ADMINISTRATIVE SERVICES AGREEMENT

 

                                                                EXHIBIT 10.12(a)

                        ADMINISTRATIVE SERVICES AGREEMENT
                                     BETWEEN
                            COMMUNITY CHOICE MICHIGAN
                                       AND
                             MANAGED CARE SOLUTIONS

         This Administrative Services Agreement is made and entered in to be
effective as of the first (1st) day of December, 1995 by and between, COMMUNITY
CHOICE MICHIGAN (hereinafter "Plan"), and MANAGED CARE SOLUTIONS, INC.
(hereinafter "MCS").

                              W I T N E S S E T H :

         WHEREAS, the Plan was formed by certain health care providers for the
purpose, among other things, of operating as a qualified health plan under a
managed care program administered by the State Medicaid Agency (SMA) of the
State of Michigan.

         WHEREAS, the Plan desires to engage MCS to provide administrative
services under the direction of the Plan's Board of Directors and President in
connection with the operation of the Plan Program.

         WHEREAS, MCS and the Plan intend to enter into an agreement pursuant to
which MCS would lend to the Plan certain amounts from time to time up to
$500,000 in the aggregate, and as partial security therefor, the Plan shall
withhold part of its capitation payments in a reserve fund to serve as a
guarantee fund for such loans;

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

I.       DEFINITIONS

         A.       The Plan Program. "The Plan Program" shall mean all
administrative and medical care delivery components and systems necessary for
the Plan to provide or arrange for the provision of Covered Services to Members.

         B.       The Program. "The Program" shall mean the State of Michigan
Medical Assistance Program for the provision of Covered Services to Medicaid
recipients in a managed care delivery setting, as it exists from time to time.

         C.       Covered Services. "Covered Services" shall mean those
services, equipment and supplies which a Member is entitled to receive as
defined by CCM in its Evidence of Coverage, as it exists from time to time.

         D.       Implementation Date. "Implementation Date" shall mean the date
the Plan Program becomes operational and the Plan is obligated to commence the
provision of Covered Services to Members.

         E.       Participating Providers. "Participating Providers" shall mean
duly licensed physicians, hospitals, health professionals, facilities, and other
health care providers which have entered into a contract with the Plan for the
provision of Covered Services to Members.

         F.       Evidence of Coverage. "Evidence of Coverage" means the
document approved by the SMA and issued by CCM to a Member which sets forth
Covered Services, exclusions, limitations, and other terms and conditions.

         G.       Members. "Members" shall refer to those individuals who are
eligible for coverage under the Program and who have enrolled in the Plan.

         H.       State Medicaid Agency. "State Medicaid Agency" (SMA) shall
mean that agency, division or department of State Government responsible for
administration of its State Medicaid Program pursuant to Title XIX of the Social
Security Act and applicable state law.

II.      MCS RESPONSIBILITIES

         A.       Plan Approval. MCS' duties are described in this Section II.
In discharging these duties, MCS shall at all times be subject to the authority
of and operate under the direction of the Plan's Board of Directors and
President. Nothing in this Agreement is intended to or shall be construed to
diminish the authority of the Board of Directors of the Plan to manage the
business and affairs of the corporation. MCS shall make regular reports to the
Board and the Board shall adopt policies which detail when MCS may contractually
bind the Plan without prior approval of the Board.

         B.       Pre-Operational Phase: SMA Related Activities.

                  1.       Generally. During the pre-operational phase, MCS will
prepare or will assist in the preparation of information and data necessary for
the Plan to be approved to sign a contract with the SMA to provide Covered
Services to Members pursuant to the Program. MCS shall, on behalf of the Plan,
respond in a timely manner to any and all SMA requests for additional
information or clarification of materials in the Plan's Application for approval
to sign a contract with the SMA, subject to the Plan's approval of any such
response.

                  2.       Negotiations With the SMA. MCS shall provide
assistance and support to the Plan in its negotiations with the SMA concerning
participation in the Program.

         C.       Pre-Operational Duties: Preparation for Plan Program Start Up.

         MCS shall perform necessary pre-operational services so that the Plan
may commence Plan Program operations on the Implementation Date as established
by the SMA. All pre-operational costs shall be reimbursed in accordance with the
Letter Agreement entered into between the Michigan Primary Care Association and
Managed Care Solutions on May 2, 1995, as amended on December 12, 1995.
Pre-operational services shall include, but are not limited to:

                  1.       Office site and equipment selection;

                  2.       Selection and installation of computer hardware,
                           software and related equipment;

                  3.       Staff selection and training, subject to Section
                           II.D.1 below;

                  4.       Development of marketing programs, if directed by the
                           Plan

                  5.       Development of Plan policy and procedures;

                  6.       Development of provider network, including but not
                           limited to:

                           a.       Negotiating.

                           b.       Beginning the process of credentialing
                                    providers.

                           c.       Contracting.

                           These services are more fully described in Section
                           II.D.2 below.

                  7.       Education of providers and their staff regarding the
                           Plan Program;

                  8.       Establishment of utilization and quality assurance
                           programs;

                  9.       Acting as a liaison with the SMA including
                           negotiation of any and all contracts;

                  10.      Preparation of all materials necessary to submit a
                           complete application to sign a contract to provide
                           services on a managed care basis to the SMA.

