FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
Wednesday, August 12, 1998 Diane Landry King 301-838-5636

MAMSI ANNOUNCES SECOND QUARTER AND FIRST HALF 1998 EARNINGS, FIFTH STRAIGHT QUARTER EARNINGS HAVE OUTPERFORMED PREVIOUS YEAR

Rockville, Md. -- Mid Atlantic Medical Services, Inc. (MAMSI) (NYSE-MME), one of the mid-Atlantic region's largest managed care companies, reported its earnings today for the second quarter ending
June 30, 1998. The Company continues its quarter over quarter earnings growth, marking the fifth consecutive quarter earnings have outperformed the previous year's same quarter.

Diluted earnings per share for the first six months of 1998 was $.22 on 47,112,435 shares outstanding, compared with $.08 on 46,717,668 shares outstanding for the first half of 1997.

Revenue for the first six months of 1998 was $583.7 million, compared with $565.6 million for the same period in 1997, an increase of $18.1 million or 3.2 %. Net income for the first half of 1998 was $10.3 million, compared with $3.6 million for the first half of 1997, an increase of $6.7 million. Medical and home health patient services costs for the six months ended June 30, 1998 were $499.2 million, compared with $492.5 million for the same period in 1997. Administrative expenses for the first half of 1998 were $66.4 million, compared with $66.0 million for the same period in 1997.

Diluted earnings per share for the second quarter of 1998 was $0.08 on 47,246,079 shares outstanding, compared with $.06 per share on 46,937,950 shares outstanding for the same period in 1997.

Revenue for the second quarter of 1998 was $294.2 million, compared to $282.4 million for the same quarter in 1997, an increase of $11.8 million. Net income for the quarter was $3.6 million, compared with $2.8 million for the same period in 1997. Medical and home health patient services expenses for the second quarter of 1998 were $253.9 million, compared with $244.2 million for the same period in 1997. Second quarter 1998 administrative expenses were $33.7 million, compared with $33.3 million for the same period in 1997.

"Our earnings momentum continues to outperform the previous year's quarter for the 5th quarter in a row," said George T. Jochum, Chairman, CEO, and President. "I am confident that 1998 will be a good year for MAMSI, both in profits and most of all, in building a foundation for the future."

Membership in MAMSI's health plans continued an upward trend, reaching 1,774,600 covered lives in all products as of June 30, 1998, up from 1,687,500 on December 31, 1997, representing an increase of 87,100 covered lives or 5.2%. Of the 1998 figure, 709,600 are HMO, indemnity, and ASO plan members; and 1,065,000 are PPO members.

Membership figures for individual product categories are as follows:
Product
6-30-98 Membership
12-31-97 Membership
Increase/(Decrease)
Change
HMO/Commercial * 662,000 625,400 36,600 5.9
HMO/Medicaid 28,000 33,900 (5,900) (17.4)
HMO/Medicare 8,600 11,200 (2,600) (23.2)
ASO 11,000 11,000 0 0
Subtotal 709,600 681,500 28,100
4.1
PPO 1,065,000 1,006,000 59,000 5.9
TOTAL 1,774,600 1,687,500 87,100 5.2

* Includes indemnity members.

The Company's provider network numbered 26,843 physicians, specialists, and affiliate providers; 276 hospitals; 1,213 outpatient facilities; and 8,703 pharmacies as of June 30, 1998.

In other news, the Company announced:

· It has achieved premium rate increases on commercial, fully-insured renewal business averaging 7 % this year through July 1998. These year-to-date renewals through July represent approximately 68.5 % of that book of business.

· An increase to the previously announced stock repurchase program was made. Under the program first announced in March, the Company was authorized to repurchase as much as $20 million of MAMSI common stock prior to February 25, 1999. Earlier this month, the MAMSI Executive Committee authorized an increase in that amount by $20 million, thus authorizing a maximum repurchase of $40 million of MAMSI common stock prior to February 25, 1999. To date, the company has repurchased 653,500 shares at a cost of approximately $8,400,000 under this authorization.

· Its commitment to improve services to physicians, hospitals, and other health care providers continues.

