Document:

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                                                                  EXHIBIT 10.13

                                CONTRACT BETWEEN

                   THE OFFICE OF MEDICAID POLICY AND PLANNING,

             THE OFFICE OF THE CHILDREN'S HEALTH INSURANCE PROGRAM

                                       AND

                      HARMONY HEALTH PLAN OF ILLINOIS, INC.

      This Contract is made and entered into by and between the State of Indiana
(hereinafter "State" or "State of Indiana"), through the Office of Medicaid
Policy and Planning and the Office of Children's Health Insurance Program
(hereinafter "the Offices"), of the Indiana Family and Social Services
Administration, 402 West Washington Street, W382, Indianapolis, Indiana, and
Harmony Health Plan of Illinois, Inc., 125 South Wacker Drive, Suite 2900,
Chicago, Illinois, doing business as Harmony Health Plan of Indiana,
(hereinafter "Contractor").

      WHEREAS, I.C. 12-15-30-1 and I.C. 12-17.6 authorize the Offices to enter
into contracts to assist in the administration of the Indiana Medicaid and the
Indiana Children's Health Insurance Program (CHIP), respectively;

      WHEREAS, the State of Indiana desires to contract for services to arrange
for and to administer a risk-based managed care program (RBMC) for certain
Hoosier Healthwise enrollees in Packages A, B and C as procured through BAA 01
-28;

      WHEREAS this Contract contains the payment rates under which the
Contractor shall be paid and that these rates have been determined to be
actuarially sound and not in excess of the fee-for-service upper payment limit
(FFS-UPL) specified for risk contracts in 42 CFR 447.361;

      WHEREAS, the Contractor is willing and able to perform the desired
services for Hoosier Healthwise Packages A, B and C;

      THEREFORE, the parties to this Contract agree that the terms and
conditions specified below will apply to services in connection with this
contract, and such terms and conditions are as follows:

                           I. TERM AND RENEWAL OPTION

      This Contract is effective from January 1, 2001 through December 31, 2002.
At the discretion of the Offices the term may be extended for up to two
additional years. In no event shall the term exceed December 31, 2004.

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                                 II. DEFINITIONS

      For the purposes of this contract, terms no defined herein shall be
defined as they are in the documents incorporated in and attached to this
document, subject to the order of precedence spelled out in Section V of this
document.

"Contract" means this document and all documents or standards incorporated
herein, expressly including but not limited to the following documents appended
hereto and listed in chronological order and to be given precedence as described
in Section V of this document, entitled "Order of Precedence":

      Attachment 1 - BAA 01 -28,released July 31, 2000;

      Attachment 2 - Contractor's response to BAA 01-28, submitted September 25,
                     2000, excluding the following sections:
                     Section 5.3.8,
                     Section 5.4.4, Appendices A, B, C, D, H; Exhibit 5.4.4I;
                     Exhibit 5.4.4M; Exhibit 5.4.4O;

      and,

      Any other documents, standards, laws, rules or regulations incorporated by
      reference in the above materials, all of which are hereby incorporated by
      reference.

"Covered Services" means all services required to be arranged, administered,
managed or provided by or on behalf of the Contractor under this contract.

"Effective Date of Enrollment" means:

   -  The first day of the birth month of a newborn that is determined by the
      Offices to be an enrolled member;

   -  The fifteenth day of the current month for a member who has, between the
      twenty-sixth day of the previous month and the tenth day of the current
      month, been determined by the Offices to be an enrolled member; and,

   -  The first day of the following month for a member who has, between the
      eleventh day and the twenty-fifth day of a month, been determined by the
      Offices to be an enrolled member.

"Enrolled Member", or "Enrollee", means a Hoosier Healthwise-eligible member
who is listed by the Offices on the enrollment rosters to receive covered
services from the Contractor or its subcontractors, employees, agents, or
providers, as of the Effective Date of Enrollment, under this contract.

"Provider" means a physician, hospital, home health agency or any other
institution, or health or other professional person or entity, which
participates in the provision of services to an enrolled

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member under BAA 01-28, whether as an independent contractor, a subcontractor,
employee, or agent of the Contractor.

"Broad Agency Announcement", or "BAA", means BAA 01-28 for providers of managed
care services, released July 31, 2000.

                          III. DUTIES OF THE CONTRACTOR

A.    The Contractor agrees to assume financial risk for developing and managing
      a health care delivery system and for arranging or administering all
      Hoosier Healthwise covered services except, as set out in section 3.4.3 of
      the BAA, dental care, long-term institutional care, services provided as
      part of an individualized education plan (IEP) pursuant to the Individuals
      with Disabilities Education Act (IDEA) at 20 U.S.C. 1400 et seq.,
      behavioral health, and hospice services, in exchange for a per-enrollee,
      per-month fixed fee, to certain enrollees in Hoosier Healthwise Packages
      A, B and C. Wards of the State, foster children and children receiving
      adoption assistance may enroll on a voluntary basis and will not be
      subject to auto-assignment into the Hoosier Healthwise program. The
      Contractor must, at a minimum, furnish covered services up to the limits
      specified by the Medicaid and CHIP programs. The Contractor may exceed
      these limits. However, in no instance may any covered service's
      limitations be more restrictive than those which exist in the Indiana
      Medicaid fee-for-service program for Packages A and B, and the Children's
      Health Insurance Program for Package C.

B.    The Contractor agrees to perform all duties and arrange and administer the
      provision of all services as set out herein and contained in the BAA as
      attached and the Contractor's responses to the BAA as attached, all of
      which are incorporated into this Contract by reference. In addition, the
      Contractor shall comply with all policies and procedures defined in any
      bulletin, manual, or handbook yet to be distributed by the State or its
      agents insofar as those policies and procedures provide further
      clarification and are no more restrictive than any policies and procedures
      contained in the BAA and any amendments to the BAA. The Contractor agrees
      to comply with all pertinent state and federal statutes and regulations in
      effect throughout the duration of this Contract and as they may be amended
      from time to time.

C.    The Contractor agrees that it will not discriminate against individuals
      eligible to be covered under this Contract on the basis of health status
      or need for health services; and the Contractor may not terminate an
      enrollee's enrollment, or act to encourage an enrollee to terminate
      his/her enrollment, because of an adverse change in the enrollee's health.
      The disenrollment function will be carried out by a State contractor who
      is independent of the Contractor; therefore, any request to terminate an
      enrollee's enrollment must be approved by the Offices.

D.    The Contractor agrees that no services or duties owed by the Contractor
      under this Contract will be performed or provided by any person or entity
      other than the Contractor, except as contained in written subcontracts or
      other legally binding agreements. Prior to entering into

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      any such subcontract or other legally binding agreement, the Contractor
      shall, in each case, submit the proposed subcontract or other legally
      binding agreement to the Offices for prior review and approval. Prior
      review and approval of a subcontract or legally binding agreement shall
      not be unreasonably delayed by the Offices. The Offices shall, in
      appropriate cases and as requested by the Contractor, expedite the review
      and approval process. Under no circumstances shall the Contractor be
      deemed to have breached its obligations under this Contract if such breach
      was a result of the Offices' failure to review and approve timely any
      proposed subcontract or other legally binding agreement. If the Offices
      disapprove any proposed subcontract or other legally binding agreement,
      the Offices shall state with reasonable particularity the basis for such
      disapproval. No subcontract into which the Contractor enters with respect
      to performance under this Contract shall in any way relieve the Contractor
      of any responsibility for the performance of duties under this Contract.
      All subcontracts and amendments thereto executed by the Contractor under
      this Contract must meet the following requirements; any existing
      subcontracts or legally binding agreements which fail to meet the
      following requirements shall be revised to include the requirements within
      ninety (90) days from the effective date of this Contract:

      1.    Be in writing and specify the functions of the subcontractor.

      2.    Be legally binding agreements.

      3.    Specify the amount, duration and scope of services to be provided by
            the subcontractor.

      4.    Provide that the Offices may evaluate, through inspection or other
            means, the quality, appropriateness, and timeliness of services
            performed.

      5.    Provide for inspections of any records pertinent to the contract by
            the Offices.

      6.    Require an adequate record system to be maintained for recording
            services, charges, dates and all other commonly accepted information
            elements for services rendered to recipients under the contract.

      7.    Provide for the participation of the Contractor and subcontractor in
            any internal and external quality assurance, utilization review,
            peer review, and grievance procedures established by the Contractor,
            in conjunction with the Offices.

      8.    Provide that the subcontractor indemnify and hold harmless the State
            of Indiana, its officers, and employees from all claims and suits,
            including court costs, attorney's fees, and other expenses, brought
            because of injuries or damage received or sustained by any person,
            persons, or property that is caused by any act or omission of the
            Contractor and/or the subcontractors. The State shall not provide
            such indemnification to the subcontractor.

      9.    Identify and incorporate the applicable terms of this Contract and
            any incorporated documents. The subcontract shall provide that the
            subcontractor

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            agrees to perform duties under the subcontract, as those duties
            pertain to enrollees, in accordance with the applicable terms and
            conditions set out in this Contract, any incorporated documents, and
            all applicable state and federal laws, as amended.

E.    The Contractor agrees that, during the term of this Contract, it shall
      maintain, with any in- network provider rendering health care services
      under the BAA, provider service agreements which meet the following
      requirements; any existing provider service agreements which fail to meet
      the following requirements shall be revised to include the requirements
      within ninety (90) days from the effective date of this Contract. The
      provider service agreements shall:

      1.    Identify and incorporate the applicable terms of this Contract and
            any incorporated documents. Under the terms of the provider services
            agreement, the provider shall agree that the applicable terms and
            conditions set out in this Contract, any incorporated documents, and
            all applicable state and federal laws, as amended, govern the duties
            and responsibilities of the provider with regard to the provision of
            services to enrollees.

      2.    Reference a written provider claim resolution procedure as set out
            in section III.Q. below.

F.    The Contractor agrees that all laboratory testing sites providing services
      under this Contract must have a valid Clinical Laboratory Improvement
      Amendments (CLIA) certificate and comply with the CLIA regulations at 42
      C.F.R. Part 493.

G.    The Contractor agrees that it shall:

      1.    Retain, at all times during the period of this Contract, a valid
            Certificate of Authority under applicable State laws issued by the
            State of Indiana Department of Insurance.

      2.    Ensure that, during the term of this Contract, each provider
            rendering health care services under the BAA is authorized to do so
            in accordance with the following:

            a.    The provider must maintain a current Indiana Health Coverage
                  Programs (IHCP) provider agreement and must be duly licensed
                  in accordance with the appropriate state licensing board and
                  shall remain in good standing with said board.

            b.    If a provider is not authorized to provide such services under
                  a current IHCP provider agreement or is no longer licensed by
                  said board, the Contractor is obligated to terminate its
                  contractual relationship authorizing or requiring such
                  provider to provide services under the BAA. The Contractor
                  must terminate its contractual relationship with the provider
                  as soon as the Contractor has knowledge of the termination of
                  the provider's license or the IHCP provider agreement.

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      3.    Comply with the specific requirements for Health Maintenance
            Organizations (HMOs) eligible to receive Federal Financial
            Participation (FFP) under Medicaid, as listed in the State
            Organization and General Administration Chapter of the Health Care
            Financing Administration (HCFA) Medicaid Manual. These requirements
            include, but are not limited to the following:

            a.    The Contractor shall meet the definition of HMO as specified
                  in the Indiana State Medicaid Plan.

            b.    Throughout the duration of this Contract, the Contractor shall
                  satisfy the Chicago Regional Office of the Health Care
                  Financing Authority (hereinafter called HCFA) that the
                  Contractor is compliant with the Federal requirements for
                  protection against insolvency pursuant to 42 CFR 434.20(c)(3)
                  and 434.50(a), the requirement that the Contractor shall
                  continue to provide services to Contractor enrollees until the
                  end of the month in which insolvency has occurred, and the
                  requirement that the Contractor shall continue to provide
                  inpatient services until the date of discharge for an enrollee
                  who is institutionalized when insolvency occurs. The
                  Contractor shall meet this requirement by posting a
                  performance bond pursuant to Section VII, paragraph C, of this
                  Contract, and satisfying the statutory reserve requirements of
                  the Indiana Department of Insurance.

            c.    The Contractor shall comply with, and shall exclude from
                  participation as either a provider or subcontractor of the
                  Contractor, any entity or person that has been excluded under
                  the authority of Sections 1124A, 1128 or 1128A of the Social
                  Security Act or does not comply with the requirements of
                  Section 1128(b) of the Social Security Act.

            d.    In the event that the HCFA determines that the Contractor has
                  violated any of the provisions of 42 CFR 434.67(a), HCFA may
                  deny payment of FFP for new enrollees of the HMO under 42 USC
                  1396b(m)(5)(B)(ii). The Offices shall automatically deny State
                  payment for new enrollees whenever, and for so long as,
                  Federal payment for such enrollees has been denied.

H.    The Contractor shall submit proof, satisfactory to the Offices, of
      indemnification of the Contractor by the Contractor's parent corporation,
      if applicable, and by all of its subcontractors.

I.    The Contractor shall submit proof, satisfactory to the Offices, that all
      subcontractors will hold the State harmless from liability under the
      subcontract. This assurance in no way relieves the Contractor of any
      responsibilities under the BAA or this Contract.

J.    The Contractor agrees that, prior to initially enrolling any Hoosier
      Healthwise Package A, B or C enrollees, it shall go through and
      satisfactorily complete the readiness review as described in the BAA. The
      required readiness review shall begin before the contract

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      between the Contractor and the State is finalized and executed. Within
      ninety (90) days from the effective date of this Contract, the Contractor
      shall make a good faith effort to resolve, to the satisfaction of the
      Offices, any outstanding issues brought to the Contractor's attention by
      the Offices as a result of the readiness review.

K.    The Contractor shall establish and maintain a quality improvement program
      that meets the requirements of 42 CFR 434.34, as well as other specific
      requirements set forth in the BAA. The Offices and the HCFA may evaluate
      through inspection or other means, including but not limited to, the
      review of the quality assurance reports required under this Contract, and
      the quality, appropriateness, and timeliness of services performed under
      this Contract. The Contractor agrees to participate and cooperate, as
      directed by the Offices, in the annual external quality review of the
      services furnished by the Contractor.

L.    In accordance with 42 CFR 434.28, the Contractor agrees that it and any of
      its subcontractors shall comply with the requirements, if applicable, of
      42 CFR 489, Subpart I, relating to maintaining and distributing written
      policies and procedures respecting advance directives. The Contractor
      shall distribute policies and procedures to adult individuals during the
      enrollee enrollment process and whenever there are revisions to these
      policies and procedures. The Contractor shall make available for
      inspection, upon reasonable notice and request by the Offices,
      documentation concerning its written policies, procedures and distribution
      of such written procedures to enrollees.

M.    Pursuant to 42 C.F.R. 417.479(a), the Contractor agrees that no specific
      payment can be made directly or indirectly under a physician incentive
      plan to a physician or physician group as an inducement to reduce or limit
      medically necessary services furnished to an individual enrollee. The
      Contractor must disclose to the State the information on provider
      incentive plans listed in 42 C.F.R. 417.479 (h)(l) and 417.479(i) at the
      times indicated at 42 C.F.R. 434.70(a)(3), in order to determine whether
      the incentive plan meets the requirements of 42 C.F.R. 417(d)-(g). The
      Contractor must provide the capitation data required under paragraph
      (h)(l)(vi) for the previous calendar year to the State by
      application/contract renewal of each year. The Contractor will provide the
      information on its physician incentive plan(s) listed in 42 C.F.R.
      417.479(h)(3) to any enrollee upon request.

N.    The Contractor must not prohibit or restrict a health care professional
      from advising an enrollee about his/her health status, medical care, or
      treatment, regardless of whether benefits for such care are provided under
      his Contract, if the professional is acting within the lawful scope of
      practice. However, this provision does not require the Contractor to
      provide coverage of a counseling or referral service if the Contractor
      objects to the service on moral or religious grounds and makes available
      information on its policies to potential enrollees and enrollees within
      ninety (90) days after the date the Contractor adopts a change in policy
      regarding such counseling or referral service.

O.    In accordance with 42 U.S.C. Section 1396u-2(b)(6), the Contractor agrees
      that an enrollee may not be held liable for the following:

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      1.    Debts of the Contractor, or its subcontractors, in the event of any
            organization's insolvency;

      2.    Services provided to the enrollee in the event the Contractor fails
            to receive payment from the Offices for such services or in the
            event a provider fails to receive payment from the Contractor or
            Offices; or

      3.    Payments made to a provider in excess of the amount that would be
            owed by the enrollee if the Contractor had directly provided the
            services.

P.    The Offices may from time to time request and the Contractor, and all of
      its subcontractors, agree that the Contractor, or its subcontractors,
      shall prepare and submit additional compilations and reports as requested
      by the Offices. Such requests will be limited to situations in which the
      desired data is considered essential and cannot be obtained through
      existing Contractor reports. The Contractor, and all of its
      subcontractors, agree that a response to the request shall be submitted
      within thirty (30) days from the date of the request, or by the Offices'
      requested completion date, whichever is earliest. The response shall
      include the additional compilations and reports as requested, or the
      status of the requested information and an expected completion date. When
      such requests pertain to legislative inquiries or expedited inquiries from
      the Office of the Governor, the additional compilations and reports shall
      be submitted by the Offices' requested completion date. Failure by the
      Contractor, or its subcontractors, to comply with response time frames
      shall be considered grounds for the Offices to pursue the provisions
      outlined in Section 3.16.5 of the BAA. In the event that delays in
      submissions are a consequence of a delay by the Offices or the Medicaid
      Fiscal Agent, the time frame for submission shall be extended by the
      length of time of the delay.

Q.    The Contractor shall establish a written claim resolution procedure
      applicable to both in-network and out-of-network providers which shall be
      distributed to all in-network providers and shall be available to out-of
      network providers upon request. The Contractor shall negotiate the terms
      of a written claim resolution procedure with in-network providers; but if
      the Contractor and an in-network provider are unable to reach agreement on
      the terms of such procedure, the out-of-network provider claims
      resolution procedure approved by the Offices under this section shall
      govern the resolution of such in-network provider's claims with the
      Contractor. The written claim resolution procedure for out-of-network
      providers (and in-network providers in the absence of an agreement) must
      be submitted to the Offices for approval within thirty (30) days from the
      effective date of this Contract and must include, at a minimum, the
      following elements:

      1.    A statement noting that providers objecting to determinations
            involving their claims will be provided procedural due process
            through the Contractor's claim resolution procedure.

      2.    A description of both the informal and formal claim resolution
            procedures that will be available to resolve a provider's objection
            to a determination involving the provider's claim.

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      3.    An informal claim resolution procedure which:

            a.    shall be available for the resolution of claims submitted to
                  the Contractor by the provider within the allowable claims
                  submission time limits under federal and state law;

            b.    shall precede the formal :claim resolution procedure;

            c.    shall be used to resolve a provider's objection to a
                  determination by the Contractor involving the provider's
                  claim, including a provider's objection to:

                  (1) any determination by the Contractor regarding payment for
                  a claim submitted by the provider including the amount of such
                  payment; and

                  (2) the Contractor's determination that a claim submitted by
                  the provider lacks sufficient supporting information, records,
                  or other materials;

            d.    may, at the election of a provider, be utilized to determine
                  the payment due for a claim in the event the Contractor fails,
                  within thirty (30) days after the provider submits the claim,
                  to notify the provider of:

                  (1) its determination regarding payment for the provider's
                  claim; or

                  (2) its determination that the provider's claim lacked
                  sufficient supporting information, records, or other
                  materials;

            e.    shall be commenced by a provider submitting to the Contractor:

                  (1) within sixty (60) days after the provider's receipt of
                  written notification of the Contractor's determination
                  regarding the provider's claim, the provider's written
                  objection to the Contractor's determination and an explanation
                  of the objection; or

                  (2) within sixty (60) days after the Contractor fails to make
                  a determination as described in subparagraph (d), a written
                  notice of the provider's election to utilize the informal
                  claims resolution procedure under subparagraph (d) above;

            f.    shall allow providers and the Contractor to make verbal
                  inquiries and to otherwise informally undertake to resolve the
                  matter submitted for resolution by the provider pursuant to
                  Paragraph 3.e.

      4.    In the event the matter submitted for informal resolution is not
            resolved to the provider's satisfaction within thirty (30) days
            after the provider commenced the informal claim resolution
            procedure, the provider shall have sixty (60) days from that point
            to submit to the Contractor written notification of the provider's
            election to submit the matter to the formal claim resolution
            procedure. The

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            provider's notice must specify the basis of the provider's dispute
            with the Contractor. The Contractor's receipt of the provider's
            written notice shall commence the formal claim resolution procedure.

      5.    The formal claim resolution procedure shall be conducted by a panel
            of one (1) or more individuals selected by the Contractor. Each
            panel must be knowledgeable about the policy, legal, and clinical
            issues involved in the matter that is the subject of the formal
            claim resolution procedure. An individual who has been involved in
            any previous consideration of the matter by the Contractor may not
            serve on the panel. The Contractor's medical director, or another
            licensed physician designated by the medical director, shall serve
            as a consultant to the panel in the event the matter involves a
            question of medical necessity or medical appropriateness.

      6.    The panel shall consider all information and material submitted to
            it by the provider that bears directly upon an issue involved in the
            matter that is the subject of the formal claim resolution procedure.
            The panel shall allow the provider an opportunity to appear in
            person before the panel, or to communicate with the panel through
            appropriate other means if the provider is unable to appear in
            person, and question the panel in regard to issues involved in the
            matter. The provider shall not be required to be represented by an
            attorney for purposes of the formal claim review procedure.

      7.    Within forty-five (45) days after the commencement of the formal
            claim resolution procedure, the panel shall deliver to the provider
            the panel's written determination of the matter before it. Such
            determination shall be the Contractor's final position in regard to
            the matter. The written determination shall include, as applicable,
            a detailed explanation of the factual, legal, policy and clinical
            basis of the panel's determination.

      8.    In the event the panel fails to deliver to the provider the panel's
            written determination within forty-five (45) days after the after
            the commencement of the formal claim resolution procedure, such
            failure on the part of the panel shall have the effect of a denial
            by the panel of the provider's claim.

      9.    The panel's written determination shall include notice to the
            provider of the provider's right, within sixty (60) days after the
            provider's receipt of the panel's written determination, to submit
            to binding arbitration the matter that was the subject of the formal
            claim resolution procedure. The provider shall also have the right
            to submit the matter to binding arbitration if the panel has failed
            to deliver its written determination to the provider within the
            required forty-five (45) day period.

      10.   Any procedure involving binding arbitration must be conducted in
            accordance with the rules and regulations of the American Health
            Lawyers Association (AHLA), pursuant to the Uniform Arbitration Act
            as adopted in the State of Indiana at I.C. 34-57-2, unless the
            provider and Contractor mutually agree to some other binding
            resolution procedure. However, any Contractor and provider

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            that are subject to statutorily imposed arbitration procedures for
            the resolution of these claims shall be required to follow the
            statutorily imposed arbitration procedures, but only to the extent
            those procedures differ from, or are irreconcilable with, the rules
            and regulations of the American Health Lawyers Association (AHLA),
            pursuant to the Uniform Arbitration Act as adopted in the State of
            Indiana at I.C. 34-57-2. It is the intent of the Offices that the
            fees and expenses of arbitration be borne by the non-prevailing
            party.

      11.   The provider and Contractor may agree, within the requisite sixty
            (60) day time period, to include in a single arbitration proceeding
            matters from multiple formal claim resolution procedures involving
            the Contractor and the provider. If the provider and Contractor are
            not able to agree, the arbitrator, as selected in Paragraph 10
            above, shall have the discretion to include in a single arbitration
            proceeding matters from multiple formal claim resolution procedures
            involving the Contractor and the provider.

      12.   For claims disputed under Paragraph 3.c.(2) above:

            a.    a claim that is finally determined through the Contractor's
                  claim resolution procedure (including arbitration) not to lack
                  sufficient supporting documentation shall be processed by the
                  Contractor within thirty (30) days after such final
                  determination. The processing of the claim and the
                  Contractor's determination involving the claim shall be
                  subject to Paragraph 3. c. and Paragraph 3. d. and the
                  Contractor's formal claim resolution procedure and binding
                  arbitration.

            b.    a claim that is finally determined through the Contractor's
                  claim resolution procedure (including arbitration) to lack
                  sufficient supporting documentation shall be processed by the
                  Contractor within thirty (30) days after the provider submits
                  to the Contractor the requisite supporting documentation. The
                  provider shall have thirty (30) days after written notice of
                  the final determination establishing that the claim lacked
                  sufficient supporting documentation is received by the
                  provider to submit the requisite supporting documentation. The
                  processing of the claim and the Contractor's determination
                  involving the claim shall be subject to Paragraph 3. c. and
                  Paragraph 3. d. and the Contractor's formal claim resolution
                  procedure and binding arbitration.

      13.   A Contractor may not include in its claim resolution procedures for
            out-of-network providers (and in-network providers in the absence
            of an agreement) elements that restrict or diminish the claim review
            procedures, time periods or subject matter provided for in
            paragraphs 1 through 12 above.

      14.   A Contractor shall maintain a log of all informally and formally
            filed provider objections to determinations involving claims. The
            logged information shall include the provider's name, date of
            objection, nature of the objection, and

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            disposition. The Contractor shall submit quarterly reports to the
            Offices regarding the number and type of provider objections.

                                   IV. PAYMENT

A.    In consideration of the services to be performed by the Contractor, the
      Offices agree to pay the Contractor the following amounts per month per
      enrolled member as contained in the Offices' capitation payment listing
      based upon the capitation rates by category as listed below:

                                CAPITATION RATES

<TABLE>
<CAPTION>
  CATEGORY                PACKAGES A AND B             PACKAGE C
-------------            ------------------        ------------------
<S>                      <C>                       <C>
Newborns                 $   355.20                $   127.99
Preschool                $    71.80                $    82.30
Children                 $    58.22                $    68.88
Adolescents              $    87.58                $    97.79
Adult Males              $   247.27
Adult Females            $    93.78
Deliveries               $ 3,297.96/delivery       $ 3,297.96/delivery
</TABLE>

      These capitation rates will be adjusted by the medical component of the
      Consumer Price Index. The initial adjustment will occur in January 2002,
      with subsequent adjustments to occur annually thereafter. In the event
      that the Offices adjust the fee-for-service (FFS) rates, the Offices may,
      in its sole discretion, further adjust the capitation rates in accordance
      with the FFS adjustment, based on the same methodology or percentage
      change used for the FFS adjustment. If the Offices make such an
      adjustment, it shall apply only to the specific service component of the
      capitation rate that corresponds to the FFS adjustment. Any capitation
      rates adjusted due to a change in the FFS program may be further adjusted
      to ensure actuarial soundness. All adjustments are subject to federal
      regulations that this Contract may not exceed the FFS Upper Payment Limit
      (UPL).

B.    All payment obligations of the Offices are subject to the encumbrance of
      monies and shall be paid to the Contractor on the first Wednesday after
      the fifteenth of the month.

C.    The capitation payment will be prospective, based upon the number of
      enrollees assigned to the Contractor as of the first of the month. The
      Offices will establish an administrative procedure to allow retroactive or
      other payment adjustments as necessary to implement this contract.

D.    The Contractor will be provided a capitation payment listing which
      includes a detailed listing of all enrollees for which the Contractor is
      receiving a capitation payment.

E.    The parties agree that the Offices have the option of renegotiating
      actuarially sound capitation rates annually. Rates revised under this
      provision shall be implemented only

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<PAGE>

      after a contract amendment is executed and approved. Contractor may submit
      information for the Offices' review and consideration.

F.    It is understood and agreed upon by the parties that all obligations of
      the State of Indiana are contingent upon the availability and continued
      appropriation of State and Federal funds, and in no event shall the State
      of Indiana be liable for any payments in excess of available appropriated
      funds.

G.    When the Director of the State Budget Agency makes a written determination
      that funds are not appropriated or otherwise available to support
      continuation of performance of this Contract, the Contract shall be
      cancelled. A determination by the State Budget Director that funds are not
      appropriated or otherwise available to support continuation of performance
      shall be final and conclusive.

                             V. ORDER OF PRECEDENCE

Any inconsistency or ambiguity in this Contract shall be resolved by giving
precedence in the following order:

      1)    The express terms of this document;

      2)    Attachment 1 - BAA 01-28, released July 31, 2000;

      3)    Attachment 2 - the Contractor's response to the BAA;

      4)    Any other documents, standards, laws, rules or regulations
            incorporated by reference in the above materials, all of which are
            hereby incorporated by reference.

                                   VI. NOTICE

A.    Whenever notice is required to be given to the other party, it shall be
      made in writing and delivered to that party. Delivery shall be deemed to
      have occurred if a signed receipt is obtained when delivered by hand or
      according to the date on the return receipt if sent by certified mail,
      return receipt requested. Notices shall be addressed as follows:

      In case of notice to the Contractor:   In case of notice to the Offices:

      Ancelmo E. Lopes, President/CEO        Sharon Steadman, Managed Care
      Harmony Health Plan of Illinois, Inc.  Director Office of Medicaid Policy
      125 South Wacker Drive, Suite 2900     and Planning Family and Social
      Chicago, Illinois 60606                Services Administration 402
                                             W. Washington St., IGCS W382, MS07
                                             Indianapolis, Indiana 46204

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                                 Page 13 of 24

<PAGE>

B.    Said notices shall become effective on the date of delivery or the date
      specified within the notice, whichever comes later. Either party may
      change its address for notification purposes by mailing a notice stating
      the change and setting forth the new address.

                          VII. MISCELLANEOUS PROVISIONS

A.    Entire Agreement. This Contract constitutes the entire agreement between
      the parties with respect to the subject matter; all prior agreements,
      representations, statements, negotiations, and undertakings are superseded
      hereby.

B.    Changes. Any changes to this Contract shall be by formal amendment of this
      Contract signed by all parties required by Indiana law.

C.    Performance Bond. The Contractor agrees that a performance bond in the
      amount of five hundred thousand dollars ($500,000.00) will be delivered to
      the Indiana Department of Administration (IDOA) within ten (10) calendar
      days of the execution of this contract. Said bond will be in the form of a
      cashier's check, a certified check, or a surety bond executed by a surety
      company authorized to do business in the State of Indiana as approved by
      the Insurance Department of State of Indiana. No other check or surety
      will be accepted. The performance bond shall be made payable to the IDOA
      and shall be effective for the duration of the contract and any extensions
      thereof. The State reserves the right to increase the performance bond
      amount if enrollment levels indicate the need for higher liquidated
      damages.

D.    Access To Records. The Contractor and any subcontractor shall maintain all
      books, documents, papers and records which are directly pertinent to this
      Contract and shall make such materials available at all reasonable times
      during the contract period and for three (3) years from the date of final
      payment under the Contract or until all pending matters are closed,
      whichever date is later, for inspection by the Office, or any other duly
      authorized representative of the State of Indiana or the Federal
      government. Copies thereof shall be furnished at no cost to the State if
      requested.

E.    Assignment. The Contractor shall not assign or subcontract the whole or
      any part of this Contract without the State's prior written consent. Such
      consent will not be unreasonably withheld. The Contractor may assign its
      right to receive payments to such third parties as the Contractor may
      desire without the prior written consent of the State, provided that the
      Contractor gives written notice (including evidence of such assignment) to
      the State thirty (30) days in advance of any payment so assigned. The
      assignment shall cover all unpaid amounts under this Contract and shall
      not be made to more than one party.

F.    Authority to Bind Contractor. Notwithstanding anything in this Contract to
      the contrary, the signatory for the Contractor represents that he/she has
      been duly authorized to execute contracts on behalf of the Contractor
      designed above, has filed proof of such authority with the Indiana
      Department of Administration, 402 West Washington Street, W469,

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<PAGE>

      Indianapolis, Indiana 46204, and has obtained all necessary or applicable
      approval from the home office of the Contractor to make this Contract
      fully binding upon the Contractor when his/her signature is affixed and is
      not subject to home office acceptance hereto and accepted by the State of
      Indiana.

G.    Compliance with Laws. The Contractor agrees to comply with all applicable
      Federal, State, and local laws, rules, regulations, or ordinances, and all
      provisions required thereby to be included herein are hereby incorporated
      by reference. The enactment of any state or federal statute or the
      promulgation of regulations thereunder after execution of this Contract
      shall be reviewed by the State and the Contractor to determine whether the
      provisions of this Contract require formal modification.

H.    Compliance with Civil Rights Laws. The Contractor and its subcontractors
      hereby assure that they will comply with all Federal and Indiana Civil
      Rights Laws, including, but not limited to, I.C. 22-9-1-10 and the Civil
      Rights Act of 1964, to the end that they shall not discriminate against
      any employee or applicant for employment, to be employed in the
      performance of this Contract, with respect to his/her hire, tenure, terms,
      conditions or privileges of employment or any matter directly or
      indirectly related to employment, because of his/her race, color,
      religion, sex, disability, national origin, ancestry or status as a
      veteran. The Contractor understands that the State of Indiana is a
      recipient of federal funds. Pursuant to that understanding, the
      Contractor, and its subcontractors, if any, agree that if the Contractor
      employs 50 or more employees and does at least $50,000 worth of business
      with the State of Indiana and is not exempt, the Contractor will comply
      with the reporting requirements of 41 CFR 60-1.7, if applicable. Breach of
      this covenant may be regarded as a material breach of the Contract. The
      State of Indiana shall comply with Section 202 of Executive Order 11246,
      as amended, and 41 CFR 60-741, as amended, which are incorporated herein
      by specific reference.

I.    Assurance of Compliance with Civil Rights Act of 1964, Section 504 of the
      Rehabilitation Act of 1973 and the Age Discrimination Act of 1975, the
      Americans with Disabilities Act of 1990 and Title IX of the Education
      Amendments of 1972: The Contractor agrees that it, and all of its
      subcontractors and providers, will comply with the following:

      1.    Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352), as
            amended, and all requirements imposed by or pursuant to the
            Regulation of the Department of Health and Human Services (45 C.F.R.
            Part 80), to the end that, in accordance with Title VI of that Act
            and the Regulation, no person in the United States shall on the
            ground of race, color, or national origin, be excluded from
            participation in, be denied the benefits of, or be otherwise
            subjected to discrimination under any program or activity for which
            the Contractor receives Federal financial assistance under this
            Contract.

      2.    Section 504 of the Rehabilitation Act of 1973 (Pub. L. 93-112), as
            amended, and all requirements imposed by or pursuant to the
            Regulation of the Department of Health and Human Services (45 C.F.R.
            Part 84), to the end that, in accordance with Section 504 of that
            Act and the Regulation, no otherwise qualified handicapped
            individual in

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                                 Page 15 of 24

<PAGE>

            the United States shall, solely by reason of his/her handicap, be
            excluded from participation in, be denied the benefits of, or be
            subjected to discrimination under any program or activity for which
            the Contractor receives Federal financial assistance under this
            Contract.

      3.    The Age Discrimination Act of 1975 (Pub. L. 94-135), as amended, and
            all requirements imposed by or pursuant to the Regulation of the
            Department of Health and Human Services (45 C.F.R. Part 91), to the
            end that, in accordance with the Act and the Regulation, no person
            in the United States shall, on the basis of age, be denied the
            benefits of, be excluded from participation in, or be subjected to
            discrimination under any program or activity for which the
            Contractor receives Federal financial assistance under this
            Contract.

      4.    The Americans with Disabilities Act of 1990 (Pub. L. 101-336), as
            amended, and all requirements imposed by or pursuant to the
            Regulation of the Department of Justice (28 C.F.R. 35.101 et seq.),
            to the end that in accordance with the Act and Regulation, no person
            in the United States with a disability shall, on the basis of the
            disability, be excluded from participation in, be denied the
            benefits of, or otherwise be subjected to discrimination under any
            program or activity for which the Contractor receives Federal
            financial assistance under this Contract.

      5.    Title IX of the Education Amendments of 1972, as amended (20 U.S.C.
            Sections 1681-1683, and 1685-1686), and all requirements imposed by
            or pursuant to regulation, to the end that, in accordance with the
            Amendments, no person in the United States shall, on the basis of
            sex, be excluded from participation in, be denied the benefits of,
            or otherwise be subjected to discrimination under any program or
            activity for which the Contractor receives Federal financial
            assistance under this Contract.

      The Contractor agrees that compliance with this assurance constitutes a
      condition of continued receipt of Federal financial assistance, and that
      it is binding upon the Contractor, its successors, transferees and
      assignees for the period during which such assistance is provided. The
      Contractor further recognizes that the United States shall have the right
      to seek judicial enforcement of this assurance.

J.    Conflict of Interest

      1.    As used in this section:

            "Immediate family" means the spouse and the unemancipated children
            of an individual.

            "Interested party" means:

            a.    The individual executing this Contract;

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<PAGE>

            b.    An individual who has an interest of three percent (3%) or
                  more of the Contractor if the Contractor is not an individual;
                  or

            c.    Any member of the immediate family of an individual specified
                  under subdivision a. or b.

            "Department" means the Indiana Department of Administration.

            "Commission" means the State Ethics Commission.

      2.    The Department may cancel this Contract without recourse by the
            Contractor if any interested party is an employee of the State of
            Indiana.

      3.    The Department will not exercise its right of cancellation under
            section 2 above if the Contractor gives the Department an opinion by
            the Commission indicating that the existence of this Contract and
            the employment by the State of Indiana of the interested party does
            not violate any statute or code relating to ethical conduct of state
            employees. The Department may take action, including cancellation of
            this Contract consistent with an opinion of the Commission obtained
            under this section.

      4.    The Contractor has an affirmative obligation under this Contract to
            disclose to the Department when an interested party is or becomes an
            employee of the State of Indiana. The obligation under this section
            extends only to those facts which the Contractor knows or reasonably
            could know.

K.    Confidentiality of Data and Property Rights. The Contractor further agrees
      that all information, data, findings, recommendations, and proposals, by
      whatever name described and by whatever form therein, secured developed,
      written, or produced by the Contractor in furtherance of this Contract,
      shall be the property of the State of Indiana and that the Contractor
      shall take such action as is necessary under law to preserve such property
      rights in and of the State of Indiana while such property is within the
      control and/or custody of the Contractor.

      By this Contract the Contractor specifically waives and/or releases to the
      State of Indiana any cognizable property right in the Contractor to
      copyright or patent such information, data, findings, recommendations, and
      proposals, that are developed exclusively in furtherance of the Contract
      and not developed by the Contractor for its other lines of business and
      incidentally applied to its Hoosier Healthwise line of business.

      The parties acknowledge that it is in their interests for the Contractor
      to develop new techniques and advances in managed care. Therefore, the
      Offices hereby grant to the Contractor, subject to the confidentiality
      obligations set forth in this Contract, as well as those imposed by
      federal and state laws and regulations, a perpetual license to use
      materials, models, methodologies and techniques developed under this
      contract.

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<PAGE>

L.    Confidentiality of State of Indiana Information. The Contractor
      understands and agrees that data, materials and information disclosed to
      the Contractor may contain confidential and protected data; therefore, the
      Contractor promises and assures that data, material, and information
      gathered, based upon or disclosed to the Contractor for the purpose of
      this Contract will not be disclosed to others or discussed with other
      parties without the prior written consent of the State of Indiana.

M.    Conveyance of Documents And Continuation of Existing Activity: Should the
      Contract for whatever reason, (i.e. completion of a contract with no
      renewal, or termination of service by either party), be discontinued and
      the activities as provided for in the Contract for services cease, the
      Contractor and any subcontractors employed by the terminating Contractor
      in the performance of the duties of the Contract shall promptly convey to
      the State of Indiana, copies of all vendor working papers, data collection
      forms, reports, charts, programs, cost records and all other material
      related to work performed on this Contract.

      The Contractor and the Office shall convene immediately upon notification
      of termination or non-renewal of the Contract to determine what work shall
      be suspended, what work shall be completed, and the timeframe for
      completion and conveyance. The Office will then provide the Contractor
      with a written schedule of the completion and conveyance activities
      associated with termination. Documents/materials associated with suspended
      activities shall be conveyed by the Contractor to the State of Indiana
      upon five days' notice from the State of Indiana. Upon completion of those
      remaining activities noted on the written schedule, the Contractor shall
      also convey all documents and materials to the State of Indiana upon five
      days' notice from the State of Indiana.

N.    Disputes. Should any disputes arise with respect to this Contract, the
      Contractor and the State of Indiana agree to act immediately to resolve
      any such disputes. Time is of the essence in the resolution of disputes.

      The Contractor agrees that, the existence of a dispute notwithstanding, it
      will continue without delay to carry out all its responsibilities under
      this Contract which are not affected by the dispute. Should the Contractor
      fail to continue without delay to perform its responsibilities under this
      Contract in the accomplishment of all non-disputed work, any additional
      costs incurred by the Contractor or the State of Indiana as a result of
      such failure to proceed shall be borne by the Contractor, and the
      Contractor shall make no claim against the State of Indiana for such
      costs. If the Contractor and the State of Indiana cannot resolve a dispute
      within ten (10) working days following notification in writing by either
      party of the existence of said dispute, then the following procedure shall
      apply:

      1.    The parties agree to resolve such matters through submission of
            their dispute to the Commissioner of the Indiana Department of
            Administration who shall reduce her decision to writing and mail or
            otherwise furnish a copy thereof to the Contractor and the State of
            Indiana within ten (10) working days after presentation of such
            dispute for her decision. Her decision shall be final and conclusive
            unless the Contractor mails or otherwise furnishes to the
            Commissioner of Administration, within ten (10) working days after
            receipt

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<PAGE>

            of the Commissioner's decision, a written appeal. Within ten (10)
            working days of receipt by the Commissioner, she may reconsider her
            decision. If no reconsideration is provided within ten (10) working
            days the Contractor may submit the dispute to an Indiana court of
            competent jurisdiction.

      2.    The State of Indiana may withhold payments on disputed items pending
            resolution of the dispute. The non-payment by the State of Indiana
            to the Contractor of one or more invoices not in dispute shall not
            constitute default, however, the Contractor may bring suit to
            collect such monies without following the disputes procedure
            contained herein.

O.    Drug-Free Workplace

      1.    The Contractor hereby covenants and agrees to make a good faith
            effort to provide and maintain during the term of this Contract a
            drug-free workplace. Contractor will give written notice to the
            Office and the Indiana Department of Administration within ten (10)
            days after receiving actual notice that an employee of the
            Contractor has been convicted of a criminal drug violation occurring
            in the Contractor's workplace.

      2.    In addition to subparagraph (1), if the total amount set forth in
            this Contract is in excess of twenty-five thousand dollars
            ($25,000.00), the Contractor hereby further agrees that this
            Contract is expressly subject to the terms, conditions, and
            representations contained in the Drug-Free Workplace Certification.
            The Certification is hereby executed by the Contractor in
            conjunction with this Contract and set forth in this Contract.

      3.    It is further expressly agreed that the failure of the Contractor to
            in good faith comply with the terms of subparagraph (1) above, or
            falsifying or otherwise violating the terms of the certification
            referenced in subparagraph (2) above shall constitute a material
            breach of this Contract, and shall entitle the State of Indiana to
            impose sanctions against the Contractor including, but not limited
            to, suspension of contract payment, termination of this Contract
            and/or debarment of the Contractor from doing further business with
            the State of Indiana for up to three (3) years.

P.    Drug-Free Workplace Certification

      This Certification is required by Executive Order No. 90-5, April 12,
      1990, issued by the Governor of Indiana. Pursuant to its delegated
      authority, the Indiana Department of Administration is requiring the
      inclusion of this certification in all contracts with the State of Indiana
      in excess of $25,000.00. No award of a contract shall be made, and no
      contract, purchase order or agreement, the total amount of which exceeds
      $25,000.00 shall be valid, unless and until this certification has been
      fully executed by the Contractor and made a part of the Contract as part
      of the Contract documents. False certification or violation of the
      certification may result in sanctions including, but not limited to,
      suspension of contract

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<PAGE>

      payment, termination of the contract and/or debarment of contracting
      opportunities with the Contractor for up to three (3) years.

      The Contractor certifies and agrees that it will provide a drug-free
      workplace by:

      1.    Publishing and providing to all of its employees a statement
            notifying them that the unlawful manufacture, distribution,
            dispensing, possession or use of a controlled substance is
            prohibited in the Contractor's workplace and specifying the actions
            that will be taken against employees for violations of such
            prohibition.

      2.    Establishing a drug-free awareness program to inform employees of
            (A) the dangers of drug abuse in the workplace; (B) the Contractor's
            policy of maintaining a drug-free workplace; (C) any available drug
            counseling, rehabilitation, and employee assistance programs; and
            (4) the penalties that may be imposed upon an employee for drug
            abuse violations occurring in the workplace.

      3.    Notifying all employees in the statement required by subparagraph
            (1) above that as a condition of continued employment the employee
            will (A) abide by the terms of the statement; and (B) notify the
            Contractor of any criminal drug statute conviction for a violation
            occurring in the workplace no later than five (5) days after such
            conviction.

      4.    Notify the State in writing within ten (10) days after receiving
            notice from an employee under subdivision (3)(B) above, or otherwise
            receiving actual notice of such conviction.

      5.    Within thirty (30) days after receiving notice under subdivision
            (3)(B) above of a conviction, imposing the following sanctions or
            remedial measures on any employee who is convicted of drug abuse
            violations occurring in the workplace: (A) take appropriate
            personnel action against the employee, up to and including
            termination; or (B) require such employee to satisfactorily
            participate in a drug abuse assistance or rehabilitation program
            approved for such purposes by a Federal, State, or local health, law
            enforcement, or other appropriate agency.

      6.    Making a good faith effort to maintain a drug-free workplace through
            the implementation of subparagraphs (1) through (5).

Q.    Environmental Standards. If the contract amount set forth in this Contract
      is in excess of $100,000, the Contractor shall comply with all applicable
      standards, orders, or requirements issued under section 305 of the Clean
      Air Act (42 USC 7606), section 508 of the Clean Air Act (33 USC 1368),
      Executive Order 11738, and Environmental Protection Agency regulations (40
      CFR Part 15), which prohibit the use under non-exempt Federal contracts of
      facilities included on the EPA List of Violating Facilities. The
      Contractor shall report any violations of this paragraph to the State of
      Indiana and to the United States Environmental Protection Agency Assistant
      Administrator for Enforcement.

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R.    Force Majeure; Suspension and Termination. In the event either party is
      unable to perform any of its obligations under this Contract or to enjoy
      any of its benefits because of (or if failure to perform the service is
      caused by) natural disaster, actions or decrees of governmental bodies, or
      communication line failure not the fault of the affected party
      (hereinafter referred to as a "Force Majeure Event"), the party who has
      been so affected shall immediately give notice to the other party and
      shall take reasonable measures to resume performance. Upon receipt of such
      notice, all obligations under this Contract shall be immediately
      suspended. If the period of non-performance exceeds thirty (30) days from
      the receipt of notice of the Force Majeure Event, the party whose ability
      to perform has not been so affected may, by giving written notice,
      terminate this Contract.

S.    Governing Laws. This Contract shall be construed in accordance with and
      governed by the laws of the State of Indiana and suit, if any, must be
      brought in the State of Indiana.

T.    Indemnification. The Contractor agrees to indemnify, defend, and hold
      harmless the State of Indiana and its agents, officers, and employees from
      all claims and suits including court costs, attorney's fees, and other
      expenses caused by any act or omission of the Contractor and/or its
      subcontractors, if any. The State shall not provide such indemnification
      to the Contractor.

U.    Independent Contractor. The Office and the Contractor acknowledge and
      agree that in the performance of this contract, the Contractor is an
      independent contractor and both parties will be acting in an individual
      capacity and not an as agents, employees, partners, joint venturers,
      officers, or associates of one another. The employees or agents of one
      party shall not be deemed or construed to be the employees or agents of
      the other party for any purposes whatsoever. Neither party will assume any
      liability for any injury (including death) to any persons, or any
      property arising out of the acts or omissions of the agents, employees or
      subcontractors of the other party.

      The Contractor shall be responsible for providing all necessary
      unemployment and worker compensation insurance for the Contractor's
      employees.

V.    Lobbying Activities. Pursuant to 31 U.S.C. 1352, and any regulations
      promulgated thereunder, the Contractor hereby assures and certifies that
      no federally 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 grant, the making of any federal loan, the entering into of any
      cooperative contract, and the extension, continuation, renewal, amendment,
      or modification of any federal contract, grant, loan or cooperative
      contract. 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 Contract, the Contractor shall complete and submit
      Standard Form-LLL, "Disclosure Form to Report Lobbying", in accordance
      with its instructions.

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W.    Ownership of Documents and Materials. All documents, records, programs,
      data, film, tape, articles, memoranda, and other materials developed under
      this Contract will be the property of the State of Indiana. Use of these
      materials other than related to contract performance by the Contractor
      without the prior written consent of the State of Indiana is prohibited.
      During the performance of the services specified herein, the Contractor
      shall be responsible for any loss or damage to these materials developed
      for or supplied by the State of Indiana and used to develop or assist in
      the services provided herein, while they are in the possession of the
      Contractor, and any loss or damage thereto shall be restored at the
      Contractor's expense. Full, immediate and unrestricted access to the work
      product of the Contractor during the term of this Contract shall be
      available to the State of Indiana. The Contractor will give to the State
      of Indiana, or the State of Indiana's designee, all records of other
      materials described in this section, after termination of the Contract and
      upon five (5) days notice of a request from the State of Indiana.

      The parties acknowledge that it is in their interests for the Contractor
      to develop new techniques and advances in managed care. Therefore, the
      Offices hereby grant to the Contractor, subject to the confidentiality
      obligations set forth in this Contract, as well as those imposed by
      federal and state laws and regulations, a perpetual license to use
      materials, models, methodologies and techniques developed under this
      contract.

X.    Penalties/Interest/Attorney's Fees. The State will in good faith perform
      its required obligations hereunder and does not agree to pay any
      penalties, liquidated damages, interest, or attorney's fees, except as
      required by Indiana law, in part, I.C. 5-17-5-1 et seq., I.C. 34-54-8-2 et
      seq., and I.C. 34-13-1-1 et seq.

Y.    Severability. The invalidity in whole or in part of any provision of this
      Contract shall not void or affect the validity of any other provision.

Z.    Successors and Assignees. The Contractor binds its successors, executors,
      assignees, and administrators, to all covenants of this Contract. Except
      as set forth above, the Contractor shall not assign, sublet, or transfer
      the Contractor's interest in this Contract without the prior written
      consent of the Office.

AA.   Termination. The Offices may, without cause, cancel and terminate this
      Contract in whole or in part upon sixty (60) days' prior written notice.
      The Contractor will be reimbursed for services performed prior to the date
      of termination consistent with the terms of the Contract. The Offices will
      not be liable for services performed after notice of termination, but
      before the date of termination, without written authorization from the
      Offices. In no event will the Offices be liable for services performed
      after the termination date.

      In the event that the Offices request that the Contractor perform any
      additional services associated with the transition or turnover of this
      Contract, the Offices agree to pay reasonable costs for those additional
      services specifically requested by the Offices.

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BB.   Termination by the Contractor. This Contract may be terminated by the
      Contractor upon one hundred eighty (180) days prior written notice to the
      Offices. The Contractor will be reimbursed for services performed prior to
      the effective date of termination consistent with the terms of the
      Contract. In no event will the Offices be liable for services performed
      after the effective date of termination, without written authorization
      from the Offices.

CC.   Change in Scope of Work -- In the event the Offices require a major change
      in scope, character or complexity of the work after the work has
      commenced, adjustments in compensation to the Contractor shall be
      determined by the Office, in the exercise of its honest and reasonable
      judgment, and the Contractor shall not commence the additional work or
      the change in the scope of work until authorized in writing by the
      Offices. No claim for additional compensation shall be made in the absence
      of a prior written approval executed by all signatories hereto.

DD.   Waiver of Breach. No waiver of breach of any provision of this Contract
      shall constitute a waiver of any other breach or of such provision.

      Failure of the Office to enforce at any time any provision of this
      Contract shall not be construed as a waiver thereof. The remedies herein
      reserved shall be cumulative and additional to any other remedies in law
      or equity.

EE.   Work Standards. The Contractor agrees to execute its respective
      responsibilities by following and applying at all times the highest
      professional and technical guidelines and standards. If the State becomes
      dissatisfied with the work product or the working relationship with those
      individuals assigned to work on this Contract, the State may request in
      writing the replacement of any or all such individuals.

FF.   Non-Collusion and Acceptance. The undersigned attests, subject to the
      penalties for perjury, that he is the contracting party, or that he is
      the representative, agent, member or officer of the contracting party,
      that he has not, nor has any other member employee, representative, agent
      or officer of the firm, company, corporation or partnership represented by
      him, directly or indirectly, to the best of his knowledge, entered into or
      offered to enter into any combination, collusion or agreement to receive
      or pay, and that he has not received or paid, any sum of money or other
      consideration for the execution of this agreement other than that which
      appears upon the face of the agreement.

         /// The remainder of this page is intentionally left blank. ///

MCO Contract                                                 Harmony Health Plan

                                 Page 23 of 24

<PAGE>

IN WITNESS WHEREOF, Harmony Health Plan of Illinois, Inc. and the State of
Indiana have, through duly authorized representatives, entered into this
agreement. The parties having read and understand the foregoing terms of the
Contract do by their respective signatures dated below hereby agree to the terms
thereof.

For the Contractor:                        For the State of Indiana:

/s/ Ancelmo E. Lopes                       /s/ Kathleen D. Gifford
----------------------------------------   -------------------------------------
Ancelmo E. Lopes, President CEO            Kathleen D. Gifford
Harmony Health Plan of Illinois, Inc.      Assistant Secretary
                                           Office of Medicaid Policy & Planning

Date: 12/19/00                             Date: 12/12/2000

                                           /s/ Nancy Cobb
                                           -------------------------------------
                                           Nancy Cobb, Director
                                           Children's Health Insurance
                                           Program

                                           Date: 1/5/00

APPROVED:                                  APPROVED

/s/ Betty Cockrum                          /s/ [ILLEGIBLE]
----------------------------------------   -------------------------------------
Betty Cockrum, Director                    Glenn R. Lawrence, Commissioner
State Budget Agency                        Department of Administration

Date: 01/10/01                             Date: Jan 4, 2001

APPROVED AS TO FORM AND LEGALITY

/s/ [ILLEGIBLE]
----------------------------------------
    [ILLEGIBLE]

Attorney General of Indiana

Date: 22/01

MCO Contract

                                 Page 24 of 24

<PAGE>
                                                                        AMEND. 2

                                CONTRACT BETWEEN
                  THE OFFICE OF MEDICAID POLICY AND PLANNING,
             THE OFFICE OF THE CHILDREN'S HEALTH INSURANCE PROGRAM
                                      AND
                     HARMONY HEALTH PLAN OF ILLINOIS, INC.

      This Contract is made and entered into by and between the State of Indiana
(hereinafter "State" or "State of Indiana"), through the Office of Medicaid
Policy and Planning and the Office of Children's Health Insurance Program
(hereinafter "the Offices"), of the Indiana Family and Social Services
Administration, 402 West Washington Street, W382, Indianapolis, Indiana, and
Harmony Health Plan of Illinois, Inc., 125 South Wacker Drive, Suite 2900,
Chicago, Illinois, doing business as Harmony Health Plan of Indiana,
(hereinafter "Contractor").

      WHEREAS, I.C. 12-15-30-1 and I.C. 12-17.6 authorize the Offices to enter
into contracts to assist in the administration of the Indiana Medicaid and the
Indiana Children's Health Insurance Program (CHIP), respectively;

      WHEREAS, the State of Indiana desires to contract for services to arrange
for and to administer a risk-based managed care program (RBMC) for certain
Hoosier Healthwise enrollees in Packages A, B and C as procured through BAA
01-28;

      WHEREAS this Contract contains the payment rates under which the
Contractor shall be paid and that these rates have been determined to be
actuarially sound for risk contracts, in accordance with applicable law;

      WHEREAS, the Contractor is willing and able to perform the desired
services for Hoosier Healthwise Packages A, B and C;

      WHEREAS, the Family and Social Services Administration (FSSA) is issuing
new contract documents in lieu of renewal or amendment documents so that FSSA
may move its contract data into a single contract database. The original
contract was issued for the contract term starting January 1, 2001, through
December 31, 2002 and provided a renewal clause, exercised at the option of the
State for two additional years. The State is hereby exercising this option and
renewing the contract.

      THEREFORE, the parties to this Contract agree that the terms and
conditions specified below will apply to services in connection with this
contract, and such terms and conditions are as follows:

                           I. TERM AND RENEWAL OPTION

      This Contract is effective from January 1, 2003 through December 31, 2004.
In no event shall the term exceed December 31, 2004.

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<PAGE>

                                II. DEFINITIONS

      For the purposes of this contract, terms not defined herein shall be
defined as they are in the documents incorporated in and attached to this
document, subject to the order of precedence spelled out in Section V of this
document.

"Contract" means this document and all documents or standards incorporated
herein, expressly including but not limited to the following documents appended
hereto and listed in chronological order and to be given precedence as described
in Section V of this document, entitled "Order of Precedence":

      Attachment 1 - BAA 01-28, released July 31, 2000;

      Attachment 2 - Contractor's response to BAA 01-28, submitted September
                     25, 2000, excluding the following sections: Section
                     5.3.8; Section 5.4.4; Appendices A, B, C, D, and H;
                     Exhibit 5.4.4I; Exhibit 5.4.4M; and Exhibit 5.4.4O.

      Attachment 3 - First Amendment to the original contract, effective
                     April 1, 2002;

      Any other documents, standards, laws, rules or regulations incorporated by
      reference in the above materials, all of which are hereby incorporated by
      reference.

"Covered Services" means all services required to be arranged, administered,
managed or provided by or on behalf of the Contractor under this contract.

"Effective Date of Enrollment" means:

   -  The first day of the birth month of a newborn that is determined by the
      Offices to be an enrolled member;

   -  The fifteenth day of the current month for a member who has, between the
      twenty-sixth day of the previous month and the tenth day of the current
      month, been determined by the Offices to be an enrolled member; and,

   -  The first day of the following month for a member who has, between the
      eleventh day and the twenty-fifth day of a month, been determined by the
      Offices to be an enrolled member.

"Enrolled Member", or "Enrollee", means a Hoosier Healthwise-eligible member who
is listed by the Offices on the enrollment rosters to receive covered services
from the Contractor or its subcontractors, employees, agents, or providers, as
of the Effective Date of Enrollment, under this contract.

"Provider" means a physician, hospital, home health agency or any other
institution, or health or other professional person or entity, which
participates in the provision of services to an enrolled member under BAA 01-28,
whether as an independent contractor, a subcontractor, employee, or agent of the
Contractor.

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<PAGE>

"Broad Agency Announcement", or "BAA", means BAA 01-28 for providers of managed
care services, released July 31, 2000.

                          III. DUTIES OF THE CONTRACTOR

A.    The Contractor agrees to assume financial risk for developing and managing
      a health care delivery system and for arranging or administering all
      Hoosier Healthwise covered services except, as set out in section 3.4.3 of
      the BAA, dental care, long-term institutional care, services provided as
      part of an individualized education plan (IEP) pursuant to the Individuals
      with Disabilities Education Act (IDEA) at 20 U.S.C. 1400 et seq.,
      behavioral health, and hospice services, in exchange for a per-enrollee,
      per-month fixed fee, to certain enrollees in Hoosier Healthwise Packages
      A, B and C. Wards of the State, foster children and children receiving
      adoption assistance may enroll on a voluntary basis and will not be
      subject to auto-assignment into the Hoosier Healthwise program. The
      Contractor must, at a minimum, furnish covered services up to the limits
      specified by the Medicaid and CHIP programs. The Contractor may exceed
      these limits. However, in no instance may any covered service's
      limitations be more restrictive than those which exist in the Indiana
      Medicaid fee-for-service program for Packages A and B, and the Children's
      Health Insurance Program for Package C.

B.    The Contractor agrees to perform all duties and arrange and administer the
      provision of all services as set out herein and contained in the BAA as
      attached and the Contractor's responses to the BAA as attached, all of
      which are incorporated into this Contract by reference. In addition, the
      Contractor shall comply with all policies and procedures defined in any
      bulletin, manual, or handbook yet to be distributed by the State or its
      agents insofar as those policies and procedures provide further
      clarification and are no more restrictive than any policies and procedures
      contained in the BAA and any amendments to the BAA. The Contractor agrees
      to comply with all pertinent state and federal statutes and regulations in
      effect throughout the duration of this Contract and as they may be amended
      from time to time.

C.    The Contractor agrees that it will not discriminate against individuals
      eligible to be covered under this Contract on the basis of health status
      or need for health services; and the Contractor may not terminate an
      enrollee's enrollment, or act to encourage an enrollee to terminate
      his/her enrollment, because of an adverse change in the enrollee's health.
      The disenrollment function will be carried out by a State contractor who
      is independent of the Contractor; therefore, any request to terminate an
      enrollee's enrollment must be approved by the Offices.

D.    The Contractor agrees that no services or duties owed by the Contractor
      under this Contract will be performed or provided by any person or entity
      other than the Contractor, except as contained in written subcontracts or
      other legally binding agreements. Prior to entering into any such
      subcontract or other legally binding agreement, the Contractor shall, in
      each case, submit the proposed subcontract or other legally binding
      agreement to the Offices for prior review and approval. Prior review and
      approval of a subcontract or legally binding agreement shall not be
      unreasonably delayed by the Offices. The Offices shall, in

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<PAGE>

      appropriate cases and as requested by the Contractor, expedite the review
      and approval process. Under no circumstances shall the Contractor be
      deemed to have breached its obligations under this Contract if such breach
      was a result of the Offices' failure to review and approve timely any
      proposed subcontract or other legally binding agreement. If the Offices
      disapprove any proposed subcontract or other legally binding agreement,
      the Offices shall state with reasonable particularity the basis for such
      disapproval. No subcontract into which the Contractor enters with respect
      to performance under this Contract shall in any way relieve the Contractor
      of any responsibility for the performance of duties under this Contract.
      All subcontracts and amendments thereto executed by the Contractor under
      this Contract must meet the following requirements; any existing
      subcontracts or legally binding agreements which fail to meet the
      following requirements shall be revised to include the requirements within
      ninety (90) days from the effective date of this Contract:

      1.    Be in writing and specify the functions of the subcontractor.

      2.    Be legally binding agreements.

      3.    Specify the amount, duration and scope of services to be provided by
            the subcontractor.

      4.    Provide that the Offices may evaluate, through inspection or other
            means, the quality, appropriateness, and timeliness of services
            performed.

      5.    Provide for inspections of any records pertinent to the contract by
            the Offices.

      6.    Require an adequate record system to be maintained for recording
            services, charges, dates and all other commonly accepted information
            elements for services rendered to recipients under the contract.

      7.    Provide for the participation of the Contractor and subcontractor in
            any internal and external quality assurance, utilization review,
            peer review, and grievance procedures established by the Contractor,
            in conjunction with the Offices.

      8.    Provide that the subcontractor indemnify and hold harmless the State
            of Indiana, its officers, and employees from all claims and suits,
            including court costs, attorney's fees, and other expenses, brought
            because of injuries or damage received or sustained by any person,
            persons, or property that is caused by any act or omission of the
            Contractor and/or the subcontractors. The State shall not provide
            such indemnification to the subcontractor.

      9.    Identify and incorporate the applicable terms of this Contract and
            any incorporated documents. The subcontract shall provide that the
            subcontractor agrees to perform duties under the subcontract, as
            those duties pertain to enrollees, in accordance with the applicable
            terms and conditions set out in this Contract, any incorporated
            documents, and all applicable state and federal laws, as amended.

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<PAGE>

E.    The Contractor agrees that, during the term of this Contract, it shall
      maintain, with any in-network provider rendering health care services
      under the BAA, provider service agreements which meet the following
      requirements:

      1.    Identify and incorporate the applicable terms of this Contract and
            any incorporated documents. Under the terms of the provider services
            agreement, the provider shall agree that the applicable terms and
            conditions set out in this Contract, any incorporated documents, and
            all applicable state and federal laws, as amended, govern the duties
            and responsibilities of the provider with regard to the provision of
            services to enrollees.

      2.    Reference a written provider claim resolution procedure as set out
            in section III.Q. below.

F.    The Contractor agrees that all laboratory testing sites providing services
      under this Contract must have a valid Clinical Laboratory Improvement
      Amendments (CLIA) certificate and comply with the CLIA regulations at 42
      C.F.R. Part 493.

G.    The Contractor agrees that it shall:

      1.    Retain, at all times during the period of this Contract, a valid
            Certificate of Authority under applicable State laws issued by the
            State of Indiana Department of Insurance.

      2.    Ensure that, during the term of this Contract, each provider
            rendering health care services under the BAA is authorized to do so
            in accordance with the following:

            a.    The provider must maintain a current Indiana Health Coverage
                  Programs (IHCP) provider agreement and must be duly licensed
                  in accordance with the appropriate state licensing board and
                  shall remain in good standing with said board.

            b.    If a provider is not authorized to provide such services under
                  a current IHCP provider agreement or is no longer licensed by
                  said board, the Contractor is obligated to terminate its
                  contractual relationship authorizing or requiring such
                  provider to provide services under the BAA. The Contractor
                  must terminate its contractual relationship with the provider
                  as soon as the Contractor has knowledge of the termination of
                  the provider's license or the IHCP provider agreement.

      3.    Comply with the specific requirements for Health Maintenance
            Organizations (HMOs) eligible to receive Federal Financial
            Participation (FFP) under Medicaid, as listed in the State
            Organization and General Administration Chapter of the Health Care
            Financing Administration (HCFA) Medicaid Manual. These requirements
            include, but are not limited to the following:

            a.    The Contractor shall meet the definition of HMO as specified
                  in the Indiana State Medicaid Plan.

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<PAGE>

            b.    Throughout the duration of this Contract, the Contractor shall
                  satisfy the Chicago Regional Office of the Centers for
                  Medicare and Medicaid Policy (hereinafter called CMS) that
                  the Contractor is compliant with the Federal requirements for
                  protection against insolvency pursuant to 42 CFR 434.20(c)(3)
                  and 434.50(a), the requirement that the Contractor shall
                  continue to provide services to Contractor enrollees until the
                  end of the month in which insolvency has occurred, and the
                  requirement that the Contractor shall continue to provide
                  inpatient services until the date of discharge for an enrollee
                  who is institutionalized when insolvency occurs. The
                  Contractor shall meet this requirement by posting a
                  performance bond pursuant to Section [ILLEGIBLE] paragraph C,
                  of this Contract, and satisfying the statutory reserve
                  requirements of the Indiana Department of Insurance.

            c.    The Contractor shall comply with, and shall exclude from
                  participation as either a provider or subcontractor of the
                  Contractor, any entity or person that has been excluded under
                  the authority of Sections 1124A, 1128 or 1128A of the Social
                  Security Act or does not comply with the requirements of
                  Section 1128(b) of the Social Security Act.

            d.    In the event that the CMS determines that the Contractor has
                  violated any of the provisions of 42 CFR 434.67(a), CMS may
                  deny payment of FFP for new enrollees of the HMO under 42 USC
                  1396b(m)(5)(B)(ii). The Offices shall automatically deny State
                  payment for new enrollees whenever, and for so long as,
                  Federal payment for such enrollees has been denied.

H.    The Contractor shall submit proof, satisfactory to the Offices, of
      indemnification of the Contractor by the Contractor's parent corporation,
      if applicable, and by all of its subcontractors.

I.    The Contractor shall submit proof, satisfactory to the Offices, that all
      subcontractors will hold the State harmless from liability under the
      subcontract. This assurance in no way relieves the Contractor of any
      responsibilities under the BAA or this Contract.

K.    The Contractor shall establish and maintain a quality improvement program
      that meets the requirements of 42 CFR 434.34, as well as other specific
      requirements set forth in the BAA. The Offices and the CMS may evaluate,
      through inspection or other means, including but not limited to, the
      review of the quality assurance reports required under this Contract, and
      the quality, appropriateness, and timeliness of services performed under
      this Contract. The Contractor agrees to participate and cooperate, as
      directed by the Offices, in the annual external quality review of the
      services furnished by the Contractor.

      Annual HEDIS rates must be submitted in a manner and timeline established
      by the Office, including but not limited, to HEDIS rates that have been
      audited by a HEDIS-certified audit firm within 30 days of receiving their
      final audit report. The HEDIS rates which have completed the certified
      audit may be submitted for 2003 HEDIS rates, but must be submitted for
      2004 HEDIS rates and all other HEDIS rates in the future.

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<PAGE>

L.    In accordance with 42 CFR 434.28, the Contractor agrees that it and any of
      its subcontractors shall comply with the requirements, if applicable, of
      42 CFR 489, Subpart I, relating to maintaining and distributing written
      policies and procedures respecting advance directives. The Contractor
      shall distribute policies and procedures to adult individuals during the
      enrollee enrollment process and whenever there are revisions to these
      policies and procedures. The Contractor shall make available for
      inspection, upon reasonable notice and request by the Offices,
      documentation concerning its written policies, procedures and distribution
      of such written procedures to enrollees.

M.    Pursuant to 42 C.F.R. 417.479(a), the Contractor agrees that no specific
      payment can be made directly or indirectly under a physician incentive
      plan to a physician or physician group as an inducement to reduce or limit
      medically necessary services furnished to an individual enrollee. The
      Contractor must disclose to the State the information on provider
      incentive plans listed in 42 C.F.R. 417.479(h)(1) and 417.479(i) at the
      times indicated at 42 C.F.R. 434.70(a)(3), in order to determine whether
      the incentive plan meets the requirements of 42 C.F.R. 417(d)-(g). The
      Contractor must provide the capitation data required under paragraph
      (h)(1)(vi) for the previous calendar year to the State by
      application/contract renewal of each year. The Contractor will provide the
      information on its physician incentive plan(s) listed in 42 C.F.R.
      417.479(h)(3) to any enrollee upon request.

N.    The Contractor must not prohibit or restrict a health care professional
      from advising an enrollee about his/her health status, medical care, or
      treatment, regardless of whether benefits for such care are provided under
      this Contract, if the professional is acting within the lawful scope of
      practice. However, this provision does not require the Contractor to
      provide coverage of a counseling or referral service if the Contractor
      objects to the service on moral or religious grounds and makes available
      information on its policies to potential enrollees and enrollees within
      ninety (90) days after the date the Contractor adopts a change in policy
      regarding such counseling or referral service.

O.    In accordance with 42 U.S.C. Section 1396u-2(b)(6), the Contractor agrees
      that an enrollee may not be held liable for the following:

      1.    Debts of the Contractor, or its subcontractors, in the event of
            any organization's insolvency;

      2.    Services provided to the enrollee in the event the Contractor fails
            to receive payment from the Offices for such services or in the
            event a provider fails to receive payment from the Contractor or
            Offices; or

      3.    Payments made to a provider in excess of the amount that would be
            owed by the enrollee if the Contractor had directly provided the
            services.

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P.    The Offices may from time to time request and the Contractor, and all of
      its subcontractors, agree that the Contractor, or its subcontractors,
      shall prepare and submit additional compilations and reports as requested
      by the Offices. Such requests will be limited to situations in which the
      desired data is considered essential and cannot be obtained through
      existing Contractor reports. The Contractor, and all of its
      subcontractors, agree that a response to the request shall be submitted
      within thirty (30) days from the date of the request, or by the Offices'
      requested completion date, whichever is earliest. The response shall
      include the additional compilations and reports as requested, or the
      status of the requested information and an expected completion date. When
      such requests pertain to legislative inquiries or expedited inquiries from
      the Office of the Governor, the additional compilations and reports shall
      be submitted by the Offices' requested completion date. Failure by the
      Contractor, or its subcontractors, to comply with response time frames
      shall be considered grounds for the Offices to pursue the provisions
      outlined in Section [ILLEGIBLE] of the BAA. In the event that delays in
      submissions are a consequence of a delay by the Offices or the Medicaid
      Fiscal Agent, the time frame for submission shall be extended by the
      length of time of the delay.

Q.    The Contractor shall establish a written claim resolution procedure
      applicable to both in-network and out-of-network providers which shall be
      distributed to all in-network providers and shall be available to out-
      of-network providers upon request. The Contractor shall negotiate the
      terms of a written claim resolution procedure with in-network providers
      individually; but if the Contractor and an in-network provider are unable
      to reach agreement on the terms of such procedure, the out-of-network
      provider claims resolution procedure approved by the Offices under this
      section shall govern the resolution of such in-network provider's claims
      with the Contractor. The written claim resolution procedure must include,
      at a minimum, the following elements:

      1.    A statement noting that providers objecting to determinations
            involving their claims will be provided due process through the
            Contractor's claim resolution procedure.

      2.    A description of both the informal and formal claim resolution
            procedures that will be available to resolve a provider's objection
            to a determination involving the provider's claim.

      3.    An informal claim resolution procedure which:

            a.    shall be available for the resolution of claims submitted to
                  the Contractor by the provider within 120 days after the date
                  on which services were rendered;

            b.    shall precede the formal claim resolution procedure;

            c.    shall be used to resolve a provider's objection to a
                  determination by the Contractor involving the provider's
                  claim, including a provider's objection to:

                  (1) any determination by the Contractor regarding payment for
                  a claim submitted by the provider, including the amount of
                  such payment; and

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<PAGE>

                  (2) the Contractor's determination that a claim submitted by
                  the provider lacks sufficient supporting information, records,
                  or other materials;

            d.    may, at the election of a provider, be utilized to determine
                  the payment due for a claim in the event the Contractor fails,
                  within thirty (30) days after the provider submits the claim,
                  to notify the provider of:

                  (1) its determination regarding payment for the provider's
                  claim; or

                  (2) its determination that the provider's claim lacked
                  sufficient supporting information, records, or other
                  materials;

            e.    shall be commenced by a provider submitting to the Contractor:

                  (1) within sixty (60) days after the provider's receipt of
                  written notification of the Contractor's determination
                  regarding the provider's claim, the provider's written
                  objection to the Contractor's determination and an explanation
                  of the objection; or

                  (2) within sixty (60) days after the Contractor fails to make
                  a determination as described in subparagraph (d), a written
                  notice of the provider's election to utilize the informal
                  claims resolution procedure under subparagraph (d) above;

            f.    shall allow providers and the Contractor to make verbal
                  inquiries and to otherwise informally undertake to resolve the
                  matter submitted for resolution by the provider.

      4.    In the event the matter submitted for informal resolution is not
            resolved to the provider's satisfaction within thirty (30) days
            after the provider commenced the informal claim resolution
            procedure, the provider shall have sixty (60) days from that point
            to submit to the Contractor written notification of the provider's
            election to submit the matter to the formal claim resolution
            procedure. The provider's notice must specify the basis of the
            provider's dispute with the Contractor. The Contractor's receipt of
            the provider's written notice shall commence the formal claim
            resolution procedure.

      5.    The formal claim resolution procedure shall be conducted by a panel
            of one (1) or more individuals selected by the Contractor. Each
            panel must be knowledgeable about the policy, legal, and clinical
            issues involved in the matter that is the subject of the formal
            claim resolution procedure. An individual who has been involved in
            any previous consideration of the matter by the Contractor may not
            serve on the panel. The Contractor's medical director, or another
            licensed physician designated by the medical director, shall serve
            as a consultant to the panel in the event the matter involves a
            question of medical necessity or medical appropriateness.

      6.    The panel shall consider all information and material submitted to
            it by the provider that bears directly upon an issue involved in the
            matter that is the subject of the

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            formal claim resolution procedure. The panel shall allow the
            provider an opportunity to appear in person before the panel, or to
            communicate with the panel through appropriate other means if the
            provider is unable to appear in person, and question the panel in
            regard to issues involved in the matter. The provider shall not be
            required to be represented by an attorney for purposes of the formal
            claim review procedure.

      7.    Within forty-five (45) days after the commencement of the formal
            claim resolution procedure, the panel shall deliver to the provider
            the panel's written determination of the matter before it. Such
            determination shall be the Contractor's final position in regard to
            the matter. The written determination shall include, as applicable,
            a detailed explanation of the factual, legal, policy and clinical
            basis of the panel's determination.

      8.    In the event the panel fails to deliver to the provider the panel's
            written determination within forty-five (45) days after the
            commencement of the formal claim resolution procedure, such failure
            on the part of the panel shall have the effect of a denial by the
            panel of the provider's claim.

      9.    The panel's written determination shall include notice to the
            provider of the provider's right, within sixty (60) days after the
            provider's receipt of the panel's written determination, to submit
            to binding arbitration the matter that was the subject of the formal
            claim resolution procedure. The provider shall also have the right
            to submit the matter to binding arbitration if the panel has failed
            to deliver its written determination to the provider within the
            required forty-five (45) day period.

      10.   Any procedure involving binding arbitration must be conducted in
            accordance with the rules and regulations of the American Health
            Lawyers Association (AHLA), pursuant to the Uniform Arbitration Act
            as adopted in the State of Indiana at I.C. 34-57-2, unless the
            provider and Contractor mutually agree to some other binding
            resolution procedure. However, any Contractor and provider that are
            subject to statutorily imposed arbitration procedures for the
            resolution of these claims shall be required to follow the
            statutorily imposed arbitration procedures, but only to the extent
            those procedures differ from, or are irreconcilable with, the rules
            and regulations of the American Health Lawyers Association (AHLA),
            pursuant to the Uniform Arbitration Act as adopted in the State of
            Indiana at I.C. 34-57-2.

      11.   A provider may, within the requisite sixty (60) day time period,
            include in a single arbitration proceeding matters from multiple
            formal claim resolution procedures involving the Contractor and the
            provider.

      12.   For claims disputed under Paragraph 3. c. (2) above:

            a.    a claim that is finally determined through the Contractor's
                  claim resolution procedure (including arbitration) not to lack
                  sufficient supporting documentation shall be processed by the
                  Contractor within thirty (30) days

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                                 Page 10 of 26

<PAGE>

                  after such final determination. The processing of the claim
                  and the Contractor's determination involving the claim shall
                  be subject to Paragraph 3. c. and Paragraph 3. d. and the
                  Contractor's formal claim resolution procedure and binding
                  arbitration.

            b.    a claim that is finally determined through the Contractor's
                  claim resolution procedure (including arbitration) to lack
                  sufficient supporting documentation shall be processed by the
                  Contractor within thirty (30) days after the provider submits
                  to the Contractor the requisite supporting documentation. The
                  provider shall have thirty (30) days after written notice of
                  the final determination establishing that the claim lacked
                  sufficient supporting documentation is received by the
                  provider to submit the requisite supporting documentation. The
                  processing of the claim and the Contractor's determination
                  involving the claim shall be subject to Paragraph 3. c. and
                  Paragraph 3. d. and the Contractor's formal claim resolution
                  procedure and binding arbitration.

      13.   A Contractor may not include in its claim resolution procedures
            elements that restrict or diminish the claim review procedures, time
            periods or subject matter provided for in paragraphs 1 through 12
            above.

      14.   A Contractor shall maintain a log of all informally and formally
            filed provider objections to determinations involving claims. The
            logged information shall include the provider's name, date of
            objection, nature of the objection, and disposition. The Contractor
            shall submit quarterly reports to the Offices regarding the number
            and type of provider objections.

R.    In accordance with the First Amendment to the original contract between
      the parties dated April 1, 2002, Section 3.6.1.3 of the BAA is amended to
      require the Contractor to submit the "Mandatory RBMC Transition Report"
      (Attachment A) according the schedule set out in the "2002 Hoosier
      Healthwise MCO Reporting Calendar for Mandatory RBMC Transition Report"
      (Attachment B), unless the MCO has received written notification from OMPP
      that the report, or certain data elements in the report, is/are no longer
      required or may be reported less frequently. Pursuant to the reporting
      calendar (Attachment B), the final submission shall be due on January
      6, 2003.

S.    In accordance with the First Amendment to the original contract between
      the parties dated April 1, 2002, the parties agree that Section 3.6.3 of
      the BAA is amended to require the Contractor to obtain written approval of
      the State prior to closing its provider networks, which shall not be
      unreasonably withheld or delayed.

T.    In accordance with the First Amendment to the original contract between
      the parties dated April 1, 2002, the parties agree that Sections 3.6.6 and
      3.6.7.3 of the BAA are amended to require the Contractor to maintain a
      monthly telephone abandonment rate equal to or less than five percent of
      calls received each by the member helpline and provider helpline. The
      parties agree that BAA Section 3.16 is amended to add a new section 3.16.8
      to read as follows:

MCO Contract Extension                                       Harmony Health Plan

                                 Page 11 of 26

<PAGE>

      Section 3.16.8. The MCO will comply with the call abandonment requirements
      for the member and provider helplines described in Sections 3.6.6. and
      3.6.7.3 of this BAA. Because actual damages caused by non-compliance are
      not subject to exact determination, the State will assess the MCO, as
      liquidated damages and not as a penalty, (a) two hundred dollars ($200.00)
      for each business day the MCO fails to submit required documentation to
      provide evidence of compliance with this requirement, or (b) two thousand
      dollars ($2000.00) for each month the MCO fails to meet the requirement
      after 2 consecutive months of non-compliance on the member helpline or (c)
      two thousand dollars ($2000.00) for each month the MCO fails to meet the
      requirement after 2 consecutive months of non-compliance on the provider
      helpline.

U.    In accordance with the First Amendment to the original contract between
      the parties dated April 1, 2002, the parties agree that Section 3.5.3 of
      the BAA is amended to allow OMPP to change, at OMPP's discretion, the
      frequency of the MCO Enrollment Rosters generated by OMPP's fiscal agent
      to once per month, upon reasonable and adequate prior written notice to
      the Contractor.

V.    In accordance with the First Amendment to the original contract between
      the parties dated April 1, 2002, the parties agree that Section 3.6.3 of
      the BAA is amended to require the Contractor to develop and adhere to a
      plan for identifying and serving people with special needs. The plan must
      satisfy any applicable federal requirements.

W.    In accordance with the First Amendment to the original contract between
      the parties dated April 1, 2002, the Contractor agrees to provide OMPP
      with prior written notice at least ninety (90) days in advance of their
      inability to maintain a sufficient Primary Medical Provider (PMP) network
      in any of the counties where mandatory RBMC has been or will be
      implemented, including Marion, Allen, Elkhart, St. Joseph, Lake, Hamilton,
      and Vanderburgh Counties, such that the program would not be able to
      maintain the appropriate member choice of two (2) MCOs, pursuant to
      federal requirements.

X.    In accordance with the First Amendment to the original contract between
      the parties dated April 1, 2002, the Contractor agrees that agreements
      with PMPs in mandatory RBMC counties shall include a provision allowing
      the PMP to terminate the agreement for any reason upon written notice to
      the Contractor. The Contractor may require that the physician provide said
      notice to the Contractor at least ninety (90) days prior to termination.

          //The remainder of this page is intentionally left blank.//

MCO Contract Extension                                       Harmony Health Plan

                                 Page 12 of 26

<PAGE>

                                  IV. PAYMENT

A.    In consideration of the services to be performed by the Contractor, the
      Offices agree to pay the Contractor the following amounts per month per
      enrolled member, as contained in the Offices' capitation payment listing,
      based upon the capitation rates by category and benefit package as listed
      below:

<TABLE>
<CAPTION>
                        CAPITATION RATES
------------------------------------------------------------
  CATEGORY            PACKAGES A/B                 PACKAGE C
-------------         ------------                 ---------
<S>                   <C>                          <C>
Newborns              $     365.86                 $  119.11
Preschool             $      73.95                 $   76.59
Children              $      59.97                 $   64.10
Adolescents           $      90.21                 $   91.00
Adult Males           $     254.69
Adult Females         $     199.59
Deliveries            $   3,396.90/delivery        $ 3410.09/delivery
</TABLE>

B.    The actuarial basis for computing the rates set forth above is as follows:
      The capitation rates have been determined from historical Hoosier
      Healthwise claim experience for the PCCM enrollees. The historical
      experience has been adjusted to reflect anticipated trend in the Hoosier
      Healthwise program, cost containment initiatives, morbidity variations
      between the PCCM and RBMC enrollees, and anticipated managed care
      utilization adjustments. The Offices may rely on self-report RBMC
      experience to determine appropriate managed care utilization adjustments
      and other morbidity variation adjustments.

C.    The parties agree that the Offices have the option to adjust the
      capitation rates annually. In the event that the Offices adjust the
      fee-for-service (FFS) rates, the Offices may, in its sole discretion,
      further adjust the capitation rates in accordance with the FFS adjustment.
      If the Offices made such an adjustment, it shall apply only to the
      specific service component of the capitation rate that corresponds to the
      FFS adjustment. Any capitation rates adjusted due to a change in the FFS
      program may be further adjusted to ensure actuarial soundness. All
      adjustments are subject to federal regulations for risk contracts. Rates
      revised under this provision shall be implemented only after a contract
      amendment is executed and approved.

D.    All payment obligations of the Offices are subject to the encumbrance of
      monies and shall be paid to the Contractor on the first Wednesday after
      the fifteenth of the month.

E.    The capitation payment will be prospective, based upon the number of
      enrollees assigned to the Contractor as of the first of the month. The
      Offices will establish an administrative procedure to allow retroactive or
      other payment adjustments as necessary to implement this contract.

F.    The Contractor will be provided a capitation payment listing which
      includes a detailed listing of all enrollees for which the Contractor is
      receiving a capitation payment.

G.    It is understood and agreed upon by the parties that all obligations of
      the State of Indiana are contingent upon the availability and continued
      appropriation of State and Federal funds, and

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<PAGE>

      in no event shall the State of Indiana be liable for any payments in
      excess of available appropriated funds.

H.    When the Director of the State Budget Agency makes a written determination
      that funds are not appropriated or otherwise available to support
      continuation of performance of this Contract, the Contract shall be
      cancelled. A determination by the State Budget Director that funds are not
      appropriated or otherwise available to support continuation of performance
      shall be final and conclusive.

                             V. ORDER OF PRECEDENCE

Any inconsistency or ambiguity in this Contract shall be resolved by giving
precedence in the following order:

      1)    The express terms of this contract;

      2)    Attachment 1 - BAA 01-28, released July 31, 2000 and First Amendment
            dated April 1, 2002;

      3)    Attachment 2 - the Contractors; response to the BAA;

      4)    Any other documents, standards laws, rules or regulations
            incorporated by reference in the above materials, all of which are
            hereby incorporated by reference.

                                   VI. NOTICE

A.    Whenever notice is required to be given to the other party, it shall be
      made in writing and delivered to that party. Delivery shall be deemed to
      have occurred if a signed receipt is obtained when delivered by hand or
      according to the date on the return receipt if sent by certified mail,
      return receipt requested. Notices shall be addressed as follows:

<TABLE>
<S>                                    <C>
In case of notice to the Contractor:   In case of notice to the Offices:

John Blank, MD, President/CEO          John Barth, Managed Care Director
Harmony Health Plan of Illinois, Inc.  Office of Medicaid Policy and Planning
125 South Wacker Drive, Suite 2900     Family and Social Services Administration
Chicago, Illinois 60606                402 W. Washington St., IGCS W382, MS07
                                       Indianapolis, Indiana 46204
</TABLE>

B.    Said notices shall become effective on the date of delivery or the date
      specified within the notice, whichever comes later. Either party may
      change its address for notification purposes by mailing a notice stating
      the change and setting forth the new address.

MCO Contract Extension           Page 14 of 26               Harmony Health Plan

<PAGE>

                          VII. MISCELLANEOUS PROVISIONS

A.    Entire Agreement. This Contract constitutes the entire agreement between
      the parties with respect to the subject matter; all prior agreements,
      representations, statements, negotiations, and undertakings are superseded
      hereby.

B.    Changes. Any changes to this Contract shall be by formal amendment of this
      Contract signed by all parties required by Indiana law.

C.    Termination. The Office may, without cause, cancel and terminate this
      Contract in whole or in part upon sixty (60) days' prior written notice.
      The Contractor will be reimbursed for services performed prior to the
      effective date of termination consistent with the terms of the Contract.
      The Office will not be liable for services performed after notice of
      termination, but before the date of termination, without written
      authorization from the Office. In no event will the Office be liable for
      services performed after the effective date of termination.

      In the event that the Office requests that the Contractor perform any
      additional services associated with the transition or turnover of the
      contract, the Office agrees to pay reasonable costs for those additional
      services specifically requested by the Office. Any additional services and
      costs must receive prior approval in writing by the Office.

D.    Disputes. Should any disputes arise with respect to this Contract, the
      Contractor and the State of Indiana agree to act immediately to resolve
      any such disputes. Time is of the essence in the resolution of disputes.

      The Contractor agrees that, the existence of a dispute notwithstanding, it
      will continue without delay to carry out all of its responsibilities under
      this Contract which are not affected by the dispute. Should the Contractor
      fail to continue without delay to perform its responsibilities under this
      Contract in the accomplishment of all non-disputed work, any additional
      costs incurred by the Contractor or the State of Indiana as a result of
      such failure to proceed shall be borne by the Contractor, and the
      Contractor shall make no claim against the State of Indiana for such
      costs. If the Contractor and the State of Indiana cannot resolve a dispute
      within ten (10) working days following notification in writing by either
      party of the existence of said dispute, then the following procedure shall
      apply:

      1.    The parties agree to resolve such matters through submission of
            their dispute to the Commissioner of the Indiana Department of
            Administration who shall reduce a decision to writing and mail or
            otherwise furnish a copy thereof to the Contractor and the State of
            Indiana within ten (10) working days after presentation of such
            dispute for decision. The Commissioner's decision shall be final and
            conclusive unless either party mails or otherwise furnishes to the
            Commissioner, within ten (10) working days after receipt of the
            Commissioner's decision, a written appeal. Within ten (10) working
            days of receipt by the Commissioner of a written request for appeal,
            the decision may be reconsidered.

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<PAGE>

            If no reconsideration is provided within ten (10) working days, the
            Contractor may submit the dispute to an Indiana court of competent
            jurisdiction.

      2.    The State of Indiana may with hold payments on disputed items
            pending resolution of the dispute. The on-payment by the State of
            Indiana to the Contractor of one or more invoices not in dispute
            shall not constitute default, however, the Contractor may bring suit
            to collect such monies without following the disputes procedure
            contained herein.

E.    Debarment and Suspension. Contractor certifies, by entering into this
      agreement, that neither it nor its principals are presently debarred,
      suspended, proposed for debarment, declared ineligible, or voluntarily
      excluded from entering into this agreement by any federal agency or
      department, agency or political subdivision of the State of Indiana. The
      term "principal" for the purposes of this agreement is defined as an
      officer, director, owner, partner, key employee, or other person with
      primary management or supervisory responsibilities or a person who has a
      critical influence on or substantive control over the operations of the
      Contractor.

F.    Compliance with Laws. The Contractor shall comply with all applicable
      federal, state, and local laws, rules, regulations, or ordinances, and all
      provisions required thereby to be included herein are hereby incorporated
      by reference. The enactment or amendment of any applicable state or
      federal statute or the promulgation of any rules or regulations thereunder
      after execution of this Contract shall be reviewed by the State and the
      Contractor to determine whether the provisions of the Contract require
      formal modification.

G.    Indemnification. Contractor agrees to indemnify, defend, and hold harmless
      the State of Indiana and its agents, officers, and employees from all
      claims and suits including court costs, attorney's fees, and other
      expenses caused by any act or omission of the Contractor and/or its
      subcontractors, if any. The state shall not provide such indemnification
      to the Contractor.

H.    Nondiscrimination. Pursuant to IC 22-9-1-10 and the Civil Rights Act of
      1964, Contractor and its subcontractors shall not discriminate against any
      employee or applicant for employment in the performance of this contract.
      The Contractor shall not discriminate with respect to the hire, tenure,
      terms, conditions or privileges of employment or any matter directly or
      indirectly related to employment, because of race, color, religion, sex,
      disability, national origin or ancestry. Breach of this covenant may be
      regarded as a material breach of contract. Acceptance of this Contract
      also signifies compliance with applicable federal laws, regulations, and
      executive orders prohibiting discrimination in the provision of services
      based on race, color, national origin, age, sex, disability, or status as
      a veteran. The Contractor understands that the State is a recipient of
      federal funds. Pursuant to that understanding, the Contractor and its
      subcontractor, if any, agree that if the Contractor employs fifty (50) or
      more employees and does at least fifty-thousand dollars ($50,000.00) worth
      of business with the State and is not exempt, the Contractor will comply
      with the affirmative action reporting requirements of 41 C.F.R. Section
      60-1.7, if applicable. The Contractor shall comply with Section 202 of

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<PAGE>

      Executive Order 11246, as amended, 41 C.F.R. Section 60-250, and 41
      C.F.R. Section 60-741, as amended, which are incorporated herein by
      specific reference. Breach of this covenant may be regarded as a material
      breach of contract.

I.    Confidentiality of State of Indiana Information. The Contractor
      understands and agrees that data, materials and information disclosed to
      the Contractor may contain confidential and protected data; therefore, the
      Contractor promises and assures that data, material, and information
      gathered, based upon or disclosed to the Contractor for the purpose of
      this Contract will not be disclosed to others or discussed with other
      parties without the prior written consent of the State of Indiana.

J.    Confidentiality of Data and Property Rights. The Contractor agrees that
      all information, data, findings, recommendations, and proposals, by
      whatever name described and by whatever form therein, secured developed,
      written, or produced by the Contractor in furtherance of this Contract,
      shall be the property of the State of Indiana and that the Contractor
      shall take such action as is necessary under law to preserve such property
      rights in and of the State of Indiana while such property is within the
      control and/or custody of the Contractor.

      By this Contract the Contractor specifically waives and/or releases to
      the State of Indiana any cognizable property right in the Contractor to
      copyright or patent such information, data, findings, recommendations,
      and proposals, that are developed exclusively in furtherance of the
      Contract and not developed by the Contractor for its other lines of
      business and incidentally applied to its Hoosier Healthwise line of
      business.

      The parties acknowledge that it is in their interests for the Contractor
      to develop new techniques and advances in managed care. Therefore, the
      Offices hereby grant to the Contractor, subject to the confidentiality
      obligations set forth in this Contract, as well as those imposed by
      federal and state laws and regulations, a perpetual license to use
      materials, models, methodologies and techniques developed under this
      contract.

K.    Ownership of Documents and Materials. All documents, records, programs,
      data, film, tape, articles, memoranda, and other materials developed under
      this Contract will be the property of the State of Indiana. Use of these
      materials other than related to contract performance by the Contractor
      without the prior written consent of the State of Indiana is prohibited.
      During the performance of the services specified herein, the Contractor
      shall be responsible for any loss or damage to these materials developed
      for or supplied by the State of Indiana and used to develop or assist in
      the services provided herein, while they are in the possession of the
      Contractor, and any loss or damage thereto shall be restored at the
      Contractor's expense. Full, immediate and unrestricted access to the work
      product of the Contractor during the term of this Contract shall be
      available to the State of Indiana. The Contractor will give to the State
      of Indiana, or the State of Indiana's designee, all records of other
      materials described in this section, after termination of the Contract and
      upon five (5) days notice of a request from the State of Indiana.

      The parties acknowledge that it is in their interests for the Contractor
      to develop new techniques and advances in managed care. Therefore, the
      Offices hereby grant to the

MCO Contract Extension           Page 17 of 26               Harmony Health Plan

<PAGE>

      Contractor, subject to the confidentiality obligations set forth in this
      Contract, as well as those imposed by federal and state laws and
      regulations, a perpetual license to use materials, models, methodologies
      and techniques developed under this contract.

L.    Conveyance of Documents And Continuation of Existing Activity: Should the
      Contract for whatever reason, (i.e. completion of a contract with no
      renewal, or termination of service by either party), be discontinued and
      the activities as provided for in the Contract for services cease, the
      Contractor and any subcontractors employed by the terminating Contractor
      in the performance of the duties of the Contract shall promptly convey to
      the State of Indiana, copies of all vendor working papers, data collection
      forms, reports, charts, programs, cost records and all other material
      related to work performed on this Contract.

      The Contractor and the Office shall convene immediately upon notification
      of termination or non-renewal of the Contract to determine what work shall
      be suspended, what work shall be completed, and the time frame for
      completion and conveyance. The Office will then provide the Contractor
      with a written schedule of the completion and conveyance activities
      associated with termination. Documents/materials associated with suspended
      activities shall be conveyed by the Contractor to the State of Indiana
      upon five days' notice from the State of Indiana. Upon completion of those
      remaining activities noted on the written schedule, the Contractor shall
      also convey all documents and materials to the State of Indiana upon five
      days' notice from the State of Indiana.

M.    Independent Contractor. The Office and the Contractor acknowledge and
      agree that in the performance of this contract, the Contractor is an
      independent contractor and both parties will be acting in an individual
      capacity and not an as agents, employees, partners, joint venturers,
      officers, or associates of one another. The employees or agents of one
      party shall not be deemed or construed to be the employees or agents of
      the other party for any purposes whatsoever. Neither party will assume
      any liability for any injury (including death) to any persons, or damage
      to any property arising out of the acts or omissions of the agents,
      employees or subcontractors of the other party.

      The Contractor shall be responsible for providing all necessary
      unemployment and worker compensation insurance for the Contractor's
      employees.

N.    Work Standards. The Contractor agrees to execute its respective
      responsibilities by following and applying at all times the highest
      professional and technical guidelines and standards. If the State becomes
      dissatisfied with the work product or the working relationship with those
      individuals assigned to work on this Contract, the State may request in
      writing the replacement of any or all such individuals and the Contractor
      shall grant such a request.

O.    Governing Laws. This Contract shall be construed in accordance with and
      governed by the laws of the State of Indiana and suit if any, must be
      brought in the State of Indiana.

P.    Severability. The invalidity in whole or in part of any provision of this
      Contract shall not void or affect the validity of any other provision.

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<PAGE>

Q.    Waiver of Rights. No right conferred on either party under this Contract
      shall be deemed waived and no breach of this Contract deemed excused,
      unless such waiver or excuse shall be in writing and signed by the party
      claimed to have waived such right.

      Failure of the Office to enforce at any time any provision of this
      Contract shall not be construed as a waiver thereof. The remedies herein
      reserved shall be cumulative and additional to any other remedies in law
      or equity.

R.    Taxes. The State of Indiana is exempt from all State, Federal and local
      taxes. The State will not be responsible for any taxes levied on the
      Contractor as a result of this Contract.

S.    Force Majeure, Suspension and Termination. In the event either party is
      unable to perform any of its obligations under this Contract or to enjoy
      any of its benefits because of (or if failure to perform the service is
      caused by) natural disaster, actions or decrees of governmental bodies, or
      communication line failure not the fault of the affected party
      (hereinafter referred to as a "Force Majeure Event"), the party who has
      been so affected shall immediately give notice to the other party and
      shall take reasonable measures to resume performance. Upon receipt of such
      notice, all obligations under this Contract shall be immediately
      suspended. If the period of non-performance exceeds thirty (30) days from
      the receipt of notice of the Force Majeure Event, the party whose ability
      to perform has not been so affected may, by giving written notice,
      terminate this Contract.

T.    Assignment. The Contractor shall not assign or subcontract the whole or
      any part of this Contract without the State's prior written consent. The
      Contractor may assign its right to receive payments to such third parties
      a the Contractor may desire without the prior written consent of the
      State, provided that the Contractor gives written notice (including
      evidence of such assignment) to the State thirty (30) days in advance of
      any payment so assigned. The assignment shall cover all unpaid amounts
      under this Contract and shall not be made to more than one party.

U.    Successors and Assignees. The Contractor binds its successors, executors,
      assignees, and administrators, to all covenants of this Contract. Except
      as set forth above, the Contractor shall not assign, sublet, or transfer
      the Contractor's interest in this Contract without the prior written
      consent of the Office.

V.    Drug-Free Workplace Certification

      The Contractor hereby covenants and agrees to make a good faith effort to
      provide and maintain a drug-free workplace. Contractor will give written
      notice to the State within ten (10) days after receiving actual notice
      that the Contractor or an employee of the Contractor has been convicted of
      a criminal drug violation occurring in the contractor's workplace.

      False certification or violation of the certification may result in
      sanctions including, but not limited to, suspension of contract payments,
      termination of the contract or agreement

MCO Contract Extension           Page 19 of 26               Harmony Health Plan

<PAGE>

      and/or debarment of contracting opportunities with the State of Indiana
      for up to three (3) years.

      In addition to the provisions of the above paragraphs, if the total
      contract amount set forth in this agreement is in excess of $25,000.00,
      Contractor hereby further agrees that this agreement is expressly subject
      to the terms, conditions, and representations of the following
      certification:

      This certification is required by Executive Order No. 90-5, April 12,
      1990, issued by the Governor of Indiana. Pursuant to its delegated
      authority, the Indiana Department of Administration is requiring the
      inclusion of this certification in all contracts with and grants from the
      State of Indiana in excess of $25,000.00. No award of a contract shall be
      made, and no contract, purchase order or agreement, the total amount of
      which exceeds $25,000.00, shall be valid, unless and until this
      certification has been fully executed by the Contractor and made a part of
      the contract or agreement as part of the contract documents.

      The Contractor certifies and agrees that it will provide a drug-free
      workplace by:

      1. Publishing and providing to all of its employees a statement notifying
      employees that the unlawful manufacture, distribution, dispensing,
      possession or use of a controlled substance is prohibited in the
      Contractor's workplace and specifying the actions that will be taken
      against employees for violations of such prohibition;

      2. Establishing a drug-free awareness program to inform employees of (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 abuse violations occurring
      in the workplace;

      3. Notifying all employees in the statement required by subparagraph (1)
      above that as a condition of continued employment the employee will (A)
      abide by the terms of the statement; and (B) notify the Contractor of any
      criminal drug statute conviction for a violation occurring in the
      workplace no later than five (5) days after such conviction;

      4. Notifying in writing the State within ten (10) days after receiving
      notice from an employee under subdivision (3)(B) above, or otherwise
      receiving actual notice of such conviction;

      5. Within thirty (30) days after receiving notice under subdivision (3)(B)
      above of a conviction, imposing the following sanctions or remedial
      measures on any employee who is convicted of drug abuse violations
      occurring in the workplace: (1) take appropriate personnel action against
      the employee, up to and including termination; or (2) require such
      employee to satisfactorily participate in a drug abuse assistance or
      rehabilitation program approved for such purposes by a Federal, State or
      local health, law enforcement, or other appropriate agency; and

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<PAGE>

      Making a good faith effort to maintain a drug-free workplace through the
      implementation of subparagraphs (1) through (5) above.

W.    Lobbying Activities. Pursuant to 31 U S.C. Section 1352, and any
      regulations promulgated thereunder, the Contractor hereby assures and
      certifies that no federally 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 in 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 contract, and the extension, continuation,
      renewal, amendment, or modification of any federal contract, grant, loan
      or cooperative contract. 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 Contract, the Contractor shall
      complete and submit Standard Form-LLL, "Disclosure Form to Report
      Lobbying", in accordance with its instructions.

X.    Access to Records. The Contractor and any subcontractor shall maintain all
      books, documents, papers, accounting records and any other evidence
      pertaining to the cost incurred under this agreement. Contractor and any
      subcontractors shall make such materials available at all reasonable times
      during the contract period and for three (3) years from the date of final
      payment under the Contract or until all pending matters are closed,
      whichever date is later, for inspection by the Office, or any other duly
      authorized representative of the State of Indiana or the Federal
      government. Copies thereof shall be furnished at no cost to the State if
      requested. To the extent that such records reveal information about
      salaries/compensation of the Contractor's employees or financial statement
      of the Contractor that are not directly pertinent to this Contract, the
      Contractor may redact it.

Y.    Environmental Standards. If the contract amount set forth in this Contract
      is in excess of $100,000, the Contractor shall comply with all applicable
      standards, orders, or requirements issued under section 306 of the Clean
      Air Act (42 U.S.C. Section 7606), section 508 of the Clean Water Act (33
      U.S.C. Section 1368), Executive Order 11738, and Environmental Protection
      Agency regulations (40 C.F.R. Part 32), which prohibit the use under
      non-exempt Federal contracts of facilities included on the EPA List of
      Violating Facilities. The Contractor shall report any violations of this
      paragraph to the State of Indiana and to the United States Environmental
      Protection Agency Assistant Administrator for Enforcement.

Z.    Conflict of Interest

      1.    As used in this section:

                  "Immediate family" means the spouse and the unemancipated
            children of an individual.

MCO Contract Extension           Page 21 of 26              Harmony Health Plan

<PAGE>

            "Interested party" means:

            a. The individual executing this Contract;

            b. An individual who has an interest of three percent (3%) or more
               of the Contractor if the Contractor is not an individual; or

            c. Any member of the immediate family of an individual specified
               under subdivision a or b.

            "Department" means the Indiana a Department of Administration.

            "Commission" means the State Ethics Commission.

            2. The Department may a cancel this Contract without recourse by the
            Contractor if any interested party is an employee of the State of
            Indiana.

            3. The Department will not exercise its right of cancellation under
            section 2 above if the Contractor gives the Department an opinion by
            the Commission indicating that the existence of this Contract and
            the employment by the State of Indiana of the interested party does
            not violate any statute or code relating to ethical conduct of state
            employ es. The Department may take action, including cancellation of
            this Contract co consistent with an opinion of the Commission
            obtained under this section.

            4. The Contractor has an affirmative obligation under this Contract
            to disclose to the Department when an interested party is or becomes
            an employee of the State of Indiana. The obligation under this
            section extends only to those facts which the Contractor knows or
            reasonably could know.

AA.   Assurance of Compliance with Civil Rights Act of 1964, Section 504 of the
      Rehabilitation Act of 1973 and the Age Discrimination Act of 1975, the
      Americans with Disabilities Act of 1990 and Title IX of the Education
      Amendments of 1972: The Contractor agrees that it, and all of its
      subcontractors and providers, will comply with the following:

            1. Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352), as
            amended, and all requirements imposed by or pursuant to the
            Regulation of the Department of Health and Human Services (45 C.F.R.
            Part 80), to the end that, in accordance with Title VI of that Act
            and the Regulation, no person in the United States shall on the
            ground of race, color, or national origin, be excluded from
            participation in, be denied the benefits of, or be otherwise
            subjected to discrimination under any program or activity for which
            the Contractor receives Federal financial assistance under this
            Contract.

            2. Section 504 of the Rehabilitation Act of 1973 (Pub. L. 93-112),
            as amended, and all requirements imposed by or pursuant to the
            Regulation of the

MCO Contract Extension           Page 22 of 26               Harmony Health Plan

<PAGE>

            Department of Health and Human Services (45 C.F.R. Part 84), to the
            end that, in accordance with Section 504 of that Act and the
            Regulation, no otherwise qualified handicapped individual in the
            United States shall, solely by reason of his/her handicap, be
            excluded from participation in, be denied the benefits of, or be
            subjected to discrimination under any program or activity for which
            the Contractor receives Federal financial assistance under this
            Contract.

            3. The Age Discrimination Act of 1975 (Pub. L. 94-135), as amended,
            and all requirements imposed by or pursuant to the Regulation of the
            Department of Health and Human Services (45 C.F.R. Part 91), to the
            end that, in accordance with the Act and the Regulation, no person
            in the United States shall, on the basis of age, be denied the
            benefits of, be excluded from participation in, or be subjected to
            discrimination under any program or activity for which the
            Contractor receives Federal financial assistance under this
            Contract.

            4. The Americans with Disabilities Act of 1990 (Pub. L. 101-336), as
            amended, and all requirements imposed by or pursuant to the
            Regulation of the Department of Justice (28 C.F.R. 35.101 et seq.),
            to the end that in accordance with the Act and Regulation, no person
            in the United States with a disability shall, on the basis of the
            disability, be excluded from participation in, be denied the
            benefits of, or otherwise be subjected to discrimination under any
            program or activity for which the Contractor receives Federal
            financial assistance under this Contract.

            5. Title IX of the Education Amendments of 1972, as amended (20
            U.S.C. Sections 1681-1683, and 1685-1686), an all requirements
            imposed by or pursuant to regulation, to the end that, in accordance
            with the Amendments, no person in the United States shall, on the
            basis of sex, be excluded from participation in, be denied the
            benefits of, or otherwise be subjected to discrimination under any
            program or activity for which the Contractor receives Federal
            financial assistance under this Contract.

      The Contractor agrees that compliance with this assurance constitutes a
      condition of continued receipt of Federal financial assistance, and that
      it is binding upon the Contractor, its successors, transferees and
      assignees for the period during which such assistance is provided. The
      Contractor further recognizes that the United States shall have the right
      to seek judicial enforcement of this assurance.

BB.   Security and Privacy of Health Information. The Contractor agrees to
      comply with all requirements of the Health Insurance Portability and
      Accountability Act of 1996 (HIPAA in all activities related to this
      contract, to maintain compliance throughout the life of the contract, to
      operate any systems used to fulfill the requirements of this contract in
      full compliance with HIPAA and to take no action which adversely affects
      the State's HIPAA compliance.