                  11.      Preparation of member handbooks and other required
                           items;

                  12.      Preparation of provider handbooks and other required
                           items.

         D.       Administrative Services.

         After the Implementation Date, MCS shall provide administrative
services necessary to the operation of the Plan Program or which are required by
any contract between the SMA and the Plan or contracts between the Plan and
Participating Providers. MCS' responsibilities shall include, but not be limited
to, the following:

                  1.       General Management Duties. MCS shall be responsible
for the day-to-day management of the Plan. MCS shall take actions necessary for
the proper administration and management of the Plan Program, so long as such
actions are consistent with, and not in conflict with, the provisions of this
Agreement and any contract between the SMA and the Plan, and pursuant to
policies and procedures consistent with this Agreement adopted by the Plan Board
of Directors from time to time. MCS shall employ such individuals as are
necessary to carry out its duties under this Agreement. MCS shall recommend to
the Board of Directors of the Plan an individual to serve as the Plan's Chief
Executive Officer. The individual approved shall serve at the pleasure of the
Board, which may remove the Chief Executive Officer by a simple majority vote.

                  2.       Contracting With Providers. MCS shall be responsible
for recruiting, negotiating, and contracting on behalf of the Plan with such
providers of services as necessary to provide Covered Services to Members as
required by any contracts between the SMA and the Plan. Provider contracts shall
be between the Plan and the Participating Providers. While it is understood that
there is no absolute guarantee that MCS will be able to contract on behalf of
the Plan with all such providers, MCS shall make reasonable efforts to recruit
and contract with such necessary providers and shall dedicate sufficient
resources to contract with such providers.

                           All contracts with Participating Providers shall be
in a form and contain such provisions as are acceptable to the Plan and shall
set forth the method and amount of reimbursement to Participating Providers, and
shall specify that the providers shall be subject to all requirements contained
in any contract between the SMA and the Plan, and all applicable provisions of
this Agreement.

                  3.       Claims Processing and Payment. MCS shall pay claims
to providers for all Covered Services rendered to Members in accordance with
contracts entered into between Participating Providers and the Plan any contract
between the SMA and the Plan, and this Agreement. The amount of reimbursement to
providers shall take into account any co-payment, deductible or co-insurance
amounts which Members are or may in the future be required to pay under the
Program. Unless otherwise directed by the Plan, MCS shall have the authority and
discretion to interpret the requirements of the contract between the SMA and the
Plan, and the contracts between the Plan and Participating Providers with
respect to payment of claims to providers. Claims payments shall be made by
checks or drafts signed by MCS as the Plan's dispersing agent out of the account
established in accordance with Section II.C.4. hereof.

                  4.       Bank Account; Accounting and Finance Duties. MCS
shall establish and maintain a bank account in the name of the Plan with a
financial institution selected by the Plan Board of Directors ("the Bank") for
the purpose of depositing all receipts from any source therein, including but
not limited to capitation payments and reinsurance payments, and paying all
expenses of the Plan Program, including payment of provider claims. MCS shall be
responsible for performing all day-to-day financial and accounting functions of
the Plan, including preparation of financial statements, accounts
payable/receivable administration, and banking arrangements. MCS shall also be
responsible for any required financial and regulatory reporting to the SMA. MCS
shall provide regular internal financial and other reports to the Plan Board of
Directors as appropriate to assist the Plan in operating its managed care
programs and to comply with federal and state laws and regulations.

                  5.       Litigation. This section defines and describes the
responsibilities of the parties in Plan Benefits Litigation and Other
Litigation. "Plan Benefits Litigation" is a claim made or action commenced by a
health care provider or a Member seeking declaratory or injunctive relief or
provider reimbursement arising out of an allegation that a service, equipment or
supply is a Covered Service under a Member's Evidence of Coverage which should
be provided or paid for by the Plan. Any claim or action which is not Plan
Benefits Litigation is "other Litigation." A claim for compensatory or exemplary
damages arising in, out of or in connection with "Plan Benefits Litigation is
"Other Litigation."

                           a.       If either MCS or the Plan becomes aware of
                                    Plan Benefits Litigation, it shall promptly
                                    notify the other party. The Plan shall,

                                    with MCS' advice and input, determine
                                    whether to cover or pay the disputed claim
                                    or proceed with Plan Benefit Litigation.

                                    In the event the Plan determines to proceed
                                    with Plan Benefits Litigation, the Plan
                                    shall retain counsel and direct the response
                                    to the Plan Benefits Litigation. The Plan
                                    shall be responsible for assuming the cost,
                                    liability and expense attributable to Plan
                                    Benefits Litigation.

                           b.       If either MCS or the Plan becomes aware of
                                    Other Litigation, it shall promptly notify
                                    the other party. In Other Litigation against
                                    MCS, the Plan or both parties, each party
                                    shall be responsible for providing and
                                    paying for its own defense unless the
                                    parties otherwise agree. Nothing in this
                                    Section 5.b is intended or shall be
                                    construed to limit in any way either party's
                                    rights to assert a claim and recover damages
                                    from the other party.

                  6.       Coordination of Benefits; Third Party Liabilities;
Reinsurance. MCS shall be responsible for coordination of benefits and
third-party recoveries as required under the provisions of the contract between
the SMA and the Plan. MCS shall be responsible for the following:

                           a.       Recovering or coordinating medical expenses
                                    incurred by Members from all third-party
                                    liability resources on behalf of the Plan
                                    and depositing any amounts recovered in the
                                    bank account established pursuant to Section
                                    II.C.4 above;

                           b.       Establishing and maintaining a file of
                                    Members' third-party liability information;

                           c.       Receiving third-party liability information
                                    from the SMA and updating the Members' files
                                    on a timely basis;

                           d.       Informing the SMA of third-party liability
                                    information discovered during the course of
                                    business operations;

                           e.       Providing the SMA with required reports
                                    relating to amounts recovered from
                                    third-parties;

                           f.       Recovering reinsurance revenues payable to
                                    the Plan from the SMA and /or other
                                    Reinsurers.

