Molina Healthcare Inc – IPO: ‘S-1’ on 12/30/02 – EX-10.6

On:  Monday, 12/30/02, at 5:20pm ET   ·   Accession #:  898430-2-4683   ·   File #:  333-102268

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Initial Public Offering (IPO):  Registration Statement (General Form)   —   Form S-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-1         Registration Statement (General Form)               HTML   1.45M 
 2: EX-3.1      Articles of Incorporation(Ca)                          3     13K 
 3: EX-3.2      Form of Certificate of Incorporation(De)               6     27K 
 4: EX-3.3      Bylaws(Ca)                                            21     65K 
 5: EX-3.4      Form of Bylaws (De)                                   24    103K 
 6: EX-10.1     Medi-Cal Agreement                                   466   1.84M 
15: EX-10.10    Employment Agreement                                  18     77K 
16: EX-10.11    Employment Agreement                                  17     75K 
17: EX-10.12    Omnibus Stock and Incentive Plan                      26     68K 
18: EX-10.13    2002 Equity Incentive Plan                            15     66K 
19: EX-10.14    2002 Employee Stock Purchase Plan                     11     54K 
 7: EX-10.2     Health Services Ageeement                             61    192K 
 8: EX-10.3     Contract No. 071B1001026                             173    747K 
 9: EX-10.4     Contract Hmo-American Family Care                    344   1.34M 
10: EX-10.5     Memorandum of Understanding                            3     16K 
11: EX-10.6     2002 Contract for Healthy Options                    155    675K 
12: EX-10.7     Employment Agreement                                  20     85K 
13: EX-10.8     Employment Agreement                                  16     75K 
14: EX-10.9     Employment Agreement                                  18     79K 
20: EX-21.1     List of Subsidiaries                                HTML      8K 
21: EX-23.1     Consent of Ernst & Young LLP                        HTML     10K 

EX-10.6   —   2002 Contract for Healthy Options
Exhibit Table of Contents

EX-10.6
1st Page of 155
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
                                                                    EXHIBIT 10.6

                                                        [Enlarge/Download Table]


                                                                                                        
                                                        DSHS Contract Number:                           
                       CLIENT SERVICE CONTRACT          0312-16028                                      
                                                        Resulting From Solicitation Number:             

[LOGO OF DEPARTMENT OF SOCIAL AND HEALTH SERVICES]                                                      

This Contract is between the State of Washington        Program Contract Number:                        
Department of Social and Health Services (DSHS)                                                         
and the Contractor identified below.                    Contractor Contract Number:                     

CONTRACTOR NAME                                 CONTRACTOR doing business as (DBA)                      

Molina Healthcare of Washington, Inc.                                                                   

CONTRACTOR ADDRESS                              WASHINGTON UNIFORM BUSINESS    DSHS INDEX NUMBER        
                                                IDENTIFIER (UBI)                                        

21540 30th Dr. SE, Suite 400                    600-546-648                    24261                    
PO Box 1469                                                                                             
Bothell, WA 98041                                                                                       

CONTRACTOR CONTACT        CONTRACTOR TELEPHONE        CONTRACTOR FAX         CONTRACTOR E-MAIL ADDRESS  

Peggy Wanta               (425) 424-1146 Ext:         (425) 424-1182         peggyw@molinahealthcare.com

DSHS ADMINISTRATION       DSHS DIVISION                    DSHS CONTRACT CODE                           

Medical Assistance        Program Support                  7000XC                                       
Administration                                                                                          

DSHS CONTACT NAME AND TITLE          DSHS CONTACT ADDRESS                                               

Michael Paulson                      P O Box 45530                                                      
MAA Program Manager                                                                                     
                                     Olympia, WA 98504-5630                                             

DSHS CONTACT TELEPHONE            DSHS CONTACT FAX                 DSHS CONTACT E-MAIL ADDRESS          

(360) 725-1641 Ext                (360) 753-7315                   paulsmj@dshs.wa.gov                  

IS THE CONTRACTOR A SUBRECIPIENT FOR PURPOSES OF THIS CONTRACT?  CFDA NUMBER(S)                         

No                                                                                                      

CONTRACT START DATE               CONTRACT END DATE                CONTRACT MAXIMUM AMOUNT              

01/01/2003                        12/31/2003                       $0.00                                

EXHIBITS, When the box below is marked with an X, the following Exhibits are                            
attached and are incorporated into this Contract by reference:                                          
[X] Exhibits (specify): A through E                                                                     

[ILLEGIBLE]                                                                                             

CONTRACTOR SIGNATURE              PRINTED NAME AND TITLE                DATE SIGNED                     
/s/                               Ann Koontz, President & CEO           12-10-02                        

DSHS SIGNATURE                    PRINTED NAME AND TITLE                DATE SIGNED                     
/s/                               Charles H. Pugh, Supervisor           16-Dec-02                       
                                  Contracts Coordination Unit                                           
                                  Medical Assistance Administration                                     

DSHS Central Contract Services                                                  
Client Service Contract #6012XF (12-13-00)                                      

                                                            Page 1

EX-10.6
2nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 2nd
DEPARTMENT OF SOCIAL AND HEALTH SERVICES

 MEDICAL ASSISTANCE ADMINISTRATION

 2003 CONTRACT

 FOR

 HEALTHY OPTIONS

 AND

 STATE CHILDREN'S HEALTH
INSURANCE PLAN

APPROVED AS TO FORM BY THE ATTORNEY GENERAL'S OFFICE

EX-10.6
3rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 3rd
 TABLE OF CONTENTS

                                                        [Enlarge/Download Table]


                                                                                                                   
1.   DEFINITIONS................................................................................................ 1 

   1.1    ANCILLARY SERVICES.................................................................................... 1 
   1.2    CHILDREN WITH SPECIAL HEALTH CARE NEEDS............................................................... 1 
   1.3    COMPARABLE COVERAGE................................................................................... 1 
   1.4    COVERED SERVICES...................................................................................... 1 
   1.5    DUAL COVERAGE......................................................................................... 1 
   1.6    EPSDT................................................................................................. 1 
   1.7    ELIGIBLE CLIENTS...................................................................................... 1 
   1.8    EMERGENCY MEDICAL CONDITION........................................................................... 1 
   1.9    ENROLLEE.............................................................................................. 2 
   1.10     MANAGED CARE........................................................................................ 2 
   1.11     MEDICALLY NECESSARY SERVICES........................................................................ 2 
   1.12     PARTICIPATING PROVIDER.............................................................................. 2 
   1.13     PEER-REVIEWED MEDICAL LITERATURE.................................................................... 2 
   1.14     PHYSICIAN GROUP..................................................................................... 2 
   1.15     PHYSICIAN INCENTIVE PLAN............................................................................ 2 
   1.16     PRIMARY CARE PROVIDER (PCP)......................................................................... 3 
   1.17     RISK................................................................................................ 3 
   1.18     SERVICE AREA........................................................................................ 3 
   1.19     SCHIP............................................................................................... 3 
   1.20     SUBCONTRACT......................................................................................... 3 

2.   ENROLLMENT................................................................................................. 3 

   2.1    SERVICE AREA.......................................................................................... 3 
   2.2    ELIGIBLE CLIENT GROUPS................................................................................ 4 
   2.3    CLIENT NOTIFICATION................................................................................... 4 
   2.4    EXEMPTION FROM ENROLLMENT............................................................................. 5 
   2.5    ENROLLMENT PERIOD..................................................................................... 5 
   2.6    ENROLLMENT PROCESS.................................................................................... 5 
   2.7    EFFECTIVE DATE OF ENROLLMENT.......................................................................... 5 
   2.8    ENROLLMENT LISTING AND REQUIREMENTS FOR CONTRACTOR'S RESPONSE......................................... 6 
   2.9    TERMINATION OF ENROLLMENT............................................................................. 6 

3.   PAYMENT................................................................................................... 10 

   3.1    RATES/PREMIUMS....................................................................................... 10 
   3.2    DELIVERY CASE RATE PAYMENT........................................................................... 11 
   3.3    RENEGOTIATION OF RATES............................................................................... 11 
   3.4    REINSURANCE/RISK PROTECTION.......................................................................... 11 
   3.5    RECOUPMENTS.......................................................................................... 11 
   3.6    ENROLLEE HOSPITALIZED AT ENROLLMENT.................................................................. 12 
   3.7    ENROLLEE HOSPITALIZED AT DISENROLLMENT............................................................... 12 
   3.8    THIRD-PARTY LIABILITY (TPL).......................................................................... 13 
   3.9    SUBROGATION RIGHTS OF THIRD-PARTY LIABILITY.......................................................... 13 

4.   ACCESS AND CAPACITY....................................................................................... 14 

   4.1    NETWORK CAPACITY..................................................................................... 14 
   4.2    ACCESSIBILITY OF SERVICES............................................................................ 14 
   4.3    24/7 AVAILABILITY.................................................................................... 14 
   4.4    APPOINTMENT STANDARDS................................................................................ 15 
   4.5    PROVIDER NETWORK-DISTANCE STANDARDS.................................................................. 15 
   4.6    ACCESS TO SPECIALTY CARE............................................................................. 16 
   4.7    EQUAL ACCESS FOR ENROLLEES WITH COMMUNICATION BARRIERS............................................... 16 

EX-10.6
4th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 4th
                                                        [Enlarge/Download Table]


                                                                                                                   
   4.8    AMERICANS WITH DISABILITIES ACT...................................................................... 18 
   4.9    CAPACITY LIMITS AND ORDER OF ACCEPTANCE.............................................................. 18 
   4.10     ASSIGNMENT OF ENROLLEES............................................................................ 18 
   4.11     PROVIDER NETWORK CHANGES........................................................................... 19 
   4.12     WOMEN'S HEALTH CARE SERVICES....................................................................... 20 
   4.13     MATERNITY NEWBORN LENGTH OF STAY................................................................... 20 

5.   QUALITY OF CARE........................................................................................... 20 

   5.1    QUALITY IMPROVEMENT PROGRAM.......................................................................... 20 
   5.2    ACCREDITATION........................................................................................ 20 
   5.3    NOTICE REQUIREMENTS FOR DENIED, DISCONTINUED, OR MODIFIED SERVICE.................................... 20 
   5.4    ENROLLEE COMPLAINTS AND APPEALS, INCLUDING INDEPENDENT REVIEW........................................ 21 
   5.5    FAIR HEARING......................................................................................... 21 
   5.6    EPSDT/IMMUNIZATIONS.................................................................................. 23 
   5.7    PROVIDER EDUCATION................................................................................... 23 
   5.8    CLAIMS PAYMENT STANDARDS............................................................................. 23 
   5.9    QUALITY IMPROVEMENT STUDIES.......................................................................... 24 
   5.10     HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT................................................ 24 
   5.11     PRACTICE GUIDELINES................................................................................ 25 
   5.12     ADVANCE DIRECTIVES................................................................................. 25 

6.   REPORTING REQUIREMENTS.................................................................................... 25 

   6.1    CERTIFICATION REQUIREMENTS........................................................................... 25 
   6.2    HEDIS(R) MEASURES.................................................................................... 26 
   6.3    ENCOUNTER DATA....................................................................................... 27 
   6.4    INTEGRATED PROVIDER NETWORK DATABASE (IPND).......................................................... 27 
   6.5    MONTHLY ADJUSTMENT REPORT FOR FQHC/RHC ENROLLEES..................................................... 28 
   6.6    ENROLLEE MORTALITY................................................................................... 28 
   6.7    CAHPS................................................................................................ 28 
   6.8    DENIALS, COMPLAINT AND APPEALS....................................................................... 29 
   6.9    DRUG FORMULARY REVIEW AND APPROVAL................................................................... 30 
   6.10     FRAUD AND ABUSE.................................................................................... 30 
   6.11     FIVE PERCENT EQUITY................................................................................ 31 

7.   GENERAL TERMS AND CONDITIONS.............................................................................. 31 

   7.1    COMPLETE AGREEMENT................................................................................... 31 
   7.2    MODIFICATION......................................................................................... 31 
   7.3    WAIVER............................................................................................... 31 
   7.4    LIMITATION OF AUTHORITY.............................................................................. 31 
   7.5    NOTICES.............................................................................................. 31 
   7.6    FORCE MAJEURE........................................................................................ 32 
   7.7    SANCTIONS............................................................................................ 32 
   7.8    ASSIGNMENT OF THIS AGREEMENT......................................................................... 33 
   7.9    HEADINGS NOT CONTROLLING............................................................................. 33 
   7.10     ORDER OF PRECEDENCE................................................................................ 33 
   7.11     PROPRIETARY RIGHTS................................................................................. 34 
   7.12     COVENANT AGAINST CONTINGENT FEES................................................................... 34 
   7.13     ENROLLEES' RIGHT TO OBTAIN A CONVERSION AGREEMENT.................................................. 34 
   7.14     RECORDS MAINTENANCE AND RETENTION.................................................................. 34 
   7.15     ACCESS TO FACILITIES AND RECORDS................................................................... 35 
   7.16     SOLVENCY........................................................................................... 35 
   7.17     COMPLIANCE WITH ALL APPLICABLE LAWS AND REGULATIONS................................................ 36 
   7.18     NONDISCRIMINATION.................................................................................. 37 
   7.19     REVIEW OF CLIENT INFORMATION....................................................................... 37 
   7.20     CONTRACTOR NOT EMPLOYEES OF DSHS................................................................... 37 

EX-10.6
5th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 5th
                                                        [Enlarge/Download Table]


                                                                                                                   
   7.21     DSHS NOT GUARANTOR................................................................................. 37 
   7.22     MUTUAL INDEMNIFICATION AND HOLD HARMLESS........................................................... 37 
   7.23     DISPUTES........................................................................................... 37 
   7.24     GOVERNING LAW AND VENUE............................................................................ 38 
   7.25     SEVERABILITY....................................................................................... 38 
   7.26     EXCLUDED PERSONS................................................................................... 38 
   7.27     FRAUD AND ABUSE REQUIREMENTS....................................................................... 39 

8.   SUBCONTRACTS.............................................................................................. 40 

   8.1    CONTRACTOR REMAINS LEGALLY RESPONSIBLE............................................................... 40 
   8.2    SOLVENCY REQUIREMENTS FOR SUBCONTRACTORS............................................................. 40 
   8.3    REQUIRED PROVISIONS.................................................................................. 40 
   8.4    HEALTH CARE PROVIDER SUBCONTRACTS.................................................................... 41 
   8.5    HEALTH CARE PROVIDER SUBCONTRACTS DELEGATING ADMINISTRATIVE FUNCTIONS................................ 42 
   8.6    EXCLUDED PROVIDERS................................................................................... 42 
   8.7    HOME HEALTH PROVIDERS................................................................................ 43 
   8.8    PHYSICIAN INCENTIVE PLANS............................................................................ 43 
   8.9    PAYMENT TO FQHCs/RHCs................................................................................ 46 

9.   TERM AND TERMINATION...................................................................................... 46 

   9.1    TERM................................................................................................. 46 
   9.2    TERMINATION FOR CONVENIENCE.......................................................................... 46 
   9.3    TERMINATION BY THE CONTRACTOR FOR DEFAULT............................................................ 47 
   9.4    TERMINATION BY DSHS FOR DEFAULT...................................................................... 47 
   9.5    MANDATORY TERMINATION................................................................................ 48 
   9.6    TERMINATION FOR REDUCTION IN FUNDING................................................................. 48 
   9.7    INFORMATION ON OUTSTANDING CLAIMS AT TERMINATION..................................................... 48 
   9.8    CONTINUED RESPONSIBILITIES........................................................................... 49 
   9.9    ENROLLEE NOTICE OF TERMINATION....................................................................... 49 

10.  SERVICE DELIVERY.......................................................................................... 49 

   10.1     SCOPE OF SERVICES.................................................................................. 49 
   10.2     MEDICAL NECESSITY DETERMINATION.................................................................... 50 
   10.3     ENROLLEE CHOICE OF PCP............................................................................. 51 
   10.4     COORDINATION OF CARE............................................................................... 52 
   10.5     SECOND OPINIONS.................................................................................... 52 
   10.6     ENROLLEE SELF-DETERMINATION........................................................................ 53 
   10.7     COMPLIANCE WITH FEDERAL REGULATIONS FOR STERILIZATIONS AND HYSTERECTOMIES.......................... 53 
   10.8     PROGRAM INFORMATION................................................................................ 53 
   10.9     CONFIDENTIALITY OF ENROLLEE INFORMATION............................................................ 53 
   10.10    MARKETING.......................................................................................... 54 
   10.11    INFORMATION REQUIREMENTS FOR ENROLLEES AND POTENTIAL ENROLLEES..................................... 54 
   10.12    PHYSICIAN INCENTIVE PLAN INFORMATION............................................................... 56 
   10.13    FAIR HEARING INFORMATION........................................................................... 56 
   10.14    PROHIBITION ON ENROLLEE CHARGES FOR COVERED SERVICES............................................... 56 
   10.15    PROHIBITION ON PROVIDER/ENROLLEE DISCUSSION LIMITATIONS............................................ 56 
   10.16    PROVIDER LICENSE NONDISCRIMINATION................................................................. 56 
   10.17    EXPERIMENTAL AND INVESTIGATIONAL SERVICES.......................................................... 56 

11.  SCHEDULE OF BENEFITS...................................................................................... 58 

   11.1     COVERED SERVICES................................................................................... 58 
   11.2     EXCLUSIONS......................................................................................... 64 

NCQA STANDARDS 2003............................................................................................  2 

CONDUCT OF THE APPEAL PROGRAM AS FOLLOWS:...................................................................... 10 

EX-10.6
6th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 6th
                                                        [Enlarge/Download Table]


                                                                                                                   
   MEDICAL RECORDS............................................................................................. 21 

EXHIBIT A            QUALITY IMPROVEMENT PROGRAM 2003 STANDARDS                                                    
EXHIBIT B            WAC 388-538 MANAGED CARE                                                                      
EXHIBIT C-1          2003 HEALTHY OPTIONS/SCHIP ENCOUNTER DATA SPECIFICATIONS                                      
EXHIBIT C-2 (a)      2003 IPND REPORTING REQUIREMENTS                                                              
EXHIBIT C-2 (b)      IPND ESCALATION PROCEDURE                                                                     
EXHIBIT D            PREMIUMS, SERVICE AREAS, AND CAPACITY                                                         
EXHIBIT E            WAC 388-542 CHILDREN'S HEALTH INSURANCE PLAN                                                  

EX-10.6
7th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 7th
                                                        2003 HO & SCHIP Contract

1.      DEFINITIONS                                                             

The following definitions shall apply to this agreement:        

      1.1.    ANCILLARY SERVICES means health services ordered by a provider
            including but not limited to, laboratory services, radiology
services, and physical therapy.                 

1.2.    CHILDREN WITH SPECIAL HEALTH CARE NEEDS means children  
       identified by DSHS to the Contractor as meeting federal
             guidelines for such children. For the term of this agreement,
                DSHS will limit such identification to children served under the
 provisions of Title V of the Social Security Act.

       1.3.    COMPARABLE COVERAGE means an enrollee has other insurance which
        DSHS has determined provides a full scope of health care
benefits.                                       

   1.4.    COVERED SERVICES means medically necessary services, as set
            forth in Section 11, Schedule of Benefits, covered under the
terms of this agreement.                        

    1.5.    DUAL COVERAGE means an enrollee is privately enrolled on any
              basis with the Contractor and simultaneously enrolled with the
Contractor under Healthy Options/SCHIP.         

        1.6.    EPSDT (Early, Periodic Screening, Diagnosis and Treatment) means
               a package of services in a preventive (well child) exam covered
               by Medicaid as defined in the Social Security Act (SSA) Section
               1905(r). Services covered by Medicaid include a complete health
           history and developmental assessment, an unclothed physical
           exam, immunizations, laboratory tests, health education and
          anticipatory guidance, and screenings for: vision, dental,
          substance abuse, mental health and hearing, as well as any
             medically necessary services found to be necessary during the
        EPSDT exam. EPSDT services covered by the Contractor are
described in Section 11, Schedule of Benefits.  

     1.7.    ELIGIBLE CLIENTS means DSHS clients certified eligible by the
            DSHS, living in the service area, and eligible to enroll for
          health care services under the terms of this agreement, as
described in Section 2.2.                       

1.8.    EMERGENCY MEDICAL CONDITION means 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: (a) placing the health of the individual (or, with
           respect to a pregnant woman, the health of the woman or her
unborn child) in                                

 1

EX-10.6
8th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 8th
                                                        2003 HO & SCHIP Contract

                serious jeopardy; (b) serious impairment to bodily functions; or
           (c) serious dysfunction of any bodily organ or part (42 USC
1396u-2(b)(2)(c)).                              

     1.9.    ENROLLEE means an individual eligible for any medical program
               who is enrolled in Healthy Options/SCHIP managed care through a
health care plan having an agreement with DSHS. 

     1.10.   MANAGED CARE means a prepaid, comprehensive system of medical
        and health care delivery, including preventive, primary,
specialty and ancillary health services.        

        1.11.   MEDICALLY NECESSARY SERVICES means services which are reasonably
             calculated to prevent, diagnose, correct, cure, alleviate, or
             prevent the worsening of conditions that endanger life, cause
              suffering or pain, result in illness or infirmity, threaten to
             cause or aggravate a handicap, or cause physical deformity or
          malfunction, and there is no other equally effective, more
             conservative or substantially less costly course of treatment
              available or suitable for the enrollee requesting the service.
          For the purpose of this agreement, course of treatment may
               include mere observation or, where appropriate, no treatment at
           all. Medically necessary services shall include, but not be
            limited to, diagnostic, therapeutic, and preventive services
               that are generally and customarily provided in the service area
(WAC 388-500-0005.)                             

      1.12.   PARTICIPATING PROVIDER means a person, practitioner as defined
                in the Quality Improvement Program 2003 Standards, Exhibit A, or
              entity with a written agreement with the Contractor to provide
        services to enrollees under the terms of this agreement.

 1.13.   PEER-REVIEWED MEDICAL LITERATURE means medical literature
           published in professional journals that submit articles for
             review by experts who are not part of the editorial staff. It
            does not include publications or supplements to publications
            primarily intended as marketing material for pharmaceutical,
               medical supplies, medical devices, health service providers, or
insurance carriers.                             

      1.14.   PHYSICIAN GROUP means a partnership, association, corporation,
                individual practice association, or other group that distributes
         income from the practice among its members. An individual
                practice association is a physician group only if it is composed
               of individual physicians and has no subcontracts with physician
groups (42 CFR 434.70).                         

   1.15.   PHYSICIAN INCENTIVE PLAN means any compensation arrangement
              between the Contractor and a physician or physician group that
         may directly or indirectly have the effect of reducing or
                limiting services to enrollees under the terms of this agreement
(42 CFR 434.70).                                

 2

EX-10.6
9th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 9th
                                                        2003 HO & SCHIP Contract

      1.16.   PRIMARY CARE PROVIDER (PCP) means a participating provider who
         has the responsibility for supervising, coordinating, and
                providing primary health care to enrollees, initiating referrals
               for specialist care, and maintaining the continuity of enrollee
                care. PCPs include, but are not limited to Pediatricians, Family
           Practitioners, General Practitioners, Internists, Physician
              Assistants (under the supervision of a physician), or Advanced
           Registered Nurse Practitioners (ARNP), as designated by the
Contractor.                                     

      1.17.   RISK means the possibility that a loss may be incurred because
               the cost of providing services may exceed the payments made for
             services (42 CFR 434.2). When applied to subcontractors, loss
         includes the loss of potential payments made as part of a
     physician incentive plan, as defined in Section 1.15.

        1.18.   SERVICE AREA means the geographic area covered by this agreement
as described in Section 2.1.                    

1.19.   SCHIP: State Children's Health Insurance Program.       

        1.20.   SUBCONTRACT means a written agreement between the Contractor and
       a subcontractor, or between a subcontractor and another
            subcontractor, to perform all or a portion of the duties and
              obligations the Contractor is obligated to perform pursuant to
this agreement.                                 

2.      ENROLLMENT                                                              

2.1.    SERVICE AREAS:                                          

           2.1.1.    The Contractor's service areas are described in Exhibit
       D, Premiums, Service Areas, and Capacity.

          2.1.2.    Clients in the eligibility groups described in Section
                    2.2 are eligible to enroll with the Contractor if they
       reside in the Contractor's service areas.

2.1.3.    Service Area Changes:                       

              2.1.3.1.       With the written approval of DSHS, the Contractor
                           may expand into additional service areas at any
                             time by giving written notice to DSHS, along with
                             evidence, as DSHS may require, to demonstrate the
                          Contractor's ability to support the expansion.
                     DSHS may withhold approval of a requested
                      expansion, if, in DSHS' sole judgment, the
                              requested expansion is not in the best interest of
DSHS.               

 3

EX-10.6
10th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 10th
                                                        2003 HO & SCHIP Contract

         2.1.3.2.       The Contractor may decrease service areas by
                            giving DSHS ninety (90) days written notice. The
                           decrease shall not be effective until the first
                              day of the month which falls after the ninety (90)
days has elapsed.   

              2.1.3.3.       The Contractor shall notify enrollees affected by
                              any service area decrease sixty (60) calendar days
                          prior to the effective date. Notices must have
                              prior approval of DSHS. If the Contractor fails to
                       notify affected enrollees of a service area
                          decrease sixty (60) calendar days prior to the
                     effective date, the decrease shall not be
                            effective until the first day of the month which
                            falls sixty (60) calendar days from the date the
          Contractor notifies enrollees.

             2.1.4.    If the U.S. Postal Service alters the zip code numbers or
                 zip code boundaries within the Contractor's service
                       areas, DSHS shall alter the service area zip code numbers
                    or the boundaries of the service areas with input from
the affected contractors.         

         2.1.5.    DSHS shall determine, in its sole judgment, which zip
                      codes fall within each service area. No zip code will be
split between service areas.      

            2.1.6.    DSHS will determine whether an enrollee resides within a
service area.                     

    2.2.    ELIGIBLE CLIENT GROUPS: DSHS shall determine eligibility for
         enrollment under this agreement. Clients in the following
             eligibility groups at the time of enrollment are eligible for
           enrollment under this agreement, and must enroll in Healthy
              Options/SCHIP unless the enrollee has dual coverage as defined
             in Section 1.5, has comparable coverage as defined in Section
1.3, or is exempted pursuant to Section 2.4.    

        2.2.1.    Clients receiving Medicaid under Social Security Act
                 (SSA) provisions for coverage of families receiving
                     Temporary Assistance for Needy Families and clients who
                      are not eligible for cash assistance who remain eligible
for Medicaid.                     

       2.2.2.    Children, from birth through eighteen years of age,
                     eligible for Medicaid under expanded pediatric coverage
                   provisions of the Social Security Act ("H" Children).

        2.2.3.    Pregnant Women, eligible for Medicaid under expanded
                      maternity coverage provisions of the Social Security Act
("S" women).                      

2.2.4.    Children eligible for SCHIP.                

        2.3.    CLIENT NOTIFICATION: DSHS shall notify eligible clients of their
              rights and responsibilities as Healthy Options/SCHIP enrollees
at the time of initial                          

 4

EX-10.6
11th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 11th
                                                        2003 HO & SCHIP Contract

                eligibility determination and eligibility review. The Contractor
                shall provide enrollees with additional information as described
            in this agreement, including the Quality Improvement Program
2003 Standards, Exhibit A.                      

      2.4.    EXEMPTION FROM ENROLLMENT: A client may request exemption from
               enrollment. Each request for exemption will be reviewed by DSHS
             pursuant to WAC 388-538, Exhibit B or WAC 388-542, Exhibit E.
           When the client is already enrolled with the Contractor and
               wishes to be exempted, the exemption request will be treated as
         a disenrollment request consistent with the provisions of
Section 2.9.                                    

    2.5.    ENROLLMENT PERIOD: Subject to the provisions of Section 2.7,
               enrollment is continuously open. Enrollees shall have the right
    to change enrollment prospectively, from one Healthy
               Options/SCHIP plan to another without cause, each month (42 CFR
434.27).                                        

      2.6.    ENROLLMENT PROCESS: To enroll with the Contractor, the client,
                his/her representative or his/her responsible parent or guardian
                must complete and submit a DSHS enrollment form to DSHS, or call
             the DSHS, Medical Assistance Administration's (MAA) toll-free
                enrollment number. If the client does not exercise his/her right
            to choose a Healthy Options/SCHIP plan, DSHS will assign the
     client, and all eligible family members, to a Healthy
      Options/SCHIP plan in accord with section 4.10 of this
agreement.                                      

             DSHS will make every effort to enroll all family members with
          the same Healthy Options/SCHIP plan. If a family member is
                covered by the Basic Health Plan, DSHS will make every effort to
             enroll the remainder of the family with the same managed care
       plan if the plan contracts with DSHS to provide Healthy
           Options/SCHIP. If the plan does not contract with DSHS, the
            remaining family members will be enrolled with a single, but
               different Healthy Options/SCHIP plan of the client's choice, or
             the client will be assigned as described above if they do not
choose.                                         

2.7.    EFFECTIVE DATE OF ENROLLMENT:                           

             2.7.1.    Except for newborns, enrollment with the Contractor shall
               be effective on the later of the following dates:

            2.7.1.1.       If the enrollment is processed on or before the
                              DSHS cut-off date for enrollment, enrollment shall
                             be effective the first day of the month following
                              the month in which the enrollment is processed; or

          2.7.1.2.       If the enrollment is processed after the DSHS
                            cut-off date for enrollment, enrollment shall be
                       effective the first day of the second month
                          following the month in which the enrollment is
processed.          

 5

EX-10.6
12th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 12th
                                                        2003 HO & SCHIP Contract

        2.7.2.    Newborns whose mothers are enrollees shall be deemed
                      enrollees and enrolled beginning from the newborn's date
                       of birth or the mother's date of enrollment, whichever is
                    later. If the mother is disenrolled before the newborn
                  receives a separate client identifier from DSHS, the
                     newborn's coverage shall end when the mother's coverage
      ends, except as provided in Section 3.7.

         2.7.3.    Adopted children shall be covered consistent with the
provisions of Title 48 RCW.       

             2.7.4.    No retroactive coverage is provided under this agreement,
  except as described in this section.

      2.8.    ENROLLMENT LISTING AND REQUIREMENTS FOR CONTRACTOR'S RESPONSE:

      2.8.1.    Before the end of each month DSHS will provide the
                     Contractor with a list of enrollees whose enrollment is
                 terminated the end of that month, and a list of the
             Contractor's enrollees for the following month.

             2.8.2.    The Contractor shall have ten (10) calendar days from the
                 receipt of the enrollment listing to notify DSHS in
                     writing of the refusal of an application for enrollment
                    or any discrepancy regarding DSHS' proposed enrollment
                     effective date. Written notice shall include the reason
                      for refusal and must be agreed to by DSHS. The effective
                      date of enrollment specified by DSHS shall be considered
                    accepted by the Contractor and shall be binding if the
                  notice is not timely or DSHS does not agree with the
                     reasons stated in the notice. Subject to DSHS approval,
                     the Contractor may refuse to accept an enrollee for the
following reasons:                

               2.8.2.1.       DSHS has enrolled the enrollee with the Contractor
                              in a service area the Contractor is not contracted
for.                

              2.8.2.2.       The enrollee is not eligible for enrollment under
        the terms of this agreement.

2.9.    TERMINATION OF ENROLLMENT:                              

            2.9.1.    VOLUNTARY TERMINATION: Enrollees may request termination
              of enrollment by submitting a written request to
                    terminate enrollment to DSHS or by calling the Medical
                  Assistance Customer Service Center (MACSC) toll-free
                       enrollment number. Requests for termination of enrollment
                      may be made to enroll with another Healthy Options plan,
                     or to disenroll from Healthy Options as provided in WAC
                     388-538, Exhibit B or WAC 388-542, Exhibit E. Except as
                provided in WAC 388-538, Exhibit B or WAC 388-542,
                      Exhibit E, enrollees whose enrollment is terminated will
                 be prospectively disenrolled. DSHS shall notify the
Contractor of enrollee            

 6

EX-10.6
13th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 13th
                                                        2003 HO & SCHIP Contract

                      terminations pursuant to Section 2.8. The Contractor may
                 not request voluntary disenrollment on behalf of an
enrollee.                         

 2.9.2.    INVOLUNTARY TERMINATION INITIATED BY DSHS FOR
                      INELIGIBILITY: The enrollment of any enrollee under this
                   agreement shall be terminated if the enrollee becomes
                      ineligible for enrollment due to a change in eligibility
status.                           

            2.9.2.1.       When an enrollee's enrollment is terminated for
                              ineligibility, the termination shall be effective:

               2.9.2.1.1.     The first day of the month following the month
                                in which the termination is processed by DSHS if
                             the termination is processed on or before the
                       DSHS cut-off date for enrollment or the
                     Contractor is informed by DSHS of the
                               termination prior to the first day of the month
                               following the month in which the termination is
  processed by DSHS.

            2.9.2.1.2.     Effective the first day of the second month
                               following the month in which the termination is
                               processed if the termination is processed after
                            the DSHS cut-off date for enrollment and the
                         Contractor is not informed by DSHS of the
                               termination prior to the first day of the month
                               following the month in which the termination is
  processed by DSHS.

          2.9.2.2.       Enrollees Eligible for Social Security Income
(SSI):              

            2.9.2.2.1.     Enrollees determined by the Social Security
                              Administration (SSA) to be eligible for SSI in
                          calendar year 2003 shall be ineligible for
                               services under the terms of this agreement when
                             DSHS receives the SSI eligibility information
                               from the Social Security Administration through
                              the electronic State Data Exchange (SDX). Such
                              enrollees will be disenrolled prospectively as
                            described in Section 2.9.2.1. DSHS shall not
                                recoup any premiums for enrollees determined SSI
                             eligible effective in 2003 and the Contractor
                           shall be responsible for providing services
                           under the terms of this agreement until the
                effective date of disenrollment.

               2.9.2.2.2.     Enrollees determined by the SSA to be eligible
                            for SSI prior to calendar year 2003 shall be
                               ineligible for services under the terms of this
                                agreement when DSHS receives the SSI eligibility
                    information from the Social Security
                                Administration through the electronic State Data
                      Exchange (SDX). Such enrollees will be
                         disenrolled prospectively as described in

 7

EX-10.6
14th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 14th
                                                        2003 HO & SCHIP Contract

                                Section 2.9.2.1. DSHS shall recoup premiums paid
                          prior to calendar year 2003 in accord with
Section 3.5.5.  

                2.9.2.2.3.     If the Contractor believes an enrollee has been
                             determined by SSA to be eligible for SSI, the
                              Contractor shall present documentation of such
                                eligibility to DSHS, DSHS will attempt to verify
                           the eligibility and, if the enrollee is SSI
                               eligible, DSHS will act upon SSI eligibility in
         accord with this section.

            2.9.3.    INVOLUNTARY TERMINATION INITIATED BY DSHS FOR COMPARABLE
COVERAGE OR DUAL COVERAGE:        

          2.9.3.1.       The Contractor shall notify DSHS as set forth
                            below when an enrollee has health care insurance
                              coverage with the Contractor or any other carrier:

         2.9.3.1.1.     Within fifteen (15) working days when an
                                enrollee is verified as having dual coverage, as
       defined in Section 1.5.

            2.9.3.1.2.     Within sixty (60) calendar days of when the
                             Contractor becomes aware that an enrollee has
                           any health care insurance coverage with any
                              other insurance carrier. The Contractor is not
                               responsible for the determination of comparable
                    coverage, as defined in Section 1.3.

             2.9.3.2.       DSHS will involuntarily terminate the enrollment
                            of any enrollee with dual coverage or comparable
coverage as follows:

              2.9.3.2.1.     When the enrollee has dual coverage which has
                           been verified by DSHS, DSHS shall terminate
                                enrollment retroactively to the beginning of the
                             month of dual coverage and recoup premiums as
        describe in Section 3.5.

                2.9.3.2.2.     When the enrollee has comparable coverage which
                               has been verified by DSHS, DSHS shall terminate
                                enrollment effective the first day of the second
                      month following the month in which the
                              termination is processed if the termination is
                                processed on or before the DSHS cut-off date for
                             enrollment or, effective the first day of the
                            third month following the month in which the
                              termination is processed if the termination is
                         processed after the DSHS cut-off date for
enrollment.     

 8

EX-10.6
15th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 15th
                                                        2003 HO & SCHIP Contract

           2.9.4.    INVOLUNTARY TERMINATION INITIATED BY THE CONTRACTOR: To
                 request involuntary termination of an enrollee, the
                      Contractor must send written notice to DSHS as described
                  in Section 7.5. DSHS shall approve or disapprove the
                     request for termination within thirty (30) working days
                  of receipt of such notice. For the termination to be
                   effective, DSHS must approve the termination request,
                    notify the Contractor, and disenroll the enrollee. The
                  Contractor shall continue to provide services to the
               enrollee until s/he is disenrolled. DSHS will not
                       disenroll an enrollee solely due to a request based on an
                   adverse change in the enrollee's health status or the
                   cost of meeting the enrollee's health care needs (WAC
               388-538-130, Exhibit B). DSHS shall involuntarily
            terminate the enrollee when the Contractor has
substantiated in writing:         

             2.9.4.1.       The enrollee's behavior is inconsistent with the
                       Contractor's rules and regulations, such as
   intentional misconduct.

     2.9.4.2.       The Contractor has provided a clinically
                             appropriate evaluation to determine whether there
                        is a treatable condition contributing to the
                          enrollee's behavior and such evaluation either
                            finds no treatable condition to be contributing,
                              or, after evaluation and treatment, the enrollee's
                           behavior continues to prevent the provider from
                             safely or prudently providing medical care to the
enrollee.           

          2.9.4.3.       The enrollee received written notice from the
                              Contractor of its intent to request the enrollee's
                     disenrollment, unless the requirement for
                            notification has been waived by DSHS because the
                              enrollee's conduct presents the threat of imminent
                          harm to others. The Contractor's notice to the
                enrollee must include the following:

             2.9.4.3.1.     The enrollee's right to use the Contractor's
                               appeal process to review the request to end the
      enrollee's enrollment.

          2.9.4.3.2.     The enrollee's right to use the DSHS fair
hearing process.

      2.9.5.    An enrollee whose enrollment is terminated for any
                      reason, other than incarceration, at any time during the
               month is entitled to receive covered services, as
                     described in Section 10.1, at the Contractor's expense,
through the end of that month.    

                 In no event will an enrollee be entitled to receive
                  services and benefits under this agreement after the
                     last day of the month in which his or her enrollment is
            terminated, except as provided in Section 3.7.

 9

EX-10.6
16th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 16th
                                                        2003 HO & SCHIP Contract

3.      PAYMENT                                                                 

 3.1.    RATES/PREMIUMS: Subject to the provisions of Section 7.7,
            Intermediate Sanctions, DSHS shall pay a monthly premium for
               each enrollee in full consideration of the work to be performed
          by the Contractor under this agreement. DSHS shall pay the
            Contractor, on or before the tenth (10th) working day of the
             month based on the DSHS list of enrollees whose enrollment is
             ongoing or effective on the first day of said calendar month.
              Such payment will be denied for new enrollees when, and for so
             long as, payment for those enrollees is denied by the Centers
               for Medicare and Medicaid Services (CMS) under 42 CFR 434.67(e)
(42 CFR 434.22).                                

       The Contractor shall reconcile the payment listing with
                remittance advice information and submit a claim to DSHS for any
               amount due the Contractor within three hundred sixty five (365)
         calendar days of the month of service. When DSHS' records
               confirm the Contractor's claim, DSHS shall remit payment within
      thirty (30) calendar days of the receipt of the claim.

3.1.1.    The statewide Base Rate is $129.88.         

         3.1.2.    The Geographical Adjustment Factors and First Quarter
                 Risk Adjustment Factors are in Exhibit D, Premiums,
Service Areas, and Capacity.      

  3.1.3.    The Age/Sex Adjustment Factors are as follows:

                                    Males        Females
                                    -----        -------
        Under age 1                2.778         2.778
        Ages 1-2                   0.899         0.899
        Ages 3-14                  0.468         0.468
        Ages 15-18                 0.531         1.872
        Ages 19-34                 0.847         2.314
        Ages 35-64                 1.639         2.057
        Age 65 and over            4.247         4.247

     3.1.4.    The monthly premium payment will be calculated as
follows:                          

                 Premium Payment = Base Rate X Age/Sex Factor X Risk
                Adjustment Factor X Geographical Adjustment Factor

       3.1.5.    The Risk Adjustment Factor will be recalculated for
                     premiums paid for May 2003 based on enrollment with the
                       Contractor on March 1, 2003 using encounter data reported
                      for the 12 months ending June 30, 2002. The recalculated
                       Risk Adjustment Factor shall be used by DSHS to calculate
                   premiums for May through December of 2003. DSHS shall

10

EX-10.6
17th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 17th
                                                        2003 HO & SCHIP Contract

                     update Exhibit D, Premiums, Service Areas, and Capacity
              to add the third quarter Risk Adjustment Factor.

      3.1.6.    DSHS shall automatically generate newborn premiums
                    whenever possible. For newborns whose premiums DSHS is
                     not able to automatically generate the Contractor shall
                   submit a supplemental premium payment request to DSHS
                     within 365 days of the month of service. The Contractor
                 shall be responsible for reviewing monthly listings
                  provided by DSHS of the newborn premiums DSHS cannot
                  generate automatically, as well as remittance advice
                     statements, to determine whether a supplemental premium
           request needs to be submitted. DSHS shall pay
                   supplemental premiums through the end of the month in
           which the sixtieth (60th) day of life occurs.

            3.1.7.    DSHS shall make a full monthly payment to the Contractor
                for the month in which an enrollee's enrollment is
             terminated except as otherwise provided herein.

           3.1.8.    The Contractor shall be responsible for covered medical
                      services provided to the enrollee in any month for which
                    DSHS paid the Contractor for the enrollee's care under
the terms of this agreement.      

   3.2.    DELIVERY CASE RATE PAYMENT: A one-time payment of $4,300.00
               shall be made to the Contractor for labor and delivery expenses
              for enrollees enrolled with the Contractor during the month of
                delivery. Delivery includes both live and still births, but does
                not include miscarriage, induced abortion, or other fetal demise
                not requiring labor and delivery to terminate the pregnancy. The
          Contractor shall submit a supplemental premium request for
payment to DSHS after the enrollee delivers.    

      3.3.    RENEGOTIATION OF RATES: The base rate set forth in Section 3.1
             shall be subject to renegotiation during the agreement period
         only if DSHS, in its sole judgment, determines that it is
          necessary due to a change in federal or state law or other
              material changes, beyond the Contractor's control, which would
justify such a renegotiation.                   

3.4.    REINSURANCE/RISK PROTECTION: The Contractor may obtain  
                reinsurance for coverage of enrollees only to the extent that it
         obtains such reinsurance for other groups enrolled by the
           Contractor, provided that the Contractor remains ultimately
liable to DSHS for the services rendered.       

   3.5.    RECOUPMENTS: Unless mutually agreed to by the parties, DSHS
         shall only recoup premium payments for enrollees who are:

3.5.1.    Dually-covered with the Contractor.         

11

EX-10.6
18th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 18th
                                                        2003 HO & SCHIP Contract

      3.5.2.    Deceased prior to the month of enrollment. Premium
                       payments shall be recouped effective the first day of the
           month following the enrollee's date of death.

           3.5.3.    Retroactively disenrolled as a result of the enrollee's
placement in foster care.         

            3.5.4.    Retroactively disenrolled consistent with the provisions
of Section 2.9.1.                 

     3.5.5.    Determined to have been eligible for SSI prior to
                       calendar year 2003 in accord with Section 2.9.2.2.2. DSHS
                  shall recoup calendar year 2002 premiums paid in and
                    subsequent to the month of SSI eligibility. DSHS shall
only recoup premiums paid in 2002.

           3.5.6.    Found ineligible for enrollment with the Contractor and
                     DSHS so notifies the Contractor before the first day of
      the month for which the premium is paid.

            3.5.7.    The Contractor may recoup payments made to providers for
                  services provided to enrollees during the period for
                     which DSHS recoups premiums for those enrollees. If the
                    Contractor recoups said payments, providers may submit
                    appropriate claims for payment to DSHS through its FFS
program.                          

    3.6.    ENROLLEE HOSPITALIZED AT ENROLLMENT: If an enrollee is in an
         acute care hospital at the time of enrollment and was not
              enrolled in Healthy Options/SCHIP on the day s/he was admitted
             to the hospital, DSHS shall be responsible for payment of all
              inpatient facility and professional services provided from the
          date of admission until the date the enrollee is no longer
                confined to an acute care hospital. If the enrollee was enrolled
            in Healthy Options/SCHIP on the day s/he was admitted to the
             hospital, then the plan the enrollee was enrolled with on the
            date of admission shall be responsible for payment until the
        date the enrollee is no longer confined to an acute care
               hospital. For newborns born while their mother is hospitalized,
      the party responsible for the payment for the mother's
       hospitalization shall be responsible for payment of all
            inpatient facility and professional services provided to the
                newborn from the date of admission until the date the newborn is
        no longer confined to an acute care hospital. If DSHS is
     responsible for payment of all inpatient facility and
            professional services provided to a mother and newborn, DSHS
           shall not pay the Contractor a Delivery Case Rate under the
provisions of Section 3.2.                      

       3.7.    ENROLLEE HOSPITALIZED AT DISENROLLMENT: If an enrollee is in an
        acute care hospital at the time of disenrollment and the
        enrollee was enrolled with the Contractor on the date of
             admission, the Contractor shall be responsible for payment of
             all covered inpatient facility and professional services from
the                                             

12

EX-10.6
19th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 19th
                                                        2003 HO & SCHIP Contract

                date of admission to the date the enrollee is no longer confined
to an acute care hospital.                      

  3.8.    THIRD-PARTY LIABILITY (TPL): Until such time as DSHS shall
          terminate the enrollment of an enrollee who has comparable
         coverage as described in Section 2.9.3., the services and
             benefits available under this agreement shall be secondary to
 any other medical coverage. The Contractor shall:

     3.8.1.    Not refuse or reduce services provided under this
                       agreement solely due to the existence of similar benefits
                 provided under any other health care contracts (RCW
              48.21.200), except in accordance with applicable
           coordination of benefits rules in WAC 284-51.

             3.8.2.    Attempt to recover any third-party resources available to
                 enrollees (42 CFR 433 Subpart D) and shall make all
                 records pertaining to TPL collections for enrollees
available for audit and review.   

         3.8.3.    Pay claims for prenatal care and preventive pediatric
                     care and then seek reimbursement from third parties (42
CFR 433.139(b)(3)).               

             3.8.4.    Pay claims for covered services when probable third party
                   liability has not been established or the third party
                      benefits are not available to pay a claim at the time it
is filed (42 CFR 433.139(c)).     

   3.8.5.    Communicate the requirements of this section to
                     subcontractors that provide services under the terms of
              this agreement, and assure compliance with them.

   3.9.    SUBROGATION RIGHTS OF THIRD-PARTY LIABILITY: Injured person
               means an enrollee covered by this agreement who sustains bodily
               injury. Contractor's medical expense means the expense incurred
         by the Contractor for the care or treatment of the injury
      sustained computed in accordance with the Contractor's
fee-for-service schedule.                       

               If an enrollee requires medical services from the Contractor as
              a result of an alleged act or omission by a third-party giving
               rise to a claim of legal liability against the third-party, the
              Contractor shall have the right to obtain recovery of its cost
    of providing benefits to the injured person from the
            third-party. DSHS specifically assigns to the Contractor the
          DSHS' rights to such third party payments for medical care
             provided to an enrollee on behalf of DSHS, which the enrollee
 assigned to DSHS as provided in WAC 388-505-0540.

                DSHS also assigns to the Contractor its statutory lien under RCW
           43.20B.060. The Contractor shall be subrogated to the DSHS'
          rights and remedies under RCW 74.09.180 and RCW 43.20B.040
through RCW                                     

13

EX-10.6
20th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 20th
                                                        2003 HO & SCHIP Contract

       43.20B.070 with respect to medical benefits provided to
enrollees on behalf of DSHS under RCW 74.09.    

              The Contractor may obtain a signed agreement from the enrollee
            in which the enrollee agrees to fully cooperate in effecting
             collection from persons causing the injury. The agreement may
        provide that if an injured party settles a claim without
                protecting the Contractor's interest, the injured party shall be
              liable to the Contractor for the full cost of medical services
               provided by the Contractor. The Contractor shall notify DSHS of
           the name, address, and other identifying information of any
                enrollee and the enrollee's attorney who settles a claim without
            protecting the Contractor's interest in contravention of RCW
43.20B.050.                                     

4.      ACCESS AND CAPACITY                                                     

4.1.    NETWORK CAPACITY:                                       

          4.1.1.    The Contractor agrees to maintain the support services
                     and a provider network sufficient to serve the enrollee
                    capacity stated in Exhibit D, Premiums, Service Areas,
                    and Capacity, consistent with the requirements of this
                     agreement. The Contractor agrees to provide the medical
         services required by this agreement through
           non-participating providers if its network of
                 participating providers is insufficient to meet the
                    medical needs of enrollees in a manner consistent with
this agreement.                   

