Q1 2020 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the H.M. Best Q1, 2020, <unk> earnings Conference call.
At this time all participants are in listen only mode. After the speakers presentation.
A question answer session.
To ask a question. During this session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded.
If your core any further systems. Please press star Zero I would now like to hand, the conference over to Mr., Robert Boschert head of Investor Relations. Thank you. Please go ahead.
Thank you Chelsea and good morning, everyone.
Joining me log bill our ability Chia, our chairman Chief Executive Officer, and Jeff Sherman, Our Chief Financial Officer. This call is being webcast and can be accessed via the Investor Relations section of our company website at HMS Dot com.
Today's press release, highlighting our financial results is posted on our IR website.
[noise] billing, Jeff will first provide their perspective on our recent financial and operating results and business outlook and then we'll open the line for questions. We ask you. Please limit yourself to one question and one follow up so we can get through the full Q in a timely fashion.
To remind you that the financial results reported today and in this mornings press release, our preliminary and are not final until our form 10-Q for the first quarter ended March 31st 20 Twentys filed.
Some of the statements we will make today are forward looking in nature based on our current expectations and the view our business as we see it today.
Such statements, including those related to our updated full year 2020 guidance the timing effect of circumstances surrounded cobot 90, 19, future financial and operating performance and future business plans and objectives are subject to risks and uncertainties that may cause actual results to differ materially.
As a result, they should be considered in conjunction with the cautionary statements in today's press release and the risk factors described into companies. Most recent SEC filings, including our form 10-K first quarter 10-Q.
And finally, we may refer to certain non-GAAP measures. This morning reconciliations of these measures to comparable GAAP measures are included in our press release posted to our web site.
With that I'll now hand, the call over to Bill.
Thank you Robert good morning, everyone.
Over the past eight weeks HMS is taken decisive actions.
Protect and support our employees clients partners and the community and to continue to say sustain a high level of operational execution.
Our core business remains strong.
Our organization seamlessly transitioned to work from home.
And the integration about that is on track.
We continue to have an abundance of opportunities for sustainable long term growth.
We also have a very solid capital structure low debt at a high cash balance that will support and enable our company to emerge from this pandemic even stronger.
We believe this health crisis will ultimately increase the need for greater cost containment and clinical outcome capabilities.
And we are well positioned to deliver enhanced value for our clients.
The pandemic subsides.
Given the current circumstances surrounding cobot 19, and its broad impact on our nation I'll first spend a few minutes discussing our company's actions to maintain business continuity.
Then I'll summarize our financial results and operational performance before handing it off the job offer his perspective on our outlook for the remainder of 2020.
The entire HMS organization move swiftly to an Arab business continuity plan.
This was to ensure continued service to our clients as we all began dealing with a global health emergency and shelter in place guideline due to cope with my team.
By the end of March essentially 100% of our more than 3100 employees were working from home with unnecessary technology security software and system access to accomplish their day to day jobs in support of our clients.
Full credit and an immense amount gratitude goes to our IP security and operations teams for making this a very smooth transition.
Importantly, our emergency response team led by our Chief Medical Officer implemented our Merck implemented.
Several measures to help employees avoid exposure to cope with my team care for their families and had the necessary resources for treatment if they become mill.
This is all part of the disaster recovery planning, we already had in place, which specifically addresses public health emergency.
And includes business continuity organizational agility and employee health and safety as well as support of our clients.
Regarding our Q1 performance, we experienced minimal impact in the first quarter as HMS delivered strong revenue and profit results with total revenue for the quarter, increasing 15.9% and 8.5% organically.
And adjusted EBITDA up 15% from last year's first quarter.
Cash flow remains strong and we continued to be well position with ample liquidity and financial strength to invest in our people processes and technology supporting future growth.
First quarter coordination of benefits revenue was a record $118.1 million.
As we noted of our last two earnings calls our COO be revenue can experience quarterly variability.
But remains a stable and resilient business.
Since HMS acquired accent more than four months ago, we've been working as one team to integrate key business operations, while remaining focused on achieving our 2020 business goals.
While HMS an accent, both identify and recover overpayments for our clients.
We've previously relied on different approaches and technologies.
Our teams are now concentrating on integrating processes that are expected to yield the largest benefits for our clients and our business.
