to alcohol and other drug (AOD) urinalysis
                    screening, assessment, counseling,
                    physician/psychologist/psychiatrist AOD treatment services,
                    outpatient clinic AOD treatment services, general hospital
                    outpatient AOD treatment services, crisis intervention,
                    inpatient detoxification services in a general hospital, and
                    Medicaid-covered prescription drugs and laboratory services.
                    MCPs are not required to cover outpatient detoxification and
                    methadone maintenance.

                    Financial Responsibility for Behavioral Health Services:
                    MCPs are responsible for the following:

                         -    payment of Medicaid-covered prescription drugs
                              prescribed by an ODMH CMHC or ODADAS-certified
                              provider when obtained through an MCP's panel
                              pharmacy;

                         -    payment of Medicaid-covered services provided by
                              an MCP's panel laboratory when referred by an ODMH

<PAGE>

Appendix G
Page 6

                              CMHC or ODADAS-certified provider;

                         -    payment of all other Medicaid-covered behavioral
                              health services obtained through providers other
                              than those who are ODMH CMHCs or ODADAS-certified
                              providers when arranged/authorized by the MCP.

                         Limitations:

                         -    Pursuant to ORC Section 5111.16, alcohol, drug
                              addiction and mental health services covered by
                              Medicaid are not to be paid by the managed care
                              program when the nonfederal share of the cost of
                              those services is provided by a board of alcohol,
                              drug addiction, and mental health services or a
                              state agency other than ODJFS. As part of this
                              limitation:

                                   -    MCPs are not responsible for paying for
                                        behavioral health services provided
                                        through ODMH CMHCs and ODADAS-certified
                                        Medicaid providers;

                                   -    MCPs are not responsible for payment of
                                        partial hospitalization (mental health),
                                        inpatient psychiatric care in a private
                                        or public free-standing inpatient
                                        psychiatric hospital, outpatient
                                        detoxification, intensive outpatient
                                        programs (IOP) (substance abuse) or
                                        methadone maintenance.

                                   -    However, MCPs are required to cover the
                                        payment of physician services in a
                                        private or public free-standing
                                        psychiatric hospital when such services
                                        are billed independent of the hospital.

               iv.  Pharmacy Benefit: In providing the Medicaid pharmacy benefit
                    to their members, MCPs must cover the same drugs covered by
                    the Ohio Medicaid fee-for-service program.

                    MCPs may establish a preferred drug list for members and
                    providers which includes a listing of the drugs that they
                    prefer to have prescribed. Preferred drugs requiring prior
                    authorization approval must be clearly indicated as such.
                    Pursuant to ORC Section 5111.72, ODJFS may approve
                    MCP-specific pharmacy program utilization management
                    strategies (see appendix G.3.a).

               v.   Organ Transplants: MCPs must ensure coverage for organ
                    transplants and related services in accordance with OAC
                    5101-3-2- 07.1 (B)(4)&(5). Coverage for all organ transplant
                    services, except kidney transplants, is contingent upon
                    review and recommendation by the "Ohio Solid Organ
                    Transplant Consortium" based on criteria established by Ohio
                    organ transplant surgeons and authorization from the ODJFS
                    prior authorization unit. Reimbursement for bone marrow
                    transplant and hematapoietic

<PAGE>

Appendix G
Page 7

                    stem cell transplant services, as defined in OAC 3701:84-01,
                    is contingent upon review and recommendation by the "Ohio
                    Hematapoietic Stem Cell Transplant Consortium" again based
                    on criteria established by Ohio experts in the field of bone
                    marrow transplant. While MCPs may require prior
                    authorization for these transplant services, the approval
                    criteria would be limited to confirming the consumer is
                    being considered and/or has been recommended for a
                    transplant by either consortium and authorized by ODJFS.
                    Additionally, in accordance with OAC 5101:3-2-03 (A)(4) all
                    services related to organ donations are covered for the
                    donor recipient when the consumer is Medicaid eligible.

3.   Care Coordination

          a.   Utilization Management (Modification) Programs

               General Provisions - Pursuant to OAC rule 5101:3-26-03.1(A)(7),
               MCPs must implement a utilization management program to maximize
               the effectiveness of the care provided to members and may develop
               other utilization management programs, subject to prior approval
               by ODJFS. For the purposes of this requirement, the specific
               utilization management programs which require ODJFS
               prior-approval are those programs designed by the MCP with the
               purpose of redirecting or restricting access to a particular
               service or service location. These programs are referred to as
               utilization modification programs. MCP care coordination and case
               management activities which are designed to enhance the services
               provided to members with specific health care needs would not be
               considered utilization management programs nor would the
               designation of specific services requiring prior approval by the
               MCP or the member=s PCP. MCPs must also implement the
               ODJFS-required emergency department diversion (EDD) program for
               frequent users. In that ODJFS has developed the parameters for an
               MCP's EDD program, it therefore does not require ODJFS approval.

               Pharmacy Programs - Pursuant to ORC Sec. 5111.172 and OAC rule
               5101:3-26-03(A) and (B), MCPs subject to ODJFS prior-approval,
               may implement strategies, including prior authorization and
               limitations on the type of provider and locations where certain
               medications may be administered, for the management of pharmacy
               utilization.

               Prior Authorizations: MCPs must receive prior approval from ODJFS
               on the types of medication that they wish to cover through prior
               authorizations. MCPs must establish their prior authorization
               system so that it does not unnecessarily impede member access to
               medically-necessary Medicaid-covered services.

               MCPs must comply with the provisions of 1927(d)(5) of the Social

<PAGE>

Appendix G
Page 8

               Security Act, 42 USC 1396r-8(k)(3), and OAC rule 5101:3-26-03.1
               regarding the timeframes for prior authorization of covered
               outpatient drugs.

               MCPs may also, with ODJFS prior approval, implement pharmacy
               utilization modification programs designed to address members
               demonstrating high or inappropriate utilization of specific
               prescription drugs.

               Emergency Department Diversion (EDD) - MCPs must provide access
               to services in a way that assures access to primary, specialist
               and urgent care in the most appropriate settings and that
               minimizes frequent, preventable utilization of emergency
               department (ED) services. OAC rule 5101:3-26-03.1(A)(7)(d)
               requires MCPs to implement the ODJFS-required emergency
               department diversion (EDD) program for frequent utilizers.

               Each MCP must establish an ED diversion (EDD) program with the
               goal of minimizing frequent ED utilization. The MCP's EDD program
               must include the monitoring of ED utilization, identification of
               frequent ED utilizers, and targeted approaches designed to reduce
               avoidable ED utilization. MCP EDD programs must, at a minimum,
               address those ED visits which could have been prevented through
               improved education, access, quality or care management
               approaches.

               Although there is often an assumption that frequent ED visits are
               solely the result of a preference on the part of the member and
               education is therefore the standard remedy, it is also important
               to ensure that a member's frequent ED utilization is not due to
               problems such as their PCP's lack of accessibility or failure to
               make appropriate specialist referrals. The MCP's EDD program must
               therefore also include the identification of providers who serve
               as PCPs for a substantial number of frequent ED utilizers and the
               implementation of corrective action with these providers as so
               indicated.

               This requirement does not replace the MCP's responsibility to
               inform and educate all members regarding the appropriate use of
               the ED.

          b.   Case Management Programs

               In accordance with 5101:3-26-03.1(A)(8), MCPs must offer and
               provide comprehensive case management services which coordinate
               and monitor the care of members with specific diagnoses, or who
               require high-cost and/or extensive services. The MCP's
               comprehensive case management program must also include a
               Children with Special Health Care Needs component as specified
               below.

               i.   Each MCP must inform all members and contracting providers
                    of

<PAGE>

Appendix G
Page 9

                    the MCP's case management services.

               ii.  Children with Special Health Care Needs (CSHCN):

                    CSHCN are a particularly vulnerable population which often
                    have chronic and complex medical health care conditions. In
                    order to ensure compliance with the provisions of 42 CFR
                    438.208, each MCP must establish a CSHCN component as part
                    of the MCP's comprehensive case management program. The MCP
                    must establish a process for the timely identification,
                    completion of a comprehensive needs assessment, and
                    providing appropriate and targeted case management services
                    for any CSHCN.

                    CSHCN are defined as children age 17 and under who are
                    pregnant, and members under 21 years of age with one or more
                    of the following:

                         -Asthma

                         -HIV/AIDS

                         -A chronic physical, emotional or mental condition for
                         which they are receiving treatment or counseling

                         -Supplemental security income (SSI) for a
                         health-related condition

                         -A current letter of approval from the Bureau of
                         Children with Medical Handicaps (BCMH), Ohio Department
                         of Health

               iii. The MCP's comprehensive case management program must
                    include, at a minimum, the following components:

                    a.   Identification -

                         The MCP must have a variety of mechanisms in place to
                         identify members potentially eligible for case
                         management. These mechanisms must include an
                         administrative data review (e.g., diagnosis, cost
                         threshold, and/or service utilization) and may include
                         provider/self referrals, telephone interviews,
                         information as reported by MCEC during membership
                         selection, or home visits.

                    b.   Assessment -

                         The MCP must arrange for or conduct a comprehensive
                         assessment of the member's physical and/or behavioral
                         health condition(s) to confirm the results of a
                         positive identification, and determine the need for
                         case management services. The assessment must be
                         completed by a physician, physician assistant, RN, LPN,
                         licensed social worker, or a graduate of a two- or
                         four-year allied health program. If the assessment is
                         completed by another medical professional, there should
                         be

<PAGE>

Appendix G
Page 10

                         oversight and monitoring by either a registered nurse
                         or physician.

                         For CSHCN, the comprehensive assessment must include,
                         at a minimum, the use of the ODJFS CSHCN Standard
                         Assessment Tool.

                    c.   Case Management-

                         1. The MCP must have a process to inform members and
                         their PCPs in writing that they have been identified as
                         meeting the criteria for case management, including
                         their enrollment into case management services.

                         2. The MCP must assure and coordinate the placement of
                         the member into case management - including
                         identification of the member's need for case management
                         services, completion of the comprehensive health needs
                         assessment, and timely development of a care treatment
                         plan. This process must occur within the following
                         timeframes for:

                              a)   newly enrolled members, 90 days from the
                                   effective date of enrollment; and

                              b)   existing members, 90 days from identifying
                                   their need for case management.

                         3. The development of the care treatment plan must be
                         based on the comprehensive health assessment. The MCP
                         must offer both the member and the member's
                         PCP/specialist the opportunity to participate in the
                         development of, and any subsequent revisions to, the
                         care treatment plan. The MCP must have a process for
                         re-evaluating the member's need for case management and
                         updating the care treatment plan, if necessary, on a
                         semi-annual basis.

                         4. The MCP must have a process to facilitate, maintain,
                         and coordinate communication between service providers,
                         the member, and the member's family. There should be an
                         accountable point of contact (i.e., case manager) who
                         can help obtain medically necessary care, assist with
                         health-related services and coordinate care needs.

                         5. The MCP must follow best-practice and/or evidence
                         based clinical guidelines when developing a member's
                         care treatment plan and coordinating the case
                         management needs. The MCP must develop and implement
                         mechanisms to educate and equip

<PAGE>

Appendix G
Page 11

                         providers and case managers with evidence-based
                         clinical guidelines or best practice approaches to
                         assist in providing a high level of quality of care to
                         members.

                         6. The MCP must implement mechanisms to notify all
                         CSHCN of their right to directly access a specialist.
                         Such access may be assured through, for example, a
                         standing referral or an approved number of visits, and
                         documented in the care treatment plan.

                         7. The MCP must provide case management services for
                         all CSHCN, including the ODJFS mandated conditions as
                         specified in Appendix M Case Management Program
                         Performance Measures. The MCP should also focus on all
                         members, including adults, whose health conditions
                         warrant case management services and should not limit
                         these services only to members with the mandated
                         conditions.

                         The MCP must submit a monthly electronic report to the
                         Case Management System (CAMS) for all members who are
                         case managed by the MCP as outlined in the ODJFS Case
                         Management File and Submission Specifications. In order
                         for a member to be submitted as case managed in CAMS,
                         the MCP must (1) complete the identification process, a
                         comprehensive health needs assessment and development
                         of a care treatment plan for the member; and (2)
                         document the member's written or verbal confirmation of
                         his/her case management status in the case management
                         record. ODJFS, or its designated entity, the external
                         quality review vendor, will validate on an annual basis
                         the accuracy of the information contained in CAMS with
                         the member's case management record.

                         The CAMS files are due the 10th business day of each
                         month.

               iv.  The MCP must have an ODJFS-approved case management program
                    which includes the items in Sections 3.b.i - iii of Appendix
                    G. Each MCP should implement an evaluation process to
                    review, revise and/or update the case management program.
                    The MCP must annually submit its case management program for
                    review and approval by ODJFS. Any subsequent changes to an
                    approved case management program description must be
                    submitted to ODJFS in writing for review and approval prior
                    to implementation.

<PAGE>

Appendix G
Page 12

          c.   Care Coordination with ODJFS-Designated Providers

               Per OAC rule 5101:3-26-03.1(A)(4), MCPs are required to share
               specific information with certain ODJFS-designated non-
               contracting providers in order to ensure that these providers
               have been supplied with specific information needed to coordinate
               care for the MCP's members. Once an MCP has obtained a provider
               agreement, but within the first month of operation, the MCP must
               provide to the ODJFS-designated providers (i.e., ODMH Community
               Mental Health Centers, ODADAS-certified Medicaid providers,
               FQHCs/RHCs, QFPPs, CNMs, CNPs [if applicable], and hospitals) a
               quick reference information packet which includes the following:

                    i.   A brief cover letter explaining the purpose of the
                         mailing; and

                    ii.  A brief summary document that includes the following
                         information:

                              -    Claims submission information including the
                                   MCP's Medicaid provider number for each
                                   region;

                              -    The MCP's prior authorization and referral
                                   procedures or the MCP's website which
                                   includes this information;

                              -    A picture of the MCP's member identification
                                   card (front and back);

                              -    Contact numbers and/or website location for
                                   obtaining information for eligibility
                                   verification, claims processing,
                                   referrals/prior authorization, and
                                   information regarding the MCP's behavioral
                                   health administrator;

                              -    A listing of the MCP's major pharmacy chains
                                   and the contact number for the MCP's pharmacy
                                   benefit administrator (PBM);

                              -    A listing of the MCP's laboratories and
                                   radiology providers; and

                              -    A listing of the MCP's contracting behavioral
                                   health providers and how to access services
                                   through them (this information is only to be
                                   provided to non-

<PAGE>

Appendix G
Page 13

                                   contracting community mental health and
                                   substance abuse providers).

          d.   Care coordination with Non-Contracting Providers

               Per OAC rule 5101:3-26-05(A)(9), MCPs authorizing the delivery of
               services from a provider who does not have an executed
               subcontract must ensure that they have a mutually agreed upon
               compensation amount for the authorized service and notify the
               provider of the applicable provisions of paragraph D of OAC rule
               5101:3-26-05. This notice is provided when an MCP authorizes a
               non-contracting provider to furnish services on a one-time or
               infrequent basis to an MCP member and must include required
               ODJFS-model language and information. This notice must also be
               included with the transition of services form sent to providers
               as outlined in paragraph 29.i.c. of Appendix C.

          e.   Integration of Member Care

               The MCP must ensure that a discharge plan is in place to meet a
               member's health care needs following discharge from a nursing
               facility, and integrated into the member's continuum of care. The
               discharge plan must address the services to be provided for the
               member and must be developed prior to the date of discharge from
               the nursing facility. The MCP must ensure follow-up contact
               occurs with the member, or authorized representative, within
               thirty (30) days of the member's discharge from the nursing
               facility to ensure that the member's health care needs are being
               met.
<PAGE>

Appendix H
Covered Families and Children (CFC) population
Page 1

                                   APPENDIX H

                          PROVIDER PANEL SPECIFICATIONS
                             CFC ELIGIBLE POPULATION

1.   GENERAL PROVISIONS

MCPs must provide or arrange for the delivery of all medically necessary,
Medicaid-covered health services, as well as assure that they meet all
applicable provider panel requirements for their entire designated service area.
The ODJFS provider panel requirements are specified in the charts included with
this appendix and must be met prior to the MCP receiving a provider agreement
with ODJFS. The MCP must remain in compliance with these requirements for the
duration of the provider agreement.

If an MCP is unable to provide the medically necessary, Medicaid-covered
services through their contracted provider panel, the MCP must ensure access to
these services on an as needed basis. For example, if an MCP meets the
pediatrician requirement but a member is unable to obtain a timely appointment
from a pediatrician on the MCP's provider panel, the MCP will be required to
secure an appointment from a panel pediatrician or arrange for an out-of-panel
referral to a pediatrician.

MCPs are REQUIRED to make transportation available to any member requesting
transportation when they MUST travel 30 miles or more from their home to receive
a medically-necessary Medicaid-covered service. If the MCP offers transportation
to their members as an additional benefit and this transportation benefit only
covers a limited number of trips, the required transportation listed above may
NOT be counted toward this trip limit (as specified in Appendix C).

In developing the provider panel requirements, ODJFS considered, on a
county-by-county basis, the population size and utilization patterns of the
Covered Families and Children (CFC) consumers, as well as the potential
availability of the designated provider types. ODJFS has integrated existing
utilization patterns into the provider network requirements to avoid disruption
of care. Most provider panel requirements are county-specific but in certain
circumstances, ODJFS requires providers to be located anywhere in the region.
Although all provider types listed in this appendix are required provider types,
only those listed on the attached charts must be submitted for ODJFS prior
approval.

2.   PROVIDER SUBCONTRACTING

Unless otherwise specified in this appendix or OAC rule 5101:3-26-05, all MCPs
are required to enter into fully-executed subcontracts with their providers.
These subcontracts must include a baseline contractual agreement, as well as the
appropriate ODJFS-approved Model Medicaid Addendum. The Model Medicaid Addendum
incorporates all applicable Ohio

<PAGE>

Appendix H
Covered Families and Children (CFC) population
Page 2

Administrative Code rule requirements specific to provider subcontracting and
therefore cannot be modified except to add personalizing information such as the
MCP's name.

ODJFS must prior approve all MCP providers in the ODJFS- required provider type
categories before they can begin to provide services to that MCP's members. MCPs
may not employ or contract with providers excluded from participation in Federal
health care programs under either section 1128 or section 1128A of the Social
Security Act. As part of the prior approval process, MCPs must submit
documentation verifying that all necessary contract documents have been
appropriately completed. ODJFS will verify the approvability of the submission
and process this information using the ODJFS Provider Verification System (PVS).
The PVS is a centralized database system that maintains information on the
status of all MCP-submitted providers.

Only those providers who meet the applicable criteria specified in this
document, as determined by ODJFS, will be approved by ODJFS. MCPs must
credential/recredential providers in accordance with the standards specified by
the National Committee for Quality Assurance (or receive approval from ODJFS to
use an alternate industry standard) and must have completed the credentialing
review before submitting any provider to ODJFS for approval. Regardless of
whether ODJFS has approved a provider, the MCP must ensure that the provider has
met all applicable credentialing criteria before the provider can render
services to the MCP's members.

MCPs must notify ODJFS of the addition and deletion of their contracting
providers as specified in OAC rule 5101:3-26-05, and must notify ODJFS within
one working day in instances where the MCP has identified that they are not in
compliance with the provider panel requirements specified in this appendix.

3.   PROVIDER PANEL REQUIREMENTS

The provider network criteria that must be met by each MCP are as follows:

a.   Primary Care Physicians (PCPs)

Primary Care Physicians (PCPs) may be individuals or group practices/clinics
[Primary Care Clinics (PCCs)]. Acceptable specialty types for PCPs are
family/general practice, internal medicine, pediatrics and
obstetrics/gynecology(OB/GYNs). Acceptable PCCs include FQHCs, RHCs and the
acceptable group practices/clinics specified by ODJFS. As part of their
subcontract with an MCP, PCPs must stipulate the total Medicaid member capacity
that they can ensure for that individual MCP. Each PCP must have the capacity
and agree to serve at least 50 Medicaid members at each practice site in order
to be approved by ODJFS as a PCP. The capacity-by-site requirement must be met
for all ODJFS-approved PCPs.

<PAGE>

Appendix H
Covered Families and Children (CFC) population
Page 3

In determining whether an MCP has sufficient PCP capacity for a region, ODJFS
considers a physician who can serve as a PCP for 2000 Medicaid MCP members as
one full-time equivalent (FTE).

ODJFS reviews the capacity totals for each PCP to determine if they appear
excessive. ODJFS reserves the right to request clarification from an MCP for any
PCP whose total stated capacity for all MCP networks added together exceeds 2000
Medicaid members (i.e., 1 FTE). Where indicated, ODJFS may set a cap on the
maximum amount of capacity that we will recognize for a specific PCP. ODJFS may
allow up to an additional 750 member capacity for each nurse practitioner or
physician's assistant that is used to provide clinical support for a PCP.

For PCPs contracting with more than one MCP, the MCP must ensure that the
capacity figure stated by the PCP in their subcontract reflects only the
capacity the PCP intends to provide for that one MCP. ODJFS utilizes each
approved PCP's capacity figure to determine if an MCP meets the provider panel
requirements and this stated capacity figure does not prohibit a PCP from
actually having a caseload that exceeds the capacity figure indicated in their
subcontract.

ODJFS recognizes that MCPs will need to utilize specialty physicians to serve as
PCPs for some special needs members. Also, in some situations (e.g., continuity
of care) a PCP may only want to serve a very small number of members for an MCP.
In these situations it will not be necessary for the MCP to submit these PCPs to
ODJFS for prior approval. These PCPs will not be included in the ODJFS PVS
database and therefore may not appear as PCPs in the MCP's provider directory.
These PCPs will, however, need to execute a subcontract with the MCP which
includes the appropriate Model Medicaid Addendum.

The PCP requirement is based on an MCP having sufficient PCP capacity to serve
40% of the eligibles in the region if three MCPs are serving the region and 55%
of the eligibles in the region if two MCPs are serving the region. At a minimum,
each MCP must meet both the PCP FTE requirement for that region, and a ratio of
one PCP FTE for each 2,000 of their Medicaid members in that region. MCPs must
also satisfy a PCP geographic accessibility standard. ODJFS will match the PCP
practice sites and the stated PCP capacity with the geographic location of the
eligible population in that region (on a county-specific basis) and perform
analysis using Geographic Information Systems (GIS) software. The analysis will
be used to determine if at least 40% of the eligible population is located
within 10 miles of PCP with available capacity in urban counties and 40% of the
eligible population within 30 miles of a PCP with available capacity in rural
counties. [Rural areas are defined pursuant to 42 CFR 412.62(f)(1)(iii).]

In addition to the PCP FTE capacity requirement, MCPs must also contract with
the specified number of pediatric PCPs for each region. These pediatric PCPs
will have their stated capacity counted toward the PCP FTE requirement.

<PAGE>

Appendix H
Covered Families and Children (CFC) population
Page 4

A pediatric PCP must maintain a general pediatric practice (e.g., a pediatric
neurologist would not meet this definition unless this physician also operated a
practice as a general pediatrician) at a site(s) located within the
county/region and be listed as a pediatrician with the Ohio State Medical Board.
In addition, half of the required number of pediatric PCPs must also be
certified by the American Board of Pediatrics. The provider panel requirements
for pediatricians are included in the practitioner charts in this appendix.

b.   Non-PCP Provider Network

In addition to the PCP capacity requirements, each MCP is also required to
maintain adequate capacity in the remainder of its provider network within the
following categories: hospitals, dentists, pharmacies, vision care providers,
obstetricians/gynecologists (OB/GYNs), allergists, general surgeons,
otolaryngologists, orthopedists, certified nurse midwives (CNMs), certified
nurse practitioners (CNPs), federally qualified health centers (FQHCs)/rural
health centers (RHCs) and qualified family planning providers (QFPPs). CNMs,
CNPs, FQHCs/RHCs and QFPPs are federally-required provider types.

All Medicaid-contracting MCPs must provide all medically-necessary
Medicaid-covered services to their members and therefore their complete provider
network will include many other additional specialists and provider types. MCPs
must ensure that all non-PCP network providers follow community standards in the
scheduling of routine appointments (i.e., the amount of time members must wait
from the time of their request to the first available time when the visit can
occur).

Although there are currently no FTE capacity requirements of the non-PCP
required provider types, MCPs are required to ensure that adequate access is
available to members for all required provider types. Additionally, for certain
non-PCP required provider types, MCPs must ensure that these providers maintain
a full-time practice at a site(s) located in the specified county/region (i.e.,
the ODJFS-specified county within the region or anywhere within the region if no
particular county is specified). A full-time practice is defined as one where
the provider is available to patients at their practice site(s) in the specified
county/region for at least 25 hours a week. ODJFS will monitor access to
services through a variety of data sources, including: consumer satisfaction
surveys; member appeals/grievances/complaints and state hearing
notifications/requests; clinical quality studies; encounter data volume;
provider complaints, and clinical performance measures.

Hospitals - MCPs must contract with the number and type of hospitals specified
by ODJFS for each county/region. In developing these hospital requirements,
ODJFS considered, on a county-by-county basis, the population size and
utilization patterns of the Covered Families and

Children (CFC) consumers and integrated the existing utilization patterns into
the hospital network requirements to avoid disruption of care. For this reason,
ODJFS may require that MCPs contract with out-of-state hospitals (i.e. Kentucky,
West Virginia, etc.).

<PAGE>

Appendix H
Covered Families and Children (CFC) population
Page 5

For each Ohio hospital, ODJFS utilizes the hospital's most current Annual
Hospital Registration and Planning Report, as filed with the Ohio Department of
Health, in verifying types of services that hospital provides. Although ODJFS
has the authority, under certain situations, to obligate a non-contracting
hospital to provide non-emergency hospital services to an MCP's members, MCPs
must still contract with the specified number and type of hospitals unless ODJFS
approves a provider panel exception (see Section 4 of this appendix - Provider
Panel Exceptions).

If an MCP-contracted hospital elects not to provide specific Medicaid-covered
hospital services because of an objection on moral or religious grounds, the MCP
must ensure that these hospital services are available to its members through
another MCP-contracted hospital in the specified county/region.

OB/GYNs - MCPs must contract with the specified number of OB/GYNs for each
county/region, all of whom must maintain a full-time obstetrical practice at a
site(s) located in the specified county/region. All MCP-contracting OB/GYNs must
have current hospital delivery privileges at a hospital under contract with the
MCP in the region.

