Document:

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                                                                   EXHIBIT 10.35

                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                     CONTRACT FOR FURNISHING HEALTH SERVICES
                                      BY A
                            MANAGED CARE ORGANIZATION

                                 AUGUST 1, 2003

                        ILLINOIS DEPARTMENT OF PUBLIC AID
                          DIVISION OF MEDICAL PROGRAMS
                          BUREAU OF CONTRACT MANAGEMENT
                           201 SOUTH GRAND AVENUE EAST
                        SPRINGFIELD, ILLINOIS 62763-0001

                                 BARRY S. MARAM
                                    DIRECTOR

                        ANNE MARIE MURPHY, ADMINISTRATOR
                          DIVISION OF MEDICAL PROGRAMS
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                                TABLE OF CONTENTS

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ARTICLE I        DEFINITIONS...............................................................................     1

ARTICLE II       TERMS AND CONDITIONS......................................................................     8

     2.1      Specification................................................................................     8

     2.2      Rules of Construction........................................................................     8

     2.3      Performance of Services and Duties...........................................................     9

     2.4      Language Requirements........................................................................     9

              (a)      Key Oral Contacts...................................................................     9

              (b)      Written Material....................................................................     9

              (c)      Oral Interpretation.................................................................    10

     2.5      List of Individuals in Administrative Capacity...............................................    10

     2.6      Certificate of Authority.....................................................................    10

     2.7      Obligation to Comply with other Laws.........................................................    10

     2.8      Provision of Covered Services Through Affiliated Providers...................................    10

ARTICLE III      ELIGIBILITY...............................................................................    11

     3.1      Determination of Eligibility.................................................................    11

     3.2      Enrollment Generally.........................................................................    11

     3.3      Enrollment Limits............................................................................    11

     3.4      Expansion to Other Contracting Areas.........................................................    12

     3.5      Discontinuation of Services in One or More Contracting Area..................................    12

ARTICLE IV       ENROLLMENT, COVERAGE AND TERMINATION OF COVERAGE..........................................    13

     4.1      Enrollment Process...........................................................................    13

     4.2      Initial Coverage.............................................................................    14

     4.3      Period of Enrollment.........................................................................    15

     4.4      Termination of Coverage......................................................................    15

     4.5      Preexisting Conditions and Treatment.........................................................    17

     4.6      Continuity of Care...........................................................................    17

     4.7      Change of Site and Primary Care Provider or Women's Health Care Provider.....................    19
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ARTICLE V        DUTIES OF CONTRACTOR......................................................................    19

     5.1      Services.....................................................................................    19

              (a)      Amount, Duration and Scope of Coverage..............................................    19

              (b)      Enumerated Covered Services.........................................................    19

              (c)      Behavioral Health Services..........................................................    21

              (d)      Services to Prevent Illness and Promote Health......................................    22

              (e)      Exclusions from Covered Services....................................................    22

              (f)      Limitations on Covered Services.....................................................    24

              (g)      Right of Conscience.................................................................    24

              (h)      Emergency Services..................................................................    24

              (i)      Post-Stabilization Services.........................................................    25

              (j)      Additional Services or Benefits.....................................................    25

              (k)      Telephone Access....................................................................    25

              (l)      Pharmacy Formulary..................................................................    26

     5.2      Marketing....................................................................................    27

     5.3      Inappropriate Activities.....................................................................    31

     5.4      Obligation to Provide Information............................................................    31

     5.5      Quality Assurance, Utilization Review and Peer Review........................................    33

     5.6      Physician Incentive Plan Regulations.........................................................    34

     5.7      Prohibited Affiliations......................................................................    34

     5.8      Records......................................................................................    35

              (a)      Maintenance of Business Records.....................................................    35

              (b)      Availability of Business Records....................................................    35

              (c)      Patient Records.....................................................................    35

     5.9      Computer System Requirements.................................................................    36

     5.10     Regular Information Reporting Requirements...................................................    37

     5.11     Health Education.............................................................................    43

     5.12     Required Minimum Standards of Care...........................................................    44

              (a)      EPSDT Services to Enrollees Under Twenty-One (21) Years.............................    44
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              (b)      Preventive Medicine Schedule (Services to Enrollees Twenty-One (21) Years of Age and
                       Over)...............................................................................    44

              (c)      Maternity Care......................................................................    46

              (d)      Complex and Serious Medical Conditions..............................................    47

              (e)      Access Standards....................................................................    48

              (f)      Coordination with Other Service Providers...........................................    48

     5.13     Authorization of Services....................................................................    49

     5.14     Choice of Physicians.........................................................................    49

     5.15     Timely Payments to Providers.................................................................    50

     5.16     Grievance Procedure and Appeal Procedure.....................................................    51

     5.17     Enrollee Satisfaction Survey.................................................................    52

     5.18     Provider Agreements and Subcontracts.........................................................    53

     5.19     Site Registration and Primary Care Provider/Women's Health Care Provider Approval and
              Credentialing................................................................................    55

     5.20     Advance Directives...........................................................................    56

     5.21     Fees to Enrollees Prohibited.................................................................    56

     5.22     Fraud and Abuse Procedures...................................................................    56

     5.23     Misrepresentation Procedures.................................................................    57

     5.24     Enrollee-Provider Communications.............................................................    57

     5.25     HIPAA Compliance.............................................................................    57

ARTICLE VI            DUTIES OF THE DEPARTMENT.............................................................    58

     6.1      Enrollment...................................................................................    58

     6.2      Payment......................................................................................    58

     6.3      Department Review of Marketing Materials.....................................................    58

     6.4      HIPAA Compliance.............................................................................    58

ARTICLE VII           PAYMENT AND FUNDING..................................................................    59

     7.1      Capitation Payment...........................................................................    59

     7.2      Hospital Delivery Case Rate Payment..........................................................    59

     7.3      Actuarially Sound Rate Representation........................................................    59

     7.4      New Covered Services.........................................................................    59
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     7.5      Adjustments..................................................................................    59

     7.6      Copayments...................................................................................    59

     7.7      Availability of Funds........................................................................    60

     7.8      Denial of Payment Sanction by CMS............................................................    60

     7.9      Hold Harmless................................................................................    60

     7.10     Payment in Full..............................................................................    61

     7.11     Remittance Advice............................................................................    61

ARTICLE VIII     TERM RENEWAL AND TERMINATION..............................................................    62

     8.1      Term.........................................................................................    62

     8.2      Continuing Duties in the Event of Termination................................................    62

     8.3      Termination With and Without Cause...........................................................    62

     8.4      Temporary Management.........................................................................    62

     8.5      Termination for Breach of HIPAA Compliance Obligations.......................................    62

     8.6      Automatic Termination........................................................................    63

     8.7      Reimbursement in the Event of Termination....................................................    63

ARTICLE IX       GENERAL TERMS.............................................................................    64

     9.1      Records Retention, Audits, and Reviews.......................................................    64

     9.2      Nondiscrimination............................................................................    65

     9.3      Confidentiality of Information...............................................................    65

     9.4      Notices......................................................................................    68

     9.5      Required Disclosures.........................................................................    68

              (a)      Conflict of Interest................................................................    68

              (b)      Disclosure of Interest..............................................................    69

     9.6      CMS Prior Approval...........................................................................    69

     9.7      Assignment...................................................................................    70

     9.8      Similar Services.............................................................................    70

     9.9      Amendments...................................................................................    70

     9.10     Sanctions....................................................................................    70

              (a)      Failure to Report or Submit.........................................................    71
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              (b)      Failure to Submit Encounter Data....................................................    71

              (c)      Failure to Meet Minimum Standards of Care...........................................    71

              (d)      Imposition of Prohibited Charges....................................................    71

              (e)      Misrepresentation or Falsification of Information...................................    71

              (f)      Failure to Comply with the Physician Incentive Plan Requirements....................    71

              (g)      Failure to Meet Access and Provider Ratio Standards.................................    71

              (h)      Failure to Provide Covered Services.................................................    72

              (i)      Discrimination Related to Pre-Existing Conditions and/or Medical History............    72

              (j)      Pattern of Marketing Failures.......................................................    72

              (k)      Other Failures......................................................................    72

     9.11     Sale or Transfer.............................................................................    72

     9.12     Coordination of Benefits for Enrollees.......................................................    72

     9.13     Subrogation..................................................................................    73

     9.14     Agreement to Obey All Laws...................................................................    73

     9.15     Severability.................................................................................    74

     9.16     Contractor's Disputes With Other Providers...................................................    74

     9.17     Choice of Law................................................................................    74

     9.18     Debarment Certification......................................................................    74

     9.19     Child Support, State Income Tax and Student Loan Requirements................................    74

     9.20     Payment of Dues and Fees.....................................................................    74

     9.21     Federal Taxpayer Identification..............................................................    74

     9.22     Drug Free Workplace..........................................................................    75

     9.23     Lobbying.....................................................................................    75

     9.24     Early Retirement.............................................................................    75

     9.25     Sexual Harassment............................................................................    75

     9.26     Independent Contractor.......................................................................    75

     9.27     Solicitation of Employees....................................................................    76

     9.28     Nonsolicitation..............................................................................    76

     9.29     Ownership of Work Product....................................................................    76
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     9.30     Bribery Certification........................................................................    77

     9.31     Nonparticipation in International Boycott....................................................    77

     9.32     Computational Error..........................................................................    77

     9.33     Survival of Obligations......................................................................    77

     9.34     Clean Air Act and Clean Water Act Certification..............................................    77

     9.35     Non-Waiver...................................................................................    77

     9.36     Notice of Change in Circumstances............................................................    77

     9.37     Public Release of Information................................................................    77

     9.38     Payment in Absence of Federal Financial Participation........................................    78

     9.39     Employment Reporting.........................................................................    78

     9.40     Certification of Participation...............................................................    78

     9.41     Indemnification..............................................................................    78

     9.42     Gifts........................................................................................    79

     9.43     Business Enterprise for Minorities, Females and Persons with Disabilities....................    79

     9.44     Non-Delinquency Certification................................................................    79
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Attachment I     -     Rate Sheets
Attachment II    -     Drug Free Workplace Agreement
Attachment III   -     HIPAA Compliance Obligations
Attachment IV          Business Enterprise Program Contracting Goal
Exhibit A        -     Quality Assurance
Exhibit B        -     Utilization Review/Peer Review
Exhibit C        -     Summary of Required Reports and Submissions
Exhibit D        -     Encounter Data Format Requirements
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                                STATE OF ILLINOIS
                            DEPARTMENT OF PUBLIC AID

                     CONTRACT FOR FURNISHING HEALTH SERVICES

         THIS CONTRACT FOR FURNISHING HEALTH SERVICES ("Contract") made,
pursuant to Section 5-11 of the Illinois Public Aid Code (305 ILCS 5/5-11), is
by and between the ILLINOIS DEPARTMENT OF PUBLIC AID ("Department"), acting by
and through its Director, and AMERIGROUP ILLINOIS, INC. ("Contractor"), who
certifies that it is a managed care organization and whose principal office is
located at 211 West Wacker Drive, Suite 1350, Chicago, IL 60606.

                                    RECITALS

         WHEREAS, the Contractor is a health maintenance organization operating
pursuant to a Certificate of Authority issued by the Illinois Department of
Insurance and wishes to provide Covered Services to Potential Enrollees (as
defined herein);

         WHEREAS, the Department, pursuant to the laws of the State of Illinois,
provides for medical assistance under the Medical Assistance Program or KidCare
to Participants wherein Potential Enrollees may enroll with the Contractor to
receive Covered Services; and

         WHEREAS, the Contractor warrants that it is able to provide and/or
arrange to provide the Covered Services set forth in this Contract to Enrollees
under the terms and conditions set forth herein;

         NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         The following terms as used in this Contract and the attachments,
exhibits and amendments hereto shall be construed and interpreted as follows,
unless the context otherwise expressly requires a different construction and
interpretation:

         ABUSE means a manner of operation that results in excessive or
unreasonable costs to the Federal and/or State health care programs.

         ACTION means a (i) denial or limitation of authorization of a requested
service; (ii) reduction, suspension, or termination of a previously authorized
service; (iii) denial of payment for a service; (iv) failure to provide services
in a timely manner; (v) failure to respond to an appeal in a timely manner; and
(vi) solely with respect to a MCO that is the only Contractor serving a rural
area, the denial of an Enrollee's request to obtain services outside of the
Contracting Area.

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         ADMINISTRATIVE RULES means the rules promulgated by the Department
governing the Medical Assistance Program or KidCare.

         AFFILIATED means associated with another party for the purpose of
providing health care services under a Contractor's Plan pursuant to a written
contract.

         APPEAL means a request for review of a decision made by the Contractor
with respect to an Action.

         AUTHORIZED PERSON means a representative of the Office of Inspector
General for the Department, the Illinois Medicaid Fraud Control Unit, the United
States Department of Health and Human Services, a representative of other State
and federal agencies with monitoring authority related to the Medical Assistance
Program or KidCare, and a representative of any QAO under contract with the
Department.

         CMS means the Centers for Medicare & Medicaid Services under the United
States Department of Health and Human Services.

         CAPITATION means the reimbursement arrangement in which a fixed rate of
payment per Enrollee per month is made to the Contractor for the performance of
all of the Contractor's duties and obligations pursuant to this Contract, except
that, if Contractor elects to receive payment of a Hospital Delivery Case Rate,
the fixed payment will not reflect the Contractor's performance of duties and
obligations related to the delivery of newborns.

         CASE means individuals who have been grouped together and assigned a
common identification number by the Department or the Department of Human
Services of which at least one individual in that grouping has been determined
by the Department to be a Potential Enrollee. An individual is added to a Case
when the Client Information System maintained by the Illinois Department of
Human Services reflects the individual is in the Case.

         CONTRACT means this document, inclusive of all attachments, exhibits,
schedules and any subsequent amendments hereto.

         CONTRACTING AREA means the area(s) from which the Contractor may enroll
Potential Enrollees as set forth in Attachment I.

         COVERED SERVICES means those benefits and services described in Article
V, Section 5.1.

         EPSDT means the Early and Periodic, Screening, Diagnostic and Treatment
services provided to children under Title XIX of the Social Security Act (42
U.S.C. Section 1396, et seq.). The preventive component of this program is
referred to as the "Healthy Kids" program.

         EQRO means an "External Quality Review Organization" that has a
contract with the Department to perform federally required oversight and
monitoring of the quality assurance component of managed care. Quality oversight
and monitoring shall include, but is not limited to, annual onsite review,
attendance at one of the quality assurance meetings, and ongoing monitoring of
quality outcomes and timeliness of, and access to, the Covered Services.

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         EARLY INTERVENTION means the program described at 325 ILCS 20/1 et
seq., which authorizes the provision of services to infants and toddlers, birth
through two years of age, who have a disability due to developmental delay or a
physical or mental condition that has a high probability of resulting in
developmental delay or being at risk of having substantial developmental delays
due to a combination of serious factors.

         EFFECTIVE DATE shall be August 1, 2003.

         EMERGENCY MEDICAL CONDITION means a medical condition manifesting
itself by acute symptoms of sufficient severity (including, but not limited to,
severe pain) such that a prudent lay person, who possesses an average knowledge
of health and medicine, could reasonably expect the absence of immediate medical
attention to result in (i) placing the health of the individual (or, with
respect to a pregnant woman, the health of the woman or her unborn child) in
serious jeopardy, (ii) serious impairment to bodily functions, or (iii) serious
dysfunction of any bodily organ or part.

         EMERGENCY SERVICES means those inpatient and outpatient health care
services that are Covered Services, including transportation, needed to evaluate
or stabilize an Emergency Medical Condition, which are furnished by a Provider
qualified to furnish emergency services.

         ENCOUNTER means an individual service or procedure provided to an
Enrollee that would result in a claim if the service or procedure were to be
reimbursed fee-for-service under the Medical Assistance Program or KidCare.

         ENCOUNTER DATA means the compilation of data elements, as specified by
the Department in written notice to the Contractor, identifying an Encounter
that includes information similar to that required in a claim for
fee-for-service payment under the Medical Assistance Program or KidCare.

         ENROLLEE means any Potential Enrollee whose coverage under the Plan has
begun and remains in effect pursuant to this Contract.

         ENROLLMENT means the completion and signing of any necessary Enrollment
forms by or on behalf of a Potential Enrollee in accordance with Enrollment
procedures prescribed in this Contract and concurrent or subsequent entry of
required information into the Department's database.

         FAMILY CASE MANAGEMENT PROVIDER means any agency contracting with the
Illinois Department of Human Services or its successor agency to provide Family
Case Management Services.

         FAMILY CASE MANAGEMENT SERVICES means the program described at 77 Ill.
Adm. Code 630.220.

         FEDERALLY QUALIFIED HMO means an HMO that CMS has determined to be a
qualified HMO under Section 1310(d) of the Public Health Service Act.

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         FEDERALLY QUALIFIED HEALTH CENTER or FQHC means a health center that
meets the requirements of 89 Ill. Adm. Code 140.461(d).

         FRAUD means knowing and willful deception, or a reckless disregard of
the facts, with the intent to receive an unauthorized benefit.

         GRIEVANCE means an Enrollees expression of dissatisfaction about any
matter other than a matter that is properly the subject of an Appeal.

         HEAD OF CASE means the individual in whose name the Case is registered
and to whom the monthly medical card is mailed.

         HOSPITAL DELIVERY CASE RATE means a fixed payment made to the
Contractor for Physician and hospital services associated with an Enrollee's
delivery of a newborn in a hospital. The Hospital Delivery Case Rate will apply
to deliveries of stillborn infants if the procedure groups into the appropriate
diagnosis related grouping (DRG) code identified in this Contract.

         INELIGIBLE PERSON means a Person which: (i) under either Section 1128
or Section 1128A of the Social Security Act, is or has been terminated, barred,
suspended or otherwise excluded from participation in or has voluntarily
withdrawn from participating in, as the result of a settlement agreement, any
program under federal law including any program under Titles XVIII, XIX, XX or
XXI of the Social Security Act; (ii) has not been reinstated in the Medical
Assistance Program or Federal health care programs after a period of exclusion,
suspension, debarment, or ineligibility; or (iii) has been convicted of a
criminal offense related to the provision of health care items or services in
the last ten (10) years.

         KIDCARE means the program operated pursuant to the Children's Health
Insurance Program Act (215 ILCS 106/1 et seq.), but not including the program
operated pursuant to Subsection 25(a)(1) of the Children's Health Insurance
Program Act (215 ILCS 106/25(a)(1)).

         MCO means a "managed care organization" that is: (i) a Federally
Qualified HMO which meets the advance directives requirements of subpart I of
part 489 of 42 C.F.R. and set forth in Article V, Section 5.19 or (ii) any
public or private entity that meets the advance directives requirements of
subpart I of part 489 of 42 C.F.R. and set forth in Article V, Section 5.19 and
is determined to meet the following conditions: (A) is organized primarily for
the purpose of providing health care services, (B) makes the services it
provides to its Medicaid Enrollees as accessible (in terms of timeliness,
amount, duration and scope) as those services are to other Medicaid participants
within the area served by the entity and (C) meets the solvency standards of
regulations promulgated under 42 C.F.R. Part 438.

         MARKETING means any activities, procedures, materials, information or
incentives used to encourage or promote the Enrollment of Potential Enrollees
with the Contractor.

         MARKETING MATERIALS means materials that are produced in any medium, by
or on behalf of a MCO, are used by the MCO to communicate with Potential
Enrollees or Enrollees, and can reasonably be interpreted as intended to
influence them to enroll with that particular MCO.

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         MEDICAL ASSISTANCE OR MEDICAL ASSISTANCE PROGRAM means the Illinois
Medical Assistance Program administered under Article V of the Illinois Public
Aid Code (305 ILCS 5/5-1 et seq.) or its successor program and Titles XIX and
XXI of the Social Security Act (42 U.S.C. 1396 et seq.) and Section 12-4.35 of
the Illinois Public Aid Code (305 ILCS 5/12-4.35).

         MEDICALLY NECESSARY means that a service, supply or medicine is
appropriate and meets the standards of good medical practice in the medical
community for the diagnosis or treatment of a covered illness or injury, the
prevention of future disease, to assist in the Enrollee's ability to attain,
maintain, or regain functional capacity, or to achieve age-appropriate growth,
as determined by the Provider in accordance with the Contractor's guidelines,
policies and/or procedures.

         MISREPRESENTATION means a statement that an individual knows to be
false or misleading, or does not believe to be true and accurate, and makes with
an intent to deceive or be unfair to a Potential Enrollee or Enrollee.

         OFFICE OF INSPECTOR GENERAL OR OIG means the Office of Inspector
General for the Illinois Department of Public Aid as set forth in 305 ILCS
5/12-13.1.

         PARTICIPANT means any individual receiving benefits under Medical
Assistance or KidCare.

         PERSON means any individual, corporation, proprietorship, firm,
partnership, limited liability company, limited partnership, trust, association,
governmental authority or other entity, whether acting in an individual,
fiduciary or other capacity.

         PERSON WITH AN OWNERSHIP OR CONTROLLING INTEREST means a Person that:
has a direct or indirect, singly or in combination, ownership interest equal to
five percent (5%) or more in the Contractor; owns an interest of five percent
(5%) or more in any mortgage, deed of trust, note or other obligations secured
by the Contractor if that interest equals at least five percent (5%) of the
value of the property or assets of the Contractor; is an officer or director of
a Contractor that is organized as a corporation, is a member of the Contractor
that is organized as a limited liability company or is a partner in the
Contractor that is organized as a partnership.

         PHYSICIAN means a person licensed to practice medicine in all its
branches under the Medical Practice Act of 1987.

         PLAN means the Contractor's program for providing Covered Services
pursuant to this Contract.

         POST-STABILIZATION SERVICES means medically necessary non-emergency
services furnished to an Enrollee after the Enrollee is Stabilized, in order to
maintain such Stabilization, following an Emergency Medical Condition.

         POTENTIAL ENROLLEE means a Participant, except one who:

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         -        is receiving Medical Assistance under Aid to the Aged, Blind
                  and Disabled; as provided by Title XIX of the Social Security
                  Act (42 U.S.C. Section 1383c) and 305 ILCS 5/3-1 et seq.

         -        is eligible only through the Transitional Assistance (305 ILCS
                  5/6-11) or Refugee Assistance Programs under Title XIX of the
                  Social Security Act (42 U.S.C. 1396 et seq.;

         -        is age 19 or older and eligible only through the State Family
                  and Children Assistance Program (305 ILCS 5/6-11);

         -        is receiving care that is subsidized by the Department of
                  Children and Family Services;

         -        is residing in a long term care facility including State of
                  Illinois operated facilities;

         -        has Medicare coverage under Title XVIII of the Social Security
                  Act (42 U.S.C. 1395 et seq.);

         -        has significant medical coverage through a third party for
                  Medical Assistance Participants;

         -        is eligible only through the Medicaid Presumptive Eligibility
                  for Pregnant Women program under Title XIX of the Social
                  Security Act (42 U.S.C. 1396r-1);

         -        is eligible for Medical Assistance only through meeting a
                  spend-down obligation;

         -        is a non-citizen receiving only emergency Medical Assistance;
                  or

         -        is identified with an "R" in the eighth position of a Case
                  identification number.

         PRELISTING REPORT means the information that the Contractor retrieves
electronically from the Department prior to the first day of each month of
coverage that reflects changes in Enrollment subsequent to the last monthly
payment and that applies to coverage for the following month. Upon notification
by the Department, but in no event later than October 16, 2003, the name of the
Prelisting Report shall change to "834 Benefit Enrollment and Maintenance," but
the definition shall remain the same. All references in this Contract to
Prelisting Report shall be deemed to refer to the "834 Benefit Enrollment and
Maintenance" after the Department notifies the Contractor of the change.

         PRIMARY CARE PROVIDER means a Physician, specializing by certification
or training in obstetrics, gynecology, general practice, pediatrics, internal
medicine or family practice who

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agrees to be responsible for directing, tracking and monitoring the health care
needs of, and authorizing and coordinating care for, Enrollees.

         PROSPECTIVE ENROLLEE means a Potential Enrollee who has begun the
process of Enrollment with the Contractor but whose coverage under the Plan has
not yet begun.

         PROVIDER means a Person who is approved by the Department to furnish
medical, educational or rehabilitative services to Participants under the
Medical Assistance Program.

         REMITTANCE ADVICE means the list that is electronically retrieved by
the Contractor with each monthly payment. The Remittance Advice list will
identify each Enrollee for whom payment is being made. Upon notification by the
Department, but in no event later than October 16, 2003, the name of the
Remittance Advice list shall change to "820 Payroll Deducted and Other Group
Premium Payment for Insurance Products," but the definition shall remain the
same. All references in this Contract to Remittance Advice shall be deemed to
refer to the "820 Payroll Deducted and Other Group Premium Payment for Insurance
Products" after the Department notifies the Contractor of the change.

         RURAL HEALTH CLINIC OR RHC means a Provider that has been designated by
the Public Health Service, the U.S. Department of Health and Human Services, or
the Governor of the State of Illinois, and approved by the Public Health
Service, in accordance with the Rural Health Clinics Act (see Public Law 95-210)
as a RHC.

         SERVICE AUTHORIZATION REQUEST means a request by an Enrollee for the
provision of a medical service.

         SITE means any contracted Provider (IPA, PHO, FQHC, individual
physician, physician groups, etc.) through which the Contractor arranges the
provision of primary care to Enrollees.

         STABILIZATION OR STABILIZED means, with respect to an Emergency Medical
Condition, and as determined by an attending emergency room Physician or other
treating Provider within reasonable medical probability, that no material
deterioration of the condition is likely to result upon discharge or transfer to
another facility.

         STATE means the State of Illinois.

         TERTIARY CARE means medical care requiring a setting outside of the
routine, community standard, which care shall be provided within a regional
medical center by highly specialized Providers (specialists and subspecialists)
who require complex technological, diagnostic, treatment and support facilities
to provide such care.

         TITLE X FAMILY PLANNING PROVIDER means an agency that receives grants
from the Illinois Department of Human Services to provide comprehensive family
planning services pursuant to Title X of the Public Health Services Act, 42
U.S.C. 300 and 77 Ill. Adm. Code 635.

         WOMEN'S HEALTH CARE PROVIDER means a Physician, specializing by
certification or training in obstetrics, gynecology or family practice.

                                       7
<PAGE>

                                   ARTICLE II

                              TERMS AND CONDITIONS

         2.1      SPECIFICATION. This Contract is for the delivery of Covered
Services to Enrollees and the administrative responsibilities attendant thereto.
The terms and conditions of this Contract, along with the applicable
Administrative Rules and the Departmental materials described in this Article
II, Section 2.3 below, shall constitute the entire and present agreement between
the parties. This Contract, including all attachments, exhibits and amendments
constitutes a total integration of all rights, benefits and obligations of both
parties for the performance of all duties and obligations hereunder including,
but not limited to, the provision of, and payment for Covered Services under
this Contract. This Contract is contingent upon receipt of approval from CMS.

         There are no extrinsic conditions or collateral agreements or
undertakings of any kind with respect to matters addressed in this Contract. It
is the express intention of both the Department and the Contractor that any and
all prior or contemporaneous agreements, promises, negotiations or
representations, either oral or written, except as provided herein are to have
no force, effect or legal consequences of any kind, nor shall any such
agreements, promises, negotiations or representations, either oral or written,
have any bearing upon this Contract or the duties or obligations hereunder. This
Contract and any amendment hereto shall be deemed the full and final expression
of the parties' agreement.

         2.2      RULES OF CONSTRUCTION.

                  (a)      Unless the context otherwise requires:

                           (1)      Provisions apply to successive events and
         transactions;

                           (2)      "Or" is not exclusive;

                           (3)      Unless otherwise specified, references to
         statutes, regulations, and rules include subsequent amendments and
         successors thereto;

                           (4)      The various headings of this Contract are
         provided for convenience only and shall not affect the meaning or
         interpretation of this Contract or any provision hereof;

                           (5)      If any payment or delivery hereunder between
         the Contractor and the Department shall be due on any day that is not a
         business day, such payment or delivery shall be made on the next
         succeeding business day;

                           (6)      Words in the plural that should be singular
         by context shall be so read, and words in the singular shall be read as
         plural where the context dictates;

                           (7)      Days shall mean calendar days unless
         otherwise designated by the context; and

                                       8
<PAGE>

                           (8)      References to masculine or feminine pronouns
         shall be interchangeable where the context requires.

                  (b)      References in the Contract to Potential Enrollee,
Prospective Enrollee and Enrollee shall include the parent, caretaker relative
or guardian where such Potential Enrollee, Prospective Enrollee or Enrollee is a
minor child or an adult for whom a guardian has been named; provided, however,
that the Contractor is not obligated to cover services for any individual who is
not enrolled as an Enrollee with the Contractor.

         2.3      PERFORMANCE OF SERVICES AND DUTIES. The Contractor shall
perform all services and other duties as set forth in this Contract in
accordance with, and subject to, the Administrative Rules and Departmental
materials, including, but not limited to, Departmental policies, Department
Provider Notices, Provider Handbooks and any other rules and regulations that
may be issued or promulgated from time to time during the term of this Contract.
The Department shall provide copies of such materials to the Contractor upon the
Contractor's written request, if such are in existence upon the Effective Date,
or upon issuance or promulgation if issued or promulgated after the Effective
Date. Changes in such materials after the Effective Date shall be binding on the
parties hereto but shall not be considered amendments to the Contract. To the
extent the Department proposes a change in policy that may have a material
impact on the Contractor's ability to perform under this Contract, the proposed
change will be subject to good faith negotiations between both parties before it
shall be binding pursuant to this Article II, Section 2.3.

         2.4      LANGUAGE REQUIREMENTS.

                  (a)      Key Oral Contacts. The Contractor shall conduct Key
Oral Contacts (as described below) with Potential Enrollees, Prospective
Enrollees or Enrollees in a language the Potential Enrollees, Prospective
Enrollees and Enrollees understand. Where the language is other than English,
the Contractor shall offer and, if accepted by the Potential Enrollee,
Prospective Enrollee or Enrollee, shall supply interpretive services. Such
services may not be rendered by any individual who is under the age of eighteen
(18). "Key Oral Contacts" include, but are not limited to: Marketing contacts;
enrollment communications; explanations of benefits; Site, Primary Care and
Women's Health Care Provider selection activity; educational information;
telephone calls to the toll-free hotline(s) described in Article V, Section
5.1(k); and face-to-face encounters with Providers rendering care.

                  (b)      Written Material. Marketing Materials, Enrollee
Handbooks, Basic Information, and any information or notices required to be
distributed to Potential Enrollees, Prospective Enrollees or Enrollees by the
Department or regulations promulgated from time to time under 42 C.F.R. Part 438
(collectively, "Written Materials") shall be easily understood by individuals
who have a sixth grade reading level. Such Written Materials shall be available
in alternative formats that take into account the special needs (e.g., vision
impairment) of Potential Enrollees, Prospective Enrollees or Enrollees. The
Contractor shall have in place a mechanism to help Potential Enrollees,
Prospective Enrollees and Enrollees understand the requirements and benefits of
the Plan. Where there is a prevalent single-language minority within the low
income households in the relevant Department of Human Services local office area
(which for purposes of this Contract shall exist when five percent (5%) or more
such families speak a language other

                                       9

<PAGE>

than English, as determined by the Department according to published Census
Bureau data), the Contractor's written materials provided to Potential
Enrollees, Prospective Enrollees or Enrollees must be available in that language
as well as English. Translations of written material are subject to prior
approval by the Department and must be accompanied by a certification that the
translation is accurate and complete.

                  (c)      Oral Interpretation. The Contractor must make oral
interpretation services available free of charge in all languages to all
Potential Enrollees, Prospective Enrollees or Enrollees who need assistance
understanding Key Oral Contacts or Written Materials. The Contractor must
include in all Key Oral Contacts and Written Materials notification that such
oral interpretation services are available, and provide a telephone number that
can be used to obtain such services.

         2.5      LIST OF INDIVIDUALS IN AN ADMINISTRATIVE CAPACITY. Upon
execution of this Contract, the Contractor shall provide the Department with a
list of individuals who have responsibility for monitoring and ensuring the
performance of each of the duties and obligations under this Contract. This list
shall be updated throughout the term of this Contract as necessary and as
changes occur, and written notice of such changes shall be given to the
Department within ten (10) business days of such changes occurring.

         2.6      CERTIFICATE OF AUTHORITY. The Contractor must obtain and
maintain during the term of the Contract a valid Certificate of Authority as a
health maintenance organization under 215 ILCS 125/1-1, et seq..

         2.7      OBLIGATION TO COMPLY WITH OTHER LAWS. No obligation imposed
herein on the Contractor shall relieve the Contractor of any other obligation
imposed by law or regulation, including, but not limited to, those imposed by
The Managed Care Reform and Patient Rights Act (215 ILCS 134/1 et seq.), the
federal Balanced Budget Act of 1997 (Public Law 105-33) and regulations
promulgated by the Illinois Department of Insurance, the Illinois Department of
Public Health or CMS. The Department shall report all information it receives
indicating a violation of a law or regulation to the appropriate agency.

                  (a)      If the Contractor believes that it is impossible to
comply with a provision of this Contract because of a contradictory provision of
applicable State or federal law, the Contractor shall immediately notify the
Department. The Department then will make a determination of whether a contract
amendment is necessary. The fact that either the Contract or an applicable law
imposes a more stringent standard than the other does not, in and of itself,
render it impossible to comply with both.

         2.8      PROVISION OF COVERED SERVICES THROUGH AFFILIATED PROVIDERS.
Where the Contractor does not employ Physicians or other Providers to provide
direct health care services, every provision in this Contract by which the
Contractor is obligated to provide Covered Services of any type to Enrollees,
including but not limited to provisions stating that the Contractor will
"provide Covered Services," "provide quality care," or provide a specific type
of health care service, such as the enumerated Covered Services in Article V,
Section 5.1 (i.e., health screenings, prenatal care or behavioral health
assessments) shall be interpreted to mean

                                       10
<PAGE>

that the Contractor arranges for the provision of those Covered Services through
its network of Affiliated Providers.

                                       11

<PAGE>

                                   ARTICLE III

                                   ELIGIBILITY

         3.1      DETERMINATION OF ELIGIBILITY. The State has the exclusive
right to determine an individual's eligibility for the Medical Assistance
Program and KidCare and eligibility to become an Enrollee. Such determination
shall be final and is not subject to review or appeal by the Contractor. Nothing
in this Article III, Section 3.1 prevents the Contractor from providing the
Department with information the Contractor believes indicates that an Enrollee's
eligibility has changed.

         3.2      ENROLLMENT GENERALLY. Any Potential Enrollee who resides, at
the time of Enrollment, in the Contracting Area shall be eligible to become an
Enrollee except as described in Article IX, Section 9.12. Enrollment shall be
voluntary, except as provided in Article IV, Section 4.1(b). Except as provided
herein, Enrollment shall be open during the entire period of this Contract until
the Enrollment limit of the Contractor, as set forth in Attachment I, is
reached. The Contractor must continue to accept Enrollment until such Enrollment
limit is reached. Such Enrollment shall be without restriction and in the order
in which Potential Enrollees apply. The Contractor shall not discriminate
against Potential Enrollees on the basis of such individuals' health status or
need for health services. Similarly, Contractor will not discriminate against
Potential Enrollees on the basis of race, color, or national origin, and will
not use any policy or practice that has the effect of discriminating on the
basis of race, color, or national origin. The Contractor shall accept each
Enrollee whose name appears on the Prelisting Report.

         3.3      ENROLLMENT LIMITS. The Department will limit the number of
Enrollees enrolled with the Contractor by Contracting Area to a level that will
not exceed its physical and professional capacity. In its determination of
capacity, the Department will only consider Providers that are approved by the
Department. When the capacity is reached, no further applications will be
submitted for Enrollment unless termination or disenrollment of Enrollees create
room for additions. The capacity limits for the Contractor are specified in
Attachment I. Prior to the Contractor's reaching its capacity, the Department
will perform a threshold review at the Enrollment level(s) set forth in
Attachment I. Should the Department determine that the Contractor's operating or
financial performance reasonably indicates a lack of additional Provider or
administrative capacity, the review of capacity may be conducted prior to the
Contractor reaching the threshold review enrollment level specified in
Attachment I. This threshold review shall examine the Contractor's Provider and
administrative capacity in each Contracting Area. The Department's standards for
the review shall be reasonable and timely and be consistent with the terms of
this Contract. The threshold review shall take place as determined by the
Department based on the rate of Enrollment in the Contractor's Plan in each
Contracting Area or upon the request of the Contractor and the subsequent
agreement of the Department. The Department shall use its best efforts to
complete the review before the Contractor reaches the threshold levels set forth
in Attachment I. Should the Department determine that the Contractor does not
have the necessary Provider and administrative capacity to service any
additional Enrollments, the Department may freeze Enrollment until such time
that the Plan's Provider and administrative capacity have increased to the
Department's satisfaction. Nothing in this Contract shall be deemed to be a
guarantee of any Potential Enrollee's Enrollment in the Contractor's Plan.

                                       12

<PAGE>

         3.4      EXPANSION TO OTHER CONTRACTING AREAS. The Contractor may,
during the term of this Contract and any renewal thereof, request of the
Department the opportunity to offer Covered Services to Potential Enrollees in
areas other than the Contracting Area(s) specified in Attachment I. The
Contractor must make this request in writing to the Department. The Department
will provide an application and instructions for completion within ten (10)
business days after receipt of written request. Upon receipt of a completed
application from the Contractor, the Department shall review the information in
a timely manner and may, at any time, request additional information of the
Contractor. It is in the sole discretion of the Department, upon review of the
Contractor's application for expansion and assessing the needs of the Potential
Enrollee population and other factors as determined by the Department, to grant
the Contractor's request for expansion. Should the Department agree to the
expansion request, the Department and the Contractor shall agree to execute an
amendment to Attachment I of the Contract to reflect the additional Contracting
Areas in which the Contractor will provide Covered Services.

         3.5      DISCONTINUATION OF SERVICES IN ONE OR MORE CONTRACTING AREA.
The Contractor may, during the term of this Contract and any renewal thereof,
request of the Department the opportunity to discontinue offering Covered
Services to Enrollees in one or more Contracting Area specified in Attachment I.
The Contractor must make this request in writing to the Department. The
Department will advise the Contractor of all information that must be submitted
to the Department. Upon receipt of such information from the Contractor, the
Department shall review the information in a timely manner and may, at any time,
request additional information of the Contractor. It is in the sole discretion
of the Department to grant the Contractor's request to discontinue offering
Covered Services in one or more Contracting Areas. Should the Department agree
to the request to discontinue offering Covered Services, the Department and the
Contractor shall agree to execute an amendment to Attachment I of the Contract
to reflect the appropriate Contracting Area(s) in which the Contractor will
provide Covered Services.

                                       13

<PAGE>

                                   ARTICLE IV

                ENROLLMENT, COVERAGE AND TERMINATION OF COVERAGE

         4.1      ENROLLMENT PROCESS.

                  (a)      The Contractor and the Department, acting directly or
through its agent, shall be responsible for the Enrollment of Potential
Enrollees.

                           (1)      When the Contractor enrolls a Potential
         Enrollee, the Contractor shall initiate the processing of the
         Enrollment by submitting a Managed Care Enrollment Form, Form No. DPA
         2575A, completed in accordance with Department instructions for
         completing such forms, and signed by the individual who is recognized
         as the Head of Case by the Department. This form will be supplied to
         the Contractor by the Department. The Contractor is responsible for
         submitting such forms to the Department or its agent, as directed. The
         Department agrees to act in good faith and use its best efforts to see
         that Managed Care Enrollment Forms submitted for Potential Enrollees
         are processed within fifteen (15) business days of receipt by the
         Department or its agent. At some point during the term of this
         Contract, but in no event later than October 16, 2003, the Contractor
         shall be required to submit all enrollment information electronically
         to the Department and retain the original forms for at least six (6)
         years. The Department shall provide the Contractor with specific file
         submission requirements.

                           (2)      Only a Head of Case may enroll another
         Potential Enrollee. A Head of Case may enroll all other Potential
         Enrollees in his Case. An adult Potential Enrollee, who is not a Head
         of Case, may enroll himself only.

                           (3)      A member of the Contractor's management
         staff may correct a Managed Care Enrollment Form only in accordance
         with Department instructions. The corrections must be initialed by the
         Contractor's manager or his designated staff person.

                  (b)      The Department may enroll Potential Enrollees with
the Contractor by means of any process the Department uses for the Enrollment of
Potential Enrollees into managed care. This may include any program the
Department implements during the term of this Contract whereby Potential
Enrollees who do not affirmatively choose between enrollment in an MCO or the
alternative delivery system offered by the Department will be enrolled in MCOs.

                  (c)      The Contractor shall conduct Enrollment activities
that include the information distribution requirements of Article V, Section 5.4
hereof and are designed and implemented so as to maximize Eligible Enrollees'
understanding of the following:

                           (1)      that all Covered Services must be received
         from or through the Plan with the exception of family planning and
         other Medical Assistance services as described in Article V, Section
         5.1(e) with provisions made to clarify when such services may also be
         obtained elsewhere;

                                       14

<PAGE>

                           (2)      that once enrolled, the Enrollees will
         receive a card from the Department which identifies such Enrollees as
         enrolled in an MCO; and

                           (3)      that the Contractor must inform Potential
         Enrollees of any Covered Services that will not be offered by the
         Contractor due to the Contractor's exercise of a right of conscience.

                  (d)      Upon the Contractor's request, the Department may
refuse Enrollment for at least a six-month period to those former Enrollees
previously terminated from coverage by the Contractor for "good cause," as
specified in Article IV, Section 4.4(a)(1).

                  (e)      When an Enrollee, who is a Head of Case, gives birth
and the newborn is added to a Case before the newborn is forty-five (45) days
old, coverage shall be retroactive to the date of birth. Coverage for all other
newborns shall be prospective according to standard Enrollment terms of this
Contract.