                  7.       Case Management. MCS shall be responsible for
performing case management services. MCS shall ensure that each Member has
chosen or is assigned a primary care provider who shall assess the Member's
health care needs and shall provide services to meet those needs either directly
or through referrals to other Participating Providers or, if necessary, to
appropriate providers outside the Plan. MCS shall implement a system for the
directing, coordinating, monitoring and tracking of the Covered Services
rendered to each member. This system shall include, but not be limited to, the
following:

                           a.       Ensuring that medically necessary services
                                    are accessible and can be provided on a
                                    timely basis;

                           b.       Providing Members with clear and adequate
                                    information on how to obtain services;

                           c.       Assisting Members to obtain the services
                                    prescribed by their primary care providers
                                    and other authorized providers.

                  8.       Facilitation of Services. MCS shall facilitate the
provision of Covered Services by Participating Providers by:

                           a.       Providing the Plan and Participating
                                    Providers with Member enrollment and
                                    eligibility information; and

                           b.       Maintaining telephone lines as required for
                                    the purpose of determining enrollment and
                                    eligibility information upon admission to an
                                    emergency facility or hospital emergency
                                    room.

                           c.       Providing staff to answer telephone
                                    inquiries concerning enrollment and
                                    eligibility during reasonable hours and on
                                    the days required by the Plan's Board of
                                    Directors.

                  9.      Program Coverage Information. MCS shall prepare and
forward to all Participating Providers, a summary of Covered Services which are
required to be provided under the Plan Program. Such summary shall be consistent
with the contract between the Plan and the SMA and the Evidence of Coverage and
shall include schedules of Covered Services and any applicable exclusions or
limitations affecting the provision of Covered Services, applicable co-insurance
and deductibles, and any other information relevant to the rendering of Covered
Services by providers. The summary of Covered Services may be included in the
provider handbook prepared by MCS.

                  10.      Quality Assurance. MCS shall be responsible for
developing and maintaining a Quality Assurance Program in compliance with the
requirements of the contract between the SMA and the Plan.

                  11.      Utilization Management. MCS shall be responsible for
developing and maintaining a Utilization Management Program. The Utilization
Management Program shall determine whether the level, type, and cost of benefits
provided are appropriate to the health care needs of Members on an ongoing
basis.

                  12.      Credentialing. MCS shall credential and recredential
Participating Providers rendering health care services to Members as described
in the Plan's credentialing policies and procedures, as adopted by the Board of
Directors from time to time.

                  13.      Information Systems and Ownership of Data. MCS shall
develop and maintain and use as of the Implementation Date an automated
management information system as necessary for the efficient operation of the
Plan Program and as required by the contract

between the SMA and the Plan, and this Agreement. All Plan specific data encoded
in MCS' computer system is owned by the Plan and shall not be disclosed to any
third party except as strictly necessary to provide services as required by this
Agreement. MCS agrees to maintain a system to physically backup the data on a
daily basis and store it off-site. In the event the contract between MCS and the
Plan is terminated, all Plan data will be promptly transferred to or as directed
by the Plan by MCS' Information Services & Technology (IST) staff using industry
standard electronic media. After the transfer is completed, all such Plan data
shall be removed from MCS' computer system and no electronic or hard copies of
same may be retained by MCS. The Plan or its designee shall notify MCS if Plan
data needs to be converted in order to be encoded into a different management
information system. MCS shall consult and work with the Plan or its designee to
the extent reasonable and customary in such circumstances to convert the data at
no extra expense to the Plan; provided however, that the Plan shall pay for
expenses associated with the conversion if the conversion requires more than 100
hours of professional staff time. The Plan shall not be charged for any
conversion services provided by MCS. All other aspects of the automated
management information system remain the exclusive property of MCS.

                  14.      Reports to and Liaison with the SMA, Other State and
Federal Agencies. MCS shall be responsible for making reports to the SMA which
are required by the contract between the Plan and the SMA and to act as a
liaison to the SMA for the general purpose of regulatory compliance. MCS shall
also be responsible for making all required reports to Michigan HMO licensing
agencies and to the Health Care Financing Administration. Reports shall be made
at such times as are required by the SMA or other regulatory agency and such
reports shall be on forms provided by and/or in format acceptable to the SMA or
the other agency. 

                  15.      Reports to The Plan. MCS shall report to the 
President and Board of Directors of the Plan on a regular basis and at such
times as are required by this Agreement and Plan policies and procedures and as
reasonably requested by the President or Board of Directors of the Plan. MCS
shall report to the Plan on any and all matters relating to the administration
of the Plan Program as requested by the President or the Board of Directors for
the Plan.

                  16.      Member Services. MCS shall be responsible for
providing all Member services as are necessary to the administration of the
Plan's Program or as are required by any and all contracts between the SMA and
the Plan, and this Agreement.