Certified Nurse Midwives (CNMs) and Certified Nurse Practitioners (CNPs) - MCPs
must ensure access to CNM and CNP services in the region if such provider types
are present within the region. The MCP may contract directly with the CNM or CNP
providers, or with a physician or other provider entity who is able to obligate
the participation of a CNM or CNP. If an MCP does not contract for CNM or CNP
services and such providers are present within the region, the MCP will be
required to allow members to receive CNM or CNP services outside of the MCP's
provider network.

Contracting CNMs must have hospital delivery privileges at a hospital under
contract to the MCP in the region. The MCP must ensure a member's access to CNM
and CNP services if such providers are practicing within the region.

Vision Care Providers - MCPs must contract with the specified number of
ophthalmologists/optometrists for each specified county/region, all of whom
must maintain a full-time practice at a site(s) located in the specified
county/region. All ODJFS-approved vision providers must regularly perform
routine eye exams. (MCPs will be expected to contract with an adequate number of
ophthalmologists as part of their overall provider panel, but only
ophthalmologists who regularly perform routine eye exams can be used to meet the
vision care provider panel requirement.) If optical dispensing is not
sufficiently available in a region through the MCP's contracting
ophthalmologists/optometrists, the MCP must separately contract with an adequate
number of optical dispensers located in the region.

Dental Care Providers - MCPs must contract with the specified number of
dentists. In order to assure sufficient access to adult MCP members, no more
than two-thirds of the dentists used to meet the provider panel requirement may
be pediatric dentists.

<PAGE>

Appendix H
Covered Families and Children (CFC) population
Page 6

Federally Qualified Health Centers/Rural Health Clinics (FQHCs/RHCs) - MCPs are
required to ensure member access to any federally qualified health center or
rural health clinic (FQHCs/RHCs), regardless of contracting status. Contracting
FQHC/RHC providers must be submitted for ODJFS approval via the PVS process.
Even if no FQHC/RHC is available within the region, MCPs must have mechanisms in
place to ensure coverage for FQHC/RHC services in the event that a member
accesses these services outside of the region.

In order to ensure that any FQHC/RHC has the ability to submit a claim to ODJFS
for the state's supplemental payment, MCPs must offer FQHCs/RHCs reimbursement
pursuant to the following:

     -    MCPs must provide expedited reimbursement on a service-specific basis
          in an amount no less than the payment made to other providers for the
          same or similar service.

     -    If the MCP has no comparable service-specific rate structure, the MCP
          must use the regular Medicaid fee-for-service payment schedule for
          non-FQHC/RHC providers.

     -    MCPs must make all efforts to pay FQHCs/RHCs as quickly as possible
          and not just attempt to pay these claims within the prompt pay time
          frames.

MCPs are required to educate their staff and providers on the need to assure
member access to FQHC/RHC services.

Qualified Family Planning Providers (QFPPs) - All MCP members must be permitted
to self-refer to family planning services provided by a QFPP. A QFPP is defined
as any public or not-for-profit health care provider that complies with Title X
guidelines/standards, and receives either Title X funding or family planning
funding from the Ohio Department of Health. MCPs must reimburse all
medically-necessary Medicaid-covered family planning services provided to
eligible members by a QFPP provider (including on-site pharmacy and diagnostic
services) on a patient self-referral basis, regardless of the provider's status
as a panel or non-panel provider. MCPs will be required to work with QFPPs in
the region to develop mutually-agreeable HIPAA compliant policies and procedures
to preserve patient/provider confidentiality, and convey pertinent information
to the member's PCP and/or MCP.

Behavioral Health Providers - MCPs must assure member access to all
Medicaid-covered behavioral health services for members as specified in Appendix
G.b.ii. Although ODJFS is aware that certain outpatient substance abuse services
may only be available through Medicaid providers certified by the Ohio
Department of Drug and Alcohol Addiction Services (ODADAS) in some areas, MCPs
must maintain an adequate number of contracted mental health providers in the
region to assure access for members who are unable to timely access services or
unwilling to access services through community mental health centers. MCPs are

<PAGE>

Appendix H
Covered Families and Children (CFC) population
Page 7

advised not to contract with community mental health centers as all services
they provide to MCP members are to be billed to ODJFS.

Other Specialty Types (pediatricians, general surgeons, otolaryngologists,
allergists, and orthopedists) - MCPs must contract with the specified number of
all other ODJFS designated specialty provider types. In order to be counted
toward meeting the provider panel requirements, these specialty providers must
maintain a full-time practice at a site(s) located within the specified
county/region. Contracting general surgeons, orthopedists and otolaryngologists
must have admitting privileges at a hospital under contract with the MCP in the
region.

4.   PROVIDER PANEL EXCEPTIONS

ODJFS may specify provider panel criteria for a service area that deviates from
that specified in this appendix if:

     -    the MCP presents sufficient documentation to ODJFS to verify that they
          have been unable to meet or maintain certain provider panel
          requirements in a particular service area despite all reasonable
          efforts on their part to secure such a contract(s), and

     -    if notified by ODJFS, the provider(s) in question fails to provide a
          reasonable argument why they would not contract with the MCP, and

     -    the MCP presents sufficient assurances to ODJFS that their members
          will have adequate access to the services in question.

If an MCP is unable to contract with or maintain a sufficient number of
providers to meet the ODJFS-specified provider panel criteria, the MCP may
request an exception to these criteria by submitting a provider panel exception
request as specified by ODJFS. ODJFS will review the exception request and
determine whether the MCP has sufficiently demonstrated that all reasonable
efforts were made to obtain contracts with providers of the type in question and
that they will be able to provide access to the services in question.

ODJFS will aggressively monitor access to all services related to the approval
of a provider panel exception request through a variety of data sources,
including: consumer satisfaction surveys; member appeals/grievances/complaints
and state hearing notifications/requests; member just-cause for termination
requests; clinical quality studies; encounter data volume; provider complaints,
and clinical performance measures. ODJFS approval of a provider panel exception
request does not exempt the MCP from assuring access to the services in
question. If ODJFS determines that an MCP has not provided sufficient access to
these services, the MCP may be subject to sanctions.

<PAGE>

Appendix H
Covered Families and Children (CFC) population
Page 8

5.   PROVIDER DIRECTORIES

MCP provider directories must include all MCP-contracted providers [except as
specified by ODJFS] as well as certain non-contracted providers. At the time of
ODJFS' review, the information listed in the MCP's provider directory for all
ODJFS-required provider types specified on the attached charts must exactly
match the data currently on file in the ODJFS PVS.

MCP provider directories must utilize a format specified by ODJFS. Directories
may be region-specific or include multiple regions, however, the providers
within the directory must be divided by region, county, and provider type, in
that order.

The directory must also specify:

-    provider address(es) and phone number(s);

-    an explanation of how to access providers (e.g. referral required vs.
     self-referral);

-    an indication of which providers are available to members on a
     self-referral basis

-    foreign-language speaking PCPs and specialists and the specific foreign
     language(s) spoken;

-    how members may obtain directory information in alternate formats that
     takes into consideration the special needs of eligible individuals
     including but not limited to, visually-limited, LEP, and LRP eligible
     individuals; and

-    any PCP or specialist practice limitations.

PRINTED PROVIDER DIRECTORY

Prior to receiving a provider agreement, all MCPs must develop a printed
provider directory that shall be prior-approved by ODJFS for each covered
population. For example, an MCP who serves CFC and ABD in the Central Region
would have two provider directories, one for CFC and one for ABD. Once approved,
this directory may be regularly updated with provider additions or deletions by
the MCP without ODJFS prior-approval, however, copies of the revised directory
(or inserts) must be submitted to ODJFS prior to distribution to members.

On a quarterly basis, MCPs MUST create an insert to each printed directory that
lists those providers DELETED from the MCP's provider panel during the previous
three months. Although this insert does not need to be prior approved by ODJFS,
copies of the insert must be submitted to ODJFS two weeks prior to distribution
to members.

INTERNET PROVIDER DIRECTORY

MCPs are required to have an internet-based provider directory available in the
same format as their ODJFS-approved printed directory. This internet directory
must allow members to electronically search for MCP panel providers based on
name, provider type, and geographic proximity, and population (e.g. CFC and/or
ABD). If an MCP has one internet-based directory for multiple populations, each
provider must include a description of which population they serve.

<PAGE>

Appendix H
Covered Families and Children (CFC) population
Page 9

The internet directory may be updated at any time to include providers who are
NOT one of the ODJFS-required provider types listed on the charts included with
this appendix. ODJFS-required providers MUST be added to the internet directory
within one week of the MCP's notification of ODJFS-approval of the provider via
the Provider Verification process. Providers being deleted from the MCP's panel
must deleted from the internet directory within one week of notification from
the provider to the MCP. Providers being deleted from the MCP's panel must be
posted to the internet directory within one week of notification from the
provider to the MCP of the deletion. These deleted providers must be included in
the inserts to the MCP's provider directory referenced above.

6.   FEDERAL ACCESS STANDARDS

MCPs must demonstrate that they are in compliance with the following federally
defined provider panel access standards as required by 42 CFR 438.206:

In establishing and maintaining their provider panel, MCPs must consider the
following:

-    The anticipated Medicaid membership.

-    The expected utilization of services, taking into consideration the
     characteristics and health care needs of specific Medicaid populations
     represented in the MCP.

-    The number and types (in terms of training, experience, and specialization)
     of panel providers required to deliver the contracted Medicaid services.

-    The geographic location of panel providers and Medicaid members,
     considering distance, travel time, the means of transportation ordinarily
     used by Medicaid members, and whether the location provides physical access
     for Medicaid members with disabilities.

-    MCPs must adequately and timely cover services to an out-of-network
     provider if the MCP's contracted provider panel is unable to provide the
     services covered under the MCP's provider agreement. The MCP must cover the
     out-of-network services for as long as the MCP network is unable to provide
     the services. MCPs must coordinate with the out-of-network provider with
     respect to payment and ensure that the provider agrees with the applicable
     requirements.

Contracting providers must offer hours of operation that are no less than the
hours of operation offered to commercial members or comparable to Medicaid
fee-for-service, if the provider serves only Medicaid members. MCPs must ensure
that services are available 24 hours a day, 7 days a week, when medically
necessary. MCPs must establish mechanisms to ensure that panel providers comply
with timely access requirements, and must take corrective action if there is
failure to comply.

In order to demonstrate adequate provider panel capacity and services, 42 CFR
438.206 and 438.207 stipulates that the MCP must submit documentation to ODJFS,
in a format specified by ODJFS, that demonstrates it offers an appropriate range
of preventive, primary care and specialty

<PAGE>

Appendix H
Page 10

services adequate for the anticipated number of members in the service area,
while maintaining a provider panel that is sufficient in number, mix, and
geographic distribution to meet the needs of the number of members in the
service area.

This documentation of assurance of adequate capacity and services must be
submitted to ODJFS no less frequently than at the time the MCP enters into a
contract with ODJFS; at any time there is a significant change (as defined by
ODJFS) in the MCP's operations that would affect adequate capacity and services
(including changes in services, benefits, geographic service or payments); and
at any time there is enrollment of a new population in the MCP.

MCPs are to follow the procedures specified in the current MCP PVS Instructional
Manual, posted on the ODJFS website, in order to comply with these federal
access requirements.
<PAGE>

                         NORTH EAST REGION - HOSPITALS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                                                                                                ADDITIONAL
                                                                                                 REQUIRED
                       TOTAL                                                                    HOSPITALS:
                      REQUIRED                                                                    OUT-OF-
                     HOSPITALS  ASHTABULA  CUYAHOGA  ERIE  GEAUGA  HURON  LAKE  LORAIN  MEDINA    REGION
                     ---------  ---------  --------  ----  ------  -----  ----  ------  ------  ----------
<S>                  <C>        <C>        <C>       <C>   <C>     <C>    <C>   <C>     <C>     <C>
GENERAL HOSPITAL(1)     8(2)        1        1(2)      1      1      1      1      1       1
HOSPITAL SYSTEM          1                   1
</TABLE>

(1)  These hospitals must provide obstetrical services if such a hospital is
     available in the county/region.

(2)  The Cuyahoga hospital requirement may be met by either contracting with (1)
     that includes fifty (50) pediatric beds and five (5) pediatric intensive
     care unit (PICU) beds OR (2) a single general hospital that includes fifty
     (50) pediatric beds and five (5) pediatric intensive care unit (PICU) beds
     and a hospital system.

<PAGE>

                      NORTH EAST CENTRAL REGION - HOSPITALS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                                                                  ADDITIONAL
                       TOTAL                                       REQUIRED
                      REQUIRED                                    HOSPITALS:
                     HOSPITALS  COLUMBIANA  MAHONING  TRUMBULL  OUT-OF-REGION
                     ---------  ----------  --------  --------  -------------
<S>                  <C>        <C>         <C>       <C>       <C>
GENERAL HOSPITAL(1)      3           1        1(2)        1
HOSPITAL SYSTEM
</TABLE>

(1)  These hospitals must provide obstetrical services if such a hospital is
     available in the county/region, except where a hospital must meet the
     criter specified in footnote #4 below.

(2)  Must be a hospital that includes thirty (30) pediatric beds and five (5)
     pediatric intensive care unit (PICU)

<PAGE>

                         EAST CENTRAL REGION - HOSPITALS

                       MINIMUM PROVIDER PANEL REQUIREMENTS
<TABLE>
<CAPTION>
                                                                                                                  ADDITIONAL
                       TOTAL                                                                                       REQUIRED
                      REQUIRED                                                                                 HOSPITALS: OUT-
                     HOSPITALS  ASHLAND  CARROLL  HOLMES  PORTAGE  RICHLAND  STARK  SUMMIT  TUSCARAWAS  WAYNE     OF-REGION
                     ---------  -------  -------  ------  -------  --------  -----  ------  ----------  -----  ----------------
<S>                  <C>        <C>      <C>      <C>     <C>      <C>       <C>    <C>     <C>         <C>    <C>
GENERAL HOSPITAL(1)      8         1                 1       1         1       1     1(2)       1         1
HOSPITAL SYSTEM          1                                                           1
</TABLE>

(1)  These hospitals must provide obstetrical services if such a hospital is
     available in the county/region, except where a hospital must meet the
     criteria specified in footnote #4 below.

(2)  Must be a hospital that includes one hundred (100) pediatric beds and five
     (5) pediatric intensive care unit (PICU) beds.

<PAGE>

                          SOUTH EAST REGION - HOSPITALS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                       TOTAL
                      REQUIRED
                     HOSPITALS  ATHENS  BELMONT  COSHOCTON  GALLIA  GUERNSEY  HARRISON  JACKSON  JEFFERSON
                     ---------  ------  -------  ---------  ------  --------  --------  -------  ---------
<S>                  <C>        <C>     <C>      <C>        <C>     <C>       <C>       <C>      <C>
GENERAL HOSPITAL(1)      11        1        1        1         1        1                             1
HOSPITAL SYSTEM

<CAPTION>
                                                                                               ADDITIONAL
                                                                                                REQUIRED
                                                                                            HOSPITALS: OUT-
                     LAWRENCE  MEIGS  MONROE  MORGON  MUSKINGUM  NOBLE  VINTON  WASHINGTON     OF-REGION
                     --------  -----  ------  ------  ---------  -----  ------  ----------  ---------------
<S>                  <C>       <C>    <C>     <C>     <C>        <C>    <C>     <C>         <C>
GENERAL HOSPITAL(1)                                       1                          1        Cabell AND
                                                                                            King's Daughter
                                                                                            AND Children's
                                                                                               Hospital
                                                                                               Columbus
HOSPITAL SYSTEM
</TABLE>

(1)  These hospitals must provide obsetrical services if such a hospital is
     available in the county/region.
<PAGE>

                           CENTRAL REGION - HOSPITALS

                      MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>

                       TOTAL
                      REQUIRED
                     HOSPITALS  CRAWFORD  DELAWARE  FAIRFIELD  FAYETTE  FRANKLIN  HOCKING  KNOX  LICKING  LOGAN
                     ---------  --------  --------  ---------  -------  --------  -------  ----  -------  -----
<S>                  <C>        <C>       <C>       <C>        <C>      <C>       <C>      <C>   <C>      <C>
GENERAL HOSPITAL(1)      14         1                   1         1       1(2)               1      1       1

HOSPITAL SYSTEM           2                                               2

<CAPTION>
                                                                                          ADDITIONAL
                                                                                           REQUIRED
                                                                                          HOSPITALS:
                                                                                            OUT-OF-
                     MADISON  MARION  MORROW  PERRY  PICKAWAY  PIKE  ROSS  SCIOTO  UNION    REGION
                     -------  ------  ------  -----  --------  ----  ----  ------  -----  ----------
<S>                  <C>      <C>     <C>     <C>    <C>       <C>   <C>   <C>     <C>    <C>
GENERAL HOSPITAL(1)     1        1                       1             1      1      1    Genesis
                                                                                          Health
                                                                                          Care
                                                                                          System,
                                                                                          Inc.
HOSPITAL SYSTEM
</TABLE>

----------
(1)  These hospitals must provide obstetrical services if such a hospital is
     available in the county/region, except where a hospital must meet the
     criteria specified in footnote #4 below.

(2)  Must be a hospital that includes one hundred fifty (150) pediatric beds and
     twenty-five (25) pediatric intensive care unit (PICU) beds.

<PAGE>

                         SOUTH WEST REGION - HOSPITALS

                      MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                                                                                                     ADDITIONAL
                                                                                                      REQUIRED
                       TOTAL                                                                         HOSPITALS:
                      REQUIRED                                                                         OUT-OF-
                     HOSPITALS  ADAMS  BROWN  BUTLER  CLERMONT  CLINTON  HAMILTON  HIGHLAND  WARREN    REGION
                     ---------  -----  -----  ------  --------  -------  --------  --------  ------  ----------
<S>                  <C>        <C>    <C>    <C>     <C>       <C>      <C>       <C>       <C>      <C>
GENERAL HOSPITAL(1)      6               1       1                 1       1(2)        1             Grandview
                                                                                                     OR Miami
                                                                                                     Valley
HOSPITAL SYSTEM          2                                                 2
</TABLE>

(1)  These hospitals must provide obstetrical services if such a hospital is
     available in the county/region, except where a hospital must meet the
     criteria specified in footnote #4 below.

(2)  Must be a hospital that includes two-hundred (200) pediatric beds and
     thirty-five (35) pediatric intensive care unit (PICU) beds.

<PAGE>

                        WEST CENTRAL REGION - HOSPITALS

                      MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                                                                                                    ADDITIONAL
                                                                                                     REQUIRED
                       TOTAL                                                                        HOSPITALS:
                      REQUIRED                                                                        OUT-OF-
                     HOSPITALS  CHAMPAIGN  CLARK  DARKE  GREENE  MIAMI  MONTGOMERY  PREBLE  SHELBY    REGION
                     ---------  ---------  -----  -----  ------  -----  ----------  ------  ------  ----------
<S>                  <C>        <C>        <C>    <C>    <C>     <C>    <C>         <C>     <C>     <C>
GENERAL HOSPITAL(1)      6                   1      1       1      1       1(2)                1
HOSPITAL SYSTEM          1                                                 1
</TABLE>

(1)  These hospitals must provide obsetrical services if such a hospital is
     available in the county/region, except where a hospital must meet the
     criteria specified in footnote #4 below.

(2)  Must be a hospital that includes seventy-five (75) pediatric beds and ten
     (10) pediatric intensive care unit (PIC

<PAGE>

                         NORTH WEST REGION - HOSPITALS

                      MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>

                       TOTAL
                      REQUIRED
                     HOSPITALS  ALLEN  AUGLAIZE  DEFIANCE  FULTON  HANCOCK  HARDIN  HENRY  LUCAS  MERCER
                     ---------  -----  --------  --------  ------  -------  ------  -----  -----  ------
<S>                  <C>        <C>    <C>       <C>       <C>     <C>      <C>     <C>    <C>    <C>
GENERAL HOSPITAL(1)      10       1                  1        1       1                              1

HOSPITAL SYSTEM           1                                                                 1(2)

<CAPTION>
                                                                                                     ADDITIONAL
                                                                                                      REQUIRED
                                                                                                     HOSPITALS:
                                                                                                       OUT-OF-
                     OTTAWA  PAULDING  PUTNAM  SANDUSKY  SENECA  VAN WERT  WILLIAMS  WOOD  WYANDOT     REGION
                     ------  --------  ------  --------  ------  --------  --------  ----  -------  -----------
<S>                  <C>     <C>       <C>     <C>       <C>     <C>       <C>       <C>   <C>      <C>
GENERAL HOSPITAL(1)                                1                 1         1              1     Bellevue
                                                                                                    Hospital
                                                                                                    Association
HOSPITAL SYSTEM
</TABLE>

(1)  These hospitals must provide obsetrical services if such a hospital is
     available in the county/region.

(2)  Must be a hospital system that includes forty-five (45) pediatric beds and
     ten (10) pediatric intensive care unit (PICU) beds.

<PAGE>

                        NORTH EAST REGION - PCP CAPACITY

                        MINIMUM PCP CAPACITY REQUIREMENTS

<TABLE>
<CAPTION>
                                                                                                     ADDITIONAL
                 TOTAL                                                                               REQUIRED:
    PCPS       REQUIRED   ASHTABULA   CUYAHOGA    ERIE   GEAUGA   HURON    LAKE   LORAIN   MEDINA   IN-REGION *
    ----       --------   ---------   --------   -----   ------   -----   -----   ------   ------   -----------
<S>            <C>        <C>         <C>        <C>     <C>      <C>     <C>     <C>      <C>      <C>
CAPACITY (1)    98,212      5,256      66,564    2,873    1,111   2,612   5,210   11,431    3,155
FTES             49.11       2.63       33.28     1.44     0.56    1.31    2.61     5.72     1.58
</TABLE>

(1)  Based on an FTE of 2000 members

*    Must be located within the region.

<PAGE>

                    NORTH EAST CENTRAL REGION - PCP CAPACITY

                        MINIMUM PCP CAPACITY REQUIREMENTS

<TABLE>
<CAPTION>
                                                              ADDITIONAL
                 TOTAL                                        REQUIRED:
    PCPS       REQUIRED   COLUMBIANA   MAHONING   TRUMBULL   IN-REGION *
    ----       --------   ----------   --------   --------   -----------
<S>            <C>        <C>          <C>        <C>        <C>
Capacity (1)    31,367       5,281      12,039      9,047       5,000
FTEs             15.68        2.64        6.02       4.52        2.50
</TABLE>

(1)  Based on an FTE of 2000 members

*    Must be located within the region.

<PAGE>

                       EAST CENTRAL REGION - PCP CAPACITY

                        MINIMUM PCP CAPACITY REQUIREMENTS

<TABLE>
<CAPTION>
                                                                                                                    ADDITIONAL
                 TOTAL                                                                                              REQUIRED:
    PCPS       REQUIRED   ASHLAND   CARROLL   HOLMES   PORTAGE   RICHLAND    STARK   SUMMIT   TUSCARAWAS   WAYNE   IN-REGION *
    ----       --------   -------   -------   ------   -------   --------   ------   ------   ----------   -----   -----------
<S>            <C>        <C>       <C>       <C>      <C>       <C>        <C>      <C>      <C>          <C>     <C>
Capacity (1)    55,006     1,732     1,226      794     4,329      5,363    14,376   20,279      3,616     3,291
FTEs             27.50      0.87      0.61     0.40      2.16       2.68      7.19    10.14       1.81      1.65
</TABLE>

(1)  Based on an FTE of 2000 members

*    Must be located within the region.

<PAGE>

                          CENTRAL REGION - PCP CAPACITY

<TABLE>
<CAPTION>
    COUNTY       CAPACITY (1)    FTES
    ------       ------------   -----
<S>              <C>            <C>
TOTAL REQUIRED      100,253     50.13
CRAWFORD              2,016      1.01
DELAWARE              2,307      1.15
FAIRFIELD             4,698      2.35
FAYETTE               1,341      0.67
FRANKLIN             55,101     27.55
HOCKING               1,672      0.84
KNOX                  2,236      1.12
LICKING               5,897      2.95
LOGAN                 1,656      0.83
MADISON               1,378      0.69
MARION                3,042      1.52
MORROW                1,492      0.75
PERRY                 2,263      1.13
PICKAWAY              2,123      1.06
PIKE                  2,116      1.06
ROSS                  4,442      2.22
SCIOTO                5,204      2.60
UNION                 1,269      0.63
</TABLE>

(1)  Based on an FTE of 2000 members

*    Must be located within the region.

<PAGE>

                        SOUTH EAST REGION - PCP CAPACITY

<TABLE>
<CAPTION>
    COUNTY       CAPACITY (1)    FTES
    ------       ------------   -----
<S>              <C>            <C>
TOTAL REQUIRED      53,000      26.50
ATHENS               2,664       1.33
BELMONT              3,178       1.59
COSHOCTON            1,840       0.92
GALLIA               1,918       0.96
GUERNSEY             2,518       1.26
HARRISON               810       0.41
JACKSON              2,107       1.05
JEFFERSON            3,418       1.71
LAWRENCE             4,021       2.01
MEIGS                1,557       0.78
MONROE                 750       0.38
MORGON                 930       0.47
MUSKINGUM            5,304       2.65
NOBLE                  581       0.29
VINTON               1,061       0.53
WASHINGTON           2,755       1.38
ADDITIONAL
  REQUIRED:
  IN-REGION *        7,000       3.50
</TABLE>

(1)  Based on an FTE of 2000 members

*    Must be located within the region.