This includes scaling and automating accents Medicare to commercial and commercial to commercial see Ob products.
To increase capacity reduce cost and improve results.
Payment integrity maintained its strong performance with first quarter revenue up 41.8% from the same period in 2019.
As anticipated Covance 19 circumstances have impacted T.I. activity.
Strictly work that involves medical record requests from hospitals.
And this was done in order to temporarily ease administrative burdens.
In fact, CMS pause all rack related medical reviews and documentation requests during the cobot 19 emergency period, and a few states, including New York followed suit.
We have been moving very quickly to reallocate resources toward areas of our Pi business that can drive near term revenue.
But our ability to operate at full capacity will depend on the pandemics circumstances, and how our clients respond to the changing landscape.
As a trusted partner to our clients, we continue to offer support and consultation on how to sustain their payment integrity efforts, while balancing the current demands on providers.
Revenue from our population health business declined slightly from the first quarter a year ago as we complete the rebuild of RPH M. Salesforce with the addition of several highly experienced sales executives.
Covance 19 has also interrupted some of our traditional consumer engagement programs as our clients shifted their focus starting the pandemic.
Despite this temporary pause in certain engagement activities, we had been agile and supporting our clients.
One example of this is our Covance 19 rapid response portion.
To date, we've delivered communications to about 7 million people, ensuring our clients members receive critical information about the virus.
And helping them learn how to stay healthy at home to providing instructions on how the order vital medication by now our team has been working non stop in the fight against the current of ours.
The number of our clients have also moved forward with contract extensions, including some of our state. So you'll be clients that were scheduled for re procurements.
Our ability to successfully operate in the current environment firmly positions HMS as a highly credible and financially strong partner that can deliver both results and innovation despite industry challenges.
We will continue to invest in our sales and marketing efforts to support our growth strategy. As we have continued to expand our services to new and existing client.
In summary, Q1, what's the challenge for industry and HMS rose to the occasion.
Our strong performance and our capacity to quickly mobilized and adapt during the crisis enabled us to continue to deliver solid results for our clients.
Jeff will now provide additional detail our first quarter performance and outlook for the remainder of the year Joe.
Thank you Bill and good morning.
As Bill mentioned, we delivered strong financial performance in Q1 with total revenue up 15.9% inorganic growth of 8.5% excluding the contribution from our recently acquired accident business.
He will be posted a record quarter with revenue growth of 11.5% over Q1 last year $218.1 million, including Axeing.
The first quarter of 29 team was our previous record high pursue be revenue and we still delivered organic growth of 1.2% over the prior year period.
We've consistently said that our business model has the potential for some quarter to quarter revenue variability, especially in coordination of benefits and this quarter clearly demonstrated that.
Payment integrity revenue increased 41.8% in the first quarter, continuing its solid solution adoption trends with our client base.
The first quarter of 29 key was our lowest revenue quarter for PCI last year.
Picture in revenue decreased 2.3% in Q1, as we have seen some delays in our traditional consumer engagement programs.
Adjusted EBITDA in the first quarter was $47.1 million, an increase of 6.1 million or 15% from the prior year quarter.
As expected, we did see an increase in compensation as well as direct project and other operating costs as a result of the vitreous health and accident acquisitions in the third and fourth quarters of 29 team.
We incurred approximately $2.8 million or the accident integration costs in the quarter, which are reflected as an add back in the adjusted EBITDA reconciliation schedule.
First quarter adjusted EPS increased 14.3% to 32 cents per diluted share, which includes two cents of integration related costs.
This compares to 28 cents per diluted share in Q1, a year ago, excluding 70 cents in discrete tax benefits.
Cash flow from operations was $17 million during the quarter, which is down from Q1 last year due primarily to $6 million bearings in income taxes.
With cash of $148 million at quarter end and total net debt of 0.5 times trailing 12 month adjusted EBITDA. We continue to have a very strong balance sheet and liquidity profile.
We also have another $253 million of capacity available under our credit facility and currently anticipate our expected cash flows in cash generation will be more than sufficient to fund their business operations and growth expectations without needing to access to credit lines.
Turning now to our updated financial guidance.
Given our analysis of the business and financial impact due to the Cobot 19 crisis. We now expect full year 2020 total revenue could be in a range of 690 $705 billion with the midpoint of guidance $12.5 billion below the midpoint of our previous guidance.