                  (f)      From birth through age eighteen (18), Potential
Enrollees who are added to a Case in which all members of the Case are enrolled
with the Contractor, will also be enrolled with the Contractor automatically.
Coverage shall begin as designated by the Department on the first day of a
calendar month no later than three (3) calendar months from the date the
Potential Enrollee was added to the Case.

                  (g)      No later than ten (10) business days following
receipt of the Prelisting Report, the Contractor must send new Enrollees an
identification card bearing the name of the Contractor's Plan; the effective
date of coverage; the twenty-four-hour telephone number to confirm eligibility
for benefits and authorization for services and the name and phone number of the
Primary Care Provider and, if applicable, the Women's Health Care Provider.
Samples of the identification cards described herein shall be submitted for
Department approval by the Contractor prior to use by the Contractor and as
revised. The Contractor shall not be required to submit for prior approval
format changes, provided there is no change in the information conveyed.

                           (1)      If the Contractor requires a female Enrollee
         who wishes to use a Women's Health Care Provider to designate a
         specific Women's Health Care Provider and if a female Enrollee does so
         designate a Women's Health Care Provider, the name and phone number of
         that Women's Health Care Provider must appear on the identification
         card.

                  (h)      Within three (3) business days following receipt of
the Prelisting Report, the Contractor must update the Enrollees' eligibility in
all electronic systems maintained by the Contractor.

         4.2      INITIAL COVERAGE. Coverage shall begin as designated by the
Department on the first day of a calendar month no later than three (3) calendar
months from the date the Enrollment is entered into the Department's database.
Enrollment can occur only upon the Prospective Enrollee's selection of a Site
and the communication of that Site by the Contractor to the Department.

                                       15

<PAGE>

                  (a)      The Contractor shall provide coordination of care
assistance to Prospective Enrollees to access a Primary Care Provider or Women's
Health Care Provider before the Contractor's coverage becomes effective, if
requested to do so by Prospective Enrollees or if the Contractor has knowledge
of the need for such assistance. Any payment for those services rendered to
Prospective Enrollees described herein shall be made directly by the Department
to such Providers under the provisions of the Medical Assistance Program or
KidCare.

         4.3      PERIOD OF ENROLLMENT. Every Enrollee shall remain enrolled
until the Enrollee's coverage is ended pursuant to Article IV, Section 4.4.

         4.4      TERMINATION OF COVERAGE.

                  (a)      An Enrollee's coverage shall be terminated, subject
to Department approval, upon the occurrence of any of the following conditions:

                           (1)      dismissal from the Plan by the Contractor
         for "good cause" shown may only occur upon receipt by the Contractor of
         written approval of such termination by the Department. The Contractor
         shall give the Enrollee at least 10 days notice before termination of
         coverage for "good cause"; except the notice period is shortened to 5
         days if probable Enrollee fraud has been verified. For purposes of this
         paragraph, "good cause" may include, but is not limited to fraud or
         other misrepresentation by an Enrollee, threats or physical acts
         constituting battery to the Contractor, the Contractor's personnel or
         the Contractor's participating Providers and staff, chronic abuse of
         emergency rooms, theft of property from the Contractor's Affiliated
         Sites, an Enrollee's sustained noncompliance with the Plan physician's
         treatment recommendations (excluding preventive care recommendations)
         after repeated and aggressive outreach attempts are made by the Plan or
         other acts of an Enrollee presented and documented to the Department by
         the Contractor which the Department determines constitute "good cause."
         Termination of coverage shall take effect at 11:59 p.m. on a date
         specified by the Department, which shall be no later than the first day
         of the second month after the Department determines that "good cause"
         exists;

                           (2)      when the Department determines that the
         Enrollee no longer qualifies as a Potential Enrollee. Termination of
         coverage shall take effect at 11:59 p.m. on a date specified by the
         Department, which shall be no later than the first day of the second
         month after the Department makes the determination. If the Enrollee is
         receiving Medical Assistance under Aid to the Aged, Blind and Disabled
         (AABD), and the Contractor notifies the Department that the Enrollee is
         receiving Social Security disability benefits (SSI), the disenrollment
         shall be retroactive to the date of AABD eligibility;

                           (3)      upon the Enrollee's death. Termination of
         coverage shall take effect at 11:59 p.m. on the last day of the month
         in which the Enrollee dies;

                           (4)      when an Enrollee elects to terminate
         coverage by so informing the Contractor or the Department, at the
         Contractor's Sites, or at such other locations as

                                       16

<PAGE>

         designated by the Department. Enrollees may elect to disenroll at any
         time. The Contractor shall comply with any Department policies then in
         effect to promote and allow interaction between the Contractor and the
         Enrollee seeking disenrollment prior to the disenrollment. The
         Contractor shall, within three (3) business days of the request, send
         to the Enrollee the Managed Care Disenrollment Form, DPA Form 2575B,
         and shall not delay the provision or processing of this form for the
         purpose of arranging informational interviews with the Enrollees, or
         for any other purpose. The Contractor shall forward to the Department
         information concerning the disenrollment by the end of the fifth (5th)
         business day following the Contractor's receipt of a completed Managed
         Care Disenrollment Form. Termination of coverage shall take effect at
         11:59 p.m. on a date specified by the Department; which shall be no
         later than the first day of the second month after the Department is
         notified of the request for disenrollment. At some point during the
         term of this Contract, but in no event later than October 16, 2003, the
         Contractor shall be required to submit all disenrollment information
         electronically to the Department and retain the original forms for at
         least six (6) years. The Department shall provide the Contractor with
         specific file submission requirements;

                           (5)      when an Enrollee no longer resides in the
         Contractor's Contracting Area, unless waiver of this subparagraph is
         approved in writing by the Department and assented to by the Contractor
         and Enrollee. If an Enrollee is to be disenrolled at the request of a
         Contractor, the Contractor first must provide documentation
         satisfactory to the Department that the Enrollee no longer resides in
         the Contractor's Contracting Area. Termination of coverage shall take
         effect at 11:59 p.m. on the last day of the month prior to the month in
         which the Department determines that the Enrollee no longer resides in
         the Contractor's Contracting Area. This date may be retroactive if the
         Department can determine the month in which the Enrollee moved from the
         Contractor's Contracting Area;

                           (6)      when the Department determines, pursuant to
         Article IX, that an Enrollee has other significant insurance coverage.
         The Contractor shall be notified by the Department of such
         disenrollment on the monthly Prelisting Report. Termination of coverage
         shall take effect at 11:59 p.m. on a date specified by the Department.

                  (b)      In conjunction with a request by the Contractor to
disenroll an Enrollee, the Contractor shall furnish to the Department all
information requested regarding the basis for disenrollment and all information
regarding the utilization of services by that Enrollee.

                  (c)      The Contractor shall not seek to terminate Enrollment
because of an adverse change in the Enrollee's health status or because of the
Enrollee's (i) utilization of Covered Services, (ii) diminished mental capacity,
(iii) uncooperative/disruptive behavior resulting from such Enrollee's special
needs (except to the extent such Enrollee's continued enrollment in the Plan
seriously impairs the Contractor's ability to furnish Covered Services to the
Enrollee or other Enrollees) or (iv) action in connection with exercising
his/her Appeal or Grievance rights. Such attempts to seek to terminate
Enrollment will be considered in violation of the terms of this Contract.

                                       17

<PAGE>

                  (d)      Except as otherwise provided in this Article IV,
Section 4.6, the termination of this Contract terminates coverage for all
persons who become Enrollees under it. Termination of coverage under this
provision will take effect at 11:59 p.m. on the last day of the last month for
which the Contractor receives payment, unless otherwise agreed to, in writing,
by the parties to this Contract.

                  (e)      Any Enrollee whose coverage has been terminated by
the Department solely because such Enrollee no longer qualifies as a Potential
Enrollee, who subsequently qualifies as a Potential Enrollee within a two (2)
month period following the date of termination, shall be automatically
re-enrolled with the Contractor.

         4.5      PREEXISTING CONDITIONS AND TREATMENT. The Contractor shall
assume, upon the effective date of coverage, full responsibility for any medical
conditions that may have been preexisting prior to Enrollment in the
Contractor's Plan and for any existing treatment plans under which an Enrollee
is currently receiving medical care provided that the Enrollee's current in-Plan
physician determines that such treatment plan is medically necessary for the
health and well-being of the Enrollee.

         4.6      CONTINUITY OF CARE. If an Enrollee is receiving medical care
or treatment as an inpatient in an acute care hospital at the time coverage
commences under this Contract, the Contractor shall assume responsibility for
the management of such care as of the effective date of coverage and shall be
liable for all claims for Covered Services from the effective date of coverage.

                  (a)      If an Enrollee is receiving medical care or treatment
as an inpatient in an acute care hospital at the time coverage under this
Contract is terminated, the Contractor shall arrange for the continuity of care
or treatment for the current episode of illness until such medical care or
treatment has been fully transferred to a treating provider who has agreed to
assume responsibility for such medical care or treatment for the remainder of
that hospital episode and subsequent follow up care. The Contractor must
maintain documentation of such transfer of responsibility of medical care or
treatment. The Contractor shall not be liable for payment for any medical care
or treatment provided to an Enrollee after the responsibility for such medical
care or treatment has been transferred to a subsequent treating provider.

                  (b)      If Contractor becomes insolvent or is subject to
insolvency proceedings as set forth in 215 ILCS 125/1-1 et seq., the Contractor
shall be liable for all claims for Covered Services for the duration of the
period for which payment has been made to the Contractor by the Department and
shall remain responsible for the management of care provided to all Enrollees
who are receiving medical care or treatment as an inpatient in an acute care
hospital at the time Contractor becomes insolvent or is subject to insolvency
proceedings until the earlier of the date on which such Enrollee is discharged
or this Contract is terminated (in the latter case the terms of subsection (a)
of this Section 4.6 shall control).

         4.7      CHANGE OF SITE AND PRIMARY CARE PROVIDER OR WOMEN'S HEALTH
CARE PROVIDER. The Contractor shall permit an Enrollee to change Site, Primary
Care Provider and

                                       18

<PAGE>

Women's Health Care Provider upon request. The Contractor
shall process such changes within thirty (30) days of receipt of an Enrollee's
request.

                  (a)      Within three (3) business days of processing such
change, the Contractor shall electronically transmit a Site transfer record to
the Department in a format designated by the Department. Such record shall
contain the following data fields: Case name and identification number; Enrollee
name and identification number; old Site number; and, new Site number. The
Department will provide the Contractor with no less than one hundred twenty
(120) days advance notification prior to imposing a requirement that the
Contractor electronically communicate old and new Primary Care Provider numbers
and old and new Women's Health Care Provider numbers with this record.

                                       19

<PAGE>

                                   ARTICLE V

                              DUTIES OF CONTRACTOR

         5.1      SERVICES.

                  (a)      Amount, Duration and Scope of Coverage. The
Contractor shall comply with the terms of 42 C.F.R. Section 438.206(b) and
provide or arrange to have provided to all Enrollees all services described in
89 Ill. Adm. Code, Part 140 as amended from time to time and not specifically
excluded therein or in this Article V, Section 5.1 in accordance with the terms
of this Contract. Covered Services shall be provided in the amount, duration and
scope as set forth in 89 Ill. Adm. Code, Part 140 and this Contract, and shall
be sufficient to achieve the purposes for which such Covered Services are
furnished. This duty shall commence at the time of initial coverage as to each
Enrollee. The Contractor shall, at all times, cover the appropriate level of
service (i.e., triage, urgent) for all Emergency Services provided in an
emergency room setting. The Contractor shall notify the Department in writing
within five (5) days following a change in the Contractor's network of
Affiliated Providers that renders the Contractor unable to provide one (1) or
more Covered Service(s) in any Contracting Area. The Contractor shall not refer
Enrollees to publicly supported health care entities to receive Covered
Services, for which the Contractor receives payment from the Department, unless
such entities are Affiliated with the Contractor's Plan. Such publicly supported
health care entities include, but are not limited to, Chicago Department of
Public Health and its clinics, Cook County Bureau of Health Services, and local
health departments. The Contractor shall provide a mechanism for an Enrollee to
obtain a second opinion from a qualified Provider, whether Affiliated or
non-Affiliated, at no cost to the Enrollee.

                  (b)      Enumerated Covered Services. The Contractor shall
have a sufficient number of Affiliated Providers (including Tertiary Care
hospital(s) and, where appropriate, advanced practice nurses) in place to
provide all of the following services and benefits (which shall be specifically
included as Covered Services under this Contract) to Enrollees at all times
during the term of this Contract, whenever Medically Necessary, except to the
extent services are identified as excluded services pursuant to subsection (e)
of this Section 5.1:

                  -    Assistive/augmentative communication devices;

                  -    Audiology services, physical therapy, occupational
                       therapy and speech therapy;

                  -    Behavioral health services, including subacute alcohol
                       and substance abuse services and mental health services,
                       in accordance with subsection (c) hereof;

                  -    Blood, blood components and the administration thereof;

                  -    Certified hospice services;

                  -    Chiropractic services;

                                       20

<PAGE>

                  -    Clinic services (as described in 89 Ill. Adm. Code, Part
                       140.460);

                  -    Diagnosis and treatment of medical conditions of the
                       eye;*

                  -    Durable and nondurable medical equipment and supplies;

                  -    Emergency Services;

                  -    Family planning services;

                  -    Home health care services;

                  -    Inpatient hospital services (including dental
                       hospitalization in case of trauma or when related to a
                       medical condition and acute medical detoxification);

                  -    Inpatient psychiatric care;

                  -    Laboratory and x-ray services; The drawing of blood for
                       lead screening shall take place within the Contractor's
                       Affiliated facilities or elsewhere at the Contractor's
                       expense.**

                  -    Medical procedures performed by a dentist;

                  -    Nurse midwives services;

                  -    Nursing facility services for the first ninety (90)
                       days;***

                  -    Orthotic/prosthetic devices, including prosthetic devices
                       or reconstructive surgery incident to a mastectomy;

                  -    Outpatient hospital services (excluding outpatient
                       behavioral health services);

                  -    Pharmacy services (including drugs prescribed by a
                       dentist or behavioral health care provider participating
                       in the Medical Assistance Program provided such drugs are
                       filled by an Affiliated pharmacy Provider);

--------------
*Covered Services may be provided by an optometrist operating within the scope
of his license.

**All laboratory tests for children being screened for lead must be sent for
analysis to the Illinois Department of Public Health's laboratory.

*** Contractors will be responsible for covering up to a maximum of ninety (90)
days nursing facility care (or equivalent care provided at home because a
skilled nursing facility is not available) annually per Enrollee. Periods in
excess of ninety (90) days annually will be paid by the Department according to
its prevailing reimbursement system.

                                       21

<PAGE>

                  -    Physicians' services, including psychiatric care;

                  -    Podiatric services;

                  -    Routine care in conjunction with certain investigational
                       cancer treatments, as provided in Public Act 91-0406;

                  -    Services required to treat a condition diagnosed as a
                       result of EPSDT services, in accordance with 89 Ill. Adm.
                       Code 140.485;

                  -    Services to Prevent Illness and Promote Health in
                       accordance with subsection (d) hereof

                  -    Transplants covered under 89 Ill. Adm. Code 148.82 (using
                       transplant providers certified by the Department, if the
                       procedure is performed in the State); and

                  -    Transportation to secure Covered Services.

                  (c)      Behavioral Health Services.

                           (1)      The Contractor will provide the following
         behavioral health services, which are Covered Services:

                  -    Inpatient psychiatric or substance abuse services that
                       are provided in general hospital medical units;

                  -    Inpatient psychiatric services provided in a hospital
                       that is a psychiatric hospital or a distinct psychiatric
                       unit, as defined in 89 Ill. Adm. Code 148.40(a)(1);

                  -    Inpatient ACUTE alcoholism and substance abuse treatment
                       (detoxification);

                  -    Hospital-based organized clinic services referred to as
                       outpatient treatment psychiatric services for Type A and
                       Type B Psychiatric Clinic Services, as defined in 89 Ill.
                       Adm. Code 148.140(b)(1)(E); and

                  -    Behavioral health services provided by Physicians,
                       including psychiatrists;

                  -    Laboratory services provided on an outpatient basis for
                       behavioral health, even if ordered by a behavioral health
                       provider in connection with the provision of treatment
                       that is excluded from Covered Services; and

                  -    Pharmaceutical services provided in accordance with the
                       terms of Section 5.1(b) of this Contract on an outpatient
                       basis or at the time of discharge from inpatient
                       services, even if ordered by a behavioral health provider
                       in connection with the provision of treatment that is
                       excluded from Covered Services.

                                       22

<PAGE>

                           (2)      If an Enrollee presents himself to the
         Contractor for behavioral health services, or is referred through a
         third party, the Contractor will compete a behavioral health
         assessment.

                  -    If the assessment indicates that all services needed are
                       within the scope of Covered Services, the Contractor will
                       arrange for the provision of all such Covered Services.

                  -    If the assessment indicates that outpatient services are
                       needed beyond the scope of Covered Services, the
                       Contractor will explain to the Enrollee the services
                       needed and the importance of obtaining them and provide
                       the Enrollee with a list of Community Behavioral Health
                       Providers (CBHP). The Contractor will assist the Enrollee
                       in contacting a CBHP chosen by the Enrollee, unless the
                       Enrollee objects.

                  -    If a Enrollee obtains needed comprehensive services
                       through a CBHP, the Contractor will be responsible for
                       payment for drugs prescribed by a Physician and
                       laboratory services in connection with the comprehensive
                       services provided by the CBHP. The Contractor shall not
                       be liable for other Covered Services provided by the
                       CBHP. The Contractor may require that drugs and
                       laboratory services are provided by Providers that are
                       Affiliated with Contractor.

                  (d)      Services to Prevent Illness and Promote Health. The
Contractor shall make documented efforts to provide initial health screenings
and preventive care to all Enrollees. The Contractor shall provide, or arrange
to provide, the following Covered Services to all Enrollees, as appropriate, to
prevent illness and promote health:

                           (1)      EPSDT services in accordance with 89 Ill.
         Adm. Code 140.485 and described in this Article V, Section 5.12(a);

                           (2)      Preventive Medicine Schedule which shall
         address preventive health care issues for Enrollees twenty-one (21)
         years of age or older (Article V, Section 5.12(b));

                           (3)      Maternity care for pregnant Enrollees
         (Article V, Section 5.12(c)); and

                           (4)      Family planning services and supplies,
         including physical examination and counseling provided during the
         visit, annual physical examination for family planning purposes,
         pregnancy testing, voluntary sterilization, insertion or injection of
         contraceptive drugs or devices, contraceptive drugs and supplies, and
         related laboratory and diagnostic testing (except to the extent an
         Enrollee has chosen to obtain such services and supplies from a
         non-Affiliated Provider, in which case the Department shall be
         responsible for providing payment for such services).

                                       23

<PAGE>

                  (e)      Exclusions from Covered Services. In addition to
those services and benefits excluded from Covered Services by 89 Ill. Adm. Code,
Part 140, as amended from time to time, the following services and benefits
shall NOT be included as Covered Services:

                           (1)      Dental services;

                           (2)      Mental health clinic services as provided
         through a community behavioral health provider as identified in 89 Ill.
         Adm. Code 140.452 and 140.454 and further defined in 59 Ill. Adm. Code,
         Part 132 "Medicaid Community Mental Health Services Program."

                           (3)      Subacute alcoholism and substance abuse
         treatment services as provided through a community behavioral health
         provider as identified in 89 Ill. Adm. Code 148.340(a) and further
         defined in 77 Ill. Adm. Code 2090.

                           (4)      Routine examinations to determine visual
         acuity and the refractive state of the eye, eyeglasses, other devices
         to correct vision, and any associated supplies and equipment. The
         Contractor shall refer Enrollees needing such services to Providers
         participating in the Medical Assistance Program able to provide such
         services, or to a central referral entity that maintains a list of such
         Providers;

                           (5)      Nursing facility services, or equivalent
         care provided at home because a skilled nursing facility is
         unavailable, beginning on the ninety-first (91st) day of service in a
         calendar year;

                           (6)      Services provided in an Intermediate Care
         Facility for the Mentally Retarded/Developmentally Disabled and
         services provided in a nursing facility to mentally retarded or
         developmentally disabled Participants;

                           (7)      Early intervention services, including case
         management, provided pursuant to the Early Intervention Services System
         Act (325 ILCS 20 et seq.);

                           (8)      Services provided through school-based
         clinics as such clinics are defined by the Department;

                           (9)      Services provided through local education
         agencies that are enrolled with the Department under an approved
         individual education plan (IEP);

                           (10)     Services provided under Section 1915(c) home
         and community-based waivers;

                           (11)     Services funded through the Juvenile
         Rehabilitation Services Medicaid Matching Fund;

                           (12)     Services that are experimental and/or
         investigational in nature;

                           (13)     Services provided by a non-Affiliated
         Provider and not authorized by the Contractor, unless this Contract
         specifically requires that such services be covered;

                                       24
<PAGE>

                           (14)     Services that are provided without first
         obtaining a required referral or prior authorization as set forth in
         the Enrollee handbook;

                           (15)     Medical and/or surgical services provided
         solely for cosmetic purposes; and

                           (16)     Diagnostic and/or therapeutic procedures
         related to infertility/sterility.

                  (f)      Limitations on Covered Services. The following
services and benefits shall be limited as Covered Services:

                           (1)      Termination of pregnancy shall be provided
         only as allowed by applicable State and federal law (42 C.F.R. Part
         441, Subpart E). In any such case, the requirements of such laws must
         be fully complied with and DPA Form 2390 must be completed and filed in
         the Enrollee's medical record. Termination of pregnancy shall not be
         provided to KidCare Enrollees.

                           (2)      Sterilization services may be provided only
         as allowed by State and federal law (see 42 C.F.R. Part 441, Subpart
         F). In any such case, the requirements of such laws must be fully
         complied with and a DPA Form 2189 must be completed and filed in the
         Enrollee's medical record.

                           (3)      If a hysterectomy is provided, a DPA Form
         1977 must be completed and filed in the Enrollee's medical record.

                  (g)      Right of Conscience. The parties acknowledge that
pursuant to 745 ILCS 70/1 et seq., a Contractor may choose to exercise a right
of conscience by not rendering certain Covered Services. Should the Contractor
choose to exercise this right, the Contractor must promptly notify the
Department of its intent to exercise its right of conscience in writing. Such
notification shall contain the services that the Contractor is unable to render
pursuant to the exercise of the right of conscience. The parties agree that at
that time the Department shall adjust the Capitation payment to the Contractor
and amend the contract accordingly.

                  Should the Contractor choose to exercise this right, the
Contractor must notify Potential Enrollees, Prospective Enrollees and Enrollees
that it has chosen to not render certain Covered Services, as follows:

                           (1)      To Potential Enrollees, prior to Enrollment;

                           (2)      To Prospective Enrollees, during Enrollment;
         and

                           (3)      To Enrollees, within ninety (90) days after
         adopting a policy with respect to any particular service that
         previously was a Covered Service.

                                       25
<PAGE>

                  (h)      Emergency Services.

                           (1)      The Contractor shall cover Emergency
         Services for all Enrollees whether the Emergency Services are provided
         by an Affiliated or non-Affiliated Provider.

                           (2)      The Contractor shall not impose any
         requirements for prior approval of Emergency Services. If an Enrollee
         calls the Contractor to request Emergency Services, such call shall
         receive an immediate response.

                           (3)      The Contractor shall cover Emergency
         Services for Enrollees who are temporarily away from their residence
         and outside the Contracting Area for all Emergency Services to which
         they would be entitled within the Contracting Area.

                           (4)      The Contractor shall have no obligation to
         cover medical services provided on an emergency basis that are not
         Covered Services under this Contract.

                           (5)      Elective care or care required as a result
         of circumstances that could reasonably have been foreseen prior to the
         Enrollee's departure from the Contracting Area are not covered.
         Unexpected hospitalization due to complications of pregnancy shall be
         covered. Routine delivery at term outside the Contracting Area,
         however, shall not be covered if the Enrollee is outside the
         Contracting Area against medical advice unless the Enrollee is outside
         of the Contracting Area due to circumstances beyond her control. The
         Contractor must educate the Enrollee of the medical and financial
         implications of leaving the Contracting Area and the importance of
         staying near the treating Provider throughout the last month of
         pregnancy.

                           (6)      The Contractor shall provide ongoing
         education to Enrollees regarding the appropriate use of Emergency
         Services.

                           (7)      The Contractor shall not condition coverage
         for Emergency Services on the treating Provider notifying the
         Contractor of the Enrollee's screening and treatment within ten (10)
         calendar days of presentation for Emergency Services.

                           (8)      The determination of whether or not an
         Enrollee is sufficiently Stabilized for discharge or transfer to
         another facility shall be binding on the Contractor.

                                       26

<PAGE>

                  (i)      Post-Stabilization Services. The Contractor shall
cover Post-Stabilization Services provided by an Affiliated or non-Affiliated
Provider in any the following situations: (a) the Contractor authorized such
services; (b) such services were administered to maintain the Enrollee's
stabilized condition within one (1) hour of a request to the Contractor for
authorization of further Post-Stabilization Services; or (c) the Contractor does
not respond to a request to authorize further Post-Stabilization Services within
one (1) hour, the Contractor could not be contacted, or the Contractor and the
treating Provider cannot reach an agreement concerning the Enrollee's care and
an Affiliated Provider is unavailable for a consultation, in which case the
treating Provider must be permitted to continue the care of the Enrollee until
an Affiliated Provider is reached and either concurs with the treating
Provider's plan of care or assumes responsibility for the Enrollee's care.

                  (j)      Additional Services or Benefits. The Contractor shall
obtain prior approval from the Department before offering any additional service
or benefit not required under this Contract to all Enrollees. The Contractor
shall notify Enrollees before discontinuing an additional service or benefit.
The notice to Enrollees must be approved in advance by the Department. The
Contractor shall continue any ongoing course of treatment for an Enrollee then
receiving such service or benefit.

                  (k)      Telephone Access. The Contractor shall establish a
toll-free twenty-four (24) hour telephone number to confirm eligibility for
benefits and seek prior approval for treatment where required under the Plan,
and shall assure twenty-four (24) hour access, via telephone(s), to medical
professionals, either to the Plan directly or to the Primary Care Providers, for
consultation to obtain medical care. The Contractor must also make a toll-free
number available, at a minimum during the business hours of 9:00 a.m. until 5:00
p.m. on regular business days. This number also will be used to confirm
eligibility for benefits, for approval for non-emergency services and for
Enrollees to call to request Site, Primary Care Provider, or Women's Health Care
Provider changes, to make complaints or grievances, to request disenrollment and
to ask questions. The Contractor may use one toll-free number for these purposes
or may establish two separate numbers.

                  (l)      Pharmacy Formulary. The Contractor shall establish a
pharmacy formulary that is no more restrictive than the Medical Assistance
Program's pharmaceutical program. In particular, the Contractor shall comply
with the following requirements:

                           (1)      For drugs included as a pharmaceutical
         benefit in the Medical Assistance Program:

                                    (A)      the Contractor's formulary must
                  include every single source drug product covered by the
                  Department under the Medical Assistance Program;

                                    (B)      the Contractor's formulary must
                  cover at least one manufacturer's product for each
                  multi-source drug product; and

                                    (C)      the Contractor may develop a
                  preferred drug list or otherwise require the prior approval
                  for drugs. The Contractor shall submit to the

                                       27
<PAGE>

                  Department any preferred drug list used, including an
                  explanation of how it is to be implemented, and a list of all
                  other drugs requiring prior approval. Any preferred drug list
                  or prior approval requirement is subject to approval by the
                  Department.

                           (2)      The Contractor shall provide a mechanism
         whereby a prescribing Provider may request approval of drugs requiring
         prior approval or drugs not included on the Contractor's formulary. The
         Contractor shall provide a response by telephone or other
         telecommunication device within one (1) hour of receipt of the request
         in the case of Emergency Services or Post-Stabilization Services and,
         in other cases, within twenty-four (24) hours of receipt of the
         request. The Contractor's pharmacy formulary shall provide a process
         for appealing denials of prescription drug coverage that is timely and
         not unduly cumbersome.

                           (3)      The Contractor shall not, without the
         prescriber's explicit approval, require a pharmacist to substitute a
         drug that is not strictly bioequivalent to the one prescribed.

                           (4)      The Contractor shall inform its Providers of
         the pharmacy formulary policy required in this Section.

                           (5)      The Contractor shall not set a limit on the
         quantities of drugs that an Enrollee may obtain at one time with a
         prescription unless that limit is applied uniformly to all pharmacy
         providers in the Contractor's network.

         5.2      MARKETING. The Contractor shall, initially and as revised,
submit to the Department for the Department's review and prior written approval
all of the following materials: Certificate of Coverage or Document of Coverage;
Enrollee Handbooks; Marketing Materials, including Marketing brochures and
fliers; Marketing plans, including descriptions of proposed Marketing approaches
and Marketing procedures; training materials and training schedules relating to
services under this Contract; and all other materials and procedures utilized by
the Contractor in connection with Marketing and training. Any substantive
revisions to the foregoing materials that will either directly or indirectly
affect interpretation of benefits, the delivery of services or the
administration of benefits are subject to the Department's prior written
approval as set forth in this paragraph.

         Marketing by mail, mass media advertising and community oriented
Marketing directed at Potential Enrollees will be allowed subject to the
Department's prior approval. The Contractor shall be responsible for all costs
of mailing, including labor costs. The Department reserves the right to
determine and set the sole process of, cost, and payment for Marketing by mail,
using names and addresses of Participants supplied by the Department, including
the right to limit Marketing by mail to a vendor under contract to the
Department and the terms and conditions set forth in that vendor contract. The
Contractor shall distribute Marketing materials to the entire Contracting Area,
but to the extent permitted by law and approved by the Department, Contractors
may market selectively by eligibility category, by Contracting Area, by county,
by local Department of Human Services office area or by other geographic area.

                                       28
<PAGE>

         The Contractor agrees to be bound by the following requirements for
Marketing:

                  (a)      The Contractor shall not engage in Marketing
practices that mislead, confuse or defraud either Potential Enrollees or the
Department;

                  (b)      Marketing Materials must be clear and must include,
at a minimum, the information required in Article V, Section 5.4;

                  (c)      Marketing Materials shall not include any assertion
or statement that the Contractor is endorsed by CMS or the Department, and
neither the Contractor nor its Marketing personnel shall make such assertions or
statements, whether in writing or orally;

                  (d)      Potential Enrollees shall be solicited from a
geographic area that does not exceed the Contracting Area(s);

                  (e)      Potential Enrollees may not be discriminated against
on the basis of health status or need for health care services or on any illegal
basis;

                  (f)      The Contractor's Marketing shall be designed to reach
a distribution of Potential Enrollees across age and sex categories, as such
categories are established for rates as set forth in Attachment I, in the
Contracting Area(s). The Contractor's Marketing shall not be designed to achieve
favorable reimbursement by enrolling a disproportionate percentage of
individuals from a particular age and sex category or family income level;

                  (g)      The Contractor shall not actively facilitate
disenrollment of Enrollees from other plans, by providing Managed Care
Disenrollment Forms or otherwise, including transporting Enrollees for the
purpose of their disenrollment. The Contractor may educate Enrollees on the
disenrollment process. The Contractor shall not offer gifts or incentives to
Enrollees of other plans that are not offered to all Potential Enrollees;

                  (h)      Marketing personnel who engage in Marketing services
under this Contract are considered the agents of the Contractor, whether they
are employees, independent contractors, or independent insurance brokers. The
Contractor shall be held responsible for any misrepresentation or inappropriate
activities by such Marketing personnel. All Marketing personnel are required to
participate in training sessions that may be developed and presented by the
Department, and which sessions set forth the Department requirements,
expectations and limitations on Marketing practices in which the Contractor's
personnel will engage. The individual salaries, benefits or other compensation
paid by the Contractor to each of its Marketing personnel shall consist of no
less than seventy-five percent (75%) salary and benefits and no more than
twenty-five percent (25%) commission in cash or kind. The salary, benefit and
other compensation schedules for such personnel are subject to audits by the
Department, Office of Inspector General and as set forth in Article IX, Section
9.1. All salary schedules shall be kept by the Contractor to enable the
Department or any Authorized Persons to identify a specific enunciation of each
Marketing personnel's total salary, benefit and other compensation, the
percentage of that salary, benefits or other compensation that was based on
commission and the basis for such commission. The Contractor shall hold the
Department harmless for any and all claims, complaints or causes of action that
shall arise as a result of this contractually imposed salary, benefit and other
compensation structure for Marketing personnel.

                                       29

<PAGE>

                  Compensation of independent insurance brokers who hold a
producers license issued by the State of Illinois Department of Insurance is not
subject to the limitations on commission described in the above paragraph. All
other provisions of the Contract regarding Marketing shall apply to the
Contractor with respect to the activities of independent insurance brokers.

                  (i)      It shall be the duty and obligation of the Contractor
to credential and where necessary or appropriate, recredential all Marketing
personnel, including trainers and field supervisors. Recredentialing shall be
performed at the time the Department of Insurance renews the individual's
license or certification. Recredentialing activity that changes the status of
Marketing personnel shall be submitted to the Department as changes occur. No
current or future personnel of the Contractor may engage in Marketing activities
hereunder without first meeting all credentialing requirements set forth herein
as well as in the regulations, guidelines or policies of the Department. At a
minimum, all Marketing personnel of the Contractor, including independent
insurance brokers, must meet the following credentialing requirements:

                           (1)      must have been trained in all provisions of
         the Contractor's Department approved training manual for marketers;

                           (2)      must hold a valid license or certification
         as issued by the State of Illinois, Department of Insurance, a copy of
         which must be submitted to the Department prior to any Marketing
         personnel's engaging in Marketing activities hereunder;

                           (3)      may not engage in Marketing activities for
         any other MCO that has a contract with the Department;

                           (4)      may not also be Providers of medical
         services;

                           (5)      may not have been convicted of any felony
         within the last ten (10) years;

                           (6)      may not have been terminated from employment
         in the previous twelve (12) months by any MCO for engaging in any
         prohibited Marketing practices or misconduct associated with or related
         to Marketing activities. The Contractor shall obtain a written consent
         from all Marketing personnel for prior employers to release employment
         information to the Contractor concerning any prior or current
         employment in which Marketing activities were performed by any
         Marketing personnel and contact the previous employer(s). The
         Contractor may use any other employment practices it deems appropriate
         to obtain and meet these credentialing requirements; and

                           (7)      must not be an Ineligible Person.

                  (j)      The Department may at any time, in its own discretion
and without notification to the Contractor, attend any Marketing training
session conducted by the Contractor.

                                       30

<PAGE>

                  (k)      The Contractor must immediately notify the
Department, in writing, of any individual who is hired by the Contractor who has
previously been employed by an agent for the Department responsible for the
education of Potential Enrollees about managed care.

                  (l)      The Contractor shall immediately notify the
Department and the Office of Inspector General, in writing, of any inappropriate
Marketing activities.

                  (m)      Before any individual may engage in any Marketing
activity under this Contract, the Contractor shall provide, in a format
designated by the Department, the name and Social Security number and a copy of
the Department of Insurance license or certification of that individual to the
Department and certify to the Department that the individual meets the minimum
credentialing requirements above. The Department must provide written approval
of such individual before the individual may engage in any Marketing activity
under this Contract.

                  Thereafter, on a monthly basis, the Contractor shall report,
in a format designated by the Department, the name and Social Security numbers
of all Marketing personnel to the Department. It is the obligation of the
Contractor to ensure that the Department has a current list of all Marketing
personnel. The Contractor must immediately notify the Department, in writing, of
any Marketing personnel who terminate employment with the Contractor either
voluntarily or involuntarily. If termination is involuntary, the Contractor must
notify the Department if the reason for termination is related to misconduct
under this Contract.

                  (n)      The Contractor shall not engage in any Marketing
activities directed at enrolling Potential Enrollees while they are admitted to
any inpatient facilities.

                  (o)      Marketing in or immediately outside of any Department
or Department of Human Services field office is strictly prohibited.

                  (p)      Marketing at Provider offices or facilities is
permissible under the following circumstances:

                           (1)      the Contractor must have a written agreement
         with the Provider, signed by the Provider or his designee, a copy of
         which shall be kept on file by the Contractor and submitted to the
         Department annually and thereafter upon request. Such written agreement
         shall set forth specifically what Marketing may be conducted at that
         Provider office or facility, the frequency with which those Marketing
         activities may occur and a description of the setting in which the
         Marketing activities will occur;

                           (2)      no Marketing activities may be conducted in
         emergency room waiting areas or in treatment areas at any Provider
         office or facility; and

                           (3)      at no time shall any Marketing personnel
         have access to a Potential Enrollee's medical records regardless of
         whether such Marketing activity is conducted at the Provider office or
         facility or another location.

                  (q)      Direct or indirect door-to-door, telephonic, or other
cold call Marketing is strictly prohibited. Door-to-door Marketing is direct or
indirect "cold call" or unsolicited Marketing activities at an individual's
residence. "Cold call" Marketing means any unsolicited

                                       31
<PAGE>

personal contact by MCO personnel with the Potential Enrollee at that
individual's residence for the purpose of influencing the individual to enroll
with that MCO and includes unsolicited telephone contact and any other type of
contact made without the individual's written consent. Such written consent may
be obtained at the initiation of a visit to an individual's residence as long as
the Contractor has obtained the individual's oral consent prior to the visit and
has documented such consent in a written form that identifies the person
granting the consent and the person receiving the consent, as well as the date,
time and place that the oral consent was given. Any contacts at the individual's
residence must be made within thirty (30) days from the date the individual gave
oral consent. Soliciting individuals to provide the names of other Potential
Enrollees is also strictly prohibited. Nothing in this section shall prohibit
the Contractor from distributing unsolicited Marketing materials via the United
States Postal Service or a commercial delivery service where such service is
unrelated to the Contractor.

                  (r)      Prior to conducting any Marketing activities, the
Contractor must obtain an authorization to use or disclose an individual's
"protected health information" (as defined in Attachment IV to this Contract)
for such purposes. To the extent such Marketing activities involve direct or
indirect remuneration to the Contractor from a third-party, the authorization
shall clearly state the existence of such remuneration. The restrictions of this
Article V, Section 5.2(q) shall not apply to Marketing activities that are
related to the following: (i) a description of medical services that are
included in the plan of benefits offered by the Contractor pursuant to this
Contract, including communications concerning the network of Providers,
replacement of or enhancements to the Contractor's plan of benefits, and
health-related products or services that are available only to Enrollee, which
add value but are not party of the plan of benefits; (ii) communications for
treatment of the individual; (iii) communications for case management or care
coordination for the individual or to direct or recommend alternative
treatments, therapies, Providers, or settings of care for an Enrollee; (iv)
in-person communications of any kind between the Contractor and a Potential
Enrollee, Prospective Enrollee, or Enrollee; or (v) the provision of a gift or
incentive that complies with Section 5.3 of this Contract.

         5.3      INAPPROPRIATE ACTIVITIES. The Contractor shall not:

                  (a)      provide cash to Potential Enrollees, Prospective
Enrollees or Enrollees, except for stipends, in an amount approved by the
Department, and reimbursement of expenses provided to Enrollees for
participation on committees or advisory groups;

                  (b)      provide gifts or incentives to Potential Enrollees or
Prospective Enrollees unless such gifts or incentives: (1) are provided to meet
the objectives of the Medical Assistance Program or KidCare; (2) do not exceed a
nominal value (i.e., an individual gift or incentive may not exceed ten dollars
($10)); and (3) have been pre-approved by the Department;

                  (c)      provide gifts or incentives to Enrollees unless such
gifts or incentives (1) are provided to promote preventive care; (2) are not in
the form of cash or an instrument that may be converted to cash; and (3) have
been pre-approved by the Department;

                  (d)      seek to influence a Potential Enrollee's Enrollment
with the Contractor in conjunction with the sale of any other insurance;

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<PAGE>

                  (e)      induce providers or employees of the Department or
the Department of Human Services to reveal confidential information regarding
Participants or otherwise use such confidential information in a fraudulent
manner;

                  (f)      threaten, coerce or make untruthful or misleading
statements to Potential Enrollees, Prospective Enrollees or Enrollees regarding
the merits of Enrollment in the Contractor's Plan or any other plan; or

                  (g)      present an incomplete Managed Care Enrollment Form to
a Potential Enrollee for his signature.

         5.4      OBLIGATION TO PROVIDE INFORMATION. The Contractor agrees to
have written policies and to provide Basic Information to the individuals, and
to notify such individuals that translated materials are available and how to
obtain them, and at the times described below:

                  (a)      to each Enrollee or Prospective Enrollee within
thirty (30) days after it receives notice of the individual's enrollment and
within thirty (30) days following a significant change;

                  (b)      to any Potential Enrollee who requests it; or

                  (c)      once a year Contractor must notify its Enrollees of
their right to request and obtain the Basic Information.

                  (d)      "Basic Information" as used herein shall mean:

                           (1)      types of benefits, and amount, duration and
         scope of such benefits available under the Plan. There must be
         sufficient detail to ensure Enrollees understand the benefits that they
         are entitled to receive as Covered Services, including pharmaceuticals
         and behavioral health services;

                           (2)      procedures for obtaining Covered Services,
         including authorization and approval requirements, if any;

                           (3)      information, as provided by the Department,
         regarding any benefits to which an Enrollee may be entitled under the
         Medical Assistance Program or KidCare that are not provided under the
         Plan and specific instructions on where and how to obtain those
         benefits, including how transportation is provided and that family
         planning services may be obtained from an Affiliated or non-Affiliated
         Provider;

                           (4)      any restrictions on an Enrollee's freedom of
         choice among Affiliated Providers;

                           (5)      the extent to which after-hours coverage and
         Emergency Services are provided, including the following specific
         information: (a) definitions of "Emergency Medical Condition,"
         "Emergency Services," and "Post-Stabilization Services" that reference
         the definitions set forth herein; (b) the fact that prior authorization
         is not required for Emergency Services; (c) the fact that, subject to
         the provisions of this

                                       33
<PAGE>

         Contract, an Enrollee has a right to use any hospital or other setting
         to receive Emergency Services; (d) the process and procedures for
         obtaining Emergency Services; and (e) the location of Emergency
         Services and/or Post-Stabilization Services Providers that are
         Affiliated Providers.