         4.1.2.    With the written approval of DSHS, the Contractor may
                       increase capacity at any time by giving written notice to
             DSHS, along with evidence, as DSHS may require,
                   demonstrating the Contractor's ability to support the
                capacity increase. DSHS may withhold approval of a
                      requested capacity increase, if, in DSHS' sole judgment,
                   the requested increase is not in the best interest of
                       DSHS. The Contractor may decrease capacity by giving DSHS
                     ninety (90) days written notice. The decrease shall not
                       be effective until the first day of the month which falls
                after the ninety (90) days has elapsed. Exhibit D,
                      Premiums, Service Areas, and Capacity will be updated by
           DSHS for increases and decreases in capacity.

     4.2.    ACCESSIBILITY OF SERVICES: The Contractor shall make services
        accessible consistent with the provisions in the Quality
             Improvement Program 2003 Standards, Exhibit A. The Contractor
            shall make covered services as accessible to enrollees under
            this agreement as under its other state, federal, or private
contracts.                                      

  4.3.    24/7 AVAILABILITY: The Contractor shall have the following
                services available on a 24-hour-a-day, seven-day-a-week basis by
telephone. These services                       

14

EX-10.6
21st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 21st
                                                        2003 HO & SCHIP Contract

              may be provided directly by the Contractor or may be delegated
to subcontractors.                              

          4.3.1.    Medical advice for enrollees from licensed health care
                      professionals concerning the emergent, urgent or routine
nature of medical condition.      

       4.3.2.    Authorization of emergency services and out-of-area
urgent care.                      

4.4.    APPOINTMENT STANDARDS: The Contractor shall comply with 
            appointment standards that are no longer than the following:

        4.4.1.    Non-symptomatic (i.e. preventive care) office visits
              shall be available from the enrollee's PCP or an
                  alternative practitioner within thirty (30) calendar
                      days. A non-symptomatic office visit may include, but is
                   not limited to, well/preventive care such as physical
                 examinations, annual gynecological examinations, or
children and adult immunizations. 

             4.4.2.    Non-urgent, symptomatic (i.e., routine care) office visit
              shall be available from the enrollee's PCP or an
                      alternative practitioner within seven (7) calendar days.
                       A non-urgent, symptomatic office visit is associated with
                       the presentation of medical signs not requiring immediate
attention.                        

        4.4.3.    Urgent, symptomatic office visits shall be available
              within 24 hours. An urgent, symptomatic visit is
                    associated with the presentation of medical signs that
           require immediate attention, but are not life
threatening.                      

          4.4.4.    Emergency medical care shall be available 24 hours per
day, seven days per week.         

        4.5.    PROVIDER NETWORK - DISTANCE STANDARDS: The Contractor network of
          providers shall meet the distance standards below in every
                service area. The designation of a zip code in a service area as
            rural or urban is in Exhibit D, Premiums, Service Areas, and
               Capacity. DSHS may, at its sole discretion, grant exceptions to
              the distance standards. DSHS' approval of an exception must be
                in writing. The Contractor shall request an exception in writing
             and shall provide evidence as DSHS may require to support the
        request. If the closest qualified provider is beyond the
          distance standard applicable to the zip code, the distance
               standard defaults to the distance to that provider. The closest
               qualified provider may be a provider not participating with the
Contractor.                                     

4.5.1.    PCP                                         

15

EX-10.6
22nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 22nd
                                                        2003 HO & SCHIP Contract

          Urban: 2 within 10 miles for 90% of Healthy Options enrollees in
the Contractor's service area                         

          Rural: 1 within 25 miles for 90% of Healthy Options enrollees in
the contractor's service area                         

4.5.2.    Obstetrics                                  

          Urban: 2 within 10 miles for 90% of Healthy Options enrollees in
the contractor's service area                         

          Rural: 1 within 25 miles for 90% of Healthy Options enrollees in
the contractor's service area                         

4.5.3.    Pediatrician                                

          Urban: 2 within 10 miles for 90% of Healthy Options enrollees in
the contractor's service area                         

          Rural: 1 within 25 miles for 90% of Healthy Options enrollees in
the contractor's service area                         

4.5.4.    Hospital                                    

   Urban/Rural: 1 within 25 miles for 90% of Healthy Options
enrollees in the contractor's service area            

4.5.5.    Pharmacy                                    

          Urban: 1 within 10 miles for 90% of Healthy Options enrollees in
the contractor's service area                         

          Rural: 1 within 25 miles for 90% of Healthy Options enrollees in
the contractor's service area                         

  4.6.    ACCESS TO SPECIALTY CARE: The Contractor shall provide all
             medically necessary specialty care for enrollees in a service
               area. If an enrollee needs specialty care from a specialist who
              is not available within the Contractor's provider network, the
                Contractor shall provide the necessary services with a qualified
     specialist outside the Contractor's provider network.

   4.7.    EQUAL ACCESS FOR ENROLLEES WITH COMMUNICATION BARRIERS: The
                Contractor shall assure equal access for all enrollees when oral
        or written language creates a barrier to such access for
Enrollees with Communication Barriers           

16

EX-10.6
23rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 23rd
                                                        2003 HO & SCHIP Contract

4.7.1.    ORAL INFORMATION:                           

         4.7.1.1.       The Contractor shall assure that interpreter
                              services are provided for enrollees with a primary
                            language other than English for all interactions
                             between the enrollee and the Contractor or any of
                            its providers including, but not limited to, all
                          appointments with any provider for any covered
                      service, emergency services, and all steps
                     necessary to file complaints and appeals.

          4.7.1.2.       The Contractor is responsible for payment for
                        interpreter services for plan administrative
                          matters including, but not limited to handling
            enrollee complaints and appeals.

            4.7.1.3.       DSHS is responsible for payment for interpreter
                     services provided by interpreter agencies
                            contracted with the state for outpatient medical
          visits and DSHS fair hearings.

      4.7.1.4.       Hospitals are responsible for payment for
                        interpreter services during inpatient stays.

            4.7.1.5.       Public entities are responsible for payment for
                             interpreter services provided at their facilities
or affiliated sites.

          4.7.1.6.       Interpreter services include the provision of
                              interpreters for enrollees who are deaf or hearing
impaired.           

4.7.2.    WRITTEN INFORMATION:                        

       4.7.2.1.       The Contractor shall provide all generally
                              available and client specific written materials in
                             a form which may be understood by each individual
                              enrollee. The Contractor may meet this requirement
          by doing one of the following:

             4.7.2.1.1.     Translating the material into the enrollee's
         primary reading language.

                 4.7.2.1.2.     Providing the material on tape in the enrollee's
 primary language.

               4.7.2.1.3.     Having an interpreter read the material to the
                            enrollee in the enrollee's primary language.

              4.7.2.1.4.     Providing the material in another alternative
                                medium or format acceptable to the enrollee. The
                       Contractor must document the enrollee's
              acceptance of the alternative.

17

EX-10.6
24th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 24th
                                                        2003 HO & SCHIP Contract

          4.7.2.1.5.     Providing the material in English, if the
                              Contractor documents the enrollee's preference
                  for receiving material in English.

         4.7.2.2.       The Contractor shall ensure that all written
                information provided to enrollees is
                             comprehensible to its intended audience, designed
                            to provide the greatest degree of understanding,
                            and is written at the sixth grade reading level.
                           Generally available, written materials shall be
consumer tested.    

  4.8.    AMERICANS WITH DISABILITIES ACT: The Contractor shall make
            reasonable accommodation for enrollees with disabilities, in
                accord with the Americans with Disabilities Act, for all covered
             services and shall assure physical and communication barriers
            shall not inhibit enrollees with disabilities from obtaining
covered services.                               

     4.9.    CAPACITY LIMITS AND ORDER OF ACCEPTANCE: The Contractor shall
              provide care to enrollees up to the capacity limits in Exhibit
              D, Premiums, Service Areas, and Capacity. The Contractor shall
               accept enrollees up to the total capacity limit in each service
               area, and enrollees will be accepted in the order in which they
      apply. DSHS shall enroll all eligible clients with the
                contractor of their choice if the contractor has not reached the
            capacity limit unless DSHS determines, in its sole judgment,
      that it is in DSHS' best interest to withhold or limit
           enrollment with the Contractor. The Contractor shall accept
        clients who are assigned by DSHS in accordance with this
              agreement, WAC 388-538, Exhibit B, and WAC 388-542, Exhibit E,
except as specifically provided in Section 2.8. 

                No eligible client shall be refused enrollment or re-enrollment,
               have his/her enrollment terminated, or be discriminated against
               in any way because of his/her health status, the existence of a
              pre-existing physical or mental condition, including pregnancy
          and/or hospitalization, or the expectation of the need for
frequent or high cost care.                     

4.10.   ASSIGNMENT OF ENROLLEES:                                

        4.10.1.   Enrollees who do not select a plan in a service area
                    identified by DSHS as having mandatory enrollment into
                       managed care shall be assigned to a plan in the following
manner:                           

           4.10.1.1       DSHS shall determine the total capacity of all
                             contractors receiving assignments in each service
area.               

               4.10.1.2.      The Contractor's capacity in each service area, as
                             stated in Exhibit D, Premiums, Service Areas, and
                            Capacity, modified by increases and decreases in
                        capacity made in accord with this agreement,

18

EX-10.6
25th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 25th
                                                        2003 HO & SCHIP Contract

                         shall be divided by the total capacity of all
                            contractors receiving assignment in each service
area.               

               4.10.1.3.      The result of the calculation in 4.10.1.2. will be
                           multiplied by the total of the households to be
assigned.           

       4.10.1.4.      DSHS shall assign the number of households
                      determined in 4.10.1.3. to the Contractor.

           4.10.2.   DSHS shall not make any assignments of enrollees to the
              Contractor in a service area if the Contractor's
                     enrollment, when DSHS calculates assignments, is ninety
                   percent (90%) or more of its capacity in that service
area.                             

           4.10.3.   The Contractor may choose not to receive assignments or
                   limit assignments in any service area by so notifying
                    DSHS in writing at least seventy-five (75) days before
                    the first of the month it is requesting not to receive
assignment of enrollees.          

         4.10.4.   DSHS reserves the right to make no assignments, or to
                       withhold or limit assignments to the Contractor, when, in
                    its sole judgment, it is in the best interest of DSHS.

          4.10.5.   If either the Contractor or DSHS limits assignments as
                       described herein, the Contractor's capacity, only for the
                     purposes of the calculation in 4.10.1.2., shall be that
limit.                            

    4.10.6.   Assigned enrollees are notified by DSHS of their
                assignment and may choose a different managed care
               organization prior to the effective date of their
assignment.                       

4.11.   PROVIDER NETWORK CHANGES:                               

           4.11.1.   The Contractor shall give DSHS a minimum of ninety (90)
                    calendar days prior written notice, in accordance with
                       Section 7.5, Notices, of the loss of a material provider.
                    A material provider is one whose loss would impair the
                      Contractor's ability to provide continuity of and access
                       to care for the Contractor's current enrollees and/or the
                       number of enrollees the Contractor has agreed to serve in
a service area.                   

         4.11.2.   The Contractor shall notify enrollees affected by any
                    provider termination sixty (60) calendar days prior to
                     the effective date. Notices must have prior approval of
              DSHS. If the Contractor fails to notify affected
                     enrollees of a provider termination sixty (60) calendar
                    days prior to the effective date, the Contractor shall
                      allow affected enrollees to continue to receive services
   from the terminating provider, at the

19

EX-10.6
26th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 26th
                                                        2003 HO & SCHIP Contract

                       enrollees' option, and administer benefits for the lessor
                   of a period ending the last day of the month in which
                sixty (60) calendar days elapses from the date the
                       Contractor notifies enrollees or the enrollee's effective
   date of enrollment with another plan.

        4.12.   WOMEN'S HEALTH CARE SERVICES: In the provision of women's health
              care services, the Contractor shall comply with the provisions
of WAC 284-43-250, as modified.                 

     4.13.   MATERNITY NEWBORN LENGTH OF STAY: The Contractor shall ensure
               that hospital delivery maternity care is provided in accordance
with RCW 48.43.115.                             

5.      QUALITY OF CARE                                                         

    5.1.    QUALITY IMPROVEMENT PROGRAM: The Contractor shall maintain a
              quality improvement program that meets the requirements of the
          Quality Improvement Program 2003 Standards, Exhibit A. The
            Contractor shall, during the annual TEAMonitor visit or upon
             request by DSHS, provide evidence of how data and information
             provided by DSHS, including external quality review findings,
          agency audits and contract monitoring activities, enrollee
                complaint and CAHPS(R) results, are used to identify and correct
       problems and to improve care and services to enrollees.

       5.2.    ACCREDITATION: If the Contractor has had an accreditation visit
                by NCQA or other accrediting body, the Contractor shall make the
           complete accreditation survey report from the accreditation
           organization available to DSHS upon request. The Contractor
   shall allow a state representative to accompany any
              accreditation review team during the site visit in an official
             observer status. The state representative shall be allowed to
              share information with DSHS and Health Care Authority staff as
                needed to reduce duplicated work for both the Contractor and the
state.                                          

   5.3.    REQUIREMENTS FOR DENIED, DISCONTINUED, OR MODIFIED SERVICE:

         5.3.1.    If the Contractor denies, discontinues, or modifies a
                  service, the Contractor shall comply with the notice
                  requirements in the Quality Improvement Program 2003
                      Standards, Exhibit A, and any other pertinent provisions
                     of this agreement, in providing notice to enrollees and
providers.                        

           5.3.2.    If the notice does not meet the timeliness standards in
                     the Quality Improvement Program 2003 Standards, Exhibit
                      A, and any other pertinent provisions of this agreement,
     the Contractor shall cover the service.

20

EX-10.6
27th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 27th
                                                        2003 HO & SCHIP Contract

        5.3.3.    If the Contractor denies, discontinues or modifies a
             medically necessary covered service because the
                      enrollee's whereabouts are unknown, the Contractor shall
                   reinstate the service when the enrollee's whereabouts
become known.                     

             5.3.4.    If the enrollee receives the service before receiving the
             notice, the Contractor shall cover the service.

         5.3.5.    If an enrollee files an appeal, including independent
                     review, or DSHS fair hearing on a service that is being
                     discontinued or modified, the Contractor shall continue
                     to provide the discontinued or modified service until a
final decision is made.           

          5.3.6.    The Contractor may seek reimbursement of the amount it
                  actually paid to continue to provide discontinued or
                       modified services, while such services are the subject of
                   an appeal, including independent review, or DSHS fair
                hearing, if the final decision determines that the
                   services are non-covered services and if the affected
                  enrollee is fully informed in writing, in advance of
                 receiving the continued services, that they will be
                     required to pay for continued services determined to be
non-covered.                      

        5.3.7.    Sections 5.3.1., 5.3.2., 5.3.3., 5.3.4., 5.3.5., and
             5.3.6. only apply to denial, discontinuance, or
                  modification of services of participating providers,
                  services from a provider to whom the Contractor or a
                  participating provider has made a referral, services
                    previously authorized by the Contractor, and emergency
                       medical services as described in the Schedule of Benefits
Section 11.1.6.                   

      5.4.    ENROLLEE COMPLAINTS AND APPEALS, INCLUDING INDEPENDENT REVIEW:
      The Contractor shall maintain a process that meets the
             requirements in the Quality Improvement Program Standards and
              other pertinent provisions of this agreement for responding to
                enrollee complaints and appeals. DSHS shall approve, in writing,
             all policies and procedures regarding complaints and appeals.
          All procedures for responding to appeals shall include the
      participation of individuals with authority to require
corrective action (42 CFR 434.32 (c)).          

           The Contractor shall also comply with the provisions of WAC
  284-43-630 regarding independent review of adverse
     determinations by an independent review organization.

5.5.    FAIR HEARING:                                           

          5.5.1.    Enrollees may request a DSHS fair hearing, pursuant to
                  WAC 388-02, without first availing themselves of the
Contractor's complaint and appeal 

21

EX-10.6
28th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 28th
                                                        2003 HO & SCHIP Contract

                 process, if the subject matter is one for which the
                    enrollee has a fair hearing right under RCW 34.05, and
WAC 388-02 or WAC 388-538.        

        5.5.2.    If the enrollee requests a DSHS fair hearing without
                     first exhausting the remedies available to the enrollee
                    through the Contractor's complaint and appeal process,
                  including independent review, and DSHS issues a fair
                       hearing determination, the fair hearing shall exhaust the
                       enrollee's rights to administrative review of the subject
                       of the fair hearing, except as provided in section 5.5.6.

           5.5.3.    If the enrollee requests a fair hearing, the Contractor
              shall provide to DSHS, at DSHS' written request,
          Contractor-held documentation related to the
                     complaint/appeal, if any, including but not limited to,
                     any transcript(s), records, or written decision(s) from
                participating providers or delegated entities. The
                  Contractor shall have the opportunity to present its
                    position at the fair hearing. The Contractor's medical
                      director or designee shall review all cases where a fair
                hearing is requested and any related appeals, when
medical necessity is an issue.    

            5.5.4.    When an enrollee requests a fair hearing with DSHS, DSHS
   shall review the request, as follows:

             5.5.4.1.       A program manager will investigate and determine
                          the facts of the complaint/appeal. The program
                              manager may hold a pre-hearing conference with the
                           enrollee to clarify the issue(s). Other parties
                          may be contacted as appropriate to resolve the
                        complaint/appeal. Other staff of DSHS may be
                        involved as necessary. The DSHS, MAA Medical
                        Director shall review any issue(s) involving
    denied medical services.

              5.5.4.2.       Based on the review of facts, the program manager
                              will respond to the complaint/appeal. The response
                             may include, but not be limited to, clarification
                              of program policy to parties who have not acted in
   accord with the policy.

           5.5.4.3.       If the matter is not resolved at a pre-hearing
                          conference, the program manager will prepare a
                           written report of the results of the review for
                            the administrative law judge. The report and all
                        supporting documentation will be sent to the
                            enrollee, the enrollee's representative, if any,
and the Contractor. 

    5.5.5.    DSHS shall notify the Contractor of fair hearing
                       determinations. The Contractor shall be bound by the fair
                    hearing determination, whether or not the fair hearing
              determination upholds the Contractor's decision.
                       Implementation of such fair hearing decision shall not be
                the basis for disenrollment of the enrollee by the
Contractor.                       

22

EX-10.6
29th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 29th
                                                        2003 HO & SCHIP Contract

                    If the fair hearing decision is not within the purview
                   of this agreement, then DSHS shall be responsible for
              the implementation of the fair hearing decision.

             5.5.6.    An enrollee who is aggrieved by the final decision in the
                      DSHS' fair hearing proceeding may appeal the decision in
                     accordance with WAC 388-02-0560--388-02-0590. Notice of
                      this right will be included in the written determination
from the administrative law judge.

5.6.    EPSDT/CHILDHOOD IMMUNIZATION:                           

             5.6.1.    The Contractor shall meet all requirements under the DSHS
                   EPSDT program policy and billing instructions manual.

            5.6.2.    If any of the Contractor's Health Plan Employer Data and
                       Information Set (HEDIS(R)) Infant Well Child Visit, Child
               Well Child Visit, Adolescent Well Child Visit, or
                       Childhood Immunization reported rates fall below 60%, the
             Contractor shall include an appropriate quality
                      improvement project designed to improve the rates in the
                  Contractor's Quality Improvement work plan and shall
 implement appropriate intervention.

       5.6.3.    Active Participation in a DSHS sponsored well child
                       quality improvement program or an appropriate alternative
                       program approved by DSHS, MAA Quality Management fulfills
                       the requirement under Section 5.6.2. Alternative programs
                   must document: a description and scope of the program
                 with identified problem(s), goals and objectives; a
                  workplan with specific QI activities, timeframes and
               person(s) responsible for each; sound measurement
              methodology; barrier and root cause analysis; an
                   evaluation of outcomes; and re-measurement and strong
         interventions designed to improve outcomes.

      5.7.    PROVIDER EDUCATION: The Contractor shall maintain a system for
          keeping participating practitioners and providers informed
about:                                          

    5.7.1.    Covered services for enrollees served under this
agreement                         

5.7.2.    Coordination of care requirements; and      

5.7.3.    DSHS policies as related to this agreement. 

       5.7.4.    Interpretation of data from the quality improvement
program (42 CFR 434.34(d)).       

5.8.    CLAIMS PAYMENT STANDARDS: The Contractor shall meet the 
      timeliness of payment standards specified for Medicaid
fee-for-service in Section                      

23

EX-10.6
30th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 30th
                                                        2003 HO & SCHIP Contract

           1902(a)(37)(A) of the Social Security Act and specified for
            health carriers in WAC 284-43-321. To be compliant with both
             payment standards the Contractor shall pay or deny, and shall
          require subcontractors to pay or deny, 95% of clean claims
              within thirty (30) calendar days of receipt, 95% of all claims
                within sixty (60) of receipt and 99% of all claims within ninety
               (90) calendar days of receipt. The Contractor and its providers
             may agree to a different payment requirement in writing on an
individual claim.                               

       5.9.    QUALITY IMPROVEMENT STUDIES: The Contractor shall conduct three
quality improvement studies.                    

           5.9.1.    Two studies shall be based upon the following questions
from the 2002 CAHPS(R) survey:    

              5.9.1.1.       In the last 6 months, how often were office staff
                        at your child's doctor's office or clinic as
                  helpful as you thought they should be?

              5.9.1.2.       In the last 6 months, when your child needed care
                             right away for an illness or an injury, how often
                          did your child get care as soon as you wanted?

          5.9.1.3.       The requirement for either of the two studies
                       shall be waived by DSHS if the Contractor's
                           unadjusted percentages for the response rate of
                            "Always" are above the 2001 National Committee's
                        Benchmarking Database (NCBD) data. Sixty-one
                        percent is the benchmark for the question in
                           Section 5.9.1,1. and sixty-seven percent is the
                          benchmark for the question in Section 5.9.1.2.
                             DSHS will notify the Contractor in writing if the
  requirement is waived.

         5.9.2.    The Contractor shall participate in a third statewide
                     quality improvement study designated by DSHS. The study
                     shall be designed to maximize resources and reduce cost
to contractors.                   

        5.10.   HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA): The
             Contractor shall comply with the applicable provisions of the
              Health Insurance Portability and Accountability Act (HIPAA) of
              1996, codified at 42 USC 1320(d) et.seq. and 45 CFR parts 160,
      162, and 164. HIPAA requires the Contractor to conduct
            electronic financial and administrative transactions using a
          mandatory format and content. The Contractor must have the
       capacity to conduct all transactions required by HIPAA,
                including but not limited to the ability to accept the following
        transactions from the Medical Assistance Administration:

        5.10.1.   The ASC X12 834 - Benefit Enrollment and Maintenance
Version 4010.                     

24

EX-10.6
31st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 31st
                                                        2003 HO & SCHIP Contract

      5.10.2.   The ASC X12 820 - Payroll Deducted and Other Group
                  Premium Payment for Insurance Products, Version 4010
Premium Payment transaction.      

   5.11.   PRACTICE GUIDELINES: The Contractor shall adopt of practice
               guidelines that meet the following requirements (42 CFR 438.6):

          5.11.1.   Are based on valid and reliable clinical evidence or a
                      consensus of health care professionals in the particular
field.                            

5.11.2.   Consider the needs of enrollees.            

            5.11.3.   Are adopted in consultation with contracting health care
professionals.                    

         5.11.4.   Are reviewed and updated periodically as appropriate.

        5.11.5.   Are disseminated to all affected providers and, upon
                  request, to DSHS, enrollees and potential enrollees.

           5.11.6.   Are the basis for and are consistent with decisions for
                     utilization management, enrollee education, coverage of
                      services, and other areas to which the guidelines apply.

 5.12.   ADVANCE DIRECTIVES: The Contractor shall maintain written
            policies and procedures for advance directives with meet the
      requirements of WAC 388-501-0125 and 42 CFR 438.6. The
              Contractor's Advance directive policies and procedure shall be
            disseminated to all affected providers and, upon request, to
DSHS, enrollees and potential enrollees.        

6.      REPORTING REQUIREMENTS:                                                 

        6.1.    CERTIFICATION REQUIREMENTS: Any information and/or data required
            by this agreement and submitted to DSHS after March 31, 2003
              must be certified by the Contractor as follows (42 CFR 438.600
through 42 CFR 438.606):                        

             6.1.1.    Source of certification: The information and/or data must
   be certified by one of the following:

     6.1.1.1.       The Contractor's Chief Executive Officer

     6.1.1.2.       The Contractor's Chief Financial Officer

              6.1.1.3.       An individual who has delegated authority to sign
                              for, and who reports directly to, the Contractor's
                              Chief Executive Officer or Chief Financial Officer

25

EX-10.6
32nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 32nd
                                                        2003 HO & SCHIP Contract

            6.1.2.    Content of certification: The Contractor's certification
                     shall attest, based on best knowledge, information, and
                       belief, to the accuracy, completeness and truthfulness of
the information and/or data.      

            6.1.3.    Timing of certification: The Contractor shall submit the
                       certification concurrently with the certified information
and/or data.                      

        6.2.    HEDIS(R) MEASURES: The Contractor shall report to DSHS (for both
            Healthy Options and SCHIP enrollees), the following HEDIS(R)
             measures in accord with the published HEDIS(R) 2003 Technical
          Specifications and official corrections published by NCQA,
unless directed otherwise in writing by DSHS.   

       6.2.1.    No later than June 30, 2003, the following HEDIS(R)
                      measures shall be submitted electronically to DSHS using
  the NCQA data submission tool (DST):

6.2.1.1.       Childhood Immunization Status      

6.2.1.2.       Prenatal and Postpartum Care       

             6.2.1.3.       Well Child Visits in the First 15 Months of Life

              6.2.1.4.       Well Child Visits in the Third, Fourth, Fifth and
Sixth Years of Life 

6.2.1.5.       Adolescent Well Child Visits       

           6.2.1.6.       Use of Appropriate Medications for People with
Asthma              

 6.2.1.7.       Antidepressant Medication Management

              6.2.1.8.       Inpatient Utilization-General Hospital/Acute Care

6.2.1.9.       Ambulatory Care                    

       6.2.1.10.      Birth and Average Length of Stay, Newborns

            6.2.2.    All measures shall be audited, at Contractor expense, by
                    an NCQA licensed organization in accord with the HEDIS
                2003 COMPLIANCE AUDIT (TM) standards, policies and
                     procedures. The signed and certified audit report shall
               be submitted to DSHS no later than July 31, 2003.

              6.2.2.1.       If the Contractor has current NCQA accreditation,
                           including Medicaid, a full audit, as defined by
NCQA, is allowed.   

26

EX-10.6
33rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 33rd
                                                        2003 HO & SCHIP Contract

         6.2.2.2.       If the Contractor does not have current NCQA
                        accreditation, including Medicaid, a partial
                         audit, as defined by NCQA, must be conducted.

     6.2.3.    If the Contractor has current NCQA accreditation,
                    including Medicaid, the Contractor may rotate HEDIS(R)
                       measures in accord with the most current requirements for
                      the HEDIS(R) rotation strategy published by NCQA. If the
                  Contractor does not have current NCQA accreditation,
               including Medicaid, the Contractor may not rotate
                     measures, unless directed otherwise in writing by DSHS.

6.3.    ENCOUNTER DATA:                                         

       6.2.1.    The Contractor shall comply with the Encounter Data
   Submission Requirements, Exhibit C-1.

 6.2.2.    DSHS may change the Encounter Data Submission
                   Requirements, Exhibit C-1, with one hundred and fifty
                       (150) calendar days written notice to the Contractor. The
                      Contractor shall, upon receipt of such notice from DSHS,
          provide notice of changes to subcontractors.

            6.2.3.    The Contractor shall correct rejected encounter data and
                      resubmit within the timelines specified in the Encounter
        Data Submission Requirements, Exhibit C-1.

         6.2.4.    The Contractor shall correct errors indicated in each
            DSHS encounter data error report in succeeding
                      submissions in accord with the Encounter Data Submission
Requirements, Exhibit C-1.        

        6.2.5.    The Contractor may request that DSHS waive reporting
                      requirements. Such request shall be in writing and shall
                   be approved at the sole discretion of DSHS. DSHS also
                     reserves the right to waive data reporting requirements
                     under exceptional circumstances. Any waiver shall be in
writing.                          

6.4.    INTEGRATED PROVIDER NETWORK DATABASE (IPND):            

         6.4.1.    The Contractor shall provide monthly provider network
                  reports to the designated data management contact in
                      accord with the Provider Network Reporting Requirements,
Exhibit C-2 (a).                  

          6.4.2.    DSHS will identify records that do not comply with the
                  Provider Network Reporting Requirements in a monthly
                     report to the Contractor. DSHS will identify records as
                   being rejected or containing errors. Rejected records
                will not appear in the Integrated Provider Network
Database (IPND) for that month.   

27

EX-10.6
34th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 34th
                                                        2003 HO & SCHIP Contract

         6.4.3.    The Contractor shall review records identified on the
                reject and error reports, and make corrections for
subsequent monthly submissions.   

             6.4.4.    Failure to comply with the data submission schedule shall
                 result in the implementation of the IPND Escalation
Procedure, Exhibit C-2 (b).       

        6.5.    MONTHLY ADJUSTMENT REPORT FOR FQHC/RHC ENROLLEES: The Contractor
               shall provide DSHS with a monthly report for enrollees enrolled
               with federally-qualified health centers (FQHC) and rural health
          clinics (RHC), in the format described in the DSHS Healthy
               Options Licensed Health Carrier Billing Instructions, published
by DSHS.                                        

     6.6.    ENROLLEE MORTALITY: The Contractor shall maintain a record of
             known enrollee deaths, including the enrollee's name, date of
              birth, age at death, location of death, and cause(s) of death.
             This information shall be available to DSHS upon request. The
               Contractor shall assist DSHS in efforts to evaluate and improve
              the availability and utility of selected mortality information
for quality improvement purposes.               

  6.7.    CAHPS(R): The contractor is required to conduct a CAHPS(R)
             survey of adult Medicaid members enrolled in Healthy Options.
The Contractor shall:                           

  6.7.1.    Ensure the survey sample frame consists of all
                     non-Medicare and non-commercial adult plan members (not
                     just subscribers) 18 years and older, as of December 31
                       of the measurement year, with Washington State addresses.

       6.7.2.    Contract with an NCQA certified vendor qualified to
                   administer the CAHPS(R) survey and conduct the survey
according to NCQA protocol.       

            6.7.3.    Contract with an NCQA-licensed organization to conduct a
                   HEDIS(R) Compliance Audit for CAHPS(R) and submit the
complete audit report to DSHS.    

        6.7.4.    Use the most recent HEDIS(R) version of the Medicaid
                      adult questionnaire (currently 2.0H) or as instructed by
                       DSHS for 2003 CAHPS(R) surveys, and include the following
 questions in the survey instrument:

  6.7.5.    Adult supplemental "Behavioral Health" MH1&MH2

              6.7.5.1.       Adult supplemental "Chronic Conditions" CC2, CC6,
CC7, CC11, CC12     

      6.7.5.2.       Adult supplemental "Pregnancy Care" P1-P4

28

EX-10.6
35th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 35th
                                                        2003 HO & SCHIP Contract

             6.7.5.3.       Adult supplemental "Prescription Medicine" PM1 &
PM2                 

6.7.5.4.       Family Centered Care - decisions   

             6.4.1.    Conduct the mixed methodology (mail and phone surveys) in
2003.                             

        6.7.6.    Submit a copy of the Washington State adult Medicaid
                       response data set according to NCQA/CAHPS(R) standards to
                    DSHS' External Quality Review vendor by June 30, 2003.

            6.7.7.    DSHS' External Quality Review vendor will forward Health
                      plan data to the National CAHPS(R) Benchmarking Database
                   (NCBD) based on the 2003 NCBD guidelines. Contractors
                    will be responsible for filling out specific NCBD data
     submission forms as determined by DSHS.

6.8.    DENIALS, COMPLAINTS AND APPEALS:                        

     The Contractor shall maintain a record of all denials, complaints and
appeals, including denials, complaints and appeals handled by a 
  delegated entity and independent review of adverse decisions by an
      independent review organization. The Contractor shall provide a report
    of complete denials, complaints and appeals to DSHS quarterly within
      sixty (60) calendar days of the end of the quarter. Delegated denials,
 complaints and appeals are to be integrated into the Contractor's
        report. DSHS and Contractor agree to collaborate in the development of a
      report format. The report medium shall be specified by DSHS. Reporting
  of denials shall include all denials of services to enrollees. The
records shall be sorted using the sort keys identified and shall
include, at a minimum:                                          

         6.8.1.    Name of Program: HO, HO-CSHCN, CHIP, CHIP-CSHCN, BH+,
or BH+-CSHCN (Primary Sort Key)   

6.8.2.    Name of the delegated entity, if any        

6.8.3.    Enrollee Identifier (three separate fields):

             6.8.3.1.       Patient Identification Code (PIC) (preferred) or

            6.8.3.2.       Enrollee Name and Enrollee Birthday: If PIC not
reported            

6.8.4.    Name of Practitioner                        

6.8.5.    Type of Practitioner (Optional)             

6.8.6.    Type (Secondary Sort Key):                  

6.8.6.1.       Denial                             

29

EX-10.6
36th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 36th
                                                        2003 HO & SCHIP Contract

6.8.6.2.       Complaint                          

6.8.6.3.       Appeal - First Level               

6.8.6.4.       Appeal - Second Level              

6.8.6.5.       IRO                                

6.8.7.    Expedited: Yes or No                        

6.8.8.    Complaint, Appeal or IRO Issue              

6.8.9.    Category of Service Denied                  

6.8.10.   Reason Service Denied                       

6.8.11.   Resolution of Complaint, Appeal or IRO      

6.8.12.   Denial Date                                 

6.8.13.   Receipt Date of Complaint, Appeal or IRO    

   6.8.14.   Date of Resolution of Complaint, Appeal, or IRO

            6.8.15.   Date written notification of Denial or Complaint, Appeal
              or IRO outcome sent to enrollee and practitioner

       6.9.    DRUG FORMULARY REVIEW AND APPROVAL: The Contractor shall submit
            its drug formulary, for use with enrollees covered under the
           terms of this agreement, to DSHS for review and approval by
January 31, 2003.                               

   6.10.   FRAUD AND ABUSE: The Contractor shall report in writing all
               verified cases of fraud and abuse, including fraud and abuse by
               the Contractor's employees and subcontractors, within seven (7)
            calendar days to DSHS according to Section 7.5, Notices. The
report shall include the following information: 

6.10.1.   Subject(s) of complaint by name and either  
               provider/subcontractor type or employee position.

          6.10.2.   Source of complaint by name and provider/subcontractor
       type or employee position, if applicable.

6.10.3.   Nature of complaint.                        

30

EX-10.6
37th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 37th
                                                        2003 HO & SCHIP Contract

6.10.4.   Estimate of the amount of funds involved.   

 6.10.5.   Legal and administrative disposition of case.

        6.11.   FIVE PERCENT EQUITY: The Contractor shall provide the DSHS, MAA,
             Division of Program Support, Contract Manager assigned to the
                Contractor a list of persons with a beneficial ownership of more
             than 5% of the Contractor's equity no later than February 28,
2003.                                           

7.      GENERAL TERMS AND CONDITIONS                                            

        7.1.    COMPLETE AGREEMENT: This agreement incorporates Exhibits to this
             agreement and the DSHS billing instructions applicable to the
          Contractor. All terms and conditions of this agreement are
         stated in this agreement and its incorporations. No other
agreements, oral or written, are binding.       

   7.2.    MODIFICATION: This agreement may only be modified by mutual
               consent of the parties. All modifications shall be set forth in
contract amendments issued by DSHS.             

       7.3.    WAIVER: The failure of either party to enforce any provision of
           this agreement shall not constitute a waiver of that or any
                other provision, and shall not be construed to be a modification
                of the terms and conditions of the agreement unless incorporated
into the agreement with an amendment.           

       7.4.    LIMITATION OF AUTHORITY: No alteration, modification, or waiver
             of any clause or condition of the agreement is binding unless
               made in writing and signed by a DSHS Contracting Officer in the
   Office of Legal Affairs, Central Contract Services.

     7.5.    NOTICES: Whenever one party is required to give notice to the
              other under this agreement, it shall be deemed given if mailed
              by United States Postal Service, registered or certified mail,
          return receipt requested, postage prepaid and addressed as
follows:                                        

In the case of notice to the Contractor:        

     _________________________________________________
     _________________________________________________
     _________________________________________________
     _________________________________________________

In the case of notice to DSHS:                  

MaryAnne Lindeblad, Director (or her successor) 
Division of Program Support                     
Medical Assistance Administration               
Department of Social and Health Services        
P.O. Box 45530                                  

31

EX-10.6
38th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 38th
                                                        2003 HO & SCHIP Contract

Olympia, WA 98504-5530                          

           Said notice shall become effective on the date delivered as
           evidenced by the return receipt or the date returned to the
            sender for non-delivery other than for insufficient postage.
                Either party may at any time change its address for notification
                purposes by mailing as aforesaid a notice stating the change and
              setting forth the new address, which shall be effective on the
              tenth day following the effective date of such notice unless a
later date is specified.                        

     7.6.    FORCE MAJEURE: If the Contractor is prevented from performing
                any of its obligations hereunder in whole or in part as a result
              of a major epidemic, act of God, war, civil disturbance, court
  order, or any other cause beyond its control, such
        nonperformance shall not be a ground for termination for
               default. Immediately upon the occurrence of any such event, the
             Contractor shall commence to use its best efforts to provide,
    directly or indirectly, alternate and, to the extent
           practicable, comparable performance. Nothing in this clause
        shall be construed to prevent DSHS from terminating this
              agreement for reasons other than for default during the period
          of events set forth above, or for default, if such default
occurred prior to such event.                   

7.7.    SANCTIONS:                                              

           7.7.1.    When the Contractor fails to meet its obligations under
                       the terms of this agreement, DSHS may impose sanctions by
               withholding up to five percent of payments to the
               Contractor rather than terminating the agreement.

                DSHS shall notify the Contractor in writing of the
                    precise nature of the default and provide a reasonable
             deadline for curing the default before imposing
             sanctions. The Contractor may request a dispute
                    resolution, as described in Section 7.23, Disputes, if
                    the Contractor disagrees with DSHS' position. DSHS may
                     withhold payment from the end the cure period until the
                      default is cured or any resulting dispute is resolved in
the Contractor's favor.           

          7.7.2.    DSHS, CMS or the Office of the Inspector General (OIG)
                      may impose intermediate sanctions, in accord with 42 CFR
                     438.700, 42 CFR 438.702 and 42 CFR 438.704, against the
Contractor for:                   

            7.7.2.1.       Failing to provide medically necessary services
                             that the Contractor is required to provide, under
                       law or under this agreement, to an enrollee
         covered under this agreement.

               7.7.2.2.       Imposing on enrollees premiums or charges that are
                          in excess of the premiums or charges permitted
              under law or under this agreement.

32

EX-10.6
39th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 39th
                                                        2003 HO & SCHIP Contract

          7.7.2.3.       Acting to discriminate among enrollees on the
                           basis of their health status or need for health
                       care services. This includes termination of
                          enrollment or refusal to reenroll a recipient,
                       except as permitted under law or under this
                            agreement, or any practice that would reasonably
                              be expected to discourage enrollment by recipients
                        whose medical condition or history indicates
                        probable need for substantial future medical
services.           

              7.7.2.4.       Misrepresenting or falsifying information that it
             furnishes to CMS or to the State.

              7.7.2.5.       Misrepresenting or falsifying information that it
                            furnishes to an enrollee, potential enrollee, or
 health care provider.

        7.7.2.6.       Failing to comply with the requirements for
      physician incentive plans.

             7.7.2.7.       Distributing 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.        

       7.7.2.8.       Violating any of the other requirements of
                           sections 1903(m) or 1932 of the Social Security
                  Act, and any implementing regulations.

   7.8.    ASSIGNMENT OF THIS AGREEMENT: This agreement, including the
            rights, benefits, and duties herein, shall be binding on the
           parties and their successors and assignees but shall not be
              assignable by either party without the express written consent
               of the other. Nor shall any claim, pertinent to this agreement,
            against one of the parties be assignable without the express
written consent of the other.                   

        7.9.    HEADINGS NOT CONTROLLING: The headings and the index used herein
                are for reference and convenience only, and shall not enter into
              the interpretation thereof, or describe the scope or intent of
any provisions or sections of this agreement.   

        7.10.   ORDER OF PRECEDENCE: In the interpretation of this agreement and
              incorporated documents, the various terms and conditions shall
            be construed as much as possible to be complementary. In the
            event that such interpretation is not possible the following
order of precedence shall apply:                

             7.10.1.   Federal statutes and regulations concerning the operation
                       of Health Maintenance Organizations and the provisions of
           Title XIX of the federal Social Security Act.

33

EX-10.6
40th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 40th
                                                        2003 HO & SCHIP Contract

           7.10.2.   State of Washington statutes and regulations concerning
                    the operation of the DSHS' Medical Assistance Program,
                  including but not limited to WAC 388-538, Exhibit B.

           7.10.3.   State of Washington statutes and regulations concerning
                   the operation of Health Maintenance Organizations and
Health Care Service Contractors.  

7.10.4.   The terms and conditions of this agreement. 

7.11.   PROPRIETARY RIGHTS: DSHS recognizes that nothing in this
            agreement shall give DSHS rights to the systems developed or
         acquired by the Contractor during the performance of this
         agreement. The Contractor recognizes that nothing in this
         agreement shall give the Contractor rights to the systems
            developed or acquired by DSHS during the performance of this
agreement.                                      

      7.12.   COVENANT AGAINST CONTINGENT FEES: The Contractor promises that
      no person or agency has been employed or retained on a
           contingent fee for the purpose of seeking or obtaining this
            agreement. This does not apply to legitimate employees or an
          established commercial or selling agency maintained by the
                Contractor for the purpose of securing business. In the event of
       breach of this clause by the Contractor DSHS may at its
               discretion: a) annul the agreement without any liability; or b)
             deduct from the agreement price or consideration or otherwise
   recover the full amount of any such contingent fee.

7.13.   ENROLLEES' RIGHT TO OBTAIN A CONVERSION AGREEMENT: The  
              Contractor shall offer a conversion agreement to all enrollees
             whose enrollment is terminated due to loss of eligibility for
Medical Assistance in accord with RCW 48.46.450.

7.14.   RECORDS MAINTENANCE AND RETENTION:                      

            7.14.1.   MAINTENANCE: The Contractor and its subcontractors shall
                     maintain financial, medical and other records pertinent
                   to this agreement. All financial records shall follow
                       generally accepted accounting principles. Medical records
                 and supporting management systems shall include all
                     pertinent information related to the medical management
                    of each enrollee. Other records shall be maintained as
                   necessary to clearly reflect all actions taken by the
   Contractor related to this agreement.

       7.14.2.   RETENTION: All records and reports relating to this
                   agreement shall be retained by the Contractor and its
                       subcontractors for a minimum of six (6) years after final
                   payment is made under this agreement or, in the event
                     that this agreement is renewed, six (6) years after the
                  renewal date. However, when an audit, litigation, or
other action involving            

34

EX-10.6
41st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 41st
                                                        2003 HO & SCHIP Contract

                   records is initiated prior to the end of said period,
                  records shall be maintained for a minimum of six (6)
        years following resolution of such action.

7.15.   ACCESS TO FACILITIES AND RECORDS: The Contractor and its
                subcontractors shall cooperate with medical and financial audits
               performed by duly authorized representatives of DSHS, the State
               of Washington Auditor's Office, DHHS, and federal auditors from
              the United States government General Accounting Office and the
        Office of Management and Budget. With reasonable notice,
           generally thirty (30) calendar days, the Contractor and its
             subcontractors shall provide access to its facilities and the
            financial and medical records pertinent to this agreement to
      monitor and evaluate performance under this agreement,
         including, but not limited to, the quality, cost, use and
             timeliness of services (42 CFR 434.52), and assessment of the
                Contractor's capacity to bear the potential financial losses (42
                CFR 434.58). The Contractor and its subcontractors shall provide
            immediate access to facilities and records pertinent to this
agreement for Medicaid fraud investigators.     

7.16.   SOLVENCY:                                               

           7.16.1.   The Contractor shall have a Certificate of Registration
                     as either a Health Maintenance Organization or a Health
                      Care Service Contractor from the Office of the Insurance
                      Commissioner (OIC). The Contractor shall comply with the
               solvency provisions of RCW 48.44 or RCW 48.46, as
amended.                          

     7.16.2.   The Contractor shall submit to DSHS copies of any
                      regulatory annual statement and any quarterly or monthly
              financial reports filed with OIC and all related
                documents and correspondence, at the same time the
                       Contractor sends them to OIC. The Contractor shall notify
                       DSHS immediately upon being notified by OIC that they are
                      to report financial information quarterly or monthly and
                       provide DSHS with the same information provided to OIC in
                       response to any OIC request. The Contractor shall deliver
                 all required information and notices to DSHS at the
                       address listed in 7.5 Notices. The Contractor agrees that
                       DSHS may at anytime access any information related to the
                      Contractor's financial condition, or compliance with OIC
                    requirements, from OIC and consult with OIC concerning
such information.                 

           7.16.3.   The Contractor shall provide DSHS with the Contractor's
                 audited financial statements as soon as they become
                     available to the Contractor. Financial statements shall
              be delivered to the address list in 7.5 Notices.

          7.16.4.   If the Contractor becomes insolvent during the term of
this agreement:                   

35

EX-10.6
42nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 42nd
                                                        2003 HO & SCHIP Contract

               7.16.4.1.      The State of Washington and enrollees shall not be
                              in any manner liable for the debts and obligations
of the Contractor.  

            7.16.4.2.      In accordance with Section 10.15 Prohibition on
                           Enrollee Charges for Covered Services, under no
                      circumstances shall the Contractor, or any
                            providers used to deliver services covered under
                             the terms of this agreement, charge enrollees for
covered services.   

         7.16.4.3.      The Contractor shall, in accordance with RCW
                             48.44.055, provide for the continuity of care for
enrollees.          

   7.17.   COMPLIANCE WITH ALL APPLICABLE LAWS AND REGULATIONS: In the
              provision of services under this agreement, the Contractor and
               its subcontractors shall comply with all applicable federal and
                state statutes and regulations, and all amendments thereto, that
            are in effect when the agreement is signed or that come into
              effect during the term of the agreement. This includes, but is
not limited to:                                 

       7.17.1.   Title XIX and Title XXI of the Social Security Act.

7.17.2.   All applicable OIC statutes and regulations.

           7.17.3.   All local, state, and federal professional and facility
                     licensing and accreditation requirements/standards that
                 apply to services performed under the terms of this
      agreement, including but not limited to:

              7.17.3.1.      All applicable standards, orders, or requirements
                             issued under Section 306 of the Clean Air Act (42
                           US 1857(h)), Section 508 of the Clean Water Act
                    (33 US 1368), Executive Order 11738, and
                             Environmental Protection Agency (EPA) regulations
                       (40 CFR Part 15), which prohibit the use of
                            facilities included on the EPA List of Violating
                           Facilities. Any violations shall be reported to
    DSHS, DHHS, and the EPA.

            7.17.3.2.      Any applicable mandatory standards and policies
                             relating to energy efficiency which are contained
                            in the State Energy Conservation Plan, issued in
                         compliance with the federal Energy Policy and
Conservation Act.   

           7.17.3.3.      Those specified for laboratory services in the
                              Clinical Laboratory Improvement Amendments (CLIA).

         7.17.3.4.      Those specified in Title 18 for professional
licensing.          

7.17.4.   Liability insurance requirements.           

36

EX-10.6
43rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 43rd
                                                        2003 HO & SCHIP Contract

    7.17.5.   Reporting of abuse as required by RCW 26.44.030.

         7.17.6.   Industrial insurance coverage as required by Title 51
RCW.                              

         7.17.7.   Any other requirements associated with the receipt of
federal funds.                    

       7.18.   NONDISCRIMINATION: The Contractor shall comply with all federal
 and state nondiscrimination laws and regulations.

7.19.   REVIEW OF CLIENT INFORMATION: DSHS agrees to provide the
              Contractor with written client information, which DSHS intends
to distribute to all or a class of clients.     

     7.20.   CONTRACTOR NOT EMPLOYEES OF DSHS: The Contractor acknowledges
                and certifies that its directors, officers, partners, employees,
                and agents are not officers, employees, or agents of DSHS or the
                state of Washington. The Contractor shall not hold itself out as
            or claim to be an officer, employee, or agent of DSHS or the
               state of Washington by reason of this agreement. The Contractor
              shall not claim any rights, privileges, or benefits that would
   accrue to a civil service employee under RCW 41.06.

     7.21.   DSHS NOT GUARANTOR: The Contractor acknowledges and certifies
               that neither DSHS nor the State of Washington are guarantors of
any obligations or debts of the Contractor.     