"Overall, our weighted average premium increases continue to be over 7% and the marketplace's perception of MAMSI's quality of medical care, level of customer service and value of its products is very positive," added Mr. Jochum. "We are making excellent progress in paying claims faster and more accurately. We firmly believe that our focus on improved customer and provider service will increase our sales and membership growth and significantly improve the Company's bottom line."

Looking ahead, the Company plans to continue its focus on service, value, and sales for its members, as well as its health care providers. Targeted areas for membership growth include small and large groups in Maryland, Virginia, Washington D.C., and Delaware. In addition, service area expansion continues in West Virginia, North Carolina, and Pennsylvania.

"MAMSI continues its recovery program and we believe 1998 is going to show substantial progress in all areas," Mr. Jochum concluded. "We maintain a very positive cash flow, and are making good use of the Company's assets. In addition, our membership continues to grow, and we have good working relationships with our delivery network. We are a solid company with a great future."

Mid Atlantic Medical Services, Inc. is one of the largest managed care companies in the mid-Atlantic region, with its health plan subsidiaries covering more than 1.7 million lives in Maryland, Virginia, Washington D.C., Pennsylvania, North Carolina, Delaware, and West Virginia. The Company's internet address is www.mamsi.com.


Selected Income Statement Information

(In thousands except share amounts)
(Unaudited)

2Q 1998
2Q 1997
1st Half-YTD '98
1st Half-YTD `97
Revenue $294,225 $282,443 $583,727 $565,608
Expenses $288,496 $278,014 $567,339 $559,870
Income Before Taxes $ 5,729 $ 4,429 $ 16,388 $ 5,738
Diluted Earnings per Common Share* $ 0 .08 0.06 $ 0.22 $ 0.08
Weighted Average Shares Outstanding* 47,246,079 46,937,950 47,112,435 46,717,668

*Earnings per share and weighted average share amounts have been restated to reflect the adoption of Statement of Financial Accounting Standards No. 128, "Earnings Per Share."

MID ATLANTIC MEDICAL SERVICES, INC.
IN 000's EXCEPT PMPM AND PER SHARE
(UNAUDITED)

QUARTER ENDED
6-30-98
QUARTER ENDED
6-30-97
QUARTER ENDED
3-31-98
MEMBER MONTHS 2,063,937 2,082,000 2,043,883
MEMBER MONTHS - ASO 32,008 30,529 32,286
HEALTH PREMIUM $ 278,029 $ 267,992 $ 274,066
PMPM $134.71 $128.72 $134.09
FEE AND OTHER 6,099 4,137 5,095
LIFE AND SHORT-TERM DISABILITY 1,695 1,274 1,605
HOME HEALTH SERVICES 5,410 5,285 5,025
INVESTMENT 2,992 3,755 3,711
TOTAL REVENUE 294,225 282,443 289,502
MEDICAL EXPENSE 249,805 240,135 241,042
PMPM $121.03 $115.34 $117.93
MED LOSS RATIO 89.8% 89.6% 88.0%
LIFE AND SHORT-TERM DISABILITY 819 517 993
HOME HEALTH COSTS 4,136 4,034 4,185
ADMINISTRATIVE 33,736 33,328 32,623
ADMIN EXPENSE RATIO 11.5% 11.8% 11.3%
INCOME BEFORE TAX 5,729 4,429 10,659
TAX PROVISION 2,144 1,641 3,969
EFFECTIVE TAX RATE 37.4% 37.1% 37.2%
NET INCOME $ 3,585 $ 2,788 $ 6,690
DILUTED EPS $ 0.08 $ 0.06 $ 0.14
WEIGHTED AVE SHARES 47,246 46,938 46,979
NET MARGIN 1.2% 1.0% 2.3%
MEDICAL CLAIMS PAYABLE AT END OF PERIOD $ 115,867 $ 112,755 $ 115,712
ADDITIONAL INFORMATION:
MEDICAID PROGRAM:
PREMIUM $ 9,200 $ 26,554 $ 8,638
PMPM $109.23 $123.22 $104.92
MEDICAL EXPENSE 7,552 21,647 6,985
PMPM $ 89.66 $100.45 $ 84.84
MED LOSS RATIO 82.1% 81.5% 80.9%
MEDICARE PROGRAM:
PREMIUM $ 11,867 $ 12,766 $ 14,067
PMPM $441.15 $429.18 $451.11
MEDICAL EXPENSE 12,337 14,880 14,899
PMPM $458.62 $500.24 $477.77
MED LOSS RATIO 104.0% 116.6% 105.9%