                  17.      Insurance Requirements.

                           a.       Professional Liability Insurance. During the
term of this Agreement, the Plan shall maintain, at its sole cost and expense, a
policy of HMO-type professional liability insurance acceptable to MCS with
coverage limits in the minimum amount of $1,000,000 per incident and $3,000,000
in the annual aggregate. MCS shall be named as an additional insured on said
professional liability insurance policy. In addition, the Plan shall purchase a
"tail policy" with the same policy limits following the effective date of
termination of the foregoing policy in the event the policy is a "claims made"
policy.

                           b.       Comprehensive Liability Insurance. MCS and
the Plan each shall maintain, at the sole cost and expense of each, throughout
the term of this Agreement, a policy of general or public liability insurance
acceptable to the other party in the minimum amount of

$1,000,000 per occurrence and $3,000,000 in the annual aggregate. Each shall
name the other party as an additional insured on said policy.

                           c.       Proof of Insurance. Each party shall furnish
the other with evidence of such insurance, including certificates of insurance
and complete copies of insurance policies, upon the other's request. Each party
shall provide the other with a minimum of 30 days prior written notice in the
event any of the insurance policies required by this Agreement are canceled,
changed or restricted in any way.

                  18.      Grievance Procedure. MCS shall maintain separate
grievance procedures to process Member and Provider complaints.

                  19.      Member Satisfaction. MCS shall administer
periodically, but not less frequently than annually, Member satisfaction surveys
to measure the level of satisfaction of Members receiving Covered Services from
Participating Providers. The development and administration of such surveys
shall be at the sole cost of MCS.

III.     ADMINISTRATIVE FEE

         A. Operational Phase. The Plan shall pay MCS an Administrative Fee
beginning on the Implementation Date. The Administrative Fee is set forth in
Exhibit A, Management Fee Schedule: Community Choice Michigan.

         The monthly Administrative Fee will be estimated and paid before the
tenth day of the month. Any adjustments based on the actual membership figures
will be made to the subsequent months payment.

         MCS shall be responsible, in return for receiving the Administrative
Fee, to assume all costs associated with the administration of the Plan Program,
except for the following expenses which shall be the responsibility of the Plan:

                           a.     Covered Services;

                           b.     Legal services of the Plan;

                           c.     Actuarial services of the Plan;

                           d.     All insurance premiums for the Plan;

                           e.     Board fees, etc.;

                           f.     Expenses relating to the corporate existence
                                  of the Plan;

                           g.     Independent outside audit and tax services of
                                  the Plan;

                           h.     Advertising and marketing expenses of the
                                  Plan;

                           i.     Any income, property, premium or other taxes
                                  of the Plan and any assessments or license
                                  fees.

                           j.     Any other expenses clearly related to the
                                  business of the Plan as an independent
                                  corporate entity;

         B.       Loan Guaranty Reserve Fund. The Plan intends to withhold an
amount equal to 2% of capitation payments from State (the 2% Withhold") in part
to meet state mandated capital requirements and in part to form a separate
guaranty fund securing the Plan's obligation to repay amounts borrowed from MCS
and all interest accrued thereon and all amounts owed to MCS for consulting fees
and interest accrued thereon. The Plan agrees and authorizes MCS to withhold
each month an amount equal to $.50 per member per month from the 2% Withhold and
to place such monies in an interest bearing account (the "Guaranty Reserve
Fund"). During the period that any obligation exists for MCS to lend money to
the Plan or as long as any consulting fees and interest thereon remain unpaid,
the Guaranty Reserve fund shall be under the exclusive control of MCS. Upon any
default of the Plan to repay principal and interest pursuant to any promissory
note or loan agreement, or upon the Plan's failure to repay accrued consulting
fees pursuant to the parties' agreement, MCS may immediately withdraw from the
Guaranty Reserve Fund all amounts to satisfy the amount owed by the Plan. When
MCS' obligation to lend the Plan money ends and all outstanding principal and
accrued interest thereon and all accrued consulting fees and accrued interest
have been paid by the Plan to MCS, MCS shall return any balance remaining in the
Guaranty Reserve Fund to the Plan.

IV.     WARRANTIES.  MCS warrants that it will in good faith make all reasonable
effort to provide services so that the Plan operates in accordance with the
state and federal laws and regulations and this contract.

V.      TERM AND TERMINATION.

        A. Term. This Agreement shall be effective on the date of its execution
first set forth above and shall be effective during the period necessary to
complete the Plan's pre-operational activities and shall then be in full force
and effect through the first five years of the Program. The first year of the
Program shall be deemed to have begun on the first day of the month in which
administrative fee is paid to MCS pursuant to Section III.B. above. Provided,
the Plan may terminate this Agreement effective the end of the third year by
giving written notice to MCS at least one hundred-eighty (180) days prior to the
end of the third year; if the Plan does not give such notice to MCS, this
Agreement shall continue in full force and effect for the entire five year term
as set forth hereinabove. Except as set forth below, this agreement is otherwise
irrevocable during the term hereof.

        B.  Termination.  This Agreement may be terminated upon the following:

                1.       Automatically in the event the Plan is notified by the
                         SMA that its application to sign a contract to provide
                         Covered Services on a managed care basis under the
                         Program has not been accepted, and the Plan Board of
                         Directors decides not to continue the application or to
                         reapply within a reasonable time.

                2.       Upon notice by the Plan, in the event any officer,
                         director or principal shareholder of MCS is suspended
                         or excluded from participating in any federal or state
                         program in any state. MCS shall immediately notify the
                         Plan of the occurrence of any event described in this
                         subparagraph.