This now reflects growth of 12.1, the 14.5 per cent compared to last year. When you exclude the Medicare RAC reserve release from 29 Kate.
This guidance revision is to compensate for the delays in payment integrity work as well as a more muted the impact to our she'll be in PHN business lines.
We are forecasting the vast majority of the Coburn 19 revenue impact for the year to occurred during this second quarter.
Payment integrity is expected to comprise a significant part of this sequential decline from Q1 Q2.
Approximately $70 million if she will be recognized in Q1 had previously been anticipated in Q4 2019, so that would account for the remainder of the sequential revenue decline from Q1 to Q2.
This pandemic has reduced the volume of health care services delivered into short term.
As these services come back online and more individuals likely in or government healthcare programs, we believe demand for our payment accuracy in cost containment capabilities will ultimately increase.
We have also lowered our full year adjusted EBITDA guidance to a range of $177 million to $187 million for 2020, and mid point reduction of $6.5 million from the previous mid point commensurate with our new revenue range.
This now represents adjusted EBITDA growth of 7.9% to 14%.
As with revenue we are normalizing between 19 adjusted EBITDA for comparison purposes to exclude 8.2 million from the Medicare RAC reserve release, as well as a 7.7 million dollar investment gain.
While we did see an increase in costs related to our acquisitions and investments beginning in the second half for 2019. We believe this spending will drive financial returns in the second half of Twentytwenty and beyond.
We remain diligent in managing expenses in order to maintain an appropriate cost structure relative to revenue growth, we expect in the third and fourth quarters. This year.
We provided some additional financial updates on our full year 2020 outlook in our press release this morning.
We believe the progress we've made in 2019 and in Q1, and this year positions us well to achieve year over year revenue growth in solid adjusted EBITDA and cash flows with a strong competitive extending into market.
Bill will now offer some concluding remarks, and then we'll be ready for questions Bill.
Thank you Jeff.
We are well positioned to deliver high value to our clients and the healthcare industry.
Given the dramatic rising unemployment and the potential for Medicaid and other government sponsored programs to increase enrollment and demand for services, our capabilities and expertise can have a strong impact on both cost management and improved outcomes.
Today, 85% of our revenue is generated from government related sources, including federal State and health plan clients, serving Medicaid Medicare and other government funded populations.
We have already received inbound requests from clients interested in expanding use of our services to help sustain their programs during and post the pandemic.
Our employees have been resilient during this challenging period.
And they have taken the time under these circumstances to develop and leverage meaningful collaboration tools.
And work in the community support our neighbors and those in need during this crisis.
They have been steadfast and supporting our clients and each other.
I want to thank our clients for their value partnership. We appreciate your continued cost and collaborations.
I also want to send my sincere, thank you and appreciation to our employees and board of directors.
Supporting commitment are vital to our business.
Lastly, I'd like to thank all the healthcare workers across our nation or on the front line, serving all of us during this pandemic.
Chelsea, we're now ready for the first question.
As a reminder to ask a question no need to press star one on your telephone to withdraw your question press the pound or hash key please stand by all the capacity coming to a roster.
Okay.
Your first question comes out of Richard close with Canaccord.
Richard our UAN.
Richard.
Sorry about that.
I was on CRB first of all I just wondered if there are obviously you had the record corridor I was wondering if you could quantify you in terms of maybe the strengths there how much of that was catch up from much like it was the third quarter of last year, maybe some thoughts on that.
Sure. Richard This is Jeff and my in my prepared remarks, I did note a $7 million in Seo be revenue in Q1 really was a revenue we expected in the back half of 29 team that then ultimately came in.
We've talked about you know the visibility a of doubt revenue. It does have variability from quarter to quarter. So we were expecting that tends to come in Q4, but it did hit in Q1 and this year.
Okay, I'm, sorry, just sorry, I misunderstood I thought the 7 million, you're referring to was payment integrity.
I apologize on that.
With respect to payment integrity yeah.
I understand the comments with risk on the second corridor.
How quickly do you think that is going to rebound.
In terms of being able to do audits and whatnot.
I'll, let me Oh. This is bill I'll answer that so we're already have we're already in discussions with a number of clients who have said they'd.