      7.22.   MUTUAL INDEMNIFICATION AND HOLD HARMLESS: The parties shall be
                responsible for and shall indemnify and hold each other harmless
         from all claims and/or damages to persons and/or property
               resulting from its negligent acts and omissions. The Contractor
         shall indemnify and hold harmless DSHS from any claims by
       non-participating providers related to the provision to
   enrollees of covered services under this agreement.

    7.23.   DISPUTES: When a dispute arises over an issue concerning the
          terms of the agreement, the parties agree to the following
process to address the dispute:                 

        7.23.1.   The Contractor and DSHS shall attempt to resolve the
                       dispute through informal means between the Contractor and
                  the DSHS, MAA, Division of Program Support, Contract
 Manager assigned to the Contractor.

          7.23.2.   If the Contractor is not satisfied with the outcome of
                      the resolution with the Contract Manager, the Contractor
                    may submit the disputed issue, in writing, for review,
              within ten (10) working days of the outcome, to:

                               MaryAnne Lindeblad, Director (or her successor)
           Division of Program Support

37

EX-10.6
44th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 44th
                                                        2003 HO & SCHIP Contract

                 Medical Assistance Administration
                        Department of Social and Health Services
P.O. Box 45530  
      Olympia, WA 98504-5530

                      The Director may request additional information from the
                  Contract Manager and/or the Contractor. The Director
                     shall issue a written review decision to the Contractor
                within thirty (30) calendar days of receipt of all
                    information relevant to the issue. The review decision
                     will be provided to the Contractor according to Section
7.5.                              

             7.23.3.   When the Contractor disagrees with the review decision of
                  the Director, the Contractor may request independent
                      mediation of the dispute. The request for mediation must
                       be submitted to the Director, in writing, within ten (10)
             working days of the Contractor's receipt of the
                       Director's review decision. The Contractor and DSHS shall
                mutually agree on the selection of the independent
               mediator and shall bear all costs associated with
                      mediation equally. The results of mediation shall not be
binding on either party.          

        Both parties agree to make their best efforts to resolve
               disputes arising from this agreement and agree that the dispute
           resolution process described herein shall precede any court
   action. This dispute resolution process is the sole
     administrative remedy available under this agreement.

    7.24.   GOVERNING LAW AND VENUE: The laws of the State of Washington
                shall govern this agreement. In the event of a lawsuit involving
              this agreement, venue shall be proper only in Thurston County,
          Washington. By execution of this agreement, the Contractor
           acknowledges the jurisdiction of the courts of the State of
Washington regarding this matter.               

       7.25.   SEVERABILITY: If any provision of this agreement, including any
             provision of any document incorporated by reference, shall be
        held invalid, that invalidity shall not affect the other
                provisions of the agreement. To that end, the provisions of this
agreement are declared to be severable.         

7.26.   EXCLUDED PERSONS:                                       

     7.26.1.   The Contractor may not knowingly have a director,
                     officer, partner, or person with a beneficial ownership
                    of more than 5% of the Contractor's equity, or have an
                      employee, consultant or contractor who is significant or
              material to the provision of services under this
                    agreement, who has been, or is affiliated with someone
                      who has been, debarred, suspended, or otherwise excluded
               by any federal agency (SSA 1932(d)(1)). A list of
                     excluded parties is available on the following Internet
website: www.arnet.gov/epls.      
  ------------------

38

EX-10.6
45th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 45th
                                                        2003 HO & SCHIP Contract

             7.26.2.   By entering into this agreement, the Contractor certifies
                       that it does not knowingly have anyone who is an excluded
                    person, or is affiliated with an excluded person, as a
                  director, officer, partner, employee, contractor, or
                       person with a beneficial ownership of more than 5% of its
                    equity. The Contractor is required to notify DSHS when
                  circumstances change that affect such certification.

          7.26.3.   The Contractor is not required to consult the excluded
                       parties list, but may instead rely on certifications from
                       directors, officers, partners, employees, contractors, or
                      persons with beneficial ownership of more than 5% of the
                Contractor's equity, that they are not debarred or
excluded from a federal program.  

7.27.   FRAUD AND ABUSE REQUIREMENTS - POLICIES AND PROCEDURES: 

        7.27.1.   The Contractor shall have policies and procedures to
                      prevent and detect fraud and abuse activities related to
                       Healthy Options/SCHIP. These include, but are not limited
                     to: claims, prior authorization, utilization management
                  and quality review, enrollee complaint and grievance
                     resolution, provider credentialing and contracting, and
                      provider and staff education to prevent fraud and abuse,
                    and corrective action plans to remedy situations where
 fraud and abuse have been detected.

           7.27.2.   If the Contractor is also a Medicare contractor, and if
                       CMS has promulgated fraud and abuse standards for federal
               health care program managed care contractors, the
                    Contractor's policies and procedures established which
                   meet CMS standards shall be deemed sufficient to meet
                  DSHS requirements for fraud and abuse prevention and
monitoring.                       

           7.27.3.   The Contractor shall submit a written copy of its fraud
                    and abuse policies and procedures for approval to DSHS
             according to Section 7.5, Notices. Policies and
                   procedures shall be due by March 31, 2003. DSHS shall
           respond with approval or denial with required
               modifications within thirty (30) calendar days of
                     receipt. The Contractor shall have thirty (30) calendar
                  days to resubmit the policies and procedures. If the
                       Contractor's fraud and abuse policies and procedures have
                       been approved by DSHS and are unchanged from the approved
                   policies and procedures, the Contractor shall only be
                 required to submit a written certification that the
    policies and procedures are unchanged.

            7.27.4.   The Contractor may request a copy of the guidelines that
                    DSHS will use in evaluating the Contractor's fraud and
                      abuse policies and procedures, and may request technical
assistance in preparing the       

39

EX-10.6
46th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 46th
                                                        2003 HO & SCHIP Contract

                   policies and procedures, by contacting the DSHS, MAA,
                      Division of Program Support Contract Manager assigned to
the Contractor.                   

8.      SUBCONTRACTS                                                            

        8.1.    CONTRACTOR REMAINS LEGALLY RESPONSIBLE: Subcontracts, as defined
                in Section 1.20, may be used by the Contractor for the provision
            of any service under this agreement. However, no subcontract
             shall terminate the Contractor's legal responsibility to DSHS
               for any work performed under this agreement (42 CFR 434.6 (c)).

       8.2.    SOLVENCY REQUIREMENTS FOR SUBCONTRACTORS: For any subcontractor
             at financial risk, as described in Section 8.8.3. Substantial
              Financial Risk, or 1.17. Risk, the Contractor shall establish,
                enforce and monitor solvency requirements that provide assurance
       of the subcontractor's ability to meet its obligations.

        8.3.    REQUIRED PROVISIONS: Subcontracts must be in writing, consistent
          with the provisions of 42 CFR 434.6. All subcontracts must
contain the following provisions:               

        8.3.1.    Identification of the parties of the subcontract and
             their legal basis for operation in the state of
Washington.                       

        8.3.2.    Procedures and specific criteria for terminating the
subcontract.                      

         8.3.3.    Identification of the services to be performed by the
              subcontractor and which of those services may be
 subcontracted by the subcontractor.

            8.3.4.    Reimbursement rates and procedures for services provided
under the subcontract.            

             8.3.5.    Release to the Contractor of any information necessary to
                  perform any of its obligations under this agreement.

             8.3.6.    Reasonable access to facilities and financial and medical
                    records for duly authorized representatives of DSHS or
               DHHS for audit purposes, and immediate access for
Medicaid fraud investigators.     

       8.3.7.    The requirement to completely and accurately report
                       encounter data to the Contractor. Contractor shall ensure
                       that all subcontractors required to report encounter data
                 have the capacity to comply with the Encounter Data
   Submission Requirements, Exhibit C-1.

        8.3.8.    The requirement to comply with the Contractor's DSHS
               approved fraud and abuse policies and procedures.

40

EX-10.6
47th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 47th
                                                        2003 HO & SCHIP Contract

      8.3.9.    No assignment of the subcontract shall take effect
  without the DSHS' written agreement.

           8.3.10.   The subcontractor must comply with the applicable state
                    and federal rules and regulations as set forth in this
agreement.                        

8.4.    HEALTH CARE PROVIDER SUBCONTRACTS, including those for  
       facilities, must also contain the following provisions:

           8.4.1.    A quality improvement system tailored to the nature and
                   type of services subcontracted, which affords quality
                     control for the health care provided, including but not
                 limited to the accessibility of medically necessary
                    health care, and which provides for a free exchange of
                      information with the Contractor to assist the Contractor
in complying with Section 5.1.    

            8.4.2.    A means to keep records necessary to adequately document
services provided to enrollees.   

        8.4.3.    Information about enrollees, including their medical
             records, shall be kept confidential in a manner
                     consistent with state and federal laws and regulations.

            8.4.4.    The subcontractor accepts payment from the Contractor as
                     payment in full and shall not request payment from DSHS
                      or any enrollee for covered services performed under the
subcontract.                      

          8.4.5.    The subcontractor agrees to hold harmless DSHS and its
                    employees, and all enrollees served under the terms of
               this agreement in the event of non-payment by the
                       Contractor. The subcontractor further agrees to indemnify
                  and hold harmless DSHS and its employees against all
               injuries, deaths, losses, damages, claims, suits,
                     liabilities, judgments, costs and expenses which may in
                     any manner accrue against DSHS or its employees through
                    the intentional misconduct, negligence, or omission of
                   the subcontractor, its agents, officers, employees or
contractors.                      

   8.4.6.    If the subcontract includes physician services,
                 provisions for compliance with the PCP requirements
stated in this agreement.         

   8.4.7.    A ninety (90) day termination notice provision.

         8.4.8.    A specific termination provision for termination with
           short notice when a provider is excluded from
    participation in the Medicaid program.

41

EX-10.6
48th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 48th
                                                        2003 HO & SCHIP Contract

   8.5.    HEALTH CARE PROVIDER SUBCONTRACTS DELEGATING ADMINISTRATIVE
              FUNCTIONS: Subcontracts that delegate administrative functions
            under the terms of this agreement must include the following
additional provisions:                          

        8.5.1.    For those subcontractors at financial risk, that the
                   subcontractor must maintain the Contractor's solvency
                requirements throughout the term of the agreement.

            8.5.2.    That the terms and conditions of this agreement, between
                     DSHS and the Contractor, apply to the subcontractor for
                      any contract responsibility the Contractor has delegated
in the subcontract.               

      8.5.3.    Clear descriptions of any administrative functions
                       delegated by the Contractor in the subcontract, including
                       but not limited to utilization/medical management, claims
                  processing, enrollee complaints and appeals, and the
                       provision of data or information necessary to fulfill any
                   of the Contractor's obligations under this agreement.

        8.5.4.    How frequently and by what means the Contractor will
               monitor compliance with solvency requirements and
                 requirements related to any administrative function
delegated in the subcontract.     

         8.5.5.    Whether referrals for enrollees will be restricted to
               providers affiliated with the group and, if so, a
description of those restrictions.

8.6.    EXCLUDED PROVIDERS:                                     

            8.6.1.    Pursuant to Section 1128 of the Social Security Act, the
               Contractor may not subcontract with an individual
                     practitioner or provider, or an entity with an officer,
                       director, agent, or manager, or an individual who owns or
                     has a controlling interest in the entity, who has been:
                     convicted of crimes as specified in Section 1128 of the
                     Social Security Act, excluded from participation in the
                     Medicare and Medicaid program, assessed a civil penalty
                     under the provisions of Section 1128, has a contractual
              relationship with an entity convicted of a crime
                    specified in Section 1128, or is a person described in
               Section 7.26 of this agreement, Excluded Persons.

        8.6.2.    In addition, if DSHS terminates a subcontractor from
                  participation in the Medical Assistance program, the
             Contractor shall exclude the subcontractor from
                    participation in Healthy Options/SCHIP. The Contractor
                shall terminate subcontracts of excluded providers
                   immediately when the Contractor becomes aware of such
                   exclusion or when the Contractor receives notice from
DSHS, whichever is earlier.       

42

EX-10.6
49th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 49th
                                                        2003 HO & SCHIP Contract

  8.7.    HOME HEALTH PROVIDERS: If the pending Medicaid home health
               agency surety bond requirement (Section 4708(d) of the Balanced
               Budget Act of 1997) becomes effective before or during the term
         of this agreement, beginning on the effective date of the
          requirement the Contractor may not subcontract with a home
              health agency unless the state has obtained a surety bond from
             the home health agency in the amount required by federal law.
                The Department will provide a current list of bonded home health
agencies upon request to the Contractor.        

        8.8.    PHYSICIAN INCENTIVE PLANS: Physician incentive plans, as defined
                in Section 1.15, are subject to the conditions set forth in this
           Section in accord with federal regulations (42 CFR 434.70).

             8.8.1.    PROHIBITED PAYMENTS: The Contractor shall make no payment
            to a physician or physician group, directly or
                indirectly, under a physician incentive plan as an
               inducement to reduce or limit medically necessary
          services provided to an individual enrollee.

         8.8.2.    DISCLOSURE REQUIREMENTS: Risk sharing arrangements in
                  subcontracts with physicians or physician groups are
                    subject to review and approval by DSHS. The Contractor
               shall provide the following information about its
                   physician incentive plan, and the physician incentive
                 plans of all its subcontractors in any tier, to the
Department annually upon request: 

         8.8.2.1.       Whether the incentive plan includes referral
services.           

              8.8.2.2.       If the incentive plan includes referral services:

           8.8.2.2.1.     The type of incentive plan (e.g. withhold,
  bonus, capitation)

           8.8.2.2.2.     For incentive plans involving withholds or
                                bonuses, the percent that is withheld or paid as
a bonus         

          8.8.2.2.3.     Proof that stop-loss protection meets the
                              requirements of 6.8.4.1., including the amount
                and type of stop-loss protection

              8.8.2.2.4.     The panel size and, if commercial members and
                          enrollees are pooled, a description of the
                               groups pooled and the risk terms of each group.
                               Medicaid, Medicare, and commercial members in a
                             physician's or physician group's panel may be
                                pooled provided the terms of risk for the pooled
                                enrollees and commercial members are comparable,
                             and the incentive payments are not calculated
                           separately for pooled enrollees. Commercial
                              members include military and Basic Health Plan
members.        

43

EX-10.6
50th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 50th
                                                        2003 HO & SCHIP Contract

         8.8.3.    SUBSTANTIAL FINANCIAL RISK: A physician, or physician
                 group as defined in Section 1.14, is at substantial
                    financial risk when more than 25% of the total maximum
                    potential payments to the physician or physician group
                    depend on the use of referral services. When the panel
                       size is fewer than 25,000 members arrangements that cause
                     substantial financial risk include, but are not limited
to, the following:                

          8.8.3.1.       Withholds greater than 25% of total potential
payments            

       8.8.3.2.       Withholds less than 25% of total potential
                            payments but the physician or physician group is
                         potentially liable for more than 25% of total
potential payments. 

        8.8.3.3.       Bonuses greater than 33% of total potential
     payments, less the bonus.

         8.8.3.4.       Withholds plus bonuses if the withholds plus
                          bonuses equal more than 25% of total potential
payments.           

              8.8.3.5.       Capitation arrangements if the difference between
                             the minimum and maximum possible payments is more
                             than 25% of the maximum possible payments, or the
                         minimum and maximum possible payments are not
              clearly explained in the contract.

        8.8.4.    REQUIREMENTS IF A PHYSICIAN OR PHYSICIAN GROUP IS AT
                   SUBSTANTIAL FINANCIAL RISK: If the Contractor, or any
                  subcontractor (e.g. IPA, PHO), places a physician or
                physician group at substantial financial risk, the
                       Contractor shall assure that all physicians and physician
                  groups have either aggregate or per member stop-loss
                  protection for services not directly provided by the
physician or physician group.     

              8.8.4.1.       If aggregate stop-loss protection is provided, it
                            must cover 90% of the costs of referral services
                         that exceed 25% of maximum potential payments
  under the subcontract.

             8.8.4.2.       If stop-loss protection is based on a per-member
                            limit, it must cover 90% of the cost of referral
                             services that exceed the limit as indicated below
                         based on panel size, and whether stop-loss is
                    provided separately for professional and
                              institutional services or is combined for the two.

                8.8.4.2.1.     1,000 members or fewer, the threshold is $3,000
                         for professional services and $10,000 for
                              institutional services, or $6,000 for combined
services.       

44

EX-10.6
51st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 51st
                                                        2003 HO & SCHIP Contract

                8.8.4.2.2.     1,001 - 5,000 members, the threshold is $10,000
                         for professional services and $40,000 for
                               institutional services, or $30,000 for combined
services.       

                8.8.4.2.3.     5,001 - 8,000 members, the threshold is $15,000
                         for professional services and $60,000 for
                               institutional services, or $40,000 for combined
services.       

                 8.8.4.2.4.     8,001 - 10,000 members, the threshold is $20,000
                          for professional services and $100,000 for
                               institutional services, or $75,000 for combined
services.       

              8.8.4.2.5.     10,001 - 25,000, the threshold is $25,000 for
                      professional services and $200,000 for
                       institutional services, or $150,000 for
  combined services.

         8.8.4.2.6.     25,001 members or more, there is no risk
threshold.      

              8.8.4.3.       For a physician or physician group at substantial
                             financial risk, the Contractor shall periodically
                             conduct surveys of enrollee satisfaction with the
                            physician or physician group. DSHS shall require
                        such surveys annually. DSHS may, at its sole
                         option, conduct enrollee satisfaction surveys
                        which satisfy this requirement and waive the
                          requirement for the Contractor to conduct such
                        surveys. DSHS shall notify the Contractor in
                              writing if the requirement is waived. If DSHS does
                           not waive the requirement, the Contractor shall
                            provide the survey results to DSHS annually upon
       request. The surveys shall:

             8.8.4.3.1.     Include current enrollees, and enrollees who
                               have disenrolled within 12 months of the survey
                       for reasons other than loss of Medicaid
                              eligibility or moving outside the Contractor's
service area.   

            8.8.4.3.2.     Be conducted according to commonly accepted
                           principles of survey design and statistical
analysis.       

        8.8.4.3.3.     Address enrollees satisfaction with the
               physician or physician group's:

  8.8.4.3.3.1.   Quality of services provided.

  8.8.4.3.3.2.   Degree of access to services.

45

EX-10.6
52nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 52nd
                                                        2003 HO & SCHIP Contract

   8.8.5.    Sanctions and Penalties: DSHS or CMS may impose
                    intermediate sanctions, as described in Section 7.7 of
                     this agreement, for failure to comply with the rules in
this section.                     

       8.9.    Payment to FQHCs/RHCs: The Contractor shall not pay a federally
              qualified health center or a rural health clinic less than the
        Contractor would pay non-FQHC/RHC providers for the same
services (42 USC 1396(m)(2)(A)(ix)).            

9.      TERM AND TERMINATION                                                    

       9.1.    TERM: This agreement is effective from January 1, 2003 at 12:01
                a.m. Pacific Standard Time (PST) through 12:00 a.m. December 31,
                2003, PST. This agreement may be extended by mutual agreement of
the parties.                                    

9.2.    TERMINATION FOR CONVENIENCE:                            

             9.2.1.    Either party may terminate, upon one-hundred twenty (120)
                       calendar days advance written notice, performance of work
                     under this agreement in whole or in part, whenever, for
                any reason, either party shall determine that such
  termination is in its best interest.

   9.2.2.    In the event DSHS terminates this agreement for
                 convenience, the Contractor shall have the right to
                    assert a claim for the Contractor's direct termination
costs. Such claim must be:        

           9.2.2.1.       Delivered to DSHS as provided in section 7.5.,
Notices.            

         9.2.2.2.       Asserted within ninety (90) calendar days of
                             termination for convenience, or, in the event the
                       termination was originally issued under the
                              provisions of Section 9.3, Termination by DSHS for
                            Default, ninety (90) calendar days from the date
                             the notice of termination was deemed to have been
                    issued under this section. The Contracts
                          Coordination Unit of MAA (CCU) may extend said
                             ninety (90) calendar days if the Contractor makes
                          a written request to the CCU and CCU deems the
                             grounds for the request to be reasonable. The CCU
                             will evaluate the claim for termination costs and
                          order DSHS to pay the claim or such amount, as
                              s/he deems valid, or deny the claim. The CCU shall
                          notify the Contractor of CCU's decision within
                             sixty (60) calendar days of receipt of the claim.

             9.2.3.    In the event the Contractor terminates this agreement for
                      convenience, DSHS shall have the right to assert a claim
                     for DSHS' direct termination costs. Such claim must be:

               9.2.3.1.       Delivered to the Contractor as provided in section
7.5., Notices.      

46

EX-10.6
53rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 53rd
                                                        2003 HO & SCHIP Contract

             9.2.3.2.       Asserted within ninety (90) calendar days of the
                            date of termination for convenience. The CCU may
                         extend said ninety (90) calendar days if DSHS
                            makes a written request to the CCU and CCU deems
                             the grounds for the request to be reasonable. The
                             CCU will evaluate the claim for termination costs
                              and order the Contractor to pay the claim for such
                          amount, as CCU deems valid, or deny the claim.

          9.2.4.    In the event the Contractor or DSHS disagrees with the
                CCU decision entered pursuant to this section, the
                  Contractor or DSHS shall have the right to a dispute
                resolution as described in Section 7.23, Disputes.

            9.2.5.    In no event shall the claim for termination costs exceed
                       the average monthly amount paid to the Contractor for the
                  twelve (12) months immediately prior to termination.

           9.2.6.    In addition to DSHS' or Contractor's direct termination
               costs, the Contractor or DSHS shall be liable for
                 administrative costs incurred by the other party in
              procuring supplies or services similar to and/or
replacing those terminated.       

      9.2.7.    The Contractor or DSHS shall not be liable for any
                     termination costs if it notifies the other party of its
                     intent not to renew this agreement at least one hundred
                   twenty (120) calendar days prior to the renewal date.

     9.2.8.    In the event this agreement is terminated for the
                convenience of either party, the effective date of
                    termination must be the last day of the month in which
                     the one hundred twenty (120) day notification period is
                      satisfied, or the last day of such later month as may be
agreed upon by both parties.      

     9.3.    TERMINATION BY THE CONTRACTOR FOR DEFAULT: The Contractor may
             terminate its performance under this agreement in whole or in
        part, whenever DSHS shall default in performance of this
                agreement and shall fail to cure such default within a period of
                one hundred twenty (120) calendar days (or such longer period as
                the Contractor may allow) after receipt from the Contractor of a
         written notice specifying the default. In the event it is
               determined that DSHS was not in default, DSHS may claim damages
               for wrongful termination. The procedure for determining damages
shall be as stated in Section 9.2.              

9.4.    TERMINATION BY DSHS FOR DEFAULT:                        

     9.4.1.    DSHS may terminate performance of work under this
                     agreement, in whole or in part, whenever the Contractor
shall default in performance      

47

EX-10.6
54th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 54th
                                                        2003 HO & SCHIP Contract

                   of this agreement and shall fail to cure such default
                  within a period of one hundred twenty (120) calendar
                    days (or such longer period as the Contracting Officer
                      may allow) after receipt from the Contracting Officer of
           a written notice specifying the default. Such
                     termination shall be referred to herein as "Termination
for Default."                     

        9.4.2.    If after notice of termination of this agreement for
                     default it is determined by DSHS or a court of law that
           the Contractor was not in default or that the
                 Contractor's failure to perform or make progress in
                  performance was due to causes beyond the control and
                       without the error or negligence of the Contractor, or any
                  subcontractor, the Contractor may claim damages. The
                     procedure for determining damages shall be as stated in
Section 9.2.                      

           9.4.3.    In the event DSHS terminates this agreement as provided
                    in (a) above, DSHS may procure, upon such terms and in
             such manner as the Contracting Officer may deem
                appropriate, supplies or services similar to those
                  terminated, and if the Contractor is judged to be in
               default by a court of law, DSHS' damages shall be
                       measured by any excess costs for such similar supplies or
                   services. In addition, DSHS' damages may also include
                   reasonable administrative costs incurred in procuring
such similar supplies or services.

        9.5.    MANDATORY TERMINATION: DSHS will terminate this agreement in the
               event that the Secretary of DHHS determines that the Contractor
                does not meet the requirements for participation in the Medicaid
                program pursuant to Title XIX of the Social Security Act and all
amendments.                                     

                In addition, DSHS is required under federal law to either impose
       temporary management or terminate this agreement if the
               Contractor is repeatedly found to not meet federal requirements
                for managed care Contractors, as specified in Section 1903(m) of
             the Social Security Act. Should this circumstance arise, DSHS
          will terminate this agreement consistent with Section 9.4,
Termination by DSHS for Default.                

       9.6.    TERMINATION FOR REDUCTION IN FUNDING: In the event funding from
         state, federal, or other sources is withdrawn, reduced or
             limited in any way after the effective date of this agreement
         and prior to the termination date, DSHS may terminate the
         agreement under the "Termination for Convenience" clause.

      9.7.    INFORMATION ON OUTSTANDING CLAIMS AT TERMINATION: In the event
                this agreement is terminated, the Contractor shall provide DSHS,
            within three hundred and sixty-five (365) calendar days, all
                available information reasonably necessary for the reimbursement
of any outstanding claims for                   

48

EX-10.6
55th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 55th
                                                        2003 HO & SCHIP Contract

           services to enrollees (42 CFR 434.6(a)(6)). Information and
            reimbursement of such claims is subject to the provisions of
Section 3, Payment.                             

 9.8.    CONTINUED RESPONSIBILITIES: After the termination of this
agreement, the Contractor remains obligated to: 

           9.8.1.    Cover hospitalized enrollees until discharge consistent
with Section 3.7.                 

9.8.2.    Submit reports required under Section 6.    

          9.8.3.    Provide access to records as required in Section 7.15.

       9.8.4.    Provide the administrative services associated with
                covered services (e.g. claims processing, enrollee
                    appeals) provided to enrollees under the terms of this
agreement.                        

        9.9.    ENROLLEE NOTICE OF TERMINATION: DSHS shall inform enrollees when
               notice is given by either party of its intent to terminate this
agreement as provided herein                    

10.     SERVICE DELIVERY                                                        

   10.1.   SCOPE OF SERVICES: The Contractor shall cover enrollees for
          preventive care and diagnosis and treatment of illness and
             injury as set forth in Section 11, Schedule of Benefits. If a
                specific procedure or element of a covered service is covered by
            DSHS under its fee-for-service program as described in DSHS'
              billing instructions, the Contractor shall cover it subject to
               the specific exclusions and limitations in Section 11, Schedule
of Benefits.                                    

                Except as specifically provided in Section 10.17, this shall not
        be construed to prevent the Contractor from establishing
            utilization control measures as it deems necessary to assure
       that services are appropriately utilized, provided that
            utilization control measures do not deny medically necessary
                covered services to enrollees. The Contractor may limit coverage
             of services to participating providers except as specifically
                provided in Section 4, Access and Capacity, Section 11, Schedule
                of Benefits, for emergency services, and as necessary to provide
              medically necessary services as described in 10.1.2.2., Urgent
Services.                                       

       10.1.1.   IN SERVICE AREA: In the service area, as defined in
                       Section 2.1, the Contractor shall cover enrollees for all
                   medically necessary services included in the scope of
 services covered by this agreement.

10.1.2.   OUT OF SERVICE AREA:                        

49

EX-10.6
56th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 56th
                                                        2003 HO & SCHIP Contract

           10.1.2.1.      EMERGENCY SERVICES: The Contractor shall cover
                           emergency services and, follow-up care which is
                            medically necessary before the enrollee's return
                          to the service area, for enrollees temporarily
                             outside of the service area, or who have moved to
                            another service area but are still enrolled with
the Contractor.     

               10.1.2.2.      URGENT SERVICES: The Contractor shall cover urgent
                       care that is medically necessary before the
                              enrollee's return to the service area. Urgent care
                          is associated with the presentation of medical
                           signs that require immediate attention, but are
                           not life threatening. The Contractor shall also
                              cover follow-up care to urgent care when such care
                             is medically necessary and cannot reasonably wait
                            until the enrollee's return to the service area.
                         Such services shall be provided for enrollees
                           temporarily outside of the service area, or who
                             have moved to another service area, but are still
                            enrolled with the Contractor. The Contractor may
                            require pre-authorization for urgent services as
                            long as the wait times specified in Section 4.4,
                    Appointment Standards, are not exceeded.

               10.1.2.3.      COVERAGE LIMITATION: When an enrollee moves out of
                            a service area, or is temporarily staying with a
                        parent or relative outside the service area,
                             coverage shall be limited to ninety (90) calendar
                      days beginning with the first of the month
                             following the month in which the enrollee changes
residence.          

       10.1.2.4.      REFERRED SERVICES: If the Contractor, or a
                           participating provider, refers an enrollee to a
                         provider out of the service area to receive a
                    covered service, the Contractor shall be
                 responsible for the referred service.

       10.2.   MEDICAL NECESSITY DETERMINATION: The Contractor shall determine
                which services are medically necessary, according to utilization
           management requirements included in the Quality Improvement
      Program 2003 Standards, Exhibit A and according to the
             definition of Medically Necessary Services in Section 1.11 of
         this agreement. The Contractor's determination of medical
        necessity in specific instances shall be final except as
              specifically provided in sections 5.4, Enrollee Complaints and
Appeals and 5.5, Fair Hearings.                 

50

EX-10.6
57th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 57th
                                                        2003 HO & SCHIP Contract

  10.3.   ENROLLEE CHOICE OF PCP: The Contractor shall allow, to the
              extent possible and appropriate, each new enrollee to choose a
            participating PCP. In the case of newborns, the parent shall
                choose the newborn's PCP. If the enrollee does not make a choice
          at the time of enrollment, the Contractor shall assign the
               enrollee to a PCP or clinic, within reasonable proximity to the
              enrollee's home, no later than fifteen (15) working days after
          coverage begins. The Contractor shall allow an enrollee to
        change PCP or clinic at anytime with the change becoming
                effective no later than the beginning of the month following the
                enrollees request for the change (WAC 388-538-060, Exhibit B and
WAC 284-43-251 (1)).                            

            The Contractor shall allow children with special health care
       needs who utilize a specialist frequently to retain the
               specialist as a PCP, or alternatively, be allowed direct access
to specialists for needed care.                 

51

EX-10.6
58th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 58th
[START HERE]                                                                    
                                                        2003 HO & SCHIP Contract

     10.4.   COORDINATION OF CARE: The Contractor shall ensure that health
               care services are coordinated for enrollees, in accordance with
      the provisions of the Quality Improvement Program 2003
Standards, Exhibit A, and as follows:           

             10.4.1.   The Contractor shall ensure that PCPs are responsible for
                    the provision, coordination, and supervision of health
                care to meet the needs of each enrollee, including
                    initiation and coordination of referrals for medically
              necessary specialty care. The PCPs shall also be
                 responsible for ongoing coordination with community
                      health and social programs, including but not limited to
               First Steps Maternity Services and Maternity Case
                    Management, and mental health services provided by the
Regional Support Networks (RSN).  

 10.4.2.   The Contractor shall ensure that PCPs develop
                 individualized care plans for children with special
                     health care needs, which ensure integration of clinical
                      and non-clinical disciplines and services in the overall
plan of care.                     

10.4.3.   The Contractor shall provide or shall ensure
                     practitioners provide case management of enrollees with
                      chronic/high risk illnesses. These services include, but
              are not limited to, coordination of services for
                      inpatient and outpatient care, and coordinated discharge
                     planning. The Contractor shall provide support services
                       to assist practitioners in providing such case management
                   if it is not provided directly by the Contractor. The
                Contractor shall also provide or shall ensure PCPs
                      provide ongoing coordination of community-based services
                  required by enrollees, including but not limited to:
               First Steps Maternity Services and Maternity Case
                       Management, Transportation, Regional Support Networks for
              mental health services, developmental disability
                   services, local health departments, Title V services,
                  home and community services for older and physically
               disabled individuals, alcohol and substance abuse
                     services, and services for children with special health
                       care needs. The Contractor shall provide support services
                    to assist PCPs in providing such coordination of it is
      not provided directly by the Contractor.

      10.5.   SECOND OPINIONS: The Contractor shall allow enrollees a second
           opinion with any primary or specialty care physician who is
        participating with the Contractor when an enrollee wants
          additional information regarding treatment or believes the
              Contractor is not authorizing medically necessary care. At the
 Contractor's discretion, a clinically appropriate
               non-participating provider who is agreed upon by the Contractor
and the enrollee may provide the second opinion.

52

EX-10.6
59th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 59th
                                                        2003 HO & SCHIP Contract

                This Section shall not be construed to require the Contractor to
              cover unlimited second opinions, nor to require the Contractor
             to cover any services other than the professional services of
the second opinion provider.                    

     10.6.   ENROLLEE SELF-DETERMINATION: The Contractor shall ensure that
              all providers: obtain informed consent prior to treatment from
           enrollees, or persons authorized to consent on behalf of an
      enrollee as described in RCW 7.70.065; comply with the
              provisions of the Natural Death Act (RCW 70.122) and state and
         federal Medicaid rules concerning advance directives (WAC
           388-501-0125 & 42 CFR 438.6); and, when appropriate, inform
      enrollees of their right to make anatomical gifts (RCW
68.50.540).                                     

  10.7.   COMPLIANCE WITH FEDERAL REGULATIONS FOR STERILIZATIONS AND
    HYSTERECTOMIES: The Contractor shall assure that all
                sterilizations and hysterectomies performed under this agreement
              are in compliance with 42 CFR 441 Subpart F, and that the DSHS
                Sterilization Consent Form (DSHS 13-364(x)) or its equivalent is
used.                                           

    10.8.   PROGRAM INFORMATION: At the Contractor's request, DSHS shall
         provide the Contractor with pertinent documents including
      statutes, regulations, and current versions of billing
            instructions and other written documents which describe DSHS
       policies and guidelines related to service coverage and
reimbursement.                                  

     10.9.   CONFIDENTIALITY OF ENROLLEE INFORMATION: The Contractor shall
      comply with all state and federal laws and regulations
       concerning the confidentiality of enrollee information.

          10.9.1.   The use or disclosure of any information concerning an
                     enrollee, including but not limited to medical records,
                      by the Contractor and its subcontractors for any purpose
                   not directly connected with the provision of services
                   under this agreement is prohibited, except by written
                 consent of the enrollee, his/her representative, or
                     his/her responsible parent or guardian, or as otherwise
provided by law.                  

         10.9.2.   The Contractor shall not require parental or guardian
                  consent for, nor inform parents or guardians of, the
                following services provided to enrollees under age
                 eighteen (18): reproductive health (State v. Koome,
                                                    --------------
                   1975), sexually-transmitted diseases (RCW 70.24.110),
                     drug and alcohol treatment (RCW 70.96A.095), and mental
                     health (RCW 71.34.200), except as specifically provided
                     in law. The Contractor shall suppress these services on
any subscriber reports.           

      10.9.3.   The Contractor and DSHS agree to share information
                 regarding enrollees in a manner which complies with
applicable state and federal      

53

EX-10.6
60th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 60th
                                                        2003 HO & SCHIP Contract

                    law protecting confidentiality of such information (42
             CFR 431 Subpart F, RCW 5.60.060(4), RCW 70.02).

       10.10.  MARKETING: The Contractor, and any subcontractors through which
               the Contractor provides covered services, shall comply with the
following requirements regarding marketing:     

         10.10.1.  Marketing materials means materials distributed to or
                       aimed at Medicaid eligibles, without regard to medium, to
                       influence those individuals to enroll or reenroll in with
                     the Contractor or with the Contractor's subcontractors.
                 All mediums are included but may include brochures,
                    leaflets, newspaper ads, signs, billboards, radio ads,
                 television ads, presentation material for marketing
representatives, and websites.    

            10.10.2.  All marketing materials must be reviewed by and have the
prior written approval of DSHS.   

             10.10.3.  Marketing materials shall not contain misrepresentations,
             or false, inaccurate or misleading information.

           10.10.4.  Marketing materials must be distributed in all services
areas the Contractor serves.      

          10.10.5.  Marketing materials must be in compliance with Section
                      4.7. Marketing materials in English must give directions
                     in the Medicaid eligible population's primary languages
                   for obtaining understandable materials in accord with
                     contract section 4.7.2. DSHS may determine, in its sole
                    judgment, if materials which are primarily visual meet
       the requirements of contract section 4.7.

          10.10.6.  The Contractor shall not offer anything of value as an
inducement to enrollment.         

            10.10.7.  The Contractor shall not use the sale of other insurance
 to attempt to influence enrollment.

           10.10.8.  The Contractor shall not directly or indirectly conduct
                      door-to-door, telephonic or other cold-call marketing of
enrollment.                       

       10.11.  INFORMATION REQUIREMENTS FOR ENROLLEES AND POTENTIAL ENROLLEES:
         The Contractor must provide sufficient, accurate oral and
            written information to potential enrollees to assist them in
              making an informed decision about enrollment (SSA 1932(d)(2)).
                The Contractor shall provide to potential enrollees upon request
         and to each enrollee, within fifteen (15) working days of
               enrollment, at any time upon request, and at least once a year,
the                                             

54

EX-10.6
61st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 61st
                                                        2003 HO & SCHIP Contract

            information needed to understand benefit coverage and obtain
           care. All enrollee information shall have the prior written
approval of DSHS.                               

         The Contractor's written information to enrollees and potential
enrollees must include:                               

           10.11.1.  How to choose a PCP, including how to request a list of
          PCPs that includes their identity, location,
qualifications and availability.  

        10.11.2.  How obtain a list of specialists that includes their
                  identity, location, qualifications and availability.

          10.11.3.  How to obtain information regarding any limitations to
                      the availability of or referral to specialists to assist
the enrollee in selecting a PCP.  

           10.11.4.  How to obtain information regarding Physician Incentive
Plans.                            

10.11.5.  How to change a PCP.                        

10.11.6.  Informed consent guidelines.                

     10.11.7.  Information regarding conversion rights under RCW
48.46.450 or RCW 48.44.370.       

10.11.8.  How to request a disenrollment.             

10.11.9.  Information regarding advance directives.   

             10.11.10. How to recommend changes in the Contractor's policies and
procedures.                       

            10.11.11. Health promotion, health education and preventive health
services available.               

             10.11.12. How to obtain assistance from the Contractor in using the
                 complaint and appeal process, including independent
                    review (must assure enrollees that information will be
               kept confidential except as needed to process the
complaint or appeal).             

        10.11.13. The right to initiate a complaint or file an appeal,
              including independent review, in accord with the
                Contractor's DSHS approved policies and procedures
regarding complaints and appeals. 

55

EX-10.6
62nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 62nd
                                                        2003 HO & SCHIP Contract

    10.11.14. The right to request a DSHS Fair Hearing with no
                   requirement to exhaust the Contractor's complaint and
appeal process, and how to do so. 

           10.11.15. The enrollee's rights and responsibilities with respect
to receiving covered services.    

         10.11.16. Information about covered benefits and how to contact
                      DSHS regarding services that may be covered by DSHS, but
            are not covered benefits under this agreement.

 10.12.  PHYSICIAN INCENTIVE PLAN INFORMATION: The Contractor must
             provide information concerning physician incentive plans upon
               request to enrollees enrolled under the terms of this agreement
(42 CFR 434.70(a)(4)).                          

10.13.  FAIR HEARING INFORMATION: The Contractor shall provide  
         information to enrollees about their right to file a Fair
             Hearing request and how to do so, pursuant to WAC 388-02, and
              their right to a second opinion, if services or a referral for
    services have been denied, discontinued or modified.

      10.14.  PROHIBITION ON ENROLLEE CHARGES FOR COVERED SERVICES: Under no
            circumstances shall the Contractor, or any providers used to
           deliver services covered under the terms of this agreement,
          charge enrollees for covered services (SSA 1932(b)(6), SSA
1128B(d)(1)).                                   

    10.15.  PROHIBITION ON PROVIDER/ENROLLEE DISCUSSION LIMITATIONS: The
               Contractor shall not prohibit any health care professional from
          fully discussing an enrollee's condition and all available
               treatment options, regardless of whether such treatment options
               are covered under the terms of this agreement (SSA 1932(b)(3)).

    10.16.  PROVIDER LICENSE NONDISCRIMINATION: The Contractor shall not
              discriminate, with respect to participation, reimbursement, or
          indemnification, against providers practicing within their
             licensed scope of practice solely on the basis of the type of
               license or certification they hold. This provision shall not be
            construed to prohibit the Contractor from otherwise limiting
             participation to meet its service and cost control needs, and
standards for quality of care (SSA 1932(b)(7)). 

10.17.  EXPERIMENTAL AND INVESTIGATIONAL SERVICES:              

         10.17.1.  If the Contractor excludes or limits benefits for any
                      services for one or more medical conditions or illnesses
                    because such services are deemed to be experimental or
                     investigational, the Contractor must develop and follow
             policies and procedures for such exclusions and
                     limitations. The policies and procedures shall identify
the persons                       

56

EX-10.6
63rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 63rd
                                                        2003 HO & SCHIP Contract

              responsible for such decisions. The policies and
                    procedures and any criteria for making decisions shall
     be made available to DSHS upon request.

               In making the determination, whether a service is
                    experimental and investigational and, therefore, not a
                covered service, the Contractor shall consider the
following:                        

              10.17.1.1.     Evidence in peer-reviewed, medical literature, as
                         defined in Section 1.13, and pre-clinical and
                            clinical data reported to the National Institute
                           of Health and/or the National Cancer Institute,
                     concerning the probability of the service
                      maintaining or significantly improving the
                            enrollee's length or quality of life, or ability
                        to function, and whether the benefits of the
                            service or treatment are outweighed by the risks
              of death or serious complications.

      10.17.1.2.     Whether evidence indicates the service or
                      treatment is likely to be as beneficial as
                         existing conventional treatment alternatives.

             10.17.1.3.     Any relevant, specific aspects of the condition.

               10.17.1.4.     Whether the service or treatment is generally used
                         for the condition in the state of Washington.

      10.17.1.5.     Whether the service or treatment is under
                       continuing scientific testing and research.

     10.17.1.6.     Whether the service or treatment shows a
                   demonstrable benefit for the condition.

         10.17.1.7.     Whether the service or treatment is safe and
efficacious.        

            10.17.1.8.     Whether the service or treatment will result in
                           greater benefits for the condition than another
        generally available service.

            10.17.1.9.     If approval is required by a regulating agency,
                             such as the Food and Drug Administration, whether
                           such approval has been given before the date of
service.            

           10.17.2.  Criteria to determine whether a service is experimental
                      or investigational must be no more stringent for Healthy
              Options enrollees than that applied to any other
           enrollees. A service or treatment that is not
                     experimental for one enrollee with a particular medical
                   condition cannot be determined to be experimental for
                  another enrollee with the same medical condition and
similar health status.            

57

EX-10.6
64th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 64th
                                                        2003 HO & SCHIP Contract

      10.17.3.  A service or treatment may not be determined to be
                   experimental and investigational solely because it is
                   under clinical investigation when there is sufficient
                  evidence in peer-reviewed medical literature to draw
                    conclusions, and the evidence indicates the service or
                  treatment will probably be of significant benefit to
enrollees.                        

           10.17.4.  A determination made by the Contractor shall be subject
                to appeal through the Contractor's appeal process,
                     including independent review, and through the DSHS fair
hearing process.                  

11.     SCHEDULE OF BENEFITS                                                    

11.1.   COVERED SERVICES:                                       

             11.1.1.   The Contractor shall cover the services described in this
                       Section when medically necessary. The amount and duration
                      of covered services that are medically necessary depends
on the enrollee's condition.      

        11.1.2.   Except as specifically provided herein, the scope of
                       covered services shall be comparable to the DSHS Medicaid
                     fee-for-service program. For specific covered services,
                     this shall not be construed as requiring the Contractor
                   to cover the specific items covered by DSHS under its
                       fee-for-service program, but shall rather be construed to
               require the Contractor to cover the same scope of
services.                         

      11.1.3.   Enrollees have the right to self-refer for certain
                      services to providers paid through separate arrangements
                 with the State of Washington. The Contractor is not
                   responsible for the coverage of the services provided
                    through such separate arrangements. The enrollees also
                      may choose to receive such services from the Contractor.
                      The Contractor shall assure that enrollees are informed,
                       whenever appropriate, of all options in such a way as not
                      to prejudice or direct the enrollee's choice of where to
                   receive the services. If the Contractor in any manner
                deprives enrollees of their free choice to receive
                       services through the Contractor, the Contractor shall pay
                       the local health department, family planning facility, or
                      RSN for such services up to the limits described herein.
                   The services to which an enrollee may self-refer are:

           11.1.3.1.      Outpatient mental health services to community
                           mental health providers of the Regional Support
            Network for Prepaid Health Plan.

              11.1.3.2.      Family planning services and sexually transmitted
                             disease screening and treatment services provided
                          at family planning facilities, such as Planned
Parenthood.         

58

EX-10.6
65th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 65th
                                                        2003 HO & SCHIP Contract

        11.1.3.3.      Immunizations, sexually-transmitted disease
                           screening and follow-up, immunodeficiency virus
                       (HIV) screening, tuberculosis screening and
                           follow-up, and family planning services through
        the local health department.

              11.1.3.4.      Medical services provided to enrollees who have a
                           diagnosis of alcohol and/or chemical dependency
                         are covered when those services are otherwise
covered services.   

        11.1.4.   INPATIENT SERVICES: Provided by acute care hospitals
               (licensed under RCW 70.41), or nursing facilities
                       (licensed under RCW 18-51) when nursing facility services
                 are not covered by the Department's Aging and Adult
                   Services Administration and the Contractor determines
                       that nursing facility care is more appropriate than acute
                       hospital care. Inpatient physical rehabilitation services
are included.                     

        11.1.5.   OUTPATIENT HOSPITAL SERVICES: Provided by acute care
   hospitals (licensed under RCW 70.41).

             11.1.6.   EMERGENCY SERVICES: In accord with the requirements of 42
                     CFR 438.114, all inpatient and outpatient services that
                    are provided by a provider who is qualified to furnish
                       Medicaid services, without regard to whether the provider
                     is a participating or non-participating provider, which
                  are necessary to evaluate and stabilize an emergency
          medical condition as defined in Section 1.8.

                    Emergency services shall be provided without requiring
prior authorization.              

                     What constitutes an emergency medical condition may not
              be limited on the basis of lists of diagnoses or
symptoms (42 CFR 438.114(d)(i)).  

          Services provided when the PCP or other plan
                representative has instructed the enrollee to seek
                      emergency services, regardless of whether the enrollee's
             condition meets the prudent layperson standard.

                   If there is a disagreement between a hospital and the
                 Contractor concerning whether the patient is stable
                      enough for discharge or transfer, or whether the medical
                      benefits of an unstabilized transfer outweigh the risks,
                 the judgment of the attending physician(s) actually
              caring for the enrollee at the treating facility
        prevails and is binding on the Contractor.

             Any post-stabilization services, related to the
                     admitting diagnosis, up to the point of discharge, that
the Contractor has either:        

59

EX-10.6
66th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 66th
                                                        2003 HO & SCHIP Contract

11.1.6.1.      Authorized                         

               11.1.6.2.      Failed to authorize because the Contractor did not
                           respond within thirty (30) minutes to a request
                             for authorization for post-stabilization services
(RCW 48.43.093(d))  

            11.1.6.3.      Failed to authorize due to circumstances beyond
              the emergency department's control

   11.1.7.   AMBULATORY SURGERY CENTER: Services provided at
ambulatory surgery centers.       

           11.1.8.   PROVIDER SERVICES: Services provided in an inpatient or
                       outpatient (e.g., office, clinic, emergency room or home)
                  setting by licensed professionals including, but not
                    limited to, physicians, physician assistants, advanced
                    registered nurse practitioners, midwives, podiatrists,
            audiologists, registered nurses, and certified
dietitians.                       

                Provider Services include, but are not limited to:

               11.1.8.1.      Medical examinations, including wellness exams for
         adults and EPSDT for children

11.1.8.2.      Immunizations                      

11.1.8.3.      Maternity care                     

               11.1.8.4.      Family planning services provided or referred by a
                  participating provider or practitioner

       11.1.8.5.      Performing and/or reading diagnostic tests

11.1.8.6.      Private duty nursing               

11.1.8.7.      Surgical services                  

               11.1.8.8.      Surgery to correct defects from birth, illness, or
                    trauma, or for mastectomy reconstruction

11.1.8.9.      Anesthesia                         

  11.1.8.10.     Administering pharmaceutical products

    11.1.8.11.     Fitting prosthetic and orthotic devices

11.1.8.12.     Rehabilitation services            

60

EX-10.6
67th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 67th
                                                        2003 HO & SCHIP Contract

11.1.8.13.     Enrollee health education          

           11.1.8.14.     Nutritional counseling for specific conditions
                      such as diabetes, high blood pressure, and
anemia              

             11.1.8.15.     Nutritional counseling when referred as a result
of an EPSDT exam    

            11.1.9.   TISSUE AND ORGAN TRANSPLANTS: Heart, kidney, liver, bone
                  marrow, lung, heart-lung, pancreas, kidney-pancreas,
     cornea, and peripheral blood stem cell.