                3.       At any time upon the written mutual consent of both
                         parties.

                4.       In the event the contract between the SMA and the Plan
                         is terminated for any reason or the Plan's
                         participation in the Program is otherwise terminated,
                         in which case termination shall be effective as of the
                         termination date of the Plan's participation in the
                         Program.

                5.       Immediately upon the filing of a bankruptcy petition by
                         either party or upon the failure of either party to
                         obtain any license, registration or approval required
                         under state or federal law that is material to the
                         operation of the Plan Program.

                6.       If after ninety days written notice of a material
                         breach of MCS' obligations hereunder, during which time
                         MCS has failed to cure the breach, the Plan may
                         terminate this Agreement; provided, however, that no
                         termination may take place pursuant to this paragraph
                         until all principal and interest owed to MCS by the
                         Plan pursuant to any loan is paid in full.

         C.     Obligations in Event of Termination.

                1. Upon termination of this Agreement, if the Plan continues to
operate, the Plan shall purchase those fixed assets acquired and used by MCS to
administer the Plan at a price equal to the book value of such assets at the
termination date; the Plan shall also agree to assume any lease of office space
or equipment being utilized for Plan operations.

                2. In the event of termination of this Agreement for any reason,
MCS shall cooperate with the person or entity selected by the Plan to assume
administration of the Plan.

                3. In the event of termination of this Agreement MCS shall
provide the Plan with all copies of records in MCS' possession directly and
specifically relating to the Plan Program and which are necessary for the
continued operation of the Plan Program, or shall forward such records to a
successor administrator as directed by the Plan. MCS' obligations under this
paragraph shall include providing data and data conversion services as required
by Section II.D.13 above.

  VI.   MISCELLANEOUS

         A. Confidentiality. MCS agrees to safeguard the confidentiality of all
data pertaining to this Agreement and Covered Services rendered to Members.
Member medical information and medical records shall be kept confidential and
may be disclosed only in accordance with Michigan law. MCS shall also conduct
the Plan's credentialing and quality assurance activities in a manner which
qualifies for all professional practice review protections against liability,
discovery

and admissibility available under the Michigan Public Health Code and the Health
Care Quality Improvement Act.

         B. Relationship of the Parties. In the performance of the work, duties
and obligations of the parties pursuant to this Agreement, the parties shall, at
all times, be acting and performing as independent contractors. No relationship
of employer and employee, or partners or joint ventures is created by this
Agreement, and neither party may therefore make any claim against the other
party for social security benefits, workers' compensation benefits, unemployment
insurance benefits, vacation pay, sick leave or any other employee benefit of
any kind. Each party shall maintain unemployment and workers compensation
coverage for its own employees. In addition, neither party shall have any power
or authority to act for or on behalf of, or to bind the other except as herein
expressly granted, and no other or greater power or authority shall be implied
by the grant or denial of power or authority specifically mentioned herein.

         C. Assignment/Subcontracting. Neither party shall have the right to
assign, delegate or subcontract any of its rights or obligations hereunder
without the prior written consent of the other party.

         D. Notices. Except as set forth herein, all notices required or
permitted to be given hereunder, shall be in writing and shall be sent by United
Stated mail, certified or registered, return receipt requested, postage prepaid,
to the parties hereto at their respective addresses set forth on the signature
page hereto, or such other address as may be fixed in accordance with the
provisions hereof. Except as set forth herein, if mailed in accordance with the
provisions of this paragraph, such notice shall be deemed to be received three
(3) business days after mailing.

         E. Headings. The headings of the various sections of this Agreement are
inserted merely for the purpose of convenience and do not expressly or by
implication limit, define or extend the specific terms of the section so
designated.

         F. Waiver of Breach. The waiver by either party of a breach or
violation of any provision of this Agreement shall not operate as, nor be
construed to be, a waiver of any subsequent breach thereof.

         G. Applicable Law. This Agreement shall be governed in all respects by
the laws of the State of Michigan.

         H. Invalid Provisions. If, for any reason, any provision of this
Agreement is or shall be hereafter determined by law, act, decision, or
regulation of a duly constituted body or authority, to be in any respect
invalid, such determination shall not nullify any of the other terms and
provisions of this Agreement and, unless otherwise agreed to in writing by the
parties, then, in order to prevent the invalidity of such provision or
provisions of this Agreement, the said provision or provisions shall be deemed
automatically amended in such respect as may be necessary to conform this entire
Agreement with such applicable law, act, decision, rule or regulation.

         I. No Third-Party Beneficiary. This Agreement is entered into by and
between the Plan and MCS and for their benefit. There is not intent by either
party to create or establish third-party beneficiary status or rights or their
equivalent in any Member, subcontractor, or other

third party, and no such third party shall have any right to enforce any right
or enjoy any benefit created or established under this Agreement.

         J. Arbitration. In the event that any dispute relating to this
Agreement arises between MCS and the Plan, the dispute shall be resolved by
binding arbitration in accordance with the Rules of Commercial Arbitration of
the American Arbitration Association. In no event may the arbitration be
initiated more than one year after the date on party first gave written notice
of the dispute to the other party. The arbitration shall be held in Lansing,
Michigan or in such other location as the parties may mutually agree upon. The
arbitrator shall have no power to award punitive or exemplary damages or vary
the terms of this Agreement and shall be bound by controlling law. Judgment upon
an arbitration award rendered may be entered by any court having jurisdiction
thereof.