Well, let you know kind of like to be one on the Q to execute on audit now not not all auditing dot.
It was really the Medicare RAC program that had put a pause and again as the temporary pause and we're already talking to them about when would we restart audit so from a T.I. perspective.
We are still performing audits, we expect that will start to.
Of course dependent upon the the.
Wave of the pandemic, we expect will will regain auditing again in Q3 and Q4. The one thing I just would remind everybody about.
Most of our businesses that.
We we rarely lose the opportunity it just gets shifted.
The next quarter or too.
Yeah, and I would just add to that we are continuing to receive medical records.
From hospitals, but as Bill noted CMS isn't good clients basically just said we could not do did not process any claims activity.
For the is from a guidance perspective, you know, we're really showing that our expectation is that.
That is going to be the biggest impact in Q2 and won't respect.
Expect a rebound of that coming into Q3 in Q4.
Okay. Thank you.
Your next question comes on at Matthew Gilmore with Baird.
A question I guess I, just I wanted to get some it your perspective on sort of how the business tends to perform starting recessionary environments and.
I guess I was curious with job losses mounting and presumably some of those folks will end up on Medicaid.
When do you expect that would sort of walk through from HMS flights perspective and impacts your revenue.
Thanks, Matt This is Phil.
So.
Clearly a significant portion of people.
Well and depending on which which.
Which agency or article you read we're expecting significant increase in Medicaid now it does take a little time to go through the Medicaid qualification. So we're expecting more of the increase starting to hit.
I'm really the end of this quarter and Q3 and four in terms of the Medicaid rolls starting to rise.
We will probably not see that in our data until sometime in Q3. We expect Q3 in Q4, primarily Q4 will have a significant increase in Medicaid lives and therefore expenditures. The other part that will that will be somewhat of a boost is that as you know.
No. We are just starting to open up in different markets.
The demand for the demand for outpatient services surgery.
Okay, and then I guess I was curious probably from Jeff perspective, but but have you kind of factored in anything explicit.
Guidance perspectives in terms of what higher Medicaid enrollment would mean for this year.
Yeah for for 2020 met we we haven't put anything explicit into the guidance is Bill said, you know getting discrete granular data on a state by state bases with the lags involved has really not occurred yet. So we're not we're going in our current forecasts have any no material upside.
To Medicaid expansion, but do think it could be a net positive too though it's obvious. He has a was you know when we saw the A.C.A. expansion that occurred.
Okay right. Thanks, very much I appreciate it.
No one asked a question for five Donald Hooker with key bank.
Oh, great. Good morning to just maybe group to clear up some of the earlier questions in my mind at least when I think about you guys in the P.I. area.
You all can go back in time right for a period of time to all anything you would have missed.
As a result of sort of concerns around a break break in with providers.
During the covert 19 outbreak.
You can go back and get get that information and and and capture revenue, they're presumably when when everything normalizes right.
Well, yeah. So we can do that often there my guess is and what we typically will recommend is that we need her out those on it.
As you could tell if let's say the Medicare program Medicare advantage, Medicaid Medicaid M.C.E.O.'s and commercial all say, okay. You can start auditing again there'd be a flood audit requests to hospitals, so we will meet or that out with our customers and.
Will be working closely with them, but clearly we don't loose.
We really don't lose anything except for maybe a couple of months off the back end.
But even that most of our plans have rights to go back pretty far in on it the same actually that's probably even greater on the C.O.B. side and that we we really have a three years to identify and recovered dollars a incoordination about it.
So that not even has a longer tail and we see any about being recapture any and all that being recaptured as we go lie began.
Okay, and then I know in the past you guys have.
Sort of focused on that thing in technology, that's sort of lessen the abrasion with providers in T.I. and I guess is here the as well, but mainly P.I. and I think I assume that's an ongoing area product and for you guys can you maybe update some advances there in terms of how you're <unk>.
<unk>.
You know currently and then over time.
Yeah. So we we have we have always.
Communicated with providers through a portal, where they're able to were able to communicate their audit and they're able to submit medical records. We have recently revised that audit to be an enterprise I portal to be an enterprise portal for the entire company we've been.
Working with providers and our client to move more of a audits to pre payment supposed to Judy occasion pre payment and then we the nabel new tools for providers to submit records electronically and for those that.