<PAGE>

                        SOUTH WEST REGION - PCP CAPACITY

                        MINIMUM PCP CAPACITY REQUIREMENTS

<TABLE>
<CAPTION>
                                                                                                        ADDITIONAL
                 TOTAL                                                                                 REQUIRED: IN
    PCPS       REQUIRED   ADAMS   BROWN   BUTLER   CLERMONT   CLINTON   HAMILTON   HIGHLAND   WARREN     REGION *
    ----       --------   -----   -----   ------   --------   -------   --------   --------   ------   ------------
<S>            <C>        <C>     <C>     <C>      <C>        <C>       <C>        <C>        <C>      <C>
Capacity (1)    58,754    2,063   2,122   12,296     5,787     1,705     29,787      2,240     2,754
FTEs             29.38     1.03    1.06     6.15      2.89      0.85      14.89       1.12      1.38
</TABLE>

(1)  Based on an FTE of 2000 members

*    Must be located within the region.
<PAGE>

                       WEST CENTRAL REGION - PCP CAPACITY

                        MINIMUM PCP CAPACITY REQUIREMENTS

<TABLE>
<CAPTION>
                                                                                             ADDITIONAL
               TOTAL                                                                         REQUIRED:
PCPS          REQUIRED  CHAMPAIGN  CLARK  DARKE  GREENE  MIAMI  MONTGOMERY  PREBLE  SHELBY  IN-REGION *
----          --------  ---------  -----  -----  ------  -----  ----------  ------  ------  -----------
<S>           <C>       <C>        <C>    <C>    <C>     <C>    <C>         <C>     <C>     <C>
Capacity(1)    42,784     1,472    7,225  1,476  4,347   2,550    22,751     1,541   1,422
FTEs            21.39      0.74     3.61   0.74   2.17    1.28     11.38      0.77    0.71
</TABLE>

(1)  Based on an FTE of 2000 members

*    Must be located within the region.

<PAGE>

                        NORTH WEST REGION - PCP CAPACITY

<TABLE>
<CAPTION>
COUNTY            CAPACITY (1)    FTES
------            ------------   -----
<S>               <C>            <C>
TOTAL REQUIRED       68,540      34.27
ALLEN                 4,262       2.13
AUGLAIZE              1,228       0.61
DEFIANCE              1,555       0.78
FULTON                1,270       0.64
HANCOCK               2,038       1.02
HARDIN                1,096       0.55
HENRY                   894       0.45
LUCAS                24,752      12.38
MERCER                  821       0.41
OTTAWA                1,271       0.64
PAULDING                710       0.36
PUTNAM                  770       0.39
SANDUSKY              2,142       1.07
SENECA                2,128       1.06
VAN WERT                847       0.42
WILLIAMS              1,478       0.74
WOOD                  2,444       1.22
WYANDOT                 634       0.32
ADDITIONAL
  REQUIRED: IN-
  REGION *           18,200       9.10
</TABLE>

(1)  Based on an FTE of 2000 members

*    Must be located within the region.

<PAGE>

                        NORTH EAST REGION - PRACTITIONERS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                      TOTAL                                                                      ADDITIONAL
                    REQUIRED                                                                      REQUIRED
PROVIDER TYPES    PROVIDERS(1)  ASHTABULA  CUYAHOGA  ERIE  GEAUGA  HURON  LAKE  LORAIN  MEDINA  PROVIDERS(2)
--------------    ------------  ---------  --------  ----  ------  -----  ----  ------  ------  ------------
<S>               <C>           <C>        <C>       <C>   <C>     <C>    <C>   <C>     <C>     <C>
Pediatricians(4)       90           1         66       2                    3      8      3          7

OB/GYNs                25           1         16       1             1      1      2      1          2

Vision                 33           1         25       1                    1      2      1          2

General Surgeons       20                     12       1             1      1      2      1          2

Otolaryngologist        6                      2                                   1                 3

Allergists              5                      2                                   1                 2

Orthopedists           16                      8       1                    1      2      1          3

Dentists(5)            89           2         65       1     1       1      5     10      3          1
</TABLE>

(1)  All required providers must be located within the region.

(2)  Additional required providers may be located anywhere within the region.

(3)  Preferred Providers are the additional provider contracts that must be
     secured in order for the MCP to receive bonus points.

(4)  Half of this number must be certified by the American Board of Pediatrics.

(5)  No more than two-thirds of this number can be pediatric dentists.

<PAGE>

                        NORTH EAST CENTRAL- PRACTITIONERS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                      TOTAL                                      ADDITIONAL
                    REQUIRED                                      REQUIRED
PROVIDER TYPES    PROVIDERS(1)  COLUMBIANA  MAHONING  TRUMBULL  PROVIDERS(2)
--------------    ------------  ----------  --------  --------  ------------
<S>               <C>           <C>         <C>       <C>       <C>
Pediatricians(4)      23            2          10         6         5

OB/GYNs                7            1           3         2         1

Vision                 7                        3         2         2

General Surgeons       6            1           3         1         1

Otolaryngologist       2                        1                   1

Allergists             1                                            1

Orthopedists           4                        2         1         1

Dentists(5)           23            2          11         8         2
</TABLE>

(1)  All required providers must be located within the region.

(2)  Additional required providers may be located anywhere within the region.

(3)  Preferred Providers are the additional provider contracts that must be
     secured in order for the MCP to receive bonus points.

(4)  Half of this number must be certified by the American Board of Pediatrics.

(5)  No more than two-thirds of this number can be pediatric dentists.
<PAGE>

                          EAST CENTRAL - PRACTITIONERS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                     TOTAL                                                                                       ADDITIONAL
                    REQUIRED                                                                                      REQUIRED
PROVIDER TYPES    PROVIDERS(1)  ASHLAND  CARROLL  HOLMES  PORTAGE  RICHLAND  STARK  SUMMIT  TUSCARAWAS  WAYNE  PROVIDERS (2)
--------------    ------------  -------  -------  ------  -------  --------  -----  ------  ----------  -----  -------------
<S>               <C>           <C>      <C>      <C>     <C>      <C>       <C>    <C>     <C>         <C>    <C>
Pediatricians(4)       49          1                         2         3       14     20         2        2          5
OB/GYNs                17                                              1        5      8                  1          2
Vision                 18                                              1        5      8                             4
General Surgeons       13                                    1         2        3      4         1        1          1
Otolaryngologist        7                                                       2      2                             3
Allergists              3                                                       1      1                             1
Orthopedists            9                                              1        2      2                  1          3
Dentists(5)            48          2                         3         5       13     17         3        3          2
</TABLE>

(1)  All required providers must be located within the region.

(2)  Additional required providers may be located anywhere within the region.

(3)  Preferred Providers are the additional provider contracts that must be
     secured in order for the MCP to receive bonus points.

(4)  Half of this number must be certified by the American Board of Pediatrics.

(5)  No more than two-thirds of this number can be pediatric dentists.

<PAGE>

                           SOUTH EAST - PRACTITIONERS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                      TOTAL
                    REQUIRED
PROVIDER TYPES    PROVIDERS(1)  ATHENS  BELMONT  COSHOCTON  GALLIA  GUERNSEY  HARRISON  JACKSON
--------------    ------------  ------  -------  ---------  ------  --------  --------  -------
<S>               <C>           <C>     <C>      <C>        <C>     <C>       <C>       <C>
Pediatricians(4)       31          1       1                   2        1
OB/GYNs                 9          1                                    1
Vision                 13          1       1                   1        1                  1
General Surgeons        8                  1                   1        1
Otolaryngologist        3                                      1
Allergists              1
Orthopedists            5                                      1
Dentists(5)            30          2       3         1         1        3                  1

<CAPTION>
                                                                                                      ADDITIONAL
                                                                                                      REQUIRED
PROVIDER TYPES    JEFFERSON  LAWRENCE  MEIGS  MONROE  MORGON  MUSKINGUM  NOBLE  VINTON  WASHINGTON  PROVIDERS (2)
--------------    ---------  --------  -----  ------  ------  ---------  -----  ------  ----------  -------------
<S>               <C>        <C>       <C>    <C>     <C>     <C>        <C>    <C>     <C>         <C>
Pediatricians(4)      1                                           2                          1           22
OB/GYNs               1                                           1                          1            4
Vision                1          1                                2                          1            3
General Surgeons      1                                           1                          1            2
Otolaryngologist                                                  1                                       1
Allergists                                                                                                1
Orthopedists                                                                                              4
Dentists(5)           3          2                                3                          2            9
</TABLE>

(1)  All required providers must be located within the region.

(2)  Additional required providers may be located anywhere within the region.

(3)  Preferred Providers are the additional provider contracts that must be
     secured in order for the MCP to receive bonus points.

(4)  Half of this number must be certified by the American Board of Pediatrics.

(5)  No more than two-thirds of this number can be pediatric dentists.

<PAGE>

                            CENTRAL - PRACTITIONERS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                     TOTAL
                    REQUIRED
PROVIDER TYPES    PROVIDERS(1)  CRAWFORD  DELAWARE  FAIRFIELD  FAYETTE  FRANKLIN  HOCKING  KNOX  LICKING  LOGAN
--------------    ------------  --------  --------  ---------  -------  --------  -------  ----  -------  -----
<S>               <C>           <C>       <C>       <C>        <C>      <C>       <C>      <C>   <C>      <C>
Pediatricians(4)       86                     4         3                  55                1      2       1
OB/GYNs                24                     2         2                  12                1      1
Vision                 31           1         2         2                  15                1      1       1
General Surgeons       22           1         1         1                  10                1      1       1
Otolaryngologist        6                     1                             4
Allergists              4                                                   2
Orthopedists           13                               1                   7                       1
Dentists(5)            77           1         2         3         1        45        1       2      3       1

<CAPTION>
                                                                                        ADDITIONAL
                                                                                         REQUIRED
PROVIDER TYPES    MADISON  MARION  MORROW  PERRY  PICKAWAY  PIKE  ROSS  SCIOTO  UNION  PROVIDERS (2)
--------------    -------  ------  ------  -----  --------  ----  ----  ------  -----  -------------
<S>               <C>      <C>     <C>     <C>    <C>       <C>   <C>   <C>     <C>    <C>
Pediatricians(4)     1        2                       1             2      2      1         11
OB/GYNs                       1                                     1      1                 3
Vision                        1                       1             1      1      1          3
General Surgeons              1                                     1      1      1          2
Otolaryngologist                                                                             1
Allergists                                                                                   2
Orthopedists                  1                                     1                        2
Dentists(5)          1        2       1      1        1       1     3      2      1          5
</TABLE>

(1)  All required providers must be located within the region.

(2)  Additional required providers may be located anywhere within the region.

(3)  Preferred Providers are the additional provider contracts that must be
     secured in order for the MCP to receive bonus points.

(4)  Half of this number must be certified by the American Board of Pediatrics.

(5)  No more than two-thirds of this number can be pediatric dentists.
<PAGE>

                           SOUTH WEST - PRACTITIONERS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                     TOTAL                                                                            ADDITIONAL
                    REQUIRED                                                                           REQUIRED
PROVIDER TYPES    PROVIDERS(1)  ADAMS  BROWN  BUTLER  CLERMONT  CLINTON  HAMILTON  HIGHLAND  WARREN  PROVIDERS(2)
--------------    ------------  -----  -----  ------  --------  -------  --------  --------  ------  -----------
<S>               <C>           <C>    <C>    <C>     <C>       <C>      <C>       <C>       <C>     <C>
Pediatricians(4)       59                        7        2        1        39                            10
OB/GYNs                16                1       2        1        1         9                  1          1
Vision                 21                        3        1        1        11         1        1          3
General Surgeons       13                        2        1        1         7                  1          1
Otolaryngologist        6                        1                           3                  1          1
Allergists              7                                                    4                             3
Orthopedists            9                        2                           5                             2
Dentists(5)            50         1      1      10        4        1        26         2        2          3
</TABLE>

(1)  All required providers must be located within the region.

(2)  Additional required providers may be located anywhere within the region.

(3)  Preferred Providers are the additional provider contracts that must be
     secured in order for the MCP to receive bonus points.

(4)  Half of this number must be certified by the American Board of Pediatrics.

(5)  No more than two-thirds of this number can be pediatric dentists.

<PAGE>

                          WEST CENTRAL - PRACTITIONERS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                     TOTAL                                                                           ADDITIONAL
                    REQUIRED                                                                          REQUIRED
PROVIDER TYPES    PROVIDERS(1)  CHAMPAIGN  CLARK  DARKE  GREENE  MIAMI  MONTGOMERY  PREBLE  SHELBY  PROVIDERS(2)
--------------    ------------  ---------  -----  -----  ------  -----  ----------  ------  ------  ------------
<S>               <C>           <C>        <C>    <C>    <C>     <C>    <C>         <C>     <C>     <C>
Pediatricians(4)       36                    2              3      1        22                            8
OB/GYNs                12                    2              1      1         6                 1          1
Vision                 20                    2      1       2      2        10                 1          2
General Surgeons       10                    2              2      1         3                            2
Otolaryngologist        7                    1                               3                            3
Allergists              4                                                    2                            2
Orthopedists            5                                   1                2                            2
Dentists(5)            38           1        5      1       3      3        20                 1          4
</TABLE>

(1)  All required providers must be located within the region.

(2)  Additional required providers may be located anywhere within the region.

(3)  Preferred Providers are the additional provider contracts that must be
     secured in order for the MCP to receive bonus points.

(4)  Half of this number must be certified by the American Board of Pediatrics.

(5)  No more than two-thirds of this number can be pediatric dentists.

<PAGE>

                           NORTH WEST - PRACTITIONERS

                       MINIMUM PROVIDER PANEL REQUIREMENTS

<TABLE>
<CAPTION>
                     TOTAL
                   REQUIRED
PROVIDER TYPES    PROVIDERS(1)  ALLEN  AUGLAIZE  DEFIANCE  FULTON  HANCOCK  HARDIN  HENRY  LUCAS  MERCER
--------------    ------------  -----  --------  --------  ------  -------  ------  -----  -----  ------
<S>               <C>           <C>    <C>       <C>       <C>     <C>      <C>     <C>    <C>    <C>
Pediatricians(4)      45          4                                   1                      23
OB/GYNs               13          2                                   1                       5
Vision                18          2        1         1                1                       7      1
General Surgeons      13          2                                   1                       4
Otolaryngologist       7          1                                   1                       2
Allergists             3          1                                                           1
Orthopedists           7          2                                   1                       2
Dentists(5)           45          4        1         1        1       2        1      1      20      1

<CAPTION>
                                                                                                  ADDITIONAL
                                                                                                   REQUIRED
PROVIDER TYPES    OTTAWA  PAULDING  PUTNAM  SANDUSKY  SENECA  VAN WERT  WILLIAMS  WOOD  WYANDOT  PROVIDERS(2)
--------------    ------  --------  ------  --------  ------  --------  --------  ----  -------  ------------
<S>               <C>     <C>       <C>     <C>       <C>     <C>       <C>       <C>   <C>      <C>
Pediatricians(4)                                1                          1        2                 13
OB/GYNs                                         1        1                          1                  2
Vision                                          1                          1        2                  1
General Surgeons                                1                          1        2                  2
Otolaryngologist                                                                                       3
Allergists                                                                                             1
Orthopedists                                    1                                   1
Dentists(5)          1                 1        2        2        1        1        2      1           2
</TABLE>

(1)  All required providers must be located within the region.

(2)  Additional required providers may be located anywhere within the region.

(3)  Preferred Providers are the additional provider contracts that must be
     secured in order for the MCP to receive bonus points.

(4)  Half of this number must be certified by the American Board of Pediatrics.

(5)  No more than two-thirds of this number can be pediatric dentists.
<PAGE>

Appendix I
Covered Families and Children population
Page 1

                                   APPENDIX I

                                PROGRAM INTEGRITY
                            CFC ELIGIBLE POPULATION

MCPs must comply with all applicable program integrity requirements, including
those specified in 42 CFR 455 and 42 CFR 438 Subpart H.

1.   Fraud and Abuse Program:

     In addition to the specific requirements of OAC rule 5101:3-26-06, MCPs
     must have a program that includes administrative and management
     arrangements or procedures, including a mandatory compliance plan to guard
     against fraud and abuse. The MCP's compliance plan must designate staff
     responsibility for administering the plan and include clear goals,
     milestones or objectives, measurements, key dates for achieving identified
     outcomes, and explain how the MCP will determine the compliance plan's
     effectiveness.

     In addition to the requirements in OAC rule 5101:3-26-06, the MCP's
     compliance program which safeguards against fraud and abuse must, at a
     minimum, specifically address the following:

          a.   Employee education about false claims recovery: In order to
               comply with Section 6032 of the Deficit Reduction Act of 2005
               MCPs must, as a condition of receiving Medicaid payment, do the
               following:

               i.   establish and make readily available to all employees,
                    including the MCP's management, the following written
                    policies regarding false claims recovery:

                    a.   detailed information about the federal False Claims Act
                         and other state and federal laws related to the
                         prevention and detection of fraud, waste, and abuse,
                         including administrative remedies for false claims and
                         statements as well as civil or criminal penalties;

                    b.   the MCP's policies and procedures for detecting and
                         preventing fraud, waste, and abuse; and

                    c.   the laws governing the rights of employees to be
                         protected as whistleblowers.

               ii.  include in any employee handbook the required written
                    policies regarding false claims recovery;

               iii. establish written policies for any MCP contractors and
                    agents that provide detailed information about the federal
                    False Claims Act and other state and federal laws related to
                    the prevention and detection of fraud, waste,

<PAGE>

Appendix I
Covered Families and Children (CFC) population
Page 2

                    and abuse, including administrative remedies for false
                    claims and statements as well as civil or criminal
                    penalties; the laws governing the rights of employees to be
                    protected as whistleblowers; and the MCP's policies and
                    procedures for detecting and preventing fraud, waste, and
                    abuse. MCPs must make such information readily available to
                    their subcontractors; and

               iv.  disseminate the required written policies to all contractors
                    and agents, who must abide by those written policies.

          b.   Monitoring for fraud and abuse The MCP's program which safeguards
               against fraud and abuse must specifically address the MCP's
               prevention, detection, investigation, and reporting strategies in
               at least the following areas:

               i.   Embezzlement and theft - MCPs must monitor activities on an
                    ongoing basis to prevent and detect activities involving
                    embezzlement and theft (e.g., by staff, providers,
                    contractors, etc.) and respond promptly to such violations.

               ii.  Underutilization of services - MCPs must monitor for the
                    potential underutilization of services by their members in
                    order to assure that all Medicaid-covered services are being
                    provided, as required. If any underutilized services are
                    identified, the MCP must immediately investigate and, if
                    indicated, correct the problem(s) which resulted in such
                    underutilization of services.

                    The MCP's monitoring efforts must, at a minimum, include the
                    following activities: a) an annual review of their prior
                    authorization procedures to determine that they do not
                    unreasonably limit a member's access to Medicaid-covered
                    services; b) an annual review of the procedures providers
                    are to follow in appealing the MCP's denial of a prior
                    authorization request to determine that the process does not
                    unreasonably limit a member's access to Medicaid-covered
                    services; and c) ongoing monitoring of MCP service denials
                    and utilization in order to identify services which may be
                    underutilized.

               iii. Claims submission and billing - On an ongoing basis, MCPs
                    must identify and correct claims submission and billing
                    activities which are potentially fraudulent including, at a
                    minimum, double-billing and improper coding, such as
                    upcoding and bundling.

          c.   Reporting MCP fraud and abuse activities: Pursuant to OAC rule
               5101:3-26-06, MCPs are required to submit annually to ODJFS a
               report which summarizes the MCP's fraud and abuse activities for
               the previous year in each of the areas specified above. The MCP's
               report must also identify any proposed changes to the MCP's
               compliance plan for the coming year.

<PAGE>

Appendix I
Covered Families and Children (CFC) population
Page 3

          d.   Reporting fraud and abuse: MCPs are required to promptly report
               all instances of provider fraud and abuse to ODJFS and member
               fraud to the CDJFS. The MCP, at a minimum, must report the
               following information on cases where the MCP's investigation has
               revealed that an incident of fraud and/or abuse has occurred:

               i.   provider's name and Medicaid provider number or provider
                    reporting number (PRN);

               ii.  source of complaint;

               iii. type of provider;

               iv.  nature of complaint;

               v.   approximate range of dollars involved, if applicable;

               vi.  results of MCP's investigation and actions taken;

               vii. name(s) of other agencies/entities (e.g., medical board, law
                    enforcement) notified by MCP; and

               viii. legal and administrative disposition of case, including
                    actions taken by law enforcement officials to whom the case
                    has been referred.

          e.   Monitoring for prohibited affiliations: The MCP's policies and
               procedures for ensuring that, pursuant to 42 CFR 438.610, the MCP
               will not knowingly have a relationship with individuals debarred
               by Federal Agencies, as specified in Article XII of the
               Agreement.

2.   Data Certification: Pursuant to 42 CFR 438.604 and 42 CFR 438.606, MCPs are
     required to provide certification as to the accuracy, completeness, and
     truthfulness of data and documents submitted to ODJFS which may affect MCP
     payment.

     a.   MCP Submissions: MCPs must submit the appropriate ODJFS-developed
          certification concurrently with the submission of the following data
          or documents:

          i.   Encounter Data [as specified in the Data Quality Appendix
               (Appendix L)]

          ii.  Prompt Pay Reports [as specified in the Fiscal Performance
               Appendix (Appendix J)]

          iii. Cost Reports [as specified in the Fiscal Performance Appendix
               (Appendix J)]

<PAGE>

Appendix I
Covered Families and Children (CFC) population
Page 4

     b.   Source of Certification: The above MCP data submissions must be
          certified by one of the following:

          i.   The MCP's Chief Executive Officer;

          ii.  The MCP's Chief Financial Officer, or

          iii. An individual who has delegated authority to sign for, or who
               reports directly to, the MCP's Chief Executive Officer or Chief
               Financial Officer.

          ODJFS may also require MCPs to certify as to the accuracy,
          completeness, and truthfulness of additional submissions.

<PAGE>

                                     MOLINA

                                   APPENDIX J

                              FINANCIAL PERFORMANCE
                            CFC ELIGIBLE POPULATION

1.   SUBMISSION OF FINANCIAL STATEMENTS AND REPORTS

     MCPs must submit the following financial reports to ODJFS:

     a.   The National Association of Insurance Commissioners (NAIC) quarterly
          and annual Health Statements (hereafter referred to as the "Financial
          Statements"), as outlined in Ohio Administrative Code (OAC) rule
          5101:3-26-09(B). The Financial Statements must include all required
          Health Statement filings, schedules and exhibits as stated in the NAIC
          Annual Health Statement Instructions including, but not limited to,
          the following sections: Assets, Liabilities, Capital and Surplus
          Account, Cash Flow, Analysis of Operations by Lines of Business,
          Five-Year Historical Data, and the Exhibit of Premiums, Enrollment and
          Utilization. The Financial Statements must be submitted to BMHC even
          if the Ohio Department of Insurance (ODI) does not require the MCP to
          submit these statements to ODI. A signed hard copy and an electronic
          copy of the reports in the NAIC-approved format must both be provided
          to ODJFS;

     b.   Hard copies of annual financial statements for those entities who have
          an ownership interest totaling five percent or more in the MCP or an
          indirect interest of five percent or more, or a combination of direct
          and indirect interest equal to five percent or more in the MCP;

     c.   Annual audited Financial Statements prepared by a licensed independent
          external auditor as submitted to the ODI, as outlined in OAC rule
          5101:3-26-09(B);

     d.   Medicaid Managed Care Plan Annual Ohio Department of Job and Family
          Services (ODJFS) Cost Report and the auditor's certification of the
          cost report, as outlined in OAC rule 5101:3-26-09(B);

     e.   Medicaid MCP Annual Restated Cost Report for the prior calendar year.
          The restated cost report shall be audited upon BMHC request;

     f.   Annual physician incentive plan disclosure statements and disclosure
          of and changes to the MCP's physician incentive plans, as outlined in
          OAC rule 5101:3-26-09(B);

     g.   Reinsurance agreements, as outlined in OAC rule 5101:3-26-09(C);

<PAGE>

Appendix J
Page 2

     h.   Prompt Pay Reports, in accordance with OAC rule 5101:3-26-09(B). A
          hard copy and an electronic copy of the reports in the ODJFS-specified
          format must be provided to ODJFS;

     i.   Notification of requests for information and copies of information
          released pursuant to a tort action (i.e., third party recovery), as
          outlined in OAC rule 5101:3-26-09.1;

     j.   Financial, utilization, and statistical reports, when ODJFS requests
          such reports, based on a concern regarding the MCP's quality of care,
          delivery of services, fiscal operations or solvency, in accordance
          with OAC rule 5101:3-26-06(D);

     k.   In accordance with ORC Section 5111.76 and Appendix C, MCP
          Responsibilities, MCPs must submit ODJFS-specified franchise fee
          reports in hard copy and electronic formats pursuant to ODJFS
          specifications.

2.   FINANCIAL PERFORMANCE MEASURES AND STANDARDS

     This Appendix establishes specific expectations concerning the financial
     performance of MCPs. In the interest of administrative simplicity and
     nonduplication of areas of the ODI authority, ODJFS' emphasis is on the
     assurance of access to and quality of care. ODJFS will focus only on a
     limited number of indicators and related standards to monitor plan
     performance. The three indicators and standards for this contract period
     are identified below, along with the calculation methodologies. The source
     for each indicator will be the NAIC Quarterly and Annual Financial
     Statements.

          Report Period: Compliance will be determined based on the annual
          Financial Statement.

     a.   INDICATOR:    NET WORTH AS MEASURED BY NET WORTH PER MEMBER

          Definition:   Net Worth = Total Admitted Assets minus Total
                        Liabilities divided by Total Members across all lines of
                        business

          Standard:     For the financial report that covers calendar year 2007,
                        a minimum net worth per member of $172.00, as determined
                        from the annual Financial Statement submitted to ODI and
                        the ODJFS.

                        The Net Worth Per Member (NWPM) standard is the Medicaid
                        Managed Care Capitation amount paid to the MCP during
                        the preceding calendar year, including delivery
                        payments, but excluding the at-risk amount, expressed as
                        a per-member per-month figure, multiplied by the
                        applicable proportion below:

<PAGE>

Appendix J
Page 3

                        0.75 if the MCP had a total membership of 100,000 or
                        more during that calendar year

                        0.90 if the MCP had a total membership of less than
                        100,000 for that calendar year

                        If the MCP did not receive Medicaid Managed Care
                        Capitation payments during the preceding calendar year,
                        then the NWPM standard for the MCP is the average
                        Medicaid Managed Care capitation amount paid to
                        Medicaid-contracting MCPs during the preceding calendar
                        year, including delivery payments, but excluding the
                        at-risk amount, multiplied by the applicable proportion
                        above.

     b.   INDICATOR:    ADMINISTRATIVE EXPENSE RATIO

          Definition:   Administrative Expense Ratio = Administrative Expenses
                        minus Franchise Fees divided by Total Revenue minus
                        Franchise Fees.

          Standard:     Administrative Expense Ratio not to exceed 15%, as
                        determined from the annual Financial Statement submitted
                        to ODI and ODJFS.

     c.   INDICATOR:    OVERALL EXPENSE RATIO

          Definition:   Overall Expense Ratio = The sum of the Administrative
                        Expense Ratio and the Medical Expense Ratio.