         K. Review and Audit. MCS will at all times make available for review
and audit by either the Plan or its designee its files, books, procedures and
records (including computer terminal access to same) pertaining to the Plan
Program or the services provided by MCS under this Agreement. In addition, MCS
shall make available for interview with the auditor those personnel with
material involvement or responsibility with respect to the services provided by
MCS under this Agreement.

         L. Entire Agreement; Amendment. This Agreement and all exhibits hereto
shall constitute the entire agreement relating to the subject matter hereof
between the parties hereto, and supersedes all other agreements, written or
oral, relating to the subject matter hereof. This Agreement may be amended by
mutual agreement of the parties, provided that such amendment is reduced to
writing and signed by both parties.

         M. Exhibits. Any exhibits attached to this Agreement are an integral
part of this Agreement and are incorporated herein by reference.

  IN WITNESS WHEREOF, the parties have executed this Agreement to be effective
as of the day and year first set forth above.

THE PLAN

By      Neal G. Colburn                      Date:    December 13. 1995
        --------------------
Its     President

ADDRESS FOR NOTICES:

1200 East Michigan, Ste C
East Lansing, MI  48823

MANAGED CARE SOLUTIONS, INC.

By      James A. Burns                       Date:    December 15, 1995
        --------------------
Its     President

ADDRESS FOR NOTICES:

2510 W. Dunlap Ave., Suite 100
Phoenix, AZ  85021

                                   EXHIBIT A:

               MANAGEMENT FEE SCHEDULE: COMMUNITY CHOICE MICHIGAN
================================================================================
                        Number of Plan Members per Month
================================================================================
PMPM Capitation Revenue Less Than 15,000* First 20,000 Next 20,000 Excess of 40,000 - - ------------------ ----------------- ------------ ----------- ---------------- $150 & above Cost 9.6% 7.7% 6.7% $145 - $149.99 Cost 10.2% 8.0% 7.2% $140 - $144.99 Cost 10.5% 8.2% 7.4% $135 - $139.99 Cost 11.0% 8.5% 7.6% $130 - $134.99 Cost 11.3% 8.7% 7.8% $125 - $129.99 Cost 11.9% 9.2% 8.1% $120 - $124.99 Cost 12.4% 9.5% 8.5% $115 - $119.99 Cost 12.9% 9.9% 8.9% $110 - $114.99 Cost 13.4% 10.4% 9.2% $105 - $109.00 Cost 14.1% 10.8% 9.6% $100 - $104.99 Cost 14.5% 11.4% 10.0% $ 95 - $ 99.99 Cost 15.0% 11.6% 10.4% $ 90 - $ 94.99 Cost 15.4% 11.8% 10.6% $ 85 - $ 89.99 Cost 15.7% 12.0% 10.8% $ 80 - $ 84.99 Cost 16.0% 12.3% 11.0% $ 75 - $ 79.99 Cost 16.3% 12.5% 11.2% $ 70 - $ 74.99 Cost 16.6% 12.8% 11.5% $ 65 - $ 69.99 Cost 17.0% 13.1% 11.7% $ 60 - $ 64.99 Cost 17.3% 13.3% 11.9% $ 55 - $ 59.99 Cost 17.6% 13.5% 12.1% $ 50 - $ 54.99 Cost 17.9% 13.8% 12.3%
* If enrollment is less than 15,000 members, the Plan shall approve a negotiated expense budget, which shall serve as MCS's definition of "cost". NOTE: The Management Fee is calculated each month based on the actual average enrollment and actual PMPM Capitation Revenue yield for that month on an accrual basis. An example follows for a Plan with 50,000 average members and revenue of $130 PMPM:
Membership Segment Fee Schedule% Proportion of Members Weighted Management Fee - - ------------------ ------------- --------------------- ----------------------- First 20,000 11.3% .400 4.52% Next 20,000 8.7% .400 3.48% Next 10,000 7.8% .200 1.56% ---- ---- 50,000 Members 1.00 9.56%
Risk Sharing If the plan implements substantial risk sharing with its participating providers, Managed Care Solutions (MCS) is willing to consider assuming a risk position as follows: Downside Risk: MCS will fund 10% of Risk Pool losses not to exceed 10% of its Management Fee. Upside Risk: MCS will receive 10% of Risk Pool profits not to exceed 10% of its Management Fee. Risk Sharing between MCS and Plan shall only apply when both parties agree to risk sharing and an amendment to this Agreement is effected in accordance with Paragraph V. L of this Agreement. Initials: NGC Date: 12-18-95 Plan Initials: JB Date: 12-15-95 MCS EXHIBIT 10.12(a)(1) AMENDMENT ONE TO ADMINISTRATIVE SERVICES AGREEMENT EXHIBIT A: MANAGEMENT FEE SCHEDULE: COMMUNITY CHOICE MICHIGAN ================================================================================ Number of Plan Members per Month ================================================================================
PMPM Capitation Revenue Less Than 15,000* First 20,000 Next 20,000 Excess of 40,000 - - ------------------ ----------------- ------------ ----------- ---------------- $150 & above Cost 9.6% 7.7% 6.7% $145 - $149.99 Cost 10.2% 8.0% 7.2% $140 - $144.99 Cost 10.5% 8.2% 7.4% $135 - $139.99 Cost 11.0% 8.5% 7.6% $130 - $134.99 Cost 11.3% 8.7% 7.8% $125 - $129.99 Cost 11.9% 9.2% 8.1% $120 - $124.99 Cost 12.4% 9.5% 8.5% $115 - $119.99 Cost 12.9% 9.9% 8.9% $110 - $114.99 Cost 13.4% 10.4% 9.2% $105 - $109.00 Cost 14.1% 10.8% 9.6% $100 - $104.99 Cost 14.5% 11.4% 10.0% $ 95 - $ 99.99 Cost 15.0% 11.6% 10.4% $ 90 - $ 94.99 Cost 15.4% 11.8% 10.6% $ 85 - $ 89.99 Cost 15.7% 12.0% 10.8% $ 80 - $ 84.99 Cost 16.0% 12.3% 11.0% $ 75 - $ 79.99 Cost 16.3% 12.5% 11.2% $ 70 - $ 74.99 Cost 16.6% 12.8% 11.5% $ 65 - $ 69.99 Cost 17.0% 13.1% 11.7% $ 60 - $ 64.99 Cost 17.3% 13.3% 11.9% $ 55 - $ 59.99 Cost 17.6% 13.5% 12.1% $ 50 - $ 54.99 Cost 17.9% 13.8% 12.3%
* If enrollment is less than 15,000 members, the Plan shall approve a negotiated expense budget, which shall serve as MCS's definition of "cost". NOTE: The Management Fee is calculated each month based on the actual average enrollment and actual PMPM Capitation Revenue yield for that month on an accrual basis. An example follows for a Plan with 50,000 average members and revenue of $130 PMPM:
Membership Segment Fee Schedule % Proportion of Members Weighted Management Fee - - ------------------ -------------- --------------------- ----------------------- First 20,000 11.3% .400 4.52% Next 20,000 8.7% .400 3.48% Next 10,000 7.8% .200 1.56% ---- ---- 50,000 Members 1.00 9.56%
Initials: NGC Date: 5-22-96 Plan Initials: JAB Date: 5-22-96 MCS EXHIBIT 10.12(a)(2) AMENDMENT TWO TO MANAGEMENT SERVICE AGREEMENT This agreement is entered into this 26TH day of August , 1996 by and among MANAGED CARE SOLUTIONS, INC. ("MCS"), a Delaware corporation and COMMUNITY CHOICE MICHIGAN ("Plan"), a not-for profit Michigan corporation. WHEREAS, MCS and the Plan have entered into a Management Services Agreement effective December 1, 1995, pursuant to which MCS will provide administrative services for the Plan in the delivery of all medical and administrative functions for the provision of covered services to members, under the managed care program administered by the State of Michigan Medicaid Agency (MSA); WHEREAS, MCS and the Plan have amended Exhibit A of the aforementioned agreement, in an agreement dated May 22, 1996 to supersede the previous Exhibit, to reflect language revisions required by the State of Michigan Insurance Bureau; WHEREAS, the Management Services Agreement includes a provision for negotiation of a fee schedule for Administrative Services provided in the event that enrollment does not exceed 15,000 members; WHEREAS, Plan enrollment is not anticipated to exceed 15,000 members upon commencement of Plan operations on August 1, 1996. NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS: 1. Exhibit A of the Management Services Agreement is hereby amended as follows: Effective August 1, 1996, administrative fees will be paid to MCS according to the schedule below, when the Plan has an actual enrollment of less than 15,000 members in a given calendar month: Month 1 Cost plus 8% Month 2 Cost plus 6% Month 3 Cost plus 4% Month 4 Cost plus 2% Month 5 and thereafter Cost plus 0%
2. At such time as enrollment reaches 15,000 members, reimbursement will revert to the Exhibit A: Fee Schedule, signed by both parties on May 22, 1996. If enrollment should exceed 15,000 members for a period and then decrease below 15,000 members, payment will commence with the next applicable Month from the point previously terminated in the schedule in Paragraph 1 above. 3. "Cost" as referenced above shall not exceed an average of $200,000 per month for the entire time period membership is less than 15,000 members. Cost will include all expenses incurred in the administration and delivery of covered services rendered to plan members, including a $1.50 per member per month (PMPM) fee assessed for corporate overhead expenses. 4. For the initial month of Plan operations, MCS will withdraw projected costs in the amount of $165,000 plus 8% from Plan revenues no later than the 15th of the first month. Thereafter, by the 15th of each month, MCS will submit a detailed listing of actual costs (including $1.50 PMPM overhead) incurred during the previous month. Reconciliation and payment will occur within two working days, with payment comprising the current month's estimated costs of $165,000 with the applicable percentage increase as denoted in Paragraph 1 above, and the reconciled balance of the previous month's costs, to the extent that total costs for the periods combined do not exceed an average of $200,000. Any funds not paid in the reconciliation process in order to retain average costs at $200,000 or less may be added into a subsequent month's reconciliation, so long as the average for all periods does not exceed $200,000. 5. Notwithstanding the provisions of Paragraph 4 above, total reimbursement for administrative expenses in any one month may exceed $200,000, if the added percentage to actual costs calculation per the schedule in Paragraph 1 exceeds $200,000, and/or the reconciliation of funds permits a reimbursement greater than $200,000 in a given month for costs incurred and averaged over more than one period. Example: Month 1 payment = $165,000 + 8% = 178,200. Month 2: Actual expenses for Month 1 received = $180,000; Month 1 reconciliation: $15,000 (180,000 - 165,000) x 8%. Month 2 payment: ($15,000 x 1.08) + ($165,000 x 1.06) = $191,100. Month 3: Actual expenses for Month 2 received = $230,000 (may only apply $220,000 so as not to exceed an average of $200,000); Month 2 reconciliation: $55,000 (220,000 - 165,000) x 6%. Month 3 payment: ($55,000 x 1.06) = ($165,000 x 1.04) = $229,900. Month 4: Actual expenses for Month 3 received = $150,000 (add $10,000 reduction from previous month for total of $160,000; average for three months = $180,000 + 220,000 + 160,000 = 186,666); Month 3 reconciliation : $-5,000 (160,000 - 165,000) x 1.04. Month 4 payment (-$5,000 x 1.04) + ($165,000 x 1.02) = $163,100. 6. MCS and the Plan agree that no other provisions or obligations in the Management Services Agreement or any other agreement previously entered into between the two parties shall be altered or any other way revised pursuant to this Agreement. MANAGED CARE SOLUTIONS, INC. By James A. Burns ------------------------------ Date August 26, 1996 ------------------------------ COMMUNITY CHOICE MICHIGAN By Neal G. Colburn ------------------------------ Date August 7, 1996 ------------------------------