We're in a couple of pilots across the nation to just have electronic access to the E.M.R. No I would tell you that the M.R. doesn't always have all the information we need them, we may need supplemental documentation, but we've also done that so our goal is to ease the burden on providers. The other way to ease the burden is to make sure as.
You select.
Claims or records for audit that you have very few false positive. So we've worked we've worked judiciously on that as well.
Okay Super Thank you.
Your next question for one of <unk> Dodge with RBC capital markets.
Hi, Thanks, Good morning, Jeff you mentioned that they're going to cost action you all have taken over the last month and a half in response to the pandemic. It can you give it's just a a couple of examples of of what you've done there and and maybe some bookends around how much you you've been able to reduce your cost structure by as a result.
Yeah. My comments were were and they found that really we just continue to manage costs. You know as we have we haven't done anything else discreetly you know opted to this point in response, obviously, given our performance in that we expect that and the pause in on it activity, particularly.
Key too is only only gonna be temporary yeah. We haven't made any major changes to our costs structure, but we are you know continuing our disciplined approach to cost management and how we add costs you know to that accompanies infrastructure you know bill a moment ago, just talked about continuing to investing in technology and that continues.
Be a source of opportunity for us as we can use technology to help automate you know more routine tasks and then really redeploy you know those snap on higher value activities, such as yielded an incline services. So that nothing major into cost structure, and we really didn't see a lot of incremental.
<unk> no very very immaterial moving to a you know entirely work from home you know process you know over the last 30 to 45 days and it's built as Bill noted in his prepared remarks <unk>. It was a fairly seamless transition. So a lot of a hard work from our teams tend to me.
Of our people Oh home, but but clearly now we're we're continuing to evaluate you know as we've actually seen that go very smoothly and actually seeing you know productivity at or above where we were previously it will cause if we take a step back and look at how we manage our real estate future basis.
Okay. That's great. Thanks, and then maybe going back in the eye, increasing Medicaid enrollment.
A different thing in timing of the list between C.O.B. in in the payment integrity does does the lift from the increase in a Roman show up in in one quicker than the other.
[noise] well that's that's an interesting question, we typically see.
They there won't be an impact on payment integrity of course until we actually see claims volume. So so really C.O.B. is the first indicator and then it would be a payment integrity.
Okay I understood. Thank you again.
Oh.
Your next question because one of decorum Chiesa bad would tell though what Guggenheim Securities.
Yeah, they could for taking the question I I want to start on the accent business and in particular I I'm curious how the current environment is just affecting the integration process, there and the timeline to the cheating growth in synergies from an acquisition.
So this is bill we are.
Nonstop on the integration you know accent, we we had to quickly move the accent employees.
To work from home than we did that along with all the H.M.S. employees.
The integration Yeah as you know, we've all become accustomed to working virtually.
So in fact, we just have integration up date meeting this week with probably 100 attendees on Webex. So things are moving smoothly. We expect that we'll have the I.T. integration done this summer.
<unk> to launch the accent products into the H.M.S. customer base and then we are working with our technology teams to see how we can further.
Apply automation, both accent and of course additional H.M.S. processes, but we'd really not seen a any slowdown in the integration process. We do have a team that's focused solely on the integration and then we have people who are business owners that are involved as well.
And I would take what you know equipment clearly we are we are excited about what we see is that the long term growth opportunities consider g. spot by bringing accent on you know, we we were moving into their commercial to commercial space you know prior to the X. and acquisition, but it is really accelerated our movement.
That space is our teams are really working together very closely we're we're identifying opportunities for the legacy accident clients as well as H. messes customers. So I think we're we're we're pretty into so far in in our pleased with with the progress today.
Okay, Great and then maybe just to follow up I'm curious if you can talk about how the current environment is affecting the sales pipeline across each <unk> each year business line and how it's affecting your visibility going forward any color there would be great.
Yeah, I'll take that so <unk> queue for him to one we had very large sales quarters now.
And that means close sales and that's you know the the turn from sales to rub in is the longest containment integrity shorter and see it will be and of course, very short and our population health business, but both q. form cue one were very strong sales and in fact.
I believe by <unk>, while we got the award after we finally got the contract with the recovery audit contract for the buttons administration. So that's a nice new when for US, but then the implementation with an expected go live data November so there has been.
