New IBM Service Automates Healthcare Insurance Claims Processing; Enables Customized Policies for Subscribers

IBM Strategic Alliance with deNovis Inc. eliminates paperwork, speeds payments to
physicians and hospitals while cutting cost as much as 50 percent

WHITE PLAINS, N.Y. & Lexington, Mass. June 13, 2002 –
IBM today announced it is offering healthcare insurance companies a fully automated, computing service
that electronically reads and processes claims much faster and at less cost over the Internet.

The new service will enable insurers to greatly reduce
paperwork while offering millions of subscribers the option of more flexible, customized
policies including those that emphasize wellness and preventive care programs. Using the service,
insurers can also offer subscribers more online help and respond to customer inquiries over the Internet.

The first insurer using the claims processing system will
be Empire Blue Cross and Blue Shield with 4.7 million subscribers.

The new claims processing system service is part of IBM’s
strategy to deliver e-business on demand, which enables customers to acquire standardized
business processes, applications and infrastructure over the Internet as a service. The
new claims processing system extends the e-business on demand capability to the healthcare
industry, making a key business process accessible as a fully managed hosted option
running on IBM’s e-business infrastructure.

If widely adopted by healthcare insurance carriers the
service could save as much as 50 percent of the estimated $250 billion or more annually
spent nationwide on the labor-intensive, paper-based processing of healthcare claims.
Insurance companies could process claims and make payments to physicians, hospitals and
pharmacies in real time at any time.

The IBM service will use application software from deNovis
Inc., of Lexington, MA, running on IBM e-business infrastructure. IBM and deNovis have
signed a strategic alliance. The deNovis software has the ability to electronically read
policy statements, rules and regulations and make appropriate payments automatically. This
ability enables carriers to offer customized policies tailored to each family member.

“This is a model for insurance companies to follow in
cutting their administration costs by as much as 50 percent, saving billions of
dollars,” said Russell Ricci, MD and general manager of IBM Global Healthcare.
“Empire Blue Cross and Blue Shield is a leader in using IBM’s service to offer
subscribers more flexible policies and access to more information. Reducing skyrocketing
administration costs and encouraging wellness and preventive care programs are key
elements in holding the line on the nation’s $1.4 trillion healthcare bill.”

According to deNovis Chairman Jerilyn P. Asher,
“deNovis’ language-based processing technology represents a critical breakthrough for
the entire healthcare benefits industry. We are confident we can help Empire meet its
dynamic vision of innovation and consumer friendliness.”

In addition to claims management, other healthcare insurance activities such as benefit
selection, customer service, premium billing, group support and member enrollment will be accomplished faster
and at lower cost using the new IBM service and the deNovis software.

Under the IBM and deNovis strategic alliance, deNovis will
optimize its transaction processing applications and data warehouse infrastructure to IBM
eServer pSeries® on AIX® and zSeries® computing platforms, IBM’s DB2® database
software and IBM’s WebSphere® infrastructure software. IBM will use its worldwide
marketing force to recommend the deNovis technology to the health insurance marketplace.
IBM Global Services will provide integration and implementation services.

Empire’s preference for mainframe processing power, for example, led to the selection of
IBM’s WebSphere Application Server running on the highly reliable and available IBM eServer zSeries.

As part of the agreement with Empire, IBM and Empire will
jointly develop and maintain the company’s core applications, including software
enhancements, fixes, testing and extensive modernization projects. In addition, IBM will
provide support services for Empire’s data center functions and the company’s technical
support help desk. Financial terms of the agreement were not disclosed.

About IBM Healthcare and IBM Global Services

IBM is in the forefront of improving how healthcare
organizations deliver efficient, high quality care. IBM, in combination with its global
network of business partners and strategic alliances, delivers powerful e-business
technology and comprehensive services that help healthcare organizations achieve success.
IBM Global Services is the world’s largest information technology services provider, with
about 150,000 professionals serving customers in 160 countries and annual revenue of $35
billion (2001). IBM Global Services integrates IBM’s broad range of capabilities —
services, consulting, hardware, software and research — to help companies of all sizes
realize the full value of information technology. For more information please visit

About deNovis Inc.

deNovis, founded in 1999 as eHealthDirect, provides
advanced technologies for claims processing and information management to the health care
benefits administration marketplace. deNovis’ dynamic, language-based transaction
technology enables health plans to dramatically reduce administrative costs, expand their
range of products and services and provide the levels of customer service demanded by
providers, employers and consumers. deNovis is backed by UK-based 3i and US-based
investors Advanced Technology Ventures, Audax Group, Psilos, Utah Ventures, and JP Morgan
Partners. The company is headquartered in Lexington, Massachusetts. Visit

About IBM e-business on demand

IBM offers a variety of e-business on demand services for
customers, including managed hosting, e-commerce, e-procurement, remote network management
and managed storage. IBM e-business on demand services represent the next stage in
computing, in which applications, infrastructure and business processes are delivered on
demand over the network as a utility-like service. For more information on IBM e-business
on demand services, visit:

About IBM PartnerWorld for Developers

PartnerWorld for Developers is the developer resource for
IBM Business Partners. It is a worldwide program designed to help software developers
reach broader markets, lower their costs of doing business, and take their products to
market faster. For more information, visit
, or call 1-800-627-8363 in North America, 1-770-835-9902 outside
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