                           (6)      the procedures for obtaining
         Post-Stabilization Services in accordance with the terms set forth
         Article V, Section 5.1(i);

                           (7)      policy on referrals for specialty care and
         for Covered Services not furnished by an Enrollee's Primary Care
         Provider;

                           (8)      cost sharing, if any;

                           (9)      the rights, protections, and
         responsibilities of an Enrollee as specified in 42 C.F.R. Section
         438.100, such as those pertaining to enrollment and disenrollment and
         those provided under State and Federal law;

                           (10)     Grievance and fair hearing procedures and
         timeframes, provided that such information must be pre-approved before
         distribution;

                           (11)     Appeal rights and procedures and timeframes,
         provided that such information must be pre-approved before
         distribution;

                           (12)     names, locations, telephone numbers, and
         non-English languages spoken by current Affiliated Providers, including
         identification of those who are not accepting new patients; and

                           (13)     a copy of the Contractor's Certificate of
         Coverage or Document of Coverage.

                  (e)      The following additional information must be provided
by Contractor upon request to any Enrollee, Prospective Enrollee, and Potential
Enrollee:

                           (1)      MCO and health care facility licensure;

                           (2)      practice guidelines maintained by the
         Contractor in accordance with Article V, Section 5.5; and

                           (3)      information about Affiliated Providers of
         health care services, including education, Board certification and
         recertification, if appropriate.

                  (f)      The Contractor must make a good faith effort to give
written notice of termination of a Provider, within fifteen (15) days following
such termination, to each Enrollee who received his or her primary care from, or
was seen on a regular basis by, the terminated Provider.

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<PAGE>

         5.5      QUALITY ASSURANCE, UTILIZATION REVIEW AND PEER REVIEW.

                  (a)      All services provided by or arranged for by the
Contractor to be provided shall be in accordance with prevailing community
standards. The Contractor must have in effect a program consistent with the
utilization control requirements of 42 C.F.R. Part 456. This program will
include, when so required by the regulations, written plans of care and
certifications of need of care.

                  (b)      The Contractor shall adopt practice guidelines that
meet the following criteria:

                           (1)      Are based on valid and reliable clinical
         evidence or a consensus of health care professionals in a particular
         field;

                           (2)      Consider the needs of the Enrollees;

                           (3)      Are adopted in consultation with Affiliated
         Providers;

                           (4)      Are reviewed and updated periodically, as
         appropriate; and

                           (5)      Are disseminated to all affected Affiliated
         Providers and, upon request, to Enrollees and Potential Enrollees.

                  (c)      The Contractor shall have a Utilization Review
Program that includes a utilization review plan, a utilization review committee,
and appropriate mechanisms covering preauthorization and review requirements.

                  (d)      The Contractor shall establish and maintain a Peer
Review Program approved by the Department to review the quality of care being
offered by the Contractor, employees and subcontractors.

                  (e)      The Contractor agrees to comply with the quality
assurance standards attached hereto as Exhibit A.

                  (f)      The Contractor agrees to comply with the utilization
review standards and peer review standards attached hereto as Exhibit B.

                  (g)      The Contractor agrees to conduct a program of ongoing
review that evaluates the effectiveness of its quality assurance and performance
improvement strategies designed in accordance with the terms of this Article V,
Section 5.5, and to report to the Department the results of such review as
provided in Article V, Section 5.10 herein.

                  (h)      The Contractor shall not compensate individuals or
entities that conduct utilization review activities on its behalf in a manner
that is structure to provide incentives for the individuals or entities to deny,
limit, or discontinue Covered Services that are Medically Necessary for any
Enrollee.

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<PAGE>

         5.6      PHYSICIAN INCENTIVE PLAN REGULATIONS. The Contractor shall
comply with the provisions of 42 C.F.R. 422.208 and 422.210. If, to conform with
these regulations, the Contractor performs Enrollee satisfaction surveys, such
surveys may be combined with those required by the Department pursuant to
Article V, Section 5.17 of this Contract.

         5.7      PROHIBITED AFFILIATIONS.

                  (a)      The Contractor shall assure that all Affiliated
Providers, including out-of-State Providers, are enrolled in the Medical
Assistance Program, if such enrollment is required for such Provider by
Department rules or policy in order to submit claims for reimbursement or
otherwise participate in the Medical Assistance Program. The Contractor shall
assure that any non-Affiliated Provider billing for services rendered in
Illinois is enrolled in the Medical Assistance Program prior to paying claims.

                  (b)      The Contractor shall not employ, subcontract with, or
affiliate itself with or otherwise accept any Ineligible Person into its
network.

                  (c)      The Contractor shall screen all current and
prospective employees, contractors, and sub-contractors, prior to engaging their
services under this Contract by: (i) requiring them to disclose whether they are
Ineligible Persons; (ii) reviewing the OIG's list of sanctioned persons
(available on the World Wide Web at http://www.arnet.gov/epls) and the HHS/OIG
List of Excluded Individuals/Entities (available on the World Wide Web at
http://www.dhhs.gov/oig). The Contractor shall annually screen all current
employees, contractors and sub-contractors providing services under this
Contract. The Contractor shall screen out-of-State non-Affiliated Providers
billing for Covered Services prior to payment and shall not pay such Providers
who meet the definition of Ineligible Persons.

                  (d)      The Contractor shall terminate its relations with any
Ineligible Person immediately upon learning that such Person or Provider meets
the definition of an Ineligible Person and notify the OIG of the termination.

         5.8      RECORDS.

                  (a)      Maintenance of Business Records. The Contractor shall
maintain all business and professional records that are required by the
Department in accordance with generally accepted business and accounting
principles. Such records shall contain all pertinent information about the
Enrollee including, but not limited to, the information required under this
Article V, Section 5.8. Medical records reporting requirements shall be adequate
to ensure acceptable continuity of care to Enrollees.

                  (b)      Availability of Business Records. Records shall be
made available in Illinois to the Department and Authorized Persons for
inspection, audit, and/or reproduction as required in Article IX, Section 9.1.
These records will be maintained as required by 45 C.F.R. Part 74. As a part of
these requirements, the Contractor will retain all records for at least six (6)
years after final payment is made under the Contract. If an audit, litigation or
other action involving the records is started before the end of the six-year (6
year) period, the records must be retained until all issues arising out of the
action are resolved.

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<PAGE>

                  (c)      Patient Records.

                           (1)      Treatment Plans. The Contractor must develop
         and use treatment plans for chronic disease follow-up care that are
         tailored to the individual Enrollee. The purpose of the plan is to
         assure appropriate ongoing treatment reflecting the prevailing
         community standards of medical care designed to minimize further
         deterioration and complications. Treatment plans shall be on file with
         the permanent record for each Enrollee with a chronic disease and with
         sufficient information to explain the progress of treatment.

                           (2)      Permanent Records. Immediately upon
         notification of an Enrollee's Enrollment with the Contractor, the
         Contractor shall create and maintain at the Enrollee's Primary Care
         Site an Enrollee file containing biographical and enrollment
         information relating to the Enrollee, including copies of all materials
         pertaining to the Enrollee provided by the Department. A permanent
         medical record shall be maintained at the Primary Care Site for every
         Enrollee and be available to the Primary Care Provider, Women's Health
         Care Provider and other Providers. Copies of the medical record shall
         be sent to any new Site to which the Enrollee transfers. The Contractor
         shall make documented efforts to obtain such consent. Copies of records
         shall be released only to Authorized Individuals. Original medical
         records shall be released only in accordance with Federal or State law,
         court orders, subpoenas, or a valid records release form executed by an
         Enrollee. The Contractor shall ensure that Enrollees have timely access
         to the records. The Contractor shall protect the confidentiality and
         privacy of minors, and abide by all Federal and State laws regarding
         the confidentiality and disclosure of medical records, mental health
         records, and any other information about Enrollee. The Contractor shall
         produce such records for the Department upon request. Medical records
         must include Provider identification and Enrollee identification. All
         entries in the medical record must be legible and dated, and the
         following, where applicable, shall be included:

                  -    patient identification;

                  -    personal health, social history and family history, with
                       updates as needed;

                  -    risk assessment;

                  -    obstetrical history (if any) and/or profile;

                  -    hospital admissions and discharges;

                  -    relevant history of current illness or injury (if any)
                       and physical findings;

                  -    diagnostic and therapeutic orders;

                  -    clinical observations, including results of treatment;

                  -    reports of procedure, tests and results;

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<PAGE>

                  -    diagnostic impressions;

                  -    patient disposition and pertinent instructions to patient
                       for follow-up care;

                  -    immunization record;

                  -    allergy history;

                  -    periodic exam record;

                  -    weight and height information and, as appropriate, growth
                       chart;

                  -    referral information, if any;

                  -    health education and anticipatory guidance provided; and

                  -    family planning and/or counseling.

         5.9      COMPUTER SYSTEM REQUIREMENTS.

                  (a)      The Contractor must establish and maintain a computer
system compatible with the Department's system, and execute an electronic
communication agreement provided by the Department. The system must be able to
exchange data using a mutually agreed-upon transfer method. Suitable software
products for data exchange can include but are not limited to a version of
Connect Direct that is supported by Sterling Commerce, FTP, or other products to
be determined by the Department. All costs associated with the data exchange
software shall be borne by the Contractor.

                  (b)      The Contractor shall pay for a line connection for
communication between the Contractor and the Department that shall be
established by the Department. A 56KB or faster dedicated telecommunication
line(s) will be necessary to interface directly with the State. All costs
associated with interfacing with the Department shall be borne by the
Contractor. The connection method will be a Frame Relay connection between the
Contractor's production location and the Illinois Central Management Services
HOST system utilizing TCP/IP. The Contractor must provide access and space for
the installation of a Cisco Router and modem for the Frame Relay connection. The
Contractor shall be responsible for providing the connection from the Frame
Relay router to the Contractor's system. The Department shall place the order
for this communication link with Illinois Central Management Services for the
Contractor. The Contractor shall be responsible for providing the Department
with all required information for the placement of the Frame Relay order with
Illinois Central Management Services. There may be up to a sixty (60) day
processing period between placement of the order and installation.

                  (c)      The Contractor must provide staff with proficient
knowledge in telecommunications to ensure communication connectivity is
established and maintained. In addition, the Contractor shall be responsible for
the installation of any firewall devices required for the data communication
link. The Contractor shall be responsible for performing Network

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<PAGE>

Address Translation ("NAT") to facilitate connectivity and security protecting
the Contractor's network.

                  (d)      The Contractor shall work with the Department to
implement changes in technology as they become available to the Department. Any
costs associated with the Contractor's side of processing, connectivity and/or
changes to the manner in which the Contractor processes data for the Department
shall be borne solely by the Contractor. The Contractor will work with the
Department to resolve any issues related to these changes.

         5.10     REGULAR INFORMATION REPORTING REQUIREMENTS.

                  (a)      The Contractor shall submit to the Department regular
reports and additional information as set forth in this Section. The Contractor
shall ensure that data received from Providers and included in reports is
accurate and complete by (1) verifying the accuracy and timeliness of reported
data; (2) screening the data for completeness, logic, and consistency; and (3)
collecting service information in standardized formats to the extent feasible
and appropriate. All data collected by the Contractor shall be available to the
Department and, upon request, to CMS. Such reports and information shall be
submitted in a format and medium designated by the Department. A schedule of all
reports and information submissions and the frequency required for each under
this Contract is provided in Exhibit C. For purposes of this Article V, Section
5.10, the following terms shall have the following meanings: "annual" shall be
defined by the State fiscal year beginning July first of each year and ending on
but including June thirtieth of the following year; and "quarter" shall be
defined as three consecutive calendar months of the State's fiscal year. The
Department shall advise the Contractor of the appropriate format for such
reports and information submissions in a written communication.

                           (1)      ADMINISTRATIVE

                                    (A)      Disclosure Statements. The
                  Contractor shall submit disclosure statements to the
                  Department initially, annually, on request and as changes
                  occur.

                                    (B)      Encounter Data.

                                             1.       Submission. The Contractor
                                    must report, in accordance with Subsections
                                    (2) and (3) of this Article V, Section
                                    5.10(a)(1)(B), all services received by
                                    Enrollees. On a monthly basis, the
                                    Contractor shall provide the Department with
                                    files in the format and medium designated by
                                    the Department, prepared with claims level
                                    detail as required herein and in Exhibit E
                                    attached hereto, for all services received
                                    by Enrollees during a given month. This data
                                    must be received by the Department within
                                    one hundred twenty (120) days of the last
                                    day of the service month. Any claims
                                    processed by the Contractor for services
                                    provided in a given report month subsequent
                                    to submission of the monthly Encounter Data
                                    Report shall be reported on the next
                                    submission of the monthly Encounter Data
                                    Report. Encounter Data submitted for any
                                    claims

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<PAGE>

                                    where the payment is later recouped from the
                                    Provider should be voided in the manner
                                    described by the Department.

                                             2.       Testing. Upon receipt of
                                    each submitted data file, the Department
                                    shall perform two distinct levels of review:

                                                      a.   The first level of
                                              review and edits performed by the
                                              Department shall check the data
                                              file format. These edits shall
                                              include, but are not limited to
                                              the following: check the data file
                                              for completeness of records;
                                              correct sort order of records;
                                              proper field length and
                                              composition; and correct file
                                              length. The format of the file, to
                                              be accepted by the Department,
                                              must be one hundred percent (100%)
                                              correct.

                                                      b.    If the format is
                                              correct, the Department shall then
                                              perform the second level of
                                              review. This second review shall
                                              be for standard claims processing
                                              edits. These edits shall include,
                                              but are not limited to the
                                              following: correct Provider
                                              numbers; valid recipient numbers;
                                              valid procedure and diagnosis
                                              codes; cross checks to assure
                                              Provider and recipient numbers
                                              match their names; and the
                                              procedures performed are correct
                                              for the age and sex of the
                                              recipient. The acceptable error
                                              rate of claims processing edits of
                                              the encounter data provided by the
                                              Contractor in accordance with
                                              Exhibit D shall be determined by
                                              the Department. Once an acceptable
                                              error rate has been achieved, as
                                              determined by the Department, the
                                              Contractor shall be instructed
                                              that the testing phase is complete
                                              and that data should be sent in
                                              production.

                                             3.       Production. Once the
                                    Contractor's testing of data specified in
                                    (B) above is completed, the Contractor will
                                    be certified for production. Once certified
                                    for production, the data shall continue to
                                    be submitted in accordance with (A) above.
                                    The data will continue to be reviewed for
                                    correct format and quality. The Contractor
                                    shall submit as many files as possible in a
                                    time frame agreed upon by the Department and
                                    the Contractor, to ensure all data is
                                    current.

                                             4.       Records that fail the
                                    edits described above in (2) or (3) will be
                                    returned to the Contractor for correction.
                                    Corrected data must be returned to the
                                    Department for re-processing.

                                    (C)      Financial Reports. The Contractor
                  shall provide the Department with copies of all financial
                  reports the Contractor is required to file with the Department
                  of Insurance.

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<PAGE>

                                    (D)      Report of Transactions with Parties
                  of Interest. The Contractor shall report to the Department all
                  "transactions" with a "party of interest" (as such terms are
                  defined in Section 1903(m)(4)(A) of the Social Security Act
                  and SMM 2087.6(A-B)), as required by Section 1903(m)(4)(A) of
                  the Social Security Act.

                           (2)      ENROLLEE MATERIALS. (In addition to the
         submission requirements described below, the Contractor must maintain
         documentation verifying that the information conveyed in the following
         categories of Enrollee materials are reviewed on an ongoing basis for
         accuracy and updated at least annually)

                                    (A)      Certificate or Document of Coverage
                  and Any Changes or Amendments. The Contractor shall submit
                  these documents to the Department for prior approval initially
                  and as revised.

                                    (B)      Enrollee Handbook. The Contractor
                  shall submit the handbook to the Department for prior approval
                  initially and as revised. The Contractor shall not be required
                  to submit for prior approval format changes, provided there is
                  no change in the information conveyed.

                                    (C)      Identification Card. The Contractor
                  shall submit the identification card to the Department for
                  prior approval initially and as revised. The Contractor shall
                  not be required to submit for prior approval format changes,
                  provided there is no change in the information conveyed.

                                    (D)      Provider Directory. The Contractor
                  shall submit the Provider Directory applicable to Enrollees to
                  the Department for review initially, and annually thereafter.

                           (3)      FRAUD/ABUSE

                                    (A)      Fraud and Abuse Report. The
                  Contractor shall report all allegations of Fraud, Abuse or
                  misconduct of Providers, Enrollees or Department employees to
                  the OIG immediately upon knowledge of such Fraud, Abuse or
                  misconduct. If no Fraud, Abuse or misconduct is reported to
                  the OIG during a quarter, the Contractor shall file a
                  certification of such with the OIG within thirty (30) days of
                  the end of the quarter.

                           (4)      MARKETING

                                    (A)      Marketing Allegation
                  Investigations. On a monthly basis, the Contractor shall
                  complete and submit the Department-approved Investigation
                  Results Form summarizing the results of investigations of
                  marketing allegations conducted by the Contractor.

                                    (B)      Marketing Allegation Notification.
                  On a weekly basis, the Contractor shall complete and submit
                  the Department-approved Marketing

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<PAGE>

                  Allegation Notification Form identifying current marketing
                  allegations originating through the Contractor.

                                    (C)      Marketing Materials. The Contractor
                  shall submit all Marketing Materials to the Department for
                  prior approval initially and as revised. The Contractor shall
                  not be required to submit for prior approval format changes,
                  provided there is no change in the information conveyed.

                                    (D)      Marketing Plans and Procedures. The
                  Contractor shall submit descriptions of proposed Marketing
                  concepts, strategies, and procedures for approval initially
                  and as revised.

                                    (E)      Marketing Representative Listing.
                  On a monthly basis, on the first day of the month for that
                  month, the Contractor shall provide the Department with a list
                  of all Marketing personnel who are active as well as any
                  Marketing personnel for whom a change of status has occurred
                  since the last report month.

                                    (F)      Marketing Representative
                  Terminations. The Contractor shall submit names of Marketing
                  personnel who have terminated employment or association with
                  the Contractor as such terminations occur. The submission
                  shall indicate whether the termination was voluntary or
                  involuntary and, if involuntary, shall state whether the
                  reason for termination was related to misconduct under this
                  Contract.

                                    (G)      Marketing at Sites:

                                             1.       Written Statement. To the
                                    extent the Contractor conducts marketing
                                    activities at one or more Sites, the
                                    Contractor shall submit, on an annual basis
                                    and throughout the year as Sites are
                                    included or deleted from the Contractor's
                                    marketing schedule, a written statement or
                                    letter from each Site setting forth in
                                    detail the understanding between the parties
                                    including, but not limited to, the following
                                    information: what marketing activities may
                                    be conducted at the Site; the frequency with
                                    which those marketing activities may occur;
                                    and a description of the setting in which
                                    the marketing activities will occur.

                                             2.       Schedule. To the extent
                                    the Contractor conducts marketing activities
                                    at one or more Sites, the Contractor shall
                                    submit, on a monthly basis, a schedule that
                                    reflects which of the Contractor's marketing
                                    representatives will market at such Site(s)
                                    and the dates and times when such activities
                                    will occur.

                                    (H)      Marketing Training Materials. The
                  Contractor shall submit Marketing training materials relating
                  to Marketing activities performed by the Contractor's
                  marketing representatives under this Contract, including
                  Marketing

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<PAGE>

                  trainer scripts and marketing representative presentations
                  scripts, to the Department for prior approval initially and as
                  revised.

                                    (I)      Marketer Training Schedule and
                  Agenda. On a quarterly basis, two weeks prior to the beginning
                  of the report quarter, the Contractor shall provide the
                  Department with its schedule for training of Marketing
                  personnel. The model agenda for each type of training must
                  accompany the schedule. The Contractor shall provide the
                  Department with written notice of any changes to the quarterly
                  schedule at least seventy-two (72) hours prior to the
                  scheduled training.

                           (5)      PROVIDER NETWORK

                                    (A)      Provider Network Submissions. The
                  Contractor shall submit to the Department, in a format and
                  medium designated by the Department, Provider network reports
                  that shall include, without limitation, the following: monthly
                  Provider Affiliation with Sites as set forth in the format
                  given to the Contractor by the Department; monthly updating of
                  all Providers who have either become a Provider in the
                  Contractor's network or who have left the network since the
                  last report; New Site Provider Affiliations as new Sites are
                  added; Site terminations immediately as they occur; and
                  Enrollee Site Transfers as they occur. New Site/PCP
                  information shall be reported in a format and medium as
                  required by the Department. During the term of this Contract,
                  this report may be converted to electronic data transmission.
                  The Department will give the Contractor no less than one
                  hundred twenty (120) days notice prior to conversion of this
                  report to electronic data transmission. Such notice shall
                  advise the Contractor of the submission requirements.

                           (6)      QUALITY ASSURANCE/MEDICAL

                                    (A)      Grievance Procedures. The
                  Contractor shall submit Grievance Procedures to the Department
                  for prior approval initially and as revised. The Contractor
                  shall not be required to submit for prior approval format
                  changes, provided there is no change in the information
                  conveyed.

                                    (B)      Network/Provider Ratio Report. The
                  Contractor shall submit a quarterly report that provides the
                  ratio of Primary Care Providers and Women's Health Care
                  Provider (by Site) to Enrollees in a format provided by the
                  Department.

                                    (C)      Quality Assurance, Utilization
                  Review and Peer Review Annual Report (QA/UR/PR Annual Report).
                  The Contractor shall submit a QA/UR/PR Annual Report on a
                  yearly basis, no later than sixty (60) days following the
                  close of the Contractor's reporting period. This report shall
                  provide a summary review of the effectiveness of the
                  Contractor's Quality Assurance Plan. The summary review shall
                  contain the Contractor's processes for quality assurance,
                  utilization review and peer review. Included with this report
                  shall be a comprehensive description of the Contractor's
                  network and an annual workplan

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<PAGE>

                  outlining the Contractor's intended activities relating to
                  quality assurance, utilization review, peer review and health
                  education. The report's content, as determined by the
                  Department is detailed in Exhibit A.

                                    (D)      QA/UR/PR Committee Meeting Minutes.
                  The Contractor shall submit the minutes of these meetings to
                  the Department on a quarterly basis.

                                    (E)      Behavioral Health Report. On a
                  quarterly basis, the Contractor shall submit to the Department
                  behavioral health utilization statistics and analysis as
                  specified in Paragraph 13 of Exhibit A.

                                    (F)      Quality Assurance, Utilization
                  Review, Peer Review and Health Education Plans. The Contractor
                  shall submit such plans to the Department for prior approval
                  initially and as revised. The Contractor shall not be required
                  to submit for prior approval format changes, provided there is
                  no change in the information conveyed.

                                    (G)      Summary of Grievances and
                  Resolutions and External Independent Reviews and Resolutions.
                  This quarterly report shall provide a summary of the
                  grievances filed by Enrollees and the resolution of such
                  grievances as well as a summary of all external independent
                  reviews and the resolution of such reviews. Such report shall
                  include types of grievances and external independent reviews
                  by category and totals, the number and levels at which the
                  grievances/reviews were resolved, the types of resolutions and
                  the number pending resolution by category.

                           (7)      SUBCONTRACTS AND PROVIDER AGREEMENTS

                                    (A)      Executed Subcontracts and Provider
                  Agreements. The Contractor shall provide copies of any
                  subcontract and Provider agreement to the Department upon
                  request.

                                    (B)      Model Subcontracts and Provider
                  Agreements. The Contractor shall provide copies of model
                  subcontracts and Provider agreements related to Covered
                  Services, assignment of risk and data reporting functions,
                  including the form of all proposed schedules or exhibits,
                  intended to be used therewith, and any substantial deviations
                  from these model subcontracts and Provider agreements to the
                  Department initially and as revised.

                  (b)      Additional Reports. The Contractor shall submit to
the Department additional reports or submissions at the frequency set forth in
Exhibit C and all other reports and information required by the provisions of
this Contract.

                  (c)      Unless otherwise specified, the Contractor shall
submit all reports to the Department within thirty (30) days from the last day
of the reporting period or as defined in Exhibit C. All reports and submissions
listed in this Article V, Section 5.10 must be submitted to the Department in a
Department designated format and at the intervals set forth in Exhibit C. The
Department may require additional reports throughout the term of this Contract.
The

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Department will provide adequate notice before requiring production of any new
reports or information, and will consider concerns raised by Contractors about
potential burdens associated with producing the proposed additional reports. The
Department will provide the basis (reason) for any such request. Failure of the
Contractor to follow reporting requirements shall subject the Contractor to the
sanctions in Article IX, Section 9.10.

         5.11     HEALTH EDUCATION. The Contractor shall establish and maintain
an ongoing program of health education as delineated in its written plan and
submitted annually to the Department. The health education program will advise
Enrollees concerning appropriate health care practices and the contributions
they can make to the maintenance of their own health. All health education
materials must be approved by the Contractor's medical director. Providing
material during Marketing and Enrollment does not satisfy the requirements of
this Article V, Section 5.11. The Contractor must make documented efforts to
educate Primary Care Providers on the importance of being active participants in
the health education program and to ensure that such Primary Care Providers
participate in the health education program. The health education program shall
provide, at a minimum, the following:

                  (a)      Information on how to use the Plan, including
information on how to receive Emergency Services in and out of the Contracting
Area.

                  (b)      Information on preventive care including the value
and need for screening and preventive maintenance.

                  (c)      Counseling and patient education as to the health
risks of obesity, smoking, alcoholism, substance abuse and improper nutrition,
and specific information for persons who have a specific disease.

                  (d)      Information on disease states, that may affect the
general population.

                  (e)      Educational material in the form of printed, audio,
visual or personal communication.

                  (f)      Information will be provided in language that the
Enrollee understands and that meets the requirements set forth in Article II,
Section 2.4.

                  (g)      A single individual appointed by the Contractor to be
responsible for the coordination and implementation of the program.

                  The Contractor further agrees to review the health education
program, at regular intervals, for the purpose of amending same, in order to
improve said program. The Contractor further agrees to supply the Department or
its designee with the information and reports prescribed in its approved health
education program or the status of such program.

         5.12     REQUIRED MINIMUM STANDARDS OF CARE. The Contractor shall
provide or arrange to provide to all Enrollees medical care consistent with
prevailing community standards at locations serving the Contracting Area that
assure availability and accessibility to Enrollees.

                                       45
<PAGE>

         The Contractor will provide a system to notify Enrollees on an ongoing
basis of the need for and benefits of health screenings and physical
examinations. The Contractor will provide or arrange to provide such
examinations to all of its Enrollees.

         The Contractor shall not be in violation of this Contract if a
particular Enrollee or group of Enrollees do not receive one of the services
listed in Section 5.1(d) or in this Section 5.12(a) through (d) if Contractor
requires its Affiliated Providers to offer those services and has documented its
efforts to educate Enrollees about the availability of coverage for such
services.

                  (a)      EPSDT Services to Enrollees Under Twenty-One (21)
Years. All Enrollees under twenty-one (21) years of age should receive screening
examinations including appropriate childhood immunizations at intervals as
specified by the EPSDT Program as set forth in Sections 1902(a)(43)and
1905(a)(4)(B) of the Social Security Act and 89 Ill. Adm. Code 140.485. Any
condition discovered during the screening examination or screening test
requiring further diagnostic study or treatment must be provided if within the
scope of Covered Services. The Contractor shall refer the Enrollee to an
appropriate source of care for any required services that are not Covered
Services. If, as a result of EPSDT services, the Contractor determines an
Enrollee is in need of services that are not Covered Services but are services
otherwise provided for under the Medical Assistance Program, the Contractor will
ensure that the Enrollee is referred to an appropriate source of care. The
Contractor shall have no obligation to pay for services that are not Covered
Services.

                  At a minimum, the Contractor shall provide or arrange to
provide all appropriate screening and vaccinations in accordance with OBRA 1989
guidelines to eighty percent (80%) of Enrollees younger than twenty-one (21)
years of age. The Contractor shall track and monitor this provision on an
ongoing basis and shall have in place a quality improvement initiative
addressing compliance until such time as this performance goal is achieved and
maintained.

                  (b)      Preventive Medicine Schedule (Services to Enrollees
Twenty-One (21) Years of Age and Over) The following preventive medicine
services and age schedule is the minimum acceptable range and scope of required
services for adults. The Contractor may substitute an alternate schedule for
adult preventive medicine services as long as such schedule is based upon
recognized guidelines such as those recommended by the current U.S. Preventive
Services Task Force's "Guide to Clinical Preventive Services" and the Contractor
submits the schedule to the Department and receives the Department's written
approval for the alternate schedule prior to implementing it.

         The Contractor shall ensure that a complete health history and physical
examination is provided to each Enrollee initially within the first twelve (12)
months of enrollment. Thereafter, for Enrollees between ages Twenty-One (21) and
Sixty-Four (64), the Contractor shall ensure that a complete health history and
physical examination is conducted every 1-3 years, as indicated by Enrollee need
and clinical care guidelines. For Enrollees aged Sixty-Five (65) and older, the
Contractor shall ensure that a complete health history and physical examination
is conducted annually.

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<PAGE>

         For purposes of this Section 5.12(b), a "complete health history and
physical examination" shall include, at a minimum, the following health services
as appropriate for the age and gender of each Enrollee:

                  -        Appropriate initial and interval history

                  -        Height and weight measurement

                  -        Nutrition assessment and counseling

                  -        Appropriate lifestyle and risk counseling

                  -        Health education and anticipatory guidance
                           (including, without limitation, education on the need
                           to monitor visual acuity for Enrollees ages 65 and
                           older)

                  -        Blood pressure

                  -        Hearing evaluation (ages 65 and older)

                  -        Annual Papanicolaou (Pap) smear test or cervical
                           smear and pelvic exam for female Enrollees (after
                           three (3) or more consecutive satisfactory normal
                           annual examinations, the Pap smear may be performed
                           at the Physician's discretion based upon the
                           Enrollee's risk assessment, but no less frequently
                           than every three (3) years)

                  -        Clinical breast examination for female Enrollees

                  -        Baseline mammogram for female Enrollees (ages 35-39)
                           and annually for female Enrollees ages 40 and older
                           (or earlier, as indicated for female Enrollees with a
                           personal of family history of breast disease)

                  -        Rectal occult blood testing (ages 50 and older);
                           sigmoidoscopy or colonoscopy should be considered
                           every 5-10 years

                  -        Digital rectal examination and a prostate-specific
                           antigen test annually based upon the Physician's
                           recommendation for male Enrollees as follows:

                              -        African-American male Enrollees (ages 40
                                       and older)

                              -        Male Enrollees of national origin other
                                       than African-American with a family
                                       history of prostate cancer (ages 40 and
                                       older)

                              -        Asymptomatic male Enrollees of national
                                       origin other than African-American (ages
                                       50 and older)

                  -        Non-fasting or fasting total blood cholesterol test,
                           at least every 5 years

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<PAGE>

                  -        Dipstick urinalysis (ages 65 and older)

                  -        Thyroid function tests for female Enrollees (ages 65
                           and older)

                  -        Tetanus-diptheria (Td) booster shot every 10 years,
                           unless contraindicated

                  -        Pneumococcal vaccine (ages 65 and older), unless
                           contraindicated

                  -        Influenza vaccine annually (ages 65 and older),
                           unless contraindicated

                  Any known condition or condition discovered during the
complete health history and physical examination requiring further Medically
Necessary diagnostic study or treatment must be provided if within the scope of
Covered Services.

                  At a minimum, the Contractor shall provide or arrange to
provide the initial history and physical examination to fifty percent (50%) of
all Enrollees in their first twelve (12) months of coverage, to seventy percent
(70%) of all Enrollees in their second twelve (12) months of coverage and eighty
percent (80%) of all Enrollees in their third twelve (12) months of coverage or
more. For purposes of this subsection, "twelve (12) months of coverage" may
include up to forty-five (45) days interrupted coverage. The Contractor shall
track and monitor this provision on an ongoing basis and shall have in place a
quality improvement initiative addressing compliance until such time as this
performance goal is achieved and maintained.

                  (c)      Maternity Care. The Contractor shall provide or
arrange to provide quality care for pregnant Enrollees. At a minimum, the
Contractor shall provide, or arrange to provide, and document:

                           (1)      A comprehensive prenatal evaluation and care
         in accordance with the latest standards published by the American
         College of Obstetrics and Gynecology or the American Academy of Family
         Physicians. The specific areas to be addressed in regard to the
         provision of care include, but are not limited to, the following items:
         content of the initial assessment, including history, physical, lab
         tests and risk assessment including HIV counseling and voluntary HIV
         testing; follow-up laboratory testing; nutritional assessment and
         counseling; frequency of visits; content of follow-up visits;
         anticipatory guidance and appropriate referral activities.

                  During the first year of this Contract, at least seventy
percent (70%) of all pregnant Enrollees shall receive the minimum level of
prenatal visits adjusted for the date of coverage under the Plan. During the
second year of this Contract, the percentage in the preceding sentence shall
increase to at least eighty percent (80%). For the exclusive purpose of
calculating these rates, women who deliver within sixty (60) days of the first
day of coverage under the Plan shall be excluded. The Contractor shall track and
monitor this provision on an ongoing basis and shall have in place a quality
improvement initiative addressing compliance until such time as this performance
goal is achieved and maintained.

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<PAGE>

                           (2)      The Contractor shall provide or arrange to
         provide nutritional assessment and counseling to all pregnant
         Enrollees. Individualized diet counseling is to be provided as
         indicated.

                           (3)      The Contractor shall require its Primary
         Care Providers and Women's Health Care Providers to identify maternity
         cases presenting the potential for high-risk maternal or neonatal
         complications and arrange appropriate referral to physician specialist
         or transfer to Level III perinatal facilities as required. The
         Contractor shall utilize, for such high-risk consultation or referrals,
         the standards of care promulgated by the Statewide Perinatal Program of
         the Illinois Department of Human Services.

                           (4)      The consulting physician at the perinatal
         center will determine the management of the Enrollee at that point in
         time. Should transport be required, the consultant at the perinatal
         center will identify the most appropriate mode of transport for such a
         transfer. Should the perinatal center be unable to accept the Enrollee
         due to bed unavailability, that center will arrange for admission of
         the Enrollee to an alternate Level III perinatal center. All records
         required for appropriate management of the high-risk Enrollee receiving
         consultation or referral to a perinatal center will be provided to the
         consulting physician as indicated. The Contractor will obtain from the
         consulting physician all necessary correspondence to enable the Primary
         Care Provider to provide, or arrange for the provision of, appropriate
         follow-up care for the mother or neonate following discharge.

                  (d)      Complex and Serious Medical Conditions.

                           (1)      The Contractor shall provide or arrange to
         provide quality care for Enrollees with complex and serious medical
         conditions. At a minimum, the Contractor shall provide and document the
         following:

                                    (A)      Timely identification of Enrollees
                  with complex and serious medical conditions.

                                    (B)      Assessment of such conditions and
                  identification of appropriate medical procedures for
                  monitoring or treating them.

                                    (C)      Implementation of a treatment plan
                  in accordance with this Article V, Section 5.8(c)(1).

                           (2)      The Contractor shall have procedures in
         place to identify Enrollees with special health care needs in order to
         identify any ongoing special conditions of the Enrollee that require a
         course of treatment or regular care monitoring. Appropriate health care
         professionals shall make such assessments. Such procedures must be
         delineated in the Contractor's Quality Assurance Plan, and ongoing
         monitoring shall occur in compliance with Exhibit A, Section
         4.a.iv(d)(2).

                           (3)      The Contractor shall have a mechanism in
         place to allow Enrollees with special health care needs as defined by
         the Contractor to have direct access to a specialist as appropriate for
         each Enrollee's condition and identified needs.

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<PAGE>

                  (e)      Access Standards.

                           (1)      Appointments. Time specific appointments for
         routine, preventive care shall be made available within five (5) weeks
         from the date of request for such care. Enrollees with more serious
         problems not deemed Emergency Medical Conditions shall be triaged and
         provided same day service, if necessary. Enrollees with problems or
         complaints that are not deemed serious shall be seen within three (3)
         weeks from the date of request for such care. The Contractor shall have
         an established policy that scheduled Enrollees shall not routinely wait
         for more than one (1) hour to be seen by a Provider and no more than
         six (6) scheduled appointments shall be made for each Primary Care
         Provider per hour. Notwithstanding this limit, the Department
         recognizes that physicians supervising other licensed health care
         Providers may routinely account for more than six (6) appointments per
         hour.

                           (2)      Services Requiring Prior Authorization. The
         Contractor shall provide, or arrange for the provision of, Covered
         Services as expeditiously as the Enrollee's health condition requires.
         Ordinarily, Covered Services shall be provided within fourteen (14)
         calendar days after receiving the request for service from a Provider,
         with a possible extension of up to fourteen (14) calendar days, if the
         Enrollee requests the extension or the Contractor provides written
         justification to the Department that there is a need for additional
         information and the Enrollee will not be harmed by the extension. If
         the Physician indicates, or the Contractor determines that following
         the ordinary time frame could seriously jeopardize the Enrollee's life
         or health, the Contractor shall provide, or arrange for the provision
         of, the Covered Service no later than seventy-two (72) hours after
         receipt of the request for service, with a possible extension of up to
         fourteen (14) calendar days, if the Enrollee requests the extension or
         the Contractor provides written justification to the Department that
         there is a need for additional information and the Enrollee will not be
         harmed by the extension.

                  (f)      Coordination with Other Service Providers.

                           (1)      The Contractor shall encourage the Plan
         Providers and subcontractors to cooperate and communicate with other
         service providers who serve Enrollees. Such other service providers may
         include: Community Behavioral Health Providers; Special Supplemental
         Nutrition Programs for Women, Infants, and Children (commonly referred
         to as "WIC" programs); Head Start programs; Early Intervention
         programs; Public Health providers; local health departments;
         school-based clinics; and school systems. Such cooperation may include
         performing annual physical examinations for school and the sharing of
         information (with the consent of the Enrollee).

                           (2)      The Contractor shall participate in the
         Family Case Management Program, which shall include, but is not limited
         to:

                                    (A)      Coordinating services and sharing
                  information with existing Family Case Management Providers for
                  its Enrollees;

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<PAGE>

                                    (B)      Developing internal policies,
                  procedures, and protocols for the organization and its
                  provider network for use with Family Case Management Providers
                  serving Enrollees; and

                                    (C)      Conducting periodic meetings with
                  Family Case Management Providers performing problem resolution
                  and handling of grievances and issues, including policy review
                  and technical assistance.

         5.13     AUTHORIZATION OF SERVICES. The Contractor shall have in place
and follow written policies and procedures when processing requests for initial
and continuing authorizations of Covered Services. Such policies and procedures
shall ensure consistent application of review criteria for authorization
decisions by a health care professional or professionals with expertise in
treating the Enrollee's condition or disease and provide that the Contractor
shall consult with the Provider requesting such authorization when appropriate.
If the Contractor declines to authorize Covered Services that are requested by a
Provider or authorizes one or more services in an amount, scope, or duration
that are less than that requested, the Contractor shall notify the Provider
orally or in writing and shall furnish the Enrollee with written notice of such
decision. Such notice shall meet the requirements set forth in 42 C.F.R.
438.404.

         5.14     CHOICE OF PHYSICIANS. The Contractor shall afford to each
Enrollee a choice of Primary Care Provider and, where appropriate, a Women's
Health Care Provider.

         In each Contracting Area, there shall be at least one (1) full-time
equivalent Physician for each 1,200 Enrollees, including one (1) full-time
equivalent Primary Care Provider for each 2,000 Enrollees. In each Contracting
Area, there shall be at least one (1) Women's Health Care Provider for each
2,000 female Enrollees between the ages of eighteen (18) and forty-four (44), at
least one (1) Physician specializing in obstetrics for each 300 pregnant female
Enrollees and at least one (1) pediatrician for each 2,000 Enrollees under age
seventeen (17). All Physicians providing services shall have and maintain
admitting privileges and, as appropriate, delivery privileges at an Affiliated
Plan hospital; or, in lieu of these admitting and delivery privileges, the
Physicians shall have a written referral agreement with a Physician who is in
the Contractor's network and who has such privileges at an Affiliated Plan
hospital. The agreement must provide for the transfer of medical records and
coordination of care between Physicians.

         In any Contracting Area in which the Contractor does not satisfy the
full-time equivalent provider requirements set forth above, the Contractor may
demonstrate compliance with these requirements by demonstrating that (i) the
Contractor's full time equivalent Physician ratios exceed ninety percent (90%)
of the requirements set forth above, and (ii) that Covered Services are being
provided in such Contracting Area in a manner which is timely and otherwise
satisfactory. The Contractor shall comply with Section 1932(b)(7) of the Social
Security Act.

         5.15     TIMELY PAYMENTS TO PROVIDERS. The Contractor shall make
payments to Providers for Covered Services on a timely basis consistent with the
Claims Payment Procedure described at 42 U.S.C. Section 1396a(a)(37)(A) and
Illinois Public Act 91-0605. Complaints and/or disputes concerning payments for
the provision of services as described in this paragraph shall be subject to the
Contractor's Provider grievance resolution system. In particular, the Contractor
must pay 90 percent (90%) of all "clean claims" from Providers within thirty
(30) days following

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<PAGE>

receipt. Further, the Contractor must pay 99 percent (99%) of all "clean claims"
from Physicians within ninety (90) days following receipt. For purposes of this
Section 5.15, a "clean claim" means one that can be processed without obtaining
additional information from the Physician who provided the service or from a
third party, except that it shall not mean a claim submitted by or on behalf of
a Physician who is under investigation for fraud or abuse, or a claim that is
under review for medical necessity.