                        Administrative Expense Ratio = Administrative Expenses
                        minus Franchise Fees divided by Total Revenue minus
                        Franchise Fees.

                        Medical Expense Ratio = Medical Expenses divided by
                        Total Revenue minus Franchise Fees.

          Standard:     Overall Expense Ratio not to exceed 100% as determined
                        from the annual Financial Statement submitted to ODI and
                        ODJFS.

     Penalty for noncompliance: Failure to meet any standard on 2.a., 2.b., or
     2.c. above will result in ODJFS requiring the MCP to complete a corrective
     action plan (CAP) and specifying the date by which compliance must be
     demonstrated. Failure to meet the standard or otherwise comply with the CAP
     by the specified date will result in a new membership freeze unless ODJFS
     determines that the deficiency does not potentially jeopardize access to or
     quality of care or affect the MCP's ability to meet administrative
     requirements (e.g., prompt pay requirements). Justifiable reasons for
     noncompliance may include one-time events (e.g., MCP investment in
     information system products).

     If the financial statement is not submitted to ODI by the due date, the MCP

<PAGE>

Appendix J
Page 4

     continues to be obligated to submit the report to ODJFS by ODI's originally
     specified due date unless the MCP requests and is granted an extension by
     ODJFS.

     Failure to submit complete quarterly and annual Financial Statements on a
     timely basis will be deemed a failure to meet the standards and will be
     subject to the noncompliance penalties listed for indicators 2.a., 2.b.,
     and 2.c., including the imposition of a new membership freeze. The new
     membership freeze will take effect at the first of the month following the
     month in which the determination was made that the MCP was noncompliant for
     failing to submit financial reports timely.

     In addition, ODJFS will review two liquidity indicators if a plan
     demonstrates potential problems in meeting related administrative
     requirements or the standards listed above. The two standards, 2.d and 2.e,
     reflect ODJFS' expected level of performance. At this time, ODJFS has not
     established penalties for noncompliance with these standards; however,
     ODJFS will consider the MCP's performance regarding the liquidity measures,
     in addition to indicators 2.a., 2.b., and 2.c., in determining whether to
     impose a new membership freeze, as outlined above, or to not issue or renew
     a contract with an MCP. The source for each indicator will be the NAIC
     Quarterly and annual Financial Statements.

     Long-term investments that can be liquidated without significant penalty
     within 24 hours, which a plan would like to include in Cash and Short-Term
     Investments in the next two measurements, must be disclosed in footnotes on
     the NAIC Reports. Descriptions and amounts should be disclosed. Please note
     that "significant penalty" for this purpose is any penalty greater than
     20%. Also, enter the amortized cost of the investment, the market value of
     the investment, and the amount of the penalty.

     d.   INDICATOR:    DAYS CASH ON HAND

          Definition:   Days Cash on Hand = Cash and Short-Term Investments
                        divided by (Total Hospital and Medical Expenses plus
                        Total Administrative Expenses) divided by 365.

          Standard:     Greater than 25 days as determined from the annual
                        Financial Statement submitted to ODI and ODJFS.

     e.   INDICATOR:    RATIO OF CASH TO CLAIMS PAYABLE

          Definition:   Ratio of Cash to Claims Payable = Cash and Short-Term
                        Investments divided by claims Payable (reported and
                        unreported).

          Standard:     Greater than 0.83 as determined from the annual
                        Financial Statement submitted to ODI and ODJFS.

<PAGE>

Appendix J
Page 5

3.   REINSURANCE REQUIREMENTS

     Pursuant to the provisions of OAC rule 5101:3-26-09 (C), each MCP must
     carry reinsurance coverage from a licensed commercial carrier to protect
     against inpatient-related medical expenses incurred by Medicaid members.

     The annual deductible or retention amount for such insurance must be
     specified in the reinsurance agreement and must not exceed $75,000.00,
     except as provided below. Except for transplant services, and as provided
     below, this reinsurance must cover, at a minimum, 80% of inpatient costs
     incurred by one member in one year, in excess of $75,000.00.

     For transplant services, the reinsurance must cover, at a minimum, 50% of
     transplant related costs incurred by one member in one year, in excess of
     $75,000.00.

     An MCP may request a higher deductible amount and/or that the reinsurance
     cover less than 80% of inpatient costs in excess of the deductible amount.
     If the MCP does not have more than 75,000 members in Ohio, but does have
     more than 75,000 members between Ohio and other states, ODJFS may consider
     alternate reinsurance arrangements. However, depending on the corporate
     structures of the Medicaid MCP, other forms of security may be required in
     addition to reinsurance. These other security tools may include parental
     guarantees, letters of credit, or performance bonds. In determining whether
     or not the request will be approved, the ODJFS may consider any or all of
     the following:

          a.   whether the MCP has sufficient reserves available to pay
               unexpected claims;

          b.   the MCP's history in complying with financial indicators 2.a.,
               2.b., and 2.c., as specified in this Appendix.

          c.   the number of members covered by the MCP;

          d.   how long the MCP has been covering Medicaid or other members on a
               full risk basis.

          e.   risk based capital ratio greater than 2.5 calculated from the
               last annual ODI financial statement.

          f.   scatter diagram or bar graph from the last calendar year that
               shows the number of reinsurance claims that exceeded the current
               reinsurance deductible.

     The MCP has been approved to have a reinsurance policy with a deductible
     amount of $150,000 that covers 80% of inpatient costs in excess of the
     deductible amount for non-transplant services.

<PAGE>

Appendix J
Page 6

     Molina has also been approved to delegate the responsibility for
     maintaining reinsurance coverage for Molina members who are with Children's
     Hospital and Physician Health Care Network (CHPHN) to CHPHN. Molina must
     assure that CHPHN maintains a reinsurance policy and that this policy
     covers at least 70% of inpatient costs incurred by one member in one year,
     in excess of CHPHN's $100,000.00 deductible.

     Penalty for noncompliance: If it is determined that an MCP failed to have
     reinsurance coverage, that an MCP's deductible exceeds $75,000.00 without
     approval from ODJFS, or that the MCP's reinsurance for non-transplant
     services covers less than 80% of inpatient costs in excess of the
     deductible incurred by one member for one year without approval from ODJFS,
     then the MCP will be required to pay a monetary penalty to ODJFS. The
     amount of the penalty will be the difference between the estimated amount,
     as determined by ODJFS, of what the MCP would have paid in premiums for the
     reinsurance policy if it had been in compliance and what the MCP did
     actually pay while it was out of compliance plus 5%. For example, if the
     MCP paid $3,000,000.00 in premiums during the period of non-compliance and
     would have paid $5,000,000.00 if the requirements had been met, then the
     penalty would be $2,100,000.00.

     If it is determined that an MCP's reinsurance for transplant services
     covers less than 50% of inpatient costs incurred by one member for one
     year, the MCP will be required to develop a corrective action plan (CAP).

4.   PROMPT PAY REQUIREMENTS

     In accordance with 42 CFR 447.46, MCPs must pay 90% of all submitted clean
     claims within 30 days of the date of receipt and 99% of such claims within
     90 days of the date of receipt, unless the MCP and its contracted
     provider(s) have established an alternative payment schedule that is
     mutually agreed upon and described in their contract. The prompt pay
     requirement applies to the processing of both electronic and paper claims
     for contracting and non-contracting providers by the MCP and delegated
     claims processing entities.

     The date of receipt is the date the MCP receives the claim, as indicated by
     its date stamp on the claim. The date of payment is the date of the check
     or date of electronic payment transmission. A claim means a bill from a
     provider for health care services that is assigned a unique identifier. A
     claim does not include an encounter form.

     A "claim" can include any of the following: (1) a bill for services; (2) a
     line item of services; or (3) all services for one recipient within a bill.
     A "clean claim" is a claim that can be processed without obtaining
     additional information from the provider of a service or from a third
     party.

     Clean claims do not include payments made to a provider of service or a
     third party where the timing of the payment is not directly related to
     submission of a completed claim by the provider of service or third party
     (e.g., capitation). A clean claim also

<PAGE>

Appendix J
Page 7

     does not include a claim from a provider who is under investigation for
     fraud or abuse, or a claim under review for medical necessity.

     Penalty for noncompliance: Noncompliance with prompt pay requirements will
     result in progressive penalties to be assessed on a quarterly basis, as
     outlined in Appendix N of the Provider Agreement.

5.   PHYSICIAN INCENTIVE PLAN DISCLOSURE REQUIREMENTS

     MCPs must comply with the physician incentive plan requirements stipulated
     in 42 CFR 438.6(h). If the MCP operates a physician incentive plan, no
     specific payment can be made directly or indirectly under this physician
     incentive plan to a physician or physician group as an inducement to reduce
     or limit medically necessary services furnished to an individual.

     If the physician incentive plan places a physician or physician group at
     substantial financial risk [as determined under paragraph (d) of 42 CFR
     422.208] for services that the physician or physician group does not
     furnish itself, the MCP must assure that all physicians and physician
     groups at substantial financial risk have either aggregate or per-patient
     stop-loss protection in accordance with paragraph (f) of 42 CFR 422.208,
     and conduct periodic surveys in accordance with paragraph (h) of 42 CFR
     422.208.

     In accordance with 42 CFR 417.479 and 42 CFR 422.210, MCPs must maintain
     copies of the following required documentation and submit to ODJFS
     annually, no later than 30 days after the close of the state fiscal year
     and upon any modification of the MCP's physician incentive plan:

          a.   A description of the types of physician incentive arrangements
               the MCP has in place which indicates whether they involve a
               withhold, bonus, capitation, or other arrangement. If a physician
               incentive arrangement involves a withhold or bonus, the percent
               of the withhold or bonus must be specified.

          b.   A description of information/data feedback to a physician/group
               on their: 1) adherence to evidence-based practice guidelines; and
               2) positive and/or negative care variances from standard clinical
               pathways that may impact outcomes or costs. The feedback
               information may be used by the MCP for activities such as
               physician performance improvement projects that include incentive
               programs or the development of quality improvement initiatives.

          c.   A description of the panel size for each physician incentive
               plan. If patients are pooled, then the pooling method used to
               determine if substantial financial risk exists must also be
               specified.

<PAGE>

Appendix J
Page 8

          d.   If more than 25% of the total potential payment of a
               physician/group is at risk for referral services, the MCP must
               maintain a copy of the results of the required patient
               satisfaction survey and documentation verifying that the
               physician or physician group has adequate stop-loss protection,
               including the type of coverage (e.g., per member per year,
               aggregate), the threshold amounts, and any coinsurance required
               for amounts over the threshold.

6.   NOTIFICATION OF REGULATORY ACTION

     Any MCP notified by the ODI of proposed or implemented regulatory action
     must report such notification and the nature of the action to ODJFS no
     later than one working day after receipt from ODI. The ODJFS may request,
     and the MCP must provide, any additional information as necessary to assure
     continued satisfaction of program requirements. MCPs may request that
     information related to such actions be considered proprietary in accordance
     with established ODJFS procedures. Failure to comply with this provision
     will result in an immediate membership freeze.

<PAGE>

Appendix K
Covered Families and Children (CFC) population
Page 1

                                   APPENDIX K

             QUALITY ASSESSMENT AND PERFORMANCE IMPROVEMENT PROGRAM
                                      AND
                            EXTERNAL QUALITY REVIEW
                            CFC ELIGIBLE POPULATION

1. As required by federal regulation, 42 CFR 438.240, each managed care plan
(MCP) must have an ongoing Quality Assessment and Performance Improvement
Program (QAPI) that is annually prior-approved by the Ohio Department of Job and
Family Services (ODJFS). The program must include the following elements:

     a. PERFORMANCE IMPROVEMENT PROJECTS

     Each MCP must conduct performance improvement projects (PIPs), including
     those specified by ODJFS. PIPs must achieve, through periodic measurements
     and intervention, significant and sustained improvement in clinical and
     non-clinical areas which are expected to have a favorable effect on health
     outcomes and satisfaction. MCPs must adhere to ODJFS PIP content and format
     specifications.

     All ODJFS-specified PIPs must be prior-approved by ODJFS. As part of the
     external quality review organization (EQRO) process, the EQRO will assist
     MCPs with conducting PIPs by providing technical assistance and will
     annually validate the PIPs. In addition, the MCP must annually submit to
     ODJFS the status and results of each PIP.

     MCPs must initiate the following PIPs:

     i. Non-clinical Topic: Identifying children/members with special health
     care needs.

     ii. Clinical Topic: Well-child visits during the first 15 months of life.

     iii. Clinical Topic: Percentage of members aged 2-21 years that access
     dental care services.

     Initiation of PIPs will begin in the second year of participation in the
     Medicaid managed care program.

     In addition, as noted in Appendix M, if an MCP fails to meet the Minimum
     Performance Standard for selected Clinical Performance Measures, the MCP
     will be required to complete a PIP.

     b. UNDER- AND OVER-UTILIZATION

     Each MCP must have mechanisms in place to detect under- and
     over-utilization of health care services. The MCP must specify the
     mechanisms used to monitor utilization in its annual submission of the QAPI
     program to ODJFS.

<PAGE>

Appendix K
Covered Families and Children (CFC) population
Page 2

     It should also be noted that pursuant to the program integrity provisions
     outlined in Appendix I, MCPs must monitor for the potential
     under-utilization of services by their members in order to assure that all
     Medicaid-covered services are being provided, as required. If any
     under-utilized services are identified, the MCP must immediately
     investigate and correct the problem(s) which resulted in such
     under-utilization of services.

     In addition the MCP must conduct an ongoing review of service denials and
     must monitor utilization on an ongoing basis in order to identify services
     which may be underutilized.

     c. SPECIAL HEALTH CARE NEEDS

     Each MCP must have mechanisms in place to assess the quality and
     appropriateness of care furnished to children/members with special health
     care needs. The MCP must specify the mechanisms used in its annual
     submission of the QAPI program to ODJFS.

     d. SUBMISSION OF PERFORMANCE MEASUREMENT DATA

     Each MCP must submit clinical performance measurement data as required by
     ODJFS that enables ODJFS to calculate standard measures. Refer to Appendix
     M "Performance Evaluation" for a more comprehensive description of the
     clinical performance measures.

     Each MCP must also submit clinical performance measurement data as required
     by ODJFS that uses standard measures as specified by ODJFS. MCPs are
     required to submit Health Employer Data Information Set (HEDIS) audited
     data for the following measures:

          i.   Well Child Visits in the First 15 Months of Life

          ii.  Child Immunization Status

          iii. Adolescent Immunization Status

     The measures must have received a "report" designation from the HEDIS
     certified auditor and must be specific to the Medicaid population. Data
     must be submitted annually and in an electronic format. Data will be used
     for MCP clinical performance monitoring and will be incorporated into
     comparative reports developed by the EQRO.

     Initiation of submission of performance data will begin in the second year
     of participation in the Medicaid managed care program.

2.   EXTERNAL QUALITY REVIEW

     In addition to the following requirements, MCPs must participate in
     external quality review activities as outlined in OAC 5101:3-26-07.

<PAGE>

Appendix K
Covered Families and Children (CFC) population
Page 3

     a. EQRO ADMINISTRATIVE REVIEW AND NON-DUPLICATION OF MANDATORY ACTIVITIES

     The EQRO will conduct administrative compliance assessments and QAPI
     program reviews for each MCP every three (3) years. The review will
     include, but not be limited to, the following domains as specified by
     ODJFS: member rights and services, QAPI program, access standards, provider
     network, grievance system, case management, coordination and continuity of
     care, and utilization management. In accordance with 42 CFR 438.360 and
     438.362, MCPs with accreditation from a national accrediting organization
     approved by the Centers for Medicare and Medicaid Services (CMS) may
     request a non-duplication exemption from certain specified components of
     the administrative review. Non-duplication exemptions may not be requested
     for SFY 08.

     b. ANNUAL REVIEW OF QAPI AND CASE MANAGEMENT PROGRAM

     Each MCP must implement an evaluation process to review, revise, and/or
     update the QAPI program. The MCP must annually submit its QAPI program for
     review and approval by ODJFS.

     The annual QAPI and case management/CSHCN (refer to Appendix G) program
     submissions are subject to an administrative review by the EQRO. If the
     EQRO identifies deficiencies during its review, the MCP must develop and
     implement Corrective Action Plan(s) that are prior approved by ODJFS.
     Serious deficiencies may result in immediate termination or non-renewal of
     the provider agreement.

     c. EXTERNAL QUALITY REVIEW PERFORMANCE

     In accordance with OAC 5101: 3-26-07, each MCP must participate in clinical
     or non-clinical focused quality of care studies as part of the annual
     external quality review survey. If the EQRO cites a deficiency in clinical
     or non-clinical performance, the MCP will be required to complete a
     Corrective Action Plan (e.g., ODJFS technical assistance session), Quality
     Improvement Directives or Performance Improvement Projects depending on the
     severity of the deficiency. (An example of a deficiency is if an MCP fails
     to meet certain clinical or administrative standards as supported by
     national evidence-based guidelines or best practices.) Serious deficiencies
     may result in immediate termination or non-renewal of the provider
     agreement. These quality improvement measures recognize the importance of
     ongoing MCP performance improvement related to clinical care and service
     delivery.

<PAGE>

Appendix L
Covered Families and Children
Page 1

                                   APPENDIX L

                                  DATA QUALITY
                            CFC ELIGIBLE POPULATION

A high level of performance on the data quality measures established in this
appendix is crucial in order for the Ohio Department of Job and Family Services
(ODJFS) to determine the value of the Medicaid Managed Health Care Program and
to evaluate Medicaid consumers' access to and quality of services. Data
collected from MCPs are used in key performance assessments such as the external
quality review, clinical performance measures, utilization review, care
coordination and case management, and in determining incentives. The data will
also be used in conjunction with the cost reports in setting the premium payment
rates. The following measures, as specified in this appendix, will be calculated
per MCP and include all Ohio Medicaid members receiving services from the MCP
(i.e., Covered Families and Children (CFC) and Aged, Blind, or Disabled (ABD)
membership, if applicable): Encounter Data Omissions, Incomplete Outpatient
Hospital Data, Rejected Encounters, Acceptance Rate, Encounter Data Accuracy,
and Generic Provider Number Usage.

Data sets collected from MCPs with data quality standards include: encounter
data; case management data; data used in the external quality review; members'
PCP data; and appeal and grievance data.

1. ENCOUNTER DATA

For detailed descriptions of the encounter data quality measures below, see
ODJFS Methods for Encounter Data Quality Measures for CFC and ABD.

1.A. ENCOUNTER DATA COMPLETENESS

Each MCP's encounter data submissions will be assessed for completeness. The MCP
is responsible for collecting information from providers and reporting the data
to ODJFS in accordance with program requirements established in Appendix C, MCP
Responsibilities. Failure to do so jeopardizes the MCP's ability to demonstrate
compliance with other performance standards.

1.A.I. ENCOUNTER DATA VOLUME

Measure: The volume measure for each service category, as listed in Table 2
below, is the rate of utilization (e.g., discharges, visits) per 1,000 member
months (MM).

Report Period: The report periods for the SFY 2008 and SFY 2009 contract periods
are listed in Table 1. below.

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 2

TABLE 1. REPORT PERIODS FOR THE SFY 2008 AND 2009 CONTRACT PERIODS

<TABLE>
<CAPTION>
                                     DATA SOURCE: ESTIMATED
                                       ENCOUNTER DATA FILE      QUARTERLY REPORT
QUARTERLY REPORT PERIODS                     UPDATE           ESTIMATED ISSUE DATE   CONTRACT PERIOD
------------------------             ----------------------   --------------------   ---------------
<S>                                  <C>                      <C>                    <C>
Qtr 3 & Qtr 4 2004, 2005, 2006
Qtr 1 2007                                 July 2007               August 2007

Qtr 3 & Qtr 4 2004, 2005, 2006
Qtr 1, Qtr 2 2007                         October 2007            November 2007
                                                                                         SFY 2008

Qtr 4 2004, 2005, 2006
Qtr 1 thru Qtr 3 2007                     January 2008            February 2008

Qtr 1 thru Qtr 4: 2005, 2006, 2007         April 2008                May 2008

Qtr 2 thru Qtr 4 2005,
Qtr 1 thru Qtr 4: 2006, 2007               July 2008               August 2008
Qtr 1 2008

Qtr 3, Qtr 4: 2005,
Qtr 1 thru Qtr 4: 2006, 2007              October 2008            November 2008
Qtr 1, Qtr 2 2008
                                                                                         SFY 2009

Qtr 4: 2005,
Qtr 1 thru Qtr 4: 2006, 2007              January 2009            February 2009
Qtr 1 thru Qtr 3: 2008

Qtr 1 thru Qtr 4: 2006, 2007, 2008         April 2009                May 2009
</TABLE>

Qtr1 = January to March Qtr2 = April to June Qtr3 = July to September Qtr4 =
October to December

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 3

TABLE 2. STANDARDS - ENCOUNTER DATA VOLUME (COUNTY-BASED APPROACH)

Data Quality Standard, County-Based Approach: The standards in Table 2 apply to
the MCP's county-based results (see County-Based Approach below). The
utilization rate for all service categories listed in Table 2 must be equal to
or greater than the standard established in Table 2 below.

<TABLE>
<CAPTION>
                                                             STANDARD FOR      STANDARD FOR
                                      STANDARD FOR DATES   DATES OF SERVICE      DATES OF
                      MEASURE PER    OF SERVICE 7/1/2003     7/1/2004 THRU     SERVICE ON OR
CATEGORY                1,000/MM        THRU 6/30/2004         6/30/2006      AFTER 7/1/2006          DESCRIPTION
--------             -------------   -------------------   ----------------   --------------   -------------------------
<S>                  <C>             <C>                   <C>                <C>              <C>
Inpatient Hospital   Discharges              5.4                  5.0               5.4        General/acute care,
                                                                                               excluding newborns and
                                                                                               mental health and
                                                                                               chemical dependency
                                                                                               services

Emergency                                    51.6                51.4              50.7        Includes physician and
Department                                                                                     hospital emergency
                                                                                               department encounters

Dental                                       38.2                41.7              50.9        Non-institutional and
                                                                                               hospital dental visits

Vision               Visits                  11.6                11.6              10.6        Non-institutional and
                                                                                               hospital outpatient
                                                                                               optometry and
                                                                                               ophthalmology visits

Primary and                                 220.1                225.7             233.2       Physician/practitioner
Specialist Care                                                                                and hospital outpatient
                                                                                               visits

Ancillary Services                          144.7                123.0             133.6       Ancillary visits

Behavioral Health    Service                 7.6                   8.6              10.5       Inpatient and outpatient
                                                                                               behavioral encounters

Pharmacy             Prescriptions          388.5                457.6             492.2       Prescribed drugs
</TABLE>

County-Based Approach: All counties with managed care membership as of February
1, 2006, will be included in a county-based encounter data volume measure until
regional evaluation is implemented for the county's applicable region.. Upon
implementation of regional-based evaluation for a particular county's region,
the county will be included in the MCP's regional-based results and will no
longer be included in the MCP's county-based results. County-based results will
be determined by MCP (i.e., one utilization rate per service category for all
applicable counties) and must be equal to or greater than the standards
established in Table 2 above. [Example: The county-based result for MCP AAA,
which has contracts in the Central and West Central regions, will include
Franklin, Pickaway, Montgomery, Greene and Clark counties (i.e., counties with
managed care membership as of February 1, 2006). When the regional-based
evaluation is implemented for the Central region, Franklin and Pickaway
counties, along with all other counties in the region, will then be included in
the Central region results for MCP AAA; Montgomery, Greene, and Clark
<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 4

counties will remain in the county-based results for MCP AAA until the West
Central regional measure is implemented.]

Interim Regional-Based Approach:

Prior to the transition to the regional-based approach, encounter data volume
will be evaluated by MCP, by region, using an interim approach. All regions with
managed care membership will be included in results for an interim
regional-based encounter data volume measure until regional evaluation is
implemented for the applicable region (see Regional-Based Approach below).
Encounter data volume will be evaluated by MCP ( i.e., one utilization rate per
service category for all counties in the region). The utilization rate for all
service categories listed in Table 3 must be equal to or greater than the
standard established in Table 3 below. The standards listed in Table 3 below are
based on utilization data for counties with managed care membership as of
February 1, 2006, and have been adjusted to accommodate estimated differences in
utilization for all counties in a region, including counties that did not have
membership as of February 1, 2006.

Prior to implementation of the regional-based approach, an MCP's encounter data
volume will be evaluated using the county-based approach and the interim
regional-based approach. A county with managed care membership as of February 1,
2006, will be included in both the County-Based approach and the Interim
Regional-Based approach until regional evaluation is implemented for the
county's applicable region.

Data Quality Standard, Interim Regional-Based Approach: The standards in Table 3
apply to the MCP's interim regional-based results. The utilization rate for all
service categories listed in Table 3 must be equal to or greater than the
standard established in Table 3 below.

TABLE 3. STANDARDS - ENCOUNTER DATA VOLUME (INTERIM REGIONAL-BASED APPROACH)

<TABLE>
<CAPTION>
                                  STANDARD FOR
                                    DATES OF
                                     SERVICE
                   MEASURE PER    ON OR AFTER
CATEGORY             1,000/MM       7/1/2006               DESCRIPTION
--------          -------------   ------------   -------------------------------
<S>               <C>             <C>            <C>
Inpatient           Discharges          2.7      General/acute care, excluding
Hospital                                         newborns and mental health and
                                                 chemical dependency services

Emergency                              25.3      Includes physician and hospital
Department                                       emergency department encounters

Dental                                 25.5      Non-institutional and hospital
                                                 dental visits

Vision                Visits            5.3      Non-institutional and hospital
                                                 outpatient optometry and
                                                 ophthalmology visits

Primary and                           116.6      Physician/practitioner and
Specialist Care                                  hospital outpatient visits

Ancillary                              66.8      Ancillary visits
Services

Behavioral           Service            5.2      Inpatient and outpatient
Health                                           behavioral encounters

Pharmacy          Prescriptions       246.1      Prescribed drugs
</TABLE>

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 5

Determination of Compliance: Performance is monitored once every quarter for the
entire report period. If the standard is not met for every service category in
all quarters of the report period in either the county-based or interim
regional-based approach, or both, then the MCP will be determined to be
noncompliant for the report period.