      The parties acknowledge that the Department of Health and Human Services
      has issued the Final Rule, as amended from time to time on the Standards
      for Privacy of Individually

MCO Contract Extension           Page 23 of 26               Harmony Health Plan

<PAGE>

      Identifiable Health Information, as required by the Administrative
      Simplification Section of the Health Insurance Portability and
      Accountability Act of 1996 (HIPAA). To the extent required by the
      provisions of HIPAA and regulations promulgated thereunder, the
      Contractor assures that it will appropriately safeguard Protected Health
      Information (PHI), as defined by the regulations, which is made available
      to or obtained by the Contractor in the course of its work under the
      contract. The Contractor agrees to comply with applicable requirements of
      law relating to PHI with respect to any task or other activity it performs
      for the Office including, as required by the final regulations:

      1.    Not using or further disclosing PHI other than as permitted or
            required by this Contract or by applicable law;

      2.    Using appropriate safeguards to prevent use or disclosure of PHI
            other than as provided by this Contract or by applicable law;

      3.    Reporting to the Office any use or disclosure by the Contractor, its
            agent, employees, subcontractors or third parties, of PHI obtained
            under this Contract in a manner not provided for by this Contract or
            by applicable law of which the Contractor becomes aware;

      4.    Ensuring that any subcontractors or agents to whom the Contractor
            provides PHI received from, or created or received by the Contractor
            on behalf of the Office agrees to the same restrictions, conditions
            and obligations applicable to such party regarding PHI;

      5.    Making the Contractor's internal practices, books and records
            related to the use of disclosure of PHI received from or created or
            received by the Contractor on behalf of the Office available to the
            Secretary of the United States Department of Health and Human
            Services for purposes of determining the Office's compliance with
            applicable law. The Contractor shall immediately notify the Office
            upon receipt by the Contractor of any such request, and shall
            provide the Office with copies of any materials made available in
            response to such a request;

      6.    Making available the information required to provide an accounting
            of disclosures pursuant to applicable law; and

      7.    At the termination of this Contract, returning or destroying all PHI
            obtained under this Contract.

BB.   Termination by the Contractor. This Contract may be terminated by the
      Contractor upon one hundred eighty (180) days prior written notice to the
      Offices. The Contractor will be reimbursed for services performed prior to
      the effective date of termination consistent with the terms of the
      Contract. In no event will the Offices be liable for services performed
      after the effective date of termination, without written authorization
      from the Offices.

CC.   Change in Scope of Work -- In the event the Offices require a major change
      in scope, character or complexity of the work after the work has
      commenced, adjustments in compensation to the Contractor shall be
      determined by the Office, in the exercise of its honest and reasonable
      judgment, and the Contractor shall not commence the additional work or the
      change in the scope of work until authorized in writing by the Offices. No
      claim for additional compensation shall be made in the absence of a prior
      written approval executed by all signatories her to.

MCO Contract Extension            Page 24 of 26              Harmony Health Plan

<PAGE>

DD.   Substantial Performance. This Contract shall be deemed to be substantially
      performed only when fully performed according to its terms and conditions
      and any modification thereof.

EE.   Penalties/Interest/Attorney's Fees. The State will in good faith perform
      its required obligations hereunder and does not agree to pay any
      penalties, liquidated damages, interest, or attorney's fees, except as
      required by Indiana law, in part, IC 5-17-5, IC 34-54-8, and IC 34-13-1.

FF.   Authority to Bind Contractor. Notwithstanding anything in the Contract to
      the contrary, the signatory for the Contractor represents that he/she has
      been duly authorized to execute contracts on behalf of the Contractor
      designated herein and has obtained all necessary or applicable approval
      from the home office of the Contractor, if applicable, to make this, the
      contract, fully binding upon the Contractor when his/her signature is
      affixed and is not subject to home office acceptance hereto when accepted
      by the State of Indiana.

GG.   Performance Bond. The Contractor agrees that a performance bond in the
      amount of five hundred thousand dollars ($500,000.00) will be maintained
      in the Indiana Department of Administration (IDOA). Said bond is in the
      form of a cashier's check, a certified check, or a surety bond executed by
      a surety company authorized to do business in the State of Indiana as
      approved by the Insurance Department of State of Indiana. No other check
      or surety will be accepted. The performance bond shall be made payable to
      the IDOA and shall be effective for the duration of the contract and any
      extensions thereof. The State reserves the right to increase the
      performance bond amount if enrollment levels indicate the need for higher
      liquidated damages.

HH.   Non-Collusion and Acceptance. The undersigned attests, subject to the
      penalties for perjury, that he/she is the contracting party, or that
      he/she is the representative, agent, member or officer of the contracting
      party, that he/she has not, nor has any other member, employee,
      representative, agent, or officer of the firm, company, corporation, or
      partnership represented by him/her, directly or indirectly, to the best of
      his/her knowledge, entered into or offered to enter into any combination,
      collusion, or agreement to receive or pay, and that he/she has not
      received or paid, any sum of money or other consideration for the
      execution of this agreement other than that which appears upon the face of
      the agreement.

         /// The remainder of this page is left intentionally blank. ///

MCO Contract Extension                                       Harmony Health Plan

                                 Page 25 of 26

<PAGE>

IN WITNESS WHEREOF, [Contractor's Name] and the State of Indiana have, through
duly authorized representatives, entered into this agreement. The parties having
read and understand the foregoing terms of the Contract do by their respective
signatures dated below hereby agree to the terms thereof.

For the Contractor:                        For the State of Indiana:

/s/ John Blank
______________________________________     _____________________________________
John Blank, MD, President/CEO              Melanie Bella, Assistant Secretary
Harmony Health Plan of Illinois, Inc.      Office of Medicaid Policy & Planning

Date: 12/20/02                             Date:________________________________

                                           _____________________________________
                                           Kathryn H. Moses, Director
                                           Children's Health Insurance Program

                                           Date:________________________________

APPROVED:                                  APPROVED:

______________________________________     _____________________________________
Marilyn Schultz, Director                  David Perlini, Commissioner
State Budget Agency                        Department of Administration

Date:_________________________________     Date:________________________________

APPROVED AS TO FORM AND LEGALITY

______________________________________
Stephen Carter
Attorney General of Indiana

Date:_________________________________

MCO Contract Extension                                       Harmony Health Plan

                                  Page 26 of 26

<PAGE>

[INDIANA FAMILY & SOCIAL SERVICES ADMINISTRATION LOGO ] Frank O'Bannon, Governor
                                                                State of Indiana

"People                                   OFFICE OF MEDICAID POLICY AND PLANNING
helping people                               402 W. WASHINGTON STREET, ROOM W382
help                                                INDIANAPOLIS, IN  46204-2739
themselves"
                                                        John Hamilton, Secretary

June  13, 2002

Robert Currie, Executive Director
Harmony Health Plan
504 Broadway, Suite 200
Gary, Indiana 46402

RE:  Hoosier Healthwise MCO Contract, First Amendment

Dear Mr. Currie:

Enclosed is your copy of the fully executed first amendment to Harmony's
contract with the State for the Hoosier Healthwise program. The amendmentis
effective April 1, 2002 through December 31, 2002.

This amendment was necessary due to the implementation of mandatory riskbased
managed care in several Indiana counties pursuant to IC 12-15-12-14. The
amendment adds new requirements and addresses changes to the capitation rates.
Some of the additional requirements include the following:

      1.    The submission of the "Mandatory RBMC Transition Report;

      2.    Written approval from OMPP prior to closing a provider network;

      3.    Monthly telephone abandonment rate of 5% for the member and provider
            helplines;

      4.    Developing a plan for identifying and serving people with special
            needs;

      5.    Ninety-day notice to OMPP of insufficient PMP network in a mandatory
            county, and

      6.    Inclusion of a 90-day termination clause in PMP agreements.

Thank you for your commitment to the Hoosier Healthwise program If you have any
questions, please do not hesitate to contact me at 317-232-4345.

Sincerely,

/s/ Ginger Brophy
--------------------------------------
Ginger Brophy
Acting Co-Director of Operations- Managed Care

Enclosure

                  Equal Opportunity/Affirmative Action Employer           [SEAL]

<PAGE>

                                 FIRST AMENDMENT
                                     TO THE
                                CONTRACT BETWEEN
                   THE OFFICE OF MEDICAID POLICY AND PLANNING,
             THE OFFICE OF THE CHILDREN'S HEALTH INSURANCE PROGRAM
                                      AND
                     HARMONY HEALTH PLAN OF ILLINOIS, INC.

      This FIRST AMENDMENT to the above-referenced Contract is made and entered
into by and between the State of Indiana [hereinafter "State" of "State of
Indiana"], through the Office of Medicaid Policy and Planning and Office of the
Children's Health Insurance Program [hereinafter called "Office"], of the
Indiana Family and Social Services Administration, 402 West Washington Street,
Room W382, Indianapolis, Indiana 46204, and Harmony Health Plan of Illinois,
Inc., 125 South Wacker Drive, Suite 2900, Chicago, Illinois, doing business as
Harmony Health Plan of Indiana, (hereinafter "Contractor").

      WHEREAS, the State of Indiana and Contractor have previously entered into
a contract for a term beginning January 1, 2001 and ending December 31, 2002,
[hereinafter "the original contract"] for services to arrange for and to
administer a risk-based managed care (RBMC) program for certain Hoosier
Healthwise enrollees in packages A, B and C as procured through Broad Agency
Announcement (BAA) 01-28;

      WHEREAS, the parties desire to further extend the duties to be performed
by the Contractor due to mandatory risk-based managed care (RBMC) in certain
counties pursuant to IC 12-15-12-14;

      NOW THEREFORE, the parties enter into this FIRST AMENDMENT for the
consideration set out below, all of which is deemed to be good and sufficient
consideration in order to make this FIRST AMENDMENT a binding legal instrument.

      1.    The parties hereby ratify and incorporate herein each term and
            condition set out in the original contract, as well as all written
            matters incorporated therein except as specifically provided for by
            this FIRST AMENDMENT.

      2.    The term of this amendment is from April 1, 2002, through December
            31, 2002, subject to the termination and/or extension provisions as
            provided for under the original contract.

      3.    The parties agree that the BAA is amended to add the following
            additional Contractor Duties:

            A.    Section 3.6.1.3 of the BAA is amended to require the
                  Contractor to submit the "Mandatory RBMC Transition Report"
                  (Attachment A) according the schedule set out in the "2002
                  Hoosier Healthwise MCO Reporting Calendar for Mandatory RBMC
                  Transition Report" (Attachment B) unless the MCO has received
                  written notification from OMPP that the report, or certain
                  data elements in the report, is/are no longer required or may
                  be reported less frequently.

MCO Contract, First Amendment               Harmony Health Plan of Indiana, Inc.

                                  Page 1 of 4

<PAGE>

            B.    The parties agree that Section 3.6.3 of the BAA is amended to
                  require the Contractor to obtain written approval of the State
                  prior to closing its provider networks, which shall not be
                  unreasonably withheld or delayed.

            C.    The parties agree that Sections 3.6.6 and 3.6.7.3 of the BAA
                  are amended to require the Contractor to maintain a monthly
                  telephone abandonment rate equal to or less than five percent
                  of calls received each by the member helpline and provider
                  helpline. The parties agree that BAA Section 3.16 is amended
                  to add a new section 3.16.8 to read as follows:

                        Section 3.16.8 The MCO will comply with the call
                        abandonment requirements for the member and provider
                        helplines described in Sections 3.6.6. and 3.6.7.3 of
                        this BAA. Because actual damages caused by
                        non-compliance are not subject to exact determination,
                        the State will assess the MCO, as liquidated damages and
                        not as a penalty, (a) two hundred dollars ($200.00) for
                        each business day the MCO fails to submit required
                        documentation to provide evidence of compliance with
                        this requirement, or (b) two thousand dollars ($2000.00)
                        for each month the MCO fails to meet the requirement
                        after 2 consecutive months of non-compliance on the
                        member helpline or (c) two thousand dollars ($2000.00)
                        for each month the MCO fails to meet the requirement
                        after 2 consecutive months of non-compliance on the
                        provider helpline.

            D.    The parties agree that Section 3.5.3 of the BAA is amended to
                  allow OMPP to change, at OMPP's discretion, the frequency of
                  the MCO Enrollment Rosters generated by OMPP's fiscal agent to
                  once per month, upon reasonable and adequate prior written
                  notice to the Contractor.

            E.    The parties agree that Section 3.6.3 of the BAA is amended to
                  require the Contractor to develop and adhere to a plan for
                  identifying and serving people with special needs. The plan
                  must satisfy any applicable federal requirements.

      4.    The parties agree that, in consideration of the services to be
            performed by the Contractor as delineated in this First Amendment
            and the original contract, the Offices' will adjust the capitation
            rates, as contained in the Offices' capitation payment listing, as
            the counties transition to mandatory MCO enrollment. The rate
            adjustment factors shown in the following table will be applied to
            the base rates for the entire region upon implementation of
            mandatory enrollment for the specified county or county
            combinations. The base rates for the region are the rates in effect
            on January 1, 2002, without any adjustment for mandatory enrollment.

<TABLE>
<CAPTION>
REGION       COUNTY       PACKAGE A/B         PACKAGE C
------     ----------     -----------         ---------
<S>        <C>            <C>                 <C>
North        Allen            0.9%              1.7%
North       Elkhart           0.7%              0.9%
North      St. Joseph         1.4%              1.6%
North         Lake            2.1%              2.1%
</TABLE>

MCO Contract, First Amendment               Harmony Health Plan of Indiana, Inc.

                                  Page 2 of 4

<PAGE>

<TABLE>
<S>          <C>                                 <C>                <C>
North               Allen/Elkhart                1.4%               2.2%
North                  Allen/St. Joseph          1.9%               2.5%
North                 Allen/Lake                 2.4%               2.8%
North             Elkhart/St. Joseph             1.8%               2.1%
North                Elkhart/Lake                2.6%               2.8%
North               Lake/St. Joseph              2.6%               2.8%
North          Allen/Elkhart/ St. Joseph         2.2%               2.8%
North             Allen/Elkhart/Lake             2.7%               3.1%
North           Elkhart/St. Joseph/Lake          2.8%               3.0%
North        Allen/Elkhart/St. Joseph/Lake       3.0%               3.4%
Central                 Marion                   1.8%               2.1%
Central                Hamilton                  0.3%               0.6%
Central             Marion/Hamilton              1.9%               2.3%
</TABLE>

      5.    The Contractor agrees to provide OMPP with prior written notice at
            least ninety (90) days in advance of their inability to maintain a
            sufficient Primary Medical Provider (PMP) network in any of the
            counties where mandatory RBMC has been or will be implemented,
            including Marion, Allen, Elkhart, St. Joseph, Lake, Hamilton, and
            Vanderburgh Counties, such that the program would not be able to
            maintain the appropriate member choice of two (2) MCOs, pursuant to
            federal requirements.

      6.    The Contractor agrees that a contracted PMP in a mandatory RBMC
            county may terminate his/her agreement for any reason upon written
            notice to the Contractor. The Contractor may require that the
            physician provide said notice to the Contractor up to ninety (90)
            days prior to termination. The Contractor further agrees that any
            existing PMP agreements that fail to meet this requirement shall be
            amended to comply with this requirement within sixty (60) days of
            the effective date of this amendment.

      7.    The parties agree that this First Amendment has been duly prepared
            and executed pursuant to Section VII.B. of the original contract.

      8.    The undersigned attests, subject to the penalties for perjury, that
            he is the contracting party, or that he is the representative,
            agent, member or officer of the contracting party, that he has not,
            nor has any other member employee, representative, agent or officer
            of the firm, company, corporation or partnership represented by him,
            directly or indirectly, to the best of his knowledge, entered into
            or offered to enter into any combination, collusion or agreement to
            receive or pay, and that he has not received or paid, any sum of
            money or other consideration for the execution of this agreement
            other than that which appears upon the face of the agreement.

MCO Contract, First Amendment               Harmony Health Plan of Indiana, Inc.

                                   Page 3 of 4

<PAGE>

WHEREOF, the parties have executed this Contract.

For the Contractor:                      For the State of Indiana:

/s/ John Blank MD                        /s/ Melanie Bella
--------------------------------------   ---------------------------------------
John Blank, MD, President/CEO            Melanie Bella, Assistant Secretary
Harmony Health Plan of Illinois, Inc.    Office of Medicaid Policy and Planning

Date: 3/29/02                            Date: 4/3/02

                                         /s/ Kathryn H. Moses
                                         ---------------------------------------

                                         Kathryn H. Moses, Director
APPROVED:                                Office of Children's Health Insurance

Program                                  Date: 4/9/02

/s/ Betty Cockrum
--------------------------------------
Betty Cockrum, Director
State Budget Agency

Date:5/6/02

APPROVED AS TO FORM AND LEGALITY:        APPROVED:

/s/ Stephen Carter                       /s/ Glenn R. Lawrence
--------------------------------------   ---------------------------------------
Stephen Carter                           Glenn R. Lawrence Commissioner
Attorney General of Indiana              Department of Administration

Date: 6/7/02                             Date : APR 22, 2002

MCO Contract, First Amendment               Harmony Health Plan of Indiana, Inc.

                                  Page 4 of 4

<PAGE>

                                  ATTACHMENT A
                        MANDATORY RBMC TRANSITION REPORT

Name of MCO                           Sample Template
Report Period Start Date                XXXXX, 2002
Report Due Date                         XXXXX, 2002

                        PROVIDER ACCESS AND AVAILABILITY

<TABLE>
<CAPTION>
     Reporting Requirement                                 Mandatory Risk Based Managed Care (RBMC) Counties
     ---------------------                                 -------------------------------------------------
                                                ALLEN    [ILLEGIBLE]   ST. JOSEPH  ELKHART  HAMILTON   LAKE    VANDERBURGH
                                               -------   -----------   ----------  -------  --------  -------  -----------
<S>                                            <C>       <C>           <C>         <C>      <C>       <C>      <C>
Potential RBMC member enrollment                25,249   [ILLEGIBLE]     23,682     14,993    3,563   55,573      15,278

Current MCO member enrollment

PRIMARY MEDICAL PROVIDER*

OB-GYN contracts at beginning of period

Pediatrician contracts at beginning of period

Other PMP contracts at beginning of period

New-OB-GYN contracts this period

New-Pediatrician contracts this period

New-Other PMP contracts this period

All PMPs at end of period                            0         0           0         0         0        0            0

Percent increase                               #DIV/0!   #DIV/0!     #DIV/0!   #DIV/0!    #VALUE! #DIV/0!      #DIV/0!

PMP-to-member ratio at end of period           #DIV/0!   #DIV/0!     #DIV/0!   #DIV/0!   #DIV/0!  #DIV/0!      #DIV/0!

PMP contracts pending- high probability of
completion within 60 days of
scheduled transition date

SPECIALTY PROVIDERS

Specialty providers at beginning of period

Specialty providers at end of period

FACILITIES

Acute care hospitals beginning of period

Acute care hospitals end of period

Hospital contracts pending - high probability
of completion within 60 days of scheduled
transition date

ANCILLARY PROVIDERS

Ancillary providers beginning of period (please
describe in Comments section)

Ancillary providers end of period (please
describe in Comments section)
</TABLE>

----------
INSTRUCTIONS: MCOs should complete cells highlighted in yellow only. Provider
and hospital disenrollments should be reported and described in the Comments
section.

"PMP contract" refers to a contract with an individual provider rather than a
delivery system

TUCKER ALAN INC. - 1/16/02

                                       1
<PAGE>

                                  ATTACHMENT A
                        MANDATORY RBMC TRANSITION REPORT

                               CLAIMS PROCESSING

<TABLE>
<CAPTION>
         Reporting Requirement                   Current Period  Previous Period
-----------------------------------------------  --------------  ---------------
<S>                                              <C>             <C>
Claims on-hand at beginning of period

Claims received this period

Claims paid this period*

Claims denied this period*

Claims on-hand end of period                            0

Average length of time to pay or deny (in days)
</TABLE>

*Claims paid are those claims for which some payment was made to the billing
provider, and those claims which were submitted as encounter claims. Claims
adjudicated but not paid should not be counted as paid claims. Denied claims are
those claims for which all payments were denied and no payment was made. Include
all claims without regard to type (UB 92 vs. HCFA 1500).

TUCKER ALAN INC. - 1/16/02

                                       2
<PAGE>

                                  ATTACHMENT A
                        MANDATORY RBMC TRANSITION REPORT

                            HELPLINE MEMBER SERVICES

<TABLE>
<CAPTION>

           Reporting Requirement                 Current Period  Previous Period
-----------------------------------------------  --------------  ---------------
<S>                                              <C>             <C>
MEMBER CALLS

Number FTEs

Member Calls received

Member calls answered live

Abandonment rate                                     #DIV/0!

Three most frequent reasons for member calls,
as percent of all calls                                %

PROVIDER CALLS

Number FTEs

Provider calls received

Provider calls answered live

Abandonment rate                                      #DIV/0!

Three most frequent reasons for provider
calls, as percent of all calls                          %
</TABLE>

TUCKER ALAN INC. - 1/16/02

                                       3
<PAGE>

                                  ATTACHMENT A
                        MANDATORY RBMC TRANSITION REPORT

<TABLE>
<CAPTION>
                Report                              Comments
-----------------------------------------------  --------------
<S>                                              <C>
PROVIDER ACCESS AND AVAILABILITY

CLAIMS PROCESSING

HELPLINE AND MEMBER SERVICES
</TABLE>

TUCKER ALAN INC. - 1/16/02

                                       4
<PAGE>

                                  ATTACHMENT B
                 2002 HOOSIER HEALTHWISE MCO REPORTING CALENDAR
                      FOR MANDATORY RBMC TRANSITION REPORT

<TABLE>
<CAPTION>
        REPORTING PERIOD                            DATE DUE*
----------------------------------------  --------------------------------------
<S>                                       <C>
January 15th through January 31st         Tuesday, February 5, 2002

February 1st through February 14th        Tuesday, February 19, 2002

February 15th through February 28th       Tuesday, March 5, 2002

March 1st through March 14th              Tuesday, March 19, 2002

March 15th through March 31st             Wednesday, April 3, 2002

April 1st through April 14th              Wednesday, April 17, 2002

April 15th through April 30th             Friday, May 3, 2002

May 1st through May 14th                  Friday, May 17, 2002

May 15th through May 31st                 Wednesday, June 5, 2002

June 1st through June 14th                Wednesday, June 19, 2002

June 15th through June 30th               Wednesday, July 3, 2002

July 1st through July 14th                Wednesday, July 17, 2002

July 15th through July 31st               Monday, August 5, 2002

August 1st through August 14th            Monday, August 19, 2002

August 15th through August 31st           Thursday, September 5, 2002

September 1st through September 14th      Wednesday, September 18, 2002

September 15th through September 30th     Thursday, October 3, 2002

October 1st through October 14th          Thursday, October 17, 2002

October 15th through October 31st         Tuesday, November 5, 2002

November 1st through November 14th        Tuesday, November 19, 2002

November 15th through November 30th       Wednesday, December 4, 2002

December 1st through December 14th        Wednesday, December 18, 2002

December 15th through December 31st       Monday, January 6, 2003
</TABLE>

----------
* Date due is by the end of the third business day after the reporting
  period..

TUCKER ALAN INC.                                                     Page 1 of 1
01/14/02

<PAGE>

                                CONTRACT BETWEEN
                   THE OFFICE OF MEDICAID POLICY AND PLANNING,
             THE OFFICE OF THE CHILDREN'S HEALTH INSURANCE PROGRAM
                                      AND
                     HARMONY HEALTH PLAN OF ILLINOIS, INC.

      This Contract is made and entered into by and between the State of Indiana
(hereinafter "State" or "State of Indiana"), through the Office of Medicaid
Policy and Planning and the Office of Children's Health Insurance Program
(hereinafter "the Offices"), of the Indiana Family and Social Services
Administration, 402 West Washington Street, W382, Indianapolis, Indiana, and
Harmony Health Plan of Illinois, Inc., 125 South Wacker Drive, Suite 2900,
Chicago, Illinois, doing business as Harmony Health Plan of Indiana,
(hereinafter "Contractor").

      WHEREAS, I.C. 12-15-30-1 and I.C. 12-17.6 authorize the Offices to enter
into contracts to assist in the administration of the Indiana Medicaid and the
Indiana Children's Health Insurance Program (CHIP), respectively;

      WHEREAS, the State of Indiana desires to contract for services to arrange
for and to administer a risk-based managed care program (RBMC) for certain
Hoosier Healthwise enrollees in Packages A, B and C as procured through BAA 01
-28;

      WHEREAS this Contract contains the payment rates under which the
Contractor shall be paid and that these rates have been determined to be
actuarially sound and not in excess of the fee-for-service upper payment limit
(FFS-UPL) specified for risk contracts in 42 CFR 447.361;

      WHEREAS, the Contractor is willing and able to perform the desired
services for Hoosier Healthwise Packages A, B and C;

      THEREFORE, the parties to this Contract agree that the terms and
conditions specified below will apply to services in connection with this
contract, and such terms and conditions are as follows:

                           I. TERM AND RENEWAL OPTION

      This Contract is effective from January 1, 2001 through December 31, 2002.
At the discretion of the Offices the term may be extended for up to two
additional years. In no event shall the term exceed December 31, 2004.

MCO Contract                                                 Harmony Health Plan

                                  PAGE 1 of 24
<PAGE>

                                 II. DEFINITIONS

      For the purposes of this contract, terms not defined herein shall be
defined as they are in the documents incorporated in and attached to this
document, subject to the order of precedence spelled out in Section V of this
document.

"Contract" means this document and all documents or standards incorporated
herein, expressly including but not limited to the following documents appended
hereto and listed in chronological order and to be given precedence as described
in Section V of this document, entitled "Order of Precedence":

      Attachment 1 - BAA 01-28, released July 31, 2000;

      Attachment 2 - Contractor's response to BAA 01-28, submitted
                     September 25, 2000, excluding the following sections:
                     Section 5.3.8,
                     Section 5.4.4, Appendices A, B, C, D, H; Exhibit 5.4.4I;
                     Exhibit 5.4.4M; Exhibit 5.4.4O;

      and,

      Any other documents, standards, laws, rules or regulations incorporated by
      reference in the above materials, all of which are hereby incorporated by
      reference.

"Covered Services" means all services required to be arranged, administered,
managed or provided by or on behalf of the Contractor under this contract.

"Effective Date of Enrollment" means:

      -     The first day of the birth month of a newborn that is determined by
            the Offices to be an enrolled member;

      -     The fifteenth day of the current month for a member who has, between
            the twenty-sixth day of the previous month and the tenth day of the
            current month, been determined by the Offices to be an enrolled
            member; and,

      -     The first day of the following month for a member who has, between
            the eleventh day and the twenty-fifth day of a month, been
            determined by the Offices to be an enrolled member.

"Enrolled Member", or "Enrollee", means a Hoosier Healthwise-eligible member who
is listed by the Offices on the enrollment rosters to receive covered services
from the Contractor or its subcontractors, employees, agents, or providers, as
of the Effective Date of Enrollment, under this contract.

"Provider" means a physician, hospital, home health agency or any other
institution, or health or other professional person or entity, which
participates in the provision of services to an enrolled

MCO Contract                                                 Harmony Health Plan

                                  Page 2 of 24
<PAGE>

member under BAA 01-28, whether as an independent contractor, a subcontractor,
employee, or agent of the Contractor.

"Broad Agency Announcement", or "BAA", means BAA 01-28 for providers of managed
care services, released July 31, 2000.

                          III. DUTIES OF THE CONTRACTOR

A.    The Contractor agrees to assume financial risk for developing and managing
      a health care delivery system and for arranging or administering all
      Hoosier Healthwise covered services except, as set out in section 3.4.3 of
      the BAA, dental care, long-term institutional care, services provided as
      part of an individualized education plan (IEP) pursuant to the Individuals
      with Disabilities Education Act (IDEA) at 20 U.S.C. 1400 et seq.,
      behavioral health, and hospice services, in exchange for a per-enrollee,
      per-month fixed fee, to certain enrollees in Hoosier Healthwise Packages
      A, B and C. Wards of the State, foster children and children receiving
      adoption assistance may enroll on a voluntary basis and will not be
      subject to auto-assignment into the Hoosier Healthwise program. The
      Contractor must, at a minimum, furnish covered services up to the limits
      specified by the Medicaid and CHIP programs. The Contractor may exceed
      these limits. However, in no instance may any covered service's
      limitations be more restrictive than those which exist in the Indiana
      Medicaid fee-for-service program for Packages A and B, and the Children's
      Health Insurance Program for Package C.

B.    The Contractor agrees to perform all duties and arrange and administer
      the provision of all services as set out herein and contained in the BAA
      as attached and the Contractor's responses to the BAA as attached, all of
      which are incorporated into this Contract by reference. In addition, the
      Contractor shall comply with all policies and procedures defined in any
      bulletin, manual, or handbook yet to be distributed by the State or its
      agents insofar as those policies and procedures provide further
      clarification and are no more restrictive than any policies and procedures
      contained in the BAA and any amendments to the BAA. The Contractor agrees
      to comply with all pertinent state and federal statutes and regulations in
      effect throughout the duration of this Contract and as they may be amended
      from time to time.

C.    The Contractor agrees that it will not discriminate against individuals
      eligible to be covered under this Contract on the basis of health status
      or need for health services; and the Contractor may not terminate an
      enrollee's enrollment, or act to encourage an enrollee to terminate
      his/her enrollment, because of an adverse change in the enrollee's health.
      The disenrollment function will be carried out by a State contractor who
      is independent of the Contractor; therefore, any request to terminate an
      enrollee's enrollment must be approved by the Offices.

D.    The Contractor agrees that no services or duties owed by the Contractor
      under this Contract will be performed or provided by any person or entity
      other than the Contractor, except as contained in written subcontracts or
      other legally binding agreements. Prior to entering into

MCO Contract                                                 Harmony Health Plan

                                  Page 3 of 24

<PAGE>

any such subcontract or other legally binding agreement, the Contractor shall,
in each case, submit the proposed subcontract or other legally binding agreement
to the Offices for prior review and approval. Prior review and approval of a
subcontract or legally binding agreement shall not be unreasonably delayed by
the Offices. The Offices shall, in appropriate cases and as requested by the
Contractor, expedite the review and approval process. Under no circumstances
shall the Contractor be deemed to have breached its obligations under this
Contract if such breach was a result of the Offices' failure to review and
approve timely any proposed subcontract or other legally binding agreement. If
the Offices disapprove any proposed subcontract or other legally binding
agreement, the Offices shall state with reasonable particularity the basis for
such disapproval. No subcontract into which the Contractor enters with respect
to performance under this Contract shall in any way relieve the Contractor of
any responsibility for the performance of duties under this Contract. All
subcontracts and amendments thereto executed by the Contractor under this
Contract must meet the following requirements; any existing subcontracts or
legally binding agreements which fail to meet the following requirements shall
be revised to include the requirements within ninety(90) days from the effective
date of this Contract:

1.    Be in writing and specify the functions of the subcontractor.

2.    Be legally binding agreements.

3.    Specify the amount, duration and scope of services to be provided by the
      subcontractor.

4.    Provide that the Offices may evaluate, through inspection or other means,
      the quality, appropriateness, and timeliness of services performed.

5.    Provide for inspections of any records pertinent to the contract by the
      Offices.

6.    Require an adequate record system to be maintained for recording services,
      charges, dates and all other commonly accepted information elements for
      services rendered to recipients under the contract.

7.    Provide for the participation of the Contractor and subcontractor in any
      internal and external quality assurance, utilization review, peer review,
      and grievance procedures established by the Contractor, in conjunction
      with the Offices.

8.    Provide that the subcontractor indemnify and hold harmless the State of
      Indiana, its officers, and employees from all claims and suits, including
      court costs, attorney's fees, and other expenses, brought because of
      injuries or damage received or sustained by any person, persons or
      property that is caused by any act or omission of the Contractor and/or
      the subcontractors. The State shall not provide such indemnification to
      the subcontractor.

9.    Identify and incorporate the applicable terms of this Contract and any
      incorporated documents. The subcontract shall provide that the
      subcontractor

MCO Contract                                               Harmony Health Plan

                                  Page 4 of 24

<PAGE>

            agrees to perform duties under the subcontract, as those duties
            pertain to enrollees, in accordance with the applicable terms and
            conditions set out in this Contract, any incorporated documents, and
            all applicable state and federal laws, as amended.

E.    The Contractor agrees that, during the term of this Contract, it shall
      maintain, with any in-network provider rendering health care services
      under the BAA, provider service agreements which meet the following
      requirements; any existing provider service agreements which fail to meet
      the following requirements shall be revised to include the requirements
      within ninety (90) days from the effective date of this Contract. The
      provider service agreements shall:

      1.    Identify and incorporate the applicable terms of this Contract and
            any incorporated documents. Under the terms of the provider services
            agreement, the provider shall agree that the applicable terms and
            conditions set out in this Contract, any incorporated documents, and
            all applicable state and federal laws, as amended, govern the duties
            and responsibilities of the provider with regard to the provision of
            services to enrollees.

      2.    Reference a written provider claim resolution procedure as set out
            in section III.Q. below.

F.    The Contractor agrees that all laboratory testing sites providing services
      under this Contract must have a valid Clinical Laboratory Improvement
      Amendments (CLIA) certificate and comply with the CLIA regulations at 42
      C.F.R. Part 493.

G.    The Contractor agrees that it shall:

      1.    Retain, at all times during the period of this Contract, a valid
            Certificate of Authority under applicable State laws issued by the
            State of Indiana Department of Insurance.

      2.    Ensure that, during the term of this Contract, each provider
            rendering health care services under the BAA is authorized to do so
            in accordance with the following:

            a.    The provider must maintain a current Indiana Health Coverage
                  Programs (IHCP) provider agreement and must be duly licensed
                  in accordance with the appropriate state licensing board and
                  shall remain in good standing with said board.

            b.    If a provider is not authorized to provide such services under
                  a current IHCP provider agreement or is no longer licensed by
                  said board, the Contractor is obligated to terminate its
                  contractual relationship authorizing or requiring such
                  provider to provide services under the BAA. The Contractor
                  must terminate its contractual relationship with the provider
                  as soon as the Contractor has knowledge of the termination of
                  the provider's license or the IHCP provider agreement.

MCO Contract                                               Harmony Health Plan

                                  Page 5 of 24

<PAGE>

      3.    Comply with the specific requirements for Health Maintenance
            Organizations (HMOs) eligible to receive Federal Financial
            Participation (FFP) under Medicaid, as listed in the State
            Organization and General Administration Chapter of the Health Care
            Financing Administration (HCFA) Medicaid Manual. These requirements
            include, but are not limited to the following:

            a.    The Contractor shall meet the definition of HMO as specified
                  in the Indiana State Medicaid Plan.

            b.    Throughout the duration of this Contract, the Contractor shall
                  satisfy the Chicago Regional Office of the Health Care
                  Financing Authority (hereinafter called HCFA) that the
                  Contractor is compliant with the Federal requirements for
                  protection against insolvency pursuant to 42 CFR 434.20(c)(3)
                  and 434.50(a), the requirement that the Contractor shall
                  continue to provide services to Contractor enrollees until the
                  end of the month in which insolvency has occurred, and the
                  requirement that the Contractor shall continue to provide
                  inpatient services until the date of discharge for an enrollee
                  who is institutionalized when insolvency occurs. The
                  Contractor shall meet this requirement by posting a
                  performance bond pursuant to Section VII, paragraph C, of this
                  Contract, and satisfying the statutory reserve requirements of
                  the Indiana Department of Insurance.

            c.    The Contractor shall comply with, and shall exclude from
                  participation as either a provider or subcontractor of the
                  Contractor, any entity or person that has been excluded under
                  the authority of Sections 1124A, 1128 or 1128A of the Social
                  Security Act or does not comply with the requirements of
                  Section 1128(b) of the Social Security Act.

            d.    In the event that the HCFA determines that the Contractor has
                  violated any of the provisions of 42 CFR 434.67(a), HCFA may
                  deny payment of FFP for new enrollees of the HMO under 42 USC
                  1396b(m)(5)(B)(ii). The Offices shall automatically deny
                  State payment for new enrollees whenever, and for so long
                  as, Federal payment for such enrollees has been denied.

H.    The Contractor shall submit proof, satisfactory to the Offices, of
      indemnification of the Contractor by the Contractor's parent corporation,
      if applicable, and by all of its subcontractors.

I.    The Contractor shall submit proof, satisfactory to the Offices, that all
      subcontractors will hold the State harmless from liability under the
      subcontract. This assurance in no way relieves the Contractor of any
      responsibilities under the BAA or this Contract.

J.    The Contractor agrees that, prior to initially enrolling any Hoosier
      Healthwise Package A, B or C enrollees, it shall go through and
      satisfactorily complete the readiness review as described in the BAA. The
      required readiness review shall begin before the contract

MCO Contract                                               Harmony Health Plan

                                  Page 6 of 24

<PAGE>

      between the Contractor and the State is finalized and executed. Within
      ninety (90) days from the effective date of this Contract, the Contractor
      shall make a good faith effort to resolve, to the satisfaction of the
      Offices, any outstanding issues brought to the Contractor's attention by
      the Offices as a result of the readiness review.

K.    The Contractor shall establish and maintain a quality improvement program
      that meets the requirements of 42 CFR 434.34, as well as other specific
      requirements set forth in the BAA. The Offices and the HCFA may evaluate,
      through inspection or other means, including but not limited to, the
      review of the quality assurance reports required under this Contract, and
      the quality, appropriateness, and timeliness of services performed under
      this Contract. The Contractor agrees to participate and cooperate, as
      directed by the Offices, in the annual external quality review of the
      services furnished by the Contractor.

L.    In accordance with 42 CFR 434.28, the Contractor agrees that it and any of
      its subcontractors shall comply with the requirements, if applicable, of
      42 CFR 489, Subpart I, relating to maintaining and distributing written
      policies and procedures respecting advance directives. The Contractor
      shall distribute policies and procedures to adult individuals during the
      enrollee enrollment process and whenever there are revisions to these
      policies and procedures. The Contractor shall make available for
      inspection, upon reasonable notice and request by the Offices,
      documentation concerning its written policies, procedures and distribution
      of such written procedures to enrollees.

M.    Pursuant to 42 C.F.R. 417.479(a), the Contractor agrees that no specific
      payment can be made directly or indirectly under a physician incentive
      plan to a physician or physician group as an inducement to reduce or limit
      medically necessary services furnished to an individual enrollee. The
      Contractor must disclose to the State the information on provider
      incentive plans listed in 42 C.F.R. 417.479(h)(1) and 417.479(i) at the
      times indicated at 42 C.F.R. 434.70(a)(3), in order to determine whether
      the incentive plan meets the requirements of 42 C.F.R. 417(d)-(g). The
      Contractor must provide the capitation data required under paragraph
      (h)(1)(vi) for the previous calendar year to the State by
      application/contract renewal of each year. The Contractor will provide the
      information on its physician incentive plan(s) listed in 42 C.F.R.
      417.479(h)(3) to any enrollee upon request.

N.    The Contractor must not prohibit or restrict a health care professional
      from advising an enrollee about his/her health status, medical care, or
      treatment, regardless of whether benefits for such care are provided under
      this Contract, if the professional is acting within the lawful scope of
      practice. However, this provision does not require the Contractor to
      provide coverage of a counseling or referral service if the Contractor
      objects to the service on moral or religious grounds and makes available
      information on its policies to potential enrollees and enrollees within
      ninety (90) days after the date the Contractor adopts a change in policy
      regarding such counseling or referral service.

O.    In accordance with 42 U.S.C. Section 1396u-2(b)(6), the Contractor
      agrees that an enrollee may not be held liable for the following:

MCO Contract                                              Harmony Health Plan

                                  Page 7 of 24

<PAGE>

      1.    Debts of the Contractor, or its subcontractors, in the event of any
            organization's insolvency;

      2.    Services provided to the enrollee in the event the Contractor fails
            to receive payment from the Offices for such services or in the
            event a provider fails to receive payment from the Contractor or
            Offices; or

      3.    Payments made to a provider in excess of the amount that would be
            owed by the enrollee if the Contractor had directly provided the
            services.

P.    The Offices may from time to time request and the Contractor, and all of
      its subcontractors, agree that the Contractor, or its subcontractors,
      shall prepare and submit additional compilations and reports as requested
      by the Offices. Such requests will be limited to situations in which the
      desired data is considered essential and cannot be obtained through
      existing Contractor reports. The Contractor, and all of its
      subcontractors, agree that a response to the request shall be submitted
      within thirty (30) days from the date of the request, or by the Offices'
      requested completion date, whichever is earliest. The response shall
      include the additional compilations and reports as requested, or the
      status of the requested information and an expected completion date. When
      such requests pertain to legislative inquiries or expedited inquiries from
      the Office of the Governor, the additional compilations and reports
      shall be submitted by the Offices' requested completion date. Failure by
      the Contractor, or its subcontractors, to comply with response time frames
      shall be considered grounds for the Offices to pursue the provisions
      outlined in Section 3.16.5 of the BAA. In the event that delays in
      submissions are a consequence of delay by the Offices or the Medicaid
      Fiscal Agent, the time frame for submission shall be extended by the
      length of time of the delay.

Q.    The Contractor shall establish a written claim resolution procedure
      applicable to both in-network and out-of-network providers which shall be
      distributed to all in-network providers and shall be available to
      out-of-network providers upon request. The Contractor shall negotiate the
      terms of a written claim resolution procedure with in-network providers;
      but if the Contractor and an in-network provider are unable to reach
      agreement on the terms of such procedure, the out-of-network provider
      claims resolution procedure approved by the Offices under this section
      shall govern the resolution of such in-network provider's claims with the
      Contractor. The written claim resolution procedure for out-of-network
      providers (and in-network providers in the absence of an agreement) must
      be submitted to the Offices for approval Within thirty (30) days from the
      effective date of this Contract and must include, at a minimum, the
      following elements:

      1.    A statement noting that providers objecting to determinations
            involving their claims will be provided procedural due process
            through the Contractor's claim resolution procedure.

      2.    A description of both the informal and formal claim resolution
            procedures that will be available to resolve a provider's objection
            to a determination involving the provider's claim.

MCO Contract                                               Harmony Health Plan

                                  Page 8 of 24
<PAGE>

      3.    An informal claim resolution procedure which:

            a.    shall be available for the resolution of claims submitted to
                  the Contractor by the provider within the allowable claims
                  submission time limits under federal and state law;

            b.    shall precede the formal claim resolution procedure;

            c.    shall be used to resolve a provider's objection to a
                  determination by the Contractor involving the provider's
                  claim, including a provider's objection to:

                  (1) any determination by the Contractor regarding payment for
                  a claim submitted by the provider, including the amount of
                  such payment; and

                  (2) the Contractor's determination that a claim submitted by
                  the provider lacks sufficient supporting information, records,
                  or other materials;

            d.    may, at the election of a provider, be utilized to determine
                  the payment due for a claim in the event the Contractor fails,
                  within thirty (30) days after the provider submits the claim,
                  to notify the provider of:

                  (1) its determination regarding payment for the provider's
                  claim; or

                  (2) its determination that the provider's claim lacked
                  sufficient supporting information, records, or the materials;

            e.    shall be commenced by a provider submitting to the Contractor:

                  (1) within sixty (60) days after the provider's receipt of
                  written notification of the Contractor's determination
                  regarding the provider's claim, the provider's written
                  objection to the Contractor's determination and an explanation
                  of the objection; or

                  (2) within sixty (60) days after the Contractor fails to make
                  a determination as described in subparagraph (d), a written
                  notice of the provider's election to utilize the informal
                  claims resolution procedure under subparagraph (d) above;

            f.    shall allow providers and the Contractor to make verbal
                  inquiries and to otherwise informally undertake to resolve the
                  matter submitted for resolution by the provider pursuant to
                  Paragraph 3.e.

      4.    In the event the matter submitted for informal resolution is not
            resolved to the provider's satisfaction within thirty (30) days
            after the provider commenced the informal claim resolution
            procedure, the provider shall have sixty (60) days from that point
            to submit to the Contractor written notification of the provider's
            election to submit the matter to the formal claim resolution
            procedure. The

MCO Contract                                                Harmony Health Plan

                                  Page 9 of 24

<PAGE>

      provider's notice must specify the basis of the provider's dispute with
      the Contractor. The Contractor's receipt of the provider's written notice
      shall commence the formal claim resolution procedure.

5.    The formal claim resolution procedure shall be conducted by a panel of one
      (1) or more individuals selected by the Contractor. Each panel must be
      knowledgeable about the policy, legal, and clinical issues involved in the
      matter that is the subject of the formal claim resolution procedure. An
      individual who has been involved in any previous consideration of the
      matter by the Contractor may not serve on the panel. The Contractor's
      medical director, or another licensed physician designated by the medical
      director, shall serve as a consultant to the panel in the event the matter
      involves a question of medical necessity or medical appropriateness.

6.    The panel shall consider all information and material submitted to it by
      the provider that bears directly upon an issue involved in the matter
      that is the subject of the formal claim resolution procedure. The panel
      shall allow the provider an opportunity to appear in person before the
      panel, or to Communicate with the panel through appropriate other means if
      the provider is unable to appear in person, and question the panel in
      regard to issues involved in the matter. The provider shall not be
      required to be represented by an attorney for purposes of the formal claim
      review procedure.

7.    Within forty-five (45) days after the Commencement of the formal claim
      resolution procedure, the panel shall deliver to the provider the panel's
      written determination of the matter before it. Such determination shall be
      the Contractor's final position in regard the matter. The written
      determination shall include, as applicable, a detailed explanation of the
      factual, legal, policy and clinical basis of the panel's determination.

8.    In the event the panel fails to deliver to the provider the panel's
      written determination within forty-five (45) days after the after the
      commencement of the formal claim resolution procedure, such failure on the
      part of the panel shall have the effect of a denial by the panel of the
      provider's claim.

9.    The panel's written determination shall include notice to the provider of
      the provider's right, within sixty (6) days after the provider's receipt
      of the panel's written determination, to submit to binding arbitration the
      matter that was the subject of the formal claim resolution procedure. The
      provider shall also have the right to submit the matter to binding
      arbitration if the panel has failed to deliver its written determination
      to the provider within the required forty-five (45) day period.

10.   Any procedure involving binding arbitration must be conducted in
      accordance with the rules and regulations of the American Health Lawyers
      Association (AHLA), pursuant to the Uniform Arbitration Act as adopted in
      the State of Indiana at I.C. 34-57-2, unless the provider and Contractor
      mutually agree to some other binding resolution procedure. However, any
      Contractor and provider

MCO Contract                                                Harmony Health Plan

                                  Page 10 of 24

<PAGE>

      that are subject to statutorily imposed arbitration procedures for the
      resolution of these claims shall be required to follow the statutorily
      imposed arbitration procedures, but only to the extent those procedures
      differ from, or are irreconcilable with, the rules and regulations of the
      American Health Lawyers Association (AHLA), pursuant to the Uniform
      Arbitration Act as adopted in the State of Indiana at I.C. 34-57-2. It is
      the intent of the Offices that the fees and expenses of arbitration be
      borne by the non-prevailing party.

11.   The provider and Contractor may agree, within the requisite sixty (60) day
      time period, to include in a single arbitration proceeding matters from
      multiple formal claim resolution procedures involving the Contractor and
      the provider. If the provider and Contractor are not able to agree, the
      arbitrator, as selected in Paragraph 10 above, shall have the discretion
      to include in a single arbitration proceeding matters from multiple formal
      claim resolution procedures involving the Contractor and the provider.

12.   For claims disputed under Paragraph 3.c.(2) above:

      a.    a claim that is finally determined through the Contractor's claim
            resolution procedure (including arbitration) not to lack sufficient
            supporting documentation shall be processed by the Contractor within
            thirty (30) days after such final determination. The processing of
            the claim and the Contractor's determination involving the. claim
            shall be subject to Paragraph 3. c. and Paragraph 3.d and the
            Contractor's formal claim resolution procedure and binding
            arbitration.

      b.    a claim that is finally determined through the Contractor's claim
            resolution procedure (including arbitration) to lack sufficient
            supporting documentation shall be processed by the Contractor within
            thirty (30) days after the provider submits to the Contractor the
            requisite supporting documentation. The provider shall have thirty
            (30) days after written notice of the final determination
            establishing that the claim lacked sufficient supporting
            documentation is received by the provider to submit the requisite
            supporting documentation. The processing of the claim and the
            Contractor's determination involving the claim shall be subject to
            Paragraph 3. c. and Paragraph 3. d. and the Contractor's formal
            claim resolution procedure and binding arbitration.

13.   A Contractor may not include in its claim resolution procedures for
      out-of-network providers (and in-network providers in the absence of an
      agreement) elements that restrict or diminish the claim review procedures,
      time periods or subject matter provided for in paragraphs 1 through 12
      above.

14.   A Contractor shall maintain a log of all informally and formally filed
      provider objections to determinations involving claims. The logged
      information shall include the provider's name, date of objection, nature
      of the objection, and

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<PAGE>
            disposition. The Contractor shall submit quarterly reports to the
            Offices regarding the number and type of provider objections.

                                   IV. PAYMENT

A.    In consideration of the services to be performed by the Contractor, the
      Offices agree to pay the Contractor the following amounts per month per
      enrolled member as contained in the Offices' capitation payment listing
      based upon the capitation rates by category as listed below:

<TABLE>
<CAPTION>
                        CAPITATION  RATES
---------------------------------------------------------------
CATEGORY                 PACKAGES A AND B             PACKAGE C
--------                 ----------------             ---------
<S>                     <C>                          <C>
Newborns                $  355.20                    $  127.99
Preschool               $   71.80                    $   82.30
Children                $   58.22                    $   68.88
Adolescents             $   87.58                    $   97.79
Adult Males             $  247.27
Adult Females           $  193.78
Deliveries              $3,297.96/delivery           $3,297.96/delivery
</TABLE>

      These capitation rates will be adjusted by the medical component of the
      Consumer Price Index. The initial adjustment will occur in January 2002,
      with subsequent adjustments to occur annually thereafter. In the event
      that the Offices adjust the fee-for-service (FFS) rates, the Offices
      may, in its sole discretion, further adjust the capitation rates in
      accordance with the FFS adjustment, based on the same methodology or
      percentage change used for the FFS adjustment. If the Offices make such an
      adjustment, it shall apply only to the specific service component of the
      capitation rate that corresponds to the FFS adjustment. Any capitation
      rates adjusted due to a change in the FFS program may be further adjusted
      to ensure actuarial soundness. All adjustments are subject to federal
      regulations that this Contract may not exceed the FFS Upper Payment Limit
      (UPL).

B.    All payment obligations of the Offices are subject to the encumbrance of
      monies and shall be paid to the Contractor on the first Wednesday after
      the fifteenth of the month.

C.    The capitation payment will be prospective, based upon the number of
      enrollees assigned to the Contractor as of the first of the month. The
      Offices will establish an administrative procedure to allow retroactive or
      other payment adjustments as necessary to implement this contract.

D.    The Contractor will be provided a capitation payment listing which
      includes a detailed listing of all enrollees for which the Contractor is
      receiving a capitation payment.

E.    The parties agree that the Offices have the option of renegotiating
      actuarially sound capitation rates annually. Rates revised under this
      provision shall be implemented only

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      after a contract amendment is executed and approved. Contractor may submit
      information for the Offices' review and consideration.

F.    It is understood and agreed upon by the parties that all obligations of
      the State of Indiana are contingent upon the availability and continued
      appropriation of State and Federal funds, and in no event shall the State
      of Indiana be liable for any payments in excess of available appropriated
      funds.

G.    When the Director of the State Budget Agency makes a written determination
      that funds are not appropriated or otherwise available to support
      continuation of performance of this Contract, the Contract shall be
      cancelled. A determination by the State Budget Director that funds are not
      appropriated or otherwise available to support continuation of performance
      shall be final and conclusive.

                             V. ORDER OF PRECEDENCE

Any inconsistency or ambiguity in this Contract shall be resolved by giving
precedence in the following order:

      1)    The express terms of this document;

      2)    Attachment 1 - BAA 01-28, released July 31, 2000;

      3)    Attachment 2 - the Contractor's response to the BAA;

      4)    Any other documents, standards, laws, rules or regulations
            incorporated by reference in the above materials, all of which are
            hereby incorporated by reference.

                                   VI. NOTICE

A.    Whenever notice is required to be given to the other party, it shall be
      made in writing and delivered to that party. Delivery shall be deemed to
      have occurred if a signed receipt is obtained when delivered by hand or
      according to the date on the return receipt if sent by certified mail,
      return receipt requested. Notices shall be addressed as follows:

<TABLE>
<S>                                          <C>
In case of notice to the Contractor:         In case of notice to the Offices:

Ancelmo E. Lopes, President/CEO              Sharon Steadman, Managed Care  Director
Harmony Health Plan of Illinois, Inc.        Office of Medicaid Policy and Planning
125 South Wacker Drive, Suite 2900           Family and Social Services Administration
Chicago, Illinois 60606                      402 W. Washington St., IGCS W382, MS07
                                             Indianapolis, Indiana 46204
</TABLE>

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B.    Said notices shall become effective on the date of delivery or the date
      specified within the notice, whichever comes later. Either party may
      change its address for notification purposes by mailing a notice stating
      the change and setting forth the new address.

                          VII. MISCELLANEOUS PROVISIONS

A.    Entire Agreement. This Contract constitutes the entire agreement between
      the parties with respect to the subject matter; all prior agreements,
      representations, statements, negotiations, and undertakings are superseded
      hereby.

B.    Changes. Any changes to this Contract shall be by formal amendment of this
      Contract signed by all parties required by Indiana law.

C.    Performance Bond. The Contractor agrees that a performance bond in the
      amount of five hundred thousand dollars ($500,000.00) will be delivered to
      the Indiana Department of Administration (IDOA) within ten (10) calendar
      days of the execution of this contract. Said bond will be in the form of a
      cashier's check, a certified check, or a surety bond executed by a surety
      company authorized to do business in the State of Indiana as approved by
      the Insurance Department of State of Indiana. No other check or surety
      will be accepted. The performance bond shall be made payable to the IDOA
      and shall be effective for the duration of the contract and any extensions
      thereof. The State reserves the right to increase the performance bond
      amount if enrollment levels indicate the need for higher liquidated
      damages.

D.    Access To Records. The Contractor and any subcontractor shall maintain all
      books, documents, papers and records which are directly pertinent to this
      Contract and shall make such materials available at all reasonable times
      during the contract period and for three (3) years from the date of final
      payment under the Contract or until all pending matters are closed,
      whichever date is later, for inspection by the Office, or any other duly
      authorized representative of the State of Indiana or the Federal
      government. Copies thereof shall be furnished at no cost to the State if
      requested.

E.    Assignment. The Contractor shall not assign or subcontract the whole or
      any part of this Contract without the State's prior written consent. Such
      consent will not be unreasonably withheld. The Contractor may assign its
      right to receive payments to such third parties as the Contractor may
      desire without the prior written consent of the State, provided that the
      Contractor gives written notice (including evidence of such assignment) to
      the State thirty (30) days in advance of any payment so assigned. The
      assignment shall cover all unpaid amounts under this Contract and shall
      not be made to more than one party.

F.    Authority to Bind Contractor. Notwithstanding anything in this Contract to
      the contrary, the signatory for the Contractor represents that he/she has
      been duly authorized to execute contracts on behalf of the Contractor
      designed above, has filed proof of such authority with the Indiana
      Department of Administration, 402 West Washington Street, W469,

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      Indianapolis, Indiana 46204, and has obtained all necessary or applicable
      approval from the home office of the Contractor to make this Contract
      fully binding upon the Contractor when his/her signature is affixed and is
      not subject to home office acceptance hereto and accepted by the State of
      Indiana.

G.    Compliance with Laws. The Contractor agrees to comply with all applicable
      Federal, State, and local laws, rules, regulations, or ordinances, and all
      provisions required thereby to be included herein are hereby incorporated
      by reference. The enactment of any state or federal statute or the
      promulgation of regulations thereunder after execution of this Contract
      shall be reviewed by the State and the Contractor to determine whether the
      provisions of this Contract require formal modification.

H.    Compliance with Civil Rights Laws. The Contractor and its subcontractors
      hereby assure that they will comply with all Federal and Indiana Civil
      Rights Laws, including, but not limited to, I.C. 22-9-1-10 and the Civil
      Rights Act of 1964, to the end that they shall not discriminate against
      any employee or applicant for employment, to be employed in the
      performance of this Contract, with respect to his/her hire, tenure, terms,
      conditions or privileges of employment or any matter directly or
      indirectly related to employment, because of his/her race, color,
      religion, sex, disability, national origin, ancestry or status as a
      veteran. The Contractor understands, that the State of Indiana is a
      recipient of federal funds. Pursuant to that understanding,
      the Contractor, and its subcontractors, if any, agree that if the
      Contractor employs 50 or more employees and does at least $50,000 worth of
      business with the State of Indiana and is not exempt, the Contractor will
      comply with the reporting requirements of 41 CFR 60-1.7, if applicable.
      Breach of this covenant may be regarded as a material breach of the
      Contract. The State of Indiana shall comply with Section 202 of Executive
      Order 11246, as amended and 41 CFR 60-741, as amended, which are
      incorporated herein by specific reference.

I.    Assurance of Compliance with Civil Rights Act of 1964, Section 504 of the
      Rehabilitation Act of 1973 and the Age Discrimination Act of 1975, the
      Americans with Disabilities Act of 1990 and Title IX of the Education
      Amendments of 1972: The Contractor agrees that it, and all of its
      subcontractors and providers, will comply with the following:

      1.    Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352), as
            amended, and all requirements imposed by or pursuant to the
            Regulation of the Department of Health and Human Services (45 C.F.R.
            Part 80), to the end that, in accordance with Title VI of that Act
            and the Regulation, no person in the United States shall on the
            ground of race, color, or national origin, be excluded from
            participation in, be denied the benefits of, or be otherwise
            subjected to discrimination under any program or activity for which
            the Contractor receives Federal financial assistance under this
            Contract.

      2.    Section 504 of the Rehabilitation Act of 1973 (Pub. L. 93-112), as
            amended, and all requirements imposed by or pursuant to the
            Regulation of the Department of Health and Human Services (45 C.F.R.
            Part 84), to the end that, in accordance with Section 504 of that
            Act and the Regulation, no otherwise qualified handicapped
            individual in

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<PAGE>

            the United States shall, solely by reason of his/her handicap, be
            excluded from participation in, be denied the benefits of, or be
            subjected to discrimination under any program or activity for which
            the Contractor receives Federal financial assistance under this
            Contract.

      3.    The Age Discrimination Act of 1975 (Pub. L. 94-135), as amended, and
            all requirements imposed by or pursuant to the Regulation of the
            Department of Health and Human Services (45 C.F.R. Part 91), to the
            end that, in accordance with the Act and the Regulation, no person
            in the United States shall, on the basis of age, be denied the
            benefits of, be excluded from participation in, or be subjected to
            discrimination under any program or activity for which the
            Contractor receives Federal financial assistance under this
            Contract.

      4.    The Americans with Disabilities Act of 1990 (Pub. L. 101-336), as
            amended, and all requirements imposed by or pursuant to the
            Regulation of the Department of Justice (28 C.F.R. 35.101)et
            seq.), to the end that in accordance with the Act and Regulation, no
            person in the United States with a disability shall, on the basis of
            the disability, be excluded from participation in, be denied the
            benefits of, or otherwise be subjected to discriminations under any
            program or activity for which the Contractor receives Federal
            financial assistance under this Contract.

      5.    Title IX of the Education Amendments of 1972, as amended (20
            U.S.C. Sections 1681-1683, and 1685-1686), and all requirements
            imposed by or pursuant to regulation, to the end that, in
            accordance with the Amendments, no person in the United States
            shall, on the basis Of sex, be excluded from participation in, be
            denied the benefits of, or otherwise be subjected to discrimination
            under any program or activity for which the Contractor receives
            Federal financial assistance under this Contract.

      The Contractor agrees that compliance with this assurance constitutes a
      condition of continued receipt of Federal financial assistance, and that
      it is binding upon the Contractor, its successors, transferees and
      assignees for the period during which such assistance is provided. The
      Contractor further recognizes that the United States shall have the right
      to seek judicial enforcement of this assurance.

J.    Conflict of Interest

      1.    As used in this section:

            "Immediate family" means the spouse and the unemancipated children
            of an individual.

            "Interested party" means:

            a.    The individual executing this Contract;

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            b.    An individual who has an interest of three percent (3%) or
                  more of the Contractor if the Contractor is not an individual;
                  or

            c.    Any member of the immediate family of an individual specified
                  under subdivision a. or b.

            "Department" means the Indiana Department of Administration.

            "Commission" means the State [ILLEGIBLE]thics Commission.

      2.    The Department may cancel this Contract without recourse by the
            Contractor if any interested party is an employee of the State of
            Indiana.

      3.    The Department will not exercise its right of cancellation under
            section 2 above if the Contractor gives the Department an opinion by
            the Commission indicating that the existence of this Contract and
            the employment by the State of Indiana of the interested party does
            not violate any statute or code relating to ethical conduct of state
            employees. The Department may take action, including cancellation of
            this Contract consistent with an opinion of the Commission obtained
            under this section.

      4.    The Contractor has an affirmative obligation under this Contract to
            disclose to the Department when an interested party is or becomes an
            employee of the State of Indiana. The obligation under this section
            extends only to those facts which the Contractor knows or reasonably
            could know.

K     Confidentiality of Data and Property Rights. The Contractor further
      agrees that all information, data, findings, recommendations, and
      proposals, by whatever name described and by whatever form therein,
      secured developed, written, or produced by the Contractor in furtherance
      of this Contract, shall be the property of the State of Indiana and that
      the Contractor shall take such action as is necessary under law to
      preserve such property rights in and of the State of Indiana while such
      property is within the control and/or custody of the Contractor.

      By this Contract the Contractor specifically waives and/or releases to the
      State of Indiana any cognizable property right in the Contractor to
      copyright or patent such information, data, findings, recommendations, and
      proposals, that are developed exclusively in furtherance of the Contract
      and not developed by the Contractor for its other lines of business and
      incidentally applied to its Hoosier Healthwise line of business.

      The parties acknowledge that it is in their interests for the Contractor
      to develop new techniques and advances in managed care. Therefore, the
      Offices hereby grant to the Contractor, subject to the confidentiality
      obligations set forth in this Contract, as well as those imposed by
      federal and state laws and regulations, a perpetual license to use
      materials, models, methodologies and techniques developed under this
      contract.

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L.    Confidentiality of State of Indiana Information. The Contractor
      understands and agrees that data, materials and information disclosed to
      the Contractor may contain confidential and protected data; therefore, the
      Contractor promises and assures that data, material, and information
      gathered, based upon or disclosed to the Contractor for the purpose of
      this Contract will not be disclosed to others or discussed with other
      parties without the prior written consent of the State of Indiana.

M.    Conveyance of Documents And Continuation of Existing Activity: Should the
      Contract for whatever reason, (i.e. completion of a contract with no
      renewal, or termination of service by either party), be discontinued and
      the activities as provided for in the Contract for services cease, the
      Contractor and any subcontractors employed by the terminating Contractor
      in the performance of the duties of the Contract shall promptly convey to
      the State of Indiana, copies of all vendor working papers, data collection
      forms, reports, charts, programs, cost records and all other material
      related to work performed on this Contract.

      The Contractor and the Office shall convene immediately upon notification
      of termination or non-renewal of the Contract to determine what work
      shall be suspended, what work shall be completed, and the timeframe for
      completion and conveyance. The Office will then provide the Contractor
      with a written schedule of the completion and conveyance activities
      associated with termination. Documents/materials associated with suspended
      activities shall be conveyed by the Contractor to the State of Indiana
      upon five days' notice from the State of Indiana. Upon completion of those
      remaining activities noted on the written schedule, the Contractor shall
      also convey all documents and materials to the State of Indiana upon five
      days' notice from the State of Indiana.

N.    Disputes. Should any disputes arise with respect to this Contract, the
      Contractor and the State of Indiana agree to act immediately to resolve
      any such disputes. Time is of the essence in the resolution of disputes.

      The Contractor agrees that, the existence of a dispute notwithstanding, it
      will continue without delay to carry out all its responsibilities under
      this Contract which are not affected by the dispute. Should the Contractor
      fail to continue without delay to perform its responsibilities under this
      Contract in the accomplishment of all non-disputed work, any additional
      costs incurred by the Contractor or the State of Indiana as a result of
      such failure to proceed shall be borne by the Contractor, and the
      Contractor shall make no claim against the State of Indiana for such
      costs. If the Contractor and the State of Indiana cannot resolve a dispute
      within ten (10) working days following notification in writing by either
      party of the existence of said dispute, then the following procedure shall
      apply:

      1.    The parties agree to resolve such matters through submission of
            their dispute to the Commissioner of the Indiana Department of
            Administration who shall reduce her decision to writing and mail or
            otherwise furnish a copy thereof to the Contractor and the State of
            Indiana within ten (10) working days after presentation of such
            dispute for her decision. Her decision shall be final and conclusive
            unless the Contractor mails or otherwise furnishes to the
            Commissioner of Administration within ten (10) working days after
            receipt

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            of the Commissioner's decision, a written appeal. Within ten (10)
            working days of receipt by the Commissioner, she may reconsider her
            decision. If no reconsideration is provided with in ten (10) working
            days the Contractor may submit the dispute to an Indiana court of
            competent jurisdiction.

      2.    The State of Indiana may withold payments on disputed items pending
            resolution of the dispute. The non-payment by the State of Indiana
            to the Contractor of one or more invoices not in dispute shall not
            constitute default, however, the Contractor may bring suit to
            collect such monies without following the disputes procedure
            contained herein.

O.    Drug-Free Workplace

      1.    The Contractor hereby covenants and agrees to make a good faith
            effort to provide and maintain during the term of this Contract a
            drug-free workplace. Contractor will give written notice to the
            Office and the Indiana Department of Administration within ten (10)
            days after receiving actual notice that an employee of the
            Contractor has been convicted of a criminal drug violation occurring
            in the Contractor's workplace.

      2.    In addition to subparagraph(1) if the total amount set forth in
            this Contract is in excess of twenty-five thousand dollars
            ($25,000.00), the Contractor hereby further agrees that this
            Contract is expressly subject to the terms, conditions, and
            representations contained in the Drug-Free Workplace
            Certification. The Certification is hereby executed by the
            Contractor in conjunction with this Contract and set forth in this
            Contract.

      3.    It is further expressly agreed that the failure of the Contractor
            to in good faith comply with the terms of subparagraph (1) above, or
            falsifying or otherwise violating the terms of the certification
            referenced in subparagraph (2) above shall constitute a material
            breach of this Contract, and shall entitle the State of Indiana to
            impose sanctions against the Contractor including, but not limited
            to, suspension of contract payment, termination of this Contract
            and/or debarment of the Contractor from doing further business with
            the State of Indiana for up to three (3) years.

P.    Drug-Free Workplace Certification

      This Certification is required by Executive Order No. 90-5, April 12,
      1990, issued by the Governor of Indiana. Pursuant to its delegated
      authority, the Indiana Department of Administration is requiring the
      inclusion of this certification in all contracts with the State of Indiana
      in excess of $25,000.00. No award of a contract shall be made, and no
      contract, purchase order or agreement, the total amount of which exceeds
      $25,000.00 shall be valid, unless and until this certification has been
      fully executed by the Contractor and made a part of the Contract as part
      of the Contract documents. False certification or violation of the
      certification may result in sanctions including, but not limited to,
      suspension of contract

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      payment, termination of the contract and/or debarment of contracting
      opportunities with the Contractor for up to three (3) years.

      The Contractor certifies and agrees that it will provide a drug-free
      workplace by:

      1.    Publishing and providing to all of its employees a statement
            notifying them that the unlawful manufacture, distribution,
            dispensing, possession or use of a controlled substance is
            prohibited in the Contractor's workplace and specifying the actions
            that will be taken against employees for violations of such
            prohibition.

      2.    Establishing a drug-free awareness program to inform employees of
            (A) the dangers of drug abuse in the workplace (B) the Contractor's
            policy of maintaining a drug-free workplace; (C) any available drug
            counseling, rehabilitation, and employee assistance programs; and
            (4) the penalties that may be imposed upon an employee for drug
            abuse violations occurring in the workplace.

      3.    Notifying all employees in the statement required by subparagraph
            (1) above that as a condition of continued employment the employee
            will (A) abide by the terms of the statement; and (B) notify the
            Contractor of any criminal drug statute conviction for a violation
            occurring in the workplace no later than five (5) days after such
            conviction.

      4.    Notify the State in writing within ten (10) days after receiving
            notice from an employee under subdivision (3)(B) above, or otherwise
            receiving actual notice of such conviction.

      5.    Within thirty (30)days after receiving notice under subdivision
            (3)(B) above of a conviction, imposing the following sanctions or
            remedial measures on any employee who is convicted of drug abuse
            violations occurring in the workplace: (A) take appropriate
            personnel action against the employee, up to and including
            termination; or (B) require such employee to satisfactorily
            participate in a drug abuse assistance or rehabilitation program
            approved for such purposes by a Federal, State, or local health, law
            enforcement, or other appropriate agency.

      6.    Making a good faith effort to maintain a drug-free workplace through
            the implementation of subparagraphs (1) through (5).

Q.    Environmental Standards. If the contract amount set forth in this Contract
      is in excess of $100,000, the Contractor shall comply with all applicable
      standards, orders, or requirements issued under section 305 of the Clean
      Air Act (42 USC 7606), section 508 of the Clean Air Act (33 USC 1368),
      Executive Order 11738, and Environmental Protection Agency regulations (40
      CFR Part 15), which prohibit the use under non-exempt Federal contracts of
      facilities included on the EPA List of Violating Facilities. The
      Contractor shall report any violations of this paragraph to the State of
      Indiana and to the United States Environmental Protection Agency Assistant
      Administrator for Enforcement.

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R.    Force Majeure; Suspension and Termination. In the event either party is
      unable to perform any of its obligations under this Contract or to enjoy
      any of its benefits because of (or if failure to perform the service is
      caused by) natural disaster, actions or decrees of governmental bodies, or
      communication line failure not the fault of the affected party
      (hereinafter referred to as a "Force Majeure Event"), the party who has
      been so affected shall immediately give notice to the other party and
      shall take reasonable measures to resume performance. Upon receipt of such
      notice, all obligations under this Contract shall be immediately
      suspended. If the period of non-performance exceeds thirty (30) days from
      the receipt of notice of the Force Majeure Event, the party whose ability
      to perform has not been so affected may, by giving written notice,
      terminate this Contract.

S.    Governing Laws. This Contract shall be construed in accordance with and
      governed by the laws of the State of Indiana and suit, if any, must be
      brought in the State of Indiana.

T.    Indemnification. The Contractor agrees to indemnify, defend, and hold
      harmless the State of Indiana and its agents, officers, and employees from
      all claims and suits including court costs, attorney's fees, and other
      expenses caused by any act or omission of the Contractor and/or its
      subcontractors, if any. The State shall not provide such indemnification
      to the Contractor.

U.    Independent Contractor. The Office and the Contractor acknowledge and
      agree that in the performance of this contract, the Contractor is an
      independent contractor and both parties will be acting in an individual
      capacity and not an as agents, employees, partners, joint venturers,
      officers, or associates of one another. The employees or agents of one
      party shall not be deemed or construed to be the employees or agents of
      the other party for any purposes whatsoever. Neither party will assume any
      liability for any injury (including death) to any persons, or any property
      arising out of the acts or omissions of the agents, employees or
      subcontractors of the other party.

      The Contractor shall be responsible for providing all necessary
      unemployment and worker compensation insurance for the Contractor's
      employees.

V.    Lobbying Activities. Pursuant to 31 U.S.C. 1352, and any regulations
      promulgated thereunder, the Contractor hereby assures and certifies that
      no federally 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 grant, the making of any federal loan, the entering into of any
      cooperative contract, and the extension, continuation, renewal, amendment,
      or modification of any federal contract, grant, loan or cooperative
      contract. 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 Contract, the Contractor shall complete and submit
      Standard Form-LLL, "Disclosure Form to Report Lobbying", in accordance
      with its instructions.

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W.    Ownership of Documents and Materials. All documents, records, programs,
      data, film, tape, articles, memoranda, and other materials developed under
      this Contract will be the property of the State of Indiana. Use of these
      materials other than related to contract performance by the Contractor
      without the prior written consent of the State of Indiana is prohibited.
      During the performance of the services specified herein, the Contractor
      shall be responsible for any loss or damage to these materials developed
      for or supplied by the State of Indiana and used to develop or assist in
      the services provided herein, while they are in the possession of the
      Contractor, and any loss or damage thereto shall be restored at the
      Contractor's expense. Full, immediate and unrestricted access to the work
      product of the Contractor during the term of this Contract shall be
      available to the State of Indiana. The Contractor will give to the State
      of Indiana, or the State of Indiana's designee, all records of other
      materials described in this section, after termination of the Contract and
      upon five (5) days notice of a request from the State of Indiana.

      The parties acknowledge that it is in their interests for the Contractor
      to develop new techniques and advances in managed care. Therefore, the
      Offices hereby grant to the Contractor, subject to the confidentiality
      obligations set forth in this Contract, as well as those imposed by
      federal and state laws and regulations, a perpetual license to use
      materials, models, methodologies and techniques developed under this
      contract.

X.    Penalties/Interest/Attorney's Fees. The State will in good faith perform
      its required obligations hereunder and does not agree to pay any
      penalties, liquidated damages, interest, or attorney's fees, except as
      required by Indiana law, in part, I.C. 5-17-5-1 et seq., IC. 34-54-8-2 et
      seq., and I.C. 34-13-1-1 et seq.

Y.    Severability. The invalidity in whole or in part of any provision of this
      Contract shall not void or affect the validity of any other provision.

Z.    Successors and Assignees. The Contractor binds its successors, executors,
      assignees, and administrators, to all covenants of this contract. Except
      as set forth above, the Contractor shall not assign, sublet, or transfer
      the Contractor's interest in this Contract without the prior written
      consent of the Office.

AA.   Termination. The Offices may, without cause, cancel and terminate this
      Contract in whole or in part upon sixty (60) days' prior written notice.
      The Contractor will be reimbursed for services performed prior to the date
      of termination consistent with the terms of the Contract. The Offices will
      not be liable for services performed after notice of termination, but
      before the date of termination, without written authorization from the
      Offices. In no event will the Offices be liable for services performed
      after the termination date.

      In the event that the Offices request that the Contractor perform any
      additional services associated with the transition or turnover of this
      Contract, the Offices agree to pay reasonable costs for those additional
      services specifically requested by the Offices.

MCO Contract                                                Harmony Health Plan

                                  Page 22  of 24

<PAGE>

BB.   Termination by the Contractor. This Contract may be terminated by the
      Contractor upon one hundred eighty (180) days prior written notice to the
      Offices. The Contractor will be reimbursed for services performed prior to
      the effective date of termination consistent with the terms of the
      Contract. In no event will the Offices be liable for services performed
      after the effective date of termination, without written authorization
      from the Offices.

CC.   Change in Scope of Work -- In the event the Offices require a major change
      in scope, character or complexity of the work after the work has
      commenced, adjustments in compensation to the Contractor shall be
      determined by the Office, in the exercise of its honest and reasonable
      judgment, and the Contractor shall not commence the additional work or the
      change in the scope of work until authorized in writing by the Offices. No
      claim for additional compensation shall be made in the absence of a prior
      written approval executed by all signatories hereto.

DD.   Waiver of Breach. No waiver of breach of any provision of this Contract
      shall constitute a waiver of any other breach or of such provision.

      Failure of the Office to enforce at any time any provision of this
      Contract shall not be construed as a waiver thereof. The remedies herein
      reserved shall be cumulative and additional to any other remedies in law
      or equity.

EE.   Work Standards. The Contractor agrees to execute its respective
      responsibilities by following and applying at all times the highest
      professional and technical guidelines and standards. If the State becomes
      dissatisfied with the work product or the working relationship with those
      individuals assigned to work on this Contract, the State may request in
      writing the replacement of any or all such individuals.

FF.   Non-Collusion and Acceptance. The undersigned attests, subject to the
      penalties for perjury, that he is the contracting party, or that he is the
      representative, agent, member or officer of the contracting party, that he
      has not, nor has any other member employee, representative, agent or
      officer of the firm, company, corporation or partnership represented by
      him, directly or indirectly, to the best of his knowledge, entered into or
      offered to enter into any combination, collusion or agreement to receive
      or pay, and that he has not received or paid, any sum of money or other
      consideration for the execution of this agreement other than that which
      appears upon the face of the agreement.

         /// The remainder of this page is intentionally left blank. ///

MCO Contract                                                Harmony Health Plan

                                  Page 23 of 24

<PAGE>

IN WITNESS WHEREOF, Harmony Health Plan of Illinois. Inc. and the State of
Indiana have through duly authorized representatives entered into this
agreement. The parties having read and understand the foregoing terms of the
Contract do by their respective signatures dated below hereby agree to the terms
thereof.

For the Contractor:                         For the State of Indiana:

/s/ Ancelmo E. Lopes                        /s/ Kathleen D. Gifford
-----------------------------               ---------------------------------
Ancelmo E.Lopes, President CEO              Kathleen D. Gifford
Harmony Health Plan of Illinois, Inc.       Assistant Secretary
                                            Office of Medicaid Policy &
                                            Planning

Date: 12/19/00                              Date: 12/21/2000

                                            /s/ Nancy Cobb
                                            ---------------------------------
                                            Nancy Cobb. Director
                                            Children's Health Insurance Program

                                            Date: [ILLEGIBLE]

APPROVED:                                   APPROVED:

/s/ Betty Cockrum                           /s/ Glenn R. Lawrence
-----------------------------               ---------------------------------
Betty Cockrum, Director                     Glenn R. Lawrence, Commissioner
State Budget Agency                         Department of Administration

Date: 01/10/01                              Date: Jan 4, 2001

APPROVED AS TO FORM AND LEGALITY

/s/ Karen Freeman-Wilson
-----------------------------------
Karen Freeman-Wilson
Attorney General of Indiana

Date: 2/2/01

MCO Contract

                                 Page 24 of 24
<PAGE>

                                   JUL 17 2003

                                                       Frank O'Bannon, Governor
                                                               State of Indiana

                                          OFFICE OF MEDICAID POLICY AND PLANNING
                                             402 W. WASHINGTON STREET, ROOM W382
                                                    INDIANAPOLIS, IN 46204-2739

                                                        John Hamilton, Secretary

[FSSA LOGO]
"People helping people help themselves"

July 15, 2003

John Blank, MD, CEO
Harmony Health Plan of Illinois, Inc.
125 South Wacker Drive, Suite 2900
Chicago, IL 60606

RE: Hoosier Healthwise Contract, Third Amendment

Dear Dr. Blank,

Enclosed you will find the Third Amendment to the Indiana MCO contract for your
review and signature.

This amendment was necessary for the contract to be compliant with the federal
managed care regulations at 42 CFR 438, and includes new actuarially sound
capitation rates and a revised Scope of Work attachment (Exhibit 1). The
transition report for the second phase of mandatory RBMC is also included as
Exhibit 3 and provides for Harmony's expansion into the Central Region. The
amendment is effective August 1, 2003.

Please sign and return the enclosed amendment document at your earliest
convenience to Ginger Brophy of my staff. You will receive a copy of the fully
executed amendment once all other signatures have been obtained. Thank you for
your continued commitment to Hoosier Healthwise.

Sincerely,

/s/ John Barth
------------------------------
John Barth
Managed Care Director

Enclosure

Cc:   Robert Currie
      Ginger Brophy

                 Equal Opportunity / Affirmative Action Employer

                                     [SEAL]
<PAGE>

                                 THIRD AMENDMENT
                                       TO
                                CONTRACT BETWEEN
                   THE OFFICE OF MEDICAID POLICY AND PLANNING
                                      AND
                     HARMONY HEALTH PLAN OF ILLINOIS, INC.

      This THIRD AMENDMENT to the above-referenced Contract is made and entered
into by and between the State of Indiana [hereinafter "State" of "State of
Indiana"], through the Office of Medicaid Policy and Planning [hereinafter
called "State" or "Office"], of the Indiana Family and Social Services
Administration, 402 West Washington Street, Room W382, Indianapolis, Indiana
46204, and Harmony Health Plan of Illinois, Inc., 125 South Wacker Drive, Suite
2900, Chicago, Illinois, doing business as Harmony Health Plan of Indiana,
[hereinafter called "Contractor"].

      WHEREAS, the State of Indiana and Contractor have previously entered into
a contract for a term beginning January 1, 2001, and ending December 31, 2004,
[hereinafter "the original contract"] for services to arrange for and to
administer a risk-based managed care program (RBMC) for certain Hoosier
Healthwise enrollees in Packages A, B and C as procured through BAA 01-28;

      WHEREAS, the parties have previously entered into a First Amendment for
additional duties and the adjustment of capitation rates related to the
mandatory MCO enrollment of Hoosier Healthwise members residing in certain
Indiana counties;

      WHEREAS, the Family and Social Services Administration (FSSA) issued new
contract documents in lieu of a Second Amendment document so that FSSA may move
its contract data into a single contract database. The original contract was
issued for the contract term starting January 1, 2001, through December 31,
2002, and provided for a renewal clause, exercised at the option of the State
for two additional years. The State exercised this option and renewed the
contract from January 1, 2003, through December 31, 2004;

      WHEREAS, this Contract contains the payment rates under which the
Contractor shall be paid and that these rates have been determined to be
actuarially sound for risk contracts, in accordance with applicable law;

      WHEREAS, the Office desires to further amend the contract with this THIRD
AMENDMENT in order to bring the contract into compliance with applicable new
federal regulations at 42 CFR 438 implementing the federal Balanced Budget Act
of 1997.

      NOW THEREFORE, the parties enter into this THIRD AMENDMENT for the
consideration set out below, all of which is deemed to be good and sufficient
consideration in order to make this THIRD AMENDMENT a binding legal instrument.

1.    The parties hereby ratify and incorporate herein each term and condition
      set out in the original Contract, First Amendment, Second Amendment (i.e.,
      renewal contract), as well

MCO Contract, Third Amendment          Page 1 of 6           Harmony Health Plan

<PAGE>

      as all written matters incorporated therein except as specifically
      provided for by this THIRD AMENDMENT.

2.    The term of this amendment is August 1, 2003, through December 31, 2004.

3.    The parties agree that BAA 01-28, Attachment A, Section 3.0, Requested
      Services, is amended, as required by 42 CFR 438, and is replaced with BAA
      01-28, Attachment A, Section 3.0, Requested Services, dated July 10, 2003,
      which is incorporated herein by reference as Exhibit 1.

4.    The parties agree that BAA 01-28, Appendix 2, Definition and
      Abbreviations, is amended, as required by 42 CFR 438, and is replaced with
      BAA 01-28, Appendix 2, Definitions and Abbreviations, dated July 10, 2003,
      which is incorporated herein by reference as Exhibit 2.

5.    Paragraph VII.BB. of the Second Amendment (Renewal Contract) is deleted
      and replaced with the following concerning Security and Privacy of Health
      Information:

      The Contractor agrees to comply with all requirements of the Health
      Insurance Portability and Accountability Act of 1996 (HIPAA) in all
      activities related to this contract, to maintain compliance throughout the
      life of the contract, to operate any systems used to fulfill the
      requirements of this contract in full compliance with HIPAA and to take no
      action which adversely affects the State's HIPAA compliance.

      The parties acknowledge that the Department of Health and Human Services
      has issued the Final Rule, as amended from time to time on the Standards
      for Privacy of Individually Identifiable Health Information, as required
      by the Administrative Simplification Section of the Health Insurance
      Portability and Accountability Act of 1996 ("HIPAA"). The parties
      acknowledge that the Office is a Covered Entity within the meaning of
      HIPAA. To the extent required by the provisions of HIPAA and regulations
      promulgated thereunder, the Contractor assures that it will appropriately
      safeguard Protected Health Information (PHI), as defined by the
      regulations, which is made available to or obtained by the Contractor in
      the course of its work under the contract. The Contractor agrees to comply
      with applicable requirements of law, as they may be amended from time to
      time, relating to PHI with respect to any task or other activity it
      performs for the Office including, as required by the final regulations:

      A.    Not using or further disclosing PHI other than as permitted or
            required by this Contract or by applicable law;

      B.    Using appropriate safeguards to prevent use or disclosure of PHI
            other than as provided by this Contract or by applicable law;

      C.    Mitigating, to the extent practicable, any harmful effect that is
            known to the Contractor and reporting to the office any use or
            disclosure by the Contractor, its agent, employees, subcontractors
            or third parties, of PHI obtained under this Contract

MCO Contract, Third Amendment          Page 2 of 6           Harmony Health Plan

<PAGE>

            in a manner not provided for by this Contract or by applicable law
            of which the Contractor becomes aware;

      D.    Ensuring that any subcontractors or agents to whom the Contractor
            provides PHI received from, or created or received by the Contractor
            on behalf of the Office agree to the same restrictions, conditions
            and obligations applicable to such party regarding PHI;

      E.    Making the Contractor's internal practices, books and records
            related to the use of disclosure of PHI received from, or created or
            received by the Contractor on behalf of the Office available to the
            Secretary of the United States Department of Health and Human
            Services for purposes of determining the Office's compliance with
            applicable law. The Contractor shall immediately notify the Office
            upon receipt by the Contractor of any such request, and shall
            provide the Office with copies of any materials made available in
            response to such a request;

      F.    In accordance with procedures established by the Office, documenting
            and making available the information required to provide an
            accounting of disclosures pursuant to applicable law, if the duties
            of the Contractor include disclosures that must be accounted for;

      G.    In accordance with procedures established by the Office, making
            available PHI for amendment and incorporating any amendments to PHI
            in accordance with 45 CFR 164.526, if the Contractor maintains PHI
            subject to amendment;

      H.    In accordance with procedures established by the Office, making PHI
            available to individuals entitled to access and requesting access in
            compliance with 45 CFR 164.524 and consistent with the duties of the
            Contractor;

      I.    At the termination of this Contract, if feasible, return or destroy
            all PHI received or created under this Contract. If the Office
            determines return or destruction is not feasible, the protections in
            this agreement shall continue to be extended to any PHI maintained
            by the Contractor for as long as it is maintained.

      In order to fulfill the terms of this Contract, Contractor will utilize
      and interface with the State's electronic systems and will use them to
      perform certain electronic transactions that contain health information,
      and which are subject to the final rules for the Standards for Electronic
      Transactions, dated August 17, 2000, under the Administrative
      Simplification Section of HIPAA (the "Transaction Standards").

      The Contractor shall comply with the Transaction Standards, as may be
      amended from time to time, and shall provide documentation of its
      compliance with them, including a summary of project plans for
      remediation, status reports of remediation efforts, summary of text
      results, copies of certifications, if any, and the Contractor's statement
      affirming completion of all requirements. Such compliance shall be
      maintained at no additional cost to the State.

MCO Contract, Third Amendment          Page 3 of 6           Harmony Health Plan

<PAGE>

      Contractor will indemnify and hold the State harmless from any loss,
      damage, costs, expense, judgment, sanction or liability including, but not
      limited to, attorneys' fees and costs, that the State incurs or is subject
      to, as a result of Contractor's breach of this Paragraph.

6.    The parties agree that Article IV. Payment, paragraph A, of the Second
      Amendment (renewal contract) is amended as follows:

                                CAPITATION RATES

<TABLE>
<CAPTION>
CATEGORY               PACKAGES A/B          PACKAGE C
--------               ------------          ---------
<S>                 <C>                      <C>
NORTH REGION
Newborns            $            381.83      $  208.22
Preschool           $             71.66      $   78.20
Children            $             58.10      $   63.25
Adolescents         $             87.40      $   83.63
Adult Males         $            246.78
Adult Females       $            203.16
Deliveries          $[ILLEGIBLE],356.03      $3,356.03
CENTRAL REGION
Newborns            $            390.49      $  156.05
Preschool           $             77.35      $   74.26
Children            $             55.04      $   50.40
Adolescents         $            105.91      $   64.08
Adult Males         $            234.59
Adult Females       $            206.70
Deliveries          $[ILLEGIBLE] 482.86      $3,482.86
</TABLE>

7.    The parties agree that paragraph III.Q.3.a. of the renewal contract is
      amended to read as follows:

            An informal claim resolution procedure which shall be available for
            the resolution of claims submitted to the Contractor by the provider
            within the allowable claims submission time limits under federal and
            state law.

8.    The parties agree that Contractor's service area, as described in
      Contractor's response to the BAA, has been amended to include, not only
      the initial service area in the Northern Region, but also the Central
      Region, including, but not limited to, the Phase II Mandatory MCO
      Enrollment counties of Grant, Howard, Madison and Delaware.

9.    Contractor shall submit a network development plan to OMPP and to the
      monitoring contractor for the counties identified for Phase II of
      mandatory MCO enrollment by August 5, 2003.

MCO Contract, Third Amendment          Page 4 of 6           Harmony Health Plan

<PAGE>

10.   The parties agree that Section 3.6.1.3 of the BAA is amended to require
      the Contractor to submit the "Transition Report (Phase II )," attached as
      Exhibit 3, monthly from August 2003 until August 2004, according to the
      schedule in Exhibit 3, or until the MCO has received written notification
      from OMPP that the report, or certain data elements in the report, is/are
      no longer required or may be reported less frequently. If Contractor fails
      to submit the Transition Report on time, or submits a Transition Report
      with incomplete data, OMPP may assess, and the MCO shall pay, liquidated
      damages in the amount of $200 per business day until a complete report is
      received.

11.   The Contractor certifies and warrants that federal funds have not been
      used for lobbying.

12.   The parties agree that this Third Amendment to the parties' original
      Contract has been duly prepared and executed pursuant to Paragraph VII.B
      of the original contract.

13.   The undersigned attests, subject to the penalties for perjury, that he is
      the contracting party, or that he is the representative, agent, member or
      officer of the contracting party, that he has not, nor has any other
      member employee, representative, agent or officer of the firm, company,
      corporation or partnership represented by him, directly or indirectly, to
      the best of his knowledge, entered into or offered to enter into any
      combination, collusion or agreement to receive or pay, and that he has not
      received or paid, any sum of money or other consideration for the
      execution of this agreement other than that which appears upon the face of
      the agreement.

             //THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.//

MCO Contract, Third Amendment          Page 5 of 6           Harmony Health Plan

<PAGE>

WHEREOF, the parties have, through duly authorized representatives, entered into
this agreement. The parties having read and understood the foregoing terms of
the contract do by their respective signatures dated below hereby agree to the
terms thereof.

For the Contractor:                          For the State of Indiana:

/s/ John Blank
_____________________________________        ___________________________________
John Blank, MD, President/CEO                Melanie Bella, Assistant Secretary
Harmony Health Plan of Illinois, Inc.        Office of Medicaid Policy Planning

Date: 7/29/03                                Date:______________________________

                                             ___________________________________
                                             Kathryn H. Moses, Director
                                             Children's Health Insurance Program

                                             Date:______________________________

APPROVED:                                    APPROVED:

__________________________________           ___________________________________
Marilyn Schultz, Director                    David Perlini, Commissioner
Slate Budget Agency                          Department of Administration

Date:_____________________________           Date:______________________________

APPROVED AS TO FORM AND LEGALITY

__________________________________
Stephen Carter
Attorney General of Indiana

Date:_____________________________

MCO Contract, Third Amendment          Page 6 of 6           Harmony Health Plan

<PAGE>

                                    EXHIBIT 1
                     BAA 01-28, ATTACHMENT A - SCOPE OF WORK
                     REVISED SECTION 3.0 REQUESTED SERVICES

<TABLE>
<S>                                                                                                            <C>
3.0   REQUESTED SERVICES....................................................................................    4
  3.1   INTRODUCTION........................................................................................    4
  3.2   FEDERAL REQUIREMENTS................................................................................    4
    3.2.1   Capacity and Service............................................................................    4
    3.2.2   Federal Upper Payment Limit.....................................................................    5
    3.2.3   Fiscal Soundness of the MCOs....................................................................    5
    3.2.4   Physician Incentive Plan(s).....................................................................    6
    3.2.5   Balance Billing.................................................................................    6
    3.2.6   Debarred or Suspended Individuals...............................................................    6
    3.2.7   Civil Rights Compliance.........................................................................    7
  3.3   CONTRACT COMMUNICATION..............................................................................    7
  3.4   DESCRIPTION OF MANAGED CARE SERVICES................................................................    7
    3.4.1   Hoosier Healthwise MCO Covered Services.........................................................    7
    3.4.2   Special Provisions..............................................................................   11
      3.4.2.1   Emergency Services and Post-Stabilization Services..........................................   11
      3.4.2.2   Out-of-Area Services........................................................................   13
      3.4.2.3   Out-of-Plan Services........................................................................   13
      3.4.2.4   MCO-Covered Self-Referral Services..........................................................   13
        3.4.2.4.1   Family Planning.........................................................................   14
        3.4.2.4.2   Chiropractic, Eye Care and Podiatry Services............................................   14
        3.4.2.4.3   HIV/AIDS Targeted Case Management Services..............................................   14
      3.4.2.5   MCO-Covered Diabetes Self-Management Services...............................................   15
      3.4.2.6   Federally Qualified Health Centers (FQHCs) and Rural Health Centers (RHCs)..................   15
      3.4.2.7   Short-term placements in long-term care facilities..........................................   16
      3.4.2.8   Co-payments.................................................................................   16
    3.4.3   Medicaid and Hoosier Healthwise Covered, But MCO Non-Covered, Services (Carved-Out Services)....   16
    3.4.4   Enhanced Services...............................................................................   18
    3.4.5   Drug Formularies................................................................................   18
  3.5   RESPONSIBILITIES OF OMPP AND CHIP...................................................................   18
    3.5.1   Determination of Hoosier Healthwise Benefits and Hoosier Healthwise Managed Care Eligibility....   18
    3.5.2   Member Enrollment in Hoosier Healthwise Managed Care............................................   19
      3.5.2.1   Member Disenrollment From Hoosier Healthwise MCOs...........................................   20
      3.5.2.2   Redetermination Enrollment In Hoosier Healthwise RBMC..........:............................   22
    3.5.3   MCO Enrollment Rosters..........................................................................   22
    3.5.4   Utilization Review..............................................................................   23
    3.5.5   Monitoring......................................................................................   23
    3.5.6   Capitation Payments.............................................................................   24
  3.6   RESPONSIBILITIES OF MCO.............................................................................   24
    3.6.1   Administration and Organizational Structure.....................................................   24
      3.6.1.1   Administrative Requirements.................................................................   25
      3.6.1.2   Meeting Requirements........................................................................   27
      3.6.1.3   Reporting Requirements......................................................................   27
      3.6.1.4   Subcontractor Review Requirements...........................................................   29
    3.6.2   Provider Network Requirements...................................................................   30
    3.6.3   Provider Network Access to Care Requirements....................................................   32
    3.6.4   Provider Payment Requirements...................................................................   34
    3.6.5   Disclosure of Physician Incentive Plan..........................................................   35
    3.6.6   Advance Directives..............................................................................   36
    3.6.7   Member Services.................................................................................   36
      3.6.7.1   Member Hotline..............................................................................   36
      3.6.7.2   Services for Newborns.......................................................................   37
      3.6.7.3   Member Outreach for the Hoosier Healthwise RBMC.............................................   38
      3.6.7.4   Member Education Requirements...............................................................   39
        3.6.7.4.1   Member Materials........................................................................   39
        3.6.7.4.2   Alternate Format Requirements...........................................................   40
      3.6.7.5   Member Grievance Procedures and Reporting Standards.........................................   40
</TABLE>

Section 3.0                          1                     Revised July 10, 2003

<PAGE>

                     BAA 01-28, ATTACHMENT A - SCOPE OF WORK
                     REVISED SECTION 3.0 REQUESTED SERVICES

<TABLE>
<S>                                                                                                          <C>
    3.6.7.6   Protection of Member-Provider Communications................................................   43
    3.6.7.7   Member Rights...............................................................................   43
    3.6.7.8   Members With Special Needs..................................................................   44
  3.6.8   Provider Services...............................................................................   45
  3.6.9   Provider Credentialing..........................................................................   45
    3.6.9.1   Provider Enrollment and Education...........................................................   50
    3.6.9.2   Maintenance of Medical Records..............................................................   50
    3.6.9.3   MCO Communications with Providers...........................................................   50
  3.6.10  Program Integrity Plan and Reporting Standard...................................................   51
    3.6.10.1      MCO Communications With Indiana Medicaid Fraud Control Unit (IMFCU).....................   52
  3.6.11  Regional Network Development Requirement and Reporting Standard.................................   53
  3.6.12  Quality Improvement and Utilization Review Program..............................................   53
    3.6.12.1      Quality Assessment and Performance Improvement Program and Reporting Standard...........   53
    3.6.12.2      Utilization Review (UR) Requirement  and UR Reporting Standard..........................   56
  3.6.13  Management Information Systems..................................................................   60
    3.6.13.1      Member Enrollment Data Exchange.........................................................   61
    3.6.13.2      Claims Processing.......................................................................   62
    3.6.13.3      Shadow Claims Reporting.................................................................   62
      3.6.13.3.1  Shadow Claims Requirements and Submission Standards.....................................   63
    3.6.13.4  Third-Party Liability Reporting.............................................................   64
      3.6.13.4.1  MCO TPL Responsibilities - Cost Avoidance...............................................   65
      3.6.13.4.2  Cost Avoidance Exceptions...............................................................   65
      3.6.13.4.3  Coordination of Benefits................................................................   66
      3.6.13.4.4  Casualty Cases..........................................................................   67
  3.6.14  Financial Reporting Requirements................................................................   67
  3.6.15  Dispute Resolution Processes....................................................................   68
3.7   REINSURANCE REQUIREMENTS............................................................................   68
3.8   CHANGE IN SCOPE OF WORK.............................................................................   69
3.9   TERMINATION OF CONTRACT.............................................................................   69
  3.9.1   Termination for Default.........................................................................   70
  3.9.2   Termination for Convenience.....................................................................   71
  3.9.3   Termination for Unavailable Funds...............................................................   71
  3.9.4   Termination for Financial Instability...........................................................   71
  3.9.5   Termination for Failure to Disclose Records.....................................................   72
  3.9.6   Procedures for Termination......................................................................   72
  3.9.7   Refunds of Advanced Payments....................................................................   73
  3.9.8   Liability for Medical Claims....................................................................   73
  3.9.9   Termination Claims..............................................................................   73
  3.9.10  Right to Suspend Operations.....................................................................   74
3.10  INDEMNIFICATION.....................................................................................   74
3.11  KICKBACKS...........................................................................................   74
3.12  ASSIGNMENTS.........................................................................................   74
3.13  AUDIT OR EXAMINATION OF RECORDS.....................................................................   74
3.14  FINANCIAL ACCOUNTING REQUIREMENTS...................................................................   75
3.15  CONTRACT PERFORMANCE DISPUTES AND APPEALS...........................................................   76
3.16  LIQUIDATED DAMAGES AND OTHER REMEDIES FOR CONTRACT NON-COMPLIANCE...................................   76
  3.16.1  Non-Compliance with Performing Requested Services...............................................   77
  3.16.2  Non-Compliance with Shadow Claims Data Submission Requirements..................................   77
  3.16.3  Non-Compliance with Submission of Quality Improvement and Quarterly Reports.....................   78
  3.16.4  Non-Compliance with Reporting Grievance Data....................................................   79
  3.16.5  Non-Compliance with all Other Reporting Requirements............................................   79
  3.16.6  Non-Compliance with General Contract Provisions.................................................   79
    3.16.6.1  Right to Suspend Enrollment.................................................................   80
    3.16.6.2  Right to Suspend Monthly Capitation Payments................................................   80
  3.16.7  Non-Compliance with Submission of Education/Outreach and Marketing Materials....................   81
3.17  WARRANT AGAINST CONTINGENCY fees....................................................................   81
3.18  INSURANCE...........................................................................................   81
  3.18.1  Professional Liability Insurance................................................................   81
  3.18.2  Workers' Compensation...........................................................................   82
</TABLE>

Section 3.0                            2                   Revised July 10, 2003

<PAGE>

                     BAA 01-28, ATTACHMENT A - SCOPE OF WORK
                     REVISED SECTION 3.0 REQUESTED SERVICES

<TABLE>
<S>                                                                                                          <C>
  3.18.3  Minimum Liability and Property Damage Insurance.................................................   82
  3.18.4  Errors and Omissions Insurance..................................................................   82
  3.18.5  Bonds...........................................................................................   82
  3.18.6  Evidence of Coverage............................................................................   83
3.19   FORCE MAJEURE......................................................................................   83
</TABLE>

Section 3.0                          3                     Revised July 10, 2003

<PAGE>

                     BAA 01-28, ATTACHMENT A - SCOPE OF WORK
                     REVISED SECTION 3.0 REQUESTED SERVICES

3.0      REQUESTED SERVICES

3.1      INTRODUCTION

         This section of the BAA provides a description of the general
         characteristics of a fully-capitated prepayment managed care system and
         sets out the minimum requirements of MCOs who are qualified to contract
         with the State as an MCO for the Hoosier Healthwise RBMC delivery
         system. In addition, this section includes an overview of other major
         State functions and federal Medicaid managed care and CHIP
         requirements, and provisions that must be considered when contracting
         with OMPP as an MCO for the Hoosier Healthwise RBMC delivery system.

         Please note that all descriptions of Federal and state statutes,
         regulations or administrative procedures currently in effect are made
         in good faith to provide MCOs relevant information available to the
         State at this time. However, MCOs will be required to comply with any
         statutes, regulations or administrative procedures that become
         effective following release of the BAA. The State is not precluded by
         any description contained in this BAA from implementing any lawful
         changes in statutes, rules or administrative procedures that may become
         effective following release of the BAA. Definitions for terms used
         throughout this BAA are provided in Appendix 2.

3.2      FEDERAL REQUIREMENTS

         Federal requirements governing contracts with risk-based managed care
         plans are specified in Section 1903(m)of the Social Security Act
         (including amendments made by the Balanced Budget Act of 1997 [P.L.
         105-33]) and Part 434 and 438 of 42 CFR. The MCO procurement must also
         comply with 45 CFR 74. In addition to these federal regulations and
         statutes, federal civil rights laws will also govern the principles of
         this procurement. The following regulations apply to Hoosier Healthwise
         managed care.

3.2.1    CAPACITY AND SERVICE

         Federal rule 42 CFR 438.207 requires a contracting MCO to provide the
         State with adequate assurances and documentation that the MCO:

         -        Offers an appropriate range of services and access to
                  preventive and primary care services for the population
                  expected to be enrolled in the service area; and

         -        Maintains a sufficient number, mix and geographic distribution
                  of providers of services.

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3.2.2    PAYMENT UNDER RISK CONTRACTS

         In accordance with 42 CFR 438.6, all payments under risk contracts must
         be actuarially sound. OMPP will comply with this requirement in setting
         the capitation rates paid to the MCOs.

3.2.3    FISCAL SOUNDNESS OF THE MCOS

         Federal regulations require that the MCO maintain a fiscally solvent
         operation. OMPP has the right to evaluate the ability of the MCO to
         bear the risk of potential financial losses, or to perform services
         based on determinations of payable amounts under the contract. The
         Department of Insurance maintains the primary responsibility for
         regulating the MCO's solvency by requiring a minimum net worth and a
         set reserve amount. MCOs or their subcontractors shall not hold members
         liable for any payments that are not made by the State to the MCO or by
         the MCO to its subcontractors in the event of an insolvency. MCOs or
         their subcontractors are also prohibited from holding members liable
         for any payments for covered services furnished under a contract,
         referral or other arrangement, to the extent that those payments are in
         excess of the amount that the enrollee would owe if the MCO provided
         the services directly. The MCO is also prohibited from holding the
         member liable for covered services provided to the member for which the
         State does not pay the MCO or for which the MCO or the State does not
         pay the provider.

         In accordance with 42 CFR 438.116(b)(l) and 438.116(b)(2), MCOs must
         meet the solvency standards established by the State for private health
         maintenance organizations, or be licensed or certified by the State as
         a risk-bearing entity except when the entity meets any one of the
         following conditions:

         -        The entity does not provide both inpatient hospital services
                  and physician services.

         -        The entity is a public entity.

         -        The entity is (or is controlled by) one or more federally
                  qualified health centers and meets the solvency standards
                  established by the State for those centers.

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3.2.4    PHYSICIAN INCENTIVE PLAN(S)

         Federal regulations regarding physician incentive plans are provided in
         42 CFR 422.208 and 42 CFR 438.6. Section 1876(i)(8) of the Social
         Security Act prohibits MCOs from making specific payments, directly or
         indirectly, to a physician or physician group as an inducement to
         reduce or limit medically necessary services to members. Other types of
         incentive arrangements are allowed, including those that place
         physicians at substantial financial risk. MCOs that have physician
         incentive plans placing a physician or physician group at substantial
         financial risk for the cost of services the physician or physician
         group does not furnish must assure that the physician or physician
         group has adequate stop-loss protection and conducts annual enrollee
         surveys. Survey results must be disclosed to the State and, upon
         request, disclosed to the members.

         In accordance with 42 CFR 422.208,422.210 and 417.479, MCOs must comply
         with physician incentive plan requirements. The MCO must supply
         information on its physician incentives plan as listed in 42 CFR
         417.479(h)(l)(I) through (v) to the OMPP in sufficient detail to permit
         the State to determine whether the plan complies with federal
         requirements. This information must be supplied to OMPP upon request.

         In addition, the MCO must provide information, upon request by a member
         and in the marketing materials, about a physician incentive plan that
         affects the use of referral services. The required disclosure to
         members is detailed in the federal regulation.

3.2.5    BALANCE BILLING

         The Balanced Budget Act (BBA) of 1997 (42 CFR 438.106(a)) provides that
         Medicaid and CHIP members in an MCO cannot be held responsible for
         payment liabilities incurred by the MCO. For example, if the MCO were
         to become bankrupt, the member would not have to assume the
         responsibility for the MCO's debts, or if the provider fails to receive
         a payment from the MCO, the member cannot be held responsible for these
         payments. An MCO cannot charge members for services at a rate in excess
         of the rate specified in the MCO's contract.

3.2.6    DEBARRED OR SUSPENDED INDIVIDUALS

         Section 1932(d)(l) of the Social Security Act provides that an MCO may
         not knowingly have a director, officer, partner or person with
         beneficial ownership of more than five percent of the entity's equity
         who has been debarred or suspended by any federal agency. This
         provision also prohibits an MCO from having an employment, consulting,
         or any other agreement with a debarred or suspended person for the
         provision of items or services that are significant and material to the
         entity's contractual obligation with the State.

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         In accordance with 42 CFR 438.610, if OMPP finds that the MCO is in
         violation of this portion of the contract OMPP will notify the
         Secretary of noncompliance and determine if the agreement will continue
         to exist. Unless the Secretary provides a written description of
         compelling reasons for renewing or extending the agreement to the State
         and to Congress, OMPP will not renew or extend the duration of existing
         agreements with the MCO. Any action taken by the Secretary will be
         taken in consultation with the Inspector General.

         The General Services Administration (GSA) maintains a list of parties
         excluded from federal programs. The "Exclude Parties Lists" (EPLS) and
         any rules and/or restrictions pertaining to the use of EPLS data can be
         found on GSA's homepage at the following Internet address:
         www.epls.gov.

3.2.7    CIVIL RIGHTS COMPLIANCE

         The Centers for Medicare and Medicaid Services (CMS) has set forth a
         Civil Rights Compliance Policy Statement, in addition to 42 CFR
         438.6(f)(l), which expresses their commitment to eliminating
         discrimination in the delivery of health care services through CMS
         programs. As such, MCOs contracting with the OMPP and CHIP are required
         to comply with the following laws:

         -        Title VI of the Civil Right Act, as amended

         -        Section 504 of the Rehabilitation Act, as amended

         -        Age Discrimination Act of 1975, as amended

         -        Americans with Disabilities Act of 1990, as amended

         -        Title IX of the Education Amendments of 1972

3.3      CONTRACT COMMUNICATION

         The MCO shall direct all contract communications directly to the OMPP
         Managed Care Program Director.

3.4      DESCRIPTION OF MANAGED CARE SERVICES

         This section provides a summary of benefit packages encompassed by
         Hoosier Healthwise, covered an non-covered services and Hoosier
         Healthwise co-payment policies. Where applicable, pertinent Federal and
         State regulations have been referenced.

         PACKAGE A (Standard Coverage):

         Full coverage for the following groups:

         -        Low income families, with children under 18 years, including
                  those receiving Temporary Assistance for Needy Families
                  (TANF).

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         -        Children's Medicaid - Children whose families do not receive
                  TANF, but who are under age 21 and meet the eligibility
                  requirements.

         -        Pregnant women who meet the TANF income and resource criteria.

         -        Wards of the state and foster children. These children may
                  enroll in managed care on a voluntary basis.

         -        CHIP - Phase I - children under age 19 whose family's income
                  is up to 150% of federal poverty level.

         PACKAGE B (Pregnancy Coverage):

         Pregnancy-related coverage is provided to women whose income is below
         150% of poverty without regard to their resources. Eligibility extends
         up to 60 days postpartum.

         PACKAGE C (CHIP Phase II):

         Preventive, primary and acute care services for children under age 19
         whose family's income is 150-200% of federal poverty level.

         PACKAGE D (Reserved):

         Formerly Hoosier Healthwise for People with Disabilities and Chronic
         Illnesses. It provided full coverage with case management services.

         PACKAGE E (Emergency Services):

         Individuals enrolled in this package are eligible for emergency
         services only. These individuals are considered Hoosier Healthwise
         members; however, they are not enrolled in managed care.

         For a complete comparison of the benefits available under each of
         benefit package, see Appendix 3.

3.4.1    HOOSIER HEALTHWISE MCO COVERED SERVICES

         Hoosier Healthwise MCO covered services are included in the MCO's
         capitation rate and the MCO's responsibility. Hoosier Healthwise MCO
         covered services include all Medicaid (Packages A and B), and CHIP
         (Package C) covered services with the exception of carved out services
         (refer to 3.4.3 for a listing of carved out services).

         CHIP Package C has a benefit package similar to Medicaid, but has some
         additional benefit limitations. 407 IAC 3-3-1 sets forth the CHIP
         Package C covered services which can be found on the State's website.
         The MCO must

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         arrange and assure the provision of all MCO covered services except
         self-referral services. For additional information about self-referral
         services, refer to Section 3.4.2.4 of this BAA. Detailed explanations
         of the amount, duration and scope of Medicaid covered services and
         limitations are cited in Title 405, Article 5 of the Indiana
         Administrative Code, which can be found on the State's website at
         www.state.in.us/legislative/iac. Services delivered must be sufficient
         in amount, duration or scope to reasonably expect that provision of
         such services would achieve the purpose of the furnished services.

