Mayo Health Plan Arizona Announces New Strategic Direction

Monday, May 20, 2002

SCOTTSDALE, Ariz. - May 20, 2002 - Mayo Health Plan Arizona (MHPA), a health plan that provides care for 43,000 members through more than 125 Arizona employer groups, announced today a new strategic direction. After a thorough and careful analysis of their business market, Mayo Health Plan Arizona has decided to replace their insurance-based product line with administrative services products for large employers. This product transition will be completed by December 31, 2003. Mayo Health Plan Arizona specializes in the large employer group market and more than 90% of the current MHPA membership comes from large employers.

The Administrative Services Only (ASO) product line for large self-funded employers will offer a broad spectrum of services featuring access to MHPA's Health Tradition (exclusive provider or EPO) and Health Tradition Plus (preferred provider or PPO) networks. The Health Tradition networks are comprised of Mayo Clinic Scottsdale physicians and facilities and carefully selected community physicians, health practitioners, and facilities throughout Maricopa, Coconino, Pima, Pinal and Yavapai counties.

This is not a new line of business for MHPA. MHPA currently provides ASO products to several employer groups.

Throughout the transition, members will continue to receive high quality benefits and service from MHPA. Large clients will have the option of converting their current

MHPA contract to a self-funded arrangement. Over the next nineteen months, MHPA will work closely with all current clients and members to help identify alternatives for their medical coverage. By December 31, 2003, all insurance-based MHPA employer group contracts will have either terminated or been converted to ASO products.

"We appreciate and care about the members that we have had the opportunity to serve and we are firmly committed to making certain that this transition is as smooth as possible," says R. Scott Gorman, M.D., Medical Director of Mayo Health Plan Arizona.

"We apologize for any inconvenience this change may cause some of our members and we are hopeful that many will be able to continue their coverage through us or another health plan with access to Mayo Clinic," says Dr. Gorman.

"We believe that our continued success can best be assured by focusing on ASO products for large employer groups. As employer-sponsored health plan costs continue to rise, there is increased interest by many large companies to consider alternate funding options," says Dr Gorman. "We are shifting our focus to meet these new marketplace demands with the broad range of administrative and health management services available through our ASO products."

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