DxCG INTRODUCES RxGROUPS 2.0 TO HEALTH CARE INDUSTRY Enhancements to Pharmacy Models Improve Prediction of Future Costs for Contracting, Budgeting and Disease Management

BOSTON, Mass. – May 07, 2002 – DxCGยฎ, Inc., a leading provider of software tools that measure health status and accurately predict health care expenses, announced today the availability of RxGroupsยฎ 2.0 predictive models. RxGroups, which were co-developed by DxCG and Kaiser Permanente, are the only commercially available models that use pharmacy data to predict total medical expenses. RxGroups 2.0, which includes several enhancements to RxGroups 1.0, helps health plans, their employers and consultants better predict costs for financial, actuarial and medical management.

RxGroups comprehensively classify National Drug Codes (NDC) based on pharmacological functionality. RxGroups 2.0 features up-to-date NDC codes, as well as an all-new reporting capability, and an easy-to-use graphical interface. It also features a model that allows plans to project total medical expenses based on pharmacy usage. Capital Health Plan, one of the nation’s top 10 HMOs in customer satisfaction, is among the first health plans to receive RxGroups 2.0.

“The RxGroups predictive models let us use readily available data from pharmacy claims to help us understand the needs of our population-whether that be identifying cases for medical support or evaluating financial factors,” said Eric Smith, CIO of Capital Health Plan. “We feel the accuracy of the RxGroups models and the readily available reports support our goals and offer an affordable solution.”

“As our population ages, health care costs will continue to escalate. It’s critical that the various constituents in the health care industry better identify the sickest people and manage their care efficiently,” said Arlene S. Ash, Ph.D., founder and senior scientist of DxCG. “Similar to DxCG’s Diagnosis-based Models, RxGroups provide health plans, actuaries, underwriters, employers, consultants and pharmacy benefit managers clinical validity and high predictive power. The enhanced functionality of RxGroups 2.0 will help these organizations improve medical and financial management.”

DxCG offers two variations of RxGroups models. One uses demographic and RxGroups only to predict total medical costs. The second uses inpatient diagnoses classified using the multiple condition the Diagnostic Cost Group/Hierarchical Condition Category (DCG/HCC) classification model in addition to RxGroups and demographics.

About Capital Health Plan

Established in 1982, Capital Health Plan is locally operated and physician-directed, with more than 300 area physicians in its network. More than 2500 area employers offer Capital Health Plan coverage to their employees. Since its founding, Capital Health Plan has successfully insulated its members from many of the problems and concerns experienced nationally in health care delivery.

About DxCG, Inc.

DxCG promotes fair and efficient health care by providing software tools to more accurately plan, budget and evaluate health care management programs. More than 120 clients, covering more than 40 million lives, use the company’s Diagnostic Cost Group and RxGroups predictive models to negotiate health-based payments, identify opportunities for disease management, profile physicians and evaluate managed care programs. DxCG clients include Blue Cross Blue Shield of Michigan, Highmark Blue Cross Blue Shield, Kaiser Permanente and Pacific Business Group on Health. Recognized by leading independent researchers as the most proven models available, DxCG’s methodologies are used by the federal government to set payment rates for the Medicare+Choice program. For more information, visit the company’s Web site at www.dxcg.com.