Breast breast sales across our product lines through both of those corridors and it really hasn't slowed down and Q1 as you can imagine sales via web X. calls and go to meetings et cetera.
N.B. challenging at times, but we're we are already as I mentioned in the prepared remarks, receiving invalid inquiry, particularly from state to are going to bear significant bronco, if the costs and their Medicaid programs that are looking for savings opportunities.
Great. Thank you.
Your next question <unk>, Gillian dressing with credit Suisse.
Funding everyone.
Got sent you guys said like below that wouldn't million.
<unk> you would have talked about and will invade off like $50 million.
That is getting that business and doesn't guidance, Dennis I'm 50 million ups contribution from that but.
[noise] drilling you were breaking up a little bit there I I take you were talking about the x. in business. So I I think it's fair to say, we're we're we're very close to that range of revenue for accident. Our forecast for this year. There has been some impact on our acts in business.
Related to Kobe, because we do recover some of those some of the recoveries that they are doing our from providers and so we have seen some slow down in in some provider recoveries. There again back back to our earlier commentary in this instance, this is really just the timing delay and so if if providers or not you know.
For not being able to recover claims from providers in the short term, we ultimately will be in recovery owns dollars. What we're seeing just seeing some timing delays, but we're very close we're right in that range for 2020, a expected performance for the accept business.
And then a quick follow up.
I was looking at the your died and so now you include eight to 10 million a sign that.
<unk>, which was not in the previous guidance can you elaborate forward and backward executive.
Spending on <unk>, I mean, given that would nine.
<unk> <unk> <unk> attractive assets available like a discounted price, which you might be <unk>.
<unk>.
Yeah, you're you're breaking up a little bit of getting there, but I I think I got the the gist of your of your questions. So we didn't say when we gave our guidance in February that accent specific integration costs. You know, we would be adding back. So we have a transition services agreement within try though that we acquired action from.
And so we're we're paying them basically for I.T. services are also using you know some outside resources to help with the lifted shift of the I.T. you know technologies in in hardware and software that we're moving to the H.M.S. systems and so we we we said we would call those out and add them back.
They <unk> they will be nonrecurrings. So we view them as one time expenses, you know not impacting the long term <unk> trajectory of the business and so we we have added those back would they range and the range really is reflecting on the scene and we can get off the legacy in Toronto a systems.
The quicker we we don't have to be paying basically you know I T resources or for for both companies in terms of a m. in a clearly I think it's it's safe to assume now that you know overall valuations will probably be coming down there's not frankly a lot in.
The marketplace Ah right now I would say probably the companies that are in the marketplace per sailing right now have to be in the marketplace probably for from liquidity profile, but I think it's it's fair to to say that valuations you know most likely will come down I think it's also fair to say that financing source is particularly with.
Some of the competitors that we might be competing against maybe our our less available now as well. So we're continuing to look for strategic ask positions. Obviously, our focus right now is continuing to integrate accent and make sure that we do that well is that we capture disynergies that we think are available where we're going to continue.
Need to look for a strategic opportunities to add into our product portfolio. You know over these next few corners.
Okay. Thanks, a lot.
Next question cause I'm, Ryan Daniels <unk> layer.
I good morning, this jarrett in for Ryan. Thanks for all the color. Thus far maybe we can just stick on T.I. sounds back then a little bit does I think if I heard correctly and a third marks it sounded like there was a little bit of impact on consumer engagement programs. There were a headwinds from covered 19. Some curious if you could just talk.
A little bit about maybe quantifying you know how big that in fact actually was on a quarterly performance.
And and maybe just help us think about maybe what the trend lines war prior to those who who's coming into place.
Yeah, I'll I'll, starting them, but <unk> I mean, there's always there's always puts and takes you know and sales q.
As we had worked with our customers I think there was certainly a definitive shift I in wine to engage with members are related to cope with 19 in his bill said in his remarks, you know, we we stood up and and did significant outrage almost 7 million members very quickly, but as you can imagine as a result.
Those outreaches plans some plans decided to you know hold some of their other more typical outreach most likely viewing it not isn't getting having much effectiveness during during code, which I think makes sense and so we were below where we initially thought we'd be in a quarter, but.