Penalty for noncompliance: The first time an MCP is noncompliant with a standard
for this measure, ODJFS will issue a Sanction Advisory informing the MCP that
any future noncompliance instances with the standard for this measure will
result in ODJFS imposing a monetary sanction. Upon all subsequent measurements
of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 6.) of two percent
of the current month's premium payment. Monetary sanctions will not be levied
for consecutive quarters that an MCP is determined to be noncompliant. If an MCP
is noncompliant for three consecutive quarters, membership will be frozen. Once
the MCP is determined to be compliant with the standard and the
violations/deficiencies are resolved to the satisfaction of ODJFS, the penalties
will be lifted, if applicable, and monetary sanctions will be returned.

Regional-Based Approach: Transition to the regional-based approach will occur by
region, after the first four quarters (i.e., full calendar year quarters) of
regional membership. Encounter data volume will be evaluated by MCP, by region,
after determination of the regional-based data quality standards. ODJFS will use
the first four quarters of data (i.e., full calendar year quarters) from all
MCPs serving in an active region to determine minimum encounter volume data
quality standards for that region.

1.A.II. ENCOUNTER DATA OMISSIONS

Omission studies will evaluate the completeness of the encounter data.

Measure: This study will compare the medical records of members during the time
of membership to the encounters submitted. Omission rates will be calculated per
MCP.

The encounters documented in the medical record that do not appear in the
encounter data will be counted as omissions.

Report Period: In order to provide timely feedback on the omission rate of
encounters, the report period will be the most recent from when the measure is
initiated. This measure is conducted annually.

Medical records retrieval from the provider and submittal to ODJFS or its
designee is an integral component of the omission measure. ODJFS has optimized
the sampling to minimize the number of records required. This methodology
requires a high record submittal rate. To aid MCPs in achieving

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 6

a high submittal rate, ODJFS will give at least an 8 week period to retrieve and
submit medical records as a part of the validation process. A record submittal
rate will be calculated as a percentage of the records requested for the study.

Data Quality Standard: The data quality standard is a maximum omission rate of
15% for studies with report periods ending in CY 2007 and CY 2008.

Penalty for Noncompliance: The first time an MCP is noncompliant with a standard
for this measure, ODJFS will issue a Sanction Advisory informing the MCP that
any future noncompliance instances with the standard for this measure will
result in ODJFS imposing a monetary sanction. Upon all subsequent measurements
of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 6) of one percent
of the current month's premium payment. Once the MCP is performing at standard
levels and violations/deficiencies are resolved to the satisfaction of ODJFS,
the money will be refunded.

1.A.III. INCOMPLETE OUTPATIENT HOSPITAL DATA

Since July 1, 1997, MCPs have been required to provide both the revenue code and
the HCPCS code on applicable outpatient hospital encounters. ODJFS will be
monitoring, on a quarterly basis, the percentage of hospital encounters which
contain a revenue code and CPT/HCPCS code. A CPT/HCPCS code must accompany
certain revenue center codes. These codes are listed in Appendix B of Ohio
Administrative Code rule 5101:3-2-21 (fee-for-service outpatient hospital
policies) and in the methods for calculating the completeness measures.

Measure: The percentage of outpatient hospital line items with certain revenue
center codes, as explained above, which had an accompanying valid procedure
(CPT/HCPCS) code. The measure will be calculated per MCP.

Report Period: For the SFY 2008 and SFY 2009 contract periods, performance will
be evaluated using the report periods listed in 1.a.i., Table 1.

Data Quality Standard: The data quality standard is a minimum rate of 95%.

Determination of Compliance: Performance is monitored once every quarter for all
report periods. For quarterly reports that are issued on or after July 1, 2007,
an MCP will be determined to be noncompliant for the quarter if the standard is
not met in any report period and the initial instance of noncompliance in a
report period is determined on or after July 1, 2007. An initial instance of
noncompliance means that the result for the applicable report period was in
compliance as determined in the prior quarterly report, or the instance of
noncompliance is the first determination for an MCP's first quarter of
measurement.

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 7

Penalty for noncompliance: The first time an MCP is noncompliant with a standard
for this measure, ODJFS will issue a Sanction Advisory informing the MCP that
any future noncompliance instances with the standard for this measure will
result in ODJFS imposing a monetary sanction. Upon all subsequent quarterly
measurements of performance, if an MCP is again determined to be noncompliant
with the standard, ODJFS will impose a monetary sanction (see Section 6) of one
percent of the current month's premium payment. Once the MCP is performing at
standard levels and violations/deficiencies are resolved to the satisfaction of
ODJFS, the money will be refunded.

1.A.IV. INCOMPLETE DATA FOR LAST MENSTRUAL PERIOD

As outlined in ODJFS Encounter Data Specifications, the last menstrual period
(LMP) field is a required encounter data field. It is discussed in Item 14 of
the "HCFA 1500 Billing Instructions." The date of the LMP is essential for
calculating the clinical performance measures and allows the ODJFS to adjust
performance expectations for the length of a pregnancy.

The occurrence code and date fields on the UB-92, which are "optional" fields,
can also be used to submit the date of the LMP. These fields are described in
Items 32a & b, 33a & b, 34a & b, 35a & b of the "Inpatient Hospital" and
"Outpatient Hospital UB-92 Claim Form Instructions."

An occurrence code value of '10' indicates that a LMP date was provided. The
actual date of the LMP would be given in the 'Occurrence Date' field.

Measure: The percentage of recipients with a live birth during the report period
where a "valid" LMP date was given on one or more of the recipient's perinatal
claims. If the LMP date is before the date of birth and there is a difference of
between 119 and 315 days between the date the recipient gave birth and the LMP
date, then the LMP date will be considered a valid date. The measure will be
calculated per MCP (i.e., to include the MCP's service area for the CFC.

Report Period: For the SFY 2008 contract period, performance will be evaluated
using the January - December 2007 report period. For the SFY 2009 contract
period, performance will be evaluated using the January - December 2008 report
period.

Data Quality Standard: The data quality standard is a minimum rate of 80%.

Penalty for noncompliance: The first time an MCP is noncompliant with a standard
for this measure, ODJFS will issue a Sanction Advisory informing the MCP that
any future noncompliance instances with the standard for this measure will
result in ODJFS imposing a monetary sanction. Upon all subsequent measurements
of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 6.) of one percent
of the current month's premium payment. Once the MCP is performing at standard
levels and violations/deficiencies are resolved to the satisfaction of ODJFS,
the money will be refunded.

1.A.V. REJECTED ENCOUNTERS

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 8

Encounters submitted to ODJFS that are incomplete or inaccurate are rejected and
reported back to the MCPs on the Exception Report. If an MCP does not resubmit
rejected encounters, ODJFS' encounter data set will be incomplete.

Measure 1 only applies to MCPs that have had Medicaid membership for more than
one year.

Measure 1: The percentage of encounters submitted to ODJFS that are rejected.
The measure will be calculated per MCP.

Report Period: For the SFY 2008 contract period, performance will be evaluated
using the following report periods: April - June 2007; July - September 2007;
October - December 2007, January - March 2008, and April - June 2008. For the
SFY 2009 contract period, performance will be evaluated using the following
report periods: July - September 2008; October - December 2008, January - March
2009, and April - June 2009.

Data Quality Standard for measure 1: Data Quality Standard 1 is a maximum
encounter data rejection rate of 10% for each file type in the ODJFS-specified
medium per format for encounters submitted in SFY 2004 and thereafter. The
measure will be calculated per MCP.

Determination of Compliance: Performance is monitored once every quarter.
Compliance determination with the standard applies only to the quarter under
consideration and does not include performance in previous quarters.

Penalty for noncompliance with the Data Quality Standard for measure 1: The
first time an MCP is noncompliant with a standard for this measure, ODJFS will
issue a Sanction Advisory informing the MCP that any future noncompliance
instances with the standard for this measure will result in ODJFS imposing a
monetary sanction. Upon all subsequent measurements of performance, if an MCP is
again determined to be noncompliant with the standard, ODJFS will impose a
monetary sanction (see Section 6.) of one percent of the current month's premium
payment. The monetary sanction will be applied for each file type in the
ODJFS-specified medium per format that is determined to be out of compliance.
Once the MCP is performing at standard levels and violations/deficiencies are
resolved to the satisfaction of ODJFS, the money will be refunded.

Measure 2 only applies to MCPs that have had Medicaid membership for one year or
less.

Measure 2: The percentage of encounters submitted to ODJFS that are rejected.
The measure will be calculated per MCP.

Report Period: The report period for Measure 2 is monthly. Results are
calculated and performance is monitored monthly. The first reporting month
begins with the third month of enrollment.

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 9

Data Quality Standard for measure 2: The data quality standard is a maximum
encounter data rejection rate for each file type in the ODJFS-specified medium
per format as follows:

<TABLE>
<S>                                              <C>
Third through sixth months with membership:      50%

Seventh through twelfth month with membership:   25%
</TABLE>

Files in the ODJFS-specified medium per format that are totally rejected will
not be considered in the determination of noncompliance.

Determination of Compliance: Performance is monitored once every month.
Compliance determination with the standard applies only to the month under
consideration and does not include performance in previous quarters.

Penalty for Noncompliance with the Data Quality Standard for measure 2: If the
MCP is determined to be noncompliant for either standard, ODJFS will impose a
monetary sanction of one percent of the MCP's current month's premium payment.
The monetary sanction will be applied for each file type in the ODJFS-specified
medium per format that is determined to be out of compliance. The monetary
sanction will be applied only once per file type per compliance determination
period and will not exceed a total of two percent of the MCP's current month's
premium payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money
will be refunded. Special consideration will be made for MCPs with less than
1,000 members.

1.A.VI. ACCEPTANCE RATE

This measure only applies to MCPs that have had Medicaid membership for one year
or less.

Measure: The rate of encounters that are submitted to ODJFS and accepted
(accepted encounters per 1,000 member months). The measure will be calculated
per MCP

Report Period: The report period for this measure is monthly. Results are
calculated and performance is monitored monthly. The first reporting month
begins with the third month of enrollment.

Data Quality Standard: The data quality standard is a monthly minimum accepted
rate of encounters for each file type in the ODJFS-specified medium per format
as follows:

<TABLE>
<S>                              <C>
Third through sixth month with   50 encounters per 1,000 MM for NCPDP
   membership:                   65 encounters per 1,000 MM for NSF
                                 20 encounters per 1,000 MM for UB-92

Seventh through twelfth month    250 encounters per 1,000 MM for NCPDP
   of membership:                350 encounters per 1,000 MM for NSF
                                 100 encounters per 1,000 MM for UB-92
</TABLE>
<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 10

Determination of Compliance: Performance is monitored once every month.
Compliance determination with the standard applies only to the month under
consideration and does not include performance in previous months.

Penalty for Noncompliance: If the MCP is determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction of one percent of the MCP's
current month's premium payment. The monetary sanction will be applied for each
file type in the ODJFS-specified medium per format that is determined to be out
of compliance. The monetary sanction will be applied only once per file type per
compliance determination period and will not exceed a total of two percent of
the MCP's current month's premium payment. Once the MCP is performing at
standard levels and violations/deficiencies are resolved to the satisfaction of
ODJFS, the money will be refunded. Special consideration will be made for MCPs
with less than 1,000 members.

1.A.VII. INCOMPLETE BIRTH WEIGHT DATA

Measure: The percentage of newborn delivery inpatient encounters during the
report period which contained a birth weight. If a value of "88" through "96" is
found on any of the five condition code fields on the UB-92 inpatient claim
format, then the encounter will be considered to have a birth weight. The
condition code fields are described in Items 24-30 of the "Inpatient Hospital,
UB-92 Claim Form Instructions." The measure will be calculated per MCP (i.e., to
include the MCP's entire service area for the CFC membership.

Report Period: For the SFY 2008 contract period, performance will be evaluated
using the January - December 2007 report period. For the SFY 2009 contract
period, performance will be evaluated using the January - December 2008 report
period.

Data Quality Standard: The data quality standard is a minimum rate of 90%.

Penalty for noncompliance: If an MCP is determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 6.) of one percent
of the current month's premium payment. Once the MCP is performing at standard
levels and violations/deficiencies are resolved to the satisfaction of ODJFS,
the money will be refunded.

1.B. ENCOUNTER DATA ACCURACY

As with data completeness, MCPs are responsible for assuring the collection and
submission of accurate data to ODJFS. Failure to do so jeopardizes MCPs'
performance, credibility and, if not corrected, will be assumed to indicate a
failure in actual performance.

1.B.I. ENCOUNTER DATA ACCURACY STUDIES

Measure 1: The focus of this accuracy study will be on delivery encounters. Its
primary purpose will be to verify that MCPs submit encounter data accurately and
to ensure only one payment is

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 11

made per delivery. The rate of appropriate payments will be determined by
comparing a sample of delivery payments to the medical record. The measure will
be calculated per MCP (i.e., to include the MCP's entire service area for the
CFC membership.

Report Period: In order to provide timely feedback on the accuracy rate of
encounters, the report period will be the most recent from when the measure is
initiated. This measure is conducted annually.

Medical records retrieval from the provider and submittal to ODJFS or its
designee is an integral component of the validation process. ODJFS has optimized
the sampling to minimize the number of records required. This methodology
requires a high record submittal rate. To aid MCPs in achieving a high submittal
rate, ODJFS will give at least an 8 week period to retrieve and submit medical
records as a part of the validation process. A record submittal rate will be
calculated as a percentage of all records requested for the study.

Data Quality Standard 1 for Measure 1: For results that are finalized during the
contract year, the accuracy rate for encounters generating delivery payments is
100%.

Penalty for noncompliance: The MCP must participate in a detailed review of
delivery payments made for deliveries during the report period. Any duplicate or
unvalidated delivery payments must be returned to ODJFS.

Data Quality Standard 2 for Measure 1: A minimum record submittal rate of 85%.

Penalty for noncompliance: For all encounter data accuracy studies that are
completed during this contract period, if an MCP is noncompliant with the
standard, ODJFS will impose a non-refundable $10,000 monetary sanction.

Measure 2: This accuracy study will compare the accuracy and completeness of
payment data stored in MCPs' claims systems during the study period to payment
data submitted to and accepted by ODJFS. The measure will be calculated per MCP.

Payment information found in MCPs' claims systems for paid claims that does not
match payment information found on a corresponding encounter will be counted as
omissions.

Report Period: In order to provide timely feedback on the omission rate of
encounters, the report period will be the most recent from when the measure is
initiated. This measure is conducted annually.

Data Quality Standard for Measure 2: TBD for SFY 2008 and SFY 2009 based on
study conducted in SFY 2007 (standard to be released in June, 2007).

Penalty for Noncompliance: The first time an MCP is noncompliant with a standard
for this measure, ODJFS will issue a Sanction Advisory informing the MCP that
any future noncompliance

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 12

instances with the standard for this measure will result in ODJFS imposing a
monetary sanction. Upon all subsequent measurements of performance, if an MCP is
again determined to be noncompliant with the standard, ODJFS will impose a
monetary sanction (see Section 6) of one percent of the current month's premium
payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money
will be refunded.

1.B.II. GENERIC PROVIDER NUMBER USAGE

Measure: This measure is the percentage of non-pharmacy encounters with the
generic provider number. Providers submitting claims which do not have an MMIS
provider number must be submitted to ODJFS with the generic provider number
9111115. The measure will be calculated per MCP.

All other encounters are required to have the MMIS provider number of the
servicing provider. The report period for this measure is quarterly.

Report Period: For the SFY 2008 and SFY 2009 contract periods, performance will
be evaluated using the report periods listed in 1.a.i., Table 1.

Data Quality Standard: A maximum generic provider number usage rate of 10%.

Determination of Compliance: Performance is monitored once every quarter for all
report periods. For quarterly reports that are issued on or after July 1, 2007,
an MCP will be determined to be noncompliant for the quarter if the standard is
not met in any report period and the initial instance of noncompliance in a
report period is determined on or after July 1, 2007. An initial instance of
noncompliance means that the result for the applicable report period was in
compliance as determined in the prior quarterly report, or the instance of
noncompliance is the first determination for an MCP's first quarter of
measurement.

Penalty for noncompliance: The first time an MCP is noncompliant with a standard
for this measure, ODJFS will issue a Sanction Advisory informing the MCP that
any future noncompliance instances with the standard for this measure will
result in ODJFS imposing a monetary sanction.

Upon all subsequent measurements of performance, if an MCP is again determined
to be noncompliant with the standard, ODJFS will impose a monetary sanction (see
Section 6.) of three percent of the current month's premium payment. Once the
MCP is performing at standard levels and violations/deficiencies are resolved to
the satisfaction of ODJFS, the money will be refunded.

1.C. TIMELY SUBMISSION OF ENCOUNTER DATA

1.C.I. TIMELINESS

ODJFS recommends submitting encounters no later than thirty-five days after the
end of the month in which they were paid. ODJFS does not monitor standards
specifically for timeliness, but the

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 13

minimum claims volume (Section 1.a.i.) and the rejected encounter (Section
1.a.v.) standards are based on encounters being submitted within this time
frame.

1.C.II. SUBMISSION OF ENCOUNTER DATA FILES IN THE ODJFS-SPECIFIED MEDIUM PER
     FORMAT

Information concerning the proper submission of encounter data may be obtained
from the ODJFS Encounter Data File and Submission Specifications document. The
MCP must submit a letter of certification, using the form required by ODJFS,
with each encounter data file in the ODJFS-specified medium per format.

The letter of certification must be signed by the MCP's Chief Executive Officer
(CEO), Chief Financial Officer (CFO), or an individual who has delegated
authority to sign for, and who reports directly to, the MCP's CEO or CFO.

2. CASE MANAGEMENT DATA

ODJFS designed a case management system (CAMS) in order to monitor MCP
compliance with program requirements specified in Appendix G, Coverage and
Services. Each MCP's case management data submissions will be assessed for
completeness and accuracy. The MCP is responsible for submitting a case
management file every month. Failure to do so jeopardizes the MCP's ability to
demonstrate compliance with CSHCN requirements. For detailed descriptions of the
case management measures below, see ODJFS Methods for Case Management Data
Quality Measures.

2.A. CASE MANAGEMENT SYSTEM DATA ACCURACY

2.A.I. OPEN CASE MANAGEMENT SPANS FOR DISENROLLED MEMBERS

Measure: The percentage of the MCP's adult and children case management records
in the Screening, Assessment, and Case Management System that have open case
management date spans for members who have disenrolled from the MCP.

Report Period: For the SFY 2007 contract period, January - March 2007, and April
- June 2007 report periods. For the SFY 2008 contract period, July - September
2007, October - December 2007, January - March 2008, and April - June 2008
report periods. For the SFY 2009 contract period, July - September 2008, October
- December 2008, January - March 2009, and April - June 2009 report periods.

Statewide and Regional Data Quality Standard: A rate of open case management
spans for disenrolled members of no more than 1.0%.

For an MCP which had membership as of February 1, 2006: Performance will be
evaluated using: 1) region-based results for any active region in which all
selected MCPs had at least 10,000 members during each month of the entire report
period; and/or 2) the statewide result for all counties

<PAGE>

Appendix L
Covered Families and Children (CFC) population
Page 14

that were not included in the region-based results, but in which the MCP had
managed care membership as of February 1, 2006.

For any MCP which did not have membership as of February 1, 2006: Performance
will begin to be evaluated using region-based results for any active region in
which all selected MCPs had at least 10,000 members during each month of the
entire report period.

Regional-Based Approach: MCPs will be evaluated by region, using results for all
counties included in the region.

Penalty for noncompliance: If an MCP is noncompliant with the standard, then the
ODJFS will issue a Sanction Advisory informing the MCP that a monetary sanction
will be imposed if the MCP is noncompliant for any future report periods. Upon
all subsequent semi-annual measurements of performance, if an MCP is again
determined to be noncompliant with the standard, ODJFS will impose a monetary
sanction of one-half of one percent of the current month's premium payment. Once
the MCP is performing at standard levels and violations/deficiencies are
resolved to the satisfaction of ODJFS, the money will be refunded.

2.B. TIMELY SUBMISSION OF CASE MANAGEMENT FILES

Data Quality Submission Requirement: The MCP must submit Case Management files
on a monthly basis according to the specifications established in ODJFS' Case
Management File and Submission Specifications.

Penalty for noncompliance: See Appendix N, Compliance Assessment System, for the
penalty for noncompliance with this requirement.

3. EXTERNAL QUALITY REVIEW DATA

In accordance with federal law and regulations, ODJFS is required to conduct an
independent quality review of contracting managed care plans. The OAC rule
5101:3-26-07(C) requires MCPs to submit data and information as requested by
ODJFS or its designee for the annual external quality review.

Two information sources are integral to these studies: encounter data and
medical records. Because encounter data is used to draw samples for the clinical
studies, quality must be sufficient to ensure valid sampling.

An adequate number of medical records must then be retrieved from providers and
submitted to ODJFS or its designee in order to generalize results to all
applicable members. To aid MCPs in achieving the required medical record
submittal rate, ODJFS will give at least an eight week period to retrieve and
submit medical records.

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Appendix L
Covered Families and Children (CFC) population
Page 15

If an MCP does not complete a study because too few medical records are
submitted, accurate evaluation of clinical quality in the study area cannot be
determined for the individual MCP and the assurance of adequate clinical quality
for the program as a whole is jeopardized.

3.A. INDEPENDENT EXTERNAL QUALITY REVIEW

Measure: The percentage of requested records for a study conducted by the
External Quality Review Organization (EQRO) that are submitted by the managed
care plan.

Report Period: The report period is one year. Results are calculated and
performance is monitored annually. Performance is measured with each review.

Data Quality Standard: A minimum record submittal rate of 85% for each clinical
measure.

Penalty for noncompliance for Data Quality Standard: For each study that is
completed during this contract period, if an MCP is noncompliant with the
standard, ODJFS will impose a non-refundable $10,000 monetary sanction.

4. MEMBERS' PCP DATA

The designated PCP is the physician who will manage and coordinate the overall
care for CFC members, including those who have case management needs. The MCP
must submit a Members' Designated PCP file every month. Specialists may and
should be identified as the PCP as appropriate for the member's condition per
the specialty types specified for the CFC population in ODJFS Member's PCP Data
File and Submission Specifications; however, no CFC member may have more than
one PCP identified for a given month.

4.A. TIMELY SUBMISSION OF MEMBER'S PCP DATA

Data Quality Submission Requirement: The MCP must submit a Members' Designated
PCP Data file on a monthly basis according to the specifications established in
ODJFS Member's PCP Data File and Submission Specifications.

Penalty for noncompliance: See Appendix N, Compliance Assessment System, for the
penalty for noncompliance with this requirement.

4.B. DESIGNATED PCP FOR NEWLY ENROLLED MEMBERS

Measure: The percentage of MCP's newly enrolled members who were designated a
PCP by their effective date of enrollment.

Report Periods: For the SFY 2007 contract period, performance will be evaluated
quarterly using the January - March 2007 and April - June 2007 report periods.
For the SFY 2008 contract period, performance will be evaluated quarterly using
the July-September 2007, October - December 2007, January - March 2008 and April
- June 2008 report periods. For the SFY

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Covered Families and Children (CFC) population
Page 16

2009 contract period, performance will be evaluated quarterly using the
July-September 2008, October - December 2008, January - March 2009 and April -
June 2009 report periods.

Data Quality Standard: SFY 2007 will be informational only. A minimum rate of
75% of new members with PCP designation by their effective date of enrollment
for quarter 1 and quarter 2 of SFY 2008. A minimum rate of 85% of new members
with PCP designation by their effective date of enrollment for quarter 3 and
quarter 4 of SFY 2008. For SFY 2009, a minimum rate of 85% of new members with
PCP designation by their effective date of enrollment.

Statewide Approach: MCPs will be evaluated using a statewide result, including
all regions in which an MCP has CFC membership.

Penalty for noncompliance: If an MCP is noncompliant with the standard, ODJFS
will impose a monetary sanction of one-half of one percent the current month's
premium payment. Once the MCP is performing at standard levels and
violations/deficiencies are resolved to the satisfaction of ODJFS, the money
will be refunded. As stipulated in OAC rule 5101:3-26-08.2, each new member must
have a designated primary care physician (PCP) prior to their effective date of
coverage. Therefore, MCPs are subject to additional corrective action measures
under Appendix N, Compliance Assessment System, for failure to meet this
requirement.

5. APPEALS AND GRIEVANCES DATA

Pursuant to OAC rule 5101:3-26-08.4, MCPs are required to submit information at
least monthly to ODJFS regarding appeal and grievance activity. ODJFS requires
these submissions to be in an electronic data file format pursuant to the Appeal
File and Submission Specifications and Grievance File and Submission
Specifications.

The appeal data file and the grievance data file must include all appeal and
grievance activity, respectively, for the previous month, and must be submitted
by the ODJFS-specified due date. These data files must be submitted in the
ODJFS-specified format and with the ODJFS-specified filename in order to be
successfully processed.

Penalty for noncompliance: MCPs who fail to submit their monthly electronic data
files to the ODJFS by the specified due date or who fail to resubmit, by no
later than the end of that month, a file which meets the data quality
requirements will be subject to penalty as stipulated under the Compliance
Assessment System (Appendix N).

6. NOTES

6.A. PENALTIES, INCLUDING MONETARY SANCTIONS, FOR NONCOMPLIANCE

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Covered Families and Children (CFC) population
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Penalties for noncompliance with standards outlined in this appendix, including
monetary sanctions, will be imposed as the results are finalized. With the
exception of Sections 1.a.i., 1.a.iii., 1.a.v., 1.a.vi., and 1.b.ii, no monetary
sanctions described in this appendix will be imposed if the MCP is in its first
contract year of Medicaid program participation. Notwithstanding the penalties
specified in this Appendix, ODJFS reserves the right to apply the most
appropriate penalty to the area of deficiency identified when an MCP is
determined to be noncompliant with a standard. Monetary penalties for
noncompliance with any individual measure, as determined in this appendix, shall
not exceed $300,000 during each evaluation period.

Refundable monetary sanctions will be based on the premium payment in the month
of the cited deficiency and due within 30 days of notification by ODJFS to the
MCP of the amount.

Any monies collected through the imposition of such a sanction will be returned
to the MCP (minus any applicable collection fees owed to the Attorney General's
Office, if the MCP has been delinquent in submitting payment) after the MCP has
demonstrated full compliance with the particular program requirement and the
violations/deficiencies are resolved to the satisfaction of ODJFS. If an MCP
does not comply within two years of the date of notification of noncompliance,
then the monies will not be refunded.