         The following is a general list of Hoosier Healthwise covered services
         that are MCO covered services, listed by general categories. If a
         service is not a Hoosier Healthwise covered service under a particular
         benefit package, then the MCO is not responsible for providing that
         service to members enrolled in that benefit package. For a more
         complete list of services covered in each of the Hoosier Healthwise
         benefit packages, see Appendix 3, Hoosier Healthwise Benefit Package
         Comparison.

         -        Emergency and poststabilization services

         -        Physician services

         -        Primary care services

         -        Preventive health services

         -        Therapeutic and rehabilitative services

         -        Specialty care services

         -        Nursing services

         -        Hospital services

         -        Inpatient care

         -        Outpatient services

         -        Therapy services

         -        Laboratory and x-ray services

         -        Diagnostic studies

         -        Sterilization, hysterectomy services

         -        Early and Periodic Screening, Diagnosis, and Treatment
                  (EPSDT)

         -        Initial and periodic screenings

         -        Diagnosis and treatment

         -        Home health services

         -        Physical, occupational and respiratory therapy

         -        Speech pathology

         -        Renal dialysis

         -        Pharmacy services

         -        Legend drugs

         -        Non-legend drugs (selected over-the-counter drugs) as
                  identified in OMPP's over-the-counter formulary (the OTC
                  formulary can be found in the IHCP Provider Manual which can
                  be found at www.indianamedicaid.com)

         -        Medical supplies and equipment

         -        Durable medical equipment

         -        Braces and orthopedic shoes

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         -        Prosthetic devices

         -        Hearing aids

         -        Preventive and diagnostic services

         -        Transportation services

         -        Emergency transportation

         -        Non-emergency transportation

         -        Transportation to and from excluded but covered services

         -        HIV/AIDS targeted case management

         -        Diabetes self-management training

         -        Smoking cessation

         If the MCO elects not to provide, reimburse for, or provide coverage
         of, a counseling or referral service because of an objection on moral
         or religious grounds, it must furnish information about the services it
         does not cover as follows, in accordance with 42 CFR 438.102(b):

         -        To the State with its application for a Hoosier Healthwise
                  contract;

         -        To the State if it adopts the policy during the term of the
                  contract;

         -        To potential members before and during enrollment; and

         -        To members within 90 days after adopting the policy with
                  respect to any particular service.

         The MCO must comply with all member requests for a second opinion from
         a qualified professional. If the provider network does not include a
         provider who is qualified to give a second opinion, the MCO must
         arrange for the member to obtain a second opinion from a provider
         outside the network, at no cost to the member.

         In accordance with 42 CFR 438.208(c), the MCO must allow members with
         special needs who are determined to need a course of treatment or
         regular care monitoring to directly access a specialist for treatment
         via an established mechanism such as a standing referral from the
         member's PMP or an approved number of visits. Treatment provided by the
         specialist must be appropriate for the member's condition and
         identified needs.

         In accordance with 42 CFR 438.206(b)(2), the MCO must also provide
         female enrollees with direct access to a women's health specialist
         within the network for covered care necessary to provide women's
         routine and preventive health care services. This is in addition to the
         enrollee's designated source of primary care if that source is not a
         woman's health specialist. Direct access must be permitted via an
         established mechanism such as a standing referral from the member's PMP
         or an approved number of visits.

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3.4.2    SPECIAL PROVISIONS

         Specific managed care coverage and payment policies (described below)
         apply to certain types of services and providers, including the
         following:

         -        Emergency room services and poststabilization services

         -        Out-of-area services

         -        Out-of-plan providers

         -        Self-referral services

         -        Federally Qualified Health Centers (FQHCs)

         -        Rural Health Clinics (RHCs)

         -        Short-term placements in a long-term care facility

         -        Co-payments

3.4.2.1  EMERGENCY SERVICES AND POST-STABILIZATION SERVICES

         The MCO must cover emergency services without regard to prior
         authorization or the emergency care provider's contractual relationship
         with the MCO. Thus, the MCO is responsible for coverage and payment of
         all emergency services, including out-of-plan or out-of-area emergency
         services. The MCO must ensure that emergency services are available 24
         hours a day, seven days a week. The MCO must comply with emergency
         services requirements specified in Indiana Code 12-15-12.

         As specified in, Indiana Code 12-15-12 and 42 CFR 438.114, "Emergency
         Services" are defined as covered inpatient and outpatient services
         furnished by a qualified IHCP provider that are necessary to evaluate
         or stabilize an emergency medical condition. "Emergency Medical
         Condition" is defined as:

                  A medical condition manifesting itself by acute symptoms of
                  sufficient severity, including severe pain, 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 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, serious
                  impairment to body functions or serious dysfunction of any
                  bodily organ or part.

         The MCO will not be responsible for paying for services not meeting the
         above "prudent layperson" definition and that are not authorized by the
         MCO or by the PMP. The MCO may use its discretion in determining
         whether to cover and reimburse non-emergency care provided in the
         emergency room.

         The MCO may not determine what constitutes an emergency on the basis of
         lists of diagnoses or symptoms. The MCO may not deny payment for
         treatment obtained when an enrollee had an emergency medical condition,
         even if the outcomes, in the absence of immediate medical attention,
         would not have been

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         those specified in the above definition of emergency medical condition.
         The MCO is prohibited from refusing to cover emergency services because
         the emergency room provider, hospital, or fiscal agent does not notify
         the member's PMP, MCO, or applicable State entity of the member's
         screening and treatment within 10 calendar days of presentation for
         emergency services. A member who has an emergency medical condition may
         not be held liable for payment of subsequent screening and treatment
         needed to diagnose the specific condition or stabilize the patient. The
         attending emergency physician, or the provider actually treating the
         enrollee, is responsible for determining when the enrollee is
         sufficiently stabilized for transfer or discharge. The physician's
         determination is binding and may not be challenged by the MCO.

         The MCO must cover poststabilization services related to an emergency
         medical condition that are provided after an enrollee is stabilized in
         order to maintain the stabilized condition, or, under the circumstances
         described in 42 CFR 438.114(e) to improve or resolve the enrollee's
         condition. The MCO is financially responsible for post-stabilization
         services obtained within or outside the MCO network that are
         pre-approved by a plan provider or other MCO representative. In
         addition, the MCO is also financially responsible for
         post-stabilization care services obtained within or outside the MCO
         network that are not pre-approved by a plan provider or other MCO
         representative, but are administered to maintain the enrollee's
         stabilized condition if:

         -        The MCO does not respond to a request for pre-approval within
                  1 hour;

         -        The MCO cannot be contacted; or

         -        The MCO representative and the treating physician cannot reach
                  an agreement concerning the enrollee's care and a plan
                  physician is not available for consultation. In this
                  situation, the MCO must give the treating physician the
                  opportunity to consult with a plan physician and the treating
                  physician may continue with care of the patient until a plan
                  physician is reached or one of the criteria of 422.133(c)(3)
                  is met.

         The MCO must limit charges to enrollees for poststabilization care
         services to an amount no greater than what the MCO would charge the
         enrollee if services were obtained through the MCO network.

         The MCO's financial responsibility for poststabilization care services
         it has not pre-approved ends when:

         -        A plan physician with privileges at the treating hospital
                  assumes responsibility for the enrollee's care;

         -        A plan physician assumes responsibility for the enrollee's
                  care through transfer;

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         -        An MCO representative and the treating physician reach an
                  agreement concerning the enrollee's care; or

         -        The enrollee is discharged.

3.4.2.2  OUT-OF-AREA SERVICES

         The MCO is responsible for payment of emergency services obtained
         out-of-area. However, MCO members and/or providers must obtain
         authorization from the PMP or MCO in order to obtain non-emergency
         services out-of-area; otherwise, the MCO may deny payment to the
         out-of-area rendering provider.

3.4.2.3  OUT-OF-PLAN SERVICES

         In accordance with 42 CFR 438.206(b)(4), the MCO must authorize and pay
         for out-of-network care if the MCO is unable to provide necessary
         medical services covered under the contract to a particular enrollee.
         Authorized out-of-network services must be provided in a timely manner
         and adequately covered for as long as the entity is unable to provide
         them.

         The MCO shall reimburse out-of-plan claims for plan or PMP authorized
         services provided to its members at a rate negotiated with the provider
         or according to the lesser of the following:

         -        The usual and customary charge made to the general public by
                  the provider; or

         -        At established IHCP reimbursement rates in effect for
                  participating IHCP providers at the time the service was
                  rendered.

3.4.2.4  MCO-COVERED SELF-REFERRAL SERVICES

         Capitation amounts include payment for the following services known as
         self-referral services which include:

         -        Services rendered for the treatment of an emergency (See
                  Section 3.4.2.1 above);

         -        Family planning services;

         -        Chiropractic services;

         -        Podiatric services;

         -        Eye Care services (except eye care surgical services);

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         -        HIV/AIDS targeted case management services;

         The MCO may negotiate reimbursement paid to self-referral service
         providers who have contractual relationships with the MCO. However,
         when members choose IHCP-enrolled providers for self-referral services
         who do not have contractual relationships with the MCO, the MCO is
         nevertheless responsible for payment to these providers at established
         Hoosier Healthwise fees that currently exist for paying participating
         Hoosier Healthwise providers. The current Hoosier Healthwise fee
         schedule can be found on the IHCP web site at: www.indianamedicaid.com.
         In addition, the MCO is responsible for ensuring that self-referral
         services are covered and prior authorized in accordance with 405 IAC 5.
         The MCO should encourage providers of self-referral services to
         communicate with PMPs once any form of medical treatment is undertaken.

3.4.2.4.1 FAMILY PLANNING

         Federal regulation requires, in 42 CFR 431.51 (b)(2), freedom of choice
         of providers and access to family planning services and supplies.
         Hoosier Healthwise members enrolled in an MCO may not be restricted in
         choice of family planning service provider. Family planning services
         are those services provided to individuals of childbearing age to
         temporarily or permanently prevent or delay pregnancy. Refer to the
         IHCP Provider Manual for a complete list of family planning services
         which can be found at www.indianamedicaid.com.

         CMS interprets family planning services to include birth control pills.
         Therefore, the member must be allowed to obtain birth control pills on
         a self-referral basis. The OMPP recognizes the need for appropriate
         management of prescription medication in the interest of the member's
         health. However, the OMPP also recognizes the importance of removing
         barriers to family planning services. In order to reduce potential
         barriers to obtaining birth control pills, which may include, but may
         not be limited to transportation to pharmacies for periodic refills,
         MCOs must, at a minimum, reimburse for the dispensation of up to a
         90-day supply of birth control pills, per member, at one time, if
         prescribed.

3.4.2.4.2 CHIROPRACTIC, EYE CARE AND PODIATRY SERVICES

         The Indiana General Assembly has specifically provided that
         chiropractic care (IC 12-15-12-1), eye care (IC 12-15-12-7), podiatry
         (IC 12-15-12-8) are self-referral services. Hoosier Healthwise members
         may self-refer these services to any IHCP provider.

3.4.2.4.3 HIV/AIDS TARGETED CASE MANAGEMENT SERVICES

         Members with HIV/AIDS may self refer to case management services.
         HIV/AIDS case management services are limited to no more than 60 hours
         per quarter and are available to Package A and Package B members (as
         the case management services relate to the pregnancy.) For more
         detailed information

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         concerning HIV/AIDS case management refer to the IHCP Provider Manual
         available at www.indianamedicaid.com.

3.4.2.5  MCO-COVERED DIABETES SELF-MANAGEMENT SERVICES

         Generally, diabetes self management (DSM) is not a self-referral
         service. MCOs may limit the providers from whom members may receive
         DSM. However, MCOs must permit members to self-refer to any
         chiropractor, optometrist, podiatrist, or non-MCO covered service
         provider with an IHCP provider agreement, who may provide DSM services.

         Indiana Code (IC) 27-8-14.5-6 requires insurers, including IHCP, to
         provide coverage for DSM training services. The statute also provides
         that coverage for DSM is subject to the requirements of the health
         insurance plan regarding the use of participating providers (IC
         27-8-14.5-6(c)). However, state statutes also provide that chiropractic
         care (IC 12-15-12-1), eye care (IC 12-15-12-7) and podiatry (IC
         12-15-12-8) are self-referral services. This means that although the
         MCOs may require members to receive DSM services from non self-referral
         providers in the MCO's network, they must make allowances for members
         who choose an IHCP chiropractor, optometrist, or podiatrist outside the
         network for DSM related services.

3.4.2.6  FEDERALLY QUALIFIED HEALTH CENTERS (FQHCS) AND RURAL HEALTH CENTERS
         (RHCS)

         Since FQHCs and RHCs are essential community providers, MCOs are
         strongly encouraged to contract with FQHCs and RHCs. The MCO must
         reimburse FQHCs and RHCs for services no less than the level and amount
         of payment that the MCO would make to a non-FQHC or RHC provider for
         the services. OMPP endorses the following two types of contractual
         arrangements:

         -        The FQHC or RHC accepts a full capitation (i.e., for primary
                  care, specialty care, and hospital care); or

         -        The FQHC or RHC accepts a partial capitation or other method
                  of payment at less than full risk for patient care (i.e.,
                  primary care capitation, fee-for-service).

         OMPP will provide a supplemental payment at least quarterly to the FQHC
         and RHC to bring reimbursement up to 100% of reasonable costs. In order
         to calculate the supplemental payment, the amount paid directly to the
         FQHC or RHC by the MCO for services provided to members will be
         subtracted from 100% of reasonable costs. The MCO must submit to OMPP,
         or its designee, at least quarterly, the amount paid by the MCO to the
         FQHC or RHC for services provided to MCO members, and/or in capitated
         amounts, in order for OMPP to calculate the supplemental payment due to
         the FQHC or RHC.

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         The MCO shall identify to the State any performance incentives offered
         to the FQHC or RHC. All such FQHC and RHC incentives which accrue
         during the contract period that are related to the cost of providing
         FQHC-covered or RHC-covered services to RBMC members shall be included
         along with any fee-for-service and/or capitation payments in the
         determination of the amount of direct reimbursement paid by the MCO to
         the FQHC or RHC.

         The MCO must provide assurances that it is paying the FQHC or RHC at a
         rate that is not less than the level and amount of payment the MCO
         would make for the services if the services were furnished by a
         provider which is not a FQHC or RHC. The MCO shall provide supporting
         documentation of its rates at OMPP's request. In addition, the FQHC or
         RHC, and the MCO, are required to maintain and submit records
         documenting the number and types of encounters provided to MCO members
         and to provide these records at OMPP's request. Capitated FQHCs and
         RHCs must also submit encounter data (e.g., in the form of shadow
         claims to the MCOs). The number of encounters will be subject to audit
         by OMPP or its representatives.

3.4.2.7  SHORT-TERM PLACEMENTS IN LONG-TERM CARE FACILITIES

         Although long-term care facilities are not a Hoosier Healthwise
         MCO-covered service, an MCO may allow its enrolled Hoosier Healthwise
         members to obtain services in a nursing facility setting on a
         short-term basis (no more than 30 days) if this setting is more cost
         effective than other options and the member can obtain the care and
         services needed.

3.4.2.8  CO-PAYMENTS

         Hoosier Healthwise MCO members, with the exception of Package C
         enrollees, may not be charged any co-payments or other cost-sharing
         fees for MCO-covered services. For Package C members, certain services
         such as transportation, non-emergency use of the emergency room, and
         pharmacy may be subject to a member co-payment under the Hoosier
         Healthwise program.

         Following 407 IAC 3-10-3 and 407 IAC 3-9-3, members enrolled in Package
         C may be charged co-payments for prescription drugs ($3.00 generic and
         $10.00 brand name) and ambulance transportation ($10.00). Package C
         members cannot be charged a co-payment for emergency room services, but
         they may be required to pay for the entire visit if it is deemed a
         non-emergency.

3.4.3    MEDICAID AND HOOSIER HEALTHWISE COVERED, BUT MCO NON-COVERED, SERVICES
         (CARVED-OUT SERVICES)

         Medicaid and Hoosier Healthwise services excluded from the MCO's
         capitated payment amount, but still a covered benefit for Hoosier
         Healthwise members, are

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         known as "carved-out" services. The carved-out services, subject to the
         benefit package limitations in which a member is enrolled, include:

         -        Long-term institutional care

         -        Hospice care

         -        Services provided by a school as part of a student's
                  Individualized Education Plan(IEP)

         -        Dental services rendered by providers enrolled in IHCP in a
                  dental specialty; the dental specialties are: endodontist,
                  general dentistry practitioner, oral surgeon, orthodontist,
                  pediatric dentist, periodontist, pedodontist, and
                  prosthodontist

         -        Behavioral health services, including mental health and
                  substance abuse and chemical dependency services, rendered by
                  providers enrolled in IHCP with a mental health specialty;
                  those provider specialties are listed below.

         Behavioral health services rendered by providers enrolled in IHCP with
         a mental health specialty can be accessed by members on a self-referral
         basis. These services are reimbursed to the provider by the IHCP fiscal
         agent on a fee-for-service basis. These provider specialties are:
         psychiatric hospital, outpatient mental health clinic, community mental
         health clinic, psychiatrist, psychologist, certified psychologist,
         health services provider in psychology, certified social worker,
         certified clinical social worker, psychiatric nurse, independent
         practice school psychologist and advanced practice nurse under IC
         25-23-1-1(b)(3), credentialed in psychiatric or mental health nursing
         by the American Nurses Credentialing Center.

         MCOs are fully responsible for payment for behavioral health services
         rendered BY PROVIDERS OTHER THAN PROVIDERS IN THE MENTAL HEALTH
         SPECIALTIES LISTED ABOVE. Behavioral health services rendered by
         providers other than those in the above-specified mental health
         specialties are not required to be rendered on a self-referral basis.

         The MCOs are financially responsible for all facility, ancillary, and
         professional services related to carved-out behavioral health services,
         including services related to substance abuse and chemical dependency
         diagnoses, when rendered in an acute care hospital, by the PMP, or by
         another specialty not enrolled as one of the specialists listed in the
         above paragraph. MCO member confinements in acute care hospitals with
         primary diagnoses of substance abuse and chemical dependency are the
         responsibility of the MCO. MCOs are financially responsible for
         behavioral health services provided in an acute care hospital,
         regardless of the admitting diagnoses. (The responsible party for claim
         payment is based on billing provider type and specialty.)

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3.4.4    ENHANCED SERVICES

         In conjunction with the provision of covered services, contracted MCOs
         are strongly encouraged to develop and maintain programs that enhance
         the general health and well-being of Hoosier Healthwise managed care
         members, including programs that specifically address preventive health
         and preventive risk factors. Wellness programs available to the MCO's
         commercial population should be made available to Hoosier Healthwise
         members. The MCO is encouraged to provide enhanced services, such as
         health education classes which target the Hoosier Healthwise population
         specifically. In addition to wellness and education services, it is
         appropriate for an MCO to provide non-Hoosier Healthwise covered
         services to members that are more clinically appropriate or
         cost-effective than Hoosier Healthwise covered services. The MCO must
         inform OMPP at least four weeks prior to implementing or providing any
         enhanced services. Enhanced services must comply with the
         education/outreach and other relevant guidelines set forth in this BAA.

3.4.5    DRUG FORMULARIES

         The MCO can implement restrictions on prescribed drugs; however, before
         a Hoosier Healthwise MCO implements a drug formulary, the MCO must
         submit the formulary to OMPP at least 35 days before the MCO intends to
         implement the formulary. OMPP will forward the formulary to the DUR
         Board for review and recommendation. Based on the recommendation of the
         DUR Board, OMPP will either approve, disapprove or require
         modifications to the MCO's proposed formulary.

         IC 12-15-35-47 provides that if a Hoosier Healthwise MCO removes one or
         more drugs from the formulary or places new restrictions on one or more
         drugs on the formulary, the MCO must submit the changes to OMPP for
         review and recommendation by the DUR Board. More information regarding
         the DUR Board is available at www.indianamedicaid.com.

3.5      RESPONSIBILITIES OF OMPP AND CHIP

         Hoosier Healthwise managed care is funded by two separate sources:
         Medicaid and CHIP. While MCO contractors are responsible to both OMPP
         and the CHIP Office, the OMPP managed care unit is responsible for
         administering Hoosier Healthwise MCO contracts, monitoring contractor
         performance and performing certain quality assurance activities.

3.5.1    DETERMINATION OF HOOSIER HEALTHWISE BENEFITS AND HOOSIER HEALTHWISE
         MANAGED CARE ELIGIBILITY

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         Through the IFFSA Division of Family and Children, the State is
         responsible for determining if persons are eligible for benefits and
         enrollment in Hoosier Healthwise. The OMPP is responsible for
         identifying and enrolling people who have been determined eligible for
         benefits into Hoosier Healthwise managed care. Most people eligible for
         Packages A, B and C are required to enroll in Hoosier Healthwise
         managed care.

3.5.2    MEMBER ENROLLMENT IN HOOSIER HEALTHWISE MANAGED CARE

         Initial applicants and re-applicants for Hoosier Healthwise will
         receive a presentation by the enrollment broker on Hoosier Healthwise
         managed care and assistance in selecting a PMP. Members are educated on
         the benefits of primary and preventive care, the differences between
         PrimeStep and the MCO networks, and the importance of choosing a PMP.
         Additionally, members receive educational materials and may watch a
         video describing Hoosier Healthwise.

         Benefit Advocates (BAs), who are employed by the enrollment broker,
         provide potential members with a list of their provider options and
         explain that they have 30 days from the date they are determined
         eligible for Hoosier Healthwise to choose a PMP. Whether the choice
         leads to enrollment in PrimeStep or RBMC will depend on the PMP's
         enrollment status at the time of selection. The education provided by
         the BAs focuses on the choice of a physician, but the implications of
         network choice are also discussed. MCOs are required to provide
         information regarding their network, grievance procedures, and any
         other information requested by the State, for use in member education
         and enrollment. If a potential member fails to make a PMP selection
         within thirty days, one will be made for him or her through an
         auto-assignment enrollment mechanism processed by the IndianaAIM
         system. Once a PMP is chosen, or when a PMP is assigned, the member is
         linked to a Hoosier Healthwise PMP, and thereby enrolled in managed
         care.

         For members who apply for Hoosier Healthwise from an outstation
         location (enrollment center), the same requirements apply to the MCO
         and OMPP. OMPP will assure that those individuals are educated and
         enrolled in Hoosier Healthwise.

         If the member does not choose a PMP within 30 days, a PMP will be
         assigned to the member through an auto-assignment process that complies
         with Section 1932(a)(4)(D) of Title XIX of the Social Security Act.
         This process automatically assigns a PMP to a member if he/she fails to
         select a PMP. A detailed description of the auto-assignment logic is
         contained in the MCO Policies and Procedures Manual.

         Once a member is linked to a PMP, either by self-selection or
         auto-assignment, the member will be informed by mail of the member's
         PMP and plan enrollment. The PMP and the MCO are informed of the
         enrollment on bi-monthly enrollment rosters, which are updated on the
         first and fifteenth of each month.

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         The MCO is prohibited from discriminating against individuals eligible
         to enroll on the basis of race, color, national origin, health status
         or the need for health care services, and will not use any policy or
         practice that has the effect of discriminating on the basis of race,
         color, national origin, health status or the need for health care
         services, in accordance with 42 CFR 438.6(d). The MCO may neither
         terminate enrollment nor encourage a member to disenroll because of a
         patient's health care needs or a change in a patient's health care
         status. Further, a patient's health care utilization patterns may not
         serve as the basis for disenrollment from the MCO. A PMP may refuse a
         member assignment only if he or she does not feel medically qualified
         to accept the case. A new PMP selection for the member will then be
         facilitated by the enrollment broker.

         The member will be allowed at any time to change PMPs. Requests for a
         PMP change are made through the Hoosier Healthwise Helpline department
         (managed by the enrollment broker) and are documented, tracked, and
         monitored.

3.5.2.1  MEMBER DISENROLLMENT FROM HOOSIER HEALTHWISE MCOS

         The MCO must comply with all federal enrollment and disenrollment
         requirements stated in 42 CFR Section 438.56, as applicable to the
         Hoosier Healthwise program. Members may change PMPs at any time, for
         any reason. However, members should be encouraged to establish a
         relationship with their PMP.

         In accordance with 42 CFR 438.56(d)(2), the following are typical
         reasons for members to request to disenroll from the MCO:

         -        The member moves out of the MCO's service area.

         -        The MCO does not, because of moral or religious objections,
                  cover the service the member seeks.

         -        The member needs related services (for example a cesarean
                  section and a tubal ligation) to be performed at the same
                  time; not all related services are available within the
                  network; and the member's PMP another provider determines that
                  receiving the services separately would subject the member to
                  unnecessary risk.

         -        Other reasons, including but not limited to, poor quality of
                  care, lack of access to services covered under the contract,
                  or lack of access to providers experienced in dealing with the
                  member's health care needs.

         For more information regarding acceptable reasons for a member
         requesting a network change, refer to the MCO Policies and Procedures
         Manual. The MCO may make PMP changes within its own network as
         requested by its members; however, the MCO must notify the enrollment
         broker of the change. If the member desires a change to a PMP in
         another MCO, the MCO must direct the

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         member to call the Hoosier Healthwise Helpline so the enrollment broker
         can make this change.

         Unless certain conditions are identified and approved for disenrollment
         from the Hoosier Healthwise managed care program entirely, members may
         be required to participate in the PrimeStep component of the program
         upon MCO disenrollment.

         Oral or written requests for disenrollment are made through the
         enrollment broker and are documented, tracked, and monitored. OMPP has
         the ultimate authority for allowing eligible members to disenroll from
         the program. Members who disenroll and switch programs frequently will
         be monitored and such activity will be discouraged. Disenrollment
         determinations will be made and implemented no later than the first day
         of the second month following the month in which the enrollee or the
         MCO files the disenrollment request. If a disenrollment decision is not
         made within this timeframe, the disenrollment will automatically be
         considered approved, in accordance with 42 CFR Section 438.56(d)(3).

         In accordance with 42 CFR 438.56(b), the MCO, a PMP, or both may, with
         just cause, and following certain guidelines, choose to discontinue
         their relationship with a Hoosier Healthwise member for the following
         reasons:

         -        Missed appointments

         -        Member fraud

         -        Uncooperative or disruptive behavior resulting from the member
                  or the member's family

         -        Medical needs could be met by a different PMP

         -        Breakdown in physician and patient relationship

         -        Member access care from providers other than the selected or
                  assigned PMP

         -        Member insists on medically unnecessary medications

         MCOs may not request to disenroll a member because of a change in the
         member's health status, or because of the member's utilization of
         medical services, diminished mental capacity, or uncooperative or
         disruptive behavior resulting from his or her special needs (except
         when the member's continued enrollment in the MCO seriously impairs the
         entity's ability to furnish services to either this particular member
         or other members).

         To ensure that the MCO does not request member disenrollment for
         reasons not permitted, the MCO must provide evidence to the enrollment
         broker that one of the acceptable terms for disenrollment exists. The
         enrollment broker may then disenroll the member from the MCO.

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         Within Package C, there is a 60-day grace period for non-payment of
         premiums after which a child is disenrolled. Families will be required
         to pay any premiums owed from the previous twenty-four months before
         they will be allowed to re-enroll their children in Package C. Families
         will lose their benefits if they do not pay the premiums.

3.5.2.2  REDETERMINATION ENROLLMENT IN HOOSIER HEALTHWISE RBMC

         Redetermination enrollment will occur no later than once every six
         months for TANF members and once every 12 months for Pregnancy
         Medicaid, Children's Medicaid, and Package C members. The redetermined
         member will be given the opportunity to choose a PMP in either the
         PrimeStep or RBMC delivery system. Redetermination is generally a
         seamless process if there have been no gaps in coverage, but some
         members lose eligibility upon redetermination, especially members in
         Package B.

         When there is a break in the member's eligibility, upon
         redetermination, the individual will be instructed to participate in an
         educational session and re-select a PMP. If a selection is not made by
         the member 30 days from the date of eligibility, he/she will be
         automatically re-enrolled in Hoosier Healthwise and assigned to the
         previous PMP. If the reasons for reassignment to the previous PMP are
         not appropriate, an assignment is made to an appropriate PMP.

3.5.3    MCO ENROLLMENT ROSTERS

         OMPP's fiscal agent notifies each MCO of all members enrolled in the
         MCO's network. The fiscal agent generates semi-monthly MCO Member
         Enrollment Rosters using information obtained from the state's Indiana
         Client Eligibility System (ICES) transmissions, PMP assignments entered
         into the IndianaAIM system during member enrollment, and the
         auto-assignment process. The MCO Member Enrollment Rosters provide the
         MCO with a detailed listing of all members for whom the MCO is
         responsible, including new and continuing members, newborns, and
         members terminated since the previous listing. The enrollment roster
         also includes deleted members who appeared as eligible members on the
         previous roster, but whose eligibility was terminated prior to the
         actual effective date with the MCO. The MCO enrollment rosters will
         include Package C members and distinguish them from Package A and B.
         The PMP enrollment rosters will also include Package C members but will
         not distinguish them from Package A and B members. It is the MCO and
         rendering provider's responsibility to check for eligibility.

         If an MCO receives either eligibility information or capitation payment
         for a member, the MCO is financially responsible for the member. While
         the enrollment rosters are accurate at the time they are produced,
         there may be discrepancies from real-time eligibility information. The
         AVR/OMNI eligibility

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         systems, which are updated daily, should be used in the event of any
         discrepancies. MCOs who discover eligibility/capitation discrepancies
         should notify OMPP or the fiscal agent within 30 days of discovering
         the discrepancy.

         Monthly member enrollments are provided to the MCO in two segments:

         -        On the 26 th of the month, MCOs are provided with managed care
                  enrollments entered into the IndianaAIM system from the 11th
                  through the 25th days of the month. Listed are members who are
                  effective on the first day of the following month.

         -        On the 11th day of the month, MCOs are provide with managed
                  care enrollments entered into the IndianaAIM system from the
                  26th day of the month through the 10th day of the following.
                  Listed are members who are effective on the 15th day of the
                  current month.

         The MCO should note that the member data on enrollment rosters are
         current as of the day the rosters are produced.

3.5.4    UTILIZATION REVIEW

         OMPP and/or the CHIP Office may waive certain administrative
         requirements, including prior authorization procedures, to the extent
         that such waivers are allowed by law and are consistent with policy
         objectives. The MCOs may be required to comply with such waivers and
         will be provided with prior notice by the Office. Removal of prior
         authorization requirements has no impact on the ability or
         responsibility of the MCO to review claims for medical necessity.

3.5.5    Monitoring

         OMPP and its MCO monitoring contractor will be responsible for
         reviewing and monitoring the performance of the MCO and for identifying
         violations of the requirements and performance standards outlined in
         Section 3.6 of this BAA. OMPP and the monitoring contractor will
         monitor contract compliance throughout the contract period. The MCO
         shall also be subject to annual, external independent reviews of
         quality outcomes, timeliness of, and access to, the services covered
         under the contract. The CHIP Office will monitor the access, quality,
         and cost-effectiveness of services provided to the CHIP members.

         The contract monitoring process and policies undergo ongoing review by
         OMPP. OMPP reserves the right to change or modify the reporting
         requirements, evaluation instruments and enforcement policies as
         necessary at any time during the contract period.

         The MCO shall allow, during normal business hours, duly authorized
         agents or representatives of the State or Federal government access to
         the health plan's

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         premises or health plan's subcontractor's premises to inspect, audit,
         monitor, or otherwise evaluate the performance of the health plan or
         its subcontractors.

3.5.6    CAPITATION PAYMENTS

         OMPP will be responsible for the payment of capitation payments to the
         MCO. Capitation payments are made on the first Wednesday after the
         fifteenth of the month. Barring problems with the run, the files will
         always be available for download from an electronic bulletin board
         system during the early morning hours of the following day.

3.6      RESPONSIBILITIES OF MCO

         The MCO will be responsible for arranging or administering the prompt
         provision of all medically necessary MCO covered services as outlined
         in this BAA and in accordance with all applicable state and federal
         requirements. The MCO must notify OMPP when it makes significant
         changes to the managed care program that affect capacity or services,
         such as change in services, geographic area or payments. The MCO must
         notify OMPP of the change at least 30-calendar days prior to the
         effective date of change. If the MCO changes subcontractors, it must
         notify OMPP 90 days before the contract effective date.

         The MCO must adhere to all requirements and reporting standards
         specified in this Section of the BAA. Any changes in the requirements
         and reporting standards will be communicated to the MCO at least 60
         days before they are effective, unless otherwise required by law.

         In addition to the requirements outlined within this document, the MCO
         must comply with all requirements stated within the MCO Policies and
         Procedures Manual as well as any revised requirements, which OMPP may
         specify in the future.

3.6.1    ADMINISTRATION AND ORGANIZATIONAL STRUCTURE

         The MCO must maintain an administrative and organizational structure
         that supports a high quality, comprehensive managed care program. The
         MCO's management approach and organizational structure should ensure
         effective linkages between administrative areas such as: provider
         enrollment, member services, provider services, regional network
         development, quality improvement and utilization review, management
         information systems, and services provided through subcontractor
         arrangements.

         The MCO must also be organized in a manner that will facilitate
         efficient and economic delivery of services conforming to acceptable
         business practices within the State of Indiana. The MCO must clearly
         demonstrate its corporate

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         qualifications and experience as a managed care organization, and also
         specifically as a Medicaid managed care organization, must employ
         senior level managers with sufficient experience and expertise in
         health care management, and must employ or contract with skilled
         clinicians for medical management activities. Section 3.6.1.1 specifies
         minimal requirements of managerial, technical, and operational
         resources. The MCO must promptly provide written notification to OMPP
         of any vacancies of key positions listed in section 3.6.1.1 and must
         make every effort to fill vacancies in all key positions with qualified
         persons approved by the OMPP.

3.6.1.1  ADMINISTRATIVE REQUIREMENTS

         The MCO must have in place sufficient administrative staff and
         organizational components to comply with all program requirements and
         standards. In addition, all MCO key personnel must be accessible to
         OMPP and other program contractors via voice-mail and electronic mail
         systems. The MCO must contract or employ the following minimum staff
         persons:

         - CONTRACT MANAGER - The MCO must employ a management level staff
           person (one dedicated, full-time equivalent or FTE) who is dedicated
           to managing the MCO's Hoosier Healthwise members and is the primary
           contact person with the State or its designee.

         - MEDICAL DIRECTOR - The MCO must employ or contract the services of a
           Medical Director. The Medical Director shall review any potential
           quality of care problems and direct the Quality Assurance/Utilization
           Review program.

         - MEMBER RELATIONS MANAGER - The MCO must employ a full-time (one
           dedicated FTE) Member Relations Manager and a sufficient number of
           member representatives to coordinate communications between the MCO,
           members, and OMPP.

         - PROVIDER RELATIONS MANAGER - the MCO must employ a full-time (one
           dedicated FTE) Provider Relations Manager and a sufficient number of
           provider representatives to coordinate communications between the
           MCO, providers, and OMPP.

         - QUALITY IMPROVEMENT/UTILIZATION REVIEW MANAGER - The MCO must employ
           a full-time (one dedicated FTE) Quality Improvement/Utilization
           Control Manager and a sufficient number of staff dedicated to perform
           QI/UR activities.

         The MCO shall have in place organizational and administrative systems
         capable of implementing contractual obligations that include, but are
         not limited to the following:

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         - A Grievance Coordinator to investigate member and provider complaints
           and grievances against the MCO.

         - A financial officer to oversee the budget and accounting systems of
           the MCO.

         - A systems coordinator to oversee MIS and serve as a liaison between
           the MCO and the State's fiscal agent.

         - A sufficient number of member service representatives to service the
           special needs of the Hoosier Healthwise population.

         - A sufficient number of claims examiners to process the timely and
           accurate submission of claims, claims correction letters (CCL),
           resubmission and overall disposition of all claims for the MCO.

         - A sufficient number of staff to ensure the timely and accurate
           submission of shadow claim data.

         - Support services staff to ensure the timely and accurate processing
           of support services reports/requests i.e. telephone systems, MIS,
           etc.).

         It is the MCO's responsibility to ensure that all staff have
         appropriate training, education and experience to fulfill the
         requirements of their position.

         The MCO must submit to OMPP on an annual basis an updated
         organizational chart including email addresses for staff. The MCO
         organizational chart shall include at least the following positions:

         - Executive management

         - Support/administrative staff

         - Medical director

         - Quality improvement director, staff and committee

         - Utilization management staff

         - Member services staff

         - Provider services staff

         - Claims administrator/Management information systems staff

         - Education/outreach staff (outreach staff is not required, but the MCO
           must specify if the MCO or any of its subcontractors intend to
           conduct outreach activities)

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         The number of member and provider services staff must be sufficient to
         satisfy the demand of members and providers.

3.6.1.2  MEETING REQUIREMENTS

         The MCO must comply with all meeting and reporting requirements
         detailed in the MCO Policies and Procedures Manual and Section 3.6 of
         this BAA.

         Quality improvement activities include both MCO meeting participation
         and MCO reporting. The lists below are an outline of current meeting
         and reporting requirements for the MCO.

         Meetings

         The MCO must attend and must participate in the following meetings:

         - Managed Care Monthly Policy/Operations meeting

         - Managed Care Technical meeting

         - Quality Improvement Committee (QIC)

         - Clinical Studies Workgroup

         The MCO must attend and may participate in the following meetings:

         - Clinical Advisory Committee (CAC)

         - Drug Utilization Review (DUR) Board

         The MCO may attend the following meetings:

         - Medicaid Medical Policy meeting

         - Medicaid Surveillance, Utilization Review (SUR) meeting

3.6.1.3  REPORTING REQUIREMENTS

         MCOs are required to submit Quarterly Reports to OMPP and the
         monitoring contractor according to a schedule established by OMPP,
         specified in the Reporting Manual. The Quarterly Reports are composed
         of seven sections:

         - NETWORK DEVELOPMENT

           PURPOSE: To identify what services are provided within the network
           for assessment of how well the MCO is addressing the needs of the
           program in terms of access/capacity. The MCO must identify current
           enrollment, gaps, and the steps that will be taken to resolve any
           potential problems relating to network development.

         - MANAGEMENT INFORMATION SYSTEMS

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           PURPOSE: To identify the collection of data and maintenance of
           network information systems for MCO management of services accessed
           and utilized by members and providers. The MCO must submit claims
           processing and shadow claims processing/adjudication data. The MCO
           must also identify specific cases and trends to prevent and respond
           to any potential problems relating to timely and appropriate claims
           processing, and shadow claim submission.

         - QUALITY IMPROVEMENT

           PURPOSE: To state the on going or future methods/processes used to
           identify program and clinical improvements which are to be made to
           enhance the appropriate access, quality, and utilization of program
           services by members and providers.

         - MEMBER EDUCATION AND OUTREACH

           PURPOSE: To identify methods used to communicate to members about
           preventive health care and program services.

         - PROVIDER EDUCATION AND OUTREACH

           PURPOSE: To identify methods used to communicate to providers about
           clinical, technical, and quality improvement issues relating to the
           program.

         - SERVICE UTILIZATION/FINANCIAL REPORTING

           PURPOSE: To identify utilization and financial trends, which includes
           but is not limited to: capitation rate calculation sheets (CRCS),
           Medicaid, Medicare, and commercial population enrollment, financial
           stability indicators, stop loss or reinsurance information, and
           financial statements required by Department of Insurance.

         - OTHER REPORTING

           PURPOSE: To state program-related issues that may not change on a
           quarterly basis, but are necessary for program monitoring including,
           but not limited to: MCO organizational chart and contact list, annual
           summary of activities, annual workplan of future activities, annual
           summary of program integrity activities specific to the Hoosier
           Healthwise population, Physician Incentive Plan (PIP) disclosure
           information, and annual member survey results.

         The Quarterly Report Submission Schedule is presented in the Reporting
         Manual.

         Additional detail regarding specific reporting requirements for each
         area can be found in the Reporting Manual, and/or the MCO Policies and
         Procedures Manual.

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3.6.1.4  SUBCONTRACTOR REVIEW REQUIREMENTS

         As used in this BAA, the term "subcontractor(s)" does not include
         contractual agreements between MCOs and health care providers or other
         ancillary medical providers. The term "subcontractor(s)" does include
         contracts between one prepaid health care delivery plan and another
         prepaid health care delivery plan or administrative entity not Involved
         in the actual delivery of medical care.

         The MCO is responsible for the performance of any obligations that may
         result from this BAA. Subcontractor or agreements do not terminate the
         legal responsibility of the MCO to the State to ensure that all
         activities under the contract are carried out. The MCO must oversee
         subcontractor activities. The MCO will be held accountable for any
         functions and responsibilities that it delegates.

         The MCO must comply with 42 CFR 438.230 and the following
         subcontracting requirements:

         - The MCO must obtain the approval of OMPP and IDOA before
           subcontracting any portion of the project's requirements. THE MCO
           MUST GIVE OMPP A WRITTEN REQUEST AT LEAST 30 DAYS PRIOR TO THE USE OF
           A SUBCONTRACTOR. If the MCO makes changes to the subcontractor
           contract, it must notify OMPP 60 days prior to the revised contract
           effective date.

         - The MCO must evaluate prospective subcontractors' abilities to
           perform delegated activities prior to contracting with the
           subcontractor to perform services associated with the Hoosier
           Healthwise program.

         - The MCO must have a written agreement in place that specifies the
           subcontractor's responsibilities and provides an option for revoking
           delegation or imposing other sanctions if performance is inadequate.
           The written agreement must be in compliance with all State of Indiana
           statutes, and will be subject to the provisions thereof.

         - The MCO must monitor delegates' performance on an ongoing basis and
           conduct formal, periodic and random reviews, as directed by OMPP.

         - All subcontractors must fulfill all State and federal requirements
           appropriate to the services or activities delegated under the
           subcontract. In addition, all subcontractors must fulfill the
           requirements of this BAA that are appropriate to the service or
           activity delegated under the subcontract.

         - The MCO must take corrective action if deficiencies are identified
           during the review.

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         All employment agreements, provider contracts, agreements or other
         arrangements by which the MCO intends to deliver services required
         under this BAA, whether or not characterized as a subcontract under
         this BAA, shall be subject to review and approval by OMPP and must be
         sufficient to assure the fulfillment of the requirements of 42 CFR
         434.6(a) that are appropriate to the service or activity delegated
         under such employment agreements, provider contracts, agreements or
         other arrangements. In addition, MCOs must comply with all subcontract
         requirements specified in 42 CFR 438.230.

3.6.2    PROVIDER NETWORK REQUIREMENTS

         The MCO will be solely responsible for arranging for and administering
         covered services to its members. Covered services shall be medically
         necessary, and shall be administered by or arranged for by, a
         designated PMP or the MCO. The MCO will assure that each member has PMP
         who is responsible for providing an ongoing source of primary care
         appropriate to his or her needs. PMPs coordinate each member's care and
         make any referrals necessary.

         The MCO must ensure that its network provides available, geographically
         accessible and adequate numbers of facilities, medical providers,
         ancillary providers, locations and personnel for the provision of
         covered services within the MCO's service area, in accordance with 42
         CFR 438.206. MCOs must arrange for laboratory services only through
         those IHCP enrolled laboratories with Clinical Laboratory Improvement
         Amendments (CLIA) certificates.

         The MCO must ensure that all of its providers, including ancillary
         providers, are enrolled as IHCP providers and that there are sufficient
         providers to adequately serve the MCO's members. The MCO must have
         policies and procedures detailing the process used to select and
         maintain providers. Policies regarding provider availability are
         referenced in the MCO Policies and Procedures Manual and the Hoosier
         Healthwise Povider Manual.

         In accordance with 42 CFR 438.206(b)(l), the MCO must consider the
         following elements when developing and maintaining its provider
         network:

         - The anticipated Hoosier Healthwise enrollment;

         - The expected utilization of services, taking into consideration the
           characteristics and health care needs of specific Hoosier Healthwise
           populations represented in the MCO;

         - The numbers and types (in terms of training, experience, and
           specialization) of providers required to furnish the contracted
           Hoosier Healthwise services;

         - The numbers of network providers who are not accepting new Hoosier
           Healthwise patients;

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

         Provider enrollment activities will be governed by the following:

         - PMP EDUCATION AND OUTREACH:

           The MCO will educate its own network providers.

         - PMP PANEL SIZE:

           PMP maximum panel size is limited to a total of 2,000 members for
           both delivery systems combined. Exceptions will be granted to allow
           the PMP to accept former Hoosier Healthwise patients, new family
           members of already enrolled individuals, and in designated medically
           under-served areas as determined by OMPP. The number of PMP panel
           slots must be stated in the PMP contract.

         - PMP ENROLLMENT:

           PMPs enroll directly with the MCO for the RBMC delivery system. PMPs
           will be allowed to enroll in both PrimeStep and RBMC, although they
           may only accept new members in one delivery system at a time. For
           example, while the PMP's practice is open for PrimeStep member
           enrollment, it will be closed for new RBMC member enrollment, and
           vice versa. Within RBMC, PMPs may not be enrolled in more than one
           MCO. In order for a PMP to change enrollment status, the PMP must
           disenroll from one delivery system and enroll in the other delivery
           system. The PMP must notify the fiscal agent no later than the 24th
           day of the month prior to the month they wish to switch delivery
           system enrollment.

         - PMP DISENROLLMENT:

           The MCO will provide the fiscal agent's Managed Care Unit with a list
           of representatives who have been trained and authorized to submit PMP
           disenrollments and keep it updated as responsibilities change.

           The MCO will notify the fiscal agent of the intent to disenroll a PMP
           within five working days of the receipt/issuance of the PMP's
           disenrollment request. The fiscal agent will not process the
           disenrollment until the disenrollment request is sent, but advance
           notification will allow the opportunity to begin the coordination of
           enrollment in another network, if necessary.

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                  The MCOs will submit completed requests for disenrollment to
                  the fiscal agent at least five working days prior to the 24th
                  day of the month for mandatory requests.

                  If a PMP disenrolls from the MCO, the MCO must ensure that the
                  PMP provides continuation of care for his/her Hoosier
                  Healthwise patients for a minimum of 30 days, or until another
                  PMP is chosen or assigned.

                  In the event of a provider termination, the MCO must make a
                  good faith effort to notify members in writing of the
                  termination within 15 calendar days of receipt of the provider
                  intent or issuance of the termination notice, in accordance
                  with 42 CFR 438.10(f). This notification applies to members
                  who received their primary care from, or were seen on a
                  regular basis by, the terminated provider. Please refer to the
                  MCO Policies and Procedures Manual for more details regarding
                  PMP disenrollment.

         Requirements governing provider selection can be found at 42 CFR
         438.214. The MCO shall not discriminate with respect to participation,
         reimbursement, or indemnification as to any provider who is acting
         within the scope of the provider's license or certification under
         applicable State law, solely on the basis of such license or
         certification. However, the MCO is not prohibited from including
         providers only to the extent necessary to meet the needs of the MCO's
         members or from establishing any measure designed to maintain quality
         and control costs consistent with the responsibilities of the MCO.
         Emphasis should be placed on the credentialing and re-credentialing
         process to ensure that provision of quality care is maintained.

3.6.3    PROVIDER NETWORK ACCESS TO CARE REQUIREMENTS

         The MCO must have a mechanism in place to ensure that emergency
         services are available seven days a week, 24 hours per day without
         prior approval. The MCO must maintain a network of sufficient size and
         resources to offer quality care that can accommodate the needs of the
         members within each enrollment area. The MCO must have a mechanism in
         place to ensure that contracted PMPs are required to provide or arrange
         for coverage of services 24 hours a day, seven days a week. The MCO
         must also ensure that PMPs are available to see patients a minimum of
         20 hours over a three day period per practice location per week. The
         three day requirement can be fulfilled by more than one PMP in a group
         practice. Each MCO must also assess the PMP's non-Hoosier Healthwise
         practice to ensure that this segment of the population is receiving
         accessible services on an equal basis with the Hoosier Healthwise
         population.

         The MCO must monitor compliance with access requirement regularly and
         take corrective action if practitioners within the network fail to
         comply with the established access requirements. The MCO must comply
         with access standards selected and approved by the QIC (Appendix 5 of
         the BAA).

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         The MCO must establish and maintain provider networks in geographically
         accessible locations for the populations to be served.

         The MCO must provide OMPP, the enrollment broker and all Hoosier
         Healthwise members with a network directory which lists PMPs and
         specialists, including their name, specialty, willingness and/or
         ability to provider services for members with special needs,
         location(s), qualifications, whether or not they are accepting new
         patients, and what languages, other than English, the provider speaks,
         in accordance with 42 CFR 438.206. Hospital providers, pharmacists,
         home care providers and all other network providers must also be listed
         in the network directory. Office hours of physician and ancillary
         providers must be stated. Office hours should include evening and
         weekend hours of operation. An electronic data file of the network
         directory must be provided to OMPP's enrollment broker, including
         updates, for the purpose of providing a program comparison guide for
         members and potential members, as required by federal law. The MCO must
         certify that all provider network information submitted to OMPP is
         timely and accurate.

         - The MCO must update the network directory monthly using addenda
           and/or through reprints, and make available for use by the enrollment
           broker in each location where potential members are enrolled in the
           Hoosier Healthwise program and any other location specified by the
           State.

         - Physician to member ratios for each geographic area must be
           sufficient to handle network capacity.

         - The MCO must have policies and procedures to allow members to change
           their PMPs within timeframes appropriate to authorized disenrollment
           and grievance procedures requirements.

         - The MCO must track member disenrollments and reasons for
           disenrollment.

         - The MCO must have a reliable method and system for providing 24 hour
           access to care and emergency services. Direct contact with a
           qualified clinical staff person must be available through a toll-free
           member services voice and telecommunication device for the deaf
           telephone number.

         - The MCO must ensure that PMPs in its network maintain office
           locations sufficiently near members' homes so that members can reach
           the PMP office within a reasonable amount of time, using available
           and affordable means of transportation.

         - Procedures must be in place for referrals to specialists.

         - The following waiting times should be monitored. These standards are
           included in the Reporting Manual:

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                           - Time to get an appointment with a provider.

                           - Time actually waiting to see a provider in his/her
                             office.

                           - For maternity care the MCO shall be able to provide
                             initial prenatal care appointments for enrolled
                             pregnant members according to standards developed
                             by the CAC and the QIC.

                           - For primary care services, the MCO shall provide
                             appointments according to standards developed by
                             the CAC and QIC.

                           - For children with special health care needs, the
                             MCO shall provide appointments acccording to the
                             standards developed by the CAC and QIC.

         The MCO must submit documentation assuring adequate network capacity
         and services, as specified by OMHP, as follows:

                           - At the time the MCO enters into contract with the
                             State

                           - At any time there has been a significant change in
                             the entity's operations that would affect adequate
                             capacity and services, including change in services
                             benefits, geographic service area or payments

                           - At the time of enrollment of a new population in
                             the MCO

         The MCO and its PMPs and other network providers should have a
         comprehensive system in place to respond to the cultural, racial and
         linguistic needs of the Hoosier Healthwise population, including those
         members with special health care needs.

3.6.4    PROVIDER PAYMENT REQUIREMENTS

         The MCO must pay providers for covered medically necessary services
         rendered to their members in accordance with the standards set forth in
         I.C. 12-15-13-1.6 and 1.7, unless the MCO and provider agree to an
         alternate payment schedule and method. The MCO must pay or deny
         electronically filed claims within 21 days of receipt and clean paper
         claims be paid within 30 days of receipt. If the MCO fails to pay or
         deny a clean claim within these timeframes and subsequently pays the
         claim, the MCO shall also pay the provider interest as required under
         I.C. 12-15-13-1.7(d). "Clean claim" has the meaning set forth in I.C.
         12-15-13-0.6. These standards will apply to out-of-network claims for
         which the MCO is responsible and any other claims submitted by
         providers that have not agreed to alternate payment arrangements.

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         While the MCO may choose to subcontract claims processing functions, or
         portions of those functions, with a State-approved subcontractor, the
         MCO is expected to demonstrate that the use of such subcontractors is
         invisible to providers, including out-of-network and self-referral, and
         will not result in confusion to the provider community about where to
         submit claims for payments. For example, the MCO may elect to establish
         one post office box address for submission of all out-of-network
         provider claims. If different subcontracting organizations are
         responsible for processing those claims, it will be the MCO's
         responsibility to ensure that the claims are forwarded to the
         appropriate processing entity. Use of a method such as this will not
         lengthen the timeliness standards discussed in this section. In this
         example, date of receipt will be defined as the date the claim is
         received at the post office box.

         If the MCO has excessive claims liability with its providers and these
         liabilities continue to increase, the State then has the option to
         withhold capitation payments from the MCO until the timeliness
         requirements are met.

3.6.5    DISCLOSURE OF PHYSICIAN INCENTIVE PLAN

         The MCO may implement a physician incentive plan only if:

         (1) no specific payment will be made directly or indirectly under the
             plan to a physician or physician group as an inducement to reduce
             or limit medically necessary services furnished to an individual
             member; and

         (2) the stop-loss protection, member survey, and disclosure
             requirements under 42 CFR 417.479 are met.

         The MCO must provide information concerning its physician incentive
         plan in accordance with the disclosure requirements listed at 42 CFR
         417.479(h)(l)(i)-(v), 422.208, 422.210, and 438.6. These requirements
         are as follows:

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

         - The type of incentive arrangement; for example, withhold, bonus,
           capitation.

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

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

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         - The panel size and, if patients are pooled, the method used to
           determine if substantial financial risk exists. The method used must
           be permitted by federal regulation, 42 C.F.R. 417.479(h)(v).

         - The annual member survey results and a copy of the survey instrument
           used.

         Similar requirements apply to subcontracting arrangements with
         physician groups and intermediate entities. These requirements are
         further detailed at 42 CFR 417.479(i).

3.6.6    ADVANCE DIRECTIVES

         In accordance with 42 CFR 422.128,438.6 and 438.10, MCOs must maintain
         written policies and procedures for advance directives relating to all
         adult individuals receiving medical care by or through the MCO. The
         policies and procedures must meet the advance directive requirements
         stated in Subpart I of 42 CFR 489.

         The MCO must provide written information to members regarding the MCO's
         advance directive policies and the member's rights under State law. The
         MCO must communicate to the member its policies for ensuring that
         member rights in relation to advance directives are implemented and
         respected. The MCO must provide a statement to the members outlining
         any limitations associated with implementing advance directives as a
         matter of conscience. The MCO must also inform individuals that
         complaints against providers concerning noncompliance with the advance
         directive requirements may be filed with the Indiana State Department
         of Health by calling 1-800-246-8909. If changes are made to the State's
         advance directive laws, the MCO must notify members in writing of the
         change within 90 days of the effective date of change.

3.6.7    MEMBER SERVICES

3.6.7.1  MEMBER HOTLINE

         The MCO must establish a single toll-free telephone number to assist
         with questions that members may have about the MCO's providers or
         benefits. In accordance with 42 CFR 438.10(c), the MCO must satisfy
         each of the following requirements:

         - Provide a description of the oral interpretation services offered to
           members

         - Notify members of the availability of free oral interpretation
           services for all languages

         - Make free oral interpretation services available for all languages

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         - Explain the process for accessing interpretation services

         - Notify members that written information is available to them in
           prevalent languages upon request

         - Explain to members the process for requesting written information in
           non-English languages

3.6.7.2  SERVICES FOR NEWBORNS

         The MCO must arrange for, and administer covered services to a newborn
         child of a Package A or B MCO enrolled mother from the newborn's date
         of birth. The MCO will receive the newborn's corresponding monthly
         capitation rate from the newborn's date of birth. If the newborn
         changes his/her PMP resulting in a change in network, the MCO remains
         responsible for services from the newborn's date of birth until such
         time as eligibility and enrollment in another network can be verified
         through the Eligibility Verification System (EVS).

         Newborns of women who were in Package C on the newborn's date of birth
         are not enrolled in an MCO. New-borns of teenagers enrolled in Package
         C are not automatically eligible for the benefits. If a teenager who is
         enrolled in Package C becomes pregnant, an application must be
         submitted for the newborn, the newborn must be found eligible for the
         program, and the premium payment must be made before the newborn is
         enrolled in the program. Once the first premium payment is received,
         and the member is thus eligible for benefits, the newborn may be
         assigned, prospectively, to managed care.

         Pregnant women in Packages A or B are encouraged to select a doctor for
         their newborn, prior to the birth. If the mother was in PrimeStep or
         fee-for-service (not managed care) on the newborn's date of birth, and
         there is a newborn PMP preselection assignment, the effective date with
         the MCO or PrimeStep PMP is the next 1st or 15th of the month,
         dependent on when the newborn's eligibility was initially established
         in the IndianaAIM system. If a Package A or B mother is enrolled in an
         MCO and she selects a PrimeStep PMP for her newborn, the system will
         auto-assign the newborn to the mother's MCO and then the PrimeStep PMP
         pre-selection will be entered as a PMP change when the newborn's
         eligibility is established. The MCO will be financially responsible for
         the newborn from birth until eligibility is established. The fiscal
         agent produces a newborn pre-selection report monthly for the MCOs. The
         MCOs are encouraged to use this report for outreach to expectant
         mothers who have not yet pre-selected an MCO PMP for their children.

         MCOs must accept as enrolled all individuals appearing on monthly
         enrollment rosters and infants enrolled by virtue of the mother's
         enrollment status, as described above, as well as those members for
         whom capitation payment is received. MCOs may not discriminate against
         Hoosier Healthwise managed care members on the basis of their Health
         needs or health status.

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3.6.7.3  MEMBER OUTREACH FOR THE HOOSIER HEALTHWISE RBMC

         The MCOs and their subcontractors are permitted and encouraged to
         promote their services to the general community. However, direct
         outreach to potential Hoosier Healthwise members and Hoosier Healthwise
         members who are not members of the MCO is not permitted. For example,
         MCOs cannot conduct, indirectly or directly, door-to-door, phone or
         other "cold call" marketing practices. The prohibition on MCO outreach
         to Hoosier Healthwise managed care members applies equally to members
         who apply for the program at a County DFC office or at any other
         outstation location.

         The MCO must comply with the following provisions applicable to
         marketing and all other marketing provisions in 42 CFR 438.104.
         Outreach and any marketing activities (written and oral) shall be
         presented and conducted in an easily understood manner and format, at a
         fifth grade reading level, and shall not be misleading or designed to
         confuse or defraud members and/or potential members. The MCO must
         include in its workplan the methods it will use to assure that
         materials are accurate and do not mislead. Examples of false or
         misleading statements include, but are not limited to:

         - Any assertion or statement that the member or potential member must
           enroll in the MCO to obtain benefits or to avoid losing benefits

         - Any assertion or statement that the MCO is endorsed by CMS, the
           Federal or State government, or a similar entity

         All outreach and marketing materials must be submitted to and approved
         by OMPP at least 10 business days prior to distribution. OMPP's
         decision on any material is final.

         MCOs cannot entice a potential member to join the MCO by offering the
         sale of any other type of insurance as a bonus for enrollment and MCOs
         must ensure that a potential member can make his/her own decision as to
         whether or not to enroll. Any type of incentives used to market an
         outreach or education program must be prior-approved by the State, and
         their value may not exceed ten dollars ($10) per event or $50 per year
         per member. Under no circumstances are monetary incentives to be
         offered or used.

         All brochures, presentation materials and informational packets used by
         education and outreach representatives should follow Quality Assurance
         Reform Initiative (QUARI) standards. To the extent possible, all
         material must be written at a fifth grade reading level or lower and
         must be culturally appropriate. Materials submitted to the State for
         approval must indicate the measurement used to assess the reading level
         (i.e. SMOG, FOG or other method) and the level the method indicated.
         Marketing materials must be distributed within the entire service area
         served by the MCO.

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         The MCO will send its education/outreach and marketing plans and
         policies and procedures to OMPP and the AGO monitoring contractor on a
         quarterly basis. The quarterly report is due on the last day of the
         month following the reporting quarter. The MCO will update its plan
         quarterly, including reporting on the status of previously projected
         activities, and submit it to OMPP and the MCO monitoring contractor.
         OMPP and the MCO monitoring contractor will review the
         outreach/education and marketing plans and workplans. OMPP will respond
         to the MCO with specific feed back to be used in improving the MCO's
         performance.

3.6.7.4  MEMBER EDUCATION REQUIREMENTS

3.6.7.4.1 MEMBER MATERIALS

           The MCO will be responsible for developing and maintaining member
           education programs designed to provide the members with clear,
           concise, and accurate information about the MCO. The MCO must provide
           information requested by the State, or the State's disagree, for use
           in member education and enrollment, upon request. Member education
           materials must include, but are not limited to the following:

         - MEMBER HANDBOOK which describes in full detail the terms and nature
           of services offered by the MCO, including MCO covered and MCO
           non-covered services and benefits, preventive services, limitations
           and exclusions, provider network, self-referral services (specified
           in Section 3.4.2.4 of this BAA), wellness programs and other enhanced
           services, coordination of benefits, disenrollment, member rights and
           responsibilities, grievance procedures, and any other terms and
           conditions pertinent to the member.

         - MCO BULLETINS OR NEWSLETTERS specific to the Hoosier Healthwise
           population issued not fewer than three times a year which provide
           updates related to covered services, access to providers, and updated
           policies and procedures.

         - LITERATURE REGARDING HEALTH/WELLNESS PROMOTION PROGRAMS offered by
           the MCO are encouraged.

         - NOTIFICATION OF COVERED SERVICES THE MCO DOES NOT ELECT TO COVER on
           the basis of moral or religious grounds and guidelines for how and
           where to obtain those services, in accordance with 42 CFR 438.102.
           The MCO must provide this information to members before and during
           enrollment and within 90 days after adopting the policy with respect
           to any particular service.

         - The MCO must inform the members that the following information is
           available upon request:

           - Information on the structure and operation of the MCO

           - Physician incentive plans as set forth in 42 CFR 438.6(h)

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            The MCO must provide the information listed under this section
            within a reasonable timeframe, following the notification from OMPP
            of the member's enrollment. In addition, the MCO must notify members
            at least once a year of their right to request and obtain the
            information listed in this section. If the MCO makes significant
            changes to the information provided under this subsection, the MCO
            must notify the member in writing of the intended change at least 30
            calendar days prior to the intended effective date of the change, in
            accordance with 42 CFR 438.10(f)(4). OMPP defines significant
            changes as any changes that effect member accessibility of the MCO's
            services and benefits. All materials must be approved by the OMPP
            prior to distribution.

3.6.7.4.2   ALTERNATE FORMAT REQUIREMENTS

            OMPP will identify prevalent languages spoken by Hoosier Healthwise
            members. The MCO must make written information in each prevalent
            non-English language, as identified by OMPP, available upon the
            member's request. In addition, the MCO must identify additional
            languages that are prevalent among the MCO's membership.

            The MCO must inform members that information is available upon
            request in alternative formats and explain how alternative formats
            may be obtained. OMPP defines alternative formats as Braille, large
            font letters, audiotape, prevalent languages, and verbal explanation
            of written materials. To the extent possible, written materials must
            be not exceed a fifth grade reading level.

3.6.7.5     MEMBER GRIEVANCE PROCEDURES AND REPORTING STANDARDS

            As required by 42 CFR 438.228, the MCO shall have a formal grievance
            system that is approved in writing by the OMPP for promptly
            reviewing and resolving grievances and appeals registered by its
            members.

            At a minimum, the grievance system includes a grievance process, an
            appeal process, as well as expedited review procedures and access to
            the State's fair hearing system. The grievance system must comply
            with Indiana Code 27-13-10 and 27-13-10.1 and 42 CFR 438, Subpart F,
            and include the all elements outlined below. The MCO must comply
            with all grievance and appeal reporting requirements provided in the
            Reporting Manual.

            In accordance with Subpart F of 42 CFR 438, the MCO's grievance and
            appeal process must comply with each of the requirements stated
            below.

            -     DECISIONS IMPLEMENTATION: Decisions must be implemented as
                  expeditiously as the member's health condition requires and no
                  later than the date the decision expires. If services were not
                  furnished while an appeal is pending and a decision to deny,
                  limit or delay services is overturned, the MCO must authorize
                  or provide the disputed services promptly.

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            -     MEMBER ASSISTANCE: The MCO shall treat oral inquiries seeking
                  to appeal an action as appeals and shall confirm those
                  inquiries in writing, unless an expedited resolution is
                  requested. The MCO must assist members in completing forms and
                  procedural steps, as needed.

            -     MEMBER REPRESENTATION: The MCO must provide members with a
                  reasonable opportunity to present their case in person and in
                  writing at each level of review. The MCO must recognize as
                  parties to the appeal members, member representatives and
                  legal representatives of deceased members' estates. The MCO
                  must allow the enrollee and representative opportunity to
                  examine the enrollee's case file before and during the appeals
                  process.

            -     PROVIDER INFORMATION AND RIGHTS: The MCO must provide
                  information about the member grievance system to all providers
                  and subcontractors at the time they enter into a contract. The
                  MCO may not take punitive action against a provider who
                  supports a member's appeal or requests an expedited
                  resolution.

            -     CONTINUATION OF BENEFITS: The MCO must continue the members
                  benefits during grievances, appeal, external reviews and State
                  fair hearings if:

                        -     The member or provider files the appeal in a
                              timely manner

                        -     The appeal involves termination, suspension or
                              reduction of previously authorized service

                        -     The services were ordered by an authorized
                              provider

                        -     The original services coverage period has not
                              expired, or

                        -     The member requests a benefits extension.

                  If a benefits continuation is granted, the benefits must be
                  continued until:

                        -     The member withdraws the review request

                        -     The timeframe for requesting the next level of
                              review passes

                        -     An adverse decision is made or the time period, or

                        -     The service limits of a previously authorized
                              service has been met.

            If the final resolution is adverse to the member, the MCO may
            recover the cost of services furnished while the grievance, appeal,
            external review or Medicaid hearing was pending. Services may be
            recovered to the extent they were furnished solely because of the
            requirements in this section. If a decision is made in favor of the
            member, the MCO must pay for services received during the review
            process.

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            -     UTILIZATION REVIEW STAFF: UR staff making determinations on
                  service cannot have been involved in previous levels of
                  review. Reviewers must possess the proper clinical expertise
                  to make decisions regarding denials based on medical
                  necessity, denials of expedited reviews and clinical
                  grievances and appeals.

            -     ISSUES TRACKING: The MCO must maintain a single toll-free
                  telephone number for members with inquiries and grievances.
                  The MCO must track and report inquiries, grievances and
                  appeals, as described in the Reporting Manual.

            -     MEMBER NOTIFICATION OF GRIEVANCE AND APPEALS PROCESS: The MCO
                  must provide members with a description of the grievance and
                  appeals procedures and timeframes after receiving notification
                  from OMPP of the member's enrollment. The materials must
                  include information regarding State fair hearings, the right
                  to file a grievance and appeal, allotted timeframes, the
                  availability of assistance in the filing process, toll-free
                  numbers enrollees can use to file an appeal over the phone, an
                  explanation of continued benefits and the members
                  responsibility to pay costs associated with an adverse
                  decision. The grievance policies and procedures provided to
                  the member must comply with 438.400 through 438.424. In
                  addition, the MCO must notify members at least once a year of
                  their right to request and obtain the information listed in
                  this section. If the MCO makes significant changes to the
                  information provided under this subsection, the MCO must
                  notify the member in writing of the intended change at least
                  30 calendar days prior to the intended effective date of the
                  change.

            -     MEMBER NOTICE OF RESOLUTION: The MCO must provide the member
                  with written notice of the resolution of the appeal. The
                  notice must include the following information:

                  -     The results and date of the resolution

                  -     For decisions not wholly in favor of the enrollee:

                                -     The right to request a State fair hearing,

                                -     How to request a State fair hearing,

                                -     The member's right to continue to receive
                                      benefits pending a hearing,

                                -     How to request the continuation of
                                      benefits, and

                                -     If the MCO's action is upheld in the
                                      hearing, the enrollee may be liable for
                                      the cost of any continued benefits.

            MCOs must submit a monthly report on inquiries, grievances and
            appeals, as specified in the Reporting Manual, to the monitoring
            contractor. The MCO must submit separate monthly reports of
            inquires, grievances and appeals filed for children with special
            health needs.

            The MCO must submit a quarterly report of all external independent
            reviews and Medicaid hearings to the Hoosier Healthwise monitoring
            contractor. The MCO

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            must submit separate quarterly reports of external reviews and
            Medicaid hearings filed for children with special health needs.

            Failure to submit the information on time, and/or in the format
            required, may result in the assessment of liquidated damages by the
            State, in accordance with Section 3.16 of this BAA.

            Records for all formal inquires and grievances shall be maintained
            for a period of three years after resolution. The record shall
            include a complete description of the grievance (or a copy of the
            original), the response to, and disposition of, such grievances. The
            record shall also include sufficient information to demonstrate
            timely attention to written grievances, including the date the
            grievance was filed, the date reviewed, the date resolution was
            proposed, the date any corrective action was initiated, and, if
            applicable, the plan of correction to avoid such occurrences in the
            future.

3.6.7.6     PROTECTION OF MEMBER-PROVIDER COMMUNICATIONS

            The MCO must not prohibit or restrict a health care professional
            from advising a member about his/her health status, medical care, or
            treatment options, regardless of whether benefits for such care are
            provided under the contract, if the professional is acting within
            the lawful scope of practice. In accordance with 42 CFR 438.102(a),
            the MCO must allow health professionals to advise the member on
            alternative treatments that may be self administered and provide the
            member with any information needed to decide among relevant
            treatment options. Health professionals are free to advise members
            on the risks, benefits and consequences of treatment or
            nontreatment.

            The MCO must not prohibit health professionals from advising members
            of their right to participate in decisions regarding their health,
            including the right to refuse treatment and express preferences for
            future treatment methods. The MCO may not take punitive action
            against a provider who requests an expedited resolution or supports
            a member's appeal.

            This provision does not require the MCO to provide coverage of a
            counseling or referral service if it objects to the service on moral
            or religious grounds. However, the MCO must makes it policies
            regarding these services available to member and potential members
            within 90 days after the date the MCO adopts a change in policy
            regarding such a counseling or referral service.

            Information provided must comply with 42 CFR 438.10, as specified in
            Section 3.6.7.4 of this BAA.

3.6.7.7     MEMBER RIGHTS

            In accordance with 42 CFR 438.100, the MCO must have written
            policies and procedures regarding member rights. The MCO must ensure
            that its staff and

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            affiliates take member rights into consideration when delivering
            services. The member rights policies and procedures must include the
            member's right to:

            -     Receive enrollment notices, informational materials, and
                  instructional materials relating to members in an easily
                  understood manner and format.

            -     Be treated with respect and due consideration for his or her
                  dignity and privacy.

            -     Receive information on available treatment options and
                  alternatives presented in a manner appropriate to the member's
                  condition and ability to understand.

            -     Receive information regarding advance directive policies in
                  place.

            -     Participate in decisions regarding the member's health care,
                  including the right to refuse treatment.

            -     Be free from any form of restraint or seclusion used as a
                  means of coercion, discipline, convenience or retaliation, in
                  accordance with Federal regulations.

            -     Request a copy of the member's medical record and request
                  amendments or corrections, as provided for in 45 CFR 164.524
                  and 164.526.

            -     Be furnished with covered health care services.

            -     Exercise his or her rights, and that the exercise of those
                  rights will not adversely affect the way the MCO and its
                  providers or OMPP treat the member.

            -     Request a second opinion from a qualified professional. If the
                  provider network does not include a professional who is
                  qualified to give a second opinion, the member can request the
                  MCO to arrange for the member to obtain a second opinion from
                  a professional outside the network, at no cost to the member.

            In addition to the rights stated above, the MCO's member rights
            policies and procedures must comply with all Federal and State laws,
            including the Health Insurance Portability and Accountability Act
            (HIPAA), regarding a member's right to privacy and confidentiality.

3.6.7.8     MEMBERS WITH SPECIAL NEEDS

            The MCO must also assist OMPP with identifying, assessing and
            tracking its members with special needs, as required by OMPP and
            pursuant to 42 CFR 438.208(c). The MCO must have procedures in place
            to conduct assessments of each member identified as having potential
            special health care needs in order to identify any ongoing special
            conditions of the member that may require a course of treatment or
            regular care monitoring. The assessment procedures must use
            appropriate health care professionals. Grievances and appeals filed
            by members with special needs must be reported separately in the
            grievance reports.

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3.6.8       PROVIDER SERVICES

            The MCO must provide enrollment and education services for the
            provider network, ensure proper maintenance of medical records,
            maintain proper staffing to respond to provider inquires and be able
            to process provider disputes and appeals.

            The MCO must have written policies and procedures for registering
            and responding to provider disputes in a timely fashion. The MCOs
            policies and procedures for informal claims disputes, formal claims
            disputes and binding arbitration must be in compliance with the
            requirements provided in the Claims Dispute Resolution process
            outlined in the MCO's contract with the State.

3.6.9       PROVIDER CREDENTIALING

            The MCO must have written credentialing and re-credentialing
            policies and procedures for ensuring quality of care and assuring
            that all providers rendering services to their members are licensed
            by the State and qualified to perform their services as approved
            IHCP providers. The MCO's credentialing and recredentialing policy
            must, at a minimum, comply with the State's credentialing and
            recredentialing policy as stated below.

3.6.9.1     PROVIDER CREDENTIALING AND RECREDENTIALING POLICIES AND PROCEDURES

            The MCO must have written policies and procedures for credentialing
            health care professionals it employs and with whom it contracts. The
            MCO should refer to NCQA standards as a guideline for credentialing.
            At a minimum, the requirements outlined in this policy must be met.

            MCOs must credential PMPs, chiropractors and podiatrists, at a
            minimum. The MCO must have documented plans to periodically review
            and revise policies and procedures. If the MCO contracts with a
            subcontractor that conducts the MCO's credentialing activity, the
            MCO must have access to the subcontractor's credentialing files. At
            minimum, the MCO must obtain and review verification of the
            following:

            -     A current valid license to practice.

            -     Status of clinical privileges at the hospital designated by
                  the practitioner as the primary admitting facility.

            -     Current and valid Drug Enforcement Administration (DEA) or
                  controlled substance registration (CSR) certificate, as
                  applicable (DEA certificates are not applicable to
                  chiropractic settings).

            -     Proof of graduation from medical school and completion of a
                  residency, or board certification for medical doctors (MDs)
                  and doctors in osteopathy

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                  (DOs), as applicable since the last time the provider was
                  credentialed or recredentialed.

            -     Proof of graduation from chiropractic college for doctors of
                  chiropractic medicine (DC).

            -     Proof of graduation from podiatry school and completion of
                  residency program for doctors in podiatric medicine (DPMs).

            -     Work history that includes a minimum of five years on the
                  curriculum vitae (the MCO is not required to verify work
                  histories).

            -     Current, adequate malpractice insurance according to the MCO's
                  policies.

            -     History detailing any pending professional liability claims,
                  as well as claims resulting in settlements or judgments paid
                  by or on behalf of the practitioner.

            -     Proof of board certification if the practitioner states being
                  board certified.

            -     Verification of IHCP enrollment. If group enrollment, verify
                  that the provider is linked appropriately to the group, and
                  verify that the provider is enrolled at the appropriate
                  service locations.

            The credentialing policies and procedures must specify the
            professional criteria required to participate in the MCO. Each
            practitioner file must contain sufficient documentation to
            demonstrate that these criteria are evaluated. Primary sources used
            by the MCO to verify credentialing information must be included in
            its policies and can include use of external agencies such as county
            medical societies, hospital associations, or private verification
            services.

3.6.9.2     MECHANISMS FOR CREDENTIALING AND RECREDENTIALING

            The MCO must document the mechanism for credentialing and
            recredentialing MDs, DOs, DPMs, and DCs that fall under the MCO's
            scope of authority and action, and with whom it contracts or employ
            to treat members outside the inpatient setting. This documentation
            includes but is not limited to the following:

            -     The scope of practitioners covered.

            -     The criteria and the primary source verification of
                  information used to meet these criteria.

            -     The process used to make decisions.

            -     The extent of any delegated credentialing or recredentialing
                  arrangements.

            Policies and procedures must specify the requirements and the
            process used to evaluate practitioners. Selection decisions must be
            based on the network needs of the MCO, as well as practitioners'
            qualifications. Selection decisions cannot be

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            based solely on a practitioner's membership in another organization,
            such as a hospital or medical group.

            Policies and procedures must include physicians and other licensed
            independent practitioners who are subject to these policies, as well
            as criteria to reach a decision.

            The MCO must have a process in place for receiving advice from
            participating practitioners in credentialing and recredentialing to
            ensure that procedures are followed consistently. MCOs must seek
            practitioner expertise on current practice in the medical community
            and advice on modifying the criteria, as appropriate. This expertise
            can be obtained from a committee with participating practitioner
            representation or from consultation with participating
            practitioners.

            Participating practitioners must complete an application for
            membership on such a committee. Through the application process, the
            practitioner discloses information about health status and any
            history of issues with licensure or privileges that may require
            additional follow-up. A signed attestation statement on the
            application ensures that the practitioner has completed it in good
            faith. Before making a credentialing decision, the MCO must have the
            following information on the practitioner:

            -     Information from the National Practitioner Data Bank (NPDB).
                  NPDB is not applicable to chiropractors and podiatrists.

            -     Information about sanctions or limitations on licensure from
                  the State Board of Medical Examiners, Federation of State
                  Medical Boards, or the Department of Professional Regulations,
                  if available.

            -     Information from the State Board of Chiropractic Examiners or
                  the Federation of Chiropractic Licensing Boards.

            -     Information from the State Board of Podiatric Examiners.

            -     Previous sanction activity by Medicare and the IHCP.

            Evidence indicating that the MCO has obtained information from the
            previously designated organizations must be included in the
            credentialing file.

3.6.9.3     CREDENTIALING - INITIAL VISIT

            The MCO credentialing process must include an initial visit to the
            offices of all potential primary medical providers including all
            OB/GYNs. There must be a structured review that evaluates the site
            against the MCO standards. The initial site visit must also include
            documentation of the evaluation of the medical record-keeping
            practices at each site to ensure conformity with the maintenance of
            medical records. Section 5: MCO Education, Outreach, and Marketing
            Activity outlines this documentation.

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3.6.9.4     RECREDENTIALING

            The MCO must have a [ILLEGIBLE] recredentialing process that
            verifies the credentialing information subject to change over time.
            The recredentialing process must be organized to verify the
            information through a primary source on the current standing of
            items listed in this section, such as member complaints, quality
            reviews, utilization management, and member satisfaction. The MCO
            must recredential providers at least every three years. The
            description of the recredentialing process must include data from at
            least three of the following six sources:

            -     Member complaints

            -     Quality reviews (practice-specific)

            -     Utilization management (profile of utilization)

            -     Member satisfaction (practice-specific)

            -     Medical record review

            -     Practice site reviews

            The recredentialing evaluation process must use this data as
            objective evidence in the reappraisal of professional performance,
            judgment, and clinical competence. There must be evidence that the
            MCO has taken action based on the data. Examples of action taken
            include continuation in the MCO, required participation in
            continuing education, required supervision, a clear plan for
            improvement with the practitioner, evidence of changes in the scope
            of practice, or termination of the practitioner from the MCO.

3.6.9.5     RECREDENTIALING PRACTICE SITE VISIT

            The MCO must conduct an on-site visit at the time of recredentialing
            to determine if there have been any changes in the facility,
            equipment, staffing, or medical record-keeping practices that would
            affect the quality of care or services provided to members of the
            MCO. Primary medical providers, OB/GYNs, and other high- volume
            specialists must be included in this site visit. The MCO is
            responsible for determining which high-volume specialists are
            subject to this visit, based on its own experience with the
            specialist.

3.6.9.6     ALTERING CONDITIONS OF PROVIDER PARTICIPATION

            MCOs must have plans for developing and implementing policies and
            procedures for altering conditions of a provider's participation
            with the MCO due to issues of quality of care and service. These
            policies and procedures need to specify actions the MCO may take
            before terminating the provider's participation with the MCO.
            Policies and procedures must have mechanisms in place for reporting
            serious quality deficiencies to the OMPP that could result in a
            provider's suspension or termination. These policies and procedures
            must specify how reporting will occur and the individual staff
            members responsible for reporting deficiencies.

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            The policies and procedures must include a well-defined appeals
            process for instances in which the MCO decides to alter the
            provider's condition of participation as a result of quality of care
            or service issues. The MCO must ensure providers are aware of the
            appeals process. Policies and procedures must include mechanisms to
            ensure that providers are treated fairly and uniformly.

3.6.9.7     CREDENTIALING PROVIDER HEALTH CARE DELIVERY ORGANIZATIONS

            The MCO must have policies and procedures for credentialing health
            care delivery organizations, including but not limited to,
            hospitals, home health agencies, freestanding surgical centers,
            laboratories, and subcontracted networks of providers.

            Every three years after the effective date of the initial contract
            the MCO must confirm the following:

            -     That the organizations are in good standing with state and
                  federal regulatory bodies.

            -     That the organizations have been reviewed and approved by an
                  accreditation body before contracting with the MCO.

            -     That the organizations conform to the previously mentioned
                  requirements.

            The MCO must also develop standards of participation and assess
            these providers accordingly if the provider has not received
            accreditation.

            The MCO is prohibited from contracting with or paying (except in the
            case of emergency situations) providers that are excluded from
            participation in Federal health care programs. The MCO must
            credential and recredential all providers. The MCO is required to
            report on the credentialing status of its providers, as required in
            the Reporting Manual.

            In accordance with 42 CFR 438.214, the credentialing and
            re-credentialing policies and procedures must be uniformly applied
            to all contracted providers. The MCO may not discriminate against
            providers serving high-risk populations or specializing in
            conditions requiring costly treatment. If the MCO declines to
            include an individual or group of providers in its network, the MCO
            must furnish written notice to the provider of the reason for its
            decision. The health plan must have written policies and procedures
            for monitoring its providers and for sanctioning providers who are
            out of compliance with the plan's medical management standards.

            In accordance with 42 CFR 438.12, the MCO is not required to
            contract with providers beyond the number necessary to meet the
            needs of its member. The MCO may choose to use different
            reimbursement amounts for different specialties or for different
            practitioners in the same specialty. The MCO is also permitted to
            establish measures that are designed to maintain quality of services
            and control

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            costs as long as they are consistent with the MCO's responsibilities
            to its members. Agreements with participating providers must include
            provisions to hold the State harmless and ensure continuation of
            benefits.

            The MCO must have a process in place to review and authorize all
            network provider contracts and review and authorize contracts
            established for reinsurance and third-party liability, if
            applicable.

3.6.9.8     PROVIDER ENROLLMENT AND EDUCATION

            All education/outreach materials designed for distribution to
            enrolled providers must be submitted to OMPP for review and approval
            at least 10 working days prior to distribution. The MCO must
            receive approval from OMPP prior to distribution of materials.
            OMPP's decision on any material is final.

3.6.9.9     MAINTENANCE OF MEDICAL RECORDS

            As required by Indiana Code [ILLEGIBLE], the MCO must assure that
            its participating providers maintain health records of all medical
            services received by the member from the MCO and its providers in
            accordance with 42 CFR 431.305 and 405 IAC 1-5-1. The medical record
            must include, at a minimum, a record of outpatient and emergency
            care, specialist referrals, ancillary care, laboratory and x-ray
            tests and findings, prescription for medications, inpatient
            discharge summaries, histories (including immunization) and
            physicals and a list of smoking and chemical dependencies.

            Medical records shall be maintained in a detailed and comprehensive
            manner which conforms to good professional medical practice, permits
            effective professional medical review and medical audit processes,
            and which facilitates an accurate system for follow-up treatment.
            Health records must be legible, signed and dated, and maintained for
            at least seven years as required by state and federal regulations.
            Confidentiality of medical records must be maintained in accordance
            with State and Federal regulations, include HIPPA.

3.6.9.10    MCO COMMUNICATIONS WITH PROVIDERS

            The MCO must establish and maintain a regular means of communicating
            and providing information on changes in policies, procedures and
            other network changes to its providers. This may include guidelines
            for answering written correspondence to providers, offering
            provider-dedicated phone lines, or a regular provider newsletter.
            The MCO must give 60-day advance notice to providers of significant
            changes that may affect the providers procedures (e.g. changes in
            subcontractors). In addition, the MCO must notify the State of
            significant changes at least 30 days prior to provision of the
            provider notification.

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            MCOs must provide a staff of sufficient size to respond timely to
            provider inquiries, questions and concerns regarding the MCO's
            Hoosier Healthwise delivery system.

3.6.10      PROGRAM INTEGRITY PLAN AND REPORTING STANDARD

            Pursuant to 42 CFR 438.601 and 438.610, the MCO must have a written
            program integrity plan that describes in detail the manner in which
            fraud and abuse will be detected. The plan should include, but not
            be limited to:

            -     Written policies, procedures and standards of conduct that
                  articulate the organization's commitment to comply with all
                  applicable Federal and State standards.

            -     A description of the safeguards the MCO will implement in
                  order to avoid and detect fraud (i.e., process for verifying
                  services are actually provided).

            -     Designation of a compliance officer and a compliance
                  committee who will be responsible for detecting fraud and
                  monitoring the contracting process between the MCO and its
                  subcontractors. The compliance officer and compliance
                  committee will be accountable to senior management.

            -     Training and education for the compliance officer and the
                  organization's employees that will be provided to detect
                  fraud.

            -     Methods of establishing effective lines of communication
                  between the compliance officer and the organization's
                  employees.

            -     A process for enforcing standards through well-publicized
                  disciplinary guidelines.

            -     An internal monitoring and auditing process.

            -     The manner (how, when, and to whom) in which fraud will be
                  reported. The reporting guidelines must include mechanisms for
                  reporting the following to the state regarding all
                  complaints of fraud and abuse that warrant investigation:

                        -     Number of complaints of fraud and abuse made to
                              State that warrant preliminary investigation

                        -     Name

                        -     Provider ID number (each provider is required to
                              have a unique identifier)

                        -     Source of complaint

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                        -     Type of provider

                        -     Nature of complaint

                        -     Approximate dollars involved

                        -     Legal and administrative disposition of the case

            -     Provision for prompt response to detected offenses, and for
                  development of corrective action initiative relating to the
                  MCO's contract.

            An annual summary of program integrity activities specific to the
            program must be submitted to OMPP and the MCO monitoring contractor
            within 60 days of the end of the contract year. The OMPP may assess
            liquidated damages, as specified in Section 3.16 of this BAA, for
            MCO non-compliance with this reporting standard.

3.6.10.1    MCO COMMUNICATIONS WITH INDIANA MEDICAID FRAUD CONTROL UNIT (IMFCU)

            The MCO shall immediately report to the IMFCU and OMPP any suspicion
            or knowledge of fraud and/or abuse, including but not limited to the
            false or fraudulent filings of claims and/or the acceptance or
            failure to return monies allowed or paid on claims known to be false
            or fraudulent. The reporting entity shall not attempt to investigate
            or resolve the reported suspicion, knowledge or action without
            informing the IMFCU and must cooperate fully in any investigation by
            the IMFCU or subsequent legal action that may result from such an
            investigation.

            If subsequent investigation or legal action results in a monetary
            recovery to the OMPP, the reporting MCO shall be entitled to share
            in such recovery following final resolution of the matter settlement
            agreement/final court judgment) and following payment of recovered
            funds to the State of Indiana. The MCO's share of recovery shall be
            as follows:

            From the recovery, the State (including the IMFCU) shall retain its
            costs of pursing the action, and its actual documented loss (if
            any). The State shall pay to the MCO the remainder of the recovery,
            not to exceed the MCO's actual documented loss. Actual documented
            loss of the parties will be determined by paid false or fraudulent
            claims, canceled checks or other similar documentation which
            objectively verifies the dollar amount of loss.

            If the State determines it is in its best interests to resolve the
            matter under a settlement agreement, the State has final authority
            concerning the offer, or acceptance, and terms of a settlement. The
            State shall exercise its best efforts to consult with the MCO about
            potential settlement. The MCO's preferences or

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            opinions about acceptance, rejection, or the terms of a settlement
            may be considered, but are not binding on the State.

            If final resolution of a matter does not occur until after the
            contract has expired, the preceding terms concerning disposition of
            any recovery and consultation with the MCO shall survive expiration
            of the contract and remain in effect until final resolution of a
            matter referred to the IMFCU by the MCO under this section.

            If the State makes a recovery in a matter where the MCO has
            sustained a documented loss but the case did not result from a
            referral made by the MCO, the recovery shall be distributed in
            accordance with the terms of this section.

3.6.11      REGIONAL NETWORK DEVELOPMENT REQUIREMENT AND REPORTING STANDARD

            OMPP recognizes the difficulty MCOs may have in developing networks
            outside of the urban areas of the state. Instead of requiring MCOs
            to concentrate on expanding networks into rural areas, MCOs
            contracting with the State should focus their efforts on providing
            quality health care to Hoosier Healthwise managed care members in
            geographical areas where the MCOs believe they can most effectively
            provide care However, MCOs are encouraged, but not required, to
            develop networks in rural areas of the state.

            The MCOs must maintain a comprehensive network in the service area
            where the MCO is contracted to provide services.

3.6.12      QUALITY IMPROVEMENT AND UTILIZATION REVIEW PROGRAM

            The MCO must monitor, evaluate, and take effective action to
            identify and address any needed improvements in the quality of care
            delivered to members by all providers in all types of settings. In
            addition, the MCO must have a utilization review program in place
            that meets the requirements specified in this BAA.

3.6.12.1    QUALITY ASSESSMENT AND PERFORMANCE IMPROVEMENT PROGRAM AND REPORTING
            STANDARD

            The MCO must have a quality improvement (QI) program that meets the
            requirements of 42 CFR 438.240. The activities of the QI program are
            to be designed in such a way that they lead to improvements in the
            MCO's functioning and delivery of health care to its Hoosier
            Healthwise members, and, to the extent possible, in the health
            outcomes of the members.

            The MCO will be required to submit quality improvement data that
            includes the status and results of performance improvement projects,
            as specified in the Reporting Manual. If the MCO does not comply
            with the submission of the quality improvement reporting
            requirements, OMPP will notify the MCO of the

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            noncompliance and will designate a period of time not less than ten
            (10) days in which the MCO must provide a written response to the
            notification or the OMPP reserves the right to assess liquidated
            damages in accordance with Section 3.16 of this BAA.

            The MCO Medical Director shall be responsible for the coordination
            and implementation of the QI program. The MCO shall establish an
            internal committee to monitor and evaluate quality improvement
            activities. The committee shall be representative of key management
            staff, MCO departments, and subcontractors, if appropriate. The MCO
            must send the Medical Director and/or any other appropriate
            personnel to the Hoosier Healthwise Quality Improvement Committee
            meetings to report on QI activities and to update OMPP on internal
            activities and outcomes. The MCO must send the Medical Director
            and/or any other appropriate personnel to the Clinical Advisory
            Committee (CAC) meetings and to the Drug Utilization Review (DUR)
            Board meetings.

            OMPP reserves the right to review the qualifications of individuals
            whom the MCO wishes to place in positions key to the operation of
            the QI program and related functions.

            The MCO must meet the following performance requirements:

            -     The MCO must have an internal system for monitoring services,
                  including clinical appropriate data collection and management
                  for focused studies, internal quality improvement activities,
                  and other quality improvement activities requested by the
                  OMPP.

            -     The MCO must conduct performance improvement projects that are
                  designed to achieve, through ongoing measurements and
                  intervention, significant improvement, sustained over time, in
                  clinical care and nonclinical care areas that are expected to
                  have a favorable effect on health outcomes and enrollee
                  satisfaction. The performance improvement projects must
                  involve the following:

                        -     Measurement of performance using objective quality
                              indicators.

                        -     Implementation of system interventions to achieve
                              improvement in quality.

                        -     Evaluation of the effectiveness of the
                              interventions.

                        -     Planning and initiation of activities for
                              increasing or sustaining improvement.

            -     The MCO's performance improvement projects must be completed
                  in a reasonable time period so as to generally allow
                  information on the success of

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                  performance improvement projects in the aggregate and to
                  produce new information on quality of care every year. .

            -     The MCO must report the status and results of each quality
                  improvement project to the State as requested.

            -     The MCO must have staff with expertise and skill sets in
                  quality assurance and improvement, and in data collection and
                  management.

            -     The MCO must have written policies and procedures for quality
                  improvement. Policies and procedures must include methods,
                  timelines, and individuals responsible for completing each
                  task.

            -     The MCO must have mechanisms in place for detecting over-and
                  under-utilization to be used in conjunction with its quality
                  assessment and improvement program.

            -     The MCO must participate appropriately in focused studies and
                  in other studies requested by the OMPP.

            -     The MCO must demonstrate an effort toward implementing
                  member-targeted or PMP-targeted programs that result from
                  areas for improvement identified through readiness review,
                  focused studies, and internal quality improvement efforts.

            -     The quality improvement program must include an assessment of
                  quality and appropriateness of care provided to members with
                  special needs, in accordance with 42 CFR 438.240(b)(4).

            -     The MCO must report an national performance measures developed
                  by CMS. The MCO must develop an approach for meeting the
                  desired performance levels established by CMS upon release of
                  the national performance measures, in accordance with 42 CFR
                  438.240(a)(2).

            -     The MCO must participate in the Hoosier Healthwise Quality
                  Improvement Committee (QIC), Managed Care Policy/Operations
                  meetings, MCO Technical meetings, and Clinical Studies
                  meetings. See Section 3.6.1.2.

            -     The MCO must submit quarterly reports, as described in the
                  Reporting Manual, on its QI program and activities and
                  performance.

            -     The MCO must be able to demonstrate that its QI program is
                  integrated throughout the organization, and by any
                  subcontractors, if appropriate, for the purposes of
                  assessment, evaluation and implementation of modifications and
                  changes.

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            -     The MCO should conduct a quality of care chart audit at least
                  bi-annually of providers of services, including service
                  providers of its subcontractors. Methods for conducting the
                  chart audit should be described within the quality improvement
                  plan.

            -     The MCO must participate in measuring indicators related to
                  areas of clinical priority and quality of care. The CAC and
                  the QIC will establish areas of clinical priority and
                  indictors of care. These may vary from one year to the next
                  and they will reflect the needs of the Indiana Hoosier
                  Healthwise population. Examples of areas of clinical priority
                  for which measures have been studied include:

                        -     Immunization rates;

                        -     EPSDT;

                        -     Prenatal care initiation;

                        -     Cervical cancer screening; and

                        -     Access to care.

                  The MCO will be required to conduct focused studies and other
                  quality measures such as Medicaid HEDIS measures. Focused
                  studies and quality measures activities will be coordinated
                  with the OMPP and its designated contractor. The MCO is
                  expected to attend clinical studies meetings held for the
                  purposes of developing study design and for coordination of
                  related activities.

            -     The MCO must have procedures to measure various quality
                  indicators. These indicators may be modified or vary at the
                  discretion of the Quality Improvement Committee or Clinical
                  Advisory Committee. The MCO must have in place a quality
                  improvement process that uses at least these indicators to
                  refine and develop MCO policies and procedures.

            -     The MCO must have procedures in place to conduct performance
                  feedback to providers that discusses clinical and facility
                  indicators and ways to improve performance.

3.6.12.2    UTILIZATION REVIEW (UR) REQUIREMENT AND UR REPORTING STANDARD

            The MCO must maintain an efficient utilization review program that:

            -     Identifies instances of over-and under-utilization

            -     Identifies aberrant provider practice patterns

            -     Ensures active participation of a normal review committee

            -     Evaluates efficiency and appropriateness of service delivery

            -     Facilitates program management and long-term quality

            -     Identifies critical quality of care issues.

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            The MCO is encouraged to monitor utilization through retrospective
            reviews. As part of the utilization review, the MCO must monitor
            utilization of preventive care services by members and access to
            preventive care, specifically to identify members who are not
            accessing preventive care services, as appropriate, and in
            accordance with preventive care standards, during their enrollment
            period with the MCO. The MCO is responsible for conducting follow-up
            education to the identified members to ensure that preventive care
            services are accessed appropriately and in accordance with
            preventive care standards.

            The major components of the MCO's utilization review (UR) program
            should encompass, at a minimum, the following:

            -     A utilization review committee directed by the MCO's Medical
                  Director to oversee the utilization review process.

            -     Sufficient resources to regularly review the effectiveness of
                  the utilization review process, and to make changes to the
                  process as needed.

            -     The MCO must have written policies and procedures for
                  utilization management and authorization of service that
                  conform with industry standards. Policies and procedures must
                  include methods, timelines, and individuals responsible for
                  completing each task. The MCO must require that all
                  subcontractors comply with these policies and procedures.

            In accordance with 42 CFR 438.210, the MCO's utilization review
            program must comply with the following requirements:

            -     The MCO must adopt practice guidelines that are based on valid
                  and reliable clinical evidence or consensus among clinical
                  professionals, and consider the needs of members. Guidelines
                  must be selected upon consultation with contracting
                  professionals and must be reviewed and updated periodically.
                  The MCO must distribute the guidelines to all providers and
                  make the guidelines available to all members and potential
                  members upon request.

            -     The MCO must consistently apply review criteria and consult
                  with requesting providers, as appropriate.

            -     Clinical professionals who have appropriate clinical expertise
                  in the treating member's condition or disease must make all
                  decisions to deny a service authorization request or to
                  authorize a service in an amount, duration or scope that is
                  less than requested.

            -     The MCO must define service authorizations in a manner that at
                  least includes a member's request for the provision of a
                  service.

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            -     The MCO must provide a notice of action to members in writing,
                  which notifies members of decisions to deny a service
                  authorization request or to authorize a service in an amount,
                  duration or scope that is less than requested. Notices must be
                  mailed a least 10 days prior to the effective date of the
                  action. The notifications must meet all requirements stated
                  within 3.6.7.4.1 and 3.6.7.4.2 regarding non-prevalent
                  languages, oral interpretation and format. The form letters
                  used must be approved by OMPP. In addition, the MCO must also
                  provide written notification to the requesting provider. The
                  member notification must clearly explain:

                        -     The action the MCO has or intends to take (i.e.,
                              deny or reduce services)

                        -     The reason for the action

                        -     The member's or the provider's right to file an
                              appeal

                        -     The procedures for exercising the member's right
                              to file an appeal or grievance

                        -     The circumstances under which the member may file
                              an expedited grievance or appeal and the process
                              for requesting and expedited resolution

                        -     The enrollee's right to have benefits continue
                              pending the resolution of an appeal and the
                              process for requesting continued benefits

                        -     The circumstances under which a member may be
                              required to pay the costs of continued benefits

                        -     The enrollee's right to represent himself or use
                              legal counsel, a relative, a friend or other
                              spokesman

                        -     The specific regulations that support the action

                        -     If the member has exhausted the MCO's appeal
                              process, an explanation of the enrollee's right to
                              request a FSSA Hearing.

            -     The MCO must notify members of standard authorization
                  decisions as expeditiously as required by the member's health
                  condition, not to exceed 14 calendar days after the request
                  for services. Extensions of up to 14 calendar days are
                  permitted if the member or provider requests an extension or
                  if the MCO justifies to the State a need for more information
                  and explains how the extension is in the member's best
                  interest. If the MCO does not make a decision within the
                  timeframe, the MCO must notify the member on the last day of
                  the decision timeframe that is has not made a decision. OMPP
                  considers untimely decisions to be denials.

            -     The MCO must make and notify enrollees of decisions to
                  terminate, suspend, or reduce previously authorized Hoosier
                  Healthwise-covered services at least 10 days before the date
                  of action, with the following exceptions:

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            -     Notice is shortened to five days if probable member fraud has
                  been verified

            -     Notice may occur no late than the date of the action in the
                  event of:

                        -     The death of a member;

                        -     The MCO's receipt of a signed written statement
                              from the member requesting service termination or
                              giving information requiring termination or
                              reduction of services (the member must understand
                              the result of supplying this information);

                        -     The member's admission to an institution and
                              consequential ineligibility for further services;

                        -     The member's inaccessibility via mail in the event
                              that the member's address is unknown and mail
                              directed to the member him has no forwarding
                              address;

                        -     The member's acceptance for Medicaid services by
                              another local juriscdiction;

                        -     A prescribed change in the level of medical care
                              by the member's physician;

                        -     An adverse determination made with regard to the
                              preadmission screening requirements for NF
                              admissions on or after January 1, 1989; or

                        -     Endangered safety or health of the individuals in
                              the facility;

                        -     Sufficient improvement in the resident's health
                              that allows a more immediate transfer or
                              discharge

                        -     An immediate transfer or discharge required by the
                              member's urgent medical needs

                        -     A member's residency in the nursing home of less
                              than 30 days

            -     The MCO must notify the member of a decision to deny payment
                  on the day of the MCO's decision.

            -     The MCO makes expedited review decisions as expeditiously as
                  required by the member's condition, but no later than three
                  business days after the request, when appropriate. The
                  expedited review period may be extended up to 14 calendar days
                  if requested by the member. If the MCO does not make a
                  decision within the timeframe, the MCO must notify the member
                  on the last day of the decision timeframe that is has not made
                  a decision. OMPP considers untimely decisions to be denials.

            -     The MCO must not provide incentives for denying, limiting or
                  discontinuing medically necessary services to individuals that
                  conduct utilization management

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            - The services provided under this contract must be no less than
              the amount, duration, and scope for the same services furnished
              under Traditional Medicaid. Pursuant to 42 CFR 438.210(a)(3), the
              MCO may place appropriate limits on coverage on the basis of
              medical necessity or utilization control criteria, provided the
              services furnished can reasonably be expected to achieve their
              purpose. The MCO is prohibited from arbitrarily denying or
              reducing the amount, duration or scope of required services solely
              because of diagnosis, type of illness or condition.

            A written UR plan detailing how the MCO's UR program works, and how
            it relates to PMPs and other providers via individual feedback, must
            be submitted to the OMPP with the first quarterly report of 2001.
            OMPP may assess liquidated damages, as specified in Section 3.16,
            for MCO non-compliance with this reporting standard.

3.6.13      MANAGEMENT INFORMATION SYSTEMS

            In accordance with 42 CFR 438.242, the MCO must have available a
            claims processing and management information system sufficient to
            support network provider claims payments and data reporting between
            the MCO and the State or its designee, including but not limited to
            utilization, grievances and appeals. The MCO must demonstrate and
            maintain the capability to control, process, and pay providers for
            services rendered to plan members in accordance with Indiana Code
            12-15-13.

            The MCO will receive detailed claims submissions from both network
            and out-of-network providers. The MCO shall have the capability to
            collect and generate service-specific procedures and diagnosis data
            on a per member basis, to price specific procedures or encounters
            (depending on the agreement between the provider and the MCO), and
            to maintain detailed records of remittances to providers. The MCO is
            responsible for annual 1099 reporting of provider earnings. The MCO
            must have written policies, procedures and an operational plan in
            place for information systems that will transmit shadow claims to
            the State no later than one year from the date of services. The MCO
            is expected to meet a shorter time frame for a specified percentage
            of claims. See Section 3.6.13.3 for the shadow claims requirements.

            Management information systems capabilities are necessary to
            collect, analyze, integrate and report data for the following areas:

            - Member data exchange

            - Provider data exchange

            - Member and provider grievances and appeals

            - MCO provider network data, including additions, changes, and
              deletions

            - Shadow claim/encounter data reporting

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            - Third party liability

            - Claims processing

            - internal quality improvement measures

            - Utilization monitoring, including tracking and monitoring members
              with special needs

            The MCO must make all collected information available to OMPP and
            upon request to CMS.

            OMPP requirements in each of the areas listed above are described in
            the following subsections. The MCO must also meet the quarterly
            reporting requirements listed in the Reporting Manual.

3.6.13.1    MEMBER ENROLLMENT DATA CHANGE

            As stated in Section 3.5.3, OMPP will maintain enrollment data and
            notify the MCOs of members who are enrolled with the MCO. OMPP will
            maintain an updated enrollment roster as a part of the Indiana
            eligibility file for MCOs. This eligibility file will determine the
            monthly capitation payment for the MCO.

            The MCO must verify member eligibility and the capitation received
            for each eligible member. The MCO is financially responsible for any
            member for whom it receives eligibility or capitation. The MCO must
            have a process to reconcile their eligibility and capitation records
            monthly. The MCO must identify eligibility/capitation discrepancies
            and notify OMPP or EDS within 30 days of discovering the
            discrepancy.

            The MCO must accept enrollment data via cartridge or bulletin board
            access as directed by OMPP. The MCO must load the eligibility
            information into their claims system within five days of receipt.
            Because the enrollment rosters are produced semi-monthly and the
            IndianaAIM system is updated with daily ICES transmissions, changes
            in enrollment may occur during the interim period between the
            production of the roster and the effective date. For example, a
            member who is auto-assigned to an MCO on the 20th day of the month
            with an effective date on the first day of the following month
            appears on the MCO enrollment roster produced on the 26th of the
            month. If that member loses eligibility in the Hoosier Healthwise
            program, and that loss is reported between the 26th day and the end
            of the month, this deletion is included on the second enrollment
            roster of the month. Because the member lost eligibility prior to
            the effective date in the MCO network, he or she is reported as a
            deleted member on the next enrollment roster. An automated
            eligibility reconciliation process is currently in development. When
            completed, this process will assist MCOs in the reconciliation of
            membership records at quarterly intervals.

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3.6.13.2    CLAIMS PROCESSING

            MCOs must have a detailed approach to claims processing, including
            electronic claims submission (ECS), for both in and out-of-network
            providers that submit claims. The approach should address all claim
            types (CMS 1500, UB92, and Pharmacy). The MCO must comply with the
            claims processing standards under Indiana Code 12-15-13-1.6 and
            12-15-13-1.7.

            The approach should also take into account communication with
            providers, particularly out-of-network providers, and ensure that
            submission requirements are efficient and not burdensome for all
            providers. For example, the MCO could establish a central claims
            submission point for all out-of-network and self-referral providers.
            The MCO must adhere to any federally mandated electronic claims
            submission standards and any other standards as directed by OMPP.

3.6.13.3    SHADOW CLAIMS REPORTING

            It is OMPP's goal to improve the quality of, and access to, Hoosier
            Healthwise services. In order to ensure that these goals are being
            met in Hoosier Healthwise, OMPP must track expenditures and service
            utilization on an ongoing and regular basis.

            The State must collect information that is sufficient to calculate
            future capitation rates. Information must also be collected that
            enables the calculation of reimbursement rates for the
            fee-for-service reimbursement system. This information is gathered
            in the form of shadow claims (or encounter data). Shadow claims are
            reports of individual patient encounters with an MCO's healthcare
            network. These claims contain fee-for-service equivalent detail as
            to procedures, diagnoses, place of service, billed amounts, and
            rendering/billing providers, as well as detailed claims data for
            utilization analysis, quality improvement program analysis, and
            future capitation rate adjustments.

            The MCO must collect shadow claims/encounter data in standard
            formats and verify that the data is accurate, complete and timely.
            The MCO is responsible for ensuring the timely receipt of shadow
            claims from its capitated providers. The MCO is also responsible for
            the timely provision of shadow claims to OMPP. The MCO must have
            policies for using incentives, sanctions, or other sanction-like
            programs to ensure timely receipt of shadow claims from its
            capitated providers.

            Shadow claims will be reviewed for, at least, four elements:
            timeliness, completeness, correctness and accuracy. See Section
            3.6.13.3.1 below for the specifics of what is expected for each of
            these named elements. The State will assess liquidated damages, in
            accordance with Section 3.16 of this BAA, for failure to comply with
            these requirements.

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3.6.13.3.1  SHADOW CLAIMS REQUIREMENTS AND SUBMISSION STANDARDS

            MCOs must submit shadow claims data in an electronic format that
            adheres to the data specification in the Electronic Claims
            Submission Manual and any other federally mandated electronic claims
            submission standard. The MCO must submit at least one batch of
            shadow claims for UB-92, CMS 1500 and pharmacy claims each month.
            More than one submission is acceptable, but an overall average of
            calendar monthly submissions will be assessed for compliance with
            requirements below and will be subject to liquidated damages
            assessments for non-compliance.

            A shadow claim must be submitted to the State's fiscal agent for
            every service rendered to an MCO member MCOs must meet requirements
            for shadow claims submissions for the elements of timeliness,
            completeness, correctness, and accuracy as follows:

            TIMELINESS: The MCO must file a shadow claim within 365 days from
            the first date of service

            The OMPP will conduct an annual review to determine MCO compliance
            with the submission schedule and liquidated damages will be
            assessed, in accordance with Section 3.16 of this BAA.

            COMPLETENESS: Each shadow claim will be assessed for its compliance
            with pre-cycle edits. For each batch of shadow claims submitted, 98
            percent of the batch must pass all pre-cycle edits. The remaining
            two (2) percent must be corrected and resubmitted until a 100
            percent accuracy rate is achieved. Each time the batch is
            resubmitted, it is treated as a new submission and checked for
            compliance with the 98 percent standard. As batches are resubmitted,
            these batches will be included in the overall average of calendar
            monthly submissions. Liquidated damages will be assessed, per claim
            type, in accordance with the schedule in Section 3.16 of this BAA,
            for submissions that fall below the 98 percent standard.

            CORRECTNESS: For each claim type submitted in shadow claims, 85
            percent of those claims must adjudicate with a paid status in a
            calendar month. Each resubmission will be included in the overall
            average of calendar monthly submissions for the calculation of
            paid/denied status. Eighty-five percent of all shadow claims must be
            adjudicated in IndianaAIM with a paid status within 365 days of the
            first date of service on the claim. Liquidated damages will be
            assessed, by claim type, in accordance with the schedule in Section
            3.16 of this BAA, for submissions that fall below the 85 percent
            compliance standard. The OMPP recognizes that certain claims will be
            denied appropriately, so it may not be possible at any time to
            attain 100 percent paid claims. However, the remaining 15 percent
            must be corrected and resubmitted with a goal of achieving as close
            to 100 percent paid status as possiible.