    11.1.10.  LABORATORY, RADIOLOGY, AND OTHER MEDICAL IMAGING
                       SERVICES: Screening and diagnostic services and radiation
therapy.                          

       11.1.11.  VISION CARE: Eye examinations for visual acuity and
                      refraction once every twenty-four (24) months for adults
                      and once every twelve (12) months for children under age
                twenty-one (21). These limitations do not apply to
                    additional services needed for medical conditions. The
          Contractor may restrict non-emergent care to
                  participating providers. Enrollees may self-refer to
         participating providers for these services.

11.1.12.  OUTPATIENT MENTAL HEALTH:                   

              11.1.12.1.     Psychiatric and psychological testing, evaluation
and diagnosis:      

         11.1.12.1.1.   Once every twelve (12) months for adults
        twenty-one (21) and over

                 11.1.12.1.2.   Unlimited for children under age twenty-one (21)
                 when identified in an EPSDT visit

11.1.12.2.     Unlimited medication management:   

       11.1.12.2.1.   Provided by the PCP or by PCP referral

           11.1.12.2.2.   Provided in conjunction with mental health
                   treatment covered by the Contractor

         11.1.12.3.     Twelve hours per calendar year for treatment

       11.1.12.4.     Transition to the RSN, as needed to assure
                     continuity of care, when the enrollee has
                              exhausted the benefit covered by the Contractor or
                 when enrollee request such transition

11.1.12.5.     Referrals To and From the RSN:     

61

EX-10.6
68th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 68th
                                                        2003 HO & SCHIP Contract

         11.1.12.5.1.   The Contractor shall cover mental health
                              services provided by the RSN, up to the limits
                             described herein, if the Contractor refers an
                       enrollee to the RSN for those services.

            11.1.12.5.2.   The Contractor may, but is not required to,
                            accept referrals from the RSN for the mental
                 health services described herein.

        11.1.12.6.     The Contractor may subcontract with RSNs to
                              provide the outpatient mental health services that
                          are the responsibility of the Contractor. Such
                             agreements shall not be written or construed in a
                       manner that provides less than the services
                      otherwise described in this Section as the
                             Contractor's responsibility for outpatient mental
health services.    

              11.1.12.7.     The DSHS Mental Health Division (MHD) and Medical
                              Assistance Administration (MAA) shall each appoint
                              a Mental Health Care Coordinator (MHCC). The MHCCs
                           shall be empowered to decide all Contractor and
                         RSN issues regarding outpatient mental health
                              coverage that cannot be otherwise resolved between
                           the Contractor and the RSN. The MHCCs will also
                       undertake training and technical assistance
                        activities that further coordination of care
                             between MAA, MHD, Healthy Options contractors and
                         RSNs. The Contractor shall cooperate with the
    activities of the MHCCs.

      11.1.13.  OCCUPATIONAL THERAPY, SPEECH THERAPY, AND PHYSICAL
                       THERAPY: Services for the restoration or maintenance of a
                     function affected by an enrollee's illness, disability,
                 condition or injury, or for the amelioration of the
    effects of a developmental disability.

       11.1.14.  PHARMACEUTICAL PRODUCTS: Prescription drug products
                 according to a Department approved formulary, which
             includes both legend and over-the-counter (OTC)
                    products. The Contractor's formulary shall include all
                    therapeutic classes in DSHS' fee-for-service drug file
                   and a sufficient variety of drugs in each therapeutic
                 class to meet medically necessary health needs. The
                   Contractor shall provide participating pharmacies and
            participating providers with its formulary and
                       information about how to request non-formulary drugs. The
               Contractor shall approve or deny all requests for
                       non-formulary drugs by the business day following the day
of request.                       

  Covered drug products shall include:

62

EX-10.6
69th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 69th
                                                        2003 HO & SCHIP Contract

     11.1.14.1.     Oral, enteral and parenteral nutritional
                          supplements and supplies, including prescribed
infant formulas     

            11.1.14.2.     All Food and Drug Administration (FDA) approved
                       contraceptive drugs, devices, and supplies;
                      including but not limited to Depo-Provera,
      Norplant, and OTC products

11.1.14.3.     Antigens and allergens             

         11.1.14.4.     Therapeutic vitamins and iron prescribed for
        prenatal and postnatal care.

      11.1.15.  HOME HEALTH SERVICES: Home health services through
state-licensed agencies.          

            11.1.16.  DURABLE MEDICAL EQUIPMENT (DME) AND SUPPLIES: Including,
                      but not limited to: DME; surgical appliances; orthopedic
                     appliances and braces; prosthetic and orthotic devices;
                    breast pumps; incontinence supplies for enrollees over
           three (3) years or age; and medical supplies.
                    Incontinence supplies shall not include non-disposable
 diapers unless the enrollee agrees.

            11.1.17.  OXYGEN AND RESPIRATORY SERVICES: Oxygen, and respiratory
therapy equipment and supplies.   

            11.1.18.  HOSPICE SERVICES: When the enrollee elects hospice care.

     11.1.19.  BLOOD, BLOOD COMPONENTS AND HUMAN BLOOD PRODUCTS:
                   Administration of whole blood and blood components as
                     well as human blood products. In areas where there is a
                   charge for blood and/or blood products the Contractor
                  shall cover the cost of the blood or blood products.

       11.1.20.  TREATMENT FOR RENAL FAILURE: Hemodialysis, or other
                      appropriate procedures to treat renal failure, including
          equipment needed in the course of treatment.

        11.1.21.  AMBULANCE TRANSPORTATION: The Contractor shall cover
                   ground and air ambulance transportation for emergency
                   medical conditions, as defined in Section 1.8 of this
                 agreement, including, but not limited to, Basic and
                Advanced Life Support Services, and other required
               transportation costs, such as tolls and fares. In
                     addition, the Contractor shall cover ambulance services
          under two circumstances for non-emergencies:

63

EX-10.6
70th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 70th
                                                        2003 HO & SCHIP Contract

          11.1.21.1.     When it is necessary to transport an enrollee
                             between facilities to receive a covered services;
and,                

               11.1.21.2.     When it is necessary to transport an enrollee, who
                              must be carried on a stretcher, or who may require
                         medical attention en route (RCW 18.73.180) to
      receive a covered service.

     11.1.22.  CHIROPRACTIC SERVICES: For children when they are
referred during an EPSDT exam.    

            11.1.23.  NEURODEVELOPMENTAL SERVICES: When provided by a facility
                      that is not a DSHS recognized neurodevelopmental center.

          11.1.24.  SMOKING CESSATION SERVICES: For pregnant women through
sixty (60) days post pregnancy.   

11.2.   EXCLUSIONS:                                                             

    The following services and supplies are excluded from coverage under
     this agreement. This shall not be construed to prevent the Contractor
        from covering any of these services when the Contractor determines it is
 medically necessary. Unless otherwise required by this agreement,
      ancillary services resulting from excluded services are also excluded.

       11.2.1.   SERVICES COVERED BY DSHS FEE-FOR-SERVICE OR THROUGH
SELECTIVE CONTRACTS:              

            11.2.1.1.      School Medical Services for Special Students as
                          described in the DSHS billing instructions for
    School Medical Services.

              11.2.1.2.      Eyeglass Frames, Lenses, and Fabrication Services
                            covered under DSHS' selective contract for these
                           services, and associated fitting and dispensing
services.           

          11.2.1.3.      Voluntary Termination of Pregnancy, including
complications.      

          11.2.1.4.      Transportation Services other than Ambulance:
                          Taxi, cabulance, voluntary transportation, and
  public transportation.

      11.2.1.5.      Dental Care, Prostheses and Oral Surgery,
                      including physical exams required prior to
                 hospital admissions for oral surgery.

              11.2.1.6.      Hearing Aid Devices, including fitting, follow-up
care and repair.    

      11.2.1.7.      First Steps Maternity Case Management and
       Maternity Support Services.

64

EX-10.6
71st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 71st
                                                        2003 HO & SCHIP Contract

          11.2.1.8.      Sterilizations for enrollees under age 21, or
                              those that do not meet other federal requirements.

11.2.1.9.      Health care services provided by a 
                         neurodevelopmental center recognized by DSHS.

             11.2.1.10.     Certain services provided by a health department
                   or family planning clinic when a client
 self-refers for care.

         11.2.1.11.     Inpatient psychiatric professional services.

               11.2.1.12.     Pharmaceutical products prescribed by any provider
                         related to services provided under a separate
                          agreement with DSHS or related to services not
      covered by the Contractor.

        11.2.1.13.     Laboratory services required for medication
                              management of drugs prescribed by community mental
                            health providers whose services are purchased by
       the Mental Health Division.

11.2.1.14.     Protease Inhibitors                

               11.2.1.15.     Services ordered as a result of an EPSDT exam that
               are not otherwise covered services.

11.2.1.16.     Gastroplasty                       

              11.2.1.17.     Prenatal Diagnosis Genetic Counseling provided to
                          enrollees to allow enrollees and their PCPs to
                             make informed decisions regarding current genetic
                          practices and testing. Genetic services beyond
                             Prenatal Diagnosis Genetic Counseling are covered
                           as maternity care when medically necessary, see
Section 11.1.8.3.   

             11.2.1.18.     Gender dysphoria surgery and related procedures,
                             treatment, prosthetics, or supplies when approved
               by DSHS in accord with WAC 388-531.

            11.2.2.   SERVICES COVERED BY OTHER DIVISIONS IN THE DEPARTMENT OF
SOCIAL AND HEALTH SERVICES:       

               11.2.2.1.      Substance abuse treatment services covered through
                       the Division of Alcohol and Substance Abuse
                      (DASA), including inpatient detoxification
                          services for alcohol (3-day) and drugs (5-day)
                    with no complicating medical conditions.

          11.2.2.2.      Nursing facility and community based services
                           (e.g. COPES and Personal Care Services) covered
                through the Aging and Adult Services
Administration.     

65

EX-10.6
72nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 72nd
                                                        2003 HO & SCHIP Contract

            11.2.2.3.      Mental health services separately purchased for
                     all Medicaid clients by the Mental Health
                            Division, including 24-hour crisis intervention,
                            outpatient mental health treatment services, and
                             inpatient psychiatric services. This shall not be
                    construed to prevent the Contractor from
                       purchasing covered outpatient mental health
                            services from community mental health providers.

              11.2.2.4.      Health care services covered through the Division
             of Developmental Disabilities for
      institutionalized clients.

11.2.3.   SERVICE COVERED BY OTHER STATE AGENCIES:    

                    Infant formula for oral feeding provided by the Women,
                     Infants and Children (WIC) program in the Department of
                     Health. Medically necessary nutritional supplements for
             infants are covered under the pharmacy benefit.

          11.2.4.   SERVICES NOT COVERED BY EITHER DSHS OR THE CONTRACTOR:

     11.2.4.1.      Medical examinations for Social Security
Disability.         

        11.2.4.2.      Services for which plastic surgery or other
                         services are indicated primarily for cosmetic
reasons.            

         11.2.4.3.      Physical examinations required for obtaining
                            continuing employment, insurance or governmental
licensing.          

          11.2.4.4.      Experimental and Investigational Treatment or
                              Services, determined in accord with Section 10.18,
                          Experimental and Investigational Services, and
                    services associated with experimental or
                  investigational treatment or services.

     11.2.4.5.      Reversal of voluntary surgically induced
sterilization.      

              11.2.4.6.      Personal Comfort Items, including but not limited
                             to guest trays, television and telephone charges.

11.2.4.7.      Biofeedback Therapy.               

               11.2.4.8.      Diagnosis and treatment of infertility, impotence,
   and sexual dysfunction.

              11.2.4.9.      Orthoptic (eye training) care for eye conditions.

66

EX-10.6
73rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 73rd
                                                        2003 HO & SCHIP Contract

     11.2.4.10.     Tissue or organ transplants that are not
           specifically listed as covered.

            11.2.4.11.     Immunizations required for international travel
purposes only.      

11.2.4.12.     Court-ordered services.            

              11.2.4.13.     Any service provided to an incarcerated enrollee,
                              beginning when a law enforcement officer takes the
        enrollee into legal custody.

             11.2.4.14.     Any service, product, or supply paid for by DSHS
                        under its fee-for-service program only on an
                              exception to policy basis. The Contractor may also
                          make exceptions and pay for services it is not
                   required to cover under this agreement.

              11.2.4.15.     Any other service, product, or supply not covered
                      by DSHS under its fee-for-service program.

67

EX-10.6
74th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 74th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

 EXHIBIT A-1
 QUALITY IMPROVEMENT STANDARDS
2003 STANDARDS
NCQA

The Contractor shall comply with the Quality Improvement Program 2003 Standards.
The standards are adopted primarily from NCQA's Standards for the Accreditation 
of Managed Care Organizations. DSHS is implementing as the Quality Improvement  
Program 2003 Standards, standards which are substantially the same as the       
Quality Improvement Program Standards in the 2002 HO/SCHIP Contract. DSHS       
reserves the right to revise the Quality Improvement Program 2003 Standards to  
ensure that no standard is in conflict with the Washington State Patient Bill of
Rights (PBOR), Health Insurance Portability and Accountability Act (HIPAA), or  
any other applicable state or federal statute or regulation. In the event of    
conflict between the Quality Improvement Program 2003 Standards and the         
standards in PBOR, HIPAA, or state or federal statute or regulation, the        
standard which, in the sole judgment of DSHS, is most favorable to enrollees    
shall have precedence.                                                          

DSHS agrees that any Contractor that meets or exceeds a 90% TEAMonitor score on 
a specific quality standard (Quality Management and Improvement, Utilization    
Management, Credentialing and Recredentialing, Members' Rights and              
Responsibilities, Preventive Health Services and Medical Records) over two      
consecutive audit years to be in compliance with that specific standard for the 
next audit year. If DSHS has evidence that subsequent performance has been      
deficient, the CONTRACTOR shall be subject to audit on all standards. In        
determining whether a Contractor's performance has been deficient with respect  
to the Quality Improvement Standards, DSHS will consider NCQA Reports, enrollee 
complaints, appeals and denials, and any other substantial data or information. 

The above process shall not apply to areas specifically required for annual     
review by The Federal Medicaid Act (Social Security Act, 42. US. C. Sec. 1396 et
seq.), applicable federal regulations, The Healthy Options Waiver 1115b,        
Guidelines for Addressing Fraud and Abuse in Medicaid Managed Care, The Balanced
Budget Act of 1997 and any published, applicable BBA regulations; applicable    
RCWs and applicable WACs.                                                       

The following NCQA definitions apply to terms used in this document:            

COMPLAINT: A term commonly used to describe an oral or written expression of    
dissatisfaction by a member.                                                    

APPEAL: A formal request by a practitioner or covered person for reconsideration
of a decision such as a utilization review recommendation, a benefit payment, an
administrative action, quality of care or service issue, with the goal of       
finding a mutually acceptable solution.                                         

PRACTITIONER: Any individual who is qualified to practice a profession.         
Practitioners are usually required to be licensed as defined by law.            

PROVIDER: An institution or organization that provides services for your        
organization's members. Examples of providers include hospitals and home health 
agencies.                                                                       

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

 1

EX-10.6
75th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 75th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

QUALITY MANAGEMENT AND IMPROVEMENT                                              

QI 1        PROGRAM STRUCTURE                                                   

      The managed care organization's (MCO) quality improvement (QI)
           structures and processes are clearly defined, and responsibility is
assigned to appropriate individuals.                    

QI 1.1      A written description of the QI program outlines the program        
structure and content.                                  

QI 1.1.2    The description of the program includes a section that addresses    
improving patient safety.                               

QI 1.2      The QI program is accountable to the governing body.                

QI 1.3      The program description is evaluated annually and updated as        
necessary.                                              

QI 1.4      A designated physician has substantial involvement in the           
implementation of the QI program.                       

QI 1.5      A committee oversees and is involved in QI activities.              

QI 1.6      The program description specifies the role, structure, and function,
     including frequency of meetings of the QI committee and other
relevant committees.                                    

QI 1.7      The annual QI work plan, or schedule of activities, includes the    
following:                                              

QI 1.7.1          objectives, scope, and planned projects or activities that    
           address the quality and safety of clinical care and the
quality of service for the year;            

QI 1.7.2          planned monitoring of previously identified issues, including 
tracking of issues over time and            

QI 1.7.3          planned evaluation of the QI program as described in QI 12.1. 

QI 1.8      The QI program resources (e.g. personnel, analytic capabilities,    
data resources) are adequate to meet its needs.         

QI 2        PROGRAM OPERATIONS                                                  

            The managed care organization's quality improvement program is fully
operational.                                            

QI 2.1      The QI committee recommends policy decisions, reviews and evaluates 
            the results of QI activities, institutes needed actions, and ensures
follow-up, as appropriate.                              

QI 2.2      There are contemporaneous minutes (i.e. created at the time the     
     activity is conducted), dated and signed, that reflect all QI
committee decisions and actions.                        

QI 2.3      The MCO's practitioners participate actively in the QI program.     

QI 2.4      Upon request, the MCO makes available to its members and            
   practitioners information about its QI program, including a
           description of the QI program and a report on the MCO's progress in
meeting its goals.                                      

QI 3        HEALTH SERVICES CONTRACTING                                         

  Contracts with individual practitioners and organizational
    providers, including those making UM decisions, specify that
     contractors cooperate with the managed care organization's QI
program.                                                

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

 2

EX-10.6
76th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 76th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

QI 3.1      Contracts with practitioners specifically require that:             

QI 3.1.1          the practitioners cooperate with QI activities;               

QI 3.1.2          the MCO has access to the practitioners' medical records to   
     the extent permitted by state and federal law and

QI 3.1.3          the MCO allows open practitioner-patient communication        
            regarding appropriate treatment alternatives and without
                  penalizing practitioners for discussing medically necessary or
appropriate care for the patient.           

QI 3.2      Contracts with providers specifically require that:                 

QI 3.2.1          the providers cooperate with QI activities and                

QI 3.2.2          the MCO has access to the provider's medical records to the   
extent permitted by state and federal law.  

QI 4        AVAILABILITY OF PRACTITIONERS                                       

           The MCO ensures that its network is sufficient in numbers and types
of practitioners.                                       

QI 4.1      In creating and maintaining its delivery system of practitioners,   
            the MCO takes into consideration assessed special and cultural needs
and preferences.                                        

QI 4.2      The MCO implements mechanisms designed to ensure the availability of
PCPs.                                                   

QI 4.2.1          The MCO defines the practitioners who serve as PCPs within its
delivery system.                            

QI 4.2.2          The MCO establishes standards for number and geographic       
distribution of PCPs.                       

QI 4.2.3          The MCO collects and analyzes data to measure its performance 
  against the standards established in QI 4.2.2.

QI 4.2.4          The MCO identifies opportunities for improvement and decides  
which opportunities to pursue.              

QI 4.2.5          The MCO implements interventions to improve its performance.  

QI 4.2.6          The MCO measures the effectiveness of the interventions.      

QI 4.3      The MCO implements mechanisms designed to ensure the availability of
specialty care practitioners.                           

QI 4.3.1          The MCO establishes standards for number and geographic       
distribution of specialty practitioners.    

QI 4.3.2          The MCO collects and analyzes data to measure its performance 
  against the standards established in QI 4.3.1.

QI 4.3.3          The MCO identifies opportunities for improvement and decides  
which opportunities to pursue.              

QI 4.3.4          The MCO implements interventions to improve its performance.  

QI 4.3.5          The MCO measures the effectiveness of the interventions.      

QI 5        ACCESSIBILITY OF SERVICES                                           

     The MCO establishes mechanisms to assure the accessibility of
    primary care services, behavioral health services and member
services.                                               

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

 3

EX-10.6
77th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 77th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

QI 5.1      The MCO establishes standards for access to medical care:           

QI 5.1.1          preventive care appointments;                                 

QI 5.1.2          routine primary care appointments;                            

QI 5.1.3          urgent care appointments;                                     

QI 5.1.4          emergency care; and                                           

QI 5.1.5          after-hours care.                                             

QI 5.2      The MCO establishes standards for key elements of telephone customer
service.                                                

QI 5.4      The MCO collects and analyzes data to measure its performance       
against the standards.                                  

QI 5.5      The MCO identifies opportunities for improvement and decides which  
opportunities to pursue.                                

QI 5.6      The MCO implements interventions to improve its performance.        

QI 5.7      The MCO measures the effectiveness of the interventions.            

QI 6        MEMBER SATISFACTION                                                 

    The MCO implements mechanisms to assure member satisfaction.

QI 6.1      The MCO assesses member satisfaction by:                            

QI 6.1.1          evaluating member complaints and appeals and                  

QI 6.1.2          evaluating requests to change practitioners and/or sites.     

QI 6.2      The MCO uses appropriate methods to collect data for the activities 
listed in QI 6.1:                                       

QI 6.2.1          The appropriate population identified.                        

QI 6.2.2          If sampling used, appropriate samples are drawn from the      
affected population.                        

QI 6.2.3          Valid and reliable data are collected.                        

QI 6.3      The MCO analyzes data from at least the activities listed in QI 6.1 
and the CAHPS(R) 2.0H survey.                           

QI 6.4      The MCO identifies opportunities for improvement and decides which  
opportunities to pursue.                                

QI 6.5      The MCO implements interventions to improve its performance.        

QI 6.6      The MCO measures the effectiveness of the interventions.            

QI 6.7      The MCO informs practitioners and providers of results of member    
satisfaction activities.                                

QI 7        HEALTH MANAGEMENT SYSTEMS                                           

          The MCO actively works to improve the health status of its members
with chronic conditions.                                

QI 7.1      The MCO identifies members with chronic conditions and offers       
     appropriate services and programs to assist in managing their
conditions.                                             

QI 7.2      The MCO informs and educates practitioners about using the health   
management programs for the members assigned to them.   

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

 4

EX-10.6
78th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 78th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

QI 8        CLINICAL PRACTICE GUIDELINES                                        

      The MCO is accountable for adopting and disseminating practice
            guidelines for the provision of acute, chronic and behavioral health
services that are relevant to its enrolled membership.  

QI 8.1      The clinical practice guidelines are based on reasonable medical    
evidence.                                               

QI 8.2      The MCO involves its practitioners in the adoption of clinical      
practice guidelines.                                    

QI 8.3      The MCO has developed a mechanism for reviewing the guidelines at   
least every two years and updating them as appropriate. 

QI 8.4      The MCO distributes the guidelines to its practitioners.            

QI 8.5      Annually, the MCO measures performance against at least three       
guidelines, one of which relates to behavioral health.  

QI 8.6      Decision making in utilization management, member education,        
       interpretation of covered benefits and other areas to which the
 clinical guidelines are applicable is consistent with the
guidelines.                                             

QI 9        CONTINUITY AND COORDINATION OF CARE                                 

     The MCO monitors the continuity and coordination of care that
members receive.                                        

QI 9.1      The MCO monitors the continuity and coordination of care that       
         members receive across practices and provider sites, including at
minimum PCP sites with 50 or more members.              

QI 9.2      The MCO monitors the continuity and coordination of general medical 
           care with behavioral health care. To this end, the MCO collaborates
with its behavioral health specialists to:              

QI 9.2.1          Exchange information in an effective, timely and confidential 
             manner, including patient-approved communications between
                 medical practitioners and behavioral health practitioners and
providers.                                  

QI 9.3      The MCO collects and analyzes data to evaluate continuity and       
coordination of care.                                   

QI 9.3.1          The MCO analyzes data to identify opportunities for           
improvement.                                

QI 9.4      The MCO implements interventions to improve continuity and          
coordination of care.                                   

QI 9.4.1          The MCO implements interventions when it identifies an        
opportunity for improvement.                

QI 9.5      To ensure the continuity and coordination of care, the MCO notifies 
         members affected by the termination of a practitioner or practice
      site and assists them in selecting a new practitioner or site.

QI 10       CLINICAL MEASUREMENT ACTIVITIES                                     

       The MCO uses data collection, measurement and analysis to track
clinical issues that are relevant to its population.    

QI 10.1     At a minimum, the MCO adopts or establishes quantitative measures to
   assess performance and to identify and prioritize areas for
     improvement for three clinical issues, including at least one
behavioral health issue.                                

QI 10.1.1         The measures used to assess performance are objective and     
quantifiable.                               

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

 5

EX-10.6
79th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 79th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

QI 10.1.2         The measures are based on current scientific knowledge and    
clinical experience.                        

QI 10.1.3         Each measure has an established goal and/or benchmark.        

QI 10.2     The MCO uses appropriate methods to collect data for each assessment
measure.                                                

QI 10.2.1         The affected population is identified.                        

QI 10.2.2         If sampling used, appropriate samples are drawn from the      
affected population.                        

QI 10.2.3         Valid and reliable data collected.                            

QI 10.3     The MCO analyzes data collected for each assessment measure.        

QI 10.3.1         There is a quantitative analysis of the assessment data.      

QI 10.3.2         Appropriate personnel, including practitioners, evaluate the  
              analyzed data to identify barriers to improvement that are
                 related to clinical practice and/or administrative aspects of
the delivery system.                        

QI 11       INTERVENTION AND FOLLOW UP FOR CLINICAL ISSUES                      

 The MCO takes action to improve quality by addressing the
            opportunities for improving performance identified in QI 10. The MCO
      also assesses the effectiveness of these interventions through
systematic follow-up.                                   

QI 11.1     The MCO follows up the opportunities for improvement identified     
through assessment and evaluation activities.           

QI 11.1.1         The MCO identifies opportunities for improvement and decides  
which opportunities to pursue.              

QI 11.1.2         The MCO implements interventions to improve practitioner and  
system performance, as appropriate.         

QI 11.1.3         The MCO measures whether the interventions have been          
effective.                                  

QI 12       EFFECTIVENESS OF THE QI PROGRAM                                     

        The MCO evaluates the overall effectiveness of its QI program in
           addressing the quality and safety of clinical care and demonstrates
           improvements in the quality of clinical care and quality of service
to its members.                                         

QI 12.1     There is an annual written evaluation of the QI program. This       
evaluation includes:                                    

QI 12.1.1         a description of completed and ongoing QI activities that     
           address the quality and safety of clinical care and the
quality of service;                         

QI 12.1.2         trending of measures to assess performance in the quality and 
       safety of clinical care and the quality of service;

QI 12.1.2         an analysis of whether there have been demonstrated           
                improvements in the quality of clinical care and the quality
of service to members and                   

QI 12.1.3         an evaluation of the overall effectiveness of the QI program, 
                 including progress toward influencing safe clinical practices
throughout the network.                     

QI 12.2     There is evidence that QI activities have contributed to meaningful 
          improvement in the quality of clinical care and quality of service
provided to members.                                    

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

 6

EX-10.6
80th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 80th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

QI 13       DELEGATION OF QI ACTIVITY                                           

    If the MCO delegates any QI activities, there is evidence of
oversight of the delegated activity.                    

QI 13.1     A mutually agreed upon document describes:                          

QI 13.1.1         the responsibilities of the MCO and the delegated entity;     

QI 13.1.2         the delegated activities;                                     

QI 13.1.3         the frequency of reporting to the MCO;                        

QI 13.1.4         the process by which the MCO evaluates the delegated entity's 
performance and                             

QI 13.1.5         the remedies, including revocation of the delegation,         
                 available to the MCO if the delegated entity does not fulfill
its obligations.                            

QI 13.2     There is evidence that the MCO:                                     

QI 13.2.1         evaluates the delegated entity's capacity to perform delegated
activities prior to delegation;             

QI 13.2.2         approves the delegated entity's QI work plan and QI program   
description annually;                       

QI 13.2.3         evaluates regular reports as specified in QI 13.1.3 and       

QI 13.2.4         evaluates annually whether the delegated entity's activities  
                 are being conducted in accordance with the MCO's expectations
and NCQA standards.                         

UTILIZATION MANAGEMENT                                                          

UM1         UTILIZATION MANAGEMENT STRUCTURE                                    

        The MCO utilization management (UM) structures and processes are
     clearly defined and responsibility is assigned to appropriate
individuals.                                            

UM 1.1      A written description of the UM program outlines the program        
structure and accountability.                           

UM 1.2      A designated senior physician has substantial involvement in the UM 
program implementation.                                 

UM 1.3      The description includes the scope of the program and the processes 
      and information sources used to make determinations of benefit
coverage and medical necessity.                         

UM 1.4      The UM program is evaluated and approved annually by senior         
   management or the QI committee. It is updated as necessary.

UM 2        CLINICAL CRITERIA FOR UM DECISIONS                                  

          To make utilization decisions, the MCO uses written criteria based
        on sound clinical evidence and specifies procedures for applying
those criteria in an appropriate manner.                

UM 2.1      The criteria for determining medical necessity are clearly          
            documented and include procedures for applying criteria based on the
     needs of individual patients and characteristics of the local
delivery system.                                        

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

 7

EX-10.6
81st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 81st
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

UM 2.2      The MCO involves appropriate, actively practicing practitioners in  
          its development or adoption of criteria and in the development and
review of procedures for applying the criteria.         

UM 2.3      The MCO reviews the criteria at specified intervals and updates them
as necessary.                                           

UM 2.4      The MCO states in writing how practitioners can obtain the UM       
           criteria and makes the criteria available to its practitioners upon
request.                                                

UM 2.5      At least annually, the MCO evaluates the consistency with which the 
          health care professionals involved in utilization review apply the
criteria in decision making.                            

UM 3        APPROPRIATE PROFESSIONALS                                           

   Qualified licensed health professionals assess the clinical
information used to support UM decisions.               

UM 3.1      Appropriately licensed health professionals supervise all the review
decisions.                                              

UM 3.2      An appropriate practitioner reviews any denial of care.             

UM 3.2.1          A licensed physician reviews any denial based on medical      
necessity.                                  

UM 3.3      The MCO has written procedures for using board-certified physicians 
           from appropriate specialty areas to assist in making determinations
of medical necessity.                                   

UM 4        TIMELINESS OF UM DECISIONS/1/                                       

 The MCO makes utilization decisions in a timely manner to
accommodate the clinical urgency of the situation.      

UM 4.1      The MCO follows the NCQA's standards for the timeliness of UM       
decision making.                                        

UM 4.1.1          For pre-certification of non-urgent care, the MCO makes       
          decisions within two working days of obtaining all the
necessary information.                      

UM 4.1.2          For pre-certification of non-urgent care, the MCO notifies    
            practitioners of the decisions within one working day of
making the decision.                        

UM 4.1.3          For pre-certifications of non-urgent care that result in      
              denial, the MCO gives members and practitioners written or
               electronic confirmation of the decisions within two working
days of making the decision.                

UM 4.1.4          For pre-certifications of urgent care, the MCO makes decisions
          and notifies practitioners of the decisions within one
                calendar day. If the decision is a denial, the MCO must also
notify members within one calendar day.     

UM 4.1.5          For pre-certification of urgent care that results in denial,  
          the MCO notifies both members and practitioners how to
                 initiate an expedited appeal at the time they are notified of
the denial.                                 

UM 4.1.6          For pre-certification of urgent care that results in denial,  
      the MCO gives members and practitioners written or

----------                                                                      
/1/ See Exhibit A-2 for language to ensure compliance with Patient Bill of      
Rights (PBOR) Legislation.                                                      

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

 8

EX-10.6
82nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 82nd
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

              electronic confirmation of the decision within two working
days of making the decision.                

UM 4.1.7          For concurrent review of services, the MCO makes decisions    
for:                                        

UM 4.1.7.2  See Exhibit A-2, PBOR 4.1.7.2                                       

UM 4.1.8          For concurrent review, the MCO notifies practitioners of      
            decisions within one working day of making the decision.

UM 4.1.9          For concurrent review decisions that result in a denial, the  
             MCO gives members and practitioners written or electronic
       confirmation within one working day of the original
notification.                               

UM 4.1.10         For concurrent review decisions that result in a denial, the  
                  MCO notifies both members and practitioners how to initiate an
                 expedited appeal at the time they are notified of the denial.

UM 4.1.11         For retrospective review, the MCO makes the decision within 30
            working days of obtaining all the necessary information.

UM 4.1.12   See Exhibit A-2, PBOR 4.1.12                                        

UM 5        MEDICAL INFORMATION                                                 

           When making a determination of coverage based on medical necessity,
           the MCO obtains relevant clinical information and consults with the
treating physician.                                     

UM 5.1      A written description identifies the information that is collected  
to support UM decision making.                          

UM 5.2      There is documentation that relevant clinical information is        
gathered consistently to support UM decision making     

UM 6        DENIAL NOTICES                                                      

       The MCO clearly documents and communicates the reasons for each
denial.                                                 

UM 6.1      The MCO makes available to practitioners a physician reviewer to    
       discuss by telephone determinations based on medical necessity.

UM 6.2      The MCO sends written notification to members and practitioners, as 
          appropriate, of the reason for each denial, including the specific
     utilization review criteria or benefit provisions used in the
determination.                                          

UM 6.3      The MCO includes information about the appeal process in all denial 
notifications.                                          

UM 7        POLICIES FOR APPEALS/2/                                             

     The MCO has written policies and procedures for the thorough,
appropriate, and timely resolution of member appeals.   

UM 7.1      Procedures for registering and responding to oral and written       
first-level appeals include the following elements:     

UM 7.1.1          notification to the member of the appeal process within five  
    working days of receiving a request for a first-

----------                                                                      
/2/ See Exhibit A-2 for language to ensure compliance with PBOR regulations.    

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

 9

EX-10.6
83rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 83rd
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

level appeal;                               

UM 7.1.2          documentation of the substance of the appeal and the actions  
taken;                                      

UM 7.1.3          full investigation of the substance of appeal, including any  
aspects of clinical care involved;          

UM 7.1.4          resolution of appeal, including:                              

UM 7.1.4.1              The MCO appoints a person of people to review the       
                   first-level appeal who were not involved in initial
determination.                  

UM 7.1.4.2  See Exhibit A-2, PBOR 7.1.4.2                                       

UM 7.1.5    See Exhibit A-2, PBOR 7.1.5                                         

UM 7.1.6          The MCO establishes procedures for registering and responding 
to expedited first-level appeals.           

UM 7.1.6.1              An expedited appeal may be initiated by the member or by
                the practitioner acting on behalf of the member.

UM 7.1.6.2  See Exhibit A-2, PBOR 7.1.6.2                                       

UM 7.3      A procedure for allowing practitioner or member representative to   
act on behalf of the member at any level of appeal.     

PBOR 1      See Exhibit A-2, PBOR 1                                             

UM 7.4      See Exhibit A-2, PBOR 7.4                                           

UM 7.5      A procedure for providing independent, external review of final     
determinations including:                               

UM 7.5.1    See Exhibit A-2, PBOR 7.5.1                                         

UM 7.5.1.1              the member is appealing an adverse determination that is
               based on medical necessity, as defined NCQA; by

UM 7.5.1.2  See Exhibit A-2, PBOR 7.5.1.2                                       

UM 7.5.1.3              the member has not withdrawn the appeal request, agreed 
                        to another dispute resolution proceeding or submitted to
                     an external dispute resolution proceeding required by
law.                            

UM 7.5.2          Notification to members about the independent appeals program 
as follows:                                 

UM 7.5.2.1              general communications to members announce the          
                availability of the right to independent review.

UM 7.5.2.2              Letters informing members and practitioners of the      
                        upholding of a denial by this standard include notice of
                independent appeal rights and processes, contact
                       information for the IRO and a statement that the member
   does not bear any costs of the IRO.

UM 7.5.2.3              Letters inform members of the time and procedure for    
                     claim payment or approval of service in the event the
                      IRO overturns the managed care organization's decision

UM 7.5.3          CONDUCT OF THE APPEAL PROGRAM AS FOLLOWS:                     

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

10

EX-10.6
84th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 84th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

UM 7.5.3.2              With the exception of exercising its rights as party to 
                      the appeal, the MCO must not attempt to interfere with
       the IRO's proceeding or appeal decision

UM 7.5.3.3              The member is not required to bear costs of the IRO,    
including any filing fees.      

UM 7.5.3.4              The member or his or her legal guardian may designate in
                     writing a representative to act on his or her behalf.

UM 7.5.3.5              The MCO implements the IRO decision within the time     
frame specified by the IRO.     

UM 7.5.3.6              The MCO obtains from the IRO, or maintains, data on each
                 appeal case, including description so fthe denied
                      item(s), reasons for denial, IRO decisions and reasons
               for decisions. The MCO uses this information in
                evaluating its medical necessity decision-making
process.                        

UM 8        APPROPRIATE HANDLING OF APPEALS                                     

UM 8.1      See Exhibit A-2, PBOR 8.1                                           

UM 8.2      independent, external appeals.                                      

CS 1        POLICIES FOR COMPLAINTS see Exhibit A-2 CS 1 through 2.1            

UM 9        EVALUATION OF NEW TECHNOLOGY                                        

       The MCO evaluates the inclusion of new technologies and the new
         application of existing technologies in the benefit package. This
       includes medical and behavioral procedures, pharmaceuticals and
devices.                                                

UM 9.1      The MCO has a written description of the process used to determine  
          whether new technologies and new uses of existing technologies are
included in the benefit package.                        

UM 9.2      The MCO implements this process to assess new technologies and new  
applications of existing technologies.                  

UM 11       EMERGENCY SERVICES                                                  

          The MCO provides, arranges for or otherwise facilitates all needed
    emergency services, including appropriate coverage of costs.

UM 11.1     The MCO covers emergency services necessary to screen and stabilize 
            members without precertification in cases where a prudent layperson,
   acting reasonably, would have believed an emergency medical
condition existed.                                      

UM 11.2     The MCO covers emergency services if an authorized representative   
    acting for the MCO has authorized the provision of emergency
services.                                               

UM 12       PROCEDURES FOR PHARMACEUTICAL MANAGEMENT                            

          The MCO ensures that its procedures for pharmaceutical management,
       if any, promotes clinically appropriate use of pharmaceuticals.

UM 12.1     The MCO's pharmaceutical management procedures are based upon sound 
          clinical evidence, and the organization specifies how to apply the
            procedures in an appropriate manner based on the needs of individual
patients.                                               

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

11

EX-10.6
85th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 85th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

UM 12.2     Where the MCO restricts pharmacy benefits to a closed formulary, it 
          has a process to consider medical necessity exceptions for members
    to obtain coverage of a pharmaceutical not on the formulary.

UM 13       ENSURING APPROPRIATE UTILIZATION                                    

         The MCO facilitates the delivery of appropriate care and monitors
          the impact of its UM program to detect and correct under- and over
utilization of services.                                

UM 13.1     The MCO monitors relevant utilization data for each product line and
      behavioral health services by product line to detect potential
under- and over-utilization.                            

UM 13.2     The MCO routinely analyzes all data collected to detect under- and  
over-utilization.                                       

UM 13.3     The MCO implements appropriate interventions whenever it identifies 
under- and overutilization.                             

UM 13.4     The MCO measures whether the interventions have been effective and  
implement strategies to achieve appropriate utilization.

UM 13.5     The MCO distributes to all its practitioners, providers, members and
           employees a statement describing its policy on financial incentives
and requires practitioners, providers and staff who make
            utilization-related decisions and those who supervise them to sign a
          document acknowledging that they have received the statement. This
statement affirms that:                                 

UM 13.5.1         UM decision-making is based only on appropriateness of care   
and service and existence of coverage.      

UM 13.5.2         The MCO does not specifically reward practitioners or other   
                 individuals conducting utilization review for issuing denials
of coverage or service care.                

UM 13.5.3         Financial incentives for UM decision makers do not encourage  
decisions that result in underutilization.  

UM 15       DELEGATION OF UM                                                    

    If the MCO delegates any UM activities, there is evidence of
oversight of the delegated activity.                    

UM 15.1     A mutually agreed upon document describes:                          

UM 15.1.1         the responsibilities of the MCO and the delegated entity;     

UM 15.1.2         the delegated activities;                                     

UM 15.1.3         the frequency of reporting to the MCO;                        

UM 15.1.4         the process by which the MCO evaluates delegated entity's     
performance and                             

UM 15.1.5         the remedies, including revocation of the delegation,         
                 available to the MCO if the delegated entity does not fulfill
its obligations.                            

UM 15.2     There is evidence that the MCO:                                     

UM 15.2.1         evaluates the delegated entity's capacity to perform the      
delegated activities prior to delegation;   

UM 15.2.2         approves the delegated entity's UM program annually;          

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

12

EX-10.6
86th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 86th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

UM 15.2.3         evaluates regular reports as specified in UM 15.1.3 and       

UM 15.2.4         evaluates annually whether the delegated entity's activities  
                 are being conducted in accordance with the MCO's expectations
& NCQA standards.                           

CREDENTIALING AND RECREDENTIALING                                               

CR 1        CREDENTIALING POLICIES                                              

 The MCO documents the mechanism for the credentialing and
          recredentialing of licensed independent practitioners with whom it
           contracts or employs and who fall within its scope of authority and
 action. At a minimum, the policies and procedures define:

CR 1.1      the scope of practitioners covered;                                 

CR 1.2      the criteria and the primary source verification of information used
to meet these criteria;                                 

CR 1.3      the process used to make decisions;                                 

CR 1.4      the process to delegate credentialing or recredentialing;           

CR 1.5      the right of practitioners to review the information submitted in   
support of their credentialing applications;            

CR 1.6      the process for notification to a practitioner of any information   
   obtained during the MCO's credentialing process that varies
     substantially from the information provided to the MCO by the
practitioner;                                           

CR 1.7      the practitioner's right to correct erroneous information;          

CR 1.8      the medical director's or other designated physician's direct       
         responsibility and participation in the credentialing program and

CR 1.9      the process used to ensure the confidentiality of all information   
           obtained in the credentialing process, except as otherwise provided
by law.                                                 

CR 2        CREDENTIALING COMMITTEE                                             

The MCO designates a credentialing committee that makes 
      recommendations regarding credentialing decisions using a peer
review process.                                         

CR 3        INITIAL PRIMARY SOURCE VERIFICATION                                 

   At the time of credentialing, the MCO verifies at least the
    following information from primary sources (unless otherwise
indicated):                                             

CR 3.1      a current valid license to practice;                                

CR 3.2      a valid DEA or CDS certificate as applicable;                       

CR 3.3      education and training of practitioners;                            

CR 3.4      board certification if the practitioner states that he/she is board 
certified on the application;                           

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

13

EX-10.6
87th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 87th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

CR 3.5      work history;                                                       

CR 3.6      history of professional liability claims that resulted in           
          settlements or judgments paid by or on behalf of the practitioner.

CR 4        APPLICATION AND ATTESTATION                                         

  The applicant completes an application for membership. The
    application includes a current and signed attestation by the
applicant regarding:                                    

CR 4.1      reasons for any inability to perform the essential functions of the 
position, with or without accommodation;                

CR 4.2      lack of present illegal drug use;                                   

CR 4.3      history of loss of license and felony convictions;                  

CR 4.4      history of loss or limitation of privileges or disciplinary         
activity;                                               

CR 4.5      current malpractice insurance coverage and                          

CR 4.6      the correctness and completeness of the application.                

CR 5        INITIAL SANCTION INFORMATION                                        

           There is documentation that before making a credentialing decision,
        the MCO has received the following information and includes this
information in the credentialing files.                 

CR 5.1      The MCO has received information from the National Practitioner Data
Bank (NPDB) and includes it in the credentialing files. 

CR 5.2      The MCO has received information about sanctions or limitations on  
           licensure as applicable and includes it in the credentialing files.

CR 5.3      The MCO has reviewed for previous sanction activity by Medicare and 
Medicaid and includes it in the credentialing files.    

CR 6        INITAL CREDENTIALING SITE VISITS                                    

        The MCO has a process for ensuring that the offices of all PCPs,
          obstetricians/gynecologists and high volume behavioral health care
practitioners meet the MCO's office site standards      

CR 7        RECREDENTIALING PRIMARY SOURCE VERIFICATION                         

       The MCO formally recredentials its practitioners at least every
            three years. During the recredentialing process it verifies at least
        the following information from primary sources (unless otherwise
indicated):                                             

CR 7.1      a valid state license to practice;                                  

CR 7.2      a valid DEA or CDS certificate, as applicable;                      

CR 7.3      board certification, if the practitioner states that he/she is board
certified;                                              

CR 7.4      history of professional liability claims that resulted in           
settlements or judgments paid by or on behalf of the    

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

14

EX-10.6
88th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 88th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

practitioner;                                           

CR 7.5      a current, signed attestation by the applicant regarding:           

CR 7.5.1          reasons for any inability to perform the essential functions  
   of the position, with or without accommodation;

CR 7.5.2          lack of present illegal drug use;                             

CR 7.5.3          history of loss or limitation of privileges or disciplinary   
activity;                                   

CR 7.5.4          current malpractice insurance coverage and                    

CR 7.5.5          the correctness and completeness of the application.          

CR 8        RECREDENTIALING SANCTION INFORMATION                                

    There is documentation that, before making a recredentialing
       decision, the MCO has received the following information on the
         practitioner and includes this information in the recredentialing
files.                                                  

CR 8.1      The MCO has received information from the National Practitioner Data
Bank and includes it in the recredentialing files.      

CR 8.2      The MCO has received information about sanctions or limitations on  
        licensure, as applicable, and includes it in the recredentialing
files:                                                  

CR 8.3      The MCO has reviewed for previous sanction activity by Medicare and 
Medicaid and records this in the recredentialing files. 

CR 9        PERFORMANCE MONITORING                                              

            The MCO incorporates information from quality improvement activities
   in its recredentialing decision-making process for PCPs and
high-volume behavioral health care practitioners.       

CR 9.1      member complaints                                                   

CR 9.2      information from QI activities.                                     

CR 10       ONGOING MONITORING OF SANCTIONS AND COMPLAINTS                      

       The MCO has implemented policies and procedures for the ongoing
   monitoring of practitioner sanctions and complaints between
            recredentialing cycles. The MCO has taken appropriate action against
     practitioners when it identifies occurrences of poor quality.

CR 10.1     The MCO has a written policy and procedure that addresses the       
         ongoing monitoring and use of the following types of information:

CR 10.1.1         Medicare and Medicaid sanctions;                              

CR 10.1.2         sanctions and limitations on licensure and                    

CR 10.1.3         complaints                                                    

CR 10.2     The MCO implements the policy and procedure by regularly obtaining  
and reviewing documentation on sanctions                

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

15

EX-10.6
89th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 89th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

and complaints.                                         

CR 10.3     The MCO implements appropriate interventions when it identifies     
occurrences of poor quality.                            

CR 11       NOTIFICATION TO AUTHORITIES AND PRACTITIONER APPEAL RIGHT           

       When a MCO has taken actions against a practitioner for quality
            reasons, the organization offers a formal appeal process and reports
the action to the appropriate authorities.              

CR 11.1     The MCO has procedures for, and documentation of implementation, as 
         appropriate, reporting of serious quality deficiencies that could
   result in a practitioner's suspension or termination to the
appropriate authorities.                                

CR 11.2     The MCO has an appeal process for instances in which the MCO chooses
           to alter the condition of the practitioner's participation based on
 issues of quality of care and/or service. The MCO informs
practitioners of the appeal process.                    

CR 12       ASSESSMENT OF ORGANIZATIONAL PROVIDERS                              

       The MCO has written policies and procedures for the initial and
            ongoing assessment of organizational providers with which it intends
to contract.                                            

CR 12.1     The MCO includes at least the following medical providers:          

CR 12.1.1         hospitals, home health agencies, skilled nursing facilities,  
     nursing homes and free standing surgical centers;

CR 12.2     The MCO confirms that the provider is in good standing with the     
state and federal regulatory bodies and                 

CR 12.3     The MCO confirms that the provider has been reviewed and approved by
an accrediting body, or                                 

CR 12.4     If the provider has not been approved by an accrediting body, the   
MCO develops and implements standards of participation. 

CR 12.5     At least every three years, the MCO confirms that the provider      
          continues to be in good standing with state and federal regulatory
  bodies and, if applicable, is reviewed and approved by and
accrediting body.                                       

CR 13       DELEGATION OF CREDENTIALING                                         

  If the MCO delegates any credentialing and recredentialing
        activities, there is documentation of oversight of the delegated
activity.                                               

CR 13.1     A mutually agreed upon document describes:                          

CR 13.1.1         the responsibilities of the MCO and the delegated entity;     

CR 13.1.2         the delegated activities;                                     

CR 13.1.3         the process by which the MCO evaluates delegated entity's     
performance and                             

CR 13.1.4         the remedies, including revocation of the delegation,         
                 available to the MCO if the delegated entity does not fulfill
its obligations.                            

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

16

EX-10.6
90th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 90th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

CR 13.2     The MCO retains the right, based on quality issues, to approve new  
      practitioners, providers and sites and to terminate or suspend
individual practitioner or providers.                   

CR 13.3     There is documentation that the MCO:                                

CR 13.3.1         evaluates the delegated entity's capacity to perform the      
delegated activities prior to delegation and

CR 13.3.2         evaluates annually whether the delegated entity's activities  
                 are being conducted in accordance with the MCO's expectations
and NCQA standards.                         

