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        <Explanation>THE INTERNAL REVENUE SERVICE HAS RECOGNIZED ORGANIZATIONS AS TAX EXEMPT UNDER SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE. ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES CLARIFIES THE ACCOUNTING OF UNCERTAINTY IN INCOME TAXES RECOGNIZED IN AN ENTERPRISE'S FINANCIAL STATEMENTS. THE ORGANIZATIONS RECOGNIZE ACCRUED INTEREST AND PENALTIES ASSOCIATED WITH UNCERTAIN TAX PROVISIONS, IF ANY. THERE WERE NO INCOME TAX-RELATED INTEREST AND PENALTIES RECORDED FOR THE YEAR ENDED JUNE 30, 2012. THE INCOME TAX RETURNS OF THE ORGANIZATIONS FOR JUNE 30, 2011, 2010, AND 2009 ARE SUBJECT TO EXAMINATION BY THE IRS AND OTHER VARIOUS TAXING AUTHORITIES, GENERALLY FOR THREE YEARS AFTER THEY WERE FILED.</Explanation>
      </Form990ScheduleDPartXIV>
    </IRS990ScheduleD>
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      <CompensationCommittee>X</CompensationCommittee>
      <BoardOrCommitteeApproval>X</BoardOrCommitteeApproval>
      <SeverancePayment>false</SeverancePayment>
      <SupplementalNonqualRetirePlan>true</SupplementalNonqualRetirePlan>
      <EquityBasedCompArrangement>false</EquityBasedCompArrangement>
      <CompBasedOnRevenueOfFilingOrg>false</CompBasedOnRevenueOfFilingOrg>
      <CompBasedOnRevenueRelatedOrgs>false</CompBasedOnRevenueRelatedOrgs>
      <CompBasedNetEarningsFilingOrg>false</CompBasedNetEarningsFilingOrg>
      <CompBasedNetEarningsRelateOrgs>false</CompBasedNetEarningsRelateOrgs>
      <AnyNonFixedPayments>false</AnyNonFixedPayments>
      <InitialContractException>false</InitialContractException>
      <Form990ScheduleJPartII>
        <NamePerson>STEPHEN A SOMERS PHD</NamePerson>
        <CompBasedOnRelatedOrgs>307212</CompBasedOnRelatedOrgs>
        <BonusRelatedOrgs>7935</BonusRelatedOrgs>
        <DeferredCompRelatedOrgs>59960</DeferredCompRelatedOrgs>
        <NontaxableBenefitsRelatedOrgs>13446</NontaxableBenefitsRelatedOrgs>
        <TotalCompensationRelatedOrgs>388553</TotalCompensationRelatedOrgs>
      </Form990ScheduleJPartII>
      <Form990ScheduleJPartII>
        <NamePerson>CAROLYN INGRAM</NamePerson>
        <CompBasedOnRelatedOrgs>149515</CompBasedOnRelatedOrgs>
        <NontaxableBenefitsRelatedOrgs>1725</NontaxableBenefitsRelatedOrgs>
        <TotalCompensationRelatedOrgs>151240</TotalCompensationRelatedOrgs>
      </Form990ScheduleJPartII>
      <Form990ScheduleJPartII>
        <NamePerson>NIKKI HIGHSMITH</NamePerson>
        <CompBasedOnRelatedOrgs>123123</CompBasedOnRelatedOrgs>
        <DeferredCompRelatedOrgs>15180</DeferredCompRelatedOrgs>
        <NontaxableBenefitsRelatedOrgs>15793</NontaxableBenefitsRelatedOrgs>
        <TotalCompensationRelatedOrgs>154096</TotalCompensationRelatedOrgs>
      </Form990ScheduleJPartII>
      <Form990ScheduleJPartIII>
        <Identifier>SEVERANCE, NONQUALIFIED, AND EQUITY-BASED PAYMENTS</Identifier>