         The Contractor shall pay for all appropriate Emergency Services
rendered by a non-Affiliated Provider within thirty (30) days of receipt of a
complete and correct claim. If the Contractor determines it does not have
sufficient information to make payment, the Contractor shall request all
necessary information from the non-Affiliated Provider within thirty (30) days
of receiving the claim, and shall pay the non-Affiliated Provider within thirty
(30) days after receiving such information. Such payment shall be made at the
same rate the Department would pay for such services according to the level of
services provided. Determination of appropriate levels of service for payment
shall be based upon the symptoms and condition of the Enrollee at the time the
Enrollee is initially examined by the non-Affiliated Provider and not upon the
final determination of the Enrollee's actual medical condition, unless the
actual medical condition is more severe. Within the time limitation stated
above, the Contractor may review the need for, and the intensity of, the
services provided by non-Affiliated Providers.

         The Contractor shall pay for all Post-Stabilization Services as a
Covered Service in any the following situations: (a) the Contractor authorized
such services; (b) such services were administered to maintain the Enrollee's
stabilized condition within one (1) hour of a request to the Contractor for
authorization of further Post-Stabilization Services; or (c) the Contractor did
not respond to a request to authorize such services within one (1) hour, the
Contractor could not be contacted, or, if the treating Provider is a
non-Affiliated Provider, the Contractor and the treating Provider could not
reach an agreement concerning the Enrollee's care and an Affiliated Provider was
unavailable for a consultation, in which case the Contractor must pay for such
services rendered by the treating non-Affiliated Provider until an Affiliated
Provider was reached and either concurred with the treating non-Affiliated
Provider's plan of care or assumed responsibility for the Enrollee's care.

         The Contractor shall pay for all Emergency Services and
Post-Stabilization Services rendered by a non-Affiliated Provider, for which the
Contractor would pay if rendered by an Affiliated Provider, at the same rate the
Department would pay for such services, unless a different rate was agreed upon
by the Contractor and non-Affiliated Provider.

         The Contractor shall accept claims from non-Affiliated Providers for at
least one (1) year after the date the services are provided. The Contractor
shall not be required to pay for claims initially submitted by such
non-Affiliated Providers more than one (1) year after the date of service.

         5.16     GRIEVANCE PROCEDURE AND APPEAL PROCEDURE.

                  (a)      Grievance. The Contractor shall establish and
maintain a procedure for reviewing Grievances registered by Enrollees. All
Grievances shall be registered initially with the Contractor and may later be
appealed to the Department. The Contractor's procedures must:

                                       52
<PAGE>

(1) be submitted to the Department in writing and approved in writing by the
Department; (2) provide for prompt resolution, and (3) assure the participation
of individuals with authority to require corrective action. The Contractor must
have a Grievance Committee for reviewing Grievances registered by its Enrollees,
and Enrollees must be represented on the Grievance Committee. At a minimum, the
following elements must be included in the Grievance process:

                           (1)      An informal system, available internally, to
         attempt to resolve all Grievances;

                           (2)      A formally structured Grievance system that
         is compliant with Section 45 of the Managed Care Reform and Patient
         Rights Act and 42 C.F.R. Part 438 Subpart F to handle all Grievances
         subject to the provisions of such sections of the Act and regulations
         (including, without limitation, procedures to ensure expedited decision
         making when an Enrollee's health so necessitates);

                           (3)      A formally structured Grievance Committee
         must be available for Enrollees whose Grievances cannot be handled
         informally and are not appropriate for the procedures set up under the
         Managed Care Reform and Patient Rights Act. All Enrollees must be
         informed that such a system exists. Grievances at this stage must be in
         writing and sent to the Grievance Committee for review;

                           (4)      The Grievance Committee must have at least
         twenty-five percent (25%) representation by members of Contractor's
         prepaid plans, with at least one (1) Enrollee of Contractor's services
         under this Contract on the Committee. The Department may require that
         one (1) member of the Grievance Committee be a representative of the
         Department;

                           (5)      Final decisions under the Managed Care
         Reform and Patient Rights Act procedures and those of the Grievance
         Committee may be appealed by the Enrollee to the Department under its
         Fair Hearings system;

                           (6)      A summary of all Grievances heard by the
         Grievance Committee and by independent external reviewers and the
         responses and disposition of those matters must be submitted to the
         Department quarterly;

                           (7)      An Enrollee may appoint a guardian,
         caretaker relative, Primary Care Provider, Women's Health Care
         Provider, or other Physician treating the Enrollee to represent him
         throughout the Grievance process.

                  (b)      Appeals. The Contractor shall establish and maintain
a procedure for reviewing Appeals made by Enrollees or Providers. All Appeals
shall be registered initially with the Contractor and may later be appealed to
the Department. The Contractor's procedures must: (1) be submitted to the
Department in writing and approved in writing by the Department; (2) provide for
prompt resolution, and (3) assure the participation of individuals with
authority to require corrective action. The Contractor must have a committee in
place for reviewing Appeals made by its Enrollees. At a minimum, the following
elements must be included in the Appeal process:

                                       53
<PAGE>

                           (1)      A system that allows an Enrollee or Provider
         to file an Appeal either orally or in writing, within a reasonable
         period of time following the date of the notice of action that
         generates such Appeal, which reasonable period of time shall not be
         less than twenty (20) days nor more than ninety (90) days; provided
         that the Contractor may require an Enrollee or Provider to follow an
         oral Appeal with a written, signed Appeal unless the Enrollee or
         Provider has requested review on an expedited basis;

                           (2)      A formally structured Appeals system that is
         compliant with Section 45 of the Managed Care Reform and Patient Rights
         Act and Subpart F of Section 438 of the Code of Federal Regulations to
         handle all Appeals subject to the provisions of such sections of the
         Act and C.F.R. (including, without limitation, procedures to ensure
         expedited decision making when an Enrollee's health so necessitates and
         procedures allowing for an external independent review of Appeals that
         are denied by the Contractor);

                           (3)      Final decisions of Appeals not resolved
         wholly in favor of the Enrollee may be appealed by the Enrollee to the
         Department under its Fair Hearings system;

                           (4)      A summary of all Appeals filed by Enrollees
         and the responses and disposition of those matters (including decisions
         made following an external independent review) must be submitted to the
         Department quarterly;

                           (5)      An Enrollee may appoint a guardian,
         caretaker relative, Primary Care Provider, Women's Health Care
         Provider, or other Physician treating the Enrollee to represent him
         throughout the Appeal process.

                  (c)      The Contractor agrees to review its Grievance and
Appeal procedures, at regular intervals, for the purpose of amending same when
necessary. The Contractor shall amend the procedures only upon receiving the
prior written consent of the Department. The Contractor further agrees to supply
the Department and/or its designee with the information and reports prescribed
in its approved procedure. This information shall be furnished to the Department
upon its request.

         5.17     ENROLLEE SATISFACTION SURVEY. The Contractor shall annually
conduct a uniform Enrollee Satisfaction Survey as approved by the Department.
The Survey shall be administered in a manner consistent with the Department's
required procedures and analyzed by the Contractor. The Department shall use
reasonable efforts to assure that its required procedures comport with the
accreditation requirements which the Contractor must follow when seeking
accreditation from NCQA, JCAHO or other accrediting bodies; however, nothing in
this Contract shall require such accreditation. The Contractor shall submit its
findings and explain what actions it will take on its findings as part of the
comprehensive Annual QA/UR/PR Report.

         5.18     PROVIDER AGREEMENTS AND SUBCONTRACTS.

                  (a)      The Contractor may provide or arrange to provide any
Covered Services identified in Article V, Section 5.1 with Affiliated Providers
or fulfill any other obligations under this Contract by means of subcontractual
relationships.

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<PAGE>

                           (1)      All Provider agreements and/or subcontracts
         entered into by the Contractor must be in writing and are subject to
         the following conditions:

                                    (A)      The Affiliated Providers and
                  subcontractors shall be bound by the terms and conditions of
                  this Contract that are appropriate to the service or activity
                  delegated under the subcontract. Such requirements include,
                  but are not limited to, the record keeping and audit
                  provisions of this Contract, such that the Department or
                  Authorized Persons shall have the same rights to audit and
                  inspect subcontractors as they have to audit and inspect the
                  Contractor.

                                    (B)      The Contractor shall remain
                  responsible for the performance of any of its responsibilities
                  delegated to Affiliated Providers or subcontractors.

                                    (C)      No Provider agreement or
                  subcontract can terminate the legal responsibilities of the
                  Contractor to the Department to assure that all the activities
                  under this Contract will be carried out.

                                    (D)      All Affiliated Providers providing
                  Covered Services for the Contractor under this Contract must
                  currently be enrolled as Providers in the Medical Assistance
                  Program. The Contractor shall not contract or subcontract with
                  an Ineligible Person or a Person who has voluntarily withdrawn
                  from the Medical Assistance Program as the result of a
                  settlement agreement.

                                    (E)      All Provider agreements and
                  subcontracts must comply with the Lobbying Certification
                  contained in Article IX, Section 9.22 of this Contract.

                                    (F)      All Affiliated Providers shall be
                  furnished with information about the Contractor's Grievance
                  and Appeal procedures at the time the Provider enters into an
                  agreement with the Contractor and within fifteen (15) days
                  following any substantive change to such procedures.

                                    (G)      The Contractor must retain the
                  right to terminate any Provider agreement and/or subcontract,
                  or impose other sanctions, if the performance of the
                  Affiliated Provider or subcontractor is inadequate.

                  (b)      With respect to all Provider agreements and
subcontracts made by the Contractor, the Contractor further warrants:

                           (1)      That such Provider agreements and
         subcontracts are binding;

                           (2)      That it will promptly terminate all
         contracts with Providers and/or subcontractors, or impose other
         sanctions, if the performance of the Affiliated Provider or
         subcontractor is inadequate;

                           (3)      That it will promptly terminate contracts
         with Providers who are terminated, barred, suspended, or have
         voluntarily withdrawn as a result of a settlement

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         agreement, under either Section 1128 or Section 1128A of the Social
         Security Act, from participating in any program under federal law
         including any program under Titles XVIII, XIX, XX or XXI of the Social
         Security Act or are otherwise excluded from participation in the
         Medical Assistance Program or KidCare;

                           (4)      That all laboratory testing Sites providing
         services under this Contract must possess a valid Clinical Laboratory
         Improvement Amendments ("CLIA") certificate and comply with the CLIA
         regulations found at 42 C.F.R. Part 493; and

                           (5)      That it will monitor the performance of all
         Affiliated Providers and subcontractors on an ongoing basis, subject
         each Affiliated Provider and subcontractor to formal review on a
         triennial basis, and, to the extent deficiencies or areas for
         improvement are identified during an informal or formal review, require
         that the Affiliated Provider or subcontractor take appropriate
         corrective action.

                  (c)      The Contractor will submit to the Department copies
of model Provider agreements and/or subcontracts, initially and revised, that
relate to Covered Services, assignment of risk and data reporting functions and
any substantial deviations from these model Provider agreements or subcontracts.
The Contractor shall provide copies of any other model Provider agreement or
subcontract or any actual Provider agreement or subcontract to the Department
upon request. The Department reserves the right to require the Contractor to
amend any Provider agreement or subcontract as necessary to conform with the
Contractor's duties and obligations under this Contract.

                  The Contractor may designate in writing certain information
disclosed under this Article V, Section 5.18 as confidential and proprietary. If
the Contractor makes such a designation, the Department shall consider said
information exempt from copying and inspection under Section 7(1)(b) or (g) of
the State Freedom of Information Act (5 ILCS 140/1 et seq.). If the Department
receives a request for said information under the State Freedom of Information
Act, however, it may require the Contractor to submit justification for
asserting the exemption. Additionally, the Department may honor a properly
executed criminal or civil subpoena for such documents without such being deemed
a breach of this Contract or any subsequent amendment hereto.

                  (d)      Prior to entering into a Provider agreement or
subcontract, the Contractor shall submit a disclosure statement to the
Department specifying any Provider agreement or subcontract and Providers or
subcontractors in which any of the following have a five percent (5%) or more
financial interest:

                           (1)      any Person also having a five percent (5%)
         or more financial interest in the Contractor or its affiliates as
         defined by 42 C.F.R. 455.101;

                           (2)      any director, officer, trustee, partner or
         employee of the Contractor or its affiliates; or

                           (3)      any member of the immediate family of any
         Person designated in (1) or (2) above.

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<PAGE>

                  (e)      Any contract or subcontract between the Contractor
and a FQHC or a RHC shall be executed in accordance with 1902(a)(13)(C) and
1903(m)(2)(A)(ix) of the Social Security Act, as amended by the Balanced Budget
Act of 1997 and shall provide payment that is not less than the level and amount
of payment which the Contractor would make for the Covered Services if the
services were furnished by a Provider which is not an FQHC or a RHC.

         5.19     SITE REGISTRATION AND PRIMARY CARE PROVIDER/WOMEN'S HEALTH
CARE PROVIDER APPROVAL AND CREDENTIALING.

                  (a)      The Contractor shall register with the Department
each Site prior to assigning Enrollees to that Site to receive primary care. A
fully executed Provider agreement must be in place between the Contractor and
the Site prior to registration of the Site. All FQHCs and RHCs must be
registered as unique sites, and all Enrollees receiving Covered Services at
those unique sites must be reflected in those Sites in the Department's system.
The Contractor must give advance notice to the Department as soon as practicable
of the anticipated closing of a Site. If it is not possible to give advance
notice of a closing of a Site, the Contractor shall notify the Department
immediately when a Site is closed.

                  (b)      The Contractor shall submit to the Department for
approval the name, license numbers, and other information requested in a format
designated by the Department of all proposed Primary Care Providers and Women's
Health Care Providers, as such new Primary Care Providers and Women's Health
Care Providers are added to the Contractor's network through executed Provider
agreements. A Primary Care Provider or Women's Health Care Provider may not be
offered to Enrollees until the Department has given its written approval of the
Primary Care Provider or Women's Health Care Provider.

                  (c)      All Primary Care Providers and Women's Health Care
Providers must be credentialed by the Contractor. The credentialing process may
be two-tiered, and the Contractor may assign Enrollees to a Primary Care
Provider or Women's Health Care Provider following preliminary credentialing,
provided that full credentialing is completed within a reasonable time following
the assignment of Enrollees to the Primary Care Provider or Women's Health Care
Provider. The Contractor must notify the Department when the credentialing
process is completed and the results of the process. If the Contractor utilizes
a single tiered credentialing process, the Contractor shall not assign Enrollees
to a Primary Care Provider or Women's Health Care Provider until such Provider
has been fully credentialed.

                  (d)      The Contractor's Provider selection policies and
procedures shall not discriminate against particular Providers that serve
high-risk populations or specialize in conditions that require costly treatment.

                  (e)      The Department, at its sole discretion, may eliminate
the requirement for Site reporting at any time during the term of this Contract.

         5.20     ADVANCE DIRECTIVES. The Contractor shall comply with all rules
concerning the maintenance of written policies and procedures with respect to
advance directives as promulgated by CMS as set forth in 42 C.F.R. Section
422.128. The Contractor shall provide adult Enrollees with oral and written
information on advance directives policies, and include a

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<PAGE>

description of applicable State law. Such information shall reflect changes in
State law as soon as possible, but no later than ninety (90) days after the
effective date of the change.

         5.21     FEES TO ENROLLEES PROHIBITED. Neither the Contractor, its
Affiliated Providers, or non-Affiliated Providers shall seek or obtain funding
through fees or charges to any Enrollee receiving Covered Services pursuant to
this Contract, except as permitted or required by the Department in 89 Ill. Adm.
Code 125 and/or the Department's fee-for-service copayment policy then in
effect. The Contractor acknowledges that imposing charges in excess of those
permitted under this Contract is a violation of Section 1128B(d) of the Social
Security Act and subjects the Contractor to criminal penalties. The Contractor
shall have language in all of its Provider subcontracts reflecting this
requirement.

         5.22     FRAUD AND ABUSE PROCEDURES.

                  (a)      The Contractor shall have an affirmative duty to
timely report suspected Fraud and/or Abuse in the Medical Assistance Program or
KidCare by the Enrollees or others, suspected criminal acts by Providers or the
Contractor's employees, or Fraud or misconduct of Department employees to the
Public Aid Office of Inspector General. To this end, the Contractor shall
establish the following procedures, in writing:

                           (1)      the Contractor shall form a compliance
         committee and appoint a single individual to serve as liaison to the
         Department regarding the reporting of allegations of Fraud, Abuse, or
         misconduct;

                           (2)      the Contractor's procedure shall ensure that
         any of Contractor's personnel or subcontractors who identify suspected
         Fraud, Abuse, or misconduct shall make a report to Contractor's
         liaison;

                           (3)      the Contractor's procedure shall ensure that
         the Contractor's liaison shall provide notice of any allegation to the
         OIG immediately upon receiving such report. If no reports are received
         in a quarter, the liaison shall certify, in writing, to the OIG that no
         such reports were received. Reports shall be considered timely if they
         are made as soon as the Contractor knew or should have known of the
         suspected Fraud, Abuse, or misconduct, or if no reports were filed, the
         certification is received within thirty (30) days after the end of the
         quarter; and

                           (4)      the Contractor shall ensure that all its
         personnel and subcontractors receive notice of these procedures.

                  (b)      The Contractor shall not conduct any investigation of
the suspected Fraud, Abuse, or misconduct of Department personnel, but shall
report all incidents immediately to the OIG.

                  The Contractor may conduct investigations of its personnel,
Providers, subcontractors, or Enrollees. If the investigation discloses
potential Fraud and Abuse, as defined in this Contract, the Contractor must
immediately notify the OIG and, if so directed, cease its internal
investigation. Should the allegation or investigation disclose potential
criminal acts by

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<PAGE>

the Contractor's personnel, Providers, subcontractors, or Enrollees, the
Contractor shall cease its internal investigation and immediately notify the
OIG.

                  (c)      The Contractor shall cooperate with all
investigations of suspected Fraud, Abuse, or Department employee misconduct.

         5.23     MISREPRESENTATION PROCEDURES. If an Enrollee states that one
of the Contractor's marketing representatives has made a Misrepresentation, the
Contractor shall conduct a retention interview with the Enrollee either at the
time the allegation is made, if the Enrollee is on the telephone, or as soon as
possible thereafter, if the Enrollee must be contacted. If, during the retention
interview, the Enrollee requests disenrollment from the Contractor, the
Contractor shall send a disenrollment form to the Enrollee within three (3)
business days following the date of the request. The Contractor shall notify the
Department weekly of all alleged misrepresentations by submitting a Marketing
Allegation Notifications Form, in accordance with the terms of this Article V,
Section 5.13(a)(15). After investigating such allegations of Misrepresentations,
the Contractor shall notify the Department of its findings on a monthly basis by
submitting a Marketing Allegation Investigation Results Form, in accordance with
the terms of this Article V, Section 5.13(a)(16).

         5.24     ENROLLEE-PROVIDER COMMUNICATIONS. Subject to this Article V,
Section 5.1(g), and in accordance with the Managed Care Reform and Patient
Rights Act, the Contractor shall not prohibit or otherwise restrict a Provider
from advising an Enrollee about the health status of the Enrollee or medical
care or treatment for the Enrollee's condition or disease regardless of whether
benefits for such care or treatment are provided under this Contract, if the
Provider is acting within the lawful scope of practice, and shall not retaliate
against a Provider for so advising an Enrollee.

         5.25     HIPAA COMPLIANCE. Contractor shall comply with the terms of
Sections B and C of the HIPAA Compliance Obligations set forth in Attachment
III.

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<PAGE>

                                   ARTICLE VI

                            DUTIES OF THE DEPARTMENT

         6.1      ENROLLMENT. Once the Department has determined that an
individual is a Potential Enrollee and after the Potential Enrollee has selected
the Contractor's Plan, such individual shall become a Prospective Enrollee. A
Prospective Enrollee shall become an Enrollee on the effective date of coverage.
Coverage shall begin as designated by the Department no later than the first day
of a calendar month no later than three (3) calendar months from the date the
Enrollment is entered into the Department's database, after Site assignment, to
ensure that Contractor's Plan is reflected on the Department-issued medical
card. The Department shall transmit to the Contractor, prior to the first day of
each month of coverage, a Prelisting Report.

         6.2      PAYMENT. The Department shall pay the Contractor for the
performance of the Contractor's duties and obligations hereunder. Such payment
amounts shall be as set forth in Article VII of this Contract and Attachment I
hereto. Unless specifically provided herein, no payment shall be made by the
Department for extra charges, supplies or expenses, including, but not limited
to, Marketing costs incurred by the Contractor.

         6.3      DEPARTMENT REVIEW OF MARKETING MATERIALS. Review of all
Marketing Materials required by this Contract to be submitted to the Department
for prior approval shall be completed by the Department on a timely basis not to
exceed thirty (30) days from the date of receipt by the Department; provided,
however, that if the Department fails to notify the Contractor of approval or
disapproval of submitted materials within thirty (30) days after receiving such
materials, the Contractor may begin to use such materials. The Department, at
any time, reserves the right to disapprove any materials that the Contractor
used and/or distributed prior to receiving the Department's express written
approval. In the event the Department disapproves any materials, the Contractor
immediately shall cease use and/or distribution of such materials.

         6.4      HIPAA COMPLIANCE. The Department shall comply with the terms
of Section D of the HIPAA Compliance Obligations set forth in Attachment III.

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<PAGE>

                                  ARTICLE VII

                               PAYMENT AND FUNDING

         7.1      CAPITATION PAYMENT. The Department shall pay the Contractor on
a Capitation basis, based on the age and gender categories of the Enrollee as
shown on the table in Attachment I, a sum equal to the product of the approved
Capitation rate and the number of Enrollees enrolled in that category as of the
first day of that month. Rates reflected in Attachment I are for the period
August 1, 2003 through July 31, 2005. At the end of the two year period, the
Department will develop an update to the rates which will be offered to the
Contractor through an amendment to the Contract.

         7.2      HOSPITAL DELIVERY CASE RATE PAYMENT. The Department shall pay
the Contractor a Hospital Delivery Case Rate as shown in Attachment I for each
hospital delivery. This payment will be generated upon receipt of the hospital
Encounter Data that groups to a diagnostic related grouping (DRG) of 370, 371,
372, 373, 374 or 375. These payments will be generated on a monthly basis only
for the Encounter Data that is accepted by the Department.

         7.3      ACTUARIALLY SOUND RATE REPRESENTATION. The Department
represents that actuarially sound Capitation rates and Hospital Delivery Case
Rates were developed by the Department's contracted actuarial firm. The rates
were developed from the fee-for-service equivalent values to be consistent with
the Federal regulations promulgated pursuant to the Balanced Budget Act of 1997.
The fee-for-service equivalent values were modified to reflect the following
adjustments: projection of future medical cost increases for the two-year rate
period beginning August 1, 2003, managed care utilization and cost adjustments,
and an administration allowance for compliance with CMS rate setting guidelines
and actuarial principles.

         7.4      NEW COVERED SERVICES. The financial impact of any new Covered
Services added to the Contractor's responsibilities under this Contract will be
evaluated from an actuarial perspective by the Department and, if deemed
material, in the Department's sole opinion, the rates set forth in this Contract
shall be amended accordingly.

         7.5      ADJUSTMENTS. Monthly payments to the Contractor will be
adjusted for retroactive disenrollments of Enrollees, retroactive Enrollments of
newborns, changes to Enrollee information that affect the monthly Capitation
rate (i.e., region of residence, eligibility classification, age, gender),
financial sanctions imposed in accordance with Article IX, Section 9.10, rate
changes in accordance with amendments to Attachment I or third-party liability
collections received by the Contractor, or other miscellaneous adjustments
provided for herein. Adjustments shall be retroactive only to eighteen (18)
months, unless otherwise provided for in writing by the Department.

         7.6      COPAYMENTS. The Contractor may charge copayments to Enrollees
in a manner consistent with 89 Ill. Adm. Code, Part 125 and/or the Department's
fee-for-service copayment policy then in effect. If the Contractor desires to
charge such copayments, the Contractor must provide written notice to the
Department before charging such copayments. Such written notice to the
Department shall include a copy of the policy the Contractor intends to give the
Providers

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<PAGE>

in its network. This policy must set forth the amount, manner, and circumstances
in which copayments may be charged. Such policy is subject to the prior written
approval of the Department. In the event the Contractor wishes to impose a
charge for copayments after enrollment of a Participant, it must first provide
at least sixty (60) days prior written notice to such Participant. The
Contractor shall be responsible for promptly refunding to a Participant any
copayment that, in the sole discretion of the Department, has been
inappropriately collected for Covered Services. The Contractor shall not charge
copayments to any Enrollee who is an American Indian or Alaska Native. The
Department will prospectively identify Enrollees who are American Indians or
Alaska Natives.

         7.7      AVAILABILITY OF FUNDS. Payment of obligations of the
Department under this Contract are subject to the availability of funds and the
appropriation authority as provided by law. Obligations of the State will cease
immediately without penalty of further payment being required if in any State
fiscal year the Illinois General Assembly or federal funding source fails to
appropriate or otherwise make available sufficient funds for this Contract
within thirty (30) days of the end of the State's fiscal year.

                  (a)      If State funds become unavailable, as set forth
herein, to meet the Department's obligations under this Contract in whole or in
part, the Department will provide the Contractor with written notice thereof
prior to the unavailability of such funds, or as soon thereafter as the
Department can provide written notice.

                  (b)      In the event that funds become unavailable to fund
this Contract in whole, this Contract shall terminate in accordance with Article
VIII, Section 8.5(c) of this Contract. In the event that funds become
unavailable to fund this Contract in part, it is agreed by both parties that
this Contract may be renegotiated (as to premium or scope of services) or
amended in accordance with Article IX, Section 9.9(c). Should the Contractor be
unable or unwilling to provide fewer Covered Services at a reduced Capitation
rate, or otherwise be unwilling or unable to amend this Contract within ten (10)
business days after receipt of a proposed amendment, the Contract shall be
terminated on a date set by the Department not to exceed thirty (30) days from
the date of such notice.

         7.8      DENIAL OF PAYMENT SANCTION BY CMS. The Department shall deny
payments otherwise provided for under this Contract for new Enrollees when, and
for so long as, payment for those Enrollees is denied by CMS under 42 C.F.R.
Section 438.726.

         7.9      HOLD HARMLESS. The Contractor shall indemnify and hold the
Department harmless from any and all claims, complaints or causes of action
which arise as a result of the Contractor's failure to pay either any Provider
for rendering Covered Services to Enrollees or any vendor, subcontractor, or the
Department's mail vendor, either on a timely basis or at all, regardless of the
reason or for any dispute arising between the Contractor and a vendor, mail
vendor, Provider, or subcontractor; provided, however, that this provision will
not nullify the Department's obligation under Article V, Sections 5.1 to cover
services that are not Covered Services under this Contract, but that are
eligible for payment by the Department.

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<PAGE>

         The Contractor warrants that Enrollees will not be liable for any of
the Contractor's debts should the Contractor become insolvent or subject to
insolvency proceedings as set forth in 215 ILCS 125/1-1 et seq.

         7.10     PAYMENT IN FULL. Acceptance of payment of the rates specified
in this Article VII for any Enrollee is payment in full for all Covered Services
provided to that Enrollee, except to the extent the Contractor charges such
Enrollee a copayment as permitted in this Contract.

         7.11     REMITTANCE ADVICE. Each month, the Department will create an
electronic Remittance Advice file. This file will include, but is not limited
to, identification of each Enrollee for whom payment is being made. This file is
to be electronically retrieved by the Contractor.

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<PAGE>

                                  ARTICLE VIII

                          TERM RENEWAL AND TERMINATION

         8.1      TERM. This Contract shall take effect on August 1, 2003 and
shall continue for a period of one year. THIS CONTRACT SHALL RENEW AUTOMATICALLY
FOR TWO CONSECUTIVE ONE-YEAR TERMS, UNLESS EITHER PARTY GIVES THE OTHER PARTY
WRITTEN NOTICE NINETY (90) DAYS PRIOR TO THE END OF THE THEN-CURRENT TERM. Once
either party receives notice of the other party's intent not to renew, such
nonrenewal shall be irrevocable.

         8.2      CONTINUING DUTIES IN THE EVENT OF TERMINATION. Upon
termination of this Contract, the parties are obligated to perform those duties
which remain under this Contract. Such duties include, but are not limited to,
payment to Affiliated or non-Affiliated Providers, completion of customer
satisfaction surveys, cooperation with medical records review, all reports for
periods of operation, including Encounter Data, and retention of records.
Termination of this Contract does not eliminate the Contractor's responsibility
to the Department for overpayments which the Department determines in a
subsequent audit may have been made to the Contractor, nor does it eliminate any
responsibility the Department may have for underpayments to the Contractor. The
Contractor warrants that if this Contract is terminated, the Contractor shall
promptly supply all information in its possession or that may be reasonably
obtained, which is necessary for the orderly transition of Enrollees and
completion of all Contract responsibilities.

         8.3      TERMINATION WITH AND WITHOUT CAUSE.

                  (a)      This Contract may be terminated by the Department
with cause upon, at least, fifteen (15) days written notice to the Contractor
for any reason set forth in Section 1932(e)(4)(A) of the Social Security Act. In
the event such notice is given, the Contractor may request in writing a hearing,
in accordance with Section 1932 of the Social Security Act by the date specified
in the notice. If such a request is made by the date specified, then a hearing
under procedures determined by the Department will be provided prior to
termination. The Department reserves the right to notify Enrollees of the
hearing and its purpose, to inform them that they may disenroll, and to suspend
further Enrollment with the Contractor during the pendency of the hearing and
any related proceedings.

                  (b)      This Contract may be terminated by the Department or
the Contractor without cause upon sixty (60) days written notice to the other
party. Any such date of termination established by the Contractor shall coincide
with the last day of a coverage month.

         8.4      TEMPORARY MANAGEMENT. While one or more agencies within the
State of Illinois have the authority and retain the power to impose temporary
management upon Contractor for repeated violations of the Contract, the
Department will exercise its option to terminate the Contract prior to imposing
temporary management. This does not preclude other state agencies from
exercising such power at their discretion.

         8.5      TERMINATION FOR BREACH OF HIPAA COMPLIANCE OBLIGATIONS. Upon
the Department's learning of a material breach of the terms of the HIPAA
Compliance Obligations,

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set forth in Attachment III ("HIPAA Compliance Obligations"), incorporated by
reference and made a part hereof, the Department shall:

                           (1)      provide the Contractor with an opportunity
         to cure the breach or end the violation, and terminate this Contract if
         the Contractor does not cure the breach or end the violation within the
         time specified by the Department; or

                           (2)      immediately terminate this Contract if the
         Contractor has breached a material term of the HIPAA Compliance
         Obligations and cure is not possible; or

                           (3)      report the violation to the Secretary of the
         U.S. Department of Health and Human Services, if neither termination
         nor cure by the Contractor is feasible.

         8.6      AUTOMATIC TERMINATION. This Contract may, in the sole
discretion of the Department, automatically terminate on a date set by the
Department for any of the following reasons:

                  (a)      refusal by the Contractor to sign an amendment to
this Contract as described in Article IX, Section 9.9(c); or

                  (b)      legislation or regulations are enacted or a court of
competent jurisdiction interprets a law so as to prohibit the continuance of
this Contract or the Medical Assistance Program; however, this provision shall
not apply should KidCare be terminated; or

                  (c)      funds become unavailable as set forth in Article VII,
Section 7.4(b); or

                  (d)      the Contractor fails to maintain a Certificate of
Authority, as required by Article II, Section 2.6.

         8.7      REIMBURSEMENT IN THE EVENT OF TERMINATION. In the event of
termination of this Contract, reimbursement for any and all claims for Covered
Services rendered to Enrollees prior to the effective termination date shall be
the Contractor's responsibility.

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                                   ARTICLE IX

                                  GENERAL TERMS

         9.1      RECORDS RETENTION, AUDITS, AND REVIEWS. The Contractor shall
maintain all business, professional and other records in accordance with 45
C.F.R. Part 74, 45 C.F.R. Part 160 and 45 C.F.R. Part 164 subparts A and E, the
specific terms and conditions of this Contract, and pursuant to generally
accepted accounting and medical practice. The Contractor shall maintain, for a
minimum of six (6) years after completion of the Contract and after final
payment is made under the Contract, adequate books, records, and supporting
documents to verify the amounts, recipients, and uses of all disbursements of
funds passing in conjunction with the Contract. If an audit, litigation or other
action involving the records is started before the end of the six (6) year
period, the records must be retained until all issues arising out of the action
are resolved. Failure to maintain the books, records, and supporting documents
required by this Section shall establish a presumption in favor of the State for
the recovery of any funds paid by the State under the Contract for which
adequate books, records, and supporting documentation are not available, in
Illinois, to support their purported disbursement.

         The Contract and all books, records, and supporting documents related
to the Contract shall be made available, at no charge, in Illinois, by the
Contractor for review and audit by the Department, the United States Department
of Health and Human Services, the Auditor General or other Authorized Persons.
The Contractor agrees to cooperate fully with any such review or audit and to
provide full access in Illinois to all relevant materials.

         The Contractor shall provide any information necessary to disclose the
nature and extent of all expenditures made under this Contract. Such information
must be sufficient to fully disclose all compensation of Marketing personnel
pursuant to Article V, Section 5.2(g). The Department, the Auditor General or
other Authorized Persons may inspect and audit any financial records of the
Contractor or its subcontractors relating to the Contractor's capacity to bear
the risk of financial losses.

         The Department, the Auditor General or other Authorized Persons may
also evaluate, through inspection or other means, the quality, appropriateness,
and timeliness of services performed under this Contract.

         The Department shall perform quality assurance reviews to determine
whether the Contractor is providing quality and accessible health care to
Enrollees under this Contract. The reviews may include, but are not limited to,
a sample review of medical records of Enrollees, Enrollee surveys and
examination by consultants or reviews and assessments performed by the
Contractor. The specific points of quality assurance which will be reviewed
include, but are not limited to:

                           (1)      legibility of records

                           (2)      completeness of records

                           (3)      peer review and quality control provisions

                           (4)      utilization review

                           (5)      availability, timeliness, and accessibility
         of care

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                           (6)      continuity of care

                           (7)      utilization reporting

                           (8)      use of services

                           (9)      quality and outcomes of medical care

                           (10)     quality improvement initiatives

         The Department shall provide for an annual (as appropriate) external
independent review of the above that is conducted by a qualified independent
entity, such as the Department's EQRO.

         The Department shall adjust future payments or final payments if the
findings of a Department audit indicate underpayments or overpayments to the
Contractor. If no payments are due and owing to the Contractor, or if the
overpayment(s) exceed the amount otherwise due to the Contractor, the Contractor
shall immediately refund all amounts which may be due the Department.

         9.2      NONDISCRIMINATION.

                  (a)      The Contractor shall abide by all Federal and state
laws, regulations, and orders that prohibit discrimination because of race,
color, religion, sex, national origin, ancestry, age, physical or mental
disability, including, but not limited to, the Federal Civil Rights Act of 1964,
the Americans with Disabilities Act of 1990, the Federal Rehabilitation Act of
1973, Title IX of the Education Amendments of 1972 (regarding education programs
and activities), the Age Discrimination Act of 1975, the Illinois Human Rights
Act, and Executive Orders 11246 and 11375. The Contractor further agrees to take
affirmative action to ensure that no unlawful discrimination is committed in any
manner including, but not limited to, the delivery of services under this
Contract.

                  (b)      The Contractor will not discriminate against
Potential Enrollees, Prospective Enrollees, or Enrollees on the basis of health
status or need for health services.

                  (c)      The Contractor may not discriminate against any
Provider who is acting within the scope of his/her licensure solely on the basis
of that licensure or certification.

                  (d)      The Contractor will provide each Provider or group of
Providers whom it declines to include in its network written notice of the
reason for its decision.

                  (e)      Nothing in subparagraph (c) or (d), above, may be
construed to require the Contractor to contract with Providers beyond the number
necessary to meet the needs of its enrollees; preclude the Contractor from using
different reimbursement amounts for different specialties or for different
practitioners in the same specialty; or preclude the Contractor from
establishing measures that are designed to maintain quality of services and
control costs and are consistent with its responsibilities to enrollees.

         9.3      CONFIDENTIALITY OF INFORMATION. All information, records, data
and data elements collected and maintained for the operation of the Plan and
pertaining to Providers, Enrollees, applicants for public assistance,
facilities, and associations shall be protected by the

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Contractor and the Department from unauthorized disclosure, pursuant to 305 ILCS
5/11.9, 5/11.10, and 5/11.12; 42 U.S.C. 654(2)(b); 42 C.F.R. Part 431, Subpart
F; and 45 C.F.R. Part 303.21.

         9.4      NOTICES. Notices required or desired to be given either party
under this Contract, unless specifically required to be given by a specific
method, may be given by any of the following methods: 1) United States mail,
certified, return receipt requested; 2) a recognized overnight delivery service;
or 3) via facsimile. Notices shall be deemed given on the date sent and shall be
addressed as follows:

                  Contractor:       Mr. Jean Moise
                                    President and Chief Operating Officer
                                    AMERIGROUP Illinois, Inc.
                                    211 West Wacker Drive, Suite 1350
                                    Chicago, IL 60606

                  Department:       Illinois Department of Public Aid
                                    Kelly Carter, Chief
                                    Bureau of Managed Care
                                    201 South Grand Avenue East
                                    Springfield, Illinois 62763-0001
                                    Facsimile: (217) 524-7535

         9.5      REQUIRED DISCLOSURES.

                  (a)      Conflict of Interest.

                           (1)      The Contractor, by signing this Contract,
         covenants that the Contractor is not prohibited from contracting with
         State on any of the bases provided in 30 ILCS 500/50-13. The Contractor
         further covenants that it neither has nor shall acquire any interest,
         public or private, direct or indirect, which conflicts in any manner
         with the performance of Contractor's services and obligations under
         this Contract. The Contractor further covenants that it shall not
         employ any person having such an interest in connection with the
         Contractors performance hereunder. The Contractor shall be under a
         continuing obligation to disclose any conflicts to the Department,
         which shall, in its discretion, determine whether any conflict is cause
         for the nonexecution or termination of this Contract and any amendments
         hereto.

                           (2)      The Contractor will provide information
         intended to identify any potential conflicts of interest regarding its
         ability to perform the duties of this Contract through the filing of a
         disclosure statement upon the execution of this Contract, annually on
         or before the anniversary date of this Contract, and within thirty-five
         (35) days of any change occurring or of any request by the Department.
         The disclosure statement shall contain the following information:

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                                    (A)      The identities of any Persons that
                  directly or indirectly provide service or supplies to the
                  Medical Assistance Program or KidCare with which the
                  Contractor has any type of business or financial relationship;
                  and

                                    (B)      A statement describing how the
                  Contractor will avoid any potential conflict of interest with
                  such Persons related to its duties under this Contract.

                  (b)      Disclosure of Interest. The Contractor shall comply
with the disclosure requirements specified in 42 C.F.R. Part 455, including, but
not limited to, filing with the Department upon the execution of this Contract
and within thirty-five (35) days of a change occurring, a disclosure statement
containing the following:

                           (1)      The name, FEIN and address of each Person
         With An Ownership Or Controlling Interest in the Contractor, and for
         individuals include home address, work address, date of birth, Social
         Security number and gender.

                           (2)      Whether any of the individuals so identified
         are related to another so identified as the individual's spouse, child,
         brother, sister or parent.

                           (3)      The name of any Person With an Ownership or
         Controlling Interest in the Contractor who also is a Person With an
         Ownership or Controlling Interest in another managed care organization
         that has a contract with the Department to furnish services under the
         Medical Assistance Program or KidCare, and the name or names of the
         other managed care organization.

                           (4)      The name and address of any Person With an
         Ownership or Controlling Interest in the Contractor or who is an agent
         or employee of the Contractor who has been convicted of a criminal
         offense related to that Person With an Ownership or Controlling
         Interest's involvement in any program under Federal law including any
         program under Titles XVIII, XIX, XX or XXI of the Social Security Act,
         since the inception of such programs.

                           (5)      Whether any Person identified in subsections
         (1) through (4) of this section, is currently terminated, suspended,
         barred or otherwise excluded from participation, or has voluntarily
         withdrawn as the result of a settlement agreement, in any program under
         Federal law including any program under Titles XVIII, XIX, XX or XXI of
         the Social Security Act or has within the last five (5) years been
         reinstated to participation in any program under Federal law including
         any program under Titles XVIII, XIX, XX or XXI of the Social Security
         Act and prior to said reinstatement had been terminated, suspended,
         barred or otherwise excluded from participation or has voluntarily
         withdrawn as the result to a settlement agreement in such programs.

                           (6)      Whether the Medical Director of the Plan is
         a Person With an Ownership or Controlling Interest.

         9.6      CMS PRIOR APPROVAL. The parties acknowledge that the terms of
this Contract and any amendments must receive the prior approval of CMS, and
that failure of CMS to

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approve any provision of this Contract will render that provision null and void.
The parties understand and agree that the Department's duties and obligations
under this Contract are contingent upon such approval.

         9.7      ASSIGNMENT. This Contract, including the rights, benefits and
duties hereunder, shall not be assignable by either party without the prior
written consent of the other party.

         9.8      SIMILAR SERVICES. Nothing in this Contract shall prevent the
Contractor from performing similar services for other parties. However, the
Contractor warrants that at no time will the compensation paid by the Department
for services rendered under this Contract exceed the rate the Contractor charges
for the rendering of a similar benefit package of services to others in the
Contracting Area. The Contractor also warrants that the services it provides to
its Enrollees will be as accessible to them (in terms of timeliness, amount,
duration and scope) as those services are to nonenrolled Participants within the
Contracting Area.

         9.9      AMENDMENTS.

                  (a)      This Contract may be modified or amended by the
mutual consent of both parties at any time during its term. Amendments to this
Contract must be in writing and signed by authorized representatives of both
parties.