MEMBERS' RIGHTS AND RESPONSIBILITIES                                            

RR 1        STATEMENT OF MEMBERS RIGHTS AND RESPONSIBILITIES                    

   The MCO has a written policy that states the organization's
      commitment to treating members in a manner that respects their
        rights as well as its expectations of members' responsibilities.
        This policy addresses the following rights and responsibilities:

RR 1.1      Members have a right to receive information about the MCO, its      
         services, its practitioners and providers and members' rights and
responsibilities.                                       

RR 1.2      Members have a right to be treated with respect and recognition of  
their dignity and right to privacy.                     

RR 1.3      Members have a right to participate with practitioners in decision  
making regarding their health care.                     

RR 1.4      Members have a right to a candid discussion of appropriate or       
   medically necessary treatment options for their conditions,
regardless of cost or benefit coverage.                 

RR 1.5      Members have a right to voice complaints or appeals about MCO or the
care provided.                                          

RR 1.6      Members have a responsibility to provide, to the extent possible,   
            information that the MCO and its practitioners and providers need in
order to care for them.                                 

RR 1.7      Members have a responsibility to follow the plans and instructions  
   for care that they have agreed on with their practitioners.

RR 2        DISTRIBUTION OF RIGHTS STATEMENTS TO MEMBERS AND PRACTITIONERS      

The MCO distributes the policy on members' rights and   
    responsibilities to members and participating practitioners.

RR 3        POLICIES FOR COMPLAINTS AND APPEALS                                 

     The MCO has written policies and procedures for the thorough,
           appropriate and timely resolution of member complaints and appeals.

RR 3.1      Procedures for registering and responding to oral and written       
complaints include the following elements:              

RR 3.1.1          documentation of the substance of the complaint and the       
actions taken;                              

RR 3.1.2          full investigation of the substance of the complaint,         
    including any aspects of clinical care involved;

RR 3.1.3          notification to the member of the disposition of the complaint
and the right to appeal, as appropriate, and

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

17

EX-10.6
91st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 91st
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

RR 3.1.4          standards for timeliness in responding to complaints that     
      accommodate the clinical urgency of the situation.

RR 4        SUBSCRIBER INFORMATION                                              

   The MCO provides each subscriber with information needed to
understand benefit coverage and obtain care.            

RR 4.1      The MCO provides written information about benefits and charges     
    applicable to the subscriber. This information addresses the
following elements:                                     

RR 4.1.1          the benefits and services included in, and excluded from,     
coverage;                                   

RR 4.1.1.1              this information states whether the MCO has             
                       pharmaceutical management procedures. It also describes
                        how to obtain the procedures, the extent to which access
                  to specific pharmaceuticals is restricted, and the
                       process for requesting an exception to receive coverage
                  for non-formulary pharmaceuticals if the MCO has a
closed formulary.               

RR 4.1.2          co-payments and other charges for which the member is         
responsible;                                

RR 4.1.3          any restrictions on benefits that apply to services obtained  
                  outside the MCO's system or outside the MCO's service area and

RR 4.2      The MCO provides written information that instructs members about   
   how to obtain primary and specialty care. This includes the
following:                                              

RR 4.2.1          how to obtain information about practitioners who participate 
in the MCO;                                 

RR 4.2.2          how to obtain primary care services, including points of      
access;                                     

RR 4.2.3          how to obtain specialty care, behavioral health services and  
hospital services;                          

RR 4.2.4          how to obtain care after normal office hours;                 

RR 4.2.5          how too obtain emergency care, including the MCO's policy on  
                  when to directly access emergency care or use 911 services and

RR 4.2.6          how to obtain care and coverage when out of the MCO's service 
area.                                       

RR 4.3      The MCO provides written information about:                         

RR 4.3.1          how to voice a complaint;                                     

RR 4.3.2          how to appeal a decision that adversely affects the member's  
              coverage, benefits or relationship to the organization and

RR 4.4      The MCO provides translation services within its member services    
       telephone function based on the linguistic needs of its members

RR 5        PRIVACY AND CONFIDENTIALLY                                          

      The MCO protects the confidentiality of member information and
records.                                                

RR 5.1      The MCO adopts and implements written confidentiality policies and  
procedures to ensure the confidentiality of             

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

18

EX-10.6
92nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 92nd
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

      member information used for any purpose including policies for
members who lack ability to give consent.               

RR 5.2      The MCO contracts with practitioners and providers explicitly state 
        expectations about the confidentiality of member information and
records.                                                

RR 5.3      The MCO ensures that data shared with employers, whether fully      
        insured or self-insured, are not implicitly or explicitly member
     identifiable, unless specific consent is provided by members.

RR 6        MARKETING INFORMATION                                               

    The MCO ensures that communications with prospective members
     correctly and thoroughly represent the benefits and operating
procedures of the organization.                         

RR 6.1      Materials for prospective members contain a summary statement of how
UM procedures work.                                     

RR 6.2      All materials and presentations accurately describe:                

RR 6.2.1          the covered benefits, non-covered services, availability of   
          practitioners and providers and potential restrictions
      incorporated in the MCO's operating procedures and

RR 6.2.2          the existence of pharmaceutical management procedures. The MCO
                informs members, upon request, how to obtain the procedures,
                the extent to which restricted pharmaceuticals are a covered
                benefit and the exceptions policy for receiving coverage for
         non-formulary pharmaceuticals if the MCO has a closed
formulary.                                  

RR 7        DELEGATION OF MEMBERS' RIGHTS AND RESPONSIBILITIES                  

     If the MCO delegates any member services activities, there is
evidence of oversight of the delegated activities.      

RR 7.1      A mutually agreed upon document describes:                          

RR 7.1.1          the responsibilities of the MCO and the delegated entity;     

RR 7.1.2          the delegated activities;                                     

RR 7.1.3          the frequency of reporting to the MCO;                        

RR 7.1.4          the process by which the MCO evaluates the delegated entity's 
performance and                             

RR 7.1.5          the remedies, including revocation of the delegation,         
                 available to the MCO if the delegated entity does not fulfill
its obligations.                            

RR 7.2      There is evidence that the MCO:                                     

RR 7.2.1          evaluates the delegated entity's capacity to perform the      
delegated activities prior to delegation;   

RR 7.2.2          evaluates regular reports as specified in RR 7.1.3 and        

RR 7.2.3          evaluates annually whether the delegated entity's activities  
                 are being conducted in accordance with the MCO's expectations
and NCQA standards.                         

PREVENTIVE HEALTH SERVICES                                                      

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission                                                                      

19

EX-10.6
93rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 93rd
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

PH 1        ADOPTION OF PREVENTIVE HEALTH GUIDELINES                            

         The MCO has preventive health guidelines for prevention and early
detection of illness and disease.                       

PH 1.1      The MCO has guidelines for the following categories:                
Prenatal and perinatal care;                            
Preventive care for infants up to 24 months;            
 Preventive care for children and adolescents, 2-19 years;
Preventive care for adults, 20-64 years;                
Preventive care for the elderly, 65 years and older.    

PH 1.2      Each guideline describes the prevention or early detection          
        interventions and the recommended frequency and conditions under
   which the interventions are required. The MCO documents the
         scientific basis or authority that it based the preventive health
guidelines.                                             

PH 1.3      Practitioners from the MCO who have appropriate knowledge have been 
 involved in adoption of the preventive health guidelines.

PH 1.4      These preventive health guidelines or its predecessors have been    
available for use for at least two years.               

PH 1.5      For those preventive health guidelines that have been in place for  
           at least two years, there is evidence of review and update at least
once every two years, where appropriate.                

PH 2        DISTRIBUTION OF GUIDELINES TO PRACTITIONERS                         

            The MCO distributes the preventive health guidelines and any updates
to its practitioners.                                   

PH 3        HEALTH PROMOTION WITH MEMBERS                                       

         The MCO regularly encourages its members to use preventive health
services.                                               

PH 3.1      The MCO distributes preventive health guidelines to members         
annually.                                               

PH 3.2      The MCO informs and encourages members to use the health promotion, 
  health education and preventive health services available.

PH 3.3      The MCO identifies specific members who, according to demographic   
          and other identifiable health factors, may be at risk for specific
         health problems and urges these members to use appropriate health
promotion and prevention services.                      

PH 4        DELEGATION OF PREVENTIVE HEALTH                                     

       If the MCO delegates any preventive health activities, there is
evidence of oversight of the delegated activities.      

PH 4.1      A mutually agreed upon document describes:                          

PH 4.1.1          the responsibilities of the MCO and the delegated entity;     

PH 4.1.2          the delegated activities;                                     

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

20

EX-10.6
94th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 94th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-1

NCQA STANDARDS 2003                                                             

PH 4.1.3          the frequency of reporting to the MCO;                        

PH 4.1.4          the process by which the MCO evaluates the delegated entity's 
performance and                             

PH 4.1.5          the remedies, including revocation of the delegation,         
                 available to the MCO if the delegated entity does not fulfill
its obligations.                            

PH 4.2      There is evidence that the MCO:                                     

PH 4.2.1          evaluates the delegated entity's capacity to perform the      
delegated activities prior to delegation;   

PH 4.2.2          approves the delegated entity's preventive health work plan   
annually;                                   

PH 4.2.3          evaluates regular reports as specified in PH 4.1.3 and        

PH 4.2.4          evaluates annually whether the delegated entity's activities  
                 are being conducted in accordance with the MCO's expectations
and NCQA standards.                         

 MEDICAL RECORDS

MR 1        MEDICAL RECORDS DOCUMENTATION STANDARDS                             

          The MCO requires medical records to be maintained in a manner that
    is current, detailed and organized and permits effective and
confidential patient care and quality review.           

MR 1.1      The MCO has medical record confidentiality policies and procedures. 

MR 1.2      The MCO has medical record documentation standards, and these       
standards and goals are distributed to practice sites.  

MR 1.3      The MCO establishes and requires its practitioners to have an       
     organized medical record keeping system and standards for the
         availability of medical records appropriate to the practice site.

MR 1.4      The MCO has process to assess and improve, as needed, the quality of
medical record keeping.                                 

MR 2        COMPLIANCE WITH NCQA RECORDS STANDARDS                              

        Documentation of items on the NCQA medical record review summary
           sheet demonstrates that medical records are in conformity with good
        professional medical practice and appropriate health management.

--------------------------------------------------------------------------------
These Standards are Copyright 2001 (July 1, 2001 - June 30, 2003) by the        
National Committee for Quality Assurance (NCQA) and protected by international  
and national copyright law. This material may not be copied, reproduced,        
distributed, modified, published, adapted, edited or translated, without express
written permission of or license from NCQA. All Rights Reserved. Used with      
permission.                                                                     

21

EX-10.6
95th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 95th
 EXHIBIT A-2
QUALITY IMPROVEMENT PROGRAM 2003 STANDARDS
PATIENT BILL OF RIGHTS (PBOR) AND COMPLAINTS

TIMELINESS OF UM DECISIONS      

WAC 284-43-10(5)(b)     ongoing ambulatory care based on the severity or        
Replaces UM 4.1.7.2     complexity of the patient's condition or on necessary   
                      treatment and discharge planning activity, but no more
                    than 1 0 working days of obtaining all the necessary
information/1/.                 

WAC 284-43-410(5)(d)    For retrospective review, the MCO notifies practitioners
Replaces UM 4.1.12      and members of denials in writing within two working    
days of making the decision./2/ 

POLICIES FOR APPEALS            

WAC 284-43-620(1)       If the MCO cannot make a decision within 14 days of     
Replaces UM 7.1.4.2     receipt of the appeal, the carrier notifies the covered 
                     person that an extension is necessary to complete the
                        appeal; however, the extension cannot delay the decision
                     beyond thirty days of the request for appeal, without
                       the informed, written consent of the covered person./3/

RCW 48.43.530(g)        written notification to the member of disposition of the
Replaces UM 7.1.5       appeal and of the potential right to appeal to a        
                   certified independent review organization (IRO)./4/

WAC 284-43-620(2)       The MCO makes the expedited appeal decision and notifies
Replaces UM 7.1.6.2     the member and practitioner(s) as expeditiously as the  
                        medical condition requires, but no later than three days
after the request is made.      
                    If the treating provider determines that delay could
                    jeopardize the covered person's health or ability to
                       regain maximum function, the MCO shall presume the need
                for expeditious determination in any independent
review./5/                      

WAC 284-43-620(4)       At least one of the people appointed to review an appeal
Replaces UM 7.4         involving clinical issues is an actively practicing     
                   practitioner in the same or a similar specialty who
                    typically treats the medical condition, performs the
                       procedure or provides the treatment. The individual did
                      not participate in any of the MCO's prior decisions on
the case.                       

WAC 284-43-630(1)       eligibility criteria stating that the MCO offers members
Replaces UM 7.5.1       the right to a certified IRO whenever:/6/               

WAC 284-43-630(1)       the MCO has completed one/7/ level of internal review   
Replaces UM 7.5. 1.2    and its decision is unfavorable to the member, or has   
                       elected to bypass/8/ internal review and proceed to the
                     independent review or has exceeded its time limit for
                internal reviews, without good cause and without
reaching a decision and         

WAC 284-43-630(2)       A procedure for providing appropriate records or        
                     information to a certified IRO within 3 business days
including:/9/                   

WAC 284-3-630(2)(a)     any medical records of the covered person relevant to   
the review;                     

----------                                                                      
/1/ PBOR states that the frequency of the reviews for the extension of initial  
determinations must be based upon the severity or complexity of the     
patient's condition or on necessary treatment and discharge planning    
activity. See PBOR WAC 284-43-410 Utilization Review--Generally 5(b).   
/2/ PBOR distinguishes different timelines for only concurrent review decisions 
   i.e., "Notification of the determination shall be provided to the attending
    physician or ordering provider or facility and the covered person within two
    days of the determination and shall be provided within one day of concurrent
review determination...." See PBOR WAC 284-43-410 Utilization           
Review--Generally 5(d).                                                 
/3/ See PBOR WAC 284-43-620(1) Procedures for review and appeal of adverse      
determinations for description of timelines. Timelines must conform with
PBOR regulations unless NCQA standards more restrictive.                
/4/ Deleted standards related to second level appeal; second level appeal is to 
an Independent Review Organization (IRO).                               
/5/ See PBOR WAC 284-43-620(2) Procedures for review and appeal of adverse      
  determinations for description of expedited review. Also note the treating
   health care provider determines if delay could jeopardize health or ability
to regain function.                                                     
/6/ Modified to comply with PBOR language, i.e., 'certified' independent review 
organization.                                                           
/7/ Modified from two levels of appeal to one level of appeal.                  
/8/ Removed reference to 'one or both levels'.                                  
/9/ See PBOR WAC 284-43-630 (2) (a), (b), (c), (d), (e), (f) and (5) Independent
review of adverse determinations.                                       

 1

EX-10.6
96th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 96th
                                                        2003 HO & SCHIP Contract
                                           Exhibit A-2

WAC 284-43-630(2)(b)    any documents used by the MCO in making the             
                  determination to be reviewed by the certified IRO;

WAC 284-3-630(2)(C)     any documentation and written information submitted to  
     the carrier in support of the appeal;

WAC 284-43-630(2)(d)    a list of each physician or health care provider who has
                    provided care to the covered person and who may have
              medical records relevant to the appeal. Health
                information or other confidential or proprietary
                       information in the custody of a carrier may be provided
                        to an IRO, subject to the privacy provision of Title 284
WAC;                            

WAC 284-43-630(2)(e)    the attending or ordering provider's recommendations;   

WAC 284-43-630(2)(f)    the terms and conditions of coverage under the relevant 
                     health plan. The MCO shall also make available to the
                      covered person and to any provider acting on behalf of
                   the covered person all materials provided to an IRO
  reviewing the MCO's determination.

   APPROPRIATE HANDLING OF APPEALS/10/

WAC 284-43-620          The MCO adjudicates member's appeals in a thorough,     
Replaces UM 8           appropriate and timely manner. The MCO meets all the    
                     requirements of standard UM 7, Patient Bill of Rights
               Legislation and its own standards for handling:

Replaces UM 8.1         first level appeals                                     

----------                                                                      
/10/ Modified to reflect Patient Bill of Rights Legislation and exclusion of    
second level appeals.                                                 

 2

EX-10.6
97th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 97th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

 EXHIBIT B
 WAC 388-538
MANAGED CARE

WAC 388-538-050                                                                 
DEFINITIONS. The following definitions and abbreviations and those found in     
chapter 388-500-0005 WAC, Medical definitions, apply to this chapter.           
"ANCILLARY HEALTH SERVICES" means health services ordered by a provider,        
including but not limited to, laboratory services, radiology services, and      
physical therapy.                                                               
"APPEAL" means a formal request by a provider or covered enrollee for           
reconsideration of a decision such as a utilization review recommendation, a    
benefit payment, an administrative action, or a quality of care or service      
issue, with the goal of finding a mutually acceptable solution.                 
"ASSIGN" or "ASSIGNMENT" means that MAA selects a managed care organization     
(MCO) or primary care case management (PCCM) provider to serve a client who     
lives in a mandatory enrollment area and who has failed to select an MCO or PCCM
provider.                                                                       
"BASIC HEALTH (BH)" means the health care program authorized by title 70.47 RCW 
and administered by the health care authority (HCA). MAA considers basic health 
to be third-party coverage, however, this does not include basic health plus    
(BH.+).                                                                         
"CHILDREN'S HEALTH INSURANCE PROGRAM (CHIP)" means the health insurance program 
authorized by Title XXI of the Social Security Act and administered by the      
department of social and health services (DSHS). This program also is referred  
to as the state children's health insurance program (SCHIP).                    
"CHILDREN WITH SPECIAL HEALTH CARE NEEDS" means children identified by the      
department of social and health services (DSHS) as having special health care   
needs. This includes:                                                           
(1) Children designated as having special health care needs by the department of
health (DOH) and served under the Title V program;                              
(2) Children who meet disability criteria of Title 16 of the Social Security Act
(SSA); and                                                                      
(3) Children who are in foster care or who are served under subsidized adoption.
"CLIENT" means an individual eligible for any medical program who is not        
enrolled with a managed care organization (MCO) or primary care case management 
(PCCM) provider. In this chapter, client refers to a person before the person is
enrolled in managed care, while enrollee refers to an individual eligible for   
any medical program who is enrolled in managed care.                            
"COMPLAINT" means an oral or written expression of dissatisfaction by an        
enrollee.                                                                       
"EMERGENCY MEDICAL CONDITION" means a condition meeting the definition in       
42 U.S.C. 1396u-2(b)(2)(C).                                                     
"EMERGENCY SERVICES" means services as defined in 42 U.S.C. 1396u-2 (b)(2)(B).  
"END ENROLLMENT" means an enrollee is currently enrolled in managed care, either
with a managed care organization (MCO) or with a primary care case management   
(PCCM) provider, and requests to discontinue enrollment and return to the       
fee-for-service delivery system for one of the reasons outlined in WAC          
388-538-130. This is also                                                       

 1

EX-10.6
98th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 98th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

referred to as "disenrollment."                                                 
"ENROLLEE" means an individual eligible for any medical program who is enrolled 
in managed care through a managed care organization (MCO) or primary care case  
management (PCCM) provider that has a contract with the state.                  
"ENROLLEES WITH CHRONIC CONDITIONS" means persons having chronic and disabling  
conditions, including persons with special health care needs that meet all of   
the following conditions:                                                       
(1) Have a biologic, psychologic, or cognitive basis;                           
(2) Have lasted or are virtually certain to last for at least one year; and     
(3) Produce one or more of the following conditions stemming from a disease:    
(a) Significant limitation in areas of physical, cognitive, or emotional        
function;                                                                       
(b) Dependency on medical or assistive devices to minimize limitation of        
function or activities; or                                                      
(c) In addition, for children, any of the following:                            
(i) Significant limitation in social growth or developmental function;          
(ii) Need for psychologic, educational, medical, or related services over and   
above the usual for the child's age; or                                         
(iii) Special ongoing treatments, such as medications, special diet,            
interventions, or accommodations at home or school.                             
"EXEMPTION" means a client, not currently enrolled in managed care, makes a pre-
enrollment request to remain in the fee-for-service delivery system for one of  
the reasons outlined in WAC 388-538-080.                                        
"HEALTH CARE SERVICE" or "SERVICE" means a service or item provided for the     
prevention, cure, or treatment of an illness, injury, disease, or condition.    
"HEALTHY OPTIONS CONTRACT OR HO CONTRACT" means the agreement between the       
department of social and health services (DSHS) and a managed care organization 
(MCO) to provide prepaid contracted services to enrollees.                      
"HEALTHY OPTIONS PROGRAM OR HO PROGRAM" means the medical assistance            
administration's (MAA) prepaid managed care health program for Medicaid-eligible
clients and CHIP clients.                                                       
"MANAGED CARE" means a comprehensive system of medical and health care delivery 
including preventive, primary, specialty, and ancillary health services. These  
services are provided either through a managed care organization (MCO) or       
primary care case management (PCCM) provider.                                   
"MANAGED CARE ORGANIZATION" or "MCO" means a health maintenance organization or 
health care service contractor that contracts with the department of social and 
health services (DSHS) under a comprehensive risk contract to provide prepaid   
health care services to eligible medical assistance administration (MAA) clients
under MAA's managed care programs.                                              
"NONPARTICIPATING PROVIDER" means a person or entity that does not have a       
written agreement with a managed care organization (MCO) but that provides      
MCO-contracted health care services to managed care enrollees with the          
authorization of the MCO. The MCO is solely responsible for payment for         
MCO-contracted health care services that are authorized by the MCO and provided 
by nonparticipating providers.                                                  

 2

EX-10.6
99th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 99th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

"PARTICIPATING PROVIDER" means a person or entity with a written agreement with 
a managed care organization (MCO) to provide health care services to managed    
care enrollees. A participating provider must look solely to the MCO for payment
for such services.                                                              
"PRIMARY CARE CASE MANAGEMENT (PCCM)" means the health care management          
activities of a provider that contracts with the department to provide primary  
health care services and to arrange and coordinate other preventive, specialty, 
and ancillary health services.                                                  
"PRIMARY CARE PROVIDER (PCP)" means a person licensed or certified under Title  
18 RCW including, but not limited to, a physician, an advanced registered nurse 
practitioner (ARNP), or a physician assistant who supervises, coordinates, and  
provides health services to a client or an enrollee, initiates referrals for    
specialist and ancillary care, and maintains the client's or enrollee's         
continuity of care.                                                             
"PRIOR AUTHORIZATION (PA)" means a process by which enrollees or providers must 
request and receive MAA approval for certain medical services, equipment, drugs,
and supplies, based on medical necessity, before the services are provided to   
clients, as a precondition for provider reimbursement. Expedited prior          
authorization and limitation extension are forms of prior authorization. See WAC
388-501-0165.                                                                   
"TIMELY" - in relation to the provision of services, means an enrollee has the  
right to receive medically necessary health care without unreasonable delay.    

WAC 388-538-060                                                                 
MANAGED CARE AND CHOICE.                                                        
(1) A client is required to enroll in managed care when that client meets all of
the following conditions:                                                       
(a) Is eligible for one of the medical programs for which clients must enroll in
managed care;                                                                   
(b) Resides in an area, determined by the medical assistance administration     
(MAA), where clients must enroll in managed care;                               
(c) Is not exempt from managed care enrollment as determined by MAA, consistent 
with WAC 388-538-080, and any related fair hearing has been held and decided;   
and                                                                             
(d) Has not had managed care enrollment ended by MAA, consistent with WAC 388-  
538-130.                                                                        
(2) American Indian/Alaska Native (AI/AN) clients who meet the provisions of 25 
U.S.C. 1603 (c)-(d) for federally-recognized tribal members and their           
descendants may choose one of the following:                                    
(a) Enrollment with a managed care organization (MCO) available in their area;  
(b) Enrollment with an Indian or tribal primary care case management (PCCM)     
provider available in their area; or                                            
(c) MAA's fee-for-service system.                                               
(3) A client may enroll with an MCO or PCCM provider by calling MAA's toll-free 
enrollment line or by sending a completed enrollment form to MAA.               
(a) Except as provided in subsection (2) of this section for clients who are    
AI/AN and in subsection (5) of this section for cross-county enrollment, a      
client required to enroll in managed care must enroll with an MCO or PCCM       
provider available in the area where the client lives.                          

 3

EX-10.6
100th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 100th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(b) All family members must either enroll with the same MCO or enroll with PCCM 
providers.                                                                      
(c) Enrollees may request an MCO or PCCM provider change at any time.           
(d) When a client requests enrollment with an MCO or PCCM provider, MAA enrolls 
a client effective the earliest possible date given the requirements of MAA's   
enrollment system. MAA does not enroll clients retrospectively.                 
(4) MAA assigns a client who does not choose an MCO or PCCM provider as follows:
(a) If the client has family members enrolled with an MCO, the client is        
enrolled with that MCO;                                                         
(b) If the client does not have family members enrolled with an MCO, and the    
client was enrolled in the last six months with an MCO or PCCM provider, the    
client is re-enrolled with the same MCO or PCCM provider;                       
(c) If a client does not choose an MCO or a PCCM provider, but indicates a      
preference for a provider to serve as the client's primary case provider (PCP), 
MAA attempts to contact the client to complete the required choice. If MAA is   
not able to contact the client in a timely manner, MAA documents the attempted  
contacts and, using the best information available, assigns the client as       
follows. If the client's preferred PCP is:                                      
(i) Available with one MCO, MAA assigns the client in the MCO where the client's
PCP provider is available. The MCO is responsible for PCP choice and assignment;
(ii) Available only as a PCCM provider, MAA assigns the client to the preferred 
provider as the client's PCCM provider;                                         
(iii) Available with multiple MCOs or through an MCO and as a PCCM provider, MAA
assigns the client to an MCO as described in (d) of this subsection;            
(iv) Not available through any MCO or as a PCCM provider, MAA assigns the client
to an MCO or PCCM provider as described in (d) of this subsection.              
(d) If the client cannot be assigned according to (a), (b), or (c) of this      
subsection, MAA assigns the client as follows:                                  
(i) If an AI/AN client does not choose an MCO or PCCM provider, MAA assigns the 
client to a tribal PCCM provider if that client lives in a zip code served by a 
tribal PCCM provider. If there is no tribal PCCM provider in the client's area, 
the client continues to be served by MAA's fee-for-service system. A client     
assigned under this subsection may request to end enrollment at any time.       
(ii) If a non-AI/AN client does not choose an MCO or PCCM provider, MAA assigns 
the client to an MCO or PCCM provider available in the area where the client    
lives. The MCO is responsible for PCP choice and assignment. An MCO must meet   
the healthy options (HO) contract's access standards unless the MCO has been    
granted an exemption by MAA. The HO contract standards are as follows:          
(A) There must be two PCPs within ten miles for ninety percent of HO enrollees  
in urban areas and one PCP within twenty-five miles for ninety percent of HO    
enrollees in rural areas;                                                       
(B) There must be two obstetrical providers within ten miles for ninety percent 
of HO enrollees in urban areas and one obstetrical provider within twenty-five  
miles for ninety percent of HO enrollees in rural areas;                        
(C) There must be one hospital within twenty-five miles for ninety percent of HO
enrollees in the contractor's service area;                                     

 4

EX-10.6
101st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 101st
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(D) There must be one pharmacy within ten miles for ninety percent of HO        
enrolles in urban areas and one pharmacy within twenty-five miles for ninety    
percent of HO enrollees in rural areas.                                         
(iii) MAA sends a written notice to each household of one or more clients who   
are assigned to an MCO or PCCM provider. The notice includes the name of the MCO
or PCCM provider to which each client has been assigned, the effective date of  
enrollment, the date by which the client must respond in order to change MAA's  
assignment, and either the toll-free telephone number of:                       
(A) The MCO for enrollees assigned to an MCO; or                                
(B) MAA for enrollees assigned to a PCCM provider.                              
(iv) An assigned client has at least thirty calendar days to contact MAA to     
change the MCO or PCCM provider assignment before enrollment is effective.      
(5) A client may enroll with a plan in an adjacent county when the client lives 
in an area, designated by MAA, where residents historically have traveled a     
relatively short distance across county lines to the nearest available          
practitioner.                                                                   
(6) An MCO enrollee's selection of the enrollee's PCP or the enrollee's         
assignment to a PCP occurs as follows:                                          
(a) MCO enrollees may choose:                                                   
(i) A PCP or clinic that is in the enrollee's MCO and accepting new enrollees;  
or                                                                              
(ii) Different PCPs or clinics participating with the same MCO for different    
family members.                                                                 
(b) The MCO assigns a PCP or clinic that meets the access standards set forth in
subsection (4)(d)(ii) of this section if the enrollee does not choose a PCP or  
clinic;                                                                         
(c) MCO enrollees may change PCPs or clinics in an MCO at least once a year for 
any reason, and at any time for good cause; or                                  
(d) In accordance with this subsection, MCO enrollees may file an appeal with   
the MCO and/or a fair hearing request with the department of social and health  
services (DSHS) and may change plans if the MCO denies an enrollee's request to 
change PCPs or clinics.                                                         

WAC 388-538-065                                                                 
MEDICAID-ELIGIBLE BASIC HEALTH (BH) ENROLLEES.                                  
(1) Certain children and pregnant women who have applied for, or are enrolled   
in, managed care through basic health (BH) (chapter 70.47 RCW) are eligible for 
Medicaid under pediatric and maternity expansion provisions of the Social       
Security Act. The medical assistance administration (MAA) determines Medicaid   
eligibility for children and pregnant women who enroll through BH.              
(2) The administrative rules and regulations that apply to managed care         
enrollees also apply to Medicaid-eligible clients enrolled through BH, except as
follows:                                                                        
(a) The process for enrolling in managed care described in WAC 388-538-060(3)   
does not apply since enrollment is through the health care authority, the state 
agency that administers BH;                                                     
(b) American Indian/Alaska Native (AI/AN) clients cannot choose fee-for-service 
or PCCM as described in WAC 388-538-060(2). They must enroll in a BH-contracted 
MCO.                                                                            

 5

EX-10.6
102nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 102nd
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(c) If a Medicaid eligible client applying for BH does not choose an MCO within 
ninety days, the client is transferred from BH to the department of social and  
health services (DSHS) for assignment to managed care.                          

WAC 388-538-067                                                                 
MANAGED CARE PROVIDED THROUGH MANAGED CARE ORGANIZATIONS (MCOs).                
(1) Managed care organizations (MCOs) may contract with the department of social
and health services (DSHS) to provide prepaid health care services to eligible  
medical assistance administration (MAA) clients under the healthy options (HO)  
managed care program. The MCOs must meet the qualifications in this section to  
be eligible to contract with DSHS. The MCO must:                                
(a) Have a certificate of registration from the office of the insurance         
commissioner (OIC) as either a health maintenance organization (HMO) or a health
care services contractor (HCSC).                                                
(b) Accept the terms and conditions of DSHS' HO contract;                       
(c) Be able to meet the network and quality standards established by DSHS; and  
(d) Accept the prepaid rates published by DSHS.                                 
(2) DSHS reserves the right not to contract with any otherwise qualified MCO.   

WAC 388-538-068                                                                 
MANAGED CARE PROVIDED THROUGH PRIMARY CARE CASE MANAGEMENT (PCCM).              
(1) A provider may contract with DSHS as a primary care case management (PCCM)  
provider to provide health care services to eligible medical assistance         
administration (MAA) clients under MAA's managed care program. The PCCM provider
or the individual providers in a PCCM group or clinic must:                     
(a) Have a core provider agreement with DSHS;                                   
(b) Hold a current license to practice as a physician, certified nurse midwife, 
or advanced registered nurse practitioner in the state of Washington;           
(c) Accept the terms and conditions of DSHS' PCCM contract;                     
(d) Be able to meet the quality standards established by DSHS; and              
(e) Accept PCCM rates published by DSHS.                                        
(2) DSHS reserves the right not to contract for PCCM with an otherwise qualified
provider.                                                                       

WAC 388-538-070                                                                 
MANAGED CARE PAYMENT.                                                           
(1) The medical assistance administration (MAA) pays Managed care organizations 
(MCOs) monthly capitated premiums that:                                         
(a) Have been determined using generally accepted actuarial methods based on    
analyses of historical healthy options (HO) contractual rates and MCO experience
in providing health care for the populations eligible for HO; and               
(b) Are paid based on legislative allocations for the HO program.               
(2) MAA pays primary care case management (PCCM) providers a monthly case       
management fee according to contracted terms and conditions.                    
(3) MAA does not pay providers on a fee-for-service basis for services that are 
the MCO's responsibility under the HO contract, even if the MCO has not paid for
the                                                                             

 6

EX-10.6
103rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 103rd
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

service for any reason. The MCO is solely responsible for payment of            
MCO-contracted health care services:                                            
(a) Provided by an MCO-contracted provider; or                                  
(b) That are authorized by the MCO and provided by nonparticipating providers.  
(4) MAA pays an additional monthly amount, known as an enhancement rate, to     
federally qualified health care centers (FQHC) and rural health clinics (RHC)   
for each client enrolled with MCOs through the FQHC or RHC. MCOs may contract   
with FQHCs and RHCs to provide services under HO. FQHCs and RHCs receive an     
enhancement rate from MAA on a per member, per month basis in addition to the   
negotiated payments they receive from the MCOs for services provided to MCO     
enrollees.                                                                      
(a) MAA pays the enhancement rate only for the categories of service provided by
the FQHC or RHC under the HO contact. MAA surveys each FQHC or RHC in order to  
identify the categories of services provided by the FQHC or RHC.                
(b) MAA bases the enhancement rate on both of the following:                    
(i) The upper payment limit (UPL) for the county in which the FQHC or RHC is    
located; and                                                                    
(ii) An enhancement percentage.                                                 
(c) MAA determines the UPL for each category of service based on MAA's          
historical fee-for-service (FFS) experience, adjusted for inflation and         
utilization changes.                                                            
(d) MAA determines the enhancement percentage for HO enrollees as follows: (i)  
For FQHCs, the enhancement percentage is equal to the FQHC finalized audit      
period ratio. The "finalized audit period" is the latest reporting period for   
which the FQHC has a completed audit approved by, and settled with, MAA.        
(A) For a clinic with one finalized audit period, the ratio is equal to: (FQHC  
total costs) - FFS reimbursements .+ HO reimbursements)/(FFS .+ HO              
reimbursements).                                                                
(B) For a clinic with two finalized audit periods, the ratio is equal to the    
percentage change in the medical services encounter rate from one finalized     
audit period to the next. A "medical services encounter" is a face-to-face      
encounter between a physician or mid-level practitioner and a client to provide 
services for prevention, diagnosis, and/or treatment of illness or injury. A    
"medical services encounter rate" is the individualized rate MAA pays each FQHC 
to provide such services to clients, or the rate set by Medicare for each RHC   
for such services.                                                              
(C) For FQHCs without a finalized audit, the enhancement percentage is the      
statewide weighted average of all the FQHCs' finalized audit period ratios.     
Weighting is based on the number of enrollees served by each FQHC.              
(ii) For RHCs, MAA applies the same enhancement percentage statewide.           
(A) On a given month, MAA determines the number of HO enrollees enrolled with   
each RHC that is located in the same county as an FQHC. This number is expressed
as a percentage of the total number of RHC enrollees located in counties that   
have both FQHCs and RHCs.                                                       
(B) For each county that has both an FQHC and an RHC, MAA multiplies the FQHC   
enhancement percentage, as determined under subsection (4)(d)(i) of this        
section, by the percentage obtained in section (4)(d)(ii)(A) of this section.   
(C) The sum of all these products is the weighted statewide RHC enhancement     
percentage.                                                                     

 7

EX-10.6
104th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 104th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(iii) The HO enhancement percentage for FQHCs and RHCs is updated once a year.  
(e) For each category of service provided by the FQHC or RHC, MAA multiplies the
UPL, as determined under subsection (4)(c) of this section, by the FQHC's or    
RHC's enhancement percentage. The sum of all these products is the enhancement  
rate for the individual FQHC or RHC.                                            
(f) To calculate the enhancement rate for FQHCs and RHCs that provide maternity 
and newborn delivery services, MAA applies each FQHC's or RHC's enhancement     
percentage to the delivery case rate (DCR), which is a one-time rate paid by MAA
to the HO plan for each pregnant enrollee who gives birth.                      

WAC 388-538-080                                                                 
MANAGED CARE EXEMPTIONS.                                                        
(1) The medical assistance administration (MAA) exempts a client from mandatory 
enrollment in managed care if MAA becomes aware of the following conditions. The
client:                                                                         
(a) Is receiving foster care placement services from the division of children   
and family services (DCFS); or                                                  
(b) Has Medicare, basic health (BH), CHAMPUS/TRICARE, or other accessible third-
party health care coverage that would require exemption from enrollment with:   
(i) A managed care organization (MCO) in accordance with MAA's healthy options  
(HO) contract requirements for MCO enrollment; or                               
(ii) A primary care case management provider (PCCM) in accordance with MAA's    
PCCM contract requirements for PCCM enrollment.                                 
(2) Only a client or a client's representative (RCW 7.70.065) may request an    
exemption from managed care enrollment for reasons other than those stated in   
subsection (1) of this section. If a client asks for an exemption prior to the  
enrollment effective date, the client is not enrolled until MAA approves or     
denies the request and any related fair hearing is held and decided.            
(3) MAA grants a client's request for an exemption from mandatory enrollment in 
managed care if any of the following apply:                                     
(a) The client has a documented and verifiable medical need to continue a       
client/provider relationship due to an established course of care with a        
physician, physician assistant or advanced registered nurse practitioner. MAA   
accepts the established provider's signed statement that the client has:        
(i) A medical need that requires a continuation of the established care         
relationship; and                                                               
(ii) The client's established provider is not available through any managed care
organization (MCO) or as a primary care case management (PCCM) provider.        
(b) Prior to enrollment, the client scheduled a surgery with a provider not     
available to the client through managed care and the surgery is scheduled within
the first thirty days of enrollment; or                                         
(c) The client is American Indian/Alaska Native (AI/AN) as specified in WAC     
388-538- 060(2) and requests exemption; or                                      
(d) The client has been identified by MAA as having special needs that meet     
MAA's definition of children with special health care needs and requests        
exemption; or                                                                   
(e) The client is pregnant and wishes to continue her established course of     
prenatal care with an obstetrical provider who is not available to her through  
managed care; or                                                                

 8

EX-10.6
105th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 105th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(f) On a case-by-case basis, the client presents evidence that managed care does
not provide medically necessary care that is reasonably available and accessible
as offered to the client. MAA considers that medically necessary care is not    
reasonably available and accessible when any of the following apply:            
(i) The client is homeless or is expected to live in temporary housing for less 
than one hundred twenty days from the date the client requests the exemption;   
(ii) The client speaks limited English or is hearing impaired and the client can
communicate with a provider who communicates in the client's language or in     
American Sign Language and is not available through managed care;               
(iii) The client shows that travel to a managed care PCP is unreasonable when   
compared to travel to a non-managed care primary care provider (PCP). This is   
shown when any of the following transportation situations apply to the client:  
(A) It is over twenty-five miles one-way to the nearest managed care PCP who is 
accepting enrollees, and the client's PCP is closer and not in an available     
plan;                                                                           
(B) The travel time is over forty-five minutes one-way to the nearest managed   
care PCP who is accepting enrollees, and the travel time to the client's PCP,   
who is not available in an MCO or as a PCCM provider, is less;                  
(C) Other transportation difficulties make it unreasonable to get primary       
medical services under HO; or                                                   
(iv) Other evidence is presented that an exemption is appropriate based on the  
client's circumstances, as evaluated by MAA.                                    
(4) MAA exempts the client for the time period the circumstances or conditions  
that led to the exemption are expected to exist. If the request is approved for 
a limited time, the client is notified in writing or by telephone of the time   
limitation, the process for renewing the exemption, and the client's fair       
hearing rights.                                                                 
(5) The client is not enrolled as provided in subsection (2) of this section and
receives timely notice by telephone or in writing when MAA approves or denies   
the client's exemption request. If initial denial notice was by telephone, then 
MAA gives the reasons for the denial in writing before requiring the client to  
enroll in managed care. The written notice to the client contains all of the    
following:                                                                      
(a) The action MAA intends to take, including enrollment information;           
(b) The reason(s) for the intended action;                                      
(c) The specific rule or regulation supporting the action;                      
(d) The client's right to request a fair hearing, including the circumstances   
under which the fee-for-service status continues, if a hearing is requested; and
(e) A translation into the client's primary language when the client has limited
English proficiency.                                                            

WAC 388-538-095                                                                 
SCOPE OF CARE FOR MANAGED CARE ENROLLEES.                                       
(1) Managed care enrollees are eligible for the scope of medical care as        
described in WAC 388-529-0100 for categorically needy clients.                  
(a) A client is entitled to timely access to medically necessary services as    
defined in WAC 388-500-0005.                                                    

 9

EX-10.6
106th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 106th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(b) The managed care organization (MCO) covers the services included in the     
healthy options (HO) contract for MCO enrollees. In addition, MCOs may, at their
discretion, cover services not required under the HO contract.                  
(c) The medical assistance administration (MAA) covers the categorically needy  
services not included in the HO contract for MCO enrollees.                     
(d) MAA covers services on a fee-for-service basis for enrollees with a primary 
care case management (PCCM) provider. Except for emergencies, the PCCM provider 
must either provide the covered services needed by the enrollee or refer the    
enrollee to other providers who are contracted with MAA for covered services.   
The PCCM provider is responsible for instructing the enrollee regarding how to  
obtain the services that are referred by the PCCM provider. The services that   
require PCCM provider referral are described in the PCCM contract. MAA informs  
enrollees about the enrollee's program coverage, limitations to covered         
services, and how to obtain covered services.                                   
(e) MCO enrollees may obtain certain services from either a MCO provider or from
a medical assistance provider with a DSHS core provider agreement without       
needing to obtain a referral from the PCP or MCO. These services are described  
in the HO contract, and are communicated to enrollees by MAA and MCOs as        
described in (f) of this subsection.                                            
(f) MAA sends each client written information about covered services when the   
client is required to enroll in managed care, and any time there is a change in 
covered services. This information describes covered services, which services   
are covered by MAA, and which services are covered by MCOs. In addition, MAA    
requires MCOs to provide new enrollees with written information about covered   
services.                                                                       
(2) For services covered by MAA through PCCM contracts for managed care:        
(a) MAA medically necessary covers services included in the categorically needy 
scope of care and rendered by providers with a current department of social and 
health services (DSHS) core provider agreement to provide the requested service;
(b) MAA may require the PCCM provider to obtain authorization from MAA for      
coverage of nonemergency services;                                              
(c) The PCCM provider determines which services are medically necessary;        
(d) An enrollee may request a fair hearing for review of PCCM provider or MAA   
coverage decisions; and                                                         
(e) Services referred by the PCCM provider require an authorization number in   
order to receive payment from MAA.                                              
(3) For services covered by MAA through contracts with MCOs:                    
(a) MAA requires the MCO to subcontract with a sufficient providers to deliver  
the scope of contracted services in a timely manner. Except for emergency       
services, MCOs provide covered services to enrollees through their participating
providers;                                                                      
(b) MAA requires MCOs to provide new enrollees with written information about   
how enrollees may obtain covered services;                                      
(c) For nonemergency services, MCOs may require the enrollee to obtain a        
referral from the primary care provider (PCP), or the provider to obtain        
authorization from the MCO, according to the requirements of the HO contract;   
(d) MCOs and their providers determine which services are medically necessary   
given the enrollee's condition, according to the requirements included in the HO
contract;                                                                       

10

EX-10.6
107th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 107th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(e) An enrollee may appeal an MCO coverage decisions using the MCO's appeal     
process, as described in WAC 388-538-0110. An enrollee may also request a       
hearing for review of an MCO coverage decision as described in chapter 388-02   
WAC;                                                                            
(f) A managed care enrollee does not need a PCP referral to receive women's     
health care services, as described in RCW 48.42.100 from any women's health care
provider participating with the MCO. Any covered services ordered and/or        
prescribed by the women's health care provider must meet the MCO's service      
authorization requirements for the specific service.                            
(4) Unless the MCO chooses to cover these services, or an appeal or a fair      
hearing decision reverses an MCO or MAA denial, the following services are not  
covered:                                                                        
(a) For all managed care enrollees:                                             
(i) Services that are not medically necessary;                                  
(ii) Services not included in the categorically needy scope of services; and    
(iii) Services, other than a screening exam as described in WAC 388-538-100(3), 
received in a hospital emergency department for nonemergency medical conditions.
(b) For MCO enrollees:                                                          
(i) Services received from a participating specialist that require prior        
authorization from the MCO, but were not authorized by the MCO; and             
(ii) Services received from a nonparticipating provider that require prior      
authorization from the MCO that were not authorized by the MCO. All nonemergency
services covered under the HO contract and received from nonparticipating       
providers require prior authorization from the MCO.                             
(c) For PCCM enrollees, services that require a referral from the PCCM provider 
as described in the PCCM contract, but were not referred by the PCCM provider.  
(5) A provider may bill an enrollee for noncovered services as described in     
subsection (4) of this section, if the enrollee and provider sign an agreement. 
The provider must give the original agreement to the enrollee and file a copy in
the enrollee's record.                                                          
(a) The agreement must state all of the following:                              
(i) The specific service to be provided;                                        
(ii) That the service is not covered by either MAA or the MCO;                  
(iii) An explanation of why the service is not covered by the MCO or MAA, such  
as:                                                                             
(A) The service is not medically necessary; or                                  
(B) The service is covered only when provided by a participating provider,      
(iv) The enrollee chooses to receive and pay for the service; and               
(v) Why the enrollee is choosing to pay for the service, such as:               
(A) The enrollee understands that the service is available at no cost from a    
provider participating with the MCO, but the enrollee chooses to pay for the    
service from a provider not participating with the MCO;                         
(B) The MCO has not authorized emergency department services for nonemergency   
medical conditions and the enrollee chooses to pay for the emergency            
department's services rather than wait to receive services at no cost in a      
participating provider's office; or                                             
(C) The MCO or PCCM has determined that the service is not medically necessary  
and the enrollee chooses to pay for the service.                                
(b) For limited English proficient enrollees, the agreement must be translated  
or interpreted into the enrollee's primary language to be valid and enforceable.

11

EX-10.6
108th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 108th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(c) The agreement is void and unenforceable, and the enrollee is under no       
obligation to pay the provider, if the service is covered by MAA or the MCO as  
described in subsection (1) of this section, even if the provider is not paid   
for the covered service because the provider did not satisfy the payor's billing
requirements.                                                                   

WAC 388-538-100                                                                 
MANAGED CARE EMERGENCY SERVICES.                                                
(1) A managed care enrollee may obtain emergency services, for emergency medical
conditions in any hospital emergency department. These definitions differ from  
the emergency services definition that applies to services covered under the    
medical assistance administration's (MAA's) fee-for-service system.             
(a) The managed care organization (MCO) covers emergency services for MCO       
enrollees.                                                                      
(b) MAA covers emergency services for primary care case management (PCCM)       
enrollees.                                                                      
(2) Emergency services for emergency medical conditions do not require prior    
authorization by the MCO, primary care provider (PCP), PCCM provider, or MAA.   
(3) Emergency services received by an MCO enrollee for nonemergency medical     
conditions must be authorized by the plan for enrollee's MCO.                   
(4) An enrollee who requests emergency services is entitled to receive an exam  
to determine if the enrollee has an emergency medical condition.                

WAC 388-538-110                                                                 
MANAGED CARE COMPLAINTS, APPEALS, AND FAIR HEARINGS.                            
(1) A managed care enrollee has the right to voice a complaint or submit an     
appeal of an MAA, MCO, PCCM, PCP or provider decision, action, or inaction. An  
enrollee may do this through the following process:                             
(a) For managed care organization (MCO) enrolles, the MCO's complaint and appeal
processes, and through the department's fair hearing process; or                
(b) For primary care case management (PCCM) enrollees, the complaint and appeal 
processes of the medical assistance administration (MAA), and through the       
department's fair hearing process (chapter 388-02 WAC).                         
(2) To ensure the rights of MCO enrollees are protected, MAA approves each MCO's
complaint and appeal policies and procedures annually or whenever the plan makes
a change to the process.                                                        
(3) MAA requires MCOs to inform MCO enrollees in writing within fifteen days of 
enrollment about their rights and how to use the MCO's complaint and appeal     
processes. MAA requires MCOs to obtain MAA approval of all written information  
sent to enrollees.                                                              
(4) MAA provides PCCM enrollees with information equivalent to that described in
subsection (3) of this section.                                                 
(5) MCO enrollees may request assistance from the MCO when using the MCO's      
complaint and appeals processes. PCCM enrollees may request assistance from MAA 
when using MAA's complaint and appeal process.                                  

