March 14, 2005

The Michigan Department of Community Health has awarded Health Management Systems, Inc. (HMS) a contract to provide revenue recovery and cost containment services for Michigan's Medicaid program.

“Revenue recovery and cost containment for Michigan’s Medicaid program are always important, but this effort takes on increased significance when the status of the state’s budget is factored into the equation,” said Janet Olszewski, MDCH Director. “Now – more than ever – it is increasingly important to ensure that Medicaid only pays for care that no other party is responsible for covering.”

Under the three-year contract, HMS will identify other insurance available to recipients and recover expenditures from insurers, including Medicare, that are liable for their care. The contract also calls for HMS to identify insurance coverage for children protected by child support orders, on behalf of the Michigan Family Independence Agency.

“We are proud that the state of Michigan has again selected Health Management Systems as a partner in revenue recovery,” said HMS President William Lucia. “The demands facing Michigan Medicaid today – and Medicaid agencies everywhere – require the resources, experience, and creative solutions that HMS brings.”

The contract extends a relationship between HMS and MDCH that dates back to 1994. In that period, HMS has recovered more than $50 million for the state.

Now, for the first time, HMS also will provide medical support enforcement services. Medicaid is the joint federal/state health care initiative for low-income Americans. Medicaid costs are expected to reach $324 billion in 2004, and represent the fastest-rising cost for state government. In Michigan, Medicaid provides benefits to more than 1.4 million recipients.

HMS, a wholly owned subsidiary of HMS Holdings Corp. (NASDAQ: HMSY), helps government health care programs contain costs by recovering inappropriate expenditures. HMS is a national leader in revenue recovery and cost containment for government health care programs.

HMS has recovered nearly $2.7 billion from third parties and other funding sources on behalf of its clients, and today has active contracts in 24 states.