6.B. COMBINED REMEDIES

If ODJFS determines that one systemic problem is responsible for multiple
deficiencies, ODJFS may impose a combined remedy which will address all areas of
deficient performance. The total fines assessed in any one month will not exceed
15% of the MCP's monthly premium payment.

6.C. MEMBERSHIP FREEZES

MCPs found to have a pattern of repeated or ongoing noncompliance may be subject
to a membership freeze.

6.D. RECONSIDERATION

Requests for reconsideration of monetary sanctions and enrollment freezes may be
submitted as provided in Appendix N, Compliance Assessment System.

6.E. CONTRACT TERMINATION, NONRENEWALS, OR DENIALS

Upon termination either by the MCP or ODJFS, nonrenewal, or denial of an MCP
provider agreement, all previously collected refundable monetary sanctions will
be retained by ODJFS.
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Appendix M
Covered Families and Children (CFC) population
Page 1

                                   APPENDIX M

                             PERFORMANCE EVALUATION
                             CFC ELIGIBLE POPULATION

This appendix establishes minimum performance standards for managed care plans
(MCPs) in key program areas. The intent is to maintain accountability for
contract requirements. Standards are subject to change based on the revision or
update of applicable national standards, methods or benchmarks. Performance will
be evaluated in the categories of Quality of Care, Access, Consumer
Satisfaction, and Administrative Capacity. Each performance measure has an
accompanying minimum performance standard. MCPs with performance levels below
the minimum performance standards will be required to take corrective action.
The Ohio Medicaid managed care program will transition to a regional-based
system as managed care expands statewide, beginning in SFY 2007. Evaluation of
performance will transition to a regional-based approach after completion of the
statewide expansion. Given that statewide expansion was not complete by December
31, 2006, ODJFS may adjust performance measure reporting periods based on the
number of months an MCP has had regional membership. Due to differences in data
and reporting requirements, transition to the regional-based approach will vary
by performance measure. Unless otherwise noted, performance measures and
standards (see Sections 1, 2, 3 and 4) will be applicable for all counties in
which the MCP has membership as of February 1, 2006, until the regional-based
approach is developed.

Selected measures in this appendix will be used to determine pay-for-performance
(P4P) as specified in Appendix O, Pay for Performance.

1. QUALITY OF CARE

1.A.I. INDEPENDENT EXTERNAL QUALITY REVIEW

In accordance with federal law and regulations, state Medicaid agencies must
annually provide for an external quality review of the quality outcomes and
timeliness of, and access to, services provided by Medicaid-contracting MCPs
[(42 CFR 438.204(d)]. The external review assists the state in assuring MCP
compliance with program requirements and facilitates the collection of accurate
and reliable information concerning MCP performance.

Measure: The independent external quality review covers both an administrative
review and focused quality of care studies as outlined in Appendix K.

Report Period: Performance will be evaluated using the reviews conducted during
SFY 2008.

Action Required for Deficiencies: For all reviews conducted during the contract
period, if the EQRO cites a deficiency in the administrative review or quality
of care studies, the MCP will be required to complete a Corrective Action Plan,
Quality Improvement Directive, or Performance Improvement Project as outlined in
Appendix K. Serious deficiencies may result in immediate termination or
non-renewal of the provider agreement.

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Appendix M
Covered Families and Children (CFC) population
Page 2

1.B. CHILDREN WITH SPECIAL HEALTH CARE NEEDS (CSHCN)

In order to ensure state compliance with the provisions of 42 CFR 438.208, the
Bureau of Managed Health Care established Children with Special Health Care
Needs (CSHCN) basic program requirements in Appendix G, Coverage and Services,
and corresponding minimum performance standards as described below. The purpose
of these measures is to provide appropriate and targeted case management
services to CSHCN.

1.B.I.CASE MANAGEMENT OF CHILDREN

Measure: The average monthly case management rate for children under 21 years of
age.

Report Period: For the SFY 2007 contract period, January - March 2007, and April
- June 2007 report periods. For the SFY 2008 contract period, July - September
2007, October - December 2007, January - March 2008, and April - June 2008
report periods. For the SFY 2009 contract period, July - September 2008, October
- December 2008, January - March 2009, and April - June 2009 report periods.

County-Based Approach: MCPs with managed care membership as of February 1, 2006
will be evaluated using their county-based statewide result until regional
evaluation is implemented for the county's applicable region. The county-based
statewide result will include data for all counties in which the MCP had
membership as of February 1, 2006 that are not included in any regional-based
result. Regional-based results will not be used for evaluation until all
selected MCPs in an active region have at least 10,000 members during each month
of the entire report period. Upon implementation of regional-based evaluation
for a particular county's region, the county will be included in the MCP's
regional-based result and will no longer be included in the MCP's county-based
statewide result. [Example: The county-based statewide result for MCP AAA, which
has contracts in the Central and West Central regions, will include Franklin,
Pickaway, Montgomery, Greene and Clark counties (i.e., counties in which MCP AAA
had managed care membership as of February 1, 2006). When regional-based
evaluation is implemented for the Central region, Franklin and Pickaway
counties, along with all other counties in the region, will then be included in
the Central region results for MCP AAA; Montgomery, Greene, and Clark counties
will remain in the county-based statewide result for evaluation of MCP AAA until
the West Central regional-based approach is implemented.]

Regional-Based Approach: MCPs will be evaluated by region, using results for all
counties included in the region. Performance will begin to be evaluated using
regional-based results for any active region in which all selected MCPs had at
least 10,000 members during each month of the entire report period.

County and Regional-Based Minimum Performance Standard: For the third and fourth
quarters of SFY 2007, a case management rate of 5.0%. For SFY 2008, a case
management rate of 5.0%. For SFY 2009, a case management rate of 6.0%.

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Appendix M
Covered Families and Children (CFC) population
Page 3

Penalty for Noncompliance: The first time an MCP is noncompliant with a standard
for this measure, ODJFS will issue a Sanction Advisory informing the MCP that
any future noncompliance instances with the standard for this measure will
result in ODJFS imposing a monetary sanction. Upon all subsequent measurements
of performance, if an MCP is again determined to be noncompliant with the
standard, ODJFS will impose a monetary sanction (see Section 5) of two percent
of the current month's premium payment. Monetary sanctions will not be levied
for consecutive quarters that an MCP is determined to be noncompliant. If an MCP
is noncompliant for a subsequent quarter, new member selection freezes or a
reduction of assignments will occur as outlined in Appendix N of the Provider
Agreement. Once the MCP is determined to be compliant with the standard and the
violations/deficiencies are resolved to the satisfaction of ODJFS, the penalties
will be lifted, if applicable, and monetary sanctions will be returned.

1.B.II. CASE MANAGEMENT OF CHILDREN WITH AN ODJFS-MANDATED CONDITION

Measure 1: The percent of children under 21 years of age with a positive
identification through an ODJFS administrative review of data for the
ODJFS-mandated case management condition of asthma that are case managed.

Measure 2: The percent of children age 17 and under with a positive
identification through an ODJFS administrative review of data for the
ODJFS-mandated case management condition of teenage pregnancy that are case
managed.

Measure 3: The percent of children under 21 years of age with a positive
identification through an ODJFS administrative review of data for the
ODJFS-mandated case management condition of HIV/AIDS that are case managed.

Report Periods for Measures 1, 2, and 3: For the SFY 2007 contract period,
January - March 2007, and April - June 2007 report periods. For the SFY 2008
contract period, July - September 2007, October - December 2007, January - March
2008, and April - June 2008 report periods. For the SFY 2009 contract period,
July - September 2008, October - December 2008, January - March 2009, and April
- June 2009 report periods.

County-Based Approach: MCPs with managed care membership as of February 1, 2006
will be evaluated using their county-based statewide result until regional
evaluation is implemented for the county's applicable region. The county-based
statewide result will include data for all counties in which the MCP had
membership as of February 1, 2006 that are not included in any regional-based
result. Regional-based results will not be used for evaluation until all
selected MCPs in an active region have at least 10,000 members during each month
of the entire report period. Upon implementation of regional-based evaluation
for a particular county's region, the county will be included in the MCP's
regional-based result and will no longer be included in the MCP's county-based
statewide result. [Example: The county-based statewide result for MCP AAA, which
has contracts in the Central and West Central regions, will include Franklin,
Pickaway, Montgomery, Greene and Clark counties (i.e., counties in which MCP AAA
had managed care membership as of February 1, 2006). When regional-based
evaluation is implemented for the Central region, Franklin and Pickaway
counties, along with all other counties in the region, will then be included in
the

<PAGE>

Appendix M
Covered Families and Children (CFC) population
Page 4

Central region results for MCP AAA; Montgomery, Greene, and Clark counties will
remain in the county-based statewide result for evaluation of MCP AAA until the
West Central regional-based approach is implemented.]

Regional-Based Approach: MCPs will be evaluated by region, using results for all
counties included in the region. Performance will begin to be evaluated using
regional-based results for any active region in which all selected MCPs had at
least 10,000 members during each month of the entire report period.

County and Regional-Based Minimum Performance Standard for Measures 1 and 3: For
the third and fourth quarters of SFY 2007, a case management rate of 70%. For
SFY 2008, a case management rate of 70%. For SFY 2009, a case management rate of
80%.

County and Regional-Based Minimum Performance Standard for Measure 2:For the
third and fourth quarters of SFY 2007, a case management rate of 60%. For SFY
2008, a case management rate of 60%. For SFY 2009, a case management rate of
70%.

Penalty for Noncompliance for Measures 1 and 2: The first time an MCP is
noncompliant with a standard for this measure, ODJFS will issue a Sanction
Advisory informing the MCP that any future noncompliance instances with the
standard for this measure will result in ODJFS imposing a monetary sanction.
Upon all subsequent measurements of performance, if an MCP is again determined
to be noncompliant with the standard, ODJFS will impose a monetary sanction (see
Section 5) of two percent of the current month's premium payment. Monetary
sanctions will not be levied for consecutive quarters that an MCP is determined
to be noncompliant. If an MCP is noncompliant for a subsequent quarter, new
member selection freezes or a reduction of assignments will occur as outlined in
Appendix N of the Provider Agreement. Once the MCP is determined to be compliant
with the standard and the violations/deficiencies are resolved to the
satisfaction of ODJFS, the penalties will be lifted, if applicable, and monetary
sanctions will be returned. Note: For the first reporting period during which
regional results are used to evaluate performance, measures 1, 2, and 3 are
reporting-only measures. For SFY 2008 and SFY 2009, measure 3 is a
reporting-only measure.

1.C. CLINICAL PERFORMANCE MEASURES

MCP performance will be assessed based on the analysis of submitted encounter
data for each year. For certain measures, standards are established; the
identification of these standards is not intended to limit the assessment of
other indicators for performance improvement activities. Performance on multiple
measures will be assessed and reported to the MCPs and others, including
Medicaid consumers.

The clinical performance measures described below closely follow the National
Committee for Quality Assurance's Health Plan Employer Data and Information Set
(HEDIS). Minor adjustments to HEDIS measures were required to account for the
differences between the commercial population and the Medicaid population such
as shorter and interrupted enrollment periods. NCQA may

<PAGE>

Appendix M
Covered Families and Children (CFC) population
Page 5

annually change its method for calculating a measure. These changes can make it
difficult to evaluate whether improvement occurred from a prior year. For this
reason, ODJFS will use the same methods to calculate the baseline results and
the results for the period in which the MCP is being held accountable. For
example, the same methods were being used to calculate calendar year 2005
results (the baseline period) and calendar year 2006 results. The methods will
be updated and a new baseline will be created during 2007 for calendar year 2006
results. These results will then serve as the baseline to evaluate whether
improvement occurred from calendar year 2006 to calendar year 2007. Clinical
performance measure results will be calculated after a sufficient amount of time
has passed after the end of the report period in order to allow for claims
runout. For a comprehensive description of the clinical performance measures
below, see ODJFS Methods for Clinical Performance Measures for the Medicaid CFC
Managed Care Program. Performance standards are subject to change based on the
revision or update of NCQA methods or other national standards, methods or
benchmarks.

For an MCP which had membership as of February 1, 2006: Prior to the transition
to the regional-based approach, MCP performance will be evaluated using an MCP's
statewide result for the counties in which the MCP had membership as of February
1, 2006. For reporting periods CY 2007 and CY 2008, targets and performance
standards for Clinical Performance Measures in this Appendix (1.c.i - 1.c.vii)
will be applicable to all counties in which MCPs had membership as of February
1, 2006. The final reporting year for the counties in which an MCP had
membership as of February 1, 2006, will be CY 2008.

For any MCP which did not have membership as of February 1, 2006: Performance
will be evaluated using a regional-based approach for any active region in which
the MCP had membership. Regional-Based Approach: MCPs will be evaluated by
region, using results for all counties included in the region. CY 2008 will be
the first reporting year that MCPs will be held accountable to the performance
standards for an active region, and penalties will be applied for noncompliance.
CY 2007 will be the first baseline reporting year for an active region.

ODJFS will use a sufficient amount of data needed per performance measure from
all MCPs serving an active region to determine performance standards and targets
for that region. For example, should a measure call for one calendar year of
baseline data, first full calendar year data will be used. CY 2008 will be the
first reporting year for measures that call for one year of baseline data.
Should a measure call for two calendar years of baseline data, the first two
full calendar years of data will be used. CY 2009 will be the first reporting
year for measures that call for two years of baseline data.

Report Period: In order to adhere to the statewide expansion timeline, reporting
periods may be adjusted based on the number of months of managed care
membership. For the SFY 2007 contract period, performance will be evaluated
using the January - December 2006 report period. For the SFY 2008 contract
period, performance will be evaluated using the January - December 2007 report
period. For the SFY 2009 contract period, performance will be evaluated using
the January - December 2008 report period.

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Appendix M
Covered Families and Children (CFC) population
Page 6

1.C.I. PERINATAL CARE - FREQUENCY OF ONGOING PRENATAL CARE

Measure: The percentage of enrolled women with a live birth during the year who
received the expected number of prenatal visits. The number of observed versus
expected visits will be adjusted for length of enrollment.

County-Based Target: At least 80% of the eligible population must receive 81% or
more of the expected number of prenatal visits.

County-Based Minimum Performance Standard: The level of improvement must result
in at least a 10% decrease in the difference between the target and the previous
report period's results. (For example, if last year's results were 20%, then the
difference between the target and last year's results is 60%. In this example,
the standard is an improvement in performance of 10% of this difference or 6%.
In this example, results of 26% or better would be compliant with the standard.)

Action Required for Noncompliance: If the standard is not met and the results
are below 42% (44% for SFY 2009), then the MCP is required to complete a
Performance Improvement Project, as described in Appendix K, Quality Assessment
and Performance Improvement Program, to address the area of noncompliance. If
the standard is not met and the results are at or above 42% (44% for SFY 2009),
then ODJFS will issue a Quality Improvement Directive which will notify the MCP
of noncompliance and may outline the steps that the MCP must take to improve the
results.

1.C.II. PERINATAL CARE - INITIATION OF PRENATAL CARE

Measure: The percentage of enrolled women with a live birth during the year who
had a prenatal visit within 42 days of enrollment or by the end of the first
trimester for those women who enrolled in the MCP during the early stages of
pregnancy.

County-Based Target: At least 90% of the eligible population initiate prenatal
care within the specified time.

County-Based Minimum Performance Standard: The level of improvement must result
in at least a 10% decrease in the difference between the target and the previous
year's results.

Action Required for Noncompliance: If the standard is not met and the results
are below 71% (74% for SFY 2009), then the MCP is required to complete a
Performance Improvement Project, as described in Appendix K, Quality Assessment
and Performance Improvement Program, to address the area of noncompliance. If
the standard is not met and the results are at or above 71% (74% for SFY 2009),
then ODJFS will issue a Quality Improvement Directive which will notify the MCP
of noncompliance and may outline the steps that the MCP must take to improve the
results.

1.C.III. PERINATAL CARE - POSTPARTUM CARE

Measure: The percentage of women who delivered a live birth who had a postpartum
visit on or between 21 days and 56 days after delivery.

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Appendix M
Covered Families and Children (CFC) population
Page 7

County-Based Target: At least 80% of the eligible population must receive a
postpartum visit.

County-Based Minimum Performance Standard: The level of improvement must result
in at least a 5% decrease in the difference between the target and the previous
year's results.

Action Required for Noncompliance: If the standard is not met and the results
are below 48% (50% for SFY 2009), then the MCP is required to complete a
Performance Improvement Project, as described in Appendix K, Quality Assessment
and Performance Improvement Program, to address the area of noncompliance. If
the standard is not met and the results are at or above 48% (50% for SFY 2009),
then ODJFS will issue a Quality Improvement Directive which will notify the MCP
of noncompliance and may outline the steps that the MCP must take to improve the
results.

1.C.IV. PREVENTIVE CARE FOR CHILDREN - WELL-CHILD VISITS

Measure: The percentage of children who received the expected number of
well-child visits adjusted by age and enrollment. The expected number of visits
is as follows:

Children who turn 15 months old: six or more well-child visits.

Children who were 3, 4, 5, or 6, years old: one or more well-child visits.

Children who were 12 through 21 years old: one or more well-child visits.

County-Based Target: At least 80% of the eligible children receive the expected
number of well-child visits.

County-Based Minimum Performance Standard for Each of the Age Groups: The level
of improvement must result in at least a 10% decrease in the difference between
the target and the previous year's results.

Action Required for Noncompliance (15 month old age group): If the standard is
not met and the results are below 34% (42% for SFY 2009), then the MCP is
required to complete a Performance Improvement Project, as described in Appendix
K, Quality Assessment and Performance Improvement Program, to address the area
of noncompliance. If the standard is not met and the results are at or above 34%
(42% for SFY 2009), then ODJFS will issue a Quality Improvement Directive which
will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.

Action Required for Noncompliance (3-6 year old age group): If the standard is
not met and the results are below 50% (57% for SFY 2009), then the MCP is
required to complete a Performance Improvement Project, as described in Appendix
K, Quality Assessment and Performance Improvement Program, to address the area
of noncompliance. If the standard is not met and the results are at or above 50%
(57% for SFY 2009), then ODJFS will issue a Quality Improvement Directive which
will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.

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Appendix M
Covered Families and Children (CFC) population
Page 8

Action Required for Noncompliance (12-21 year old age group): If the standard is
not met and the results are below 30% (33% for SFY 2009), then the MCP is
required to complete a Performance Improvement Project, as described in Appendix
K, Quality Assessment and Performance Improvement Program, to address the area
of noncompliance. If the standard is not met and the results are at or above 30%
(33% for SFY 2009), then ODJFS will issue a Quality Improvement Directive which
will notify the MCP of noncompliance and may outline the steps that the MCP must
take to improve the results.

1.C.V. USE OF APPROPRIATE MEDICATIONS FOR PEOPLE WITH ASTHMA

Measure: The percentage of members with persistent asthma who were enrolled for
at least 11 months with the plan during the year and who received prescribed
medications acceptable as primary therapy for long-term control of asthma.

County-Based Target: At least 95% of the eligible population must receive the
recommended medications.

County-Based Minimum Performance Standard: The level of improvement must result
in at least a 10% decrease in the difference between the target and the previous
year's results.

Action Required for Noncompliance: If the standard is not met and the results
are below 83% (84% for SFY 2009), then the MCP is required to complete a
Performance Improvement Project, as described in Appendix K, Quality Assessment
and Performance Improvement Program, to address the area of noncompliance. If
the standard is not met and the results are at or above 83% (84% for SFY 2009),
then ODJFS will issue a Quality Improvement Directive which will notify the MCP
of noncompliance and may outline the steps that the MCP must take to improve the
results.

1.C.VI. ANNUAL DENTAL VISITS

Measure: The percentage of enrolled members age 4 through 21 who were enrolled
for at least 11 months with the plan during the year and who had at least one
dental visit during the year.

County-Based Target: At least 60% of the eligible population receive a dental
visit.

County-Based Minimum Performance Standard: The level of improvement must result
in at least a 10% decrease in the difference between the target and the previous
year's results.

Action Required for Noncompliance: If the standard is not met and the results
are below 40% (42% for SFY 2009), then the MCP is required to complete a
Performance Improvement Project, as described in Appendix K, Quality Assessment
and Performance Improvement Program, to address the area of noncompliance. If
the standard is not met and the results are at or above 40% (42% for SFY 2009),
then ODJFS will issue a Quality Improvement Directive which will notify the MCP
of noncompliance and may outline the steps that the MCP must take to improve the
results.

1.C.VII. LEAD SCREENING

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Appendix M
Covered Families and Children (CFC) population
Page 9

Measure: The percentage of one and two year olds who received a blood lead
screening by age group.

County-Based Target: At least 80% of the eligible population receive a blood
lead screening.

County-Based Minimum Performance Standard for Each of the Age Groups: The level
of improvement must result in at least a 10% decrease in the difference between
the target and the previous year's results.

Action Required for Noncompliance (1 year olds): If the standard is not met and
the results are below 45% then the MCP is required to complete a Performance
Improvement Project, as described in Appendix K, Quality Assessment and
Performance Improvement Program, to address the area of noncompliance. If the
standard is not met and the results are at or above 45%, then ODJFS will issue a
Quality Improvement Directive which will notify the MCP of noncompliance and may
outline the steps that the MCP must take to improve the results.

Action Required for Noncompliance (2 year olds): If the standard is not met and
the results are below 28% then the MCP is required to complete a Performance
Improvement Project, as described in Appendix K, Quality Assessment and
Performance Improvement Program, to address the area of noncompliance. If the
standard is not met and the results are at or above 28%, then ODJFS will issue a
Quality Improvement Directive which will notify the MCP of noncompliance and may
outline the steps that the MCP must take to improve the results.

2. ACCESS

Performance in the Access category will be determined by the following measures:
Primary Care Physician (PCP) Turnover, Children's Access to Primary Care, and
Adults' Access to Preventive/Ambulatory Health Services. For a comprehensive
description of the access performance measures below, see ODJFS Methods for
Access Performance Measures for the Medicaid CFC Managed Care Program.

2.A. PCP TURNOVER

A high PCP turnover rate may affect continuity of care and may signal poor
management of providers. However, some turnover may be expected when MCPs end
contracts with physicians who are not adhering to the MCP's standard of care.
Therefore, this measure is used in conjunction with the children and adult
access measures to assess performance in the access category.

Measure: The percentage of primary care physicians affiliated with the MCP as of
the beginning of the measurement year who were not affiliated with the MCP as of
the end of the year.

For an MCP which had membership as of February 1, 2006: Prior to the transition
to the regional-based approach, MCP performance will be evaluated using an MCP's
statewide result for the counties in which the MCP had membership as of February
1, 2006. The minimum performance standard in this Appendix (2.a) will be
applicable to the MCP's statewide result for the counties in

<PAGE>

Appendix M
Covered Families and Children (CFC) population
Page 10

which the MCP had membership as of February 1, 2006. The last reporting year
using the MCP's statewide result for the counties in which the MCP had
membership as of February 1, 2006 for performance evaluation is CY 2007; the
last reporting year using the MCP's statewide result for the counties in which
the MCP had membership as of February 1, 2006 for P4P(Appendix O) is CY 2008.

For any MCP which did not have membership as of February 1, 2006: Performance
will be evaluated using a regional-based approach for any active region in which
the MCP had membership.

Regional-Based Approach: MCPs will be evaluated by region, using results for all
counties included in the region. ODJFS will use the first full calendar year of
data (which may be adjusted based on the number of months of managed care
membership). from all MCPs serving an active region to determine a minimum
performance standard for that region. CY 2008 will be the first reporting year
that MCPs will be held accountable to the performance standards for an active
region, and penalties will be applied for noncompliance.

Report Period: In order to adhere to the statewide expansion timeline, reporting
periods may be adjusted based on the number of months of managed care
membership. For the SFY 2007 contract period, performance will be evaluated
using the January - December 2006 report period. For the SFY 2008 contract
period, performance will be evaluated using the January - December 2007 report
period. For the SFY 2009 contract period, performance will be evaluated using
the January - December 2008 report period.

County-Based Minimum Performance Standard: A maximum PCP Turnover rate of 18%.

Action Required for Noncompliance: MCPs are required to perform a causal
analysis of the high PCP turnover rate and assess the impact on timely access to
health services, including continuity of care. If access has been reduced or
coordination of care affected, then the MCP must develop and implement an action
plan to address the findings.

2.B. CHILDREN'S ACCESS TO PRIMARY CARE

This measure indicates whether children aged 12 months to 11 years are accessing
PCPs for sick or well-child visits.

Measure: The percentage of members age 12 months to 11 years who had a visit
with an MCP PCP-type provider.

For an MCP which had membership as of February 1, 2006: Prior to the transition
to the regional-based approach, MCP performance will be evaluated using an MCP's
statewide result for the counties in which the MCP had membership as of February
1, 2006. The minimum performance standard in this Appendix (2.b) will be
applicable to the MCP's statewide result for the counties in which the MCP had
membership as of February 1, 2006. The last reporting year using the MCP's
statewide result for the counties in which the MCP had membership as of February
1, 2006 is CY 2008.

<PAGE>

Appendix M
Covered Families and Children (CFC) population
Page 11

For any MCP which did not have membership as of February 1, 2006: Performance
will be evaluated using a regional-based approach for any active region in which
the MCP had membership.

Regional-Based Approach: MCPs will be evaluated by region, using results for all
counties included in the region. ODJFS will use the first two full calendar
years of data (which may be adjusted based on the number of months of managed
care membership) from all MCPs serving an active region to determine a minimum
performance standard for that region. CY 2009 will be the first reporting year
that MCPs will be held accountable to the performance standards for an active
region, and penalties will be applied for noncompliance. Performance measure
results for that region will be calculated after a sufficient amount of time has
passed after the end of the report period in order to allow for claims runout.

Report Period: In order to adhere to the statewide expansion timeline, reporting
periods may be adjusted based on the number of months of managed care
membership. For the SFY 2007 contract period, performance will be evaluated
using the January - December 2006 report period. For the SFY 2008 contract
period, performance will be evaluated using the January - December 2007 report
period. For the SFY 2009 contract period, performance will be evaluated using
the January - December 2008 report period.

