American Healthways, Blue Cross/Blue Shield Minnesota Announce Ten-Year Agreement for Population Health Management Services.

Business Editors/Health & Medical Writers

NASHVILLE, Tenn. & MINNEAPOLIS--(BUSINESS WIRE)--Dec. 10, 2001

Strategic Relationship Marks Industry First

in Providing Expanded Care Enhancement Programming

Tom Cigarran, Chairman and CEO of American Healthways' (Nasdaq/NM:AMHC) and Mark Banks, MD, CEO of Blue Cross and Blue Shield Minnesota (BCBSMN) today announced a 10-year strategic alliance designed to close the gaps in care recently identified by the National Science Foundation's Institute of Medicine in its Crossing the Quality Chasm report as the principal causes of poor health outcomes.

Under the terms of the landmark agreement, the organizations will embark on a cooperative effort to create the nation's first comprehensive, integrated, outcomes-focused care enhancement strategy and to deliver the resulting programs, ultimately to all plan members.

"This agreement represents an industry first in that BCBSMN will be providing outcomes-focused care enhancement services that go beyond chronic diseases. As a result, employers who contract with BCBSMN will, for the first time, have the opportunity to receive these care enhancement services, not just for those employees with chronic diseases, but also for those with impact conditions that can significantly affect a person's quality of life." Cigarran said. "We are extremely pleased to have a health plan with the stature, reputation and demonstrated capacity for innovation of Blue Cross and Blue Shield of Minnesota as our strategic partner in this effort to comprehensively address the gaps in health care."

The joint effort will begin on March 1, 2002 with a timed rollout of American Healthways' MyHealthways(SM) total population health management services. The MyHealthways(SM) program will initially provide comprehensive and integrated programs to nearly one million Blue Cross fully insured and self-insured members in Blue Plus, Blue Cross' Managed Care Plan, including specifically members with diabetes, coronary artery disease, congestive heart failure, chronic obstructive pulmonary disease, asthma and end-stage renal disease. Full implementation of these programs is expected to be completed by the end of June at which time implementation of programming will begin for members who have one or more of 11 Impact Conditions such as atrial fibrillation, low back pain, osteoarthritis, and osteoporosis.

"Blue Cross and Blue Shield of Minnesota prides itself on its nearly 70-year commitment to innovative initiatives designed to improve the health care services we provide to our members. The transition from utilization management to outcomes-focused care is long overdue," said Mark Banks, CEO of BCBSMN. "Because we share the national concern with respect to rising health care costs, perceptions of decreasing quality and service, and increasing skepticism about the efficacy of traditional cost containment activities, we are excited to join with American Healthways in this pioneering and innovative effort to provide significant benefit to our members, our physician network and our customers."

"An undertaking of this scale required us to find a true strategic partner, not simply a vendor of services," Banks added. "American Healthways shared our vision, had the breadth of essential programs and the large health plan integration experience, program results, platform scalability, and outcomes focus we believe are critical success factors for this initiative."

All members in care enhancement programs will also be supported by the Company's CareSteps(SM) personal health information program. In addition, all Blue Cross members covered by the agreement will be supported by the MMIQ(SM) neural-net predictive modeling application. For those members receiving disease-specific services, CareSteps(SM) and MMIQSM will enable enhanced risk stratification and more effective matching of interventions with patient needs. For all other members, the programs will identify those who are at high risk for short-term health status compromise, thereby enabling those members and their physicians to initiate effective, pro-active interventions to minimize or eliminate the predicted cost or utilization impact.

All programming provided to the approximately one million initially eligible Blue Cross members will also be made available to BCBSMN's other self-insured customers - representing another potential 1.2 million members - who elect to include the programs in their benefits package.

In addition to providing services in support of BCBSMN members and network physicians, the agreement calls for American Healthways to provide a dedicated, nurse call center and field-based team in the Minneapolis area. As previously announced, the development work on the new call center has already begun. The agreement also provides for both organizations to work cooperatively on the development of additional programs and initiatives to support the overall strategic objective. Program components and outcomes will be validated by the Johns Hopkins Outcomes Verification Program announced last June. Additional input in support of this effort will be sought from the National and Minnesota Business Coalitions on Health, participating Minnesota employers, and leading physicians and hospitals in the BCBSMN network.

The agreement between American Healthways and Blue Cross and Blue Shield of Minnesota is the outgrowth of a discussion held several months ago between David W. Plocher, MD and Dr. Banks. Dr. Plocher is a Vice President in Cap Gemini Ernst & Young's Health consulting practice, the largest health consulting organization in the nation. "The scope of this agreement is the largest and most comprehensive in the history of the disease management industry," Plocher said, "More important, the focus on improving health outcomes will fundamentally change the way care is delivered by escalating attention on the patients, helping them manage their chronic conditions, and supporting the doctor-patient relationship. We believe this relationship will come to serve as a model for health plans nationwide."

Blue Cross and Blue Shield of Minnesota was chartered in 1933 as Minnesota's first health plan and continues to carry out its charter mission: to promote wider, more economical and timely availability of health services for the people of Minnesota. Under the parent organization, Aware Integrated, Inc., Blue Cross and its affiliates serve approximately 2.1 million members through a variety of health coverage plans for organizations and individuals. Blue Cross is an independent licensee of the Blue Cross and Blue Shield Association, headquartered in Chicago.

This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. In order for the Company to utilize the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, investors are hereby cautioned that these statements may be affected by the important factors as described in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission, as well as by, among other factors, the Company's ability to implement the anticipated number of contracted lives within time frames contemplated by the Company and the ability to maintain the number of covered lives anticipated to be enrolled in the BCBSMN programs. The Company undertakes no obligation to update or revise any such forward-looking statements.

Nashville-based American Healthways (www.americanhealthways.com ) is the nation's leading provider of specialized, comprehensive care enhancement services to health plans, physicians and hospitals. The Company's programs have been recognized for innovation and excellence, most recently by the Disease Management Association of America's 2001 Comprehensive Disease Management Company Leadership Award. American Healthways has contracts to provide disease and care management programs to health plans with approximately 500,000 equivalent member lives in all 50 states, the District of Columbia, and Puerto Rico. The company also operates diabetes management programs in hospitals nationwide.