                  (b)      No change in, addition to or waiver of any term or
condition of this Contract shall be binding on the Department or the Contractor
unless approved in writing by authorized representatives of both parties.

                  (c)      The Contractor shall, upon request by the Department
and upon receipt of a proposed amendment to this Contract, amend this Contract,
if and when required in the opinion of the Department, to comply with federal or
State laws or regulations. If the Contractor refuses to sign such amendment by
the date specified by the Department, which may not be less than ten (10)
business days after receipt, this Contract may terminate as provided in Article
VIII, Section 8.5(a).

         9.10     SANCTIONS. In addition to termination for cause pursuant to
Article VIII, Section 8.3(a), the Department may impose sanctions on the
Contractor for the Contractor's failure to substantially comply with the terms
of this Contract. Monetary sanctions imposed pursuant to this section may be
collected by deducting the amount of the sanction from any payments due to the
Contractor or by demanding immediate payment by the Contractor. The Department,
at its sole discretion, may establish an installment payment plan for payment of
any sanction. The determination of the amount of any sanction shall be at the
sole discretion of the Department, within the ranges set forth below.
Self-reporting by the Contractor will be taken into consideration in determining
the sanction amount.

         The Department shall not impose any sanction where the noncompliance is
directly caused by the Department's action or failure to act or where a force
majeure delays performance by the Contractor. The Department, in its sole
discretion, may waive the imposition of sanctions for failures that it judges to
be minor or insignificant.

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         Upon determination of substantial noncompliance, the Department shall
give written notice to the Contractor describing the noncompliance, the
opportunity to cure the noncompliance where a cure is allowed under this
Contract and the sanction which the Department will impose hereunder.

                  (a)      Failure to Report or Submit. If the Contractor fails
to submit any report or other material required by the Contract to be submitted
to the Department, other than Encounter Data, by the date due, the Department
will give notice to the Contractor of the late report or material and the
Contractor must submit it within thirty (30) days following the notice. If the
report or other material has not been submitted within thirty (30) days
following the notice, the Department may, at its sole discretion, impose a
sanction of $1,000.00 to $5,000.00 for the late report.

                  (b)      Failure to Submit Encounter Data. If the Department
determines that the Contractor has not demonstrated progress towards compliance
with the requirements of Article V, Section 5.10(b)(1) regarding Encounter Data,
the Department will send the Contractor a notice of non-compliance. If the
Contractor does not demonstrate progress towards compliance with these
requirements by the end of the thirty (30) day period following the notice, the
Department, without further notice, may impose a sanction of $1,000.00 to
$5,000.00. At the end of each subsequent period of thirty (30) days in which no
demonstrated progress is made towards compliance, the Department may, without
further notice, impose an additional sanction of $1,000.00 to $5,000.00.

                  (c)      Failure to Meet Minimum Standards of Care. If the
Department determines that the Contractor has not demonstrated progress towards
compliance with the requirements of Article V, Section 5.12 regarding minimum
standards of care, the Department will send the Contractor a notice of
noncompliance. If the Contractor does not demonstrate progress towards
compliance with these requirements by the end of the thirty (30) day period
following the notice, the Department, without further notice, may impose a
sanction of $1,000.00 to $5,000.00. At the end of each subsequent period of
thirty (30) days in which no demonstrated progress is made towards compliance,
the Department may, without further notice, impose an additional sanction of
$1,000.00 to $5,000.00.

                  (d)      Imposition of Prohibited Charges. If the Department
determines that the Contractor has imposed a charge on an Enrollee that is
prohibited by this Contract, the Department may impose a sanction of $1,000.00
to $5,000.00.

                  (e)      Misrepresentation or Falsification of Information. If
the Department determines that the Contractor has misrepresented or falsified
information furnished to a Potential Enrollee, Prospective Enrollee, Enrollee,
Provider, the Department or CMS, the Department may impose a sanction of
$1,000.00 to $5,000.00.

                  (f)      Failure to Comply with the Physician Incentive Plan
Requirements. If the Department determines that the Contractor has failed to
comply with the Physician Incentive Plan requirements of Article V, Section 5.6,
the Department may impose a sanction of $1,000.00 to $5,000.00.

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<PAGE>

                  (g)      Failure to Meet Access and Provider Ratio Standards.
If the Department determines that the Contractor has not met the Provider to
Enrollee access standards established in Article V, Sections 5.12(e) and/or 5.14
the Department will send the Contractor a notice of noncompliance. If the
Contractor has not met these requirements by the end of the thirty (30) day
period following the notice the Department may, without further notice, (i)
impose a sanction of $1,000.00 to $5,000.00, (ii) suspend Enrollment of
Potential Enrollees with the Contractor, or (iii) impose both sanctions. At the
end of each subsequent period of thirty (30) days in which no demonstrated
progress is made towards compliance, the Department may, without further notice,
impose additional sanctions of $1,000.00 to $5,000.00.

                  (h)      Failure to Provide Covered Services. If the
Department determines that the Contractor has failed to provide, or arrange to
provide, a medically necessary service that the Contractor is required to
provide under law or this Contract, the Department may (i) impose a sanction of
$5,000.00 to $25,000.00, (ii) suspend Enrollment of Potential Enrollees with the
Contractor, or (iii) impose both sanctions.

                  (i)      Discrimination Related to Pre-Existing Conditions
and/or Medical History. If the Department determines that discrimination has
occurred in relation to an Enrollee's pre-existing condition or medical history
indicating a probable need for substantial medical services in the future has
occurred, the Department may (i) impose a sanction of $5,000.00 to $25,000.00,
(ii) suspend Enrollment of Potential Enrollees with the Contractor or (iii)
impose both sanctions.

                  (j)      Pattern of Marketing Failures. Where the Department
determines a pattern of Marketing failures, the Department may (i) impose a
sanction of $5,000.00 to $25,000.00, (ii) suspend Enrollment of Potential
Enrollees with the Contractor, or (iii) impose both sanctions.

                  (k)      Other Failures. If the Department determines that the
Contractor is in substantial noncompliance with any material terms of this
Contract or any state or federal laws affecting the Contractors conduct under
this Contract, which are not specifically enunciated in this Article IX but
which the Department reasonably deems sanctionable, the Department shall provide
written notice to the Contractor setting forth the specific failure or
noncompliant activity. If the Contractor does not correct the noncompliance
within thirty (30) days of the notice the Department, without further notice,
may (i) impose a sanction of $1,000.00 to $5,000.00, (ii) suspend Enrollment of
Potential Enrollees with the Contractor, or (iii) impose both sanctions.

         9.11     SALE OR TRANSFER. The Contractor shall provide the Department
with the earliest possible actual notice of any sale or transfer of the
Contractor's business as it relates to this Contract. If the Contractor is
otherwise subject to SEC rules and regulations, actual notice shall be given to
the Department as soon as those SEC rules and regulations permit. The Department
agrees that any such notice shall be held in the strictest confidence until such
sale or transfer is publicly announced or consummated. The Department shall have
the right to terminate the Contract and any amendments thereto, without cause,
upon notification of such sale or transfer, in accordance with Article VIII,
Section 8.3(b).

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         9.12     COORDINATION OF BENEFITS FOR ENROLLEES.

                  (a)      The Department is responsible for the identification
of Enrollees with health insurance coverage provided by a third party and
ascertaining whether third parties are liable for medical services provided to
such Enrollees. Money which the Department receives as a result of these
collection activities shall belong to the Department to the extent the
Department has incurred any expense or paid any claim and thereafter any excess
receipts shall belong to the Contractor, to the extent the Contractor has
incurred any expense or paid any claim, as permitted by law.

                  (b)      The Contractor will conduct a data match for the
Department to identify Medical Assistance Program and KidCare Participants with
active private health insurance through the Contractor. The Department will
assume the reasonable and customary costs of these semi-annual matches. The
discovery of a third party liability match will prevent the Department from
paying premiums for recipients already covered by the Contractor. The Contractor
will further make available to the Department a contact person from whom the
Department can request to make third party liability inquiries for the purpose
of maintaining accurate eligibility information for these recipients.

                  (c)      Upon the Department's verification that an Enrollee
has third party coverage for major medical benefits, the Department shall
disenroll such Enrollee from the Contractor's Plan. Such disenrollment shall be
effective the first day of the calendar month no later than three (3) months
from the date the disenrollment is entered into the Department's computer
system. The monthly Capitation payments shall be adjusted accordingly on the
first day of the month the disenrollment is effective. The Contractor shall be
notified of the disenrollment on the Prelisting Report.

                  (d)      The Contractor shall report with the reported
Encounter Data any and all third party liability collections it receives so the
Department can offset the next month's Capitation payment accordingly.

                  (e)      The Contractor shall report to the Department any
health insurance coverage for Enrollees it discovers at any time.

         9.13     SUBROGATION. In the event an Enrollee is injured by the act or
omission of a third party, the Contractor shall have the right to pursue
subrogation and recover reimbursement from third parties for all Covered
Services the Contractor provided for Enrollee in exchange for the Capitation
paid hereunder. Upon receiving payment from the responsible party, the
Contractor shall refund to the Department the Capitation payment(s) received on
behalf of the Enrollee for the Covered Services involved, and shall be entitled
to retain any payments received in excess of that amount.

         9.14     AGREEMENT TO OBEY ALL LAWS. The Contractor's obligations and
services hereunder are hereby made and must be performed in compliance with all
applicable federal and State laws, including, but not limited to, applicable
provisions of 45 C.F.R. Part 74 not hereto specified. In the provision of
services under this Contract, the Contractor and its subcontractors shall comply
with all applicable Federal and state statutes and regulations, and all
amendments

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thereto, that are in effect when this Contract is signed, or that come into
effect during the term of this Contract. This includes, but is not limited to
Title XIX of the Social Security Act and Title 42 of the Code of Federal
Regulations.

         9.15     SEVERABILITY. Invalidity of any provision, term or condition
of this Contract for any reason shall not render any other provision, term or
condition of this Contract invalid or unenforceable.

         9.16     CONTRACTOR'S DISPUTES WITH OTHER PROVIDERS. All disputes
between the Contractor and any Affiliated or non-Affiliated Provider, or between
the Contractor and any other subcontractor, shall be solely between such
Provider or subcontractor and the Contractor.

         9.17     CHOICE OF LAW. This Contract shall be governed and construed
in accordance with the laws of the State of Illinois. Should any provision of
this Contract require judicial interpretation, the parties agree and stipulate
that the court interpreting or considering this Contract shall not apply any
presumption that the terms of this Contract shall be more strictly construed
against a party who itself or through its agents prepared this Contract. The
parties acknowledge that all parties hereto have participated in the preparation
of this Contract either through drafting or negotiation and that each party has
had full opportunity to consult legal counsel of choice before execution of this
Contract. Any claim against the Department arising out of this Contract must be
filed exclusively with the Illinois Court of Claims (as defined in 705 ILCS
505/1) of, if jurisdiction is not accepted by that court, with the appropriate
State or federal court located in Sangamon County, Illinois. The State does not
waive sovereign immunity by entering into this Contract.

         9.18     DEBARMENT CERTIFICATION. The Contractor certifies that it is
not barred from being awarded a contract or subcontract under Section 50-5 of
the Illinois Procurement Code (30 ILCS 500/1-1).

         The Contractor certifies that it has not been barred from contracting
with a unit of State or local government as a result of a violation of 720 ILCS
5/33-E3 or 5/33-E4.

         9.19     CHILD SUPPORT, STATE INCOME TAX AND STUDENT LOAN REQUIREMENTS.
The Contractor certifies that its officers, directors and partners are not in
default on an educational loan as provided in 5 ILCS 385/0.01 et seq., and is in
compliance with State income tax requirements and with child support payments
imposed upon it pursuant to a court or administrative order of this or any
state. The Contractor will not be considered out of compliance with this
requirement if (a) the Contractor provides proof of payment of past due amounts
in full or (b) the alleged obligation of past due amounts is being contested
through appropriate court or administrative agency proceedings and the
Contractor provides proof of the pendency of such proceedings or (c) the
Contractor provides proof of entry into payment arrangements acceptable to the
appropriate State agency are entered into. For purposes of this paragraph, a
partnership shall be considered barred if any partner is in default.

         9.20     PAYMENT OF DUES AND FEES. The Contractor certifies that it is
not prohibited from selling goods or services to the State because it pays dues
or fees on behalf of its employees

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or agents or subsidizes or otherwise reimburses them for payment of dues or fees
to any club which unlawfully discriminates (see 775 ILCS 25/1--25/3).

         9.21     FEDERAL TAXPAYER IDENTIFICATION. Under penalties of perjury,
the Contractor certifies that it has affixed its correct Federal Taxpayer
Identification Number on the signature page of this Contract. The Contractor
certifies that it is not: 1) a foreign corporation, partnership, limited
liability company, estate, or trust; or 2) a nonresident alien individual except
for those corporations registered in Illinois as a foreign corporation.

         9.22     DRUG FREE WORKPLACE. The Contractor certifies that it is in
compliance with the requirements of 30 ILCS 580/1 et seq., and has completed
Attachment III to this Contract.

         9.23     LOBBYING. The Contractor certifies to the best of his
knowledge and belief, that:

                  (a)      No federal appropriated funds have been paid or will
be paid by or on behalf of the Contractor, to any Person for influencing or
attempting to influence an officer or employee of any agency, a Member of
Congress, an officer or employee of Congress, or an employee of a Member of
Congress in connection with the awarding of any federal contract, the making of
any federal loan or grant, the entering into of any cooperative agreement, or
the extension, continuation, renewal, amendment, or modification of any federal
contract, grant, loan, or cooperative agreement.

                  (b)      If any funds other than Federally appropriated funds
have been paid or will be paid to any Person for influencing or attempting to
influence an officer or employee of any agency, a Member of Congress, an officer
or employee of Congress, or an employee of a Member of Congress in connection
with this Federal contract, grant, loan, or cooperative agreement, the
Contractor shall complete and submit a Federal Standard Form LLL, "Disclosure
Form to Report Lobbying," in accordance with its instructions. Such Disclosure
Form may be obtained by request from the Illinois Department of Public Aid,
Bureau of Fiscal Operations.

                  (c)      The Contractor shall require that the language of
this certification be included in all subcontracts and shall ensure that such
subcontracts disclose accordingly.

                  This certification is a material representation of fact upon
which reliance was placed when this Contract was entered into. Submission of
this certification is a prerequisite for making or entering into the transaction
imposed by 31 U.S.C. Section 1352. Any person who fails to file the required
certification shall be subject to a civil penalty of not less than ten thousand
dollars ($10,000.00) and not more than one hundred thousand dollars
($100,000.00) for each such failure.

         9.24     EARLY RETIREMENT. If the Contractor is an individual, the
Contractor certifies that he has informed the director of the Department in
writing if he was formerly employed by the Department and received an early
retirement incentive under Section 14-108.3 or Section 16-133.3 of the Illinois
Pension Code (40 ILCS 5/13 et seq.). Contractor acknowledges and agrees that if
such early retirement incentive was received, this Contract is not valid unless
the official executing the Contract has made the appropriate filing with the
Auditor General prior to execution, pursuant to 30 ILCS 105/15a.

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         9.25     SEXUAL HARASSMENT. The Contractor shall have written sexual
harassment policies that shall comply with the requirements of 75 ILCS 5/2-105.

         9.26     INDEPENDENT CONTRACTOR. The Contractor is an independent
contractor for all purposes under this Contract and is not a Provider as defined
by the Public Aid Code and the Administrative Rules. Employees of the Contractor
are not employees of the State of Illinois, and are, therefore, not entitled to
any benefits provided employees of the State under the Personnel Code and
regulations or other laws of the State of Illinois nor are they eligible for
indemnity under the State Employee Indemnity Act (5 ILCS 350/1 et seq.) The
Contractor shall be responsible for accounting for the reporting of State and
Federal Income Tax and Social Security Taxes, if applicable.

         9.27     SOLICITATION OF EMPLOYEES. The Contractor and the Department
agree that they shall not, during the term of this Contract and for a period of
one (1) year after its termination, solicit for employment or employ, whether as
employee or independent contractor, any person who is or has been employed by
the other during the term of this Contract, in a managerial or policy-making
role relating to the duties and obligations under this Contract, without written
notice to the other. However, should an employee of the Contractor, without the
prior knowledge of the management of the Department, take and pass all required
employment examinations and meet all relevant employment qualifications, the
Department may employ that individual and no breach of this Contract shall be
deemed to have occurred. The Contractor shall immediately notify the
Department's Ethics Officer in writing if the Contractor solicits or intends to
solicit for employment any of the Department's employees during the term of this
Contract. The Department will be responsible for keeping the Contractor informed
as to the name and address of the Ethics Officer.

         9.28     NONSOLICITATION. The Contractor warrants that it has not
employed or retained any company or person, other than a bona fide employee
working solely for the Contractor, to solicit or secure this Contract, and that
he has not paid or agreed to pay any company or person, other than a bona fide
employee working solely for the Contractor, any fee, commission, percentage,
brokerage fee, gifts or any other consideration contingent upon or resulting
from the award or making of this Contract. For breach or violation of this
warranty, the Department shall have the right to annul this Contract without
liability, or in its discretion, to deduct from compensation otherwise due the
Contractor the commission, percentage, brokerage fee, gift or contingent fee.

         9.29     OWNERSHIP OF WORK PRODUCT. Any documents prepared by the
Contractor solely for the Department upon the Department's request or as
required under this Contract, shall be the property of the Department, except
that the Contractor is hereby granted permission to use, without payment, all
such materials as it may desire. Standard documents and reports, claims
processing data and Enrollee files and information prepared or maintained by the
Contractor in order to perform under this Contract are and shall remain the
property of the Contractor, subject to applicable confidentiality statutes;
however, the Department shall be entitled to copies of all such documents,
reports or claims processing information which relate to Enrollees or services
performed hereunder. In the event of any termination of the Contract, the
Contractor shall cooperate with the Department in supplying any required data in
order to ensure a smooth termination and provide for continuity of care of all
Enrollees enrolled with the Contractor.

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Notwithstanding anything to the contrary contained in this Contract, all
computer programs, electronic data bases, electronic data processing
documentation and source materials collected, developed, purchased or used by
the Contractor in order to perform its duties under this Contract, shall be and
remain the sole property of the Contractor.

         9.30     BRIBERY CERTIFICATION. By signing this Contract, the
Contractor certifies that neither it nor any of its officers, directors,
partners, or subcontractors have been convicted of bribery or attempting to
bribe an officer or employee of the State of Illinois, nor has the Contractor,
its officers, directors, or partners made an admission of guilt of such conduct
which is a matter of record, nor has an official, agent, or employee of the
Contractor committed bribery or attempted bribery on behalf of the Contractor,
its officers, directors, partners or subcontractors and pursuant to the
direction or authorization of any responsible official of the Contractor. The
Contractor further certifies that it will not subcontract with any
subcontractors who have been convicted of bribery or attempted bribery.

         9.31     NONPARTICIPATION IN INTERNATIONAL BOYCOTT. The Contractor
certifies that neither it nor any substantially owned Affiliated company is
participating or shall participate in an international boycott in violation of
the provisions of the U.S. Export Administration Act of 1979 or the regulations
of the U.S. Department of Commerce promulgated under that Act.

         9.32     COMPUTATIONAL ERROR. The Department reserves the right to
correct any mathematical or computational error in payment subtotals or total
contractual obligation. The Department will notify the Contractor of any such
corrections.

         9.33     SURVIVAL OF OBLIGATIONS. The Contractor's and the Department's
obligations under this Contract that by their nature are intended to continue
beyond the termination or expiration of this Contract will survive the
termination or expiration of this Contract.

         9.34     CLEAN AIR ACT AND CLEAN WATER ACT CERTIFICATION. The
Contractor certifies that it is in compliance with all applicable standards,
orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401 et
seq.) and the Federal Water Pollution Control Act, as amended (33 U.S.C. 1251 et
seq.). The Department shall report violations to the United States Department of
Health and Human Services and the appropriate Regional Office of the United
States Environmental Protection Agency.

         9.35     NON-WAIVER. Failure of either party to insist on performance
of any term or condition of this Contract or to exercise any right or privilege
hereunder shall not be construed as a continuing or future waiver of such term,
condition, right, or privilege.

         9.36     NOTICE OF CHANGE IN CIRCUMSTANCES. In the event the
Contractor, its parent or related corporate entity becomes a party to any
litigation, investigation, or transaction that may reasonably be considered to
have a material impact on the Contractor's ability to perform under this
Contract, the Contractor will immediately notify the Department in writing.

         9.37     PUBLIC RELEASE OF INFORMATION. News releases directly
pertaining to this Contract or the services or project to which it relates shall
not be made without prior approval by, and in coordination with, the Department,
subject however, to any disclosure obligations of the Contractor under
applicable law, rule or regulation.

                                       77
<PAGE>

         The parties will cooperate in connection with media inquiries and in
regard to media campaigns or media initiatives involving this project.

         The Contractor shall not disseminate any publication, presentation,
technical paper or other information related to the Contractor's duties and
obligations under this Contract unless such dissemination has been approved in
writing by the Department.

         9.38     PAYMENT IN ABSENCE OF FEDERAL FINANCIAL PARTICIPATION. In
addition to any assessment of sanctions, pursuit of actual damages, or
termination or nonextension of this Contract, if any failure of the Contractor
to meet the requirements, including time frames, of this Contract results in the
deferring or disallowance of federal funds from the State, the Department will
withhold and retain an equivalent amount from payment(s) to the Contractor until
such federal funds are released to the State (at which time the Department will
release to the Contractor such funds as the Department was retaining as a result
thereof).

         9.39     EMPLOYMENT REPORTING. The Contractor certifies that it shall
comply with the requirements of 820 ILCS 405/1801.1, concerning newly hired
employees.

         9.40     CERTIFICATION OF PARTICIPATION.

                  (a)      The Contractor certifies that neither it, nor any
employees, partners, officers or shareholders owning at least five percent (5%)
of said Contractor is currently barred, suspended or terminated from
participation in the Medicaid or Medicare programs, nor are any of the above
persons currently under sanction for, or serving a sentence for conviction of
any Medicaid or Medicare program offenses.

                  (b)      If Contractor, any employee, partner, officer or
shareholder owning at least five percent (5%) was ever (but is not currently)
barred, suspended or terminated from participation in the Medicaid or Medicare
programs or was ever sanctioned for or convicted of any Medicaid or Medicare
program offenses, the Contractor must immediately report to the Department in
writing, including for each offense, the date the offense occurred, the action
causing the offense, the penalty or sentence assessed and the date the penalty
was paid or the sentence completed.

         9.41     INDEMNIFICATION. To the extent allowed by law, the Contractor
and the Department agree to indemnify, defend and hold harmless the other party,
its officers, agents, designees, and employees from any and all claims and
losses accruing or resulting in connection with the performance of this Contract
which are due to the negligent or willful acts or omission of the other party.
In the event either party becomes involved as a party to litigation in
connection with services or products provided under this Contract, that party
agrees to immediately give the other party written notice. The Party so
notified, at its sole election and cost, may enter into such litigation to
protect its interests.

         This indemnification is conditioned upon (1) the right of the
Department or the Contractor when such party is the indemnifying party pursuant
to this Article IX, Section 9.40 ("indemnifying party") to defend against any
such action or claim and to settle, compromise or defend same in the sole
discretion of the indemnifying party; (2) receipt of written notice by the
indemnifying party as soon as practicable after the party seeking
indemnification's first notice of

                                       78
<PAGE>

an action or claim for which indemnification is sought hereunder; and (3) the
full cooperation of the party seeking indemnification in defense or handling of
any such action or claim.

         9.42     GIFTS.

                  (a)      The Contractor and the Contractor's principals,
employees, and subcontractors are prohibited from giving gifts to employees of
the Department, and are prohibited from giving gifts to, or accepting gifts
from, any Person who has a contemporaneous contract with the Department
involving duties or obligations related to the Contract.

                  (b)      The Contractor will provide the Department with
advance notice of the Contractor's providing gifts, excluding charitable
donations, given as incentives to community-based organizations in Illinois and
Participants or KidCare Participants in Illinois to assist the Contractor in
carrying out its responsibilities under this Contract.

         9.43     BUSINESS ENTERPRISE FOR MINORITIES, FEMALES AND PERSONS WITH
DISABILITIES. The Contractor certifies that it is in compliance with 30 ILCS
575/0.01 et seq., and has completed Attachment V.

         9.44     NON-DELINQUENCY CERTIFICATION. Contractor certifies that
Contractor is not delinquent in the payment of any debt to the State and,
therefore, is not barred from being awarded a contract under 30 ILCS 500/50-11.
Contractor acknowledges that the Department may declare the Contract void if
this certification is false, or if Contractor is determined to be delinquent in
the payment of any debt to the State during the term of the Contract.

         IN WITNESS WHEREOF, the Department and the Contractor hereby execute
and deliver this Contract effective as of the Effective Date.

                                    STATE OF ILLINOIS
                                    DEPARTMENT OF PUBLIC AID

                                    By:_________________________________________
                                                    Barry S. Maram
                                                       Director

                                    Date:_______________________________________

                                    AMERIGROUP ILLINOIS, INC.

                                    By:_________________________________________
                                    Title:______________________________________
                                    Date:_______________________________________
                                    FEIN:_______________________________________

                                       79
<PAGE>

                                  ATTACHMENT I

                                   RATE SHEETS

(a)      Contractor Name: AMERIGROUP Illinois, Inc.

         Address:         211 West Wacker Drive, Suite 1350

                          Chicago, IL 60606

(b)      Contracting Area(s) Covered by the Contractor and Enrollment Limit:

<TABLE>
<CAPTION>
CONTRACTING AREA                                         ENROLLMENT LIMIT
--------------------------------------------------------------------------------
<S>                                                      <C>
Region IV                                                    100,000
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
</TABLE>

(c)      Total Enrollment Limit for all Contracting Areas: 100,000

(d)      Threshold Review Levels: 80,000

(e)      Standard Capitation Rates for Enrollees, effective AUGUST 1, 2003
         through JULY 31, 2005:

<TABLE>
<CAPTION>
                          REGION I      REGION II     REGION III    REGION IV     REGION V
    AGE/GENDER             (N.W.        (CENTRAL      (SOUTHERN       (COOK       (COLLAR
    MO = MONTH            ILLINOIS)     ILLINOIS)     ILLINOIS)      COUNTY)      COUNTIES)
    YR = YEAR               PMPM          PMPM          PMPM          PMPM          PMPM
--------------------------------------------------------------------------------------------
<S>                      <C>           <C>            <C>           <C>           <C>
0-3Mo                    $1,152.25     $1,178.77      $1,242.71     $1,244.64     $854.58
--------------------------------------------------------------------------------------------
4Mo-1Yr                     127.81        117.63         165.94        125.04      108.35
--------------------------------------------------------------------------------------------
2Yr-5Yr                      63.77         67.81          71.74         58.67       56.28
--------------------------------------------------------------------------------------------
6Yr-13Yr                     72.08         79.78          75.18         58.18       57.47
--------------------------------------------------------------------------------------------
14Yr-20Yr, Male             115.93        135.96         131.18         90.67      142.60
--------------------------------------------------------------------------------------------
14Yr-20Y, Female            148.51        157.40         155.15        112.48      119.82
--------------------------------------------------------------------------------------------
21Yr-44Yr, Male             161.79        216.53         201.90        164.23      159.43
--------------------------------------------------------------------------------------------
21Yr-44Yr, Female           217.61        228.14         237.13        185.81      184.20
--------------------------------------------------------------------------------------------
45Yr+ Male and Female       437.86        486.40         476.29        359.61      409.17
--------------------------------------------------------------------------------------------
</TABLE>

(f)      Hospital Delivery Case Rate, effective AUGUST 1, 2003 through JULY 31,
         2005:

<Table>
<S>                      <C>        <C>        <C>         <C>         <C>
Hospital Delivery Case
      Rate
  (per delivery)         $3,196.12  $3,104.66  $3,281.22   $3,748.33   $3,276.03
</Table>

                                      I-1
<PAGE>

                                  ATTACHMENT II

                          DRUG FREE WORKPLACE AGREEMENT

         The Contractor certifies that he/she/it will not engage in the unlawful
manufacture, distribution, dispensation, possession, or use of a controlled
substance in the performance of the Contract.

CHECK THE BOX THAT APPLIES:

         [ ]      This business or corporation does not have twenty-five (25) or
                  more employees.

         [ ]      This business or corporation has twenty-five (25) or more
                  employees, and the Contractor certifies and agrees that it
                  will provide a drug free workplace by:

A)       Publishing a statement:

         1)       Notifying employees that the unlawful manufacture,
                  distribution, dispensation, possession or use of a controlled
                  substance, including cannabis, is prohibited in the grantee's
                  or Contractor's workplace.

         2)       Specifying the actions that will be taken against employees
                  for violations of such prohibition.

         3)       Notifying the employees that, as a condition of employment on
                  such contract, the employee will:

                  a)       abide by the terms of the statement; and

                  b)       notify the employer of any criminal drug statute
                           conviction for a violation occurring in the workplace
                           no later than five (5) days after such conviction.

B)       Establishing a drug free awareness program to inform employees about:

         1)       the dangers of drug abuse in the workplace;

         2)       the Contractor's policy of maintaining a drug free workplace;

         3)       any available drug counseling, rehabilitation, and employee
                  assistance programs; and

         4)       the penalties that may be imposed upon an employee for drug
                  violations.

C)       Providing a copy of the statement required by subparagraph (a) to each
         employee engaged in the performance of the contract or grant and to
         post the statement in a prominent place in the workplace.

                                      II-1

<PAGE>

D)       Notifying the contracting or granting agency within ten (10) days after
         receiving notice under part (B) or paragraph (3) of subsection (a)
         above from an employee or otherwise receiving actual notice of such
         conviction.

E)       Imposing a sanction on, or requiring the satisfactory participation in
         a drug abuse assistance or rehabilitation program by, any employee who
         is so convicted, as required by section 5 of the Drug Free Workplace
         Act, 1992 Illinois Compiled Statute, 30 ILCS 580/5.

F)       Assisting employees in selecting a course of action in the event drug
         counseling, treatment, and rehabilitation is required and indicating
         that a trained referral team is in place.

G)       Making a good faith effort to continue to maintain a drug free
         workplace through implementation of the Drug Free Workplace Act, 1992
         Illinois Compiled Statute, 30 ILCS 580/1 et seq.

         THE UNDERSIGNED AFFIRMS, UNDER PENALTIES OF PERJURY, THAT HE OR SHE IS
AUTHORIZED TO EXECUTE THIS CERTIFICATION ON BEHALF OF THE DESIGNATED
ORGANIZATION.

                                     ___________________________________________
                                     Printed Name of Organization

                                     ___________________________________________
                                     Signature of Authorized Representative

                                     ___________________________________________
                                     Requisition/Contract/Grant ID Number

                                     ___________________________________________
                                     Printed Name and Title

                                     ___________________________________________
                                     Date

                                      II-2

<PAGE>

                                 ATTACHMENT III

                          HIPAA COMPLIANCE OBLIGATIONS

         A.       Definitions.

                  (1)      "Designated Record Set" shall have the same meaning
         as the term "designated record set" in 45 C.F.R. 164.501.

                  (2)      "HIPAA" means the federal Health Insurance
         Portability and Accountability Act, Public Law 104-191.

                  (3)      "Individual" shall have the same meaning as the term
         "individual" in 45 C.F.R. 164.501 and shall include a person who
         qualifies as a personal representative in accordance with 45 C.F.R.
         164.502(g).

                  (4)      "PHI" means Protected Health Information, which shall
         have the same meaning as the term "protected health information" in 45
         C.F.R. 164.501, limited to the information created or received by the
         Contractor/Provider from or on behalf of the Department.

                  (5)      "Privacy Rule" shall mean the Standards for Privacy
         of Individually Identifiable Health Information at 45 C.F.R. Part 160
         and 45 C.F.R. Part 164 subparts A and E.

                  (6)      "Required by law" shall have the same meaning as the
         term "required by law" in 45 C.F.R. 164.501.

         B.       Contractor's Permitted Uses and Disclosures.

                  (1)      Except as otherwise limited by this Contract, the
         Contractor may use or disclose PHI to perform functions, activities, or
         services for, or on behalf of, the Department as specified in this
         Contract, provided that such use or disclosure would not violate the
         Privacy Rule if done by the Department.

                  (2)      Except as otherwise limited by this Contract, the
         Contractor may use PHI for the proper management and administration of
         the Contractor or to carry out the legal responsibilities of the
         Contractor.

                  (3)      Except as otherwise limited by this Contract, the
         Contractor may disclose PHI for the proper management and
         administration of Contractor, provided that the disclosures are
         required by law, or the Contractor obtains reasonable assurances from
         the person to whom the PHI is disclosed that the PHI will remain
         confidential and used or further disclosed only as required by law or
         for the purpose for which it was disclosed to the person. The
         Contractor shall require the person to whom the PHI was disclosed to
         notify the Contractor of any instances of which the person is aware in
         which the confidentiality of the PHI has been breached.

                                     III-1

<PAGE>

                  (4)      Except as otherwise limited by this Contract, the
         Contractor may use PHI to provide data aggregation services to the
         Department as permitted by 45 C.F.R. 164.504(e)(2)(i)(B).

                  (5)      The Contractor may use PHI to report violations of
         law to appropriate federal and state authorities, consistent with 45
         C.F.R. 164.502(j)(1).

         C.       Limitations on the Contractor's Uses and Disclosures. The
Contractor shall:

                  (6)      Not use or further disclose PHI other than as
         permitted or required by the Contract or as required by law;

                  (7)      Use appropriate safeguards to prevent use or
         disclosure of PHI other than as provided for by this Contract;

                  (8)      Mitigate, to the extent practicable, any harmful
         effect that is known to the Contractor of a use or disclosure of PHI by
         the Contractor in violation of the requirements of this Contract;

                  (9)      Report to the Department any use or disclosure of PHI
         not provided for by this Contract of which the Contractor becomes
         aware;

                  (10)     Ensure that any agents, including a subcontractor, to
         whom the Contractor provides PHI received from the Department or
         created or received by the Contractor on behalf of the Department,
         agree to the same restrictions and conditions that apply through this
         Contract to the Contractor with respect to such information;

                  (11)     Provide access to PHI in a Designated Record Set to
         the Department or to another individual whom the Department names, in
         order to meet the requirements of 45 C.F.R. 164.524, at the
         Department's request, and in the time and manner specified by the
         Department.

                  (12)     Make available PHI in a Designated Record Set for
         amendment and to incorporate any amendments to PHI in a Designated
         Record Set that the Department directs or that the Contractor agrees to
         pursuant to 45 C.F.R. 164.526 at the request of the Department or an
         individual, and in a time and manner specified by the Department;

                  (13)     Make the Contractor's internal practices, books, and
         records, including policies and procedures and PHI, relating to the use
         and disclosure of PHI received from the Department or created or
         received by the Contractor on behalf of the Department available to the
         Department and to the Secretary of Health and Human Services for
         purposes of determining the Department's compliance with the Privacy
         Rule;

                  (14)     Document disclosures of PHI and information related
         to disclosures of PHI as would be required for the Department to
         respond to a request by an individual for an accounting of disclosures
         of PHI in accordance with 45 C.F.R. 165.528;

                                     III-2

<PAGE>

                  (15)     Provide to the Department or to an individual, in a
         time and manner specified by the Department, information collected in
         accordance with the terms of this Contract to permit the Department to
         respond to a request by an individual for an accounting of disclosures
         of PHI in accordance with 45 C.F.R. 165.528;

                  (16)     Return or destroy all PHI received from the
         Department or created or received by the Contractor on behalf of the
         Department that the Contractor still maintains in any form, and to
         retain no copies of such PHI, upon termination of this Contract for any
         reason. If such return or destruction is not feasible, the Contractor
         shall provide the Department with notice of such purposes that make
         return or destruction infeasible, and upon the parties' written
         agreement that return or destruction is infeasible, the Contractor
         shall extend the protections of the Contracts to the PHI and limit
         further uses and disclosures to those purposes that make the return or
         destruction of the PHI infeasible. This provision shall apply equally
         to PHI that is in the possession of the Contractor and to PHI that is
         in the possession of subcontractors or agents of the Contractors.

         D.       Department Obligations. The Department shall:

                  (17)     Provide the Contractor with the Department's Notice
         of Privacy Practices and notify the Contractor of any changes to said
         Notice;

                  (18)     Notify the Contractor of any changes in or revocation
         of permission by an individual to use or disclose PHI, to the extent
         that such changes may affect the Contractor's permitted or required
         uses and disclosures of PHI;

                  (19)     Notify the Contractor of any restriction to the use
         or disclosure of PHI that the Department had agreed to in accordance
         with 45 C.F.R. 165.522, to the extent that such restriction may affect
         the Contractor's use or disclosure of PHI;

                  (20)     Not request that the Contractor use or disclose PHI
         in any manner that would not be permissible under the Privacy Rule if
         done by the Department.

         E.       Interpretation. Any ambiguity in this Contract shall be
resolved in favor of a meaning that permits the Department to comply with the
Privacy Rule.

                                     III-3

<PAGE>

                                  ATTACHMENT IV

                  BUSINESS ENTERPRISE PROGRAM CONTRACTING GOAL

         The Business Enterprise Program Act for Minorities, Females and Persons
with Disabilities (30 ILCS 575/1) establishes a goal that not less than 12% of
the total dollar amount of State contracts be awarded to businesses owned and
controlled by persons who are minority, female or who have disabilities (the
percentages are 5%/5%/2% respectively) and have been certified as such ("BEPs").
This goal can be met by contracts let directly to such businesses by the State,
or indirectly by the State's contractor ordering goods or services from BEPs
when suppliers or subcontractors are needed to fulfill the contract. Call the
Business Enterprise Program at 312/814-4190 (Voice & TDD), 800/356-9206 (Toll
Free), or 800/526-0844 (Illinois Relay Center for Hearing Impaired) for a list
of certified businesses appropriate for the particular contract.

1.       If you are a BEP, please identify which agency certified the business
         and in what capacity by checking the applicable blanks:

<TABLE>
<CAPTION>
               CERTIFYING AGENCY:                             CAPACITY:
                -----------------                             ---------
<S>                                                   <C>
___ Department of Central Management Services         ___ Minority
___ Women's Business Development Center               ___ Female
___ Chicago Minority Business Development Council     ___ Person with Disability
___ Illinois Department of Transportation             ___ Disadvantaged
___ Other (identify)
</TABLE>

2.       If the "Capacity" blank is not checked, do you have a written policy or
         goal regarding contracting with BEPs?

         Yes ___ No ___

         -  If "Yes", please attach a copy.

         -  If "No", will you make a commitment to contact BEPs and consider
            their proposals?

                  Yes ___ No ___

3.       Do you plan on ordering supplies or services in furtherance of this
         project from BEPs?

         Yes ___ No ___

         -    If "Yes", please identify what you plan to order, the estimated
              value as a percentage of your total proposal, and the names of the
              BEPs you plan to use.

         This information is submitted on behalf of_____________________________
                                                           (Name of Vendor)

                                              Name (printed):___________________
                                              Title:____________________________
                                              Signature:________________________
                                              Date:_____________________________

                                      IV-1

<PAGE>

                                    EXHIBIT A

                             QUALITY ASSURANCE (QA)

         1.       All services provided by or arranged by the Contractor to be
provided shall be in accordance with prevailing professional community
standards. The Contractor shall establish a program that systematically and
routinely collects data to review that includes quality oversight and monitoring
performance and patient results. The program shall include provision for the
interpretation of such data to the Contractor's practitioners. The program shall
be designed to perform quantitative and qualitative analytical activities to
assess opportunities to improve efficiency, effectiveness, appropriate health
care utilization and health status and shall be updated no less frequently than
annually. The Contractor shall ensure that data received from Providers and
included in reports is accurate and complete by (1) verifying the accuracy and
timeliness of reported data; (2) screening the data for completeness, logic, and
consistency; and (3) collecting service information in standardized formats to
the extent feasible and appropriate. The Contractor shall have in effect a
program consistent with the utilization control requirements of 42 C.F.R. Part
456. This program will include, when required by the regulations, written plans
of care and certifications of need of care.

         2.       The Contractor shall establish procedures such that the
Contractor shall be able to demonstrate that it meets the requirements of the
HMO Federal qualification regulations (42 C.F.R. 417.106) and/or the Medicare
HMO/CMP regulations (42 C.F.R. 417.418(c)), as well as the regulations
promulgated pursuant to the Balanced Budget Act of 1997 (42 C.F.R. 438.200 et
seq.). These regulations require that the Contractor have an ongoing fully
implemented Quality Assurance program for health services that:

                  a.       incorporates practice guidelines that meet the
following criteria, and are distributed to Affiliated Providers, as appropriate,
and to Enrollees and Potential Enrollees, upon request:

                           i.       are based on valid and reliable clinical
                                    evidence or a consensus of Providers in the
                                    particular field;

                           ii.      consider the needs of Enrollees;

                           iii.     are adopted in consultation with Affiliated
                                    Providers; and

                           iv.      are reviewed and updated periodically as
                                    appropriate.

                  b.       Monitors the health care services the Contractor
provides, including assessing the appropriateness and quality of care;

                  c.       stresses health outcomes;

                  d.       provides review by Physicians and other health
professionals of the process followed in the provision of health services;

                  e.       includes fraud control provisions;

                                      A-1

<PAGE>

                  f.       establishes and monitors access standards;

                  g.       uses systematic data collection of performance and
patient results, provides interpretation of these data to its practitioners
(including, without limitation, patient-specific and aggregate data provided by
the Department, such as childhood immunization data, pregnancy status and/or
child profile information), and institutes needed changes; and

                  h.       includes written procedures for taking appropriate
remedial action whenever, as determined under the quality assurance program,
inappropriate or substandard services have been furnished or services that
should have been furnished have not been provided.

         3.       The Contractor shall provide to the Department a written
description of its Quality Assurance Plan (QAP) for the provision of clinical
services (e.g., medical, medically related services and behavioral health
services). This written description must meet federal and State requirements:

                  a.       Goals and objectives -- The written description shall
contain a detailed set of QA objectives that are developed annually and include
a workplan and timetable for implementation and accomplishment.