12

EX-10.6
109th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 109th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(6) An MCO enrollee who submits a complaint under this section is entitled to a 
written or verbal response from the MCO or from MAA within the timeline in the  
MAA-approved complaint process.                                                 
(7) When an enrollee is not satisfied with how the complaint is resolved by the 
MCO or by MAA, or if the complaint is not resolved in a timely fashion, the     
enrollee may submit an appeal to the MCO or to MAA. An enrollee may also appeal 
an MAA, MCO, primary care provider (PCP), or provider decision, or              
reconsideration of any action or inaction. An enrollee who appeals an MAA, MCO, 
PCP, or provider decision is entitled to all of the following:                  
(a) A review of the decision being appealed. The review must be conducted by an 
MCO or MAA representative who was not involved in the decision under appeal;    
(b) Continuation of the service already being received and which is under       
appeal, until a final decision is made;                                         
(c) A written decision from MAA or the MCO, within the timeline(s) in the appeal
process standards, in the enrollee's primary language. The decision does not    
need to be translated if an enrollee with limited English proficiency prefers   
correspondence in English, and the deciding authority documents the enrollee's  
preference. The notice must clearly explain all of the following:               
(i) The decision and any action MAA or the MCO intends to take;                 
(ii) The reason for the decision;                                               
(iii) The specific information that supports MAA's or the MCO's decision; and   
(iv) Any further appeal or fair hearing rights available to the enrollee,       
including the enrollee's right to continue receiving the service under appeal   
until a final decision is made.                                                 
(d) An expedited decision when it is necessary to meet an existing or           
anticipated acute or urgent medical need.                                       
(8) An enrollee may file a fair hearing request without also filing an appeal   
with MAA or the MCO or exhausting MAA's or the MCO's appeal process.            
(9) The MCO's medical director or designee reviews all fair hearings requests,  
and any related appeals, when the issues involve an MCO's determination of      
medical necessity.                                                              
(10) MAA's medical director or the medical director's designee reviews all fair 
hearings requests, and any related appeals, when the PCCM enrollee's issues     
involve an MAA determination of medical necessity.                              

WAC 388-538-120                                                                 
ENROLLEE REQUEST FOR A SECOND MEDICAL OPINION.                                  
(1) A managed care enrollee has the right to a timely referral for a second     
opinion upon request when:                                                      
(a) The enrollee needs more information about treatment recommended by the      
provider or managed care organization (MCO); or                                 
(b) The enrollee believes the MCO is not authorizing medically necessary care.  
(2) A managed care enrollee has a right to a second opinion from a primary or   
specialty care physician who is participating with the MCO. At the MCO's        
discretion, a clinically appropriate nonparticipating provider who is agreed    
upon by the MCO and the enrollee may provide the second opinion.                

13

EX-10.6
110th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 110th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(3) Primary care case management (PCCM) provider enrollees have a right to a    
timely referral for a second opinion by another provider who has a core provider
agreement with medical assistance administration (MAA).                         

WAC 388-538-130                                                                 
ENDING ENROLLMENT IN MANAGED CARE.                                              
(1) MAA ends an enrollee's enrollment in a managed care organization (MCO) or   
with a primary care case management (PCCM) provider when the enrollee meets any 
of the following conditions. The enrollee:                                      
(a) Is no longer eligible for a medical program subject to enrollment; or       
(b) Is receiving foster care placement services from the division of children   
and family services; or                                                         
(c) Is or becomes eligible for Medicare, basic health (BH), CHAMPUS/TRICARE, or 
any other accessible third party health care coverage that would require        
involuntary disenrollment from:                                                 
(i) An MCO in accordance with MAA's healthy options (HO) contract for MCO       
enrollees; or                                                                   
(ii) A PCCM provider in accordance with MAA's PCCM contract for PCCM enrollees. 
(2) An enrollee or the enrollee's representative as defined in RCW 7.70.065 may 
request MAA to end enrollment as described in subsections (3) through (10) of   
this section. A managed care organization (MCO) may request MAA to end          
enrollment for an enrollee as described in subsection (11) of this section. Only
MAA has authority to remove an enrollee from managed care. Pending MAA's final  
decision, the enrollee remains enrolled unless staying in managed care would    
adversely affect the enrollee's health status.                                  
(3) MAA grants an enrollee's request to have the enrollee's enrollment ended    
under the following conditions:                                                 
(a) Is American Indian or Alaska Native (AI/AN) and requests disenrollment; or  
(b) Is identified by DSHS as a child who meets the definition of "children with 
special health care needs" and requests disenrollment.                          
(4) MAA grants an enrollee's requests to be removed from managed care when the  
client is pregnant or when there is a verified medical need to continue an      
established course of care. These end enrollments are limited to the following  
situations: The enrollee:                                                       
(a) Has a documented medical need to continue a client/provider relationship due
to an established course of care with a physician, physician assistant, or      
advanced registered nurse practitioner. The standards for documenting a medical 
need are those in WAC 388-538-080(3)(a). The established course of care must    
begin:                                                                          
(i) While the enrollee was enrolled with managed care but the PCP is no longer  
available to the enrollee under managed care; or                                
(ii) Prior to enrollment in managed care and the PCP is not available under any 
MCO or as a PCCM provider.                                                      
(b) Is pregnant and requests to continue her course of prenatal care that was   
established with an obstetrical provider:                                       
(i) While she was enrolled with the MCO but that provider is no longer available
to her in managed care; or                                                      

14

EX-10.6
111th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 111th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(ii) Prior to enrollment with the current MCO but that provider is not available
to her under managed care.                                                      
(c) Is scheduled for a surgery with a provider not available to the enrollee in 
the enrollee's current MCO and the surgery is scheduled to be performed within  
the first thirty days of enrollment.                                            
(5) Except as provided in subsection (4) of this section, MAA does not permit an
enrollee to obtain an end enrollment by establishing a course of care with a    
provider who is not participating with the enrollee's MCO.                      
(6) MAA ends enrollment on a case-by-case basis when the enrollee presents      
evidence that the managed care program does not provide medically necessary care
that is reasonable available and accessible as offered to the enrollee. MAA     
considers enrollee requests under this subsection with the same criteria as     
listed in WAC 388-538-080(3)(f).                                                
(7) MAA ends enrollment temporarily if an enrollee asks to be taken out of the  
current MCO in order to stay with the enrollee's established provider, but is   
willing to enroll in the established provider's MCO for the next enrollment     
month. MAA reviews the enrollee request according to the criteria in subsections
(4) and (6) of this section. MAA's decision under this subsection include all of
the following:                                                                  
(a) The decision is given verbally and in writing;                              
(b) Verbal and written notices include the reason for the decision and          
information on hearings so the enrollee may appeal the decision;                
(c) If the request to end enrollment is approved, it may be effective back to   
the beginning of the month the request is made; and                             
(d) If the request to end enrollment is denied, and the enrollee requests a     
hearing; the enrollee remains in the MCO or with the PCCM until the hearing     
decision is made as provided in subsection (2) of this section.                 
(8) MAA ends enrollment for the period of time the circumstances or conditions  
that led to ending the enrollment are expected to exist. If the request to end  
enrollment is approved for a limited time, the client is notified in writing or 
by telephone of the time limitation, the process for renewing the disenrollment,
and their fair hearing rights.                                                  
(9) MAA does not approve an enrollee's request to end enrollment solely to pay  
for services received but not authorized by the MCO.                            
(10) The enrollee remains in managed care as provided in subsection (1) of this 
section and receives timely notice by telephone or in writing when MAA approves 
or denies the enrollee's request to end enrollment. Except as provided in       
subsection (7) of this section, MAA gives the reasons for a denial in writing.  
The written denial notice to the enrollee contains all of the following:        
(a) The action MAA intends to take;                                             
(b) The reason(s) for the intended action;                                      
(c) The specific rule or regulation supporting the action;                      
(d) The enrollee's right to request a fair hearing; and                         
(e) A translation into the enrollee's primary language when the enrollee has    
limited English proficiency.                                                    
(11) MAA may end an enrollee's enrollment in a MCO or with a PCCM provider when 
the enrollee's MCO or PCCM provider substantiates in writing, to MAA's          
satisfaction, that:                                                             

15

EX-10.6
112th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 112th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(a) The enrollee's behavior is inconsistent with the MCO or PCCM provider rules 
and regulations, such as intentional misconduct; and                            
(b) After the MCO or PCCM provider has provided:                                
(i) Clinically appropriate evaluation(s) to determine whether there is a        
treatable problem contributing to the enrollee's behavior; and                  
(ii) If so, has provided clinically appropriate referral(s) and treatment(s),   
but the enrollee's behavior continues to prevent the provider from safely or    
prudently providing medical care to the enrollee; and                           
(c) The enrollee received written notice from the MCO or PCCM provider of the   
MCO or PCCM provider intent to request the enrollee's removal, unless MAA has   
waived the requirement for the MCO or PCCM provider notice because the          
enrollee's conduct presents the threat of imminent harm to others. The MCO or   
PCCM provider notice to the enrollee must include both of the following:        
(i) The enrollee's right to use the appeal process as described in WAC          
388-538-110 to review the MCO or PCCM provider request to end the enrollee's    
enrollment; and                                                                 
(ii) The enrollee's right to use the department fair hearing process.           
(12) MAA makes a decision to remove an enrollee from enrollment in managed care 
within thirty days of receiving the MCO or PCCM provider request to do so.      
Before making a decision, MAA attempts to contact the enrollee and learn the    
enrollee's perspective. If MAA approves the MCO or PCCM provider request to     
remove the enrollee, MAA sends a notice at least ten days in advance of the     
effective date that enrollment will end. The notice includes the reason for     
MAA's approval to end enrollment and information about the enrollee's fair      
hearing rights.                                                                 
(13) MAA does not approve a request to remove an enrollee from managed care when
the request is solely due to an adverse change in the enrollee's health or the  
cost of meeting the enrollee's needs.                                           

WAC 388-538-140                                                                 
QUALITY OF CARE.                                                                
(1) In order to assure that managed care enrollees receive appropriate access to
quality health care and services, the medical assistance administration (MAA)   
does all of the following:                                                      
(a) Requires managed care organizations (MCOs) to have a fully operational      
quality assurance system that meets a comprehensive set of quality improvement  
program (QIP) standards.                                                        
(b) Monitors MCO performance through on-site visits and other audits, and       
requires corrective action for deficiencies that are found.                     
(c) Requires MCOs to report annually on standardized clinical performance       
measures that are specified in the contract with MAA, and requires corrective   
action for substandard performance.                                             
(d) Contracts with a professional review organization to conduct independent    
external review studies of selected health care and service delivery.           
(e) Conducts enrollee satisfaction surveys.                                     

16

EX-10.6
113th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 113th
                                                        2003 HO & SCHIP Contract
                                         Exhibit B

(f) Annually publishes individual MCO performance information and primary care  
case management (PCCM) program performance information including certain        
clinical measures and enrollee satisfaction surveys and makes reports of site   
monitoring visits available upon request.                                       
(2) MAA requires MCOs and PCCM providers to have a method to assure             
consideration of the unique needs of enrollees with chronic conditions. The     
method includes:                                                                
(a) Early identification;                                                       
(b) Timely access to health care; and                                           
(c) Coordination of health service delivery and community linkages.             

17

EX-10.6
114th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 114th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

 EXHIBIT C-1
2003 HEALTHY OPTIONS & SCHIP
ENCOUNTER DATA SPECIFICATIONS 

 PREFACE

Healthy Options & SCHIP encounter data is used for many purposes. Among these   
are federal reporting to the Medicaid Statistical Information System (MSIS); HO 
& SCHIP rate setting and risk adjustment; Medical Assistance Administration's   
(MAA) hospital rate setting; the HO & SCHIP quality improvement program, and    
research. To ensure the efficient and timely collection of quality encounter    
data for these purposes 2003 encounter data specifications are as follows:      

 GENERAL FILE REQUIREMENTS

     1)   The Contractor shall submit encounter data in accordance with the 2003
        HO & SCHIP Encounter Data Specifications. These specifications apply
         to adjudicated and capitated encounter records. Adjudicated encounter
       records include those that the Contractor paid as well as those for
which the Contractor denied payment.                        

  2)   The Contractor shall submit all encounter records no later than 450
  calendar days following the date of service for the encounters
reported.                                                   

  3)   The Contractor shall submit all finalized, not previously submitted
        encounter records that the Contractor processed during the reporting
       quarter by the specified encounter data submission date which is 90
calendar days after the end of the reporting quarter.       

    4)   The Contractor shall submit a "roll up" of any adjustments made to an
encounter record into a single encounter record for initial 
submission.                                                 

5)   MAA may reject files exceeding 2% overall error rate.            

  6)   The Contractor shall correct rejected encounter records and include
      these with a complete resubmission of all records pertinent to the
      reporting quarter. Resubmissions are due no later than 90 calendar
       days after receiving them back from DSHS. After this date encounter
      records are still required to be submitted but shall be considered
late.                                                       

  7)   The Contractor must assign the services and codes to the associated
    encounter type specified in the associated MAA 'fee-for-service'
      Billing Instructions (e.g. for Physician Related Services, that is
   current on the date of service). Examples of the encounter type
  associated with some commonly used procedures are given in the
        Encounter Type Table. Contractors may use 'J' (medical practitioner)
 and 'L' (EPSDT) designations on different records of the same
encounter when both types of services were provided.        

    8)   Excluding inpatient hospital (R) encounter type, "Date of Service" in
these specifications                                        

 1

EX-10.6
115th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 115th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

  means the day the enrollee received the service. For inpatient
hospital (R) encounters, "Date of Service" means the date of
          discharge. Except for inpatient hospital services, the Contractor must
       report services provided on different dates as separate encounters.
      This includes professional medical services provided in a hospital
setting.                                                    

  9)   The Contractor may submit encounters by contract type (HO/SCHIP and
          Basic Health Plus) in a single file. The Plan ID (Field 6) assigned to
         a record must reflect the contract under which the member is enrolled
on the date of service.                                     

10)  The Contractor must use the Contractor's Plan ID (Field 6) in    
         encounter records when enrollees receive care through an FQHC or RHC.

11)  Procedure code modifiers are required for outpatient hospital (M)
         services (reported on the federal HCFA/CMS UB-92 form) as well as for
        medical professional (J), EPSDT (L), and (P) encounters (reported on
HCFA/CMS 1500 form).                                        

12)  EPSDT Referral Indicator (Field 24) is a required field. The     
    associated error flag will be tracked separately by EDU. Related
          errors will be excluded from the total count and percentage of records
     otherwise with errors. Blank-fill Field 24 if the EPSDT indicator
          cannot be obtained. The contractor is required to report the encounter
          even though the blank fill will result in an error during the MAA edit
process.                                                    

     13)  Contractors submitting alternative identifiers (Field 38 and 39) shall
     submit, with each quarterly submission, a separate file list that
       enables MAA to link the alternative identifier with the identity of
the provider.                                               

    14)  Contractors must meet new, additional, or revised requirements of the
       federal Health Insurance Portability and Accountability Act (HIPAA)
that may take affect during the contract period.            

15)  MAA reserves the right to:                                       

a)   Modify any encounter data reporting requirement following 120
calendar days notice to the Contractor;                 

      b)   Request data substantiating reported encounter records following at
least 30 calendar days notice to the Contractor; and    

    c)   Waive encounter data requirements under exceptional circumstances
with written approval from MAA.                         

 2

EX-10.6
116th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 116th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

SCHEDULE

The HO/SCHIP 2003 encounter data requirements are effective with data collected 
on or after January 1, 2003.                                                    

REPORTING QUARTER: The quarter in which the encounter records were processed by 
the Contractor for initial submission. The submission is due no later than 90   
calendar days after the last day of the reporting quarter.                      

------------------------------------------------------------------------------  
REPORTING                                                             
  QUARTER                REPORTING QUARTER               SUBMISSION DATE
------------------------------------------------------------------------------  
   Q3-02         July 1 through September 30, 2002       January 2, 2003
------------------------------------------------------------------------------  
   Q4-02        October 1 through December 31, 2002        April 1, 2003
------------------------------------------------------------------------------  
  Q1-03          January 1 through March 31, 2003         July 1, 2003
------------------------------------------------------------------------------  
   Q2-03           April 1 through June 30, 2003         October 1, 2003
------------------------------------------------------------------------------  
   Q3-03         July 1 through September 30, 2003       January 2, 2004
------------------------------------------------------------------------------  
  Q4-03        October 1 through December 31, 2003       April 1, 2004
------------------------------------------------------------------------------  

 SUBMISSION MEDIA SPECIFICATIONS

1)   When submitting compact disk or computer diskette, submit fixed width text 
     files. Do not include internal labels. For compact disk, computer diskette,
and tape include:                                                     

Data Set Name format: MCED.Pppppppp.YyyQTRq                           

  MCED      A literal value abbreviation for "Managed Care Encounter Data"
P         A literal prefix                                            
ppppppp   The Contractor's Medicaid Provider Number                   
Y         A literal prefix                                            
yy        The last two digits of the calendar year reported           
QTR       A literal value                                             
q         The calendar quarter reported (see Schedule of Submissions) 

2)   For submissions on magnetic tape:                                          

   Write encounter data file to an IBM OS standard labeled tape (8 1/2 or 10
1/2 inches) in EBCDIC:                                                

RECFM=FB                                                        
BLKSIZE=30000                                                   
LRECL=500                                                       
DENSITY=1600BPI or 6250 BPI                                     

 3

EX-10.6
117th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 117th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

TEST FILES

1)   Contractors may submit a compact disk, computer diskette, or tape          
     containing test data (2000-3000 records) to identify and resolve errors and
problems with field definitions.                                      

2)   Records representing all encounter types covered by the contract should be 
included.                                                             

3)   Identify the file as a "test" at the time of submission.                   

 EXTERNAL LABEL AND SHIPPING/MAILING ADDRESS

1)   Submit initial encounter records in a file separate from file(s) containing
adjusted, corrected and/or voided encounter records.                  

2)   Attach an external label for each file contained on the tape, compact disk,
and computer diskette including at least the following information:   

o  Plan name                                                                    
o  File name: Specify content: 1) "initial submission" or; 2) "complete         
resubmission (i.e. encounters pertaining to previous submissions)         
o  Logical record length                                                        
o  Year and quarter reported                                                    
o  Program(s) i.e., Healthy Options, BHP Plus, or both                          
o  Specify whether the compact disk, computer diskette, or tape contains records
  for some encounter types (for example, pharmacy only) or all encounter types
o  Block size (needed only for submissions on tape)                             
o  Number of records per file                                                   

3)   Send to:                                                                   
Encounter Data Coordinator                                        
Information Services Division                                     
DSHS Medical Assistance Administration                            
617 8th Avenue SE, Bldg. 1, 4th Fl.                               
P.O. Box 45511                                                    
Olympia, WA 98504-5511                                            

Direct questions and comments to the Encounter Data Coordinator at (360)        
725-1288.                                                                       

ERROR REPORT

The Encounter Data Unit will provide a report evaluating timely reported        
encounter data submissions. In addition, error flags will be placed in each     
record during MAA's edit of the record to assist the Contractor in the          
identification of problem areas.                                                

Contractors must prevent reoccurrence of the same type of errors in subsequent  
submissions. If the same type of errors reoccur, DSHS may return the incorrect  
encounter submission.                                                           

NOTE: To permit error flags to be written to an encounter data tape, the Tape   
Label EXPIRATION DATE must either be eliminated or set at a date at least six   
months after the date of submission.                                            

 4

EX-10.6
118th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 118th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

GENERIC FIELD SPECIFICATIONS

1)   NUMERIC FIELDS                                                             

o    RIGHT justify (data)                                             

o    ZERO fill (from left)                                            

o    EIGHT fill when:                                                 
         o  Not applicable to the encounter type. Examples: (1) Eight-fill
            the hospital discharge date for all encounter types, excluding
            inpatient hospital (R). (2) Eight-fill the revenue code (Field
             21) for outpatient hospital encounters when a procedure code is
reported in Field 16 not IP.                      

-OR-

      o  Applicable but not required and for which there is no data.
               Example: When a Contractor is unable to obtain a Medicaid Billing
          Provider Number of a pharmacy, it may eight-fill Field 7 and
       report a NAPB Identifier or Federal Tax Identifier as the
    alternate Billing Provider Identification in Field 38.

     o    NINE fill when valid entries are required but unknown. Nine-filling is
         required, but unknown numeric data will result in an error. Nine-fill
          only when the required information cannot be supplied within reporting
deadlines.                                                  

o    DATE FORMAT - MMDDYY (DSHS edits provide for identifying century)

  o    DECIMAL POINTS - DSHS edits assume decimal points except for Fields
          16, 17, 19 and 20. For these four fields, the decimal points are to be
inserted as required by the appropriate coding systems.     

2)   CHARACTER FIELDS                                                           

o    LEFT justify (data)                                              

o    BLANK fill (from right) when                                     
         o  valid entries are required but unknown. Blank-filling required
              but unknown character fields will result in an error. Blank-fill
               only when there is a need to meet time requirements for reporting
       encounter events. Example: An EPSDT Referral Indicator is
         unknown. Blank-fill Field 24. The Contractor is required to
               report the encounter even though the Blank-fill will result in an
error during the MAA edit process.                

o    HYPHEN ('-') fill when                                           
o  not applicable, OR                                   
      o  applicable but not required and for which there is no data.
              Example: A hospital reports an inpatient stay and there are only
2 diagnosis codes. Hyphen-fill diagnoses 3 through

 5

EX-10.6
119th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 119th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

9 since there are no diagnoses to report.         

VALIDATION EDITS

DSHS will perform edits on all submitted encounter data files. If an invalid    
result is found, it may be treated as an 'error' and included in the count of   
records with errors or it may be the result of an 'association check' and       
reported as 'information only'.                                                 

ERRORS: The edits that will identify the following conditions as errors pertain 
to the required fields:                                                         

1.   Missing (required) values                                                  
2.   Non-numeric data in numeric fields                                         
3.   Negative values in numeric fields                                          
4.   Invalid dates                                                              
5.   Invalid values for:                                                        

------------------------------------------------------------------------- 
                   FIELD NAME                           FIELD NUMBER
------------------------------------------------------------------------- 
Encounter Type                                                    1       
------------------------------------------------------------------------- 
Line Item Number                                                  3       
------------------------------------------------------------------------- 
Recipient ID/PIC                                                  4       
------------------------------------------------------------------------- 
Billing and Performing/Attending or Prescribing Provider    7,8,38 & 39   
ID                                                                        
(Billing ID may be a Medicaid #, Tax ID, or for                           
pharmacies NABP#;                                                         

Performing/Attending or Prescribing ID may be a                           
Medicaid #, State License #, or DEA #)                                    
------------------------------------------------------------------------- 
DRG                                                               9       
------------------------------------------------------------------------- 
Place of Service                                                 15       
------------------------------------------------------------------------- 
Procedure Code                                                16 & 17     
------------------------------------------------------------------------- 
Procedure Code Modifier                                          18       
------------------------------------------------------------------------- 
Diagnosis Code                                                19 & 20     
------------------------------------------------------------------------- 
Revenue Codes                                                    21       
------------------------------------------------------------------------- 
National Drug Code                                               22       
------------------------------------------------------------------------- 
EPSDT Referral Code                                              24       
Tracked separately and not included in count and                          
percentage of records otherwise with errors.                              
------------------------------------------------------------------------- 
Plan Record ID                                                   25       
------------------------------------------------------------------------- 
Prescription Number                                              27       
------------------------------------------------------------------------- 
Claim Status                                                     28       
------------------------------------------------------------------------- 
Line Status                                                      29       
------------------------------------------------------------------------- 
Patient Control Number                                           41       
------------------------------------------------------------------------- 
Prescription Days Supply                                         88       
------------------------------------------------------------------------- 
Alternate Bill-Provider ID Type                                  90       
------------------------------------------------------------------------- 
Alternate Perf-Attend-Presc ID Type                              91       
------------------------------------------------------------------------- 

 6

EX-10.6
120th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 120th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

6.   EPSDT encounters with incorrect procedure codes or age greater than 20.    

7.   Records for the same encounter containing different encounter type         
    designations, except J and L Encounter Type designations that may occur on
different records for the exact same encounter.                       

8.   Other conditions occurring due to improperly following encounter data      
specifications may also be evaluated.                                 

ASSOCIATION CHECKS: Edits of the association between two fields will check for  
invalid recipient age or sex for diagnosis or procedure, and recipient          
eligibility and provider Medicaid number active status for the dates of service.
Counts of inconsistent associations will be indicated by the prefix' * ' on the 
hard copy of error summary reports and will not be included in the counts of    
errors.                                                                         

 7

EX-10.6
121st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 121st
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

 PHYSICAL RECORD LAYOUT AND FIELD REQUIREMENTS

--------------------------------------------------------------------------------
KEY FOR ENCOUNTER TYPE CODES
--------------------------------------------------------------------------------
 R   Required field - Required for processing. DSHS will return records with
 missing, invalid, or uncorrectable values. Contractors must correct
returned records and submit within 90 calendar days.              
--------------------------------------------------------------------------------
   *   Applicable field - Information entered into these fields(30-33)is used to
       identify valid Patient Identification Codes (PIC) when a plan either does
not submit a PIC or the submitted PIC is invalid.                 
--------------------------------------------------------------------------------
   O   Optional field -Contractors are encouraged to submit optional information
--------------------------------------------------------------------------------
E   Field at the encounter level                                          
--------------------------------------------------------------------------------
L   Field at the line item level                                          
--------------------------------------------------------------------------------
X   Cobol Picture for character or alphanumeric field                     
--------------------------------------------------------------------------------
9   Cobol Picture for numeric field                                       
--------------------------------------------------------------------------------
V99  Implied decimal point followed by 2 digits                             
--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
      #      FIELD NAME                                LEVEL           ENCOUNTER TYPE                   PHYSICAL RECORD LAYOUT      
                                                              ----------------------------------------------------------------------
                                                                J,L,       R        M       D       COBOL        OCCURS      START  
                                                                 P                                 PICTURE                  POSITION
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
      1      Encounter Type Indicator                  E          R        R        R       R       X(1)            1           1   
------------------------------------------------------------------------------------------------------------------------------------
      2      Encounter ID                              E          R        R        R       R       9(9)            1           2   
------------------------------------------------------------------------------------------------------------------------------------
      3      Line Item Number                          L          R        R        R       R       9(2)            1          11   
------------------------------------------------------------------------------------------------------------------------------------
      4      PIC                                       E          R        R        R       R       X(14)           1          13   
------------------------------------------------------------------------------------------------------------------------------------
      5      Date of Birth                             E          R        R        R       R       9(6)            1          27   
------------------------------------------------------------------------------------------------------------------------------------
      6      Plan ID                                   E          R        R        R       R       9(7)            1          33   
------------------------------------------------------------------------------------------------------------------------------------
      7      Billing Provider Medicaid                 E          R        R        R       R       9(7)            1          40   
             Number                                           ----------------------------------                                    
                                                              Required only if the provider has                                     
                                                              a Medicaid provider ID                                                
------------------------------------------------------------------------------------------------------------------------------------
      8      Performing/Attending                      E          R        R        R       R       9(7)            1          47   
             or Prescribing Provider                          ----------------------------------                                    
             Medicaid Number                                  Required only if the provider                                         
                                                              has a Medicaid provider ID                                            
------------------------------------------------------------------------------------------------------------------------------------
      9      DRG                                       E                   R                        9(3)            1          54   
------------------------------------------------------------------------------------------------------------------------------------
     10      Hospital Admission Date                   E                   R                        9(6)            1          57   
------------------------------------------------------------------------------------------------------------------------------------
     11      Patient Destination on Discharge          E                   R                        X(2)            1          63   
------------------------------------------------------------------------------------------------------------------------------------
     12      Line Billed Charges                       L                   R        R             9(7)V99           1          65   
------------------------------------------------------------------------------------------------------------------------------------
     13      Date of Service                           L          R        R        R       R       9(6)            1          74   
------------------------------------------------------------------------------------------------------------------------------------
     14      Hospital Discharge Date                   E                   R                        9(6)            1          80   
------------------------------------------------------------------------------------------------------------------------------------

 8

EX-10.6
122nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 122nd
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
      #      FIELD NAME                                LEVEL           ENCOUNTER TYPE                   PHYSICAL RECORD LAYOUT      
                                                              ----------------------------------------------------------------------
                                                                J,L,       R        M       D       COBOL        OCCURS      START  
                                                                 P                                 PICTURE                  POSITION
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
      15     Place of Service                          E          R                 R               X(1)            1          86   
------------------------------------------------------------------------------------------------------------------------------------
      16     Primary Procedure: Report                 E                   R                        X(5)            1          87   
      IP     ICD.9.CM procedures.                                                                                                   
------------------------------------------------------------------------------------------------------------------------------------
      16     Primary Procedure:                        L          R                 R               X(5)            1          87   
    Not IP   Applicable to 'M' encounters:                                                                                          
             If there is no Revenue Code in                                                                                         
             Field #21, then a CPT,                                                                                                 
             HCPCS, or ICD.9.CM code is                                                                                             
             required. If there is a valid                                                                                          
             Revenue Code and no                                                                                                    
             procedures to report,                                                                                                  
             then hyphen-fill this field.                                                                                           
------------------------------------------------------------------------------------------------------------------------------------
      17     Other ICD.9.CM Procedure                  E                   R        R               X(5)            5          92   
             Codes ('M' or 'R' encounters).                                                                                         
------------------------------------------------------------------------------------------------------------------------------------
      18     Procedure Code Modifier                   L          R                 R               X(2)            1         117   
------------------------------------------------------------------------------------------------------------------------------------
      19     Principal Diagnosis Code                  L          R        R        R               X(7)            1         119   
------------------------------------------------------------------------------------------------------------------------------------
      20     Other Diagnosis Codes                     E                   R        R               X(7)            8         126   
------------------------------------------------------------------------------------------------------------------------------------
      21     Revenue Code                              L                   R        R               9(4)            1         182   
             Applicable to 'M' encounters:                                                                                          
             If Field #16 has CPT, HCPCS,                                                                                           
             or ICD.9.CM procedure code -                                                                                           
             8-fill if no Revenue Code.                                                                                             
------------------------------------------------------------------------------------------------------------------------------------
      22     National Drug Code (NDC)                  L                                    R       X(11)           1         186   
------------------------------------------------------------------------------------------------------------------------------------
      23     Units of Service                          L          R        R        R       R       9(7)            1         197   
------------------------------------------------------------------------------------------------------------------------------------
      24     EPSDT Referral Indicator                  E          R                                 X(2)            1         204   
                                                                 (L)                                                                
------------------------------------------------------------------------------------------------------------------------------------
      25     Plan Record ID (EPRI)                     E          O        O        O       O       X(20)           1         206   
------------------------------------------------------------------------------------------------------------------------------------
      26     Newborn Birth Weight                      E                   R        R               9(4)            1         226   
------------------------------------------------------------------------------------------------------------------------------------
      27     Prescription Number                       L                                    R       X(7)            1         230   
------------------------------------------------------------------------------------------------------------------------------------
      28     Claim Status                              E          R        R        R       R       X(1)            1         237   
------------------------------------------------------------------------------------------------------------------------------------
      29     Line Status                               L          R        R        R       R       X(1)            1         238   
------------------------------------------------------------------------------------------------------------------------------------
      30     Patient's First Name                      E          *        *        *       *       X(17)           1         239   
------------------------------------------------------------------------------------------------------------------------------------
      31     Patient's Middle Initial                  E          *        *        *       *       X(1)            1         256   
------------------------------------------------------------------------------------------------------------------------------------
      32     Patient's Last Name                       E          *        *        *       *       X(20)           1         257   
------------------------------------------------------------------------------------------------------------------------------------
      33     Patient's SSN                             E          *        *        *       *       X(9)            1         277   
------------------------------------------------------------------------------------------------------------------------------------
      34     Subscriber's First Name                   E          O        O        O       O       X18)            1         286   
------------------------------------------------------------------------------------------------------------------------------------
      35     Subscriber's Last Name                    E          O        O        O       O       X(20)           1         304   
------------------------------------------------------------------------------------------------------------------------------------
      36     Subscriber's SSN                          E          O        O        O       O       X(9)            1         324   
------------------------------------------------------------------------------------------------------------------------------------
      37     Subscriber's Birth Date                   E          O        O        O       O       9(6)            1         333   
------------------------------------------------------------------------------------------------------------------------------------
      38     Alternate Billing Provider ID:            E         R/O      R/O      R/O     R/O      X(10)           1         339   
             Tax or NABP Identifier.                                                                                                
------------------------------------------------------------------------------------------------------------------------------------

 9

EX-10.6
123rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 123rd
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
      #      FIELD NAME                                LEVEL           ENCOUNTER TYPE                   PHYSICAL RECORD LAYOUT      
                                                              ----------------------------------------------------------------------
                                                                J,L,       R        M       D       COBOL        OCCURS      START  
                                                                 P                                 PICTURE                  POSITION
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
                                                              Required only if the provider has                                     
                                                              no Medicaid provider number.                                          
------------------------------------------------------------------------------------------------------------------------------------
      39     Alternate Performing /                    E         R/O      R/O      R/O     R/O      X(10)           1         349   
             Attending or Prescribing                         ----------------------------------                                    
             Provider ID: State License                       Required only if the                                                  
             Number or DEA Identifier                         provider has no Medicaid                                              
                                                              provider number.                                                      
------------------------------------------------------------------------------------------------------------------------------------
      40     ED Processor Tax ID                       E          O        O        O       O       X(10)           1         359   
------------------------------------------------------------------------------------------------------------------------------------
      41     Hospital Patient Control                  E                   R        O               X(20)           1         369   
             Number (PCN)                                                                                                           
------------------------------------------------------------------------------------------------------------------------------------
      42     FILLER                                                                                 X(47)           1         389   
------------------------------------------------------------------------------------------------------------------------------------
ERROR FLAG FORMAT (DSHS COMPLETES)                                                                                                  
------------------------------------------------------------------------------------------------------------------------------------
      43     Error Flag 1 Enc, Type                                                                 X(1)            1         436   
------------------------------------------------------------------------------------------------------------------------------------
      44     Error Flag 2 Enc. ID                                                                   X(1)            1         437   
------------------------------------------------------------------------------------------------------------------------------------
      45     Error Flag 3 Line Item                                                                 X(1)            1         438   
------------------------------------------------------------------------------------------------------------------------------------
      46     Error Flag 4 PIC                                                                       X(1)            1         439   
------------------------------------------------------------------------------------------------------------------------------------
      47     Error Flag 5 Date of Birth                                                             X(1)            1         440   
------------------------------------------------------------------------------------------------------------------------------------
      48     Error Flag 6 Plan #                                                                    X(1)            1         441   
------------------------------------------------------------------------------------------------------------------------------------
      49     Err. Flg 7 Bill. Prov. Medicaid #                                                      X(1)            1         442   
------------------------------------------------------------------------------------------------------------------------------------
      50     Err. Flg 8 Perf. Prov Medicaid #                                                       X(1)            1         443   
------------------------------------------------------------------------------------------------------------------------------------
      51     Error Flag 9 DRG                                                                       X(1)            1         444   
------------------------------------------------------------------------------------------------------------------------------------
      52     Err. Flag 10 Hosp. Admit Date                                                          X(1)            1         445   
------------------------------------------------------------------------------------------------------------------------------------
      53     Err. Flg 11 Disch. Destination                                                         X(1)            1         446   
------------------------------------------------------------------------------------------------------------------------------------
      54     Err. Flg 12 Line Billed Charge                                                         X(1)            1         447   
------------------------------------------------------------------------------------------------------------------------------------
      55     Error Flag 13 Date of Service                                                          X(1)            1         448   
------------------------------------------------------------------------------------------------------------------------------------
      56     Err. Flg 14 Hosp. Disch. Date                                                          X(1)            1         449   
------------------------------------------------------------------------------------------------------------------------------------
      57     Error Flag 15 Place of Service                                                         X(1)            1         450   
------------------------------------------------------------------------------------------------------------------------------------
      58     Error Flag 16 Principal Proc.                                                          X(1)            1         451   
------------------------------------------------------------------------------------------------------------------------------------
      59     Error Flag 17-1 to 17-5: Other                                                         X(1)            5         452   
             ICD.9.CM Procedures                                                                                                    
------------------------------------------------------------------------------------------------------------------------------------
      60     Error Flag 18 Proc. Modifier                                                           X(1)            1         457   
------------------------------------------------------------------------------------------------------------------------------------
      61     Error Flag 19 Principal Diag.                                                          X(1)            1         458   
------------------------------------------------------------------------------------------------------------------------------------
      62     Error Flag 20-1 to 20-8                                                                X(1)            8         459   
             Other Diagnoses                                                                                                        
------------------------------------------------------------------------------------------------------------------------------------
      63     Error Flag 21 Revenue Code                                                             X(1)            1         467   
------------------------------------------------------------------------------------------------------------------------------------
      64     Err. Flg 22 National Drug Code                                                         X(1)            1         468   
------------------------------------------------------------------------------------------------------------------------------------
      65     Error Flag 23 Units of Service                                                         X(1)            1         469   
------------------------------------------------------------------------------------------------------------------------------------
      66     Err. Flg 24 EPSDT Refer. Ind.                                                          X(1)            1         470   
------------------------------------------------------------------------------------------------------------------------------------
      67     Filler hyphen-filled: Had been                                                         X(1)            1         471   
             Err. Flg 25 Enc. Plan Rec. ID                                                                                          
------------------------------------------------------------------------------------------------------------------------------------
      68     Err. Flg 26 Newborn Birth Wt.                                                          X(1)            1         472   
------------------------------------------------------------------------------------------------------------------------------------

10

EX-10.6
124th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 124th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
      #      FIELD NAME                                LEVEL           ENCOUNTER TYPE                   PHYSICAL RECORD LAYOUT      
                                                              ----------------------------------------------------------------------
                                                                J,L,       R        M       D       COBOL        OCCURS      START  
                                                                 P                                 PICTURE                  POSITION
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
      69     Error Flag 27 Prescription No.                                                         X(1)           1          473   
------------------------------------------------------------------------------------------------------------------------------------
      70     Error Flag 28 Claim Status                                                             X(1)           1          474   
------------------------------------------------------------------------------------------------------------------------------------
      71     Error Flag 29 Line Status                                                              X(1)           1          475   
------------------------------------------------------------------------------------------------------------------------------------
      72     Err. Flg 30                                                                            X(1)           1          476   
------------------------------------------------------------------------------------------------------------------------------------
      73     Err. Flg 31                                                                            X(1)           1          477   
------------------------------------------------------------------------------------------------------------------------------------
      74     Err. Flg 32                                                                            X(1)           1          478   
------------------------------------------------------------------------------------------------------------------------------------
      75     Error Flag 33                                                                          X(1)           1          479   
------------------------------------------------------------------------------------------------------------------------------------
      76     Error Flag 38 Bill.Prov. Alt. ID                                                       X(1)           1          480   
------------------------------------------------------------------------------------------------------------------------------------
      77     Error Flag 39 Perf.Prov. Alt. #                                                        X(1)           1          481   
------------------------------------------------------------------------------------------------------------------------------------
      78     Error Flag 40                                                                          X(1)           1          482   
------------------------------------------------------------------------------------------------------------------------------------
      79     Association Flag 41 Patient not                                                        X(1)           1          483   
             eligible on date of service                                                                                            
------------------------------------------------------------------------------------------------------------------------------------
      80     Assn. Flg 42 Perf.Prov Medi. #                                                         X(1)           1          484   
             is not active on date of service                                                                                       
------------------------------------------------------------------------------------------------------------------------------------
      81     Assn. Flg. 43 Invalid age for                                                          X(1)           1          485   
             diagnosis                                                                                                              
------------------------------------------------------------------------------------------------------------------------------------
      82     Assn Flg 44 Invalid sex x diag.                                                        X(1)           1          486   
------------------------------------------------------------------------------------------------------------------------------------
      83     Assn Flg 45 Invalid age x proc.                                                        X(1)           1          487   
------------------------------------------------------------------------------------------------------------------------------------
      84     Assn Flg 46 Invalid sex x proc.                                                        X(1)           1          488   
------------------------------------------------------------------------------------------------------------------------------------
      85     Assn. Fl. 47 Invalid place x                                                           X(1)           1          489   
             procedure                                                                                                              
------------------------------------------------------------------------------------------------------------------------------------
      86     PIC Change Flag                                                                        X(1)           1          490   
------------------------------------------------------------------------------------------------------------------------------------
      87     PCN Error Flag                                                                         X(1)           1          491   
------------------------------------------------------------------------------------------------------------------------------------
      88     Prescription Days Supply                  L                                  R         9(3)           1          492   
------------------------------------------------------------------------------------------------------------------------------------
      89     Err.Flg.Prescrip. Days Supply                                                          X(1)           1          495   
------------------------------------------------------------------------------------------------------------------------------------
      90     Alternate Bill-Provider ID Type           E         O        O        O      O         X(1)           1          496   
------------------------------------------------------------------------------------------------------------------------------------
      91     Alternate Perf-Attend-Presc               L         O        O        O      O         X(1)           1          497   
             Provider ID Type                                                                                                       
------------------------------------------------------------------------------------------------------------------------------------
      92     Err. Flg Alt-Bill Prov ID Type                                                         X(1)                      498   
------------------------------------------------------------------------------------------------------------------------------------
      93     Err. Flg Alt-Perf-Attend-Presc                                                         X(1)           1          499   
             ID Type                                                                                                                
------------------------------------------------------------------------------------------------------------------------------------
      94     FILLER                                                                                 X(1)           1          500   
------------------------------------------------------------------------------------------------------------------------------------

GENERAL DEFINITIONS AND DATA SOURCES

ENCOUNTER:                                                          
----------                                                          
o    One occurrence (e.g. an office visit); or                      
      o    A period of examination or treatment (e.g. inpatient hospital stay or
   long term care facility) by a medical practitioner or medical
facility.                                                 

11

EX-10.6
125th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 125th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

REPORT:                                                                         
1) Any SERVICE or PROCEDURE listed in the following:                      

    o  AMA Physicians' Current Procedural Terminology (CPT). Use the edition
concurrent with reporting period.                             
   o  Standard Edition International Classification of Diseases (ICD.9.CM)
o  State-specific Codes.                                            
  o  Health Care Financing Administration Comprehensive Procedure Coding
System (HCPCS).                                               
o  Dental ADA Procedure Codes.                                      

    NOTE: All carrier and provider-specific ("in-house") codes must be
         converted to a corresponding code from one of the above listed sources.

2) Any VALID Provider Identifiers are allowed in the following list:      

o  Medicaid Provider Numbers with active status (as per the monthly 
provider list);                                               
  o  Federal Tax Identification numbers used by the billing provider for
reporting to the U.S. Internal Revenue Service;               
   o  State License numbers assigned by the Washington State Department of
  Health assigns to providers certified, registered or licensed in
accordance with Title 18 RCW or Chapter 70.127 RCW;           
o  DEA Identifier numbers assigned by the U.S. Drug Enforcement     
Administration;                                               
     o  NABP (National Association of Boards of Pharmacy) ID numbers. The NABP
  has been purchased by the National Council for Prescription Drug
   Programs (NCPDP) that now assigns this number. Refer to the NCPDP
website for further information www.ncpdp.org/provider.asp.   

12

EX-10.6
126th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 126th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

--------------------------------------------------------------------------------
FIELD ID                   GENERAL FIELD DESCRIPTION                            
--------------------------------------------------------------------------------
1      ENCOUNTER TYPE CODE Contractors are required to assign the services
        and codes to the associated encounter type specified on the attached
        Encounter Type Table. Enter a single character code to designate the
        type of encounter. Where EPSDT services are involved, encounters can
         have line item records with encounter type 'L' for EPSDT services and
encounter type 'J' for non-EPSDT medical services.          
D - Drugs/Medications                             
J - Medical Practitioner                          
L - EPSDT                                         
M - Outpatient                                    
               P - Medical Supplies/Equipment, Vision, Hearing, & Transportation
R - Inpatient Hospital                            
--------------------------------------------------------------------------------
2      ENCOUNTER IDENTIFICATION NUMBER                                    
      A number assigned to each encounter and attached to each record in
     that encounter for the purpose of grouping records belonging to a
         single encounter. Number encounters sequentially in an encounter data
file.                                                       
--------------------------------------------------------------------------------
   3      LINE ITEM NUMBER A number (e.g. 01, 02, 03 etc.) assigned sequentially
    to each instance/item separately reported in a single encounter.
--------------------------------------------------------------------------------
4      PIC = PERSONAL IDENTIFICATION CODE                                 
     Identifier assigned to each recipient approved for Medicaid. DSHS
        provides a list of Medicaid recipients enrolled with the plan to the
          Contractor on a monthly basis. The list includes each recipient's PIC.
The PIC is to be reported in Field 4 in DATA format:        
     o    First 5 characters of last name (Blank-fill unused
positions);                             
o    Initial character of first name;             
            o    Initial character of middle name (If no middle initial, a
hyphen is shown);                       
o    Date of birth in YYMMDD format;              
              o    A tiebreaker code (assigned by DSHS at time of enrollment).

          For NEWBORNS use mother's PIC only until newborn has own PIC and it is
no more than 90 days after date of birth or:                
o    The family moves out of state;               
               o    The newborn is adopted, placed in foster care or dies before
getting a PIC; or                       
              o    The mother leaves the Contractor within 30 calendar days of
                 the birth and the newborn never appears on the payment or
enrollment listing for the Contractor.  
--------------------------------------------------------------------------------
5      DATE OF BIRTH                                                      
      Patient birth date formatted: MMDDYY. Use newborns birth date when
using mother's PIC.                                         
--------------------------------------------------------------------------------
6      PLAN ID                                                            
        The Medicaid Provider Number assigned to the carrier designating the
      contract under which the member is enrolled (e.g. Healthy Options,
Basic Health Plan Plus).                                    
--------------------------------------------------------------------------------

13

EX-10.6
127th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 127th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

--------------------------------------------------------------------------------
FIELD ID                   GENERAL FIELD DESCRIPTION                            
--------------------------------------------------------------------------------
7      BILLING PROVIDER ID - The Medicaid Provider Number assigned to the:
o    CLINIC or PROVIDER PRACTICE of the encounter's         
performing/attending provider.                    
        o    CONTRACTOR, when it is the sole performing/attending provider's
employer.                                         
         o    FACILITY reporting inpatient and outpatient services. (Encounter
Types R and M).                                   
          o    PHARMACY for the reporting of Drug encounters (Encounter Type D).
          o    HOME HEALTH/HOSPICE AGENCY when independently operated (Encounter
type M).                                          
--------------------------------------------------------------------------------
8      PERFORMING/ATTENDING OR PRESCRIBING PROVIDER ID A Medicaid Provider
number assigned to:                                         
      o    The provider who renders the service for Medical Practitioner
              (Encounter Type J), EPSDT (Encounter Type L), Inpatient Hospital
             (Encounter Type R) and Outpatient Hospital (Encounter Type M ).

     o    For prescribed services, prescriptions, and supplies use the
            Medicaid Provider Number of the 'prescribing' practitioner who
            writes the prescription. This applies to writers of orders for
              drug prescriptions (Pharmacy Encounter Type D), Medical Supplies
            or equipment (Encounter Type P), or Laboratory, Radiology, and
  other diagnostic services (within Encounter Type J).