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            ACCURACY: In addition, the MCO must ensure that shadow claims
            submissions are accurate. The MCO must submit to OMPP its internal
            criteria for determining claims payment accuracy, their internal
            standard for an acceptable level of accuracy, as well as its
            monitoring plan for determining levels of accuracy. The monitoring
            plan must include a description of any liquidated damages, sanctions
            or sanction-like provisions employed to ensure accuracy of claims,
            and how often the MCO conducts its claims accuracy audits. The OMPP
            will regularly monitor MCO shadow claims for accuracy. The OMPP
            reserves the right to assess liquidated damages, similar to that
            described in the MCO monitoring plan for non compliance. The MCO
            must submit the status and results of its internal Hoosier
            Healthwise claims audit to OMPP. OMPP reserves the right to re-audit
            claims or perform a random sample audit of all claims.

            The MCO shall report problem(s) with shadow claims submissions at
            the monthly MCO technical meeting. The purpose of the meeting is
            to provide a forum for MCO technical support staff to ask questions
            related to data exchange issues and shadow claims issues. In
            addition, the MCO must report on the measures it is taking to
            correct any shadow claims submission problem(s) that have been
            identified. The MCO must include a discussion of the quarter's
            claims submission problem(s) and its corrective action plan and
            progress in the quarterly quality report submitted to OMPP.

3.6.13.4    THIRD-PARTY LIABILITY REPORTING

            Federal regulations require that OMPP's contract with risk-based
            managed care entities specify any activities to be performed by the
            MCO relating to third party liability (TPL) requirements in 42 CFR
            433.138, Subpart D. MCOs will be responsible for identifying and
            collecting third party liability information, and may retain third
            party liability collections.

            The State's fiscal agent will provide each MCO with a monthly
            listing, on tape, of the known TPL resources for its members. The
            tape will be produced monthly and will report information relating
            to:

            - Member name/RID/SSN

            - Carrier name/Address/Phone number/Contact person

            - Policyholder name/Address/SSN/Relationship to member

            - Policy number/Effective date/Coverage type

            The MCO will provide the same categories of information to the
            fiscal agent each month for those members where it identifies newly
            discovered health insurance, a change in an member's health
            insurance coverage, or casualty insurance coverage available to an
            member that has not been included in the fiscal agent's monthly
            listing.

            The MCO shall notify the local county DFC office within 30 days of
            the date it becomes aware of the death of one of its Hoosier
            Healthwise members, giving the

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            member's full name, address, Social Security Number, member
            identification (RID) number, and date of death. The MCO will have no
            authority to pursue recovery against the estate of a deceased
            Medicaid member.

            As TPL information is a component of capitation rate development,
            MCOs must maintain records regarding TPL collections sufficient to
            comply with the financial reporting requirements described in this
            BAA. TPL recovery information will be reported to OMPP annually.

3.6.13.4.1  MCO TPL RESPONSIBILITIES - COST AVOIDANCE

            When the MCO is aware of health or casualty insurance coverage prior
            to paying for a health care service for a member, it shall avoid
            payment by rejecting a provider's claim and direct that the claim be
            submitted first to the appropriate third party.

            If insurance coverage is not available, or if one of the exceptions
            to the cost avoidance rule discussed in Section 3.6.13.4.2 applies,
            then payment must be made and a claim made against the third party,
            if it is determined that the third party is or may be liable.

            The MCO must ensure that its cost avoidance efforts do not prevent a
            member from receiving medically necessary services in a timely
            manner.

3.6.13.4.2  COST AVOIDANCE EXCEPTIONS

            In the following situations, the MCO must first pay the provider and
            then coordinate with the liable third party:

            - The coverage is derived from a parent whose obligation to pay
              support is being enforced by the State Title IV-D Agency and the
              provider of service has not received payment from the third party
              within 30 days after the date of service.

            - The claim is for prenatal care for a pregnant woman or for
              preventive pediatric services (including EPSDT) that are covered
              by the Medicaid program.

            - The claim is for labor, delivery and post-partum care, and does
              not involve hospital costs associated with the inpatient hospital
              stay.

            If any other third party payor fails to respond within 90 days of
            the date of the provider's attempt to bill, the MCO must pay the
            claim upon submission by the provider of the claim and documentation
            supporting the billing provider's persistent attempts to obtain
            payment. Such documentation can include copies of unpaid bills or
            statements sent to the third party or copies of complaints filed
            with the Department of Insurance. A written explanation from the
            billing provider of

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            attempts to bill, dates of contracts, and response of third party
            should also be included. The MCO can propose other documentation
            requirements, but must assure that any additional requirements do
            not serve only to further delay payment.

            If the MCO was not aware of third party coverage at the time
            services were rendered or paid for, the MCO shall pursue
            reimbursement from potentially liable third parties, if it is
            cost-effective to do so.

            The OMPP has a cost avoidance waiver for pharmacy claims. This means
            that pharmacy providers, unlike other Medicaid providers, are not
            required to bill potentially liable third parties before filing
            claims for Medicaid payment. The MCO may negotiate agreements with
            its contracted pharmacy providers to cost avoid; however, if there
            are situations where the MCO is responsible for payment of an
            out-of-network or out-of-area claim to a non-contracted pharmacy
            provider, the MCO must follow fee-for service policy by paying the
            claim, including any co-payments, and then pursuing reimbursement
            from the liable third party.

3.6.13.4.3  COORDINATION OF BENEFITS

            If a Hoosier Healthwise member enrolled with the MCO is also
            enrolled or covered by a health or casualty insurer, the MCO is
            fully responsible for coordinating benefits so as to maximize the
            utilization of third party coverage. The MCO must share information
            on its members with special health care needs, with other MCOs, as
            specified by OMPP and in accordance with 42 CFR 438.208(b). In the
            process of coordinating care, the MCO must protect each member's
            privacy in accordance with the confidentiality requirements stated
            in 45 CFR 160 and 164. The MCO shall be responsible for payment of
            the member's coinsurance, deductibles, co-payments, and other
            cost-sharing expenses, but the MCO's total liability shall not
            exceed what the MCO would have paid in the absence of TPL, after
            subtracting the amount paid by the primary payor. There is one
            exception to this general rule because of the cost avoidance waiver
            discussed in the previous section. Co-payments imposed by a primary
            payor for pharmacy services remain the responsibility of the MCO,
            regardless of the amount paid for the service by the primary
            insurer. This exception does not apply to deductibles or coinsurance
            amounts for pharmacy services or co-payments, deductibles or
            coinsurance amount for any other service.

            The MCO shall coordinate benefits and payments with the health or
            casualty insurer for services authorized by the MCO, but provided
            outside the MCO's plan. Such authorization may occur prior to
            provision of service but any authorization requirements imposed on
            the member or provider of service by the MCO must not prevent or
            unduly delay a member from receiving medically necessary services.
            MCOs must include in their responses a detailed explanation of any
            authorization procedures they propose as part of their coordination
            of benefits efforts. The MCO remains responsible for the costs
            incurred by the member with respect to

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            care and services which are included in the MCO's capitation rate,
            but which are not covered or payable under the health or casualty
            insurer's plan.

            If the Hoosier Healthwise member's primary insurer is a commercial
            HMO and the MCO cannot efficiently coordinate benefits because of
            conflicts between the primary HMO's rules and the MCO's rules, the
            MCO may submit a written request for disenrollment to the enrollment
            broker. The request must provide the specific description of the
            conflicts and explain why benefits cannot be coordinated. The
            enrollment broker will consult with the OMPP and the request for
            disenrollment will be considered and acted upon promptly.

3.6.13.4.4  CASUALTY CASES

            The MCO may exercise any independent subrogation rights it may have
            under Indiana law in pursuit or collection of payments it has made
            when a legal cause of action for damages is instituted by the member
            or on behalf of the member. Any recoveries made may be retained by
            the MCO, but must be reported to the OMPP.

3.6.14      FINANCIAL REPORTING REQUIREMENTS

            The MCO must submit financial information including:

            - Department of Insurance quarterly audited statements

            - Certified annual audits

            - The final management letter provided by the independent certified
              public accountants shall be provided to OMPP along with the
              required financial statements

            - Insurance and re-insurance coverage

            - Health Employer Data Information Set (HEDIS(R)) Financial
              Stability Indicators

            - Utilization rates by category of service

            Please see Appendix 4 for financial reporting requirements.

            If the MCO does not meet the financial requirements, the State will
            notify the MCO of the non-compliance and designate a period of time,
            not less than ten days in which the MCO must provide a written
            response to the notification. OMPP will reserve the right to assess
            liquidated damages in accordance with Section 3.16 of this BAA.

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3.6.15      DISPUTE RESOLUTION PROCESSES

            A contract between the MCO and another entity for the provision of
            services under the Hoosier Healthwise managed care program must
            include a contract clause outlining a dispute resolution procedure
            for all disputed claims. The MCO also must develop and maintain a
            dispute resolution process to resolve disputed claims between the
            MCO and any provider not contracted with the MCO. The dispute
            resolution process must be in compliance with the Claims Dispute
            Resolution process outlined in the MCO's contract with the State.

3.7         REINSURANCE REQUIREMENTS

            The MCO must purchase reinsurance from a commercial reinsurer and
            must establish reinsurance agreerments meeting the requirements
            listed below. These agreements must be reviewed and approved by the
            State prior to their effective date.

            - The attachment point must be equal to or less than $75,000.

            - Reinsurance agreements must transfer risk from the ceding company
              to the reinsurer.

            - The reinsurer's payment to the ceding company must depend on and
              vary directly with the amount and timing of claims settled under
              the reinsured contract. Contractual features that delay timely
              reimbursement are not acceptable.

            - The MCO must follow the National Association of Insurance
              Commissioners' (NAIC) Reinsurance Accounting Standards and
              document its compliance with NAIC.

            - Subcontractors' reinsurance coverage requirements must be clearly
              defined in the reinsurance agreement.

            - If subcontractors do not obtain reinsurance on their own, the MCOs
              should be required to forward appropriate recoveries from
              stop-loss coverage to applicable subcontractors.

            - MCOs must receive reinsurance coverage of at least
              $2,000,000/member/year.

            - If the MCO elects to self-insure, it must provide audited
              financial information on its insurance subsidiary and obtain
              Moody's or Standard and Poor's bond and claims-paying ability
              ratings for its insurance subsidiary.

            - MCOs must obtain continuation of Coverage (Insolvency Insurance)
              to cover members who are in an acute care hospital/nursing
              facility setting until their

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              discharge and to continue plan benefits for members until the end
              of the period for which premiums have been paid.

            - Subcontractors should be encouraged to obtain their own stop-loss
              coverage with the above-mentioned terms.

            - MCOs are required to obtain reinsurance from insurance
              organizations that have S&P claims-paying ability ratings of "AA"
              or higher.

            - MCOs are required to obtain reinsurance from insurance
              organizations that also have Moody's bond ratings of "A1" or
              higher.

3.8         CHANGE IN SCOPE OF WORK

            An approved contract amendment is required whenever a change affects
            the payment provisions, the term or scope of the contract. Formal
            contract amendments may be negotiated by the State with the MCO on
            an annual basis to address changes to the terms and conditions, or
            the cost of the scope of work included under the contract which may
            result from new federal or state legislative requirements or medical
            policy mandates. An approved contract amendment is defined as one
            approved by OMPP, the MCO, and all other applicable State and
            Federal agencies prior to the effective date of such change.

            IFSSA/OMPP may use contract amendments to reduce or increase the
            scope of services in MCO contracts prior to their expiration to
            comply with changes in federal mandates for the Medicaid and/or CHIP
            Program or other circumstances as deemed necessary by the State. The
            State will establish processes for notifying MCOs of such changes
            when they occur and may adjust MCO capitation payments as determined
            by the State's actuaries.

3.9         TERMINATION OF CONTRACT

            The contract between the parties may be terminated on the following
            bases listed below:

            - By mutual written agreement of the State and MCO.

            - By the State, in whole or in part, whenever the State determines
              that the MCO has failed to satisfactorily perform its contracted
              duties and responsibilities and is unable to cure such failure
              within 60 days after receipt of a notice specifying those
              conditions.

            - By the State, in whole or in part, whenever, for any reason, the
              State shall determine that such termination is in the best
              interest of the State, with sufficient prior notice to the MCO as
              defined by Section 3.9.2.

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         -        By the State, in whole or in part, whenever funding from
                  State, Federal, or other sources are withdrawn, reduced, or
                  limited, with sufficient prior notice to the MCO.

         -        By the State, in whole or in part, whenever the State
                  determines that the instability of the MCO's financial
                  conditions threatens delivery of Medicaid services and
                  continued performance of MCO responsibilities.

         Each of these circumstances is incorporated in the following sections.
         The State will provide the MCO with a hearing prior to contract
         termination in accordance with the 42 CFR Section 438.708. The notice
         of termination will include appeal rights. After the State notifies an
         MCO that it intends to terminate the contract, the State may give the
         MCO's members written notice of the State's intent to terminate the
         contract and allow the members to disenroll immediately.

3.9.1    TERMINATION FOR DEFAULT

         The State may terminate the Contract, in whole or in part, whenever the
         State determines that the MCO or subcontractor has failed to
         satisfactorily perform its contracted duties and responsibilities and
         is unable to cure such failure within a reasonable period of time as
         specified in writing by the State, taking into consideration the
         gravity and nature of the default. Such termination shall be referred
         to herein as "Termination for Default."

         Upon determination by the State that the MCO has failed to
         satisfactorily perform its contracted duties and responsibilities, the
         MCO shall be notified in writing, by either certified or registered
         mail, of the failure and of the time period of sixty (60) days which
         has been established to cure such failure. If the MCO is unable to cure
         the failure within the specified time period, the State will notify the
         MCO that the Contract, in full or in part, has been terminated for
         default.

         If, after notice of termination for default, it is determined by the
         State or by a court of law that the MCO was not in default or that the
         MCO's failure to perform or make progress in performance was due to
         causes beyond the control of, and without error or negligence on the
         part of, the MCO or any of its subcontractors, the notice of
         termination shall be deemed to have been issued as a termination for
         the convenience of the State, and the rights and obligations of the
         parties shall be governed accordingly.

         In the event of termination for default, in full or in part, as
         provided under this clause, the State may procure, upon such terms and
         in such manner as is deemed appropriate by the State, supplies or
         services similar to those terminated, and the MCO shall be liable for
         any costs for such similar supplies and services and all other damages
         allowed by law. In addition, the MCO shall be liable to the State for
         administrative costs incurred to procure such similar supplies or
         services as are needed to continue operations.

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         In the event of a termination for default prior to the start of
         operations, any claim the MCO may assert shall be governed by the
         procedures defined in Section 3.9.6 of this BAA.

         In the event of a termination for default during ongoing operations,
         the MCO shall be paid for any outstanding capitation payments due, less
         any assessed damages.

         The rights and remedies of the State provided in this clause shall not
         be exclusive and are in addition to any other rights and remedies
         provided by law or under the Contract.

3.9.2    TERMINATION FOR CONVENIENCE

         The State may terminate performance of work under the Contract, in
         whole or in part, whenever, for any reason, the State shall determine
         that such termination is the most appropriate action for the State of
         Indiana. The provisions of this clause may also be applied to a
         termination of mutual agreement.

         In the event that the contract is terminated pursuant to this
         provision, the MCO shall be notified in writing by either certified or
         registered mail either sixty (60) days prior to or such other
         reasonable period of time prior to the effective date, of the basis and
         extent of termination. Termination shall be effective as of the close
         of business on the date specified in the notice.

3.9.3    TERMINATION FOR UNAVAILABLE FUNDS

         When the Director of the State Budget Agency makes a written
         determination that funds are not appropriated or otherwise available to
         support continuance of performance of this Contract, the Contract shall
         be canceled. A determination by the Budget Director that funds are not
         appropriated or otherwise available to support continuation of
         performance shall be final and conclusive.

3.9.4    TERMINATION FOR FINANCIAL INSTABILITY

         In the event that the MCO becomes financially unstable to the point of
         threatening the ability of the State to obtain the services provided
         for under the Contract, ceases to conduct business in normal course,
         makes a general assignment for the benefit of creditors, or suffers or
         permits the appointment of a receiver for its business or assets, the
         State may, at its option, immediately terminate this Contract effective
         at the close of business on the date specified. In the event the State
         elects to terminate the contract under this provision, the MCO shall be
         notified in writing, by either certified or registered mail, specifying
         the date of termination. The MCO shall submit a written waiver of the
         MCO's rights under the federal bankruptcy laws. In the event of the
         filing of a petition in bankruptcy by or against a principal
         subcontractor, the MCO shall immediately so advise the Contract
         Administrator as specified in the contract between the State and the

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         MCO. The MCO shall ensure that all tasks related to the subcontract are
         performed in accordance with the terms of this Contract.

3.9.5    TERMINATION FOR FAILURE TO DISCLOSE RECORDS

         The State may terminate the Contract, in whole or in part, whenever the
         State determines that the MCO has failed to make available to any
         authorized representative of the State, any administrative, financial
         and medical records relating to the delivery of times or services for
         which State Medicaid and CHIP program dollars have been expended.

         In the event that the Contract is terminated pursuant to this
         provision, the MCO shall be notified in writing, either by certified or
         registered mail, either sixty (60) days prior to or such other
         reasonable period of time prior to the effective date, of the basis and
         extent of the termination. Termination shall be effective as of the
         close of business on the date specified in the notice.

3.9.6    PROCEDURES FOR TERMINATION

         Upon delivery by certified mail or registered mail to the MCO of a
         Notice of Termination, specifying the nature of the termination and the
         date upon which such termination becomes effective, the MCO shall:

         -        Stop work under the Contract on the date, and to the extent
                  specified in the Notice of Termination.

         -        Place no further orders or subcontracts for materials,
                  services or facilities.

         -        Notify all of the MCO's members regarding the date of
                  termination and the process by which members will continue to
                  receive medical care.

         -        Terminate all orders and subcontracts to the extent that they
                  relate to the performance of work terminated by the Notice of
                  Termination.

         -        Assign to the State in the manner, and to the extent that they
                  relate to the performance of work terminated by the Notice of
                  Termination.

         -        Assign to the State in the manner, and to the extent directed,
                  all of the rights, titles, and interests of the MCO under the
                  orders or subcontracts so terminated.

         -        With the approval of the State, settle outstanding liabilities
                  and all claims arising out of such termination of orders and
                  subcontracts.

         -        Within ten working days from the effective date of the
                  termination, transfer title to the State of Indiana (to the
                  extent that title has not already been transferred) and
                  deliver, in the manner and to the extent directed, all data,

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                  other information and documentation, in any form that relates
                  to the work terminated by the Notice of Termination.

         -        Complete the performance of such part of the work as has not
                  been specified for termination by the Notice of Termination.

         -        Take such action as may be necessary, or as the State may
                  direct, for the protection and preservation of the property
                  related to the Contract which is in the possession of the MCO
                  and in which the State has or may acquire an interest.

         -        Assist the State in taking the necessary steps to ensure a
                  smooth transition of Requested Services after receipt of the
                  Notice of Termination.

         The MCO acknowledges that any failure or unreasonable delay on its part
         in affecting a smooth transition will cause irreparable injury to the
         State, which may not be adequately compensable in damages. The MCO
         accordingly agrees that the State may, in such event, seek and obtain
         injunctive relief, as well as monetary damages. Any payments made by
         the State pursuant to this section may also constitute an element of
         damages in any action in which MCO default is alleged.

         The MCO shall proceed immediately with the performance of the above
         obligations. Upon termination of this Contract in full, the State shall
         require the MCO to return to the State any property made available for
         its use during the Contract term.

3.9.7    REFUNDS OF ADVANCED PAYMENTS

         The MCO shall, within thirty (30) days of receipt, return any funds
         advanced for coverage of members for periods after the date of
         termination of the contract.

3.9.8    LIABILITY FOR MEDICAL CLAIMS

         The MCO shall be liable for all medical claims incurred up to the date
         of termination. This shall include the relevant portion of hospital
         inpatient claims incurred for members hospitalized at the time of
         terminating.

3.9.9    TERMINATION CLAIMS

         If the Contract is terminated under this section, the MCO shall be
         entitled to be paid a prorated capitation amount, determined by the
         State based on available information, for the month in which notice of
         termination was received for the service days prior to the effective
         date of termination. The MCO shall have the right of appeal, as stated
         under the subsection on Disputes, of any such determination. The MCO
         shall not be entitled to be paid for any services performed after the
         effective date of termination.

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3.9.10   RIGHT TO SUSPEND OPERATIONS

         If, at any time during the operations phase of the Contract, the state
         determines that it is in its best interest to temporarily suspend
         enrollment, reassign all or some members to another health plan,
         terminate payments, or any part thereof, the State may do so by
         providing the MCO with written notice to that effect. The MCO shall,
         immediately upon receipt of such notice, cease providing services for
         the period specified in such notice. The MCO shall be responsible for
         any administrative costs incurred by the State as a result of
         suspending operations.

3.10     INDEMNIFICATION

         The MCO, its subcontractors and its providers shall indemnify and hold
         harmless the State, its officers, and employees from all suits,
         actions, or claims of any character brought because of injuries or
         damage received or sustained by any person, persons, or property. The
         contracting MCO also undertakes to indemnify and hold the State
         harmless from all losses, costs, damages, and all fees arising out of
         or in any manner connected with the MCO's performance of managed care
         services under the contract. The State shall not provide such
         indemnification to the contractor.

3.11     KICKBACKS

         Each MCO must certify and warrant that no gratuities, kickbacks, or
         contingency fees were paid in connection with the contract, nor were
         any fees, commissions, gifts, or other considerations made contingent
         upon the award of the contract.

3.12     ASSIGNMENTS

         MCOs shall not sell, transfer, assign, or otherwise dispose of the
         contract or any portion thereof or of any right, title, or interest
         therein without the prior written consent of the state. Such consent,
         if granted, shall not relieve the MCO of its responsibilities under the
         contract. This provision includes reassignment of the contract due to
         change in ownership of the organization.

3.13     AUDIT OR EXAMINATION OF RECORDS

         Throughout the duration of the contract term, or until all other
         pending matters are closed, whichever is later, and for a period of
         three years after termination of the contract, each MCO, in accordance
         with 45 CFR, 92.36(i), shall agree that the State Board of Accounts or
         any authorized representative of the State, and where Federal funds are
         involved, the Comptroller General of the United States or any other
         authorized representative of the United States Government, shall have
         access to, and the right to examine, audit, excerpt, and transcribe any
         pertinent books, documents, paper, and records of the contractor
         related to order, invoices, or payments under the contract. The
         contractor further expressly agrees to provide full cooperation and
         access to such records and personnel and to provide

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         such information as shall be requested by the state Insurance
         Commissioner or her designee.

3.14     FINANCIAL ACCOUNTING REQUIREMENTS

         Each MCO shall maintain accounting records relating directly to
         performance of the contract. Accounting records shall be maintained in
         accordance with generally accepted Federal cost accounting standards
         and principles and in accordance with NAIC. The MCO must provide
         documentation that it is in compliance with NAIC standards. In
         accordance with 42 CFR 455.100-104, the MCO must notify OMPP of any
         person or corporation with five percent or more of ownership or
         controlling interest in the MCO and must submit financial statements
         for these individuals or corporations. Financial records should include
         matters of ownership, organization, and operation of the MCO's
         financial, medical, and other record keeping systems.

         Authorized representatives or agents of the State and the Federal
         government shall have access to the MCO's accounting records and the
         accounting records of its subcontractors upon reasonable notice and at
         reasonable times during the performance and/or retention period of this
         contract for purposes of review, analysis, inspection, audit, and/or
         reproduction. In addition, each MCO shall file with the State Insurance
         Commissioner under oath and on a form prescribed by the State Insurance
         Commissioner, the financial and other information required.
         Non-federally qualified MCO's must report a description of certain
         transactions with parties of interest.

         Copies of any accounting records pertaining to the contract shall be
         made available by the MCO within ten days of receiving a written
         request from the State for specified records. If such original
         documentation is not made available as requested, the MCO agrees to
         provide transportation, lodging, and subsistence at no cost, for all
         State and/or Federal representatives to carry out their audit functions
         at the principal offices of the MCO or other locations of such records.
         The Family and Social Services Administration, The Indiana Department
         of Insurance, and other State and Federal agencies and their respective
         authorized representatives or agents shall have access to all
         accounting and financial records of any individual, partnership, firm,
         or corporation insofar as they relate to transactions with any
         department, board, commission, institution, or other State or Federal
         agency connected with the contract.

         Financial records pertaining to the contract, including all claims
         records, shall be maintained for three years following the end of the
         Federal fiscal year during which the contract is terminated, or when
         all State and Federal audits of the contract have been completed,
         whichever is later, in accordance with 45 CFR 74.53. However,
         accounting records pertaining to the contract shall be retained until
         final resolution of all pending audit questions and for one year
         following the terminating of any litigation relating to the contract if
         the litigation has not

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         terminated within the three year period. Accounting records and
         procedures shall be subject to State and Federal approval.

         In addition to the above, the MCO shall be subject to the applicable
         suspension, revocation and penalty provisions imposed by the State
         Insurance Commissioner.

3.15     CONTRACT PERFORMANCE DISPUTES AND APPEALS

         The Assistant Secretary of OMPP shall be authorized to resolve contract
         disputes between Contractors and OMPP upon the submission of a request
         in writing from either party. The request shall provide:

         -        A description of the problem, including all appropriate
                  citations and references from the contract in question

         -        A clear statement by the party requesting the decision of his
                  interpretation of the contract

         -        A proposed course of action to resolve the dispute

         The Assistant Secretary of OMPP shall determine whether:

         -        The interpretation provided is appropriate

         -        The proposed solution is feasible

         -        Another solution may be negotiable

         The Contractor agrees that, the existence of a dispute notwithstanding,
         it will continue without delay to carry out all its responsibilities
         under this contract which are not affected by the dispute. Should the
         Contractor fail to continue without delay to perform its
         responsibilities under this contract in the accomplishment of all
         nondisputed work, any additional costs incurred by the Contractor or
         the State as a result of such failure to proceed shall be borne by the
         Contractor, and the Contractor shall make no claim against the State of
         Indiana for such costs. If the Contractor and the OMPP cannot resolve a
         dispute within ten working days following notification in writing by
         either party of the existence of said dispute, then the procedures
         outlined in the contract between the MCO and the State shall apply.

3.16     LIQUIDATED DAMAGES AND OTHER REMEDIES FOR CONTRACT NON-COMPLIANCE

         In the event that the MCO fails to meet performance requirements or
         reporting standards set forth in this BAA, the contract, or reporting
         requirements schedule, it is agreed that damages shall be sustained by
         the State and the MCO shall pay to the State its actual or liquidated
         damages according to the following subsections and subject to the
         limitations provided in Section 1932(e) of the Balanced Budget

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         Act of 1997 and 42 CFR 438, Subpart I. The State may also impose any of
         the sanctions specified in 42 CFR 438, Subpart I, including the
         assessment of monetary penalties, and the appointment of temporary
         management. In accordance with 42 CFR 438, 708(a)(3), the State will
         impose temporary management if it finds that an MCO has repeatedly
         failed to meet substantive requirements in Section 1903(m) or Section
         1932 of the Act. In the event that the State assumes temporary
         management of the MCO, the State will grant enrollees the right to
         terminate without cause and will notify enrollees of this right.

         It is agreed that in the event of a failure to meet specified
         performance or reporting requirements subject to liquidated damages, it
         is and will be impractical and difficult to ascertain and determine the
         actual damages which the State will sustain in the event of, and by
         reason of, such failure; and it is therefore agreed that the MCO will
         pay the State for such failures according to the following subsections.
         No punitive intention is inherent in the following liquidated damages
         provisions.

         Written notice of failure to perform will be provided to the MCO within
         thirty days of the State's discovery of such failure.

         If the OMPP elects not to exercise a damage clause contained anywhere
         in the BAA or contract in a particular instance, this decision shall
         not be construed as a waiver of the State's right to pursue future
         assessment of that performance requirement and associated damages,
         including damages that, under the terms of the BAA or contract, may be
         retroactively assessed.

3.16.1   NON-COMPLIANCE WITH PERFORMING REQUESTED SERVICES

         Damages resulting from failure of the MCO to provide the requested
         services will vary depending on the nature of the deficiency. Damages
         will include, but not be limited to, the costs incurred by the State to
         ensure adequate service delivery to the affected members. If
         non-compliance results in a transfer of members to another health plan,
         damages will include the following: the difference between the
         capitated rates that would have been paid to the originally contracted
         MCO and the actual rates paid to the replacement health plan; and costs
         incurred by the State to accomplish the transfer of members.

3.16.2   NON-COMPLIANCE WITH SHADOW CLAIMS DATA SUBMISSION REQUIREMENTS

         The MCO must comply with the shadow claims submission standards under
         Section 3.6.13.3.1 of this BAA. Liquidated damages will be assessed on
         three elements of shadow claims submissions, as follows.

         TIMELINESS: An annual review of the MCO's rate of compliance with the
         established schedule for submitting shadow claims within 90, 180, and
         270 days increments will be performed. Liquidated damages in the amount
         of $200.00 per claim type, per percentage point of non-compliance will
         be assessed. For example, if the established schedule indicated that 50
         percent of claims would be

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         submitted within 180 days and the MCO's actual performance was 48
         percent compliance, then liquidated damages of $400.00 would be
         assessed. Damages will be assessed for each of the three time frames.

         COMPLETENESS: Each shadow claim must pass pre-cycle edits. For each
         batch submitted, a 98 percent compliance rate is required. Liquidated
         damages will be assess based on an overall average of calendar monthly
         submissions. For compliance levels lower than 98 percent, the following
         schedule of liquidated damages will be assessed:

<TABLE>
<CAPTION>
Percent of Claims Accepted                     Liquidated Damages Amount
--------------------------                     -------------------------
<S>                                            <C>
       93.0 - 97.9                                        $ 100
       88.0 - 92.9                                        $ 300
       83.0 - 87.9                                        $ 500
       78.0 - 82.9                                        $ 700
       76.0 - 77.9                                        $ 900
        0.0 - 75.9                                        $1000
</TABLE>

         Failure to submit all claim types per month will result in an
         assessment of liquidated damages of $2,000.00 for each claim type not
         submitted during that month.

         CORRECTNESS: Each claim must pass paid/denied edits and audits. For
         each claim type of shadow claims submitted, a minimum of 85 percent of
         details must adjudicate with a paid status in a calendar month. For
         compliance levels lower than 85 percent, the following schedule of
         liquidated damages will be assessed:

<TABLE>
<CAPTION>
Percent of Details Accepted                   Liquidated Damages Amount
---------------------------                   -------------------------
<S>                                           <C>
      80.0 - 84.9                                       $ 100
      75.0 - 79.9                                       $ 300
      70.0 - 74.9                                       $ 500
      65.0 - 69.9                                       $ 700
      60.0 - 64.9                                       $ 900
       0.0 - 59.9                                       $1000
</TABLE>

3.16.3   NON-COMPLIANCE WITH SUBMISSION OF QUALITY IMPROVEMENT PLAN AND
         QUARTERLY REPORTS

         The MCO must comply with the timely submission requirements and OMPP
         approval of the quality improvement plan, which is due within 90 days
         of the execution of the contract date. Because actual damages caused by
         non-compliance is not subject to exact determination, the State will
         assess the MCO, as liquidated damages, $200.00 for each business day
         that the plan is not delivered after the date it was due. In addition,
         $200.00 will be applied for each

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         business day that the quarterly report and/or readiness review
         responses are not delivered after the date it was due.

3.16.4   NON-COMPLIANCE WITH REPORTING GRIEVANCE DATA

         Each MCO will be expected to report complaints and grievances data, as
         required in Section 3.6.7.5 of this BAA. Failure to report the data
         within the allotted time frame and in the appropriate format will
         constitute non-compliance. Because actual damages caused by
         non-compliance is not subject to exact determination, the State will
         assess the MCO, as liquidated damages, $200.00 for each business day
         the MCO is out of compliance with either or both time frame and format
         requirements.

3.16.5   NON-COMPLIANCE WITH ALL OTHER REPORTING REQUIREMENTS

         Liquidated damages under this Subsection 3.16 of this BAA apply to non-
         compliance with all other reporting requirements for which liquidated
         damages are not separately addressed in Section 3.16 of this BAA.

         The MCO will comply with the education/outreach, marketing, network
         development/access to services, quality improvement, utilization and
         financial reporting requirements described in this BAA. Because actual
         damages caused by non-compliance is not subject to exact determination,
         the State will assess the MCO, as liquidated damages and not as a
         penalty, $200.00 for each business day the MCO is out of compliance.

         The MCO will be responsible for the timely reporting of utilization and
         financial data to keep OMPP and the Department of Insurance informed of
         the latest developments. If any non-compliance negatively impacts the
         ability of the State to monitor the MCO's solvency position, and
         changes in the MCO's financial position would have required the State
         to transfer members to another health plan, actual damages for which
         the MCO will be responsible in addition to the liquidated amounts
         above, will include the following: the difference between the capitated
         rates that would have been paid to the originally contracted MCO and
         the actual rates paid to the replacement health plan as a result of
         member transfer; and costs incurred by the State to accomplish the
         transfer of members. Further, OMPP may withhold all capitation payments
         until satisfactory financial data is provided.

3.16.6   NON-COMPLIANCE WITH GENERAL CONTRACT PROVISIONS

         The objective of this requirement is to provide the State with an
         administrative procedure to address issues where the MCO is out of
         compliance with the Contract. Examples of noncompliance include:

         -        Fails to provide medically necessary services that the MCO is
                  required to provide by law or under this contract.

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            -           Imposing premiums or charges on members that are in
                        excess of the premiums or charges permitted under the
                        Hoosier Healthwise program.

            -           Discriminating among enrollees on the basis of their
                        health status or need for health care services.

            -           Misrepresenting or falsifying information furnished to
                        CMS or to the State.

            -           Misrepresenting or falsifying information furnished to a
                        member, potential member, or health care provider.

            -           Failing to comply with the requirements for physician
                        incentive plans, as set forth (for Medicare) in 42 CFR
                        422.208 and 422.210.

            -           Distributing, either directly or indirectly through any
                        agent or independent contractor, marketing materials
                        that have not been approved by the State or that contain
                        false or materially misleading information.

            -           Violating any of the other applicable requirements of
                        sections 1903(m), or 1932 of the Balanced Budget Act of
                        1997 and any implementing regulations.

            Through routine monitoring, the State may identify contract
            non-compliance issues resulting from non-performance. If this
            occurs, the Assistant Secretary of the OMPP or his/her designee will
            notify the MCO in writing of the nature of the non-performance
            issue, the basis and nature of the sanction, and the required
            timeframe for correction. The State will establish a reasonable
            period of time, not less than ten business days, in which the MCO
            must provide a written response to the notification. If the
            noncompliance is not corrected within the specified time, the State
            may enforce any of the remedies listed below or as allowed under 42
            CFR 438 Subpart I.

3.16.6.1    RIGHT TO SUSPEND ENROLLMENT

            Whenever the State determines that the managed care organization is
            out of compliance with this contract the State may suspend the MCO's
            right to enroll new participants under this contract. The State must
            notify the MCO in writing of its intent to suspend new enrollment
            ten business days before the beginning of the suspension period. The
            suspension period may be for any length of time specified by the
            State.

3.16.6.2    RIGHT TO SUSPEND MONTHLY CAPITATION PAYMENTS

            The State may suspend capitation payments for the following month or
            subsequent months when the State determines that the MCO is out of
            compliance with this contract. The managed care organization shall
            be given written notice ten business days prior to the suspension of
            capitation payments and specific reasons for non-compliance that
            results in suspension of payments. The OMPP may continue to suspend
            all capitation payments until non-compliance issues are corrected.

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            In addition, payments provided for under the contract will be denied
            for new enrollees when, and for so long as, payment for those
            enrollees is denied by CMS in accordance with the requirements in 42
            CFR 438.730.

3.16.7      NON-COMPLIANCE WITH SUBMISSION OF EDUCATION/OUTREACH AND MARKETING
            MATERIALS

            The MCO must submit all education/outreach materials, including
            materials developed by subcontractors, to the State for approval,
            prior to distribution, in accordance with Section 3.6.7.3 and
            3.6.7.4. If the OMPP becomes aware of the failure of the MCO to
            comply with these requirements, the OMPP may assess liquidated
            damages in the amount of $200.00 for every piece of material
            distributed, without OMPP approval, to either members or enrolled
            providers.

3.17        WARRANT AGAINST CONTINGENCY FEES

            Each MCO warrants that no person or selling agency has been employed
            or retained to solicit and secure the MCO contract upon an agreement
            or understanding for commission, percentage, brokerage, or
            contingency excepting bona fide employees or selling agents
            maintained by the MCO for the purpose of securing the business. For
            breach or violation of this warranty, the State of Indiana will have
            the right to cancel the contract without liability, or in its
            discretion, to deduct from the contract price or to otherwise
            recover, the full amount of such commission, percentage, brokerage,
            or contingency.

3.18        INSURANCE

            Before delivering services under the contract, MCOs will obtain from
            an insurance company duly authorized to do business in the State of
            Indiana, at least the minimum coverage levels as listed below for
            the following types of insurance:

            -           Professional Liability Insurance for the MCO Medical
                        Director

            -           Workers' Compensation

            -           Comprehensive Liability Insurance

            -           Property Damage Insurance

            -           Errors and Omissions Insurance

            Each MCO must be in compliance with all applicable insurance laws of
            the State of Indiana and the federal government throughout the term
            of the contract.

3.18.1      PROFESSIONAL LIABILITY INSURANCE

            Professional liability insurance in the amount of at least one
            million dollars ($ 1,000,000.00) for each occurrence shall be
            maintained for the MCO Medical Director.

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3.18.2      WORKERS' COMPENSATION

            The Contractor shall obtain and maintain, for the duration of this
            Contract, workers' compensation insurance for all of its employees
            working in the State of Indiana. In the event any work is
            subcontracted, the Contractor shall require the subcontractor
            similarly to provide workers' compensation insurance for all the
            latter's employees working in the state, unless such subcontractor's
            employees are covered by the workers' compensation protection
            afforded by the Contractor. Any subcontract executed with a firm not
            having the requisite workers' compensation coverage will be
            considered void by the Sate of Indiana.

3.18.3      MINIMUM LIABILITY AND PROPERTY DAMAGE INSURANCE

            The Contractor shall obtain, pay for, and keep in force, general
            liability insurance (including, but not limited to automobile and
            broad form contractual coverage) against bodily injury or death of
            any person in the amount of one-million dollars ($1,000,000.00) for
            each occurrence; and insurance against liability for property
            damages, as well as first-party fire insurance, including contents
            coverage for all records maintained pursuant to this contract, in
            the amount of five-hundred thousand dollars ($500,000.00) for each
            occurrence; and such insurance coverage that will protect the State
            against liability from other types of damages, for up to
            five-hundred thousand dollars ($500,000.00) for each occurrence.

3.18.4      ERRORS AND OMISSIONS INSURANCE

            The Contractor shall obtain, pay for, and keep in force for the
            duration of the Contract, Error and Omissions Insurance in the
            amount of one-million dollars ($1,000,000.00).

3.18.5      BONDS

            There must also be a willingness on the part of the MCO to furnish
            to the IDOA a performance bond of five hundred thousand dollars
            ($500,000.00). The performance bond, which is due within ten
            calendar days after the execution of the renewed contract, shall be
            in the form of a cashier's check, a certified check, or a surety
            bond. No other check or surety will be accepted. If a surety bond is
            executed, the surety company must be authorized to do business in
            the State of Indiana as approved by the Insurance Department of the
            State of Indiana. The Performance Bond shall be made payable to the
            IDOA of the State of Indiana and shall be effective for the duration
            of the contract and any extensions thereof.

            The State reserves the right to increase required bond amounts if
            enrollment levels indicate the need for higher liquidated damages.

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3.18.6      EVIDENCE OF COVERAGE

            The Contractor shall furnish to the State upon request, a
            certificate or certificates evidencing that required insurance is in
            effect, for what amounts, and applicable policy numbers and
            expiration dates, prior to start of work under the Contract. In the
            event of cancellation of any insurance coverage, the Contractor
            shall immediately notify the State of such cancellation. The
            Contractor shall provide the State with written notice at least ten
            days prior to any change in the insurance required under this
            subsection.

            The Contractor shall also require that each of its subcontractors
            maintain insurance coverage as specified above or provide coverage
            for each subcontractor's liability and employees. The provisions of
            this clause shall not be deemed to limit the liability or
            responsibility of the Contractor or any of its subcontractors
            hereunder.

3.19        FORCE MAJEURE

            Neither the MCO nor the State will be liable for any damages or
            excess costs for failure to perform their contract responsibilities
            if such failure arises from causes beyond their reasonable control
            and without fault or neglect by the MCO or the State. Such causes
            may include, but are not restricted to, fires, earthquakes,
            tornadoes, floods, unusually severe weather, or other catastrophic
            natural events or acts of God; quarantine restrictions; explosions;
            subsequent legislation by the State of Indiana or the Federal
            government; strikes by other than the MCOs' employees; and freight
            embargoes. In all cases, the failure to perform must be beyond the
            reasonable control of, and without fault or negligence of, either
            party.

            Within 48 hours of the occurrence of such an event, the MCO will
            initiate disaster recovery and/or back-up procedures to provide
            alternate services for the resumption of business operations. During
            such period, the MCO will be responsible for all costs and expenses
            related to provision of the alternate services. Each MCO will notify
            OMPP prior to initiation of alternate services as to the extent of
            the disaster and/or emergency and the expected duration of alternate
            services within 24 hours from onset of the problem.

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<PAGE>
BAA 1-28                                                              Appendix 2

                                    EXHIBIT 2
                          BAA 1-28, APPENDIX 2, REVISED

                          DEFINITIONS AND ABBREVIATIONS

Following are explanations of terms and abbreviations appearing throughout the
BAA. These terms will apply in the interpretation of the BAA.

ACTION - The denial or limited authorization of a requested service, including
the type or level of service; reduction, suspension, or termination of a
previously authorized service; denial, in whole or in part, of payment for a
service; failure to provide services in a timely manner; or failure of an MCO or
PIHP to act within the timeframes.

AMBULATORY-SENSITIVE CONDITIONS - Chronic diseases or conditions that are
amenable to timely office-based management and, therefore, can result in
improved patient status and decrease in high cost of care (e.g. reduced
inpatient stays and decrease in Emergency Room utilization). Examples of
ambulatory-sensitive conditions are diabetes, asthma, congestive heart failure,
and pregnancy.

AUTOMATED VOICE RESPONSE (AVR) SYSTEM - A system that helps providers obtain
pertinent information about Traditional Medicaid and Hoosier Healthwise member
eligibility, benefit limitation, Hoosier Healthwise managed care membership,
including delivery system and Primary Medical Provider information, as well as
information about prior authorization. Enrollee information obtained through AVR
is confidential.

BALANCED BUDGET ACT OF 1997 - Public Law 105-33 that makes numerous changes to
various titles of the Social Security Act and creates a new Title XXI, the State
Children's Health Insurance Program (CHIP).

BIDDER OR OFFEROR - A qualified, "eligible organization" that submits a bid
under this BAA, meets the Criteria for Selection in Section 4.3 of this BAA, and
can perform the scope of services outlined in this BAA.

BROAD AGENCY ANNOUNCEMENT (BAA) - This document.

CAPITATION MODEL - A set of fixed rates that is comprised of individual rate
components for each type of covered service category (e.g., inpatient hospital,
outpatient hospital, physician, home health, etc.).

CAPITATION RATE - The fixed fee that OMPP and CHIP pay monthly to a contracted
managed care organization (MCO) for each Hoosier Healthwise member enrolled with
that MCO for the provision of covered medical and health services whether or not
the member received services during the month for which the fee is intended.
These rates vary by age/sex and pregnancy delivery..

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<PAGE>

BAA 1-28                                                              Appendix 2

CASUALTY INSURANCE - Includes, but is not limited to, no fault auto insurance,
worker's compensation benefits, and medical payments coverage through a
homeowner's insurance policy.

CHILDREN'S HEALTH INSURANCE PROGRAM (CHIP) - As part of the Balance Budget Act
of 1997, Congress created CHIP as a way to encourage states to provide health
insurance to uninsured children. The federal CHIP program gave states the option
to develop a children's health insurance program that was: 1) a Medicaid
expansion; 2) a private health insurance program; or 3) a combination of a
Medicaid expansion and a private program. The Indiana program is a combination
program.

CHILDREN'S MEDICAID - Children whose families do not receive Temporary
Assistance to Needy Families (TANF), but who are under age 21 and meet the
eligibility requirements.

CHIP COVERED SERVICES - A service provided or authorized by a CHIP provider for
a CHIP Package C enrollee for which payment is available under IHCP as set forth
407 IAC 3-3-1.

CLINICAL ADVISORY COMMITTEE (CAC) - The committee established by the OMPP
comprised of actively participating medical providers enrolled in Hoosier
Healthwise. The CAC's mission is to advise the OMPP concerning its policies by
making recommendations that support the quality, accessibility, appropriateness,
and cost-effectiveness of health and medical care provided to Indiana's Hoosier
Healthwise managed care members.

COLD-CALL MARKETING - Any unsolicited personal contact with a potential enrollee
by an employee or agent of an MCO for the purpose of influencing the individual
to enroll with the MCO.

CONTRACT - A binding agreement between OMPP and CHIP and the successful offeror
for arranging delivery of medical and health services to Hoosier Healthwise
managed care program enrollees in which the eligible organization assumes a risk
as defined in the contract. The terms of any contract issued pursuant to this
BAA shall be construed to be consistent with the Code of Federal Regulations 42
CFR, Part 434.

CONTRACTOR - Any successful offeror or organization selected as a result of the
procurement process and contracted to deliver the products/services requested by
this BAA.

COST AVOIDANCE - When Medicaid payment is denied or reduced because coverage is
available from a liable third party.

CULTURALLY APPROPRIATE - The ability of individuals or organizations to
effectively identify and address health practices and behaviors of target
populations.

DISEASE MANAGEMENT - An approach to patient care that emphasizes coordinated
comprehensive care along the continuum of disease and across health care
services. It includes coordination of educational, promotive, preventive,
diagnostic and therapeutic services and decisions.

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<PAGE>

BAA 1-28                                                              Appendix 2

DRUG UTILIZATION REVIEW BOARD - The Indiana Drug Use Review Board is appointed
by the governor to serve in an advisory capacity to Indiana Medicaid with regard
to the prescription and dispensing of drugs by Medicaid providers and the use of
drugs by Medicaid recipients. The board, composed of representatives of the
pharmacy, medical, and scientific community has a responsibility to establish
criteria for both retrospective review and prospective surveillance of drug
prescription and dispensing for and use by Medicaid recipients.

EARLY PERIODIC SCREENING, DIAGNOSIS, AND TREATMENT (EPSDT) SERVICES - Those
services described at 405 IAC 5-15 as required by Federal law pursuant to 42
U.S.C. 1396d(r), which include certain preventive services to children under 21
years of age.

ELIGIBILITY VERIFICATION SYSTEM (EVS) - There are three eligibility verification
systems available to providers. They are Automated Voice Response System (AVR),
OMNI 380 Terminal (OMNI), and electronic claims software such as National
Electronic Claims Submission (NECS) or Provider Electronic Solutions (PES).

EMERGENCY MEDICAL CONDITION - A medical condition manifesting itself by acute
symptoms of sufficient severity (including severe pain) such that a prudent
layperson, who possesses an average knowledge of health and medicine, could
reasonably expect the absence of immediate medical attention to result in
placing the health of the individual (or with respect to a pregnant woman, the
health of the woman or her unborn child) in serious jeopardy, serious impairment
to bodily functions, or serious dysfunction of any bodily organ or part.

EMERGENCY SERVICES - With respect to an individual enrolled with a managed care
organization, covered inpatient and outpatient services that are furnished by a
provider that is qualified to furnish such services and are needed to evaluate
or stabilize an emergency medical condition.

EPSDT - Early and Periodic Screening, Diagnosis and Treatment

ENROLLMENT BROKER - The contractor that is responsible for educating potential
Hoosier Healthwise enrollees about and enrolling them in Hoosier Healthwise.
This contractor is also responsible for enrolling providers in the Hoosier
Healthwise PCCM delivery system and maintaining the Hoosier Healthwise Help-
line.

EXPERIMENTAL SERVICE/TREATMENT - Medical technology or a new application of
existing medical technology, including medical procedures, drugs, and devices
for treating a medical condition, illness or diagnosis that: (1) is not
generally accepted by informed health care professionals in the United States as
effective, or (2) has not been proven by scientific testing or evidence to be
effective in treating the medical condition, illness, or diagnosis for which its
use is proposed. Experimental services/treatments are not covered by the Indiana
Medicaid and CHIP programs and Federal Financial Participation is not available
for experimental services.

FQHC - Federally Qualified Health Center.

FISCAL AGENT - The contractor that is responsible for managing all of the
information systems related to the processing and reporting of enrollment,
claims, and utilization data. This

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<PAGE>

BAA 1-28                                                              Appendix 2

contractor is responsible for making capitated payments and for reimbursing
fee-for-service providers on behalf of OMPP.

HCFA - Health Care Financing Administration.

HEALTH MAINTENANCE ORGANIZATION (HMO) - An entity that operates a prepaid health
care delivery plan that is licensed by the Indiana Department of Insurance as an
HMO.

HEALTH INSURANCE - Includes, but is not limited to, coverage by any health care
insurer, MCO, Medicare, or an employer-administered ERISA plan.

HOOSIER HEALTHWISE - Hoosier Healthwise was the name for Indiana's Medicaid
managed care program. With the CHIP program's influence, and an extensive
marketing campaign, Hoosier Healthwise is now the program name for Medicaid and
CHIP sponsored health care coverage to eligible children, pregnant women and
low-income families. The two delivery systems of Hoosier Healthwise are primary
care case management (PCCM), risk-based managed care (RBMC).

INDIANAAIM - The Indiana Advanced Information Management System; another name
for the State's Medicaid Management Information System (MMIS).

INDIANA DEPARTMENT OF ADMINISTRATION (IDOA) - The State of Indiana Department
of Administration.

INDIANA DEPARTMENT OF INSURANCE (IDOI) - The State of Indiana Department of
Insurance.

INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION (IFSSA) - The umbrella agency
administering many of Indiana's social service programs, including those
administered by the Office of Medicaid Policy and Planning, and the Office of
the Children's Health Insurance Program.

INDIANA HEALTH COVERAGE PROGRAMS -- Includes three distinct programs: 590,
Traditional Medicaid, and Hoosier Healthwise (which also includes CHIP).

MCO ENROLLEE OR MCO MEMBER - A Hoosier Healthwise Package A, B or C enrollee who
is eligible to participate in managed care, and is enrolled with a Hoosier
Healthwise contracted MCO.

MANAGED CARE - Any effort to influence the utilization and efficiency of
medical/health care through the restructuring and integration of both financing
and health care delivery systems.

MANAGED CARE ENTITY (MCE) - Following the Balanced Budget Act, it refers to both
PCCM and contracted MCOs.

Revision date: 7/10/2003                                                 Page 4

<PAGE>

BAA 1-28                                                              Appendix 2

MANAGED CARE ORGANIZATION (MCO) - A contracting organization that assumes
financial risk for arranging or administering a health care delivery system for
Hoosier Healthwise enrollees and paying for covered health care services.

MANAGED CARE ENTITY MONITORING CONTRACTOR - An entity under contract with the
State to evaluate the quality of services under the Hoosier Healthwise program
and assist the State in monitoring the performance of the Managed Care
Organization (MCO) under the MCO contract with the State and the PCCM component
of the program.

MANAGED CARE MEMBER - An individual linked to a PMP and a plan within the
Hoosier Healthwise program.

MARKETING - Communication from an MCO to a Medicaid recipient who is not
enrolled in that entity, that can reasonably be interpreted as intended to
influence the recipient to enroll in that particular MCO's Medicaid product, or
either to not enroll in, or to disenroll from, another MCO's Medicaid product.

MARKETING MATERIALS - Materials that are produced in any medium, by or on behalf
of an MCO that can reasonably be interpreted as intended to market to potential
enrollees.

MEDICAID OR MEDICAL ASSISTANCE PROGRAM - Medicaid is a federal-state funded
medical assistance program administered by the State to provide reasonable and
necessary medical care for persons meeting both medical and financial
eligibility requirements pursuant to federal law, 42 U.S.C. 1396 and state law,
IC 12-15.

MEDICAID COVERED SERVICE - A service provided or authorized by a Medicaid
provider for a Medicaid enrollee for which payment is available under the
Indiana Medicaid program as set forth in 405 IAC 5. A list of covered services
is referenced in IC 12-15-5-1.

MEDICAID MANAGEMENT INFORMATION SYSTEM (MMIS) - The new medical assistance and
payment information system of the Indiana Family and Social Services
Administration; also known as IndianaAIM.

MEDICAID ENROLLEE - A person who is Medicaid-eligible, enrolled and receives
health services covered by Medicaid. Enrollees are divided into the following
eligibility categories: Traditional Medicaid (Aged; Blind and Disabled); and
Hoosier Healthwise (TANF; Pregnancy Medicaid and Children's Medicaid).

MEDICALLY NECESSARY - Medically necessary services covered by the Indiana
Medicaid and CHIP are specified in 405 IAC 5.

MEMBER IDENTIFICATION NUMBER - The member identification number may also be
called recipient identification (RID) number. This number is on the enrollee's
Hoosier Health Card. See the IHCP Provider Manual for a picture of the card.

Revision date: 7/10/2003                                                  Page 5

<PAGE>

BAA 1-28                                                              Appendix 2

NON-COVERED SERVICE - Service not covered, arranged or provided for under the
Indiana Medicaid or CHIP program.

OFFICE OF MEDICAID POLICY AND PLANNING (OMPP) - The office within IFSSA that is
the designated single state agency that administers the Indiana Health Coverage
Programs. OMPP is responsible for developing the policies and procedures for
Hoosier Healthwise.

OUT-OF-AREA SERVICES - Services provided outside of the MCO contracted region.

OUT-OF-PLAN SERVICES (also referred to as "OUT-OF-NETWORK" SERVICES) - Services
provided outside of the established MCO network.

PACKAGE A - Full Medicaid coverage for low income families, with children under
18 years, including those receiving Temporary Assistance for Needy Families
(TANF); children whose families do not receive TANF, but who are under age 21
and meet the eligibility requirements; pregnant women who meet the TANF income
and resource criteria; wards of the state and foster children (on a voluntary
basis); and CHIP Phase I, children under age 19 whose family's income is up to
150% of federal poverty level.

PACKAGE B - Pregnancy-related coverage is provided to women whose income is
below 150% of poverty without regard to their resources. Eligibility extends up
to 60 days postpartum.

PACKAGE C - Preventive, primary and acute care services for children under age
19 whose family's income is 150-200% of federal poverty level.

PACKAGE D - Formerly Hoosier Healthwise for People with Disabilities and Chronic
Illnesses. It provided full coverage with case management services.

PACKAGE E - Individuals enrolled in this package are eligible for emergency
services only. These individuals are considered Hoosier Healthwise enrollees,
however, they are no enrolled in managed care.

PARTICIPATING PROVIDER - The healthcare practitioner who is either employed by,
or has executed an agreement with an MCO, to service Indiana Medicaid and
Hoosier Healthwise managed care members.

POST-STABILIZATION SERVICES - Covered services, related to an emergency medical
condition that are provided after an enrollee is stabilized in order to maintain
the stabilized condition, or, under the circumstances described in 42 CFR
438.114(e) to improve or resolve the enrollee's condition.

PRIMARY CARE CASE MANAGEMENT (PCCM) - One of the delivery systems of Hoosier
Healthwise, in which members are linked to a Primary Medical Provider (PMP) who
contracts directly with the State of Indiana. The PMP is responsible for
coordinating designated covered services and is reimbursed on a fee-for-service
basis.

Revision date: 7/10/2003                                                  Page 6

<PAGE>

BAA 1-28                                                              Appendix 2

PRIMARY MEDICAL PROVIDER (PMP) - Those contracted physicians who are responsible
for providing primary and preventive care, and for authorizing other Medicaid
and CHIP covered services as needed, and within the scope of their contracts to
authorize, for members of Hoosier Healthwise.

PRIMESTEP - This is the name of the Hoosier Healthwise PCCM network. PCCM and
PrimeStep are often used interchangeably.

QUALITY ASSURANCE/QUALITY CONTROL (QA/QC)- QA/QC are interrelated methods of
monitoring the services that MCOs arrange or administer for their members.

QUALITY IMPROVEMENT COMMITTEE (QIC) - The committee established by the OMPP that
serves to provide oversight for the appropriateness and quality of care provided
to members by establishing standards and guidelines for the provision of care.
The QIC is responsible for integrating the quality improvement process and
serves as a coordinating and advisory body. ,

RHC - Rural Health Clinic.

REDETERMINATION - A process performed by the County Office of the Division of
Family and Children (DFC) caseworkers, to determine whether a currently eligible
member continues to be eligible to receive benefits.

RISK-BASED MANAGED CARE (RBMC) FOR HOOSIER - A fully capitated prepayment plan
where MCOs are at risk to arrange for and administer the provision of a
comprehensive set of covered services to Hoosier Healthwise members. Members are
linked to a Primary Medical Provider (PMP) who contracts directly with the MCO.

SELF-REFERRAL SERVICES - Services that enrolled members may receive from any
IHCP-enrolled provider qualified to render the service. These are: emergency
services; family planning services; behavioral health services rendered by
providers in a Medicaid mental health specialty; podiatric services;
chiropractic services; eye care services (except for eye-care surgical
services); and HIV/AIDS targeted case management services.

SERVICE AREA - The counties and municipalities in which an MCO is authorized by
the State of Indiana pursuant to a contract under this BAA to operate as a
Medicaid MCO and in which service capability exists as defined by the State.

SERVICES - Work to be performed as specified in this BAA.

SHADOW CLAIMS - Reports of individual patient encounters with an MCO's
healthcare delivery system which contain fee-for-service equivalent detail as to
procedures, diagnoses, place of service, billed amounts, and rendering/billing
providers.

STATE - The State of Indiana.

Revision date: 7/10/2003                                                  Page 7

<PAGE>

BAA 1-28                                                              Appendix 2

SUBCONTRACTOR - A state-approved entity that contracts with the MCO, or one of
the MCO's approved subcontractors, to perform a specific part of the MCO's
obligations under the provisions of the Contract between the State and the MCO.
For purposes of this BAA, the definition of subcontractors is limited to parties
not involved in the actual delivery of health care services.

TANF (TEMPORARY ASSISTANCE FOR NEEDY FAMILIES) - A cash assistance program for
families (caretakers and children under 18 years). TANF replaces the
cash-assistance program, Aid to Families with Dependent Children.

THIRD PARTY - Any person or entity who is or may be liable to pay for health
care and services rendered to a Medicaid beneficiary. Some examples of "third
parties" include a beneficiary's health insurer, casualty insurer, a managed
care organization (MCO), or an employer-administered ERISA plan.

UPPER PAYMENT LIMIT - A federal regulation which requires that the maximum
payments to the MCO, for a defined scope of services delivered to a defined
number of members, may not exceed the cost to the Medicaid program of paying for
those same services on a fee-for-service basis, for an actuarially equivalent
non-enrolled population group.

UTILIZATION REVIEW (UR) - A process by which the MCO performs ongoing monitoring
of the services arranged for and administered by the MCO and provided by its
participating providers to ensure that members receive appropriate and medically
necessary health care services.

Revision date: 7/10/2003                                                  Page 8

<PAGE>

                                TRANSITION REPORT

<TABLE>
<S>                                <C>
NAME OF MCO                            MCO A
REPORTING PERIOD START DATE         JULY 1, 2003
REPORT DUE DATE                    AUGUST 7, 2003
</TABLE>

                          PROVIDER NETWORK DEVELOPMENT

<TABLE>
<CAPTION>
       REPORTING REQUIREMENT                         MANDATORY RISK BASED MANAGED CARE (RBMC) COUNTIES
                                                PORTER    LAPORTE      MORGAN   JOHNSON   HOWARD       GRANT    MADISON     DELAWARE
                                                ------    -------      ------   -------   ------       -----    -------     --------
<S>                                             <C>       <C>          <C>      <C>       <C>          <C>      <C>         <C>
Total member enrollment
Current MCO member enrollment
PRIMARY MEDICAL PROVIDER
OB-GYN contracts at beginning of period
Pediatricians at beginning of period
Other PMPs at beginning of period
New - OB-GYN contracts this period
New - Pediatrician contracts this period
New - Other PMP contracts this period
All PMPs at end of period                            0          0           0         0        0           0          0            0
PMP contracts pending ***
SPECIALISTS
Specialists at beginning of period
New specialist contracts this period**
Specialists at end of period
FACILITIES
Acute care hospitals beginning of period
Acute care hospitals end of period
Hospital contracts pending***
ANCILLARY PROVIDERS
Pharmacies beginning of period
Pharmacies end of period
Home Health Providers beginning
Home Health end of period
Transportation providers beginning
Transportation end of period
Other - Beginning of period
Other - End of period**
</TABLE>

INSTRUCTIONS: For the first reporting period, MCOs should complete all cells
highlighted in blue and yellow.

For all subsequent reporting periods, MCOs should complete cells highlighted in
yellow only. Disenrollments should be reported and described should be reported
and described in the Comments section.

*  "PMP contract" refers to a contract with an individual provider rather than a
   group or delivery system

** Give provider type in Comments section

*** high probability of completing contract negotiations within 60 days after
    end of period

<PAGE>

                                   EXHIBIT 3

MCO Transition Report for Mandatory MCO Counties (Phase II)

<TABLE>
<CAPTION>
   PROVIDER             CLAIMS
    NETWORK           STATISTICS                   DATE DUE
 REPORT PERIOD       REPORT PERIOD    (5TH BUSINESS DAY AFTER MONTH END)
 -------------       -------------    ----------------------------------
<S>                  <C>              <C>
   July-03             June-03             August 7, 2003
  August-03            July-03           September 8, 2003
September-03          August-03           October 7, 2003
 October-03          September-03         November 7, 2003
 November-03          October-03          December 5, 2003
 December-03         November-03          January 7, 2004
 January-04          December-03          February 6, 2004
 February-04          January-04           March 5, 2004
  March-04           February-04           April 7, 2004
  April-04             March-04             May 7, 2004
   May-04              April-04             June 7, 2004
   June-04              May-04              July 7, 2004
   July-04             June-04             August 6, 2004
</TABLE>

Submissions are due to Kristy Bredemeier by 5:00 PM on the date listed
                         BredemeierKE@fssa.state.in.us

<PAGE>

                                TRANSITION REPORT

<TABLE>
<S>                                                <C>
NAME OF MCO                                             MCO A
REPORTING PERIOD START DATE                         JUNE 1, 2003
REPORT DUE DATE                                    AUGUST 7, 2003
</TABLE>

                                CLAIMS PROCESSING

<TABLE>
<CAPTION>
       REPORTING REQUIREMENT                     CURRENT PERIOD                  PREVIOUS PERIOD
       ---------------------                     --------------                  ---------------
<S>                                              <C>                             <C>
Claims on-hand at beginning of period
Claims received this period
Claims paid this period*
Claims denied this period*
Claims on-hand end of period                                  0                                0
Average length of time to pay or deny (in days)
</TABLE>

*  Claims paid are those claims for which some payment was made to the billing
   provider, and those

<PAGE>

                                TRANSITION REPORT
<TABLE>
<S>                                                   <C>
NAME OF MCO                                               MCO A
REPORTING PERIOD START DATE                            JULY 1, 2003
REPORT DUE DATE                                       August 7, 2003
</TABLE>

<TABLE>
<CAPTION>
                  REPORT                                    COMMENTS
                  ------                                    --------
<S>                                                         <C>
PROVIDER ACCESS AND AVAILABILITY
CLAIMS PROCESSING
</TABLE>

<PAGE>

                                                      Joseph E. Kernan, Governor
                                                                State of Indiana

[INDIANA FAMILY &          "People        OFFICE OF MEDICAID POLICY AND PLANNING
SOCIAL SERVICES         helping people       402 W. WASHINGTON STREET, ROOM W382
ADMINISTRATION LOGO]         help                    INDIANAPOLIS, IN 46204-2739
                         themselves"

March 2, 2004

John Blank, MD, CEO
Harmony Health Plan of Illinois, Inc.
125 South Wacker Drive, Suite 2900
Chicago, IL 60606

RE: Hoosier Healthwise Contract, Fourth Amendment

Dear Dr. Blank,

Enclosed is your copy of the fully executed Fourth Amendment to the Hoosier
Healthwise MCO contract.

The amendment is effective January 1, 2004, and adjusts the capitation rates.
OMPP and Milliman USA discussed the adjusted rates with representatives of the
MCOs on December 19, 2003.

OMPP appreciates Harmony's continued partnership in the Hoosier Healthwise
program.

Sincerely,

/s/ John Barth
-------------------------------------
John Barth
Director of Managed Care

Enclosure

Cc: Robert Currie, Harmony
    Ginger Brophy

             Equal Opportunity / Affirmative Action Employer [SEAL]
<PAGE>
MAR - 8 2004

                                FOURTH AMENDMENT
                                       TO
                                CONTRACT BETWEEN
                   THE OFFICE OF MEDICAID POLICY AND PLANNING,
              THE OFFICE OF THE CHILDREN'S HEALTH INSURANCE PROGRAM
                                       AND
                      HARMONY HEALTH PLAN OF ILLINOIS, INC.

      This FOURTH AMENDMENT to the above-referenced Contract is made and entered
into by and between the State of Indiana [hereinafter "State" of "State of
Indiana"], through the Office of Medicaid Policy and Planning and Office of the
Children's Health Insurance Program [hereinafter called "State" or "Office"], of
the Indiana Family and Social Services Administration, 402 West Washington
Street, Room W382, Indianapolis, Indiana 46204, and Harmony Health Plan of
Illinois, Inc., doing business as Harmony Health Plan of Indiana, [hereinafter
called "Contractor"], 125 South Wacker Drive, Suite 2900, Chicago, Illinois,
60606.

      WHEREAS, the State of Indiana and Contractor have previously entered into
a contract for a term beginning January 1, 2001, and ending December 31, 2002,
[hereinafter "the original contract"] for services to arrange for and to
administer a risk-based managed care program (RBMC) for certain Hoosier
Healthwise enrollees in Packages A, B and C as procured through BAA 01-28;

      WHEREAS, the parties have previously entered into a First Amendment for
additional duties and the adjustment of capitation rates related to the
mandatory MCO enrollment of Hoosier Healthwise members residing in certain
Indiana counties;

      WHEREAS, the Family and Social Services Administration (FSSA) issued new
contract documents in lieu of a Second Amendment document so that FSSA may move
its contract data into a single contract database. The original contract was
issued for the contract term starting January 1, 2001, through December 31,
2002, and provided for a renewal clause, exercised at the option of the State
for two additional years. The State exercised this option and renewed the
contract from January 1, 2003, through December 31, 2004;

      WHEREAS, the parties have previously entered into a Third Amendment in
order to bring the contract into compliance with applicable new federal
regulations at 42 CFR 438 implementing the federal Balanced Budget Act of 1997;

      WHEREAS, the Office desires to further amend the contract with this FOURTH
AMENDMENT to adjust the capitation rates under which the Contractor shall be
paid and these rates have been determined to be actuarially sound for risk
contracts, in accordance with applicable law and federal regulations at 42 CFR
438.6(c), and to update state contract language;

      NOW THEREFORE, the parties enter into this FOURTH AMENDMENT for the
consideration set out below, all of which is deemed to be good and sufficient
consideration in order to make this FOURTH AMENDMENT a binding legal instrument.

MCO Contract, Fourth Amendment         Page 1 of 4           Harmony Health Plan

<PAGE>

1.    The parties hereby ratify and incorporate herein each term and condition
      set out in the original Contract and the first, second, and third
      amendments, as well as all written matters incorporated therein except as
      specifically provided for by this FOURTH AMENDMENT.

2.    The effective date of this amendment is January 1, 2004.

3.    The parties agree that Article IV. Payment, paragraph A, of the Second
      Amendment (renewal contract) is amended as follows:

                                CAPITATION RATES

<TABLE>
<CAPTION>
CATEGORY                      PACKAGES A/B            PACKAGE C
--------                      ------------            ---------
<S>                           <C>                <C>
NORTH REGION
Newborns                      $       397.38     $       217.38
Preschool                     $        73.69     $        78.20
Children                      $        58.10     $        63.25
Adolescents                   $        91.72     $        83.63
Adult Males                   $       246.78
Adult Females                 $       214.49
Deliveries                    $      3406.34     $      3406.34
CENTRAL REGION
Newborns                      $       406.30     $       162.90
Preschool                     $        82.21     $        78.39
Children                      $        58.89     $        53.63
Adolescents                   $       113.13     $        67.91
Adult Males                   $       247.25
Adult Females                 $       217.85
Deliveries                    $      3535.12     $      3535.12
</TABLE>

4.    Insurance Coverage.

      a. The Contractor shall secure and keep in force during the term of this
      agreement, the following insurance coverage, covering the Contractor for
      any and all claims of any nature, which may in any manner arise out of or
      result from this agreement:

            1)    Commercial general liability, including contractual coverage,
                  and products or completed operations coverage (if applicable),
                  with minimum liability limits of $500,000 per person and
                  $1,0000,000 per occurrence unless additional coverage is
                  required by the State.

            2)    (Reserved)

            3)    (Reserved)

            4)    Workers compensation coverage meeting all statutory
                  requirements of IC 22-3-2. In addition, an "all states
                  endorsement" covering claims occurring outside the state of
                  Indiana if any of the services provided under this agreement
                  involve work outside the state of Indiana. The Contractor
                  shall provide proof of such insurance coverage by tendering to
                  the undersigned State representative, a certificate of
                  insurance prior to the commencement of this agreement.

   b. The Contractor's insurance coverage must meet the following additional
      requirements:

            1)    Any deductible or self-insured retention amount or other
                  similar obligation

MCO Contract, Fourth Amendment       Page 2 of 4             Harmony Health Plan

<PAGE>

                  under the insurance policies shall be the sole obligation of
                  the Contractor.

            2)    The State will be defended, indemnified, and held harmless to
                  the full extent of any coverage actually secured by the
                  contractor in excess of the minimum requirements set forth
                  above. The duty to indemnify the State under this agreement
                  shall not be limited by the insurance required in this
                  agreement.

            3)    The insurance required in this agreement, through a policy or
                  endorsement, shall included a provision that the policy and
                  endorsements may not be canceled or modified without thirty
                  (30) days prior written notice to the undersigned State
                  representative.

            4)    Failure to provide insurance as required in this agreement is
                  a material breach of contract entitling the State to
                  immediately terminate this agreement.

      c. The Contractor shall furnish a certificate of insurance and all
         endorsements to the undersigned State representative prior to the
         commencement of this agreement.

5.    The Contractor agrees to comply fully with the provisions of the
      Contractor's MBE/WBE participation plans, and agrees to comply with all
      Minority and Women Business Enterprise statutory and administrative code
      requirement and obligations, including IC 4-13-16.5 and 25 IAC 5.

      The Contractor further agrees to cooperate fully with the minority and
      women's business enterprises division to facilitate the promotion,
      monitoring, and enforcement of the policies and goals of the MBE/WBE
      program, including any and all assessments, compliance reviews and audits
      that may be required.

6.    The Contractor certifies that, if it is a non-domestic entity, it is
      registered with the Indiana Secretary of State to do business in the State
      of Indiana.

7.    The parties agree that this Fourth Amendment to the parties' original
      Contract has been duly prepared and executed pursuant to Paragraph VII.B
      of the original contract.

8.    The undersigned attests, subject to the penalties for perjury, that he is
      the contracting party, or that he is the representative, agent, member or
      officer of the contracting party, that he has not, nor has any other
      member employee, representative, agent or officer of the firm, company,
      corporation or partnership represented by him, directly or indirectly, to
      the best of his knowledge, entered into or offered to enter into any
      combination, collusion or agreement to receive or pay, and that he has not
      received or paid, any sum of money or other consideration for the
      execution of this agreement other than that which appears upon the face of
      the agreement.

             //THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.//

MCO Contract, Fourth Amendment        Page 3 of 4            Harmony Health Plan

<PAGE>

WHEREOF, the parties have, through duly authorized representatives, entered into
this agreement. The parties having read and understood the foregoing terms of
the contract do by their respective signatures dated below hereby agree to the
terms thereof.

For the Contractor:                         For the State of Indiana:

/s/ John Blank                              /s/ Melanie M. Bella
-------------------------------------       ------------------------------------
John Blank, MD                              Melanie M. Bella
President/CEO                               Assistant Secretary
Harmony Health Plan of Illinois, Inc.       Office of Medicaid Policy & Planning

Date: 1/8/04                                Date: 1/13/04

APPROVED:

/s/ [ILLEGIBLE]                             /s/ Elizabeth A. Culp
-------------------------------------       ------------------------------------
Marilyn Schultz, Director                   Elizabeth A. Culp, Director
State Budget Agency                         Children's Health Insurance Program

Date: 1-26-04                               Date: 1-14-04

APPROVED AS TO FORM AND LEGALITY:           APPROVED:

/s/ Stephen Carter                          /s/ A. Douglas Seidman (for)
-------------------------------------       ------------------------------------
Stephen Carter                              Charles R. Martindale, Commissioner
Attorney General of Indiana                 Department of Administration

Date: 2/25/04                               Date: 1/16/04

MCO Contract, Fourth Amendment        Page 4 of 4            Harmony Health Plan<PAGE>

                                                                 EXHIBIT 10.14

                MEDICAID MANAGED CARE MODEL CONTRACT ATTESTATION

I Todd S. Farha, being an individual authorized to execute agreements
on behalf of WellCare of New York, Inc. (hereafter "MCO"), hereby attest that
             --------------------------
            (Name of Managed Care Organization)
the contract submitted by MCO to Orange County, follows the latest model
                                 --------------
                                 (County Name)
contract provided to us by the above named county. This executed contract
contains no deviations from the aforementioned model contract language.

9/24/04                                                        -s- Todd S. Farha
--------                                                       ----------------
(Date)                                                            (Signature)

                                                               Todd S. Farha
                                                            --------------------
                                                            (Print Name In Full)

                                           President and Chief Executive Officer
                                           -------------------------------------
                                                       (Title)

                               [SEAL TINA R. MARCARIO
                           MY COMMISSION # DD 292803
                             EXPIRES: APRIL 3, 2008
                    Bonded Thru Notary Public Underwriters]

-s- Tina R. Marcario
---------------------
(Notary Seal and Signature)

I Edward A. Diana, attest that the County has reviewed this executed contract
and that it follows the latest model contract provided to us by the New York
State Department of Health.

________________________                                ________________________
        (Date)                                                   (Signature)

                                                              Edward A. Diana
                                                            --------------------
                                                            (Print Name In Full)

                                              County Executive, County of Orange
                                              ----------------------------------
                                                          (Title)

___________________________
(Notary Seal and Signature)

<PAGE>

                              MEDICAID MANAGED CARE
                                 MODEL CONTRACT

                                 October 1, 2004

<PAGE>

                       TABLE OF CONTENTS FOR MODEL CONTRACT

Recitals

Section 1  Definitions

Section 2  Agreement Term, Amendments, Extensions, and General Contract
           Administration Provisions
           2.1   Term
           2.2   Amendments and Extensions
           2.3   Approvals
           2.4   Entire Agreement
           2.5   Renegotiation
           2.6   Assignment and Subcontracting
           2.7   Termination
                 a.  LDSS Initiated Termination of Contract
                 b.  Contractor and LDSS Initiated Termination
                 c.  Contractor Initiated Termination
                 d.  Termination Due to Loss of Funding
           2.8   Close-Out Procedures
           2.9   Rights and Remedies
           2.10  Notices
           2.11  Severability

Section 3  Compensation
           3.1   Capitation Payments
           3.2   Modification of Rates During Contract Period
           3.3   Rate Setting Methodology
           3.4   Payment of Capitation
           3.5   Denial of Capitation Payments
           3.6   SDOH Right to Recover  Premiums
           3.7   Third Party Health Insurance Determination
           3.8   Payment for Newborns
           3.9   Supplemental Maternity Capitation Payment
           3.10  Contractor Financial Liability
           3.11  Inpatient Hospital Stop-Loss Insurance
           3.12  Mental Health and Chemical Dependence Stop-Loss
           3.13  Enrollment Limitations
           3.14  Tracking Visits Provided by Indian Health Clinics

Section 4  Service Area

Section 5  Eligible, Exempt and Excluded Populations
           5.1   Eligible Populations
           5.2   Exempt Populations
           5.3   Excluded Populations
           5.4   Family Health Plus
           5.5   Family Enrollment

                                TABLE OF CONTENTS
                                October 1, 2004

                                        1

<PAGE>

                      TABLE OF CONTENTS FOR MODEL CONTRACT

Section 6  Enrollment
           6.1   Enrollment Guidelines
           6.2   Equality of Access to Enrollment
           6.3   Enrollment Decisions
           6.4   Auto Assignment
           6.5   Prohibition Against Conditions on Enrollment
           6.6   Family Enrollment
           6.7   Newborn Enrollment
           6.8   Effective Date of Enrollment
           6.9   Roster
           6.10  Automatic Re-Enrollment

Section 7  Lock-In Provisions
           7.1   Lock-In Provisions in Voluntary Counties
           7.2   Lock-In Provisions in Mandatory Counties and New York City
           7.3   Disenrollment During Lock-In Period
           7.4   Notification Regarding Lock-In and End of Lock-In Period

Section 8  Disenrollment
           8.1   Disenrollment Guidelines
           8.2   Disenrollment Prohibitions
           8.3   Reasons for Voluntary Disenrollment
           8.4   Processing of Disenrollment Requests
                 a.  Routine Disenrollment
                 b.  Expedited Disenrollment
                 c.  Retroactive Disenrollment
           8.5   Contractor Notification of Disenrollments
           8.6   Contractor's Liability
           8.7   Enrollee Initiated Disenrollment
                 a.  Disenrollment for Good Cause
           8.8   Contractor Initiated Disenrollment
           8.9   LDSS Initiated Disenrollment

Section 9  Guaranteed Eligibility

Section 10 Benefit Package, Covered and Non-Covered Services
           10.1  Contractor Responsibilities
           10.2  Compliance with State Medicaid Plan and Applicable Laws
           10.3  Definitions
           10.4  Provision of Services Through Participating and Non-
                 Participating Providers
           10.5  Child Teen Health Program / Adolescent Preventive Services
           10.6  Foster Care Children
           10.7  Child Protective Services
           10.8  Welfare Reform

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           10.9    Adult Protective Services
           10.10   Court-Ordered Services
           10.11   Family Planning and Reproductive Health Services
           10.12   Prenatal Care
           10.13   Direct Access
           10.14   Emergency Services
           10.15   Medicaid Utilization Thresholds (MUTS)
           10.16   Services for Which Enrollees Can Self-Refer
                   a.  Mental Health and Chemical Dependence Services
                   b.  Vision Services
                   c.  Diagnosis and Treatment of Tuberculosis
                   d.  Family Planning and Reproductive Health Services
                   e.  Article 28 Clinics Operated by Academic Dental Centers
           10.17   Second Opinions for Medical or Surgical Care
           10.18   Coordination with Local Public Health Agencies
           10.19   Public Health Services
                   a.  Tuberculosis Screening, Diagnosis and Treatment;
                       Directly Observed Therapy (TB/DOT)
                   b.  Immunizations
                   c.  Prevention and Treatment of Sexually Transmitted
                       Diseases
                   d.  Lead Poisoning
           10.20   Adults with Chronic Illnesses and Physical or Developmental
                   Disabilities
           10.21   Children with Special Health Care Needs
           10.22   Persons Requiring Ongoing Mental Health Services
           10.23   Member Needs Relating to HIV
           10.24   Persons Requiring Chemical Dependence Services
           10.25   Native Americans
           10.26   Women, Infants, and Children (WIC)
           10.27   Urgently Needed Services
           10.28   Dental Services Provided by Article 28 Clinics Operated by
                   Academic Dental Centers Not Participating in Contractor's
                   Network
           10.29   Coordination of Services
           10.30   Prospective Benefit Package Change for Retroactive SSI
                   Determinations

Section 11 Marketing
           11.1    Marketing Plan
           11.2    Marketing Activities
           11.3    Prior Approval of Marketing Materials, Procedures,
                   Subcontracts
           11.4    Marketing Infractions
           11.5    LDSS Option to Adopt Additional Marketing Guidelines

Section 12 Member Services
           12.1    General Functions
           12.2    Translation and Oral Interpretation
           12.3    Communicating with the Visually, Hearing and Cognitively
                   Impaired

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Section 13  Enrollee Notification
            13.1   Provider Directories/Office Hours for Participating Providers
            13.2   Member ID Cards
            13.3   Member Handbooks
            13.4   Notification of Effective Date of Enrollment
            13.5   Notification of Enrollee Rights
            13.6   Enrollee's Rights to Advance Directives
            13.7   Approval of Written Notices
            13.8   Contractor's Duty to Report Lack of Contact
            13.9   Contractor Responsibility to Notify Enrollee of Expected
                   Effective Date of Enrollment
            13.10  LDSS Notification of Enrollee's Change in Address
            13.11  Contractor Responsibility to Notify Enrollee of Effective
                   Date of Benefit Package Change
            13.12  Contractor Responsibility to Notify Enrollee of Termination,
                   Service Area Changes and Network Changes

Section 14  Complaint and Appeal Procedure
            14.1   Contractor's Program to Address Complaints
            14.2   Notification of Complaint and Appeal Program
            14.3   Guidelines for Complaint and Appeal Program
            14.4   Complaint Investigation Determinations

Section 15  Access Requirements
            15.1   Appointment Availability Standards
            15.2   Twenty-Four (24) Hour Access
            15.3   Appointment Waiting Times
            15.4   Travel Time Standards
                   a.  Primary Care
                   b.  Other Providers
            15.5   Service Continuation
                   a.  New Enrollees
                   b.  Enrollees Whose Health Care Provider Leaves Network
            15.6   Standing Referrals
            15.7   Specialist as a Coordinator of Primary Care
            15.8   Specialty Care Centers

Section 16  Quality Assurance
            16.1   Internal Quality Assurance Program
            16.2   Standards of Care

Section 17  Monitoring and Evaluation
            17.1   Right To Monitor Contractor Performance
            17.2   Cooperation During Monitoring And Evaluation
            17.3   Cooperation During On-Site Reviews
            17.4   Cooperation During Review of Services by External
                   Review Agency

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Section 18  Contractor Reporting Requirements
            18.1   Time Frames for Report Submissions
            18.2   SDOH Instructions for Report Submissions
            18.3   Liquidated Damages
            18.4   Notification of Changes in Report Due Dates, Requirements or
                   Formats
            18.5   Reporting Requirements
                   a.  Annual Financial Statements
                   b.  Quarterly Financial Statements
                   c.  Other Financial Reports
                   d.  Encounter Data
                   e.  Quality of Care Performance Measures
                   f.  Complaint Reports
                   g.  Fraud and Abuse Reporting Requirements
                   h.  Participating Provider Network Reports
                   i.  Appointment Availability/Twenty-Four Hour (24) Access and
                       Availability Surveys
                   j.  Clinical Studies
                   k.  Independent Audits
                   l.  New Enrollee Health Screening Completion Report
                   m.  Additional Reports
                   n.  LDSS Specific Reports
            18.6   Ownership and Related Information Disclosure
            18.7   Revision of Certificate of Authority
            18.8   Public Access to Reports
            18.9   Professional Discipline
            18.10  Certification Regarding Individuals Who Have Been Debarred or
                   Suspended by Federal or State Government
            18.11  Conflict of Interest Disclosure
            18.12  Physician Incentive Plan Reporting

Section 19  Records Maintenance and Audit Rights
            19.1   Maintenance of Contractor Performance Records
            19.2   Maintenance of Financial Records and Statistical Data
            19.3   Access to Contractor Records
            19.4   Retention Periods

Section 20  Confidentiality
            20.1   Confidentiality of Identifying Information about Medicaid
                   Recipients and Applicants
            20.2   Medical Records of Foster Children
            20.3   Confidentiality of Medical Records
            20.4   Length of Confidentiality Requirements

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Section 21  Participating Providers
            21.1   Network Requirements
                   a.  Sufficient Number
                   b.  Absence of Appropriate Network Provider
                   c.  Suspension of Enrollee Assignments to Providers
                   d.  Notice of Provider Termination
            21.2   Credentialing
                   a.  Licensure
                   b.  Minimum Standards
                   c.  Credentialing/Recredentialing Process
                   d.  Application Procedure
            21.3   SDOH Exclusion or Termination of Providers
            21.4   Evaluation Information
            21.5   Payment In Full
            21.6   Choice/Assignment of PCPs
            21.7   PCP Changes
            21.8   Provider Status Changes
            21.9   PCP Responsibilities
            21.10  Member to Provider Ratios
            21.11  Minimum Office Hours
                   a.  General Requirements
                   b.  Medical Residents
            21.12  Primary Care Practitioners
                   a.  General Limitations
                   b.  Specialists and Sub-specialists as PCPs
                   c.  OB/GYN Providers as PCPs
                   d.  Certified Nurse Practitioners as PCPs
                   e.  Registered Physician's Assistants as Physician Extenders
            21.13  PCP Teams
                   a.  General Requirements
                   b.  Medical Residents
            21.14  Hospitals
                   a.  Tertiary Services
                   b.  Emergency Services
            21.15  Dental Networks
            21.16  Presumptive Eligibility Providers
            21.17  Mental Health and Chemical Dependence Services Providers
            21.18  Laboratory Procedures
            21.19  Federally Qualified Health Centers (FQHCs)
            21.20  Provider Services Function

Section 22  Subcontracts Contracts and Provider Agreements
            22.1   Written Subcontracts
            22.2   Permissible Subcontracts
            22.3   Provision of Services Through Provider Agreements
            22.4   Approvals

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            22.5   Required Components
            22.6   Timely Payment
            22.7   Restrictions on Disclosure
            22.8   Transfer of Liability
            22.9   Termination of Health Care Professional Agreements
            22.10  Health Care Professional Hearings
            22.11  Non-Renewal of Provider Agreements
            22.12  Physician Incentive Plan

Section 23  Fraud and Abuse Prevention Plan

Section 24  Americans With Disabilities Act Compliance Plan

Section 25  Fair Hearings
            25.1   Enrollee Access to Fair Hearing Process
            25.2   Enrollee Rights to a Fair Hearing
            25.3   Contractor Notice to Enrollees
            25.4   Aid Continuing
            25.5   Responsibilities of SDOH
            25.6   Contractor's Obligations

Section 26  External Appeal
            26.1   Basis for External Appeal
            26.2   Eligibility For External Appeal
            26.3   External Appeal Determination
            26.4   Compliance With External Appeal Laws and Regulations

Section 27  Intermediate Sanctions

Section 28  Environmental Compliance

Section 29  Energy Conservation

Section 30  Independent Capacity of Contractor

Section 31  No Third Party Beneficiaries

Section 32  Indemnification
            32.1   Indemnification by Contractor
            32.2   Indemnification by LDSS

Section 33  Prohibition on Use of Federal Funds for Lobbying
            33.1   Prohibition of Use of Federal Funds for Lobbying
            33.2   Disclosure Form to Report Lobbying
            33.3   Requirements of Subcontractors

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                              TABLE OF CONTENTS FOR MODEL CONTRACT

Section 34  Non-Discrimination
            34.1   Equal Access to Benefit Package
            34.2   Non-Discrimination
            34.3   Equal Employment Opportunity
            34.4   Native Americans Access to Services From Tribal or Urban
                   Indian Health Facility

Section 35  Compliance with Applicable Laws
            35.1   Contractor and LDSS Compliance With Applicable Laws
            35.2   Nullification of Illegal, Unenforceable, Ineffective or Void
                   Contract Provisions
            35.3   Certificate of Authority Requirements
            35.4   Notification of Changes In Certificate of Incorporation
            35.5   Contractor's Financial Solvency Requirements
            35.6   Compliance With Care for Maternity Patients
            35.7   Informed Consent Procedures for Hysterectomy and
                   Sterilization
            35.8   Non-Liability of Enrollees For Contractor's Debts
            35.9   LDSS Compliance With Conflict of Interest Laws
            35.10  Compliance With PHL Regarding External Appeals

Section 36  New York State Standard Contract Clauses

Section 37  Insurance Requirements

Signature Page

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                                        8
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                 TABLE OF CONTENTS FOR MODEL CONTRACT

                               APPENDICES

A.    New York State Standard Clauses and Local Standard Clauses, if applicable

B.    Certification Regarding Lobbying

C.    New York State Department of Health Guidelines for the Provision of
      Family Planning and Reproductive Health Services

D.    New York State Department of Health Marketing Guidelines

E.    New York State Department of Health Member Handbook Guidelines

F.    New York State Department of Health Medicaid Managed Care Complaint and
      Appeals Requirements

G.    New York State Department of Health Guidelines for the Provision of
      Emergency Care and Services

H.    New York State Department of Health Guidelines for the Processing of
      Enrollments and Disenrollments

I.    New York State Department of Health Guidelines for Use of Medical
      Residents

J.    New York State Department of Health Guidelines of Federal Americans with
      Disabilities Act

K.    Prepaid Benefit Package Definitions of Covered and Non-Covered Services

L.    Approved Capitation Payment Rates

M.    Service Area

N.    Contractor-County Specific Agreements

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                                       9
<PAGE>

                                AGREEMENT BETWEEN

                                 Orange County
                         ------------------------------
                         County Name or City of New York

                                      And

                            WellCare of New York Inc
                           ---------------------------
                                 Contractor Name

                      This Agreement is made by and between

                                  Orange County
                                  -------------
              County Name or City of New York ("County" or "City")

                                 Acting through,

                   Orange County Department of Social Services
                   -------------------------------------------
            Department of Social Services ("LDSS") or Health ("CDOH")

                                   Located at

                               Box Z 11 Quarry Rd
                                Goshen, NY 10924

                                       And

                           WellCare of New York, Inc.
                           --------------------------
                       Contractor Name ("the Contractor")

                                   Located At

                              11 West 19th Street

                            New York, New York 1001

                                    RECITALS
                                October 1, 2004

                                  Page 1 of 2

<PAGE>

                                    RECITALS

      Pursuant to Title XIX of the Federal Social Security Act, codified as 42
U.S.C. Section 1396 et seq. (the "Social Security Act"), and Title 11 of Article
5 of the New York State Social Services Law ("SSL"), codified as N.Y.S.S.L.
Section 363 et seq., a comprehensive program of Medical Assistance for needy
persons exists in the State of New York ("Medicaid").

      Pursuant to Article 44 of the Public Health Law ("PHL"), the New York
State Department of Health ("SDOH") is authorized to issue Certificates of
Authority to establish Health Maintenance Organizations ("HMOs"), PHL Section
4400 et seq., and Prepaid Health Services Plans ("PHSPs"), PHL Section 4403-a.

      The State Social Services Law defines Medicaid to include payment of part
or all of the cost of care and services furnished by an HMO or a PHSP,
identified as Managed Care Organizations ("MCOs") in this Agreement, to Eligible
Persons, as defined in this Agreement, residing in the geographic area specified
in Appendix M (Service Area) when such care and services are furnished in
accordance with an agreement approved by the SDOH that meets the requirements of
federal law and regulations.

      The Contractor is a corporation organized under the laws of New York State
and is certified under Article 44 of the State Public Health Law or Article 43
of the NYS Insurance Law.

      The Contractor offers a comprehensive health services plan and represents
that it is able to make provision for furnishing medical and health service
benefits and has proposed to Orange County Department of Social Services to
                             -------------------------------------------
                                        [INSERT LDSS OR CDOH]
provide these services to Eligible Persons; and

      The Contractor has applied to participate in the Medicaid Managed Care
Program and the SDOH and Orange County Department of Social Services have
                         -------------------------------------------
                               [INSERT LDSS OR CITY OF NEW YORK]
determined that the Contractor meets the qualification criteria established for
participation.

NOW THEREFORE, the parties agree as follows:

                                    RECITALS
                                October 1, 2004

                                  Page 2 of 2

<PAGE>

1.    DEFINITIONS

      "AUTO-ASSIGNMENT" means a process by which an Eligible Person, who is
      mandated to enroll in managed care, but who has not chosen to enroll
      within sixty (60) days of receipt of the mandatory notice, is assigned to
      a MCO contracted with the LDSS as a Medicaid Managed Care Provider in
      accordance with the auto-assignment algorithm determined by the SDOH.

      "BEHAVIORAL HEALTH SERVICES" means services to address mental health
      disorders and/or chemical dependence.

      "BENEFIT PACKAGE" means the covered services described in Appendix K of
      this Agreement to be provided to the Enrollee, as Enrollee is hereinafter
      defined, by or through the Contractor.

      "CAPITATION RATE" means the fixed monthly amount that the Contractor
      receives for an Enrollee to provide that Enrollee with the Benefit
      Package.

      "CHEMICAL DEPENDENCE SERVICES" means examination, diagnosis, level of care
      determination, treatment, rehabilitation, or habilitation of persons
      suffering from chemical abuse or dependence, and includes the provision of
      alcohol and/or substance abuse services.

      "CHILD/TEEN HEALTH PROGRAM" or "C/THP" means the program of early and
      periodic screening, including inter-periodic, diagnostic and treatment
      services (EPSDT) that New York State offers all Medicaid eligible children
      under twenty-one (21) years of age. Care and services are provided in
      accordance with the periodicity schedule and guidelines developed by the
      New York State Department of Health. The services include administrative
      services designed to help families obtain services for children including
      outreach, information, appointment scheduling, administrative case
      management and transportation assistance, to the extent that
      transportation is included in the Benefit Package.

      "COMPREHENSIVE HIV SPECIAL NEEDS PLAN, OR HIV SNP" means a Managed Care
      Organization certified pursuant to Section forty-four hundred three-c
      (4403-c) of Article 44 of the Public Health Law (Article 44) which, in
      addition to providing or arranging for the provision of comprehensive
      health services on a capitated basis, including those for which Medical
      Assistance payment is authorized pursuant to Section three hundred
      sixty- five-a (365-a) of the Social Services Law, also provides or
      arranges for the provision of comprehensive and specialized HIV care to
      HIV positive persons eligible to receive benefits under Title XIX of the
      federal Social Security Act or other public programs.

      "COURT-ORDERED SERVICES" means those services that the Contractor is
      required to provide to Enrollees pursuant to orders of courts of competent
      jurisdiction, provided however, that such ordered services are within the
      Contractor's Medicaid managed care

                                   SECTION 1
                                 (DEFINITIONS)
                                October 1, 2004

                                       1-1

<PAGE>

      Benefit Package and reimbursable under Title XIX of the Federal Social
      Security Act (SSL 364-j(4)(r)).

      "DAYS" means calendar days except as otherwise stated.

      "DETOXIFICATION SERVICES" means Medically Managed Detoxification Services;
      and Medically Supervised Inpatient and Outpatient Withdrawal Services as
      defined in Appendix K.

      "DISENROLLMENT" means the process by which an Enrollee's membership in the
      Contractor's plan terminates.

      "EFFECTIVE DATE OF DISENROLLMENT" means the date on which an Enrollee may
      no longer receive services from the Contractor, pursuant to Section 8.6
      and Appendix H of this Agreement.

      "EFFECTIVE DATE OF ENROLLMENT" means the date on which an Enrollee may
      receive services from the Contractor, pursuant to Section 6.8(b) and
      Appendix H of this Agreement.

      "ELIGIBLE PERSON" means a person whom the LDSS, state or federal
      government determines to be eligible for Medicaid and who meets all the
      other conditions for enrollment in Medicaid managed care as set forth in
      this Agreement.

      "EMERGENCY MEDICAL CONDITION" means a medical or behavioral condition, the
      onset of which is sudden, that manifests itself by symptoms of sufficient
      severity, including severe pain, that a prudent layperson, possessing an
      average knowledge of medicine and health, could reasonably expect the
      absence of immediate medical attention to result in: (i) placing the
      health of the person afflicted with such condition in serious jeopardy, or
      in the case of a behavioral condition, placing the health of the person or
      others in serious jeopardy; or (ii) serious impairment to such person's
      bodily functions; or (iii) serious dysfunction of any bodily organ or part
      of such person; or (iv) serious disfigurement of such person.

      "EMERGENCY SERVICES" means covered medical services that are required to
      treat an Emergency Medical Condition.

      "ENROLLEE" means an Eligible Person who, either personally or through an
      authorized representative, has enrolled (or who has been auto-assigned) in
      the Contractor's plan pursuant to Section 6 of this Agreement.

      "ENROLLMENT" means the process by which an Enrollee's membership in a
      Contractor's Plan begins.

      "ENROLLMENT BROKER" means the state and/or county-contracted entity that
      provides enrollment, education, and outreach services; effectuates
      enrollments and disenrollments

                                   SECTION 1
                                 (DEFINITIONS)
                                October 1, 2004

                                      1-2

<PAGE>

      in Medicaid managed care; and provides other contracted services on behalf
      of the SDOH and the LDSS.

      "EXPERIENCED HIV PROVIDER" means an entity grant-funded by the SDOH AIDS
      Institute to provide clinical and/or supportive services or an entity
      licensed or certified by the SDOH to provide HIV/AIDS services.

      "FAMILY" means a mother and child(ren), a father and child(ren), a father
      and mother and child(ren), or a husband and wife residing in the same
      household or persons included in the same case for purposes of family
      enrollment in mandatory counties.

      "FISCAL AGENT" means the entity that processes or pays vendor claims on
      behalf of the Medicaid state agency pursuant to an agreement between the
      entity and such agency.

      "GUARANTEED ELIGIBILITY" means the period beginning on the Enrollee's
      Effective Date of Enrollment with the Contractor and ending six (6) months
      thereafter, during which the Enrollee may be entitled to continued
      enrollment in the Contractor's plan despite the loss of Medicaid
      eligibility as set forth in Section 9 of this Agreement.

      "HEALTH PROVIDER NETWORK" or "HPN" means a closed communication network
      dedicated to secure data exchange and distribution of health related
      information between various health facility providers and the SDOH. HPN
      functions include: collection of Medicaid complaint and disenrollment
      information; collection of Medicaid financial reports; collection and
      reporting of managed care provider networks systems (PNS); and the
      reporting of Medicaid encounter data systems (MEDS).

      "HIV SPECIALIST PCP" means a Primary Care Provider that meets the
      following criteria:

            -     Direct clinical management of persons with HIV as part of a
                  postgraduate program, clinic, hospital-based or private
                  practice during the last two years. Primary ambulatory care of
                  HIV-infected patients should include the management of
                  patients receiving antiretroviral therapy over an extended
                  period of time. This experience should equal twenty
                  patient-years experience, and

            -     Ten hours annually of Continuing Medical Education (CME) that
                  includes information on the use of antiretroviral therapy in
                  the ambulatory care setting.

      "INPATIENT STAY PENDING ALTERNATE LEVEL OF MEDICAL CARE" means continued
      care in a hospital pending placement in an alternate lower medical level
      of care, consistent with the provisions of 18 NYCRR 505.20 and 10 NYCRR,
      Part 85.

      "INSTITUTION FOR MENTAL DISEASE" or "IMD" means a hospital, nursing
      facility, or other institution of more than sixteen (16) beds that is
      primarily engaged in providing diagnosis, treatment or care of persons
      with mental diseases, including medical attention, nursing care and
      related services. Whether an institution is an Institution for Mental
      Disease is determined by its overall character as that of a facility
      established and maintained primarily for the care and treatment of
      individuals with mental diseases,

                                   SECTION 1
                                 (DEFINITIONS)
                                October 1, 2004
                                      1-3

<PAGE>

      whether or not it is licensed as such. An institution for the mentally
      retarded is not an Institution for Mental Diseases.

      "LOCAL PUBLIC HEALTH AGENCY" means Orange County Department of Health.
                                         -----------------------------------
                                                  Insert Name of Agency

      "LOCK-IN PERIOD" means the period of time during which the Enrollee may
      not disenroll from the Contractor's plan, unless the Enrollee becomes
      eligible for an exclusion or an exemption or can demonstrate good cause as
      established in state law and in 18 NYCRR Section 360-10.13.

      "MANAGED CARE ORGANIZATION" or "MCO" means a health maintenance
      organization ("HMO") or prepaid health service plan ("PHSP") certified
      under Article 44 of the New York State PHL.

      "MARKETING" means any activity of the Contractor, subcontractor or
      individuals or entities affiliated with the Contractor by which
      information about the Contractor is made known to Eligible Persons for the
      purpose of persuading such persons to enroll with the Contractor.

      "MARKETING REPRESENTATIVE" means any individual or entity engaged by the
      Contractor to market on behalf of the Contractor.

      "MEDICAID MANAGEMENT INFORMATION SYSTEM" or "MMIS" means the Medical
      Assistance Information and Payment System of the SDOH.

      "MEDICAL RECORD" means a complete record of care rendered by a provider
      documenting the care rendered to the Enrollee, including inpatient,
      outpatient, and emergency care, in accordance with all applicable federal,
      state and local laws, rules and regulations. Such record shall be signed
      by the medical professional rendering the services.

      "MEDICALLY NECESSARY" means health care and services that are necessary to
      prevent, diagnose, manage or treat conditions in the person that cause
      acute suffering, endanger life, result in illness or infirmity, interfere
      with such person's capacity for normal activity, or threaten some
      significant handicap.

      "NATIVE AMERICAN" means, for purposes of this contract, a person
      identified in the Medicaid eligibility system as a Native American.

      "NONCONSENSUAL ENROLLMENT" means Enrollment of an Eligible Person, other
      than through Auto-assignment, newborn enrollment or case addition, in a
      Managed Care Organization without the consent of the Eligible Person or
      consent of a person with the legal authority to act on behalf of the
      Eligible Person at the time of Enrollment.

      "NON-PARTICIPATING PROVIDER" means a provider of medical care and/or
      services with which the Contractor has no Provider Agreement.

                                   SECTION 1
                                 (DEFINITIONS)
                                October 1, 2004
                                      1-4

<PAGE>

      "PARTICIPATING PROVIDER" means a provider of medical care and/or services
      that has a Provider Agreement with the Contractor.

      "PHYSICIAN INCENTIVE PLAN" or "PIP" means any compensation arrangement
      between the Contractor or one of its contracting entities and a physician
      or physician group that may directly or indirectly have the effect of
      reducing or limiting services furnished to Medicaid recipients enrolled by
      the MCO.

      "PREPAID CAPITATION PLAN ROSTER" OR "ROSTER" means the enrollment list
      generated on a monthly basis by SDOH by which LDSS and Contractor are
      informed of specifically which recipients the Contractor will be serving
      for the coming month, subject to any revisions communicated in writing or
      electronically by SDOH, LDSS, or the Enrollment Broker.

      "PRESUMPTIVE ELIGIBILITY PROVIDER" means a provider designated by the SDOH
      as qualified to determine the presumptive eligibility for pregnant women
      to allow them to receive prenatal services immediately. Such providers
      assist recipients with the completion of the full application for Medicaid
      and they may be comprehensive Prenatal Care Programs, Local Public Health
      Agencies, Certified Home Health Agencies, Public Health Nursing Services,
      Article 28 facilities, and individually licensed physicians and certified
      nurse practitioners.

      "PREVENTIVE CARE" means the care or services rendered to avert
      disease/illness and/or its consequences. There are three levels of
      preventive care: primary, such as immunizations, aimed at preventing
      disease; secondary, such as disease screening programs aimed at early
      detection of disease; and tertiary, such as physical therapy, aimed at
      restoring function after the disease has occurred. Commonly, the term
      "preventive care" is used to designate prevention and early detection
      programs rather than treatment programs.

      "PRIMARY CARE PROVIDER" or "PCP" means a qualified physician, or certified
      nurse practitioner or team of no more than four (4) qualified
      physicians/nurse practitioners which provides all required primary care
      services contained in the Benefit Package to Enrollees.

      "PROVIDER AGREEMENT" means any written contract between the Contractor and
      participating Providers to provide medical care and/or services to
      Contractor's Enrollees.

      "SCHOOL BASED HEALTH CENTERS" or "SSHC" are SDOH approved centers which
      provide comprehensive primary and mental health services including health
      assessments, diagnosis and treatment of acute illnesses, screenings and
      immunizations, routine management of chronic diseases, health education,
      mental health counseling and treatment on-site in schools. Services are
      offered by multi-disciplinary staff from sponsoring Article 28 licensed
      hospitals and community health centers.

      "SERIOUSLY EMOTIONALLY DISTURBED" or "SED" means, a child through
      seventeen (17) years of age who has utilized the following during the
      twelve (12) month period prior to scheduled enrollment:

                                   SECTION 1
                                 (DEFINITIONS)
                                October 1, 2004
                                      1-5

<PAGE>

      -     ten (10) or more encounters, including visits to a mental health
            clinic, psychiatrist or psychologist, and inpatient hospital days
            relating to a psychiatric diagnosis; or

      -     one (1) or more specialty mental health visits (i.e., psychiatric
            rehabilitation treatment program; day treatment; continuing day
            treatment; comprehensive case management; partial hospitalization;
            rehabilitation services provided to residents of Office of Mental
            Health (OMH) licensed community residences and family-based
            treatment; and mental health clinics for seriously emotionally
            disturbed children).

      "SERIOUSLY AND PERSISTENTLY MENTALLY ILL" or "SPMI" means an adult
      eighteen (18) years or older who has utilized the following during the
      twelve (12) month period prior to scheduled enrollment:

      -     ten (10) or more encounters, including visits to a mental health
            clinic, psychiatrist or psychologist, and inpatient hospital days
            relating to a psychiatric diagnosis; or

      -     one (1) or more specialty mental health visits (i.e., psychiatric
            rehabilitation treatment program; day treatment; continuing day
            treatment; comprehensive case management; partial hospitalization;
            rehabilitation services provided to residents of OMH licensed
            community residences and family-based treatment; and mental health
            clinics for seriously emotionally disturbed children).

      "SUPPLEMENTAL MATERNITY CAPITATION PAYMENT" means the fixed amount paid to
      the Contractor for the prenatal and [ILLEGIBLE] physician care and
      hospital or birthing center delivery costs, limited to those cases in
      which the plan has paid the hospital or birthing center for the maternity
      stay, and can produce evidence of such payment.

      "SUPPLEMENTAL NEWBORN CAPITATION PAYMENT" means the fixed amount paid to
      the Contractor for the inpatient birthing costs for a newborn enrolled in
      the plan, limited to those cases in which the plan has paid the hospital
      or birthing center for the newborn stay, and can produce evidence of such
      payment.

      "TUBERCULOSIS DIRECTLY OBSERVED THERAPY" or "TB/DOT" means the direct
      observation of ingestion of oral TB medications to assure patient
      compliance with the physician's prescribed medication regimen.

      "URGENTLY NEEDED SERVICES" means covered services that are not Emergency
      Services as defined in this Section, provided when an Enrollee is
      temporarily absent from the Contractor's service area, when the services
      are medically necessary and immediately required: (1) as a result of an
      unforeseen illness, injury, or condition; and (2) it was not reasonable
      given the circumstances to obtain the services through the Contractor's
      plan.

                                   SECTION 1
                                 (DEFINITIONS)
                                October 1, 2004
                                      1-6

<PAGE>

2.    AGREEMENT TERM, AMENDMENTS, EXTENSIONS, AND GENERAL CONTRACT
      ADMINISTRATION PROVISIONS

      2.1   Term

            a)    This Agreement is effective October 1, 2004 and shall remain
                  in effect until September 30, 2005; or until the execution of
                  an extension, renewal or successor Agreement approved by the
                  SDOH and the Department of Health and Human Services (DHHS);
                  or until the effective date of an executed agreement between
                  the Contractor and SDOH for Contractor's participation in the
                  Medicaid managed care program; whichever occurs first.

            b)    The parties to the Agreement shall have the option to renew
                  this Agreement for additional two (2) year and or one (1) year
                  terms, subject to the approval of the LDSS, SDOH, DHHS and any
                  other entities as required by law or regulation.

            c)    However, in no event, shall the maximum duration of this
                  Agreement exceed five (5) years.

      2.2   Amendments and Extensions

            a)    This Agreement may only be modified in writing. Unless
                  otherwise specified in this Agreement, modifications must be
                  signed by the parties and approved by the SDOH, DHHS, and any
                  other entities as required by law or regulation, prior to the
                  end of the quarter in which the amendment is to be effective.

            b)    This Agreement shall not be automatically renewed at its
                  expiration. This Agreement may be extended by written
                  amendment, in accordance with the procedures set forth in this
                  Section.

            c)    An extension to this Agreement may be granted for reasons
                  including, but not limited, to the following:

                  i)    Negotiations for a successor Agreement will not be
                        completed by the expiration date of the current
                        contract; or

                  ii)   The Contractor has submitted a termination notice and
                        transition of Enrollees will not be completed by the
                        expiration date of the current contract.

                                   SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                October 1, 2004
                                      2-1

<PAGE>

            d)    The parties will submit, to the extent practicable, the
                  proposed signed and dated extensions, including all necessary
                  local government approvals, to SDOH prior to the scheduled
                  expiration date of this Agreement.

      2.3   Approvals

            This Agreement and any amendments to this Agreement shall not be
            effective or binding unless and until approved, in writing, by the
            DHHS, the SDOH and any other entity as required in law and
            regulation. SDOH will provide a notice of each such approval to the
            Contractor and the LDSS upon such approval.