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

                  c.       Methodology -- The QAP methodology shall provide for
review of the entire range of care provided, by assuring that all demographic
groups, care settings, (e.g., inpatient, ambulatory, and home care), and types
of services (e.g., preventive, primary, specialty care, behavioral health and
ancillary services) are included in the scope of the review. Documentation of
the monitoring and evaluation plan shall be provided to Department.

                  d.       Activities -- The written description shall specify
quality of care studies and other activities to be undertaken over a prescribed
period of time, and methodologies and organizational arrangements to be used to
accomplish them. Individuals responsible for the studies and other activities
shall be clearly identified in the written workplan and shall be appropriately
skilled or trained to undertake such tasks. The written description shall
provide for continuous performance of the activities, including tracking of
issues over time.

                  e.       Provider review -- The written description shall
document how Physicians licensed to practice medicine in all its branches and
other health professionals will be involved in reviewing quality of care and the
provision of health services and how feedback to health professionals and the
Contractor staff regarding performance and patient results will be provided.

                  f.       Focus on health outcomes -- The QAP methodology shall
address health outcomes; a complete description of the methodology shall be
fully documented and provided to Department.

                                      A-2

<PAGE>

                  g.       Systematic process of quality assessment and
improvement -- The QAP shall objectively and systematically monitor and evaluate
the quality, appropriateness of, and timely access to, care and service to
members, and pursue opportunities for improvement on an ongoing basis.
Documentation of the monitoring activities and evaluation plan shall be provided
to the Department.

         4.       The Contractor shall provide the Department with the QAP
written guidelines which delineate the QA process, specifying:

                  a.       Clinical areas to be monitored:

                           i.       The monitoring and evaluation of clinical
         care shall reflect the population served by the Contractor in terms of
         age groups, disease categories, and special risk status, and shall
         include quality improvement initiatives, as determined appropriate by
         the Contractor or as required by the Department.

                           ii.      The QAP shall, at a minimum, monitor and
         evaluate care and services in certain priority clinical areas of
         interest specified by the Department.

                           iii.     At its discretion and/or as required by the
         Department, the Contractor's QAP must monitor and evaluate other
         important aspects of care and service.

                           iv.      At a minimum, the following areas shall be
         monitored:

                           (a)      for pregnant women:

                                    (1)      number of prenatal visits;

                                    (2)      provision of ACOG recommended
                                             prenatal screening tests;

                                    (3)      neonatal deaths;

                                    (4)      birth outcomes;

                                    (5)      length of hospitalization for the
                                             mother; and

                                    (6)      length of newborn hospital stay for
                                             the infant.

                           (b)      for children:

                                    (1)      number of well-child visits
                                             appropriate for age;

                                    (2)      immunization status;

                                    (3)      lead screening status;

                                    (4)      number of hospitalizations;

                                    (5)      length of hospitalizations; and

                                    (6)      medical management for a limited
                                             number of medically complicated
                                             conditions as agreed to by the
                                             Contractor and Department.

                           (c)      for adults:

                                    (1)      preventive health care (e.g.,
                                             initial health history and physical
                                             exam; mammography; papanicolaou
                                             smear).

                                      A-3

<PAGE>

                           (d)      for medically complicated conditions/chronic
                                    care (such conditions specifically
                                    including, without limitation, diabetes and
                                    asthma):

                                    (1)      appropriate treatment, follow-up
                                             care, and coordination of care for
                                             Enrollees of all ages; and

                                    (2)      identification of Enrollees with
                                             special health care needs and
                                             processes in place to assure
                                             adequate, ongoing assessments,
                                             treatment plans developed with the
                                             Enrollee's participation in
                                             consultation with any specialists
                                             caring for the Enrollee, the
                                             appropriateness and quality of
                                             care, and if approval is required,
                                             such approval occurs in a timely
                                             manner.

                           (e)      for behavioral health:

                                    (1)      all areas specified in Paragraph 13
                                             of this Exhibit A.

                  b.       Use of Quality Indicators -- Quality indicators are
measurable variables relating to a specified clinical area, which are reviewed
over a period of time to monitor the process of outcomes of care delivered in
that clinical area:

                           i.       The Contractor shall identify and use
         quality indicators that are objective, measurable, and based on current
         knowledge and clinical experience.

                           ii.      The Contractor shall document that methods
         and frequency of data collected are appropriate and sufficient to
         detect need for program change.

                           iii.     For the priority clinical areas specified by
         Department, the Contractor shall monitor and evaluate quality of care
         through studies which address, but are not limited to, the quality
         indicators also specified by Department.

                  c.       Analysis of clinical care and related services,
including behavioral health services:

                           i.       Appropriate clinicians shall monitor and
         evaluate quality through review of individual cases where there are
         questions about care, and through studies analyzing patterns of
         clinical care and related service.

                           ii.      Multi disciplinary teams shall be used,
         where indicated, to analyze and address systems issues.

                           iii.     Clinical and related service areas requiring
         improvement shall be identified and documented with a corrective action
         plan developed and monitored.

                  d.       Conduct Quality Improvement Projects - Quality
Improvement Projects shall be designed to achieve, through ongoing measurements
and intervention, significant improvement of the quality of care rendered,
sustained over time, and resulting in a favorable effect on health outcome and
Enrollee satisfaction. Performance measurements and

                                      A-4

<PAGE>

interventions shall be submitted to the Department annually as part of the
QA/UR/PR Annual Report and at other times throughout the year upon request by
the Department. If the Contractor implements a Quality Improvement Project that
spans more than one (1) year, the Contractor shall report annually the status of
such project and the results thus far.

                  e.       Implementation of Remedial/Corrective Actions -- The
QAP shall include written procedures for taking appropriate remedial action
whenever, as determined under the QAP, inappropriate or substandard services are
furnished, including in the area of behavioral health, or services that should
have been furnished were not. Quality assurance actions that result in remedial
or corrective actions shall be forwarded by the Contractor to the Department on
a timely basis.

                  Written remedial/corrective action procedures shall include:

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

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

                           iii.     specific actions to be taken;

                           iv.      a provision for feedback to appropriate
         health professionals, providers and staff;

                           v.       the schedule and accountability for
         implementing corrective actions;

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

                           vii.     procedures for notifying a Primary Care
         Provider group that a particular Physician licensed to practice
         medicine in all its branches is no longer eligible to provide services
         to Enrollees.

                  f.       Assessment of Effectiveness of Corrective Actions --
The Contractor shall monitor and evaluate corrective actions taken to assure
that appropriate changes have been made. The Contractor shall assure follow-up
on identified issues to ensure that actions for improvement have been effective
and provide documentation of same.

                  g.       Evaluation of Continuity and Effectiveness of the
QAP:

                           i.       The Contractor shall conduct a regular
         (minimum annual) examination of the scope and content of the QAP to
         ensure that it covers all types of services, including behavioral
         health services, in all settings, as required.

                           ii.      At the end of each year, a written report on
         the QAP shall be prepared by the Contractor and submitted to the
         Department as a component part of the

                                      A-5

<PAGE>

         QA/UR/PR Annual Report identified in Exhibit C, which report shall
         include, without limitation:

                  (a)      QA/UR/PR Plan

                           (1)      Summary of Quality Assurance, Utilization
                                    Review, and Peer Review (QA/UR/PR)
                                    activities during the fiscal year;

                           (2)      Summary of changes in QA/UR/PR Plan that
                                    will be reflected in the next fiscal year;

                           (3)      Areas of deficiency and recommendations for
                                    corrective action;

                           (4)      Evaluation of the overall effectiveness of
                                    the QAP; and

                           (5)      Detailed Workplan for the next fiscal year

                  (b)      Provider Network Adequacy -- Application of a
                           geographical mapping software that has been approved
                           by the Department, and identifies and evaluates
                           network:

                           (1)      PCPs;

                           (2)      WHCPs;

                           (3)      Specialists;

                           (4)      Pharmacies;

                           (5)      Tertiary care facilities (i.e., perinatal
                                    and children's hospitals);

                           (6)      Ancillary services; and

                           (7)      Behavioral health network

                           The report shall include all Providers and each
                           Provider's admitting and, as appropriate, delivery
                           privileges at Affiliated hospitals or, in the
                           alternative, if the Provider does not have such
                           admitting and/or delivery privileges, a detailed
                           description of the written referral agreement with a
                           Provider who is in the Contractor's network and who
                           has such privileges at an Affiliated hospital. The
                           report shall also include the updated Provider
                           Directory and a summary of
                           credentialing/recredentialing and peer review
                           activities.

                  (c)      Outreach and Health Education

                           (1)      Summary and outcomes of outreach activities;
                                    and

                           (2)      Description of health education initiatives
                                    during fiscal year

                  (d)      Coordination with Other Service Providers and Care
                           Coordination Activities

                                      A-6

<PAGE>

                           (1)      Description of coordination with other
                                    service providers; and

                           (2)      Description of care coordination initiatives
                                    and outcomes

                  (e)      Studies, Outcomes, and Relevant Statistics

                           (1)      Results of medical record reviews and
                                    quality studies;

                           (2)      Contractor's progress toward meeting the
                                    Department's preventive care participation
                                    goals as set forth in Article V, Section
                                    5.12 (a), (b), and (c) of the Contract;

                           (3)      Aggregated data on utilization of services;

                           (4)      HEDIS or Department-defined reporting;

                           (5)      Trending and comparison of health outcomes;

                           (6)      Outcomes of A-3 iv(a), A-3 iv(b), A-3 iv(c),
                                    A-3 iv(d), and A-3 iv(e);

                           (7)      Enrollee Satisfaction Survey analysis; and

                           (8)      Description of the way in which
                                    Department-generated data supplied to the
                                    Contractor was utilized, accurate, and
                                    effective in developing ongoing quality
                                    improvement strategies.

                  (f)      Summary of Quality Improvement Activities

                           (1)      Quality indicators and methodologies for
                                    measuring quality indicators;

                           (2)      Quality improvement activities implemented;
                                    and

                           (3)      Results and demonstrated improvements

                  (g)      Monitoring of Delegated Activities

                           (1)      Description of the Contractor's oversight
                                    and monitoring activities, including a
                                    summary of findings relative to each
                                    subcontractor's ability to perform the
                                    required functions;

                           (2)      Summary of deficiencies and quality
                                    improvement activities developed as a result
                                    of the ongoing monitoring and periodic
                                    formal reviews, including the workplan for
                                    implementation of the QI activities;

                           (3)      Workplan for MCO monitoring of its
                                    subcontractors, including schedule for
                                    formal reviews

         5.       The Contractor shall have a governing body to which the QAP
shall be held accountable ("Governing Body"). The Governing Body of the
Contractor shall be the Board of Directors or, where the Board's participation
with quality improvement issues is not direct, a designated committee of the
senior management of the Contractor. This Board of Directors or

                                      A-7

<PAGE>

Governing Body shall be ultimately responsible for the execution of the QAP.
However, changes to the medical quality assurance program shall be made by the
chair of the QA Committee.

         Responsibilities of the Governing Body include:

                  a.       Oversight of QAP -- The Contractor shall document
that the Governing Body has approved the overall QAP and an annual QA plan.

                  b.       Oversight Entity -- The Governing Body shall document
that it has formally designated an accountable entity or entities within the
organization to provide oversight of QA, or has formally decided to provide such
oversight as a committee of the whole.

                  c.       QAP Progress Reports -- The Governing Body shall
routinely receive written reports from the QAP describing actions taken,
progress in meeting QA objectives, and improvements made.

                  d.       Annual QAP Review -- The Governing Body shall
formally review on a periodic basis (but no less frequently than annually) a
written report on the QAP which includes: studies undertaken, results,
subsequent actions, and aggregate data on utilization and quantity of services
rendered, to assess the QAP's continuity, effectiveness and current
acceptability. Behavioral health shall be included in the Annual QAP Review.

                  e.       Program Modification -- Upon receipt of regular
written reports from the QAP delineating actions taken and improvements made,
the Governing Body shall take action when appropriate and direct that the
operational QAP be modified on an ongoing basis to accommodate review findings
and issues of concern within the Contractor. This activity shall be documented
in the minutes of the meetings of the Governing Board in sufficient detail to
demonstrate that it has directed and followed up on necessary actions pertaining
to Quality Assurance.

         6.       The QAP shall delineate an identifiable structure responsible
for performing QA functions within the Contractor. This committee or other
structure shall have:

                  a.       Regular Meetings -- The structure/committee shall
meet on a regular basis with specified frequency to oversee QAP activities. This
frequency shall be sufficient to demonstrate that the structure/committee is
following-up on all findings and required actions, but in no case shall such
meetings be held less frequently than quarterly. A copy of the meeting
summaries/minutes shall be submitted to the Department no later than thirty (30)
days after the close of the quarterly reporting period.

                  b.       Established Parameters for Operating -- The role,
structure and function of the structure/committee shall be specified.

                  c.       Documentation -- There shall be records kept
documenting the structure's/committee's activities, findings, recommendations
and actions.

                                      A-8

<PAGE>

                  d.       Accountability -- The QAP committee shall be
accountable to the Governing Body and report to it (or its designee) on a
scheduled basis on activities, findings, recommendations and actions.

                  e.       Membership -- There shall be active participation in
the QA committee from Plan Providers, who are representative of the composition
of the Plan's Providers. There shall be a majority of Contractor-Affiliated
practicing Physicians licensed to practice medicine in all its branches.

         7.       There shall be a designated senior executive who will be
responsible for program implementation. The Contractor's Medical Director shall
have substantial involvement in QA activities and shall be responsible for the
required reports.

                  a.       Adequate Resources -- The QAP shall have sufficient
material resources, and staff with the necessary education, experience, or
training, to effectively carry out its specified activities.

                  b.       Provider Participation in the QAP --

                           i.       Participating Physicians licensed to
         practice medicine in all its branches and other Providers shall be kept
         informed about the written QA plan.

                           ii.      The Contractor shall include in all its
         Provider subcontracts and employment agreements a requirement securing
         cooperation with the QAP for both Physicians licensed to practice
         medicine in all its branches and non-physician Providers.

                           iii.     Contracts shall specify that hospitals and
         other subcontractors will allow access to the medical records of its
         Enrollees to the Contractor.

         8.       The Contractor shall remain accountable for all QAP functions,
even if certain functions are delegated to other entities. If the Contractor
delegates any QA activities to subcontractors:

                  a.       There shall be a written description of the
following: the delegated activities; the delegate's accountability for these
activities; and the frequency of reporting to the Contractor.

                  b.       The Contractor shall have written procedures for
monitoring and evaluating the implementation of the delegated functions and for
verifying the actual quality of care being provided.

                  c.       There shall be evidence of continuous and ongoing
evaluation of delegated activities, including approval of quality improvement
plans and regular specified reports, as well as a formal review of such
activities conducted on no less than an annual basis.

                  d.       If the Contractor or subcontractor identifies
deficiencies or areas requiring improvement, the Contractor and subcontractor
shall take corrective action and implement a quality improvement initiative, as
appropriate.

                                      A-9

<PAGE>

         9.       The QAP shall contain provisions to assure that Physicians
licensed to practice medicine in all its branches and other health care
professionals, who are licensed by the State and who are under contract with the
Contractor, are qualified to perform their services and credentialed by the
Contractor. Recredentialing shall occur at least once every three (3) years. The
Contractor's written policies shall include procedures for selection and
retention of Physicians and other Providers.

         10.      The Contractor shall put a basic system in place which
promotes continuity of care and case management. The Contractor shall provide
documentation on:

                  a.       Monitoring the quality of care across all services
and all treatment modalities.

                  b.       Studies, reports, protocols, standards, worksheets,
minutes, or such other documentation as may be appropriate, concerning its QA
activities and corrective actions and make such documentation available to the
Department upon request.

         11.      The findings, conclusions, recommendations, actions taken, and
results of the actions taken as a result of QA activity, shall be documented and
reported to appropriate individuals within the organization and through the
established QA channels. The Contractor shall document coordination of QA
activities and other management activities.

                  a.       QA information shall be used in recredentialing,
recontracting and/or annual performance evaluations.

                  b.       QA activities shall be coordinated with other
performance monitoring activities, including utilization management, risk
management, and resolution and monitoring of member complaints and grievances.

                  c.       There shall be a linkage between QA and the other
management functions of the Plan such as:

                           i.       network changes;

                           ii.      benefits redesign;

                           iii.     medical management systems (e.g.,
         pre-certification);

                           iv.      practice feedback to Physicians licensed to
         practice medicine in all its branches; and

                           v.       patient education.

                  d.       In the aggregate, without reference to individual
Physicians licensed to practice medicine in all its branches or Enrollee
identifying information, all Quality Assurance findings, conclusions,
recommendations, actions taken, results or other documentation relative to QA
shall be reported to Department on a quarterly basis or as requested by the
Department. The

                                      A-10

<PAGE>

Department shall be notified of any Physician licensed to practice medicine in
all its branches terminated from a subcontract with the Contractor for a quality
of care issue.

         12.      The Contractor shall, at the direction of the Department,
cooperate with the external, independent quality review process conducted by the
EQRO. The Contractor shall address the findings of the external review through
its Quality Assurance program by developing and implementing performance
improvement goals, objectives and activities, which shall be documented in the
next quarterly report submitted by the Contractor following the EQRO's findings.

         13.      The Contractor shall, through its behavioral health
subcontractor or program and its internal QAP, monitor the quality of behavioral
health services it provides. Areas to be monitored include:

                  a.       behavioral health network adequacy;

                  b.       Enrollee access to timely behavioral health services
through self-referral, PCP/specialist referral, MCO referral, CBHP referral, or
referral by other entities;

                  c.       an individual plan or treatment and provision of
appropriate level of care;

                  d.       coordination of care between the CBHPs, MCO
behavioral health subcontractor, and the Primary Care Provider

                  e.       provision of follow-up services and continuity of
care;

                  f.       involvement of the Primary Care Provider in aftercare
to the extent possible, ensuring client confidentiality protections provided
under law;

                  g.       member satisfaction with access to and quality of
behavioral health services; and

                  h.       behavioral health service utilization, as set forth
in the following chart, reported quarterly to the Department in a format agreed
to by the MCOs and Department:

<TABLE>
<CAPTION>
SUBSTANCE ABUSE/CHEMICAL DEPENDENCY:         MENTAL HEALTH:
-----------------------------------          -------------
<S>                                          <C>
Inpatient (Rehab):                           Acute Inpatient Psychiatric Admission:

Number of Admits                             Number of Admits
Admits/1000 Beneficiaries                    Admits/1000 Beneficiaries
Number of Days of Care                       Number of Days of Care
Days/1000 Beneficiaries                      Days/1000 Beneficiaries
Average Length of Stay (ALOS)                ALOS

Inpatient (Detox):

Number of Admits
Admits/1000 Beneficiaries
</TABLE>

                                      A-11

<PAGE>

<TABLE>
<S>                                          <C>
Number of Days of Care
Days/1000 Beneficiaries
ALOS

Partial (Day/Night) Treatment:               Partial (Day/Night) Treatment:

Number of Admits                             Number of Admits
Admits/1000 Beneficiaries                    Admits/1000 Beneficiaries
Number of Days of Care                       Number of Days of Care
Days/1000 Beneficiaries                      Days/1000 Beneficiaries
ALOS                                         ALOS

Intensive Outpatient Program:                Intensive Outpatient Program:

Number of Outpatients                        Number of Outpatients
Outpatients/1000 Beneficiaries               Outpatients/1000 Beneficiaries
Number of Days of Care                       Number of Days of Care
Days/1000 Beneficiaries                      Days/1000 Beneficiaries
ALOS                                         ALOS

Outpatient:                                  Outpatient:

Number of Outpatients                        Number of Outpatients
Outpatients/1000 Beneficiaries               Outpatients/1000 Beneficiaries
Number of Outpatient Sessions                Number of Outpatient Sessions
Average Number of Sessions                   Average Number of Sessions

Follow-up:                                   Follow-up:

Number of Discharges with Follow-up          Number of Discharges with Follow-up
care Plan and Treatment                      Care Plan and Treatment
</TABLE>

The provision of behavioral health services and appropriate risk assessment and
referral shall be included in the Contractor's medical record review processes
and considered for a clinical evaluation study as further described in Exhibit
B, Utilization Review/Peer Review.

         14.      The Contractor shall perform and report the quality and
utilization measures identified in the following chart, as directed by the
Department. The Contractor shall not modify the reporting methodology prescribed
by the Department without first obtaining the Department's written approval.

<TABLE>
<CAPTION>
BEGINNING
CONTRACT
  YEAR                          INDICATOR                                               METHODOLOGY
-----------------------------------------------------------------------------------------------------------
<S>           <C>                                                               <C>
Year 1        Effectiveness of Care: Childhood Immunization Status              HEDIS or Department-defined
-----------------------------------------------------------------------------------------------------------
Year 1        Effectiveness of Care: Breast Cancer Screen                       HEDIS
-----------------------------------------------------------------------------------------------------------
Year 1        Effectiveness of Care: Cervical Cancer Screening                  HEDIS
-----------------------------------------------------------------------------------------------------------
Year 1        Access/Availability of Care: Adult access to                      HEDIS
              Preventive/Ambulatory Health Services
-----------------------------------------------------------------------------------------------------------
</TABLE>

                                      A-12

<PAGE>
<TABLE>
<S>           <C>                                                               <C>
-----------------------------------------------------------------------------------------------------------
Year 1        Use of Services: Well Child Visits during first 15 months         HEDIS or Department-defined
              of life
-----------------------------------------------------------------------------------------------------------
Year 1        Use of Services: Well Child Visits in the Third, Fourth,          HEDIS or Department-defined
              Fifth, and Sixth years of lift
-----------------------------------------------------------------------------------------------------------
Year 1        Use of Services: Adolescent Well Care Visits                      HEDIS or Department-defined
-----------------------------------------------------------------------------------------------------------
Year 1        Use of Services: Mental Health Utilization (percentage of         HEDIS or Department-defined
              Enrollees receiving inpatient, day/night, and ambulatory
              services)
-----------------------------------------------------------------------------------------------------------
Year 1        Use of Services: Mental Health Utilization (inpatient             HEDIS or Department-defined
              discharges and average length of stay)
-----------------------------------------------------------------------------------------------------------
Year 1        Effectiveness of Care: Follow-up after hospitalization for        HEDIS or Department-defined
              mental illness
-----------------------------------------------------------------------------------------------------------
Year 1        Use of Services: Chemical Dependency Utilization                  HEDIS or Department-defined
              (percentage of Enrollees receiving inpatient, day/night
              ambulatory services)
-----------------------------------------------------------------------------------------------------------
Year 1        Use of Services: Chemical Dependency Utilization                  Department-defined
              (inpatient discharges and average length of stay)
-----------------------------------------------------------------------------------------------------------
Year 1        Chemical Dependency Follow-up                                     HEDIS or Department-defined
-----------------------------------------------------------------------------------------------------------
Year 1        Enrollee Satisfaction Survey                                      HEDIS CAHPS-like, or
                                                                                Department prior-approved
                                                                                alternative survey tool and
                                                                                methodology
-----------------------------------------------------------------------------------------------------------
Year 2        Use of Services: Frequency of Ongoing Prenatal Care               HEDIS
-----------------------------------------------------------------------------------------------------------
Year 2        Access/Availability of Care: Prenatal and Postpartum Care         HEDIS
-----------------------------------------------------------------------------------------------------------
Year 2        Use of Services: Births and Average Length of Stay,               HEDIS
              Newborns
-----------------------------------------------------------------------------------------------------------
Year 2        Use of Services: Discharges and Average Length of Stay -          HEDIS
              Maternity Care
-----------------------------------------------------------------------------------------------------------
Year 2        Effectiveness of Care: Use of Appropriate Medications for         HEDIS
              Enrollees with Asthma
-----------------------------------------------------------------------------------------------------------
Year 2        Effectiveness of Care: Comprehensive Diabetes Care                HEDIS
-----------------------------------------------------------------------------------------------------------
Year 3        Effectiveness of Care: Advising Smokers to Quit                   HEDIS
-----------------------------------------------------------------------------------------------------------
Year 3        Effectiveness of Care: Controlling High Blood Pressure            HEDIS
-----------------------------------------------------------------------------------------------------------
Year 3        Effectiveness of Care: Chlamydia Screening in Women               HEDIS
-----------------------------------------------------------------------------------------------------------
</TABLE>

         15.      The Contractor shall monitor other performance measures as
required by CMS in accordance with notification by the Department.

                                      A-13

<PAGE>

                                    EXHIBIT B

                         UTILIZATION REVIEW/PEER REVIEW

         1.       The Contractor shall have a utilization review and peer review
committee(s) whose purpose will be to review data gathered and the
appropriateness and quality of care. The committee(s) shall review and make
recommendations for changes when problem areas are identified and report
suspected Fraud and Abuse in the Medical Assistance Program to the Department's
Office of Inspector General. The committees shall keep minutes of all meetings,
the results of each review and any appropriate action taken. A copy of the
minutes shall be submitted to the Department no later than thirty (30) days
after the close of the quarterly reporting period. At a minimum, these programs
must meet all applicable federal and State requirements for utilization review.
The Contractor and Department may further define these programs.

         2.       The Contractor shall implement a Utilization Review Plan,
including peer review. The Contractor shall provide the Department with
documentation of its utilization review process. The process shall include:

                  a.       Written program description -- The Contractor shall
have a written utilization management program description which includes, at a
minimum, procedures to evaluate medical necessity criteria used and the process
used to review and approve the provision of medical services.

                  b.       Scope -- The program shall have mechanisms to detect
under-utilization as well as over-utilization.

                  c.       Preauthorization and concurrent review requirements
-- For organizations with preauthorization and concurrent review programs:

                           i.       Have in effect mechanisms to ensure
         consistent application of review criteria for authorization decisions;

                           ii.      Utilize practice guidelines that have been
         adopted, pursuant to Exhibit A

                           iii.     review decisions shall be supervised by
         qualified medical professionals and any decision to deny a service
         authorization request or to authorize a service in an amount, duration
         or scope that is less than requested must be made by a health care
         professional who has appropriate clinical expertise in treating the
         Enrollee's condition or disease;

                           iv.      efforts shall be made to obtain all
         necessary information, including pertinent clinical information, and
         consultation with the treating Physician licensed to practice medicine
         in all its branches as appropriate;

                           v.       the reasons for decisions shall be clearly
         documented and available to the Enrollee and the requesting Provider,
         provided, however, that any decision to deny

                                      B-1

<PAGE>

         a service request or to authorize a service in an amount, duration or
         scope that is less than requested shall be furnished in writing to the
         Enrollee;

                           vi.      there shall be written well-publicized and
         readily available appeals mechanisms for both Providers and patients;

                           vii.     decisions and appeals shall be made in a
         timely manner as required by the circumstances of the situation and
         shall be made in accordance with the timeframes specified in the
         Contract for standard and expedited authorizations;

                           viii.    there shall be mechanisms to evaluate the
         effects of the program using data on member satisfaction, provider
         satisfaction or other appropriate measures;

                           ix.      if the organization delegates responsibility
         for utilization management, it shall have mechanisms to ensure that
         these standards are met by the delegate.

         3.       The Contractor further agrees to review the utilization review
procedures, at regular intervals, but no less frequently than annually, for the
purpose of amending same, as necessary in order to improve said procedures. All
amendments must be approved by the Department. The Contractor further agrees to
supply the Department and/or its designee with the utilization information and
data, and reports prescribed in its approved utilization review system or the
status of such system. This information shall be furnished upon request by the
Department.

         4.       The Contractor shall establish and maintain a peer review
program approved by the Department to review the quality of care being offered
by the Contractor, employees and subcontractors. This program shall provide, at
a minimum, the following:

                  a.       A peer review committee comprised of Physicians
licensed to practice medicine in all its branches, formed to organize and
proceed with the required reviews for both the health professionals of the
Contractor's staff and any contracted Providers which include:

                           i.       A regular schedule for review;

                           ii.      A system to evaluate the process and methods
         by which care is given; and

                           iii.     A medical record review process.

         b.       The Contractor shall maintain records of the actions taken by
the peer review committee with respect to providers and those records shall be
available to the Department upon request.

         c.       A system of internal medical review, including behavioral
health services, medical evaluation studies, peer review, a system for
evaluating the processes and outcomes of care, health education, systems for
correcting deficiencies, and utilization review.

                                      B-2

<PAGE>

                  d.       At least two medical evaluation studies must be
completed yearly that analyze pressing problems identified by the Contractor,
the results of such studies and appropriate action taken. One of the studies may
address an administrative problem noted by the Contractor and one may address a
clinical problem or diagnostic category. One brief follow-up study shall take
place for each medical evaluation study in order to assess the actual effect of
any action taken.

         5.       The Contractor further agrees to review the peer review
procedures, at regular intervals, but no less frequently than annually, for the
purpose of amending same in order to improve said procedures. All amendments
must be approved by the Department. The Contractor further agrees to supply the
Department and/or its designee with the information and reports related to its
peer review program upon request.

         6.       The Department may request that peer review be initiated on
specific providers.

         7.       The Department will conduct its own peer reviews at its
discretion.

                                      B-3

<PAGE>

                                    EXHIBIT C

                   SUMMARY OF REQUIRED REPORTS AND SUBMISSIONS

         Report names, information submission requirements and corresponding
frequencies are listed herein. These shall be due to the Department no later
than thirty (30) days after the close of the reporting period unless otherwise
stated. Reports and submissions include hard copy reports and/or any electronic
medium as designated by the Department.

         Report frequencies are defined as follows:

         Annually   -   The State fiscal year of July 1 - June 30.

         Quarterly  -   The last day of the fiscal quarter grouped as:
                        J/A/S (1st qtr), O/N/D (2nd qtr), J/F/M (3rd qtr), and
                        A/M/J (4th qtr).

         Monthly    -   The last day of a calendar month.

<TABLE>
<CAPTION>
                                                                                                     DPA PRIOR
        NAME OF REPORT/SUBMISSION                                   FREQUENCY                        APPROVAL
        -------------------------                                   ---------                        --------
<S>                                                   <C>                                            <C>
ADMINISTRATIVE

Disclosure Statements                                 Initially, Annually, on request and as         No
                                                      changes occur

Encounter Data Report                                 Monthly, no later than 120 days after the      No
                                                      close of the reporting period

Financial Reports                                     Concurrent with submissions to Department      No
                                                      of Insurance

Report of Transactions with Parties of Interest       Annually                                       No

ENROLLEE MATERIALS

Certificate or Document of Coverage and               Initially and as revised                       Yes
Any Changes or Amendments

Enrollee Handbook                                     Initially and as revised                       Yes

Identification Card                                   Initially and as revised                       Yes

Provider Directory                                    Initially and annually                         Yes (only
                                                                                                     initially)
</TABLE>

                        [Remainder of table on next page]

                                      C-1

<PAGE>

<TABLE>
<S>                                                   <C>                                            <C>
FRAUD/ABUSE

Fraud and Abuse Report                                Immediately upon identification or             N/A
                                                      knowledge of suspected Fraud, Abuse, or
                                                      misconduct; or quarterly certification,
                                                      due 30 days after the close of the
                                                      quarter, that no Fraud, Abuse, or
                                                      misconduct was identified during the
                                                      quarter

MARKETING

Marketing Allegation Investigation Disclosure         Monthly, on the first day of each month        No

Marketing Allegation Notification                     Weekly                                         No

Marketing Materials and Information                   Initially and as revised                       Yes

Marketing Plans and Procedures                        Initially and as revised                       Yes

Marketing Representative Listing                      Monthly, on the first day of each month        No

Marketing Representative Termination Notification     As they occur                                  No

Marketing at Site Permission Statement                Annually                                       No

Marketing at Site Schedule                            Monthly, on the first day of each month        No

Marketing Training Manuals                            Initially and as revised                       Yes

Marketing Training Schedule and Agenda                Quarterly, 2 weeks prior to the beginning      No
                                                      of each quarter, and as revised
</TABLE>

                        [Remainder of table on next page]

                                      C-2

<PAGE>

<TABLE>
<S>                                                   <C>                                            <C>
PROVIDER NETWORK

Enrollee Site Transfer                                As each occurs                                 No

New Site Provider Affiliation File (electronic)       Initially, and as new sites/PCPs are added     Yes

Provider Affiliation with Site Report                 Monthly, on the first day of each month        No

Site/PCP Approvals (paper format-A&B forms)           Initially, and as new sites/PCPs are added     Yes

Site Terminations                                     As each occurs                                 No

QUALITY ASSURANCE/MEDICAL

Grievance Procedures                                  Initially and as revised                       Yes

Network/Provider Ratio Report                         Quarterly                                      N/A

QA/UR/PR Annual Report                                Annually, no later than 60 days after          N/A
                                                      close of reporting period

Behavioral Health Report                              Quarterly, no later than 60 days after         N/A
                                                      close of reporting period

QA/UR/PR Committee Meeting Minutes                    Quarterly                                      No

Quality Assurance, Utilization Review and Peer        Initially and as revised                       Yes
Review Plan (includes health education plan)

Summary of Grievances and Resolutions and External    Quarterly                                      N/A
Independent Reviews and Resolutions

SUBCONTRACTS AND PROVIDER AGREEMENTS

Copies of Executed Subcontractor Agreements           Upon request                                   N/A

Model Subcontractor Agreements                        Initially and as revised                       N/A
</TABLE>

                                      C-3

<PAGE>

                                    EXHIBIT D

                       ENCOUNTER DATA FORMAT REQUIREMENTS

REQUIREMENTS PRIOR TO HIPAA IMPLEMENTATION (BEFORE OCTOBER 16, 2003)

Illinois Medicaid UB92 Billing Specification

         (Approved by the Illinois UB92 Billing Committee)

CMS National Standard Format for non-institutional claims

IDPA Direct Tape format for pharmacy claims

REQUIREMENTS AFTER HIPAA IMPLEMENTATION (ON AND AFTER OCTOBER 16, 2003)

837I - Health Care Claim: Institutional

837P - Health Care Claim: Professional

NCPDP 1.1 Batch - Pharmacy

835 - Health Care Claim Payment/Advice

                                      D-1<PAGE>

                                                                   EXHIBIT 10.36

                            MEDICAL SERVICES CONTRACT

                        FLORIDA HEALTHY KIDS CORPORATION

                                       AND

                            AMERIGROUP FLORIDA, INC.

                                       FOR

            BROWARD, MIAMI-DADE, HILLSBOROUGH, ORANGE, PALM BEACH AND
                                    PINELLAS

                      OCTOBER 1, 2003 - SEPTEMBER 30, 2005

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 1 of 45
<PAGE>

                        FLORIDA HEALTHY KIDS CORPORATION
                          CONTRACT FOR MEDICAL SERVICES

                                TABLE OF CONTENTS

<TABLE>
<S>              <C>
SECTION   1      GENERAL PROVISIONS

          1-1    Definitions

SECTION   2      FLORIDA HEALTHY KIDS CORPORATION
          RESPONSIBILITIES

          2-1    Participant Identification
          2-2    Payments
          2-3    Reduced Fee Arrangements
                 2-3-1   Specialty Fee Arrangements
                 2-3-2   Children's Medical Services
          2-4    Quarterly Program Updates
          2-5    Change in Benefit Schedule
          2-6    Marketing
          2-7    Forms and Reports
          2-8    Coordination of Benefits
          2-9    Entitlement to Reimbursement

SECTION   3      AMERIGROUP

          3-1    Benefits
          3-2    Access to Care
                 3-2-1    Access and Appointment Standards
                 3-2-2    Integrity of Professional Advice to Enrollees
          3-3    Fraud and Abuse
          3-4    Marketing Materials
          3-5    Use of Name
          3-6    Eligibility
          3-7    Effective Date of Coverage
          3-8    Termination of Participation
          3-9    Continuation of Coverage Upon Termination of this Agreement
          3-10   Individual Contracts
          3-11   Refusal of Coverage
          3-12   Extended Coverage
          3-13   Grievances and Complaints
          3-14   Claims Payment
          3-15   Notification
          3-16   Rates
          3-16   Rate Modification
                 3-16-1  Annual Adjustment
                 3-16-2  Denial of Rate Request
          3-18   Conditions of Services
          3-19   Medical Records Requirements
                 3-19-1  Medical Quality Review and Audit
</TABLE>

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 2 of 45
<PAGE>

<TABLE>
<S>              <C>
                 3-19-2  Privacy of Medical Records
                 3-19-3  Requests by Participants for Medical Records
          3-20   Quality Enhancement
                 3-20-1  Authority
                 3-20-2  Staff
                 3-20-3  Peer Review
                 3-20-4  Referrals
          3-21   Availability of Records
          3-22   Audits
                 3-22-1  Accessibility of Records
                 3-22-2  Financial Audit
                 3-22-3  Post-Contract Audit
                 3-22-4  Accessibility for Monitoring
          3-23   Indemnification
          3-24   Confidentiality of Information
          3-25   Insurance
          3-26   Lobbying Disclosure
          3-27   Reporting Requirements
          3-28   Participant Liability
          3-29   Protection of Proprietary Information
          3-30   Regulatory Filings

SECTION   4      TERMS AND CONDITIONS

          4-1    Effective Date
          4-2    Multi-year Agreement
          4-3    Entire Understanding
          4-4    Relation to Other Laws
                 4-4-1   Health Insurance Portability and Accountability Act
                 4-4-2   Mental Health Parity Act
                 4-4-3   Newborns and Mothers Health Protection Act of 1996
          4-5    Independent Contractor
          4-6    Assignment
          4-7    Notice
          4-8    Amendments
          4-9    Governing Law
          4-10   Contract Variation
          4-11   Attorney's Fees
          4-12   Representatives
          4-13   Termination
          4-14   Contingency
</TABLE>

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 3 of 45
<PAGE>

<TABLE>
<S>           <C>
SECTION   5         EXHIBITS
              Exhibit A: Premium Payment and Rates
              Exhibit B: Enrollment Dates
              Exhibit C: Benefits
              Exhibit D: Coordination of Benefits
              Exhibit E: Access Standards
              Exhibit F: Eligibility
              Exhibit G: Reporting Requirements
              Exhibit H: Certification Regarding Debarment, Suspension and
              Involuntary Cancellation
              Exhibit I: Certification Regarding Lobbying Certification For
              Contracts, Grants, Loans And Cooperative Agreements
              Exhibit J: Certification Regarding Health Insurance Portability and
              Accountability Access Act of 1996 Compliance
</TABLE>

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 4 of 45
<PAGE>

                              AGREEMENT TO PROVIDE
                       COMPREHENSIVE HEALTH CARE SERVICES

         This agreement is made by and between the Florida Healthy Kids
Corporation, hereinafter referred to as "FHKC" and AMERIGROUP Florida, Inc.,
hereinafter referred to as "AMERIGROUP".

         WHEREAS, FHKC has been specifically empowered in section 624.91
(4)(b)(12), Florida Statutes, to enter into contracts with Health Maintenance
Organization (HMO's), INSURERS, or any provider of health care services
hereinafter referred to as AMERIGROUP, meeting standards established by FHKC,
for the provision of comprehensive health insurance coverage to participants;
and

         WHEREAS, Sections 641.2017 (1) and (2), Florida Statutes, allows
AMERIGROUP to enter such a contractual arrangement on a prepaid per capita basis
whereby AMERIGROUP assumes the risk that costs exceed the amount paid on a
prepaid per capita basis; and

         WHEREAS, FHKC desires to increase access to health care services and
improve children's health; and

         WHEREAS, FHKC did issue an Request for Proposals in the FHKC Health
Insurance Program inviting AMERIGROUP as well as other entities, to submit a
proposal for the provision of those comprehensive health care services set forth
in the Request for Proposals; and

         WHEREAS, AMERIGROUP'S proposal in response to the Request for Proposals
was selected through a competitive bid process as one of the most responsive
bids; and

         WHEREAS, AMERIGROUP has assured FHKC of full compliance with the
standards established in this Agreement and agrees to promptly respond to any
required revisions or changes in the FHKC operating procedures or benefits which
may be required by law or implementing regulations; and

         WHEREAS, AMERIGROUP agrees that the Request for Proposals released by
FHKC in March 2003 and AMERIGROUP'S response to that RFP are incorporated by
reference and in any conflict between the RFP or AMERIGROUP'S response to the
RFP and this contract, the contract condition shall control; and

         WHEREAS, FHKC is desirous of using AMERIGROUP'S provider network to
deliver comprehensive health care services to all eligible FHKC participants in
Broward, Miami-Dade, Hillsborough, Orange, Palm Beach and Pinellas counties;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises contained herein, the parties agree as follows:

SECTION 1 GENERAL PROVISIONS

1-1      Definitions

         As used in this agreement, the term:

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 5 of 45
<PAGE>

                  A.       "COMPREHENSIVE HEALTH CARE SERVICES" means those
                           services, medical equipment, and supplies to be
                           provided by AMERIGROUP in accordance with standards
                           set by FHKC and further described in Exhibit C.

                  B.       "THE PROGRAM" shall mean the project established by
                           FHKC pursuant to Section 624.91, Florida Statutes and
                           specified herein.

                  C.       "PARTICIPANT" or "ENROLLEE" means those individuals
                           meeting FHKC standards of eligibility and who have
                           been enrolled in the program.

                  D.       "AMERIGROUP PROVIDERS" shall mean those providers set
                           forth in AMERIGROUP'S Response to the Request for
                           Proposals and the participant's handbook as from time
                           to time amended.

                  E.       "CO-PAYMENT" or "COST SHARING" is the payment
                           required of the participant at the time of obtaining
                           service. In the event the participant fails to pay
                           the required co-payment, AMERIGROUP may decline to
                           provide non-emergency or non-urgently needed care
                           unless the participant meets the conditions for
                           waiver of co-payments described in Exhibit C.

