CMS and CIGNA Announce September Start of Georgia Medicare Health Support Program; American Healthways Expects Cooperative Agreement to be Accretive by End of Fiscal 2006.

NASHVILLE, Tenn. -- American Healthways, Inc. (NASDAQ: AMHC) confirmed it will participate as a subcontractor to CIGNA Health Support for the Georgia Medicare Health Support program, which CIGNA today announced will begin in September. Under the federally-sponsored program, the companies expect to provide health support services to approximately 20,000 Georgia Medicare fee-for-service beneficiaries with complex diabetes or heart failure.

"Our collaboration with American Healthways has helped us to develop industry-leading disease management capabilities," said Chris Coloian, president of CIGNA Health Support. "We look forward to extending our collaboration with American Healthways through this new initiative and to providing these important health support services to help program participants in Georgia."

American Healthways President and CEO Ben R. Leedle Jr. said CIGNA and American Healthways' proven track record of working together to improve health outcomes, health-care quality and health-care costs for people with chronic conditions will translate well in the Medicare fee-for-service population. "We are excited about the opportunity to continue our good work with CIGNA in this way, and we are confident in our ability to meet the requirements and the expectations set forth by the Centers for Medicare and Medicaid Services (CMS) in this historic effort."

CIGNA Health Support is providing the Medicare Health Support program under a cooperative agreement with CMS. CMS last year selected CIGNA as one of the organizations to take part in Phase I of Medicare Health Support. The initiative was authorized by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and is designed to offer support to Medicare fee-for-service beneficiaries with chronic conditions to help them manage their health and receive appropriate care to avoid complications. In addition to its collaboration with CIGNA Health Support on the Georgia program, American Healthways began providing services on August 1 under its own cooperative agreement with CMS directly to another 20,000 Medicare fee-for-service beneficiaries in Maryland and the District of Columbia.

American Healthways today reaffirms its previously provided financial guidance for fiscal 2005. The Company expects the MHS pilots will be accretive to its earnings per share for fiscal 2006, both for the 12 months comprising fiscal 2006 and, cumulatively, including the pilot costs incurred in the second half of fiscal 2005. As is customary, the Company intends to establish its financial guidance for fiscal 2006 in conjunction with the release of its fourth quarter and fiscal 2005 financial results on October 11, 2005.

CMS will evaluate the programs for their success in improving quality of care, promoting patient satisfaction and achieving financial targets. Each pilot must achieve at least 5 percent net cost savings versus a control group over the three years of the program. If successful, the programs could be rolled out nationally to all eligible Medicare fee-for-service beneficiaries.

Safe Harbor Provisions

This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Those forward-looking statements include all statements other than those made solely with respect to historical fact. 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, set forth below, and consequently, actual operations and results may differ materially from those expressed in these forward-looking statements. These factors include, but are not limited to: the timing and costs of implementation, and the effect, of regulations and interpretations relating to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003; the Company's ability to effect cost savings and clinical outcomes improvements under disease management and care enhancement contracts and reach mutual agreement with customers and/or CMS with respect to cost savings, or to effect such savings and improvements within the time frames contemplated by the Company; the ability of the Company's customers and/or CMS to provide timely and accurate data that is essential to the operation and measurement of the Company's performance under the terms of its health plan contracts; the ability of the Company to accurately forecast performance and the timing of revenue recognition under the terms of its health plan contracts and/or its cooperative agreement with CMS ahead of data collection and reconciliation in order to provide forward-looking guidance; the Company's ability to sign and implement new contracts for disease management and care enhancement services; the risks associated with a significant concentration of the Company's revenues with a limited number of customers; the Company's ability to renew and/or maintain contracts with its customers under existing terms or restructure these contracts on terms that would not have a material negative impact on the Company's results of operations; and the ability of the Company to implement its care enhancement strategy within expected cost estimates. Other factors that could cause operating and financial results to differ are described in the Company's annual, quarterly, or other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements following the date hereof to reflect events or circumstances occurring after the date hereof.

About American Healthways

American Healthways, Inc. is the nation's leading and largest provider of disease management, care enhancement and high-risk health management services proven to improve the quality of health care and lower costs. As of May 31, 2005, the Company had more than 1.6 million lives under management worldwide. For more information visit www.americanhealthways.com.