County-Based Minimum Performance Standards:

CY 2006 report period - 70% of children must receive a visit.
CY 2007 report period - 71% of children must receive a visit
CY 2008 report period - TBD (in May 2007)

Penalty for Noncompliance: If an MCP is noncompliant with the Minimum
Performance Standard, then the MCP must develop and implement a corrective
action plan.

2.C. ADULTS' ACCESS TO PREVENTIVE/AMBULATORY HEALTH SERVICES

This measure indicates whether adult members are accessing health services.

Measure: The percentage of members age 20 and older who had an ambulatory or
preventive-care visit.

For an MCP which had membership as of February 1, 2006: Prior to the transition
to the regional-based approach, MCP performance will be evaluated using an MCP's
statewide result for the counties in which the MCP had membership as of February
1, 2006. The minimum performance standard in this Appendix (2.c) will be
applicable to the MCP's statewide result for the counties in which the MCP had
membership as of February 1, 2006. The last reporting year using the MCP's
statewide result for the counties in which the MCP had membership as of February
1, 2006 for performance evaluation is CY2007; the last reporting year using the
MCP's statewide result for the counties in which the MCP had membership as of
February 1, 2006 for P4P (Appendix O) is CY 2008.

<PAGE>

Appendix M
Covered Families and Children (CFC) population
Page 12

For any MCP which did not have membership as of February 1, 2006: Performance
will be evaluated using a regional-based approach for any active region in which
the MCP had membership.

Regional-Based Approach: MCPs will be evaluated by region, using results for all
counties included in the region. ODJFS will use the first full calendar year of
data (which may be adjusted based on the number of months of managed care
membership) from all MCPs serving an active region to determine a minimum
performance standard for that region. CY 2008 will be the first reporting year
that MCPs will be held accountable to the performance standards for an active
region, and penalties will be applied for noncompliance. Performance measure
results for that region will be calculated after a sufficient amount of time has
passed after the end of the report period in order to allow for claims runout.

Report Period: In order to adhere to the statewide expansion timeline, reporting
periods may be adjusted based on the number of months of managed care
membership. For the SFY 2007 contract period, performance will be evaluated
using the January - December 2006 report period. For the SFY 2008 contract
period, performance will be evaluated using the January - December 2007 report
period. For the SFY 2009 contract period, performance will be evaluated using
the January - December 2008 report period.

County-Based Minimum Performance Standards:

CY 2006 report period - 63% of adults must receive a visit.
CY 2007 report period - 63% of adults must receive a visit.
CY 2008 report period - TBD (in May 2007)

Penalty for Noncompliance: If an MCP is noncompliant with the Minimum
Performance Standard, then the MCP must develop and implement a corrective
action plan.

2.D. MEMBERS' ACCESS TO DESIGNATED PCP

The MCP must encourage and assist CFC members without a designated primary care
physician (PCP) to establish such a relationship, so that a designated PCP can
coordinate and manage a member's health care needs. This measure is to be used
to assess MCPs' performance in the access category.

Measure: The percentage of members who had a visit through members' designated
PCPs.

Regional-Based Approach: MCPs will be evaluated by region, using results for all
counties included in the region. ODJFS will use the first full calendar year of
data (CY2007) as a baseline from all MCPs serving CFC membership to determine a
minimum performance standard for that region. CY 2008 will be the first
reporting year that MCPs will be held accountable to the performance standards
for an active region and penalties will be applied for noncompliance.
Performance measure results for that region will be calculated after a
sufficient amount of time has passed after the end of the report period in order
to allow for claims runout.

Report Period: For the SFY 2009 contract period, performance will be evaluated
using the January - December 2008 report period.

<PAGE>

Appendix M
Covered Families and Children (CFC) population
Page 13

Minimum Performance Standards: TBD

Penalty for Noncompliance: If an MCP is noncompliant with the Minimum
Performance Standard, then the MCP must develop and implement a corrective
action plan.

3. CONSUMER SATISFACTION

In accordance with federal requirements and in the interest of assessing
enrollee satisfaction with MCP performance, ODJFS annually conducts independent
consumer satisfaction surveys. Results are used to assist in identifying and
correcting MCP performance overall and in the areas of access, quality of care,
and member services. For SFY 2007 and SFY 2008, performance in this category
will be determined by the overall satisfaction score. For a comprehensive
description of the Consumer Satisfaction performance measure below, see ODJFS
Methods for Consumer Satisfaction Performance Measures for the Medicaid CFC
Managed Care Program.

Measure: Overall Satisfaction with MCP: The average rating of the respondents to
the Consumer Satisfaction Survey who were asked to rate their overall
satisfaction with their MCP. The results of this measure are reported annually.

County-Based Approach: Prior to the transition to the regional-based approach,
MCP performance will be evaluated using an MCP's statewide result. For
performance evaluation, the last year to use the county-based approach will be
SFY 2008, using CY 2008 data. For P4P (Appendix O), the last year to use the
county-based approach will be SFY 2009, using CY 2009 data.

Regional-Based Approach: MCPs will be evaluated by region, using results for all
counties included in the region. ODJFS will use the first full calendar year of
regional data (CY 2008 adult and child survey results from all MCPs serving CFC
membership to establish a measure and determine regional minimum performance
standards. For performance evaluation, the first year to use the regional-based
approach will be SFY 2009, using CY 2009 data. For P4P (Appendix O), the first
year to use the regional-based approach will be SFY 2010, using CY 2010 data.

Report Period: For the SFY 2007 contract period, performance will be evaluated
using the results from the most recent consumer satisfaction survey completed
prior to the end of the SFY 2007. For the SFY 2008 contract period, performance
will be evaluated using the results from the most recent consumer satisfaction
survey completed prior to the end of the SFY 2008. For the SFY 2009 contract
period, performance will be evaluated using the results from the most recent
consumer satisfaction survey completed prior to the end of the SFY 2009.

County-Based Minimum Performance Standard: An average score of no less than 7.0.

Penalty for noncompliance: If an MCP is determined noncompliant with the Minimum
Performance Standard, then the MCP must develop a corrective action plan and
provider agreement renewals may be affected.

4. ADMINISTRATIVE CAPACITY

<PAGE>

Appendix M
Covered Families and Children (CFC) population
Page 14

The ability of an MCP to meet administrative requirements has been found to be
both an indicator of current plan performance and a predictor of future
performance. Deficiencies in administrative capacity make the accurate
assessment of performance in other categories difficult, with findings
uncertain. Performance in this category will be determined by the Compliance
Assessment System, and the emergency department diversion program. For a
comprehensive description of the Administrative Capacity performance measures
below, see ODJFS Methods for Administrative Capacity Performance Measures for
the Medicaid CFC Managed Care Program.

4.A. COMPLIANCE ASSESSMENT SYSTEM

Measure: The number of points accumulated during a rolling 12-month period
through the Compliance Assessment System.

Report Period: For the SFY 2008 and SFY 2009 contract periods, performance will
be evaluated using a rolling 12-month report period.

Performance Standard: A maximum of 15 points

Penalty for Noncompliance: Penalties for points are established in Appendix N,
Compliance Assessment System.

4.B. EMERGENCY DEPARTMENT DIVERSION

Managed care plans must provide access to services in a way that assures access
to primary and urgent care in the most effective settings and minimizes
inappropriate utilization of emergency department (ED) services. MCPs are
required to identify high utilizers of ED services and implement action plans
designed to minimize inappropriate ED utilization.

Measure: The percentage of members who had four or more ED visits during the six
month reporting period.

For an MCP which had membership as of February 1, 2006: Prior to the transition
to the regional-based approach, MCP performance will be evaluated using an MCP's
statewide result for the counties in which the MCP had membership as of
February 1, 2006. The minimum performance standard and the target in this
Appendix (4.b) will be applicable to the MCP's statewide result for the counties
in which the MCP had membership as of February 1, 2006. The last reporting
period using the MCP's statewide result for the counties in which the MCP had
membership as of February 1, 2006 for performance evaluation is July-December
2007; the last reporting period using the MCP's statewide result for the
counties in which the MCP had membership as of February 1, 2006 for P4P
(Appendix O) is July-December 2006.

For any MCP which did not have membership as of February 1, 2006: Performance
will be evaluated using a regional-based approach for any active region in which
the MCP had membership.

<PAGE>

Appendix M
Covered Families and Children (CFC) population
Page 15

Regional-Based Approach: MCPs will be evaluated by region, using results for all
counties included in the region. The reporting period will be a full calendar
year. ODJFS will use the first full calendar year of data, which may be adjusted
based on the number of months of managed care membership, as a baseline from all
MCPs serving an active region to determine a minimum performance standard and a
target for that region. CY 2008 will be the first reporting year that MCPs will
be held accountable to the performance standards for an active region, and
penalties will be applied for noncompliance. Performance measure results for
that region will be calculated after a sufficient amount of time has passed
after the end of the report period in order to allow for claims runout.

Regional-Based Measure: The percentage of members who had TBD or more ED visits
during the 12 month reporting period.

Report Period: In order to adhere to the statewide expansion timeline, reporting
periods may be adjusted based on the number of months of managed care
membership. For the SFY 2007 contract period, a baseline level of performance
will be set using the January - June 2006 report period. Results will be
calculated for the reporting period of July - December 2006 and compared to the
baseline results to determine if the minimum performance standard is met. For
the SFY 2008 contract period, a baseline level of performance will be set using
the January - June 2007 report period (which may be adjusted based on the number
of months of managed care membership). Results will be calculated for the
reporting period of July - December 2007 and compared to the baseline results to
determine if the minimum performance standard is met. SFY 2008 is also the first
year for regional based reporting, using January - December 2007 as a baseline.
For the SFY 2009 contract period, results will be calculated for the reporting
period January - December 2008 and compared to the baseline.

County-Based Target: A maximum of 0.70% of the eligible population will have
four or more ED visits during the reporting period.

County-Based Minimum Performance Standard: The level of improvement must result
in at least a 10% decrease in the difference between the target and the baseline
period results.

Penalty for Noncompliance: If the standard is not met and the results are above
1.1%, then the MCP must develop a corrective action plan, for which ODJFS may
direct the MCP to develop the components of their EDD program as specified by
ODJFS. If the standard is not met and the results are at or below 1.1%, then the
MCP must develop a Quality Improvement Directive.

5. NOTES

Given that unforeseen circumstances (e.g., revision or update of applicable
national standards, methods or benchmarks, or issues related to program
implementation) may impact performance assessment as specified in Sections 1
through 4, ODJFS reserves the right to apply the most

<PAGE>

Appendix M
Covered Families and Children (CFC) population
Page 16

appropriate penalty to the area of deficiency identified with any individual
measure, notwithstanding the penalties specified in this Appendix.

5.A. REPORT PERIODS

Unless otherwise noted, the most recent report or study finalized prior to the
end of the contract period will be used in determining the MCP's performance
level for that contract period.

5.B. MONETARY SANCTIONS

Penalties for noncompliance with individual standards in this appendix will be
imposed as the results are finalized. Penalties for noncompliance with
individual standards for each period compliance is determined in this appendix
will not exceed $250,000.

Refundable monetary sanctions will be based on the capitation payment in the
month of the cited deficiency and due within 30 days of notification by ODJFS to
the MCP of the amount. Any monies collected through the imposition of such a
sanction would be returned to the MCP (minus any applicable collection fees owed
to the Attorney General's Office, if the MCP has been delinquent in submitting
payment) after they have demonstrated improved performance in accordance with
this appendix. If an MCP does not comply within two years of the date of
notification of noncompliance, then the monies will not be refunded.

5.C. COMBINED REMEDIES

If ODJFS determines that one systemic problem is responsible for multiple
deficiencies, ODJFS may impose a combined remedy which will address all areas of
deficient performance. The total fines assessed in any one month will not exceed
15% of the MCP's monthly capitation.

5.D. ENROLLMENT FREEZES

MCPs found to have a pattern of repeated or ongoing noncompliance may be subject
to an enrollment freeze.

5.E. RECONSIDERATION

Requests for reconsideration of monetary sanctions and enrollment freezes may be
submitted as provided in Appendix N, Compliance Assessment System.

5.F. CONTRACT TERMINATION, NONRENEWALS OR DENIALS

Upon termination, nonrenewal or denial of an MCP contact, all monetary sanctions
collected under this appendix will be retained by ODJFS. The at-risk amount paid
to the MCP under the current provider agreement will be returned to ODJFS in
accordance with Appendix P, Terminations, of the provider agreement.
<PAGE>

Appendix N
Covered Families and Children (CFC) population
Page 1

                                   APPENDIX N

                          COMPLIANCE ASSESSMENT SYSTEM
                             CFC ELIGIBLE POPULATION

I. GENERAL PROVISIONS OF THE COMPLIANCE ASSESSMENT SYSTEM

     A. The Compliance Assessment System (CAS) is designed to improve the
     quality of each managed care plan's (MCP's) performance through actions
     taken by the Ohio Department of Job and Family Services (ODJFS) to address
     identified failures to meet program requirements. This appendix applies to
     the MCP specified in the baseline of this MCP Provider Agreement
     (hereinafter referred to as the Agreement).

     B. The CAS assesses progressive remedies with specified values (e.g.,
     points, fines, etc.) assigned for certain documented failures to satisfy
     the deliverables required by Ohio Administrative Code (OAC) rule or the
     Agreement. Remedies are progressive based upon the severity of the
     violation, or a repeated pattern of violations. The CAS allows the
     accumulated point total to reflect patterns of less serious violations as
     well as less frequent, more serious violations.

     C. The CAS focuses on clearly identifiable deliverables and
     sanctions/remedial actions are only assessed in documented and verified
     instances of noncompliance. The CAS does not include categories which
     require subjective assessments or which are not within the MCPs control.

     D. The CAS does not replace ODJFS' ability to require corrective action
     plans (CAPs) and program improvements, or to impose any of the sanctions
     specified in OAC rule 5101:3-26-10, including the proposed termination,
     amendment, or nonrenewal of the MCP's Provider Agreement.

     E. As stipulated in OAC rule 5101:3-26-10(F), regardless of whether ODJFS
     imposes a sanction, MCPs are required to initiate corrective action for any
     MCP program violations or deficiencies as soon as they are identified by
     the MCP or ODJFS.

     F. In addition to the remedies imposed in Appendix N, remedies related to
     areas of financial performance, data quality, and performance management
     may also be imposed pursuant to Appendices J, L, and M respectively, of the
     Agreement.

     G. If ODJFS determines that an MCP has violated any of the requirements of
     sections 1903(m) or 1932 of the Social Security Act which are not
     specifically identified within the CAS, ODJFS may, pursuant to the
     provisions of OAC rule 5101:3-26-10(A), notify the MCP's members that they
     may terminate from the MCP without cause and/or

<PAGE>

Appendix N
Covered Families and Children (CFC) population
Page 2

     suspend any further new member selections.

     H. For purposes of the CAS, the date that ODJFS first becomes aware of an
     MCP's program violation is considered the date on which the violation
     occurred. Therefore, program violations that technically reflect
     noncompliance from the previous compliance term will be subject to remedial
     action under CAS at the time that ODJFS first becomes aware of this
     noncompliance.

     I. In cases where an MCP contracted healthcare provider is found to have
     violated a program requirement (e.g., failing to provide adequate contract
     termination notice, marketing to potential members, inappropriate member
     billing, etc.), ODJFS will not assess points if: (1) the MCP can document
     that they provided sufficient notification/education to providers of
     applicable program requirements and prohibited activities; and (2) the MCP
     takes immediate and appropriate action to correct the problem and to ensure
     that it does not happen again to the satisfaction of ODJFS. Repeated
     incidents will be reviewed to determine if the MCP has a systemic problem
     in this area, and if so, sanctions/remedial actions may be assessed, as
     determined by ODJFS.

     J. All notices of noncompliance will be issued in writing via email and
     facsimile to the identified MCP contact.

II. TYPES OF SANCTIONS/REMEDIAL ACTIONS

     ODJFS may impose the following types of sanctions/remedial actions,
     including, but not limited to, the items listed below. The following are
     examples of program violations and their related penalties. This list is
     not all inclusive. As with any instance of noncompliance, ODJFS retains the
     right to use their sole discretion to determine the most appropriate
     penalty based on the severity of the offense, pattern of repeated
     noncompliance, and number of consumers affected. Additionally, if an MCP
     has received any previous written correspondence regarding their duties and
     obligations under OAC rule or the Agreement, such notice may be taken into
     consideration when determining penalties and/or remedial actions.

     A. Corrective Action Plans (CAPs) - A CAP is a structured activity/process
     implemented by the MCP to improve identified operational deficiencies.

     MCPs may be required to develop CAPs for any instance of noncompliance, and
     CAPs are not limited to actions taken in this Appendix. All CAPs requiring
     ongoing activity on the part of an MCP to ensure their compliance with a
     program requirement remain in effect for twenty-four months.

     In situations where ODJFS has already determined the specific action which
     must be implemented by the MCP or if the MCP has failed to submit a CAP,
     ODJFS may require the MCP to comply with an ODJFS-developed or "directed"
     CAP.

<PAGE>

Appendix N
Covered Families and Children (CFC) population
Page 3

     In situations where a penalty is assessed for a violation an MCP has
     previously been assessed a CAP (or any penalty or any other related written
     correspondence), the MCP may be assessed escalating penalties.

     B. Points - Points will accumulate over a rolling 12-month schedule. Each
     month, points that are more than 12-months old will expire. Points will be
     tracked and monitored separately for each Agreement the MCP concomitantly
     holds with the BMHC, beginning with the commencement of this Agreement
     (i.e., the MCP will have zero points at the onset of this Agreement).

     No points will be assigned for any violation where an MCP is able to
     document that the precipitating circumstances were completely beyond their
     control and could not have been foreseen (e.g., a construction crew severs
     a phone line, a lightning strike blows a computer system, etc.).

          B.1. 5 Points -- Failures to meet program requirements, including but
          not limited to, actions which could impair the member's ability to
          obtain correct INFORMATION regarding services or which could impair a
          consumer's or member's rights, as determined by ODJFS, will result in
          the assessment of 5 points. Examples include, but are not limited to,
          the following:

               -    Violations which result in a member's MCP selection or
                    termination based on inaccurate provider panel information
                    from the MCP.

               -    Failure to provide member materials to new members in a
                    timely manner.

               -    Failure to comply with appeal, grievance, or state hearing
                    requirements, including the failure to notify a member of
                    their right to a state hearing when the MCP proposes to
                    deny, reduce, suspend or terminate a Medicaid-covered
                    service.

               -    Failure to staff 24-hour call-in system with appropriate
                    trained medical personnel.

               -    Failure to meet the monthly call-center requirements for
                    either the member services or the 24-hour call-in system
                    lines.

               -    Provision of false, inaccurate or materially misleading
                    information to health care providers, the MCP's members, or
                    any eligible individuals.

               -    Use of unapproved marketing or member materials.

               -    Failure to appropriately notify ODJFS or members of provider
                    panel terminations.

               -    Failure to update website provider directories as required.

          B.2. 10 Points -- Failures to meet program requirements, including but
          not limited to, actions which could affect the ability of the MCP to
          deliver or the CONSUMER TO ACCESS covered services, as determined by
          ODJFS. Examples include, but are

<PAGE>

Appendix N
Page 4

          not limited to, the following:

               -    Discrimination among members on the basis of their health
                    status or need for health care services (this includes any
                    practice that would reasonably be expected to encourage
                    termination or discourage selection by individuals whose
                    medical condition indicates probable need for substantial
                    future medical services).

               -    Failure to assist a member in accessing needed services in a
                    timely manner after request from the member.

               -    Failure to provide medically-necessary Medicaid covered
                    services to members.

               -    Failure to process prior authorization requests within the
                    prescribed time frames.

     C. Fines - Refundable or nonrefundable fines may be assessed as a penalty
     separate to or in combination with other sanctions/remedial actions.

          C.1. Unless otherwise stated, all fines are nonrefundable.

          C.2. Pursuant to procedures as established by ODJFS, refundable and
          nonrefundable monetary sanctions/assurances must be remitted to ODJFS
          within thirty (30) days of receipt of the invoice by the MCP. In
          addition, per Ohio Revised Code Section 131.02, payments not received
          within forty-five (45) days will be certified to the Attorney
          General's (AG's) office. MCP payments certified to the AG's office
          will be assessed the appropriate collection fee by the AG's office.

          C.3. Monetary sanctions/assurances imposed by ODJFS will be based on
          the most recent premium payments.

          C.4. Any monies collected through the imposition of a refundable fine
          will be returned to the MCP (minus any applicable collection fees owed
          to the Attorney General's Office if the MCP has been delinquent in
          submitting payment) after they have demonstrated full compliance, as
          determined by ODJFS, with the particular program requirement. If an
          MCP does not comply within one (1) year of the date of notification of
          noncompliance involving issues of case management and two (2) years of
          the date of notification of noncompliance in issues involving
          encounter data, then the monies will not be refunded.

          C.5. MCPs are required to submit a written request for refund to ODJFS
          at the time they believe is appropriate before a refund of monies will
          be considered.

     D. Combined Remedies - Notwithstanding any other action ODJFS may take
     under this Appendix, ODJFS may impose a combined remedy which will address
     all areas of

<PAGE>

Appendix N
Page 5

     noncompliance if ODJFS determines, in its sole discretion, that (1) one
     systemic problem is responsible for multiple areas of noncompliance and/or
     (2) that there are a number of repeated instances of noncompliance with the
     same program requirement.

     E. Progressive Remedies - Progressive remedies will be based on the number
     of points accumulated at the time of the most recent incident. Unless
     specifically otherwise indicated in this appendix, all fines are
     nonrefundable. The designated fine amount will be assessed when the number
     of accumulated points falls within the ranges specified below:

<TABLE>
<S>             <C>
0 -15 Points    Corrective Action Plan (CAP)

16-25 Points    CAP + $5,000 fine

26-50 Points    CAP + $10,000 fine

51-70 Points    CAP + $20,000 fine

71-100 Points   CAP + $30,000 fine

100+ Points     Proposed Contract Termination
</TABLE>

     F. New Member Selection Freezes - Notwithstanding any other penalty or
     point assessment that ODJFS may impose on the MCP under this Appendix,
     ODJFS may prohibit an MCP from receiving new membership through consumer
     initiated selection or the assignment process if: (1) the MCP has
     accumulated a total of 51 or more points during a rolling 12-month period;
     (2) or the MCP fails to fully implement a CAP within the designated time
     frame; or (3) circumstances exist which potentially jeopardize the MCP's
     members' access to care. [Examples of circumstances that ODJFS may consider
     as jeopardizing member access to care include:

     -    the MCP has been found by ODJFS to be noncompliant with the prompt
          payment or the non-contracting provider payment requirements;

     -    the MCP has been found by ODJFS to be noncompliant with the provider
          panel requirements specified in Appendix H of the Agreement;

     -    the MCP's refusal to comply with a program requirement after ODJFS has
          directed the MCP to comply with the specific program requirement; or

     -    the MCP has received notice of proposed or implemented adverse action
          by the Ohio Department of Insurance.]

     Payments provided for under the Agreement will be denied for new enrollees,
     when and

<PAGE>

Appendix N
Page 6

     for so long as, payments for those enrollees are denied by CMS in
     accordance with the requirements in 42 CFR 438.730.

     G. Reduction of Assignments - ODJFS has sole discretion over how member
     auto-assignments are made. ODJFS may reduce the number of assignments an
     MCP receives to assure program stability within a region or if ODJFS
     determines that the MCP lacks sufficient capacity to meet the needs of the
     increased volume in membership. Examples of circumstances which ODJFS may
     determine demonstrate a lack of sufficient capacity include, but are not
     limited to an MCP's failure to: maintain an adequate provider network;
     repeatedly provide new member materials by the member's effective date;
     meet the minimum call center requirements; meet the minimum performance
     standards for identifying and assessing children with special health care
     needs and members needing case management services; and/or provide complete
     and accurate appeal/grievance, member's PCP and CAMS data files.

     H. Termination, Amendment, or Nonrenewal of MCP Provider Agreement - ODJFS
     can at any time move to terminate, amend or deny renewal of a provider
     agreement. Upon such termination, nonrenewal, or denial of an MCP provider
     agreement, all previously collected monetary sanctions will be retained by
     ODJFS.

     I. Specific Pre-Determined Penalties

          I.1. Adequate network-minimum provider panel requirements - Compliance
          with provider panel requirements will be assessed quarterly. Any
          deficiencies in the MCP's provider network as specified in Appendix H
          of the Agreement or by ODJFS, will result in the assessment of a
          $1,000 nonrefundable fine for each category (practitioners, PCP
          capacity, hospitals), for each county, and for each population (e.g.,
          ABD, CFC). For example if the MCP did not meet the following minimum
          panel requirements, the MCP would be assessed (1) a $3,000
          nonrefundable fine for the failure to meet CFC panel requirements;
          and, (2) a $1,000 nonrefundable fine for the failure to meet ABD panel
          requirements).

               -    practitioner requirements in Franklin county for the CFC
                    population

               -    practitioner requirements in Franklin county for the ABD
                    population

               -    hospital requirements in Franklin county for the CFC
                    population

               -    PCP capacity requirements in Fairfield county for the CFC
                    population

          In addition to the pre-determined penalties, ODJFS may assess
          additional penalties pursuant to this Appendix (e.g. CAPs, points,
          fines) if member specific access issues are identified resulting from
          provider panel noncompliance.

          I.2. Geographic Information System - Compliance with the Geographic
          Information System (GIS) requirements will be assessed semi-annually.
          Any failure to meet GIS requirements as specified in Appendix H of the
          Agreement will result a $1,000 nonrefundable fine for each county and
          for each population

<PAGE>

Appendix N
Page 7

          (e.g., ABD, CFC, etc.). For example if the MCP did not meet GIS
          requirements in the following counties, the MCP would be assessed (1)
          a nonrefundable $2,000 fine for the failure to meet GIS requirements
          for the CFC population and (2) a $1,000 nonrefundable fine for the
          failure to meet GIS requirements for the ABD population.