                  F.       "FRAUD" shall mean:

                           1)       Any FHKC participant or person who
                                    knowingly:

                                    a)       Fails, by any false statement,
                                             misrepresentation, impersonation,
                                             or other fraudulent means, to a
                                             disclose a material fact used in
                                             making a determination as to such
                                             person's qualification to receive
                                             comprehensive health care services
                                             coverage under the FHKC program;

                                    b)       Fails to disclose a change in
                                             circumstances in order to obtain or
                                             continue to receive comprehensive
                                             health care services coverage under
                                             the FHKC program to which he or she
                                             is not entitled or in an amount
                                             larger than that which he or she is
                                             entitled;

                                    c)       Aids and abets another person in
                                             the commission of any such act.

                           2)       Any person or FHKC participant who:

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 6 of 45
<PAGE>

                                    a)       Uses, transfers, acquires,
                                             traffics, alters, forges, or
                                             possess, or

                                    b)       Attempts to use, transfer, acquire,
                                             traffic, alter, forge or possess,
                                             or

                                    c)       Aids and abets another person in
                                             the use, transfer, acquisition,
                                             traffic, alteration, forgery or
                                             possession of an FHKC
                                             identification card.

                  G.       "STATE CHILDREN'S HEALTH INSURANCE PROGRAM (SCHIP)"
                           OR "TITLE XXI" shall mean the program created by the
                           federal Balanced Budget Act of 1997 as Title XXI of
                           the Social Security Act.

SECTION 2 FLORIDA HEALTHY KIDS CORPORATION RESPONSIBILITIES

2-1      Participant Identification

FHKC shall promptly furnish to AMERIGROUP information to sufficiently identify
participants in the Comprehensive Health Care Services plan authorized by this
agreement. Additionally, FHKC shall provide AMERIGROUP a compatible computer
tape, or other computer-ready media, with the names of participants along with
monthly additions or deletions throughout the term of this Agreement in
accordance with the following:

         A.       With respect to participants who enroll during open
                  enrollment, such listing shall be furnished not less than
                  seven (7) working days prior to the effective date of
                  coverage.

         B.       With respect to additions and deletions occurring after open
                  enrollment, such listing shall be furnished not less than
                  seven (7) working days prior to effective date of coverage.

         C.       With respect to both A and B above, furnish a supplemental
                  list of eligible participants by the third day after the
                  effective date of coverage. AMERIGROUP shall adjust enrollment
                  retroactively to the 1st day of that month in accordance with
                  the supplemental list and as listed in Exhibit B.

         D.       FHKC may request AMERIGROUP to accept additional participants
                  after the supplemental listing for enrollment retroactive to
                  the 1st of that coverage month. Such additions will be limited
                  to those participants who made timely payments but were not
                  included on the previous enrollment reports. If such additions
                  exceed more than one percent on that month's enrollment,
                  AMERIGROUP reserves the right to deny FHKC's request.

2-2      Payments

FHKC will promptly forward the authorized premiums in accordance with Exhibit A
attached hereto and incorporated herein as part of this Agreement on or before
the 1st day of each month

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 7 of 45
<PAGE>

this Agreement is in force commencing with the 1st day of October 2003. Premiums
are past due on the 15th day of each month.

In the case of non-payment of premiums by the 15th day of the month for that
month of coverage, AMERIGROUP shall have the right to terminate coverage under
this Agreement, provided FHKC is given written notice prior to such termination.
Termination of coverage shall be retroactive to the last day for which premium
payment has been made.

2-3      Reduced Fee Arrangements

         2-3-1    Specialty Service Fee Arrangements

                  Upon prior approval of AMERIGROUP, FHKC shall have the right
                  to negotiate specialty service fee arrangements with
                  non-AMERIGROUP affiliated providers and make such rates
                  available to AMERIGROUP. In such cases if there is a material
                  impact on the premium, the premium in Exhibit A will be
                  adjusted by AMERIGROUP in a manner consistent with sound
                  actuarial practices.

         2-3-2    Children's Medical Services Network

                  If there is a material impact on the premium in Exhibit A due
                  to the implementation of the Children's Medical Services
                  Network as created in Chapter 391, Florida Statutes,
                  AMERIGROUP agrees to reduce the premium in Exhibit A in an
                  amount consistent with sound actuarial practices.

2-4      Program Updates

FHKC shall provide AMERIGROUP with updates on program highlights such as
participant demographics, profiles, newsletters, legislative or regulatory
inquiries and program directives.

2-5      Change in Benefit Schedule

AMERIGROUP understands that changes in federal and state law may require
amendments to the participant benefit schedule as set forth in Exhibit C. Should
such changes be necessary, FHKC shall notify AMERIGROUP in writing of the
required change and AMERIGROUP shall have thirty days (30) to agree to the
amended benefit schedule. If AMERIGROUP elects not to implement a change in the
benefit schedule, FHKC may terminate this Agreement by providing AMERIGROUP with
a written notice of termination and include a termination date of not less than
ninety (90) days from date of the written notification.

If a change in the benefit schedule is required, AMERIGROUP must provide an
actuarial memorandum indicating the actuarial value of the benefit change.

2-6      Marketing

FHKC will market the program primarily through the county school districts. FHKC
agrees that AMERIGROUP shall be allowed to participate in any scheduled
marketing efforts to include, but not be limited to, any scheduled open house
type activities. However, AMERIGROUP is prohibited from any direct marketing to
applicants or the use of FHKC's logo, name or corporate

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 8 of 45
<PAGE>

identity unless such activity has received prior written authorization from
FHKC. Written authorization must be received for every individual activity.

FHKC will have the right of approval or disapproval of all descriptive plan
literature and forms.

2-7      Forms and Reports

FHKC agrees that AMERIGROUP shall participate in the development of any FHKC
eligibility report formats that may be required from time to time.

2-8      Coordination of Benefits

FHKC agrees that AMERIGROUP shall be able to coordinate health benefits with
other insurers as provided for in Florida Statutes and the procedures contained
in Exhibit D attached hereto and incorporated herein as part of this Agreement.
AMERIGROUP also agrees to coordinate benefits with any insurer under contract
with FHKC to provide comprehensive dental benefits to FHKC participants.

If AMERIGROUP identifies a participant covered through another health benefits
program, AMERIGROUP shall notify FHKC. FHKC shall make the decision as to
whether the participant may continue coverage through FHKC in accordance with
the eligibility standards adopted by FHKC and in accordance with any applicable
state laws.

2-9      Entitlement to Reimbursement

In the event AMERIGROUP provides medical services or benefits to participants
who suffer injury, disease or illness by virtue of the negligent act or omission
of a third party, AMERIGROUP shall be entitled to reimbursement from the
participant, at the prevailing rate, for the reasonable value of the services or
benefits provided. AMERIGROUP shall not be entitled to reimbursement in excess
of the participant's monetary recovery for medical expenses provided, from the
third party.

SECTION 3 AMERIGROUP RESPONSIBILITIES

3-1      Benefits

AMERIGROUP agrees to make its provider network available to FHKC participants in
Broward, Miami-Dade, Hillsborough, Orange, Palm Beach and Pinellas counties and
to provide the comprehensive health care services as set forth in Exhibit C
attached hereto and by reference made a part hereof.

3-2      Access to Care

         3-2-1    Access and Appointment Standards

         AMERIGROUP agrees to meet or exceed the appointment and geographic
         access standards for pediatric care existing in the community and as
         specifically provided for in Exhibit E attached hereto and incorporated
         herein as a part of this Agreement.

         In the event AMERIGROUP'S provider network is unable to provide those
         medically necessary benefits specified in Exhibit C, for any reason,
         except force majeure,

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 9 of 45
<PAGE>

         AMERIGROUP shall be responsible for those contract benefits obtained
         from providers other than AMERIGROUP for eligible FHKC participants. In
         the event AMERIGROUP fails to meet those access standards set forth in
         Exhibit E, FHKC shall notify AMERIGROUP of its noncompliance with the
         standards in Exhibit E. If the non-compliance is not corrected within
         ninety (90) days, FHKC may, after following procedures set forth in
         Exhibit E, direct its participants to obtain such contract benefit from
         other providers and may contract for such services. All financial
         responsibility related to services received under these specific
         circumstances shall be assumed by AMERIGROUP.

         3-2-2    Integrity of Professional Advice to Enrollees

         AMERIGROUP ensures no interference with the advice of health care
         professionals to enrollees and that information about treatments will
         be provided to enrollees and their families in the appropriate manner.

         AMERIGROUP agrees to comply with any federal regulations related to
         physician incentive plans and any disclosure requirements related to
         such incentive plans.

3-3      Fraud and Abuse

AMERIGROUP ensures that it has appropriate measures in place to ensure against
fraud and abuse. AMERIGROUP shall report to FHKC any information on violations
by subcontractors or participants that pertain to enrollment or the payment and
provision of health care services under this Agreement.

AMERIGROUP agrees to FHKC access to monitor any fraud and abuse prevention
activities conducted by AMERIGROUP under this Agreement.

3-4      Marketing Materials

AMERIGROUP agrees that it shall not utilize the marketing materials, logos,
trade names, service marks or other materials belonging to FHKC without FHKC's
consent that shall not be unreasonably withheld.

AMERIGROUP will be responsible for all preparation, cost and distribution of
member handbooks, plan documents, materials, and orientation, for FHKC
participants. Materials will be appropriate to the population served and unique
to the program. All materials and documents that are distributed to FHKC
participants must be reviewed and approved by FHKC prior to distribution.

3-5      Use of Name

AMERIGROUP consents to the use of its name in any marketing and advertising or
media presentations describing FHKC, which are developed and disseminated by
FHKC to participants, employees, employers, the general public or the County
School System, provided however, AMERIGROUP reserves the right to review and
concur in any such marketing materials prior to their dissemination.

3-6      Eligibility

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 10 of 45
<PAGE>

AMERIGROUP agrees to accept those participants that FHKC has determined meet the
program's eligibility requirements. AMERIGROUP reserves the right to request
that FHKC review the eligibility of a particular enrollee. FHKC shall ensure all
records and findings concerning a particular eligibility determination will be
made available with reasonable promptness to the extent permitted under section
624.91, Florida Statutes and 409.821, Florida Statutes, regarding
confidentiality of information held by FHKC. AMERIGROUP agrees that the FHKC is
the sole determiner of whether or not a child is eligible for the FHKC program.

3-7      Effective Date of Coverage

Coverage for every participant shall become effective at 12:01 a.m. EST/EDT, on
the first day of the participant's first coverage month, as determined by FHKC.

3-8      Termination of Participation

A participant's coverage under this program shall terminate on the last day of
the month in which the participant:

         A.       ceases to be eligible to participate in the program;

         B.       establishes residence outside the service area; or

         C.       is determined to have acted fraudulently pursuant to Section
                  1-1 (F).

Termination of coverage and the effective date of that termination shall be
determined solely by FHKC.

3-9      Continuation of Coverage Upon Termination of this Agreement

AMERIGROUP agrees that, upon termination of this Agreement for any reason,
unless instructed otherwise by FHKC, it will continue to provide inpatient
services to FHKC participants who are then inpatients until such time as such
participants have been appropriately discharged. However, AMERIGROUP shall not
be required to provide such extended benefits beyond 12 calendar months from the
date the Agreement is terminated.

If AMERIGROUP terminates this Agreement at its sole option and through no fault
of the FHKC and if on the date of termination a participant is totally disabled
and such disability commenced while coverage was in effect, that participant
shall continue to receive all benefits otherwise available under this Agreement
for the condition under treatment which caused such total disability until the
earlier of (1) the expiration of the contract benefit period for such benefits;
(2) determination by the Medical Director of AMERIGROUP that treatment is no
longer medically necessary; (3) twelve (12) months from the date of termination
of coverage; (4) a succeeding carrier elects to provide replacement coverage
without limitation as to the disability condition; provided however, that
benefits will be provided only so long as the participant is continuously
totally disabled and only for the illness or injury which caused the total
disability.

For the purpose of this section, a participant who is "totally disabled" shall
mean a participant who is physically unable to work, as determined by the
Medical Director of AMERIGROUP, due to an illness or injury at any gainful job
for which the participant is suited by education, training, experience or
ability. Pregnancy, childbirth or hospitalization in and of themselves do not
constitute "total disability". In the case of maternity coverage, when
participant is eligible for

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 11 of 45
<PAGE>

such coverage, when not covered by a succeeding carrier, a reasonable period of
extension of benefits shall be granted. The extension of benefits shall be only
for the period of pregnancy, and shall not be based on total disability.

3-10     Participant Certificates and Handbooks

AMERIGROUP will issue participant certificates, identification cards, provider
network listings and handbooks to all FHKC designated participants within five
business days of receipt of an eligibility tape. Except as specifically provided
in Sections 3-9 and 3-12 hereof, all participant rights and benefits shall
terminate upon termination of this Agreement or upon termination of
participation in the program. All participant handbooks and member materials
must be approved by FHKC prior to distribution.

3-11     Refusal of Coverage

AMERIGROUP shall not refuse to provide coverage to any participant on the basis
of past or present health status.

3-12     Extended Coverage

With regards to those participants who have been terminated pursuant to Section
3-8 A, AMERIGROUP agrees to offer individual coverage to all participants
without regard to health condition or status.

3-13     Grievances and Complaints

AMERIGROUP agrees to provide all FHKC participants a Grievance Process. The
grievance and complaint procedures shall be governed by any applicable federal
and state laws and regulations issued for SCHIP, and the following additional
rules and guidelines also apply:

         A.       There must be sufficient support staff (clerical and
                  professional) available to process grievances.

         B.       Staff must be educated concerning the importance of the
                  procedure and the rights of the enrollee.

         C.       Someone with problem solving authority must be part of the
                  grievance procedure.

         D.       In order to initiate the grievance process, such grievance
                  must be filed in writing.

         E.       The parties will provide assistance to grievant during the
                  grievance process to the extent FHKC deems necessary.

         F.       Grievances shall be resolved within sixty days from initial
                  filing by the participant, unless information must be
                  collected from providers located outside the authorized
                  service area or from non-contract providers. In such
                  exceptions, an additional extension shall be authorized upon
                  establishing good cause.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 12 of 45
<PAGE>

         G.       A record of informal complaints received that are not
                  grievances shall be maintained and shall include the date,
                  name, nature of the complaint and the disposition.

         H.       The grievance procedures must conform to the federal
                  regulations governing the State Children's Health Insurance
                  Program (SCHIP).

         I.       A quarterly report of all grievances involving FHKC
                  participants must be submitted to FHKC. The report should list
                  the number of grievances received during the quarter and the
                  disposition of those grievances. AMERIGROUP shall also inform
                  FHKC of any grievances that are referred to the Statewide
                  Subscriber Assistance Panel prior to their presentation at the
                  panel.

         J.       AMERIGROUP shall provide FHKC with their current grievance
                  process for FHKC participants upon request of FHKC. Any
                  subsequent changes to the process must be reviewed and
                  approved by FHKC prior to implementation.

3-14     Claims Payment

AMERIGROUP will pay any claims from its offices located at 4425 Corporation
Lane, Virginia Beach, VA 23462 (or any other designated claims office located in
its service area). AMERIGROUP will pay clean claims filed within thirty (30)
working days or request additional information of the claimant necessary to
process the claim.

3-15     Notification

         A.       AMERIGROUP shall immediately notify FHKC in writing of:

                  1.       Any judgment, decree, or order rendered by any court
                           of any jurisdiction or Florida Administrative Agency
                           enjoining AMERIGROUP from the sale or provision of
                           service under Chapter 641, Part II, Florida Statutes.

                  2.       Any petition by AMERIGROUP in bankruptcy or for
                           approval of a plan of reorganization or arrangement
                           under the Bankruptcy Act or Chapter 631, Part I,
                           Florida Statutes, or an admission seeking the relief
                           provided therein.

                  3.       Any petition or order of rehabilitation or
                           liquidation as provided in Chapters 631 or 641,
                           Florida Statutes.

                  4.       Any order revoking the Certificate Of Authority
                           granted to AMERIGROUP.

                  5.       Any administrative action taken by the Department of
                           Financial Services or Agency for Health Care
                           Administration in regard to AMERIGROUP.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 13 of 45
<PAGE>

                  6.       Any medical malpractice action filed in a court of
                           law in which a FHKC participant is a party (or in
                           whose behalf a participant's allegations are to be
                           litigated).

                  7.       The filing of an application for change of ownership
                           with the Florida Department of Financial Services.

                  8.       Any change in subcontractors who are providing
                           services to FHKC participants.

         B.       Monthly Notification Requirements

                  AMERIGROUP shall inform FHKC monthly of any changes to the
                  provider network that differ from the network presented in the
                  original bid proposal, including discontinuation of any
                  primary care providers or physician practice associations or
                  groups with Healthy Kids enrollees on their panels. FHKC may
                  require AMERIGROUP to provide FHKC with evidence that its
                  provider network continues to meet the access standards
                  described in Exhibit E.

3-16     Rates

The rate charged for provision of Comprehensive Health Care Services shall be as
stated in Exhibit A.

3-17     Rate Modification

         I.       Annual Adjustment

                  Upon request by AMERIGROUP, the Board of Directors of the FHKC
                  may approve an adjustment to the premium effective only on
                  October 1, however each adjustment must meet the following
                  minimum conditions:

                  A.       Any request to adjust the premium must be received by
                           the preceding April 1;

                  B.       The request for an adjustment must be accompanied by
                           a supporting actuarial memorandum;

                  C.       The proposed premium shall not be excessive or
                           inadequate in accordance with the standards
                           established by the Department of Financial Services
                           for such determination;

                  D.       The proposed premium rate shall not include an
                           administrative component which exceeds 15 percent;
                           and,

                  E.       The minimum medical loss ratio on the proposed
                           premium rate shall be 85 percent.

         II.      Rate Adjustment Denials

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 14 of 45
<PAGE>

                  In the event that AMERIGROUP'S rate adjustment is denied by
                  the Board of Directors of the FHKC, AMERIGROUP may request
                  that an independent actuary be retained to determine whether
                  or not the proposed rate is excessive or inadequate.

                  A.       Any request for a review of a denied rate must be
                           submitted by AMERIGROUP to the FHKC in writing within
                           fourteen (14) calendar days of the date of the board
                           meeting in which the Board of Directors' denied the
                           rate request.

                  B.       AMERIGROUP must provide FHKC with a list of three
                           qualified independent actuaries and also provide the
                           curriculum vitae for each proposed actuary within
                           thirty (30) days from AMERIGROUP'S notification of
                           intention to seek a review of the denied rate.

                  C.       FHKC shall select an actuary from the list provided
                           by AMERIGROUP no later than fourteen (14) calendar
                           days following receipt of the information from
                           AMERIGROUP.

                  D.       The actuary's findings must be in writing and
                           communicated to both FHKC and AMERIGROUP within
                           thirty (30) days after execution of the Letter of the
                           Engagement by all parties.

                  E.       The effective date of the actuary's determination
                           shall be October 1st or the first of the month
                           following the receipt of the actuary's findings,
                           whichever occurs later.

                  F.       The cost for such review will be shared equally
                           between FHKC and AMERIGROUP.

                  G.       The decision of the independent actuary will be
                           binding on FHKC and AMERIGROUP.

3-18     Conditions of Services

         Services shall be provided by AMERIGROUP under the following
         conditions:

         A.       Appointment. Participants shall first contact their assigned
                  primary care physician for an appointment in order to receive
                  non-emergency health services.

         B.       Provision of Services. Services shall be provided and paid for
                  by AMERIGROUP only when AMERIGROUP performs, prescribes,
                  arranges or authorizes the services. Services are available
                  only from and under the direction of AMERIGROUP and neither
                  AMERIGROUP nor AMERIGROUP Physicians shall have any liability
                  or obligation whatsoever on account of any service or benefit
                  sought or received by any member from any other physician or
                  other person, institution or organization, unless prior
                  special arrangements are made by AMERIGROUP and confirmed in
                  writing except as provided for in Section 3-2.

         C.       Hospitalization. AMERIGROUP does not guarantee the admission
                  of a participant to any specific hospital or other facility or
                  the availability of any accommodations or services therein.
                  Inpatient Hospital Service is

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 15 of 45
<PAGE>

                  subject to all rules and regulations of the hospital or other
                  medical facility to which the member is admitted.

         D.       Emergency Services. Exceptions to Section 3-17 A, B and C are
                  services which are needed immediately for treatment of an
                  injury or sudden illness where delay means risk of permanent
                  damage to the participant's health. AMERIGROUP shall provide
                  and pay for emergency services both inside and outside the
                  service area.

3-19     Medical Records Requirements

AMERIGROUP shall require providers to maintain medical records for each
participant under this Agreement in accordance with applicable state and federal
law.

         3-19-1   Medical Quality Review and Audit

                  FHKC shall conduct an independent medical quality review of
                  AMERIGROUP during the contract term. The independent auditor's
                  report will include a written review and evaluation of care
                  provided to FHKC participants in the counties covered by the
                  Contract. Additional reviews may also be conducted after
                  completion of the baseline review at the discretion of FHKC.
                  AMERIGROUP agrees to cooperate in all evaluation efforts
                  conducted or authorized by FHKC.

         3-19-2   Privacy of Medical Records

                  AMERIGROUP will ensure that all individual medical records
                  will be maintained with confidentiality in accordance with
                  state and federal guidelines. AMERIGROUP agrees to abide by
                  all applicable state and federal laws governing the
                  confidentiality of minors and the privacy of individually
                  identifiable health information. AMERIGROUP'S policies and
                  procedures for handling medical records and protected health
                  information (PHI) shall be compliant with the Health Insurance
                  Portability and Accountability Act of 1996 (HIPAA) and shall
                  include provisions for when an enrollee's PHI may be disclosed
                  without consent or authorization.

         3-19-3   Requests by Participants for Medical Records

                  AMERIGROUP will ensure that each participant may request and
                  receive a copy of records and information pertaining to that
                  enrollee in a timely manner. Additionally, the participant may
                  request that such records be corrected or supplemented.

3-20     Quality Enhancement (Assurance)

AMERIGROUP shall have a quality enhancement program. If AMERIGROUP has an
existing program, it must satisfy the FHKC's quality enhancement standards.
Approval will be based on AMERIGROUP adherence to the minimum standards listed
below.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 16 of 45
<PAGE>

         3-20-1   Quality Enhancement Authority. The Plan shall have a quality
                  enhancement review authority that shall:

                  (a)      Direct and review all quality enhancement activities.

                  (b)      Assure that quality enhancement activities take place
                           in all areas of the plan.

                  (c)      Review and suggest new or improved quality
                           enhancement activities.

                  (d)      Direct task forces/committees in the review of
                           focused concern.

                  (e)      Designate evaluation and study design procedures.

                  (f)      Publicize findings to appropriate staff and
                           departments within the plan.

                  (g)      Report findings and recommendations to the
                           appropriate executive authority.

                  (h)      Direct and analyze periodic reviews of enrollees'
                           service utilization patterns.

         3-20-2   Quality Enhancement Staff. The plan shall provide for quality
                  enhancement staff which has the responsibility for:

                  (a)      Working with personnel in each clinical and
                           administrative department to identify problems
                           related to quality of care for all covered
                           professional services.

                  (b)      Prioritizing problem areas for resolution and
                           designing strategies for change.

                  (c)      Implementing improvement activities and measuring
                           success.

                  (d)      Providing outcome of any Quality Enhancement
                           activities involving children 5-19 years of age to
                           the FHKC.

         3-20-3   Peer Review Authority. The plan's quality enhancement program
                  shall have a peer review component and a peer review
                  authority.

                  Scope of Activities

                  (a)      The review of the practice methods and patterns of
                           individual physicians and other health care
                           professionals.

                  (b)      The ability and responsibility to evaluate the
                           appropriateness of care rendered by professionals.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 17 of 45
<PAGE>

                  (c)      The authority to implement corrective action when
                           deemed necessary.

                  (d)      The responsibility to develop policy recommendations
                           to maintain or enhance the quality of care provided
                           to plan participants.

                  (e)      A review process which includes the appropriateness
                           of diagnosis and subsequent treatment, maintenance of
                           medical record requirements, adherence to standards
                           generally accepted by professional group peers, and
                           the process and outcome of care.

                  (f)      The maintenance of written minutes of the meetings
                           and provision of reports to FHKC of any activities
                           related to FHKC participants.

                  (g)      Peer review must include examination of morbidity and
                           mortality.

         3-20-4   Referrals To Peer Review Authority

                  (a)      All written and/or oral allegations of inappropriate
                           or aberrant service must be referred to the Peer
                           Review Authority.

                  (b)      Recipients and staff must be advised of the role of
                           the Peer Review Authority and the process to advise
                           the authority of situations or problems.

                  (c)      All grievances related to medical treatment must be
                           presented to the Authority for examination and, when
                           a FHKC participant is involved, the outcome of the
                           grievance resolution reported to FHKC.

3-21     Availability of Records

AMERIGROUP shall make all records available at its own expense for review,
audit, or evaluation by authorized federal, state and FHKC personnel. The
location will be determined by AMERIGROUP subject to approval of FHKC. Access
will be during normal business hours and will be either through on-site review
of records or through the mail.

Copies of all records, will be sent to FHKC by certified mail within seven
working days of request. It is FHKC's responsibility to obtain sufficient
authority, as provided for by applicable statute or requirement, to provide for
the release of any patient specific information or records requested by the
FHKC, State or Federal agencies.

3-22     Audits

         3-22-    Accessibility of Records

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 18 of 45
<PAGE>

                  AMERIGROUP shall maintain books, records, documents, and other
                  evidence pertaining to the administrative costs and expenses
                  of the Agreement relating to the individual participants for
                  the purposes of audit requirements. These records, books,
                  documents, etc., shall be available for review by authorized
                  federal, state and FHKC personnel during the Agreement period
                  and five (5) years thereafter, except if an audit is in
                  progress or audit findings are yet unresolved in which case
                  records shall be kept until all tasks are completed. During
                  the contract period these records shall be available at
                  AMERIGROUP'S offices at all reasonable times. After the
                  contract period and for five years following, the records
                  shall be available at AMERIGROUP'S chosen location subject to
                  the approval of FHKC. If the records need to be sent to FHKC,
                  AMERIGROUP shall bear the expense of delivery. Prior approval
                  of the disposition of AMERIGROUP and subcontractor records
                  must be requested and approved if the contract or subcontract
                  is continuous.

                  This agreement is subject to unilateral cancellation by FHKC
                  if AMERIGROUP refuses to allow such public access.

         3-22-2   Financial Audit

                  Upon reasonable notice by FHKC, AMERIGROUP shall permit an
                  independent audit by FHKC of its financial condition or
                  performance standard in accordance with the provisions of this
                  agreement and the Florida Insurance Code and regulations
                  adopted thereunder.

                  Additionally, AMERIGROUP agrees to provide an audited
                  financial statement to FHKC on an annual basis upon the
                  request of FHKC.

         3-22-3   Post-Contract Audit

                  AMERIGROUP agrees to cooperate with the post-contract audit
                  requirements of appropriate regulatory authorities and in the
                  interim will forward promptly AMERIGROUP'S annually audited
                  financial statements to the FHKC. In addition, AMERIGROUP
                  agrees to the following:

                  AMERIGROUP agrees to retain and make available upon request,
                  all books, documents and records necessary to verify the
                  nature and extent of the costs of the services provided under
                  this Agreement, and that such records will be retained and
                  held available by AMERIGROUP for such inspection until the
                  expiration of four (4) years after the services are furnished
                  under this Agreement. If, pursuant to this Agreement and if
                  AMERIGROUP'S duties and obligations are to be carried out by
                  an individual or entity subcontracting with AMERIGROUP and
                  that subcontractor is, to a significant extent, owns or is
                  owned by or has control of or is controlled by AMERIGROUP,
                  each subcontractor shall itself be subject to the access
                  requirement and AMERIGROUP hereby agrees to require such
                  subcontractors to meet the access requirement.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 19 of 45
<PAGE>

                  AMERIGROUP understands that any request for access must be in
                  writing and contain reasonable identification of the
                  documents, along with a statement as to the reason that the
                  appropriateness of the costs or value of the services in
                  question cannot be adequately or efficiently determined
                  without access to its books or records. AMERIGROUP agrees that
                  it will notify FHKC in writing within ten (10) days upon
                  receipt of a request for access.

         3-22-4   Accessibility for Monitoring

                  AMERIGROUP shall make available to all authorized federal,
                  state and FHKC personnel, records, books, documents, and other
                  evidence pertaining to the Agreement as well as appropriate
                  personnel for the purpose of monitoring under this Agreement.
                  The monitoring shall occur periodically during the contract
                  period.

                  AMERIGROUP also agrees to cooperate in any evaluative efforts
                  conducted by FHKC or an authorized subcontractor of FHKC.

3-23     Indemnification

AMERIGROUP agrees to indemnify and hold harmless FHKC from any losses resulting
from negligent, dishonest, fraudulent or criminal acts of AMERIGROUP, its
officers, its directors, or its employees, whether acting alone or in collusion
with others.

AMERIGROUP shall indemnify, defend, and hold FHKC and its officers, employees
and agents harmless from all claims, suits, judgments or damages, including
court costs and attorney fees, arising out of any negligent or intentional torts
by AMERIGROUP.

AMERIGROUP shall hold all enrolled participants harmless from all claims for
payment of covered services, except co-payments, including court costs and
attorney fees arising out of or in the course of this Agreement pertaining to
covered services. In no case will FHKC or program participants be liable for any
debts of AMERIGROUP.

AMERIGROUP agrees to indemnify, defend, and save harmless FHKC, its officers,
agents, and employees from:

         A.       Any claims or losses attributable to a service rendered by any
                  subcontractor, person, or firm performing or supplying
                  services, materials, or supplies in connection with the
                  performance of the contract regardless of whether FHKC knew or
                  should have known of such improper service, performance,
                  materials or supplies.

         B.       Any failure of AMERIGROUP, its officers, employees, or
                  subcontractors to observe Florida law, including but not
                  limited to labor laws and minimum wage laws, regardless of
                  whether the FHKC knew or should have known of such failure.

With respect to the rights of indemnification given herein, FHKC agrees to
provide to AMERIGROUP, if known to FHKC, timely written notice of any loss or
claim and the opportunity to mitigate, defend and settle such loss or claim as a
condition to indemnification

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 20 of 45
<PAGE>

3-24     Confidentiality of Information

AMERIGROUP shall treat all information, and in particular information relating
to participants which is obtained by or through its performance under the
Agreement, as confidential information to the extent confidential treatment is
provided under state and federal laws. AMERIGROUP shall not use any information
so obtained in any manner except as necessary for the proper discharge of its
obligations and securement of its rights under the Agreement.

All information as to personal facts and circumstances concerning participants
obtained by AMERIGROUP shall be treated as privileged communications, shall be
held confidential, and shall not be divulged without the written consent of FHKC
or the participant, provided that nothing stated herein shall prohibit the
disclosure of information in summary, statistical, or other form which does not
identify particular individuals. The use or disclosure of information concerning
participants will be limited to purposes directly connected with the
administration of the Agreement. It is expressly understood that substantial
evidence of AMERIGROUP'S refusal to comply with this provision shall constitute
a breach of contract.

3-25     Insurance

AMERIGROUP shall not commit any work in connection with the Agreement until it
has obtained all types and levels of insurance required and approved by
appropriate state regulatory agencies. The insurance includes but is not limited
to worker's compensation, liability, fire insurance, and property insurance.
Upon request, FHKC shall be provided proof of coverage of insurance by a
certificate of insurance accompanying the contract documents.

FHKC shall be exempt from and in no way liable for any sums of money that may
represent a deductible in any insurance policy. The payment of such a deductible
shall be the sole responsibility of AMERIGROUP and/or subcontractor holding such
insurance. The same holds true of any premiums paid on any insurance policy
pursuant to this Agreement. Failure to provide proof of coverage may result in
the Agreement being terminated.

3-26     Lobbying Disclosure

AMERIGROUP shall comply with applicable state and federal requirements for the
disclosure of information regarding lobbying activities of the firm,
subcontractors or any authorized agent. Certification forms shall be filed by
AMERIGROUP certifying that no state or federal funds have been or will be used
in lobbying activities, and the disclosure forms shall be used by AMERIGROUP to
disclose lobbying activities in connection with the Program that have been or
will be paid for with non-federal funds.

3-27     Reporting Requirements

AMERIGROUP agrees to provide on a timely basis the quarterly statistical reports
detailed in Exhibit G to FHKC that FHKC must have to satisfy reporting
requirements. AMERIGROUP also agrees to attest to the accuracy, completeness and
truthfulness of claims and payment data that are submitted to FHKC under penalty
of perjury. Access to participant claims data by FHKC, the State of Florida, the
federal Centers for Medicare and Medicaid Services, the Department of Health and
Human Services Inspector General will be allowed to the extent allowed under any
state privacy protections.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 21 of 45
<PAGE>

3-28     Participant Liability

AMERIGROUP hereby agrees that no FHKC participant shall be liable to AMERIGROUP
or any AMERIGROUP network providers for any services covered by FHKC under this
Agreement. Neither AMERIGROUP nor any representative of AMERIGROUP shall collect
or attempt to collect from an FHKC participant any money for services covered by
the program and neither AMERIGROUP nor representatives of AMERIGROUP may
maintain any action at law against a FHKC participant to collect money owed to
AMERIGROUP by FHKC. FHKC participants shall not be liable to AMERIGROUP for any
services covered by the participant's contract with FHKC. This provision shall
not prohibit collection of co-payments made in accordance with the terms of this
Agreement. Nor shall this provision prohibit collection for services not covered
by the contract between FHKC and the participants.

3-29     Protection of Proprietary Information

AMERIGROUP and FHKC mutually agree to maintain the integrity of all proprietary
information, including but not limited to membership lists, including names,
addresses and telephone numbers. Neither party will disclose or allow to
disclose proprietary information, by any means, to any person without the prior
written approval of the other party. All proprietary information will be so
designated.

This requirement does not extend to routine reports and membership disclosure
necessary for efficient management of the program.

3-30     Regulatory Filings

AMERIGROUP will forward all regulatory filings, (i.e., documents, forms and
rates) relating to this Agreement to FHKC for their review and approval. Once
such regulatory filings are approved, FHKC will submit them to the Department of
Financial Services on AMERIGROUP'S behalf.

SECTION 4 TERMS AND CONDITIONS

4-1      Effective Date

This Agreement shall be effective on the first (1st) day of October 2003 and
shall remain in effect through September 30, 2005.

4-2      Multiple Year Agreement

Parties hereto agree this is a "Multiple Year Agreement" meaning this Agreement
which is effective as of October 1, 2003 shall extend through September 30,2005
and shall thereafter be automatically renewed for no more than (2) successive
one year periods. Either party may elect not to renew this Agreement and in that
event shall give written notice to said effect to the other party at least six
(6) months prior to the expiration of the then current term.

4-3      Entire Understanding

This Agreement embodies the entire understanding of the parties in relationship
to the subject matter hereof. No other agreement, understanding or
representation, verbal or otherwise, relative to the subject matter hereof
exists between the parties at the time of execution of this Agreement.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 22 of 45
<PAGE>

4-4      Relation to Other Laws

         4-4-1    Health Insurance Portability and Accountability Act (HIPAA)

                  Coverage offered under this Agreement is considered creditable
                  coverage for the purposes of part 7 of subtitle B of title II
                  of ERISA, title XXVII of the Public Health Services Act and
                  subtitle K of the Internal Revenue Code of 1986. AMERIGROUP is
                  responsible for issuing a certificate of creditable coverage
                  to those FHKC participants who disenroll from the Program.

                  Additionally, AMERIGROUP agrees to comply with all other
                  applicable provisions of the HIPAA, and will certify
                  compliance under Exhibit J.

         4-4-2    Mental Health Parity Act (MHPA)

                  AMERIGROUP agrees to comply with the requirements of the
                  Mental Health Parity Act of 1996 regarding parity in the
                  application of annual and lifetime dollar limits to mental
                  health benefits in accordance with 45 CFR 146.136.

         4-4-3    Newborns and Mothers Health Protection Act of 1996 (NMHPA)

                  AMERIGROUP agrees to comply with the requirements of the NMHPA
                  of 1996 regarding requirements for minimum hospital stays for
                  mothers and newborns in accordance with 45 CFR 146.130 and
                  148.170.

4-5      Independent Contractor

The relationship of AMERIGROUP to the FHKC shall be solely that of an
independent contractor. As an independent contractor, AMERIGROUP agrees to
comply with the following provisions:

                  a.       Title VI of the Civil Rights Act of 1964, as amended,
                           42 U.S.C. 2000d et seq., which prohibits
                           discrimination on the basis of race, color, or
                           national origin.

                  b.       Section 504 of the Rehabilitation Act of 1973, as
                           amended, 29 U.S.C. 794, which prohibits
                           discrimination on the basis of handicap.

                  c.       Title IX of the Education Amendments of 1972, as
                           amended 29 U.S.C. 601 et seq., which prohibits
                           discrimination on the basis of sex.

                  d.       The Age Discrimination Act of 1975, as amended, 42
                           U.S.C. 6101 et seq., which prohibits discrimination
                           on the basis of age.

                  e.       Section 654 of the Omnibus Budget Reconciliation Act
                           of

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 23 of 45
<PAGE>

                           1981, as amended, 42 U.S.C. 9848, which prohibits
                           discrimination on the basis of race, creed, color,
                           national origin, sex, handicap, political affiliation
                           or beliefs.

                  f.       The American with Disabilities Act of 1990, P.L.
                           101-336, which prohibits discrimination on the basis
                           of disability and requires reasonable accommodation
                           for persons with disabilities.

                  g.       Section 274A (e) of the Immigration and
                           Nationalization Act, FHKC shall consider the
                           employment by any contractor of unauthorized aliens a
                           violation of this Act. Such violation shall be cause
                           for unilateral cancellation of this Agreement.

                  h.       OMB Circular A-110 (Appendix A-4) which identifies
                           procurement procedures which conform to applicable
                           federal law and regulations with regard to debarment,
                           suspension, ineligibility, and involuntary exclusion
                           of contracts and subcontracts and as contained in
                           Exhibit I of this Agreement. Covered transactions
                           include procurement contracts for services equal to
                           or in excess of $100,000 and all non-procurement
                           transactions.

                  i.       The federal regulations implementing the State
                           Children's Health Insurance Program (SCHIP) as found
                           in 42 CFR Parts 431,433,435,436 and 457 and any
                           subsequent revisions to the regulation.

4-6      Assignment

This Agreement may not be assigned by AMERIGROUP without the express prior
written consent of FHKC. Any purported assignment shall be deemed null and void.

This Agreement and the monies that may become due hereunder are not assignable
by AMERIGROUP except with the prior written approval of FHKC.

4-7      Notice

Notice required or permitted under this Agreement shall be directed as follows:

                  For AMERIGROUP:
                  MR. MITCH WRIGHT
                  MANAGER, REGULATORY COMPLIANCE
                  4425 CORPORATION LANE
                  VIRGINIA BEACH, VA 23462

                  For FHKC:
                  EXECUTIVE DIRECTOR
                  FLORIDA HEALTHY KIDS CORPORATION
                  POST OFFICE BOX 980
                  TALLAHASSEE, FL 32302

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 24 of 45
<PAGE>

                  or to such other place or person as written notice thereof may
                  be given to the other party.

4-8      Amendment

Not withstanding anything to the contrary contained herein, this Agreement may
be amended by mutual written consent of the parties at any time.

4-9      Governing Law

This Agreement shall be construed and governed in accordance with the laws of
the State of Florida. In the event any action is brought to enforce the
provisions of this Agreement, venue shall be in Leon County, Florida.

4-10     Contract Variation

If any provision of the Agreement (including items incorporated by reference) is
declared or found to be illegal, unenforceable, or void, then both FHKC and
AMERIGROUP shall be relieved of all obligations arising under such provisions.
If the remainder of the Agreement is capable of performance, it shall not be
affected by such declaration or finding and shall be fully performed. In
addition, if the laws or regulations governing this Agreement should be amended
or judicially interpreted as to render the fulfillment of the Agreement
impossible or economically infeasible, both FHKC and AMERIGROUP will be
discharged from further obligations created under the terms of the Agreement.

4-11     Attorneys Fees

In the event that either party deems it necessary to take legal action to
enforce any provision of this Agreement the court or hearing officer, in his
discretion, may award costs and attorneys' fees to the prevailing party. Legal
actions are defined to include administrative proceedings.

4-12     Representatives

Each party shall designate a representative to serve as the day to day
management of FHKC Health Insurance Plan, helping to resolve services questions,
assuring proper arbitration in the event of a dispute, as well as responding to
general administrative and procedural problems. These individuals will be the
principal points of contact for all inquiries unless the designated
representatives specifically refer the inquiry to another party within their
respective organizations.

4-13     Termination

         A. Termination for Cause

         FHKC shall have the absolute right to terminate for cause, this
         Agreement, and all obligations contained hereunder. Cause shall be
         defined as any material breach of AMERIGROUP'S responsibilities as set
         forth herein, which can not be cured by AMERIGROUP within 30 days from
         the date of written notice from FHKC but, if the default condition
         cannot be cured within the 30 days, AMERIGROUP may, if it has commenced
         reasonable efforts to correct the condition within that 30 day period,
         have

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 25 of 45
<PAGE>

         up to 90 days to complete the required cure. Nothing in this Agreement
         shall extend this 90 day period except the mutual consent of the
         parties hereto.

         AMERIGROUP shall have the absolute right to terminate for cause this
         Agreement, and all obligations contained hereunder. Cause shall be
         defined as any material breach of FHKC's responsibilities as set forth
         herein, which can not be cured by FHKC within 30 days from the date of
         written notice from AMERIGROUP but, if the default condition cannot be
         cured within the 30 days, FHKC may, if it has commenced reasonable
         efforts to correct the condition within that 30 day period, have up to
         90 days to complete the required cure. Nothing in this Agreement shall
         extend this 90 day period except the mutual consent of the parties
         hereto.