          For Inpatient claims this field should identify the Attending Provider
as described in instructions for UB-92 FL-82.               
--------------------------------------------------------------------------------
9      DRG CODE INPATIENT HOSPITAL (ENCOUNTER TYPE R) ONLY                
       Diagnosis Related Group (DRG) Codes developed using All Patient DRG
    (AP-DRG) Grouper Version 14.1 from 3M/HIS. If this number is not
         available from the hospital reporting the encounter, the carrier will
have to determine the appropriate DRG.                      
--------------------------------------------------------------------------------
10     HOSPITAL ADMISSION DATE                                            
Format: MMDDYY Source: UB-92: FL-17, "Admission Date"       
--------------------------------------------------------------------------------
11     PATIENT DESTINATION ON DISCHARGE Applies only to Inpatient Hospital
     (Encounter Type 'R'). Location to where a patient was discharged.
Code   Destination at discharge                             
01  Home discharge                                      
02  Discharge/Transfer General Hospital                 
03  Discharge/Transfer SNF                              
04  Discharge/Transfer ICF                              
05  Discharge/Transfer INST                             
06  Discharge/Transfer Home                             
07  Left against medical advice                         
08  Home discharge with IV Therapy                      
20  Death                                               

Source: UB-92: FL-22, "Patient Status"                      
--------------------------------------------------------------------------------

14

EX-10.6
128th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 128th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

--------------------------------------------------------------------------------
FIELD ID                   GENERAL FIELD DESCRIPTION                            
--------------------------------------------------------------------------------
12     LINE BILLED CHARGES Applies to hospital (M and R) encounters only. 
      Enter the line-billed charges for each Revenue Code reported on an
     inpatient hospital encounter and the line-billed charges for each
         Revenue Code and CPT or HCPCS Code reported on an outpatient hospital
     encounter. Source: UB-92: FL-47, Line charges associated with the
     service codes reported in the rows of the "Total Charges" column.
--------------------------------------------------------------------------------
13     DATE OF SERVICE                                                    
       Format: MMDDYY Source: Hospital Inpatient upon discharge (Encounter
  Type R) & Outpatient (Encounter Type M) - Source: UB 92: FL-6,
      "Through" date; Pharmacy (Encounter Type D) -Source: Form 525-106:
         FL-9, "Fill Date"; Medical Practitioner, EPSDT, & Medical Equip, etc.
(Encounter types J, L, & P) - Source: HCFA 1500 FL-24.      
--------------------------------------------------------------------------------
14     HOSPITAL DISCHARGE DATE                                            
Format: MMDDYY Source: UB 92: FL-6, "Through."              
--------------------------------------------------------------------------------
15     PLACE OF SERVICE CODES                                             
         Note: These codes are different from Medicare Place-of-Service codes.
Code   Place of Service                           
----   --------------------------------------     
1        Hospital, Inpatient                    
2        Hospital, Outpatient                   
3        Office or ambulatory surgery center    
4        Client's residence                     
5        Emergency room                         
6        Congregate care facility               
8     Skilled nursing facility                  
9     Other                                     
--------------------------------------------------------------------------------
16     PRIMARY PROCEDURE CODE Includes Primary ICD.9.CM Procedure Code if 
applicable:                                                 
          o    Medical Practitioner (Encounter Type J), EPSDT (Encounter Type L)
          and Medical Supplies (Encounter Type P) CPT, HCPCS procedure
codes. Source: HCFA-1500: FL-24D, "CPT/HCPCS".    
  o    Dental ADA Procedure Codes. Source: Form 525-108: FL-15G,
"Procedure Number"                                
         o    Hospital, Inpatient (Encounter Type R) ICD.9.CM Procedure Codes.
Source: UB-92: FL-80, "Principal Procedure Code"  
       o    Hospital, Outpatient (Encounter Type M) CPT or HCPCS Procedure
          Codes and/or ICD.9.CM Procedure Codes. Source: UB-92: FL-44,
           "HCPCS/Rates" FL-80, "Principal Procedure Code". (Hyphen-fill
            FL-16 if reporting a Revenue Code and there is no CPT or HCPCS
code to report.                                   
  o    If Revenue Code F21 is reported on an Outpatient Hospital
              encounter record (Encounter Type M) DO NOT report a CPT or HCPCS
               or ICD.9.CM procedure in FL 16 for the same record. (8-fill FL 21
            if reporting a procedure code and not reporting Revenue Code.)
--------------------------------------------------------------------------------
17     OTHER ICD.9.CM PROCEDURE CODES (up to 5) Hospital, Inpatient       
       (Encounter Type R) and Outpatient (Encounter Type M) Source: UB-92:
       FL-81A-E, "Other Procedure Codes". These should be repeated on each
line of an inpatient encounter.                             
--------------------------------------------------------------------------------
18     PROCEDURE CODE MODIFIER Applicable to all encounters, excluding    
Inpatient Hospital.                                         
--------------------------------------------------------------------------------

15

EX-10.6
129th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 129th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

--------------------------------------------------------------------------------
FIELD ID                   GENERAL FIELD DESCRIPTION                            
--------------------------------------------------------------------------------
      Medical Practitioner (Encounter Type J), EPSDT (Encounter Type L),
  Outpatient Hospital (Encounter Type M) when using CPT or HCPCS
     procedure codes, and Medical Supplies (Encounter Type P). Source:
HCFA-1500: FL-24D, "Modifier".                              
Dental Source: Form 525-108: FL-15H, "Mod".                 
--------------------------------------------------------------------------------
19     PRINCIPAL DIAGNOSIS CODE                                           
o    Only ICD.9.CM diagnosis codes are allowed.             
   o    Coding must be explicit using the maximum number of digits
           appropriate AND including the decimal point where applicable.

         Medical Practitioner (Encounter Type J), EPSDT (Encounter Type L) and
  Medical Supplies (Encounter Type P) Source: HCFA-1500: FL-24E,
"Diagnosis Code";                                           
Dental: Source: 525-108: FL-5, "Dental Diagnosis Code";     
         Hospital, Inpatient (Encounter Type R) and Outpatient (Encounter Type
M) Source: UB- 92: FL-67, "Principal Diagnosis Code".       
--------------------------------------------------------------------------------
   20     OTHER DIAGNOSIS CODES (up to 8) Applicable to hospital encounters only
         Hospital, Inpatient (Encounter Type R) and Outpatient (Encounter Type
     M) Source: UB- 92: FL-68-75, "Other Diagnosis Codes". Hyphen-fill
       unused diagnosis fields (See example-Generic Field Specifications).
--------------------------------------------------------------------------------
21     REVENUE CODE Applicable to hospital encounters only.               
         For Outpatient: Either a Revenue Code or a Procedure Code is required
          for each line item, but NOT BOTH. For Hospital Inpatient, Revenue Code
     is required. Hospital Inpatient (Encounter Type R) and Outpatient
 (Encounter Type M) Source: UB-92: FL-42. (8-fill when using a
Procedure Code in FL 16.)                                   
--------------------------------------------------------------------------------
22     NATIONAL DRUG CODE (NDC) Applicable to Pharmacy (Encounter Type D) 
      only Enter eleven-digit NDC number without hyphens/spaces. Source:
Form 525-106: Field "National Drug Code". Include NDCs for  
        over-the-counter medications. Use the Food and Drug Administration's
(FDA's) website to verify federally covered Medicaid NDCs:  
http://www.fda.gov/cder/.                                   
--------------------------------------------------------------------------------

16

EX-10.6
130th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 130th
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

--------------------------------------------------------------------------------
FIELD ID                   GENERAL FIELD DESCRIPTION                            
--------------------------------------------------------------------------------
23     UNITS OF SERVICE                                                   
o    A quantitative measure of services provided.           
      o    Hospital Inpatient (Encounter Type R) Revenue Codes 100 - 210
             Accommodations: number of days. Source: UB-92: FL-46, "Units of
Service"                                          
      o    Hospital Outpatient (M type) Revenue Code 45X Emergency Room:
        number of visits. Source: UB-92: FL-46, "Units of Service"
          o    Pharmacy (Encounter Type D) Source: Form 525-106: Field "Quantity
- Filled"                                         
  o    Medical Practitioner (J type), EPSDT (L type) and Medical
              Supplies (Encounter Type P). Source: HCFA-1500: FL-24G, "Days or
Units"                                            
o    Dental - Source: Form 525-108: FL-15F, "Units"         
--------------------------------------------------------------------------------
24     EPSDT REFERRAL INDICATOR [EPSDT = Early and Periodic Screening     
Diagnosis and Treatment] Applicable to EPSDT encounters only
       (Encounter Type L or Type J when an encounter involves both L and J
          types of services). A two-digit code that indicates that a patient was
       or was not referred for treatment as the result of the EPSDT visit:
YR - yes, referred                                
NR - no, not referred                             

         If a plan cannot obtain the referral indicator, then leave this field
         blank. Although this will result in an error during the MAA edit, the
       plan is required to report the encounter. Errors due to blank fills
will be tracked separately.                                 
Source: HCFA-1500: FL-24D: "Modifier".                      
--------------------------------------------------------------------------------
25     PLAN RECORD ID CODE (EPRI) - A plan-assigned code that uniquely    
       identifies the encounter in the submitted encounter data and in the
     plan's internal database. The EPRI is Optional for the Year 2003.
--------------------------------------------------------------------------------
   26     NEWBORN BIRTH WEIGHT Hospital encounters for newborns must include the
         Birth Weight in grams. Hospital, Inpatient (R type) and Outpatient (M
         type) Source: UB-92: is given in the "Value Amount column of FL-39-41
a-d where the Value Code ="80" (in grams).                  
--------------------------------------------------------------------------------
   27     PRESCRIPTION NUMBER Applicable to Pharmacy (D type) encounters only. A
      seven-character code assigned in sequence to regular prescriptions
         filled by the pharmacy. Contractors may use the original prescription
          number for refills or assign a new number. Source: Form 525-106: Field
"Prescription Number".                                      
--------------------------------------------------------------------------------
   28     CLAIM STATUS Indicates whether all services of the submitted encounter
were denied or one or more services were paid/accepted.     
              N = Paid or Accepted (e.g. for services provided on a capitation
                basis). If an inpatient claim is paid on a DRG basis, then
use Claim Status N.                       
               P = Denied (Includes only finalized claims where disposition is a
denial).                                  
--------------------------------------------------------------------------------

17

EX-10.6
131st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 131st
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

--------------------------------------------------------------------------------
FIELD ID                   GENERAL FIELD DESCRIPTION                            
--------------------------------------------------------------------------------
   29     LINE STATUS Indicates whether or not payment for an individual service
          was denied or paid/accepted. For inpatient encounters that are paid or
      denied based on DRG code, code all lines of the encounter as "N" =
paid/accepted, unless claim was denied ("P" = Denied).      
           N = Paid/Accepted (e.g. for services provided on a capitation
basis).                                   
P = Denied                                        
--------------------------------------------------------------------------------
30-33    PATIENT FIRST NAME, MIDDLE INITIAL, LAST NAME and SSN. If there is no
middle initial or it is unknown, insert a "-" in Field 31.  
--------------------------------------------------------------------------------
34-37    SUBSCRIBER FIRST NAME, LAST NAME, SSN and BIRTH DATE (optional). The 
    Subscriber is the head of household in which the patient resides
    and/or a guardian (for patients who are dependents). Patient and
      Subscriber can be the same. Information may be used for PIC match.
--------------------------------------------------------------------------------
   38     ALTERNATE BILLING PROVIDER ID is required if the billing provider does
        not have a valid Medicaid Provider Number. Medicaid Provider Numbers
          may be used in combination with any of the following Alternate Billing
     provider Identifiers: Federal Tax Identifier, or NABP Identifier.
--------------------------------------------------------------------------------
  39     ALTERNATE PERFORMING/ATTENDING OR PRESCRIBING PROVIDER ID is required
       if the performing/attending or prescribing provider does not have a
         valid Medicaid Provider Number. Medicaid Provider Numbers may be used
in combination with any of the following Alternate          
   Performing/Attending or Prescribing provider Identifiers: State
License Number, or DEA Identifier.                          

        When service is given out-of-state, report the license number issued
        by the associated state. See Field #8 for determining when to report
the performing/attending or prescribing provider.           
--------------------------------------------------------------------------------
   40     ENCOUNTER DATA PROCESSOR TAX ID Optional field to assist Contractor in
tracking encounter records to their processors.             
--------------------------------------------------------------------------------
41     HOSPTIAL PATIENT CONTROL NUMBER (PCN) Applicable to hospital claims
    (Encounter Type R - required and M - optional). Patient's unique
        alphanumeric number assigned by the provider to facilitate retrieval
      of individual case record. CHARS reporting requires that hospitals
   make the PCN unique. An encounter record PCN must match the PCN
     reported in the associated claims reported to CHARS. For services
         given out-of-state, the PCN number assigned by the hospital should be
reported.                                                   

   For hospitals that use patient-based PCNs on their UB92 claims,
   Contractors should replicate the numbering scheme used by those
      hospitals to make their PCN unique and transaction based for their
       CHARS submissions. For example, if a hospital makes a patient-based
       PCN unique by adding the admit date, the Contractor can do the same
for that encounter record.                                  

         Source: UB92 Manual Form Locator 3 and the CHARS Procedure Manual for
Submitting Discharge Data, UB92 Data Elements, page 11.     
--------------------------------------------------------------------------------
42     FILLER                                                             
--------------------------------------------------------------------------------

18

EX-10.6
132nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 132nd
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

--------------------------------------------------------------------------------
FIELD ID                   GENERAL FIELD DESCRIPTION                            
--------------------------------------------------------------------------------
43-78    ERROR FLAGS - Position #'s 436-482 Codes:                            
'1' = field value did not pass edits                        
' ' (blank) = field value did pass edits                    
'-' = no edit required                                      

Codes unique to specific error flag fields:                 
Error Flag Field 21 - Revenue Codes:              
o    Code '-' = no edit required.                           
   o    Code '1' = required revenue code is not valid or is blank.
o    Code ' ' (blank) = required revenue code is valid.     
o    Code 'M' = required revenue code is modified.          
o    Code 'C' = modified value is valid.                    
Error Flag Field 12 - Lined Billed Charges:       
o    Code 'Z' - field 12 = zeros                            
o    Code 'U - field 12 = all 9's (i.e. 9999999.99)         
o    Code 'I' - field 12 = all 8's (i.e. 8888888.88)        
o    Code 'N' - field 12 = 099999999 (i.e. 0999999.99)      
o    Code 'E' - field 12 = 088888888 (i.e. 0888888.88)      
  o    Code 'G' - field 12 = any other non-numeric or low values
--------------------------------------------------------------------------------
         The following edits are used to validate data in the specified fields
(Position #s 483-489)                                       
--------------------------------------------------------------------------------
79     ASSOCIATION FLAG 41 Recipient not eligible for date of service     
--------------------------------------------------------------------------------
   80     ASSOCIATION FLAG 42 Performing provider not active for date of service
--------------------------------------------------------------------------------
81     ASSOCIATION FLAG 43 Invalid recipient age for diagnosis            
--------------------------------------------------------------------------------
82     ASSOCIATION FLAG 44 Invalid recipient sex for diagnosis            
--------------------------------------------------------------------------------
83     ASSOCIATION FLAG 45 Invalid recipient age for procedure            
--------------------------------------------------------------------------------
84     ASSOCIATION FLAG 46 Invalid recipient sex for procedure            
--------------------------------------------------------------------------------
85     ASSOCIATION FLAG 47 Invalid place of service for procedure         
--------------------------------------------------------------------------------
   86     PIC-CHANGE-FLAG [PIC = Patient Identification Code] Completed by DSHS.
         When the PIC submitted in Field 4 is invalid and a valid PIC is found
by DSHS by any of the following:                            
         o    Name (Fields 31, 32 & 33) and Date of Birth (Field 5);
 o    Name and Social Security Number (Field 34); or
o    Social Security Number and Date of Birth;    

             The matched PIC will replace the invalid PIC in Field 4 for use
              in all subsequent processing of the encounter record. One of the
following codes will appear in Field 86:          
o    C = PIC corrected;                           
o    V = original (submitted) PIC is valid;       
        o    I = invalid PIC submitted and no valid PIC identified
through match process.          
--------------------------------------------------------------------------------
 87     PCN ERROR FLAG (For explanation codes see for Field ID numbers 43-78
above.)                                                     
--------------------------------------------------------------------------------
88     PRESCRIPTION DAYS SUPPLY: Number of days prescription is to cover. 
Source: Pharmacy Form 525-106: Field "Est. Days' Supply".   
--------------------------------------------------------------------------------
 89     ERROR FLAG PRESCRIPTION DAYS SUPPLY: Same codes as for fields 43-78.
--------------------------------------------------------------------------------

19

EX-10.6
133rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 133rd
                                                        2003 HO & SCHIP Contract
                                           Exhibit C-1

--------------------------------------------------------------------------------
FIELD ID                   GENERAL FIELD DESCRIPTION                            
--------------------------------------------------------------------------------
  90     ALTERNATE BILLING PROVIDER ID: required if no valid Medicaid Provider
  Number is reported - Hyphen-fill if no Alternate Identifier is
reported and a Medicaid Provider Number is reported:        

      o    United States Federal Tax Identifier. Leave Field 90 blank if
               alternate Tax Identifier is reported. No error will be generated.

   o    N = National Association of Boards of Pharmacy Identifier,
              recently purchased by the National Council for Prescription Drug
      Programs (NCPDP) and also known as the NCPDP Identifier.
--------------------------------------------------------------------------------
   91     ALTERNATE PERFORMING/ATTENDING OR PRESCRIBING PROVIDER ID: REQUIRED IF
NO VALID MEDICAID ID IS REPORTED                            
     Hyphen-fill if no Alternate Identifier is reported and a Medicaid
Provider Number is reported:                                

               o    Washington State Professional License Number. If the service
              is given out-of-state then the performing/attending or
               prescribing license number refers to the license number
                    issued by the state in which the provider is licensed. Leave
                  Field 91 blank if an alternate State License Identifier is
reported. No error will be generated.   

          o    D = U.S. Drug Enforcement Agency issued DEA Identifier.
--------------------------------------------------------------------------------
92     ERROR FLAG ALT-BILLING PROVIDER ID (FIELD 90)                      
--------------------------------------------------------------------------------
93     ERROR FLAG ALTERNATE PERF/ATTEND OR PRESCR. PROVIDER (FIELD 91)    
--------------------------------------------------------------------------------

20

EX-10.6
134th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 134th
                                                   2003 Healthy Options Contract
                                 Exhibit C-1

ENCOUNTER TYPE TABLE

Contractors are required to assign at least the services and codes specified    
below to the associated encounter types. Consult the 2003 HO/SCHIP contract for 
the Schedule of Benefits and the MAA Billing Instructions for further           
information on code and service encounter type designations (MAA Billing        
Instructions take precedence over the listing below).                           

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
                                            TYPES OF SERVICES                         TYPICAL CPT-4 AND HCPCS CODES                 
E-TYPE        DESCRIPTION OF         FOR A COMPLETE LISTING SEE 2003    SEE MAA BILLING INSTRUCTIONS FOR COMPLETE LISTING OF CODES  
 CODE         ENCOUNTER TYPE          CONTRACT SCHEDULE OF BENEFITS                  ASSOCIATED WITH COVERED SERVICE                
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
  D       DRUGS & MEDICATIONS       Includes only drugs and                                        N/A                              
          Prescriptions ordered     medications dispensed by a                                                                      
          by the                    pharmacy. Does not include                                                                      
          performing/attending      those provided during a J, M, or                                                                
          or prescribing            R encounter.                                                                                    
          physician. Includes                                                                                                       
          dispensing fee.                                                                                                           
------------------------------------------------------------------------------------------------------------------------------------
  J       Medical Practitioner      Surgery, including pre-and post-    10040-36410, 36420-55899, 56300-58301, 58340-58960,         
          Services Professional     surgical encounters with the        58999, 59525, 60000-69020, 69100-69979, 69990, 92980-       
          charges only or the       surgeon and assistant surgeon.      92998, 93501-93536, 93561-93572, A6020-A6406, G0051-        
          combined professional     Includes oral surgery services      G0053                                                       
          and technical charges                                                                                                     
          for the following         Anesthesia                          00100-01999, 99100-99142 or 10040-36410, 36420-55899,       
          medical services                                              56300-58301, 58340-58960, 58999, 59525, 60000-69020,        
          provided in inpatient,    * MAA FFS: 00100-01999 are          69100-69979, 69990, 92980-92998, 93501-93536, 93561-        
          outpatient, and office    billed with surgery procedure +     93572 with anesthesia modifier                              
          settings.                 modifier                                                                                        

                                    Maternity                           59400-59430, 59610-59614, 59899, 59510-59515, 59618-        
                                                                        59622, 59899, 59000-59350, 59812-59871 (excluding           
                                                                        59840, 59841, 59850 through 59852 and 59855 through         
                                                                        59857)                                                      
------------------------------------------------------------------------------------------------------------------------------------

23

EX-10.6
135th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 135th
                                                   2003 Healthy Options Contract
                                 Exhibit C-1

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
                                            TYPES OF SERVICES                          TYPICAL CPT-4 AND HCPCS CODES                
E-TYPE        DESCRIPTION OF         FOR A COMPLETE LISTING SEE 2003     SEE MAA BILLING INSTRUCTIONS FOR COMPLETE LISTING OF CODES 
 CODE         ENCOUNTER TYPE          CONTRACT SCHEDULE OF BENEFITS                   ASSOCIATED WITH COVERED SERVICE               
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
  J       MEDICAL PRACTITIONER      Visits, consults and urgent care    99175-99195, 99221-99239, 99356-99357, 99431, 99433-99440;  
          SERVICES (continued)                                          99201-99215, 99241-99275, 99201-99215, 99321-99355,         
                                                                        99361-99380, 99385 (for persons age 21-39), 99386-99387,    
          "J" and "L" encounter                                         99395 (for persons age 21-39), 99499                        
          types may occur on        Critical care                       99291-99316, 99217-99220, 99281-99288                       
          different records for                                                                                                     
          the same encounter.                                                                                                       
                                    Physical Medicine &                 97001-97799, 98925-98929; H5300, Q0082, Q0086,              
                                    Rehabilitation                      Q0103-Q0110                                                 

                                    Cardiovascular                      92950-92979, 93000-93350, 93539-93556, 93600-93799;         
                                                                        G0004-G0007, G0015-G0016, M0300-M0302                       

                                    Immunizations                       90471-90472, 90476-90749; G0008-G0010, J1670                

                                    Mental Health                       90816-90829                                                 

                                    Newborn care                        99431-99436,99440                                           

                                    Vision & Hearing/                   92002-92015, 92310, 92314 92506-92510, 92551-92599;         
                                    Speech Exams                        V5008-V5010, V5362-V5364                                    

                                    Physical Exams                      99386, 99387, 99396, 99397, 99401-99429                     

                                    Pathology                           80049-89399; G0058-G0060, P2028-P9615, Q0068, Q0091,        
                                                                        Q0111-Q0115                                                 

                                    Radiology                           70010-79999; A4647-A4649, A9500-A9600, G0030-G0050, Q0035,  
                                                                        Q0092, R0070-R0076                                          

                                    Therapeutic injections              90281-90399, 90780-90799, J0120-J1650, J1690-J7310, Q0081,  
                                                                        Q9920-Q9940                                                 

                                    Allergy testing & Immunotherapy     95004-95078, 95115-95199                                    
------------------------------------------------------------------------------------------------------------------------------------

24

EX-10.6
136th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 136th
                                                   2003 Healthy Options Contract
                                 Exhibit C-1

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
                                           TYPES OF SERVICES                          TYPICAL CPT-4 AND HCPCS CODES                 
E-TYPE        DESCRIPTION OF        FOR A COMPLETE LISTING SEE 2003      SEE MAA BILLING INSTRUCTIONS FOR COMPLETE LISTING OF CODES 
 CODE         ENCOUNTER TYPE         CONTRACT SCHEDULE OF BENEFITS                   ASSOCIATED WITH COVERED SERVICE                
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
  J       MEDICAL PRACTITIONER      Miscellaneous medical services      36415, 90901, 90911, 90918-90999, A4650-A4927, 91000-91299, 
          SERVICES (continued)      such as Venipuncture,               92018-92287 92311-92313 92315-92317 92330, 92335            
                                    Biofeedback, Dialysis,              92352-92358 92371 92393-92499, 92502-92504 92511-92526,     
                                    Gastroenterology, Ophthalmology,    92531-92548, 93875-93990, 94010-94799, 95805-95999,         
                                    Otorhinolaryngology, Vestibular     95805-95999, 96400-96549, J8530-J9999, 96900-96999,         
                                    Function Tests, Non-Invasive        99000-99070 99199, 99360, G0001-G0002 G0025-G0027           
                                    Vascular Diagnostic Studies,        G0062-G0063 Q0083-Q0085 M0075-M0076 M0010 M0101             
                                    Pulmonology, Neurology, Central                                                                 
                                    Nervous System Tests,                                                                           
                                    Chemotherapy, Dermatology, or                                                                   
                                    Podiatry.                                                                                       
------------------------------------------------------------------------------------------------------------------------------------
  L       EPSDT                     Well Baby/Well Child Exams          99381-99384, 99385 (for ages 18-20), 99391-99394, and 99395 
          All covered services                                          (for ages 18-20)                                            
          for children age 0 - 20                                                                                                   
          "J" and "L" encounter     Immunizations                       90471-90472, 90476-90749; G0008-G0010, J1670                
          types may occur on                                                                                                        
          different records for     Interperiodic well child visit      0203M, 0252M                                                
          the same encounter.                                                                                                       
                                    Chiropractic: Visits,               98940-98943, A2000                                          
                                    manipulations and radiology                                                                     
                                    services provided in the                                                                        
                                    chiropractor's office.                                                                          
------------------------------------------------------------------------------------------------------------------------------------
  M       OUTPATIENT facility charges for the technical         Emergency & Urgent Care; Maternity: delivery, non-delivery          
          components and services performed by full-time        (miscarriages, therapeutic abortions, ultrasound, amniocentesis),   
          staff of a hospital outpatient, freestanding          & well newborn care; Outpatient Surgery including oral surgery,     
          facility, ambulatory surgical center, FQHC or RHC,    Anesthesia, Radiology & Pathology; Pharmacy and Blood;              
          kidney dialysis center, mobile radiology unit, or     Cardiovascular tests such as EKG and stress tests; Physical therapy,
          birthing center for the following types of medical    occupational therapy, and speech therapy; Home health; Hospice;     
          services.  Does not include professional charges      Chemotherapy; Diagnostic services                                   
          that are billed separately                                                                                                
------------------------------------------------------------------------------------------------------------------------------------

25

EX-10.6
137th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 137th
                                                   2003 Healthy Options Contract
                                 Exhibit C-1

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
                                           TYPES OF SERVICES                          TYPICAL CPT-4 AND HCPCS CODES                 
E-TYPE        DESCRIPTION OF        FOR A COMPLETE LISTING SEE 2003      SEE MAA BILLING INSTRUCTIONS FOR COMPLETE LISTING OF CODES 
 CODE         ENCOUNTER TYPE         CONTRACT SCHEDULE OF BENEFITS                   ASSOCIATED WITH COVERED SERVICE                
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
  P       MEDICAL SUPPLIES,         Braces (orthotics), canes,          A4206-A4646, A5051-A5149, A5500-A5507,                      
          APPLIANCES, EQUIPMENT,    crutches, glucoscan, glucometer,    B4034-B9999, E0100-E1830, K0001-K0116,                      
          VISION, HEARING AIDS,     intermittent positive pressure      K0137-K0439, K0452, L0100-L4398, V2600-                     
          AND TRANSPORTATION:       machines, rib belt for treatment    V2615, V5336 K0440-K0451, L5000-L8690,                      
          Includes only those       of an accident or illness,          V2623-V2632; 92325-92326, 92340-92342, 92370,               
          dispensed by a medical    walker, wheel chairs, etc;          92390-92392; V2020-V2599, V2700-V2799;                      
          supplier. Does not        artificial parts that replace a     A0021-A0999, A6020-A6406                                    
          include those provided    missing body part or improve a                                                                  
          during a J, M, or R       body function (i.e., artificial                                                                 
          encounter.                limb, heart valve, medically                                                                    
                                    necessary reconstruction);                                                                      
                                    glasses or contacts; and                                                                        
                                    ambulance.                                                                                      
------------------------------------------------------------------------------------------------------------------------------------
  R       INPATIENT HOSPITAL: Inpatient room and board and ancillary    Medical & Surgical Confinement                              
          services in short-term community hospitals. Ancillary         Surgery, Emergency & Urgent Care; Skilled Nursing           
          services include use of surgical and intensive care           Facility; Maternity: delivery, complications of             
          facilities, inpatient nursing care, pathology and             pregnancy, non-delivery (includes miscarriages              
          radiology procedures, drugs and supplies. Facility charges    & therapeutic abortion), & well newborn care;               
          for technical components and services performed by            Surgery, Anesthesia, Radiology & Pathology;                 
          full-time staff of a hospital on an inpatient basis. Does     Pharmacy and Blood; Chemotherapy; Diagnostic                
          not include professional charges unless performed by full-    services                                                    
          time staff of the facility and not billed separately.                                                                     
------------------------------------------------------------------------------------------------------------------------------------

26            

EX-10.6
138th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 138th
                                                        2003 HO & SCHIP Contract
                                               Exhibit C-2 (a)

EXHIBIT C-2(a)
2003 IPND REPORTING REQUIREMENTS
BASIC HEALTH PLAN (BHP), HEALTHY OPTIONS (HO),
PUBLIC EMPLOYEES BENEFIT BOARD (PEBB),
AND CHILDREN'S HEALTH INSURANCE PROGRAM (SCHIP) 

Note: Validate the field type and maximum size, values bolded, and whether the
field is required or not, for each Provider Type. 

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             PROVIDER TYPES         
                                                                                                             (SEE FOOTNOTES)   EDIT 
                                                                                                             ----------------       
                  FIELD NAME       FIELD TYPE  SIZE                    DEFINITION                            PRAC  HOSP  PHA        
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
  Carrier        Program Type         Numeric     1  The program supported by the Practitioner,               X     X     X     TR  
   Area                                              hospital or pharmacy at this location. HO = 1,                                 
                                                     BHP = 2, PEBB = 4, CHIP= 8. A separate record                                  
                                                     must be submitted for each program type.                                       
------------------------------------------------------------------------------------------------------------------------------------
               InternalProviderID      Text      15  The internal identification number by which the          A     A     A     ERR 
                                                     Carrier refers to the Health Care Provider. Required                           
                                                     for PEBB PCPs, using ProviderClinic code (used for                             
                                                     enrollment purposes).                                                          
------------------------------------------------------------------------------------------------------------------------------------
                Credential Date        Date      10  The date the Carrier last credentialed the               A                 ERR 
                                                     Practitioner. Must be in correct format: MM/DD/YYYY,                           
                                                     a valid date, and not a date in the future.                                    
------------------------------------------------------------------------------------------------------------------------------------
                   Obstetric          Yes/No      1  Does the Practitioner offer Obstetric services,          X                     
                                                     including birthing?                                                            
------------------------------------------------------------------------------------------------------------------------------------
                      PSB              Text       1  A single upper-case character indicating: P =            X                 TR  
                                                     Primary Care Provider, S = Specialist, B = Both.                               
------------------------------------------------------------------------------------------------------------------------------------
               AcceptNewPatients      Yes/No      1  Does the Practitioner currently accept new               X                     
                                                     enrollees?                                                                     
------------------------------------------------------------------------------------------------------------------------------------
                     Limits            Text      50  The practice limitations the Practitioner places         *X                    
                                                     on his/her services (e.g., age 0-19, 2 days a                                  
                                                     week). *Required only if the carrier is aware of                               
                                                     practice limitations.                                                          
------------------------------------------------------------------------------------------------------------------------------------
                AfterHoursPhone        Text      23  Telephone number of the business (not a specific         X      A    A     ERR 
                                                     Practitioner) for after normal business hours.                                 
                                                     Format: (nnn) nnn-nnnn ext. nnnnn. (Telephone                                  
                                                     extensions are optional)                                                       
------------------------------------------------------------------------------------------------------------------------------------
                SpecialtyPrimary       Text      50  The full name or approved abbreviation of the            X                 TR  
                                                     specialty offered by the Practitioner under the                                
                                                     current contract. (see tblSpecialtyType for                                    
                                                     approved specialties and their abbreviations)                                  
------------------------------------------------------------------------------------------------------------------------------------
               SpecialtySecondary      Text      50  The full name or approved abbreviation of the            A                     
                                                     specialty offered by the Practitioner under the                                
                                                     current contract. Can be multiple if active. (see                              
                                                     tblSpecialtyType for approved specialties and their                            
                                                     abbreviations)                                                                 
------------------------------------------------------------------------------------------------------------------------------------

X     =   Required Field                                                        
*X    =   Required only if carrier is aware of this information                 
A     =   Required if applicable                                                
Blank =   Optional                                                              

TR    =   Total Reject (don't work record)                                      
ERR   =   Error (blank the field in error but still work the record)            

 1

EX-10.6
139th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 139th
                                                        2003 HO & SCHIP Contract
                                               Exhibit C-2 (a)

Note: Validate the field type and maximum size, values bolded, and whether the
 field is required or not, for each Provider Type.

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             PROVIDER TYPES         
                                                                                                             (SEE FOOTNOTES)   EDIT 
                                                                                                             ----------------       
                  FIELD NAME       FIELD TYPE  SIZE                    DEFINITION                            PRACT HOSP  PHAR       
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
                    Start              Date     10   The effective date the Practitioner, Hospital or                               
                                                     Pharmacy entered/will enter into a contract with the     X     X     X     TR  
                                                     carrier to administer health care for each place of                            
                                                     business for each program: HO, BHP or PEBB. Must be                            
                                                     in correct format: MM/DD/YYYY and a valid date.                                
------------------------------------------------------------------------------------------------------------------------------------
                     End               Date     10   The date the Practitioner, Hospital or Pharmacy          *X    *X    *X    TR  
                                                     ended/will end their contract to administer health                             
                                                     care for each place of business for each program:                              
                                                     HO, BHP or PEBB. If there is not a known contract                              
                                                     end date, field can be left blank. Must be in                                  
                                                     correct format: MM/DD/YYYY and a valid date                                    
------------------------------------------------------------------------------------------------------------------------------------
                 RestrictedMSO         Text     35   If the provider is a member of a group that delivers     *X                    
                                                     services through a sub-capitated (risk-based)                                  
                                                     arrangement and does not permit enrollees to use                               
                                                     providers outside of that group for routine primary                            
                                                     and referral care, list the name of that provider                              
                                                     group. *If the provider is not a member of such a                              
                                                     group, leave blank.                                                            
------------------------------------------------------------------------------------------------------------------------------------
                   Language            Text     30   Language(s), other than English, in which the            *X                    
                                                     Practitioner is fluent. This does not include all                              
                                                     languages that may be available at the Health Care                             
                                                     Provider's place of business. (see tblLanguage for                             
                                                     approved abbreviations).                                                       
------------------------------------------------------------------------------------------------------------------------------------
                   Capacity           Numeric    4   The maximum number of clients the Primary Care                                 
                                                     Provider can manage under the current contract for                             
                                                     each program, listed separately. (Applies to provider                          
                                                     Type 1 records only)                                                           
------------------------------------------------------------------------------------------------------------------------------------
 Provider          LastName            Text     25   The last name, family name or surname of the             X                 TR  
   Area                                              Practitioner and any suffix that applies                                       
                                                     (i.e. Sr., Jr., etc.)                                                          
------------------------------------------------------------------------------------------------------------------------------------
                   FirstName           Text     15   The first or given name of the Practitioner.             X                 TR  
------------------------------------------------------------------------------------------------------------------------------------
                  MiddleName           Text     15   The middle name(s) or initial(s) of the Practitioner.    A                     
------------------------------------------------------------------------------------------------------------------------------------
                  ProfDegree           Text     10   The professional title of the Practitioner. This         X                 TR  
                                                     title may refer to a graduate title received from a                            
                                                     college or university, or may refer to the title on                            
                                                     the professional license (e.g. MD, DO, ARNP, PA, LM,                           
                                                     CNM). Can be multiple if active.                                               
------------------------------------------------------------------------------------------------------------------------------------
                     DOB               Date     10   The date of birth of the Practitioner, for internal      X                 ERR 
                                                     data management purposes, not public distribution.                             
                                                     Must be in correct format: MM/DD/YYYY, a valid date,                           
                                                     not be a date in the future, and be a minimum age of                           
                                                     16 years old.                                                                  
------------------------------------------------------------------------------------------------------------------------------------
                    Gender             Text      1   The gender of the Practitioner (M or F).                 A                 ERR 
------------------------------------------------------------------------------------------------------------------------------------
               PractitionersNPI        Text     10   The Practitioner's National Provider Identification      A                     
                                                     number. As the NPI numbers are assigned, the carrier                           
                                                     must report the identification number. Not currently                           
                                                     required.                                                                      
------------------------------------------------------------------------------------------------------------------------------------

X     =   Required Field                                                        
*X    =   Required only if carrier is aware of this information                 
A     =   Required if applicable                                                
Blank =   Optional                                                              

TR    =   Total Reject (don't work record)                                      
ERR   =   Error (blank the field in error but still work the record)            

 2

EX-10.6
140th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 140th
                                                        2003 HO & SCHIP Contract
                                               Exhibit C-2 (a)

Note: Validate the field type and maximum size, values bolded, and whether the
field is required or not, for each Provider Type.     

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             PROVIDER TYPES         
                                                                                                             (SEE FOOTNOTES)   EDIT 
                                                                                                             ----------------       
                  FIELD NAME        FIELD TYPE  SIZE                    DEFINITION                           PRACT HOSP  PHAR       
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
                LicensePrimary         Text     10   State-issued professional license number. Submitted      X                 TR  
                                                     in complete format and match the following patterns.                           
                                                     For WAshington = [A-Z][A-Z]######## (ie MD12345678)                            
                                                     For ORegon MD's: [A-Z][A-Z]#### (ieMD1234)                                     
                                                     For Oregon RN's: ####### (ie 1234567)                                          
                                                     For IDaho MD's: M-#### (ie M-1234)                                             
                                                     For IDaho PA's: PA-### (ie RPA-123)                                            
                                                     For IDaho RN's: ##### (ie N-12345)                                             
------------------------------------------------------------------------------------------------------------------------------------
             LicensingStatePrimary     Text      2   The two-character upper case Postal Service              X                 TR  
                                                     abbreviation TR of the state issuing the                                       
                                                     professional license.                                                          
------------------------------------------------------------------------------------------------------------------------------------
               LicenseSecondary        Text     10   State-issued professional license number. Submitted      A                 ERR 
                                                     in complete format and match the following patterns.                           
                                                     For Washington = [A-Z][A-Z]######## (ie MD12345678)                            
                                                     For Oregon MD's: [A-Z][A-Z]#### (ieMD1234)                                     
                                                     For Oregon RN's: ####### (ie 1234567)                                          
                                                     For IDaho MD's: M-#### (ie M-1234)                                             
                                                     For IDaho PA's: PA-### (ie RPA-123)                                            
                                                     For IDaho RN's: N-##### (ie N-12345)                                           
------------------------------------------------------------------------------------------------------------------------------------
            LicensingStateSecondary    Text      2   The two-character upper case Postal Service              A                 ERR 
                                                     abbreviation of the state issuing the                                          
                                                     professional license.                                                          
------------------------------------------------------------------------------------------------------------------------------------
Business         ProviderType          Numeric   1   Defines the type of provider services offered by         X     X     X     TR  
 Area                                                the business:  1 = Practitioner, 2 = Hospital,                                 
                                                     3 = Pharmacy.                                                                  
------------------------------------------------------------------------------------------------------------------------------------
                 BusinessName          Text     65   Name of Clinic, Office, Hospital or Pharmacy, as the     X     X     X     TR  
                                                     public knows it. If a practitioner is located at                               
                                                     more than one place of business, a separate record                             
                                                     must be submitted for each address. The Business                               
                                                     Name may be the Practitioner's name.                                           
------------------------------------------------------------------------------------------------------------------------------------
                StreetAddress1         Text     36   The address of the physical location of the Clinic,      X     X     X     TR  
                                                     Office, Hospital or Pharmacy. May not contain Post                             
                                                     Office Box numbers or separate billing address. If a                           
                                                     practitioner is located at more than one place of                              
                                                     business, a separate record must be submitted for                              
                                                     each address. No suite #s permitted, Use USPS Listing                          
------------------------------------------------------------------------------------------------------------------------------------
                StreetAddress2         Text     36   Overflow address line only if required. Not a            A     A     A         
                                                     different address location. No suite #s permitted.                             
------------------------------------------------------------------------------------------------------------------------------------
                     City              Text     25   The full name of the city in which the business is       X     X     X     TR  
                                                     physically located.                                                            
------------------------------------------------------------------------------------------------------------------------------------
                     State             Text      2   The two-character upper-case Postal Service              X     X     X     TR  
                                                     abbreviation of the state in which the Clinic,                                 
                                                     Office, Hospital or Pharmacy is physically located.                            
------------------------------------------------------------------------------------------------------------------------------------
                      ZIP              Text     10   The postal ZIP code in which the Clinic, Office,         X     X     X     TR  
                                                     Hospital or Pharmacy is located.                                               
------------------------------------------------------------------------------------------------------------------------------------

X     =   Required Field                                                        
*X    =   Required only if carrier is aware of this information                 
A     =   Required if applicable                                                
Blank =   Optional                                                              

TR    =   Total Reject (don't work record)                                      
ERR   =   Error (blank the field in error but still work the record)            

 3

EX-10.6
141st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 141st
                                                        2003 HO & SCHIP Contract
                                               Exhibit C-2 (a)

Note: Validate the field type and maximum size, values bolded, and whether the
 field is required or not, for each Provider Type.

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             PROVIDER TYPES         
                                                                                                             (SEE FOOTNOTES)    EDIT
                                                                                                             ----------------       
                    FIELD NAME   FIELD TYPE  SIZE                 DEFINITION                                 PRACT HOSP  PHAR       
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    
                      County        Text      15     The name of the County in which the Clinic, Office,      X     X     X     TR  
                                                     Hospital or Pharmacy is physically located. Spelled                            
                                                     out in full.                                                                   
------------------------------------------------------------------------------------------------------------------------------------
                    Day Phone       Text      23     The telephone number of the business (not a specific     X     X     X     TR  
                                                     Practitioner.) available during normal business                                
                                                     hours to make an appointment. Format: (nnn)                                    
                                                     nnn-nnnn ext. nnnnn. (Telephone extensions are                                 
                                                     optional)                                                                      
------------------------------------------------------------------------------------------------------------------------------------
                   BusinessNPI      Text      10     The National Provider Identification number              A     A     A         
                                                     given to the Clinic, Office, Hospital or Pharmacy.                             
                                                     As the NPI numbers are assigned, the carrier must                              
                                                     report the identification number. Not currently                                
                                                     required.                                                                      
------------------------------------------------------------------------------------------------------------------------------------
                       NAPB         Text      10     The Pharmacy Board identification number, to use as                  X     ERR 
                                                     a unique identifier for pharmacies.                                            
------------------------------------------------------------------------------------------------------------------------------------
                     Comments       Text     255     Comments to IPND Coordinator regarding record.                                 
------------------------------------------------------------------------------------------------------------------------------------
                     Website        Text       1     Is this record available to publish on the IPND Web                            
                                                     Provider Directory Values of Y or N Defaults to Y                              
------------------------------------------------------------------------------------------------------------------------------------
                  Billing Address   Text       1     Is this record a billing address only? Values of Y                             
                                                     or N Defaults to N                                                             
------------------------------------------------------------------------------------------------------------------------------------

X     =   Required Field                                                        
*X    =   Required only if carrier is aware of this information                 
A     =   Required if applicable                                                
Blank =   Optional                                                              

TR    =   Total Reject (don't work record)                                      
ERR   =   Error (blank the field in error but still work the record)            

 4

EX-10.6
142nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 142nd
                                                        2003 HO & SCHIP Contract
                                               Exhibit C-2 (b)

 EXHIBIT C-2 (b)
 IPND ESCALATION PROCEDURE

The State of Washington has a contract with GeoAccess for provider network data 
management for Basic Health (BH), Healthy Options (HO), Children's Health       
Insurance Program (CHIP), and Public Employees Benefits Board (PEBB) programs.  
The following are guidelines in the event a carrier does not submit their       
monthly provider network report by the designated due date, for loading in the  
Integrated Provider Network Database (IPND). Late submissions are equal to      
non-submission for the month. Late submissions may be used as the next month's  
submission if another submission is not received before the deadline.           

--------------------------------------------------------------------------------
Late or No Submission                     ESCALATION PROCEDURES                 
--------------------------------------------------------------------------------
First Month              o   GeoAccess will follow up with the carrier
contact.    

                           o   GeoAccess will notify the IPND Coordinator.

                     o   The IPND Coordinator will contact the
                             carrier(s) via telephone and follow up in
                                writing to determine and resolve reasons for
                                late or non-submittal. IPND Coordinator will
                              work with the plan to ensure timely future
                   submission and update routines.

                           o   If no new submission is received by the due
                                  date the prior month's data will be re-entered
in IPND.    
--------------------------------------------------------------------------------
Second Month              o   GeoAccess will follow up with the carrier 
contact.    

                           o   GeoAccess will notify the IPND Coordinator.

                             o   The plan will receive a "warning letter" from
MAA/HCA.    

                              o   Prior month's data will be re-entered in IPND.
--------------------------------------------------------------------------------
   Third Month              o   No data for the carrier(s) will be displayed
                          in the database until the next monthly
           submission is received.

                           o   Notification of the removal of carrier data
                              will be sent to the HCA/MAA User Interface
customers.  

                       o   HCA/MAA will send written notice to the
                               carrier(s) to inform them of their omission
                            from the database and steps necessary to
               update IPND for their plan.
--------------------------------------------------------------------------------

 1

EX-10.6
143rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 143rd
                                                          2003 HO SCHIP Contract
                                             Exhibit D

Premiums, Service Areas and Capacity
Exhibit D-1, Capacity 
Contractor: MHC 
Effective: January 1, 2003

                                                                [Download Table]

----------------------------------------------------------
    REGION           SERVICE AREA                CAPACITY 
----------------------------------------------------------
                                                          
      1        Island                               5,000 
----------------------------------------------------------
      1        San Juan                               150 
----------------------------------------------------------
      1        Skagit                               9,000 
----------------------------------------------------------
      1        Whatcom                              7,000 
----------------------------------------------------------
      2        Snohomish                              500 
----------------------------------------------------------
      3        King                                61,000 
----------------------------------------------------------
      3        Pierce                              55,000 
----------------------------------------------------------
      4        Clallam                              4,000 
----------------------------------------------------------
      4        Jefferson*                               0*
----------------------------------------------------------
      4        Kitsap                               9,000 
----------------------------------------------------------
      5        Grays Harbor                         7,000 
----------------------------------------------------------
      5        Lewis                                8,400 
----------------------------------------------------------
      5        Mason                                  800 
----------------------------------------------------------
      5        Pacific                              1,000 
----------------------------------------------------------
      5        Thurston                             4,000 
----------------------------------------------------------
      6        Clark*                                   0*
----------------------------------------------------------
      6        Cowlitz                              6,400 
----------------------------------------------------------
      6        Skamania*                                0*
----------------------------------------------------------
      6        Wahkiakum*                               0*
----------------------------------------------------------
      7        Adams                                1,250 
----------------------------------------------------------
      7        Chelan                              10,000 
----------------------------------------------------------
      7        Douglas                              4,000 
----------------------------------------------------------
      7        Grant                                9,900 
----------------------------------------------------------
      7        Okanogan                             7,450 
----------------------------------------------------------
      8        Kittitas*                                0*
----------------------------------------------------------
      8        Klickitat*                               0*
----------------------------------------------------------
      8        Yakima                               4,000 
----------------------------------------------------------
      9        Ferry*                                   0*
----------------------------------------------------------
      9        Lincoln                              1,000 
----------------------------------------------------------
      9        Pend Orielle                         1,600 
----------------------------------------------------------
      9        Stevens*                                 0*
----------------------------------------------------------
      10       Spokane                             30,000 
----------------------------------------------------------
      11       Asotin*                                  0*
----------------------------------------------------------
      11       Garfield                               120 
----------------------------------------------------------
      11       Whitman                              2,300 
----------------------------------------------------------
      12       Benton                               9,000 
----------------------------------------------------------
      12       Columbia                               450 
----------------------------------------------------------
      12       Franklin                             8,500 
----------------------------------------------------------
      12       Walla Walla                          6,000 
----------------------------------------------------------

*NOTE: Shaded areas are those not currently served.                             

