American Healthways, Blue Cross and Blue Shield of Kansas City Extend Term, Expand Agreement to Include PPO.

NASHVILLE, Tenn. -- American Healthways, Inc. (Nasdaq: AMHC) today announced the expansion of its contract with Blue Cross and Blue Shield of Kansas City (BCBSKC) to provide diabetes and cardiac disease management programs to the health plan's eligible PPO members as well as an extension of the existing contract term to Jan. 1, 2007.

American Healthways has been delivering diabetes and cardiac disease management services to HMO customers of BCBSKC since June 2000, a relationship that was renewed last year. The contract expansion, which was effective Jan. 1, 2005, includes services for those eligible from the health plan's 80,000 members in the large group segment of BCBSKC's PPO product.

"American Healthways has consistently provided quality support services to our members and the physicians in our network," said BCBSKC Chief Medical Officer and Senior Vice President Frank J. DiTirro, PhD., M.D. "Our experience tells us that our partnership with American Healthways has positively impacted the health of our members participating in their diabetes and cardiac programs, and we were eager to extend those programs to even more of our members."

American Healthways is focused on helping people with chronic diseases and health conditions, their families and their physicians bridge the gaps in the health care system through education, coordination and continuing support. The Company has contracts with more than 50 health plans throughout the country, including 18 independent Blue Cross and Blue Shield plans, and is committed to improving health outcomes, improving patient and physician satisfaction, improving workforce productivity and reducing health-care costs.

"The extension and expansion of our relationship with BCBSKC is a testament to our commitment to customer service and to the value of our programs," said Ben R. Leedle Jr., president and CEO of American Healthways. "We certainly value BCBSKC as a customer and look forward to continuing our work with them and with their members and physicians to help close the gaps in health care."

About Blue Cross and Blue Shield of Kansas City

Blue Cross and Blue Shield of Kansas City, the largest not-for-profit health insurer in the state and the only not-for-profit health insurer in Kansas City, has been part of the Kansas City community since 1938. BCBSKC provides health coverage to more than 880,000 residents in the greater Kansas City metro area and Northwest Missouri. Blue Cross and Blue Shield of Kansas City is an independent licensee of the Blue Cross and Blue Shield Association.

About American Healthways

American Healthways is the nation's leading and largest provider of specialized, comprehensive disease management, care enhancement and high-risk health management services proven to improve the quality of health care and lower costs. As of Nov. 30, 2004, the Company had over 1.4 million lives under management nationwide. For more information, visit www.americanhealthways.com.

Safe Harbor Provisions

This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. In order for American Healthways 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, among others, included in the discussion in Part I, Item 1, and Part II, Item 7, of American Healthways' Annual Report on Form 10-K for the fiscal year ended August 31, 2004. Consequently, actual operations and results may differ materially from those expressed in these forward-looking statements. American Healthways undertakes no obligation to update or revise any such forward-looking statements.