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22nd Annual Piper Jaffray Health Care Conference November 30 , 2010 Walter Hosp, CFO Contact: Christine Saenz csaenz@hms.com 212.857.5986. What We Do. We provide cost containment services for healthcare payors .
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22nd Annual Piper JaffrayHealth Care Conference November 30, 2010Walter Hosp, CFOContact:Christine Saenzcsaenz@hms.com212.857.5986
What We Do • We provide cost containment services for healthcare payors. • We help ensure that claims are paid correctly (Program Integrity) and by the responsible party (Coordination of Benefits). As a result, our clients spend more of their healthcare dollars on the people entitled to them.
Who We Serve Federal Programs Centers for Medicare & Medicaid Services Veterans Administration State Programs • Medicaid agencies • CHIPs (Children’s Health Insurance Programs) • Child Support agencies Commercial Programs • Medicaid Managed Care Organizations (MCOs) • Commercial Plans • Employers
Coordination of Benefits UNINSURED46 million lives MEDICAID$436 billion 57 million lives COMMERCIAL$847 billion164 million lives MEDICARE$515.5 billion 47 million lives Source: 2009 CMS Office of the Actuary 4
How We Grow Capture more lives Ride the Medicaid growth wave Add new products, enter new markets Upsell to existing customers 5 5
Capture More Medicaid Lives Sources: HMS & 2009 CMS Office of the Actuary. 6
Ride the Medicaid Growth Wave Actual Projected With reform 1995-2008 data, 2008 CMS Office of the Actuary 2010-2019 data, 2009 CMS Office of the Actuary
Add New Products, Enter New Markets Acquired AMG Acquired Chapman Kelly Medicare Employers Commercial Insures Dependent Eligibility Audits New Product Development Healthcare Reform Products M & A Market Service Acquired BSPA Premium Assistance Real-time COB Acquired PrudentRx Federal MIC Clinical Review 2005 2006 2007 2008 2009 2010 & Beyond Acquired IntegriGuard Acquired Verify Solutions Behavioral Health Long-term Care Audits Pharmacy Audits Acquired Permedion Hospital Audits CHIP Enrollment Integrity Managed Care
Impact of Health Reform Law • Medicaid/Medicare expansion • New pathways to coverage • Emphasis on program integrity • Employer requirements
Medicaid/Medicare Expansion MEDICAID$436 billion 57 million lives UNINSURED46 million lives COMMERCIAL$847 billion164 million lives MEDICARE$515.5 billion 47 million lives Source: 2009 CMS Office of the Actuary 13
Medicaid/Medicare 2019 UNINSURED16 million lives MEDICAID$994 billion 83 million lives COMMERCIAL$1335 billion 168 million lives MEDICARE$904 billion 60.5 million lives Source: 2019 Estimates, 2009 CMS Office of the Actuary.
New Pathways to Coverage • State and Regional exchanges • Tax credits and cost-sharing assistance • Eligibility in multiple plans • Coordination of benefits with Medicaid • Find the “Right Insurance Home”
Emphasis on Program Integrity • Increase in funding • Expansion of RAC program to Medicaid • Data, technology and services needed to support reductions in fraud, waste, and abuse
Employer Requirements • New coverage requirements and employer penalties • Automatic enrollment of employees into health plans • Reporting mandates
Revenue Diversity and Growth $ Millions $ Millions
Investment Considerations Low risk, high growth core business Proprietary data and technologies High barriers to entry High growth Program integrity business in early stage Well positioned in current healthcare environment Multiple new growth opportunities - Products - Acquisitions - Markets Recurring, transparent and diversified revenue Strong financial position 21 21
Safe Harbor Statement Certain statements in this presentation constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of HMSY, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to (i) the information being of a preliminary nature and therefore subject to further adjustment; (ii) the uncertainties of litigation; (iii) HMSY’s dependence on significant customers; (iv) changing conditions in the healthcare industry which could simplify the reimbursement process and adversely affect HMSY’s business; (v) government regulatory and political pressures which could reduce the rate of growth of healthcare expenditures and/or discourage the assertion of claims for reimbursement against and delay the ultimate receipt of payment from third party payors; (vi) competitive actions by other companies, including the development by competitors of new or superior services or products or the entry into the market of new competitors; (vii) all the risks inherent in the development, introduction, and implementation of new products and services; and (viii) other risk factors described from time to time in HMSY’s filings with the SEC, including HMSY’s Form 10-K for the year ended December 31, 2009. HMSY assumes no responsibility to update the forward-looking statements contained in this release as a result of new information, future events or otherwise. When/if used in this presentation, the words “ focus,”“ believe, ”“ confident, ”“ anticipate, ”“ expected, ”“ strong, ”“ potential, ” and similar expressions are intended to identify forward-looking statements, and the above described risks inherent therein.