This Notice of Privacy Practices applies to Discount Diabetic's mail order customers

This notice describes how medical information about you may be used and disclosed and how you can get access to this information. Please review it carefully.

Discount Diabetic considers personal information to be confidential. We protect the privacy of that information in accordance with federal and state privacy laws, as well as our own company privacy policies.

This notice describes how we may use and disclose information about you in providing you healthcare services, and it explains your legal rights regarding the information.

When we use the term "personal information," we mean financial, health and other information about you that is nonpublic, and that we obtain so we can provide you with insurance coverage. By "health information," we mean information that identifies you and relates to your medical history (i.e., the health care you receive or the amounts paid for that care).

This notice will become effective on April 14, 2003.

How Discount Diabetic Uses and Discloses Personal information.
In order to provide you with healthcare services, we need personal information about you, and we obtain that information from many several different sources - particularly your benefits plan sponsor, your Medicare benefits administrator, your private insurance company or supplemental insurance company, third-party administrators (TPAs), and other health care providers such as your doctor. In providing you healthcare services and providing mail order services, we may use and disclose personal information about you in various ways, including:

Health Care Operations: We may use and disclose personal information during the course of running our health business - that is, during operational activities such as quality assessment and improvement; licensing; accreditation by independent organizations; performance measurement and outcomes assessment; health services research; and preventive health, disease management, case management and care coordination. For example, we may use the information to provide disease management programs for members with specific conditions, such as diabetes, asthma or heart failure. Other operational activities requiring use and disclosure include administration of reinsurance and stop loss; underwriting and rating; detection and investigation of fraud; administration of pharmaceutical programs and payments; transfer of policies or contracts from and to other health plans; facilitation of a sale, transfer, merger or consolidation of all or part of Discount Diabetic with another entity (including due diligence related to such activity); and other general administrative activities, including data and information systems management, and customer service.

Payment: to help pay for your covered services, we may use and disclose personal information in a number of ways - in conducting utilization and medical necessity reviews; coordinating care; determining eligibility; determining formulary compliance; collecting premiums; calculating cost-sharing amounts; and responding to complaints, appeals and requests for external review. For example, we may use your medical history and other health information about you to decide whether a particular treatment is medically necessary and what the payment should be - and during the process, we may disclose information to your provider. We also use personal information to obtain payment for any mail order services provided to you.

Treatment: We may disclose information to doctors, dentists, pharmacies, hospitals and other health care providers who take care of you. For example, doctors may request medical information from us to supplement their own records. We also may use personal information in providing mail order services and by sending certain information to doctors for patient safety or other treatment-related reasons.

Disclosure to Other Covered Entities: We may disclose personal information to other covered entities, or business associates of those entities for treatment, payment and certain health care operations purposes. For example, we may disclose personal information to other health plans maintained by your employer if it has been arranged for us to do so in order to have certain expenses reimbursed.

Additional Reasons for Disclosure
We may use or disclose health information about you in providing you with treatment alternatives, treatment reminders, or other health-related benefits and services. We also may disclose such information in support of:

• Plan Administration - to your employer, when we have been informed that appropriate language has been included in your plan documents.
• Research - to researchers, provided measures are taken to protect your privacy.
• Business Associates - to persons who provide services to us and assure us they will protect the information.
• Industry Regulation - to state insurance departments, boards of pharmacy, U.S. Food and Drug Administration, U.S. Department of Labor and other government agencies that regulate us.
• Law Enforcement - to federal, state and local law enforcement officials.
• Legal Proceedings - in response to a court order or other lawful process.
• Public Welfare - to address matters of public interest as required or permitted by law (i.e., child abuse and neglect, threats to public health and safety, and national security).

Disclosure to Others Involved in Your Health Care
We may disclose health information about you to a relative, a friend, the subscriber of your health benefits plan or any other person you identify, provided the information is directly relevant to that person's involvement with your health care or payment for that care. For example, if a family member or a caregiver calls us with prior knowledge of a claim, we may confirm whether or not the claim has been received and paid. You have the right to stop or limit this kind of disclosure by calling the toll-free number 480-314-0181.

If you are a minor, you also may have the right to block parental access to your health information in certain circumstances, if permitted by state law. You can contact us using the toll-free number 480-314-0181.

Uses and Disclosures Requiring Your Written Authorization
In all situations other than those described above, we will ask for your written authorization before using or disclosing personal information about you. If you have given us an authorization, you may revoke it at any time, if we have not already acted on it. If you have questions regarding authorizations, please call the toll-free number 480-314-0181.

Your Legal Rights
The federal privacy regulations give you the right to make certain requests regarding health information about you. You may ask us to:

• Communicate with you in a certain way or at a certain location. For example, if you are covered as an adult dependent, you might want us to send health information to a different address from that of your subscriber. We will accommodate reasonable requests.
• Restrict the way we use or disclose health information about you in connection with health care operations, payment and treatment. We will consider, but may not agree to, such requests. You also have the right to ask us to restrict disclosures to persons involved in your health care.
• Obtain a copy of health information that is contained in a "designated record set" - medical records and other records maintained and used in making enrollment, payment, claims adjudication, medical management and other decisions. We may ask you to make your request in writing, may charge a reasonable fee for producing and mailing the copies and, in certain cases, may deny the request.
• Amend health information that is in a "designated record set." Your request must be in writing and must include the reason for the request. If we deny the request, you may file a written statement of disagreement.
• Provide a list of certain disclosures we have made about you, such as disclosures of health information to government agencies that license us. Your request must be in writing. If you request such an accounting more than once in a 12-month period, we may charge a reasonable fee.

You may make any of the requests described above, or may request a paper copy of this notice, by calling the toll-free number 480-314-0181.

You also have the right to file a complaint if you think your privacy rights have been violated. To do so, please follow the complaint procedures on our Web site at www.discountdiabetic.com . You also may write to the Secretary of the U.S. Department of Health and Human Services. You will not be penalized for filing a complaint.

Discount Diabetic's Legal Obligations
The federal privacy regulations require us to keep personal information about you private, to give you notice of our legal duties and privacy practices, and to follow the terms of the notice currently in effect.

This Notice is Subject to Change
We may change the terms of this notice and our privacy policies at any time. If we do, the new terms and policies will be effective for all the information that we already have about you, as well as any information that we may receive or hold in the future.

Please note that we do not destroy personal information about you when you terminate your coverage with us. It may be necessary to use and disclose this information for the purposes described above even after your coverage terminates, although policies and procedures will remain in place to protect against inappropriate use or disclosure.

If you have questions regarding this notice, please contact Discount Diabetic's Legal Support Services Department by mail at 15255 N 40th Street. Suite 119, Phoenix , AZ 85032 ; by phone at 480-314-0181; or by fax at 480-314-0184. Include your name, phone and fax number.