MID ATLANTIC MEDICAL SERVICES, INC.
IN 000's EXCEPT PMPM AND PER SHARE
(UNAUDITED)

SIX MONTHS ENDED
6-30-98
SIX MONTHS ENDED
6-30-97
MEMBER MONTHS 4,107,820 4,179,817
MEMBER MONTHS - ASO 64,294 63,278
HEALTH PREMIUM $ 552,095 $ 539,238
PMPM $134.40 $129.01
FEE AND OTHER 11,194 8,658
LIFE AND SHORT-TERM DISABILITY 3,300 2,435
HOME HEALTH SERVICES 10,435 10,351
INVESTMENT 6,703 4,926
TOTAL REVENUE 583,727 565,608
MEDICAL EXPENSE 490,847 484,779
PMPM $119.49 $115.98
MED LOSS RATIO 88.9% 89.9%
LIFE AND SHORT-TERM DISABILITY 1,812 1,410
HOME HEALTH COSTS 8,321 7,721
ADMINISTRATIVE 66,359 65,960
ADMIN EXPENSE RATIO 11.4% 11.7%
INCOME BEFORE TAX 16,388 5,738
TAX PROVISION 6,113 2,144
EFFECTIVE TAX RATE 37.3% 37.4%
NET INCOME $ 10,275 $ 3,594
DILUTED EPS $ 0.22 $ 0.08
WEIGHTED AVE SHARES 47,112 46,718
NET MARGIN 1.8% 0.6%
MEDICAL CLAIMS PAYABLE AT END OF PERIOD $ 115,867 $ 112,755
ADDITIONAL INFORMATION:
MEDICAID PROGRAM:
PREMIUM $ 17,838 $ 56,542
PMPM $107.10 $127.89
MEDICAL EXPENSE 14,537 44,692
PMPM $ 87.28 $101.08
MED LOSS RATIO 81.5% 79.0%
MEDICARE PROGRAM:
PREMIUM $ 25,934 $ 24,838
PMPM $446.50 $426.13
MEDICAL EXPENSE 27,236 30,703
PMPM $468.91 $526.75
MED LOSS RATIO 105.0% 123.6%

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Note 1: Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: All forward-looking information or statements contained in this release are based on management's current knowledge of factors, all with inherent risks and uncertainties, affecting MAMSI's business. MAMSI's actual results may differ materially if these assumptions prove invalid. Significant risk factors, while not all-inclusive, are: the possibility of increasing price competition in the Company's marketplace; the possibility of state or Federal budget mandates that reduce premium levels; the possibility of increased medical expenses due to increased utilization, inflation or legislative mandates; and the possibility that the Company is not able to expand its Service Area as planned. Investors should review other risks and uncertainties contained in Company documents filed with the Securities and Exchange Commission.

Note 2: MAMSI is a regional holding company for health care organizations that provide comprehensive health insurance products and services including: M.D. IPA, a traditional HMO, and M.D. IPA Preferred, an open-ended version of the HMO; Optimum Choice, Inc., a non-federally qualified HMO; Optimum Choice of the Carolinas, Inc.; Optimum Choice, Inc. of Pennsylvania; Alliance PPO, Inc., a preferred provider organization; Mid Atlantic Psychiatric Services, Inc., a preferred provider organization offering managed psychiatric health care services; MAMSI Life and Health Insurance Company, an indemnity insurance company; HomeCall, Inc. and FirstCall, Inc., home health care companies; and HomeCall Pharmaceutical Services, Inc., a mail order pharmacy and home infusion services company.

Note 3: Mid Atlantic Medical Services, Inc. common stock is traded on the New York Stock Exchange (NYSE-MME).