First Health Brings New MMIS System Live in Nevada and Signs New Medicaid Contract in Alaska

Company implements its market leading health care system in record time for Nevada Medicaid and signs contract with Alaska to provide new Medicaid system and health care management services.

FOR IMMEDIATE RELEASE
Contact: Scott Allocco
First Health Services
804-965-7472
sjallocco@fhsc.com

Downers Grove, IL– October 7, 2003 – First Health Group Corp. (NASDAQ: FHCC), announced today that its subsidiary, First Health Services Corporation (FHSC), has successfully implemented its new MMIS system and launched fiscal agent operations for Medicaid health care management and administration for the State of Nevada. Additionally, the company has just signed a new contract with the State of Alaska to implement its new MMIS and fiscal agent services there.

The company’s new Core MMIS was launched in record time in Nevada, principally due to its extensive capabilities and flexibility, coupled with effective project management. The new system provides enhanced health care management capabilities, web-interfaces for hospitals and doctors, and better information for policy decision making. It also includes the company’s full suite of pharmacy benefit management services. Nevada Medicaid Director, Charles Duarte, said, “This implementation has set a new standard in the Medicaid market, being successfully launched in 12 short months, and within budget. We are very pleased with the system and its implementation, and continue our efforts to wrap up the non-critical components.”

First Health Services has also signed an up to 10-year contract with the State of Alaska to implement its new MMIS system and related health care administration and clinical services. First Health Services, which has served as Alaska’s Medicaid fiscal agent since 1987, was the successful bidder in this competitive re-procurement. Alaska will utilize the company’s Core MMIS, in conjunction with clinical management services, the full array of pharmacy benefit management services and its web-based provider features to facilitate enhanced administration, enable cost containment efforts, promote quality of care and maximize provider satisfaction with the Medicaid program.

“First Health Services has been a trusted partner of the Alaska Medicaid program for many years,” said Bob Labbe, Deputy Commissioner, Health and Social Services for the State of Alaska. “I'm happy that this partnership will continue into the future and bring with it new health care administrative systems and analytical capability to help us continually improve the Medicaid program for recipients and health care providers."

First Health Services Core MMIS, which is modular in design, gives both Nevada and Alaska Medicaid programs the flexibility needed to rapidly adapt to new health care policies and programs. This flexibility can expand beyond the Medicaid program, as both states now have the infrastructure to facilitate administration of other state health care programs through the Core MMIS. The new system also helps the states to meet the new federal requirements of the Health Insurance Portability and Accountability Act (HIPAA).

“This is a new day in the Medicaid business,” said Teresa DiMarco, president of First Health Services. “States are recognizing that the use of our portable Core MMIS as a base, offers much faster implementation and lower implementation risk and cost than the custom-build approach which is historically characteristic of this business.” Use of the Core MMIS also provides a common set of capabilities that allow states to share in the Customer Community. “First Health, being a health care company first, uses IT as an enabler,” said DiMarco. “We understand that states are looking for a focus on fully integrated health care management and administration, and not the custom IT model of years past.”

First Health Services is a leading national provider of health care management and administration to public sector health care clients. The Company serves state Medicaid programs, health and mental health agencies, pharmacy benefit programs and senior drug assistance programs. First Health Services is a pioneer in the Medicaid management field, offering a full range of Medicaid fiscal agent, pharmacy benefit administration, healthcare management and quality assurance services. The Company is a wholly owned subsidiary of First Health Group Corp. (NASDAQ: FHCC), the nation’s premier full-service health benefits company. For more information about First Health Services, visit the Company Website at www.fhsc.com.