SUBJECT:

PacifiCare Contract Negotiations

I want to advise you of a potential issue if you are a current PacifiCare HMO member or are planning to enroll in this health plan for 2007.

UCSD Medical Center is currently negotiating a new contract with PacifiCare. UCLA and UCSF Medical Centers are also participating in these negotiations. The three campuses have not reached an agreement with PacifiCare, and might not achieve a final contract before the close of open enrollment on November 21. The final outcome, including timing, is uncertain at this time.

If after November 21 we are still negotiating, those who have selected PacifiCare will be fully covered throughout our negotiations. If we reach a contract agreement there will be no change in member coverage.

If we are unsuccessful in our negotiations and terminate our contract, PacifiCare members could still see their UCSD physician since the UCSD Medical Group has a separate contract. However patients would be referred for hospitalization to a PacifiCare contracted hospital in San Diego, instead of UCSD Medical Center.

If we do not achieve a contract, we will notify employees who are PacifiCare members and offer a special enrollment period during which they would be able to select a different plan, such as Health Net or Blue Cross, to remain fully within the UCSD Medical Center system.

If you have questions about your health care coverage options, please review the UC open enrollment material, available online at http://atyourservice.ucop.edu, or call the Benefits Services unit of Campus Human Resources at (858) 534-2816 or Medical Center Human Resources at (619) 543-8215.

Thomas R. Leet Assistant Vice Chancellor - Human Resources