        <ReturnReference>SCHEDULE J, PAGE 1, PART I, LINE 4</ReturnReference>
        <Explanation>STEPHEN A. SOMERS, PHD 0 15,500 0</Explanation>
      </Form990ScheduleJPartIII>
    </IRS990ScheduleJ>
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      <GeneralExplanation>
        <Identifier>ORGANIZATION'S MISSION</Identifier>
        <ReturnReference>FORM 990 - ORGANIZATION'S MISSION</ReturnReference>
        <Explanation>CENTER FOR HEALTH CARE STRATEGIES SUPPORTING ORGANIZATION PARTNERS WITH MEDICAID POLICYMAKERS AND STAKEHOLDERS AT THE GROUND LEVEL TO DEVELOP BETTER MODELS OF ORGANIZING, FINANCING, AND DELIVERING HEALTH CARE SERVICES, ESPECIALLY FOR THOSE WITH CHRONIC ILLNESSES AND DISABILITIES. WE PROVIDE TRAINING AND TECHNICAL ASSISTANCE TO STRENGTHEN THE CAPACITY OF STATES AND HEALTH PLANS AND ESTABLISH LOCAL, STATE, AND NATIONAL PARTNERSHIPS TO REDUCE DISPARITIES AND DRIVE SYSTEM-LEVEL IMPROVEMENTS IN CARE. OUR WORK INFORMS NATIONAL HEALTH POLICY DECISION MAKING AND HELPS TRANSLATE POLICY INTO ACTION IN STATES ACROSS THE COUNTRY. BY FOCUSING QUALITY IMPROVEMENTS ON MEDICAID'S HIGH-RISK, HIGH-COST POPULATIONS, STATES AND HEALTH PLANS CAN IMPROVE HEALTH OUTCOMES, INVEST LIMITED PUBLIC DOLLARS MORE EFFECTIVELY, AND ULTIMATELY, BY CONTROLLING COSTS, FREE UP RESOURCES TO EXPAND HEALTH COVERAGE FOR MORE AMERICANS.</Explanation>
      </GeneralExplanation>
      <GeneralExplanation>
        <Identifier>ORGANIZATION'S PROCESS USED TO REVIEW FORM 990</Identifier>
        <ReturnReference>FORM 990, PAGE 6, PART VI, LINE 11B</ReturnReference>
        <Explanation>EACH MEMBER OF THE GOVERNING BODY WAS PROVIDED AN ELECTRONIC COPY OF THE COMPLETED FORM 990 FOR REVIEW PRIOR TO IT BEING FILED.</Explanation>
      </GeneralExplanation>
      <GeneralExplanation>
        <Identifier>ENFORCEMENT OF CONFLICTS POLICY</Identifier>
        <ReturnReference>FORM 990, PAGE 6, PART VI, LINE 12C</ReturnReference>
        <Explanation>EACH EMPLOYEE AND MEMBER OF THE BOARD OF TRUSTEES IS REQUIRED TO COMPLETE A CONFLICT OF INTEREST DISCLOSURE AGREEMENT ON AN ANNUAL BASIS. THE HUMAN RESOURCES DIRECTOR AND OPERATIONS OFFICER REVIEW THE AGREEMENTS AND REPORTS ANY CONCERNS TO THE PRESIDENT/CEO.</Explanation>
      </GeneralExplanation>
      <GeneralExplanation>
        <Identifier>COMPENSATION PROCESS FOR TOP OFFICIAL</Identifier>
        <ReturnReference>FORM 990, PAGE 6, PART VI, LINE 15A</ReturnReference>
        <Explanation>THE COMPENSATION PACKAGE FOR THE CEO IS REVIEWED BY THE EXECUTIVE COMMITTEE OF THE BOARD OF TRUSTEES. THE EXECUTIVE COMMITTEE MAKES A RECOMMENDATION TO THE FULL BOARD OF TRUSTEES FOR APPROVAL. THE APPROVAL IS OFFICIALLY DOCUMENTED IN THE MINUTES, AND THE BOARD CHAIR ISSUES A LETTER TO THE CEO FOR THE FILE. THE DIRECTOR OF HUMAN RESOURCES OVERSEES THE PROCESS.</Explanation>
      </GeneralExplanation>
      <GeneralExplanation>
        <Identifier>GOVERNING DOCUMENTS DISCLOSURE EXPLANATION</Identifier>