      2.4   Entire Agreement

            This Agreement shall supersede all prior Agreements between the
            Contractor and the LDSS. This Agreement, including those
            attachments, schedules, appendices, exhibits, and addenda that have
            been specifically incorporated herein and written plans submitted by
            the Contractor and maintained on file by SDOH and/or LDSS pursuant
            to this Agreement, contains all the terms and conditions agreed upon
            by the parties, and no other Agreement, oral or otherwise, regarding
            the subject matter of this Agreement shall be deemed to exist or to
            bind any of the parties or vary any of the terms contained in this
            Agreement. In the event of any inconsistency or conflict among the
            document elements of this Agreement, such inconsistency or conflict
            shall be resolved by giving precedence to the document elements in
            the following order:

                  1)    Appendix A, Standard Clauses for all New York State
                        Contracts;

                  2)    Local Standard Clauses, if any;

                  3)    The body of this Agreement;

                  4)    The appendices attached to the body of this Agreement,
                        other than Appendix A;

                  5)    The Contractor's approved:

                        i)    Marketing Plan on file with SDOH and LDSS

                        ii)   Complaint and Appeals Procedure on file with SDOH
                              and LDSS

                        iii)  Quality Assurance Plan on file with SDOH and LDSS

                        iv)   Americans with Disabilities Act Compliance Plan on
                              file with SDOH and LDSS

                        v)    Fraud and Abuse Prevention Plan on file with SDOH
                              and LDSS.

                                   SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                October 1, 2004
                                      2-2

<PAGE>

      2.5   Renegotiation

            The parties to this Agreement shall have the right to renegotiate
            the terms and conditions of this Agreement in the event applicable
            local, state or federal law, regulations or policy are altered from
            those existing at the time of this Agreement in order to be in
            continuous compliance therewith. This Section shall not limit the
            right of the parties to this Agreement from renegotiating or
            amending other terms and conditions of this agreement. Such changes
            shall only be made with the consent of the parties and the prior
            approval of the SDOH and the DHHS.

      2.6   Assignment and Subcontracting

            a)    The Contractor shall not, without LDSS and SDOH's prior
                  written consent, assign, transfer, convey, sublet, or
                  otherwise dispose of this Agreement; of the Contractor's
                  right, title, interest, obligations, or duties under the
                  Agreement; of the Contractor's power to execute the Agreement;
                  or, by power of attorney or otherwise, of any of the
                  Contractor's rights to receive monies due or to become due
                  under this Agreement. Any assignment, transfer, conveyance,
                  sublease, or other disposition without LDSS and SDOH's consent
                  shall be void.

            b)    Contractor may not enter into any subcontracts related to the
                  delivery of services to Enrollees, except by written
                  agreement, as set forth in Section 22 of this Agreement. The
                  Contractor may subcontract for provider services and
                  management services. If such written agreement would be
                  between Contractor and a provider of health care or ancillary
                  health services or between Contractor and an independent
                  practice association, the agreement must be in a form
                  previously approved by SDOH. If such subcontract is for
                  management services under 10 NYCRR Section 98-1.11, it must be
                  approved by SDOH prior to its becoming effective. Any
                  subcontract entered into by Contractor shall fulfill the
                  requirements of 42 CFR Parts 434 and 438 that are appropriate
                  to the service or activity delegated under such subcontract.
                  Contractor agrees that it shall remain legally responsible to
                  LDSS for carrying out all activities under this Agreement and
                  that no subcontract shall limit or terminate Contractor's
                  responsibility.

      2.7   Termination

            a)    LDSS Initiated Termination of Contract

                  i)    LDSS shall have the right to terminate this Agreement,
                        in whole or in part if the Contractor:

                        A)    takes any action that threatens the health,
                              safety, or welfare of its Enrollees;

                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                October 1, 2004
                                       2-3

<PAGE>

                        B)    has engaged in an unacceptable practice under 18
                              NYCRR, Part 515, that affects the fiscal integrity
                              of the Medicaid program;

                        C)    has its Certificate of Authority suspended,
                              limited or revoked by SDOH;

                        D)    materially breaches the Agreement or fails to
                              comply with any term or condition of this
                              Agreement that is not cured within twenty (20)
                              days, or to such longer period as the parties may
                              agree, of LDSS's written request for compliance;

                        E)    becomes insolvent;

                        F)    brings a proceeding voluntarily, or has a
                              proceeding brought against it involuntarily, under
                              Title 11 of the U.S. Code (the Bankruptcy Code);
                              or

                        G)    knowingly has a director, officer, partner or
                              person owning or controlling more than five
                              percent (5%) of the Contractor's equity, or has an
                              employment, consulting, or other agreement with
                              such a person for the provision of items and/or
                              services that are significant to the Contractor's
                              contractual obligation who has been debarred or
                              suspended by the federal, state or local
                              government, or otherwise excluded from
                              participating in procurement activities.

                  ii)   The LDSS will notify the Contractor of its intent to
                        terminate this Agreement for the Contractor's failure to
                        meet the requirements of this Agreement and provide
                        Contractor with a hearing prior to the termination.

                  iii)  If SDOH suspends, limits or revokes Contractor's
                        Certificate of Authority under PHL Section 4404, this
                        Agreement shall expire on the date the Contractor ceases
                        to have authority to serve the geographic area of the
                        LDSS. No hearing will be required if the contract
                        expires due to SDOH suspension, limitation or revocation
                        of the Contractor's Certificate of Authority.

                  iv)   Prior to the effective date of the termination the LDSS
                        shall notify Enrollees of the termination, or delegate
                        responsibility for such notification to the Contractor,
                        and such notice shall include a statement that Enrollees
                        may disenroll immediately without cause.

            b)    Contractor and LDSS Initiated Termination

                  The Contractor and the LDSS each shall have the right to
                  terminate this Agreement in the event that SDOH and the
                  Contractor fail to reach agreement on the monthly Capitation
                  Rates. In such event, the party exercising its right shall
                  give the other party, LDSS, and SDOH written notice specifying
                  the reason for and the effective date of termination, which

                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 2004
                                       2-4

<PAGE>

                  shall not be less time than will permit an orderly
                  disenrollment of Enrollees to the Medicaid fee-for-service
                  payment mechanism or transfer to another MCO, as determined by
                  LDSS, but no more than ninety (90) days.

            c)    Contractor Initiated Termination

                  i)    The Contractor shall have the right to terminate this
                        Agreement in the event that LDSS materially breaches the
                        Agreement or fails to comply with any term or condition
                        of this Agreement that is not cured within twenty (20)
                        days, or to such longer period as the parties may agree,
                        of the Contractor's written request for compliance. The
                        Contractor shall give LDSS written notice specifying the
                        reason for and the effective date of the termination,
                        which shall not be less time than will permit an orderly
                        disenrollment of Enrollees to the Medicaid
                        fee-for-service payment mechanism or transfer to another
                        managed care program, as determined by LDSS, but no more
                        than ninety (90) days.

                  ii)   The Contractor shall have the right to terminate this
                        Agreement in the event that its obligations are
                        materially changed by modifications to this Agreement
                        and its Appendices by SDOH or LDSS. In such event,
                        Contractor shall give LDSS and SDOH written notice
                        within thirty (30) days of notification of changes to
                        the Agreement or Appendices specifying the reason and
                        the effective date of termination, which shall not be
                        less time than will permit an orderly disenrollment of
                        Enrollees to the Medicaid fee-for-service program or
                        transfer to another MCO, as determined by the LDSS, but
                        no more than ninety (90) days.

                  iii)  The Contractor shall also have the right to terminate
                        this Agreement if the Contractor is unable to provide
                        services pursuant to this Agreement because of a natural
                        disaster and/or an act of God to such a degree that
                        Enrollees cannot obtain reasonable access to services
                        within the Contractor's organization, and, after
                        diligent efforts, the Contractor cannot make other
                        provisions for the delivery of such services. The
                        Contractor shall give LDSS written notice of any such
                        termination that specifies:

                        A)    the reason for the termination, with appropriate
                              documentation of the circumstances arising from a
                              natural disaster and/or an act of God that
                              preclude reasonable access to services;

                        B)    the Contractor's attempts to make other provision
                              for the delivery of services; and

                                    SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                 AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                 October 1, 2004
                                       2-5

<PAGE>

                        C)    the effective date of the termination, which shall
                              not be less time than will permit an orderly
                              disenrollment of Enrollees to the Medicaid fee-
                              for-service payment mechanism or transfer to
                              another MCO, as determined by LDSS, but no more
                              than ninety (90) days.

            d)    Termination Due To Loss of Funding

                  In the event that State and/or Federal funding used to pay for
                  services under this Agreement is reduced so that payments
                  cannot be made in full, this Agreement shall automatically
                  terminate, unless both parties agree to a modification of the
                  obligations under this Agreement. The effective date of such
                  termination shall be ninety (90) days after the Contractor
                  receives written notice of the reduction in payment, unless
                  available funds are insufficient to continue payments in full
                  during the ninety (90) day period, in which case LDSS shall
                  give the Contractor written notice of the earlier date upon
                  which the Agreement shall terminate. A reduction in State
                  and/or Federal funding cannot reduce monies due and owing to
                  the Contractor on or before the effective date of the
                  termination of the Agreement.

      2.8   Close-Out Procedures

            Upon termination or expiration of this Agreement and in the event
            that it is not scheduled for renewal, the Contractor shall comply
            with close-out procedures that the Contractor develops in
            conjunction with LDSS and that the LDSS, and the SDOH have approved.
            The close-out procedures shall include the following:

            a)    The Contractor shall promptly account for and repay funds
                  advanced by SDOH for coverage of Enrollees for periods
                  subsequent to the effective date of termination;

            b)    The Contractor shall give LDSS, SDOH, and other authorized
                  federal, state or local agencies access to all books, records,
                  and other documents and upon request, portions of such books,
                  records, or documents that may be required by such agencies
                  pursuant to the terms of this Agreement;

            c)    The Contractor shall submit to LDSS, SDOH, and other
                  authorized federal, state or local agencies, within ninety
                  (90) days of termination, a final financial statement and
                  audit report relating to this Agreement, made by a certified
                  public accountant or a licensed public accountant, unless the
                  Contractor requests of LDSS and receives written approval from
                  LDSS, SDOH and all other governmental agencies from which
                  approval is required, for an extension of time for this
                  submission;

                                   SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                October 1, 2004
                                      2-6

<PAGE>

            d)    The Contractor shall furnish to SDOH immediately upon receipt
                  all information related to any request for reimbursement of
                  any medical claims that result from services delivered after
                  the date of termination of this Agreement;

            e)    The Contractor shall establish an appropriate plan acceptable
                  to and prior approved by the LDSS and SDOH for the orderly
                  disenrollment of Enrollees to the Medicaid fee-for-service
                  program or enrollment into another MCO. This plan shall
                  include the provision of pertinent information to identified
                  Enrollees who are: pregnant; currently receiving treatment for
                  a chronic or life threatening condition prior approved for
                  services or surgery; or whose care is being monitored by a
                  case manager to assist them in making decisions which will
                  promote continuity of care.

            f)    SDOH shall promptly pay all claims and amounts owed to the
                  Contractor;

            g)    Any termination of this Agreement by either the Contractor or
                  LDSS shall be done by amendment to this Agreement, unless the
                  contract is terminated by the LDSS due to conditions in
                  Section 2.7 a.(i) or Appendix A of this Agreement.

      2.9   Rights and Remedies

            The rights and remedies of LDSS and the Contractor provided
            expressly in this Article shall not be exclusive and are in addition
            to all other rights and remedies provided by law or under this
            Agreement.

                                   SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                October 1, 2004
                                      2-7

<PAGE>

      2.10  Notices

      All notices to be given under this Agreement shall be in writing and shall
      be deemed to have been given when mailed to, or, if personally delivered,
      when received by the Contractor, LDSS, and the SDOH at the following
      addresses:

            For LDSS:

            Orange County Department of Social Services
            Commissioner
            Box Z, Quarry Road
            Goshen, NY 10924
            ------------------------
            [Insert Name and Address]

            For SDOH:
            New York State Department of Health
            Empire State Plaza
            Corning Tower, Rm. 2074
            Albany, NY 12237-0065

            For the Contractor:
            WellCare of New York, Inc.
            11 West 19th Street 2nd floor
            New York, NY 10011

            __________________________
            [Insert Name and Address]

      2.11  Severability

            If this Agreement contains any unlawful provision that is not an
            essential part of this Agreement and that was not a controlling or
            material inducement to enter into this Agreement, the provision
            shall have no effect and, upon notice by either party, shall be
            deemed stricken from this Agreement without affecting the binding
            force of the remainder of this Agreement.

                                   SECTION 2
                    (AGREEMENT TERM, AMENDMENTS, EXTENSIONS,
                AND GENERAL CONTRACT ADMINISTRATION PROVISIONS)
                                October 1, 2004
                                      2-8

<PAGE>

3.    COMPENSATION

      3.1   Capitation Payments

            Compensation to the Contractor shall consist of a monthly capitation
            payment for each Enrollee and the Supplemental Capitation Payments
            as described in Sections 3.1 (c) and 3.1 (d), where applicable.

            a)    In no event shall monthly capitation payments to the
                  Contractor for the Benefit Package exceed the cost of
                  providing the Benefit Package on a fee-for-service basis to an
                  actuarially equivalent, non-enrolled population group Upper
                  Payment Limit (UPL) as determined by SDOH.

            b)    The monthly Capitation Rates are attached hereto as Appendix L
                  and shall be deemed incorporated into this Agreement without
                  further action by the parties.

            c)    The monthly capitation payments and the Supplemental Newborn
                  Capitation Payment and the Supplemental Maternity Capitation
                  Payment to the Contractor shall constitute full and complete
                  payments to the Contractor for all services that the
                  Contractor provides pursuant to this Agreement subject to
                  stop-loss provisions set forth in Section 3.11 and 3.12 of
                  this Agreement.

            d)    Capitation Rates shall be effective for the entire contract
                  period, except as described in Section 3.2.

      3.2   Modification of Rates During Contract Period

            a)    Any technical modification to Capitation Rates during the term
                  of the Agreement as agreed to by the Contractor, including but
                  not limited to, changes in reinsurance or the Benefit Package,
                  shall be deemed incorporated into this Agreement without
                  further action by the parties, upon approval by SDOH, and upon
                  written notice by SDOH to the LDSS.

            b)    Any other modification to Capitation Rates, as agreed to by
                  SDOH and the Contractor, during the term of the Agreement
                  shall be deemed incorporated into this Agreement without
                  further action by the parties upon approval of such
                  modifications by the SDOH and the State Division of the
                  Budget, and upon written notice by SDOH to the LDSS.

            c)    In the event that SDOH and the Contractor fail to reach
                  agreement on modifications to the monthly Capitation Rates,
                  the SDOH will provide formal written notice to the Contractor
                  and LDSS of the amount and effective date of the modified
                  Capitation Rate approved by the State Division of the
                  Budget. The Contractor shall have the option of terminating
                  this Agreement if such

                                   SECTION 3
                                 (COMPENSATION)
                                October 1, 2004
                                      3-1

<PAGE>

                  approved modified Capitation on Rates are not acceptable. In
                  such case, the Contractor shall give written notice to the
                  SDOH and the LDSS within thirty (30) days of the date of the
                  formal written notice of the modified Capitation Rates from
                  SDOH specifying the reasons for and effective date of
                  termination. The effective date of termination shall be ninety
                  (90) days from the date of the Contractor's written notice
                  unless the SDOH determines that an orderly disenrollment to
                  Medicaid fee-for-service or transfer to another MCO can be
                  accomplished in fewer days. During the period commencing with
                  the effective date of the SDOH modified Capitation Rates
                  through the effective date of termination of the Agreement,
                  the Contractor shall have the option of continuing to receive
                  capitation payments at the expired Capitation Rates or at the
                  modified Capitation Rates approved by SDOH and State Division
                  of the Budget for the rate period.

                  If the Contractor fails to exercise its right to terminate in
                  accordance with this Section, then the modified Capitation
                  Rates approved by SDOH and the State Division of the Budget
                  shall be deemed incorporated into this Agreement without
                  further action by the parties as of the effective date of the
                  modified Capitation Rates as established by SDOH and approved
                  by State Division of the Budget.

      3.3   Rate Setting Methodology

            Capitation Rates are determined using a prospective methodology
            whereby cost, utilization and other rate-setting data available for
            the time period prior to the time period covered by the rates are
            used to establish premiums. Capitation rates will not be
            retroactively adjusted to reflect actual fee-for-service data or
            plan experience for the time period covered by the rates.

      3.4   Payment of Capitation

            a)    The monthly capitation payments for each Enrollee are due to
                  the Contractor from the Effective Date of Enrollment until the
                  Effective Date of Disenrollment of the Enrollee or termination
                  of this Agreement, whichever occurs first. The Contractor
                  shall receive a full month's capitation payment for the month
                  in which disenrollment occurs. The Roster generated by SDOH
                  with any modification communicated electronically or in
                  writing by the LDSS or the Enrollment Broker prior to the end
                  of the month in which the Roster is generated, shall be the
                  enrollment list for purposes of MMIS premium billing and
                  payment, as discussed in Section 6.9 and Appendix H.

            b)    Upon receipt by the Fiscal Agent of a properly completed claim
                  for monthly capitation payments submitted by the Contractor
                  pursuant to this Agreement, the Fiscal Agent will promptly
                  process such claim for payment through MMIS and use its best
                  efforts to complete such processing within thirty (30)
                  business days from date of receipt of the claim by the Fiscal
                  Agent. Processing of

                                   SECTION 3
                                 (COMPENSATION)
                                October 1, 2004
                                      3-2

<PAGE>

                  Contractor claims shall be in compliance with the requirements
                  of 42 CFR 447.45. The Fiscal Agent will also use its best
                  efforts to resolve any billing problem relating to the
                  Contractor's claims as soon as possible. In accordance with
                  Section 41 of the State Finance Law, the State and LDSS shall
                  have no liability under this Agreement to the Contractor or
                  anyone else beyond funds appropriated and available for
                  payment of Medical Assistance care, services and supplies.

      3.5   Denial of Capitation Payments

            If the Centers for Medicare and Medicaid Services denies payment for
            new Enrollees, as authorized by Social Security Act (SSA) Section
            1903(m)(5) and 42 CFR Section 434.67, or such other applicable
            federal statutes or regulations, based upon a determination that
            Contractor failed substantially to provide medically necessary items
            and services, imposed premium amounts or charges in excess of
            permitted payments, engaged in discriminatory practices as described
            in SSA Section 1932(e)(1)(A)(iii), misrepresented or falsified
            information submitted to CMS, SDOH, LDSS, the Enrollment Broker, or
            an Enrollee, potential Enrollee, or health care provider, or failed
            to comply with federal requirements (i.e. 42 CFR Section 417.479 and
            42 CFR Section 434.70) relating to the Physician Incentive Plans,
            SDOH and LDSS will deny capitation payments to the Contractor for
            the same Enrollees for the period of time for which CMS denies such
            payment.

      3.6   SDOH Right to Recover Premiums

            The parties acknowledge and accept that the SDOH has a right to
            recover premiums paid to the Contractor for Enrollees listed on the
            monthly Roster who are later determined for the entire applicable
            payment month, to have been in an institution; to have been
            incarcerated; to have moved out of the Contractor's service area
            subject to any time remaining in the Enrollee's Guaranteed
            Eligibility period; or to have died. In any event, the State may
            only recover premiums paid for Medicaid Enrollees listed on a Roster
            if it is determined by the SDOH that the Contractor was not at risk
            for provision of Benefit Package services for any portion of the
            payment period.

      3.7   Third Party Health Insurance Determination

            The Contractor and the LDSS will make diligent efforts to determine
            whether Enrollees have third party health insurance (TPHI). The LDSS
            shall use its best efforts to maintain third party information on
            the WMS/MMIS Third Party Resource System. The Contractor shall make
            good faith efforts to coordinate benefits with and collect TPHI
            recoveries from other insurers, and must inform the LDSS of any
            known changes in status of TPHI insurance eligibility within thirty
            (30) days of learning of a change in TPHI. The Contractor may use
            the Roster as one method to determine TPHI information. The
            Contractor will be permitted to retain 100 percent of any
            reimbursement for Benefit Package services obtained

                                   SECTION 3
                                 (COMPENSATION)
                                October 1, 2004
                                      3-3

<PAGE>

            from TPHI. Capitation Rates are net of TPHI recoveries. In no
            instances may an Enrollee be held responsible for disputes over
            these recoveries.

      3.8   Payment For Newborns

            a)    The Contractor shall be responsible for all costs and services
                  included in the Benefit Package associated with the Enrollee's
                  newborn, unless the child is excluded from Medicaid Managed
                  Care.

            b)    The Contractor shall receive a capitation payment from the
                  first day of the newborn's month of birth and, in instances
                  where the plan pays the hospital or birthing center for the
                  newborn stay, a Supplemental Newborn Capitation Payment.

            c)    Capitation Rate and Supplemental Newborn Capitation Payment
                  for a newborn will begin the month following certification of
                  the newborn's eligibility and enrollment, retroactive to the
                  first day of the month in which the child was born.

            d)    The Contractor cannot bill for a Supplemental Newborn
                  Capitation Payment unless the newborn hospital or birthing
                  center payment has been paid by the Contractor. The Contractor
                  must maintain on file evidence of payment to the hospital or
                  birthing center of the claim for the newborn stay. Failure to
                  have supporting records may, upon an audit, result in
                  recoupment of the Supplemental Newborn Capitation Payment by
                  SDOH.

      3.9   Supplemental Maternity Capitation Payment

            a)    The Contractor shall be responsible for all costs and services
                  included in the Benefit Package associated with the maternity
                  care of an Enrollee.

            b)    In instances where the Enrollee is enrolled in the
                  Contractor's plan on the date of the delivery of a child, the
                  Contractor shall be entitled to receive a Supplemental
                  Maternity Capitation Payment. The Supplemental Maternity
                  Capitation Payment reimburses the Contractor for the inpatient
                  and outpatient costs of services normally provided as part of
                  maternity care including anteparturm care, delivery and
                  post-partum care. The Supplemental Maternity Capitation
                  Payment is in addition to the monthly Capitation Rate paid by
                  the SDOH to the Contractor for the Enrollee.

            c)    In instances where the Enrollee was enrolled in the
                  Contractor's plan for only part of the pregnancy, but was
                  enrolled on the date of the delivery of the child, the plan
                  shall be entitled to receive the entire Supplemental Maternity
                  Capitation Payment. The Supplemental Capitation payment shall
                  not be prorated to reflect that the Enrollee was not a member
                  of the Contractor's plan for the entire duration of the
                  pregnancy.

                                   SECTION 3
                                 (COMPENSATION)
                                October 1, 2004
                                       3-4

<PAGE>

            d)    In instances where the Enrollee was enrolled in the
                  Contractor's plan for part of the pregnancy, but was not
                  enrolled on the date of the delivery of the child, the
                  Contractor shall not be entitled to receive the Supplemental
                  Maternity Capitation Payment, or any portion thereof.

            e)    Costs of inpatient and outpatient care associated with
                  maternity cases that end in termination or miscarriage shall
                  be reimbursed to the Contractor through the monthly Capitation
                  Rate for the Enrollee and the Contractor shall not receive the
                  Supplemental Maternity Capitation Payment.

            f)    The Contractor may not bill a supplemental Maternity
                  Capitation Payment until the hospital inpatient or birthing
                  center delivery is paid by the Contractor, and the Contractor
                  must maintain on file evidence of payment of the delivery,
                  plus any other inpatient and outpatient services for the
                  maternity care of the Enrollee to be eligible to receive a
                  Supplemental Maternity Capitation Payment. Failure to have
                  supporting records may, upon audit, result in recoupment of
                  the Supplemental Maternity Capitation Payment by the SDOH.

      3.10  Contractor Financial Liability

            Contractor shall not be financially liable for any services rendered
            to an Enrollee prior to his or her Effective Date of Enrollment in
            the Contractor's plan.

      3.11  Inpatient Hospital Stop-Loss Insurance

            The Contractor must obtain stop-loss coverage for inpatient
            hospital services. A Contractor may elect to purchase stop-loss
            coverage from New York State. In such cases, the Capitation Rates
            paid to the Contractor shall be adjusted to reflect the cost of such
            stop-loss coverage. The cost of such coverage shall be determined by
            SDOH.

            Under NYS stop-loss coverage, if the hospital inpatient expenses
            incurred by the Contractor for an individual Enrollee during any
            calendar year reaches $50,000, the Contractor shall be compensated
            for 80% of the cost of hospital inpatient services in excess of this
            amount up to a maximum of $250,000. Above that amount, the
            Contractor will be compensated for 100% of cost. All compensation
            shall be based on the lower of the Contractor=s negotiated hospital
            rate or Medicaid rates of payment.

            [ ]   The Contractor has elected to have NYS provide stop-loss
                  reinsurance.

            OR

            [x]   Contractor has not elected to have NYS provide stop-loss
                  reinsurance.

                                    SECTION 3
                                 (COMPENSATION)
                                October 1, 2004
                                       3-5

<PAGE>

      3.12  Mental Health and Chemical Dependence Stop-Loss

            a)    The Contractor will be compensated for medically necessary and
                  clinically appropriate Medicaid reimbursable mental health
                  treatment outpatient visits in excess of twenty (20) visits
                  during any calendar year at rates set forth in contracted fee
                  schedules. Any Court Ordered Services for mental health
                  treatment outpatient visits which specify the use of Non-
                  Participating Providers shall be compensated at the Medicaid
                  rate of payment.

            b)    The Contractor will be compensated for medically necessary and
                  clinically appropriate inpatient mental health services and/or
                  Chemical Dependence Inpatient Rehabilitation and Treatment
                  Services as defined in Appendix K in excess of a combined
                  total of thirty (30) days during a calendar year at the lower
                  of the Contractor's negotiated inpatient rate or Medicaid rate
                  of payment.

            c)    Detoxification Services in Article 28 inpatient hospital
                  facilities are subject to the stop-loss provisions specified
                  in Section 3.11 of this Agreement.

      3.13  Enrollment Limitations

            a)    The Contractor may enroll up to the county specific provider
                  network capacity limits determined by SDOH, provided that the
                  Contractor's statewide enrollment does not exceed the MCO's
                  financial capacity as determined annually by SDOH, or more
                  frequently as deemed necessary by SDOH.

            b)    LDSS shall have the right, upon consultation with and notice
                  to the SDOH, to limit, suspend, or terminate enrollment
                  activities by the Contractor and/or enrollment into the
                  Contractor's plan upon ten (10) days written notice to the
                  Contractor. The written notice shall specify the actions
                  contemplated and the reason(s) for such action(s) and shall
                  provide the Contractor with an opportunity to submit
                  additional information that would support the conclusion that
                  limitation, suspension or termination of enrollment activities
                  or enrollment in the Contractor's plan is unnecessary. Nothing
                  in this paragraph limits other remedies available to the LDSS
                  under this Agreement.

            c)    The SDOH shall have the right, upon notice to the LDSS, to
                  limit, suspend or terminate enrollment activities by the
                  Contractor and/or enrollment into the Contractor's plan upon
                  ten (10) days written notice to the Contractor. The written
                  notice shall specify the action(s) contemplated and the

                                    SECTION 3
                                 (COMPENSATION)
                                October 1, 2004
                                       3-6

<PAGE>

                  reason(s) for such action(s) and shall provide the Contractor
                  with an opportunity to submit additional information that
                  would support the conclusion that limitation, suspension or
                  termination of enrollment activities or enrollment in the
                  Contractor's plan is unnecessary. Nothing in this paragraph
                  limits other remedies available to the SDOH or the LDSS under
                  this Agreement.

      3.14  Tracking Visits Provided by Indian Health Clinics

            The SDOH shall monitor all visits provided by tribal or Indian
            health clinics or urban Indian health facilities or centers to
            enrolled Native Americans, so that the SDOH can reconcile payment
            made for those services, should it be deemed necessary to do so.

                                    SECTION 3
                                 (COMPENSATION)
                                October 1, 2004
                                       3-7

<PAGE>

4.    SERVICE AREA

      The Service Area described in Append ix M of this Agreement, which is
      hereby made a part of this Agreement as if set forth fully herein, is the
      specific geographic area within which Eligible Persons must reside to
      enroll in the Contractor's plan.

                                   SECTION 4
                                 (SERVICE AREA)
                                October 1, 2004
                                      4-1

<PAGE>

5.    ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS

      5.1   Eligible Populations

            a)    Except as specified in Section 5.1(b) and 5.3 below, all
                  persons in the following Medicaid-eligible beneficiary
                  categories who reside in the service area shall be eligible
                  for enrollment in the Contractor's plan:

                  i)    Singles/Childless Couples - Cash and Medicaid only

                  ii)   Low Income Families with Children - Cash and Medicaid
                        only

                  iii)  Aid to Families with Dependent Children - Medicaid only

                  iv)   Pregnant women whose net available income is at or below
                        two hundred percent (200%) of the federal poverty level
                        for the applicable household size.

                  v)    Children aged one (1) year or below whose family's net
                        available income is at or below two hundred percent
                        (200%) of the federal poverty level for the applicable
                        household size.

                  vi)   Children between ages one (1) and five (5), whose
                        family's net available income is at or below one hundred
                        and thirty-three percent (133%) of the federal poverty
                        level for the applicable household size.

                  vii)  Children age six (6) up to age nineteen (19), whose
                        family's net available income is at or below one hundred
                        and thirty-three percent (133%) of the federal poverty
                        level for the applicable household size.

                  viii) Transitional Medical Assistance Beneficiaries

                  ix)   Supplemental Security Income (cash) and Supplemental
                        Security Income Related (Medicaid only).

            b)    Medicaid eligible individuals in the following categories may
                  be eligible for enrollment in the Contractors plan at the
                  LDSS' option, as indicated by an X below.

                  i)    Foster care children in the direct care of LDSS.

                        [ ]   Mandatory county - children in LDSS direct care
                              are mandatorily enrolled.

                        [X]   Mandatory OR voluntary county - children in LDSS
                              direct care are enrolled on a case-by-case basis.

                        [ ]   Mandatory OR voluntary county - all foster care
                              children are excluded from managed care.

                                    SECTION 5
                  (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                October 1, 2004
                                       5-1

<PAGE>

                  ii)   Homeless persons living in shelters outside of New York
                        City may be eligible for enrollment if so determined by
                        the LDSS.

                  [ ]   Mandatory county - homeless persons are mandatorily
                        enrolled.

                  [X]   Mandatory OR voluntary county - homeless persons
                        are enrolled on a case-by-case basis.

                  [ ]   Mandatory OR voluntary county - all homeless persons are
                        excluded from managed care.

      5.2   Exempt Populations

            The following populations are exempt from mandatory enrollment in
            Medicaid managed care, but may enroll on a voluntary basis, if
            otherwise eligible.

            a)    Individuals who are HIV+ or have AIDS.

            b)    Individuals who are Seriously and Persistently Mentally III or
                  Seriously Emotionally Disturbed.

            c)    Individuals for whom a Managed Care Provider is not
                  geographically accessible so as to reasonably provide
                  services. To qualify for this exemption, an individual must
                  demonstrate that no participating MCO has a provider located
                  within thirty (30) minutes travel time/thirty (30) miles
                  travel distance from the individual's home, who is accepting
                  new patients, and that there is a fee-for-service Medicaid
                  provider available within the thirty (30) minutes travel
                  time/thirty (30) miles travel distance.

            d)    Pregnant women who are already receiving prenatal care from a
                  provider authorized to provide such care not participating in
                  any Medicaid managed care plan. This status will last through
                  a woman's pregnancy, extend through the sixty (60) day
                  post-partum period and end at the end of the month in which
                  the sixtieth (60th) day occurs.

            e)    Individuals with a chronic medical condition who, for at least
                  six (6) months, have been under active treatment with a
                  non-participating sub-specialist physician who is not a
                  network provider for any MCO participating in the Medicaid
                  managed care program service area. This status will last as
                  long as the individual's chronic medical condition exists or
                  until the physician joins a participating MCO's network. The
                  SDOH's Office of Managed Care, Medical Director will, upon the
                  request of an individual or his/her guardian or legally
                  authorized representative (health care agent authorized
                  through a health care proxy), review cases of individuals with
                  unusually severe chronic care needs for a possible exemption
                  from mandatory enrollment in managed care if such individuals
                  are not otherwise eligible for an exemption (i.e., meet one of
                  the seventeen (17) criteria listed here) The SDOH's OMC
                  Medical Director may also authorize a plan disenrollment for
                  such individuals. Disenrollment requests

                                    SECTION 5
                   (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                October 1, 2004
                                       5-2

<PAGE>

                  should be made in a manner consistent with the overall
                  disenrollment request process for "good cause" disenrollment.

            f)    Individuals with End Stage Rental Disease (ESRD).

            g)    Individuals who are residents of Intermediate Care Facilities
                  for the Mentally Retarded ("ICF/MR").

            h)    Individuals with characteristics and needs similar to those
                  who are residents of ICF/MRs based on criteria cooperatively
                  established by the State Office of Mental Retardation and
                  Developmental Disabilities (OMRDD) and the SDOH.

            i)    Individuals already scheduled for a major surgical procedure
                  (within thirty (30) days of scheduled enrollment) with a
                  provider who is not a participant in the network of a Medicaid
                  MCO under contract with the LDSS. This exemption will only
                  apply until such time as the individual's course of treatment
                  is complete.

            j)    Individuals with a developmental or physical disability who
                  receive services through a Medicaid Home-and Community-Based
                  Services Waiver or Medicaid Model Waiver (care-at-home)
                  through a Section 1915c waiver, or individuals having
                  characteristics and needs similar to such individuals
                  (including individuals on the waiting list), based on criteria
                  cooperatively established by OMRDD and SDOH.

            k)    Individuals who are residents of Alcohol and Substance Abuse
                  or Chemical Dependence Long Term Residential Treatment
                  Programs.

            l)    In New York City, all homeless individuals are exempt. In
                  areas outside of NYC, exemption of homeless individuals
                  residing in the shelter system is at the discretion of the
                  local district. - See Section 5.1 (b).

            m)    Native Americans

            n)    Individuals who cannot be served by a managed care provider
                  due to a language barrier which exists when the individual is
                  not capable of effectively communicating his or her medical
                  needs in English or in a secondary language for which PCPs are
                  available within the Medicaid managed care program.
                  Individuals with a language barrier will be deemed able to be
                  served if they have a choice, within time and distance
                  standards, of three (3) PCPs who are able to communicate in
                  the primary language of the eligible individual or who have a
                  person on his/her staff capable of translating medical
                  terminology. Individuals will be eligible for an exemption
                  when:

                  i)    The individual has a relationship with a Medicaid
                        fee-for-service Primary Care Provider who:

                        A)    has the language capability to serve the
                              individual;

                                   SECTION 5
                   (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                October 1, 2004
                                       5-3

<PAGE>

                        B)    does not participate in any of the Medicaid
                              managed care plans contracted for a service area
                              which includes the individual's residence;

                        C)    is located within a thirty (30) minute/thirty (30)
                              mile radius of the eligible individual's
                              residence;
                                                   AND

                        D)    there are fewer than three (3) participating PCPs
                              available within the thirty (30) minute/thirty
                              (30) mile radius who are able to communicate in
                              the primary language of the eligible individual or
                              who have a person on his/her staff capable of
                              translating medical terminology.

                                                    OR

                  ii)   The individual has a relationship with a Medicaid
                        fee-for-service Primary Care Provider who:

                        A)    has the language capability to service the
                              individual;

                        B)    does not participate in any of the Medicaid
                              managed care plans contracted for a service area
                              which includes the individual's residence;

                        C)    is located outside a thirty (30) minute/thirty
                              (30) mile radius of the eligible individual's
                              residence;

                                                   AND

                        D)    there are fewer than three (3) participating PCPs
                              available within or outside the thirty (30)
                              minute/thirty (30) mile radius who are able to
                              communicate in the primary language of the
                              eligible individual or who have a person on
                              his/her staff capable of translating medical
                              terminology.

            o)    Individuals temporarily residing out of district, (e.g.,
                  college students) will be exempt until the last day of the
                  month in which the purpose of the absence is accomplished. The
                  definition of temporary absence is set forth in Social
                  Services regulations 18 NYCRR Section 360-1.4(p).

            p)    SSI and SSI-related beneficiaries are considered exempt and
                  may enroll on a voluntary basis.

            q)    Individuals with a "County of Fiscal Responsibility" code of
                  98 (OMRDD in MMIS) are exempt in counties where program
                  features are approved by the State and operational at the
                  local district level to permit these individuals to
                  voluntarily enroll in Medicaid managed care.

                  [ ]   State-approved program features are in place and
                        operational at the local district level to permit
                        individuals with a "County of Fiscal Responsibility"
                        code of 98 to voluntarily enroll in Medicaid managed
                        care.

                  OR

                  [X]   State-approved program features are not in place and
                        operational at the local district level, therefore
                        individuals with a "County of Fiscal Responsibility"
                        code of 98 are excluded from enrollment in Medicaid
                        managed care.

                                    SECTION 5
                   (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                October 1, 2004
                                       5-4

<PAGE>

            r)    Individuals who are eligible for Medical Assistance pursuant
                  to the "Medicaid buy-in for the working disabled"
                  (subparagraphs twelve or thirteen of paragraph (a) of
                  subdivision one of Section 366 of the Social Services Law),
                  and who, pursuant to subdivision 12 of Section 367-a of the
                  Social Services Law, are not required to pay a premium.

      5.3   Excluded Populations

            The following populations are ineligible for enrollment in Medicaid
            managed care.

            a)    Individuals who are Dually Eligible for Medicare/Medicaid.

            b)    Individuals who become eligible for Medicaid only after
                  spending down a portion of their income (Spend-down).

            c)    Individuals who are residents of State-operated psychiatric
                  facilities or residents of State-certified or voluntary
                  treatment facilities for children and youth.

            d)    Individuals who are residents of Residential Health Care
                  Facilities ("RHCF") at the time of Enrollment, and Enrollees
                  whose stay in a RHCF is classified as permanent upon entry
                  into the RHCF or is classified as permanent at a time
                  subsequent to entry.

            e)    Individuals enrolled in managed long term care demonstrations
                  authorized under Article 4403-f of the New York State PHL.

            f)    Medicaid-eligible infants living with incarcerated mothers.

            g)    Infants weighing less than 1200 grams at birth and other
                  infants under six (6) months of age who meet the criteria for
                  the SSI or SSI related category (shall not be enrolled or
                  shall be disenrolled retroactive to date of birth).

            h)    Individuals with access to comprehensive private health care
                  coverage including those already enrolled in an MCO. Such
                  health care coverage, purchased either partially or in full,
                  by or on behalf of the individual, must be determined to be
                  cost effective by the local social services district.

            i)    Foster children in the placement of a voluntary agency.

            j)    Certified blind or disabled children living or expected to be
                  living separate and apart from the parent for thirty (3)
                  days or more.

            k)    Individuals expected to be eligible for Medicaid for less than
                  six (6) months, except for pregnant women (e.g., seasonal
                  agricultural workers).

                                    SECTION 5
                  (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                October 1, 2004
                                       5-5

<PAGE>

            l)    Foster children in direct care (unless LDSS opts to enroll
                  them see Section 5.1(b)).

            m)    Youths in the care and custody of the Commissioner of the NYS
                  Office of Children and Family Services.

            n)    Individuals in receipt of long-term care services through Long
                  Term Home Health Care programs, or Child Care Facilities
                  (except ICF services for the Developmentally Disabled).

            o)    Individuals eligible for Medical assistance benefits only with
                  respect to TB related services.

            p)    Individuals placed in State Office of Mental Health licensed
                  family care homes pursuant to NYS Mental Hygiene Law, Section
                  31.03.

            q)    Individuals enrolled in the Restricted Recipient Program.

            r)    Individuals with a "County of Fiscal Responsibility" code of
                  99.

            s)    Individuals admitted to a Hospice program prior to time of
                  enrollment (if an Enrollee enters a Hospice program while
                  enrolled in the Contractor's plan, he/she may remain enrolled
                  in the Contractor's plan to maintain continuity of care with
                  his/her PCP). Hospice services are accessed through the
                  fee-for-service Medicaid Program.

            t)    Individuals with a "County of Fiscal Responsibility" code of
                  97 (OMH in MMIS).

            u)    Individuals with a "County of Fiscal Responsibility" code of
                  98 (OMRDD in MMIS) will be excluded until program features are
                  approved by the State and operational at the local district
                  level to permit these individuals to voluntarily enroll in
                  Medicaid managed care.

            v)    Individuals receiving family planning services pursuant to
                  Section 366(1)(a)(11) of the Social Services Law who are not
                  otherwise eligible for medical assistance and whose net
                  available income is 200% or less of the federal poverty level.

            w)    Individuals who are eligible for Medical Assistance pursuant
                  to the "Medicaid buy-in for the working disable"
                  (subparagraphs twelve or thirteen of paragraph (a) of
                  subdivision one of Section 366 of the Social Services Law),
                  and who, pursuant to subdivision 12 of Section 367-a of the
                  Social Services Law, are required to pay a premium.

            x)    Individuals who are eligible for Medical Assistance pursuant
                  to paragraph (v) of subdivision four of Section 366 of the
                  Social Services Law (persons who are under 65 years of age,
                  have been screened for breast and/or cervical cancer under

                                    SECTION 5
                   (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                October 1, 2004
                                       5-6

<PAGE>

            the Centers for Disease Control and Prevention Breast and Cervical
            Cancer Early Detection Program and need treatment for breast or
            cervical cancer, and are not otherwise covered under creditable
            coverage as defined in the Federal Public Health Service Act).

      5.4   Family Health Plus

            Individuals eligible for Medicaid (Family Health Plus) pursuant to
            Title 11-D of the Social Services Law are not eligible for
            enrollment in Medicaid managed care under this Agreement.

      5.5   Family Enrollment

            In local social service districts where enrollment in managed care
            is mandatory, the Contractor agrees that members of the same family
            (defined as mother and her child(ren), father and his child(ren), a
            husband, wife and child(ren) or a husband and wife residing in the
            same household, or persons included in the same case) will be
            required to enroll in the same health plan, in accordance with
            Section 6.6 of this Agreement.

                                    SECTION 5
                   (ELIGIBLE, EXEMPT AND EXCLUDED POPULATIONS)
                                October 1, 2004
                                      5-7

<PAGE>

6.    ENROLLMENT

      6.1   Enrollment Guidelines

            a)    The LDSS may employ a variety of methods and programs for
                  enrollment of Eligible Persons including, but not limited to
                  enrollment assisted by the Contractor, enrollment assisted by
                  an Enrollment Broker, enrollment by LDSS, or a combination of
                  such. The policies and procedural guidelines which will be
                  used for enrollment are set forth in Appendix H, which is
                  hereby made a part of this Agreement as if set forth fully
                  herein.

            b)    The LDSS and the Contractor agree to conduct enrollment of
                  eligible individuals in accordance with the guidelines set
                  forth in Appendix H.

            c)    The SDOH and LDSS, upon mutual agreement, may make
                  modifications to the guidelines set forth in appendix H. The
                  parties further acknowledge that such modifications shall be
                  effective and made a part of this Agreement without further
                  action by the parties upon sixty (60) days written notice to
                  the LDSS and the Contractor.

      6.2   Equality of Access to Enrollment

            Eligible Person's shall be enrolled in the Contractor's plan, in
            accordance with the requirements set forth in Appendix H, Section
            A. In those instances in which the Contractor is directly involved
            in enrolling eligible recipients, the Contractor shall accept
            enrollments in the order they are received without regard to the
            Eligible Person's age, sex, race, creed, physical or mental
            handicap/developmental disability, national origin, sexual
            orientation, type of illness or condition, need for health services
            or to the Capitation Rate that the Contractor will receive for such
            Eligible Person.

      6.3   Enrollment Decisions

            An Eligible Person's decision to enroll in the Contractor's plan
            shall be voluntary except as otherwise provided in Section 6.4 of
            the Agreement.

      6.4   Auto Assignment

            An Eligible Person whose enrollment in a MCO is mandatory and who
            fails to select a MCO within sixty (60) days of receipt of notice of
            mandatory enrollment may be assigned by the LDSS to the Contractor's
            plan pursuant to NYS Social Services Law Section 364-j and in
            accordance with Appendix H.

                                    SECTION 6
                                  (ENROLLMENT)
                                October 1, 2004
                                       6-1

<PAGE>

      6.5   Prohibition Against Conditions on Enrollment

            Unless otherwise required by law or this Agreement, neither the
            Contractor nor LDSS shall condition any Eligible Person's enrollment
            upon the performance of any act or suggest in any way that failure
            to enroll may result in a loss of Medicaid benefits.

      6.6   Family Enrollment

            a)    In local social service districts where enrollment in managed
                  care is mandatory, all eligible members of the Eligible
                  Person's Family shall be enrolled into the same plan.

            b)    In local social service districts where enrollment in managed
                  care is mandatory, the LDSS must inform Enrollees who have
                  Family members enrolled in other MCOs that if anyone in the
                  Family wishes to change plans, all members of the Family must
                  enroll together in the newly-selected plan. The LDSS shall
                  also notify the Enrollee that all members of the Family will
                  be required to enroll together in a single MCO at the time of
                  their next recertification for Medicaid eligibility unless
                  waiver of this requirement is approved by the LDSS.

            c)    Notwithstanding the foregoing,

                  i)    the LDSS may, on a case-by-case basis, waive the same
                        family rule specified in Sections 6.6 (a) and (b) to
                        preserve continuity of care:

                        1)    if one or more members of the Family are receiving
                              prenatal care and/or continuing care for a complex
                              chronic medical condition from Non-Participating
                              Providers; or

                        2)    if one or more members of the Family transition
                              from one government-sponsored insurance program
                              to another.

                  ii)   the LDSS must allow HIV SNP-eligible individuals within
                        a family to enroll in an HIV SNP, in Service Areas in
                        which an HIV SNP exists.

      6.7   Newborn Enrollment

            a)    All newborn children not in an excluded category shall be
                  enrolled in the MCO of the mother, effective from the first
                  day of the child's month of birth.

                                    SECTION 6
                                  (ENROLLMENT)
                                October 1, 2004
                                       6-2

<PAGE>

            b)    In addition to the responsibilities set forth in Appendix H,
                  the Contractor is responsible for doing all of the following
                  with respect to newborns:

                  i)    Coordinating with the LDSS the efforts to ensure that
                        all newborns are enrolled in the managed care plan;

                  ii)   Issuing a letter informing parent(s) about newborn
                        child's enrollment or a member identification card
                        within 14 days of the date on which the Contractor
                        becomes aware of the birth;

                  iii)  Assuring that enrolled pregnant women select a PCP for
                        an infant prior to birth and the mother to make an
                        appointment with the PCP immediately upon birth; and

                  iv)   Ensuring that the newborn is linked with a PCP prior to
                        discharge from the hospital, in those instances in which
                        the Contractor has received appropriate notification of
                        the birth prior to discharge.

            c)    The LDSS shall be responsible for ensuring that timely
                  Medicaid Eligibility determination and enrollment of the
                  newborns is effected consistent with state laws, regulations,
                  and policy and with the newborn enrollment guidelines set
                  forth in Appendix H, Section B of this Agreement.

      6.8   Effective Date of Enrollment

            a)    The Contractor and the LDSS must notify the Enrollee of the
                  expected Effective Date of Enrollment. This may be
                  accomplished through a "Welcome Letter". To the extent
                  practicable, such notification must precede the Effective Date
                  of Enrollment. In the event that the actual Effective Date of
                  Enrollment changes, the Contractor and the LDSS must notify
                  the Enrollee of the change.

            b)    As of the Effective Date of Enrollment, and until the
                  Effective Date of Disenrollment from the Contractor's plan,
                  the Contractor shall be responsible for the provision and cost
                  of all care and services covered by the Benefit Package and
                  provided to Enrollees whose names appear on the Prepaid
                  Capitation Plan Roster, except as hereinafter provided.

                  i)    Contractor shall not be liable for the cost of any
                        services rendered to an Enrollee prior to his or her
                        Effective Date of Enrollment.

                  ii)   Contractor shall not be liable for any part of the cost
                        of a hospital stay for an Enrollee who is admitted to
                        the hospital prior to the Effective Date of Enrollment
                        in the Contractor's plan and who remains hospitalized on
                        the Effective Date of Enrollment; except when the
                        Enrollee, on or after the Effective Date of Enrollment,
                        1) is transferred from one hospital to another; or 2)
                        is discharged from one unit in the hospital to another
                        unit in the same facility and under Medicaid fee for
                        service payment rules the method of payment changes
                        from: a) DRG

                                    SECTION 6
                                  (ENROLLMENT)
                                October 1, 2004
                                       6-3

<PAGE>

                        case-based rate of payment per discharge to a per diem
                        rate of payment exempt from DRG case-based payment
                        rates, or b) from a per diem payment rate exempt from
                        DRG case-based payment rates either to another per diem
                        rate, or a DRG case-based payment rate. In such
                        instances, the Contractor shall be liable for the cost
                        of the consecutive stay.

                  iii)  Except for newborns, an Enrollee's Effective Date of
                        Enrollment shall be the first day of the month on which
                        the Enrollee's name appears on the PCP roster for that
                        month.

      6.9   Roster

            a)    The first and second monthly Rosters generated by SDOH in
                  combination shall serve as the official Contractor enrollment
                  list for purposes of MMIS premium billing and payment, subject
                  to ongoing eligibility of the Enrollees as of the first ( 1st)
                  day of the enrollment month. Modifications to the first (1st)
                  Roster may be made electronically or in writing by the LDSS or
                  the Enrollment Broker prior to the end of the month in which
                  the Roster is generated.

            b)    The LDSS shall make data on eligibility determinations
                  available to the Contractor and SDOH to resolve discrepancies
                  that may arise between the Roster and the Contractor's
                  enrollment files in accordance with the provisions in Appendix
                  H, Section D.

            c)    If LDSS or Enrollment Broker notifies the Contractor in
                  writing or electronically of changes; in the first (1st)
                  Roster and provides supporting information as necessary prior
                  to the effective date of the Roster, the Contractor will
                  accept that notification in the same manner as the Roster.

            d)    All Contractors must have the ability to receive these Rosters
                  electronically.

      6.10  Automatic Re-Enrollment

            The Contractor agrees that Eligible Persons who are disenrolled from
            the Contractor's plan due to loss of Medicaid eligibility and who
            regain eligibility within three (3) months will automatically be
            prospectively re-enrolled with the Contractor's plan, subject to
            availability of enrollment capacity in the plan.

                                    SECTION 6
                                  (ENROLLMENT)
                                October 1, 2004
                                       6-4

<PAGE>

7.    LOCK-IN PROVISIONS

      7.1   Lock-In Provisions in Voluntary Counties

            All Enrollees in local social service districts where enrollment in
            managed care is voluntary shall be subject to a Lock-In Period under
            this Agreement if so required by the LDSS as indicated by an x
            below:

            [ ]   Enrollees are subject to a twelve (12) month Lock-In Period
                  following the Effective Date of Enrollment in the Contractor's
                  plan with an initial ninety (90) day grace period to disenroll
                  from the Contractor's plan without cause.

            [X]   Enrollees are not subject to a Lock-In Period.

      7.2   Lock-In Provisions in Mandatory Counties and New York City

            All Enrollees in local social service districts where enrollment in
            managed care is mandatory and in New York City are subject to a
            twelve (12) month Lock-In period following the Effective Date of
            Enrollment in the Contractor's plan, with an initial ninety (90) day
            grace period in which to disenroll from the Contractor's plan
            without cause, regardless of whether the Enrollee selected or was
            auto-assigned to the Contractor's plan.

      7.3   Disenrollment During Lock-In Period

            An Enrollee, subject to Lock-In, may disenroll from the Contractor's
            plan during the Lock-In period for "good cause" as established in
            18 NYCRR Subpart 360-10 or, if the Enrollee becomes eligible for an
            exemption or exclusion from Medicaid managed care as set forth in
            Sections 5.2 and 5.3 of this Agreement.

      7.4   Notification Regarding Lock-In and End of Lock-In Period

            LDSS, either directly or through the Enrollment Broker, shall notify
            Enrollees of their right to change MCOs in the enrollment
            confirmation notice sent to individuals after they have selected a
            MCO or been auto-assigned (the latter being applicable to areas
            where the mandatory program is in effect). LDSS and the Enrollment
            Broker will be responsible for providing a notice of end of Lock-In
            and the right to change MCOs at least sixty (60) days prior to the
            first plan enrollment anniversary date.

                                    SECTION 7
                              (LOCK-IN PROVISIONS)
                                October 1, 2004
                                       7-1

<PAGE>

8.    DISENROLLMENT

      8.1   Disenrollment Guidelines

            a)    Disenrollment of an Enrollee from the Contractor's Plan may be
                  initiated by the Enrollee, LDSS or the Contractor under the
                  conditions specified in Sections 8.4, 8.7, 8.8 and 8.9 and as
                  detailed in Appendix H, Section E and F of this Agreement.

            b)    The LDSS and the Contractor agree to conduct disenrollment in
                  accordance with the guidelines set forth in Appendix H,
                  Section E and F of this Agreement.

            c)    The SDOH and LDSS, upon mutual agreement, may modify Appendix
                  H of this Agreement upon sixty (60) days prior written notice
                  to the Contractor and such modifications shall become binding
                  and incorporated into this Agreement without further action by
                  the parties.

            d)    LDSS shall make the final determination concerning
                  disenrollment.

      8.2   Disenrollment Prohibitions

            Disenrollment shall not be based in whole or in part on any of the
            following reasons:

            a)    an existing condition or a change in the Enrollee's health
                  which would necessitate disenrollment pursuant to the terms of
                  this Agreement, unless the change

                  i)    results in the Enrollee being reclassified into an
                        excluded category for Medicaid managed care as listed in
                        Section 5.3 of this Agreement;

                  ii)   results in the Enrollee being reclassified into an
                        exempt category as listed in Section 5.2 of this
                        Agreement and the Enrollee wants to disenroll from
                        managed care.

            b)    any of the factors listed in Section 34 - Non-Discrimination
                  of this Agreement; or

            c)    on the Capitation Rate payable to the Contractor related to
                  the Enrollee's participation with the Contractor.

                                    SECTION 8
                                 (DISENROLLMENT)
                                 October 1, 2004
                                       8-1

<PAGE>

      8.3   Reasons for Voluntary Disenrollment

            The LDSS or the Contractor, as agreed upon between the LDSS and
            Contractor, shall provide Enrollees who disenroll voluntarily with
            an opportunity to identify, in writing, their reason(s) for
            disenrollment.

      8.4   Processing of Disenrollment Requests

            a)    Routine Disenrollment

                  Unless otherwise specified in Appendix H, Section F
                  disenrollment requests will be processed to take effect on the
                  first (1st) day of the next month if the request is made
                  before the date specified in Appendix H. In no event shall the
                  Effective Date of Disenrollment be later than the first (1st)
                  day of the second 2nd) month after the month in which an
                  Enrollee requests a disenrollment

            b)    Expedited Disenrollment

                  i)    Enrollees with an urgent medical need to disenroll from
                        the Contractor's plan may request an expedited
                        disenrollment by the LDSS. Substantiation of the request
                        by the LDSS will result in an expedited disenrollment in
                        accordance with the guidelines and timeframes as set
                        forth in Appendix H. Individuals who are to be
                        disenrolled from managed care based on their HIV, ESRD
                        or SPMI/SED status are categorically eligible for an
                        expedited disenrollment on the basis of urgent medical
                        need.

                  ii)   Enrollees may request an expedited disenrollment by the
                        LDSS based on a complaint of Non-consensual Enrollment.
                        Substantiation of such a request by the LDSS shall
                        result in an expedited disenrollment retroactive to the
                        first day of the month of enrollment.

                  iii)  In New York City and other districts where homeless
                        individuals are exempt, homeless Enrollees residing in
                        the shelter system may request an expected disenrollment
                        by the LDSS. Substantiation of such a request by the
                        LDSS will result in an expedited disenrollment in
                        accordance with the guidelines and timeframes as set
                        forth in Appendix H.

            c)    Retroactive Disenrollment

                  i)    Retroactive disenrollments may be warranted in rare
                        instances and include when an individual is enrolled or
                        autoassigned while meeting exclusion criteria or when an
                        Enrollee enters or stays in a residential institution
                        under circumstances which render the

                                    SECTION 8
                                 (DISENROLLMENT)
                                October 1, 2004
                                       8-2

<PAGE>

                        individual excluded from managed care; is incarcerated;
                        is an SSI infant less than six months of age; or dies -
                        as long as the Contractor was not at risk for provision
                        of Benefit Package services for any portion of the
                        retroactive period.

      8.5   Contractor Notification of Disenrollments

            a)    Notwithstanding anything herein to the contrary, the Roster,
                  along with any changes sent by the LDSS to the Contractor in
                  writing or electronically, shall serve as official notice to
                  the Contractor of disenrollment of an Enrollee. In cases of
                  expedited and retroactive disenrollment, the Contractor shall
                  be notified of the Enrollee's effective date of disenrollment
                  by the LDSS.

            b)    In the event that the LDSS intends to retroactively disenroll
                  an Enrollee on a date prior to the first day of the month of
                  the disenrollment request, the LDSS shall consult with the
                  Contractor prior to disenrollment. Such consultation shall not
                  be required for the retroactive disenrollment of SSI infants
                  or in cases where it is clear that the Contractor was not a
                  risk for the provision of Benefit Package services for any
                  portion of the retroactive period.

            c)    In all cases of retroactive disenrollment, including
                  disenrollments effective the first day of the current month,
                  the LDSS must notice the plan at the time of disenrollment, of
                  the Contractor's responsibility to submit to the SDOH's Fiscal
                  Agent voided premium claims for any months of retroactive
                  disenrollment where the Contract was not at risk for the
                  provision of Benefit Package services during the month.

      8.6   Contractor's Liability

            a)    The Contractor is not responsible for providing the Benefit
                  Package under this Agreement after the Effective Date of
                  Disenrollment except as hereinafter provided:

                  i) The Contractor shall be liable for any part of the cost of
                  a hospital stay for an Enrollee who is admitted to the
                  hospital prior to the Effective Date of Disenrollment in the
                  Contractor's plan and who remains hospitalized on the
                  Effective Date of Disenrollment; except when the Enrollee, on
                  or after the Effective Date of Disenrollment, 1) is
                  transferred from one hospital to another; or 2) is discharged
                  from one unit in the hospital to another unit in the same
                  facility and under Medicaid fee for service payment rules, the
                  method of payment changes from: a) DRG case-based rate of
                  payment per discharge to a per diem rate of payment exempt
                  from DRG case-based payment rates, or b) from a per diem
                  payment rate exempt from DRG case-based payment rates to
                  either another per diem rate, or a DRG case-based

                                    SECTION 8
                                 (DISENROLLMENT)
                                October 1, 2004
                                      8-3
<PAGE>

                  payment rate. In such instances, the Contractor shall not be
                  liable for the cost of the consecutive stay. For the purposes
                  of this Section, "hospital stay" does not include a stay in a
                  hospital that is a) certified by Medicare as a long-term care
                  hospital and b) has an average length of stay for all patients
                  greater than ninety-five (95) days as reported in the
                  Statewide Planning and Research Cooperative System (SPARCS)
                  Annual Report 2002; in such instances, Contractor liability
                  will cease on the Effective Date of Disenrollment.

            b)    The Contractor shall notify the LDSS that the Enrollee remains
                  in the hospital and provide the LDSS with information
                  regarding his or her medical status. The Contractor is
                  required to cooperate with the Enrollee and the new MCO (if
                  applicable) on a timely basis to ensure a smooth transition
                  and continuity of care.

      8.7   Enrollee Initiated Disenrollment

            a)    Disenrollment For Good Cause

                  i)    An Enrollee subject to Lock-In may initiate
                        disenrollment from the Contractor's plan for "good
                        cause" as defined in 18 NYCRR Section 360-10 at any time
                        during the Lock-In period and may disenroll for any
                        reason at any time after the twelfth (12th) month
                        following the Effective Date of Enrollment.

                  ii)   An Enrollee subject to Lock-In may initiate
                        disenrollment for "good cause" by filing a written
                        request with the LDSS or the Contractor. The Contractor
                        must notify the LDSS of the request. The LDSS must
                        respond with a determination within thirty (30) days
                        after receipt of the request. The Contractor must
                        respond timely to LDSS inquiries regarding "good cause"
                        disenrollment requests to enable the LDSS to make a
                        determination within 30 days of the receipt of the
                        request from the Enrollee.

                  iii)  Enrollees granted disenrollment for "good cause" in a
                        voluntary county may join another plan, if one is
                        available, or participate in Medicaid Fee-for-service
                        program. In mandatory counties, unless the Enrollee
                        becomes exempt or excluded, he/she may be required to
                        enroll with another MCO.

                  iv)   In the event that the LDSS denies an Enrollee's request
                        for disenrollment for "good cause", the LDSS must inform
                        the Enrollee of the denial of the request with a written
                        notice which explains the reason for the denial, states
                        the facts upon which denial is based, cites the
                        statutory and regulatory authority and advises the
                        recipient of his or her right to a fair hearing pursuant
                        to 18 NYCRR Part 358. In the event that the Enrollee's
                        request to disenroll is approved, the notice must state
                        the Effective Date of Disenrollment.

                                    SECTION 8
                                 (DISENROLLMENT)
                                October 1, 2004
                                      8-4
<PAGE>

                  v)    Once the Lock-In Period has expired, an Enrollee may
                        disenroll from the Contractor's plan at any time, for
                        any reason.

      8.8   Contractor Initiated Disenrollment

            a)    The Contractor may initiate an involuntary disenrollment if
                  the Enrollee engages in conduct or behavior that seriously
                  impairs the Contractor's ability to furnish services to either
                  the Enrollee or other Enrollees, provided that the Contractor
                  has made and documented reasonable efforts to resolve the
                  problems presented by the Enrollee.

            b)    Consistent with 42 CFR 438.56 (b), the Contractor may not
                  request disenrollment because of an adverse change in the
                  Enrollee's health status, or because of the Enrollee's
                  utilization of medical services, diminished mental capacity,
                  or uncooperative or disruptive behavior resulting from the
                  Enrollee's special needs (except where continued enrollment in
                  the Contractor's plan seriously impairs the Contractor's
                  ability to furnish services to either the Enrollee or other
                  Enrollees).

            c)    The Contractor must make a reasonable effort to identify for
                  the Enrollee, both verbally and in writing, those actions of
                  the Enrollee that have interfered with the effective provision
                  of covered services as well as explain what actions or
                  procedures are acceptable.

            d)    The Contractor shall give prior verbal and written notice to
                  the Enrollee, with a copy to the LDSS, of its intent to
                  request disenrollment. The written notice shall advise the
                  Enrollee that the request has been forwarded to the LDSS for
                  review and approval. The written notice must include the
                  mailing address and telephone number of the LDSS.

            e)    The Contractor shall keep the LDSS informed of decisions
                  related to all complaints filed by an Enrollee as a result of,
                  or subsequent to, the notice of intent to disenroll.

            f)    The LDSS will review each Contractor initiated disenrollment
                  request in accordance with the provisions of this Section.
                  Where applicable, the LDSS may consult with local mental
                  health and substance abuse authorities in the district when
                  making the determination to approve or disapprove a Contractor
                  initiated disenrollment request.

            g)    The LDSS will render a decision within fifteen (15) days of
                  receipt of the fully documented request for disenrollment.
                  Final written determination will be provided to the Enrollee
                  and the Contractor. If the LDSS determination upholds the
                  Contractor's request to disenroll, the LDSS's written
                  determination must inform the Enrollee of the Effective Date
                  of Disenrollment and include a notice of rights to a fair
                  hearing. Should an

                                    SECTION 8
                                 (DISENROLLMENT)
                                October 1, 2004
                                      8-5
<PAGE>

                  Enrollee request a fair hearing as a result of the LDSS
                  determination, the LDSS shall inform the Contractor of the
                  fair hearing request and the Enrollee will remain enrolled in
                  the Contractor's plan until disposition of the fair hearing.

            h)    Once an Enrollee has been disenrolled at the Contractor's
                  request, he/she will not be re-enrolled with the Contractor's
                  plan unless the Contractor first agrees to such re-enrollment.

      8.9   LDSS Initiated Disenrollment

            a)    LDSS will promptly initiate disenrollment when:

                  i)    an Enrollee is no longer eligible for any Medicaid
                        benefits; or

                  ii)   the Guaranteed Eligibility period ends (See Section 9)
                        and an Enrollee is no longer eligible for any Medicaid
                        benefits; or

                  iii)  an Enrollee is no longer the financial responsibility of
                        the LDSS; or

                  iv)   an Enrollee becomes ineligible for enrollment pursuant
                        to Section 5.3 of this Agreement, as appropriate; or

                  v)    an Enrollee resides outside the Service Area covered by
                        this Agreement, unless Contractor can demonstrate that
                        the Enrollee has made an informed choice to continue
                        enrollment with Contractor and that Enrollee will have
                        sufficient access to Contractor's provider network.

                                    SECTION 8
                                 (DISENROLLMENT)
                                October 1, 2004
                                      8-6
<PAGE>

9.    GUARANTEED ELIGIBILITY

      Except as may otherwise be required by law:

      9.1   New Enrollees, other than those identified in Sections 9.2 who would
            otherwise lose Medicaid eligibility during the first six (6) months
            of enrollment will retain the right to remain enrolled in the
            Contractor's plan under this Agreement for a period of six (6)
            months from their Effective Date of Enrollment.

      9.2   Guaranteed eligibility is not available to Enrollees who lose
            Medicaid eligibility for one of the following reasons:

            a)    death, moving out of State, or incarceration;

            b)    being a woman with a net a available income in excess of
                  medically necessary income but at or below 200% of the federal
                  poverty level who is only eligible for Medicaid while she is
                  pregnant and then through the end of the month in which the
                  sixtieth (60th) day following the end of the pregnancy occurs.

      9.3   If, during the first six (6) months of enrollment in the
            Contractor's plan, an Enrollee becomes eligible for Medicaid only as
            a spend-down, the Enrollee will be eligible to remain enrolled in
            the Contractor's plan for the remainder of the six (6) month
            guarantee period. During the six (6) month guarantee period, an
            Enrollee eligible for spend-down and in need of wraparound services
            has the option of spending down to gain full Medicaid eligibility
            for the wraparound services. In this situation, the LDSS will
            monitor the Enrollee's need for wrap around services and manually
            set coverage codes as a appropriate.

      9.4   The services covered during the Guaranteed Eligibility period shall
            be those contained in the Benefit Package, as specified in Appendix
            K, including free access to family planning services as set forth in
            Section 10.12 of this Agreement. During the Guaranteed Eligibility
            period Enrollees are also eligible for pharmacy services on a
            Medicaid fee-for-service basis.

      9.5   An Enrollee-initiated disenrollment from the Contractor's plan
            terminates the Guaranteed Eligibility period.

      9.6   Enrollees who lose and regain Medicaid eligibility within a three
            (3) month period will not be entitled to a new period of six (6)
            months Guaranteed Eligibility.

      9.7   During the guarantee period, an Enrollee may not change health
            plans. An Enrollee may choose to disenroll from the Contractor's
            Plan during the guarantee period but is not eligible to enroll in
            any other MCO because he/she has lost eligibility for Medicaid.

                                    SECTION 9
                            (GUARANTEED ELIGIBILITY)
                                 October 1, 2004
                                       9-1

<PAGE>

10.   BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES

      10.1  Contractor Responsibilities

            Contractor must provide all services set forth in the Benefit
            Package (Appendix K) that are covered under the Medicaid fee for
            service program except for services specifically excluded by the
            contract, or enacted or affected by Federal or State Law during the
            period of this agreement. SDOH and LDSS shall assure the continued
            availability and accessibility of Medicaid services not covered in
            the Benefit Package.

      10.2  Compliance with State Medicaid Plan and Applicable Laws

            Benefit Package services provided by the Contractor under this
            Agreement shall comply with all standards of the State Medicaid Plan
            established pursuant to Section 363-a of the State Social Services
            Law and shall satisfy all applicable requirements of the State
            Public Health and Social Services Laws.

      10.3  Definitions

            Benefit Package and Non-Covered Service definitions agreed to by the
            Contractor and the LDSS are contained in Appendix K, which is hereby
            made a part of this contract as if set forth fully herein.

      10.4  Provision of Services Through Participating and Non-Participating
            Providers

            With the exception of Emergency services described in Section 10.14
            of this Agreement, Family Planning Services described in Section
            10.11 of this Agreement, and services for which Enrollees can self
            refer as described in Section 10.16 of this Agreement, the Benefit
            Package must be provided and authorized by the Contractor through
            Provider Agreements with Participating Providers, as specified in
            Section 22 of this Agreement. A plan may also arrange for specialty
            or other services for Enrollees with Non-Participating Providers, in
            accordance with Section 21.1(b) of this Agreement.

      10.5  Child Teen Health Program/Adolescent Preventive Services

            a)    The Contractor and its Participating Providers are required to
                  provide the Child Teen Health Program C/THP services outlined
                  in Appendix K (Benefit Package) and comply with applicable
                  EPSDT requirements specified in 42 CFR, Part 441, sub-part B,
                  18NYCRR, Part 508 and the New York State Department of Health
                  C/THP manual. The Contractor and its Participating Providers
                  are required to provide C/THP services to Medicaid Enrollees
                  under 21 years of age when:

                                   SECTION 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 2004
                                      10-1

<PAGE>

                  i)    The care or services are essential to prevent, diagnose,
                        prevent the worsening of, alleviate or ameliorate the
                        effects of an illness, injury, disability, disorder or
                        condition.

                  ii)   The care or services are essential to the overall
                        physical, cognitive and mental growth and developmental
                        needs of the child.

                  iii)  The care or service will assist the individual to
                        achieve or maintain maximum functional capacity in
                        performing daily activities, taking into account both
                        the functional capacity of the individual and those
                        functional capacities that are appropriate for
                        individuals of the same age.

            The Contractor shall base its determination on medical and other
            relevant information provided by the Enrollee's PCP, other health
            care providers, school, local social services, and/or local public
            health officials that have evaluated the child.

            b)    The Contractor and its Participating Providers must comply
                  with the C/THP program standards and must do at least the
                  following with respect to all Enrollees under age 21:

                  i)    Educate pregnant women and families with under age 21
                        Enrollees about the program and its importance to a
                        child's or adolescent's health.

                  ii)   Educate network providers about the program and their
                        responsibilities under it.

                  iii)  Conduct outreach, including by mail, telephone, and
                        through home visits (where appropriate), to ensure
                        children are kept current with respect to their
                        periodicity schedules.

                  iv)   Schedule appointments for children and adolescents
                        pursuant to the periodicity schedule, assist with
                        referrals, and conduct follow-up with children and
                        adolescents who miss or cancel appointments.

                  v)    Ensure that all appropriate diagnostic and treatment
                        services, including specialist referrals, are furnished
                        pursuant to findings from a C/THP screen.

                  vi)   Achieve and maintain an acceptable compliance rate for
                        screening schedules during the contract period.

            c)    In addition to C/THP requirements, the Contractor and its
                  Participating Providers are required to comply with the
                  American Medical Association's Guidelines for Adolescent
                  Preventive Services which require annual well adolescent
                  preventive visits which focus on health guidance,
                  immunizations, and screening for physical, emotional, and
                  behavioral conditions.

      10.6  Foster Care Children

            The Contractor shall comply with the health requirements for foster
            children specified in 18 NYCRR Section 441.22 and Part 507 and any
            subsequent amendments thereto. These requirements include thirty
            (30) day obligations for

                                   SECTION 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 2004
                                      10-2

<PAGE>

            a comprehensive physical and behavioral health assessment and
            assessment of the risk that the child may be HIV+ and should be
            tested.

      10.7  Child Protective Services

            The Contractor shall comply with the requirements specified for
            child protective examinations, provision of medical information to
            the child protective services investigation and court ordered
            services as specified in 18 NYCRR Section 432, and any subsequent
            amendments thereto. Medically necessary services, whether provided
            in or out of plan, must be provided. Out of plan providers will be
            reimbursed at the Medicaid fee schedule by the Contractor.

      10.8  Welfare Reform

            a)    The LDSS must determine whether each public assistance or
                  combined public assistance/Medicaid applicant is incapacitated
                  or can participate in work activities. As part of this work
                  determination process, the LDSS may require medical
                  documentation and/or an initial mental and/or physical
                  examination to determine whether an individual has a mental or
                  physical impairment that limits his/her ability to engage in
                  work (12 NYCRR Section 1300.2(d)(13)(i)). The LDSS may not
                  require the Contractor to provide the initial district
                  mandated or requested medical examination necessary for an
                  Enrollee to meet welfare reform work participation
                  requirements.

            b)    The Contractor shall require that its Participating Providers,
                  upon Enrollee consent, provide medical documentation and
                  health, mental health and chemical dependence assessments as
                  follows:

                  i)    Within ten (10) days of a request of an Enrollee or a
                        former Enrollee, currently receiving public assistance
                        or who is applying for public assistance, the Enrollee's
                        or former Enrollee's PCP or specialist provider, as
                        appropriate, shall provide medical documentation
                        concerning the Enrollee or former Enrollee's health or
                        mental health status to the LDSS or to the LDSS'
                        designee. Medical documentation includes but is not
                        limited to drug prescriptions and reports from the
                        Enrollee's PCP or specialist provider. The Contractor
                        shall include the foregoing as a responsibility of the
                        PCP and specialist provider in its provider contracts or
                        in their provider manuals.

                  ii)   Within ten (10) days of a request of an Enrollee, who
                        has already undergone, or is scheduled to undergo, an
                        initial LDSS required mental and/or physical
                        examination, the Enrollee's PCP shall provide a health,
                        or mental health and/or chemical dependence assessment,
                        examination or other services as appropriate to identify
                        or quantify an Enrollee's level of incapacitation. Such
                        assessment must contain a specific diagnosis resulting
                        from any medically appropriate tests and specify any
                        work

                                   SECTION 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 2004
                                      10-3

<PAGE>

                        limitations. The LDSS, may, upon written notice to the
                        Contractor, specify the format and instructions for such
                        an assessment.

            c)    The Contractor shall designate a Welfare Reform liaison who
                  shall work with the LDSS or its designee to (1) ensure that
                  Enrollees receive timely access to assessments and services
                  specified in this Agreement and (2) ensure completion of
                  reports containing medical documentation required by the LDSS.

            d)    The Contractor will continue to be responsible for the
                  provision and payment of Chemical Dependence Services in the
                  Benefit Package for Enrollees mandated by the LDSS under
                  Welfare Reform if such services are already underway and the
                  LDSS is satisfied with the level of care and services.

            e)    The Contractor is not responsible for the provision and
                  payment of Chemical Dependence Inpatient Rehabilitation and
                  Treatment Services for Enrollees mandated by the LDSS as a
                  condition of eligibility for Public Assistance or Medicaid
                  under Welfare Reform (as indicated by Code 83) unless such
                  services are already under way as described in (c) above.

            f)    The Contractor is not responsible for the provision and
                  payment of Medically Supervised Inpatient and Outpatient
                  Withdrawal Services for Enrollees mandated by the LDSS under
                  Welfare Reform (as indicated by Code 83) unless such services
                  are already under way as described in (c) above.

            g)    The Contractor is responsible for the provision and payment of
                  Medically Managed Detoxification Services ordered by the LDSS
                  under Welfare Reform.

            h)    The Contractor is responsible for the provisions of Sections
                  10.10, 10.16 (a) and 10.24 of this Agreement for Enrollees
                  requiring LDSS mandated Chemical Dependence Services.

      10.9  Adult Protective Services

            The Contractor shall cooperate with LDSS in the implementation of 18
            NYCRR Part 457 and any subsequent amendments thereto with regard to
            medically necessary health and mental health services and all Court
            Ordered Services for adults. These services are to be provided in or
            out of plan. Out of plan providers will be reimbursed at the
            Medicaid fee schedule.

      10.10 Court-Ordered Services

            a)    The Contractor shall provide any Benefit Package services to
                  Enrollees as ordered by a court of competent jurisdiction,
                  regardless of whether such services are provided by
                  Participating Providers within the plan or by a

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                  Non-Participating Provider in compliance with such court
                  order. The Non-Participating Provider shall be reimbursed by
                  the Contractor at the Medicaid fee schedule. The Contractor is
                  responsible for court-ordered services to the extent that such
                  court-ordered services are covered by and reimbursable by
                  Medicaid.

            b)    Court Ordered Services are those services ordered by the court
                  performed by, or under the supervision of a physician,
                  dentist, or other provider qualified under State Law to
                  furnish medical, dental, behavioral health (including mental
                  health and/or Chemical Dependence), or other Medicaid covered
                  services. The Contractor is responsible for payment of those
                  Medicaid services as covered by the Benefit Package, even when
                  the providers are not in the Contractor's provider network.

      10.11 Family Planning and Reproductive Health Services

            a)    Nothing in this Agreement shall restrict the right of
                  Enrollees to receive Family Planning and Reproductive Health
                  Services from any qualified Medicaid provider, regardless of
                  whether the provider is a participating provider or a
                  non-participating provider, without referral from the
                  Enrollee's PCP and without approval from the Contractor.

            b)    The Contractor agrees to permit Enrollees to exercise their
                  right to obtain Family Planning and Reproductive Health
                  Services as defined in Part C-l of Appendix C, which is hereby
                  made a part of this contract as if set forth fully herein,
                  from either the Contractor, if family planning is a part of
                  the Contractor's Benefit Package, or from any appropriate
                  Medicaid enrolled Non-Participating Family Planning Provider
                  without a referral from the Enrollee's PCP and without
                  approval by the Contractor.

            c)    The Contractor agrees to permit Enrollees to obtain pre and
                  post-test HIV counseling and blood testing when performed as
                  part of a Family Planning encounter from the Contractor, if
                  Family Planning is a part of the Contractor's Benefit Package,
                  or from any appropriate Medicaid enrolled Non-Participating
                  family planning Provider without a referral from the
                  Enrollee's PCP and without approval by the Contractor.

            d)    The Contractor will inform Enrollees about the availability of
                  in-plan HIV counseling and testing services, out-of-plan HIV
                  counseling and testing services when performed as part of a
                  Family Planning encounter and anonymous counseling and testing
                  services available from SDOH, Local Public Health Agency
                  clinics and other county programs. Counseling and testing
                  rendered outside of a Family Planning encounter, as well as
                  services provided as the result of an HIV+ diagnosis, will be
                  furnished by the Contractor in accordance with standards of
                  care.

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            e)    Contractor must comply with federal, state, and local laws,
                  regulations and policies regarding informed consent and
                  confidentiality. Providers who are employed by the Contractor
                  may share patient information with appropriate Contractor
                  personnel for the purposes of claims payment, utilization
                  review and quality assurance. Providers who have a contract
                  with the Contractor, with an appropriate consent, may share
                  patient information with the Contractor for purposes of claims
                  payment, utilization review and quality assurance. Contractor
                  must ensure that an individual's use of family planning
                  services remains confidential and is not disclosed to family
                  members or other unauthorized parties.

            f)    Contractor must inform its practitioners and administrative
                  personnel about policies concerning free access to family
                  planning services, HIV counseling and testing, reimbursement,
                  enrollee education and confidentiality. Contractor must inform
                  its providers that they must comply with professional medical
                  standards of practice, the Contractor's practice guidelines,
                  and all applicable federal, state, and local laws. These
                  include but are not limited to, standards established by the
                  American College of Obstetricians and Gynecologists, the
                  American Academy of Family Physicians, the U.S. Task Force on
                  Preventive Services and the New York State Child/ Teen Health
                  Program. These standards and laws indicate that family
                  planning counseling is an integral part of primary and
                  preventive care.

            g)    The Contractor agrees that if Family Planning is part of the
                  Contractor's Benefit Package, the Contractor will be charged
                  for the services of out of network providers at the applicable
                  Medicaid rate or fee. In such instances, out of network
                  providers will bill Medicaid and the SDOH will issue a
                  confidential charge back to the Contractor. Such charge back
                  mechanism will comply with all applicable patient
                  confidentiality requirements.

            h)    If Contractor includes family planning and reproductive health
                  services in its benefits package, the Contractor shall comply
                  with the requirements for informing Enrollees about family
                  planning and reproductive health services set forth in Part
                  C-2 of Appendix C, which is hereby made a part of this
                  contract as if set forth herein.

            i)    If Contractor does not include family planning and
                  reproductive health services in its Benefit Package, within
                  ninety (90) days of signing this Agreement, Contractor must
                  submit to the SDOH and LDSS a statement of the policy and
                  procedure that the Contractor will use to ensure that its
                  Enrollees are fully informed of their rights to access a full
                  range of family planning and reproductive health services.
                  Refer to Part C-3 of Appendix C for the SDOH Guidelines for
                  Plans That Do Not Provide Family Planning Services in their
                  Capitation. Contractor shall ensure that

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                  prospective Enrollees and Enrollees are advised of the family
                  planning services which are not provided by the Contractor and
                  of their right of access to such services in accordance with
                  the provisions of Part C-3 of Appendix C, which is hereby made
                  a part of this contract as if set forth fully herein.

            j)    SDOH with DHHS approval may issue modifications to Appendix
                  (C) consistent with relevant provisions of federal and state
                  statutes and regulations. Once issued and upon sixty (60) days
                  notice to the LDSS and Contractor, such modifications shall be
                  deemed incorporated into this Agreement without further action
                  by the parties.

      10.12 Prenatal Care

            The Contractor is responsible for arranging for the provision of
            comprehensive Prenatal Care Services to all pregnant Enrollees
            including all services enumerated in Subdivision 1, Section 2522 of
            the Public Health Law in accordance with 10 NYCRR Part 85.40
            (Prenatal Care Assistance Program).

      10.13 Direct Access

            The Contractor shall offer female Enrollees direct access to primary
            and preventive obstetrics and gynecology services, follow-up care as
            a result of a primary and preventive visit, and any care related to
            pregnancy from the Contractor's network providers without referral
            from the PCP as set forth in Public Health Law Section 4406-b(1).

      10.14 Emergency Services

            a)    The Contractor shall maintain coverage utilizing a toll free
                  telephone number twenty-four (24) hours per day seven (7) days
                  per week, answered by a live voice, to advise Enrollees of
                  procedures for accessing services for Emergency Medical
                  Conditions and for accessing Urgently Needed Services.
                  Emergency mental health calls must be triaged via telephone by
                  a trained mental health professional.

            b)    The Contractor agrees that it will not require prior
                  authorization for services in a medical or behavioral health
                  emergency. The Contractor agrees to inform its Enrollees that
                  access to Emergency Services is not restricted and Emergency
                  Services may be obtained from a Non-Participating Provider
                  without penalty. The Contractor may require Enrollees to
                  notify the plan or their PCP within a specified time frame
                  after receiving emergency care and to obtain prior
                  authorization for any follow-up care delivered pursuant to the
                  emergency, as stated in Appendix G. Nothing herein precludes
                  the Contractor from entering into contracts with providers or
                  facilities that require providers or facilities to provide
                  notification to the Contractor after Enrollees present for

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                  Emergency Services and are subsequently stabilized. Except as
                  otherwise provided by contractual agreement between the
                  Contractor and a Participating Provider, the Contractor must
                  pay for services for Emergency Medical Conditions whether
                  provided by a Participating Provider or a Non-Participating
                  Provider, and may not deny payments if notification is not
                  timely.

            c)    Emergency Services rendered by Non-Participating Providers:
                  The Contractor shall advise its Enrollees how to obtain
                  Emergency Services when it is not feasible for Enrollees to
                  receive Emergency Services from or through a Participating
                  Provider. The Contractor shall bear the cost of providing
                  Emergency Services through Non-Participating Providers.

            d)    The Contractor agrees to abide by guidelines for the provision
                  and payment of Emergency Care and Services which are specified
                  in Appendix G, which is hereby made a part of this contract as
                  if set forth fully herein.

            e)    When emergency transportation is included in the Contractor's
                  Benefit Package, the Contractor shall reimburse for all
                  emergency ambulance services without regard to final diagnosis
                  or prudent layperson standards.

      10.15 Medicaid Utilization Thresholds (MUTS)

            Enrollees may be subject to MUTS for outpatient pharmacy services
            which are billed Medicaid fee-for-service and for dental services
            provided without referral at Article 28 clinics operated by academic
            dental centers as described in Section 10.28 of this Agreement.
            Enrollees are not otherwise subject to MUTS for services included in
            the Benefit Package.

      10.16 Services for Which Enrollees Can Self-Refer

            a)    Mental Health and Chemical Dependence Services

                  The Contractor will allow Enrollees or LDSS officials on the
                  Enrollee's behalf to make self referral or referral for one
                  mental health assessment from a Participating Provider and one
                  chemical dependence assessment from a Detoxification or
                  Chemical Dependence Inpatient Rehabilitation and Treatment
                  Participating Provider in any calendar year period without
                  requiring preauthorization or referral from the Enrollee's
                  Primary Care Provider. In the case of children, such
                  self-referrals may originate at the request of a school
                  guidance counselor (with parental or guardian consent, or
                  pursuant to procedures set forth in Section 33.21 of the
                  Mental Hygiene Law), LDSS Official, Judicial Official,
                  Probation Officer, parent or similar source.

                  i)    The Contractor shall make available to all Enrollees a
                        complete listing of their participating mental health
                        and Chemical Dependence Services

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                        providers. The listing should specify which provider
                        groups or practitioners specialize in children's mental
                        health services.

                  ii)   The Contractor will also ensure that its Participating
                        Providers have available and use formal assessment
                        instruments to identify Enrollees requiring mental
                        health and Chemical Dependence Services, and to
                        determine the types of services that should be
                        furnished.

                  iii)  The Contractor will implement policies and procedures to
                        ensure that Enrollees receive follow-up Benefit Package
                        services from appropriate providers based on the
                        findings of their mental health and/or Detoxification or
                        Chemical Dependence Inpatient Rehabilitation and
                        Treatment assessment(s).

                  iv)   The Contractor will implement policies and procedures to
                        ensure that Enrollees are referred to appropriate
                        Chemical Dependence outpatient rehabilitation and
                        treatment providers based on the findings of the
                        Chemical Dependence assessment by the Contractor's
                        Participating Provider.

            b)    Vision Services

                  The Contractor will allow its Enrollees to self-refer to any
                  participating provider of vision services (optometrist or
                  ophthalmologist) for refractive vision services. (See Appendix
                  K).

            c)    Diagnosis and Treatment of Tuberculosis

                  Enrollees may self-refer to public health agency facilities
                  for the diagnosis and/or treatment of TB as described in
                  Section 10.19(a)(i) of this Agreement.

            d)    Family Planning and Reproductive Health Services.

                  Enrollees may self-refer to family planning and reproductive
                  health services as described in Section 10.1 and Appendix C of
                  this Agreement.

            e)    Article 28 Clinics Operated by Academic Dental Centers

                  Enrollees may self-refer to Article 28 clinics operated by
                  academic dental centers to obtain covered dental services as
                  described in Section 10.28 of this Agreement.

      10.17 Second Opinions for Medical or Surgical Care

            The Contractor will allow Enrollees to obtain a second opinion
            within the Contractor's network of providers for diagnosis of a
            condition, treatment or surgical procedure.

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      10.18 Coordination with Local Public Health Agencies

            The Contractor will coordinate its public health-related activities
            with the Local Public Health Agency. Coordination mechanisms and
            operational protocols for addressing public health issues will be
            negotiated with the Local Public Health and Social Services
            Departments and be customized to reflect County public health
            priorities. Negotiations must result in agreements regarding
            required health plan activities related to public health. The
            outcome of negotiations may take the form of an informal agreement
            among the parties which may include memos; a separate memorandum of
            understanding signed by the Local Public Health Agency, LDSS, and
            the Contractor; or an appendix to the contract between the LDSS and
            the Contractor which shall be included in Appendix N as if set forth
            fully herein.

      10.19 Public Health Services

            a)    Tuberculosis Screening, Diagnosis and Treatment; Directly
                  Observed Therapy(TB\DOT):

                  i)    Consistent with New York State law, public health
                        clinics are required to provide or arrange for treatment
                        to individuals presenting with tuberculosis, regardless
                        of the person's insurance or enrollment status. It is
                        the State's preference that the Contractor's Enrollees
                        receive TB diagnosis and treatment through the
                        Contractor's plan, to the extent that providers
                        experienced in this type of care are available in the
                        Contractor's network of Participating Providers,
                        although Enrollees may self-refer to public health
                        agency facilities for the diagnosis and/or treatment of
                        TB. The Contractor agrees to reimburse public health
                        clinics when physician visit and patient management or
                        laboratory and radiology services are rendered to their
                        Enrollees, within the context of TB diagnosis and
                        treatment.

                  ii)   The Contractor's Participating Providers must report TB
                        cases to the Local Public Health Agency. The LDSS will
                        have the Local Public Health Agency review the
                        tuberculosis treatment protocols and networks of
                        Participating Providers of the Contractor, to verify
                        their readiness to treat Tuberculosis patients. The
                        Contractor's protocols will be evaluated against State
                        and local guidelines. State and local departments of
                        health also will be available to offer technical
                        assistance to the Contractor in establishing TB policies
                        and procedures.

                  iii)  The Contractor may require the Local Public Health
                        Agency to give notification before delivering services,
                        unless these services are ordered by a court of
                        competent jurisdiction. The Local Public Health Agency
                        will: 1) make reasonable efforts to verify with the
                        Enrollee's PCP that he/she has not already provided TB
                        care and treatment, and 2) provide documentation of
                        services rendered along with the claim.

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                  iv)   The Contractor may use locally negotiated fees. In
                        addition, SDOH will establish fee schedules for these
                        services, which the Contractor may use in the absence of
                        locally negotiated fees.

                  v)    Contractors may require prior authorization for
                        non-emergency inpatient hospital admissions, except that
                        prior authorization will not be required for an
                        admission pursuant to a court order or an order of
                        detention issued by the local commissioner or director
                        of public health.

                  vi)   The Contractor shall provide the Local Public Health
                        Agency with access to health care practitioners on a
                        twenty-four (24) hour a day, seven (7) day a week basis
                        who can authorize inpatient hospital admissions. The
                        Contractor shall respond to the Local Public Health
                        Agency's request for authorization within the same day.

                  vii)  The Contractor will not be capitated or financially
                        liable for Directly Observed Therapy (DOT) costs. The
                        Contractor agrees to make all reasonable efforts to
                        ensure coordination with DOT providers regarding
                        clinical care and services. HIV counseling and testing
                        during a TB related visit at a public health clinic,
                        directly operated by a county health department or the
                        New York City Department of Health and Mental Hygiene,
                        will be covered by Medicaid fee-for-service (FFS) at
                        rates established by the State. The Contractor also will
                        not be financially liable for treatments rendered to
                        Enrollees who have been institutionalized as a result of
                        a local health commissioner's order due to
                        non-compliance with TB care regimens.

                  viii) While all other clinical management of tuberculosis is
                        covered by the Contractor, TB/DOT where applicable, can
                        be billed directly to Medicaid by any SDOH approved
                        fee-for-service Medicaid TB/DOT provider. The Contractor
                        remains responsible for communicating, cooperating, and
                        coordinating clinical management of TB with the TB/DOT
                        provider. The Enrollee reserves the right to use any
                        fee-for-service DOT provider because TB/DOT is a
                        non-covered benefit.

            b)    Immunizations

                  i)    Immunizations for adults and administration of
                        immunizations for children will be included in the
                        Benefit Package and the Contractor will be required to
                        reimburse the Local Public Health Agency when Enrollees
                        self-refer.

                  ii)   In order to be eligible for reimbursement, a Local
                        Public Health Agency must make reasonable efforts to (1)
                        determine the Enrollee's managed care membership status;
                        and (2) ascertain the Enrollee's immunization status.
                        Such efforts shall consist of client interviews and,
                        when available, access to the Immunization Registry.
                        When an Enrollee presents a membership card with a PCP's
                        name, the Local Public Health Agency shall call the PCP.
                        If the agency is unable to verify the immunization
                        status from the PCP or learns that immunization is
                        needed, the agency shall proceed to deliver the service
                        as appropriate, and the Contractor will reimburse the
                        Local Public Health Agency at the negotiated rate or at
                        a fee schedule to

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                        be used in the absence of a negotiated rate. Upon
                        implementation of the immunization registry, the Local
                        Public Health Agency shall not be required to contact
                        the PCP.

                  iii)  If the immunization is administered by the PCP,
                        immunization materials for children should be obtained
                        free of charge from the "Vaccine For Children Program".
                        The Contractor will be reimbursed only for administering
                        the vaccine to children.

            c)    Prevention and Treatment of Sexually Transmitted Diseases

                  The Contractor will be responsible for ensuring that its
                  Participating Providers educate their Enrollees about the risk
                  and prevention of sexually transmitted disease (STD). The
                  Contractor also will be responsible for ensuring that its
                  Participating Providers screen and treat Enrollees for STDs
                  and report cases of STD to the Local Public Health Agency and
                  cooperate in contact investigation, in accordance with
                  existing state and local laws and regulations. HIV counseling
                  and testing provided during a STD related visit at a public
                  health clinic, directly operated by a county health department
                  or the New York City Department of Health and Mental Hygiene,
                  will be covered by Medicaid FFS at rates established by the
                  State.

            d)    Lead Poisoning

                  The Contractor will be responsible for carrying out and
                  ensuring that its Participating Providers comply with lead
                  poisoning screening and follow-up as specified in 10 NYCRR,
                  Sub-part 67.1. The Contractor shall coordinate the care of
                  such children with Local Public Health Agencies to assure
                  appropriate follow-up in terms of environmental investigation,
                  risk management and reporting requirements.

      10.20 Adults with Chronic Illnesses and Physical or Developmental
            Disabilities

            The Contractor will implement all of the following to meet the needs
            of their adult Enrollees with chronic illnesses and physical or
            developmental disabilities:

            a)    Satisfactory methods for ensuring that the Contractor is in
                  compliance with the Americans with Disabilities Act ("ADA")
                  and Section 504 of the Rehabilitation Act of 1973. Program
                  accessibility for persons with disabilities shall be in
                  accordance with Section 24 of this Agreement.

            b)    Clinical case management which uses satisfactory
                  methods/guidelines for identifying persons at risk of, or
                  having, chronic diseases and disabilities and determining
                  their specific needs in terms of specialist physician
                  referrals, durable medical equipment, home health services,
                  self-management education and training, etc. The Contractor
                  shall:

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                  i)    develop protocols describing the Contractor's case
                        management services and minimum qualification
                        requirements for case management staff;

                  ii)   develop and implement protocols for monitoring
                        effectiveness of case management based on patient
                        outcomes;

                  iii)  develop and implement protocols for monitoring service
                        utilization including emergency room visits and
                        hospitalizations, with adjustment of severity of patient
                        conditions;

                  iv)   provide regular information to network providers on the
                        case management services available to the Contractor's
                        Enrollees and the criteria for referring Enrollees to
                        the Contractor for case management services.

            c)    Satisfactory methods/guidelines for determining which patients
                  are in need of case management services, including
                  establishment of severity thresholds, and methods for
                  identification of patients including monitoring of
                  hospitalizations and ER visits, provider referrals, new
                  Enrollee health screenings ands self referrals by Enrollees.

            d)    Guidelines for determining specific needs of Enrollees in case
                  management, including specialist physician referrals, durable
                  medical equipment, home health services, self management
                  education and training, etc.

            e)    Satisfactory systems for coordinating service delivery with
                  out-of-network providers, including behavioral health
                  providers for all Enrollees.

            f)    Policies and procedures to allow for the continuation of
                  existing relationships with out-of-network providers,
                  consistent with PHL 4403 6(e) and Section 15.5 of this
                  Agreement.

      10.21 Children with Special Health Care Needs

            Children with special health care needs are those who have or are
            suspected of having a serious or chronic physical, developmental,
            behavioral, or emotional condition and who also require health and
            related services of a type or amount beyond that required by
            children generally. The Contractor will be responsible for
            performing all of the same activities for this population as for
            adults. In addition, the Contractor will implement the following for
            these children:

            a)    Satisfactory methods for interacting with school districts,
                  preschool services, child protective service agencies, early
                  intervention officials, behavioral health, and developmental
                  disabilities service organizations for the purpose of
                  coordinating and assuring appropriate service delivery.

            b)    An adequate network of pediatric providers and
                  sub-specialists, contractual relationships with tertiary
                  institutions, to meet their medical needs.

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            c)    Satisfactory methods for assuring that children with serious,
                  chronic, and rare disorders receive appropriate diagnostic
                  work-ups on a timely basis.

            d)    Satisfactory arrangements for assuring access to specialty
                  centers in and out of New York State for diagnosis and
                  treatment of rare disorders.

            e)    A satisfactory approach for assuring access to allied health
                  professionals (Physical Therapists, Occupational Therapists,
                  Speech Therapists, and Audiologists) experienced in dealing
                  with children and families.

      10.22 Persons Requiring Ongoing Mental Health Services

            The Contractor will implement all of the following for its Enrollees
            with chronic or ongoing mental health service needs:

            a)    Inclusion of all of the required provider types listed in
                  Section 21 of this Agreement.

            b)    Satisfactory methods for identifying persons requiring such
                  services and encouraging self-referral and early entry into
                  treatment.

            c)    Satisfactory case management systems or satisfactory case
                  management.

            d)    Satisfactory systems for coordinating service delivery between
                  physical health, chemical dependence, and mental health
                  providers, and coordinating services with other available
                  services, including Social Services.

            The Contractor agrees to participate in the local planning process
            for serving persons with mental health needs to the extent requested
            by the LDSS. At the LDSS' discretion, the Contractor will develop
            linkages with local governmental units on coordination, procedures
            and standards related to mental health services and related
            activities.

      10.23 Member Needs Relating to HIV

            Persons with HIV infection are exempt from mandatory enrollment;
            however, they will be permitted to enroll voluntarily into Managed
            Care Organizations. The Contractor must inform Enrollees newly
            diagnosed with HIV infection or AIDS, known to the Contractor, of
            their enrollment options including the ability to return to
            fee-for-service or to disenroll from the Contractor's plan and to
            enroll into HIV Special Needs Plans (SNPs) as such plans become
            available.

            The Contractor agrees that anonymous testing may be furnished to the
            Enrollee without prior approval by the Contractor and may be
            conducted at anonymous testing sites available to clients. Services
            provided for HIV treatment may only

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            be obtained from the Contractor during the period the Enrollee is
            enrolled in the Contractor's plan.

            To adequately address the HIV prevention needs of uninfected
            Enrollees, as well as the special needs of individuals with HIV
            infection who do enroll in managed care, the Contractor shall have
            in place all of the following:

            a)    Methods for promoting HIV prevention to all Plan Enrollees.
                  HIV prevention information, both primary, as well as secondary
                  should be tailored to the Enrollee's age, sex, and risk
                  factor(s), (e.g., injection drug use and sexual risk
                  activities), and should be culturally and linguistically
                  appropriate. HIV primary prevention means the reduction or
                  control of causative factors for HIV, including the reduction
                  of risk factors. HIV Primary prevention includes strategies to
                  help prevent uninfected Enrollees from acquiring HIV, i.e.,
                  behavior counseling for HIV negative Enrollees with risk
                  behavior. Primary prevention also includes strategies to help
                  prevent infected Enrollees from transmitting HIV infection
                  i.e., behavior counseling with an HIV infected Enrollee to
                  reduce risky sexual behavior or providing antiviral therapy to
                  a pregnant, HIV infected female to prevent transmission of HIV
                  infection to a newborn. HIV Secondary Prevention means
                  promotion of early detection and treatment of HIV disease in
                  an asymptomatic Enrollee to prevent the development of
                  symptomatic disease. This includes: regular medical
                  assessments; routine immunization for preventable infections;
                  prophylaxis for opportunistic infections; regular dental,
                  optical, dermatological and gynecological care; optimal
                  diet/nutritional supplementation; and partner notification
                  services which lead to the early detection and treatment of
                  other infected persons. All plan Enrollees should be informed
                  of the availability of HIV counseling, testing, referral and
                  partner notification (CTRPN) services.

            b)    Policies and procedures promoting the early identification of
                  HIV infection in Enrollees. Such policies and procedures shall
                  include at a minimum: assessment methods for recognizing the
                  early signs and symptoms of HIV disease; initial and routine
                  screening for HIV risk factors through administration of
                  sexual behavior and drug and alcohol use assessments; and the
                  provision of information to all Enrollees regarding the
                  availability of in-plan HIV CTRPN services, out of plan CTRPN
                  services as part of a family planning visit, and anonymous
                  CTRPN services from New York State, New York City and Local
                  Public Health Agencies.

            c)    The Contractor shall comply with the requirements set forth in
                  Title 10 NYCRR (including Part 98 and in Subpart 69-1) which
                  mandate that HIV counseling with testing, presented as a
                  clinical recommendation, be provided to all women in prenatal
                  care and their newborns. Consistent with these requirements,
                  the Contractor shall ensure that Participating Providers refer
                  such Enrollees determined to have HIV infection for clinically
                  appropriate services.

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            d)    Network Sufficiency. A network of providers sufficient to meet
                  the needs of its Enrollees with HIV. Satisfaction of the
                  network requirement may be accomplished by inclusion of HIV
                  specialists within the network or the provision of HIV
                  specialist consultation to non-HIV specialists serving as PCPs
                  for persons with HIV infection; inclusion of Designated AIDS
                  Center Hospitals or other hospitals experienced in HIV care in
                  the Contractor's network; and contracts or linkages with
                  providers funded under the Ryan White CARE Act. The Contractor
                  shall inform the providers in its network how to obtain
                  information about the availability of Experienced HIV
                  Providers and HIV Specialist PCPs

            e)    Case Management Assessment for Enrollees with HIV Infection.
                  The Contractor shall establish policies and procedures to
                  ensure that Enrollees who have been identified as having HIV
                  infection are assessed for case management services. The
                  Contractor shall arrange for any Enrollee identified as having
                  HIV infection and needing case management services to be
                  referred to an appropriate case management services provider,
                  including in-plan case management, and/or, with appropriate
                  consent of the Enrollee, COBRA Comprehensive Medicaid Case
                  Management (CMCM) services and/or HIV community-based
                  psychosocial case management services.

            f)    Reporting. The Contractor shall require that its Participating
                  Providers shall report positive HIV test results and diagnoses
                  and known contacts of such persons to the New York State
                  Commissioner of Health. In New York City, these shall be
                  reported to the New York City Commissioner of Health. Access
                  to partner notification services must be consistent with 10
                  NYCRR Part 63.

            g)    Updates and Dissemination of HIV Practice Guidelines. The
                  Contractor's Medical Director shall review Contractor's HIV
                  practice guidelines at least annually and update them as
                  necessary for compliance with recommended SDOH AIDS Institute
                  and federal government clinical standards. The Contractor will
                  disseminate the HIV Practice Guidelines or revised guidelines
                  to Participating Providers at least annually, or more
                  frequently as appropriate.

      10.24 Persons Requiring Chemical Dependence Services

            The Contractor will have in place all of the following for its
            Enrollees requiring Chemical Dependence Services:

            a)    Participating Provider networks consisting of licensed
                  providers, as defined in Section 21.17 of this contract.

            b)    Satisfactory methods for identifying persons requiring such
                  services and encouraging self-referral and early entry into
                  treatment. In the case of

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               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 2004
                                      10-16

<PAGE>

                  pregnant women, having methods for referring to OASAS for
                  appropriate services beyond the Contractor's Benefit Package
                  (e.g., halfway houses).

            c)    Satisfactory systems of care (provider networks and referral
                  processes sufficient to ensure that emergency services can be
                  provided in a timely manner), including crisis services.

            d)    Satisfactory case management systems.

            e)    Satisfactory systems for coordinating service delivery between
                  physical health, chemical dependence, and mental health
                  providers, and coordinating in-plan services with other
                  services, including Social Services.

            The Contractor agrees to also participate in the local planning
            process for serving persons with chemical dependence, to the extent
            requested by the LDSS. At the LDSS's discretion, the Contractor will
            develop linkages with local governmental units on coordination
            procedures and standards related to Chemical Dependence Services and
            related activities.

      10.25 Native Americans

            If the Contractor's Enrollee is a Native American and the Enrollee
            chooses to access primary care services through their tribal health
            center, the PCP authorized by the Contractor to refer the Enrollee
            for plan benefits must develop a relationship with the Enrollee's
            PCP at the tribal health center to coordinate services for said
            Native American Enrollee.

      10.26 Women, Infants, and Children (WIC)

            The Contractor shall develop linkage agreements or other mechanisms
            to ensure women and children enrollees are referred to WIC services
            if qualified to receive such services. The Contractor shall refer
            pregnant women and children, younger than five (5) years of age, to
            WIC local agencies for nutritional assessments and supplements.

      10.27 Urgently Needed Services

            a)    The Contractor is responsible for Urgently Needed Services.

            b)    Urgently Needed Services are covered only in the United
                  States, the Commonwealth of Puerto Rico, the U.S. Virgin
                  Islands, Guam, American Samoa, the Northern Mariana Islands
                  and Canada.

            c)    The Contractor must disclose to all Enrollees the procedures
                  to be followed to obtain Urgently Needed Services.

                                   SECTION 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
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                                      10-17

<PAGE>

            d)    The Contractor may require Enrollees or the Enrollee's
                  designee to coordinate with the Contractor or the Enrollee's
                  PCP prior to receiving care, to ensure that the needed care
                  will be authorized and covered by the plan as Urgently Needed
                  Services.

      10.28 Dental Services Provided by Article 28 Clinics Operated by Academic
            Dental Centers Not Participating in Contractor's Network

            a)    Consistent with Chapter 697 of Laws of 2003 amending Section
                  364 (j) of the Social Services Law, dental services provided
                  by Article 28 clinics operated by academic dental centers may
                  be accessed directly by Medicaid managed care Enrollees
                  without prior approval and without regard to network
                  participation.

            b)    If dental services are part of the Contractor's Benefit
                  Package, the Contractor will reimburse non-participating
                  Article 28 clinics operated by academic dental centers for
                  covered dental services provided to Enrollees on or after
                  November 19, 2003 at approved Article 28 Medicaid clinic rates
                  in accordance with the protocols issued by the SDOH.

      10.29 Coordination of Services

            a)    The Contractor shall coordinate care for Enrollees with:

                        i)    the court system (for court ordered evaluations
                              and treatment);

                        ii)   specialized providers of health care for the
                              homeless, and other providers of services for
                              victims of domestic violence;

                        iii)  family planning clinics, community health centers,
                              migrant health centers, rural health centers;

                        iv)   WIC, Head Start, Early Intervention;

                        v)    special needs plans;

                        vi)   programs funded through the Ryan White CARE Act;

                        vii)  other pertinent entities that provide services out
                              of network;

                        viii) Prenatal Care Assistance Program (PCAP) Providers;

                        ix)   local governmental units responsible for public
                              health, mental health, mental retardation or
                              Chemical Dependence Services;

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               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 2004
                                      10-18

<PAGE>

                        x)    specialized providers of long term care for people
                              with developmental disabilities; and

                        xi)   School-based health centers.

            b)    Coordination may involve contracts or linkage agreements (if
                  entities are willing to enter into such agreement), or other
                  mechanisms to ensure coordinated care for Enrollees, such as
                  protocols for reciprocal referral and communication of data
                  and clinical information on MCO Enrollees.

      10.30 Prospective Benefit Package Change for Retroactive SSI
            Determinations

            The managed care Benefit Package and associated Capitation Rate for
            Enrollees who become SSI or SSI related retroactively shall be
            changed prospectively as of the effective date of the Roster on
            which the Enrollee's status change appears.

                                   SECTION 10
               (BENEFIT PACKAGE, COVERED AND NON-COVERED SERVICES)
                                 October 1, 2004
                                      10-19

<PAGE>

11.   MARKETING

      11.1  Marketing Plan

            The Contractor shall have a Marketing Plan, that has been
            prior-approved by the SDOH and/or LDSS, that describes the Marketing
            activities the Contractor will undertake within the local district
            during the term of this Agreement.

            The Marketing Plan and all marketing activities must be consistent
            with the Marketing Guidelines which are set forth in Appendix D,
            which is hereby made a part of this Agreement as if set forth fully
            herein.

            The Marketing Plan shall be kept on file in the offices of the
            Contractor, LDSS, and the SDOH. The Marketing Plan may be modified
            by the Contractor subject to prior written approval by the SDOH
            and/or the LDSS. The LDSS or SDOH must take action on the changes
            submitted within sixty (60) calendar days of submission or the
            Contractor may deem the changes approved.

      11.2  Marketing Activities

            Marketing activities by the Contractor shall conform to the approved
            Marketing Plan.

      11.3  Prior Approval of Marketing Materials, Procedures, Subcontracts

            The Contractor shall submit all subcontracts, procedures, and
            materials related to Marketing to Eligible Persons to the SDOH
            and/or LDSS for prior written approval. The Contractor shall not
            enter into any subcontracts or use any marketing subcontractors,
            procedures, or materials that the SDOH and/or LDSS has not approved.

      11.4  Marketing Infractions

            Infractions of the Marketing Guidelines may result in the following
            actions being taken by the LDSS to protect the interests of the
            program and its clients. These actions shall be taken at the sole
            discretion of the LDSS.

            a)    If an MCO or its representative commits a first time
                  infraction of marketing guidelines and the LDSS deems the
                  infraction to be minor or unintentional in nature, the LDSS
                  may issue a warning letter to the MCO.

            b)    For subsequent or more serious infractions, the LDSS may
                  impose liquidated damages of $2,000 or other appropriate
                  non-monetary sanction for each infraction.

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                                   (MARKETING)
                                 October 1, 2004
                                      11-1

<PAGE>

            c)    The LDSS may require the MCO to prepare a corrective action
                  plan with a specified deadline for implementation.

            d)    If the MCO commits further infractions, fails to pay
                  liquidated damages within the specified timeframe, fails to
                  implement a corrective action plan in a timely manner or
                  commits an egregious first-time infraction, the LDSS may:

                  i)    prohibit the plan from conducting any marketing
                        activities for a period up to the end of the contract
                        period;

                  ii)   suspend new enrollments, other than newborns, for a
                        period up to the remainder of the contract; or

                  iii)  terminate the contract pursuant to termination
                        procedures described therein.

      11.5  LDSS Option to Adopt Additional Marketing Guidelines

            The LDSS may adopt, subject to SDOH approval, additional and/or more
            restrictive terms in the Marketing Guidelines to the extent
            appropriate to local conditions and circumstances, which shall be
            appended to Appendix D, Section E.

