PURCHASE, N.Y. & BALTIMORE, Mar 21, 2005 (BUSINESS WIRE) -- Nutrition 21, Inc. (NXXI:NASDAQ) and XLHealth Corporation announced today an agreement in principle for a program that will make Diachrome(R) available to physicians for people with diabetes participating in the Center for Medicare and Medicaid (CMS) sponsored Chronic Care Improvement Program (CCIP) in Tennessee. The state ranks 2nd in the nation with persons diagnosed with diabetes, and spends approximately $3.6 billion on direct and indirectly associated health care costs.
 
The CCIP is the first large-scale chronic care improvement initiative under the Medicare fee-for-service (FFS program). "We are excited about the opportunity to include Diachrome in this important health initiative for people with diabetes," said Patrick Hervy, chairman and chief executive officer of XLHealth. "We have seen from our past work with Nutrition 21 that Diachrome can in many cases be a valuable complement to managing beneficiaries diagnosed with diabetes, and we would like to extend these benefits to the physicians and patients who will be participating with us in our CCIP in Tennessee."

According to the Tennessee Department of Health, Bureau of Health Informatics, an estimated 417,000 state residents suffer with diabetes. XLHealth's CCIP, created by Congress as part of the 2004 Medicare Modernization Act, will begin to address the need for diabetes management by reaching out to 20,000 Medicare beneficiaries in Tennessee who are living with diabetes and heart failure.

Diachrome, a nutritional supplement specifically formulated for people with diabetes, is a patented combination of chromium as chromium picolinate and biotin. "Several years ago we entered into an alliance with XLHealth to conduct a study to validate the benefits of Diachrome as a nutritional adjunct therapy to diabetes care in large populations with diabetes," commented Gail Montgomery, president and CEO of Nutrition 21. "Today we are pleased to know that we will be working with XLHealth and directly with physicians who will be making the product available in Tennessee. As we present and publicize the new Diachrome study results at upcoming medical conferences, we expect to replicate this model of adoption with other strategic partners who are responsible for reducing the public health burden associated with the epidemic of diabetes in the United States. "

Details of the sales agreement and the use of the Diachrome(R) product are being finalized over the coming months, as XLHealth completes its contract with CMS and develops final operating protocols based on input from the Tennessee Medical Association, local physician advisory boards and the Tennessee State Medicaid office

About the Chronic Care Improvement Programs

Chronic Care Improvement Programs are an important component of the Medicare Modernization Act and demonstrate a commitment to improving and strengthening the traditional fee-for-service (FFS) Medicare program. CMS selected XLHealth to offer self-care guidance and support to 20,000 chronically ill beneficiaries in Tennessee. XLHealth will help beneficiaries manage their health, adhere to their physicians' plans of care, and assure that they seek or obtain medical care that they need to reduce their health risks.

About Nutrition 21

Nutrition 21 is a nutritional bioscience company and the maker of chromium-based supplements with health benefits substantiated by clinical research. The company markets Chromax(R) chromium picolinate, which is the most-studied form of the essential mineral chromium. Nutrition 21 also developed Diachrome(R), which is available through diabetes educators or at www.diachrome.com. Nutrition 21 holds 36 patents for nutrition products and uses, 27 of which are for chromium compounds and their uses. More information is available at www.nutrition21.com.

About XLHealth Corporation

XLHealth (www.xlhealth.com) is a privately held company owned by a combination of founders, management and Goldman Sachs Private Equity Funds. It has been at the forefront of disease management innovations since its inception. Founded by physicians, many of whom were affiliated with Johns Hopkins, XLHealth replaces the more customary remote telephone "call-center" or direct mail support with ongoing, face-to-face meetings with patients and physicians. XLHealth also uses tight coordination of care, behavior modification, and in-depth patient profiling integrated with claims, pharmacy, and lab information to generate sophisticated, predictive modeling. The firm emphasizes preventing avoidable and expensive disease complications and hospitalizations. XLHealth was recently awarded the Disease Management Association of America's (DMAA) Recognizing Excellence Award for "Best Disease Management Program: Medicare."

The statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays beyond the company's control with respect to market acceptance of new technologies and products, delays in testing and evaluation of products, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.