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Pegasystems delivers cure for healthcare industry’s .2 billion pain
with new Claims Repair solution

‘Smart’ BPM application helps reduce expensive claims exceptions handling;
provides powerful new functionality for integrated, front-to-back-office healthcare suite

CAMBRIDGE, Mass., March 15, 2004 – Pegasystems Inc. (NASDAQ: PEGA), a leading provider of smart, rules-based business process management (BPM) software, today extended its suite of industry-specific BPM applications for the healthcare industry. Continuing to execute on its promise to deliver an integrated front-to-back-office solution set, the company announced PegaHEALTH Claims Repair Version 4, designed to help healthcare payer organisations reduce operational costs by increasing first-pass claims resolution and helping to eliminate claims backlogs.

PegaHEALTH Claims Repair is the newest application in a broad suite of healthcare solutions from Pegasystems. In addition to packaged, best-practice applications to support and optimise claims processing, the company provides solutions that increase productivity and the quality of customer interactions across the enterprise, including both member and provider services. The company’s software is installed in healthcare payer organisations covering nearly 35 million individuals, including over one-fifth of the nation’s Blue Cross Blue Shield organisations. Pegasystems works with industry-leading companies, including CSC and IBM, to deliver these solutions to the healthcare market.

“Manual claims processing costs healthcare companies on the order of .2 billion each year, according to industry estimates,” said Tom Congoran, vice president, Healthcare, for Pegasystems. “Every percentage point a company can shave from expenses is that much more in potential profit. PegaHEALTH Claims Repair has been designed to do precisely that – deliver an enterprise-wide impact from a nimble platform that changes quickly to accommodate market shifts.”

For today’s healthcare payer, ongoing industry change has made claims processing an expensive, complex, and resource-intensive process. The demands of emerging consumer-driven health plans, changing federal and state mandates, and increasingly complex risk-sharing agreements between payers and providers, have all combined to push traditional claims adjudication systems to their limits. PegaHEALTH Claims Repair helps maximise the value of existing payer systems, infusing them with greater intelligence by utilising rules-based, ‘smart’ BPM to help ensure that claims adjudication occurs automatically, consistently and cost-effectively. By providing greater control over the claims process, PegaHEALTH Claims Repair enables payers to create innovative benefit designs that can help expand their product offerings and increase competitive advantage.

Automating the claims process from pre-adjudication through claims finalisation, PegaHEALTH Claims Repair applies best-practice business rules to help check, correct and translate common claims edits, such as member eligibility, timely filing or duplicate claims. The application also enables the acceptance of the “837” claims format, to assist with Health Insurance Portability and Accountability Act (HIPAA) standards compliance.

Typically, back-end healthcare payer IT infrastructures are a combination of legacy systems – membership, medical management, claims, etc. – each with its own data format, making importing data into claims processing systems both inefficient and expensive. As a result, most payers manually process 30 to 50 percent of all claims submitted. Through one-click integration forms, PegaHEALTH Claims Repair can easily integrate with core processing systems or other applications, without duplicating functionality, to extract the required data needed for claims resolution.

“With the inherent intelligence of IT systems, there’s no reason for the level of manual claims processing that healthcare companies accept today,” explained Pegasystems’ Tom Congoran. “PegaHEALTH Claims Repair harnesses that intelligence at the right level – outside the hard-coded processes – to help companies handle most of their claims automatically and put the savings back on their bottom lines.”

Blue Cross & Blue Shield of Rhode Island (BC&BSRI) executives will present a compelling profile of Pegasystems’ healthcare solutions in action when they speak at leading industry forums this week and next. Attendees at Gartner’s CRM Summit in Baltimore, March 15-17, and at the BCBSA Customer Contact Center Conference in Atlanta, March 21-24, will hear in detail about how BC&BSRI deployed its Pegasystems contact center solution in five short months, for less than million.

Platforms, availability, pricing
PegaHEALTH Claims Repair is available immediately through Pegasystems and its partners. It runs on Windows, AIX and Solaris platforms, and the IBM DB2 and Oracle databases. Contact Pegasystems or an authorised partner for pricing information.

About Pegasystems
Pegasystems Inc. (NASDAQ: PEGA) provides rules-based, smart business process management (BPM) software to large organisations, helping to deliver significant ROI and providing them with the flexibility and agility to respond to changing business needs. With annualised revenues of approximately 0 million and a blue-chip customer base, the company offers applications for the financial services, healthcare, insurance and government markets, as well as a cross-industry BPM application. Pegasystems is headquartered in Cambridge, Mass., and has regional offices in North America, Europe and the Pacific Rim. For more information, visit

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For information, contact:
Jeremy Payne
Pegasystems Europe
+44 118 965 1641

Alex Crawshaw
Pirate Communications
+44 (0)20 7760 7050

Forward-Looking Statements
Certain statements contained in this press release may be construed as “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 including, without limitation, our financial guidance with respect to 2004 revenue, profit before tax, tax rate, earnings per share and cash from operating activities. The words “believe,” “expect,” “hope,” “anticipate,” “plan” and similar expressions, among others, identify forward-looking statements, which speak only as of the date the statement was made. The Company does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause the Company's actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties in
clude volatility of our quarterly operating results, difficulty in predicting the completion of product implementations and consequently the timing of our license revenue recognition, the timing of term software license renewals, customer acceptance of our new PegaRULES Process Commander technology, our ability to develop new products and evolve existing ones, the impact on our business of the ongoing consolidation in the financial services market, historically our core market, our ability to attract and retain key employees, reliance on certain key third-party relationships, and other risks and uncertainties. Further information regarding these and other factors, which could cause the Company’s actual results to differ materially from any forward-looking statements contained in this press release, is contained in the Company’s most recent report on form 10-K and other recent filings on file with the Securities and Exchange Commission. The forward-looking statements contained in this press release represent the Company’s views as of March 15, 2004. Investors are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved. Although subsequent events may cause the Company’s view to change, the Company does not undertake and specifically disclaims any obligation to publicly update or revise these forward-looking statements whether as the result of new information, future events or otherwise. The statements should therefore not be relied upon as representing the Company’s view as of any date subsequent to the date of this release.

NOTE: Pegasystems is a registered trademark of Pegasystems Inc. Other product and company names may be trademarks of their respective owners.

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