        <ReturnReference>FORM 990, PAGE 6, PART VI, LINE 19</ReturnReference>
        <Explanation>THE FORM 990 IS AVAILABLE ON WWW.GUIDESTAR.ORG. THE ORGANIZATION'S GOVERNING DOCUMENTS ARE AVAILABLE TO THE PUBLIC UPON REQUEST ON LOCATION AT CENTER FOR HEALTH CARE STRATEGIES, INC. AND CENTER FOR HEALTH CARE STATEGIES SUPPORTING ORGANIZATION.</Explanation>
      </GeneralExplanation>
    </IRS990ScheduleO>
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      <Form990ScheduleRPartII>
        <NameOfDisregardedEntity>
          <BusinessNameLine1>CENTER FOR HEALTH CARE STRATEGIES</BusinessNameLine1>
        </NameOfDisregardedEntity>
        <AddressUS>
          <AddressLine1>200 AMERICAN METRO BOULEVARD</AddressLine1>
          <AddressLine2>SUITE 119</AddressLine2>
          <City>HAMILTON</City>
          <State>NJ</State>
          <ZIPCode>08619</ZIPCode>
        </AddressUS>
        <EIN>223375015</EIN>
        <PrimaryActivities>FACILITATE</PrimaryActivities>
        <LegalDomicileState>NJ</LegalDomicileState>
        <ExemptCodeSection>501(C)</ExemptCodeSection>
        <PublicCharityStatus>7</PublicCharityStatus>
        <DirectControllingEntityName>
          <BusinessNameLine1>NA</BusinessNameLine1>
        </DirectControllingEntityName>
        <ControlledOrg>false</ControlledOrg>
      </Form990ScheduleRPartII>
      <ReceiptOfIntAnnRentsRoyalties>false</ReceiptOfIntAnnRentsRoyalties>
      <GiftGrantOrCapContrToOtherOrg>true</GiftGrantOrCapContrToOtherOrg>
      <GiftGrantOrCapContrFrOtherOrg>false</GiftGrantOrCapContrFrOtherOrg>
      <LoansOrGuaranteesToOtherOrg>false</LoansOrGuaranteesToOtherOrg>
      <LoansOrGuaranteesFromOtherOrg>false</LoansOrGuaranteesFromOtherOrg>
      <SaleOfAssetsToOtherOrg>false</SaleOfAssetsToOtherOrg>
      <PurchaseOfAssetsFromOtherOrg>false</PurchaseOfAssetsFromOtherOrg>
      <ExchangeOfAssets>false</ExchangeOfAssets>
      <RentalOfFacilitiesToOtherOrgs>false</RentalOfFacilitiesToOtherOrgs>
      <RentalOfFacilitiesFrOtherOrgs>false</RentalOfFacilitiesFrOtherOrgs>
      <PerformOfServicesForOtherOrgs>false</PerformOfServicesForOtherOrgs>
      <PerformOfServicesByOtherOrgs>false</PerformOfServicesByOtherOrgs>
      <SharingOfFacilities>false</SharingOfFacilities>
      <SharingOfPaidEmployees>false</SharingOfPaidEmployees>
      <ReimbursementPaidToOtherOrg>false</ReimbursementPaidToOtherOrg>
      <ReimbursementPaidByOtherOrg>false</ReimbursementPaidByOtherOrg>
      <OtherTransferToOtherOrg>false</OtherTransferToOtherOrg>
      <OtherTransferFromOtherOrg>false</OtherTransferFromOtherOrg>
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          <BusinessNameLine1>CENTER FOR HEALTH CARE STRATEGIES</BusinessNameLine1>
          <BusinessNameLine2>INC</BusinessNameLine2>
        </NameOfOtherOrganization>
        <TransactionType>B</TransactionType>
        <AmountInvolved>2100000</AmountInvolved>
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  </ReturnData>
</Return>