First Health Services to Administer One of Nation’s Largest Medicaid Pharmacy Programs
TennCare Selects First Health Services to Help Manage $2 Billion Drug Program

Media Contact:
Scott Allocco, (804)965-7472
sjallocco@fhsc.com

FOR IMMEDIATE RELEASE

Richmond, VA – December 15, 2003 – First Health Services has been selected by the Tennessee TennCare Program to serve as the Pharmacy Benefits Manager (PBM) for the TennCare pharmacy program, one of the nation’s largest Medicaid drug programs. The contract, which has a three-year term with two, one-year renewable periods, is valued at approximately $14 million over the three-year term.

“We look forward to working in partnership with the TennCare team to help the State achieve its goal of streamlining the pharmacy program for the patients, doctors, and pharmacists that rely on it,” said Teresa DiMarco, president of First Health Services. “We are honored at being selected to bring our integrated clinical management capabilities and innovative technology to improve quality and reduce costs in the TennCare pharmacy program.”

As the Pharmacy Benefits Administrator for TennCare, Tennessee’s managed care insurance program for 1.3 million people who are poor, disabled or uninsured, First Health Services will use its online, real-time point-of-sale pharmacy management and claims processing system to provide TennCare with more flexibility in managing its pharmacy program. In addition, the company will provide integrated clinical management and advanced drug utilization review (DUR) services. The company will also administer the state’s new Preferred Drug List (PDL) program.

“One of the key priorities the Governor identified in turning around the TennCare program is to get control over the rising costs in our pharmacy program,” said TennCare Director, Manny Martins. “By selecting First Health Services to be the single pharmacy benefit manager to work with TennCare for the coming years, the TennCare program has streamlined the administration of pharmacy benefits. This will simplify the process for providers, save money for the State and bring further stability to the program.”

First Health now has contracts to develop, implement or administer Medicaid preferred drug list programs for eight states, including Tennessee, Ohio, Vermont, Maryland, Michigan, Virginia, South Carolina, Nevada. The company also administers the nation’s only Medicaid-based multi-state pooling program, the National Medicaid Pooling Initiative (NMPI)—a program designed to maximize drug discounting while preserving complete State independence in preferred drug selection. Preferred drug list and supplemental rebate programs are effective tools in helping states reduce pharmacy costs in a clinically appropriate manner.

First Health Services is one of the nation’s leading providers of integrated clinical management services for public sector health care clients. As a pioneer in the Medicaid management field, First Health Services offers a full range of Medicaid fiscal agent, pharmacy benefit administration, healthcare management and quality assurance services. With the addition of TennCare, First Health Services has pharmacy management contracts in 15 states, including Virginia, Michigan, Ohio and South Carolina. They also manage the nation’s largest senior drug programs in New York, New Jersey and Pennsylvania. The Company is a wholly owned subsidiary of First Health Group Corp. (NASDAQ: FHCC), based in Downers Grove, Illinois.