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OWINGS MILLS, MD (April 29, 2004) – CareFirst BlueCross BlueShield announced today that it has begun the process of winding down clinical operations at Patuxent Medical Group (PMG) by November 1, 2004. The company is in discussions with the group's physicians to continue providing medical services as independent practices serving Patuxent's 40,000 current patients at the Twin Knolls facility in Columbia.

PMG has been a subsidiary of CareFirst, or its predecessor Blue Cross Blue Shield of Maryland, for 18 years.

"Now is the right time for the physicians at PMG to return to their roots," said Kevin C. O'Neill, PMG president and a CareFirst vice president. "It's clear from the changing health care marketplace that the system works best when doctors manage their own business affairs and insurers focus on doing what they do best – providing and administering the health insurance coverage needs of its members."

PMG originally had been the group of primary- and specialty-care physicians that served members of the former Columbia Medical Plan (CMP), a staff-model HMO based in the then-fledgling community of Columbia in Howard County. CMP, which was acquired by the Maryland Blues plan in 1986, was eventually merged into the insurer's FreeState Health Plan.

Historically, PMG had been a "closed panel" network, under which primary care physicians coordinated all aspects of their patients' care. Responding to the changing nature of managed care, coupled with patients' desire for greater access to a broader panel of physicians, PMG several years ago converted to a fee-for-service practice and began accepting patients from multiple payers.

"The closed network, tightly controlled, capitated fee structure had been an effective way of controlling our costs. That is no longer the case," O'Neill explained. "Like other organizations that had maintained business ownership/affiliations with physician groups, including other insurers and area hospitals, CareFirst has determined that it is best for this group of doctors to establish their own independent practices."

O'Neill said that CareFirst is working with PMG physicians on a detailed plan giving physicians the opportunity to continue providing services as independent practices by November 1. He said CareFirst will expedite any re-contracting and re-credentialing required to retain these medical professionals in CareFirst's provider networks.

"Ideally, our goal is to make this a smooth transition for PMG's patients, under which they could continue to see their current physicians," he said. "Affected members may remain with their existing physicians, assuming the doctors continue practicing in a CareFirst participating network, or they will be assigned to another physician in the CareFirst provider network."

To fulfill certain contractual obligations, PMG will remain a legal entity under CareFirst. The new physician practices would operate under different names.

CareFirst, an independent licensee of the Blue Cross and Blue Shield Association, is a not-for-profit health care company which, through its affiliates and subsidiaries, offers a comprehensive portfolio of health insurance products, direct health care and administrative services to nearly 3.3 million individuals and groups in Northern Virginia, the District of Columbia, Maryland and Delaware.

To learn more about CareFirst BlueCross BlueShield, visit our web site at http:/www.carefirst.com

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