Walter Hosp Chief Financial Officer Maria Perrin Chief Business Officer Contact: Christine Saenz csaenz@hms.com 212.857.5986 Credit Suisse 2012 Healthcare Conference November 14, 2012
Sf Safe Harbor Statement This presentation contains forward looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such statements give our expectations or forecasts of future events; they do not relate strictly to historical or current facts. Forward looking statements can be identified by words such as anticipates, estimates, expects, projects, intends, plans, believes, will, target, seeks, forecast and similar expressions and references to guidance. In particular, these include statements relating to future actions, business plans, objects and prospects, and future operating or financial performance. Forward looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. We caution you therefore against relying on any of these forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to: regulatory actions, budgetary pressures and political influences that could affect the procurement practices and operations of healthcare organizations and agencies, reducing demand for our services; our ability to continue to secure contracts through the competitive bidding process and to accurately predict the cost and time to complete such contracts;our our ability to retain clients or the loss of one or more major clients; client dissatisfaction or early termination of contracts triggering significant costs or liabilities; the development by competitors of new or superior products or services; the emergence of new competitors, or the development by our clients of in house capacity to perform the services we offer; all the risks inherent in the development, introduction, and implementation of new products and services; our ability to manage our growth and its demands on our resources and infrastructure; our ability to successfully integrate our acquisitions; our compliance with the covenants and obligations under the terms of our credit facility and our ability to generate sufficient cash to cover our interest and principal payments thereunder; variations in our results of operations; negative results of government reviews, audits or investigations to verify our compliance with contracts and applicable laws and regulations; changing conditions in the healthcare industry which could simplify the payment process and reduce the need for and price of our services; our failure to comply with laws and regulations governing health data or to protect such data from theft and misuse; and, our ability to maintain effective information systems and protect them from damage or interruption. A further description of these and other risks, uncertainties, and related matters can be found in our Annual Report on Form 10 K for the fiscal year ended December 31, 2011, which is available at www.hms.com under the Investor Relations tab. Any forward looking statements made by us in this presentation speak only as of the date of this presentation. Factors or events that could cause actual results to differ may emerge from time to time and it is not possible for us to predict all of them. We undertake no obligation to publicly l update forward looking statements, t t whether as a result of new information, future events or otherwise, except as may be required by law. 2
Overview 3
Our payment integrity services help ensure a more effective healthcare system. 4
Our Role HMS helps control spending by addressing payment errors. 5
What is Payment Integrity? Claims are paid by the responsible party. Claims are paid accurately. 6
Our Business Performance Based Services Multiple Growth Drivers Demonstrated Results 7
The Markets 8
Health hexpenditures vs. Revenue 1,000 400 1,000 400 1,000 400 900 350 900 350 900 350 800 700 300 800 700 300 800 700 300 600 250 600 250 600 250 500 200 500 200 500 200 400 150 400 150 400 150 300 200 100 300 200 100 300 200 100 100 50 100 50 100 50 9 Expenditures ($Billions) HMS Revenue ($Millions) Expenditures ($ Billions) HMS Revenue ($Millions) Expenditures ($ Billions) HMS Revenue ($ Millions) Medicaid Medicare Commercial Source: CMS Office of the Actuary, National Healthcare Expenditure Projections 2011 2021
The Opportunity 10
Addressable Market, 2015 Medicaid Medicare Commercial $631 Billion $668 Billion $1.1 Trillion 8.4% 8.6% 5% $53 $57 $55 Billion Billion Billion Sources: Spend data: CMS Office of the Actuary, National Healthcare Expenditure Projections, September 2011. Error rate Medicaid: based on 2011 estimated, CMS PERM Report 2011; Medicare based on 2011 estimated, www.paymentaccuracy.gov/programs/medicare fee service; Commercial: HMS Projection
Addressable Market, 2015 Medicaid Medicare Commercial 12
Mdi Medicaid idracs Status WA OR NV CA ID AZ UT MT WY CO NM ND SD NE KS* OK MN WI IA IL MO AR MI OH IN KY TN WV SC NY PA VA NC MD ME VT NH MA CT RI NJ DE Washington, D.C. AK TX LA MS AL GA FL HMS Prime/Prime Shared/Sub (31) HMS No Bid/Loss/ Competitor Converted (12) 13 HI Decision Pending/Bid Submitted (1) No Selection (7)
Market Penetration Medicaid Medicare Commercial Coordination of Benefits Program Integrity
Market Penetration Medicaid Medicare Commercial Coordination of Benefits Program Integrity
Market Penetration Medicaid Medicare Commercial Coordination of Benefits Program Integrity BSPA
Market Penetration Medicaid Medicare Commercial Program Integrity RAC BSPA Coordination of Benefits
Market Penetration Medicaid Medicare Commercial Program Integrity AUDIT MIC RAC ZPIC Co oordination o f Benefits BSPA
Market Penetration Medicaid Medicare Commercial Program Integrity AUDIT MIC RAC ZPIC RAC HDI Co oordination o f Benefits BSPA BPOC
Our Products 20
Di Drive Payment Integrity Products Claims Paid by Responsible Party Eligibility Verification Coordination of Benefits Dependent Eligibility Audit Cost Avoidance Real Time COB TPL Recovery Premium Payment Subrogation Workers Comp Claims Paid Accurately Pre Pay Pay Utilization Review Fraud Pattern Identification Coding Errors Complex Clinical Review Utilization Management Medical Necessity Pharmacy Audit Credit Balance Review Plan/Benefit Audit Special Investigations 21
Are Broadly Applicable Products Claim Stages Claim Types Error Types Markets 22 Claims Pidb Paid by Claims Pid Paid Responsible Party Accurately Eligibility Verification Coordination of Benefits Dependent Eligibility Audit Cost Avoidance Real Time COB TPL Recovery Premium Payment Subrogation Workers Comp Pre Pay Pay Utilization Review Fraud Pattern Identification Coding Errors Complex Clinical Review Utilization Management Medical Necessity Pharmacy Audit Credit Balance Review Plan/Benefit Audit Special Investigations Enrollment Pre payment Post payment/recovery Eligibility Financial Clinical Compliance Fraud Hospital Physician Pharmacy DME Behavioral Home Health Eligibility Financial Clinical Compliance Fraud Medicaid Medicare Commercial
Guidance and Strategic Outlook 23
2013 Guidance 2013 % Change YOY Guidance (approximate) REVENUE ($ millions) $570.0 0 $600.00 21% GAAP EPS $0.63 $0.70 16% ADJUSTED EPS $0.95 $1.02 13% 24
2013/2014 Strategic Initiatives i i Medicaid RAC implementations Medicare RAC reprocurement Medicare COB implementation Exchange products Expansion into commercial insurance 25
Strategic Outlook Supreme Court and national election affirm healthcare reform Leader in COB and RAC for both Medicaid and Medicare Growing commercial footprint Emerging eligibility/exchange opportunities 26
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