         B. Change of Controlling Interest

         FHKC shall have the absolute right to elect to continue or terminate
         this Agreement, at its sole discretion, in the event of a change in the
         ownership or controlling interest of AMERIGROUP. AMERIGROUP shall
         provide notice of regulatory agency approval prior to any transfer or
         change in control, and FHKC shall have ten (10) days thereafter to
         elect continuation or termination of this Agreement.

         C. Lack of Funding

         FHKC shall have the absolute right to terminate this Agreement should
         state, federal or other funds for the Program be reduced or terminated
         such that the Program cannot be sustained at the sole discretion of the
         FHKC. Should FHKC elect to terminate this Agreement, FHKC shall provide
         AMERIGROUP a written notice of termination and include a termination
         date of not less than thirty (30) days from the date of the notice.

         4-14     Contingency

         This Agreement and all obligations created hereunder, are subject to
         continuation and approval of funding of the FHKC by the appropriate
         state and federal or local agencies.

         IN WITNESS WHEREOF the parties hereto have executed this Agreement on
         the 15 day of July, 2003.

                                        AMERIGROUP FLORIDA, INC.
                                        BY:

/s/ [ILLEGIBLE]                         /s/ Imtiaz Sattaur
------------------------------          ----------------------------------------
Witness                                 Name:
                                        Title

                                        FLORIDA HEALTHY KIDS CORPORATION
                                        BY:

/s/ [ILLEGIBLE]                         /s/ Rose M. Naff
------------------------------          ----------------------------------------
Witness                                 Rose M. Naff
                                        Executive Director

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 26 of 45
<PAGE>

EXHIBIT A

                            HEALTH SERVICES AGREEMENT

         I.       Premium Rate

                  The Comprehensive Health Care Services premium for
                  participants in the Florida Healthy Kids Health Insurance
                  Program for the coverage period October 1, 2003 through
                  September 30, 2004 shall be as follows for each county:

                  Broward County:                    $83.47 per member per month
                  Miami-Dade County:                 $83.47 per member per month
                  Hillsborough County:               $69.15 per member per month
                  Orange County:                     $70.64 per member per month
                  Palm Beach County:                 $83.47 per member per month
                  Pinellas County:                   $69.15 per member per month

         II.      Additional Requirements for Premium Rates

                      The rate listed in Paragraph I of this Exhibit also
                      incorporates the following requirements:

                          A. Minimum Medical Loss Ratio
                             The minimum medical loss ratio shall be 85 percent.

                          B. Maximum Administrative Component
                             The maximum administrative cost for the premium
                             listed in Paragraph I of this Exhibit shall not
                             exceed 15 percent.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 27 of 45

<PAGE>

EXHIBIT B

                              ENROLLMENT PROCEDURES

1        All FHKC eligible participants will be provided with necessary
         enrollment materials and forms from FHKC or its assignee.

2.       FHKC will provide AMERIGROUP with eligible participants who have
         selected AMERIGROUP or who have been assigned by FHKC to AMERIGROUP
         according to the provisions of Section 2-1 via an enrollment tape,
         using a tape layout to be specified by FHKC.

3.       Upon receipt of such enrollment tape, AMERIGROUP acting as an agent for
         FHKC shall provide each participant with an enrollment package within
         five business days of receipt of an enrollment tape that includes at a
         minimum the following items:

         A. A membership card displaying participant's name, participation
            number and effective date of coverage.

         B. A Participant's handbook that complies with any federal requirements
            and has been approved by the FHKC, including at a minimum, a
            description of how to access services, a listing of any copayment
            requirements, the grievance process and the covered benefits.

         C. Current listing of all primary care physicians, specialists and
            hospital providers.

4.       All additions or deletions will be submitted in accordance with
         referenced sections of this Agreement and Exhibit B.

5.       Upon receipt of monthly tape from FHKC, AMERIGROUP will process all new
         enrollments and provide new participants with an enrollment package
         within five business days of receipt of the enrollment tape.

6.       Deletions will be processed by AMERIGROUP and AMERIGROUP will notify
         each cancelled participant in writing by regular mail of the effective
         date of deletion.

7.       In accordance with state law, a waiting period of sixty days will be
         imposed on those participants who voluntarily cancel their coverage by
         non-payment of the required monthly premium. Cancelled participants
         must request reinstatement from FHKC and wait at least sixty days from
         the date of that request before coverage can be reinstated.

8.       FHKC is the sole determiner of eligibility and effective dates of
         coverage.

9.       AMERIGROUP must also comply with the guidance issued by the Office of
         Civil Rights of the United States Department of Health and Human
         Services ("Policy Guidance on the Title VI Prohibition against National
         Origin Discrimination as it Effects Persons with Limited English
         Proficiency") regarding the availability of information and assistance
         for persons with limited English proficiency.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 28 of 45

<PAGE>

EXHIBIT C

                           ENROLLEE BENEFIT SCHEDULE

I.       Minimum Benefits; Statutory Requirements

             AMERIGROUP agrees to provide, at a minimum, those benefits that are
             prescribed by state law under Section 409.815(2)(a-p) and 409.815
             (r-t). AMERIGROUP shall pay an enrollees' covered expenses up to a
             lifetime maximum of $1 million per covered enrollee.

             The following health care benefits are included under this
             Agreement:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
        BENEFIT                                             LIMITATIONS                                 CO-PAYMENTS
-------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                                              <C>

A. Inpatient Services                  All admissions must be authorized by AMERIGROUP.                    NONE
All covered services provided for      The length of the patient stay shall be determined based on
the medical care and treatment         the medical condition of the enrollee in relation to
of an enrollee who is admitted         the necessary and appropriate level of care.
as an inpatient to a hospital
licensed under part I of
Chapter 395.                           Room and board may be limited to semi-private accommodations,
Covered services include:              unless a private room is considered medically necessary
physician's services;                  or semi-private accommodations are not available.
room and board; general                Private duty nursing limited to circumstances where
nursing care; patient meals;           such care is medically necessary.
use of operating room and              Admissions for rehabilitation and physical therapy are limited
related facilities; use of             to 15 days per contract year.
intensive care unit and                Shall Not Include Experimental  or Investigational Procedures as
services; radiological,                defined as a drug, biological product, device, medical treatment
laboratory and other                   or procedure that meets any one of the following criteria,
diagnostic tests; drugs;               as determined by AMERIGROUP.
medications; biologicals;              1. Reliable Evidence shows the drug, biological product, device,
anesthesia and oxygen                  medical treatment, or procedure when applied to the
services; special duty                 circumstances of a particular patient is the subject of
nursing; radiation and                 ongoing phase I, II or III clinical trials or
chemotherapy; respiratory              2. Reliable Evidence shows the drug, biological product,
therapy; administration of             device, medical treatment or procedure when applied to
whole blood plasma; physical,          the circumstances of a particular patient is under
speech and occupational therapy;       study with a written protocol to determine maximum
medically necessary services           tolerated dose, toxicity, safety, efficacy, or efficacy
of other health professionals.         in comparison to conventional alternatives, or
                                       3. Reliable Evidence shows the drug, biological product,
                                       device, medical treatment, or procedure is being
                                       delivered or should be delivered subject to the
                                       approval and supervision of an Institutional Review
                                       Board (IRB) as required and defined by federal
                                       regulations, particularly those of the U.S. Food and
                                       Drug Administration or the Department of Health and
                                       Human Services.

-------------------------------------------------------------------------------------------------------------------
</TABLE>

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 29 of 45

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
          BENEFIT                                     LIMITATIONS                             CO-PAYMENTS
-----------------------------------------------------------------------------------------------------------------
<S>                                    <C>                                              <C>
B. Emergency Services                  Must use a AMERIGROUP designated                 $ 10 per visit waived if
Covered Services include visits        facility or provider for emergency care          admitted or authorized
to an emergency room or other          unless the time to reach such facilities         by primary care physician
licensed facility if needed            or providers would mean the risk of
immediately due to an injury           permanent damage to patient's health.
or illness and delay
means risk of permanent                AMERIGROUP must also comply with the
damage to the enrollee's               provisions of s. 641.513, Florida
health.                                Statutes.
-----------------------------------------------------------------------------------------------------------------
C. Maternity Services and              Infant is covered for up to three (3)            NONE
Newborn Care                           days following birth or until the infant
Covered services include               is transferred to another medical
maternity and newborn care;            facility, whichever occurs first.
prenatal and postnatal care;
initial inpatient care of              Coverage may be limited to the fee for
adolescent participants,               vaginal deliveries.
including nursery charges and
initial pediatric or neonatal
examination.
-----------------------------------------------------------------------------------------------------------------
D. Organ Transplantation               Coverage is available for transplants            NONE
Services                               and medically related services if deemed
Covered services include               necessary and appropriate within the
pretransplant, transplant and          guidelines set by the Organ Transplant
postdischarge services and             Advisory Council or the Bone Marrow
treatment of complications             Transplant Advisory Council.
after transplantation.
-----------------------------------------------------------------------------------------------------------------
E. Outpatient Services                 Services must be provided directly by            No co-payment for well
Preventive, diagnostic,                AMERIGROUP or through pre-approved               child care, preventive
therapeutic, palliative care,          referrals.                                       care or for routine vision
and other services provided to                                                          and hearing screenings.
an enrollee in the outpatient          Routine hearing and screening must be
portion of a health facility           provided by primary care physician.
licensed under chapter 395.
                                       Family planning limited to one annual
                                       visit and one supply visit each ninety           $5 per office visit
                                       days.
Covered services include
Well-child care, including             Chiropractic services shall be provided
those services recommended             in the same manner as in the Florida
in the Guidelines for                  Medicaid program.
Health Supervision of
Children and Youth as                  Podiatric services are limited to one visit
developed by Academy of                per day totaling two visits per month for
Pediatrics; immunizations              specific foot disorders. Dental services
and injections as                      must be provided to an oral surgeon for
recommended by the                     medically necessary reconstructive dental
Advisory Committee on                  surgery due to injury.
Immunization Practices;
health education                       Immunizations are to be provided by the
counseling and clinical                primary care physician.
services; family planning
services, vision                       Treatment for temporomandibular joint
screening; hearing                     (TMJ) disease is specifically excluded.
screening; clinical
radiological, laboratory               Shall Not Include Experimental or
and other outpatient                   Investigational Procedures as defined as a
diagnostic tests;                      drug, biological product, device, medical
ambulatory surgical                    treatment or procedure that meets any one of
procedures; splints and                the following criteria, as determined by
casts; consultation with               AMERIGROUP:
and treatment by referral              1. Reliable Evidence shows the drug,
physicians; radiation and              biological product, device, medical
chemotherapy;                          treatment, or procedure when applied to the
                                       circumstances of a particular patient is
                                       the subject of
-----------------------------------------------------------------------------------------------------------------
</TABLE>

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 30 of 45

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
        BENEFIT                                         LIMITATIONS                      CO-PAYMENTS
-----------------------------------------------------------------------------------------------------
<S>                                    <C>                                              <C>
chiropractic services;                 ongoing phase I, II or III clinical trials or
podiatric services.                    2. Reliable Evidence shows the drug,
                                       biological product, device, medical
                                       treatment or procedure when applied to
                                       the circumstances of a particular
                                       patient is under study with a written
                                       protocol to determine maximum
                                       tolerated dose, toxicity, safety,
                                       efficacy, or efficacy in comparison to
                                       conventional alternatives, or

                                       3. Reliable Evidence shows the drug,
                                       biological product, device, medical
                                       treatment, or procedure is being
                                       delivered or should be delivered
                                       subject to the approval and
                                       supervision of an Institutional Review
                                       Board (IRB) as required and defined by
                                       federal regulations, particularly
                                       those of the U.S. Food and Drug
                                       Administration or the Department of
                                       Health and Human Services
-----------------------------------------------------------------------------------------------------
E. Behavioral Health Services          All services must be provided directly
Covered services include               by AMERIGROUP or upon approved
inpatient and outpatient care          referral.
for psychological or
psychiatric evaluation,                Inpatient services are limited to not            INPATIENT:
diagnosis and treatment by a           more than thirty inpatient days per              NONE
licensed mental health                 contract year for psychiatric
professional.                          admissions, or residential services in
                                       lieu of inpatient psychiatric
                                       admissions; however, a minimum of ten
                                       of the thirty days shall be available
                                       only for inpatient psychiatric
                                       services when authorized by AMERIGROUP
                                       physician.

                                       Outpatient services are limited to a
                                       maximum of forty outpatient visits per
                                       contract year.                                   OUTPATIENT:$5
                                                                                        per visit
-----------------------------------------------------------------------------------------------------
F. Substance Abuse Services            All services must be provided directly by        INPATIENT:
Includes coverage for                  AMERIGROUP or upon approved referral.            NONE
inpatient and outpatient
care for drug and alcohol              Inpatient services are limited to not more
abuse including counseling             than seven inpatient days per contract
and placement assistance.              year for medical detoxification only and
Outpatient services include            thirty days residential services.
evaluation, diagnosis and
treatment by a licensed                Outpatient visits are limited to a maximum
practitioner.                          of forty visits per contract year.               OUTPATIENT:$5
                                                                                        per visit
-----------------------------------------------------------------------------------------------------
G. Therapy Services                    All treatments must be performed directly        $5 per visit
Covered services include physical,     or as authorized by AMERIGROUP.
occupational, respiratory and
speech therapies for                   Limited to up to twenty-four treatment
short-term rehabilitation              sessions within a sixty day period per
where significant improvement          episode or injury, with the sixty day
in the enrollee's condition            period beginning with the first
will result.                           treatment.
-----------------------------------------------------------------------------------------------------
H. Home Health Services                Coverage is limited to skilled nursing           $5 per visit
Includes prescribed home               services only. Meals, housekeeping and
visits by both registered and          personal comfort items are excluded.
licensed practical nurses to           Services must be provided directly by
provide skilled nursing                AMERIGROUP.
services on a part-time
intermittent basis.                    Private duty nursing is limited to
                                       circumstances where such care is
                                       medically appropriate.
-----------------------------------------------------------------------------------------------------
</TABLE>

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 31 of 45

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
         BENEFIT                                  LIMITATIONS                               CO-PAYMENTS
-----------------------------------------------------------------------------------------------------------
<S>                                    <C>                                              <C>
I. Hospice Services                    Once a family elects to receive hospice          $5 per visit
Covered services include reasonable    care for an enrollee, other services
and necessary services for palliation  that treat the terminal condition will
or management of not be covered. an    not be covered.
enrollee's terminal illness.
                                       Services required for conditions totally
                                       unrelated to the terminal condition are
                                       covered to the extent that the services
                                       are covered under this contract.
-----------------------------------------------------------------------------------------------------------
J.Nursing Facility Services            All admissions must be authorized by             NONE
                                       AMERIGROUP and provided by a AMERIGROUP
Covered services include               affiliated facility.
regular nursing services,              Participant must require and receive skilled
rehabilitation services,               services on a daily basis as ordered by
drugs and biologicals,                 AMERIGROUP physician.
medical supplies, and the
use of appliances and
equipment furnished by the             The length of the enrollee's stay shall be
facility.                              determined by the medical condition of the
                                       enrollee in relation to the necessary and
                                       appropriate level of care, but is no more
                                       than 100 days per contract year.

                                       Room and board is limited to
                                       semi-private accommodations unless a
                                       private room is considered medically
                                       necessary or semi-private accommodations
                                       are not available.
                                       Specialized treatment centers and independent
                                       kidney disease treatment centers are excluded.
                                       Private duty nurses, television, and custodial
                                       care are excluded.
                                       Admissions for rehabilitation and
                                       physical therapy are limited to fifteen
                                       days per contract year.
-----------------------------------------------------------------------------------------------------------
K. Durable Medical                     Equipment and devices must be provided           NONE
Equipment and Prosthetic               by authorized AMERIGROUP supplier.
Devices
Equipment and devices that             Covered prosthetic devices include
are medically indicated to             artificial eyes and limbs, braces, and
assist in the treatment of a           other artificial aids.
medical condition and
specifically prescribed as             Low vision and telescopic lenses are not
medically necessary by                 included.
enrollee's AMERIGROUP
physician.                             Hearing aids are covered only when
                                       medically indicated to assist in the
                                       treatment of a medical condition.
-----------------------------------------------------------------------------------------------------------
L. Refractions                         Enrollee must have failed vision                 $5 per visit
Examination by a                       screening by primary care physician.
AMERIGROUP optometrist
to determine the need                  Corrective lenses and frames are limited
for and to prescribe                   to one pair every two years unless head
corrective lenses as                   size or prescription changes.                    $ 10 for corrective
medically indicated.                                                                    lenses

                                       Coverage is limited to Medicaid frames
                                       with plastic or SYL non-tinted lenses.
-----------------------------------------------------------------------------------------------------------
M. Pharmacy                            Prescribed drugs covered under this              $5 per prescription
Prescribed drugs for the               Agreement shall include all prescribed           for up to a 31-day
treatment of illness or injury         drugs covered under the Florida Medicaid         supply
or injury.                             program. AMERIGROUP may implement a pharmacy
                                       benefit management program if FHKC so
                                       authorizes.

                                       Brand name products are covered if a
                                       generic substitution is not available or
                                       where the prescribing physician indicates
                                       that a brand name is medically necessary.

                                       All medications must be dispensed through
                                       AMERIGROUP or a AMERIGROUP designated
                                       pharmacy.
                                       All prescriptions must be written by the
                                       participant's
-----------------------------------------------------------------------------------------------------------
</TABLE>

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 32 of 45

<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
         BENEFIT                                 LIMITATIONS                                       CO-PAYMENTS
----------------------------------------------------------------------------------------------------------------
<S>                                <C>                                                           <C>
                                   primary care physician, AMERIGROUP approved
                                   specialist or consultant physician.
----------------------------------------------------------------------------------------------------------------
N. Transportation Services         Must be in response to an emergency situation.                $10 per service
Emergency transportation as
determined to be medically
necessary in response to
an emergency situation.
----------------------------------------------------------------------------------------------------------------
</TABLE>

II.               Cost Sharing Provisions

AMERIGROUP agrees to comply with all cost sharing restrictions imposed on FHKC
participants by federal or state laws and regulations, including the following
specific provisions:

         A.       Special Populations
                  Enrollees identified by FHKC to AMERIGROUP as Native Americans
                  or Alaskan Natives are prohibited from paying any cost sharing
                  amounts.

         B.       Cost Sharing Limited to No More than Five Percent of Family's
                  Income FHKC may identify to AMERIGROUP other enrollees who
                  have met federal requirements regarding maximum out of pocket
                  expenditures. Enrollees identified by FHKC as having met this
                  threshold are not required to pay any further cost sharing for
                  covered services for a time specified by FHKC.

         C.       AMERIGROUP is responsible for informing its providers of these
                  provisions and ensuring that enrollees under this section
                  incur no further out of pocket costs for covered services and
                  are not denied access to services. FHKC will provide these
                  enrollees with a letter indicating that they may not incur any
                  cost sharing obligations.

III.              Other Benefit Provision

                  All requirements for prior authorizations must conform with
                  federal and state regulations and must be completed within
                  fourteen (14) days of request by the enrollee. Extensions to
                  this process may be granted in accordance with federal and/or
                  state regulations.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 33 of 45

<PAGE>

EXHIBIT D

                    WORKER'S COMPENSATION, THIRD PARTY CLAIM
                    PERSONAL INJURY PROTECTION BENEFITS, AND
                            COORDINATION OF BENEFITS

A.                WORKER'S COMPENSATION

                  Worker's compensation benefits are primary to all benefits
                  that may be provided pursuant to this Agreement. In the event
                  AMERIGROUP provides services or benefits to a participant who
                  is entitled to worker's compensation benefits, AMERIGROUP
                  shall complete and submit to the appropriate carrier, such
                  forms, assignments, consents and releases as are necessary to
                  enable AMERIGROUP to obtain payment, or reimbursement, under
                  the worker's compensation law.

B.                THIRD PARTY CLAIMS

                  In the event AMERIGROUP provides medical services or benefits
                  to participants who suffer injury, disease or illness by
                  virtue of the negligent act or omission of a third party,
                  AMERIGROUP shall be entitled to reimbursement from the
                  participant, at the prevailing rate, for the reasonable value
                  of the services or benefits provided. AMERIGROUP shall not be
                  entitled to reimbursement in excess of the participant's
                  monetary recovery for medical expenses provided, from the
                  third party.

C.                NO-FAULT, PERSONAL INJURY PROTECTION AND MEDICAL
                  PAYMENTS COVERAGE

                  As noted in the Florida Statutes (F.S. 641.31(8)), automobile
                  no-fault, personal injury protection, and medical payments
                  insurance, maintained by or for the benefit of the
                  participant, shall be primary to all services or benefits that
                  may be provided pursuant to this Agreement. In the event
                  AMERIGROUP provides services or benefits to a participant who
                  is entitled to the aforesaid automobile insurance benefits,
                  the parent/guardian or participant shall complete and submit
                  to AMERIGROUP, or to the automobile insurance carrier, such
                  forms, assignments, consents and releases as are necessary to
                  enable AMERIGROUP to obtain payment or reimbursement from such
                  automobile insurance carrier.

D.                COORDINATION OF BENEFITS AMONG HEALTH AMERIGROUPS

                  AMERIGROUP shall coordinate benefits in accordance with NAIC
                  principles as may be amended from time to time. If any
                  benefits to which a participant is entitled under this
                  Agreement are also covered under any other group health
                  benefit plan or insurance policy, the benefits hereunder shall
                  be reduced to the extent that benefits are available to
                  participant under such other plan or policy whether or not a
                  claim is made for the same, subject to the following:

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 34 of 45

<PAGE>

                                                                       EXHIBIT D
                                                                     (CONTINUED)

                  1.       The rules establishing the order of benefit
                           determination between this Agreement and other plan
                           covering the participant on whose behalf a claim is
                           made are as follows:

                           (a)      The benefits of a policy or plan that covers
                                    the person as an employee, member, or
                                    subscriber, other than as a dependent are
                                    determined before those of the policy or
                                    plan that covers the person as a dependent.

                           (b)      Except as stated in paragraph C, when two or
                                    more policies or plans cover the same child
                                    as a dependent of different parents:

                                    (l)The benefits of the policy or plan of the
                                    parent whose birthday, excluding year of
                                    birth, falls earlier in a year are
                                    determined before those of the policy of the
                                    parent whose birthday, excluding year of
                                    birth, falls later in that year; but

                                    (2)If both parents have the same birthday,
                                    the benefits of the policy or plan that
                                    covered the parent for a longer period of
                                    time are determined before those of the
                                    policy or plan which covered the parent for
                                    shorter period of time. However, if a policy
                                    or plan subject to the rule based on the
                                    birthday of the parents as stated above
                                    coordinates with an out-of-state policy or
                                    plan which contains provisions under the
                                    benefits of a policy or a person as a
                                    dependent of a male are determined before
                                    those of a policy or plan which covers the
                                    person as a dependent of a female and if, as
                                    a result, the policies or plans do not agree
                                    in the order of benefits, the provisions or
                                    the other policy or plan shall determine the
                                    order of benefits.

                           (c)      If two or more policies or plans cover a
                                    dependent child of divorced or separated
                                    parents, benefits for the child are
                                    determined in this order:

                                    (l)First, the policy or plan of the parent
                                    with custody of the child;

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 35 of 45

<PAGE>

                                    (2)Second, the policy or plan of the spouse
                                    of the parent with custody of the child, and
                                    (3)Third, the policy or plan of the parent
                                    not having custody of the child. However, if
                                    the specific terms of a court decree state
                                    that one of the parents is responsible for
                                    the health care expenses of the child and of
                                    the entity obliged to pay or provide the
                                    benefits of the policy or plan or that
                                    parent has actual knowledge of those terms,
                                    the benefits of that policy are determined
                                    first. This does not apply with respect to
                                    any claim determination period or plan or
                                    policy year during which any benefits are
                                    actually paid or provided before the entity
                                    has that knowledge.

                           (d)      The benefits of a policy or plan which
                                    covers a person as an employee which is
                                    neither laid off nor retired, or as that
                                    employee's dependent, are determined before
                                    those of a policy or plan which covers that
                                    person as a laid off or retired employee or
                                    as that employee's dependent. If the other
                                    policy or plan is not subject to this rule,
                                    and if, as result, the policies or plans do
                                    not agree on the order of benefits, this
                                    paragraph shall not apply.

                           (e)      If none of the rules in paragraph a,
                                    paragraph b, paragraph c, or paragraph d,
                                    determine the order of benefits of the
                                    policy or plan which covered an employee,
                                    member or subscriber for a longer period of
                                    time are determined before those of the
                                    policy or plan which covered that person for
                                    the shorter period of time.

                  2.       None of the above rules as to coordination of
                           benefits shall limit the participant's right to
                           receive direct health services hereunder.

                  3.       Any participant claiming benefits under the Agreement
                           shall furnish to AMERIGROUP all information deemed
                           necessary by it to implement this provision.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 36 of 45

<PAGE>

EXHIBIT E

                       ACCESS AND CREDENTIALING STANDARDS

AMERIGROUP shall maintain a medical staff, under contract, sufficient to permit
reasonably prompt medical service to all participants in accordance with the
following:

                  1.                Physician and Facility Standards

                           A.       Physician and Medical Provider Standards

                           AMERIGROUP'S network shall include only board
                           certified pediatricians and family practice
                           physicians or physician extenders working under the
                           direct supervision of a board certified practitioner
                           to serve as primary care physicians in its provider
                           network for Broward, Miami-Dade, Hillsborough,
                           Orange, Palm Beach and Pinellas Counties.

                           Primary care physicians must provide covered
                           immunizations to enrollees.

                           AMERIGROUP may request that an individual provider be
                           granted an exception to this policy by making such a
                           request in writing to the Corporation and providing
                           the provider's curriculum vitae and a reason why the
                           provider should be granted an exception to the
                           accepted standard. Such requests will be reviewed by
                           the Corporation on a case by case basis and a written
                           response will be made to AMERIGROUP on the outcome of
                           the request.

                           B.       Facility Standards

                           Facilities used for participants shall meet
                           applicable accreditation and licensure requirements
                           and meet facility regulations specified by the Agency
                           for Health Care Administration.

2.                Geographical Access:

                           A.       Primary Care Providers

                           Geographical access to board certified family
                           practice physicians, pediatric physicians, primary
                           care dental providers or ARNP's, experienced in child
                           health care, of approximately twenty (20) minutes
                           driving time from residence to provider, except that
                           this driving time limitation shall be reasonably
                           extended in those areas where such limitation with
                           respect to rural residence is unreasonable. In such
                           instance, AMERIGROUP shall provide access for urgent
                           care through contracts with nearest providers.

                           B.       Specialty Physician Services

                           Specialty physician services, ancillary services and
                           specialty hospital services are to be available
                           within sixty (60) minutes driving time from the
                           participant's residence to provider. Driving time
                           standards may be waived with sufficient

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 37 of 45

<PAGE>

                  justification if specialty care services are not obtainable
                  due to a limitation of providers, such as in rural areas.

3.                Timely Treatment:

                  Timely treatment by providers, such that the participant shall
                  be seen by a provider in accordance with the following:

                  A.       Emergency care shall be provided immediately;

                  B.       Urgently needed care shall be provided within
                           twenty-four (24) hours;

                  C.       Routine care of patients who do not require emergency
                           or urgently needed care shall be provided within
                           seven (7) calendar days;

                  D.       Follow-up care shall be provided as medically
                           appropriate.

For the purposes of this section, the following definitions shall apply:

                  Emergency care is that required for the treatment of an injury
                  or acute illness that, if not treated immediately, could
                  reasonably result in serious or permanent damage to the
                  patient's health.

                  Urgently needed care is that required within a twenty-four
                  (24) hour period to prevent a condition from requiring
                  emergency care.

                  Routine care is that level of care that can be delayed without
                  anticipated deterioration in the patient's medical condition
                  for a period of seven (7) calendar days.

By utilization of the foregoing standards, FHKC does not intend to create
standards of care or access different from those that are deemed acceptable
within AMERIGROUP service area. Rather FHKC intends that the provider timely and
appropriately respond to patient care needs, as they are presented, in
accordance with standards of care existing within the service area. In applying
the foregoing standards, the provider shall give due regard to the level of
discomfort and anxiety of the patient and/or parent.

In the event FHKC determines that AMERIGROUP, or its providers, has failed to
meet the access standards herein set forth, FHKC shall provide AMERIGROUP with
written notice of non-compliance. Such notice can be provided via facsimile or
other means, specifying the failure in such detail as will reasonably allow
AMERIGROUP to investigate and respond. Failure of AMERIGROUP to obtain
reasonable compliance or acceptable community care under the following
conditions shall constitute a breach of this agreement:

                  A.       immediately upon receipt of notice for emergency or
                           urgent problem; or

                  B.       within ten (10) days of receipt of notice for routine
                           visit access.

Such breach shall entitle FHKC to such legal and equitable relief as may be
appropriate. In particular, FHKC may direct its participants to obtain such
services outside AMERIGROUP provider network as specified in Section 3-2-1 of
this Agreement. AMERIGROUP shall be financially responsible for all services
under this provision.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 38 of 45

<PAGE>

                                    EXHIBIT F

                             ELIGIBILITY STANDARDS

                        PARTICIPANT ELIGIBILITY CRITERIA

The following eligibility criteria for participation in the Healthy Kids Program
must be met:

1.                The participants must be children who are age 5 through 18.
                  Participants who applied for coverage prior to July 1, 1998
                  are eligible for coverage through their 19th birthday.

                  For Broward, Miami-Dade, Palm Beach and Pinellas some children
                  may have age eligibility from age 3 to 5 based on date of
                  application to the program.

2.                Participants must meet the eligibility criteria established
                  under Section 624.91, Florida Statutes, and as implemented by
                  FHKC Board of Directors.

3.                Eligible participants may enroll during time periods
                  established by FHKC Board of Directors and in accordance
                  with Section 624.91, Florida Statutes.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 39 of 45

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EXHIBIT G

                             REPORTING REQUIREMENTS

AMERIGROUP shall provide the following reports and data tapes to FHKC according
to the time schedules detailed below. This information shall include all
services provided by AMERIGROUP'S subcontractors. AMERIGROUP is responsible for
ensuring that all subcontractors comply with these reporting requirements.

I.                Data Tape

                  A quarterly data tape shall be prepared that will contain the
                  following data fields. The tape shall reflect claims and
                  encounters entered during the quarter and shall be delivered
                  to FHKC according to the time table listed below. AMERIGROUP
                  shall also provide quarterly tapes that reflect claims run-off
                  once the Agreement between AMERIGROUP and FHKC terminates.

                       REQUIRED DATA FIELDS TO BE CAPTURED

                  -                 Provider's name, address and tax I.D. number
                                    (and payee's group number if applicable)

                  -                 Patient's name, address, social security
                                    number, I.D. number, birth date, and sex

                  -                 Third party payor information, including
                                    amount(s) paid by other payor(s).

                  -                 Primary and secondary diagnosis code(s) and
                                    treatment(s) related to diagnosis

                  -                 Date(s) of service

                  -                 Procedure code(s)

                  -                 Unit(s) of service

                  -                 Total charge(s)

                  -                 Total payment(s)

                  Additional required hospital fields include the following:

                  -                 Date and type of admission (emergency,
                                    outpatient, inpatient, newborn, etc.)

                  -                 For inpatient care: covered days and date of
                                    discharge

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 40 of 45

<PAGE>

                                                                       EXHIBIT G
                                                                     (CONTINUED)

                  Specific pharmacy fields include:

                  -                 Pharmacy name and tax I.D. number

                  -                 Other payor information

                  -                 Rx number and date filled

                  -                 National drug code, manufacturer number,
                                    item number, package size, quantity, days
                                    supply

                  -                 Prescriber's Florida Department of
                                    Professional Regulations number

                       REQUIRED TAPE FORMAT SPECIFICATIONS

                  The tape format is as follows or an alternative format as
                  mutually agreed upon by both parties:

                  -                 1600 BPI

                  -                 EBCDIC

                  -                 9 Track

                  -                 no labels

                  -                 each file not to exceed 100 megs in size

                  -                 fixed record length

                        TIME TABLE FOR DELIVERY OF TAPE

--------------------------------------------------------------------------------
For encounters and claims processed during:        Claims tape due to FHKC by:
--------------------------------------------------------------------------------
January 1 - March 31                               April 15
--------------------------------------------------------------------------------
April 1 - June 30                                  July 15
--------------------------------------------------------------------------------
July 1 - September 30                              October 15
--------------------------------------------------------------------------------
October 1 - December 31                            January 15
--------------------------------------------------------------------------------

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 41 of 45

<PAGE>

EXHIBIT H

          CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY,
                             AND VOLUNTARY EXCLUSION
                           CONTRACTS AND SUBCONTRACTS

THIS CERTIFICATION IS REQUIRED BY THE REGULATIONS IMPLEMENTING EXECUTIVE ORDER
12549, DEBARMENT AND SUSPENSION, SIGNED FEBRUARY 18,1986. THE GUIDELINES WERE
PUBLISHED IN THE MAY 29, 1987, FEDERAL REGISTER (52 FED. REG., PAGES
20360-20369).

                                  INSTRUCTIONS

A.                Each AMERIGROUP whose contract\subcontract equals or exceeds
$25,000 in federal monies must sign this certification prior to execution of
each contract\subcontract. Additionally, AMERIGROUPs who audit federal programs
must also sign, regardless of the contract amount. The Florida Healthy Kids
Corporation cannot contract with these types of AMERIGROUPs if they are debarred
or suspended by the federal government.

B.                This certification is a material representation of fact upon
which reliance is placed when this contract\subcontract is entered into. If it
is later determined that the signer knowingly rendered an erroneous
certification, the Federal Government may pursue available remedies, including
suspension and/or debarment.

C.                AMERIGROUP shall provide immediate written notice to the
contract manager at any time AMERIGROUP learns that its certification was
erroneous when submitted or has become erroneous by reason of changed
circumstances.

D.                The terms "debarred," "suspended," "ineligible," "person,"
"principal," and "voluntarily excluded," as used in this certification, have the
meanings set out in the Definitions and Coverage sections of rules implementing
Executive Order 12549. You may contact the contract manager for assistance in
obtaining a copy of those regulations.

E.                AMERIGROUP agrees by submitting this certification that, it
shall not knowingly enter into any subcontract with a person who is debarred,
suspended, declared ineligible, or voluntarily excluded from participation in
this contract/subcontract unless authorized by the Federal Government.

F.                AMERIGROUP further agrees by submitting this certification
that it will require each subcontractor of this contract/subcontract whose
payment will equal or exceed $25,000 in federal monies, to submit a signed copy
of this certification.

G.                The Florida Healthy Kids Corporation may rely upon a
certification of a AMERIGROUP that it is not debarred, suspended, ineligible, or
voluntarily excluded from contracting\subcontracting unless it knows that the
certification is erroneous.

H.                This signed certification must be kept in the contract
manager's file. Subcontractor's certifications must be kept at the contractor's
business location.

                                  CERTIFICATION

The prospective AMERIGROUP certifies, by signing this certification, that
neither he nor his principals is presently debarred, suspended, proposed for
debarment, declared ineligible, or voluntarily excluded from participation in
this contract/subcontract by any federal agency.

Where the prospective AMERIGROUP is unable to certify to any of the statements
in this certification, such prospective AMERIGROUP shall attach an explanation
to this certification.

Signature /s/ Imtiaz Sattaur                               Date 7-15-03
          -------------------------
Name and Title of Authorized Signee
IMTIAZ SATTAUR
PRESIDENT: CEO

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 42 of 45

<PAGE>

EXHIBIT I

                        CERTIFICATION REGARDING LOBBYING
           CERTIFICATION FOR CONTRACTS, GRANTS, LOANS AND COOPERATIVE
                                   AGREEMENTS

The undersigned certifies, to the best of his or her knowledge and belief, that:

(1)      No federal appropriated funds have been paid or will be paid, by or on
         behalf of the undersigned, to any person for influencing or attempting
         to influence an officer or employee of any agency, a member of
         congress, an officer or employee of congress, or an employee of a
         member of congress in connection with the awarding of any federal
         contract, the making of any federal grant, the making of any federal
         loan, the entering into of any cooperative agreement, and the
         extension, continuation, renewal, amendment, or modification of any
         federal contract, grant, loan, or cooperative agreement.

(2)      If any funds other than federal appropriated funds have been paid or
         will be paid to any person for influencing or attempting to influence
         an officer or employee of any agency, a member of congress, an officer
         or employee of congress, or an employee of a member of congress in
         connection with this federal contract, grant, loan, or cooperative
         agreement, the undersigned shall complete and submit Standard Form-LLL,
         "Disclosure Form to Report Lobbying," in accordance with its
         instructions.

(3)      The undersigned shall require that the language of this certification
         be included in the award documents for all subawards at all tiers
         (including subcontracts, subgrants, and contracts under grants, loans,
         and cooperative agreements) and that all subrecipients shall certify
         and disclose accordingly.

This certification is a material representation of fact upon which reliance was
placed when this transaction was made or entered into. Submission of this
certification is a prerequisite for making or entering into this transaction
imposed by section 1352, Title 31, U.S. Code. Any person who fails to file the
required certification shall be subject to a civil penalty of not less than
$10,000 and not more than $100,000 for each such failure.

/s/ IMTIAZ SATTAUR                                 7-15-03
------------------                                 -------
Signature                                          Date

IMTIAZ SATTAUR
-----------------------------
Name of Authorized Individual

--------------------------------------
Name and Address of Organization
AMERIGROUP FLORIDA, INC.
4200 W. CYPRESS ST.
TAMPA, FL. 33607

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 43 of 45

<PAGE>

EXHIBIT J

                                  CERTIFICATION

      REGARDING HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996

                                   COMPLIANCE

This certification is required for compliance with the requirements of the
Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The undersigned AMERIGROUP certifies and agrees as to abide by the following:

     1.  Protected Health Information. For purposes of this Certification,
         Protected Health Information shall have the same meaning as the term
         "protected health information" in 45 C.F.R. section 164.501, limited to
         the information created or received by AMERIGROUP from or on behalf of
         the FHKC.

     2.  Limits on Use and Disclosure of Protected Health Information (PHI)
         AMERIGROUP shall not use or disclose Protected Health Information other
         than as permitted by this Contract or by federal and state law.
         AMERIGROUP will use appropriate safeguards to prevent the use or
         disclosure of Protected Health Information for any purpose not in
         conformity with this Contract and federal and state law. AMERIGROUP
         will not divulge, disclose, or communicate in any manner any Protected
         Health Information to any third party without prior written consent
         from the FHKC. AMERIGROUP will report to the FHKC, within two (2)
         business days of discovery, any use or disclosure of Protected Health
         Information not provided for in this Contract of which AMERIGROUP is
         aware. A violation of this paragraph shall be a material violation of
         this Contract.

     3.  Use and Disclosure of Information for Management, Administration, and
         Legal Responsibilities. AMERIGROUP is permitted to use and disclose
         Protected Health Information received from FHKC for the proper
         management and administration of AMERIGROUP or to carry out the legal
         responsibilities of AMERIGROUP, in accordance with 45 C.F.R.
         164.504(e)(4). Such disclosure is only permissible where required by
         law, or where AMERIGROUP obtains reasonable assurances from the person
         to whom the Protected Health Information is disclosed that: (1) the
         Protected Health Information will be held confidentially, (2) the
         Protected Health Information will be used or further disclosed only as
         required by law or for the purposes for which it was disclosed to the
         person, and (3) the person notifies AMERIGROUP of any instance of which
         it is aware in which the confidentiality of the Protected Health
         Information has been breached.

     4.  Disclosure to Subcontractors or Agents. AMERIGROUP agrees to enter into
         a subcontract with any person, including a subcontractor or agent, to
         whom it provides Protected Health Information received from, or created
         or received by AMERIGROUP on behalf of, the FHKC. Such subcontract
         shall contain the same terms, conditions, and restrictions that apply
         to AMERIGROUP with respect to Protected Health Information.

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 44 of 45

<PAGE>

     5.  Access to Information. AMERIGROUP shall make Protected Health
         Information available in accordance with federal and state law,
         including providing a right of access to persons who are the subjects
         of the Protected Health Information.

     6.  Amendment and Incorporation of Amendments. AMERIGROUP shall make
         Protected Health Information available for amendment and to incorporate
         any amendments to the Protected Health Information in accordance with
         45 C.F.R. Section 164.526.

     7.  Accounting for Disclosures. AMERIGROUP shall make Protected Health
         Information available as required to provide an accounting of
         disclosures in accordance with 45 C.F.R. Section 164.528.

     8.  Access to Books and Records. AMERIGROUP shall make its internal
         practices, books, and records relating to the use and disclosure of
         Protected Health Information received from, or created or received by
         AMERIGROUP on behalf of, the FHKC to the Secretary of the Department of
         Health and Human Services or the Secretary's designee for purposes of
         determining compliance with the Department of Health and Human Services
         Privacy Regulations.

     9.  Termination. At the termination of this contract, AMERIGROUP shall
         return all Protected Health Information that AMERIGROUP still maintains
         in any form, including any copies or hybrid or merged databases made by
         AMERIGROUP; or with prior written approval of the FHKC, the Protected
         Health Information may be destroyed by AMERIGROUP after its use. If the
         Protected Health Information is destroyed pursuant to the FHKC's prior
         written approval, AMERIGROUP must provide a written confirmation of
         such destruction to the FHKC. If return or destruction of the Protected
         Health Information is determined not feasible by the FHKC, AMERIGROUP
         agrees to protect the Protected Health Information and treat it as
         strictly confidential.

CERTIFICATION

         AMERIGROUP and the Florida Healthy Kids Corporation have caused this
         Certification to be signed and delivered by their duly authorized
         representatives, as of the date set forth below.

         AMERIGROUP Name:

         /s/ IMTIAZ SATTAUR                         7-15-03
         ------------------                        ---------
         Signature                                 Date

         IMTIAZ SATTAUR
         -----------------------------------
         Name and Title of Authorized Signee
             President & CEO

AMERIGROUP                  Effective Date: October 1, 2003 - September 30, 2005

                                  Page 45 of 45

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