Basic Info X:

Name: ADMINISTRATIVE SERVICES AGREEMENT
Type: Administrative Services Agreem
Date: Aug. 29, 1996
Company: LIFEMARK CORP /DE/
State: Delaware

Other info:

Date:

  • December , 1995
  • May 2 , 1995
  • December 12 , 1995
  • December 13
  • December 15 , 1995
  • 26TH day of August , 1996
  • December 1 , 1995
  • August 1 , 1996
  • May 22 , 1996
  • 15th of the first month
  • August 26 , 1996
  • August 7 , 1996

Organization:

  • Administrative Services Agreement
  • State of Michigan Medical Assistance Program
  • C. Covered Services
  • E. Participating Providers
  • F. Evidence of Coverage
  • H. State Medicaid Agency
  • SMA Related Activities
  • Covered Services to Members
  • Michigan Primary Care Association and Managed Care Solutions
  • D. Administrative Services
  • General Management Duties
  • Bank Account ; Accounting and Finance Duties
  • Third Party Liabilities ; Reinsurance
  • Facilitation of Services
  • Covered Services by Participating Providers
  • Utilization Management Program
  • Ownership of Data
  • MCS ' Information Services & Technology IST
  • Other State and Federal Agencies
  • Health Care Financing Administration
  • Professional Liability Insurance
  • Comprehensive Liability Insurance
  • Proof of Insurance
  • Community Choice Michigan
  • Guaranty Reserve Fund
  • Plan Board of Directors
  • C. Obligations in Event of Termination
  • Michigan Public Health Code
  • the Health Care Quality
  • F. Waiver of Breach
  • Rules of Commercial Arbitration of the American Arbitration Association
  • W. Dunlap Ave.
  • State of Michigan Medicaid Agency MSA
  • State of Michigan Insurance Bureau
  • the Management Services Agreement

Location:

  • East Michigan
  • Ste C East Lansing
  • Phoenix
  • AZ
  • Delaware

Money:

  • $ 500,000
  • $ 1,000,000
  • $ 3,000,000
  • $ .50
  • 145
  • $ 149.99
  • $ 144.99
  • 135
  • $ 139.99
  • $ 134.99
  • $ 129.99
  • $ 124.99
  • 115
  • $ 119.99
  • $ 114.99
  • $ 109.00
  • $ 104.99
  • 95
  • $ 99.99
  • $ 94.99
  • 85
  • $ 89.99
  • $ 84.99
  • 75
  • $ 79.99
  • 70
  • $ 74.99
  • $ 69.99
  • $ 64.99
  • $ 59.99
  • $ 54.99
  • $ 130
  • $ 1.50
  • $ 15,000
  • $ 191,100
  • $ 230,000
  • $ 220,000
  • $ 200,000
  • $ 55,000
  • $ 229,900
  • $ 150,000
  • $ 10,000
  • $ 160,000
  • $ 180,000
  • $ -5,000
  • $ 5,000
  • $ 165,000
  • $ 163,100

Person:

  • James A. Burns
  • Neal G. Colburn

Percent:

  • 10 %
  • 9.6 % 7.7 % 6.7 %
  • 10.2 % 8.0 % 7.2 %
  • 10.5 % 8.2 % 7.4 %
  • 11.0 % 8.5 % 7.6 %
  • 11.3 % 8.7 % 7.8 %
  • 11.9 % 9.2 % 8.1 %
  • 12.4 % 9.5 % 8.5 %
  • 12.9 % 9.9 % 8.9 %
  • 13.4 % 10.4 % 9.2 %
  • 14.1 % 10.8 % 9.6 %
  • 14.5 % 11.4 % 10.0 %
  • 15.0 % 11.6 % 10.4 %
  • 15.4 % 11.8 % 10.6 %
  • 15.7 % 12.0 % 10.8 %
  • 16.0 % 12.3 % 11.0 %
  • 16.3 % 12.5 % 11.2 %
  • 16.6 % 12.8 % 11.5 %
  • 17.0 % 13.1 % 11.7 %
  • 17.3 % 13.3 % 11.9 %
  • 17.6 % 13.5 % 12.1 %
  • 17.9 % 13.8 % 12.3 %
  • Schedule %
  • 4.52 %
  • 3.48 %
  • 1.56 %
  • 9.56 %