J.P. Morgan 29th Annual Healthcare ConferenceJanuary 10, 2011

Bill Lucia, CEOWalter Hosp, CFO

Contact:Christine Saenz

csaenz@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.

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Who We Serve

Federal Programs– Centers for Medicare & Medicaid Services– Veterans Administration

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State Programs– Medicaid agencies– CHIPs (Children’s Health Insurance Programs)– Child Support agencies

Commercial Programs– Medicaid Managed Care Organizations (MCOs)– Commercial Plans– Employers

COMMERCIAL

$847 billion164 million lives

Source: 2009 CMS Office of the Actuary

MEDICARE

$515.5 billion 47 million lives

MEDICAID

$436 billion 57 million lives

UNINSURED46 million lives

Coordination of Benefits

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5

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

Sources: HMS & 2009 CMS Office of the Actuary.

2005 2006 2007 2008 2009 2019E0

10000000

20000000

30000000

40000000

50000000

60000000

70000000

80000000

90000000 TOTAL

HMS

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Ride the Medicaid Growth Wave

Actual Projected

1995-2008 data, 2008 CMS Office of the Actuary2010-2019 data, 2009 CMS Office of the Actuary

With reform

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20190

200

400

600

800

1000

1200

Historical and Projected Medicaid Expeditures

Fiscal Year

$ b

illio

ns

7

2005 2006 2007 2008 2009 2010 & Beyond

Acquired Permedion

Hospital Audits

CHIP Enrollment Integrity

Acquired BSPA

Premium Assistance

Real-time COB

Managed Care

Acquired PrudentRx

Federal MIC

Clinical Review

M & A

Market

Service

Acquired IntegriGuard

Acquired Verify Solutions

Behavioral Health

Long-term Care Audits

Pharmacy Audits

Acquired AMG

Acquired Chapman Kelly

Medicare

Employers

Commercial Insures

Dependent Eligibility Audits

New Product Development

Healthcare Reform Products

Add New Products, Enter New Markets

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Upsell to existing customers

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Upsell to existing customers

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Upsell to existing customers

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HEALTHCARE REFORM

COMMERCIAL

$847 billion164 million lives

Source: 2009 CMS Office of the Actuary

MEDICARE

$515.5 billion 47 million lives

MEDICAID

$436 billion 57 million lives

UNINSURED46 million lives

Healthcare Financing Today

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COMMERCIAL

$1335 billion 168 million lives

Source: 2019 Estimates, 2009 CMS Office of the Actuary.

MEDICARE

$904 billion 60.5 million lives

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UNINSURED16 million

livesMEDICAID

$994 billion 83 million lives

Healthcare Financing 2019

Medicaid Expansion

Actual Projected

151995-2008 data, 2008 CMS Office of the Actuary2010-2019 data, 2009 CMS Office of the Actuary

With reform

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20190

200

400

600

800

1000

1200

Historical and Projected Medicaid Expeditures

Fiscal Year

$ b

illio

ns

National healthcare expenditures

Early adoption of reform

Program compliance

Exchanges

Reform Activity 2011-2014

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National Healthcare Expenditures

2010 2011 2012 2013 2014 2015 2016 2017 2018 201916

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18

19

20

21

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17CMS Office of the Actuary, “Estimated Financial Effects of PPACA as Amended”, April 2010

As a percentage of GDP

Massachusetts (2007)

Connecticut (2010)

District of Columbia (2010)

California (2010)

Minnesota (2011)

Early Adoption of Reform

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Medicaid RACs

Employer plan and claim audits

Third-level appeals

Managed care

Federal

Program Compliance

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Federal planning grants awarded

Pilots in place in several states

Coordination of benefits required

Responsible for eligibility determination

Right insurance home

Exchanges

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Revenue Diversity and Growth

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$ M

illio

ns

2007 2008 2009 2010G 2011G0

50

100

150

200

250

300

350

400

135164

194

226

27012

21

35

74

100

Coordination of Benefits (COB) Program Integrity (PI)

2007 2008 2009 2010G 2011G0

50

100

150

200

250

300

350

400

14 15 12 9 9

110130 147

172

20019

34

57

80

107

4

5

13

33

37

6 16

Other Employer State Medicaid MCO Federal

$ M

illio

ns

Key Financial IndicatorsRolling Four Quarters

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Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

130.0

150.0

170.0

190.0

210.0

230.0

250.0

270.0

290.0 Revenue

($ m

illio

ns)

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

$0.50 $0.60 $0.70 $0.80 $0.90 $1.00 $1.10 $1.20 $1.30 $1.40

Earning Per Share

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

25.0

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0 Operating Profit

($ m

illio

ns)

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

$35.0 $40.0 $45.0 $50.0 $55.0 $60.0 $65.0 $70.0 $75.0 $80.0 $85.0

EBITDA

($ m

illio

ns)

Guidance

Revenue 2010 2011$ $300.0 $370.0

% change y/y 30.9% 23.0%

Operating Profit$ $66.9 $85.0

% change y/y 29.0% 26.8%

Margin 22.3% 23.0%

GAAP EPS$ $1.40 $1.74

% change y/y 28.7% 23.6%

Adjusted EPS$ $1.68 $2.03

% change y/y 25.9% 20.1%

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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

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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.

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