                                   SECTION 11
                                   (MARKETING)
                                 October 1, 2004
                                      11-2

<PAGE>

12.   MEMBER SERVICES

      12.1  General Functions

            The Contractor shall operate a Member Services function during
            regular business hours, which must be accessible to Enrollees via a
            toll-free telephone line. Personnel must also be available via a
            toll-free telephone line (which can be the member services toll-free
            line or separate toll-free lines) not less than during regular
            business hours to address complaints and utilization review
            inquiries. In addition, the Contractor must have a telephone system
            capable of accepting, recording or providing instruction to incoming
            calls regarding complaints and utilization review during other than
            normal business hours and measures in place to ensure a response to
            those calls the next business day after the call was received. At a
            minimum, the Member Services Department must be staffed at a ratio
            of at least one (1) full time equivalent Member Service
            Representative for every 4,000 or fewer Enrollees. Member Services
            staff must be responsible for the following:

            a)    Explaining the Contractor's rules for obtaining services and
                  assisting Enrollees in making appointments.

            b)    Assisting Enrollees to select or change Primary Care
                  Providers.

            c)    Fielding and responding to Enrollee questions and complaints,
                  and advising Enrollees of the prerogative to complain to the
                  SDOH and LDSS at any time.

            d)    Clarifying information in the member handbook for Enrollees.

            e)    Advising Enrollees of the Contractor's complaint and appeals
                  program, the utilization review process, and Enrollee's rights
                  to a fair hearing or external review.

            f)    Clarifying for potential Enrollees current categories of
                  exemptions and exclusions. The Contractor may refer to the
                  LDSS or the Enrollment Broker, where one is in place, if
                  necessary, for more information on exemptions and exclusions.

      12.2  Translation and Oral Interpretation

            a)    The Contractor must make available written marketing and other
                  informational materials (e.g., member handbooks) in a
                  language other than English whenever at least five percent
                  (5%) of the potential Enrollees of the Contractor in any
                  county of the service area speak that particular language and
                  do not speak English as a first language.

                                   SECTION 12
                                (MEMBER SERVICES)
                                 October 1, 2004
                                      12-1

<PAGE>

            b)    In addition, verbal interpretation services must be made
                  available to Enrollees who speak a language other than English
                  as a primary language. Interpreter services must be offered in
                  person where practical, but otherwise may be offered by
                  telephone.

            c)    The SDOH will determine the need for other than English
                  translations based on County-specific census data or other
                  available measures.

      12.3  Communicating with the Visually, Hearing and Cognitively Impaired

            The Contractor also must have in place appropriate alternative
            mechanisms for communicating effectively with persons with visual,
            hearing, speech, physical or developmental disabilities. These
            alternative mechanisms include Braille or audio tapes for the
            visually impaired, TTY access for those with certified speech or
            hearing disabilities, and use of American Sign Language and/or
            integrative technologies.

                                   SECTION 12
                               (MEMBER SERVICES)
                                October 1, 2004
                                      12-2

<PAGE>

13.   ENROLLEE NOTIFICATION

      13.1  Provider Directories/Office Hours for Participating Providers

            a)    The Contractor shall maintain and update, on a quarterly
                  basis, a listing by specialty of the names, addresses and
                  telephone numbers of all Participating Providers, including
                  facilities. Such a list/directory shall include names, office
                  addresses, telephone numbers, board certification for
                  physicians, and information on language capabilities and
                  wheelchair accessibility of Participating Providers.

            b)    New Enrollees, and upon request, prospective Enrollees, must
                  receive the most current complete listing in hardcopy, along
                  with any updates to such listing.

            c)    Enrollees must be notified of updates in writing at least
                  annually in one of the following methods: provide updates in
                  hardcopy; provide a new complete listing/directory in
                  hardcopy; or provide written notification that a new complete
                  listing/directory is available and will be provided upon
                  request either in hardcopy, or electronically if the
                  Contractor has the capability of providing such data in an
                  electronic format and the data is requested in that format by
                  an Enrollee.

            d)    In addition, the Contractor must make available to the LDSS
                  the office hours for Participating Providers. This requirement
                  may be satisfied by providing a copy of the list or Provider
                  Directory described in this Section with the addition of
                  office hours or by providing a separate listing of office
                  hours for Participating Providers.

      13.2  Member ID Cards

            a)    The Contractor must issue an identification card to the
                  Enrollee containing the following information:

                  i)    the name of the Enrollee's clinic (if applicable);

                  ii)   the name of the Enrollee's PCP and the PCP's telephone
                        number;

                  iii)  the member services toll free telephone number;

                  iv)   the twenty-four (24) hour toll free telephone number
                        that Enrollees may use to access information on
                        obtaining services when his/her PCP is not available;
                        and

                  v)    for ID Cards issued after October 1, 2004, the
                        Enrollee's Client Identification Number (CIN).

            b)    If an Enrollee is being served by a PCP team, the name of the
                  individual shown on the card should be the lead provider. PCP
                  information may be embossed on the card or affixed to the card
                  by a sticker.

                                   SECTION 13
                             (ENROLLEE NOTIFICATION)
                                 October 1, 2004
                                      13-1

<PAGE>

            c)    The Contractor shall issue an identification card within
                  fourteen (14) days of an Enrollee's Effective Date of
                  Enrollment. If unforeseen circumstances, such as the lack of
                  identification of a PCP, prevent the MCO from forwarding the
                  official identification card to new Enrollees within the
                  fourteen (14) day period, alternative measures by which
                  Enrollees may identify themselves such as use of a Welcome
                  Letter or a temporary identification card shall be deemed
                  acceptable until such time as a PCP is either chosen by the
                  Enrollee or auto assigned by the Contractor. The Contractor
                  agrees to implement an alternative method by which individuals
                  may identify themselves as Enrollees prior to receiving the
                  card (e.g., using a "welcome letter" from the plan) and to
                  update PCP information on the identification card. Newborns of
                  Enrollees need not present ID cards in order to be seen by the
                  MCO and its Participating Providers.

      13.3  Member Handbooks

            The Contractor shall issue to a new Enrollee within fourteen (14)
            days of the Effective Date of Enrollment a Member Handbook, which is
            consistent with the SDOH guidelines described in Appendix E, which
            is hereby made a part of this Agreement as if set forth fully
            herein.

      13.4  Notification of Effective Date of Enrollment

            The Contractor shall inform each Enrollee in writing within fourteen
            (14) days of the Effective Date of Enrollment of any restriction on
            the Enrollee's right to terminate enrollment. The initial enrollment
            information and the Member Handbook shall be adequate to convey this
            notice.

      13.5  Notification of Enrollee Rights

            The Contractor agrees to make all reasonable efforts to contact new
            Enrollees, in person, by telephone, or by mail within thirty (30)
            days of their Effective Date of Enrollment. "Reasonable efforts" are
            defined to mean at least three (3) attempts, with more than one
            method of contact being employed. Upon contacting the new
            Enrollee(s), the Contractor agrees to do at least the following:

            a)    Inform the Enrollee about the Contractor's policies with
                  respect to obtaining medical services, including services for
                  which the Enrollee may self-refer, and what to do in an
                  emergency.

            b)    Conduct a brief health screening to assess the Enrollee's need
                  for any special health care (e.g., prenatal or behavioral
                  health services) or language/communication needs. If a special
                  need is identified, the Contractor shall assist the Enrollee
                  in arranging for an appointment with his/her PCP or other
                  appropriate provider.

                                   SECTION 13
                             (ENROLLEE NOTIFICATION)
                                 October 1, 2004
                                      13-2

<PAGE>

            c)    Offer assistance in arranging an initial visit to the
                  Enrollee's PCP for a baseline physical and other preventive
                  services, including an assessment of the Enrollee's potential
                  risk if any, for specific diseases or conditions.

            d)    Inform new Enrollees about their rights for continuation of
                  certain existing services.

            e)    Provide the Enrollee with the Contractor's toll free telephone
                  number that may be called twenty-four (24) hours a day, seven
                  (7) days a week if the Enrollee has questions about obtaining
                  services and cannot reach his/her PCP (this telephone number
                  need not be the Member Services line and need not be staffed
                  to respond to Member Services-related inquiries). The
                  Contractor must have appropriate mechanisms in place to
                  accommodate Enrollees who do not have telephones and therefore
                  cannot readily receive a call back.

            f)    Advise Enrollee about opportunities available to learn about
                  MCO policies and benefits in greater detail (e.g., welcome
                  meeting, Enrollee orientation and education sessions).

            g)    Provide the Enrollee with a complete list of network providers
                  that may be accessed directly, without referral. The list
                  should group providers by service type and must include
                  addresses and telephone numbers.

            h)    Assist the Enrollee in selecting a primary care provider if
                  one has not already been chosen.

      13.6  Enrollee's Rights to Advance Directives

            The Contractor shall, in compliance with the requirements of 42 CFR
            434.28, maintain written policies and procedures regarding advance
            directives and inform each Enrollee in writing at the time of
            enrollment of an individual's rights under State law to formulate
            advance directives and of the Contractor's policies regarding the
            implementation of such rights. The Contractor shall include in such
            written notice to the Enrollee materials relating to advance
            directives and health care proxies as specified in 10 NYCRR Sections
            98.14(f) and 700.5.

      13.7  Approval of Written Notices

            The Contractor shall submit the format and content of all written
            notifications described in this Section to LDSS for review and prior
            approval by LDSS or SDOH. All written notifications must be written
            at a fourth (4th) to sixth (6th) grade level and in at least ten
            (10) point print.

                                   SECTION 13
                             (ENROLLEE NOTIFICATION)
                                 October 1, 2004
                                      13-3

<PAGE>

      13.8  Contractor's Duty to Report Lack of Contact

            The Contractor must inform the LDSS of any Enrollee they are unable
            to contact within ninety (90) days of enrollment using reasonable
            efforts as defined in Section 13.5 of the Agreement and who have not
            presented for any health care services through the Contractor or its
            Participating Providers.

      13.9  Contractor Responsibility to Notify Enrollee of Expected Effective
            Date of Enrollment

            The Contractor must notify the Enrollee of the expected Effective
            Date of Enrollment. In the event that the actual Effective Date of
            Enrollment is different from that given to the Enrollee the
            Contractor must notify the Enrollee of the actual date of
            enrollment. This may be accomplished through a Welcome Letter. To
            the extent practicable, such notification must precede the Effective
            Date of Enrollment.

      13.10 LDSS Notification of Enrollee's Change in Address

            The LDSS must notify the Contractor of any known change in address
            of Enrollees in the Contractor's plan.

      13.11 Contractor Responsibility to Notify Enrollee of Effective Date of
            Benefit Package Change

            The Contractor must provide written notification of the effective
            date of any Contractor-initiated, SDOH and LDSS-approved benefit
            package change to Enrollees in the Contractor's plan. Notification
            to Enrollees must be provided at least 30 days in advance of the
            effective date of such change.

      13.12 Contractor Responsibility to Notify Enrollee of Termination, Service
            Area Changes and Network Changes

            With prior notice to and approval of the SDOH and LDSS, the
            Contractor shall inform each Enrollee in writing of any withdrawal
            by the Contractor from the Medicaid managed care program pursuant to
            Section 2.7, withdrawal from the Service Area encompassing the
            Enrollee's zip code, and/or significant changes to the Contractor's
            provider network pursuant to Section 21.1(d), except that the
            Contractor need not notify Enrollees who will not be affected by
            such changes.

            The Contractor shall provide the notifications within the timeframes
            specified by SDOH and LDSS, and shall obtain the prior approval of
            the notification from SDOH and LDSS.

                                   SECTION 13
                             (ENROLLEE NOTIFICATION)
                                 October 1, 2004
                                      13-4

<PAGE>

14.   COMPLAINT AND APPEAL PROCEDURE

      14.1  Contractor's Program to Address Complaints

            a)    The Contractor shall establish and maintain a comprehensive
                  program designed to address clinical and other complaints, and
                  appeals of complaint determinations, which may be brought by
                  Enrollees, consistent with Articles 44 and 49 of the New York
                  State PHL.

            b)    The program must include methods for prompt internal
                  adjudication of Enrollee complaints and appeals and provide
                  for the maintenance of a written record of all complaints and
                  appeals received and reviewed and their disposition.

            c)    The Contractor shall ensure that persons with authority to
                  require corrective action participate in the complaint and
                  appeal process.

      14.2  Notification of Complaint and Appeal Program

            a)    The Contractor's specific complaint and appeal program shall
                  be described in the Contractor's member handbook and shall be
                  made available to all Enrollees.

            b)    The Contractor will advise Enrollees of their right to a fair
                  hearing as appropriate and comply with the procedures
                  established by SDOH for the Contractor to participate in the
                  fair hearing process, as set forth in Section 25 of this
                  Agreement. The Contractor will also advise Enrollees of their
                  right to an external appeal, in accordance with Section 26 of
                  this Agreement.

      14.3  Guidelines for Complaint and Appeal Program

            a)    The Contractor's complaint and appeal program will comply with
                  the Managed Care Complaint and Appeals Program Guidelines
                  described in Appendix F, which is hereby made a part of this
                  Agreement as if set forth fully herein. The SDOH and LDSS may
                  modify Appendix F of this Agreement upon sixty (60) days prior
                  written notice to the Contractor and such modifications shall
                  become binding and incorporated into this Agreement without
                  further action by the parties.

            b)    The Contractor's complaint and appeal procedures shall be
                  approved by the SDOH and LDSS and kept on file with the
                  Contractor, LDSS and SDOH.

            c)    The Contractor shall not modify its complaint and appeals
                  procedure without the prior written approval of SDOH, in
                  consultation with LDSS, and shall provide LDSS and SDOH with a
                  copy of the approved modification within fifteen (15) days
                  after its approval.

                                   SECTION 14
                        (COMPLAINT AND APPEAL PROCEDURE)
                                 October 1, 2004
                                      14-1

<PAGE>

      14.4  Complaint Investigation Determinations

            The MCO must adhere to determinations resulting from complaint
            investigations conducted by SDOH.

                                   SECTION 14
                        (COMPLAINT AND APPEAL PROCEDURE)
                                October 1, 2004
                                      14-2

<PAGE>

15.   ACCESS REQUIREMENTS

      15.1  Appointment Availability Standards

            The Contractor shall comply with the following appointment
            availability standards(1).

            a)    For emergency care: immediately upon presentation at a service
                  delivery site.

            b)    For urgent care: within twenty-four (24) hours of request

            c)    Non-urgent "sick" visit: within forty-eight (48) to
                  seventy-two (72) hours of request, as clinically indicated.

            d)    Routine non-urgent, preventive appointments: within four (4)
                  weeks of request.

            e)    Specialist referrals (not urgent): within four (4) to six (6)
                  weeks of request.

            f)    Initial prenatal visit: within three (3) weeks during first
                  trimester, within two (2) weeks during the second trimester
                  and within one (1) week during the third trimester.

            g)    Adult Baseline and routine physicals: within twelve (12) weeks
                  from enrollment. (Adults >21).

            h)    Well child care: within four (4) weeks of request.

            i)    Initial family planning visits: within two (2) weeks of
                  request.

            j)    In-plan mental health or substance abuse follow-up visits
                  (pursuant to an emergency or hospital discharge): within five
                  (5) days of request, or as clinically indicated.

            k)    In-plan, non-urgent mental health or substance abuse visits:
                  within two (2) weeks of request.

            l)    Initial PCP office visit for newborns: within two (2) weeks of
                  hospital discharge.

            m)    Provider visits to make health, mental health and substance
                  abuse assessments for the purpose of making recommendations
                  regarding a recipient's ability to perform work when requested
                  by a LDSS: within ten (10) days of request by an Enrollee, in
                  accordance with Section 10.8 of this Agreement.

      15.2  Twenty-Four (24) Hour Access

            a)    The Contractor must provide access to medical services and
                  coverage to Enrollees, either directly or through their PCPs
                  and OB/GYNs, on a twenty-four (24) hour a day, seven (7) day a
                  week basis. The Contractor must instruct Enrollees on what to
                  do to obtain services after business hours and on weekends.

-------------------
1 These are general standards and are not intended to supersede sound clinical
judgement as to the necessity for care and services on a more expedient basis,
when judged clinically necessary and appropriate.

                                   SECTION 15
                       (EQUALITY OF ACCESS AND TREATMENT)
                                 October 1, 2004
                                      15-1

<PAGE>

            b)    The Contractor may satisfy the requirement in Section 15.2(a)
                  by requiring their PCPs and OB/GYNs to have primary
                  responsibility for serving as an after hours "on-call"
                  telephone resource to members with medical problems. Under no
                  circumstances may the Contractor routinely refer calls to an
                  emergency room.

      15.3  Appointment Waiting Times

            Enrollees with appointments shall not routinely be made to wait
            longer than one hour.

      15.4  Travel Time Standards

            The Contractor will maintain a network that is geographically
            accessible to the population to be served.

            a)    Primary Care

                  Travel time/distance to primary care sites shall not exceed
                  thirty (30) minutes in metropolitan areas or thirty (30)
                  minutes/thirty (30) miles in non-metropolitan areas. Transport
                  time and distance in rural areas to primary care sites may be
                  greater than thirty (30) minutes/thirty (30) miles if based on
                  the community standard for accessing care or if by Enrollee
                  choice.

                  Enrollees may, at their discretion, select participating PCPs
                  located farther from their homes as long as they are able to
                  arrange and pay for transportation to the PCP themselves.

            b)    Other Providers

                  Travel time/distance to specialty care, hospitals, mental
                  health, lab and x-ray providers shall not exceed thirty (30)
                  minutes/thirty (30) miles. Transport time and distance in
                  rural areas to specialty care, hospitals, mental health, lab
                  and x-ray providers may be greater than thirty (30)
                  minutes/thirty (30) miles if based on the community standard
                  for accessing care or if by Enrollee choice.

      15.5  Service Continuation

            a)    New Enrollees

                  If a new Enrollee has an existing relationship with a health
                  care provider who is not a member of the Contractor's provider
                  network, the contractor shall permit the Enrollee to continue
                  an ongoing course of treatment by the Non-Participating
                  Provider during a transitional period of up to sixty (60) days
                  from the Effective Date of Enrollment, if, (1) the Enrollee
                  has a life-

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                  threatening disease or condition or a degenerative and
                  disabling disease or condition, or (2) the Enrollee has
                  entered the second trimester of pregnancy at the Effective
                  Date of Enrollment, in which case the transitional period
                  shall include the provision of post-partum care directly
                  related to the delivery up until sixty (60) days post partum.
                  If the Enrollee elects to continue to receive care from such
                  Non-Participating Provider, such care shall be authorized by
                  the Contractor for the transitional period only if the
                  Non-Participating Provider agrees to:

                  i)    accept reimbursement from the Contractor at rates
                        established by the Contractor as payment in full, which
                        rates shall be no more than the level of reimbursement
                        applicable to similar providers within the Contractor's
                        network for such services; and

                  ii)   adhere to the Contractor's quality assurance
                        requirements and agrees to provide to the Contractor
                        necessary medical information related to such care; and

                  iii)  otherwise adhere to the Contractor's policies and
                        procedures including, but not limited to procedures
                        regarding referrals and obtaining pre-authorization in
                        a treatment plan approved by the Contractor.

            In no event shall this requirement be construed to require the
            Contractor to provide coverage for benefits not otherwise covered.

            b)    Enrollees Whose Health Care Provider Leaves Network

                  The Contractor shall permit an Enrollee, whose health care
                  provider has left the Contractor's network of providers, for
                  reasons other than imminent harm to patient care, a
                  determination of fraud or a final disciplinary action by a
                  state licensing board that impairs the health professional's
                  ability to practice, to continue an ongoing course of
                  treatment with the Enrollee's current health care provider
                  during a transitional period, consistent with New York State
                  PHL Section 4403(6)(e).

                  The transitional period shall continue up to ninety (90) days
                  from the date of notice to the Enrollee of the provider's
                  disaffiliation from the network; or, if the Enrollee has
                  entered the second trimester of pregnancy, for a transitional
                  period that includes the provision of post-partum care
                  directly related to the delivery through sixty (60) days post
                  partum. If the Enrollee elects to continue to receive care
                  from such Non-Participating Provider, such care shall be
                  authorized by the Contractor for the transitional period only
                  if the Non-Participating Provider agrees to:

                  i)    accept reimbursement from the Contractor at rates
                        established by the Contractor as payment in full, which
                        rates shall be no more than the level of reimbursement
                        applicable to similar providers within the Contractor's
                        network for such services;

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                  ii)   adhere to the Contractor's quality assurance
                        requirements and agrees to provide to the Contractor
                        necessary medical information related to such care; and

                  iii)  otherwise adhere to the Contractor's policies and
                        procedures including, but not limited to procedures
                        regarding referrals and obtaining pre-authorization in a
                        treatment plan approved by the Contractor.

            In no event shall this requirement be construed to require the
            Contractor to provide coverage for benefits not otherwise covered.

      15.6  Standing Referrals

            The Contractor will implement policies and procedures to allow for
            standing referrals to specialist physicians for Enrollees who have
            ongoing needs for care from such specialists, consistent with PHL
            Section 4403(6)(b).

      15.7  Specialist as a Coordinator of Primary Care

            The Contractor will implement policies and procedures to allow
            Enrollees with a life-threatening or degenerative and disabling
            disease or condition, which requires prolonged specialized medical
            care, to receive a referral to a specialist, who will then function
            as the coordinator of primary and specialty care for that Enrollee,
            consistent with PHL Section 4403(6)(c).

      15.8  Specialty Care Centers

            The Contractor will implement policies and procedures to allow
            Enrollees with a life-threatening or a degenerative and disabling
            condition or disease, which requires prolonged specialized medical
            care to receive a referral to an accredited or designated specialty
            care center with expertise in treating the life-threatening or
            degenerative and disabling disease or condition, consistent with New
            York State PHL Section 4403(6)(d).

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16.   QUALITY ASSURANCE

      16.1  Internal Quality Assurance Program

            a)    Contractor must operate a quality assurance program which is
                  approved by SDOH and which includes methods and procedures to
                  control the utilization of Medicaid services consistent with
                  PHL Article 49 and 42 CFR Part 456. Recipients' records must
                  include information needed to perform utilization review as
                  specified in 42 CFR Sections 456.111 and 456.211. The
                  Contractor's approved quality assurance program must be kept
                  on file by the Contractor and the LDSS. The Contractor shall
                  not modify the quality assurance program without the prior
                  written approval of the SDOH, and notice to the LDSS.

            b)    The Contractor shall incorporate the findings from reports in
                  Section 18 of this Agreement into its quality assurance
                  program. Where performance is less than the statewide average
                  or another standard as defined by the SDOH and developed in
                  consultation with plans and appropriate clinical experts, the
                  Contractor will be required to develop and implement a plan
                  for improving performance that is approved by the SDOH and
                  LDSS and that specifies the expected level of improvement and
                  timeframes for actions expected to result in such improvement.
                  In the event that such approved plan does not result in the
                  expected level of improvement, the Contractor shall work with
                  the SDOH and the LDSS to develop and implement alternative
                  plans to achieve improvement. The Contractor agrees to meet
                  with the SDOH and LDSS to review improvement plans and quality
                  performance.

      16.2  Standards of Care

            The Contractor must adopt practice guidelines consistent with
            current standards of care, complying with recommendations of
            professional specialty groups or the guidelines of programs such as
            the American Academy of Pediatrics, the American Academy of Family
            Physicians, the U.S. Task Force on Preventive Care, the New York
            State Child/Teen Health Program (C/THP) standards for provision of
            care to individuals under age 21, the American Medical Association's
            Guidelines for Adolescent and Preventive Services, the US Department
            of Health and Human Services Center for Substance Abuse Treatment,
            the American College of Obstetricians and Gynecologists, the
            American Diabetes Association, and the AIDS Institute clinical
            standards for adult, adolescent, and pediatric care. The Contractor
            must have mechanisms in place to disseminate any changes in practice
            guidelines to its network providers at least annually, or more
            frequently, as appropriate. The Contractor shall develop and
            implement protocols for identifying providers who do not adhere to
            practice guidelines and for making reasonable efforts to improve the
            performance of these providers. Annually, the Contractor shall
            select a minimum of two practice guidelines and monitor

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            performance of appropriate providers (or a sample of providers)
            against such guidelines.

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17.   MONITORING AND EVALUATION

      17.1  Right to Monitor Contractor Performance

            The SDOH, LDSS, and DHHS shall each have the right, during the
            Contractor's normal operating hours, and at any other time a
            Contractor function or activity is being conducted, to monitor and
            evaluate, through inspection or other means, the Contractor's
            performance, including, but not limited to, the quality,
            appropriateness, and timeliness of services provided under this
            Agreement.

      17.2  Cooperation During Monitoring and Evaluation

            The Contractor shall cooperate with and provide reasonable
            assistance to the SDOH, LDSS, and DHHS in the monitoring and
            evaluation of the services provided under this Agreement.

      17.3  Cooperation During On-Site Reviews

            The Contractor shall cooperate with SDOH and LDSS in any on-site
            review of the MCO's operations. SDOH shall give the Contractor
            notification of the date(s) and survey format for any full
            operational review at least forty-five (45) days prior to the site
            visit. This requirement shall not preclude LDSS or SDOH from site
            visits upon shorter notice for other monitoring purposes.

      17.4  Cooperation During Review of Services by External Review Agency

            The Contractor shall comply with all requirements associated with
            any review of the quality of services rendered to its Enrollees to
            be performed by an external review agent selected by the SDOH.

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                           (MONITORING AND EVALUATION)
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                                      17-1

<PAGE>

18.   CONTRACTOR REPORTING REQUIREMENTS

      18.1  Time Frames for Report Submissions

            Except as otherwise specified herein, the Contractor shall prepare
            and submit to SDOH and the LDSS the reports required under this
            Agreement in an agreed media format within sixty (60) days of the
            close of the applicable semi-annual or annual reporting period, and
            within fifteen (15) business days of the close of the applicable
            quarterly reporting period.

      18.2  SDOH Instructions for Report Submissions

            SDOH, with prior notice to the LDSS, will provide Contractor with
            instructions for submitting the reports required by Section 18.5 (a)
            through (n), including time frames, and requisite formats. The
            instructions, time frames and formats may be modified by SDOH with
            prior notice to the LDSS, and thereafter upon sixty (60) days
            written notice to the Contractor. The LDSS, with prior notice to
            SDOH, shall provide the Contractor with instructions for submitting
            the reports, required by Section 18.5(o) including time frames and
            requisite formats.

      18.3  Liquidated Damages

            The Contractor shall pay liquidated damages of $2,500 if any report
            required pursuant to this Section is materially incomplete, contains
            material misstatements or inaccurate information, or is not
            submitted on time in the requested format. The Contractor shall pay
            liquidated damages of $2,500 to the LDSS if its monthly encounter
            data submission is not received by the Fiscal Agent by the due date
            specified in Section 18.5(d). The Contractor shall pay liquidated
            damages of $500 to the LDSS for each day other reports required by
            this Section are late. The LDSS shall not impose liquidated damages
            for a first time infraction by the Contractor unless the LDSS deems
            the infraction to be a material misrepresentation of fact or the
            Contractor fails to cure the first infraction within a reasonable
            period of time upon notice from the LDSS. Liquidated damages may be
            waived at the sole discretion of LDSS. Nothing in this Section shall
            limit other remedies or rights available to LDSS and SDOH relating
            to the timeliness, completeness and/or accuracy of Contractor's
            reporting submission.

      18.4  Notification of Changes in Report Due Dates, Requirements or Formats

            SDOH or LDSS may extend due dates, or modify report requirements or
            formats upon a written request by the Contractor to the SDOH or LDSS
            with a copy of the request to the other agency, where the Contractor
            has demonstrated a good and compelling reason for the extension or
            modification. The determination to grant a modification or,
            extension of time shall be made by SDOH with regard to annual and
            quarterly statements, complaint reports, audits, encounter data,
            change of ownership, clinical studies, QARR, and provider network
            reports. The

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                       (CONTRACTOR REPORTING REQUIREMENTS)
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                                      18-1

<PAGE>

            determination to grant a modification or extension of time shall be
            made by the LDSS with respect to No-Contact, PCP auto assignment,
            and reports required by Sections 18.5 (n) and (o) of the Agreement.

      18.5  Reporting Requirements

            The Contractor shall submit the following reports to SDOH and to the
            LDSS except in those instances in which this Agreement specifies the
            reports shall be submitted solely to SDOH:

            a)    Annual Financial Statements:

                  Contractor shall submit Annual Financial Statements to SDOH.
                  The due date for annual statements shall be April 1 following
                  the report closing date.

            b)    Quarterly Financial Statements:

                  Contractor shall submit Quarterly Financial Statements to
                  SDOH. The due date for quarterly reports shall be forty-five
                  (45) days after the end of the calendar quarter.

            c)    Other Financial Reports:

                  Contractor shall submit financial reports, including certified
                  annual financial statements, and make available documents
                  relevant to its financial condition to SDOH and the State
                  Insurance Department (SID) in a timely manner as required by
                  State laws and regulations including but not limited to PHL
                  Sections 4403-a, 4404 and 4409, Title 10 NYCRR Sections
                  98.11, 98.16 and 98.17 and applicable Insurance Law Sections
                  304, 305, 306, and 310. The LDSS reserves the right to require
                  Contractor to submit such relevant financial reports and
                  documents related to the financial condition of the MCO to the
                  LDSS, as set forth in Section 18.5(o) of this Agreement.

            d)    Encounter Data:

                  The Contractor shall prepare and submit encounter data on a
                  monthly basis to SDOH through its designated Fiscal Agent.
                  Each provider is required to have a unique identifier.
                  Submissions shall be comprised of encounter records, or
                  adjustments to previously submitted records, which the
                  Contractor has received and processed from provider encounter
                  or claim records of any contracted services rendered to the
                  Enrollee in the current or any preceding months. Monthly
                  submissions must be received by the Fiscal Agent by the
                  Tuesday before the last Monday of the month to assure the
                  submission is included in the Fiscal Agent's monthly
                  production processing.

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            e)    Quality of Care Performance Measures:

                  The Contractor shall prepare and submit reports to SDOH, as
                  specified in the Quality Assurance Reporting Requirements
                  (QARR). The Contractor must arrange for an NCQA-certified
                  entity to audit the QARR data prior to its submission to the
                  SDOH, unless this requirement is specifically waived by the
                  SDOH. The SDOH will select the measures which will be audited

            f)    Complaint Reports:

                  The Contractor must provide the SDOH on a quarterly basis, and
                  within fifteen (15) business days of the close of the quarter,
                  a summary of all complaints received during the preceding
                  quarter on the Health Provider Network ("HPN").

                  The Contractor also agrees to provide on a quarterly basis,
                  via the HPN, the total number of complaints that have been
                  unresolved for more than forty-five (45) days. The Contractor
                  shall maintain records on these and other complaints which
                  shall include all correspondence related to the complaint, and
                  an explanation of disposition. These records shall be readily
                  available for review by the SDOH or LDSS upon request.

                  Nothing in this Section is intended to limit the right of the
                  SDOH and the LDSS to obtain information immediately from a
                  Contractor pursuant to investigating a particular Enrollee or
                  provider complaint.

                  The LDSS reserves the right to require the Contractor to
                  submit a hardcopy of complaint reports in Section 18.5(o) of
                  this Agreement.

            g)    Fraud and Abuse Reporting Requirements:

                  i)    The Contractor must submit quarterly, via the HPN
                        complaint reporting format, the number of complaints of
                        fraud or abuse made to the Contractor that warrant
                        preliminary investigation by the Contractor.

                  ii)   The Contractor must also submit to the SDOH the
                        following on an ongoing basis for each confirmed case of
                        fraud and abuse it identifies through complaints,
                        organizational monitoring, contractors, subcontractors,
                        providers, beneficiaries, Enrollees, etc:

                        A)    The name of the individual or entity that
                              committed the fraud or abuse;

                        B)    The source that identified the fraud or abuse;

                        C)    The type of provider, entity or organization that
                              committed the fraud or abuse;

                        D)    A description of the fraud or abuse;

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                        E)    The approximate range of dollars involved;

                        F)    The legal and administrative disposition of the
                              case including actions taken by law enforcement
                              officials to whom the case has been referred; and

                        G)    Other data/information as prescribed by SDOH.

                  iii)  Such report shall be submitted when cases of fraud and
                        abuse are confirmed, and shall be reviewed and signed by
                        an executive officer of the Contractor.

            h)    Participating Provider Network Reports:

                  The Contractor shall submit electronically, to the HPN, an
                  updated provider network report on a quarterly basis. The
                  Contractor shall submit an annual notarized attestation that
                  the providers listed in each submission have executed an
                  agreement with the Contractor to serve Contractor's Medicaid
                  Enrollees. The report submission must comply with the Managed
                  Care Provider Network Data Dictionary. Networks must be
                  reported separately for each county in which the Contractor
                  operates.

            i)    Appointment Availability/Twenty-four (24) Hour Access and
                  Availability Surveys:

                  The Contractor will conduct a county specific (or service area
                  if appropriate) review of appointment availability and
                  twenty-four (24) hour access and availability surveys
                  annually. Results of such surveys must be kept on file and be
                  readily available for review by the SDOH or LDSS, upon
                  request. Guidelines for such studies may be obtained by
                  contacting the SDOH, Office of Managed Care, Bureau of
                  Certification and Surveillance.

                  The LDSS reserves the right to require the Contractor to
                  conduct appointment availability and twenty-four (24) hour
                  access studies twice a year, and to submit these reports to
                  the LDSS, as stated in Section 18.5(o) of this Agreement.

            j)    Clinical Studies:

                  The Contractor will participate in up to four (4) SDOH
                  sponsored focused clinical studies annually. The purpose of
                  these studies will be to promote quality improvement within
                  the MCO.

                  The Contractor will be required to conduct at least one (1)
                  internal focused clinical study each year in a priority topic
                  area of its choosing, from a list to be generated through the
                  mutual agreement of the SDOH and the Contractor's Medical
                  Director. The Contractor may conduct its internal focused
                  clinical study in conjunction with one or more MCOs. The

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<PAGE>

                  purpose of these studies will be to promote quality
                  improvement within the MCO. SDOH will provide guidelines which
                  address study structure and plan collaboration. Results of
                  these studies will be provided to the SDOH and the LDSS.

            k)    Independent Audits:

                  The Contractor must submit copies of all certified financial
                  statements and a QARR validation audit by independent auditors
                  of their plan to the SDOH and the LDSS within thirty (30) days
                  of receipt by the Contractor.

            l)    New Enrollee Health Screening Completion Report:

                  The Contractor shall submit a quarterly report within thirty
                  (30) days of the close of the quarter showing the percentage
                  of new Enrollees for which the Contractor was able to complete
                  a health screening consistent with Section 13.5(b) of this
                  Contract.

            m)    Additional Reports:

                  Upon request by the SDOH and/or the LDSS, the Contractor shall
                  prepare and submit other operational data reports. Such
                  requests will be limited to situations in which the desired
                  data is considered essential and cannot be obtained through
                  existing Contractor reports. Whenever possible, the Contractor
                  will be provided with ninety (90) days notice and the
                  opportunity to discuss and comment on the proposed
                  requirements before work is begun. However, the SDOH and the
                  LDSS reserve the right to give thirty (30) days notice in
                  circumstances where time is of the essence.

            n)    LDSS Specific Reports:

                  The Contractor shall submit to Orange County Department of
                  Social Services a monthly report to all additions to and
                  deletions from the Contractor's Orange County provider network
                  which occurred during the preceding month and of any known
                  prospective changes.

      18.1  Ownership and Related Information Disclosure

            The Contractor shall report ownership and related information to
            SDOH and the LDSS, and upon request to the Secretary of Department
            of Health and Human Services and the Inspector General of Health and
            Human Services, in accordance with 42 U.S.C. Section 1320a-3 and
            1396b(m)(4) (Sections 1124 and 1903(m)(4) of the Federal Social
            Security Act).

      18.7  Revision of Certificate of Authority

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                                      18-5

<PAGE>

            The Contractor shall give prompt written notice to LDSS of any
            revisions of its Certificate of Authority issued pursuant to Article
            44 of the State Public Health Law.

      18.8  Public Access to Reports

            Any data, information, or reports collected and prepared by the
            Contractor and submitted to NYS authorities in the course of
            performing their duties and obligation under this program will be
            deemed to be owned by the State of New York subject to and
            consistent with the requirements of Freedom of Information Law. This
            provision is made in consideration of the Contractor's use of public
            funds in collecting and preparing such data, information, and
            reports.

      18.9  Professional Discipline

            a)    Pursuant to PHL Section 4405-b, the Contractor shall have in
                  place policies and procedures to report to the appropriate
                  professional disciplinary agency within thirty (30) days of
                  occurrence, any of the following:

                  i)    the termination of a health care provider contract
                        pursuant to Section 4406-d of the Public Health Law for
                        reasons relating to alleged mental and physical
                        impairment, misconduct or impairment of patient safety
                        or welfare;

                  ii)   the voluntary or involuntary termination of a contract
                        or employment or other affiliation with such Contractor
                        to avoid the imposition of disciplinary measures; or

                  iii)  the termination of a health care provider contract in
                        the case of a determination of fraud or in a case of
                        imminent harm to patient health.

            b)    The Contractor shall make a report to the appropriate
                  professional disciplinary agency within thirty (30) days of
                  obtaining knowledge of any information that reasonably appears
                  to show that a health professional is guilty of professional
                  misconduct as defined in Articles 130 and 131(a) of the State
                  Education Law.

      18.10 Certification Regarding Individuals Who Have Been Debarred Or
            Suspended By Federal or State Government

            Contractor will certify to the SDOH and LDSS initially and
            immediately upon changed circumstances from the last such
            certification that it does not knowingly have an individual who has
            been debarred or suspended by the federal or state government, or
            otherwise excluded from participating in procurement activities:

            a)    as a director, officer, partner or person with beneficial
                  ownership of more than 5% of the Contractor's equity; or

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                       (CONTRACTOR REPORTING REQUIREMENTS)
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<PAGE>

            b)    as a party to an employment, consulting or other agreement
                  with the Contractor for the provision of items and services
                  that are significant and material to the Contractor's
                  obligations in the Medicaid managed care program, consistent
                  with requirements of SSA ' 1982 (d)(1).

      18.11 Conflict of Interest Disclosure

            Contractor shall report to SDOH, in a format specified by SDOH,
            documentation, including but not limited to the identity of and
            financial statements of, person(s) or corporation(s) with an
            ownership or contract interest in the managed care plan, or with any
            subcontract(s) in which the managed care plan has a 5% or more
            ownership interest, consistent with requirements of SSA ' 1903
            (m)(2)(a)(viii) and 42 CFR ' ' 455.100 B 455.104.

      18.12 Physician Incentive Plan Reporting

            The Contractor shall submit to SDOH annual reports containing the
            information on all of its Physician Incentive Plan arrangements in
            accordance with 42 CFR Section 434.70 or, if no such arrangements
            are in place, attest to that. The contents and time frame of such
            reports shall comply with the requirements of 42 CFR Section 417.479
            and be in a format provided by SDOH.

                                   SECTION 18
                       (CONTRACTOR REPORTING REQUIREMENTS)
                                 October 1, 2004
                                      18-7

<PAGE>

19.   RECORDS MAINTENANCE AND AUDIT RIGHTS

      19.1  Maintenance of Contractor Performance Records

            The Contractor shall maintain and shall require its subcontractors,
            including its Participating Providers, to maintain appropriate
            records relating to Contractor performance under this Agreement,
            including:

            a)    records related to services provided to Enrollees, including a
                  separate Medical Record for each Enrollee;

            b)    all financial records and statistical data that LDSS, SDOH and
                  any other authorized governmental agency may require including
                  books, accounts, journals, ledgers, and all financial records
                  relating to capitation payments, third party health insurance
                  recovery, and other revenue received and expenses incurred
                  under this Agreement;

            c)    appropriate financial records to document fiscal activities
                  and expenditures, including records relating to the sources
                  and application of funds and to the capacity of the Contractor
                  or its subcontractors, including its Participating Providers,
                  if relevant, to bear the risk of potential financial losses.

      19.2  Maintenance of Financial Records and Statistical Data

            The Contractor shall maintain all financial records and statistical
            data according to generally accepted accounting principles.

      19.3  Access to Contractor Records

            The Contractor shall provide LDSS, SDOH, the Comptroller of the
            State of New York, DHHS, the Comptroller General of the United
            States, and their authorized representatives with access to all
            records relating to Contractor performance under this Agreement for
            the purposes of examination, audit, and copying (at reasonable cost
            to the requesting party) of such records. The Contractor shall give
            access to such records on two (2) business days prior written
            notice, during normal business hours, unless otherwise provided or
            permitted by applicable laws, rules, or regulations.

      19.4  Retention Periods

            The Contractor shall preserve and retain all records relating to
            Contractor performance under this Agreement in readily accessible
            form during the term of this Agreement and for a period of six (6)
            years thereafter except that the Contractor shall retain Enrollees'
            medical records that are in the custody of the Contractor for six
            (6) years after the date of service rendered to the Enrollee or

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                     (RECORDS MAINTENANCE AND AUDIT RIGHTS)
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<PAGE>

            cessation of Contractor operation, and in the case of a minor, for
            six (6) years after majority. The Contractor shall require and make
            reasonable efforts to assure that Enrollees' medical records are
            retained by providers for six (6) years after the date of service
            rendered to the Enrollee or cessation of Contractor operation, and
            in the case of a minor, for six (6) years after majority. All
            provisions of this Agreement relating to record maintenance and
            audit access shall survive the termination of this Agreement and
            shall bind the Contractor until the expiration of a period of six
            (6) years commencing with termination of this Agreement or if an
            audit is commenced, until the completion of the audit, whichever
            occurs later. If the Contractor becomes aware of any litigation,
            claim, financial management review or audit that is started before
            the expiration of the six (6) year period, the records shall be
            retained until all litigation, claims, financial management reviews
            or audit findings involved in the record have been resolved and
            final action taken.

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                     (RECORDS MAINTENANCE AND AUDIT RIGHTS)
                                 October 1, 2004
                                      19-2
<PAGE>

20. CONFIDENTIALITY

      20.1  Confidentiality of Identifying Information about Medicaid Recipients
            and Applicants

            All information relating to services to Medicaid recipients and
            applicants which is obtained by the Contractor shall be confidential
            pursuant to the New York State Public Health Law including PHL
            Article 27 F, the provisions of Section 369(4) of the NYS Social
            Services Law, 42 U.S.C. Section 1396a(a)(7) (Section 1902(a)(7) of
            the Federal Social Security Act), Section 33.13 of the Mental
            Hygiene Law, and regulations promulgated under such laws including
            42 CFR Part 2 pertaining to Alcohol and Substance Abuse Services.
            Such information including information relating to services to
            Medicaid recipients and applicants as these relate to the provision
            of services to the recipient or applicant under this Agreement shall
            be used or disclosed by the Contractor only for a purpose directly
            connected with performance of the Contractor's obligations. It shall
            be the responsibility of the Contractor to inform its employees and
            contractors of the confidential nature of Medicaid information.

      20.2  Medical Records of Foster Children

            Medical records of enrolled Medicaid recipients enrolled in foster
            care programs shall be disclosed to local social service officials
            in accordance with State Social Services Law including Sections
            358-a, 384-a and 392 and 18 NYCRR Section 507.1.

      20.3  Confidentiality of Medical Records

            Medical records of Medicaid recipients enrolled pursuant to this
            Agreement shall be confidential and shall be disclosed to and by
            other persons within the Contractor's organization including
            Participating Providers, only as necessary to provide medical care,
            to conduct quality assurance functions and peer review functions, or
            as necessary to respond to a complaint and appeal under the terms of
            this Agreement.

      20.4  Length of Confidentiality Requirements

            The provisions of this Section shall survive the termination of this
            Agreement and shall bind the Contractor so long as the Contractor
            maintains any individually identifiable information relating to
            Medicaid recipients and applicants.

                                   SECTION 20
                               (CONFIDENTIALITY)
                                October 1, 2004
                                      20-1

<PAGE>

21.   PARTICIPATING PROVIDERS

21.1  Network Requirements

      a)    Sufficient Number

            i)    The Contractor will establish and maintain a network of
                  Participating Providers.

            ii)   The Contractor's network must contain all of the provider
                  types necessary to furnish the prepaid Benefit Package,
                  including but not limited to: hospitals, physicians (primary
                  care and specialists), mental health and substance abuse
                  providers, allied health professionals, ancillary providers,
                  DME providers and home health providers.

            iii)  To be considered accessible, the network must contain a
                  sufficient number and array of providers to meet the diverse
                  needs of the Enrollee population. This includes being
                  geographically accessible (meeting time/distance standards)
                  and being accessible for the disabled.

            iv)   The Contractor shall not include in its network any provider
                  who has been sanctioned or prohibited from serving Medicaid
                  recipients or receiving Medical Assistance payments.

      b)    Absence of Appropriate Network Provider

            In the event that the Contractor determines that it does not have a
            Participating Provider with appropriate training and experience to
            meet the particular health care needs of an Enrollee, the Contractor
            shall make a referral to an appropriate Non-Participating Provider,
            pursuant to a treatment plan approved by the Contractor in
            consultation with the Primary Care Provider, the Non-Participating
            Provider and the Enrollee or the Enrollee's designee. The Contractor
            shall pay for the cost of the services in the treatment plan
            provided by the Non-Participating Provider.

      c)    Suspension of Enrollee Assignments To Providers

            The Contractor shall ensure that there is sufficient capacity,
            consistent with SDOH standards, to serve Enrollees under this
            Agreement. In the event any of the Contractor's Participating
            Providers are no longer able to accept assignment of new Enrollees
            due to capacity limitations, as determined by the SDOH and the LDSS,
            the Contractor will suspend assignment of any additional Enrollees
            to such Participating Provider until it is capable of further
            accepting Enrollees. When a Participating Provider has more than one
            (1) site, the suspension will be made by site.

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 2004
                                      21-1

<PAGE>

      d)    Notice of Provider Termination

            The Contractor shall notify LDSS and SDOH of any notice of
            termination of an IPA, hospital or medical group provider agreement
            which affects an Enrollee's access to care.

            Such notification to the LDSS and the SDOH shall be made ninety (90)
            days prior to the effective date of the termination of the provider
            agreement or immediately upon notice from such provider if less than
            ninety (90) days.

            The Contractor shall also notify LDSS and SDOH in the event that the
            Contractor and the providers have failed to re-execute a renewal
            provider agreement forty-five (45) days prior to the expiration of
            the agreement.

            The Contractor shall submit a contingency plan to LDSS and SDOH, at
            least forty-five (45) days prior to the termination of expiration
            of the agreement, identifying the number of Enrollees affected by
            the potential withdrawal, if applicable, and specifying how services
            previously furnished by the participating providers will be provided
            in the event of their withdrawal. If the provider is a participating
            hospital, the Contractor shall identify the number of doctors who
            would not have admitting privileges in the absence of such
            participating hospital.

            The Contractor shall develop a transition plan for patients of the
            departing providers subject to approval by LDSS and SDOH. SDOH and
            LDSS may direct the Contractor to provide notice to the patients of
            PCPs or specialists including available options for the patients,
            and availability of continuing care, consistent with Section 13.7,
            not less than thirty (30) days prior to the termination of the
            provider agreement. In the event that provider agreements are
            terminated with less than the notice period required by this
            section, the Contractor shall immediately notify LDSS and SDOH, and
            develop a transition plan on an expedited basis and provide notice
            to patients subject to the consent of LDSS and SDOH.

            Upon Contractor notice of failure to re-execute, or termination of,
            a provider agreement, the SDOH and the LDSS, in their sole
            discretion, may waive the requirement of submission of a contingency
            plan upon a determination by the SDOH and the LDSS that:

            i)    the impact upon Enrollees is not significant, and/or

            ii)   the Contractor and provider are continuing to negotiate in
                  good faith and consent to extend the provider agreement for a
                  period of time necessary to provide not less than thirty (30)
                  days notice to Enrollees.

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 OCTOBER 1, 2004
                                      21-2

<PAGE>

            SDOH and the LDSS reserve the right to take any other actions
            permitted by this Agreement and under regulatory or statutory
            authority, including but not limited to contract termination.

      21.2  Credentialing

            a)    Licensure

                  The Contractor shall ensure, in accordance with Article 44 of
                  the Public Health Law, that persons and entities providing
                  care and services for the Contractor in the capacity of
                  physician, dentist, physician's assistant, registered nurse,
                  other medical professional or paraprofessional, or other such
                  person or entity satisfy all applicable licensing,
                  certification, or qualification requirements under New York
                  law and that the functions and responsibilities of such
                  persons and entities in providing Benefit Package services
                  under this Agreement do not exceed those permissible under New
                  York law.

            b)    Minimum Standards

                  The Contractor agrees that all network physicians will meet at
                  least one (1) of the following standards, except as specified
                  in Section 21.13(b) and Appendix I of this agreement:

                  i)    Be board-certified or -eligible in their area of
                        specialty;

                  ii)   Have completed an accredited residency program; or

                  iii)  Have admitting privileges at one (1) or more hospitals
                        participating in the Contractor's network.

            c)    Credentialing/Recredentialing Process

                  The Contractor shall have in place a formal process for
                  credentialing Participating Providers on a periodic basis (not
                  less than once every three (3) years) and for monitoring
                  Participating Providers performance.

            d)    Application Procedure

                  The Contractor shall establish a written application procedure
                  to be used by a health care professional interested in serving
                  as a Participating Provider with the Contractor. The criteria
                  for selecting providers, including the minimum qualification
                  requirements that a health care professional must meet to be
                  considered by the Contractor, must be defined in writing and
                  developed in consultation with appropriately qualified health
                  care professionals. Upon request, the application procedures
                  and minimum qualification requirements must be made available
                  to health care professionals.

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 2004
                                      21-3

<PAGE>

      21.3  SDOH Exclusion or Termination of Providers

            If SDOH excludes or terminates a provider from its Medicaid Program,
            the Contractor shall, upon learning of such exclusion or
            termination, immediately terminate the provider agreement with the
            Participating Provider as it pertains to the Contractor's Medicaid
            program, and agrees to no longer utilize the services of the subject
            provider, as applicable. The Contractor shall access information
            pertaining to excluded Medicaid providers through the SDOH Health
            Provider Network (HPN). Such information available to the Contractor
            on the HPN shall be deemed to constitute constructive notice. The
            HPN should not be the sole basis for identifying current exclusions
            or termination of previously approved providers. Should the
            Contractor become aware, through the HPN or any other source, of an
            SDOH exclusion or termination, the Contractor shall validate this
            information with the Office of Medicaid Management, Bureau of
            Enforcement Activities and comply with the provisions of this
            Section.

      21.4  Evaluation Information

            The Contractor shall develop and implement policies and procedures
            to ensure that health care professionals are regularly advised of
            information maintained by the Contractor to evaluate the performance
            or practice of health care professionals. The Contractor shall
            consult with health care professionals in developing methodologies
            to collect and analyze health care professional profiling data. The
            Contractor shall provide any such information and profiling data and
            analysis to health care professionals. Such information, data or
            analysis shall be provided on a periodic basis appropriate to the
            nature and amount of data and the volume and scope of services
            provided. Any profiling data used to evaluate the performance or
            practice of a health care professional shall be measured against
            stated criteria and an appropriate group of health care
            professionals using similar treatment modalities serving a
            comparable patient population. Upon presentation of such information
            or data, each health care professional shall be given the
            opportunity to discuss the unique nature of the health care
            professional's patient population which may have a bearing on the
            health care professional's profile and to work cooperatively with
            the Contractor to improve performance.

      21.5  Payment In Full

            Contractor must limit participation to providers who agree that
            payment received from the Contractor for services included in the
            Benefit Package is payment in full for services provided to
            Enrollees.

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 2004
                                      21-4

<PAGE>

      21.6  Choice/Assignment of PCP's

            a)    The Contractor shall offer each Enrollee the choice of no
                  fewer than three (3) Primary Care Providers within program
                  distance/travel time standards. Contractor must assign a PCP
                  to individuals that fail to select a PCP. The assignment of a
                  PCP by the Contractor may occur after written notification of
                  Contractor by LDSS of the enrollment (through Roster or other
                  method) and after written notification of the Enrollee by the
                  Contractor but in no event later than thirty (30) days after
                  notification of enrollment, and only after the Contractor has
                  made reasonable efforts as set forth in Section 13.5 of this
                  Agreement to contact the Enrollee and inform him/her of
                  his/her right to choose a PCP.

            b)    PCP assignments should be made taking into consideration the
                  following:

                  i)    Enrollee's geographic location;

                  ii)   any special health care needs, if known by the
                        Contractor; and

                  iii)  any special language needs, if known by the Contractor.

            c)    In circumstances where the Contractor operates or contracts
                  with a multi-provider clinic to deliver primary care
                  services, the Enrollee must choose or be assigned a specific
                  provider or provider team within the clinic to serve as
                  his/her PCP. This "lead" provider will be held accountable for
                  performing the PCP duties.

      21.7  PCP Changes

            a)    The Contractor must allow Enrollees the freedom to change
                  PCPs, without cause, within thirty (30) days of the Enrollee's
                  first appointment with the PCP. After the first thirty (30)
                  days PCP may be changed once every six (6) months without
                  cause.

            b)    The Contractor must process a request to change PCPs and
                  advise the Enrollee of the effective date of the change within
                  forty-five (45) days of receipt of the request. The change
                  must be effective no later than the first (1st) day of the
                  second (2nd) month following the month in which the request is
                  made.

            c)    The Contractor will provide Enrollees with an opportunity to
                  select a new PCP in the event that the Enrollee's current PCP
                  leaves the network or otherwise becomes unavailable. Such
                  changes shall not be considered in the calculation of changes
                  for cause allowed within a six (6) month period.

            d)    In the event that an assignment of a new PCP is necessary due
                  to the unavailability of the Enrollee's former PCP, such
                  assignment shall be

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 2004
                                      21-5

<PAGE>

                  made in accordance with the requirements of Section 21.6 of
                  this Agreement.

            e)    In addition to those conditions and circumstances under which
                  the Contractor may assign an Enrollee a PCP when the Enrollee
                  fails to make an affirmative choice of a PCP, the Contractor
                  may initiate a PCP change for an Enrollee under the following
                  circumstances:

                  i)    The Enrollee requires specialized care for an acute or
                        chronic condition and the Enrollee and Contractor agree
                        that reassignment to a different PCP is in the
                        Enrollee's interest.

                  ii)   The Enrollee's place of residence has changed such that
                        he/she has moved beyond the PCP travel time/distance
                        standard.

                  iii)  The Enrollee's PCP ceases to participate in the
                        Contractor's network.

                  iv)   The Enrollee's behavior toward the PCP is disruptive and
                        the PCP has made all reasonable efforts to accommodate
                        the Enrollee.

                  v)    The Enrollee has taken legal action against the PCP.

            f)    Whenever initiating a change, the Contractor must offer
                  affected Enrollees the opportunity to select a new PCP in the
                  manner described in this Section.

      21.8  Provider Status Changes

            1)    PCP Changes

                  The Contractor agrees to notify its Enrollees of any of the
                  following PCP changes:

                  a)    Enrollees will be notified within fifteen (15) days from
                        the date on which the Contractor becomes aware that such
                        Enrollee's PCP has changed his or her office address or
                        telephone number.

                  b)    If a PCP ceases participation in the Contractor's
                        network, the Contractor shall provide written notice
                        within fifteen (15) days from the date that the
                        Contractor becomes aware of such change in status to
                        each Enrollee who has chosen the provider as their PCP.
                        In such cases, the notice shall describe the procedures
                        for choosing an alternative PCP and, in the event that
                        the Enrollee is in an ongoing course of treatment, the
                        procedures for continuing care consistent with
                        subdivision 6 (e) of PHL Section 4403.

                  c)    Where an Enrollee's PCP ceases participation with the
                        Contractor, the Contractor must ensure that a new PCP is
                        assigned within thirty (30) days of the date of the
                        notice to the Enrollee.

            2)    Other Provider Changes

                  In the event that an Enrollee is in an ongoing course of
                  treatment with another Participating Provider who becomes
                  unavailable to continue to provide

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 2004
                                      21-6

<PAGE>

                  services to such Enrollee, the Contractor shall provide
                  written notice to the Enrollee within fifteen (15) days from
                  the date on which the Contractor becomes aware of the
                  Participating Provider's unavailability to the Enrollee. In
                  such cases, the notice shall describe the procedures for
                  continuing care consistent with subdivision 6 (e) of PHL
                  Section 4403 and for choosing an alternative provider.

      21.9  PCP Responsibilities

            In conformance with the Benefit Package, the PCP shall provide
            health counseling and advice; conduct baseline and periodic health
            examinations; diagnose and treat conditions not requiring the
            services of a specialist; arrange inpatient care, consultation with
            specialists, and laboratory and radiological services when medically
            necessary; coordinate the findings of consultants and laboratories;
            and interpret such findings to the Enrollee and the Enrollee's
            family, subject to the confidentiality provisions of Section 20 of
            this Agreement, and maintain a current medical record for the
            Enrollee. The PCP shall also be responsible for determining the
            urgency of a consultation with a specialist and shall arrange for
            all consultation appointments within appropriate time frames.

      21.10 Member to Provider Ratios

            The Contractor agrees to adhere to the member-to-PCP ratios shown
            below. These ratios are for Medicaid Enrollees only, are
            Contractor-specific, and assume the practitioner is a full time
            equivalent (FTE) (defined as a provider practicing forty (40) hours
            per week for the Contractor):

            i)    No more than 1,500 Medicaid Enrollees for each physician, or
                  2,400 for a physician practicing in combination with a
                  registered physician assistant or a certified nurse
                  practitioner.

            ii)   No more than 1,000 Medicaid Enrollees for each certified nurse
                  practitioner.

            The Contractor agrees that these ratios will be prorated for
            Participating Providers who represent less than a FTE to the
            Contractor.

      21.11 Minimum Office Hours

            a)    General Requirements

                  A PCP must practice a minimum of sixteen (16) hours a week at
                  each primary care site.

            b)    The minimum office hours requirement may be waived under
                  certain circumstances. A request for a waiver must be
                  submitted by the MCO to the Medical Director of the Office of
                  Managed Care for review and approval; and the physician must
                  be available at least eight hours/week; and the

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 2004
                                      21-7

<PAGE>

                  physician must be practicing in a Health Provider Shortage
                  Area (HPSA) or other similarly determined shortage area; and
                  the physician must be able to fulfill the other
                  responsibilities of a PCP (as described in this Section); and
                  the waiver request must demonstrate there are systems in place
                  to guarantee continuity of care and to meet all access and
                  availability standards, (24-hr/7 day week coverage,
                  appointment availability, etc.). SDOH shall notify the LDSS
                  when a waiver has been granted.

      21.12 Primary Care Practitioners

            a)    General Limitations

                  The Contractor agrees to limit its PCPs to the following
                  primary care specialties: Family Practice, General Practice,
                  General Pediatrics, General Internal Medicine, except as
                  specified in (b), (c), (d) and (e) of this Section.

            b)    Specialist and Sub-specialist as PCPs

                  The Contractor is permitted to use specialist and
                  sub-specialist physicians as PCPs when such an action is
                  considered by the Contractor to be medically appropriate and
                  cost-effective. As an alternative, the Contractor may restrict
                  it's PCP network to primary care specialties only, while
                  relying on standing referrals to specialists and
                  sub-specialists for Enrollees who require regular visits to
                  such physicians.

            c)    OB/GYN Providers as PCPs

                  The Contractor, at its option, is permitted to use OB/GYN
                  providers as PCPs, subject to SDOH qualifications.

            d)    Certified Nurse Practitioners as PCPs

                  The Contractor is permitted to use certified nurse
                  practitioners as PCPs, subject to their scope of practice
                  limitations under New York State Law.

            e)    Registered Physician's Assistants as Physician Extenders

                  The Contractor is permitted to use registered physician's
                  assistants as physician-extenders, subject to their scope of
                  practice limitations under New York State Law.

                                     SECTION 21
                         (PROVIDER NETWORK AND AGREEMENTS)
                                    October 1, 2004
                                        21-8

<PAGE>

      21.13 PCP Teams

            a)    General Requirements

                  The Contractor may designate teams of physicians/certified
                  nurse practitioners to serve as PCPs for Enrollees. Such teams
                  may include no more than four (4) physicians/certified nurse
                  practitioners and, when an Enrollee chooses or is assigned to
                  a team, one of the practitioners must be designated as "lead
                  provider" for that Enrollee. In the case of teams comprised of
                  medical residents under the supervision of an attending
                  physician, the attending physician must be designated as the
                  lead physician.

            b)    Medical Residents

                  The Contractor shall comply with SDOH Guidelines for use of
                  Medical Residents as found in Appendix I, which is hereby made
                  a part of this Agreement as if set forth fully herein.

      21.14 Hospitals

            a)    Tertiary Services

                  The Contractor will establish hospital networks capable of
                  furnishing the full range of tertiary services to Enrollees.
                  Contractors shall ensure that all Enrollees have access to at
                  least one (1) general acute care hospital within thirty (30)
                  minutes/thirty (30) miles travel time (by car or public
                  transportation) from the Enrollee's residence, unless none are
                  located within such a distance. If none are located within
                  thirty (30) minutes travel time/thirty (30) miles travel
                  distance, the Contractor must include the next closest site in
                  its network.

            b)    Emergency Services

                  The Contractor shall ensure and demonstrate that it maintains
                  relationships with hospital emergency facilities, including
                  comprehensive psychiatric emergency programs (where available)
                  within and around its Service Area to provide Emergency
                  Services.

      21.15 Dental Networks

            If the Contractor includes dental services in its Benefit Package,
            the Contractor's dental network shall include geographically
            accessible general dentists sufficient to offer each Enrollee a
            choice of two (2) primary care dentists in their Service Area and to
            achieve a ratio of at least one (1) primary care dentist for each
            2,000 Enrollees. Networks must also include at least one (1)
            pediatric dentist and one (1) oral surgeon. Orthognathic surgery,
            temporal mandibular disorders (TMD)

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 2004
                                      21-9

<PAGE>

            and oral/maxillofacial prosthodontics must be provided through any
            qualified dentist, either in-network or by referral. Periodontists
            and endodontists must also be available by referral. The network
            should include dentists with expertise in serving special needs
            populations (e.g., HIV+ and developmentally disabled patients).

            Dental surgery performed in an ambulatory or inpatient setting is
            the responsibility of the Contractor whether dental services are a
            covered benefit or not, as set forth in Appendix K-II - B-Optional
            Service, Dental Services.

      21.16 Presumptive Eligibility Providers

            Contractors must offer Presumptive Eligibility Providers the
            opportunity to contract at terms which are at least as favorable as
            the terms offered to other providers performing equivalent services
            (prenatal care). Contractors need not contract with every
            Presumptive Eligibility Provider in their County, but must include a
            sufficient number in their networks of Participating Providers to
            meet the distance/travel time standards defined for primary care.

      21.17 Mental Health and Chemical Dependence Services Providers

            The Contractor will include a full array of mental health and
            Chemical Dependence Services providers in its networks, in
            sufficient numbers to assure accessibility to Benefit Package
            services on the part of both children and adults, using either
            individual, appropriately licensed practitioners or New York State
            Office of Mental Health (OMH) and Office of Alcohol and Substance
            Abuse Services (OASAS) licensed programs and clinics, or both.

            The State defines mental health and Chemical Dependence Services
            providers to include the following: Individual Practitioners,
            Psychiatrists, Psychologists, Psychiatric Nurse Practitioners,
            Psychiatric Clinical Nurse Specialists, Licensed Certified Social
            Workers, OMH and OASAS Programs and Clinics, and providers of mental
            health and/or Chemical Dependence Services certified or licensed
            pursuant to Article 31 or 32 of the Mental Hygiene Law, as
            appropriate.

      21.18 Laboratory Procedures

            The Contractor agrees to restrict its laboratory provider network to
            entities having either a CLIA certificate of registration or a CLIA
            certificate of waiver.

      21.19 Federally Qualified Health Centers (FQHCs)

            In voluntary counties, the Contractor is not required to contract
            with FQHCs.

            However, when an FQHC is part of the provider network (voluntary or
            mandatory counties) the Provider Agreement must include a provision
            whereby the

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 2004
                                     21-10

<PAGE>

            Contractor agrees to compensate the FQHC for services provided to
            Enrollees at a payment rate that is not less than the level and
            amount for a similar set of services which the Contractor would make
            to a provider that is not an FQHC.

            In mandatory counties, the Contractor shall contract with FQHCs
            operating in its Service Area. However, the Contractor has the
            option to make a written request to the SDOH for an exemption from
            the FQHC contracting requirement, if the Contractor can demonstrate,
            with supporting documentation, that it has adequate capacity and
            will provide a comparable level of clinical and enabling services
            (e.g., outreach, referral services, social support services,
            culturally sensitive services such as training for medical and
            administrative staff, medical and non-medical and case management
            services) to vulnerable populations in lieu of contracting with an
            FQHC in its Service Area. Written requests for exemption from this
            requirement are subject to approval by HCFA.

            When the Contractor is participating in a county where an MCO that
            is sponsored, owned and/or operated by one or more FQHCs exists, the
            Contractor is not required to include any FQHCs within its network
            in that county.

      21.20 Provider Services Function

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

            a)    Assisting providers with prior authorization and referral
                  protocols.

            b)    Assisting providers with claims payment procedures.

            c)    Fielding and responding to provider questions and complaints.

                                   SECTION 21
                        (PROVIDER NETWORK AND AGREEMENTS)
                                 October 1, 2004
                                      21-11

<PAGE>

22.   SUBCONTRACTS AND PROVIDER AGREEMENTS

      22.1  Written Subcontracts

            Contractor may not enter into any subcontracts related to the
            delivery of services to Enrollees, except by a written agreement.

      22.2  Permissible Subcontracts

            Contractor may subcontract for provider services as set forth in
            Section 2.6 and 21 of this contract and management services
            including, but not limited to, marketing, quality assurance and
            utilization review activities and such other services as are
            acceptable to the SDOH.

      22.3  Provisions of Services through Provider Agreements

            All medical care and/or services covered under this Agreement, with
            the exception of seldom used subspecialty and Emergency Services,
            Family Planning Services, and services for which Enrollees can self
            refer, shall be provided through Provider Agreements with
            Participating Providers.

      22.4  Approvals

            a)    Provider Agreements shall require the approval of SDOH as set
                  forth in PHL 4402 and 10 NYCRR Part 98.

            b)    If a subcontract is for management services under 10 NYCRR
                  Section 98-1.11, it must be approved by SDOH prior to its
                  becoming effective.

            c)    The Contractor shall notify SDOH of any material amendments to
                  any Provider Agreement as set forth in 10 NYCRR Section
                  98-1.8.

      22.5  Required Components

            a)    The Contractor shall impose obligations and duties on its
                  subcontractors, including its Participating Providers, that
                  are consistent with this Agreement, and that do not impair any
                  rights accorded to LDSS, SDOH, or DHHS.

            b)    No subcontract, including any Provider Agreement shall limit
                  or terminate the Contractor's duties and obligations under
                  this Agreement.

            c)    Nothing contained in this Agreement between LDSS and the
                  Contractor shall create any contractual relationship between
                  any subcontractor of the Contractor, including Participating
                  Providers, and the County or LDSS.

                                   SECTION 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 2004
                                      22-1

<PAGE>

            d)    Any subcontract entered into by the Contractor shall fulfill
                  the requirements of 42 [ILLEGIBLE] Part 434 that are
                  appropriate to the service or activity delegated under such
                  subcontract.

            e)    The Contractor shall also ensure that, in the event the
                  Contractor fails to pay any subcontractor, including any
                  Participating Provider in accordance with the subcontract or
                  Provider Agreement, the subcontractor or Participating
                  Provider will not seek payment from the LDSS, the Enrollees,
                  or their eligible dependents.

            f)    The Contractor shall include in every Provider Agreement a
                  procedure for the resolution of disputes between the
                  Contractor and its Participating Providers.

            g)    The Contractor shall ensure that all Provider Agreements
                  entered into with Providers require acceptance of a woman's
                  enrollment in the MCO as sufficient to provide services to her
                  newborn, unless the newborn is excluded from participating in
                  Medicaid managed care.

      22.6  Timely Payment

            Contractor shall make payments to health care providers for items
            and services covered under this Agreement on a timely basis,
            consistent with the claims payment procedures described in NYS
            Insurance Law Section 3224-a.

      22.7  Restrictions on Disclosure

            The Contractor shall not by contract or written policy or written
            procedure prohibit or restrict any health care provider from the
            following:

            a) disclosing to any subscriber, Enrollee, patient, designated
               representative or, where appropriate, prospective Enrollee any
               information that such provider deems appropriate regarding:

                  i)    a condition or a course of treatment with such
                        subscriber, Enrollee, patient, designated representative
                        or prospective Enrollee, including the availability of
                        other therapies, consultations, or tests; or

                  ii)   The provisions, terms, or requirements of the
                        Contractor's products as they relate to the Enrollee,
                        where applicable.

            b) filing a complaint, making a report or comment to an appropriate
               governmental body regarding the policies or practices of the
               Contractor when they believe that the policies or practices
               negatively impact upon the quality of, or access to, patient care

            c) advocating to the Contractor on behalf of the Enrollee for
               approval or coverage of a particular treatment or for the
               provision of health care services.

                                   SECTION 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 2004
                                      22-2

<PAGE>

      22.8  Transfer of Liability

            No contract or agreement between the Contractor and a health care
            provider shall contain any clause purporting to transfer to the
            health care provider, other than a medical group, by indemnification
            or otherwise, any liability relating to activities, actions or
            omissions of the Contractor as opposed to those of the health care
            provider.

      22.9  Termination of Health Care Professional Agreements

            The Contractor shall not terminate a contract with a health care
            professional unless the Contractor provides to the health care
            professional a written explanation of the reasons for the proposed
            termination and an opportunity for a review or hearing as
            hereinafter provided. For purposes of this Section a health care
            professional is an individual licensed, registered or certified
            pursuant to Title 8 of the Education Law.

            These requirements shall not apply in cases involving imminent harm
            to patient care, a determination of fraud, or a final disciplinary
            action by a state licensing board or other governmental agency that
            impairs the health care professional's ability to practice.

            When the Contractor desires to terminate a contract with a health
            care professional, the notification of the proposed termination by
            the Contractor to the health care professional shall include:

            a)    the reasons for the proposed action;

            b)    notice that the health care professional has the right to
                  request a hearing or review, at the provider's discretion,
                  before a panel appointed by the Contractor;

            c)    a time limit of not less than thirty (30) days within which a
                  health care professional may request a hearing; and

            d)    a time limit for a hearing date which must be held within
                  thirty (30) days after the date of receipt of a request for a
                  hearing.

            No contract or agreement between the Contractor and a health care
            professional shall contain any provision which shall supersede or
            impair a health care professional's right to notice of reasons for
            termination and the opportunity for a hearing or review concerning
            such termination.

                                   SECTION 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 2004
                                      22-3

<PAGE>

      22.10 Health Care Professional Hearings

            A health care professional that has been notified of his or her
            proposed termination must be allowed a hearing. The procedures for
            this hearing must meet the following standards:

            a)    The hearing panel shall be comprised of at least three persons
                  appointed by the Contractor. At least one person on such panel
                  shall be a clinical peer in the same discipline and the same
                  or similar specialty as the health care professional under
                  review. The hearing panel may consist of more than three
                  persons, provided however that the number of clinical peers on
                  such panel shall constitute one-third or more of the total
                  membership of the panel.

            b)    The hearing panel shall render a decision on the proposed
                  action in a timely manner. Such decision shall include
                  reinstatement of the health care professional by the
                  Contractor, provisional reinstatement subject to conditions
                  set forth by the Contractor or termination of the health care
                  professional. Such decision shall be provided in writing to
                  the health care professional.

            c)    A decision by the hearing panel to terminate a health care
                  professional shall be effective not less than thirty (30) days
                  after the receipt by the health care professional of the
                  hearing panel's decision. Notwithstanding the termination of a
                  health care professional for cause or pursuant to a hearing, a
                  plan shall permit an Enrollee to continue an on-going course
                  of treatment for a transition period of up to ninety (90)
                  days, and post-partum care, subject to provider agreement,
                  pursuant to PHL Section 4406(6)(e).

            d)    In no event shall termination be effective earlier than sixty
                  (60) days from the receipt of the notice of termination.

      22.11 Non-Renewal of Provider Agreements

            Either party to a contract may exercise a right of non-renewal at
            the expiration of the contract period set forth therein or, for a
            contract without a specific expiration date, on each January first
            occurring after the contract has been in effect for at least one
            year, upon sixty (60) days notice to the other party; provided,
            however, that any non-renewal shall not constitute a termination for
            the purposes of this Section.

                                   SECTION 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 2004
                                      22-4

<PAGE>

      22.12 Physician Incentive Plan

            If Contractor elects to operate a Physician Incentive Plan,
            Contractor agrees that no specific payment will be made directly or
            indirectly under the plan to a physician or physician group as an
            inducement to reduce or limit medically necessary services furnished
            to an Enrollee. Contractor agrees to submit to SDOH annual reports
            containing the information on its physician incentive plan in
            accordance with 42 CFR Section 434.70. The contents of such reports
            shall comply with the requirements of 42 CFR Section 417.479 and be
            in a format to be provided by SDOH.

            The Contractor must ensure that any agreements for contracted
            services covered by this Agreement, such as agreements between the
            Contractor and other entities or between the Contractor's
            subcontracted entities and their contractors, at all levels
            including the physician level, include language requiring that the
            physician incentive plan information be provided by the
            sub-contractor in an accurate and timely manner to the Contractor,
            in the format requested by SDOH.

            In the event that the incentive arrangements place the physician or
            physician group at risk for services beyond those provided directly
            by the physician or physician group for an amount beyond the risk
            threshold of 25% of potential payments for covered services
            (substantial financial risk), the Contractor must comply with all
            additional requirements listed in regulation, such as: conduct
            enrollee/disenrollee satisfaction surveys; disclose the requirements
            for the physician incentive plans to its beneficiaries upon request;
            and ensure that all physicians and physician groups at substantial
            financial risk have adequate stop-loss protection. Any of these
            additional requirements that are passed on to the subcontractors
            must be clearly stated in their Agreement.

                                   SECTION 22
                              (PROVIDER AGREEMENTS)
                                 October 1, 2004
                                      22-5

<PAGE>

23.   FRAUD AND ABUSE PREVENTION PLAN

      A Fraud and Abuse Prevention Plan for the detection, investigation and
      prevention of fraudulent activities must be filed by the Contractor with
      the Commissioner of Health to the extent required by SDOH regulations. A
      copy of this plan must be submitted to the LDSS, upon request of the LDSS.

24.   AMERICANS WITH DISABILITIES ACT COMPLIANCE PLAN

      Contractor must comply with Title II of the Americans with Disabilities
      Act (ADA) and Section 504 of the Rehabilitation Act of 1973 for program
      accessibility, and must develop an ADA Compliance Plan consistent with the
      SDOH Guidelines for Medicaid MCO Compliance with the ADA which are set
      forth in Appendix J, which is hereby made a part of this Agreement as if
      set forth fully herein. Said plan must be approved by the SDOH and/or the
      LDSS, and filed with the Contractor, SDOH and the LDSS.

25.   FAIR HEARINGS

      25.1  Enrollee Access To Fair Hearing Process

            Enrollees may access the fair hearing process in accordance with
            applicable federal and state laws and regulations. Contractors must
            abide by and participate in New York State's Fair Hearing Process
            and comply with determinations made by a fair hearing officer.

      25.2  Enrollee Rights to a Fair Hearing

            Enrollees may request a fair hearing regarding adverse LDSS
            determinations concerning enrollment, disenrollment and eligibility,
            and regarding the denial, termination, suspension or reduction of a
            clinical treatment or other Benefit Package services by the
            Contractor. For issues related to disputed services, Enrollees must
            have received an adverse determination from the Contractor or its
            approved utilization review agent either overriding a recommendation
            to provide services by a Participating Provider or confirming the
            decision of a Participating Provider to deny those services. An
            Enrollee may also seek a fair hearing for a failure by the
            Contractor to act with reasonable promptness with respect to such
            services. Reasonable promptness shall mean compliance with the time
            frames established for review of grievances and utilization review
            in Sections 44 and 49 of the Public Health Law.

      25.3  Contractor Notice to Enrollees

            a)    Contractor must issue a written Notice of Adverse
                  Determination and Fair Hearing Rights to any Enrollee:

                  i)    When Contractor or its utilization review agent has
                        denied a request to approve a Benefit Package service
                        ordered by an MCO provider; or

                             SECTION 23 - SECTION 37
                                 October 1, 2004
                                       -1-

<PAGE>

                  ii)   When an Enrollee is denied a requested service or
                        benefit by an MCO provider and has exhausted the
                        Contractor's approved internal complaint and appeal
                        procedures or utilization review processes; or

                  iii)  At least 10 days before the effective date of
                        Contractor's termination, suspension or reduction of a
                        benefit or treatment already in progress for that
                        Enrollee.

            b)    Contractor agrees to serve notice on affected Enrollees by
                  mail and must maintain documentation of such.

            c)    Contractor's Notice of Adverse Determination and Notice of a
                  Right to Request a Fair Hearing shall include the following:

                  i)     the description of the action Contractor intends to
                         take;

                  ii)    the reasons for the determination including the
                         clinical rationale, if any;

                  iii)   the process for filing a grievance/complaint with the
                         organization;

                  iv)    the timeframes within which a grievance/complaint must
                         be made;

                  v)     the right of an Enrollee to designate a representative
                         to file a grievance/complaint on behalf of the
                         Enrollee;

                  vi)    the notice of the right of the Enrollee to contact the
                         New York State Department of Health (800 206-8125)
                         with their complaint; and

                  vii)   the notice entitled "Managed Care Action Taken"
                         containing the Enrollee's fair hearing and aid
                         continuing rights.

            d)    The Contractor's Notice of Adverse Determination and Notice of
                  a Right to Request a Fair Hearing for Article 49 Utilization
                  Review Determinations shall include the following:

                  (i)    a description of the action Contractor intends to take;

                  (ii)   the reasons for the determination including the
                         clinical rationale, if any;

                  (iii)  instructions on how to initiate standard and expedited
                         appeals pursuant to section 4904 of the Public Health
                         Law (PHL);

                  (iv)   instructions on how to initiate an external appeal
                         pursuant to section 4914 of the PHL;

                  (v)    notice of availability of the clinical review criteria
                         relied upon to make such determination;

                  (vi)   the additional, if any, necessary information to be
                         provided to, or obtained by, the UR agent in order to
                         render a decision on the appeal;

                  (vii)  notice of the right of the Enrollee to contact the New
                         York State Department of Health (800 206-8125) with
                         their complaint; and

                  (viii) the notice entitled "Managed Care Action Taken"
                         containing the Enrollee's fair hearing and aid
                         continuing rights.

                        SECTION [ILLEGIBLE] - SECTION 37
                                October 1, 2004
                                      -2-

<PAGE>

      25.4  Aid Continuing

            Contractor shall be required to continue the provision of the
            Benefit Package services that are the subject of the fair hearing to
            an Enrollee (hereafter referred to as "aid continuing") if so
            ordered by the OAH under the following circumstances:

            i)       Contractor has or is seeking to reduce, suspend or
                     terminate a treatment or Benefit Package service currently
                     being provided;

            ii)      Enrollee has filed a timely request for a fair hearing with
                     OAH; and

            iii)     There is a valid order for the treatment or service from a
                     participating provider. Contractor shall provide aid
                     continuing until the matter has been resolved to the
                     Enrollee's satisfaction or until the administrative process
                     is completed and there is a determination from OAH that
                     Enrollee is not entitled to receive the service, the
                     Enrollee withdraws the request for aid continuing and/or
                     the fair hearing in writing, or the treatment or service
                     originally ordered by the provider has been completed,
                     whichever occurs first.

            iv)      If the services and/or benefits in dispute have been
                     terminated, suspended or reduced and the Enrollee timely
                     requests a fair hearing, Contractor shall, at the direction
                     of either SDOH or LDSS, restore the disputed services
                     and/or benefits consistent with the provisions of Section
                     25.4(iii) of this Agreement.

      25.5  Responsibilities of SDOH

            SDOH will make every reasonable effort to ensure that the Contractor
            receives timely notice in writing by fax, or e-mail, of all
            requests, schedules and directives regarding fair hearings.

      25.6  Contractor's Obligations

            a)    Contractor shall appear at all scheduled fair hearings
                  concerning its clinical determinations and/or
                  Contractor-initiated disenrollments to present evidence as
                  justification for its determination or submit written evidence
                  as justification for its determination regarding the disputed
                  benefits and/or services. If Contractor will not be making a
                  personal appearance at the fair hearing, the written material
                  must be submitted to OAH and Enrollee or Enrollee's
                  representative at least three (3) business days prior to the
                  scheduled hearing. If the hearing is scheduled fewer than
                  three (3) business days after the request, Contractor must
                  deliver the evidence to the hearing site no later than one (1)
                  business day prior to the hearing, otherwise Contractor must
                  appear in person. Notwithstanding the above provisions,
                  Contractor may be required to make a personal appearance at
                  the discretion of the hearing officer and/or SDOH.

            b)    Despite an Enrollee's request for a State fair hearing in any
                  given dispute, Contractor is required to maintain and operate
                  in good faith its own internal

                             SECTION 23 - SECTION 37
                                 October 1, 2004
                                      -3-

<PAGE>

                  complaint and appeal process as required under state and
                  federal laws and by Section 14 and Appendix F of this
                  Agreement. Enrollees may seek redress of adverse
                  determinations simultaneously through Contractor's internal
                  process and the State fair hearing process. If Contractor has
                  reversed its initial determination and provided the service to
                  the Enrollee, Contractor may request a waiver from appearing
                  at the hearing and, in submitted papers, explain that it has
                  withdrawn its initial determination and is providing the
                  service or treatment formerly in dispute.

            c)    Contractor shall comply with all determinations rendered by
                  OAH at fair hearings. Contractor shall cooperate with SDOH
                  efforts to ensure that Contractor is in compliance with fair
                  hearing determinations. Failure by Contractor to maintain such
                  compliance shall constitute breach of this Agreement. Nothing
                  in this Section shall limit the remedies available to SDOH,
                  LDSS or the federal government relating to any non-compliance
                  by Contractor with a fair hearing determination or
                  Contractor's refusal to provide disputed services.

            d)    If SDOH investigates a complaint that has as its basis the
                  same dispute that is the subject of a pending fair hearing
                  and, as a result of its investigation, concludes that the
                  disputed services and/or benefits should be provided to the
                  Enrollee, Contractor shall comply with SDOH's directive to
                  provide those services and/or benefits and provide notice to
                  OAH and Enrollee as required by Section 25.6(b) of this
                  Agreement.

            e)    If SDOH, through its complaint investigation process, or OAH,
                  by a determination after a fair hearing, directs Contractor to
                  provide a service that was initially denied by Contractor,
                  Contractor may either directly provide the service, arrange
                  for the provision of that service or pay for the provision of
                  that service by a Non-Participating Provider.

            f)    Contractor agrees to abide by changes made to this Section of
                  the Agreement with respect to the fair hearing, grievance and
                  complaint processes by SDOH in order to comply with any
                  amendments to applicable state or federal statutes or
                  regulations. Such changes shall become effective without need
                  for any further action by the parties to this Agreement.

            g)    Contractor agrees to identify a contact person within its
                  organization who will serve as a liaison to SDOH for the
                  purpose of receiving fair hearing requests, scheduled fair
                  hearing dates and adjourned fair hearing dates and compliance
                  with State directives. Such individual: shall be accessible to
                  the State by e-mail; shall monitor e-mail for correspondence
                  from the State at least once every business day; and shall
                  agree, on behalf of Contractor, to accept notices to
                  Contractor transmitted via e-mail as legally valid.

                        SECTION [ILLEGIBLE] - SECTION 37
                                October 1, 2004
                                      -4-

<PAGE>

            h)    The information describing fair hearing rights, aid
                  continuing, complaint procedures and utilization review
                  appeals shall be included in all Medicaid managed care member
                  handbooks and shall comply with SDOH's member handbook
                  guidelines.

            i)    Contractor shall bear the burden of proof at hearings
                  regarding the reduction, suspension or termination of ongoing
                  services. In the event that Contractor's initial adverse
                  determination is upheld as a result of a fair hearing, any aid
                  continuing provided pursuant to that hearing request, may be
                  recouped by Contractor.

26.   EXTERNAL APPEAL

      26.1  Basis for External Appeal

            Managed care Enrollees are eligible to request an external appeal
            when one or more covered health care services have been denied by
            the Contractor on the basis that the service(s) is not medically
            necessary or is experimental or investigational.

      26.2  Eligibility for External Appeal

            An Enrollee is eligible for an external appeal when the Enrollee has
            exhausted the Contractor's internal utilization review procedure or
            both the Enrollee and the Contractor have agreed to waive internal
            appeal procedures in accordance with New York State P.H.L. Section
            4914(2)2(a). A provider is also eligible for an external appeal of
            retrospective denials.

      26.3  External Appeal Determination

            The external appeal determination is binding on the Contractor,
            however, a fair hearing determination supercedes an external appeal
            determination for Medicaid Enrollees.

      26.4  Compliance with External Appeal Laws and Regulations

            MCOs must comply with the provisions of New York State P.H.L.
            Sections 4910-4914 and Title 10 of NYCRR Subpart 98-2 regarding the
            external appeal program.

27.   INTERMEDIATE SANCTIONS

      Contractor is subject to the imposition of sanctions as authorized by
      State law including the SDOH's right to impose sanctions for unacceptable
      practices as set forth in Title 18 of the Official Compilation of Codes,
      Rules and Regulations of the State of New York (NYCRR) Part 515 and civil
      and monetary penalties pursuant to 18 NYCRR Part 516 and such other
      sanctions and penalties as are authorized by local laws and ordinances and

                           SECTION 23 - SECTIONS 37 .
                                 October 1, 2004
                                       -5-

<PAGE>

      resultant administrative codes, rules and regulations related to the
      Medical Assistance Program or to the delivery of the contracted for
      services.

28.   ENVIRONMENTAL COMPLIANCE

      The Contractor shall comply with all applicable standards, orders, or
      requirements issued under Section 306 of the Clean Air Act 42 U.S.C.
      Section 1857(h), Section 508 of the Clean Water Act (33 U.S.C. Section
      1368), Executive Order 11738, and the Environmental Protection Agency
      ("EPA") regulations (40 CFR, Part 15) that prohibit the use of the
      facilities included on the EPA List of Violating Facilities. The
      Contractor shall report violations to SDOH and to the Assistant
      Administrator for Enforcement of the EPA.

29.   ENERGY CONSERVATION

      The Contractor shall comply with any applicable mandatory standards and
      policies relating to energy efficiency that are contained in the State
      Energy Conservation regulation issued in compliance with the Energy Policy
      and Conservation Act of 1975 (Pub. L. 94-165) and any amendment to the
      Act.

30.   INDEPENDENT CAPACITY OF CONTRACTOR

      The parties agree that the Contractor is an independent Contractor, and
      that the Contractor, its agents, officers, and employees act in an
      independent capacity and not as officers or employees of LDSS, DHHS or the
      SDOH.

31.   NO THIRD PARTY BENEFICIARIES

      Only the parties to this Agreement and their successors in interest and
      assigns have any rights or remedies under or by reason of this Agreement.

32.   INDEMNIFICATION

      32.1  Indemnification by Contractor

            The Contractor shall indemnify, defend, and hold harmless the LDSS,
            its officers, agents, and employees and the Enrollees and their
            eligible dependents from:

            a)    any and all claims and losses accruing or resulting to any and
                  all Contractors, subcontractors, materialmen, laborers, and
                  any other person, firm, or corporation furnishing or supplying
                  work, services, materials, or supplies in connection with the
                  performance of this Agreement;

            b)    any and all claims and losses accruing or resulting to any
                  person, firm, or corporation that may be injured or damaged by
                  the Contractor, its officers,

                            SECTION 23 - SECTION 37
                                October 1, 2004
                                      -6-

<PAGE>

                  agents, employees, or subcontractors, including Participating
                  Providers, in connection with the performance of this
                  Agreement;

            c)    any liability, including costs and expenses, for violation of
                  proprietary rights, copyrights, or rights of privacy, arising
                  out of the publication, translation, reproduction, delivery,
                  performance, use, or disposition of any data furnished under
                  this Agreement, or based on any libelous or otherwise unlawful
                  matter contained in such data.

                  i)    The LDSS will provide the Contractor with prompt written
                        notice of any claim made against the LDSS, and the
                        Contractor, at its sole option, shall defend or settle
                        said claim. The LDSS shall cooperate with the Contractor
                        to the extent necessary for the Contractor to discharge
                        its obligation under Section 32.1.

                  ii)   The Contractor shall have no obligation under this
                        section with respect to any claim or cause of action for
                        damages to persons or property solely caused by the
                        negligence of LDSS, its employees, or agents.

      32.2  Indemnification by LDSS

            The LDSS shall indemnify and hold harmless the Contractor and its
            officers, agents, and employees from any and all claims for damages
            resulting from actions by the LDSS or their Contractors in
            connection with their performance under this Agreement, except for
            such damages, costs, and expenses resulting from the negligence or
            culpable act of the Contractor, its officers, agents, employees, or
            subcontractors, including Participating Providers.

33.   PROHIBITION ON USE OF FEDERAL FUNDS FOR LOBBYING

      33.1  Prohibition of Use of Federal Funds for Lobbying

            The Contractor agrees, pursuant to 31 U.S.C. Section 1352 and 45 CFR
            Part 93, that no Federally appropriated funds have been paid or will
            be paid to any person by or on behalf of the Contractor for the
            purpose of 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 award of any Federal contract, the making of any federal
            grant, the making of any Federal loan, the entering into of any
            cooperative agreement, or the extension, continuation, renewal,
            amendment, or modification of any Federal contract, grant, loan, or
            cooperative agreement. The Contractor agrees to complete and submit
            the "Certification Regarding Lobbying", Appendix B attached hereto
            and incorporated herein, if this Agreement exceeds $100,000.

                             SECTION 23 - SECTION 37
                                 October 1, 2004
                                       -7-

<PAGE>

      33.2  Disclosure Form to Report Lobbying

            If any funds other than Federally appropriated funds have been paid
            or will be paid to any person for the purpose of 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 award of any
            Federal contract, the making of any Federal grant, the making of any
            Federal loan, the entering into of any cooperative agreement, or the
            extension, continuation, renewal, amendment, or modification of any
            Federal contract, grant, loan, or cooperative agreement, and the
            Agreement exceeds $100,000, the Contractor shall complete and submit
            Standard Form-LLL "Disclosure Form to Report Lobbying," in
            accordance with its instructions.

      33.3  Requirements of Subcontractors

            The Contractor shall include the provisions of this section in its
            subcontracts, including its Provider Agreements. For all
            subcontracts, including Provider Agreements, that exceed $100,000,
            the Contractor shall require the subcontractor, including any
            Participating Provider to certify and disclose accordingly to the
            Contractor.

34.   NON-DISCRIMINATION

      34.1  Equal Access to Benefit Package

            Except as otherwise provided in applicable sections of this
            Agreement the Contractor shall provide the Benefit Package to all
            Enrollees in the same manner, in accordance with the same standards,
            and with the same priority as Enrollees of the Contractor under any
            other contracts.

      34.2  Non-Discrimination

            The Contractor shall not discriminate against Eligible Persons or
            Enrollees on the basis of age, sex, race, creed, physical or mental
            handicap/developmental disability, national origin, sexual
            orientation, type of illness or condition, need for health services,
            or Capitation Rate that the Contractor will receive for such
            Eligible Persons or Enrollees.

      34.3  Equal Employment Opportunity

            Contractor must comply with Executive Order 11246, entitled "Equal
            Employment Opportunity", as amended by Executive Order 11375, and as
            supplemented in Department of Labor regulations.

                            SECTION 23 - SECTION 37
                                October 1, 2004
                                      -8-

<PAGE>

      34.4  Native Americans Access to Services From Tribal or Urban Indian
            Health Facility

            The Contractor shall not prohibit, restrict or discourage enrolled
            Native Americans from receiving care from or accessing Medicaid
            reimbursed health services from or through a tribal health or urban
            Indian health facility or center.

35.   COMPLIANCE WITH APPLICABLE LAWS

      35.1  Contractor and LDSS Compliance With Applicable Laws

            Notwithstanding any inconsistent provisions in this Agreement, the
            Contractor and LDSS shall comply with all applicable requirements of
            the State Public Health Law; the State Social Services Law; Title
            XIX of the Social Security Act; Title VI of the Civil Rights Act of
            1964 and 45 C.F.R. Part 80, as amended; Section 504 of the
            Rehabilitation Act of 1973 and 45 C.F.R. Part 84, as amended; Age
            Discrimination Act of 1975 and 45 C.F.R. Part 91, as amended; the
            Americans with Disabilities Act Title XIII of the Federal Public
            Health Services Act, 42 U.S.C. Section 300e [ILLEGIBLE] seq.,
            regulations promulgated there under; the Health Insurance
            Portability and Accountability Act of 1996 (P.L. 104-191) and
            related regulations; and all other applicable legal and regulatory
            requirements in effect at the time that this Agreement is signed and
            as adopted or amended during the term of this Agreement.

      35.2  Nullification of Illegal, Unenforceable, Ineffective or Void
            Contract Provisions

            Should any provision of this Agreement be declared or found to be
            illegal or unenforceable, ineffective or void, then each party shall
            be relieved of any obligation arising from such provision; the
            balance of this Agreement, if capable of performance, shall remain
            in full force and effect.

      35.3  Certificate of Authority Requirements

            The Contractor must satisfy conditions for issuance of a certificate
            of authority, including proof of financial solvency, as specified in
            10 NYCRR, Section 98.6.

      35.4  Notification of Changes in Certificate of Incorporation

            The Contractor shall notify LDSS of any amendment to its Certificate
            of Incorporation in the same manner as and simultaneously with the
            notice given to SDOH pursuant to 10 NYCRR Section 98.4(a).

      35.5  Contractor's Financial Solvency Requirements

            The Contractor, for the duration of this Agreement, shall remain in
            compliance with all applicable state requirements for financial
            solvency for MCOs participating in the Medicaid Program. The
            Contractor shall continue to be

                             SECTION 23 - SECTION 37
                                 October 1, 2004
                                       -9-

<PAGE>

            financially responsible as defined in PHL Section 4403(1)(c) and
            shall comply with the contingent reserve fund and escrow deposit
            requirements of 10 NYCRR Sections 98.11(d) and 98.11(e),
            respectively, and must meet minimum net worth requirements
            established by SDOH and the State Insurance Department. The
            Contractor shall make provision, satisfactory to SDOH, for
            protections for SDOH, LDSS and the Enrollees in the event of HMO or
            subcontractor insolvency, including but not limited to, hold
            harmless and continuation of treatment provisions in all provider
            agreements which protect SDOH, LDSS and Enrollees from costs of
            treatment and assures continued access to care for Enrollees.

      35.6  Compliance With Care for Maternity Patients

            Contractor must comply with Section 2803-n of the Public Health Law
            and Section 3216 (i) (10) (a) of the State Insurance Law related to
            hospital care for maternity patients.

      35.7  Informed Consent Procedures for Hysterectomy and Sterilization

            The Contractor is required and shall require Participating Providers
            to comply with the informed consent procedures for Hysterectomy and
            Sterilization specified in 42 CFR, Part 441, sub-part F, and 18
            NYCRR Section 505.13.

      35.8  Non-Liability of Enrollees for Contractor's Debts

            Contractor agrees that in no event shall the Enrollee become liable
            for the Contractor's debts as set forth in SSA Section 1932(b)(6).

      35.9  LDSS Compliance With Conflict of Interest Laws

            LDSS and its employees shall comply with General Municipal Law
            Article 18 and all other appropriate provisions of New York State
            law, local laws and ordinances and all resultant codes, rules and
            regulations pertaining to conflicts of interest.

      35.10 Compliance With PHL Regarding External Appeals

            Contractor must comply with Article 49 Title II of the Public Health
            Law regarding external appeal of adverse determinations.

36.   NEW YORK STATE STANDARD CONTRACT CLAUSES

      The parties agree to be bound by the standard clauses for all New York
      State contracts and standard clauses, if any, for local government
      contracts contained in Appendix A, attached to and incorporated as if set
      forth fully herein, and any amendment thereto.

                             SECTION 23 - SECTION 37
                                 October 1, 2004
                                      -10-

<PAGE>

37.   INSURANCE REQUIREMENTS

      MODEL CONTRACT NOTE: The LDSS may propose insurance requirements based on
      the contract practices of its County. Such requirements must be reasonable
      and consistent with the attainment of managed care program objectives.

      [X]   The LDSS has insurance requirements (attached) as Section 37 of this
            Agreement.

      [ ]   The LDSS does not have insurance requirements.

                             SECTION 23 - SECTION 37
                                 October 1, 2004
                                      -11-
<PAGE>

                                    ADDENDUM
                             INSURANCE REQUIREMENTS

      For all of the Services set forth herein, and as hereinafter amended,
CONTRACTOR shall maintain, or cause to be maintained, in full force and effect
during the term of this Agreement, at its expense, Worker's Compensation
insurance, liability insurance covering personal injury and property damage, and
other insurance, with stated minimum coverages, all as listed below. Such
policies are to be in the broadest form available on usual commercial terms and
shall be written by insurers of recognized financial standing satisfactory to
the COUNTY who have been fully informed as to the nature of the Services to be
performed. Except for Worker's Compensation and professional liability, the
COUNTY shall be an additional insured on all such policies with the
understanding that any obligations imposed upon the insured (including, without
limitation, the liability to pay premiums) shall be the sole obligations of
CONTRACTOR and not those of the COUNTY. Notwithstanding anything to the
contrary in this Agreement, CONTRACTOR irrevocably waives all claims against
the COUNTY for all losses, damages, claims or expenses resulting from risks
commercially insurable under the insurance described in this ADDENDUM. The
provisions of insurance by CONTRACTOR shall not in any way limit CONTRACTOR's
liability under this Agreement.

<TABLE>
<CAPTION>
Type of Coverage                                                Limits of Coverage
----------------                                                ------------------
<S>                                                             <C>
Worker's Compensation                                           Statutory

Employer's Liability or similar insurance                       $ 1,000,000 each occurrence

Automobile Liability                                            $ 1,000,000 aggregate
Bodily Injury Property Damage                                   $1,000,000 each occurrence

Comprehensive general Liability, including broad form           $1,000,000 each occurrence
contractual liability, bodily injury, and property damage       $ 1,000,000 aggregate

Professional Liability                                          $ 1,000,000 aggregate
(If commercially available for your profession)                 $ 1,000,000 each claim
</TABLE>

CONTRACTOR shall attach to this Agreement certificates of insurance evidencing
CONTRACTOR's compliance with these requirements.

Each policy of insurance shall contain clauses to the effect that (i) such
insurance shall be primary without right of contribution of any other insurance
carried by or on behalf of the COUNTY with respect to its interests, (ii) it
shall not be canceled, including without limitation, for non-payment of premium,
or materially amended without fifteen (15) days prior written notice to the
COUNTY, directed to the COUNTY'S Risk Management

<PAGE>

Division and the Department Head, and the COUNTY shall have the option to pay
any necessary premiums to keep such insurance in effect and charge the cost back
to CONTRACTOR.

To the extent it is commercially available, each policy of insurance shall be
provided on an "occurrence" basis. If any insurance is not so commercially
available on an "occurrence" basis it shall be provided on a "claims made"
basis, and all such "claims made" policies shall provide that:

      A. Policy retroactive dates coincide with or precede the CONTRACTOR's
start of the performance of the Services (including subsequent policies
purchased as renewals or replacements);

      B. CONTRACTOR will maintain similar insurance for at least six (6) years
following final acceptance of the Services;

      C. If the insurance is terminated for any reason, CONTRACTOR agrees to
purchase an unlimited extended reporting provision to report claims arising from
the Services performed for the COUNTY: and

      D. Immediate notice shall be given to the COUNTY through the Department
Head and the COUNTY'S Risk Management Division, of circumstances or incidents
that might give rise to future claims with respect to the Services performed
under this Agreement.

<PAGE>

      [MODEL CONTRACT NOTE: FORMAT OF SIGNATURE PAGE(S) MAY BE ESTABLISHED BY
      THE LDSS, OR THIS PAGE MAY BE USED. THE TERM OF AGREEMENT MUST BE
      SPECIFIED ON THE SIGNATURE PAGE.]

      This Agreement is effective October 1, 2004 and shall remain in effect
      until September 30, 2005 or until the execution of an extension, renewal
      or successor agreement as provided for in the Agreement.

      In Witness Whereof, the parties have duly executed this Agreement on the
      dates appearing below their respective signatures.

By /s/ Todd S. Farha                   By ______________________________________
   -----------------                        County Department of Social Services
      Contractor                         (or New York City Department of Health)

Todd S. Farha, President & CEO         Edward A. Diana
WellCare of New York, Inc.             County Executive, County of Orange

Date 9/24/04                           Date ____________________________________

                                 SIGNATURE PAGE
                                 October 1, 2004

<PAGE>

                                   APPENDIX A

                         NEW YORK STATE STANDARD CLAUSES
                           AND LOCAL STANDARD CLAUSES

                                   APPENDIX A
                                 October 1, 2004

<PAGE>

STANDARD CLAUSES FOR NYS CONTRACTS                               APPENDIX A

                       STANDARD CLAUSES FOR NYS CONTRACTS

      The parties to the attached contract, license, lease, amendment or other
agreement of any kind (hereinafter, "the contract" or this contract") agree to
be bound by the following clauses which are hereby made a part of the contract
(the word "Contractor" herein refers to any party other than the State, whether
a contractor, licenser, licensee, lessor, lessee or any other party):

1. EXECUTORY CLAUSE. In accordance with Section 41 of the State Finance Law, the
State shall have no liability under this contract to the Contractor or to anyone
else beyond funds appropriated and available for this contract.

2. NON-ASSIGNMENT CLAUSE. In accordance with Section 138 of the State Finance
Law, this contract may not be assigned by the Contractor or its right, title or
interest therein assigned, transferred, conveyed, sublet or otherwise disposed
of without the previous consent, in writing, of the State and any attempts to
assign the contract without the State's written consent are null and void. The
Contractor may, however, assign its right to receive payment without the State's
prior written consent unless this contract concerns Certificates of
Participation pursuant to Article 5-A of the State Finance Law.

3. COMPTROLLER'S APPROVAL. In accordance with Section 12 of the State Finance
Law (or, if this contract is with the State University or City University of New
York, Section 355 or Section 6218 of the Education Law), if this contract
exceeds $15,000 (or the minimum thresholds agreed to by the Office of the State
Comptroller for certain S.U.N.Y. and C.U.N.Y. contracts), or if this is an
amendment for any amount to a contract which, as so amended, exceeds said
statutory amount, or if, by this contract, the State agrees to give something
other than money when the value or reasonably estimated value of such
consideration exceeds $10,000, it shall not be valid, effective or binding upon
the State until it has been approved by the State Comptroller and filed in his
office. Comptroller's approval of contracts let by the Office of General
Services is required when such contracts exceed $30,000 (State Finance Law
Section 163.6.a).

4.WORKERS' COMPENSATION BENEFITS. In accordance with Section 142 of the State
Finance Law, this contract shall be void and of no force and effect unless the
Contractor shall provide and maintain coverage during the life of this contract
for the benefit of such employees as are required to be covered by the
provisions of the Workers' Compensation Law.

5. NON-DISCRIMINATION REQUIREMENTS. To the extent required by Article 15 of the
Executive Law (also known as the Human Rights Law) and all other State and
Federal statutory and constitutional non-discrimination provisions, the
Contractor will not discriminate against any employee or applicant for
employment because of race, creed, color, sex, national origin, sexual
orientation, age, disability, genetic predisposition or carrier status, or
marital status. Furthermore, in accordance with Section 220-e of the Labor Law,
if this is a contract for the construction, alteration or repair of any public
building or public work or for the manufacture, sale or distribution of
materials, equipment or supplies, and to the extent that this contract shall be
performed within the State of New York, Contractor agrees that neither it not
its subcontractors shall, by reason of race, creed, color, disability, sex, or
national origin: (a) discriminate in hiring against any New York State citizen
who is qualified and available to perform the work; or (b) discriminate against
or intimidate any employee hired for the performance of work under this
contract. If this is a building service contract as defined in Section 230 of
the Labor Law, then, in accordance with Section 239 thereof, Contractor agrees
that neither it nor its subcontractors shall by reason of race, creed, color,
national origin, age, sex or disability: (a) discriminate in hiring against any
New York State citizen who is qualified and available to perform the work; or
(b) discriminate against or intimidate any employee hired for the performance of
work under this contract. Contractor is subject to fines of $50.00 per person
per day for any violation of Section 220-e or Section 239 as well as possible
termination of this contract and forfeiture of all moneys due hereunder for a
second or subsequent violation.

6. WAGE AND HOURS PROVISIONS. If this is a public work contract covered by
Article 8 of the Labor Law or a building service contract covered by Article 9
thereof, neither Contractor's employees nor the employees of its subcontractors
may be required or permitted to work more than the number of hours or days
stated in said statutes, except as otherwise provided in the Labor Law and as
set forth in prevailing wage and supplement schedules issued by the State Labor
Department. Furthermore, Contractor and its subcontractors must pay at least the
prevailing wage rate and pay or provide the prevailing supplements, including
the premium rates for overtime pay, as determined by the State Labor Department
in accordance with the Labor Law.

7. NON-COLLUSIVE BIDDING CERTIFICATION. In accordance with Section 139-d of the
State Finance Law, if this contract was awarded based upon the submission of
bids, Contractor warrants, under penalty of perjury, that its bid was arrived at
independently and without collusion aimed at restricting competition. Contractor
further warrants that, at the time Contractor submitted its bid, an authorized
and responsible person executed and delivered to the State a non-collusive
bidding certification on Contractor's behalf.

8. INTERNATIONAL BOYCOTT PROHIBITION. In accordance with Section 220-f of the
Labor Law and Section 139-h of the State Finance Law, if this contract exceeds
$5,000, the Contractor agrees, as a material condition of the contract, that
neither the Contractor nor any substantially owned or affiliated person, firm,
partnership or corporation has participated, is participating, or shall
participate in an international boycott in violation of the federal Export
Administration Act of 1979 (50 USC App. Sections 2401 et seq.) or regulations
thereunder. If such Contractor, or any of the aforesaid affiliates of
Contractor, is convicted or is otherwise found to have violated said laws or
regulations upon the final determination of the United States Commerce
Department or any other appropriate agency of the United States subsequent to
the contract's execution, such contract, amendment or modification thereto shall
be rendered forfeit and void. The Contractor shall so notify the State
Comptroller within five (5) business days of such conviction, determination or
disposition of appeal (2NYCRR 105.4).

9. SET-OFF RIGHTS. The State shall have all of its common law, equitable and
statutory rights of set-off. These rights shall include, but not be limited to,
the State's option to withhold for the purposes of set-off any moneys due to
the Contractor under this contract up to any amounts due and owing to the State
with regard to this contract, any other contract with any State department or
agency, including any contract for a term commencing prior to the term of this
contract, plus my amounts due and owing to the State for any other reason
including, without limitation, tax delinquencies, fee delinquencies or monetary
penalties relative thereto. The State shall exercise its set-off rights in
accordance with normal State practices including, in cases of set-off pursuant
to an audit, the finalization of such audit by the State agency, its
representatives, or the State Comptroller.

10. RECORDS. The Contractor shall establish and maintain complete and accurate
books, records, documents, accounts and other evidence directly pertinent to
performance under this contract (hereinafter, collectively, "the Records"). The
Records must be kept for the balance of the calendar year in which they were
made and for six (6) additional years thereafter. The State Comptroller, the
Attorney General and any other person or entity authorized to conduct an
examination, as well as the agency or agencies involved in this contract, shall
have access to the Records during normal business hours at an office of the
Contractor

Page 1                                                                 May, 2003

<PAGE>

STANDARD CLAUSES FOR NYS CONTRACTS                               APPENDIX A

within the State of New York or, if no such office is available, at a mutually
agreeable and reasonable venue within the State, for the term specified above
for the purposes of inspection, auditing and copying. The State shall take
reasonable steps to protect from public disclosure any of the Records which are
exempt from disclosure under Section 87 of the Public Officers Law (the
"Statute") provided that: (i) the Contractor shall timely inform an appropriate
State official, in writing, that said records should not be disclosed; and (ii)
said records shall be sufficiently identified; and (iii) designation of said
records as exempt under the Statute is reasonable. Nothing contained herein
shall diminish, or in any way adversely affect, the State's right to discovery
in any pending or future litigation.

11. IDENTIFYING INFORMATION AND PRIVACY NOTIFICATION. (a) FEDERAL EMPLOYER
IDENTIFICATION NUMBER and/or FEDERAL SOCIAL SECURITY NUMBER. All invoices or New
York State standard vouchers submitted for payment for the sale of goods or
services or the lease of real or personal property to a New York State agency
must include the payee's identification number, i.e., the seller's or lessor's
identification number. The number is either the payee's Federal employer
identification number or Federal social security number, or both such numbers
when the payee has both such numbers. Failure to include this number or numbers
may delay payment. Where the payee does not have such number or numbers, the
payee, on its invoice or New York State standard voucher, must give the reason
or reasons why the payee does not have such number or numbers.

(b) PRIVACY NOTIFICATION. (1) The authority to request the above personal
information from a seller of goods or services or a lessor of real or personal
property, and the authority to maintain such information, is found in Section 5
of the State Tax Law. Disclosure of this information by the seller or lessor to
the State is mandatory. The principal purpose for which the information is
collected is to enable the State to identify individuals, businesses and others
who have been delinquent in filing tax returns or may have understated their tax
liabilities and to generally identify persons affected by the taxes administered
by the Commissioner of Taxation and Finance. The information will be used for
tax administration purposes and for any other purpose authorized by law.

