AMERICAN SPECIALTY HEALTH PLANS BECOMES CALIFORNIA’S FIRST ACUPUNCTURE HMO, INTRODUCES CHINESE HERBAL SUPPLEMENT BENEFIT

SAN DIEGO,CA (December 2, 1997)-- American Specialty Health Plans (ASHP) announced today that it has received approval from the California Department of Corporations to offer an acupuncture and traditional Chinese herbal supplement benefit as part of its specialized health care service plan license. As a result, ASHP becomes the first California specialized health plan to receive approval for acupuncture from the California DOC. In 1994, the company, then called American Chiropractic Network Health Plan, set a milestone in the specialty HMO industry by becoming the state’s first chiropractic HMO.

“Consumers are demanding more effective options and choice in their health care coverage. They want to be in control of their health care alternatives and to have easy access to them,” said George DeVries, ASHP president and CEO. “Not only are we delivering a product that gives them these options, but we are able to provide it in a managed care setting.”

The approval of ASHP’s acupuncture HMO license came just weeks after the National Institutes of Health, a federal advisory panel, issued a report endorsing the practice of acupuncture for treating certain types of pain and nausea. Earlier this year, the World Health Organization endorsed acupuncture for the treatment of 40 different ailments, and the Food and Drug Administration (FDA) approved acupuncture needles as medical devices.

ASHP will provide the acupuncture benefit through a network of over 600 California-licensed acupuncturists servicing the entire state. ASHP credentials all providers, abiding by the applicable standards outlined by the National Committee for Quality Assurance (NCQA).

Members may go to an ASHP participating provider on a “direct-access basis,” without a referral from their primary care physician. Enrollees also have “open-access” to any participating provider and are not required to predesignate an ASHP provider at open enrollment. They may also change participating providers at any time.

California employers and Taft-Hartley trust funds may add the acupuncture benefit either through a health plan that contracts with ASHP or as a stand-alone benefit. Health Net and United Healthcare have already indicated they will provide an acupuncture benefit through ASHP in the near future. ASHP currently provides a chiropractic managed care benefit to more than a dozen full-service health plans, including eight of the state’s 10 largest HMOs.

The acupuncture benefit covers initial and subsequent examinations; office visits including acupuncture treatments (subject to annual limits); adjunctive therapeutic procedures and modalities, such as acupressure, cupping and moxibustion; radiology or clinical laboratory services; and a traditional Chinese herbal supplement annual benefit of $1,000. All services after the initial examination are reviewed by California-licensed acupuncturists and authorized based on clinical necessity. Copayments include $0, $5, $10 or $15 with annual limits of 20, 30, 40 or 50 office visits.

Revolutionary Approach to Traditional Chinese Herbal Supplements

A unique component of the acupuncture benefit is the inclusion of traditional Chinese herbal supplements. ASHP is one of the first health plans in the nation to provide traditional Chinese herbal supplements as a covered benefit. Approximately 100 Chinese herbal combinations are available to members from ASHP.

ASHP’s distributor for traditional Chinese herbal supplements is American Specialty Health Products, an affiliate of ASHP. American Specialty Health Products has entered into a mutually exclusive agreement with Sun Ten Laboratories, of Irvine, California, and Taiwan to provide its herbal supplements. Sun Ten is the world’s leading manufacturer of traditional Chinese herbal supplements, distributing Chinese herbal products into six continents and 22 countries. Sun Ten Laboratories is the only Asian manufacturer of traditional Chinese herbal supplements with a full manufacturing facility in the United States.

Sun Ten will manufacture ASHP’s traditional Chinese herbal supplements at its Irvine facility. Sun Ten also produces “private label” vitamins and nutritional supplement products which are distributed through 36,000 stores in the United States.

Sun Ten’s vertically integrated process controls production from harvesting herbs from Asian farms and purifying the herb extracts to manufacturing the herb products in capsule or tablet form and packaging. Sun Ten uses an innovative procedure to manage each segment of the production process, thereby controlling and maintaining the consistency and quality of traditional Chinese herbal supplements.

Dr. Steven Paul, vice president of sales and marketing at Sun Ten, said, “Sun Ten is impressed with the extraordinary success, quality and track record of ASHP as a specialty HMO. Sun Ten has been committed to delivering the highest quality traditional Chinese herbal supplements since we started 52 years ago in Taiwan. Sun Ten and ASHP share a common vision of the future and a common commitment to quality, safety, effectiveness and efficiency.”

