CareFirst Y2K Readiness Update

CareFirst is on target to meet its critical Y2K readiness goal. The company's goal was to have all CareFirst computer systems' hardware, software and applications Y2K-ready by September 30, 1999.

The general public is concerned about the ability of businesses and other organizations to continue operations without interruption beginning January 1, 2000. CareFirst is committed to its members, providers and partners to continue business with minimal disruption.

The Year 2000 computer problem stems from the inability of many computer systems to interpret data involving the Year 2000. These systems use only two digits to indicate a year. When 1999 rolls over to 2000, these systems will likely interpret the "00" as 1900, setting system clocks back 100 years, and causing errors in processing dates which result in data corruption.

Our goal was to have CareFirst computer systems and infrastructure Y2K-ready by September 30, 1999. We are currently in the implementation and testing phases and we are on schedule to meet the target completion date. In fact, many areas of the organization already are Y2K-ready.

All managed care areas of the business, as well as the local FEP business and the FEP Operations Center, are substantially Y2K-ready.

CareFirst is working closely with federal and state regulators. The company has been audited by the federal Health Care Financing Administration (HCFA) and Maryland Insurance Administration (MIA). CareFirst also complies with Blue Cross and Blue Shield Association requirements. Before completing its Y2K readiness strategy, CareFirst worked with an outside advisor to confirm the appropriateness of its Y2K readiness plans.

If you have any further questions or concerns regarding CareFirst's Y2K readiness, please contact your broker representative. A general statement on CareFirst's Y2K readiness status is also available on our Web site: www.carefirst.com.