SIE Sierra Health Svcs

State Cancels Request for Proposal; Cites "Calculation Errors" in Bid Process Sierra Health Services Inc. (NYSE:SIE) announced today that it has received notice from the Purchasing Division of the State of Nevada, Department of Administration (DOA), that contracts with the state's Division of Healthcare Financing and Policy (DHCFP) to provide certain Medicaid services, beginning July 1, 2006, have been rescinded and will be reopened to a new bid at a later date. This action has been taken in response to a reported error in the state's calculation of responses to the request for proposal (RFP) from various bidders, as well as the composition of the evaluation panel and the instructions it received. Sierra's current contract to provide certain Medicaid services remains in effect. On Nov. 10, 2005, Sierra announced that it had received notice from the DHCFP of its intent to award a contract to Health Plan of Nevada Inc. (HPN) as one of two Medicaid managed care contractors in the state of Nevada. On Dec. 20, 2005, HPN received final confirmation of the contract award. A notice rescinding the award was received thereafter without explanation regarding the calculation error. "The company has been a strong partner with the state for many years," said Anthony M. Marlon, M.D., chairman and chief executive officer of Sierra. "In 2004, HPN received a 100% compliance score on the state's quality and performance audit, and received a 98% score in 2002 and 2000. In fact, Health Plan of Nevada's performance has been so strong that the state waived the audit requirements for 2005. We expect the state will resolve any technical issues surrounding the RFP, and we intend to pursue the new contract." HPN currently has a contract with the DHCFP to provide health care coverage to certain Medicaid-eligible individuals and uninsured children who do not qualify for Medicaid. As of Sept. 30, 2005, HPN had approximately 40,700 members enrolled in its HMO Medicaid risk program, which includes the Temporary Assistance for Needy Families and the Children's Health Assurance Program. HPN also covers an additional 12,600 uninsured children who do not qualify for Medicaid under the Nevada Check Up program. HPN receives a monthly fee for each Medicaid and Nevada Check Up member enrolled by the state's managed care division and also receives a per case fee for each Medicaid and Nevada Check Up eligible newborn delivery. In total, as of Sept. 20, 2005, HPN had 53,300 Medicaid members. Sierra Health Services Inc., based in Las Vegas, is a diversified health care services company that operates health maintenance organizations, indemnity insurers, preferred provider organizations and multi-specialty medical groups. Sierra's subsidiaries serve over 600,000 people through health benefit plans for employers, government programs and individuals. For more information, visit the company's Web site at www.sierrahealth.com.