American Specialty Health Products will distribute the herbal supplements to members through a mail order process.

“There was nothing on the market that offered the delivery system for traditional Chinese herbal supplements that we needed, so we created a distribution company,” DeVries said. “By bringing the fulfillment process under our distributor, we can enhance the quality, timeliness and safety for our members.” He added that the herbal supplements, along with member education information, will be delivered to members’ homes within 24 to 72 hours of approval by ASHP.

“Our information systems are set up to interface with the authorization process and to track inventory and delivery,” DeVries said. “We hope in the future to provide the Sun Ten herbal products through a network of pharmacies and other outlets with which ASHP will contract.”

ASHP to Offer Three Benefit Programs

With the addition of acupuncture and traditional Chinese herbal supplements, ASHP now offers three benefit programs: 1) a chiropractic benefit, 2) an acupuncture benefit with traditional Chinese herbal supplements, and 3) a complementary health benefit that includes both chiropractic and acupuncture/herbal supplements.

In addition to the services covered under the acupuncture benefit, the complementary health benefit includes initial and subsequent chiropractic examinations; chiropractic office visits and adjustments; chiropractic therapeutic procedures and modalities, such as ultrasound, electric muscle stimulation, and hot and cold packs; and a $50 annual chiropractic appliance benefit. The annual office visit limit applies to any combination of chiropractic and/or acupuncture visits.

ASHP currently covers 1.8 million members under its chiropractic HMO, making it the third largest specialty HMO in the state out of approximately 60 dental, vision, mental health, and chiropractic HMOs. ASHP expects to begin 1998 with a significant increase in HMO enrollment to over 3 million members.

ASHP provides a chiropractic HMO benefit to the following health plans: Aetna/US Health Care, Blue Shield HMO, Blue Cross/CaliforniaCare Health Plans, CIGNA Health Care, Health Net, Health Plan of the Redwoods, HMO California, Kaiser Foundation Health Plan, One Health Plan, PacifiCare, Prudential HealthCare Plan, Sharp Health Plan, United HealthCare, and Universal Care.

AMERICAN SPECIALTY HEALTH PLANS, INC. FACT SHEET

• ASHP is California's first Chiropractic HMO, licensed by the California Department of Corporations as a "specialized health care service plan" in 1994.
• ASHP is California's first Acupuncture HMO, licensed by the California Department of Corporations.
• ASHP is one of the first specialty or full service Health Plans in the US to offer Traditional Chinese Herbal Supplements as a Covered Service.
• ASHP offers chiropractic, acupuncture/herbal supplement and complementary health benefit plans to full service health plans, employer groups, Taft-Hartley trust funds, and other buying groups.
• ASHP contracts with over 1,500 participating chiropractors and over 600 acupuncturists in California.
• ASHP's benefit plans allow direct access to participating chiropractors or acupuncturists without referral from a primary care physician.
• ASHP's benefit plans allow open access to participating chiropractors or acupuncturists. The member may select any participating provider at the point-of-service and may change participating providers at any time without ASHP approval.
• ASHP manages the delivery of services through a system of peer review which requires pre-authorization of all services by participating providers.
• ASHP credentials all participating providers, abiding by the applicable NCQA standards and processes.
• ASHP offers a full range of benefit plans including annual office visit limits of 20, 30, 40, or 50 visits per year with copayments ranging from $0 to $15 per office visit.
• ASHP offers access to a benefit plan for Traditional Chinese Herbal Supplements which will include approximately 100 approved herbal supplements.
• ASHP is the largest chiropractic HMO in America, covering 3 million Californians in its specialty HMO (as of January 1, 1998).
• ASHP is the third largest specialty HMO in California, behind Delta Dental and Vision Service Plan (out of approximately 60 specialty plans).
• ASHP's sister company, American Specialty Networks, covers over 1.5 million Californians in ASO managed PPO and EPOs, another 3 million Californians in unmanaged PPO plans and 1 million Californians in various Worker's Compensation programs.
• ASHP has over 300 employees (1/98) in its San Diego offices and expects to post over $70 million in revenues in 1998.
• ASHP provides chiropractic benefit plans for such California Health Plans as Aetna/US Health Care, Blue Shield HMO, Blue Cross/CaliforniaCare, CIGNA Health Care, Health Net, Health Plan of the Redwoods, HMO California, Kaiser Foundation Health Plan, One Health Plan, PacifiCare, Prudential, United Health Care and Universal Care.