               -    GIS requirements in Franklin county for the CFC population

               -    GIS requirements in Fairfield county for the CFC population

               -    GIS requirements in Franklin county for the ABD population

          I.3. Late Submissions - All required submissions/data and
          documentation requests must be received by their specified deadline
          and must represent the MCP in an honest and forthright manner. Failure
          to provide ODJFS with a required submission or any data/documentation
          requested by ODJFS will result in the assessment of a nonrefundable
          fine of $100 per day, unless the MCP requests and is granted an
          extension by ODJFS. Assessments for late submissions will be done
          monthly. Examples of such program violations include, but are not
          limited to:

               -    Late required submissions

                    -    Annual delegation assessments

                    -    Call center report

                    -    Franchise fee documentation

                    -    Reinsurance information (e.g., prior approval of
                         changes)

                    -    State hearing notifications

               -    Late required data submissions

                    -    Appeals and grievances, case management, or PCP data

               -    Late required information requests

                    -    Automatic call distribution reports

                    -    Information/resolution regarding consumer or provider
                         complaint

                    -    Just cause or other coordination care request from
                         ODJFS

                    -    PVS survey forms

                    -    Failure to provide ODJFS with a required submission
                         after ODJFS has notified the MCP that the prescribed
                         deadline for that submission has passed

          If an MCP determines that they will be unable to meet a program
          deadline or data/documentation submission deadline, the MCP must
          submit a written request to its Contract Administrator for an
          extension of the deadline, as soon as possible, but no later than 3 PM
          EST on the date of the deadline in question. Extension requests should
          only be submitted in situations where unforeseeable circumstances have
          occurred which make it impossible for the MCP to meet an
          ODJFS-stipulated deadline and all such requests will be evaluated upon
          this standard. Only written approval as may be granted by ODJFS of a
          deadline extension will preclude the assessment of compliance action
          for untimely

<PAGE>

Appendix N
Page 8

          submissions.

          I.4. Noncompliance with Claims Adjudication Requirements - If ODJFS
          finds that an MCP is unable to (1) electronically accept and
          adjudicate claims to final status and/or (2) notify providers of the
          status of their submitted claims, as stipulated in Appendix C of the
          Agreement, ODJFS will assess the MCP with a monetary sanction of
          $20,000 per day for the period of noncompliance.

          If ODJFS has identified specific instances where an MCP has failed to
          take the necessary steps to comply with the requirements specified in
          Appendix C of the Agreement for (1) failing to notify non-contracting
          providers of procedures for claims submissions when requested and/or
          (2) failing to notify contracting and non-contracting providers of the
          status of their submitted claims, the MCP will be assessed 5 points
          per incident of noncompliance.

          I.5. Noncompliance with Prompt Payment: - Noncompliance with the
          prompt pay requirements as specified in Appendix J of the Agreement
          will result in progressive penalties. The first violation during a
          rolling 12-month period will result in the submission of quarterly
          prompt pay and monthly status reports to ODJFS until the next
          quarterly report is due. The second violation during a rolling
          12-month period will result in the submission of monthly status
          reports and a refundable fine equal to 5% of the MCP's monthly premium
          payment or $300,000, whichever is less. The refundable fine will be
          applied in lieu of a nonrefundable fine and the money will be refunded
          by ODJFS only after the MCP complies with the required standards for
          two (2) consecutive quarters. Subsequent violations will result in an
          enrollment freeze.

          If an MCP is found to have not been in compliance with the prompt pay
          requirements for any time period for which a report and signed
          attestation have been submitted representing the MCP as being in
          compliance, the MCP will be subject to an enrollment freeze of not
          less than three (3) months duration.

          I.6. Noncompliance with Franchise Fee Assessment Requirements - In
          accordance with ORC Section 5111.176, and in addition to the
          imposition of any other penalty, occurrence or points under this
          Appendix, an MCP that does not pay the franchise permit fee in full by
          the due date is subject to any or all of the following:

               -    A monetary penalty in the amount of $500 for each day any
                    part of the fee remains unpaid, except the penalty will not
                    exceed an amount equal to 5 % of the total fee that was due
                    for the calendar quarter for which the penalty was imposed;

               -    Withholdings from future ODJFS capitation payments. If an
                    MCP fails to pay the full amount of its franchise fee when
                    due, or the full amount of the

<PAGE>

Appendix N
Page 9

                    imposed penalty, ODJFS may withhold an amount equal to the
                    remaining amount due from any future ODJFS capitation
                    payments. ODJFS will return all withheld capitation payments
                    when the franchise fee amount has been paid in full.

               -    Proposed termination or non-renewal of the MCP's Medicaid
                    provider agreement may occur if the MCP:

                         a.   Fails to pay its franchise permit fee or fails to
                              pay the fee promptly;

                         b.   Fails to pay a penalty imposed under this Appendix
                              or fails to pay the penalty promptly;

                         c.   Fails to cooperate with an audit conducted in
                              accordance with ORC Section 5111.176.

          I.7. Noncompliance with Clinical Laboratory Improvement Amendments -
          Noncompliance with CLIA requirements as specified by ODJFS will result
          in the assessment of a nonrefundable $1,000 fine for each violation.

          I.8. Noncompliance with Abortion and Sterilization Payment -
          Noncompliance with abortion and sterilization requirements as
          specified by ODJFS will result in the assessment of a nonrefundable
          $2,000 fine for each documented violation. Additionally, MCPs must
          take all appropriate action to correct each ODJFS-documented
          violation.

          I.9. Refusal to Comply with Program Requirements - If ODJFS has
          instructed an MCP that they must comply with a specific program
          requirement and the MCP refuses, such refusal constitutes
          documentation that the MCP is no longer operating in the best
          interests of the MCP's members or the state of Ohio and ODJFS will
          move to terminate or nonrenew the MCP's provider agreement.

III. REQUEST FOR RECONSIDERATIONS

     MCPs may request a reconsideration of remedial action taken under the CAS
     for penalties that include points, fines, reductions in assignments and/or
     selection freezes. Requests for reconsideration must be submitted on the
     ODJFS required form as follows:

     A. MCPs notified of ODJFS' imposition of remedial action taken under the
     CAS will have ten (10) working days from the date of receipt of the
     facsimile to request reconsideration, although ODJFS will impose enrollment
     freezes based on an access to care concern concurrent with initiating
     notification to the MCP. Any information that the MCP would like reviewed
     as part of the reconsideration request must be submitted at the time of
     submission of the reconsideration request, unless ODJFS extends the time
     frame in writing.

     B. All requests for reconsideration must be submitted by either facsimile
     transmission or

<PAGE>

Appendix N
Page 10

     overnight mail to the Chief, Bureau of Managed Health Care, and received by
     ODJFS by the tenth business day after receipt of the faxed notification of
     the imposition of the remedial action by ODJFS.

     C. The MCP will be responsible for verifying timely receipt of all
     reconsideration requests. All requests for reconsideration must explain in
     detail why the specified remedial action should not be imposed. The MCP's
     justification for reconsideration will be limited to a review of the
     written material submitted by the MCP. The Bureau Chief will review all
     correspondence and materials related to the violation in question in making
     the final reconsideration decision.

     D. Final decisions or requests for additional information will be made by
     ODJFS within ten (10) business days of receipt of the request for
     reconsideration.

     E. If additional information is requested by ODJFS, a final reconsideration
     decision will be made within three (3) business days of the due date for
     the submission. Should ODJFS require additional time in rendering the final
     reconsideration decision, the MCP will be notified of such in writing.

     F. If a reconsideration request is decided, in whole or in part, in favor
     of the MCP, both the penalty and the points associated with the incident,
     will be rescinded or reduced, in the sole discretion of ODJFS. The MCP may
     still be required to submit a CAP if ODJFS, in its sole discretion,
     believes that a CAP is still warranted under the circumstances.

<PAGE>

Appendix O
Covered Families and Children (CFC) population
Page 1

                                   APPENDIX O

                            PAY-FOR PERFORMANCE (P4P)
                             CFC ELIGIBLE POPULATION

This Appendix establishes P4P for managed care plans (MCPs) to improve
performance in specific areas important to the Medicaid MCP members. P4P include
the at-risk amount included with the monthly premium payments (see Appendix F,
Rate Chart), and possible additional monetary rewards up to $250,000.

To qualify for consideration of any P4P, MCPs must meet minimum performance
standards established in Appendix M, Performance Evaluation on selected
measures, and achieve P4P standards established for selected Clinical
Performance Measures. For qualifying MCPs, higher performance standards for
three measures must be reached to be awarded a portion of the at-risk amount and
any additional P4P (see Sections 1 and 2). An excellent and superior standard is
set in this Appendix for each of the three measures. Qualifying MCPs will be
awarded a portion of the at-risk amount for each excellent standard met. If an
MCP meets all three excellent and superior standards, they may be awarded
additional P4P (see Section 3).

Prior to the transition to a regional-based P4P system (SFY 2006 through SFY
2009), the county-based P4P system (sections 1 and 2 of this Appendix) will
apply to MCPs with membership as of February 1, 2006. Only counties with
membership as of February 1, 2006 will be used to calculate performance levels
for the county-based P4P system.

1. SFY 2007 P4P

1.A. QUALIFYING PERFORMANCE LEVELS

To qualify for consideration of the SFY 2007 P4P, an MCP's performance level
must:

     1) Meet the minimum performance standards set in Appendix M, Performance
     Evaluation, for the measures listed below; and

     2) Meet the P4P standards established for the Emergency Department
     Diversion and Clinical Performance Measures below.

A detailed description of the methodologies for each measure can be found on the
BMHC page of the ODJFS website.

Measures for which the minimum performance standard for SFY 2007 established in
Appendix M, Performance Evaluation, must be met to qualify for consideration of
P4P are as follows:

1. PCP Turnover (Appendix M, Section 2.a.)

     Report Period: CY 2006

<PAGE>

Appendix O
Covered Families and Children (CFC) population
Page 2

2. Children's Access to Primary Care (Appendix M, Section 2.b.)

     Report Period: CY 2006

3. Adults' Access to Preventive/Ambulatory Health Services (Appendix M, Section
2.c.)

     Report Period: CY 2006

4. Overall Satisfaction with MCP (Appendix M, Section 3.)

     Report Period: The most recent consumer satisfaction survey completed prior
     to the end of the SFY 2007 contract period.

For the EDD performance measure, the MCP must meet the P4P standard for the
report period of July - December, 2006 to be considered for SFY 2007 P4P. The
MCP meets the P4P standard if one of two criteria are met. The P4P standard is a
performance level of either:

1) The minimum performance standard established in Appendix M, Section 4.b.; or

2) The Medicaid benchmark of a performance level at or below 1.1%.

For each clinical performance measure listed below, the MCP must meet the P4P
standard to be considered for SFY 2007 P4P. The MCP meets the P4P standard if
one of two criteria are met. The P4P standard is a performance level of either:

1) The minimum performance standard established in Appendix M, Performance
Evaluation, for seven of the nine clinical performance measures listed below; or

2) The Medicaid benchmarks for seven of the nine clinical performance measures
listed below. The Medicaid benchmarks are subject to change based on the
revision or update of applicable national standards, methods or benchmarks.

<TABLE>
<CAPTION>
                                                            Medicaid
              Clinical Performance Measure                 Benchmark
              ----------------------------                 ---------
<S>                                                        <C>
1. Perinatal Care - Frequency of Ongoing Prenatal Care        42%
2. Perinatal Care - Initiation of Prenatal Care               71%
3. Perinatal Care - Postpartum Care                           48%
4. Well-Child Visits - Children who turn 15 months old        34%
5. Well-Child Visits - 3, 4, 5, or 6, years old               50%
6. Well-Child Visits - 12 through 21 years old                30%
7. Use of Appropriate Medications for People with Asthma      83%
8. Annual Dental Visits                                       40%
9. Blood Lead - 1 year olds                                   45%
</TABLE>

<PAGE>

Appendix O
Covered Families and Children (CFC) population
Page 3

1.B. EXCELLENT AND SUPERIOR PERFORMANCE LEVELS

For qualifying MCPs as determined by Section 2.a., performance will be evaluated
on the measures below to determine the status of the at-risk amount or any
additional P4P that may be awarded. Excellent and Superior standards are set for
the three measures described below. The standards are subject to change based on
the revision or update of applicable national standards, methods or benchmarks.

A brief description of these measures is provided in Appendix M, Performance
Evaluation. A detailed description of the methodologies for each measure can be
found on the BMHC page of the ODJFS website.

1. Case Management of Children (Appendix M, Section 1.b.ii.)

     Report Period: April - June 2007

     Excellent Standard: 5.5%

     Superior Standard: 6.5%

2. Use of Appropriate Medications for People with Asthma (Appendix M, Section
1.c.vi.)

     Report Period: CY 2006

     Excellent Standard: 86%

     Superior Standard: 88%

3. Adults' Access to Preventive/Ambulatory Health Services (Appendix M, Section
2.c.)

     Report Period: CY 2006

     Excellent Standard: 76%

      Superior Standard: 83%

1.C. DETERMINING SFY 2007 P4P

MCPs reaching the minimum performance standards described in Section 1.a.
herein, will be considered for P4P including retention of the at-risk amount and
any additional P4P. For each Excellent standard established in Section 1.b.
herein, that an MCP meets, one-third of the at-risk amount may be retained. For
MCPs meeting all of the Excellent and Superior standards established in Section
1.b. herein, additional P4P may be awarded. For MCPs receiving additional P4P,
the amount in the P4P fund (see section 2.) will be divided equally, up to the
maximum additional amount, among all MCPs'ABD and/or CFC programs

<PAGE>

Appendix O
Covered Families and Children (CFC) population
Page 4

receiving additional P4P. The maximum additional amount to be awarded per plan,
per program, per contract year is $250,000. An MCP may receive up to $500,000
should both of the MCP's ABD and CFC programs achieve the Superior Performance
Levels.

2. SFY 2008 P4P

2.A. QUALIFYING PERFORMANCE LEVELS

To qualify for consideration of the SFY 2008 P4P, an MCP's performance level
must meet the minimum performance standards set in Appendix M, Performance
Evaluation, for the measures listed below. A detailed description of the
methodologies for each measure can be found on the BMHC page of the ODJFS
website.

Measures for which the minimum performance standard for SFY 2008 established in
Appendix M, Performance Evaluation, must be met to qualify for consideration of
P4P are as follows:

1. PCP Turnover (Appendix M, Section 2.a.)

     Report Period: CY 2007

2. Children's Access to Primary Care (Appendix M, Section 2.b.)

     Report Period: CY 2007

3. Adults' Access to Preventive/Ambulatory Health Services (Appendix M, Section
2.c.)

     Report Period: CY 2007

4. Overall Satisfaction with MCP (Appendix M, Section 3.)

     Report Period: The most recent consumer satisfaction survey completed prior
     to the end of the SFY2008.

For each clinical performance measure listed below, the MCP must meet the P4P
standard to be considered for SFY 2008 P4P. The MCP meets the P4P standard if
one of two criteria are met. The P4P standard is a performance level of either:

1) The minimum performance standard established in Appendix M, Performance
Evaluation, for seven of the nine clinical performance measures listed below; or

2) The Medicaid benchmarks for seven of the nine clinical performance measures
listed below. The Medicaid benchmarks are subject to change based on the
revision or update of applicable national standards, methods or benchmarks.

<PAGE>

Appendix O
Covered Families and Children (CFC) population
Page 5

<TABLE>
<CAPTION>
                                                            Medicaid
               Clinical Performance Measure                Benchmark
               ----------------------------                ---------
<S>                                                        <C>
1. Perinatal Care - Frequency of Ongoing Prenatal Care        42%
2. Perinatal Care - Initiation of Prenatal Care               71%
3. Perinatal Care - Postpartum Care                           48%
4. Well-Child Visits - Children who turn 15 months old        34%
5. Well-Child Visits - 3, 4, 5, or 6, years old               50%
6. Well-Child Visits - 12 through 21 years old                30%
7. Use of Appropriate Medications for People with Asthma      83%
8. Annual Dental Visits                                       40%
9. Blood Lead - 1 year olds                                   45%
</TABLE>

2.B. EXCELLENT AND SUPERIOR PERFORMANCE LEVELS

For qualifying MCPs as determined by Section 2.a., performance will be evaluated
on the measures below to determine the status of the at-risk amount or any
additional P4P that may be awarded. Excellent and Superior standards are set for
the three measures described below. The standards are subject to change based on
the revision or update of applicable national standards, methods or benchmarks.

A brief description of these measures is provided in Appendix M, Performance
Evaluation. A detailed description of the methodologies for each measure can be
found on the BMHC page of the ODJFS website.

1. Case Management of Children (Appendix M, Section 1.b.i.)

     Report Period: April - June 2008

     Excellent Standard: 5.5%

     Superior Standard: 6.5%

2. Use of Appropriate Medications for People with Asthma (Appendix M, Section
1.c.v.)

     Report Period: CY 2007

     Excellent Standard: 86%

     Superior Standard: 88%

3. Adults' Access to Preventive/Ambulatory Health Services (Appendix M, Section
2.c.)

     Report Period: CY 2007

     Excellent Standard: 76%

<PAGE>

Appendix O
Covered Families and Children (CFC) population
Page 6

     Superior Standard: 84%

2.C. DETERMINING SFY 2008 P4P

MCP's reaching the minimum performance standards described in Section 2.a.
herein, will be considered for P4P including retention of the at-risk amount and
any additional P4P. For each Excellent standard established in Section 2.b.
herein, that an MCP meets, one-third of the at-risk amount may be retained. For
MCPs meeting all of the Excellent and Superior standards

established in Section 2.b. herein, additional P4P may be awarded. For MCPs
receiving additional P4P, the amount in the P4P fund (see Section 3.) will be
divided equally, up to the maximum additional amount, among all MCPs' ABD and/or
CFC programs receiving additional P4P. The maximum additional amount to be
awarded per plan, per program, per contract year is $250,000. An MCP may receive
up to $500,000 should both of the MCP's ABD and CFC programs achieve the
Superior Performance Levels.

3. NOTES

3.A. INITIATION OF THE P4P SYSTEM

For MCPs in their first twenty-four months of Ohio Medicaid CFC Managed Care
Program participation, the status of the at-risk amount will not be determined
because compliance with many of the standards cannot be determined in an MCP's
first two contract years (see Appendix F., Rate Chart). In addition, MCPs in
their first two contract years are not eligible for the additional P4P amount
awarded for superior performance.

Starting with the twenty-fifth month of participation in the program, a new
MCP's at-risk amount will be included in the P4P system. The determination of
the status of this at-risk amount will be after at least three full calendar
years of membership as many of the performance standards require three full
calendar years to determine an MCP's performance level. Because of this
requirement, more than 12 months of at-risk dollars may be included in an MCP's
first at-risk status determination depending on when an MCP starts with the
program relative to the calendar year.

3.B. DETERMINATION OF AT-RISK AMOUNTS AND ADDITIONAL P4P PAYMENTS

For MCPs that have participated in the Ohio Medicaid Managed Care Program long
enough to calculate performance levels for all of the performance measures
included in the P4P system, determination of the status of an MCP's at-risk
amount will occur within six months of the end of the contract period.
Determination of additional P4P payments will be made at the same time the
status of an MCP's at-risk amount is determined.

<PAGE>

Appendix O
Covered Families and Children (CFC) population
Page 7

3.C. TRANSITION FROM A COUNTY-BASED TO A REGIONAL-BASED P4P SYSTEM.

The current county-based P4P system will transition to a regional-based system
as managed care expands statewide. The regional-approach will be fully phased in
no later than SFY 2010. The regional-based P4P system will be modeled after the
county-based system with adjustments to performance standards where appropriate
to account for regional differences.

3.C.I. COUNTY-BASED P4P SYSTEM

During the transition to a regional-based system (SFY 2006 through SFY 2009),
MCPs with membership as of February 1, 2006 will continue in the county-based
P4P system until the transition is complete. These MCPs will be put at-risk for
a portion of the premiums received for members in counties they are serving as
of February 1, 2006.

3.C.II. REGIONAL-BASED P4P SYSTEM

All MCPs will be included in the regional-based P4P system. The at-risk amount
will be determined separately for each region an MCP serves.

The status of the at-risk amount for counties not included in the county-based
P4P system will not be determined for the first twenty-four months of regional
membership. Starting with the twenty-fifth month of regional membership, the
MCP's at-risk amount will be included in the P4P system. The determination of
the status of this at-risk amount will be after at least three full calendar
years of regional membership as many of the performance standards require three
full calendar years to determine an MCP's performance level. Given that
statewide expansion was not complete by December 31, 2006, ODJFS may adjust
performance measure reporting periods based on the number of months an MCP has
had regional membership. Because of this requirement, more than 12 months of
at-risk dollars may be included in an MCP's first regional at-risk status
determination depending on when regional membership starts relative to the
calendar year. Regional premium payments for months prior to July 2009 for
members in counties included in the county-based P4P system for the SFY 2009 P4P
determination, will be excluded from the at-risk dollars included in the first
regional P4P determination.

3.D. CONTRACT TERMINATION, NONRENEWALS, OR DENIALS

Upon termination, nonrenewal or denial of an MCP contract, the at-risk amount
paid to the MCP under the current provider agreement will be returned to ODJFS
in accordance with Appendix P., Terminations/Nonrenewals/Amendments, of the
provider agreement.

Additionally, in accordance with Article XI of the provider agreement, the
return of the at-risk amount paid to the MCP under the current provider
agreement will be a condition necessary for ODJFS' approval of a provider
agreement assignment.

<PAGE>

Appendix O
Covered Families and Children (CFC) population
Page 8

3.E. REPORT PERIODS

The report period used in determining the MCP's performance levels varies for
each measure depending on the frequency of the report and the data source.
Unless otherwise noted, the most recent report or study finalized prior to the
end of the contract period will be used in determining the MCP's overall
performance level for that contract period.

<PAGE>

Appendix P
Covered Families and Children (CFC) population
Page 1

                                   APPENDIX P

                     MCP TERMINATIONS/NONRENEWALS/AMENDMENTS
                             CFC ELIGIBLE POPULATION

Upon termination either by the MCP or ODJFS, nonrenewal or denial of an MCP's
provider agreement, all previously collected refundable monetary sanctions will
be retained by ODJFS.

MCP-INITIATED TERMINATIONS/NONRENEWALS

If an MCP provides notice of the termination/nonrenewal of their provider
agreement to ODJFS, pursuant to Article VIII of the agreement, the MCP will be
required to submit a refundable monetary assurance. This monetary assurance will
be held by ODJFS until such time that the MCP has submitted all outstanding
monies owed and reports, including, but not limited to, grievance, appeal,
encounter and cost report data related to time periods through the final date of
service under the MCP's provider agreement. The monetary assurance must be in an
amount of either $50,000 or 5% of the capitation amount paid by ODJFS in the
month the termination/nonrenewal notice is issued, whichever is greater.

The MCP must also return to ODJFS the at-risk amount paid to the MCP under the
current provider agreement. The amount to be returned will be based on actual
MCP membership for preceding months and estimated MCP membership through the end
date of the contract. MCP membership for each month between the month the
termination/nonrenewal is issued and the end date of the provider agreement will
be estimated as the MCP membership for the month the termination/nonrenewal is
issued. Any over payment will be determined by comparing actual to estimated MCP
membership and will be returned to the MCP following the end date of the
provider agreement.

The MCP must remit the monetary assurance and the at-risk amount in the
specified amounts via separate electronic fund transfers (EFT) payable to
Treasurer of State, State of Ohio (ODJFS). The MCP should contact their Contract
Administrator to verify the correct amounts required for the monetary assurance
and the at-risk amount and obtain an invoice number prior to submitting the
monetary assurance and the at-risk amount. Information from the invoices must be
included with each EFT to ensure monies are deposited in the appropriate ODJFS
Fund account. In addition, the MCP must send copies of the EFT bank
confirmations and copies of the invoices to their Contract Administrator.

If the monetary assurance and the at-risk amount are not received as specified
above, ODJFS will withhold the MCP's next month's capitation payment until such
time that ODJFS receives documentation that the monetary assurance and the
at-risk amount are received by the Treasurer of State. If within one year of the
date of issuance of the invoice, an MCP does not submit all outstanding monies
owed and required submissions, including, but not limited to, grievance, appeal,
encounter and cost report data related to time periods through the final date of
service under the MCP's provider agreement, the monetary assurance will not be
refunded to the MCP.

<PAGE>

Appendix P
Covered Families and Children (CFC) population
Page 2

ODJFS-INITIATED TERMINATIONS

If ODJFS initiates the proposed termination, nonrenewal or amendment of an MCP's
provider agreement pursuant to OAC rule 5101:3-26-10 and the MCP appeals that
proposed action, the MCP's provider agreement will be extended through the
issuance of an adjudication order in the MCP's appeal under R.C. Chapter 119.

During this time, the MCP will continue to accrue points and be assessed
penalties for each subsequent compliance assessment occurrence/violation under
Appendix N of the provider agreement. If the MCP exceeds 69 points, each
subsequent point accrual will result in a $15,000 nonrefundable fine.

Pursuant to OAC rule 5101:3-26-10(H), if ODJFS has proposed the termination,
nonrenewal, denial or amendment of a provider agreement, ODJFS may notify the
MCP's members of this proposed action and inform the members of their right to
immediately terminate their membership with that MCP without cause. If ODJFS has
proposed the termination, nonrenewal, denial or amendment of a provider
agreement and access to medically-necessary covered services is jeopardized,
ODJFS may propose to terminate the membership of all of the MCP's members. The
appeal process for reconsideration of the proposed termination of members is as
follows:

-    All notifications of such a proposed MCP membership termination will be
     made by ODJFS via certified or overnight mail to the identified MCP
     Contact.

-    MCPs notified by ODJFS of such a proposed MCP membership termination will
     have three working days from the date of receipt to request
     reconsideration.

-    All reconsideration requests must be submitted by either facsimile
     transmission or overnight mail to the Deputy Director, Office of Ohio
     Health Plans, and received by 3PM on the third working day following
     receipt of the ODJFS notification of termination. The address and fax
     number to be used in making these requests will be specified in the ODJFS
     notification of termination document.

-    The MCP will be responsible for verifying timely receipt of all
     reconsideration requests. All requests must explain in detail why the
     proposed MCP membership termination is not justified. The MCP's
     justification for reconsideration will be limited to a review of the
     written material submitted by the MCP.

-    A final decision or request for additional information will be made by the
     Deputy Director within three working days of receipt of the request for
     reconsideration. Should the Deputy Director require additional time in
     rendering the final reconsideration decision, the MCP will be notified of
     such in writing.

<PAGE>

Appendix P
Covered Families and Children (CFC) population
Page 3

-    The proposed MCP membership termination will not occur while an appeal is
     under review and pending the Deputy Director's decision. If the Deputy
     Director denies the appeal, the MCP membership termination will proceed at
     the first possible effective date. The date may be retroactive if the ODJFS
     determines that it would be in the best interest of the members.

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