The Hawaii Medical Service Association (HMSA) and Healthways (NASDAQ: HWAY) today announced a new 10-year agreement transferring HMSA's integrated health management functions and its HealthPass and other health and wellness programs to Healthways. The two organizations will also work jointly to further the development and implementation of the HMSA's state-wide patient-centered medical home initiative.

Under the terms of the agreement, Healthways will assume responsibility for HMSA's disease management, care management, pharmacy benefit management, and health promotion, prevention and quality improvement solutions and functions for the plan's approximately 700,000 individual, commercial and government-sponsored members.

?This is an important part of our effort to provide our members the best quality, most affordable health care in the nation,? said Robert P. Hiam, president and CEO of HMSA. ?Utilizing Healthways' nationally recognized expertise in health management and health coaching enables HMSA to streamline our core business functions, expand patient support services for our providers and continue working to create an economically sustainable health care delivery system in Hawaii,? Hiam added.

Healthways has been delivering HMSA's health coaching and CareConnection chronic disease programs for the past decade from its facility in Kapolei, Hawaii where it maintains a clinical and operations staff of approximately 60 employees.

Michael A. Gold, HMSA executive vice president and COO said,?HMSA and Healthways have a long history of jointly developed and implemented innovations designed to improve the health and well-being of our members while reducing the cost of care. Our new arrangement will enable us to put more focus on supporting the patient-physician relationship and is a major step forward in pursuit of our goal to have the healthiest members in the nation by providing them with the country's most affordable, highest quality health care and best customer experience.?

HMSA will also transfer operations of HMSA subsidiary Integrated Services, Inc. (ISI) to Healthways. ISI provides health, wellness and prevention support to HMSA employer groups, health care providers and members. Approximately 125 HMSA and ISI employees will be offered positions by Healthways. The company will also assume responsibility for HMSA's current health research functions.

?Hawaii's #1 state ranking in the Gallup-Healthways Well-Being Index is not an accident,? said Ben R. Leedle, Jr., Healthways CEO. ?HMSA's continual focus on improving the health and health care for its members and customers, and the processes of care delivery for its providers is reflected in that result. We are proud to have been part of helping HMSA in that effort over the past decade but the work of maintaining the #1 ranking is never done. The data collected by the Well-Being Index identifies areas of opportunity, particularly with respect to helping employers across the state further realize the individual and corporate performance benefits associated with improved well-being.?

?In the post-health care reform environment, the challenges facing America's health care system are well understood,? Leedle added. ?More importantly, there is growing recognition among all stakeholders that the best solutions will be based on collaborative efforts that help individuals, wherever they may be on the health continuum, avoid the next episode of care; and, when care is needed, assure that it's provided effectively, efficiently and by health care professionals who are able to maximize their training and capabilities. But we will not just be integrating services; we will also be further integrating those services with the delivery system. By doing so, we will be actively removing historic system barriers to achieving those goals and providing time-tested, proven solutions that will improve the health and well being of members, improve both member and provider satisfaction with the care experience and, as a result, reduce the cost of care and improve individual and organizational performance.?

?Over our 10-year relationship with HMSA, we continually have been impressed by their leaders' focus on innovation and their willingness to jointly develop approaches to improve the health and reduce the cost of care for their members and customers,? Leedle concluded. ?Both organizations long have been convinced of the real value for members and providers resulting from effective integration of services. The arrangement between us takes that integration to a new and exciting dimension. As has been the case with so many other innovations over the past decade, we are convinced that this new approach will distinguish itself as a model for the entire health insurance industry. We look forward to getting started on this next chapter of our relationship.?

About HMSA

HMSA is a nonprofit, mutual benefit association founded in Hawaii in 1938. It is governed by a community board of directors that includes representatives from health care, business, labor, government, education, clergy, and the community at large. HMSA is an independent licensee of the Blue Cross and Blue Shield Association. Nationally, HMSA and 38 other Blue Cross and Blue Shield plans provide worldwide coverage to more than 100 million members. For more information, please visit hmsa.com.

About Healthways

Healthways is the leading provider of specialized, comprehensive solutions to help millions of people maintain or improve their health and well-being and, as a result, reduce overall costs. Healthways' solutions are designed to keep healthy people healthy, reduce health-related risks and optimize care for those with chronic illness. Our proven, evidence-based programs provide highly specific and personalized interventions for each individual in a population, irrespective of age or health status, and are delivered to consumers by phone, mail, internet and face-to-face interactions, both domestically and internationally. Healthways also provides a national, fully accredited complementary and alternative Health Provider Network and a national Fitness Center Network, offering convenient access to individuals who seek health services outside of, and in conjunction with, the traditional healthcare system. For more information, please visit www.healthways.com. For more information about the Gallup-Healthways Well-Being Index, please visit www.well-beingindex.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 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 1A, and Part II, Item 7, of Healthways' Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and Part I, Item 2 and Part II, Item 1A of Healthways' Quarterly Report on Form 10-Q for the period ended September 30, 2010. Consequently, actual operations and results may differ materially from those expressed in these forward-looking statements. Healthways undertakes no obligation to update or revise any such forward-looking statements.

Investor Relations:
Healthways
Chip Wochomurka, 615-614-4493
Chip.Wochomurka@Healthways.com
or
Media:
Healthways
Robert Stone, 615-614-4483
Bob.Stone@Healthways.com
or
The Hawaii Medical Service Association
Elisa Yadao, 808-948-6025
elisa_yadao@hmsa.com