(2) The personal information is requested by the purchasing unit of the agency
contracting to purchase the goods or services or lease the real or personal
property covered by this contract or lease. The information is maintained in New
York State's Central Accounting System by the Director of Accounting Operations,
Office of the State Comptroller, AESOB, Albany, New York 12236.

12. EQUAL EMPLOYMENT OPPORTUNITIES FOR MINORITIES AND WOMEN. In accordance with
Section 312 of the Executive Law, if this contract is: (i) a written agreement
or purchase order instrument, providing for a total expenditure in excess of
$25,000.00, whereby a contracting agency is committed to expend or does expend
funds in return for labor, services, supplies, equipment, materials or any
combination of the foregoing, to be performed for, or rendered or furnished to
the contracting agency; or (ii) a written agreement in excess of $100,000.00
whereby a contracting agency is committed to expend or does expend funds for the
acquisition, construction, demolition, replacement, major repair or renovation
of real property and improvements thereon; or (iii) a written agreement in
excess of $100,000.00 whereby the owner of a State assisted housing project is
committed to expend or does expend funds for the acquisition, construction,
demolition, replacement, major repair or renovation of real property and
improvements thereon for such project, then:

(a) The Contractor will not discriminate against employees or applicants for
employment because of race, creed, color, national origin, sex, age, disability
or marital status, and will undertake or continue existing programs of
affirmative action to ensure that minority group members and women are afforded
equal employment opportunities without discrimination. Affirmative action shall
mean recruitment, employment, job assignment, promotion, upgradings, demotion,
transfer, layoff, or termination and rates of pay or other forms of
compensation;

(b) at the request of the contracting agency, the Contractor shall request each
employment agency, labor union, or authorized representative of workers with
which it has a collective bargaining or other agreement or understanding, to
furnish a written statement that such employment agency, labor union or
representative will not discriminate on the basis of race, creed, color,
national origin, sex, age, disability or marital status and that such union or
representative will affirmatively cooperate in the implementation of the
contractor's obligations herein; and

(c) the Contractor shall state, in all solicitations or advertisements for
employees, that, in the performance of the State contract, all qualified
applicants will be afforded equal employment opportunities without
discrimination because of race, creed, color, national origin, sex, age,
disability or marital status.

Contractor will include the provisions of "a", "b", and "c" above, in every
subcontract over $25,000.00 for the construction, demolition, replacement, major
repair, renovation, planning or design of real property and improvements thereon
(the "Work") except where the Work is for the beneficial use of the Contractor.
Section 312 does not apply to: (i) work, goods or services unrelated to this
contract; or (ii) employment outside New York State; or (iii) banking services,
insurance policies or the sale of securities. The State shall consider
compliance by a contractor or subcontractor with the requirements of any federal
law concerning equal employment opportunity which effectuates the purpose of
this section. The contracting agency shall determine whether the imposition of
the requirements of the provisions hereof duplicate or conflict with any such
federal law and if such duplication or conflict exists, the contracting agency
shall waive the applicability of Section 312 to the extent of such duplication
or conflict. Contractor will comply with all duly promulgated and lawful rules
and regulations of the Governor's Office of Minority and Women's Business
Development pertaining hereto.

13. CONFLICTING TERMS. In the event of a conflict between the terms of the
contract (including any and all attachments thereto and amendments thereof) and
the terms of this Appendix A, the terms of this Appendix A shall control.

14. GOVERNING LAW. This contract shall be governed by the laws of the State of
New York except where the Federal supremacy clause requires otherwise.

15. LATE PAYMENT. Timeliness of payment and any interest to be paid to
Contractor for late payment shall be governed by Article 11-A of the State
Finance Law to the extent required by law.

16. NO ARBITRATION. Disputes involving this contract, including the breach or
alleged breach thereof, may not be submitted to binding arbitration (except
where statutorily authorized), but must, instead, be heard in a court of
competent jurisdiction of the State of New York.

17. SERVICE OF PROCESS. In addition to the methods of service allowed by the
State Civil Practice Law & Rules ("CPLR"), Contractor hereby consents to service
of process upon it by registered or certified mail, return receipt requested.
Service hereunder shall be complete upon Contractor's actual receipt of process
or upon the State's receipt of the return thereof by the United States Postal
Service as refused or undeliverable. Contractor must promptly notify the State,
in writing, of each and every change of address to which service of process can
be made. Service by the State to the last known address shall be sufficient.
Contractor will have thirty (30) calendar days after service hereunder is
complete in which to respond.

Page 2                                                                 May, 2003

<PAGE>

STANDARD CLAUSES FOR NYS CONTRACTS                               APPENDIX A

18. PROHIBITION ON PURCHASE OF TROPICAL HARDWOODS. The Contractor certifies and
warrants that all wood products to be used under this contract award will be in
accordance with, but not limited to, the specifications and provisions of State
Finance Law Section 165. (Use of Tropical Hardwoods) which prohibits purchase
and use of tropical hardwoods, unless specifically exempted, by the State or any
governmental agency or political subdivision or public benefit corporation.
Qualification for an exemption under this law will be the responsibility of the
contractor to establish to meet with the approval of the State.

In addition, when any portion of this contract involving the use of woods,
whether supply or installation, is to be performed by any subcontractor, the
prime Contractor will indicate and certify in the submitted bid proposal that
the subcontractor has been informed and is in compliance with specifications and
provisions regarding eus of tropical hardwoods as detailed in section.165 State
Finance Law. Any such use must meet with the approval of the State; otherwise,
the bid may not be considered responsive. Under bidder certifications, proof of
qualification for exemption will be the responsibility of the Contractor to meet
with the approval of the State.

19. MACBRIDE FAIR EMPLOYMENT PRINCIPLES. In accordance with the MacBride Fair
Employment Principles (Chapter 807 of the Laws of 1992), the Contractor hereby
stipulates that the Contractor either (a) has no business operations in Northern
Ireland , or (b) shall take lawful steps in good faith to conduct any business
operations in Northern Ireland in accordance with the MacBride Fair Employment
Principles (as described in Section 165 of the New York State Finance Law), and
shall permit independent monitoring of compliance with such principles.

20.OMNIBUS PROCUREMENT ACT OF 1992. It is the policy of New York State to
maximize opportunities for the participation of New York State business
enterprises, including minority and women-owned business enterprises as bidders,
subcontractors and suppliers on its procurement contracts.

Information on the availability of New York State subcontractors and suppliers
is available from:

      NYS Department of Economic Development
      Division for Small Business
      30 South Pearl St -- 7th Floor
      Albany, New York 12245
      Telephone: 518-292-5220

A directory of certified minority and women-owned business enterprises is
available from:

      NYS Department of Economic Development
      Division of Minority and Women's Business Development
      30 South Pearl St - 2nd Floor
      Albany, New York 12245
      http://www.empire.state.ny.us

The Omnibus Procurement Act of 1992 requires that by signing this bid proposal
or contract, as applicable, Contractors certify that whenever he total bid
amount is greater than $1 million:

(a) The Contractor has made reasonable efforts to encourage the participation of
New York State Business Enterprises as suppliers and subcontractors, including
certified minority and women-owned business enterprises, on this project, and
has retained the documentation of these efforts to be provided upon request to
the State;

(b) The Contractor has complied with the Federal Equal Opportunity Act of 1972
(P.L. 92-261), as amended;

(c)The Contractor agrees to make reasonable efforts to provide notification to
New York State residents of employment opportunities on this project through
listing any such positions with the Job Service Division of the New York State
Department of Labor, or providing such notification in such manner as is
consistent with existing collective bargaining contracts or agreements. The
Contractor agrees to document these efforts and to provide said documentation to
the State upon request; and

(d) The Contractor acknowledges notice that the State may seek to obtain offset
credits from foreign countries as a result of this contract and agrees to
cooperate with the State in these efforts.

21. RECIPROCITY AND SANCTIONS PROVISIONS. Bidders are hereby notified that if
their principal place of business is located in a country, nation, province,
state or political subdivision that penalizes New York State vendors, and if the
goods or services they offer will be substantially produced or performed outside
New York State, the Omnibus Procurement Act 1994 and 2000 amendments (Chapter
684 and Chapter 383, respectively) require that they be denied contracts which
they would otherwise obtain. NOTE: As of May 15, 2002, the list of
discriminatory jurisdictions subject to this provision includes the states of
South Carolina, Alaska, West Virginia, Wyoming, Louisiana and Hawaii. Contact
NYS Department of Economic Development for a current list of jurisdictions
subject to this provision.

22. PURCHASES OF APPAREL. In accordance with State Finance Law 162 (4-a), the
State shall not purchase any apparel from any vendor unable or unwilling to
certify that: (i) such apparel was manufactured in compliance with all
applicable labor and occupational safety laws, including, but not limited to,
child labor laws, wage and hours laws and workplace safety laws, and (ii) vendor
will supply, with its bid (or, if not a bid situation, prior to or at the time
of signing a contract with the State), if known, the names and addresses of each
subcontractor and a list of all manufacturing plants to be utilized by the
bidder.

Page 3                                                                 May, 2003

<PAGE>

                                   APPENDIX B

                        CERTIFICATION REGARDING LOBBYING

                                   APPENDIX B
                                October 1, 2004
                                       B-1

<PAGE>

                                   APPENDIX B
                        CERTIFICATION REGARDING LOBBYING

The undersigned certifies, to the best of his or her knowledge, that:

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

2.    If any funds other than Federal appropriated funds have been paid or will
      be paid to any person for the purpose of influencing or attempting to
      influence an officer or employee of any agency, a Member of Congress in
      connection with the award of any Federal contract, the making of any
      Federal grant, the making of any Federal loan, the entering into of any
      cooperative agreement, or the extension, continuation, renewal, amendment,
      or modification of any Federal contract, grant, loan, or cooperative
      agreement, and the Agreement exceeds $100,000, the Contractor shall
      complete and submit Standard Form - LLL "Disclosure Form to Report
      Lobbying", in accordance with its instructions.

3.    The Contractor shall include the provisions of this section in all
      provider Agreements under this Agreement and require all Participating
      providers whose Provider Agreements exceed $100,000 to certify and
      disclose accordingly to the Contractor.

      This certification is a material representation of fact upon which
reliance was place when this transaction was made or entered into. Submission of
this certification is a prerequisite for making or entering into this
transaction pursuant to U.S.C. Section 1352. The failure to file the required
certification shall subject the violator to a civil penalty of not less than
$10,000 and not more than $ 100,000 for each such failure.

DATE: 9/24/04

SIGNATURE: /s/ Todd S. Farha
           ----------------------------

TITLE: President and CEO

ORGANIZATION: WellCare of New York, Inc.

                                   APPENDIX B
                                 October [ILLEGIBLE], 2004
                                       B-2

<PAGE>

                                   APPENDIX C

                       NEW YORK STATE DEPARTMENT OF HEALTH
                         GUIDELINES FOR THE PROVISION OF
                FAMILY PLANNING AND REPRODUCTIVE HEALTH SERVICES

                                   APPENDIX C
                                 October 1, 2004
                                       C-1

<PAGE>

                                       C.1

                         GUIDELINES FOR THE PROVISION OF
                FAMILY PLANNING AND REPRODUCTIVE HEALTH SERVICES

Enrollees may obtain family planning and or reproductive health services and HIV
blood testing and pre-and post-test counseling when performed as part of a
family planning encounter from either the Contractor or from any appropriate
MMIS-enrolled health care provider of the Enrollee's choice. Pharmacy
prescriptions, Medical Supplies, and over the counter drugs are to be billed
fee-for-service by all providers.

Family planning services means the offering, arranging and furnishing of those
health services which enable individuals, including minors who may be sexually
active, to prevent or reduce the incidence of unwanted pregnancies.

Family planning and reproductive health services include: the following
medically-necessary services, related drugs and supplies which are furnished or
administered under the supervision of a physician or certified nurse
practitioner during the course of a family planning visit for the purpose of:

-     contraception, including insertion/removal of an intrauterine device
      (IUD), insertion/removal of Norplant, and injection procedures involving
      Pharmaceuticals such as Depo-Provera;

-     sterilization;

-     screening, related diagnosis, and referral to participating provider for
      pregnancy;

-     medically-necessary induced abortions and for New York City recipients,
      elective induced abortions.

Such services include those education and counseling services to render the
services effective. Medically-necessary induced abortions are procedures, either
medical or surgical, which result in the termination of pregnancy. The
determination of medical necessity shall include positive evidence of pregnancy,
with an estimate of its duration.

When clinically indicated, the following services may be provided as a part of a
family planning and reproductive health visit:

-     screening, related diagnosis, ambulatory treatment and referral as needed
      for dysmenorrhea, cervical cancer, or other pelvic abnormality/pathology.

-     screening, related diagnosis and referral for anemia, cervical cancer,
      glycosuria, proteinuria, hypertension and breast disease.

-     screening and treatment for sexually transmissible disease.

                                   APPENDIX C
                                October 1, 2004
                                      C-2

<PAGE>

Providers of family planning and reproductive health care shall comply with all
of the requirements set forth in Sections 17 and 18 of the New York State Public
Health Law, and 10 NYCRR Section 751.9 and Part 753 relating to informed consent
and confidentiality.

The above family planning and reproductive health services are the only services
which are covered under the free access policy. Routine obstetric and/or
gynecologic care, including hysterectomies, pre-natal, delivery and post-partum
care are not covered under the free access policy, and are the responsibility of
the Contractor if they are covered contract services.

                                   APPENDIX C
                                October 1, 2004
                                       C-3

<PAGE>

                                       C.2

    GUIDELINES FOR PLANS THAT INCLUDE FAMILY PLANNING AND REPRODUCTIVE HEALTH
                        SERVICES IN THEIR BENEFIT PACKAGE

If the Contractor includes family planning and reproductive health services in
its benefit package, the Contractor must notify all Enrollees of reproductive
age (including minors who may be sexually active) at the time of enrollment
about their right to obtain family planning and reproductive health services and
supplies from any network or non-network provider without referral or approval.
The notification must contain the following:

1)    notification of the Medicaid Enrollee's right to obtain the full range of
      family planning and reproductive health services (including HIV counseling
      and testing when performed as part of a family planning encounter) from
      either a Contractor's participating provider or any qualified non-network
      provider who accepts Medicaid who undertakes to provide such services to
      them, without referral, approval or notification;

2)    a current list of qualified network family planning providers, within the
      geographic area, including addresses and telephone numbers, who provide
      the full range of family planning and reproductive health services.
      Contractor may also choose to provide a list of qualified non-network
      Medicaid providers who provide the full range of family planning and
      reproductive health services;

3)    information that the cost of the Enrollee's care will be fully covered by
      Medicaid, when services are obtained in accordance with #1 above,
      regardless of where the Enrollee obtains services.

The Contractor must notify its participating providers that all claims for
family planning services must be billed to the Contractor and not the Medicaid
fee-for-service program.

                                   APPENDIX C
                                October 1, 2004
                                       C-4

<PAGE>

                                       C.3

           GUIDELINES FOR POLICY AND PROCEDURES FOR PLANS THAT DO NOT
              INCLUDE FAMILY PLANNING SERVICES IN THEIR CAPITATION

      Any Contractor who does not include family planning services in its
Benefit Package must notify all Enrollees and prospective Enrollees that these
services are not covered through the plan and submit a statement of the policy
and procedure they will use to inform Enrollees, prospective Enrollees, and
network providers using the following guidelines. The statement must be sent to
Director, Office of Managed Care, NYS Department of Health, Corning Tower, Room
2001, Albany, NY 12237 before signing the contract.

      The policy and procedure statement regarding family planning services must
contain the following:

1)    A statement that the Contractor will inform prospective Enrollees, new
      Enrollees and current Enrollees that:

      a.    Certain family planning and reproductive health services (such as
            abortion, sterilization and birth control) are not covered by the
            Contractor.

      b.    Such services may be obtained through fee-for-service Medicaid from
            any provider who accepts Medicaid

      c.    No referral is needed for such services, and that there will be no
            cost to the Enrollee for such services.

2)    A statement that this information will be provided in the following
      manner:

      a.    Through the Contractor's written marketing materials, including the
            member handbook.

      b.    Orally at the time of enrollment and any time an inquiry is made
            regarding family planning and reproductive health services.

      c.    Included on any web site of the Contractor which includes
            information concerning its Medicaid managed care program. Such
            information shall be prominently displayed and easily navigated.

3)    The procedure for informing the Contractor's primary care providers,
      obstetricians, and gynecologists that the Contractor has elected not to
      cover certain reproductive and family planning services, but that such
      Participating Providers may provide, make referrals, or arrange for these
      services in accordance with MA fee-for-service billing policies.

                                   APPENDIX C
                                October 1, 2004
                                       C-5

<PAGE>

4)    Mechanisms to inform the Contractor's providers who also participate in
      the fee-for-service Medicaid program that, if they render non-covered
      reproductive health and family planning services, they do so as a
      fee-for-service Medicaid practitioner, independent of the Contractor.

5)    The member handbook and marketing materials indicating that the Contractor
      has elected not to cover certain reproductive health and family planning
      services, and explaining the right of all Enrollees to secure such
      services through fee-for-service Medicaid from any Medicaid
      provider/clinic which offers these services.

6)    With the advent of mandatory enrollment and auto-assignment, mechanisms to
      provide all new Enrollees with an SDOH approved letter explaining how to
      access family planning services and the SDOH approved or LDSS approved
      list of family planning providers. This material will be furnished by SDOH
      or LDSS to the plan and mailed with the first new member communication,
      prior to the enrollment effective date.

7)    If an Enrollee or prospective Enrollee requests information about these
      non-covered services, the Contractor's marketing or enrollment staff or
      member services department will advise the Enrollee or prospective
      Enrollee as follows:

      a.    Family planning and reproductive health services such as abortion,
            sterilization and birth control are not covered through the plan.

      b.    Enrollees can receive these non covered services using their
            Medicaid card from any doctor or clinic that provide these services
            and accepts Medicaid.

      c.    The Contractor will mail to each Enrollee or prospective Enrollee
            who calls, a copy of the SDOH or LDSS approved letter explaining the
            Enrollee's right to receive these non-covered services and an SDOH
            approved or LDSS approved list of family planning providers, who
            participate in Medicaid in the Enrollee's community. The Contractor
            will mail these materials within 48 hours of the contact.

      d.    Enrollees can call the Contractor's member services number or the
            New York State Growing-Up-Healthy Hotline (1-800 522-5006) to
            request a copy of the list of Family Planning Providers and for
            further information about how to obtain these non-covered services.

8)    The procedure for maintaining a manual log of all requests for such
      information, including the date of the call, the Enrollee's ID number, and
      the date the SDOH approved letter and SDOH or LDSS approved list were
      mailed. The Contractor will review this log monthly and upon request,
      submit a copy to SDOH or the LDSS.

9)    Mechanisms to inform participating providers that, if requested by the
      Enrollee, or, if in the provider's best professional judgement, certain
      reproductive health and family

                                   APPENDIX C
                                October 1, 2004

                                       C-6

<PAGE>

      planning services not offered through the Contractor are medically
      indicated in accordance with generally accepted standards of professional
      practice, an appropriately trained professional should so advise the
      Enrollee and either: (1) offer those services on a fee-for-service basis;
      or (2) provide the Enrollee with a copy of the SDOH approved or LDSS
      approved list of Medicaid family planning providers, or (3) give the
      Enrollee the member services number to call to obtain this listing.

10)   The Contractor must recognize that the exchange of medical information,
      when indicated in accordance with generally accepted standards of
      professional practice, is necessary for the overall coordination of
      Enrollees' care and will assist primary care providers in providing the
      highest quality care to the Contractor's Enrollees. The Contractor must
      acknowledge that medical record information maintained by network
      providers may include information relating to family planning services
      provided under the fee-for-service Medicaid program.

11)   Quality assurance initiatives to ensure compliance with this policy. These
      should include the following procedures:

      a.    The Contractor will submit any materials to be furnished to
            Enrollees and providers relating to access to non-covered
            reproductive health and family planning services to SDOH, (Office
            of Managed Care for its review and approval before issuance. Such
            materials include, but are not limited to, member handbooks,
            provider manuals, and marketing materials.

      b.    Monitoring calls to member services and providers will be conducted
            to assess the quality of the information provided. These calls will
            be performed weekly by the manager/director or his or her designee.

      c.    Every month, the plan will prepare a list of Enrollees who have been
            sent a copy of the SDOH approved letter and the SDOH approved or
            LDSS approved list of family planning providers. This information
            will be submitted to the Chief Operating Officer and President/CEO
            on a monthly basis.

      d.    The Contractor will provide all new employees with a copy of this
            policy. The Contractor's orientation programs will include a
            thorough discussion of all aspects of this policy and procedure.
            Annual retraining programs for all employees will also be conducted
            to ensure continuing compliance with this policy.

                                   APPENDIX C
                                October 1, 2004

                                       C-7

<PAGE>

                                   APPENDIX D

                       NEW YORK STATE DEPARTMENT OF HEALTH
                              MARKETING GUIDELINES

                                   APPENDIX D
                                October 1, 2004

                                       D-1

<PAGE>

                              MARKETING GUIDELINES
                                  INTRODUCTION

The purpose of these guidelines is to provide an operational framework for
localities and Medicaid managed care organizations (MCOs) in the development of
MCO marketing plans, materials, and activities and to describe SDOH's marketing
rules, MCO marketing requirements, and prohibited practices.

The guidelines are consistent with those issued to all states by the Health Care
Financing Administration (HCFA), U.S. Department of Health and Human Services
(DHHS) in August 1994. These guidelines are consistent with the requirements of
New York State.

                                   APPENDIX D
                                October 1, 2004

                                       D-2

<PAGE>

A. MARKETING PLANS

1.    The MCO shall develop a marketing plan that meets SDOH guidelines and any
      local requirements as approved by the State Department of Health (SDOH).

2.    The LDSS is responsible for the review and approval of MCO marketing
      plans, using a SDOH approved checklist.

3.    Approved marketing plans set forth the allowable terms and conditions and
      the proposed activities that the MCO intends to undertake during the
      contract period. Locally determined variations, as specified in Section E
      of this Appendix, must be described in the MCO's specific marketing plan
      for each LDSS the MCO contracts with.

4.    The MCO must have on file with the SDOH and each LDSS with which it will
      contract, an approved marketing plan, prior to the contract award date or
      before marketing and enrollment begin, whichever is sooner. Subsequent
      changes to the plan must be submitted to the LDSS or SDOH for approval at
      least sixty (60) days before implementation.

5.    The plan shall include: a stated marketing goal and strategies; marketing
      activities; and staff training, development and responsibilities. The
      following must be included in the plan's description of materials to be
      used: distribution methods; primary marketing locations, and a listing of
      the kinds of community service events the MCO anticipates sponsoring
      and/or participating in, during which it will provide information and/or
      distribute marketing materials.

6.    The MCO must describe how it is able to meet the informational needs,
      related to marketing, for the physical and cultural diversity of its
      potential membership. This may include, but not be limited to, a
      description of the MCO's other-than English language provisions,
      interpreter services, alternate communication mechanisms, including sign
      language, Braille, audio tapes, and/or use of Telecommunications Device
      for the Deaf (TDD)/TTY services.

7.    The MCO shall describe measures for monitoring and enforcing compliance
      with the guidelines by its marketing representatives and its providers
      including: the prohibition of door-to-door solicitation and cold-call
      telephoning; a description of the development of pre-enrollee mailing
      lists, that maintains client confidentiality and that honors the client's
      express request for direct contact by the MCO; the selection and
      distribution of pre-enrollment gifts and incentives to consumers; and a
      description of the training, compensation and supervision of its marketing
      representatives.

                                   APPENDIX D
                                 October 1, 2004

                                       D-3

<PAGE>

B. MARKETING MATERIALS

1.    Definitions

      a)    Marketing materials generally include the concepts of advertising,
            public service announcements, printed publications, and other
            broadcast or electronic messages designed to increase awareness and
            interest in Medicaid managed care and/or a MCO's Medicaid managed
            care product. The target audience for these marketing materials is
            Medicaid-eligible persons who are not enrolled in a Medicaid managed
            care plan, and who are living in a defined service area.

      b)    Marketing materials include any information that references the
            Medicaid managed care program, is intended for general distribution,
            and is produced in a variety of print, broadcast, and direct
            marketing mediums. These generally include: radio, television,
            billboards, newspapers, leaflets, informational brochures, videos,
            telephone book yellow page ads, letters, and posters. Additional
            materials requiring marketing approval include a listing of items to
            be provided as nominal gifts or incentives.

2.    Marketing Material Requirements

      a)    Marketing materials must be written in prose that is understood at a
            fourth-to sixth-grade reading level and must be printed in at least
            ten (10) point type.

      b)    The Contractor must make available written marketing and other
            informational materials (e.g., member handbooks) in a language other
            than English whenever at least five percent (5%) of the potential
            Enrollees of the Contractor in any county of the service area speak
            that particular language and do not speak English as a first
            language. SDOH will inform the LDSS and LDSS will inform the
            Contractor when the 5% threshold has been reached. Marketing
            materials to be translated include those key materials, such as
            informational brochures, that are produced for routine distribution,
            and which are included within the MCO's marketing plan. SDOH will
            determine the need for other than English translations based on
            county specific census data or other available measures.

      c)    Alternate forms of communications must be provided for persons with
            visual, hearing, speech, physical, or developmental disabilities.
            These alternate forms include Braille or audiotapes for the visually
            impaired, TTY access for those with certified speech or hearing
            disabilities, and use of American Sign Language and/or integrative
            technologies.

      d)    The plan name, mailing address (and location, if different), and
            toll free phone number must be prominently displayed on the cover of
            all multi-paged marketing materials.

                                   APPENDIX D
                                 October 1, 2004

                                       D-4

<PAGE>

      e)    Marketing materials must not contain false, misleading, or ambiguous
            information--such as "You have been pre-approved for the XYZ Health
            Plan," or "If you do not choose a plan you will lose your Medicaid
            coverage," or "You get free, unlimited visits." Materials must not
            use broad, sweeping statements-for example, "If you are eligible for
            Medicaid, you are eligible for Medicaid Managed Care and/or the XYZ
            Health Plan."

      f)    The material must accurately reflect general information, which is
            applicable to the average consumer of Medicaid managed care.

      g)    The Contractor may not use logos or wording used by government
            agencies if such use could imply or cause confusion about a
            connection between a governmental agency and the Contractor.

      h)    Marketing materials may not make reference to incentives that may be
            available to Enrollees after they join a plan, such as "If you join
            the XYZ Plan, you will receive a free baby carriage after you
            complete eight prenatal visits."

      i)    Marketing materials that are prepared for distribution or
            presentation by the LDSS or enrollment broker must be provided in a
            manner that is easily understood and appropriate to the target
            audience. The material covered must include sufficient information
            to assist the individual in making an informed choice of MCO.

      j)    The MCO shall advise potential Enrollees, in written materials
            related to enrollment, to verify with the medical services providers
            they prefer, or have an existing relationship with, that such
            medical services providers participate in the selected managed care
            provider's network and are available to serve the participant.

3.    Prior Approvals

      a)    The SDOH will review and approve MCO, marketing videos, materials
            for broadcast (radio, television, or electronic), billboards, mass
            transit (bus, subway or other livery) and statewide/regional print
            advertising materials. These materials must be submitted to the SDOH
            for review. A copy must be simultaneously provided to the LDSS.

      b)    The LDSS will review and approve the following marketing material:

            i)    MCO marketing plans;

            ii)   Scripts or outlines of presentations and materials used at
                  health fairs and other LDSS approved events and locations;

            iii)  All pre-enrollment written marketing materials - written
                  marketing materials include brochures and leaflets, and
                  presentation materials used by marketing representatives;

                                   APPENDIX D
                                October 1, 2004

                                       D-5
<PAGE>

            iv)   County specific MCO informational brochures to be included in
                  LDSS enrollment packets; and

            v)    All direct mailing from MCOs targeted to the Medicaid market.

      c)    Both SDOH and LDSS will adhere to a sixty (60) day "file and use"
            policy, whereby materials submitted by the MCO must be reviewed and
            commented on within sixty (60) days of submission or the MCO may
            assume the materials have been approved if the reviewer has not
            submitted any written comment.

      d)    The Contractor shall submit all subcontracts, procedures, and
            materials related to Marketing to Eligible Persons to the SDOH
            and/or LDSS for prior written approval. The Contractor shall not
            enter into any subcontracts or use any marketing subcontractors,
            procedures, or materials that the SDOH and/or LDSS has not approved.

4. Dissemination of LDSS Outreach Materials

      The Contractor shall provide to the LDSS and/or Enrollment Broker upon
      request, a marketing/informational brochure or alternative informational
      document that describes coverage in the county specific service area.

      The Contractor shall, upon request, submit to the LDSS or Enrollment
      Broker, a current provider directory, together with information that
      describes how to determine whether a provider is presently available.

                                   APPENDIX D
                                 October 1, 2004

                                       D-6

<PAGE>

C. MARKETING ACTIVITIES

1. Definitions

      a)    Marketing activities are occasions during which marketing
            information and material regarding Medicaid managed care and
            information about a particular MCO's affiliated products are
            presented. Typically, such information is presented both in verbal
            exchanges and through the distribution of written materials,
            together with the giving away of nominal gifts. The informal nature
            of the marketing activity requires MCOs to be forthright in their
            presentations to allow potential Enrollees the exercise of informed
            choice, and localities must provide the best assurances that
            marketing practices are consistent with established guidelines. Any
            exchange of verbal marketing information must include the
            following:

            i)    if the plan is not capitated for family planning services, the
                  representative must tell potential Enrollees that:

                  a)    certain family planning and reproductive health services
                        (such as abortion, sterilization and birth control) are
                        not covered by the Contractor;

                  b)    whenever needed such services may be obtained through
                        fee-for- service Medicaid from any provider who accepts
                        Medicaid;

                  c)    no referral is needed for such services;

                  d)    there will be no cost to the enrollee for such services.

      b)    With prior local approval MCO's may engage in marketing activities
            that include community-sponsored social gatherings, provider-hosted
            informational sessions, or MCO-sponsored events. Events may include
            such activities as health fairs workshops on health promotion,
            holiday parties, after school programs, raffles, etc. These events
            must not be restricted to Medicaid Recipients only.

      c)    Media campaigns are the distribution of information/materials
            regarding the Medicaid managed care program and/or a specific MCO
            for the purpose of encouraging Medicaid recipients to join a managed
            care plan. All mediums-including television, radio, billboards,
            subway and bus posters, and electronic messages--must be
            pre-approved by the SDOH at least thirty (30) days prior to the
            campaign. A copy must be simultaneously submitted to the SDOH and
            the LDSS.

2. Marketing Sites

      a)    With prior LDSS approval, MCOs may distribute approved marketing
            material in such places as, an income support maintenance center,
            community centers (if the center agrees and allows all MCOs to use
            the center), markets, pharmacies, hospitals and other provider
            sites, schools, health fairs, a resource center established by the
            LDSS or the enrollment counseling contractor, and other areas where
            potential Enrollees are likely to gather.

                                   APPENDIX D
                                October 1, 2004

                                       D-7

<PAGE>

      b)    MCOs are PROHIBITED from door-to-door solicitation of potential
            Enrollees, or distribution of material, and may not engage in "cold
            calling" inquiries or solicitation.

      c)    MCOs are PROHIBITED from direct marketing or distribution of
            material in hospital emergency rooms including emergency room
            waiting areas. Marketing may not take place in patient rooms or
            treatment areas (except for waiting areas) or other prohibited sites
            unless requested by the individual. LDSS may not allow MCO to market
            in individual homes without permission of the individual.

      d)    MCOs may not require its Participating Providers to distribute
            plan-prepared communications to their patients.

      e)    Participating Providers may display the marketing materials of their
            contracting MCOs provided that appropriate notice is conspicuously
            posted for all other MCOs with whom the Provider has a contract.

      f)    Participating Providers are encouraged to communicate with their
            patients about managed care options and to advise their patients in
            determining the MCO that best meets the health needs of the patient
            and his/her family. Such advice, whether presented verbally or in
            writing, must be individually based and not merely a promotion of
            one plan over another. Providers who wish to let their patients know
            of their affiliation with one or more MCOs must list each MCO with
            whom they hold contracts. In the event marketing material is
            included with such communication, the material, together with the
            intended communication, must be pre-approved by the LDSS before
            distribution.

      g)    In the event a provider is no longer affiliated with a particular
            MCO but remains affiliated with other participant MCOs, the provider
            may notify his/her/its patients of the new status and the impact of
            such change on the patient.

3     Restricted Marketing Activities

      a)    MCOs are PROHIBITED from misrepresenting the Medicaid program, the
            Medicaid managed care program, or the program or policy requirements
            of the LDSS or the SDOH.

      b)    MCOs are PROHIBITED from purchasing or otherwise acquiring or using
            mailing lists of Medicaid recipients from third party vendors,
            including providers and LDSS offices.

      c)    MCOs are PROHIBITED from using raffle tickets and event attendance
            or sign-in sheets to develop mailing lists of potential Enrollees.

                                   APPENDIX D
                                October 1, 2004

                                       D-8

<PAGE>

      d)    MCOs may not discriminate against a potential Enrollee based on
            his/her current health status or anticipated need for future health
            care. The MCO may not discriminate on the basis of disability or
            perceived disability of an Enrollee or their family member. Health
            assessments may not be performed by MCOs prior to enrollment. MCOs
            may inquire about existing primary care relationships of the
            applicant and explain whether and how such relationships may be
            maintained. Upon request, each potential Enrollee shall be provided
            with a listing of all Participating Providers including specialists
            and facilities in the MCO's network. The MCO may respond to a
            potential Enrollee's question about whether a particular specialist
            is in the network. However, MCOs are prohibited from inquiring about
            the types of specialists utilized by the potential Enrollee.

      e)    MCOs may not offer incentives of any kind to Medicaid recipients to
            join a health plan. "Incentives" are defined as any type of
            inducement whose receipt is contingent upon the recipients joining
            the plan.

      f)    MCOs are responsible for ensuring that their marketing
            representatives engage in professional and courteous behavior in
            their interactions with LDSS staff, staff from other health plans,
            and Medicaid clients. Examples of inappropriate behavior include
            interfering with other health plan presentations, talking negatively
            about another health plan, and participating with Medicaid clients
            during the verification interview with LDSS staff.

      g)    MCOs may offer nominal gifts of not more than $5.00 in fair-market
            value as part of a health fair or other marketing activity to
            stimulate interest in managed care and/or the MCO. Such gifts must
            be pre-approved by the LDSS, and offered without regard to
            enrollment. The MCO must submit a listing of intended items to be
            distributed at marketing activities as nominal gifts. The submission
            of actual samples or photographs of intended nominal gifts will not
            be routinely required, but must be made available upon request by
            the state or local reviewer. Listings of item donors or co-sponsors
            must be submitted along with the description of items.

      h)    MCOs may offer its Enrollees rewards for completing a health goal,
            such as finishing all prenatal visits, participating in a smoking
            cessation session, attending initial orientation sessions upon
            enrollment, and timely completion of immunizations or other health
            related programs. Such rewards may not exceed $50.00 in fair-market
            value per Enrollee over a twelve (12) month period, and must be
            related to a health goal. MCOs may not make reference to these
            rewards in their pre-enrollment marketing materials or discussions
            and all such rewards must be approved by the LDSS.

      i)    MCOs may not offer compensation to marketing representatives,
            including salary increases or bonuses, based solely on the number of
            individuals they enroll. However, MCOs may base compensation of
            marketing representatives on periodic performance evaluations which
            consider enrollment productivity as one

                                   APPENDIX D
                                October 1, 2004

                                       D-9

<PAGE>

            of several performance factors during a performance period, subject
            to the following requirements:

            1)    "Compensation" shall mean any remuneration required to be
                  reported as income or compensation for federal tax purposes;

            2)    MCOs may not pay a "commission" or fixed amount per
                  enrollment;

            3)    Bonuses may not be awarded more frequently than quarterly, and
                  the annual amount awarded as bonus compensation to a marketing
                  representative may not exceed 10% of his/her total annual
                  compensation;

            4)    Performance evaluations used as a basis for such bonus or
                  salary increase shall be set forth in writing and available
                  for inspection by SDOH or the LDSS;

            5)    Other appropriate factors which may be considered by an MCO in
                  awarding merit salary increase or bonuses to marketing
                  representatives include but are not limited to:

                  -     Ratio of "clean" or successful enrollments submitted;
                        quality of applications;

                  -     Attendance; adherence to marketing schedules; timeliness

                  -     Observed marketing behavior; absence/paucity of
                        complaints regarding marketing conduct

            6)    Affiliated providers engaged in marketing on behalf of an MCO
                  shall be considered "marketing representatives" for purposes
                  of Section C (3)(i) of Appendix D.

      j)    Individuals employed by MCO's as marketing representatives, and
            employees of marketing subcontractors must have successfully
            completed a training program about the basic concepts of managed
            care and the Medicaid recipients' rights and responsibilities
            relating to membership in managed care. MCOs must submit a copy of
            the training curriculum for their marketing representatives to SDOH
            and the LDSS as part of the marketing plan. The MCO shall be
            responsible for the activities of its marketing representatives and
            the activities of any subcontractor or management entity. A
            marketing representative means any individual or entity engaged by
            the Contractor to market on behalf of the Contractor.

                                   APPENDIX D
                                October 1, 2004

                                      D-10

<PAGE>

D. MARKETING INFRACTIONS

1.    Infractions of the marketing guidelines may result in the following
      actions being taken by the LDSS to protect the interests of the program
      and its clients. These actions shall be taken at the sole discretion of
      the LDSS.

      a)    If an MCO or its representative commits a first time infraction of
            marketing guidelines and the LDSS deems the infraction to be minor
            or unintentional in nature, the LDSS may issue a warning letter to
            the MCO.

      b)    For subsequent or more serious infractions, the LDSS may impose
            liquidated damages of $2,000.00, or other appropriate non-monetary
            sanctions for each infraction.

      c)    The LDSS may require the MCO to prepare a corrective action plan
            with a specified deadline for implementation.

      d)    If the MCO commits further infractions, fails to pay liquidated
            damages within the specified timeframe or fails to implement a
            corrective action plan in a timely manner or commits an egregious
            first-time infraction, the LDSS may:

            i)    prohibit the plan from conducting any marketing activities for
                  a period up to the end of the contract period;

            ii)   suspend new enrollments, other than newborns, for a period up
                  to the remainder of the contract; or

            iii)  terminate the contract pursuant to termination procedures
                  described therein.

                                   APPENDIX D
                                October 1, 2004

                                      D-11

<PAGE>

E. LDSS SPECIFIC MARKETING GUIDELINES

{insert LDSS specific marketing guidelines as applicable}.

LDSS: Orange County Department of Social Services

MCO: WellCare of New York Inc

                                   APPENDIX D
                                October 1, 2004

                                      D-12

<PAGE>

                       LDSS SPECIFIC MARKETING GUIDELINES
                         FOR MANAGED CARE ORGANIZATIONS
                                  (APPENDIX D)

The Contractor (Managed Care Organization - MCO) and the Local Department of
Social Services (LDSS) agree to the marketing guidelines as presented in section
11 and Appendix D of the voluntary model contract and to the following:

The LDSS Commissioner will receive formal notification of any changes to the
marketing plan (function) of the Contractor (MCO).

The Contractor (MCO) will maintain a viable presence within the Local District.
As conditions permit or as otherwise agreed upon by the Contractor (MCO) and the
Local District, the Marketing Representative assigned to the county will be
on-site at the Local District no less than 3 days during recertification weeks
and no less than 2 days during non-recertification weeks. There shall be 1
marketer per plan per (assigned) day unless otherwise approved.

The Contractor's Regional Marketing Manager (MCO's) and the Local District will
meet no less than quarterly to maintain open communication.

The Contractor (MCO) will submit a copy of the quarterly analysis of
disenrollment reasons for members in the given County. This shall be coordinated
by SDOH.

The Contractor (MCO) marketing and enrollment activities shall take place in the
following sites:

                        -     LDSS offices

                        -     WIC Centers

                        -     Via telephone with proper educational component

All other enrollment initiatives (for example: Provider Offices, Community and
Health Centers) or changes MUST be presented to State DOH and the Local
District for review and approval with at least 30 days notice.

The Contractor (MCO) will supply the Local District with a schedule (2 weeks in
advance) of all prior approved marketing activities including the time and dates
that marketers will be on-site and written notice of all scheduling changes.

The Contractor (MCO) marketers will sign in and out on the appropriate sign-in
sheet within the Local District.

The Contractor (MCO) shall conduct or participate in Community Outreach.

The Contractor (MCO) must have an established process with the Local District to
resolve marketing issues and concerns regarding the Marketing Representatives.
The Contractor (MCO) must provide the Local District with a corrective action
plan that includes specific time frames.

<PAGE>

The Contractor's (MCO's) Medicaid Program and Marketing Departments will attempt
to resolve all appropriate complaints to the satisfaction of the Local District.

The Local District has the right to evaluate all marketers. The Local District
may use post enrollment surveys, on-site reviews, follow-up telephone calls and
overall performance in this process. The Local District will share this
information with the appropriate Contractor (MCO) staff.

The Local District designates State DOH as the primary reviewer of all marketing
materials. The Local District will review and approve marketing activities, in
consultation with the SDOH as necessary.

The Contractor (MCO) will send LDSS monthly updates on any changes in their
provider network. Written notice must be sent to the Local District Managed Care
Coordinator.

<PAGE>

                                   APPENDIX E

                       NEW YORK STATE DEPARTMENT OF HEALTH
                           MEMBER HANDBOOK GUIDELINES

                                   APPENDIX E
                                October 1, 2004

                                       E-1

<PAGE>

                                  INTRODUCTION

This document contains member handbook guidelines for use by managed care
organizations (MCOs) under contract to serve New York Medicaid beneficiaries.
These guidelines may be revised from time to time based on changes in the law
and the changing needs of the program. The guidelines reflect the review
criteria used by the SDOH Office of Managed Care in its review of all Medicaid
managed care member handbooks. Handbooks and addenda must be approved by SDOH
prior to printing and distribution by MCOs. In addition, the SDOH has developed
a model member handbook at the fourth to sixth grade reading level for use by
MCOs. The model member handbook contains language to address required disclosure
regarding free access for family planning; self referral policies; obtaining
OB/GYN services; the definitions of medical necessity and emergency services;
protocols for complaints, utilization review, external appeals, fair hearings
and newborn enrollments; and listing of member entitlements, including benefits,
rights and responsibilities, and information available upon request. MCOs must
use the language provided in these required disclosure areas in their member
handbooks. A copy of the model handbook is available from the Office of Managed
Care, Bureau of Intergovernmental Affairs.

GENERAL FORMAT

Member handbooks must be written in a style and reading level that will
accommodate the reading skills of many Medicaid recipients. In general the
writing should be at no higher than a sixth-grade level, taking into
consideration the need to incorporate and explain certain technical or
unfamiliar terms to assure accuracy. The text must be printed in at least ten
(10) point font. The SDOH reserves the right to require evidence that a handbook
has been tested against the sixth-grade reading-level standard. Member handbooks
must be available in languages other than English whenever at least five (5)
percent of the potential enrollees of the MCO in any county in the MCO's service
area speak a language other than English as a first language.

HANDBOOK REQUIREMENTS

a)    General Overview (how the plan works)

      i)    Explanation of the plan, including what happens when you become a
            member.

      ii)   Explanation of the plan ID card, obtaining routine medical care,
            help by telephone, and general information pertaining to the plan,
            i.e., location of the plan, providers, etc.

      iii)  Invitation to attend scheduled orientation sessions and other
            educational and outreach activities.

b)    Provider Listing, including Site Locations

      Note: The information described here can be included in the handbook or as
      an insert to the handbook, or can be produced as a separate document and
      referenced in the handbook.

                                   APPENDIX E
                                October 1, 2004

                                       E-2

<PAGE>

      i)    A current listing of providers, including facilities.

      ii)   For physicians, separate listings of primary care practitioners and
            specialty providers; include location, phone number, and board
            certification status.

      iii)  Listing also must include a notice of how to determine whether a
            participating provider is accepting new patients.

c)    Voluntary or Mandatory Enrollment

      i)    Must indicate whether enrollment is voluntary or mandatory.

      ii)   If plan participates in both mandatory and voluntary counties,
            explanation of the difference, i.e., disenrollment, family members
            in the same plan, etc.

d)    Choice of Primary Care Provider (including how to make an appointment)

      i)    Explanation of the role of PCP as a coordinator of care, giving some
            examples, and how to choose one for self and family.

      ii)   How to make an appointment with the PCP, importance of base line
            physical, immunizations and well-child care.

      iii)  Explanation of different types of PCPs, i.e., family practice,
            pediatricians, internists, etc.

      iv)   Notification that the plan will assign the member to a PCP if one is
            not chosen in thirty (30) days.

      v)    OB/GYN choice rules for women

e)    Changing Primary Care Provider

      i)    Explanation of plan policy, time frames, and process related to
            changing PCP.

      ii)   Explanation of process for changing OB/GYN when applicable.

      iii)  Explanation of requirements for choosing a specialist as PCP.

f)    Referrals to Specialists (in and out-of-plan)

      i)    Explanation of specialist care and how referrals are accomplished.

      ii)   Explanation of process for changing specialists.

      iii)  Explanation of self-referral services, i.e., OB/GYN services, HIV
            counseling and testing, eye exams, etc.

      iv)   Notice that Enrollee may obtain a referral to a Non-Participating
            Provider when the plan does not have a Participating Provider with
            appropriate training or experience to meet the needs of the
            Enrollee; and the procedure for obtaining such referrals.

      v)    Notice that an Enrollee with a condition that requires ongoing care
            from a specialist may request a standing referral to such a
            specialist; procedure for obtaining such referrals.

      vi)   Notice that an Enrollee with a life-threatening condition or
            disease, or a degenerative and disabling condition or disease,
            either of which require

                                   APPENDIX E
                                October 1, 2004

                                       E-3

<PAGE>

            specialized medical care over a prolonged period of time, may
            request access to a specialist responsible for providing or
            coordinating the Enrollee's medical care; and the procedure for
            obtaining such a specialist.

      vii)  Notice that an Enrollee with a life-threatening condition or
            disease, or a degenerative and disabling condition or disease,
            either of which require specialized medical care over a prolonged
            period of time, may request access to a specialty care center; and
            the procedure for obtaining such access.

g)    Covered and Non-Covered Services

      i)    Benefits and services covered by the plan, including benefit
            maximums and limits.

      ii)   Definition of medical necessity used to determine whether benefits
            will be covered (same as plan-county contract definition).

      iii)  Medicaid services not covered by the plan or excluded from managed
            care; how to access these services.

      iv)   Prior authorization and other requirements for treatments and
            services.

      v)    Family planning and reproductive health services free access policy.

      vi)   HIV counseling and testing free access policy.

      vii)  Direct access policy for dental services provided at Article 28
            clinics operated by academic dental centers when dental is in the
            Benefit Package.

      viii) Plan policy relating to transportation, including who to call and
            what to do if plan does not cover transportation.

      ix)   Plan toll-free number for Enrollee to call for more information.

h)    Out of Area Coverage

      i)    Explanation of what to do and who to call if medical care is
            required when beneficiary is out of plan's service area.

i)    Emergency Care Access

      i)    Definition of emergency services, as defined in law including
            examples of situations that constitute an emergency and situations
            that do not.

      ii)   What to do in an emergency, including notice that services in a true
            emergency are not subject to prior approval.

      iii)  A phone number to call if PCP is not available.

      iv)   Explanation of what to do in non-emergency situations (PCP, urgent
            care, etc.).

j)    Utilization Review

      i)    Circumstances under which utilization review will be undertaken.

      ii)   Toll-free telephone number of the utilization review agent.

      iii)  Time frames under which UR decisions must be made for prospective,
            retrospective, and concurrent decisions.

      iv)   Right to reconsideration.

                                   APPENDIX E
                                October 1, 2004

                                       E-4

<PAGE>

      v)    Right to an appeal, including expedited and standard appeals
            processes and the time frames for such appeals.

      vi)   Right to designate a representative.

      vii)  A notice that all denials of claims will be made by qualified
            clinical personnel and that all notices will include information
            about the basis of the decision, and further appeal rights (if any).

k)    Enrollment and Disenrollment Procedures

      i)    Where appropriate, explanation of Lock-In requirements, and initial
            grace period when person may change plans, or return to
            fee-for-service in voluntary areas.

      ii)   Choice of PCP (each person can have his/her own PCP and can change
            thirty (30) days after the initial appointment with their PCP, and
            once every six months thereafter).

      iii)  Procedures for disenrollment.

      iv)   Opportunities for change

      v)    LDSS/or enrollment broker phone number for information on enrollment
            and disenrollment.

l)    Rights and Responsibilities of Enrollees

      i)    Explanation of what an Enrollee has the right to expect from the
            Contractor in the way of medical care and treatment of the Enrollee.

      ii)   Responsibilities of the Enrollee (general).

      iii)  Enrollee's financial responsibility for payment when services are
            furnished by a provider who is not part of the Contractor's network
            or by any provider without required authorization or when a
            procedure, treatment, or service is not a covered benefit; also note
            exceptions such as family planning and HIV counseling/testing.

      iv)   Enrollee's rights under State law to formulate advance directives.

      v)    The manner in which Enrollees may participate in the development of
            plan policies.

m)    Language

      i)    Description of how the Contractor addresses the needs of non-English
            speaking Enrollees.

n)    Grievance Procedures (complaints)

      i)    Right to file a grievance regarding any dispute between the
            Contractor and an Enrollee.

      ii)   Right to file a grievance orally when the dispute is about referrals
            or covered benefits.

      iii)  Explanation of who in the plan to call, along with the Contractor's
            toll-free number.

      iv)   Time frames and circumstances for expedited and standard grievances.

                                   APPENDIX E
                                October 1, 2004

                                       E-5

<PAGE>

      v)    Right to appeal a grievance determination and the procedures for
            filing such an appeal.

      vi)   Time frames and circumstances for expedited and standard appeals.

      vii)  Right to designate a representative.

      viii) A notice that all decisions involving clinical disputes will be made
            by qualified clinical personnel and that all notices will include
            information about the basis of the decision, and further appeal
            rights (if any).

      ix)   NYSDOH number for medically related complaints (1-800-206-8125).

      x)    New York State Insurance Department number for certain complaints
            relating to billing.

o)    Fair Hearing

      Explain that:

      i)    Enrollee has a right to a State Fair Hearing and Aid to Continuing
            in some situations.

      ii)   Describe situations when the Enrollee may ask for a fair hearing as
            described in Section 25 of this Agreement including State or LDSS
            decision about staying in or leaving the plan; decision the
            Contractor makes that stops or limits Medicaid benefits; Contractor
            decision agreeing with doctor who will not order services (must
            complain to the plan first).

      iii)  Describe how to request a fair hearing (assistance through member
            services, LDSS, State fair hearing contact).

p)    External Appeals

      i)    Description of circumstances where a person may request an external
            appeal

      ii)   Time frames for applying for appeal and for decision-making

      iii)  How and where to apply

      iv)   Describe expedited appeal time frame

      v)    Process for Contractor and Enrollee to agree on waiving the UR
            appeal process.

q)    Payment Methodologies

      i)    Description prepared annually of the types of methodologies the plan
            uses to reimburse providers, specifying the type of methodology used
            to reimburse particular types of providers or for the provision of
            particular types of services.

r)    Physician Incentive Plan Arrangements

      i)    The Member Handbook must contain a statement indicating the
            Enrollees and potential Enrollees are entitled to ask if the MCO has
            special financial arrangements with physicians that can affect the
            use of referrals and other services that they might need and how to
            obtain this information.

                                   APPENDIX E
                                October 1, 2004

                                       E-6

<PAGE>

s)    How and Where to Get More Information

      i)    How to access a member services representative through a toll-free
            number.

      ii)   How and when to contact LDSS for assistance.

OTHER INFORMATION AVAILABLE UPON ENROLLEE'S REQUEST

      a)    List of the names, business addresses and official positions of the
            membership of the board of directors, officers, controlling persons,
            owners or partners of the Contractor.

      b)    Copy of the most recent annual certified financial statement of the
            Contractor, including a balance sheet and summary of receipts and
            disbursements prepared by a CPA.

      c)    Copy of the most recent individual, direct pay subscriber contracts.

      d)    Information relating to consumer complaints compiled pursuant to
            Section 210 of the insurance law.

      e)    Procedures for protecting the confidentiality of medical records and
            other Enrollee information.

      f)    Written description of the organizational arrangements and ongoing
            procedures of the Contractor's quality assurance program.

      g)    Description of the procedures followed by the Contractor in making
            decisions about the experimental or investigational nature of
            medical devices, or treatments in clinical trials.

      h)    Individual health practitioner affiliations with participating
            hospitals.

      i)    Specific written clinical review criteria relating to a particular
            condition or disease and, where appropriate, other clinical
            information which the plan might consider in its utilization review
            process.

      j)    Written application procedures and minimum qualification
            requirements for health care providers to be considered by the plan.

      k)    Upon request, MCOs are required to provide the following information
            on the incentive arrangements affecting the MCO's physicians to
            current, previous and prospective Enrollees:

            1.    Whether the MCO's contract or subcontracts include Physician
                  Incentive Plans that affect the use of referral services.

            2.    Information on the type of incentive arrangements used.

            3.    Whether stop-loss protection is provided for physicians and
                  physicians groups.

            4.    If the MCO is at substantial financial risk, as defined in the
                  PIP regulations, a summary of the required customer
                  satisfaction survey results.

                                   APPENDIX E
                                October 1, 2004

                                       E-7

<PAGE>

                                   APPENDIX F

                       NEW YORK STATE DEPARTMENT OF HEALTH
            MEDICAID MANAGED CARE COMPLAINT AND APPEALS REQUIREMENTS

                                   APPENDIX F
                                October 1, 2004

                                       F-1
<PAGE>

I.    OVERALL OBJECTIVES

      The Medicaid managed care program complaint process accomplishes four
      objectives:

      a)    Ensures that each MCO resolves its Enrollees' problems promptly and
            at the lowest level of formality, wherever possible.

      b)    Ensures that the MCO reports the full extent of complaint activity
            to governmental oversight entities.

      c)    Ensures that the MCO uses complaint information to assess and
            improve program performance.

      d)    Provides an independent process for complaint resolution when issues
            are not resolved by the MCO.

II.   DEFINITIONS

      a)    A complaint is a written or verbal contract to the MCO in which the
            Enrollee or designee describes a dissatisfaction with the MCO, its
            employees, benefits, providers or contractors, including but not
            limited to:

            -     a determination made by the MCO;

            -     treatment experienced through the MCO, its providers, or
                  contractors.

            Medical necessity determinations pursuant to Article 49 of the
            Public Health Law are not included in the definition of a complaint.

      b)    An inquiry is a written or verbal question or request for
            information posed to the MCO with regard to such issues as benefits,
            contracts, and organization rules. Inquiries do not reflect Enrollee
            complaints or disagreements with MCO determinations.

      c)    Summary Complaint Forms are forms developed by the State that
            categorize the type of complaints received. These forms should be
            submitted via the HPN on a quarterly basis to the SDOH.

III.  COMPLAINT PROCEDURES

      a)    The MCO shall describe its complain and appeal procedure in the
            member handbook, and it must be accessible to non-English speaking,
            visually, and hearing impaired Enrollees. The handbook shall comply
            with Section 13.3 and The Member Handbook Guidelines (Appendix E) of
            this Agreement.

      b)    Anytime the MCO denies access to a referral; denies or reduces
            benefits or services; determines that a requested benefit is not
            covered in the MCO's benefit package, or denies payment of a claim
            for services, the MCO shall provide written notice of the procedures
            for the Enrollee to file a complaint, including:

                                   APPENDIX F
                                 October 1, 2004
                                       F-2
<PAGE>

            i)    the description of the action Contractor intends to take;

            ii)   the reasons for the determination including the clinical
                  rationale, if any;

            iii)  the process for filing a grievance/complaint with the
                  organization;

            iv)   the timeframes within which a grievance/complaint
                  determination must be made;

            v)    the right of an Enrollee to designate a representative to
                  file a grievance/complaint on behalf of the Enrollee;

            vi)   the notice of the right of the member to contact the New York
                  State Department of Health (800 206-8125) with their
                  complaint; and

            vii)  the notice entitled "Managed Care Action Taken" containing the
                  member's fair hearing and aid continuing rights.

      c)    If the MCO immediately resolves a verbal complaint to the Enrollee's
            satisfaction, that complaint may be considered resolved without any
            additional written notification to the Enrollee. Such complaints
            must be logged by the MCO and included in the MCO's quarterly HPN
            complaint report submitted to SDOH.

      d)    MCO procedures for accepting complaints shall include:

            i)    toll-free telephone number;

            ii)   designated staff to receive calls;

            iii)  "live" phone coverage at least 40 hours a week during normal
                  business hours;

            iv)   a mechanism to receive after hours calls including either:

                  A)    telephone system available to take calls and a plan to
                        respond to all such calls no later than on the next
                        business day after the call was recorded.

                  Or

                  B)    a mechanism to have available on a twenty-four (24)
                        hour, seven (7) day a week basis designated staff to
                        accept telephone complaints, whenever a delay would
                        significantly increase the risk to an Enrollee's health.

      e)    Determinations of all clinical complaints involving clinical
            decisions shall be made by qualified clinical personnel.

      f)    Upon receipt of a complaint, the MCO shall send a notice to the
            Enrollee specifying what information must be provided to the MCO in
            order for a determination to be made.

IV.   NOTICE TO ENROLLEE PROCEDURES

Upon receipt of the following type of complaints; 1) anytime that the MCO denies
access to a referral; 2) denies or reduces benefits or services; 3) determines
that a requested benefit is not covered by the MCO's benefit package, the MCO
shall send a notice to the Enrollee. The notice shall describe:

      a)    The Enrollee's right to file a complaint regarding any dispute with
            the MCO.

      b)    The information to be provided to the MCO in order for a
            determination to be made.

                                   APPENDIX F
                                 October 1, 2004
                                       F-3
<PAGE>

      c)    The fact that the MCO will not retaliate or take any discriminatory
            action against the Enrollee because he/she filed a complaint or
            appeal.

      d)    The right of the Enrollee to designate a representative to file
            complaints and appeals on his/her behalf.

      e)    The MCO's requirements for accepting written complaints, which can
            be either a letter or MCO supplied form.

      f)    The Enrollee's right to file a verbal complaint when the dispute is
            about referrals or covered benefits. The MCO must list a toll-free
            number which Enrollee may use to file a verbal complaint.

      g)    For verbal complaints, whether the Enrollee is required to sign an
            acknowledgment and description of the complaint prepared by the MCO.
            The acknowledgment must clearly advise the Enrollee that the
            Enrollee may amend the description but must sign and return it in
            order to initiate the complaint.

V.    TIMEFRAMES FOR COMPLAINT RESOLUTION BY THE MCO.

Procedures should indicate the following specific timeframes regarding complaint
resolution:

      a)    The MCO has to provide written acknowledgment of the complaint
            including the name, address and telephone number of the individual
            or department handling the complaint within fifteen (15) days of
            receipt of the complaint.

      b)    Complaints shall be resolved whenever a delay would significantly
            increase the risk to an Enrollee's health within forty-eight (48)
            hours after receipt of all necessary information.

      c)    Complaints shall be resolved in the case of requests for referrals
            or determinations concerning benefits covered by the contractual
            benefit package within thirty (30) days after the receipt of all
            necessary information.

      d)    All other complaints shall be resolved within forty-five (45) days
            after the receipt of all necessary information. The MCO shall
            maintain reports of complaints unresolved after forty-five (45) days
            in accordance with Section 18 of this Agreement.

VI.   COMPLAINT DETERMINATIONS

Procedures regarding the resolution of Enrollee complaints should include the
following:

      a)    Complaints shall be reviewed by one or more qualified personnel.

                                   APPENDIX F
                                 October 1, 2004
                                       F-4
<PAGE>

      b)    Complaints pertaining to clinical matters shall be reviewed by one
            or more licensed, certified or registered health care professionals
            in addition to whichever non-clinical personnel the MCO designates.

      c)    Determinations by the MCO shall be made in writing to the Enrollee
            or his/her designee and include:

            i)    the detailed reasons for the determination;

            ii)   in cases where the determination has a clinical basis, the
                  clinical rationale for the determination;

            iii)  the procedures for the filing of an appeal of the
                  determination, including a form for the filing of such an
                  appeal;

            iv)   notice of the right of the Enrollee to contact the State
                  Department of Health (800 206-8125) with their complaint; and

            v)    if applicable, the notice entitled "Managed Care Action
                  Taken," containing the Enrollee's fair hearing and aid
                  continuing rights if not provided with the initial action.

      d)    Notices of determinations shall be sent to the Enrollee or the
            Enrollee's designee within three (3) business days after a
            determination is made.

      e)    In cases where delay would significantly increase the risk to an
            Enrollee's health, notice of a determination shall be made by
            telephone directly to the Enrollee or to the Enrollee's designee, or
            when no phone is available some other method of communication, with
            written notice to follow within three (3) business days.

VII.  APPEALS

Procedures regarding Enrollee appeals of MCO complaint determinations should
include the following:

      a)    The Enrollee or designee has no less than sixty (60) business days
            after receipt of the notice of the complaint determination to file a
            written appeal. Appeals may be submitted by letter or by form
            provided by the MCO.

      b)    Within fifteen (15) business days of receipt of the appeal, the MCO
            shall provide written acknowledgment of the appeal including the
            name, address and telephone number of the individual designated to
            respond to the appeal. The MCO shall indicate what additional
            information, if any, must be provided for the MCO to render a
            decision.

      c)    Appeals of clinical matter must be decided by personnel qualified to
            review the appeal including licensed, certified or registered health
            care professionals who did not make the initial determination, at
            least one of whom must be a clinical peer reviewer. Clinical peer
            reviewers may be physicians who possess a current and valid
            non-restricted license to practice medicine. A clinical peer
            reviewer also may be a health care professional, who where
            applicable, possesses a current and valid non-restricted license,
            certification or registration, or where no provision for a license,
            certification, or registration exists, is

                                   APPENDIX F
                                 October 1, 2004
                                       F-5
<PAGE>

            credentialed by the national accrediting body appropriate to the
            profession. The clinical peer reviewer must be a physician or other
            health care professional practicing in the same professional
            specialty as the healthcare provider who typically manages the
            medical condition, procedure or treatment under review.

      d)    Appeals of non-clinical matters shall be determined by qualified
            personnel at a higher level than the personnel who made the original
            complaint determination.

      e)    Appeals shall be decided and notification provided to the Enrollee
            no more than:

            i)    two (2) business days after the receipt of all necessary
                  information when a delay would significantly increase the risk
                  to an Enrollee's health;

            ii)   thirty (30) business days after the receipt of all necessary
                  information in all other instances.

      f)    The notice of an appeal determination shall include:

            i)    the detailed reasons for the determination and the clinical
                  rationale for the determination;

            ii)   if applicable, a notice containing fair hearing rights;

            iii)  the notice shall also inform the Enrollee of his/her option to
                  also contact the State Department of Health (800-206-8125)
                  with his/her complaint;

            iv)   instructions for any further appeal.

VIII. RIGHT TO AN EXTERNAL APPEAL

The MCO shall describe its utilization review policies and procedures including
a notice of the right to an external appeal together with a description of the
external appeal process and the timeframes for external appeal, in the member
handbook. It must be accessible to non-English speaking, visually, and hearing
impaired Enrollees. The handbook shall comply with Section 13 and The Member
Handbook Guidelines (Appendix E) of this Agreement.

IX.   RECORDS

The MCO shall maintain a file on each complaint and appeal, if any. The file
shall include:

      a)    date the complaint was filed;

      b)    copy of the complaint, if written;

      c)    date of receipt of and copy of the Enrollee's acknowledgment, if
            any;

      d)    log of complaint determination including the date of the
            determination and the titles of the personnel and credentials of
            clinical personnel who reviewed the complaint;

      e)    date and copy of the Enrollee's appeal;

                                   APPENDIX F
                                 October 1, 2004
                                       F-6
<PAGE>

      f)    determination and date of determination of the appeal;

      g)    the titles, and credentials of clinical staff who reviewed the
            appeal.

In addition, the Contractor shall maintain a list of the following:

      a)    complaints unresolved for greater than 45 days;

      b)    complaints referred for external appeal

                                   APPENDIX F
                                 October 1, 2004
                                       F-7
<PAGE>

                                   APPENDIX G

                       NYSDOH GUIDELINES FOR THE PROVISION
                         OF EMERGENCY CARE AND SERVICES

                                   APPENDIX G
                                 October 1, 2004
                                       G-1
<PAGE>

         NYSDOH GUIDELINES FOR THE PROVISION OF EMERGENCY CARE AND SERVICES

DEFINITION OF AN "EMERGENCY MEDICAL CONDITION"

      The term "Emergency Medical Condition" means a medical or behavioral
      condition, the onset of which is sudden, that manifests itself by symptoms
      of sufficient severity, including severe pain, that a prudent layperson,
      possessing an average knowledge of medicine and health, could reasonably
      expect the absence of immediate medical attention to result in:

      i.    Placing the health of the person afflicted with such condition in
            serious jeopardy or, in the case of a behavioral condition, placing
            the health of the person or others in serious jeopardy; or

      ii.   serious impairment to such person's bodily functions; or

      iii.  serious dysfunction of any bodily organ or part of such person; or

      iv.   serious disfigurement of such person.

      Emergency Medical Services include health care procedures, treatments or
      services needed to evaluate or stabilize an Emergency Medical Condition
      including psychiatric stabilization and medical detoxification from drugs
      or alcohol.

PROTOCOLS FOR NOTIFICATION/AUTHORIZATION

      Preauthorization for treatment of an Emergency Medical Condition is never
      required.

      In circumstances where notification of arrival in the emergency department
      (ED) is requested by the managed care organization following the
      assessment and stabilization of the Enrollee, the notification process for
      the participating ED should require no more than one (1) phone call (or
      fax), and include a limited amount of standard clinical and demographic
      information.

                                   APPENDIX G
                                 October 1, 2004
                                       G-2
<PAGE>

PROTOCOL FOR ACCEPTABLE TRANSFER BETWEEN FACILITIES

      All relevant COBRA requirements must be met.

      MCOs must provide for an appropriate (as determined by the ED physician)
      transfer method/level with personnel as needed.

      MCOs must contact/arrange for an available, accepting physician and
      patient bed at the receiving institution.

      If a patient is not transferred within eight (8) hours to an appropriate
      inpatient setting, after the decision to admit has been made, then
      admission at the original facility is deemed authorized.

PROTOCOLS FOR DISPOSITION

      If, pursuant to a screening evaluation, ED staff determines that a patient
      requires further services (other than emergency medical services), the MCO
      will have two (2) hours to respond to a call from the ED with the
      appropriate person to discuss the case. If such response is longer than
      two (2) hours, that admission or treatment is deemed "authorized" for
      purposes of payment.

      In the event that the MCO/provider suggests a level of care for a specific
      patient deemed inappropriate by the attending physician in the ED, and no
      agreement as to disposition can be reached, a physician from the plan must
      physically come to the ED and evaluate/take responsibility for this
      patient.

TRIAGE FEES

      For emergency room services that do not meet the definition of Emergency
      Medical Condition, the MCO shall pay the hospital a triage fee of $40.00
      in the absence of a negotiated rate.

      Non-participating EDs cannot be denied payment on the basis of
      non-notification.

                                   APPENDIX G
                                 October 1, 2004
                                       G-3
<PAGE>

                                   APPENDIX H

             NEW YORK STATE DEPARTMENT OF HEALTH GUIDELINES FOR THE
                  PROCESSING OF ENROLLMENTS AND DISENROLLMENTS

                                   APPENDIX H
                                 October 1, 2004
                                       H-1
<PAGE>

                                   APPENDIX H
                                 SDOH GUIDELINES
              FOR THE PROCESSING OF ENROLLMENTS AND DISENROLLMENTS

This appendix is intended to provide general guidelines to LDSS and MCOs for the
processing of enrollments and disenrollments. Where an enrollment broker
exists, the enrollment broker may be responsible for some or all of the LDSS
responsibilities. To allow LDSS and MCOs flexibility in developing processes
that will meet the needs of both parties, SDOH may allow modifications to
timeframes and some procedures. Modifications are to be specified in Section G
of this Appendix and must be agreed to by both parties and receive prior
approval from SDOH.

A.    ENROLLMENT

SDOH RESPONSIBILITIES:

1.    The SDOH is responsible for monitoring Local District program activities
      and providing technical assistance to the LDSS and MCOs to ensure
      compliance with the State's policies and procedures.

2.    SDOH reviews and approves proposed enrollment materials prior to MCOs
      publishing and disseminating or otherwise using the materials.

LDSS RESPONSIBILITIES:

The LDSS has the primary responsibility for the enrollment process.

1.    Each local district determines Medicaid eligibility. To the extent
      practicable, the LDSS will follow up with Enrollees when the MCO provides
      documentation of any change in status which may affect the Enrollee's
      Medicaid and/or managed care eligibility.

2.    LDSS will provide pre-enrollment information to beneficiaries, consistent
      with Social Services Law, Section 364-j(4)(e)(iv) and train persons
      providing enrollment counseling to beneficiaries.

3.    The LDSS must inform beneficiaries of the availability of MCOs and HIV
      SNPs and the scope of services covered by each.

4.    LDSS will inform beneficiaries of the right to confidential face-to-face
      enrollment counseling and will make confidential face-to-face sessions
      available upon request.

5.    The LDSS shall advise potential Enrollees, in written materials related to
      enrollment, to verify with the medical services providers they prefer, or
      have an existing relationship with that such medical services providers
      participate in the selected managed care provider's network and are
      available to serve the participant.

                                   APPENDIX H
                                 October 1, 2004
                                       H-2
<PAGE>

6.    For enrollments made during face-to-face counseling, if the participant
      has a preference for particular medical services providers, enrollment
      counselors shall verify with the medical services providers that such
      medical services providers whom the participant prefers participate in the
      MCO's network and are available to serve the participant.

7.    The LDSS is responsible for the timely processing of managed care
      enrollment applications, exemptions, and exclusions and ensuring
      attestations are on file for all Enrollees.

8.    The LDSS will determine the status of enrollment applications.
      Applications will be enrolled, pended or denied.

9.    The LDSS will notify the Contractor of plan-assisted enrollment
      applications that are denied.

10.   The LDSS enters individual enrollment form data and transmits that data to
      the State's Prepaid Capitation Plan (PCH) Subsystem. The transfer of
      enrollment information may be accomplished by any of the following:

      i)    LDSS directly enters data into PCP Subsystem; or

      ii)   LDSS or Contractor submits a tape to the State, to be edited and
            entered into PCP Subsystem; or

      iii)  LDSS electronically transfers data, via a dedicated line or Medicaid
            Eligibility Verification System (MEVS) to the PCP Subsystem.

11.   The LDSS is required to send the following notices to Eligible Persons:

      i)    Initial Notification Letter: This letter informs the Eligible
            Persons about the mandatory program and the timeframes for choosing
            a plan. Included with the letter are managed care brochures, an
            enrollment form, and information on their rights and
            responsibilities under this program, including the option for
            HIV/AIDS infected individuals who are categorically exempt from the
            mainstream Medicaid Managed Care program to enroll in an HIV SNP on
            a voluntary basis in districts where HIV SNPs exist. (MANDATORY
            PROGRAM ONLY)

      ii)   Reminder Letter: A letter to all Eligible Persons in a mandatory
            category who have not responded by submitting a completed enrollment
            form within thirty (30) days of being sent or given an enrollment
            packet. (MANDATORY PROGRAM ONLY)

      iii)  Enrollment Confirmation Notice: This notice indicates the Effective
            Date of Enrollment, the name of the MCO and all individuals who are
            being enrolled. This notice should also be used for case additions
            and re-enrollments into the same plan.

      iv)   Notice of Denial of Enrollment: This notice is used when an
            individual has been determined by LDSS to be ineligible for
            enrollment into a Medicaid managed care plan. This notice must
            include fair hearing rights. Note: This notice is not required when
            Medicaid eligibility is being denied (or closed).

                                   APPENDIX H
                                 October 1, 2004
                                       H-3
<PAGE>

      v)    Exemption and Exclusion Request Forms: Exemption forms are provided
            to Eligible Persons upon request if they wish to apply for an
            exemption. Exclusion forms are provided to individuals in New York
            City who self-identify as qualifying for an exclusion. Individuals
            precoded on the system as meeting exemption or exclusion criteria do
            not need to complete an exemption or exclusion request form.

      vi)   Exemption and Exclusion Request Approval or Denial: This notice is
            designed to inform a recipient who applied for an exemption or
            exclusion of the LDSS's disposition of the request, including the
            right to a fair hearing if the request for exemption or exclusion is
            denied.

MCO RESPONSIBILITIES:

1.    In those instances in which the Contractor is marketing to persons already
      in receipt of Medicaid, the Contractor will submit plan enrollments to the
      LDSS, within a maximum of five (5) business days from the day the
      enrollment is received by the Contractor (unless otherwise agreed to by
      SDOH and LDSS).

2.    The Contractor must notify new Enrollees of their Effective Date of
      Enrollment. To the extent practicable, such notification must precede the
      Effective Date of Enrollment. (Section 13 of the Model Contract).

3.    The Contractor must report any changes in status for its enrolled members
      to the LDSS within five (5) business days of such information becoming
      known to the Contractor. This includes, but is not limited to, factors
      that may impact Medicaid eligibility such as address changes,
      verification of pregnancy, incarceration, third party insurance, etc.

4.    The Contractor shall advise potential Enrollees, in written materials
      related to enrollment, to verify with the medical services providers they
      prefer, or have an existing relationship with, that such medical services
      providers participate in the MCO's selected network and are available to
      serve the participant.

5.    The Contractor shall accept all enrollments as ordered by the Office of
      Temporary and Disability Assistance's Office of Administrative Hearings
      due to fair hearing requests or decisions.

B. NEWBORN ENROLLMENTS:

The Contractor agrees to enroll and provide coverage for eligible newborn
children of Enrollees effective from the time of birth.

SDOH Responsibilities:

1.    The SDOH will update WMS with information on the newborn received from
      hospitals, consistent with the requirements of Section 366-g of the Social
      Services Law as amended by Chapter 412 of the Laws of 1999.

                                   APPENDIX H
                                 October 1, 2004
                                       H-4
<PAGE>

2.    Upon notification of the birth by the hospital or birthing center, the
      SDOH will update WMS with the demographic data for the newborn and enroll
      the newborn in the mother's MCO if not already enrolled. The newborn will
      be retroactively enrolled back to the first (1st) day of the month of
      birth. Based on the transaction date of the enrollment of the newborn on
      the PCP subsystem, the newborn will appear on either the next month's
      roster or the subsequent month's roster. On plan rosters for upstate and
      NYC, the "PCP Effective From Date" will indicate the first day of the
      month of birth, as described in 01 OMM/ADM 5 "Automatic Medicaid
      Enrollment for Newborns."

LDSS Responsibilities:

1.    Grant Medicaid eligibility for newborns for one (1) year if born to a
      woman eligible for and receiving MA assistance on the date of birth.
      (SOCIAL SERVICES LAW SECTION 366 (4) (1))

2.    LDSS must add eligible unborns to all WMS cases that include a pregnant
      woman as soon as the pregnancy is medically verified. (NYS DSS
      ADMINISTRATIVE DIRECTIVE 85 ADM-33)

3.    In the event that the LDSS learns of an Enrollee's pregnancy prior to the
      Contractor, the LDSS is to establish MA eligibility and enroll the unborn
      in the Contractor's plan.

4.    The LDSS is responsible for newborn enrollment should it not be
      successfully competed under the "SDOH Responsibilities" process as
      outlined in #2 above.

5.    When a newborn is enrolled in managed care, the LDSS must send an
      Enrollment Confirmation Notice to inform the mother of the Effective Date
      of Enrollment, which is the first (1st) day of the month of birth, and the
      plan in which the newborn is enrolled.

6.    The LDSS may develop a transmittal form to be used for unborn/newborn
      notification between the Contractor and the LDSS.

MCO RESPONSIBILITIES:

1.    The Contractor must notify the LDSS in writing of any Enrollee that is
      pregnant within thirty (30) days of knowledge of the pregnancy.
      Notifications should be transmitted to the LDSS at least monthly. The
      notifications should contain the pregnant woman's name, Client ID Number
      (CIN), and the expected date of confinement (EDC).

2.    Upon the newborn's birth, the Contractor must send verifications of
      infant's demographic data to the LDSS, within five (5) days after
      knowledge of the birth. The

                                   APPENDIX H
                                 October 1, 2004
                                       H-5
<PAGE>

      demographic data must include: the mother's name and CIN, the newborn's
      name and CIN (if newborn has a CIN), sex and the date of birth.

3.    In districts that use an Enrollment Broker, the Contractor shall not
      submit electronic enrollments of newborns to the Enrollment Broker, as
      this will interfere with the retroactive enrollment of the newborn back to
      the first (1st) day of the month of birth. For newborns whose mothers are
      not enrolled in the Contractor's plan and who were not pre-enrolled into
      the plan as an unborn, the Contractor may submit an electronic enrollment
      of the newborn to the Enrollment Broker. In such cases, the Effective Date
      of Enrollment will be prospective.

4.    In voluntary counties, the Contractor will accept applications for unborns
      if that is the mother's intent, even if the mother is not and/or will not
      be enrolled in the Contractor's plan. In all Counties when a mother is
      ineligible for enrollment or chooses not to enroll, the Contractor will
      accept applications for pre-enrollment of unborns who are eligible.

5.    The Contractor is responsible for provision of services to the newborn and
      payment of the hospital or birthing center bill, if the mother is an
      Enrollee at the time of the newborn's birth, even if the newborn is not
      yet on the Roster.

6.    The Contractor will reimburse the hospital or birthing center at the
      Medicaid rate (or at another rate if contractually agreed to between the
      Contractor and the hospital or birthing center) for this episode of care.
      Hospitals and birthing centers have been advised by SDOH to expeditiously
      bill MCOs to allow MCOs to arrange for care for the Enrollees. However,
      the Contractor may not deny the inpatient hospital or birthing center
      costs if billing/notification is not timely except as otherwise provided
      by contractual agreement by the Contractor and hospital or birthing
      center.

7.    Within fourteen (14) days of the date on which the Contractor becomes
      aware of the birth, the Contractor will issue a letter informing parent(s)
      about the newborn's enrollment and how to access care or a member
      identification card.

8.    In those cases in which the Contractor is aware of the pregnancy, the
      Contractor will ensure that enrolled pregnant women select a PCP for their
      infants prior to birth.

9.    The Contractor will ensure that the newborn is linked with a PCP prior to
      discharge from the hospital or birthing center, in those instances in
      which the Contractor has received appropriate notification of birth prior
      to discharge.

C.    AUTO-ASSIGNMENT PROCESS (MANDATORY PROGRAM ONLY):

This section only applies to a LDSS where CMS has given approval and the LDSS
has begun mandatory enrollment. The details of the auto-assignment process are
contained in Section 12 of the State's Operational Protocol.

                                   APPENDIX H
                                 October 1, 2004
                                       H-6
<PAGE>

SDOH RESPONSIBILITIES:

1.    SDOH will provide information to LDSS on a daily basis of those
      individuals who have been added to the tickler file through the Potential
      Auto-Assign List.

2.    SDOH, LDSS or Enrollment Broker will assign eligible individuals not
      pre-coded in WMS as exempt or excluded, who have not chosen an MCO in the
      required time period to an MCO using an algorithm as specified in State
      Law SSL Section 364-j(4)(d).

3.    SDOH will ensure the auto-assignment process automatically updates the PCP
      Subsystem, and will notify the MCO of auto-assigned individuals
      electronically.

4.    SDOH will notify the LDSS electronically on a daily basis of those
      individuals for whom the State has selected a health plan through the
      Automated PCP Update Report. Note: This will not apply in Local Districts
      that utilize an enrollment broker.

LDSS RESPONSIBILITIES:

1.    The LDSS is responsible for tracking an individual's choice period.

2.    The LDSS will use the information contained in the Potential Auto-Assign
      List for education and outreach purposes.

3.    The LDSS will send at least one reminder notice to individuals who fail to
      return the enrollment application within thirty (30) days. The LDSS may
      employ other methods during the choice period to encourage individuals to
      choose an MCO prior to auto-assignment.

4.    The LDSS is responsible for providing notification to individuals
      regarding their enrollment status as specified in Section A of this
      Appendix.

MCO RESPONSIBILITIES:

1)    The Contractor is also responsible for providing notification to
      individuals regarding their enrollment status as specified in Section A of
      this Appendix.

D.    ROSTER RECONCILIATION:

All enrollments are effective the first of the month.

SDOH Responsibilities:

1)    The SDOH maintains both the PCP subsystem enrollment files and the WMS
      eligibility files, using data input by the LDSS. SDOH uses data contained
      in both these files to generate the Roster.

                                   APPENDIX H
                                 October 1, 2004
                                       H-7
<PAGE>

2)    SDOH shall send each MCO and LDSS monthly (according to a schedule
      established by SDOH), a complete list of all Enrollees for which the
      Contractor is expected to assume medical risk beginning on the 1st of the
      following month (First Monthly Roster). Notification to MCOs and LDSS will
      be accomplished via paper transmission, magnetic media, or the HPN.

3)    SDOH shall send each MCO and LDSS monthly, at the time of the first
      monthly roster production, a Disenrollment Report listing those Enrollees
      from the previous month's roster who were disenrolled, transferred to
      another MCO, or whose enrollments were deleted from the file. Notification
      to the MCOs and LDSSs will be accomplished via paper transmission,
      magnetic media, or the HPN.

4)    The SDOH shall also forward an error report as necessary to each MCO and
      LDSS.

5)    On the first (1st) weekend after the first (1st) day of the month
      following the generation of the first (1st) Roster, SDOH shall send MCOs
      and LDSS a second Roster which contains any additional Enrollees that the
      LDSS has added for enrollment for the current month. The SDOH will also
      include any additions to the error report that have occurred since the
      initial error report was generated.

LDSS RESPONSIBILITIES:

1)    LDSS must notify the Contractor electronically or in writing of changes in
      the First Roster and error report, no later than the end of the month.
      (Note: To the extent practicable the date specified must allow for timely
      notice to Enrollees regarding their enrollment status. MCOs and the LDSS
      may develop protocols for the purpose of resolving Roster discrepancies
      that remain unresolved beyond the end of the month. These protocols should
      be contained in Section G of this Appendix.)

2)    Enrollment and eligibility issues are reconciled by the LDSS to the extent
      possible, through manual adjustments to the PCP subsystem enrollment and
      WMS eligibility files, if appropriate.

MCO RESPONSIBILITIES:

1)    The Contractor is at risk for providing Benefit Package services for those
      Enrollees listed on the 1st and 2nd rosters for the month in which the 2nd
      Roster is generated. Contractor is not at risk for providing services to
      Enrollees who appear on the monthly disenrollment report.

2)    The Contractor must submit claims to the State's Fiscal Agent for all
      Eligible Persons that are on the 1st and 2nd Rosters (see Appendix H, page
      7), adjusted to add Eligible Persons enrolled by the LDSS after Roster
      production and to remove individuals disenrolled by LDSS after Roster
      production (as notified to the Contractor). In the cases of retroactive
      disenrollments, the Contractor is responsible for submitting an adjustment
      to void any previously paid premiums for the period of retroactive
      disenrollment, where the Contractor was not at risk for the provision of
      Benefit

                                   APPENDIX H
                                 October 1, 2004

                                       H-8
<PAGE>

      Package services. Payment of subcapitation does not constitute "provision
      of Benefit Package services."

E. DISENROLLMENT:

LDSS RESPONSIBILITIES:

      1.    The LDSS will accept requests for disenrollment directly from
            Enrollees and may not require Enrollees to approach the MCO for a
            disenrollment form. Where an LDSS is authorized to mandate
            enrollment, all requests for disenrollment must be directed to the
            LDSS or the enrollment broker. LDSSs and the enrollment broker must
            utilize the State-approved Disenrollment forms.

      2.    Enrollees may initiate a request for an expedited disenrollment to
            the LDSS. The LDSS will expedite the disenrollment process in those
            cases where an Enrollee's request for disenrollment involves an
            urgent medical need, a complaint of non-consensual enrollment or,
            in New York City and other local districts where homeless
            individuals are exempt, homeless individuals in the shelter system.
            If approved, the LDSS will manually process the disenrollment
            through the PCP Subsystem.

      3.    The LDSS will process routine disenrollment requests to take effect
            on the first (1st) day of the following month if the request is made
            BEFORE the fifteenth (15th) day of the month. In no event shall the
            Effective Date of Disenrollment be later than the first (1st) day of
            the second month after the month in which an Enrollee requests a
            disenrollment.

      4.    The LDSS will disenroll Enrollees automatically upon death or loss
            of Medicaid eligibility. All such disenrollments will be effective
            at the end of the month in which the death or loss of eligibility
            occurs or at the end of the last month of guaranteed eligibility,
            where applicable.

      5.    In districts where the LDSS has the authority to operate a mandatory
            program, and in voluntary counties that enforce lock-in, the LDSS
            will disenroll Enrollees who request disenrollment upon
            determination that they meet good cause requirements as specified in
            Section 7.3 and 8.7 of this Agreement. The LDSS will provide
            Enrollees with notice of their right to request a fair hearing if
            their disenrollment request is denied. This notice must outline the
            reason(s) for the denial.

      6.    The LDSS will promptly disenroll an Enrollee whose managed care
            eligibility or health status changes such that he/she is deemed by
            the LDSS to meet the exclusion criteria. The LDSS will provide
            Enrollees with a notice of their right to request a fair hearing.

                                   APPENDIX H
                                 October 1, 2004

                                       H-9
<PAGE>

      7.    In instances where an Enrollee requests disenrollment due to
            exclusion, the LDSS must notify the Enrollee of the approval or
            denial of exclusion/disenrollment status, including fair hearing
            rights if disenrollment is denied.

      8.    The LDSS agrees that retroactive disenrollments are to be used only
            when absolutely necessary. Circumstances warranting a retroactive
            disenrollment are rare and include when an individual is enrolled or
            autoassigned while meeting exclusion criteria or when an Enrollee
            enters or resides in a residential institution under circumstances
            which render the individual excluded from managed care; is
            incarcerated; is an SSI infant less than six (6) months of age; or
            dies - as long as the Contractor was not at risk for provision of
            Benefit Package services for any portion of the retroactive period.
            Payment of subcapitation does not constitute "provision of Benefit
            Package services." The LDSS must notify the Contractor of the
            retroactive disenrollment prior to the action. The LDSS must find
            out if the Contractor has made payments to providers on behalf of
            the Enrollee prior to disenrollment. After this information is
            obtained, the LDSS and Contractor will agree on a retroactive
            disenrollment or prospective disenrollment date.

            In all cases of retroactive disenrollment, including
            disenrollments effective the first day of the current month, the
            local district must notice the Contractor at the time of
            disenrollment, of the Contractor's responsibility to submit to the
            SDOH's Fiscal Agent voided premium claims for any full months of
            retroactive disenrollment where the Contractor was not at risk for
            the provision of Benefit Package services during the month. However,
            failure by the LDSS to so notify the Contractor does not affect the
            right of the SDOH to recover the premium payment as authorized by
            Section 3.6 of this Agreement.

                                   APPENDIX H
                                 October 1, 2004

                                      H-10
<PAGE>

      9.    Generally the effective dates of disenrollment are prospective.
            Effective dates for other than routine disenrollments are described
            below:

<TABLE>
<CAPTION>
                 REASON FOR DISENROLLMENT                                        EFFECTIVE DATE OF DISENROLLMENT
                 ------------------------                                        -------------------------------
<S>                                                            <C>
-  Infants weighing less than 1200 grams at birth and other    -  First Day of the month of birth or the month of onset of
   infants under six (6) months of age who meet the criteria      disability, whichever is later
   for the SSI or SSI related category

-  Death of Enrollee                                           -  First day of the month after death

-  Incarceration                                               -  First day of the month after incarceration

-  Enrollee entered or stayed in a residential institution     -  First day of the month following entry or first day of
   under circumstances which rendered the individual              the month following classification of the stay as
   excluded from managed care, including when an Enrollee is      permanent, subsequent to entry(1)
   admitted to a hospital that 1) is certified by Medicare
   as a long-term care hospital and 2) has an average length
   of stay for all patients greater than ninety-five (95)
   days as reported in the Statewide Planning and Research
   Cooperative System (SPARCS) Annual Report 2002.

-  Individual enrolled or autoassigned while meeting           -  Effective Date of Enrollment in the Contractor's Plan.
   exclusion criteria

Move by Enrollee

      -  (Non-NYC)-Enrollee moved outside of the Service       -  First day of the month after the update of the system
         Area of the contract                                     with the new address(2)

      -  (NYC)-Enrollee moved outside of New York City         -  First day of month after the update of the system with
                                                                  the new address(3)
</TABLE>

(1) Local districts shall make adjustments as necessary to allow a residential
institution to be reimbursed by SDOH's Fiscal Agent for services provided by the
residential institution if such stay is under circumstances which render the
Enrollee excluded from managed care. However in such instances, if the
Contractor was at risk for providing Benefit Package services to the Enrollee
for a portion of the month, the Contractor is entitled to keep the capitation
payment for the month.

(2) In counties outside of New York City, LDSSs should work together to ensure
continuity of care through the Contractor if the Contractor's service area
includes the county to which the Enrollee has moved and the Enrollee, with
continuous eligibility, wishes to stay enrolled in the Contractor's plan.

                                   APPENDIX H
                                 October 1, 2004

                                      H-11
<PAGE>
    (3)In New York City, Enrollees, not in guaranteed status, who move out of
    the Contractor's Service Area but not outside, of the City of New York
    (e.g., move from one borough to another), will not be involuntarily
    disenrolled, but must request a disenrollment or transfer. These
    disenrollments will be performed on a routine basis unless there is an
    urgent medical need to expedite the disenrollment.

10.   The LDSS is responsible for informing Enrollees of their right to change
      MCOs including any applicable lock-in restrictions. For those LDSSs that
      have implemented a mandatory enrollment program, families or members of a
      case wishing to change MCOs will be required to do so as a unit, unless
      the LDSS determines a "good cause" reason to waive this requirement as
      specified in Section 6.6 (c)(i) of this Agreement.

11.   The LDSS will render a decision within thirty (30) days of the receipt of
      a fully documented request for disenrollment, except for
      Contractor-initiated disenrollments where the LDSS decision must be made
      within fifteen (15) days as specified in Section 8.8 (g) of this
      Agreement.

12.   The LDSS is responsible for sending the following notices to Enrollees
      regarding their disenrollment status. Where practicable, the process will
      allow for timely notification to Enrollees unless there is "good cause" to
      disenroll more expeditiously.

      a)    Notice of Disenrollment: These notices will advise the Enrollee of
            the LDSS's determination regarding an Enrollee-initiated,
            LDSS-initiated or Contractor-initiated disenrollment and will
            include the Effective Date of Disenrollment. In cases where the
            Enrollee is being involuntarily disenrolled, the notice must contain
            fair hearing rights.

      b)    When the LDSS denies any Enrollee's request for disenrollment
            pursuant to Section 8 of the contract, the LDSS must inform the
            Enrollee in writing explaining the reason for the denial, stating
            the facts upon which the denial is based, citing the statutory and
            regulatory authority and advising the Enrollee of his/her right to a
            fair hearing pursuant to 18NYCRR Part 358.

      c)    End of Lock-In Notice: Where Lock-In provisions are enforced,
            Enrollees must be notified sixty (60) days before the end of their
            Lock-In Period.

      d)    Notice of Change to "Guarantee Coverage": This notice will advise
            the Enrollee that his or her Medicaid coverage is ending and how
            this affects his or her enrollment in Medicaid managed care. This
            notice contains pertinent information regarding "guaranteed
            eligibility" benefits and dates of coverage. If an Enrollee is not
            eligible for guarantee, this notice is not necessary.

                                   APPENDIX H
                                 October 1, 2004

                                      H-12
<PAGE>

13.   The LDSS may require that an individual that has been disenrolled at the
      request of the Contractor be returned to the Medicaid fee-for-service
      program.

14.   In those instances where the LDSS approves the Contractor's request to
      disenroll an Enrollee, and the Enrollee requests a fair hearing, the
      Contractor will continue to keep the Enrollee in the plan until the
      disposition of the fair hearing, when Aid to Continue is ordered by OAH.

15.   The LDSS will review each Contractor requested disenrollment in accordance
      with the provisions of Section 8.8 of this Agreement. Where applicable,
      the LDSS may consult with local mental health and substance abuse
      authorities in the district when making the determination to approve or
      disapprove the request.

16.   The LDSS shall establish procedures whereby the Contractor refers cases
      which are appropriate for an LDSS-initiated disenrollment and submits
      supporting documentation to the LDSS.

17.   After the LDSS receives and, if appropriate, approves the request for
      disenrollment either from the Enrollee or the Contractor, the LDSS will
      update the PCP subsystem file with an end date. MEVS and the Fiscal Agent
      are then updated to reflect the Enrollee's return to fee-for-service
      processing. The Enrollee is removed from the Contractor's Roster.

MCO RESPONSIBILITIES:

1.    In those instances where the Contractor directly receives disenrollment
      forms, the Contractor will forward these disenrollments to the LDSS for
      processing within five (5) business days (or according to Section F of
      this Appendix). During pulldown week, these forms may be faxed to the LDSS
      with the hard copy to follow.

2.    The Contractor must accept and transmit all requests for voluntary
      disenrollments from its Enrollees to the LDSS, and shall not impose any
      barriers to disenrollment requests. The Contractor may require that a
      disenrollment request be in writing, contain the signature of the
      Enrollee, and state the Enrollee's correct MCO or Medicaid identification
      number.

3.    Following LDSS procedures, the Contractor will refer cases which are
      appropriate for an LDSS-initiated disenrollment and will submit supporting
      documentation to the LDSS. This includes, but is not limited to, changes
      in status for its enrolled members that may impact eligibility for
      enrollment in an MCO such as address changes, incarceration, death,
      exclusion from managed care, etc.

4.    With respect to Contractor-initiated disenrollments:

            a)    The Contractor may initiate an involuntary disenrollment if
                  the Enrollee engages in conduct or behavior that seriously
                  impairs the Contractor's ability

                                   APPENDIX H
                                 October 1, 2004

                                      H-13
<PAGE>

                  to furnish services to either the Enrollee or other
                  Enrollee's, provided that the Contractor has made and
                  documented reasonable efforts to resolve the problems
                  presented by the Enrollee.

            b)    The Contractor may not request disenrollment because of an
                  adverse change in the Enrollee's health status, or because of
                  the Enrollee's utilization of medical services, diminished
                  mental capacity, or uncooperative or disruptive behavior
                  resulting from the Enrollee's special needs (except where
                  continued enrollment in the Contractor's plan seriously
                  impairs the Contractor's ability to furnish services to either
                  the Enrollee or other Enrollees).

            c)    The Contractor must make a reasonable effort to identify for
                  the Enrollee, both verbally and in writing, those actions of
                  the Enrollee that have interfered with the effective provision
                  of covered services as well as explain what actions or
                  procedures are acceptable.

            d)    The Contractor shall give prior verbal and written notice to
                  the Enrollee, with a copy to the LDSS, of its intent to
                  request disenrollment. The written notice shall advise the
                  Enrollee that the request has been forwarded to the LDSS for
                  review and approval. The written notice must include the
                  mailing address and telephone number of the LDSS.

            e)    The Contractor shall keep the LDSS informed of decisions
                  related to all complaints filed by an Enrollee as a result of,
                  or subsequent to, the notice of intent to disenroll.

5.    The Contractor will not consider an Enrollee disenrolled without
      confirmation from the LDSS or the Roster (as described in Section D of
      this Appendix).

F. EXPEDITED DISENROLLMENTS

Enrollees may request an expedited disenrollment if they have an urgent medical
need to disenroll, if they were non-consensually enrolled in a managed care
plan, or, if they are homeless and residing in the shelter system in New York
City or other local districts where homeless individuals are exempt. Individuals
who request to be disenrolled from managed care based on their documented HIV,
ESRD, or SPMI/SED status are categorically eligible for an expedited
disenrollment on the basis of urgent medical need.

LDSS RESPONSIBILITIES:

1.    The LDSS, to the extent possible, will process an expedited disenrollment
      within two business days of its determination that an expedited
      disenrollment is warranted. A disenrollment notice must be sent to the
      Enrollee outlining approval of the disenrollment request, including the
      Effective Date of Disenrollment.

                                   APPENDIX H
                                 October 1, 2004

                                      H-14
<PAGE>

2.    The Effective Date of Disenrollments resulting from expedited processing
      are as follows:

<TABLE>
<CAPTION>
        REASON FOR DISENROLLMENT                                                 EFFECTIVE DATE OF DISENROLLMENT
        ------------------------                                                 -------------------------------
<S>                                                            <C>
Urgent medical need                                            -    First day of the next month after determination except where
                                                                    medical need requires an earlier disenrollment

Non-consensual enrollment                                      -    Retroactive to the first day of the month of enrollment

Homeless individuals residing in the shelter                   -    Retroactive to the first day of the month of the request
system in NYC or in other districts where homeless
individuals are exempt
</TABLE>

G. LDSS AND PLAN SPECIFIC ADDENDA TO APPENDIX H.

LDSS Name   Orange County Department of Social Services

MCO Name    WellCare of New York Inc.

                                   APPENDIX H
                                 October 1, 2004

                                      H-15
<PAGE>

                  LDSS ENROLLMENT AND DISENROLLMENT PROCEDURES
                            (APPENDIX H, SECTION G)

ENROLLMENT

1     Enrollment applications will be submitted to the LDSS on a regular basis
      (monthly, weekly, if not more often) or as agreed to by the Contractor
      (MCO) and LDSS.

2.    Applications will be enrolled, pended or denied.

3.    A copy of the enrollment applications that are enrolled or denied will be
      sent back to the Contractor (MCO) with the noted outcome, on a regular
      basis (monthly, weekly, if not more often). The remaining applications
      will be pended at least 60 days. The Contractor (MCO) will be sent a list
      of pended applications after pulldown.

4.    The Contractor (MCO) is responsible for notifying the Enrollee regarding
      the status of their application (e.g., enrolled or denied).

5.    All unborns will be added as soon as the Contractor (MCO) or LDSS
      identifies the pregnancy. It will be the responsibility of each entity to
      notify the other on a regular basis. All children born to mothers enrolled
      in Managed Care added after birth will be retroactively enrolled to the
      first of the month of their birth.

DISENROLLMENT

1     Disenrollment forms will be available at the LDSS and the MCO.

2.    Disenrollment forms will be submitted to the LDSS.

3     Mailed-in disenrollment forms received by the Contractor (MCO) will be
      sent to the LDSS within 3 days of receipt. During the pulldown week, these
      forms will be faxed with a hard copy to follow.

4.    A copy of the processed disenrollment form will be sent to the Contractor
      (MCO) with the noted outcome, on a regular basis (monthly, weekly, if not
      more often).

5.    The Contractor (MCO) will not consider an Enrollee disenrolled without
      confirmation from LDSS.

6.    The Contractor (MCO) is responsible for notifying Enrollees who have been
      disenrolled. The effective date and the reason should appear on the
      notice.

7.    Enrollees are not subject to LOCK-IN.

8.    Any enrollment/disenrollment discrepancies called to the attention of the
      LDSS by the Contractor (MCO) will be resolved on a case by case basis by
      the LDSS.

9.    LDSS can accept disenrollments from Enrollees.

RETROACTIVE DISENROLLMENT

1.    Retroactive disenrollments must be coordinated between the LDSS and the
      Contractor (MCO).

2.    Retroactive disenrollments will be processed when appropriate and in the
      best interest of the Enrollee.

3.    The LDSS will notify the Contractor (MCO), in writing, of the date of the
      disenrollment.

4.    The Contractor (MCO) is responsible for filing a void claim for the
      affected months.

Appendix H, Section G                                                Page 1 of I
Oranae County                                                               2004

<PAGE>

                                   APPENDIX I

                       NEW YORK STATE DEPARTMENT OF HEALTH
                    GUIDELINES FOR USE OF MEDICAL RESIDENTS

                                   APPENDIX I
                                 October 1, 2004

                                       I-1
<PAGE>

                                   APPENDIX I

                               MEDICAL RESIDENTS

(a)   Medical Residents as Primary Care Providers. MCOs may utilize medical
      residents as participants (but not designated as 'primary care providers')
      in the care of Enrollees as long as all of the following conditions are
      met:

      1)    Residents are a part of patient care teams headed by fully licensed
            and MCO credentialed attending physicians serving patients in one or
            more training sites in an "up weighted" or "designated priority"
            residency program. Residents in a training program which was
            disapproved as a designated priority program solely due to the
            outcome measurement requirement for graduates may be eligible to
            participate in such patient care teams.

      2)    Only the attending physicians and nurse practitioners on the
            training team, not residents, may be credentialed to the MCO and may
            be empanelled with Enrollees. Enrollees must be assigned an
            attending physician or certified nurse practitioner to act as their
            PCP, though residents on the team may perform all or many of the
            visits to the Enrollee as long as the majority of these visits are
            under the direct supervision of the Enrollee's designated PCP.
            Enrollees have the right to request care by their PCP in addition or
            instead of being seen by a resident.

      3)    Residents may work with attending physicians and certified nurse
            practitioners to provide continuity of care to patients under the
            supervision of the patient's PCP. Patients must be made aware of the
            resident/attending relationship and be informed of their rights to
            be cared for directly by their PCP.

      4)    Residents eligible to be involved in a continuity relationship with
            patients must be available at least 20% of the total training time
            in the continuity of care setting and no less than 10% of training
            time in any training year must be in the continuity of care setting
            and no fewer than nine (9) months a year must be spent in the
            continuity of care setting.

      5)    Residents meeting these criteria provide increased capacity for
            enrollment to their team according to the following formula:

<TABLE>
<S>         <C>
PGY-1       300 per FTE
PGY-2       750 per FTE
PGY-3       1125 per FTE
PGY-4       1500 per FTE
</TABLE>

            Only hours spent routinely scheduled for patient care in the
            continuity of care training site may count as providing capacity and
            are based on 1.0 FTE=40 hours.

                                   APPENDIX I
                                October 1, 2004

                                      I-2
<PAGE>

      6)    In order for a resident to provide continuity of care to an
            Enrollee, both the resident and the attending PCP must have regular
            hours in the continuity site and must be scheduled to be in the site
            together the majority of the time.

      7)    A preceptor/attending is required to be present a minimum of sixteen
            (16) hours of combined precepting and direct patient care in the
            primary care setting to be counted as a team supervising PCP and
            accept an increased number of Enrollees based upon the residents
            working on his/her team. Time spent in patient care activities at
            other clinical sites or in other activities off-site is not counted
            towards this requirement.

      8)    A sixteen (16) hour per week attending may have no more than four
            (4) residents on their team. Attendings spending twenty-four (24)
            hours per week in patient care/supervisory activity at the
            continuity site could have six (6) residents per team. Attendings
            spending thirty-two (32) hours per week could have eight (8)
            residents on their team. Two (2) or more attendings may join
            together to form a larger team as long as the ratio of attending to
            residents does not exceed 1:4 and all attendings comply with the
            sixteen (16) hour minimum.

      9)    Specialty consults must be performed or directly supervised by a MCO
            credentialed specialist. The specialist may be assisted by a
            resident or fellow.

      10)   Responsibility for the care of the Enrollee remains with the
            attending physician. All attending/resident teams must provide
            adequate continuity of care, twenty-four (24) hour a day, seven (7)
            day a week coverage, and appointment and availability access.

      11)   Residents who do not qualify to act as continuity providers as part
            of an attending/resident team may still participate in the episodic
            care of Enrollees as long as that care is under the supervision of
            an attending physician credentialed to a MCO. Such residents would
            not add to the capacity of that attending to empanel Enrollees,
            however.

      12)   Certified nurse practitioners and registered physician's assistants
            may not act as attending preceptors for resident physicians.

(B) MEDICAL RESIDENTS AS SPECIALTY CARE PROVIDERS

      (1)   Residents may participate in the specialty care of Medicaid managed
            care patients in all settings supervised by fully licensed and
            MCO/PHSP credentialed specialty attending physicians.

      (2)   Only the attending physicians, not residents or fellows, may be
            credentialed by the MCO. Each attending must be credentialed by each

                                   APPENDIX I
                                 October 1, 2004

                                       I-3
<PAGE>

            MCO with which they will participate. Residents may perform all or
            many of the clinical services for the Enrollee as long as these
            clinical services are under the supervision of an appropriately
            credentialed specialty physician. Even when residents are
            credentialed by their program in particular procedures, certifying
            their competence to perform and teach those procedures, the overall
            care of each Enrollee remains the responsibility of the supervising
            MCO-credentialed attending.

      (3)   It is understood that many Enrollees will identify a resident as
            their specialty provider but the responsibility for all clinical
            decision-making remains with the attending physician of record.

      (4)   Enrollees must be given the name of the responsible attending
            physician in writing and be told how they may contact their
            attending physician or covering physician, if needed. This allows
            Enrollees to assist in the communication between their primary care
            provider and specialty attending and enables them to reach the
            specialty attending if an emergency arises in the course of their
            care. Enrollees must be made aware of the resident/attending
            relationship and must have a right to be cared for directly by the
            responsible attending physician, if requested.

      (5)   Enrollees requiring ongoing specialty care must be cared for in a
            continuity of care setting. This requires the ability to make
            follow-up appointments with a particular resident/attending
            physician, or if that provider team is not available, with a member
            of the provider's coverage group in order to insure ongoing
            responsibility for the patient by his/her MCO credentialed
            specialist. The responsible specialist and his/her specialty
            coverage group must be identifiable to the patient as well as to the
            referring primary care provider.

      (6)   Attending specialists must be available for emergency consultation
            and care during non-clinic hours. Emergency coverage may be provided
            by residents under adequate supervision. The attending or a member
            of the attending's coverage group must be available for telephone
            and/or in-person consultation when necessary.

      (7)   All training programs participating in Medicaid managed care must be
            accredited by the appropriate academic accrediting agency.

      (8)   All sites in which residents train must produce legible (preferably
            typewritten) consultation reports. Reports must be transmitted such
            they are received in a time frame consistent with the clinical
            condition of the patient, the urgency of the problem and the need
            for follow-up by the primary care physician. At a minimum, reports
            should be transmitted so that they are received no later than two
            (2) weeks from the date of the specialty visit.

                                   APPENDIX I
                                 October 1, 2004

                                       I-4
<PAGE>

      (9)   Written reports are required at the time of initial consultation
            and again with the receipt of all major significant diagnostic
            information or changes in therapy. In addition, specialists must
            promptly report to the referring primary care physician any
            significant findings or urgent changes in therapy which result from
            the specialty consultation.

All training sites must deliver the same standard of care to all patients
irrespective of payor. Training sites must integrate the care of Medicaid,
uninsured and private patients in the same settings.

                                   APPENDIX I
                                 October 1, 2004

                                       I-5
<PAGE>

                                   APPENDIX J

           NEW YORK STATE DEPARTMENT OF HEALTH GUIDELINES OF FEDERAL
                        AMERICANS WITH DISABILITIES ACT

                                   APPENDIX J
                                 October 1, 2004

                                       J-1
<PAGE>

                     GUIDELINES FOR MEDICAID MCO COMPLIANCE
                 WITH THE AMERICANS WITH DISABILITIES ACT (ADA)

I.    OBJECTIVES

Title II of the Americans With Disabilities Act (ADA) and Section 504 of the
Rehabilitation Act of 1973 (Section 504) provides that no qualified individual
with a disability shall, by reason of such disability, be excluded from
participation in or denied access to the benefits of services, programs or
activities of a public entity, or be subject to discrimination by such an
entity. Public entities include State and local government and ADA and Section
504 requirements extend to all programs and services provided by State and local
government. Since Medicaid is a government program, health services provided
through Medicaid Managed Care must be accessible to all who qualify for the
program.

MCO responsibilities for compliance with the ADA are imposed under Title II and
Section 504 when, as a contractor in a Medicaid program, a plan is providing a
government service. If an individual provider under contract with the MCO is not
accessible, it is the responsibility of the MCO to make arrangements to assure
that alternative services are provided. The MCO may determine it is expedient to
make arrangements with other providers, or to describe reasonable alternative
means and methods to make these services accessible through its existing
contractors. The goals of compliance with ADA Title II requirements are to offer
a level of services that allows people with disabilities access to the program
in its entirety, and the ability to achieve the same health care results as any
program participant.

MCO responsibilities for compliance with the ADA are also imposed under Title
III when the MCO functions as a public accommodation providing services to
individuals (e.g. program areas and sites such as marketing, education, member
services, orientation, complaints and appeals). The goals of compliance with ADA
Title III requirements are to offer a level of services that allows people with
disabilities full and equal enjoyment of the goods, services, facilities or
accommodations that the entity provides for its customers or clients. New and
altered areas and facilities must be as accessible as possible. Whenever MCOs
engage in new construction or renovation, compliance is also required with
accessible design and construction standards promulgated pursuant to the ADA as
well as State and local laws. Title III also requires that public accommodations
undertake "readily achievable barrier removal" in existing facilities where
architectural and communications barriers can be removed easily and without much
difficulty or expense.

The state uses Plan Qualification Standards to qualify MCOs for participation in
the Medicaid Managed Care Program. Pursuant to the state's responsibility to
assure program access to all recipients, the Plan Qualification Standards
require each MCO to submit an ADA Compliance Plan that describes in detail how
the MCO will make services, programs and activities readily accessible and
useable by

                                   APPENDIX J
                                 October 1, 2004

                                       J-2
<PAGE>

individuals with disabilities. In the event that certain program sites are not
readily accessible, the MCO must describe reasonable alternative methods for
making the services or activities accessible and usable.