EX-10.6
144th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 144th
                                                          2003 HO SCHIP Contract
                                             Exhibit D

Premiums, Service Areas and Capacity
Exhibit D-2, Adjustment Factors 
Contractor: MHC 
Effective: January 1, 2003

                                                        [Enlarge/Download Table]

-----------------------------------------------------------------------------------------------------
   REGION           SERVICE AREA              GEO ADJ FACTOR                  HO RISK ADJ FACTOR     
-----------------------------------------------------------------------------------------------------
                                                                          1st Qtr      2nd - 4th Qtr 
-----------------------------------------------------------------------------------------------------
                                                                                                     
      1       Island                            1.005                      0.974                     
---------------------------------------------------------------------------------------------------- 
      1       Skagit                            1.005                      0.974                     
---------------------------------------------------------------------------------------------------- 
      1       San Juan                          1.005                      0.974                     
---------------------------------------------------------------------------------------------------- 
      1       Whatcom                           1.005                      0.974                     
---------------------------------------------------------------------------------------------------- 
      2       Snohomish                         1.053                      0.977                     
---------------------------------------------------------------------------------------------------- 
      3       King                              0.998                      0.994                     
---------------------------------------------------------------------------------------------------- 
      3       Pierce                            0.998                      0.994                     
---------------------------------------------------------------------------------------------------- 
      4       Clallam                           1.011                      0.949                     
---------------------------------------------------------------------------------------------------- 
      4       Jefferson*                        1.011*                     0.949*                    
---------------------------------------------------------------------------------------------------- 
      4       Kitsap                            1.011                      0.949                     
---------------------------------------------------------------------------------------------------- 
      5       Grays Harbor                      1.028                      1.002                     
---------------------------------------------------------------------------------------------------- 
      5       Lewis                             1.028                      1.002                     
---------------------------------------------------------------------------------------------------- 
      5       Mason                             1.028                      1.002                     
---------------------------------------------------------------------------------------------------- 
      5       Pacific*                          1.028*                     1.002*                    
---------------------------------------------------------------------------------------------------- 
      5       Thurston                          1.028                      1.002                     
---------------------------------------------------------------------------------------------------- 
      6       Clark*                            0.955*                     1.046*                    
---------------------------------------------------------------------------------------------------- 
      6       Cowlitz                           0.955                      1.046                     
---------------------------------------------------------------------------------------------------- 
      6       Skamania*                         0.955*                     1.046*                    
---------------------------------------------------------------------------------------------------- 
      6       Wahkiakum*                        0.955*                     1.046*                    
---------------------------------------------------------------------------------------------------- 
      7       Adams                             1.011                      1.014                     
---------------------------------------------------------------------------------------------------- 
      7       Chelan                            1.011                      1.014                     
---------------------------------------------------------------------------------------------------- 
      7       Douglas                           1.011                      1.014                     
---------------------------------------------------------------------------------------------------- 
      7       Grant                             1.011                      1.014                     
---------------------------------------------------------------------------------------------------- 
      7       Okanogan                          1.011                      1.014                     
---------------------------------------------------------------------------------------------------- 
      8       Kittitas*                         0.981*                     1.003*                    
---------------------------------------------------------------------------------------------------- 
      8       Klickitat*                        0.981*                     1.003*                    
---------------------------------------------------------------------------------------------------- 
      8       Yakima                            0.981                      1.003                     
---------------------------------------------------------------------------------------------------- 
      9       Ferry*                            1.044*                     1.009*                    
---------------------------------------------------------------------------------------------------- 
      9       Lincoln                           1.044                      1.009                     
---------------------------------------------------------------------------------------------------- 
      9       Pend Orielle                      1.044                      1.009                     
---------------------------------------------------------------------------------------------------- 
      9       Stevens*                          1.044*                     1.009*                    
---------------------------------------------------------------------------------------------------- 
     10       Spokane                           1.018                      0.998                     
---------------------------------------------------------------------------------------------------- 
     11       Asotin*                           1.021*                     0.981*                    
---------------------------------------------------------------------------------------------------- 
     11       Garfield                          1.021                      0.981                     
---------------------------------------------------------------------------------------------------- 
     11       Whitman                           1.021                      0.981                     
---------------------------------------------------------------------------------------------------- 
     12       Benton                            0.991                      1.004                     
---------------------------------------------------------------------------------------------------- 
     12       Columbia                          0.991                      1.004                     
---------------------------------------------------------------------------------------------------- 
     12       Franklin                          0.991                      1.004                     
---------------------------------------------------------------------------------------------------- 
     12       Walla Walla                       0.991                      1.004                     
---------------------------------------------------------------------------------------------------- 

*Note: Shaded areas are those not currently served.                             

EX-10.6
145th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 145th
                                                          2003 Ho Schip Contract
                                                                       Exhibit D

Premiums, Service Areas and Capacity
Exhibit D-3 Service Area Detail 
Contractor: Mhc 
Effective January 1, 2002 

                                                        [Enlarge/Download Table]

--------------------------------------------------------------------------------------------------------------------------------
   Adams                            Benton                   Chelan                     Clallam                  Clark          
================================================================================================================================
================================================================================================================================
   CITY           ZIP          CITY       ZIP          CITY           ZIP         CITY          ZIP      CITY            ZIP    
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                
Benge (50)       99105    Benton City     99320     Ardenvoir         98811      Beaver         98305    Amboy*          98601* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Cunningham       99327    Kennewick (U)   99336     Cashmere          98815      Carlsborg      98324    Battle Ground*  98604* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Hatton           99332    Kennewick       99337     Chelan            98816      Clallam Bay    98326    Bush Prairie*   98606* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Lind             99341    Kennewick       99338     Chelan Falls      98817      Forks          98331    Camas*          98607* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Othello          99344    Paterson        99345     Dryden            98821      Joyce          98343    Heison*         98622* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Washtucna (50)   99371    Plymouth (50)   99346     Entiat            98822      La Push        98350    La Center*      98629* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
Ritzville        99169    Prosser         99350     Leavenworth       98826      Neah Bay (50)  98357    Ridgefield*     98642* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                          Richland        99352     Malaga            98828      Port Angeles   98362    Vancouver*      98660* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                          West Richland   99353     Manson            98831      Port Angeles   98363    Vancouver (U)*  98661* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                    Monitor           98836      Sekiu (50)     98381    Vancouver*      98662* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                    Peshastin         98847      Sequim         98382    Vancouver (U)*  98663* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                    Stehekin (CP 65)  98852                              Vancouver (U)*  98664* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                    Wenatchee         98801                              Vancouver*      98665* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                    Wenatchee         98807                              Vancouver*      98666* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Vancouver*      98667* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Vancouver*      98668* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Vancouver*      98682* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Vancouver*      98683* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Vancouver (U)*  98684* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Vancouver*      98685* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Vancouver*      98686* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Vancouver*      98687* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Yacolt*         98675* 
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Washougal*       98671*
--------------------------------------------------------------------------------------------------------------------------------

                                                                [Download Table]


----------------------------------------------
      Columbia                 Cowlitz        
==============================================
==============================================
  CITY      ZIP           CITY         ZIP    
----------------------------------------------
----------------------------------------------
                                              
Dayton      99328     Ariel (50)       98603  
----------------------------------------------
----------------------------------------------
Starbuck    99359     Carrolls         98609  
----------------------------------------------
----------------------------------------------
                      Castle Rock      98611  
----------------------------------------------
----------------------------------------------
                      Cougar (50)      98616  
----------------------------------------------
----------------------------------------------
                      Kalama           98625  
----------------------------------------------
----------------------------------------------
                      Kelso            98626  
----------------------------------------------
----------------------------------------------
                      Longview         98632  
----------------------------------------------
----------------------------------------------
                      Ryderwood        98581  
----------------------------------------------
----------------------------------------------
                      Silverlake       98645  
----------------------------------------------
----------------------------------------------
                      Toutle           98649  
----------------------------------------------
----------------------------------------------
                      Woodland         98674  
----------------------------------------------
----------------------------------------------

EX-10.6
146th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 146th
                                                          2003 HO SCHIP Contract
                                             Exhibit D

 Exhibit D
Premiums, Service Areas and Capacity
Exhibit D-3, Service Area Detail
Contractor: MHC 
Effective: January 1, 2003

                                                        [Enlarge/Download Table]

---------------------------------------------------------------------------------------------        
      Douglas                      Ferry                    Franklin       Garfield                  
=============================================================================================        
        CITY           ZIP         CITY         ZIP       CITY      ZIP      CITY       ZIP          
---------------------------------------------------------------------------------------------        
                                                                                                     
Bridgeport            98813   Boyd*            99107*  Connell     99326  Pomeroy      99347         
---------------------------------------------------------------------------------------------        
East Wenatchee        98802   Curlew (50)*     99118*  Eltopia     99330                             
---------------------------------------------------------------------------------------------        
Mansfield             98830   Danville (50)*   99121*  Kahlotus    99335                             
---------------------------------------------------------------------------------------------        
Orondo                98843   Inchelium (50)*  99138*  Mesa        99343                             
---------------------------------------------------------------------------------------------        
Palisades             98845   Keller*          99140*  Pasco       99301                             
---------------------------------------------------------------------------------------------        
Rock Island           98850   Laurier (50)*    99146*  Pasco       99302                             
---------------------------------------------------------------------------------------------        
Waterville            98858   Malo*            99150*                                                
---------------------------------------------------------------------------------------------        
                              Orient*          99160*                                                
---------------------------------------------------------------------------------------------        
                              Republic*        99166*                                                
---------------------------------------------------------------------------------------------        

-----------------------------------------------------------------------------------------------------
      Grant                     Grays Harbor           Island                 Jefferson              
=====================================================================================================
       CITY         ZIP         CITY          ZIP       CITY        ZIP          CITY          ZIP   
-----------------------------------------------------------------------------------------------------
                                                                                                     
 Beverly           99321  Aberdeen*          98520* Clinton        98236  Brinnon*            98320* 
-----------------------------------------------------------------------------------------------------
 Coulee City       99115  Amanda Park*       98526* Coupeville     98239  Chimacum*           98325* 
-----------------------------------------------------------------------------------------------------
 Electric City     99123  Copalis Bch.*      98535* Freeland       98249  Port Hadlock*       98339* 
-----------------------------------------------------------------------------------------------------
 Ephrata           98823  Copalis Cros*      98536* Greenbank      98253  Nordland*           98358* 
-----------------------------------------------------------------------------------------------------
 George            98824  Cosmopolis*        98537* Langley        98260  Port Ludlow*        98365* 
-----------------------------------------------------------------------------------------------------
 Grand Coulee      99133  Elma*              98541* Oak Harbor     98277  Port Townsend*      98368* 
-----------------------------------------------------------------------------------------------------
 Hartline          99135  Grayland*          98547* Oak Harbor     98278  Quilcene*           98376* 
-----------------------------------------------------------------------------------------------------
 Marlin            98832  Hoquiam*           98550*                                                  
-----------------------------------------------------------------------------------------------------
 Mattawa (50)      99349  Humptuliips*       98552*                                                  
-----------------------------------------------------------------------------------------------------
 Moses Lake        98837  Malone*            98559*                                                  
-----------------------------------------------------------------------------------------------------
 Quincy            98848  McCleary*          98557*                                                  
-----------------------------------------------------------------------------------------------------
 Royal City        99357  Moclips*           98562*                                                  
-----------------------------------------------------------------------------------------------------
 Soap Lake         98851  Montesano*         98563*                                                  
-----------------------------------------------------------------------------------------------------
 Stratford         98853  Neilton*           98566*                                                  
-----------------------------------------------------------------------------------------------------
 Warden            98857  Oakville*          98568*                                                  
-----------------------------------------------------------------------------------------------------
 Wilson Creek      98860  Ocean Shores*      98569*                                                  
-----------------------------------------------------------------------------------------------------
                          Pacific Bch.*      98571*                                                  
-----------------------------------------------------------------------------------------------------
                          Quinault*          98575*                                                  
-----------------------------------------------------------------------------------------------------
                          Satsop*            98583*                                                  
-----------------------------------------------------------------------------------------------------
                          Taholah*           98587*                                                  
-----------------------------------------------------------------------------------------------------
                          Westport*          98595*                                                  
-----------------------------------------------------------------------------------------------------

NOTES:                                                                          

* Shaded areas are those not currently served.                                  
Zip codes with a (U) after the city name are urban.                             
Zip codes with a number (##) after the city name have that number of miles as   
the global distance standard.                                                   

EX-10.6
147th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 147th
                                                          2003 HO SCHIP Contract
                                             Exhibit D

Premiums, Service Areas and Capacity
Exhibit D-3, Service Area Detail
Contractor: MHC 
Effective: January 1, 2003

                                                        [Enlarge/Download Table]

--------------------------------------------------------------------------------------------------------------
                                                  King                                                        
==============================================================================================================
        CITY           ZIP         CITY         ZIP       CITY        ZIP             CITY              ZIP   
--------------------------------------------------------------------------------------------------------------
                                                                                                              
Auburn                98001   Kent             98042  Seattle (U)    98111  Seattle                    98166  
--------------------------------------------------------------------------------------------------------------
Auburn (U)            98002   Kent             98064  Seattle (U)    98112  Seattle                    98168  
--------------------------------------------------------------------------------------------------------------
Auburn                98071   Kirkland (U)     98033  Seattle (U)    98114  Seattle (U)                98170  
--------------------------------------------------------------------------------------------------------------
Auburn                98092   Kirkland (U)     98034  Seattle (U)    98115  Seattle (U)                98171  
--------------------------------------------------------------------------------------------------------------
Baring (50)           98224   Kirkland         98083  Seattle (U)    98116  Seattle (U)                98174  
--------------------------------------------------------------------------------------------------------------
Bellevue              98004   Maple Valley     98038  Seattle (U)    98117  Seattle (U)                98177  
--------------------------------------------------------------------------------------------------------------
Bellevue (U)          98005   Medina           98039  Seattle (U)    98118  Seattle (U)                98178  
--------------------------------------------------------------------------------------------------------------
Bellevue              98006   Mercer Is. (U)   98040  Seattle (U)    98119  Seattle (U)                98181  
--------------------------------------------------------------------------------------------------------------
Bellevue (U)          98007   North Bend       98045  Seattle (U)    98121  Seattle (U)                98184  
--------------------------------------------------------------------------------------------------------------
Bellevue (U)          98008   Pacific (U)      98047  Seattle (U)    98122  Seattle (U)                98185  
--------------------------------------------------------------------------------------------------------------
Bellevue              98009   Preston          98050  Seattle (U)    98124  Seattle                    98188  
--------------------------------------------------------------------------------------------------------------
Bellevue              98015   Ravensdale       98051  Seattle (U)    98125  Seattle (U)                98190  
--------------------------------------------------------------------------------------------------------------
Black Diamond         98010   Redmond          98052  Seattle (U)    98126  Seattle (U)                98191  
--------------------------------------------------------------------------------------------------------------
Bothell (U)           98011   Redmond          98053  Seattle (U)    98129  Seattle (U)                98195  
--------------------------------------------------------------------------------------------------------------
Bothell               98041   Redmond          98073  Seattle (U)    98131  Seattle                    98198  
--------------------------------------------------------------------------------------------------------------
Burton                98013   Redmond          98074  Seattle (U)    98132  Seattle (U)                98199  
--------------------------------------------------------------------------------------------------------------
Carnation             98014   Redondo          98054  Seattle (U)    98133  Skykomish (50)             98288  
--------------------------------------------------------------------------------------------------------------
Duvall                98019   Renton           98055  Seattle (U)    98134  Snoqualmie                 98065  
--------------------------------------------------------------------------------------------------------------
Enumclaw (50)         98022   Renton (U)       98056  Seattle (U)    98136  Vashon                     98070  
--------------------------------------------------------------------------------------------------------------
Fall City             98024   Renton           98057  Seattle (U)    98138  Woodinville                98072  
--------------------------------------------------------------------------------------------------------------
Federal Way (U)       98003   Renton           98058  Seattle (U)    98144  Bothell (U)                98012  
--------------------------------------------------------------------------------------------------------------
Federal Way (U)       98023   Renton           98059  Seattle (U)    98145  Bothell (U)                98021  
--------------------------------------------------------------------------------------------------------------
Federal Way           98063   Seahurst         98062  Seattle (U)    98146  Bothell (U)                98082  
--------------------------------------------------------------------------------------------------------------
Federal Way           98093   Seattle (U)      98101  Seattle        98148  Snoqualmie Pass (50)       98068  
--------------------------------------------------------------------------------------------------------------
Hobart                98025   Seattle (U)      98102  Seattle (U)    98151                                    
--------------------------------------------------------------------------------------------------------------
Issaquah              98027   Seattle (U)      98103  Seattle (U)    98154                                    
--------------------------------------------------------------------------------------------------------------
Issaquah              98029   Seattle (U)      98104  Seattle (U)    98155                                    
--------------------------------------------------------------------------------------------------------------
Kent                  98030   Seattle (U)      98105  SeaTac (U)     98158                                    
--------------------------------------------------------------------------------------------------------------
Issaquah              98075   Seattle (U)      98106  Seattle (U)    98160                                    
--------------------------------------------------------------------------------------------------------------
Kenmore               98028   Seattle (U)      98107  Seattle (U)    98161                                    
--------------------------------------------------------------------------------------------------------------
Kent (U)              98031   Seattle (U)      98108  Seattle (U)    98164                                    
--------------------------------------------------------------------------------------------------------------
Kent                  98032   Seattle (U)      98109                                                          
--------------------------------------------------------------------------------------------------------------
Kent                  98035                                                                                   
--------------------------------------------------------------------------------------------------------------

Shaded areas are those not currently served.                                    
Zip codes with a (U) after the city name are urban.                             
Zip codes with a number (##) after the city name have that number of miles as   
the global distance standard.                                                   

EX-10.6
148th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 148th
                                                          2003 HO SCHIP Contract
                                             Exhibit D

Premiums, Service Areas and Capacity
Exhibit D-3, Service Area Detail
Contractor: MHC 
Effective: January 1, 2003

                                                        [Enlarge/Download Table]

-----------------------------------------------------------------------------------------------------
      Kitsap                 Kittitas                Klickitat                   Lewis               
=====================================================================================================
       CITY          ZIP       CITY        ZIP         CITY          ZIP          CITY          ZIP  
-----------------------------------------------------------------------------------------------------
                                                                                                     
Bainbridge Is.      98110  CleElum*       98922* Appleton*          98602* Adna                98522 
-----------------------------------------------------------------------------------------------------
Bremerton (U)       98310  Easton*        98925* Bickleton (50)*    99322* Centralia           98531 
-----------------------------------------------------------------------------------------------------
Bremerton           98311  Ellensburg*    98926* Bingen*            98605* Chehalis            98532 
-----------------------------------------------------------------------------------------------------
Bremerton           98312  Kittitas*      98934* Centerville*       98613* Cinnabar            98533 
-----------------------------------------------------------------------------------------------------
Bremerton (U)       98314  Ronald*        98940* Dallesport*        98617* Curtis              98538 
-----------------------------------------------------------------------------------------------------
Bremerton           98337  Roslyn*        98941* Glenwood (50)*     98619* Doty                98539 
-----------------------------------------------------------------------------------------------------
Bremerton           98322  S. CleElum*    98943* Goldendale*        98620* Ethel               98542 
-----------------------------------------------------------------------------------------------------
Hansville           98340  Thorp*         98946* Husum*             98623* Galvin              98544 
-----------------------------------------------------------------------------------------------------
Indianola           98342  Vantage*       98950* Klickitat*         98628* Glennoma            98336 
-----------------------------------------------------------------------------------------------------
Keyport             98345                        Lyle*              98635* Mineral             98355 
-----------------------------------------------------------------------------------------------------
Kingston            98346                        Roosevelt (50)*    99356* Morton              98356 
-----------------------------------------------------------------------------------------------------
Manchester          98353                        Trout Lake*        98650* Mossyrock           98564 
-----------------------------------------------------------------------------------------------------
Ollala              98359                        Wahkiacus*         98670* Napavine            98565 
-----------------------------------------------------------------------------------------------------
Port Gamble         98364                        White Salmon*      98672* Onalaska            98570 
-----------------------------------------------------------------------------------------------------
Port Orchard        98366                        Wishram*           98673* Packwood (50)       98361 
-----------------------------------------------------------------------------------------------------
Port Orchard        98367                                                  Pe Ell              98572 
-----------------------------------------------------------------------------------------------------
Poulsbo             98370                                                  Randle (50)         98377 
-----------------------------------------------------------------------------------------------------
Retsil              98378                                                  Salkum              98582 
-----------------------------------------------------------------------------------------------------
Rollingbay          98061                                                  Silver Creek        98585 
-----------------------------------------------------------------------------------------------------
Seabeck             98380                                                  Toledo              98591 
-----------------------------------------------------------------------------------------------------
Silverdale          98315                                                  Vader               98593 
-----------------------------------------------------------------------------------------------------
Silverdale          98383                                                  Winlock             98596 
-----------------------------------------------------------------------------------------------------
SouthColby          98384                                                                            
-----------------------------------------------------------------------------------------------------
Southworth          98386                                                                            
-----------------------------------------------------------------------------------------------------
Suquamish           98392                                                                            
-----------------------------------------------------------------------------------------------------
Tracyton            98393                                                                            
-----------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------                            
     Lincoln                Mason                  Okanogan                                          
=========================================================================                            
      CITY         ZIP       CITY       ZIP          CITY          ZIP                               
-------------------------------------------------------------------------                            
                                                                                                     
 Almira           99103  Allyn         98524  Brewster            98812                              
-------------------------------------------------------------------------                            
 Creston          99117  Belfair       98528  Carlton             98814                              
-------------------------------------------------------------------------                            
 Davenport        99122  Grapeview     98546  Conconully          98819                              
-------------------------------------------------------------------------                            
 Edwall           99008  Hoodsport     98548  Coulee Dam          99116                              
-------------------------------------------------------------------------                            
 Harrington       99134  Lilliwaup     98555  Elmer City          99124                              
-------------------------------------------------------------------------                            
 Odessa           99144  Matlock       98560  Loomis              98827                              
-------------------------------------------------------------------------                            
 Lincoln          99147  Shelton       98584  Malott              98829                              
-------------------------------------------------------------------------                            
 Mohler           99154  Tahuya        98588  Mazama (50)         98833                              
-------------------------------------------------------------------------                            
 Odessa           99159  Union         98592  Methow              98834                              
-------------------------------------------------------------------------                            
 Reardan          99029                       Nespelem            99155                              
-------------------------------------------------------------------------                            
 Sprague (50)     99032                       Okanogan            98840                              
-------------------------------------------------------------------------                            
 Wilbur           99185                       Omak                98841                              
-------------------------------------------------------------------------                            
                                              Oroville            98844                              
-------------------------------------------------------------------------                            
                                              Pateros             98846                              
-------------------------------------------------------------------------                            
                                              Riverside           98849                              
-------------------------------------------------------------------------                            
                                              Tonasket            98855                              
-------------------------------------------------------------------------                            
                                              Twisp (50)          98856                              
-------------------------------------------------------------------------                            
                                              Wauconda (50)       98859                              
-------------------------------------------------------------------------                            
                                              Winthrop (50)       98862                              
-------------------------------------------------------------------------                            

NOTES:                                                                          

*  Shaded areas are those not currently served.                                 
Zip codes with a (U) after the city name are urban.                             
Zip codes with a number (##) after the city name have that number of miles as   
the global distance standard.                                                   

EX-10.6
149th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 149th
2003 HO SCHIP Contract                                                          
Exhibit D                                                                       
Premiums, Service Areas and Capacity                                            
Exhibit D-3, Service Area Detail                                                
Contractor: MHC                                                                 
Effective: January 1, 2003                                                      

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------------------------
    Pacific                  Pend Oreille                                      Pierce                  
=======================================================================================================
      CITY         ZIP           CITY            ZIP         CITY         ZIP        CITY         ZIP  
-------------------------------------------------------------------------------------------------------
                                                                                                       
Bay Center        98527  Cusick (50)            99119  Anderson Is.      98303  South Prairie    98385 
-------------------------------------------------------------------------------------------------------
Chinook           98614  Ione (50)              99139  Ashford (50)      98304  Spanaway         98387 
-------------------------------------------------------------------------------------------------------
Illwaco           98624  Metaline (50)          99152  Buckley           98321  Steilacoom       98388 
-------------------------------------------------------------------------------------------------------
Lebam             98554  Metaline Falls (50)    99153  Camp Murray       98430  Sumner           98352 
-------------------------------------------------------------------------------------------------------
Long Beach        98631  Newport                99156  Carbonado         98323  Sumner           98390 
-------------------------------------------------------------------------------------------------------
Menlo             98561  Usk                    99180  Dupont            98327  Tacoma (U)       98401 
-------------------------------------------------------------------------------------------------------
Nahcotta          98637                                Eatonville        98328  Tacoma (U)       98402 
-------------------------------------------------------------------------------------------------------
Naselle           98638                                Elbe              98330  Tacoma (U)       98403 
-------------------------------------------------------------------------------------------------------
Ocean Park        98640                                Fox Island        98333  Tacoma (U)       98404 
-------------------------------------------------------------------------------------------------------
Oysterville       98641                                Gig Harbor        98329  Tacoma (U)       98405 
-------------------------------------------------------------------------------------------------------
Raymond           98577                                Gig Harbor        98332  Tacoma (U)       98406 
-------------------------------------------------------------------------------------------------------
Seaview           98644                                Gig Harbor        98335  Tacoma (U)       98407 
-------------------------------------------------------------------------------------------------------
South Bend        98586                                Graham            98338  Tacoma (U)       98408 
-------------------------------------------------------------------------------------------------------
Tokeland          98590                                Kapowsin          98344  Tacoma (U)       98409 
-------------------------------------------------------------------------------------------------------
                                                       La Grande         98348  Tacoma (U)       98411 
-------------------------------------------------------------------------------------------------------
                                                       Lake Bay          98349  Tacoma (U)       98412 
-------------------------------------------------------------------------------------------------------
                                                       Lakewood          98439  Tacoma (U)       98413 
-------------------------------------------------------------------------------------------------------
                                                       Lakewood          98492  Tacoma (U)       98415 
-------------------------------------------------------------------------------------------------------
                                                       Lakewood          98497  Tacoma (U)       98416 
-------------------------------------------------------------------------------------------------------
                                                       Lakewood          98498  Tacoma (U)       98418 
-------------------------------------------------------------------------------------------------------
                                                       Lakewood          98499  Tacoma           98421 
-------------------------------------------------------------------------------------------------------
                                                       Longbranch        98351  Tacoma           98422 
-------------------------------------------------------------------------------------------------------
                                                       Longmire          98397  Tacoma           98424 
-------------------------------------------------------------------------------------------------------
                                                       McChord AFB       98438  Tacoma           98431 
-------------------------------------------------------------------------------------------------------
                                                       McKenna           98558  Tacoma           98433 
-------------------------------------------------------------------------------------------------------
                                                       Milton            98354  Tacoma           98442 
-------------------------------------------------------------------------------------------------------
                                                       Orting            98360  Tacoma           98443 
-------------------------------------------------------------------------------------------------------
                                                       Puyallup          98371  Tacoma (U)       98444 
-------------------------------------------------------------------------------------------------------
                                                       Puyallup          98372  Tacoma (U)       98445 
-------------------------------------------------------------------------------------------------------
                                                       Puyallup (U)      98373  Tacoma           98446 
-------------------------------------------------------------------------------------------------------
                                                       Puyallup          98374  Tacoma (U)       98447 
-------------------------------------------------------------------------------------------------------
                                                       Puyallup           98375 Tacoma (U)       98450 
-------------------------------------------------------------------------------------------------------
                                                       Roy               98580                         
-------------------------------------------------------------------------------------------------------


----------------------------------------------------------                                             
                 Pierce                   San Juan                                                     
==========================================================                                             
          CITY             ZIP         CITY         ZIP                                                
----------------------------------------------------------                                             
                                                                                                       
 Tacoma (U)               98455  Deer Harbor       98243                                               
----------------------------------------------------------                                             
 Tacoma (U)               98460  Eastsound         98245                                               
----------------------------------------------------------                                             
 University Place (U)     98464  Friday Harbor     98250                                               
----------------------------------------------------------                                             
 Tacoma (U)               98465  Lopez Is.         98261                                               
----------------------------------------------------------                                             
 Tacoma (U)               98466  Olga              98279                                               
----------------------------------------------------------                                             
 Tacoma                   98471  Orcas             98280                                               
----------------------------------------------------------                                             
 Tacoma                   98477  Shaw Is.          98286                                               
----------------------------------------------------------                                             
 Tacoma                   98481  Waldron           98297                                               
----------------------------------------------------------                                             
 Tacoma                   98493  Blakley Island    98222                                               
----------------------------------------------------------                                             
 University Place         98467                                                                        
----------------------------------------------------------                                             
 Vaughn                   98394                                                                        
----------------------------------------------------------                                             
 Wauna                    98395                                                                        
----------------------------------------------------------                                             
 Wilkeson                 98396                                                                        
----------------------------------------------------------                                             
 Paradise Inn             98398                                                                        
----------------------------------------------------------                                             

NOTES:                                                                          

* Shaded areas are those not currently served.                                  
Zip codes with a (U) after the city name are urban.                             
Zip codes with a number (##) after the city name have that number of miles as   
the global distance standard.                                                   

EX-10.6
150th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 150th
                                                          2003 HO SCHIP Contract
                                             Exhibit D

Premiums, Service Areas and Capacity
Exhibit D-3, Service Area Detail
Contractor: MHC 
Effective: January 1, 2003

                                                        [Enlarge/Download Table]

------------------------------------------------------------------------------------------------------------------------------------
        Skagit                      Skamania*                  Snohomish                                Spokane                     
====================================================================================================================================
====================================================================================================================================
         CITY         ZIP         CITY*        ZIP*            CITY           ZIP          CITY           ZIP        CITY      ZIP  
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                    

Anacortes            98221   Carson*          98610* Arlington*              98223*  Airway Hts.         99001  Spokane       99210 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Bow                  98232   N. Bonneville*   98639* Darrington (50)*        98241*  Chattaroy           99003  Spokane       99211 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Bow                  98246   Stevenson*       98648* Edmonds (U)             98020   Cheney              99004  Spokane       99212 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Burlington           98233   Underwood*       98651* Edmonds (U)             98026   Colbert             99005  Spokane       99213 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Clear Lake           98235                           Everett*                98201*  Deer Park           99006  Spokane       99214 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Concrete (50)        98237                           Everett*                98203*  Elk                 99009  Spokane       99215 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Conway               98238                           Everett*                98204*  Fairchild AFB       99011  Spokane       99216 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Hamilton             98255                           Everett*                98205*  Fairfield           99012  Spokane       99217 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
La Conner            98257                           Everett*                98206*  Four Lakes          99014  Spokane (U)   99218 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Lyman                98263                           Everett*                98207*  Freeman             99015  Spokane       99219 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Marble Mount (50)    98267                           Everett*                98208*  Greenacres          99016  Spokane       99220 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Mt. Vernon           98273                           Gold Bar*               98251*  Latah               99018  Spokane       99223 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Mt. Vernon           98274                           Granite Falls*          98252*  Liberty Lake        99019  Spokane       99224 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Rockport (50)        98283                           Index*                  98256*  Marshall            99020  Spokane       99228 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Sedro Wooley         98284                           Lake Stevens*           98258*  Mead                99021  Spokane       99251 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Lynnwood (U)*           98036*  Medical Lake        99022  Spokane       99252 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Lynnwood (U)*           98037*  Mica                99023  Spokane       99256 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Lynnwood (U)*           98046*  Newman Lake         99025  Spokane       99258 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Marysville*             98270*  Nine Miles Falls    99026  Spokane       99260 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Marysville*             98271*  Otis Orchards       99027  Spokane       99299 
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Monroe*                 98272* Rockford            99030  Valleyford    99036  
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Mountlake Terrace (U)*  98043* Spangle             99031  Veradale      99037  
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Mukilteo*               98275* Spokane (U)         99201  Waverly       99039  
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     N. Lakewood*            98259* Spokane (U)         99202                       
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Silvana*                98287* Spokane (U)         99203                       
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Snohomish*              98290* Spokane (U)         99204                       
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Snohomish*              98291* Spokane (U)         99205                       
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Snohomish*              98296* Spokane             99206                       
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Stanwood*               98282* Spokane (U)         99207                       
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Stanwood*               98292* Spokane             99208                       
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Startup*                98293* Spokane             99209                       
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
                                                     Sultan*                 98294*                                                 
------------------------------------------------------------------------------------------------------------------------------------

NOTES:                                                                        
*Shaded areas are those not currently served.                                   
Zip codes with a (U) after the city name are urban.                           
Zip codes with a number (##) after the city name have that number of miles as 
the global distance standard.                                                 

EX-10.6
151st Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 151st
                                                          2003 HO SCHIP Contract
                                             Exhibit D

Premiums, Service Areas and Capacity
Exhibit D-3, Service Area Detail
Contractor: MHC 
Effective: January 1, 2003

                                                        [Enlarge/Download Table]

-------------------------------------------------------------------------------------------------------------------------------
      Stevens                   Thurston                    Wahkiakum          Walla Walla                 Whatcom             
===============================================================================================================================
       CITY           ZIP         CITY         ZIP        CITY        ZIP          CITY         ZIP         CITY          ZIP  
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               
Addy*                99101*  Bucoda           98530  Cathlamet*      98612*  Burbank           99323  Acme               98220 
-------------------------------------------------------------------------------------------------------------------------------
Chewelah*            99109*  East Olympia     98540  Grays River*    98621*  College Place     99324  Bellingham (U)     98225 
-------------------------------------------------------------------------------------------------------------------------------
Clayton*             99110*  Lacey            98503  Rosburg*        98643*  Dixie             99329  Bellingham         98226 
-------------------------------------------------------------------------------------------------------------------------------
Colville*            99114*  Lacey            98509  Skamokawa*      98647*  Prescott (50)     99348  Bellingham         98227 
-------------------------------------------------------------------------------------------------------------------------------
Evans*               99126*  Littlerock       98556                          Touchet           99360  Bellingham         98228 
-------------------------------------------------------------------------------------------------------------------------------
Ford*                99013*  Olympia          98501                          Walla Walla       99362  Bellingham         98229 
-------------------------------------------------------------------------------------------------------------------------------
Fruitland*           99129*  Olympia          98502                          Wallula           99363  Blaine             98230 
-------------------------------------------------------------------------------------------------------------------------------
Gifford*             99131*  Olympia          98504                          Waitsburg         99361  Blaine             98231 
-------------------------------------------------------------------------------------------------------------------------------
Hunters (50)*        99137*  Olympia          98505                                                   Custer             98240 
-------------------------------------------------------------------------------------------------------------------------------
Kettle Falls (50)*   99141*  Olympia          98506                                                   Deming             98244 
-------------------------------------------------------------------------------------------------------------------------------
Loon Lake*           99148*  Olympia          98507                                                   Everson            98247 
-------------------------------------------------------------------------------------------------------------------------------
Marcus*              99151*  Olympia          98508                                                   Ferndale           98248 
-------------------------------------------------------------------------------------------------------------------------------
Northport (50)*      99157*  Olympia          98512                                                   Lummi Is.          98262 
-------------------------------------------------------------------------------------------------------------------------------
Rice*                99167*  Olympia          98513                                                   Lynden             98264 
-------------------------------------------------------------------------------------------------------------------------------
Springdale*          99173*  Olympia          98516                                                   Maple Falls        98266 
-------------------------------------------------------------------------------------------------------------------------------
Tumtum*              99034*  Olympia          98599                                                   Nooksack           98276 
-------------------------------------------------------------------------------------------------------------------------------
Valley*              99181*  Rainier          98576                                                   Pt. Roberts        98281 
-------------------------------------------------------------------------------------------------------------------------------
Wellpinit*           99040*  Rochester        98579                                                   Sumas              98295 
-------------------------------------------------------------------------------------------------------------------------------
                             Tenino           98589                                                                            
-------------------------------------------------------------------------------------------------------------------------------
                             Tumwater         98511                                                                            
-------------------------------------------------------------------------------------------------------------------------------
                             Yelm             98597                                                                            
-------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

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

---------------------------------------------------------                                                                      
    Whitman                         Yakima                                                                                     
=========================================================                                                                      
     CITY        ZIP                 CITY          ZIP                                                                         
---------------------------------------------------------                                                                      
                                                                                                                               
 Albion         99102          Brownstown*        98920*                                                                       
---------------------------------------------------------                                                                      
 Belmont        99104          Buena              98921                                                                        
---------------------------------------------------------                                                                      
 Colfax         99111          Cowiche*           98923*                                                                       
---------------------------------------------------------                                                                      
 Colton         99113          Goose Prairie*     98929*                                                                       
---------------------------------------------------------                                                                      
 Endicott       99125          Grandview          98930                                                                        
---------------------------------------------------------                                                                      
 Farmington     99128          Granger            98932                                                                        
---------------------------------------------------------                                                                      
 Garfield       99130          Harrah*            98933*                                                                       
---------------------------------------------------------                                                                      
 Hay            99136          Mabton             98935                                                                        
---------------------------------------------------------                                                                      
 Hooper         99333          Moxee*             98936*                                                                       
---------------------------------------------------------                                                                      
 LaCross        99143          Naches (50)*       98937*                                                                       
---------------------------------------------------------                                                                      
 Lamont         99017          Outlook            98938                                                                        
---------------------------------------------------------                                                                      
 Malden         99149          Parker*            98939*                                                                       
---------------------------------------------------------                                                                      
 Oakesdale      99158          Selah              98942                                                                        
---------------------------------------------------------                                                                      
 Palouse        99161          Sunnyside          98944                                                                        
---------------------------------------------------------                                                                      
 Pullman        99163          Tieton*            98947*                                                                       
---------------------------------------------------------                                                                      
 Pullman        99164          Toppenish          98948                                                                        
---------------------------------------------------------                                                                      
 Pullman        99165          Wapato*            98951*                                                                       
---------------------------------------------------------                                                                      
 Rosalia        99170          White Swan*        98952*                                                                       
---------------------------------------------------------                                                                      
 St John        99127          Yakima             98901                                                                        
---------------------------------------------------------                                                                      
 St. John       99171          Yakima (U)         98902                                                                        
---------------------------------------------------------                                                                      
 Steptoe        99174          Yakima             98903                                                                        
---------------------------------------------------------                                                                      
 Tekoa          99033          Yakima*            98904*                                                                       
---------------------------------------------------------                                                                      
 Thornton       99176          Yakima*            98907*                                                                       
---------------------------------------------------------                                                                      
 Uniontown      99179          Yakima*            98908*                                                                       
---------------------------------------------------------                                                                      
                               Yakima*            98909*                                                                       
---------------------------------------------------------                                                                      
                               Zillah             98953                                                                        
---------------------------------------------------------                                                                      

NOTES:                                                                          
* Shaded areas are those not currently served.                                  
Zip codes with a (U) after the city name are urban.                             
Zip codes with a number (##) after the city name have that number of miles as   
the global distance standard.                                                   

EX-10.6
152nd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 152nd
                                                        2003 HO & SCHIP Contract
                                         Exhibit E

 EXHIBIT E
 CHAPTER 388-542 WAC
 CHILDREN'S HEALTH INSURANCE PLAN (CHIP)

WAC 388-542-0050 DEFINITIONS FOR CHILDREN'S HEALTH INSURANCE PROGRAM (CHIP)     
TERMS. The following definitions and abbreviations, those found in WAC          
388-538-050 and in 388-500-0005 Medical definitions, apply to this chapter.     
"CHILDREN'S HEALTH INSURANCE PROGRAM (CHIP)" means the health insurance program 
authorized by Title XXI of the Social Security Act and administered by the      
department of social and health services (DSHS). This program also is referred  
to as the state children's health insurance program (SCHIP).                    
"CLIENT PREMIUM" means a monthly payment a client makes to the department of    
social and health services (DSHS) for CHIP coverage.                            
"CREDITABLE COVERAGE" means most types of public and private health coverage,   
except Indian health services, that provides access to physicians, hospitals,   
laboratory services, and radiology services. This term applies to the coverage  
whether or not the coverage is equivalent to that offered under CHIP.           
"Creditable coverage" is described in 42 U.S.C. Sec. 1397jj.                    
"EMPLOYER-SPONSORED DEPENDENT COVERAGE" means creditable health coverage for    
dependents offered by a family member's employer or union, for which the        
employer or union may contribute in whole or part towards the premium.          
Extensions of such coverage (e.g., COBRA extensions) also qualify as            
employer-sponsored dependent coverage as long as there remains a contribution   
toward the premiums by the employer or union.                                   
"FINANCE DIVISION" means the division of the department of social and health    
services that sends out billing statements, monitors accounts, and collects the 
CHIP client premiums.                                                           

WAC 388-542-0100 CHIP SCOPE OF CARE. (1) Children's health insurance program    
(CHIP) clients are eligible for the same scope of medical care as Medicaid      
categorically needy clients as described in WAC 388-529-0100.                   
(2) The medical assistance administration (MAA) requires CHIP clients, except   
for clients who are American Indian or Alaska Native (AI/AN), to enroll in      
managed care according to WAC 388-538-060(1)(b) through (5)(d). AI/AN clients   
may choose to receive services under MAA's fee-for-service system.              
(3) For eligible CHIP clients who are not enrolled in managed care:             
(a) MAA determines which services are medically necessary;                      
(b) Clients must obtain covered services from providers who have core provider  
agreements with MAA; and                                                        
(c) As a condition of coverage, MAA may require the service provider to obtain  
authorization from MAA for coverage of nonemergency services.                   
(4) A CHIP client enrolled in managed care may submit a complaint or appeal as  
described in WAC 388-538-110.                                                   
(5) Any CHIP client may request a fair hearing as described in chapter 388-02   
WAC for                                                                         

 1

EX-10.6
153rd Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 153rd
                                                        2003 HO & SCHIP Contract
                                         Exhibit E

review of MAA coverage decisions. Clients may elect to participate in a         
pre-hearing review as described in WAC 388-526-2610.                            

WAC 388-542-0125 ACCESS TO CARE. (1) If a children's health insurance program   
(CHIP) client is subject to mandatory enrollment in a managed care organization 
(MCO) or with a primary care case management (PCCM) provider, the medical       
assistance administration (MAA) provides fee-for-service coverage between the   
time a client becomes eligible for CHIP services and the time the client is     
enrolled in managed care.                                                       
(2) Not all CHIP clients are required to enroll in an MCO or with a PCCM        
provider. The same enrollment criteria are applied to CHIP clients as to        
categorically needy Medicaid clients under WAC 388-538-060.                     
(3) If a CHIP client is not already enrolled in managed care, the client may    
request an exemption to mandatory enrollment under the process described in WAC 
388-538-080. MAA provides fee-for-service coverage while a client's request for 
exemption from mandatory enrollment in an MCO or with a PCCM provider is being  
considered and until a final decision is made.                                  
(4) If a CHIP client is already enrolled in an MCO or with a PCCM provider and  
requests to end the enrollment, the client remains enrolled in the client's MCO 
or with the PCCM provider pending MAA's final decision. The process for ending  
enrollment is described in WAC 388-538-130.                                     
(5) If a CHIP client has no MCO or PCCM provider available or is permitted to   
choose the fee-for-service system under this chapter, the rules that apply to   
service coverage and payment for the children's health program apply to CHIP    
coverage (chapters 388-550 through 388-556 WAC).                                

WAC 388-542-0150 CLIENT ELIGIBILITY REQUIREMENTS FOR CHIP. (1) To be eligible   
for the children's health insurance program (CHIP) a client must meet all of the
following. The client must:                                                     
(a) Not have other creditable coverage (see WAC 388-542-0220(1)); and           
(b) Meet the CHIP program requirements and conditions in WAC 388-505-0210(3).   
(2) There are no resource standards for a CHIP client. See WAC 388-478-0075(3). 
(3) CHIP eligibility certification periods are described in WAC 388-416-0015.   
(4) CHIP eligibility is affected by changes in a client's circumstances. See WAC
388-418-0025(2) and (6).                                                        
(5) Ongoing eligibility for CHIP requires the payment of CHIP premiums as       
described in WAC 388-542-0250. MAA enrolls an otherwise eligible client into the
CHIP program in advance of any client premium payment.                          

WAC 388-542-0200 CHIP ENROLLMENT. (1) If the area in which a CHIP client lives  
has more than one service delivery option available to the client, the client   
must make a choice concerning how to receive health care services. The choice   
and enrollment process for CHIP clients is the same as that for categorically   
needy Medicaid clients described in WAC 388-538-060.                            
(2) The medical assistance administration (MAA) enrolls CHIP clients in MAA's   
managed care program (with a managed care organization (MCO) or with a primary  
care case management (PCCM) provider) prospectively only.                       

 2

EX-10.6
154th Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 154th
                                                        2003 HO & SCHIP Contract
                                         Exhibit E

(3) CHIP clients are enrolled in managed care as provided for categorically     
needy Medicaid clients in WAC 388-538-060.                                      
(4) A client who is required to enroll in managed care may request a change in  
the client's MCO or PCCM provider on the same bases as in WAC 388-538-060.      

WAC 388-542-0220 ENDING CHIP CLIENT ELIGIBILITY. (1) If the medical assistance  
administration (MAA) finds out after eligibility determination that a CHIP      
client has creditable coverage at the time of application, MAA ends the client's
eligibility for CHIP effective at the close of the last day of the current      
month.                                                                          
(2) MAA ends a client's eligibility for CHIP when the client owes four          
consecutive months of premiums, based on the due dates listed on the billing    
from the finance division for the client premium(s).                            
(3) When MAA ends a client's eligibility according to subsection (2) of this    
section, a client must meet both of the following conditions to become eligible 
for CHIP again:                                                                 
(a) Pay all unforgiven past due premiums (see WAC 388-542-0250(5); and          
(b) Serve a waiting period of four consecutive months. The waiting period begins
the day after termination of CHIP coverage for nonpayment of premiums as        
described in this section. The waiting period ends once four full consecutive   
months of CHIP noncoverage has elapsed. The client does not have CHIP coverage  
during the waiting period.                                                      

WAC 388-542-0250 CHIP CLIENT COSTS. (1) The finance division charges ten dollars
per covered child, per month, for the CHIP client premium. The family maximum   
for CHIP premiums is thirty dollars per month.                                  
(2) The finance division sends bills for client premiums at the beginning of    
each month of coverage. Client premiums begin the first of the month in which   
the bill was sent, not the date that the client became eligible for services.   
(3) MAA limits a client's out-of-pocket expenses for covered services the client
obtains under the CHIP program rules, to the payment of premiums described in   
subsection (1) if this section.                                                 
(4) MAA exempts American Indian/Alaska Native (AI/AN) clients from paying client
premiums for coverage under the CHIP program.                                   
(5) MAA forgives client premiums that are more than twelve months overdue.      

WAC 388-542-0275 REIMBURSEMENT. (1) For contractors serving CHIP clients        
enrolled in managed care, MAA reimburses contracted managed care organizations  
(MCOs), primary care case management (PCCM) providers and providers of approved 
or ancillary care in the same way as described in chapter 388-538 WAC.          
(2) For providers of services serving CHIP clients under MAA's fee-for-service  
system and without the involvement of MCOs or PCCMs, MAA reimburses according to
the regulations that apply to categorically needy Medicaid clients under        
chapters 388-500 through 388-556 WAC.                                           

WAC 388-542-0300 WAITING PERIOD FOR CHIP COVERAGE FOLLOWING EMPLOYER COVERAGE.  
(1) The medical assistance administration (MAA) requires applicants to serve a  
full four-consecutive-month waiting period for CHIP coverage if the client or   

 3

EX-10.6
Last Page of 155
TOC
1st
Previous
Next
↓Bottom
Just 155th
                                                        2003 HO & SCHIP Contract
                                         Exhibit E

family:                                                                         
(a) Chooses to end employer sponsored dependent coverage. The waiting period    
begins the day after the employment-based coverage ends, and ends on the last   
day of the fourth full month of noncoverage; or                                 
(b) Fails to exercise an optional coverage extension (e.g., COBRA) that meets   
the following conditions. The waiting period begins on the day there is a       
documented refusal of the coverage extension when the extended coverage is:     
(i) Subsidized in part or in whole by the employer or union;                    
(ii) Available and accessible to the applicant or family; and                   
(iii) At a monthly cost to the family meeting the limitation of subsection      
(2)(b)(iv).                                                                     
(2) MAA does not require a waiting period prior to CHIP coverage when:          
(a) The client or family member has a medical condition that, without treatment,
would be life-threatening or cause serious disability or loss of function; or   
(b) The loss of employer sponsored dependent coverage is due to any of the      
following((;)):                                                                 
(i) Loss of employment with no post-employment subsidized coverage as described 
in subsection (1)(b);                                                           
(ii) Death of the employee;                                                     
(iii) The employer discontinues employer-sponsored dependent coverage;          
(iv) The family's total out-of-pocket maximum for employer-sponsored dependent  
coverage is fifty dollars per month or more;                                    
(v) The plan terminates employer-sponsored dependent coverage for the client    
because the client reached the maximum lifetime coverage amount;                
(vi) Coverage under a COBRA extension period expired;                           
(vii) Employer-sponsored dependent coverage is not reasonably available (e.g.,  
client would have to travel to another city or state to access care); or        
(viii) Domestic violence caused the loss of coverage for the victim.            

WAC 388-542-0500 MANAGED CARE RULES THAT APPLY TO CHIP. (1) In addition to the  
other rules that are incorporated by reference elsewhere in this chapter, the   
medical assistance administration (MAA) applies the following rules from chapter
388-538 WAC to the CHIP program:                                                
(a) WAC 388-538-060, Managed care and choice, with the exception of subsection  
(1)(a);                                                                         
(b) WAC 388-538-070, Managed care payment;                                      
(c) WAC 388-538-080, Managed care exemptions;                                   
(d) WAC 388-538-095, Scope of care for managed care enrollees;                  
(e) WAC 388-538-100, Managed care emergency services;                           
(f) WAC 388-538-110. Managed care complaints, appeals and fair hearings;        
(g) WAC 388-538-120, Enrollee requests for a second medical opinion;            
(h) WAC 388-538-130, Ending enrollment in healthy options; and                  
(i) WAC 388-538-140, Quality of care.                                           

 4

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-1’ Filing		Date		First		Last			Other Filings
		4/1/04		116
		1/2/04		116					4
		12/31/03		52		116			10-K,  4
		10/1/03		116
		9/30/03		116					10-Q
		7/31/03		32
		7/1/03		116					4,  S-1MEF
		6/30/03		32		116			10-Q
		4/1/03		116
		3/31/03		31		116
		3/1/03		16
		2/28/03		37
		1/31/03		36
		1/2/03		116
		1/1/03		52		151
		12/31/02		116
Filed on:		12/30/02
		9/30/02		116
		6/30/02		16
		1/1/02		145
		7/1/01		74		94
									List all Filings

4 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 2/13/24  Molina Healthcare, Inc.           10-K       12/31/23  122:32M
 2/13/23  Molina Healthcare, Inc.           10-K       12/31/22  116:14M
 2/14/22  Molina Healthcare, Inc.           10-K       12/31/21  118:14M
 2/16/21  Molina Healthcare, Inc.           10-K       12/31/20  122:15M