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J.P. Morgan 29 th Annual Healthcare Conference January 10, 2011 Bill Lucia, CEO Walter Hosp, CFO Contact: Christine Saenz [email protected] 212.857.5986. What We Do. We provide cost containment services for healthcare payors .

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J.P. Morgan 29th Annual Healthcare ConferenceJanuary 10, 2011 Bill Lucia, CEOWalter Hosp, CFOContact:Christine [email protected]

What we do
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
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

How we grow
How We Grow

Capture more lives

Ride the Medicaid growth wave

Add new products, enter new markets

Upsell to existing customers

Capture more medicaid lives
Capture More Medicaid Lives

Sources: HMS & 2009 CMS Office of the Actuary.

Ride the medicaid growth wave
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
Add New Products, Enter New Markets

Acquired AMG

Acquired Chapman Kelly



Commercial Insures

Dependent Eligibility Audits

New Product Development

Healthcare Reform Products

M & A



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

Healthcare Financing Today

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

Healthcare Financing 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.

Medicaid expansion
Medicaid Expansion

Actual Projected

With reform

1995-2008 data, 2008 CMS Office of the Actuary

2010-2019 data, 2009 CMS Office of the Actuary

Reform Activity 2011-2014

  • National healthcare expenditures

  • Early adoption of reform

  • Program compliance

  • Exchanges

National Healthcare Expenditures

As a percentage of GDP

CMS Office of the Actuary, “Estimated Financial Effects of PPACA as Amended”, April 2010

Early Adoption of Reform

  • Massachusetts (2007)

  • Connecticut (2010)

  • District of Columbia (2010)

  • California (2010)

  • Minnesota (2011)

Program Compliance

  • Medicaid RACs

  • Employer plan and claim audits

  • Third-level appeals

  • Managed care

  • Federal


  • Federal planning grants awarded

  • Pilots in place in several states

  • Coordination of benefits required

  • Responsible for eligibility determination

  • Right insurance home

Revenue diversity and growth
Revenue Diversity and Growth

$ Millions

$ Millions

Key financial indicators rolling four quarters
Key Financial IndicatorsRolling Four Quarters

Investment considerations
Investment Considerations

Low risk, high growth core business

High growth, early stage program integrity business

Well positioned in current healthcare environment

Multiple new growth opportunities

- Products - Acquisitions - Markets

Recurring, transparent and diversified revenue

Strong financial position

Safe harbor statement
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.