The objectives of these guidelines are threefold:

      -     to ensure that MCOs take appropriate steps to measure access and
            assure program accessibility for persons with disabilities;

      -     to provide a framework for managed care organizations (MCOs) as they
            develop a plan to assure compliance with the Americans with
            Disabilities Act (ADA); and

      -     to provide standards for the review of MCO Compliance Plans.

These guidelines include a general standard followed by a discussion of specific
considerations and suggestions of methods for assuring compliance. Please be
advised that, although these guidelines and any subsequent reviews by State and
local governments can give the contractor guidance, it is ultimately the
contractor's obligation to ensure that it complies with its contractual
obligations, as well as with the requirements of the ADA, Section 504, and other
federal, state and local laws. Other federal, state and local statutes and
regulations also prohibit discrimination on the basis of disability and may
impose requirements in addition to those established under ADA. For example,
while the ADA covers those impairments that "substantially" limit one or more of
the major life activities of an individual, New York City Human Rights Law
deletes the modifier "substantially".

II.   DEFINITIONS

A.    "Auxiliary aids and services" may include qualified interpreters, note
      takers, computer-aided transcription services, written materials,
      telephone handset amplifiers, assistive listening systems, telephones
      compatible with hearing aids, closed caption decoders, open and closed
      captioning, telecommunications devices for enrollees who are deaf or hard
      of hearing (TTY/TDD), video test displays, and other effective methods of
      making aurally delivered materials available to individuals with hearing
      impairments; qualified readers, taped texts, audio recordings, Brailled
      materials, large print materials, or other effective methods of making
      visually delivered materials available to individuals with visual
      impairments.

B.    "Disability" means a mental or physical impairment that substantially
      limits one or more of the major life activities of an individual; a record
      of such impairment; or being regarded as having such an impairment.

                                   APPENDIX J
                                 October 1, 2004

                                       J-3
<PAGE>

III.  SCOPE OF MCO COMPLIANCE PLAN

      The MCO Compliance Plan must address accessibility to services at the
      MCO's program sites, including both participating provider sites and MCO
      facilities intended for use by enrollee.

IV.   PROGRAM ACCESSIBILITY

Public programs and services, when viewed in their entirety, must be readily
accessible to and useable by individuals with disabilities. This standard
includes physical access, non-discrimination in policies and procedures and
communication. Communications with individuals with disabilities are required to
be as effective as communications with others. The MCO Compliance Plan must
include a detailed description of how MCO services, programs and activities are
readily accessible and usable by individuals with disabilities. In the event
that full physical accessibility is not readily available for people with
disabilities, the MCO Compliance Plan will describe the steps or actions the MCO
will take to assure accessibility to services equivalent to those offered at the
inaccessible facilities.

IV.   PROGRAM ACCESSIBILITY

A.    PRE-ENROLLMENT MARKETING AND EDUCATION

STANDARD FOR COMPLIANCE:

Marketing staff, activities and materials will be made available to persons with
disabilities. Marketing materials will be made available in alternative formats
(such as Braille, large print, audio tapes) so that they are readily usable by
people with disabilities.

SUGGESTED METHODS FOR COMPLIANCE

1.    Activities held in physically accessible location, or staff at activities
      available to meet with person in an accessible location as necessary

2.    Materials available in alternative formats, such as Braille, large print,
      audio tapes

3.    Staff training which includes training and information regarding
      attitudinal barriers related to disability

4.    Activities and fairs that include sign language interpreters or the
      distribution of a written summary of the marketing script used by plan
      marketing representatives

5.    Enrollee health promotion material/activities targeted specifically to
      persons with disabilities (e.g. secondary infection prevention,

                                   APPENDIX J
                                October 1, 2004
                                       J-4
<PAGE>

      decubitus prevention, special exercise programs, etc.)

6.    Policy statement that marketing representatives will offer to read or
      summarize to blind or vision impaired individuals any written material
      that is typically distributed to all enrollees

7.    Staff/resources available to assist individuals with cognitive impairments
      in understanding materials

COMPLIANCE PLAN SUBMISSION

1.    A description of methods to ensure that the MCO's marketing presentations
      (materials and communications) are accessible to persons with auditory,
      visual and cognitive impairments

2.    A description of the MCO's policies and procedures, including marketing
      training, to ensure that marketing representatives neither screen health
      status nor ask questions about health status or prior health care services

IV.   PROGRAM ACCESSIBILITY

B.    MEMBER SERVICES DEPARTMENT

      Member services functions included the provision to enrollees of
      information necessary to make informed choices about treatment options, to
      effectively utilize the health care resources, to assist enrollees in
      making appointments, and to field questions and complaints, to assist
      enrollees with the complaint process.

B1.   ACCESSIBILITY

STANDARD FOR COMPLIANCE:

Member Services sites and functions will be made accessible to, and usable by,
people with disabilities.

SUGGESTED METHODS FOR COMPLIANCE (include, but are not limited to those
identified below)

1.    Exterior routes of travel, at least 36" wide, from parking areas or public
      transportation stops into the MCO's facility

2.    If parking is provided, spaces reserved for people with disabilities,
      pedestrian ramps at sidewalks, and dropoffs

3.    Routes of travel into the facility are stable, slip-resistant, with all
      steps > 1/2" ramped, doorways with minimum 32" opening

4.    Interior halls and passageways providing a clear and unobstructed path or
      travel at least 36" wide to bathrooms and other rooms commonly used by
      enrollees

5.    Waiting rooms, restrooms, and other rooms used by enrollees are accessible
      to people with disabilities

6.    Sign language interpreters and other auxiliary aids and services provided
      in appropriate circumstances

                                   APPENDIX J
                                October 1, 2004
                                       J-5
<PAGE>

7.    Materials available in alternative formats, such as Braille, large print,
      audio tapes

8.    Staff training which includes sensitivity training related to disability
      issues [Resources and technical assistance are available through the NYS
      Office of Advocate for Persons with Disabilities - V/TTY (800) 522-4369;
      and the NYC Mayor's Office for People with Disabilities - (212) 788-2830
      or TTY (212)788-2838]

9.    Availability of activities and educational materials tailored to specific
      conditions/illnesses and secondary conditions that affect these
      populations (e.g. secondary infection prevention, decubitus prevention,
      special exercise programs, etc.)

10.   MCO staff trained in the use of telecommunication devices for enrollees
      who are deaf or hard of hearing (TTY/TDD) as well as in the use of NY
      Relay for phone communication

11.   New enrollee orientation available in audio or by interpreter services

12.   Policy that when member services staff receive calls through the NY Relay,
      they will offer to return the call utilizing a direct TTY/TDD connection

COMPLIANCE PLAN SUBMISSION

1.    A description of accessibility to the member services department or
      reasonable alternative means to access member services for enrollees using
      wheelchairs (or other mobility aids)

2.    A description of the methods the member services department will use to
      communicate with enrollees who have visual or hearing impairments,
      including any necessary auxiliary aid/services for enrollees who are deaf
      or hard of hearing, and TTY/TDD technology or NY Relay Service available
      through a toll-free telephone number

3.    A description of the training provided to member services staff to assure
      that staff adequately understands how to implement the requirements of the
      program, and of these guidelines, and are sensitive to the needs of
      persons with disabilities

IV.   PROGRAM ACCESSIBILITY

B2.   IDENTIFICATION OF ENROLLEES WITH DISABILITIES

STANDARD FOR COMPLIANCE:

MCOs must have in place satisfactory methods/guidelines for identifying persons
at risk of, or having, chronic diseases and disabilities and determining their
specific needs in terms of specialist physician referrals, durable medical
equipment, medical supplies, home health services etc. MCOs may not discriminate
against a potential enrollee based on his/her current health status or
anticipated need for future health care. MCOs may not discriminate on the basis
of disability, or perceived disability of an enrollee or their family member.
Health assessment forms may not be used by plans prior to enrollment. (Once a
plan has been chosen, a health assessment form may be used to assess the
person's health care needs.)

                                   APPENDIX J
                                October 1, 2004
                                       J-6
<PAGE>

SUGGESTED METHODS FOR COMPLIANCE

1.    Appropriate post enrollment health screening for each enrollee, using an
      appropriate health screening tool

2.    Patient profiles by condition/disease for comparative analysis to national
      norms, with appropriate outreach and education

3.    Process for follow-up of needs identified by initial screening; e.g.
      referrals, assignment of case manager, assistance with scheduling/keeping
      appointments

4.    Enrolled population disability assessment survey

5.    Process for enrollees who acquire a disability subsequent to enrollment to
      access appropriate services

COMPLIANCE PLAN SUBMISSION

1.    A description of how the MCO will identify special health care, physical
      access or communication needs of enrollees on a timely basis, including
      but not limited to the health care needs of enrollees who:

      -     are blind or have visual impairments, including the type of
            auxiliary aids and services required by the enrollee

      -     are deaf or hard of hearing, including the type of auxiliary aids
            and services required by the enrollee

      -     have mobility impairments, including the extent, if any, to which
            they can ambulate

      -     have other physical or mental impairments or disabilities, including
            cognitive impairments

      -     have conditions which may require more intensive case management

IV.   PROGRAM ACCESSIBILITY

B3.   NEW ENROLLEE ORIENTATION

STANDARD FOR COMPLIANCE;

Enrollees will be given information sufficient to ensure that they understand
how to access medical care through the plan. This information will be made
accessible to, and usable by, people with disabilities.

SUGGESTED METHODS FOR COMPLIANCE

1.    Activities held in physically accessible location, or staff at activities
      available to meet with person in an accessible location as necessary

2.    Materials available in alternative formats, such as Braille, large print,
      audio tapes

3.    Staff training which includes sensitivity training related to disability
      issues [Resources and technical assistance are available

                                   APPENDIX J
                                October 1, 2004
                                       J-7
<PAGE>

      through the NYS Office of Advocate for Persons with Disabilities - V/TTY
      (800) 522-4369; and the NYC Mayor's Office for People with Disabilities -
      (212) 788-2830 or TTY (212)788-2838]

4.    Activities and fairs that include sign language interpreters or the
      distribution of a written summary of the marketing script used by plan
      marketing representatives

5.    Include in written/audio materials available to all enrollees information
      regarding how and where people with disabilities can access help in
      getting services, for example help with making appointments or for
      arranging special transportation, ah interpreter or assistive
      communication devices

6.    Staff/resources available to assist individuals with cognitive impairments
      in understanding materials

COMPLIANCE PLAN SUBMISSION

1.    A description of how the MCO will advise enrollees with disabilities,
      during the new enrollee orientation on how to access care

2.    A description of how the MCO will assist new enrollees with disabilities
      (as well as current enrollees who acquire a disability) in selecting or
      arranging an appointment with a Primary Care Practitioner (PCP)

      -     This should include a description of how the MCO will assure and
            provide notice to enrollees who are deaf or hard of hearing, blind
            or who have visual impairments, of their right to obtain necessary
            auxiliary aids and services during appointments and in scheduling
            appointments and follow-up treatment with participating providers

      -     In the event that certain provider sites are not physically
            accessible to enrollees with mobility impairments, the MCO will
            assure that reasonable alternative site and services are available

      3.    A description of how the MCO will determine the specific needs of an
            enrollee with or at risk of having a disability/chronic disease, in
            terms of specialist physician referrals, durable medical equipment
            (including assistive technology and adaptive equipment), medical
            supplies and home health services and will assure that such
            contractual services are provided

      4.    A description of how the MCO will identify if an enrollee with a
            disability requires on-going mental health services and how MCO will
            encourage early entry into treatment

      5.    A description of how the MCO will notify enrollees with disabilities
            as to how to access transportation, where applicable

IV.   PROGRAM ACCESSIBILITY

B4.   COMPLAINTS AND APPEALS

STANDARD FOR COMPLIANCE:

The MCO will establish and maintain a procedure to protect the rights and
interests of both enrollees and managed care plans by receiving, processing, and
resolving grievances and complaints in an expeditious manner, with the goal of
ensuring resolution of complaints and

                                   APPENDIX J
                                October 1, 2004
                                      J-8
<PAGE>

access to appropriate services as rapidly as possible.

All enrollees must be informed about the complaint process within their plan and
the procedure for filing complaints. This information will be made available
through the member handbook, the SDOH toll-free complaint line [1-(800)
206-8125] and the plan's complaint process annually, as well as when the MCO
denies a benefit or referral. The MCO will inform enrollees of: the MCO's
complaint procedure; enrollees' right to contact the local district or SDOH with
a complaint, and to file an appeal or request a fair hearing; the right to
appoint a designee to handle a complaint or appeal; the toll free complaint
line. The MCO will maintain designated staff to take and process complaints, and
be responsible for assisting enrollees in complaint resolution.

The MCO will make all information regarding the complaint process available to
and usable by people with disabilities, and will assure that people with
disabilities have access to sites where enrollees typically file complaints and
requests for appeals.

SUGGESTED METHODS FOR COMPLIANCE

1.    800 complaint phone line with TDD/TTY capability

2.    Staff trained in complaint process, and able to provide interpretive or
      assistive support to enrollee during the complaint process

3.    Notification materials and complaint forms in alternative formats for
      enrollees with visual or hearing impairments

4.    Availability of physically accessible sites, e.g. member services
      department sites

5.    Assistance for individuals with cognitive impairments

COMPLIANCE PLAN SUBMISSION

1.    A description of how MCO's complaint and appeal procedures shall be
      accessible for persons with disabilities, including:

      -     procedures for complaints and appeals to be made in person at sites
            accessible to persons with mobility impairments

      -     procedures accessible to persons with sensory or other impairments
            who wish to make verbal complaints, and to communicate with such
            persons on an ongoing basis as to the status or their complaints and
            rights to further appeals

      -     description of methods to ensure notification material is available
            in alternative formats for enrollees with vision and hearing
            impairments

2.    A description of how MCOs monitor complaints and grievances related to
      people with disabilities. Also, as part of the Compliance Plan, MCOs must
      submit a summary report based on the MCO's most recent year's complaint
      data.

                                   APPENDIX J
                                October 1, 2004
                                      J-9
<PAGE>

IV.   PROGRAM ACCESSIBILITY

C. CASE MANAGEMENT

STANDARD FOR COMPLIANCE:

MCOs must have in place adequate case management systems to identify the service
needs of all enrollees, including enrollees with chronic illness and enrollees
with disabilities, and ensure that medically necessary covered benefits are
delivered on a timely basis. These systems must include procedures for standing
referrals, specialists as PCPs, and referrals to specialty centers for enrollees
who require specialized medical care over a prolonged period of time (as
determined by a treatment plan approved by the MCO in consultation with the
primary care provider, the designated specialist and the enrollee or his/her
designee), out of plan referrals and continuation of existing treatment
relationships with out-of-plan providers (during transitional period).

SUGGESTED METHODS FOR COMPLIANCE

1.    Procedures for requesting specialist physicians to function as PCP

2.    Procedures for requesting standing referrals to specialists and/or
      specialty centers, out of plan referrals, and continuation of existing
      treatment relationships

3.    Procedures to meet enrollee needs for, durable medical equipment, medical
      supplies, home visits as appropriate

4.    Appropriately trained MCO staff to function as case managers for special
      needs populations, or sub-contract arrangements for case management

5.    Procedures for informing enrollees about the availability of case
      management services

COMPLIANCE PLAN SUBMISSION

1.    A description of the MCO case management program for people with
      disabilities, including case management functions, procedures for
      qualifying for and being assigned a case manager, and description of case
      management staff qualifications

2.    A description of the MCO's model protocol to enable participating
      providers, at their point of service, to identify enrollees who require a
      case manager

3.    A description of the MCO's protocol for assignment of specialists as PCP,
      and for standing referrals to specialists and specialty centers,
      out-of-plan referrals and continuing treatment relationships

4.    A description of the MCO's notice procedures to enrollees regarding the
      availability of case management services, specialists as PCPs, standing
      referrals to specialists and specialty centers, out-of-plan referrals and
      continuing treatment relationships

                                   APPENDIX J
                                October 1, 2004
                                      J-10
<PAGE>

IV.   PROGRAM ACCESSIBILITY

D.    PARTICIPATING PROVIDERS

STANDARD FOR COMPLIANCE:

MCOs networks will include all the provider types necessary to furnish the
benefit package, to assure appropriate and timely health care to all enrollees,
including those with chronic illness and/or disabilities. Physical accessibility
is not limited to entry to a provider site, but also includes access to services
within the site, e.g. exam tables and medical equipment.

SUGGESTED METHODS FOR COMPLIANCE

1.    Process for MCO to evaluate provider network to ascertain the degree of
      provider accessibility to persons with disabilities, to identify barriers
      to access and required modifications to policies/procedures

2.    Model protocol to assist participating providers, at their point of
      service, to identify enrollees who require case manager, audio, visual,
      mobility aids, or other accommodations

3.    Model protocol for determining needs of enrollees with mental
      disabilities.

4.    Use of Wheelchair Accessibility Certification Form (see attached)

5.    Submission of map of physically accessible sites

6.    Training for providers re: compliance with Title III of ADA, e.g. site
      access requirements for door widths, wheelchair ramps, accessible
      diagnostic/treatment rooms and equipment; communication issues;
      attitudinal barriers related to disability, etc. [Resources and technical
      assistance are available through the NYS Office of Advocate for Persons
      with Disabilities - V/TTY (800) 522-4369; and the NYC Mayor's Office for
      People with Disabilities - (212) 788-2830 or TTY (212)788-2838]

7.    Use of ADA Checklist for Existing Facilities and NYC Addendum to OAPD ADA
      Accessibility Checklist as guides for evaluating existing facilities and
      for new construction and/or alteration.

COMPLIANCE PLAN SUBMISSION

1.    A description of how MCO will ensure that its participating provider
      network is accessible to persons with disabilities. This includes the
      following:

      -     Policies and procedures to prevent discrimination on the basis of
            disability or type of illness or condition

      -     Identification of participating provider sites which are accessible
            by people with mobility impairments, including people using mobility
            devices. If certain provider sites are not physically accessible to
            persons with disabilities, the MCO shall describe reasonable,
            alternative means that result in making the provider services
            readily accessible.

      -     Identification of participating provider sites which do not have
            access to sign language interpreters or reasonable alternative

                                   APPENDIX J
                                October 1, 2004
                                      J-11
<PAGE>

            means to communicate with enrollees who are deaf or hard of hearing;
            and for those sites describe reasonable alternative methods to
            ensure that services will be made accessible

      -     Identification of participating providers which do not have adequate
            communication systems for enrollees who are blind or have vision
            impairments (e.g. raised symbol and lettering or visual signal
            appliances), and for those sites describe reasonable alternative
            methods to ensure that services will be made accessible

2.    A description of how the MCO's specialty network is sufficient to meet the
      needs of enrollees with disabilities

3.    A description of methods to ensure the coordination of out-of-network
      providers to meet the needs of the enrollees with disabilities

      -    This may include the implementation of a referral system to ensure
           that the health care needs of enrollees with disabilities are met
           appropriately

      -    MCO shall describe policies and procedures to allow for the
           continuation of existing relationships with out-of-network providers,
           when in the best interest of the enrollee with a disability

4.    Submission of ADA Compliance Summary Report (see attached - county
      specific/borough specific for NYC) or MCO statement that data submitted to
      SDOH on the Health Provider Network (HPN) files is an accurate reflection
      of each network's physical accessibility

IV.   PROGRAM ACCESSIBILITY

E.    POPULATIONS SPECIAL HEALTH CARE NEEDS

STANDARD FOR COMPLIANCE:

MCOs will have satisfactory methods for identifying persons at risk of, or
having, chronic disabilities and determining their specific needs in terms of
specialist physician referrals, durable medical equipment, medical supplies,
home health services, etc. MCOs will have satisfactory systems for coordinating
service delivery and, if necessary, procedures to allow continuation of existing
relationships with out-of-network provider for course of treatment.

SUGGESTED METHODS FOR COMPLIANCE

1.    Procedures for requesting standing referrals to specialists and/or
      specialty centers, specialist physicians to function as PCP, out of plan
      referrals, and continuation of existing relationships with out-of-network
      providers for course of treatment

2.    Contracts with school-based health centers

3.    Linkages with preschool services, child protective agencies, early
      intervention officials, behavioral health agencies, disability and
      advocacy organizations, etc.

4.    Adequate network of providers and subspecialists (including pediatric
      providers and sub-specialists) and contractual relationships

                                   APPENDIX J
                                October 1, 2004
                                      J-12
<PAGE>

      with tertiary institutions

5.    Procedures for assuring that these populations receive appropriate
      diagnostic workups on a timely basis

6.    Procedures for assuring that these populations receive appropriate access
      to durable medical equipment on a timely basis

7.    Procedures for assuring that these populations receive appropriate allied
      health professionals (Physical, Occupational and Speech Therapists,
      Audiologists) on a timely basis

8.    State designation as a Well Qualified Plan to serve OMRDD population and
      look-alikes

COMPLIANCE PLAN SUBMISSION

1.    A description of arrangements to ensure access to specialty care providers
      and centers in and out of New York State, standing referrals, specialist
      physicians to function as PCP, out of plan referrals, and continuation of
      existing relationships (out-of-plan) for diagnosis and treatment of rare
      disorders.

2.    A description of appropriate service delivery for children with
      disabilities. This may include a description of methods for interacting
      with school districts, preschool services, child protective service
      agencies, early intervention officials, behavioral health, and disability
      and advocacy organizations and School Based Health Centers.

3.    A description of the pediatric provider and sub-specialist network,
      including contractual relationships with tertiary institutions to meet the
      health care needs of children with disabilities

V.    ADDITIONAL ADA RESPONSIBILITIES FOR PUBLIC ACCOMMODATIONS

Please note that Title III of the ADA applies to all non-governmental providers
of health care. Title III of the Americans With Disabilities Act prohibits
discrimination on the basis of disability in the full and equal enjoyment of
goods, services, facilities, privileges, advantages or accommodations of any
place of public accommodation. A public accommodation is a private entity that
owns, leases or leases to, or operates a place of public accommodation. Places
of public accommodation identified by the ADA include, but are not limited to,
stores (including pharmacies) offices (including doctors' offices), hospitals,
health care providers, and social service centers.

New and altered areas and facilities must be as accessible as possible. Barriers
must be removed from existing facilities when it is readily achievable, defined
by the ADA as easily accomplishable without much difficulty or expense. Factors
to be considered when determining if barrier removal is readily achievable
include the cost of the action, the financial resources of the site involved,
and, if applicable, the overall financial resources of any parent corporation or
entity. If barrier removal is not readily achievable, the ADA requires alternate
methods of making goods and services available. New facilities must be
accessible unless structurally impracticable.

Title III also requires places of public accommodation to provide any auxiliary
aids and services that are needed to ensure equal access to the services it
offers, unless a fundamental alteration in the nature of services or an undue
burden would result. Auxiliary aids include but

                                   APPENDIX J
                                October 1, 2004
                                      J-13
<PAGE>

are not limited to qualified sign interpreters, assistive listening systems,
readers, large print materials, etc. Undue burden is defined as "significant
difficulty or expense". The factors to be considered in determining "undue
burden" include, but are not limited to, the nature and cost of the action
required and the overall financial resources of the provider. "Undue burden" is
a higher standard than "readily achievable" in that it requires a greater level
of effort on the part of the public accommodation.

Please note also that the ADA is not the only law applicable for people with
disabilities. In some cases, State or local laws require more than the ADA. For
example, New York City's Human Rights Law, which also prohibits discrimination
against people with disabilities, includes people whose impairments are not as
"substantial" as the narrower ADA and uses the higher "undue burden"
("reasonable") standard where the ADA requires only that which is "readily
achievable". New York City's Building Code does not permit access waivers for
newly constructed facilities and requires incorporation of access features as
existing facilities are renovated. Finally, the State Hospital code sets a
higher standard than the ADA for provision of communication (such as sign
language interpreters) for services provided at most hospitals, even on an
outpatient basis.

                                   APPENDIX J
                                October 1, 2004
                                      J-14
<PAGE>

                                   APPENDIX K

                             PREPAID BENEFIT PACKAGE
                           DEFINITIONS OF COVERED AND
                              NON-COVERED SERVICES

                                   APPENDIX K
                                October 1, 2004
                                      K-1

<PAGE>

                                   APPENDIX K
                             PREPAID BENEFIT PACKAGE
                DEFINITIONS OF COVERED AND NON-COVERED SERVICES

The categories of services in the Medicaid Managed Care Benefit Package, when
listed as covered services shall be provided by the Contractor to Enrollees when
medically necessary under the terms of this Agreement. The definitions of
covered and non-covered services therein are in summary form; the full
description and scope of each Medicaid covered service as established by the New
York Medical Assistance Program are set forth in the applicable MMIS Provider
Manual.

All care provided by the Contractor, pursuant to this Agreement, must be
provided, arranged, or authorized by the Contractor or its Participating
Providers with the exception of most behavioral health services to SSI or SSI
related beneficiaries (see Benefit Package K-2), and emergency services,
emergency transportation, family planning, mental health and chemical dependence
assessments (one (1) of each per year), court ordered services, and services
provided by Local Public Health Agencies as described in Section 10 of this
Agreement.

This Appendix contains the following two (2) charts:

K-1 A summary of services provided by the Contractor to all Non-SSI Enrollees.

K-2 A summary of services provided by the Contractor to all SSI Enrollees.

ALSO INCLUDED:

I.    Prepaid Benefit Package Definitions of Covered Services

            A)    Medical Services

                  1.    Inpatient Hospital Services

                  1a.   Inpatient Stay Pending Alternate Level of Medical Care

                  2.    Professional Ambulatory Services

                  3.    Physician Services

                  4.    Home Health Services

                  5.    Private Duty Nursing Services

                  6.    Emergency Room Services

                  7.    Services of Other Practitioners

                  8.    Eye Care and Low Vision Services

                  9.    Laboratory Services

                  10.   Radiology Services

                  11.   Early Periodic Screening Diagnosis and Treatment (EPSDT)
                        Services Through the Child Teen Health Program (C/THP)
                        and Adolescent Preventive Services

                  12.   Durable Medical Equipment (DME)

                  13.   Audiology, Hearing Aid Services and Products

                  14.   Preventive Care

                  15.   Prosthetic/Orthotic Orthopedic Footwear

                  16.   Renal Dialysis

                                   APPENDIX K
                                October 1, 2004
                                      K-2

<PAGE>

                  17.   Experimental or Investigational Treatment

            B)    Behavioral Health Services

                  1.    Chemical Dependence Services

                        a)    Detoxification Services

                              i)    Medically Managed Inpatient Detoxification

                              ii)   Medically Supervised Withdrawal

                        b)    Chemical Dependence Inpatient Rehabilitation and
                              Treatment Services

                        c)    Chemical Dependence Assessment Self-Referral

                  2.    Mental Health Services

                        a)    Inpatient Services

                        b)    Outpatient Services

            C)    Other Covered Services

                  1.    Federally Qualified Health Center (FQHC) Services

II.   Optional Covered Services (at discretion of LDSS and/or Contractor) [See
      Schedule A of Appendix K for Coverage Status]

            A)    Family Planning and Reproductive Health Care

            B)    Dental Services

            C)    Transportation Services

                  1.    Non-Emergency Transportation

                  2.    Emergency Transportation

III.  Definitions of Non-Covered Services

            A)    Medical Non-Covered Services

                  1.    Personal Care Agency Services

                  2.    Residential Health Care Facilities (RHCF)

                  3.    Hospice Program

                  4.    Prescription and Non-Prescription (OTC) Drugs, Medical
                        Supplies, and Enteral Formula

            B)    Non-Covered Behavioral Health Services

                  1.    Chemical Dependence Services

                        a)    Outpatient Rehabilitation and Treatment Services

                              i)    Methadone Maintenance Treatment Program
                                    (MMTP)

                              ii)   Medically Supervised Ambulatory Chemical
                                    Dependence Outpatient Clinic Programs

                              iii)  Medically Supervised Chemical Dependence
                                    Outpatient Rehabilitation Programs

                              iv)   Outpatient Chemical Dependence for Youth
                                    Programs

                        b)    Chemical Dependence Services Ordered by the LDSS

                  2.    Mental Health Services

                        a)    Intensive Psychiatric Rehabilitation Treatment
                              Programs (IPRT)

                                   APPENDIX K
                                October 1, 2004
                                      K-3

<PAGE>

                        b)    Day Treatment

                        c)    Continuing Day Treatment

                        d)    Day Treatment Programs Serving Children

                        e)    Home and Community Based Services Waiver for
                              Seriously Emotionally Disturbed Children

                        f)    Case Management

                        g)    Partial Hospitalization

                        h)    Services Provided through OMH Designated Clinics
                              for Children With a Diagnosis of Serious Emotional
                              Disturbance (SED)

                        i)    Assertive Community Treatment (ACT)

                        j)    Personalized Recovery Oriented Services (PROS)

                  3.    Rehabilitation Services Provided to Residents of OMH
                        Licensed Community Residences (CRs) and Family Based
                        Treatment Programs

                        a)    OMH Licensed CRs

                        b)    Family-Based Treatment

                  4.    Office of Mental Retardation and Developmental
                        Disabilities (OMRDD) Services

                        a)    Long Term Therapy Services Provided by Article
                              16-Clinic Treatment Facilities or Article 28
                              Facilities

                        b)    Day Treatment

                        c)    Medicaid Service Coordination (MSC)

                        d)    Home and Community Based Services Waivers (HCBS)

                        e)    Services Provided Through the Care at Home Program
                              (OMRDD)

            C)    Other Non-Covered Services

                     1.     The Early Intervention Program (EIP) - Children
                            Birth to Two (2) Years of Age

                     2.     Preschool Supportive Health Services - Children
                            Three (3) Through Four (4 ) Years of Age

                     3.     School Supportive Health Services - Children Five
                            (5) Through Twenty-One (21 ) Years of Age

                     4.     Comprehensive Medicaid Case Management (CMCM)

                     5.     Directly Observed Therapy for Tuberculosis Disease

                     6.     AIDS Adult Day Health Care

                     7.     HIV COBRA Case Management

                     8.     Fertility Services

                     9.     Adult Day Health Care

                     10.    Personal Emergency Response Systems (PERS)

                     11.    School-Based Health Centers

IV.   Schedule A of Appendix K, Prepaid Benefit Package, Coverage Status of
      Optional Covered Services

                                   APPENDIX K
                                October 1, 2004
                                      K-4

<PAGE>

                                  APPENDIX K-1
                   MANAGED CARE PLAN PREPAID BENEFIT PACKAGE

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT              COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------    -----------------------------------
<S>                                   <C>                                                        <C>
Inpatient Hospital Services           Up to 365 medically necessary days per year (366 for
                                      leap year) in accordance with the stop-loss provisions
                                      of Section 3.10 of this Agreement. Includes inpatient
                                      detoxification services provided in Article 28
                                      hospitals for all Enrollees. Inpatient dental services
                                      are covered. (See dental definition)

Inpatient Stay Pending Alternate      Continued care in a hospital pending placement in an
Level of Medical Care                 alternate lower medical level of care, consistent with
                                      the provisions of 18 NYCRR 505.20 and 10 NYCRR, Part 85.

Professional Ambulatory Services      Provided through ambulatory care facilities including
                                      hospital outpatient departments, D&T centers, and
                                      emergency rooms. Services include medical, surgical,
                                      preventive, primary, rehabilitative, specialty care,
                                      mental health, family planning, C/THP services and
                                      ambulatory dental surgery. Covered as needed based on
                                      medical necessity.

Preventive Health Services            Care or service to avert disease/illness and/or its
                                      consequences. Preventive care includes primary care,
                                      secondary care and tertiary care. Coverage includes
                                      general health education classes, smoking cessation
                                      classes, childbirth education classes, parenting classes
                                      and nutrition counseling (with targeted outreach to
                                      persons with diabetes and pregnant women). HIV counseling
                                      and testing is a covered service for all Enrollees.

Laboratory Services                   Covered when medically necessary as ordered by a           HIV phenotypic, HIV virtual
                                      qualified medical HIV phenotypic, HIV virtual              phenotypic and HIV genotypic drug
                                      phenotypic and professional, and when listed in the        resistance tests with a Provider's
                                      Medicaid fee schedule. Coverage excludes HIV phenotypic,   order.
                                      HIV virtual phenotype and HIV genotypic drug resistance
                                      tests.

Radiology Services                    Covered when medically necessary as ordered by a
                                      qualified medical professional, and when ordered and
                                      provided by a qualified medical
                                      professional/practitioner.

EPSDT Services/Child Teen             EPSDT is a package of early and periodic screening,        Services not included in the
Health Program (C/THP)                including inter-periodic screens and, diagnostic and       managed care Benefit Package
                                      treatment services that are offered to all Medicaid        ordered by the child's physician
                                      eligible children under twenty-one (21) years of age       based on the results of a
                                      known in New York State as the Child Teen Health           screening.
                                      Program (C/THP).
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-5

<PAGE>

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT              COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------    -----------------------------------
<S>                                   <C>                                                        <C>
Home Health Services                  Home health care services include medically necessary      Services rendered by a personal
                                      nursing, home health aide services, equipment and          care agency which are approved by
                                      appliances, physical therapy, speech/language              the Local Social Services District
                                      pathology, occupational therapy, social work services      when ordered by the Enrollee's
                                      or nutritional services provided by a home health care     Primary Care Provider (PCP). The
                                      agency pursuant to an established care plan. Personal      district will determine the
                                      care tasks performed by a home health aide in              applicant's need for personal care
                                      connection with a home health care agency visit, and       agency services and coordinate a
                                      pursuant to an established care plan, are covered.         plan of care with the personal care
                                                                                                 agency.

Private Duty Nursing Services         Covered service when medically necessary in accordance
                                      with the ordering physician, registered physician
                                      assistant or certified nurse practitioner's written
                                      treatment plan.

Emergency Room Services               Covered for emergency conditions, medical or
                                      behavioral, the onset of which is sudden, manifesting
                                      itself by symptoms of sufficient severity, including
                                      severe pain, that a prudent layperson, possessing an
                                      average knowledge of medicine and health, could
                                      reasonably expect the absence of medical attention to
                                      result in (a) placing the health of the person
                                      afflicted with such condition in serious jeopardy, or
                                      in the case of a behavioral condition placing the
                                      health of such person or others in serious jeopardy;
                                      (b) serious impairment of such person's bodily
                                      functions; (c) serious dysfunction of any bodily organ
                                      or part of such person; or (d) serious disfigurement of
                                      such person. Emergency services include health care
                                      procedures, treatments or services, including
                                      psychiatric stabilization and medical detoxification
                                      from drugs or alcohol that are provided for an
                                      emergency medical condition. A medical assessment
                                      (triage) is covered for non-emergent conditions.

Foot Care Services                    Foot care when the Enrollee's (any age) physical
                                      condition poses a hazard due to the presence of
                                      localized illness, injury or symptoms involving the
                                      foot, or when performed as a necessary and integral
                                      part of otherwise covered services such as the
                                      diagnosis and treatment of diabetes, ulcers, and
                                      infections.

Eye Care and Low Vision Services      Eye care includes the services of an ophthalmologist,
                                      optometrist and an ophthalmic dispenser and coverage
                                      for contact lenses, polycarbonate lenses, artificial
                                      eyes and replacement of lost or destroyed glasses
                                      (including repairs) when medically necessary.
                                      Artificial eyes are covered as ordered by a
                                      Contractor's Participating Provider.
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-6

<PAGE>

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT              COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------    -----------------------------------
<S>                                   <C>                                                        <C>
Durable Medical Equipment (DME)       DME are devices and equipment other than                   Excluded services, such as
                                      medical/surgical supplies, enteral formula, and            disposable medical/surgical
                                      prosthetic or orthotic appliances. Covered when            supplies and enteral formula with a
                                      medically necessary as ordered by a Contractor's           Provider's order.
                                      Participating Provider and procured from a
                                      Participating Provider. Coverage excludes disposable
                                      medical/surgical supplies and enteral formula.

Hearing Aids Services                 Provided when medically necessary to alleviate             Excluded services, such as hearing
                                      disability caused by the loss or impairment of hearing.    aid batteries with a Provider's
                                      Hearing aid products include hearing aids, earmolds,       order.
                                      special fittings, and replacement parts. Coverage
                                      excludes hearing aid batteries.

Family Planning and                   Family planning means the offering, arranging, and         Enrollees may always obtain family
Reproductive Health Services          furnishing of those health services which enable           planning and HIV testing and
                                      individuals, including minors, who may be sexually         counseling services, when part of a
                                      active, to prevent or reduce the incidence of              family planning visit, outside of
SEE SCHEDULE A OF APPENDIX K          unintended pregnancies and includes the screening,         the plan's network from any
FOR COVERAGE STATUS                   diagnosis and treatment, as medically necessary, for       Provider that accepts Medicaid.
                                      sexually transmissible diseases, sterilization services
                                      and screening for pregnancy. Reproductive health
                                      services also includes all medically necessary
                                      abortions.
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-7

<PAGE>

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT              COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------    -----------------------------------
<S>                                   <C>                                                        <C>
Transportation Services               NON-EMERGENCY TRANSPORTATION:                              For Contractors that do not cover
                                      Transportation expenses are covered when transportation    transportation services, these
Non-Emergency Transportation          is essential in order for an Enrollee to obtain            services are paid for
                                      necessary medical care and services which are covered      fee-for-service. Non-emergent
SEE SCHEDULE A OF APPENDIX K FOR      under this Benefit Package (or by fee-for-service          transportation requests should be
COVERAGE STATUS                       Medicaid for carved-out services). Non-emergent            referred to the LDSS. Contractors
                                      transportation guidelines may be developed in              that cover non-emergency
                                      conjunction with the LDSS, based on the LDSS' approved
                                      transportation plan.
                                                                                                 For Contractors that cover
                                      Transportation services means transportation by            non-emergency transportation in the
                                      ambulance, ambulette or invalid coach, taxicab, livery,    Benefit Package, transportation
                                      public transportation, or other means appropriate to       costs to MMTP services may be
                                      the Enrollee's medical condition; and a transportation     reimbursed by Medicaid
                                      attendant to accompany the Enrollee, if necessary. Such    fee-for-service in accordance with
                                      services may include the transportation attendant's        the LDSS transportation polices in
                                      transportation, meals, lodging and salary; however, no     local districts where there is a
                                      salary will be paid to a transportation attendant who      systematic method to discretely
                                      is a member of the Enrollee's family.                      identify and reimburse such
                                                                                                 transportation costs.
                                      For Enrollees with disabilities, the method of
                                      transportation must reasonably accommodate their needs,
                                      taking into account the severity and nature of the
                                      disability.

Emergency Transportation              EMERGENCY TRANSPORTATION
                                      Emergency transportation can only be provided by an
SEE SCHEDULE A OF APPENDIX K FOR      ambulance service. Emergency transportation is covered
COVERAGE STATUS                       for Enrollees suffering from severe, life-threatening
                                      or potentially disabling conditions which require the
                                      provision of emergency medical services while the
                                      Enrollee is being transported.

Dental Services                       Optional Benefit Package dental services include:          Routine exams, orthodontic services
                                                                                                 and appliances, dental office
SEE SCHEDULE A OF APPENDIX K          - Medically necessary preventive, prophylactic and         surgery, fillings, prophylaxis,
FOR COVERAGE STATUS                     other routine dental care, services and supplies and     provided to Enrollees of plans not
                                        dental prosthetics required to alleviate a serious       electing to cover dental services.
                                        health condition, including one which affects
                                        employability.

                                      As described in Sections 10.16 and 10.28 of this           Orthodontic services are always
                                      Agreement, Enrollees may self-refer to Article 28          covered by fee-for-service.
                                      clinics operated by academic dental centers to obtain
                                      covered dental services.

                                      All Contractors must cover the following, even if
                                      dental services is not a plan covered benefit:

                                      - Ambulatory or inpatient surgical services (subject to
                                        prior authorization by the Contractor).

                                      Coverage excludes the professional services of the
                                      dentist if dental services are not covered by the
                                      Contractor's Benefit Package.
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-8

<PAGE>

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT              COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------    -----------------------------------
<S>                                   <C>                                                        <C>
Court-Ordered Services                Coverage includes such services ordered by a court of
                                      competent jurisdiction if the services are in the
                                      Contractor's Benefit Package.

Prosthetic/Orthotic                   Covered when medically necessary as ordered by the
Services/Orthopedic Footwear          Contractor's Participating Provider.

Mental Health Services                Covered when medically necessary, in accordance with       All services in excess of twenty
                                      the stop-loss provisions as described in Section 3.12      (20) outpatient visits and thirty
                                      of this Agreement. Enrollees must be allowed to            (30) inpatient days in accordance
                                      self-refer for one (1) mental health assessment from a     with the stop-loss provisions in
                                      Contractor's Participating Provider in a twelve (12)       Section 3.12 of this Agreement.
                                      month period. In the case of children, such                Contractor continues to reimburse
                                      self-referrals may originate at the request of a school    mental health service providers and
                                      guidance counselor or similar source.                      coordinate care. The Contractor is
                                                                                                 reimbursed for payment through the
                                                                                                 stop-loss provisions.

Detoxification Services               Covered when medically necessary on either an inpatient    Medically Supervised Inpatient and
                                      or outpatient basis. Such services are referred to as      Outpatient Withdrawal Services,
                                      "Medically Managed Detoxification Services" when           when ordered by the LDSS under
                                      provided in facilities licensed under Title 14 NYCRR       Welfare Reform (as indicated by
                                      Part 816.6 or Article 28 of the Public Health Law;         "code 83").
                                      and "Medically Supervised Inpatient and Outpatient
                                      Withdrawal Services" when provided in facilities
                                      licensed under Title 14 NYCRR Part 816.7.

Chemical Dependence Inpatient         Covered when medically necessary in accordance with the    Chemical Dependence Inpatient
Rehabilitation and Treatment          stop-loss provisions described in Section 3.12 of this     Rehabilitation and  Treatment
Services                              Agreement.                                                 Services when ordered by the LDSS
                                                                                                 under Welfare Reform (as indicated
                                                                                                 by "code 83")

Chemical Dependence Assessment        Enrollees must be allowed to self refer for one (1)
Self-Referral                         assessment from a Contractor's participating provider
                                      in a twelve (12) month period.

Experimental and/or Investigational   Covered on a case by case basis in accordance with the
Treatment                             provisions of Section 4910 of the New York State P.H.L.

Renal Dialysis                        Renal dialysis is covered when medically necessary as
                                      ordered by a qualified medical professional. Renal
                                      dialysis may be provided in an inpatient hospital
                                      setting, in an ambulatory care facility, or in the home
                                      on recommendation from a renal dialysis center.
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-9

<PAGE>

                                       K-2
              MANAGED CARE PLAN PREPAID HEALTH ONLY BENEFIT PACKAGE
                       FOR SSI AND SSI RELATED RECIPIENTS

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT             COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------   ------------------------------------
<S>                                   <C>                                                       <C>
Inpatient Hospital Services           Up to 365 medically necessary days per year (366 for
                                      leap year) in accordance with the stop-loss provisions
                                      of Section 3.10 of this Agreement. Includes inpatient
                                      detoxification services provided in Article 28
                                      hospitals for all Enrollees. Inpatient dental services
                                      are covered.

Inpatient Stay Pending Alternate      Continued care in a hospital pending placement in an
Level of Medical Care                 alternate lower medical level of care, consistent with
                                      the provisions of 18 NYCRR 505.20 and 10 NYCRR, Part
                                      85.

Professional Ambulatory Services      Provided through ambulatory care facilities including     Mental Health and Chemical
                                      hospital outpatient departments, D&T centers, and         Dependence services.
                                      emergency rooms. Services include medical, surgical,
                                      preventive, primary, rehabilitative, specialty care,
                                      family planning, C/THP services and ambulatory dental
                                      surgery. Covered as needed based on medical necessity.

EPSDT Services/ Child Teen Health     EPSDT is a package of early and periodic screening,       Services not included in the
Program (C/THP)                       including inter-periodic screens and diagnostic and       managed care Benefit Package ordered
                                      treatment services that are offered to all Medicaid       by the child's physician based on
                                      eligible children under twenty-one (21) years of age,     the results of a screening.
                                      known in New York State as the Child Teen Health Plan
                                      (C/THP).

Preventive Health Services            Care and services to avert disease/illness and/or its
                                      consequences. Preventive care includes primary care,
                                      secondary care and tertiary care. Coverage includes
                                      general health education classes, smoking cessation
                                      classes, childbirth education classes, parenting
                                      classes and nutrition counseling (with targeted
                                      outreach to persons with diabetes and pregnant women).
                                      HIV counseling and testing is a covered service for all
                                      Enrollees.

 Home Health Services                 Home health care services include medically necessary     Services rendered by a personal
                                      nursing, home health aide services, equipment and         care agency which are approved by
                                      appliances, physical therapy, speech/language             the Local Social Services District
                                      pathology, occupational therapy, social work services     when ordered by the Enrollee's
                                      or nutritional services provided by a home health care    Primary Care Provider (PCP). The
                                      agency pursuant to an established care plan. Personal     district will determine the
                                      care tasks performed by a home health aide in             applicant's need for personal care
                                      connection with a home health care agency visit, and      agency services and coordinate with
                                      pursuant to an established care plan, are covered.        the personal care agency a plan of
                                                                                                care.
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-10

<PAGE>

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT              COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------    -----------------------------------
<S>                                   <C>                                                        <C>
Private Duty Nursing Services         Covered service when medically necessary in accordance
                                      with the ordering physician, registered physician
                                      assistant or certified nurse practitioner's written
                                      treatment plan.

Emergency Room Services               Covered for emergency conditions, medical or
                                      behavioral, the onset of which is sudden, manifesting
                                      itself by symptoms of sufficient severity, including
                                      severe pain, that a prudent layperson, possessing an
                                      average knowledge of medicine and health, could
                                      reasonably expect the absence of medical attention to
                                      result in (a) placing the health of the person
                                      afflicted with such condition in serious jeopardy, or
                                      in the case of a behavioral condition placing the
                                      health of such person or others in serious jeopardy;
                                      (b) serious impairment of such person's bodily
                                      functions; (c) serious dysfunction of any bodily organ
                                      or part of such person; or (d) serious disfigurement of
                                      such person. Emergency services include health care
                                      procedures, treatments or services, including
                                      psychiatric stabilization and medical detoxification
                                      from drugs or alcohol that are provided for an
                                      emergency medical condition. A medical assessment
                                      (triage) is covered for non-emergent conditions.

Foot Care Services                    Foot care when the Enrollee's (of any age) physical
                                      condition poses a hazard due to the presence of
                                      localized illness, injury or symptoms involving the
                                      foot, or when performed as a necessary and integral
                                      part of otherwise covered services such as the
                                      diagnosis and treatment of diabetes, ulcers, and
                                      infections.

Eye Care and Low Vision Services      Eye care includes the services of an ophtholmologist,
                                      optometrist and an ophthalmic dispenser and coverage
                                      for contact lenses, polycarbonate lenses, artificial
                                      eyes and replacement of lost or destroyed glasses
                                      (including repairs) when medically necessary.

                                      Artificial eyes are covered as ordered by the
                                      Contractor's Participating Provider.
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-11

<PAGE>

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT              COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------    -----------------------------------
<S>                                   <C>                                                        <C>
Dental Services                       Optional Benefit Package dental services include:          Routine exams, orthodontic services
                                                                                                 and appliances, dental office
                                      - Medically necessary preventive, prophylactic and         surgery, fillings, prophylaxis,
SEE SCHEDULE A OF APPENDIX K FOR        other routine dental care, services and supplies and     provided to Enrollees of MCOs not
COVERAGE STATUS                         dental prosthetics required to alleviate a serious       electing to cover dental services.
                                        health condition, including one which affects
                                        employability.

                                      As described in Sections 10.16 and 10.28 of this
                                      Agreement, Enrollees may self-refer to Article 28
                                      clinics operated by academic dental centers to obtain
                                      covered dental services.

                                      All Contractors must cover the following, even if
                                      dental services is not a plan covered benefit:

                                      - Ambulatory or inpatient surgical services (subject to
                                        prior authorization by the Contractor).

                                      Coverage excludes the professional services of the
                                      dentist if dental services are not covered by the
                                      Contractor's Benefit Package.

Family Planning and Reproductive      Family planning means the offering, arranging, and         Enrollees may always obtain family
Health Services                       furnishing of those health services which enable           planning and HIV testing and
                                      individuals, including minors, who may be sexually         counseling services, when part of a
                                      active, to prevent or reduce the incidence of              family planning visit, outside of
                                      unintended pregnancies and includes the                    the Contractor's network from any
                                      screening, diagnosis and treatment as medically            Provider that accents Medicaid.
                                      necessary for sexually transmissible diseases,
SEE SCHEDULE A OF APPENDIX K  FOR     sterilization services and screening for pregnancy.
COVERAGE STATUS                       Reproductive health services also includes all
                                      medically necessary abortions.
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-12

<PAGE>

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT              COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------    -----------------------------------
<S>                                   <C>                                                        <C>
Transportation Services               NON-EMERGENCY TRANSPORTATION:

Non-Emergency Transportation:         Transportation expenses are covered when transportation    For Contractors that do not cover
                                      is essential in order for an Enrollee to obtain            transportation services, these
SEE SCHEDULE A OF APPENDIX K FOR      necessary medical care and services which are covered      services are paid for
COVERAGE STATUS                       under this Benefit Package (or by fee-for-service          fee-for-service. Non-emergent
                                      Medicaid for carved-out services). Non-emergent            transportation requests should be
                                      transportation guidelines may be developed in              referred to the LDSS.
                                      conjunction with the LDSS, based on the LDSS' approved
                                      transportation plan.

                                      Transportation services means transportation by            For Contractors that cover
                                      ambulance, ambulette or invalid coach, taxicab, livery,    non-emergency transportation in the
                                      public transportation, or other means appropriate to       Benefit Package, transportation
                                      the Enrollee's medical condition; and a transportation     costs to MMTP services may be
                                      attendant to accompany the Enrollee, if necessary. Such    reimbursed by Medicaid
                                      services may include the transportation attendant's        fee-for-service in accordance with
                                      transportation, meals, lodging and salary; however, no     the LDSS transportation polices in
                                      salary will be paid to a transportation attendant who      local districts where there is a
                                      is a member of the Enrollee's family.                      systematic method to discretely
                                                                                                 identify and reimburse such
                                                                                                 transportation costs.

                                      For Enrollees with disabilities, the method of
                                      transportation must reasonably accommodate their needs,
                                      taking into account the severity and nature of the
                                      disability.

Emergency Transportation:             EMERGENCY TRANSPORTATION :
                                      Emergency transportation can only be provided by an
                                      ambulance service. Emergency transportation is covered
SEE SCHEDULE A OF APPENDIX K FOR      for Enrollees suffering from severe, life-threatening
COVERAGE STATUS                       or potentially disabling conditions which require the
                                      provision of emergency medical services while the
                                      Enrollee is being transported.

Laboratory Services                   Covered when medically necessary as ordered by a           HIV phenotypic, HIV virtual
                                      medical professional, and when listed in the Medicaid      phenotypic and HIV genotypic drug
                                      fee schedule. Coverage excludes HIV phenotypic, HIV        resistance tests with a Provider's
                                      virtual phenotypic and HIV genotypic drug resistance       order.
                                      tests.

Radiology Services                    Covered when medically necessary as ordered by a
                                      medical professional, and when ordered and provided by
                                      a qualified medical professional/practitioner.

Durable Medical Equipment (DME)       DME are devices and equipment other than                   Excluded services, such as
                                      medical/surgical supplies enteral formula, and             disposable medical/surgical
                                      prosthetic or orthotic appliances. Covered when            supplies and enteral formula with a
                                      medically necessary as ordered by the Contractor's         Provider's order.
                                      Participating Provider and procured from a
                                      Participating Provider. Coverage excludes disposable
                                      medical/surgical supplies and enteral formula.
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-13

<PAGE>

<TABLE>
<CAPTION>
        COVERED SERVICES                         MANAGED CARE PLAN SCOPE OF BENEFIT              COVERED BY MEDICAID FEE-FOR-SERVICE
-----------------------------------   -------------------------------------------------------    -----------------------------------
<S>                                   <C>                                                        <C>
Hearing Aid Services                  Provided when medically necessary to alleviate             Excluded services, such as hearing
                                      disability caused by the loss or impairment of hearing.    aid batteries with a Provider's
                                      Hearing aid products include hearing aids, earmolds,       order.
                                      special fittings, and replacement parts. Coverage
                                      excludes hearing aid batteries.

Court-Ordered Services                Coverage includes such services ordered by a court of
                                      competent jurisdiction if the services are in the
                                      Contractor's Benefit Package.

Prosthetic/Orthotic                   Covered when medically necessary as ordered by a
Services/Orthotic Footwear            managed care plan qualified medical professional.

Renal Dialysis                        Renal dialysis is covered when medically necessary as
                                      ordered by a qualified medical professional. Renal
                                      dialysis may be provided in an inpatient hospital
                                      setting, in an ambulatory care facility, or in the home
                                      on recommendation from a renal dialysis center.

Experimental and/or                   Covered on a case by case basis in accordance with the
Investigational Treatment             provisions of Section 4910 of the New York State P.H.L.

Detoxification Services               Covered when medically necessary on either an inpatient
                                      or outpatient basis. Such services are referred to as
                                      "Medically Managed Detoxification Services" when
                                      provided in facilities licensed under Title 14 NYCRR
                                      Part 816.6 or Article 28 of the Public Health Law; and
                                      "Medically Supervised Inpatient and Outpatient
                                      Withdrawal Services" when provided in facilities
                                      licensed under Title 14 NYCRR Part 816.7
</TABLE>

                                   APPENDIX K
                                October 1, 2004
                                      K-14

<PAGE>

I.    PREPAID BENEFIT PACKAGE DEFINITIONS OF COVERED SERVICES

A.    MEDICAL SERVICES

1.    INPATIENT HOSPITAL SERVICES

Inpatient hospital services, as medically necessary, shall include, except as
otherwise specified, the care, treatment, maintenance and nursing services as
may be required, on an inpatient hospital basis, up to 365 days per year (366
days in leap year). Among other services, inpatient hospital services encompass
a full range of necessary diagnostic and therapeutic care including medical,
surgical, nursing, radiological, and rehabilitative services. Services are
provided under the direction of a physician, certified nurse practitioner, or
dentist.

1a.   INPATIENT STAY PENDING ALTERNATE LEVEL OF MEDICAL CARE

Inpatient stay pending alternate level of medical care, or continued care in a
hospital pending placement in an alternate lower medical level of care,
consistent with the provisions of 18 NYCRR 505.20 and 10 NYCRR, Part 85.

2.    PROFESSIONAL AMBULATORY SERVICES

Outpatient hospital services are provided through ambulatory care facilities.
Ambulatory care facilities include hospital outpatient departments (OPD),
diagnostic and treatment centers (free standing clinics) and emergency rooms.
These facilities may provide those necessary medical, surgical, and
rehabilitative services and items authorized by their operating certificates.
Outpatient services (clinic) also include preventive, primary medical,
specialty, mental health, C/THP and family planning services provided by
ambulatory care facilities.

Hospital OPDs and D&T centers may perform ordered ambulatory services. The
purpose of ordered ambulatory services is to make available to the Participating
Provider those services needed to complement the provision of ambulatory care in
his/her office. Examples are: diagnostic testing and radiology.

3.    PHYSICIAN SERVICES

"Physicians' services," whether furnished in the office, the Enrollee's home, a
hospital, a skilled nursing facility, or elsewhere, means services furnished by
a physician:

      (1)   within the scope of practice of medicine or osteopathy as defined in
            law by the New York State Education Department; and

      (2)   by or under the personal supervision of an individual licensed and
            currently registered by the New York State Education Department to
            practice medicine or osteopathy.

                                   APPENDIX K
                                October 1, 2004
                                      K-15

<PAGE>

Physician services include the full range of preventive care services, primary
care medical services and physician specialty services that fall within a
physician's scope of practice under New York State law.

The following are also included without limitations:

      -     pharmaceuticals and medical supplies routinely furnished or
            administered as part of a clinic or office visit;

      -     physical examinations, including those which are necessary for
            employment, school, and camp;

      -     physical and/or mental health, or chemical dependence examinations
            of children and their parents as requested by the LDSS to fulfill
            its statutory responsibilities for the protection of children and
            adults and for children in foster care;

      -     health and mental health assessments for the purpose of making
            recommendations regarding a Enrollee's disability status for Federal
            SSI applications;

      -     health assessments for the Infant/Child Assessment Program (ICHAP);

      -     annual preventive health visits for adolescents;

      -     new admission exams for school children if required by the LDSS;

      -     health screening, assessment and treatment of refugees, including
            completing SDOH/LDSS required forms;

      -     Child/Teen Health Program (C/THP) services which are comprehensive
            primary health care services provided to children under twenty-one
            (21) years of age (see Section 10 of this Agreement).

4.    HOME HEALTH SERVICES

      18 NYCRR 505.23(a)(3)

Home health care services are provided to Enrollees in their homes by a home
health agency certified under Article 36 of the New York State P.H.L. (Certified
Home Health Agency - CHHA). Home health services mean the following services
when prescribed by a Provider and provided to a Medicaid managed care Enrollee
in his or her home:

            -     nursing services provided on a part-time or intermittent basis
                  by a CHHA or, if there is no CHHA that services the
                  county/district, by a registered professional nurse or a
                  licensed practical nurse acting under the direction of the
                  Enrollee's PCP;

            -     physical therapy, occupational therapy, or speech pathology
                  and audiology services; and

            -     home health services provided by a person who meets the
                  training requirements of the SDOH, is assigned by a registered
                  professional nurse to provide home health aid services in
                  accordance with the Enrollee's plan of care, and is supervised
                  by a registered professional nurse from a CHHA or if the
                  Contractor has no CHHA available, a registered nurse, or
                  therapist.

                                   APPENDIX K
                                October 1, 2004
                                      K-16

<PAGE>

Personal care tasks performed by a home health aide incidental to a certified
home health care agency visit, and pursuant to an established care plan, are
covered.

Services include care rendered directly to the Enrollee and instructions to
his/her family or caretaker such as teacher or day care provider in the
procedures necessary for the Enrollee's treatment or maintenance.

The Contractor must provide up to two (2) post partum home visits for high risk
infants and/or high risk mothers, as well as to women with less than a
forty-eight (48) hour hospital stay after a vaginal delivery or less than
a ninety-six (96) hour stay after a cesarean delivery. Visits must be made by a
qualified health professional (minimum qualifications being an RN with
maternal/child health background), the first visit to occur within forty-eight
(48) hours of discharge.

5.    PRIVATE DUTY NURSING SERVICES

Private duty nursing services shall be provided by a person possessing a license
and current registration from the NYS Education Department to practice as a
registered professional nurse or licensed practical nurse. Private duty nursing
services can be provided through an approved certified home health agency, a
licensed home care agency, or a private Practitioner. The location of nursing
services may be in the Enrollee's home or in the hospital.

Private duty nursing services are covered only when determined by the attending
physician to be medically necessary. Nursing services may be intermittent,
part-time or continuous and provided in accordance with the ordering physicians,
or certified nurse practitioner's written treatment plan.

6.    EMERGENCY ROOM SERVICES

Emergency conditions, medical or behavioral, the onset of which is sudden,
manifesting itself by symptoms of sufficient severity, including severe pain,
that a prudent layperson, possessing an average knowledge of medicine and
health, could reasonably expect the absence of medical attention to result in
(a) placing the health of the person afflicted with such condition in serious
jeopardy, or in the case of a behavioral condition placing the health of such
person or others in serious jeopardy; (b) serious impairment of such person's
bodily functions; (c) serious dysfunction of any bodily organ or part of such
person; or (d) serious disfigurement of such person are covered. Emergency
services include health care procedures, treatments or services, needed to
evaluate or stabilize an Emergency Medical Condition including psychiatric
stabilization and medical detoxification from drugs or alcohol. A medical
assessment (triage) is covered for non-emergent conditions.

7.    SERVICES OF OTHER PRACTITIONERS

a)    Nurse Practitioner Services

Nurse practitioner services include preventive services, the diagnosis of
illness and physical conditions, and the performance of therapeutic and
corrective measures, within the scope of the certified nurse practitioner's
licensure and collaborative practice agreement with a licensed physician in
accordance with the requirements of the NYS Education Department.

                                   APPENDIX K
                                October 1, 2004
                                      K-17

<PAGE>

The following services are also included in the certified nurse practitioner's
scope of services, without limitation:

-     Child/Teen Health Program(C/THP) services which are comprehensive primary
      health care services provided to children under twenty-one (21) (see page
      20 of this Appendix and Section 10.5 of this Agreement);

-     Physical examinations including those which are necessary for employment,
      school and camp.

b.    Rehabilitation Services

      18 NYCRR 505.11

Rehabilitation services are provided for the maximum reduction of physical or
mental disability and restoration of the Enrollee to his or her best functional
level. Rehabilitation services include care and services rendered by physical
therapists, speech-language pathologists and occupational therapists.
Rehabilitation services may be provided in an Article 28 inpatient or outpatient
facility, an Enrollee's home, in an approved home health agency, in the office
of a qualified private practicing therapist or speech pathologist, or for a
child in a school, pre-school or community setting, or in a Residential Health
Care Facility (RHCF) as long as the Enrollee's stay is classified as a
rehabilitative stay. Rehabilitation services are covered as medically necessary,
when ordered by the Contractor's Participating Provider.

c.    Midwifery Services

      SSA Section 1905 (a)(17), Education Law Section 6951(i).

Midwifery services include the management of normal pregnancy, childbirth and
postpartum care as well as primary preventive reproductive health care to
essentially healthy women as specified in a written practice agreement and shall
include newborn evaluation, resuscitation and referral for infants. The care may
be provided on an inpatient or outpatient basis including in a birthing center
or in the Enrollee's home as appropriate. The midwife must be licensed by the
NYS Education Department.

d.    Clinical Psychological Services

      18 NYCRR 505.18(a)

Clinical psychological services include psychological evaluation, testing and
therapeutic treatment for personality or behavior disorders.

e.    Foot Care Services

Covered services must include routine foot care when any Enrollee's (regardless
of age) physical condition poses a hazard due to the presence of localized
illness, injury or symptoms involving the foot, or when performed as a necessary
and integral part of otherwise covered services such as the diagnosis and
treatment of diabetes, ulcers, and infections.

                                   APPENDIX K
                                October 1, 2004
                                      K-18

<PAGE>

Services provided by a podiatrist for persons under twenty-one (21) must be
covered upon referral of a physician, registered physician's assistant,
certified nurse practitioner or certified midwife.

Routine hygienic care of the feet, the treatment of corns and calluses, the
trimming of nails, and other hygienic care such as cleaning or soaking feet, is
not covered in the absence of a pathological condition.

8.    EYE CARE AND LOW VISION SERVICES

      18 NYCRR Section 505.6(b)(1-3)

Eye care includes the services of ophthalmologists, optometrists and ophthalmic
dispensers, and includes eyeglasses, medically necessary contact lenses and
polycarbonate lenses, artificial eyes (stock or custom-made), low vision aids
and low vision services. Eyecare coverage includes the replacement of lost or
destroyed eyeglasses. The replacement of the complete pair of eyeglasses should
duplicate the original prescription and frames. Coverage also includes the
repair or replacement of parts in situations where the damage is the result of
causes other than defective workmanship. Replacement parts should duplicate the
original prescription and frames. Repairs to, and replacements of, frames and/or
lenses must be rendered as needed.

MCOs that allow upgrades of eyeglass frames or additional features, cannot apply
the eyeglass benefit towards the cost and bill the difference to the Enrollee.
However, if the Contractor does not include upgraded eyeglasses or additional
features such as scratchcoating, progressive lenses, or photogray lenses, the
Enrollee may choose to purchase the upgraded frame or feature by paying the
entire cost as a private customer.

Examinations for diagnosis and treatment for visual defects and/or eye disease
is provided only as necessary and as required by the Enrollee's particular
condition. Examinations which include refraction are limited to every two (2)
years unless otherwise justified as medically necessary.

Eyeglasses do not require changing more frequently than every two (2) years
unless medically indicated, such as a change in correction greater than 1/2
diopter, or unless the glasses are lost, damaged, or destroyed.

An ophthalmic dispenser fills the prescription of an optometrist or
opthalmologist and supplies eyeglasses or other vision aids upon the order of a
qualified practitioner.

Enrollees may self-refer to any Participating Provider of vision services
(optometrist or opthalmologist) for refractive vision services.

9.    LABORATORY SERVICES

      18 NYCRR Section 505.7(a)

Laboratory services include medically necessary tests and procedures ordered by
a qualified medical professional and listed in the Medicaid fee schedule for
laboratory services, with the exception of HIV phenotypic, HIV virtual
phenotypic and HIV genotypic drug resistance tests, which are not included in
the Benefit Package and are covered by Medicaid fee-for-service.

                                   APPENDIX K
                                October 1, 2004
                                      K-19

<PAGE>

All laboratory testing sites providing services under this Contract must have a
permit issued by the New York State Department of Health and a Clinical
Laboratory Improvement Act (CLIA) certificate of waiver, a physician performed
microscopy procedures (PPMP) certificate, or a certificate of registration along
with a CLIA identification number. Those laboratories with certificates of
waiver or a PPMP certificate may perform only those specific tests permitted
under the terms of their waiver. Laboratories with certificates of registration
may perform a full range of laboratory tests for which they have been certified.
Physicians providing laboratory testing may perform only those specific limited
laboratory procedures identified in the Physician's MMIS Provider Manual.

10.   RADIOLOGY SERVICES

      18 NYCRR Section 505.17(c)(7)(d)

Radiology services include medically necessary services provided by qualified
practitioners in the provision of diagnostic radiology, diagnostic ultrasound,
nuclear medicine, radiation oncology, and magnetic resonance imaging (MRI).
These services may only be performed upon the order of a qualified practitioner.

11.   EARLY PERIODIC SCREENING DIAGNOSIS AND TREATMENT (EPSDT) SERVICES THROUGH
      THE CHILD TEEN HEALTH PROGRAM (C/THP) AND ADOLESCENT PREVENTIVE SERVICES

      18 NYCRR Section 508.8

Child/Teen Health Program (C/THP) is a package of early and periodic screening,
including interperiodic screens and, diagnostic and treatment services that New
York State offers all Medicaid eligible children under twenty-one (21) years of
age. Care and services shall be provided in accordance with the periodicity
schedule and guidelines developed by the New York State Department of Health.
The care includes necessary health care, diagnostic services, treatment and
other measures (described in Section 1905(a) of the Social Security Act) to
correct or ameliorate defects, and physical and mental illnesses and conditions
discovered by the screening services (regardless of whether the service is
otherwise included in the New York State Medicaid Plan). The package of services
includes administrative services designed to assist families obtain services for
children that include outreach, education, appointment scheduling,
administrative case management and transportation assistance.

12.   DURABLE MEDICAL EQUIPMENT (DME)

      18 NYCRR Section 505.5(a)(1) and Section 4.4 of the MMIS DME, Medical and
      Surgical Supplies and Prosthetic and Orthotic Appliances Provider Manual

Durable Medical Equipment (DME) are devices and equipment, other than
medical/surgical supplies, enteral formula, and prosthetic or orthotic
appliances, and have the following characteristics:

      (i)   can withstand repeated use for a protracted period of time;

      (ii)  are primarily and customarily used for medical purposes;

      (iii) are generally not useful to a person in the absence of illness or
            injury; and

      (iv)  are usually not fitted, designed or fashioned for a particular
            individual's use. Where equipment is intended for use by only one
            (1) person, it may be either custom made or customized.

                                   APPENDIX K
                                October 1, 2004
                                      K-20

<PAGE>

DME must be ordered by a qualified practitioner and procured from a
Participating Provider.

13.   AUDIOLOGY, HEARING AID SERVICES AND PRODUCTS

      18 NYCRR Section 505.31 (a)(1)(2) and Section 4.7 of the MMIS Hearing Aid
      Provider Manual

a)    Hearing aid services and products are provided in compliance with Article
      37-A of the General Business Law when medically necessary to alleviate
      disability caused by the loss or impairment of hearing. Hearing aid
      services include: selecting, fitting and dispensing of hearing aids,
      hearing aid checks following dispensing of hearing aids, conformity
      evaluation, and hearing aid repairs.

b)    Audiology services include audiometric examinations and testing, hearing
      aid evaluations and hearing aid prescriptions or recommendations, as
      medically indicated.

c)    Hearing aid products include hearing aids, earmolds, special fittings, and
      replacement parts (hearing aid batteries are excluded from the Benefit
      Package, but are covered by Medicaid fee-for-service as part of the
      prescription benefit).

14.   PREVENTIVE CARE

Preventive care means care and services to avert disease/illness and/or its
consequences. There are three (3) levels of preventive care: 1) primary, such as
immunizations, aimed at preventing disease; 2) secondary, such as disease
screening programs aimed at early detection of disease; and 3) tertiary, such as
physical therapy, aimed at restoring function after the disease has occurred.
Commonly, the term "preventive care" is used to designate prevention and early
detection programs rather than restorative programs.

The following preventive services are also included in the managed care Benefit
Package. These preventive services are essential for promoting wellness and
preventing illness. MCOs must offer the following:

-     General health education classes.

-     Pneumonia and influenza immunizations for at risk populations.

-     Smoking cessation classes, with targeted outreach for adolescents and
      pregnant women.

-     Childbirth education classes.

-     Parenting classes covering topics such as bathing, feeding, injury
      prevention, sleeping, illness prevention, steps to follow in an emergency,
      growth and development, discipline, signs of illness, etc.

-     Nutrition counseling, with targeted outreach for diabetics and pregnant
      women.

-     Extended care coordination, as needed, for pregnant women.

-     HIV counseling and testing.

                                   APPENDIX K
                                October 1, 2004
                                      K-21

<PAGE>

15.   PROSTHETIC/ORTHOTIC ORTHOPEDIC FOOTWEAR

      Section 4.5, 4.6 and 4.7 of the MMIS DME, Medical and Surgical Supplies
      and Prosthetic and Orthotic Appliances Provider Manual

a. PROSTHETICS are those appliances or devices ordered for an Enrollee by a
Participating Provider which replace or perform the function of any missing part
of the body. Artificial eyes are covered as part of the eye care benefit.

b. ORTHOTICS are those appliances or devices, ordered for an Enrollee by a
qualified practitioner which are used for the purpose of supporting a weak or
deformed body part or to restrict or eliminate motion in a diseased or injured
part of the body.

c. ORTHOPEDIC FOOTWEAR means shoes, shoe modifications, or shoe additions which
are used to correct, accommodate or prevent a physical deformity or range of
motion malfunction in a diseased or injured part of the ankle or foot; to
support a weak or deformed structure of the ankle or foot, or to form an
integral part of a brace.

16.   RENAL DIALYSIS

Renal dialysis is covered when medically necessary as ordered by a qualified
medical professional. Renal dialysis may be provided in an inpatient hospital
setting, in an ambulatory care facility, or in the home on recommendation from a
renal dialysis center.

17.   EXPERIMENTAL OR INVESTIGATIONAL TREATMENT

Experimental and investigational treatment is covered on a case by case basis.

Experimental or investigational treatment for life-threatening and/or disabling
illnesses may also be considered for coverage under the external appeal process
pursuant to the requirements of Section 4910 of New York State P.H.L under the
following conditions:

(1)   The Enrollee has had coverage of a health care service denied on the basis
      that such service is experimental and investigational, and

(2)   The Enrollee's attending physician has certified that the Enrollee has a
      life-threatening or disabling condition or disease:

            (a)   for which standard health services or procedures have been
            ineffective or would be medically inappropriate, or

            (b)   for which there does not exist a more beneficial standard
            health service or procedure covered by the health care plan, or

            (c)   for which there exists a clinical trial, and

                                   APPENDIX K
                                October 1, 2004

                                      K-22

<PAGE>

(3)   The Enrollee's provider, who must be a licensed, board-certified or
      board-eligible physician, qualified to practice in the area of practice
      appropriate to treat the Enrollee's life-threatening or disabling
      condition or disease, must have recommended either:

            (a)   a health service or procedure that, based on two (2) documents
                  from the available medical and scientific evidence, is likely
                  to be more beneficial to the Enrollee than any covered
                  standard health service or procedure; or

            (b)   a clinical trial for which the Enrollee is eligible; and

(4)   The specific health service or procedure recommended by the attending
      physician would otherwise be covered except for the MCO's determination
      that the health service or procedure is experimental or investigational.

B.    BEHAVIORAL HEALTH SERVICES

These services include Chemical Dependence and Mental Health Services.

-     CHEMICAL DEPENDENCE SERVICES:

      For all Enrollees not categorized as SSI or SSI related, Chemical
      Dependence Services in the Benefit Package include inpatient treatment
      services including inpatient rehabilitation and treatment services
      programs, Detoxification Services (Medically Managed Inpatient
      Detoxification and Medically Supervised Inpatient and Outpatient
      Withdrawal Services) and self-referral for assessment as described below.

      For all Enrollees categorized as SSI or SSI related, the Benefit Package
      includes Detoxification Services (Medically Managed Inpatient
      Detoxification and Medically Supervised Inpatient and Outpatient
      Withdrawal Services). All other Chemical Dependence Services, including
      Chemical Dependence Inpatient Rehabilitation and Treatment, are covered on
      a Medicaid fee-for-service basis for the SSI population.

-     MENTAL HEALTH SERVICES:

      The Mental Health Services listed below are in the Benefit Package for all
      Enrollees not categorized as SSI or SSI related. For Enrollees who are
      categorized as SSI or SSI related, all Mental Health Services are covered
      on a Medicaid fee-for-service basis.

1.    CHEMICAL DEPENDENCE SERVICES

a.    Detoxification Services

i)    Medically Managed Inpatient Detoxification

      These programs provide medically directed twenty-four hour care on an
      inpatient basis to individuals who are at risk of severe alcohol or
      substance abuse withdrawal, incapacitated, a risk to self or others, or
      diagnosed with an acute physical or mental co-morbidity. Specific services
      include, but are not limited to: medical management, bio-psychosocial
      assessments, stabilization of medical psychiatric / psychological
      problems, individual and group

                                   APPENDIX K
                                October 1, 2004

                                      K-23

<PAGE>

      counseling, level of care determinations and referral and linkages to
      other services as necessary. Medically Managed Detoxification Services are
      provided by facilities licensed by OASAS under Title 14 NYCRR Part 816.6
      and the Department of Health as a general hospital pursuant to Article 28
      of the Public Health Law or by the Department of Health as a general
      hospital pursuant to Article 28 of the Public Health Law.

ii)   Medically Supervised Withdrawal

      (a) Medically Supervised Inpatient Withdrawal

      These programs offer treatment for moderate withdrawal on an inpatient
      basis. Services must include medical supervision and direction under the
      care of a physician in the treatment for moderate withdrawal. Specific
      services must include, but are not limited to: medical assessment within
      twenty four hours of admission; medical supervision of intoxication and
      withdrawal conditions; bio-psychosocial assessments; individual and group
      counseling and linkages to other services as necessary. Maintenance on
      methadone while a patient is being treated for withdrawal from other
      substances may be provided where the provider is appropriately
      authorized. Medically Supervised Inpatient Withdrawal services are
      provided by facilities licensed under Title 14 NYCRR Part 816.7.

      (b) Medically Supervised Outpatient Withdrawal

      These programs offer treatment for moderate withdrawal on an outpatient
      basis. Required services include, but are not limited to: medical
      supervision of intoxication and withdrawal conditions; bio-psychosocial
      assessments; individual and group counseling; level of care
      determinations; discharge planning; and referrals to appropriate services.
      Maintenance on methadone while a patient is being treated for withdrawal
      from other substances may be provided where the provider is appropriately
      authorized. Medically Supervised Outpatient Withdrawal services are
      provided by facilities licensed by Title 14 NYCRR Part 816.7.

      All detoxification and withdrawal services are a covered benefit for all
      Enrollees, including those categorized as SSI or SSI related.

      Detoxification Services in Article 28 inpatient hospital facilities are
      subject to the stop-loss provisions specified in Section 3.11 of this
      Agreement.

b.    Chemical Dependence Inpatient Rehabilitation and Treatment Services

      Services provided include intensive management of chemical dependence
      symptoms and medical management of physical or mental complications from
      chemical dependence to clients who cannot be effectively served on an
      outpatient basis and who are not in need of medical detoxification or
      acute care. These services can be provided in a hospital or freestanding
      facility. Specific services can include, but are not limited to:
      comprehensive admission evaluation and treatment planning; individual
      group, and family counseling; awareness and relapse prevention; education
      about self-help groups; assessment and referral services; vocational and
      educational assessment; medical and psychiatric consultation; food and
      housing; and HIV and AIDS education. These services may be provided by
      facilities

                                   APPENDIX K
                                October 1, 2004

                                      K-24

<PAGE>

      licensed by OASAS to provide: Chemical Dependence Inpatient Rehabilitation
      and Treatment Services under Title 14 NYCRR Part 818. Maintenance on
      methadone while a patient is being treated for withdrawal from other
      substances may be provided where the provider is appropriately authorized.

      MCOs will be reimbursed for qualifying inpatient days of chemical
      dependence inpatient treatment beyond thirty (30) days according to
      stop-loss provisions contained in Section 3.12 of this Agreement.

c.    Chemical Dependence Assessment Self-Referral

      Enrollees must be allowed to self refer for one (1) assessment from a
      Contractor's participating provider in a twelve (12) month period.

2.    MENTAL HEALTH SERVICES

Mental Health Services are subject to the stop-loss provisions specified in
Section 3.12 of this Agreement.

a.    Inpatient Services

All inpatient mental health services, including voluntary or involuntary
admissions for mental health services. The Contractor may provide the covered
benefit for medically necessary mental health inpatient services through
hospitals licensed pursuant to Article 28 of the New York State P.H.L.

b.    Outpatient Services

Outpatient services including but not limited to: assessment, stabilization,
treatment planning, discharge planning, verbal therapies, education, symptom
management, case management services, crisis intervention and outreach services,
chlozapine monitoring and collateral services as certified by OMH. Services may
be provided in-home, office or the community. Services may be provided by
licensed OMH providers or by other providers of mental health services including
clinical psychologists and physicians. For further information regarding service
coverage consult the following MMIS Provider Manuals: Clinic, Ambulatory
Services for Mental Illness (Clinic Treatment Program), Clinical Psychology, and
Physician (Psychiatric Services).

Enrollees must be allowed to self-refer for one (1) mental health assessment
from a Contractor's Participating Provider in a twelve (12) month period. In the
case of children, such self-referrals may originate at the request of a school
guidance counselor or similar source.

Services provided through OMH designated clinics for Enrollees with a clinical
diagnosis of SED are covered by Medicaid fee-for-service.

                                   APPENDIX K
                                October 1, 2004

                                      K-25

<PAGE>

C.    OTHER COVERED SERVICES

1. Federally Qualified Health Center (FQHC) Services

FQHC services include physician services, services and supplies covered under
SSA Section 1861(s)(2) (A). Services include primary health, referral for
supplemental health services, health education, patient case management,
including outreach, counseling, referral and follow-up services (see 42 USC
Section 254c(a) & (b)).

                                   APPENDIX K
                                October 1, 2004

                                      K-26

<PAGE>

                             PREPAID BENEFIT PACKAGE

II.   OPTIONAL COVERED SERVICES (AT DISCRETION OF LDSS AND/OR CONTRACTOR)

A.    FAMILY PLANNING AND REPRODUCTIVE HEALTH CARE

      Family Planning and Reproductive Health Care services means the offering,
      arranging and furnishing of those health services which enable Enrollees,
      including minors, who may be sexually active to prevent or reduce the
      incidence of unwanted pregnancy. These include: diagnosis and all
      medically necessary treatment, sterilization, screening and treatment for
      sexually transmissible diseases and screening for disease and pregnancy.

      Also included is HIV counseling and testing when provided as part of a
      family planning visit. Additionally, reproductive health care includes
      coverage of all medically necessary abortions. Elective induced abortions
      must be covered for New York City recipients. Fertility services are not
      covered.

      If the Contractor excludes family planning from its Benefit Package, the
      Contractor is still required to provide the following services:

      i)    screening, related diagnosis, ambulatory treatment, and referral to
            Participating Provider as needed for dysmenorrhea, cervical cancer
            or other pelvic abnormality/pathology;

      ii)   screening, related diagnosis, and referral to Participating Provider
            for anemia, cervical cancer, glycosuria, proteinuria, hypertension,
            breast disease and pregnancy.

B.    DENTAL SERVICES

      Dental care includes preventive, prophylactic and other routine dental
      care, services, supplies and dental prosthetics required to alleviate a
      serious health condition, including one which affects employability.

      Dental surgery performed in an ambulatory or inpatient setting is the
      responsibility of the Contractor whether dental services are a covered
      plan benefit, or not. Inpatient claims and referred ambulatory claims for
      dental services provided in an inpatient or outpatient hospital setting
      for surgery, anesthesiology, X-rays, etc. are the responsibility of the
      Contractor. In these situations, the professional services of the dentist
      are covered by Medicaid fee-for-service. The Contractor should set up
      procedures to prior approve dental services provided in inpatient and
      ambulatory settings.

      As described in Sections 10.16 and 10.28 of this Agreement, Enrollees may
      self-refer to Article 28 clinics operated by academic dental centers to
      obtain covered dental services.

      If Contractor's Benefit Package excludes dental services:

      i)    Enrollees may obtain routine exams, orthodontic services and
            appliances, dental office surgery, fillings, prophylaxis, and other
            Medicaid covered dental services from any qualified Medicaid
            provider who shall claim reimbursement from MMIS; and

                                   APPENDIX K
                                October 1, 2004

                                      K-27

<PAGE>

      ii)   Inpatient and referred ambulatory claims for medical services
            provided in an inpatient or outpatient hospital setting in
            conjunction with a dental procedure (e.g. anesthesiology, X-rays),
            are the responsibility of the Contractor. In these situations, the
            professional services of the dentist are covered Medicaid
            fee-for-service.

C.    TRANSPORTATION SERVICES

      18 NYCRR Section 505.10

      a. Non-Emergency Transportation

      Transportation expenses are covered when transportation is essential in
      order for an Enrollee to obtain necessary medical care and services which
      are covered under the Medicaid program (either as part of the Contractor's
      Benefit Package or by fee-for-service Medicaid). Non-emergent
      transportation guidelines may be developed in conjunction with the LDSS,
      based on the LDSS' approved transportation plan.

      Transportation services means transportation by ambulance, ambulette fixed
      wing or airplane transport, invalid coach, taxicab, livery, public
      transportation, or other means appropriate to the Enrollee's medical
      condition; and a transportation attendant to accompany the Enrollee, if
      necessary. Such services may include the transportation attendant's
      transportation, meals, lodging and salary; however, no salary will be paid
      to a transportation attendant who is a member of the Enrollee's family.

      When the Contractor is capitated for non-emergency transportation, the
      Contractor is also responsible for providing transportation to Medicaid
      covered services that are not part of the Contractor's Benefit Package.

      For Contractors that cover non-emergency transportation in the Benefit
      Package, transportation costs to MMTP services may be reimbursed by
      Medicaid fee-for-service in accordance with the LDSS transportation
      polices in local districts where there is a systematic method to
      discretely identify and reimburse such transportation costs.

      For Enrollees with disabilities, the method of transportation must
      reasonably accommodate their needs, taking into account the severity and
      nature of the disability.

      b. Emergency Transportation

      Emergency transportation can only be provided by an ambulance service
      including air ambulance service. Emergency ambulance transportation means
      the provision of ambulance transportation for the purpose of obtaining
      hospital services for an Enrollee who suffers from severe,
      life-threatening or potentially disabling conditions which require the
      provision of emergency medical services while the Enrollee is being
      transported.

      Emergency medical services means the provision of initial urgent medical
      care including, but not limited to, the treatment of trauma, burns,
      respiratory, circulatory and obstetrical emergencies.

                                   APPENDIX K
                                October 1, 2004

                                      K-28

<PAGE>

      Emergency ambulance transportation is transportation to a hospital
      emergency room generated by a "Dial 911" emergency system call or some
      other request for an immediate response to a medical emergency. Because of
      the urgency of the transportation request, insurance coverage or other
      billing provisions are not addressed until after the trip is completed.
      When the Contractor is capitated for this benefit, emergency
      transportation via 911 or any other emergency call system is a covered
      benefit and the Contractor is responsible for payment.

                                   APPENDIX K
                                October 1, 2004

                                      K-29

<PAGE>

                             PREPAID BENEFIT PACKAGE
                    III. DEFINITIONS OF NON-COVERED SERVICES

The following services are excluded from the Contractor's Benefit Package, but
are covered, in most instances, by Medicaid fee-for-service:

A. MEDICAL NON-COVERED SERVICES

1. PERSONAL CARE AGENCY SERVICES

Personal care services (PCS) are the provision of some or total assistance with
personal hygiene, dressing and feeding; and nutritional and environmental
support (meal preparation and housekeeping). Such services must be essential to
the maintenance of the Enrollee's health and safety in his or her own home. The
service has to be ordered by a physician, and there has to be a medical need for
the service. Licensed home care services agencies, as opposed to certified home
health agencies, are the primary providers of PCS. Enrollee's receiving PCS have
to have a stable medical condition and are generally expected to be in receipt
of such services for an extended period of time (years).

Services rendered by a personal care agency which are approved by the LDSS are
not covered under the Benefit Package. Should it be medically necessary for the
PCP to order personal care agency services, the PCP (or the Contractor on the
physician's behalf) must first contact the Enrollee's LDSS contact person for
personal care. The district will determine the Enrollee's need for personal care
agency services and coordinate with the personal care agency a plan of care.

2. RESIDENTIAL HEALTH CARE FACILITIES (RHCF)

Permanent residency in a Residential Health Care Facility (RHCF) is not covered
(see 18 NYCRR Section 360-1.4 (k)). Rehabilitation services in such a setting
are covered as medically necessary when ordered by the Contractor's
Participating Provider.

3. HOSPICE PROGRAM

Hospice is a coordinated program of home and inpatient care that provides
non-curative medical and support services for persons certified by a physician
to be terminally ill with a life expectancy of six (6) months or less. Hospice
programs provide patients and families with palliative and supportive care to
meet the special needs arising out of physical, psychological, spiritual, social
and economic stresses which are experienced during the final stages of illness
and during dying and bereavement.

Hospices are organizations which must be certified under Article 40 of the NYS
P.H.L. All services must be provided by qualified employees and volunteers of
the hospice or by qualified staff through contractual arrangements to the extent
permitted by federal and state requirements. All services must be provided
according to a written plan of care which reflects the changing needs of the
patient/family.

                                   APPENDIX K
                                October 1, 2004

                                      K-30

<PAGE>

If an Enrollee in the Contractor's plan becomes terminally ill and receives
Hospice Program services he or she may remain enrolled and continue to access
the Contractor's Benefit Package while Hospice costs are paid for by Medicaid
fee-for-service.

4. PRESCRIPTION AND NON-PRESCRIPTION (OTC) DRUGS, MEDICAL SUPPLIES, AND ENTERAL
FORMULA

Coverage for drugs dispensed by community pharmacies, over the counter drugs,
medical/surgical supplies and enteral formula are not included in the Benefit
Package and will be paid for by Medicaid fee-for-service. Medical/surgical
supplies are items other than drugs, prosthetic or orthotic appliances, or DME
which have been ordered by a qualified practitioner in the treatment of a
specific medical condition and which are: consumable, non-reusable, disposable,
or for a specific rather than incidental purpose, and generally have no
salvageable value (e.g. gauze pads, bandages and diapers). Pharmaceuticals and
medical supplies routinely furnished or administered as part of a clinic or
office visit are covered.

                                   APPENDIX K
                                October 1, 2004

                                      K-31

<PAGE>

B. NON-COVERED BEHAVIORAL HEALTH SERVICES

1. CHEMICAL DEPENDENCE SERVICES

a. OUTPATIENT REHABILITATION AND TREATMENT SERVICES

i). Methadone Maintenance Treatment Program (MMTP)

Consists of drug detoxification, drug dependence counseling, and rehabilitation
services which include chemical management of the patient with methadone.
Facilities that provide methadone maintenance treatment do so as their principal
mission and are certified by the Office of Alcohol and Substance Abuse Services
(OASAS) under Title 14 NYCRR, Part 828.

ii). Medically Supervised Ambulatory Chemical Dependence Outpatient Clinic
Programs

Medically Supervised Ambulatory Chemical Dependence Outpatient Clinic Programs
are licensed under Title 14 NYCRR Part 822 and provide chemical dependence
outpatient treatment to individuals who suffer from chemical abuse or dependence
and their family members or significant others.

iii). Medically Supervised Chemical Dependence Outpatient Rehabilitation
Programs

Medically Supervised Chemical Dependence Outpatient Rehabilitation Programs
provide full or half-day services to meet the needs of a specific target
population of chronic alcoholic persons who need a range of services which are
different from those typically provided in an alcoholism outpatient clinic.
Programs are licensed by as Chemical Dependence Outpatient Rehabilitation
Programs under Title 14 NYCRR Part 822.9.

iv). Outpatient Chemical Dependence for Youth Programs

Outpatient Chemical Dependence for Youth Programs (OCDY) licensed under Title 14
NYCRR Part 823, establishes programs and service regulations for OCDY programs.
OCDY programs offer discrete, ambulatory clinic services to chemically-dependent
youth in a treatment setting that supports abstinence from chemical dependence
(including alcohol and substance abuse) services.

B. CHEMICAL DEPENDENCE SERVICES ORDERED BY THE LDSS

The Contractor is not responsible for the provision and payment of Chemical
Dependence Inpatient Rehabilitation and Treatment Services ordered by the LDSS
and provided to Enrollees who have:

            -     been assessed as unable to work by the LDSS and are mandated
                  to receive Chemical Dependence Inpatient Rehabilitation and
                  Treatment Services as a condition of eligibility for Public
                  Assistance or Medicaid, or

                                   APPENDIX K
                                October 1, 2004

                                      K-32

<PAGE>

            -     have been determined to be able to work with limitations (work
                  limited) and are simultaneously mandated by the district into
                  Chemical Dependence Inpatient Rehabilitation and Treatment
                  Services (including alcohol and substance abuse treatment
                  services) pursuant to work activity requirements.

The Contractor is not responsible for the provision and payment of Medically
Supervised Inpatient and Outpatient Withdrawal Services ordered by the LDSS
under Welfare Reform (as indicated by Code 83).

The Contractor is responsible for the provision and payment of Medically Managed
Detoxification Services in this Agreement.

If the Contractor is already providing an Enrollee with Chemical Dependence
Inpatient Rehabilitation and Treatment Services and Detoxification Services and
the LDSS is satisfied with the level of care and services, then the Contractor
will continue to be responsible for the provision and payment of these services.

2. MENTAL HEALTH SERVICES

a.    Intensive Psychiatric Rehabilitation Treatment Programs (IPRT)

A time limited active psychiatric rehabilitation designed to assist a patient in
forming and achieving mutually agreed upon goals in living, learning, working
and social environments, to intervene with psychiatric rehabilitative
technologies to overcome functional disabilities. IPRT services are certified by
OMH under 14 NYCRR, Part 587.

b.    Day Treatment

A combination of diagnostic, treatment, and rehabilitative procedures which,
through supervised and planned activities and extensive client-staff
interaction, provides the services of the clinic treatment program, as well as
social training, task and skill training and socialization activities. Services
are expected to be of six (6) months duration. These services are certified by
OMH under 14 NYCRR, Part 587.

c.    Continuing Day Treatment

Provides treatment designed to maintain or enhance current levels of functioning
and skills, maintain community living, and develop self-awareness and
self-esteem. Includes: assessment and treatment planning; discharge planning;
medication therapy; medication education; case management; health screening and
referral; rehabilitative readiness development; psychiatric rehabilitative
readiness determination and referral; and symptom management. These services are
certified by OMH under 14 NYCRR, Part 587.

d.    Day Treatment Programs Serving Children

Day treatment programs are characterized by a blend of mental health and special
education services provided in a fully integrated program. Typically these
programs include: special

                                   APPENDIX K
                                October 1, 2004

                                      K-33

<PAGE>

education in small classes with an emphasis on individualized instruction,
individual and group counseling, family services such as family counseling,
support and education, crisis intervention, interpersonal skill development,
behavior modification, art and music therapy.

e.    Home and Community Based Services Waiver for Seriously Emotionally
      Disturbed Children

This waiver is in select counties for children and adolescents who would
otherwise be admitted to an institutional setting if waiver services were not
provided. The services include individualized care coordination, respite, family
support, intensive in-home skill building, and crisis response.

f.    Case Management

The target population consists of individuals who are seriously and persistently
mentally ill (SPMI), require intensive, personal and proactive intervention to
help them obtain those services which will permit functioning in the community
and either have symptomology which is difficult to treat in the existing mental
health care system or are unwilling or unable to adapt to the existing mental
health care system. Three case management models are currently operated pursuant
to an agreement with OMH or a local governmental unit, and receive Medicaid
reimbursement pursuant to 14 NYCRR Part 506.

Please note: See generic definition of Comprehensive Medicaid Case Management
(CMCM) under OTHER NON-COVERED SERVICES.

g.    Partial Hospitalization

Provides active treatment designed to stabilize and ameliorate acute systems,
serves as an alternative to inpatient hospitalization, or reduces the length of
a hospital stay within a medically supervised program by providing the
following: assessment and treatment planning; health screening and referral;
symptom management; medication therapy; medication education; verbal therapy;
case management; psychiatric rehabilitative readiness determination and referral
and crisis intervention. These services are certified by OMH under NYCRR Part
587.

h.    Services Provided Through OMH Designated Clinics for Children With A
      Diagnosis of Serious Emotional Disturbance (SED)

These are services provided by designated OMH clinics to children and
adolescents with a clinical diagnosis of SED.

i.    Assertive Community Treatment (ACT)

ACT is a mobile team-based approach to delivering comprehensive and flexible
treatment, rehabilitation, case management and support services to individuals
in their natural living setting. ACT programs deliver integrated services to
recipients and adjust services over time to meet the recipient's goals and
changing needs; are operated pursuant to approval or certification by OMH; and
receive Medicaid reimbursement pursuant to 14 NYCRR Part 508.

j.    Personalized Recovery Oriented Services (PROS)

                                   APPENDIX K
                                October 1, 2004

                                      K-34

<PAGE>

PROS, licensed and reimbursed pursuant to 14 NYCCR Part 512, are designed to
assist individuals in recovery from the disabling effects of mental illness
through the coordinated delivery of a customized array of rehabilitation,
treatment, and support services in traditional settings and in off-site
locations. Specific components of PROS include Community Rehabilitation and
Support, Intensive Rehabilitation, Ongoing Rehabilitation and Support and
Clinical Treatment.

3. REHABILITATION SERVICES PROVIDED TO RESIDENTS OF OMH LICENSED COMMUNITY
RESIDENCES (CRS) AND FAMILY BASED TREATMENT PROGRAMS, AS FOLLOWS:

a.    OMH Licensed CRs*

Rehabilitative services in community residences are interventions, therapies and
activities which are medically therapeutic and remedial in nature, and are
medically necessary for the maximum reduction of functional and adaptive
behavior defects associated with the person's mental illness.

b.    Family-Based Treatment*

Rehabilitative services in family-based treatment programs are intended to
provide treatment to seriously emotionally disturbed children and youth to
promote their successful functioning and integration into the natural family,
community, school or independent living situations. Such services are provided
in consideration of a child's developmental stage. Those children determined
eligible for admission are placed in surrogate family homes for care and
treatment.

*These services are certified by OMH under 14 NYCRR Part 586.3, 594 and 595.

4. OFFICE OF MENTAL RETARDATION AND DEVELOPMENTAL DISABILITIES (OMRDD) SERVICES

a.    Long Term Therapy Services Provided by Article 16-Clinic Treatment
      Facilities or Article 28 Facilities

These services are provided to persons with developmental disabilities including
medical or remedial services recommended by a physician or other licensed
practitioner of the healing arts for a maximum reduction of the effects of
physical or mental disability and restoration of the person to his or her best
possible functional level. It also includes the fitting, training, and
modification of assistive devices by licensed practitioners or trained others
under their direct supervision. Such services are designed to ameliorate or
limit the disabling condition and to allow the person to remain in or move to,
the least restrictive residential and/or day setting. These services are
certified by OMRDD under 14 NYCRR, Part 679 (or they are provided by Article 28
Diagnostic and Treatment Centers that are explicitly designated by the SDOH as
serving primarily persons with developmental disabilities). If care of this
nature is provided in facilities other than Article 28 or Article 16 centers, it
is a covered service.

b.    Day Treatment

                                   APPENDIX K
                                October 1, 2004

                                      K-35

<PAGE>

A planned combination of diagnostic, treatment and rehabilitation services
provided to developmentally disabled individuals in need of a broad range of
services, but who do not need intensive twenty-four (24) hour care and medical
supervision. The services provided as identified in the comprehensive assessment
may include nutrition, recreation, self-care, independent living, therapies,
nursing, and transportation services. These services are generally provided in
ICF or a comparable setting. These services are certified by OMRDD under 14
NYCRR, Part 690.

c.    Medicaid Service Coordination (MSC)

Medicaid Service Coordination (MSC) is a Medicaid State Plan service provided by
OMRDD which assists persons with developmental disabilities and mental
retardation to gain access to necessary services and supports appropriate to the
needs of the needs of the individual. MSC is provided by qualified service
coordinators and uses a person centered planning process in developing,
implementing and maintaining an Individualized Service Plan (ISP) with and for a
person with developmental disabilities and mental retardation. MSC promotes the
concepts of a choice, individualized services and consumer satisfaction.

MSC is provided by authorized vendors who have a contract with OMRDD, and who
are paid monthly pursuant to such contract. Persons who receive MSC must not
permanently reside in an ICF for persons with developmental disabilities, a
developmental center, a skilled nursing facility or any other hospital or
Medical Assistance institutional setting that provides service coordination.
They must also not concurrently be enrolled in any other comprehensive Medicaid
long term service coordination program/service including the Care at Home
Waiver.

Please note: See generic definition of Comprehensive Medicaid Case Management
(CMCM) under OTHER NON-COVERED SERVICES.

d.    Home And Community Based Services Waivers (HCBS)

The Home and Community-Based Services Waiver serves persons with developmental
disabilities who would otherwise be admitted to an ICF/MR if waiver services
were not provided. HCBS waivers services include residential habilitation, day
habilitation, prevocational, supported work, respite, adaptive devices,
consolidated supports and services, environmental modifications, family
education and training, live-in caregiver and plan of care support services.
These services are authorized pursuant to a SSA Section 1915(c) waiver from
DHHS.

e.    Services Provided Through the Care At Home Program (OMRDD)

The OMRDD Care at Home III, Care at Home IV, and Care at Home VI waivers, serve
children who would otherwise not be eligible for Medicaid because of their
parents' income and resources, and who would otherwise be eligible for an ICF/MR
level of care. Care at Home waiver services include service coordination,
respite and assistive technologies. Care at Home waiver services are authorized
pursuant to a SSA section 1915(c) waiver from DHHS.

                                   APPENDIX K
                                October 1, 2004

                                      K-36

<PAGE>

C.    OTHER NON-COVERED SERVICES

1.    THE EARLY INTERVENTION PROGRAM (EIP) - CHILDREN BIRTH TO TWO (2) YEARS OF
      AGE

This program provides early intervention services to certain children, from
birth through two (2) years of age, who have a developmental delay or a
diagnosed physical or mental condition that has a high probability of resulting
in developmental delay. All managed care providers MUST refer infants and
toddlers suspected of having a delay to the local designated Early Intervention
agency in their area. (In most municipalities, the County Health Department is
the designated agency, except: New York City - the Department of Health, Mental
Retardation and Alcoholism Services; Erie County - The Department of Youth
Services; Jefferson County - the Office of Community Services; and Ulster County
- the Department of Social Services).

Early intervention services provided to this eligible population are categorized
as Non-Covered. These services, which are designed to meet the developmental
needs of the child and the needs of the family related to enhancing the child's
development, will be identified on MMIS by unique rate codes by which only the
designated early intervention agency can claim reimbursement. Contractor covered
and authorized services will continue to be provided by the Contractor.
Consequently, the Contractor will be expected to refer any enrolled child
suspected of having a developmental delay to the locally designated early
intervention agency in their area and participate in the development of the
Child's Individualized Family Services Plan (IFSP). Contractor's participation
in the development of the IFSP is necessary in order to coordinate the provision
of early intervention services and services covered by the Contractor.

Additionally, the locally designated early intervention agencies will be
instructed on how to identify a managed care Enrollee and the need to contact
the Contractor to coordinate service provision.

2.    PRESCHOOL SUPPORTIVE HEALTH SERVICES-CHILDREN THREE (3) THROUGH FOUR (4)
      YEARS OF AGE

The Preschool Supportive Health Services Program (PSHSP) enables counties and
New York City to obtain Medicaid reimbursement for certain educationally related
medical services provided by approved preschool special education programs for
young children with disabilities. The Committee on Preschool Special Education
in each school district is responsible for the development of an Individualized
Education Program (IEP) for each child evaluated in need of special education
and medically related health services.

PSHSP services rendered to children three (3) through four (4) years of age in
conjunction with an approved IEP are categorized as Non-Covered.

The PSHSP services will be identified on MMIS by unique rate codes through
which only counties and New York City can claim reimbursement. In addition, a
limited number of Article 28 clinics associated with approved pre-school
programs are allowed to directly bill Medicaid fee-for-service for these
services. Contractor covered and authorized services will continue to be
provided by the Contractor.

                                   APPENDIX K
                                October 1, 2004

                                      K-37

<PAGE>

3.    SCHOOL SUPPORTIVE HEALTH SERVICES-CHILDREN FIVE (5) THROUGH TWENTY-ONE
      (21) YEARS OF AGE

The School Supportive Health Services Program (SSHSP) enables school districts
to obtain Medicaid reimbursement for certain educationally related medical
services provided by approved special education programs for children with
disabilities. The Committee on Special Education in each school district is
responsible for the development of an Individualized Education Program (IEP) for
each child evaluated in need of special education and medically related
services.

SSHSP services rendered to children five (5) through twenty-one (21) years of
age in conjunction with an approved IEP are categorized as Non-Covered.

The SSHSP services are identified on MMIS by unique rate codes through which
only school districts can claim Medicaid reimbursement. Contractor covered and
authorized services will continue to be provided by the Contractor.

4.    COMPREHENSIVE MEDICAID CASE MANAGEMENT (CMCM)

A program which provides "social work" case management referral services to a
targeted population (e.g.: pregnant teens, mentally ill). A CMCM case manager
will assist a client in accessing necessary services in accordance with goals
contained in a written case management plan. CMCM programs do not provide
services directly, but refer to a wide range of service Providers. Some of these
services are: medical, social, psycho-social, education, employment, financial,
and mental health. CMCM referral to community service agencies and/or medical
providers requires the case manager to work out a mutually agreeable case
coordination approach with the agency/medical providers. Consequently, if an
Enrollee of the Contractor is participating in a CMCM program, the Contractor
should work collaboratively with the CMCM case manager to coordinate the
provision of services covered by the Contractor. CMCM programs will be
instructed on how to identify a managed care Enrollee on EMEVS and informed on
the need to contact the Contractor to coordinate service provision.

5.    DIRECTLY OBSERVED THERAPY FOR TUBERCULOSIS DISEASE

Tuberculosis directly observed therapy (TB/DOT) is the direct observation of
oral ingestion of TB medications to assure patient compliance with the
physician's prescribed medication regimen. While the clinical management of
tuberculosis is covered in the Benefit Package, TB/DOT where applicable, can be
billed directly to MMIS by any SDOH approved fee-for-service Medicaid TB/DOT
Provider. The Contractor remains responsible for communicating, cooperating and
coordinating clinical management of TB with the TB/DOT Provider.

6.    AIDS ADULT DAY HEALTH CARE

Adult Day Health Care Programs (ADHCP) are programs designed to assist
individuals with HIV disease to live more independently in the community or
eliminate the need for residential health care services. Registrants in ADHCP
require a greater range of comprehensive health care

                                    APPENDIX K
                                 October 1, 2004

                                      K-38

<PAGE>

services than can be provided in any single setting, but do not require the
level of services provided in a residential health care setting. Regulations
require that a person enrolled in an ADHCP must require at least three (3) hours
of health care delivered on the basis of at least one (1) visit per week. While
health care services are broadly defined in this setting to include general
medical care, nursing care, medication management, nutritional services,
rehabilitative services, and substance abuse and mental health services, the
latter two (2) cannot be the sole reason for admission to the program. Admission
criteria must include, at a minimum, the need for general medical care and
nursing services.

7.    HIV COBRA CASE MANAGEMENT

The HIV COBRA (Community Follow-up Program) Case Management Program is a program
that provides intensive, family-centered case management and community follow-up
activities by case managers, case management technicians, and community
follow-up workers. Reimbursement is through an hourly rate billable to Medicaid.
Reimbursable activities include intake, assessment, reassessment, service plan
development and implementation, monitoring, advocacy, crisis intervention, exit
planning, and case specific supervisory case-review conferencing.

8.    FERTILITY SERVICES

Fertility services are not covered by the Benefit Package nor by Medicaid
fee-for-service.

9.    ADULT DAY HEALTH CARE

ADULT DAY HEALTH CARE means care and services provided to a registrant in a
residential health care facility or approved extension site under the medical
direction of a physician and which is provided by personnel of the adult day
health care program in accordance with a comprehensive assessment of care needs
and individualized health care plan, ongoing implementation and coordination of
the health care plan, and transportation.

REGISTRANT means a person who is a nonresident of the residential health care
facility who is functionally impaired and not homebound and who requires certain
preventive, diagnostic, therapeutic, rehabilitative or palliative items or
services provided by a general hospital, or residential health care facility;
and whose assessed social and health care needs, in the professional judgment of
the physician of record, nursing staff, Social Services and other professional
personnel of the adult day health care program can be met in while or in part
satisfactorily by delivery of appropriate services in such program.

10.   PERSONAL EMERGENCY RESPONSE SERVICES (PERS)

Personal Emergency Response Services (PERS) are not covered by the Benefit
Package. PERS are covered on a fee-for-service basis through contracts between
the LDSS and PERS vendors.

                                    APPENDIX K
                                 October 1, 2004

                                      K-39

<PAGE>

11.   SCHOOL-BASED HEALTH CENTERS

A School-Based Health Center (SBHC) is an Article 28 extension clinic that is
located in a school and provides students with primary and preventive physical
and mental health care services, acute or first contact care, chronic care, and
referral as needed. SBHC services include comprehensive physical and mental
health histories and assessments, diagnosis and treatment of acute and chronic
illnesses, screenings (e.g., vision, hearing, dental, nutrition, TB), routine
management of chronic diseases (e.g., asthma, diabetes), health education,
mental health counseling and/or referral, immunizations and physicals for
working papers and sports.

                                    APPENDIX K
                                 October 1, 2004

                                      K-40

<PAGE>

                          IV. SCHEDULE A OF APPENDIX K

                             PREPAID BENEFIT PACKAGE
                  COVERAGE STATUS OF OPTIONAL COVERED SERVICES

COUNTY: ORANGE COUNTY DEPARTMENT OF SOCIAL SERVICES

MCO: WELLCARE OF NEW YORK INC.

<TABLE>
<CAPTION>
                                          COVERAGE STATUS
                                 -------------------------------------
                                 COVERED BY               NOT COVERED
          SERVICE                CONTRACTOR              BY CONTRACTOR
----------------------------     ----------              -------------
<S>                              <C>                     <C>
Family Planning                      X

Dental Services                                                X

Emergency Transportation                                       X

Non-Emergency Transportation                                   X
</TABLE>

                                    APPENDIX K
                                 October 1, 2004

                                      K-41

<PAGE>

                                   APPENDIX L

                       APPROVED CAPITATION PAYMENT RATES

                                    APPENDIX L
                                 October 1, 2004

                                      L-1

<PAGE>

                           WELLCARE OF NEW YORK, INC.

                           Medicaid Managed Care Rates

MMIS ID#: 01182503                           Effective Date: 04/01/04
Approved by DOB: Yes                         Region: Mid-Hudson
DOH HMO #: 04-008                            County: Orange
Reinsurance: Private                         Status: Voluntary

<TABLE>
<CAPTION>
PREMIUM GROUP                         RATE AMOUNT
----------------------                -----------
<S>                                   <C>
TANF/SN <6MO M/F                      $    222.23
TANF/SN 6MO-14 F                      $     77.91
TANF/SN 15-20 F                       $    140.16
TANF/SN 6MO-20 M                      $     90.59
TANF 21+ M/F                          $    187.60
SN 21-29 M/F                          $    200.37
SN 30+ M/F                            $    362.90
SSI 6MO-20 M/F                        $    207.18
SSI 21-64 M/F                         $    389.65
SSI 65+ M/F                           $    269.26
MATERNITY KICK PAYMENT                $  4,526.04
NEWBORN KICK PAYMENT                  $  2,338.57
</TABLE>

OPTIONAL BENEFITS OFFERED:

[ ] Emergency    Transportation                  [ ] Dental

[ ] Non-Emergent    Transportation               [X] Family  Planning

       BOX WILL BE CHECKED IF THE OPTIONAL BENEFIT IS COVERED BY THE PLAN

BENEFIT LIMITATIONS:

      Outpatient Mental Health Cap of 20 visits

      Inpatient Mental Health\Substance Abuse Cap of 30 Days

<PAGE>

                                   APPENDIX M

                                  SERVICE AREA

                                    APPENDIX M
                                 October 1, 2004

                                      M-1

<PAGE>

      The Contractor's Medicaid managed care service area is comprised of Orange
      County in its entirety.

                                    APPENDIX M
                                 October 1, 2004

                                      M-2

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