Not by much true for Q1, and I think the focus now is as planned start to look to the teacher Yeah. How do they start you know reengaging with patients that what we're focusing our sales q. on that and continuing to do outreach and coping 19, because it's it's not over yet, but I think once we get to that.
And is it back half of the year, we would expect them or normal returned to some of the typical programs we've done for our customers.
And the only thing I would add to that is the only thing I would ask for that is while while C.M.S. has.
As a watch them the requirements are reporting for reporting data for heat isn't Sars all of our health plan clients are still interested and continuing with medication adherence programs than other other factors and engagement programs that will help them make sure there.
Clients are healthy their members are healthy through this pandemic. So we expect that now that we're going to get a little bit back to business as normal that the typical timeline for rubbing it will follow that and of course, we've had a very even though it's the smaller.
But populations help.
Revenue, we've had an uptick in our interest in sales in both a set an alley.
<unk>.
Okay, Great. Yeah, that's that's really help a color and I think I think on the last call. Jeff Maybe you mentioned thinking this segment as being a a double digit grower. This year is that still a a reasonable benchmark when we think about modeling for 2020, even given some of the haggling.
[noise] Yeah, we we haven't we haven't broke down individual product line. So we haven't updated individual product line view I think you know as we think about the business. We certainly they get the double digit growth or over time in our overall revenue you know guidance reflects you know the puts and takes by product line.
But we haven't updated a specific you know P.H.M.O. product fine revenue for this year, but do so many big over time, it's gonna be a double digit grower.
Okay. Thanks, everyone.
<unk> what about sarcasm.
Hi, Good morning, Thanks for taking my question I guess, maybe on program integrity.
Payment integrity.
Can you talk about how you think health plans are approaching how much they actually want to audit not necessarily you know our medical records available.
Ah you know to be able to do the auditing work, but you know when they see provider organizations that are in pretty rough shape right now how interested are they in pressing audit activity this year.
Oh, yeah, so Jamie <unk>, they're they're actually so we have somehow plans will not turned on its all meaning we're still collecting medical records of course, but medical records. We always have a a backlog of records to to review. So we're we're busy doing that.
But some who have turned off.
Audits that require medical records for documentation requests we are shifting our resources to make sure that we get as many automated services out the door. So what that means is our Addison analytics overpayment analysis, we're still running those.
And the only the only total pause that we have has been in the Medicare Iraq, but we expect that they will turn that back on.
Then hopefully within the next couple of months because as you can tell Medicare is both from H.S., sending out advance Medicare payments the hospitals.
The Medicare trust funds going to be bleeding quite a bit and so they'll want to return to our normal normal audit process.
Okay, and so you know, they're not looking at provider fundamentals and saying, Hey, that's gonna tell pretty or for you know hospitals and doctors offices were gonna take a break.
I think Jamie I would add that they are they are looking at you know areas that are hit harder as well from a geographic standpoint. So it's not it's not a just a blanket you know view for the country. You certainly there's area like New York, You know New Jersey that I've been hit pretty hard Ah, but there's also many areas that but that have been hit.
Frequently less in terms of the medium pack. So I think it's it's you know really klein dependent on those issues, but I'd say I don't think we've seen any you know significant diminishing of demand for the services you know and as Bill said sales activity continued as even into payment integrity space as well.
So I think it's more in the case by case basis, but as we looked at the impact you know two two is where we are expecting the biggest you know biggest impact you know as we've already talked about and then expect it'll ramp backed up in the third and fourth corners.
Okay, and then yeah.
Go ahead.
I'm, sorry, I just wanted to add a little color because I just had a calls with one of our New York based health plans and obviously the effect of things pretty large plan, but there are indications were that they would like us to pick up in fact, this as a new implementation bets ready.
But has been on pause, but they'd like us to start back in June So that's a pretty it's pretty short timeframe, but as they see they're looking at the curb their plans are start the auditing back in June start media ringing metering it out.
And of course their goal as can you get us in line for her. So so you know a lot of these plans are particularly in the Medicaid space are in in the areas that have been hit the hardest experiencing some real challenges and we're helping them through that so we expect that the audit will begin by the.
End of this quarter and as as Jeff said, we'll start to see the impact and Q3 and Q. for.
And then my other question would just be on utilization and you know how you think it impacts your business. This year you know obviously, it's been a week and and you know March and and the second quarter. You know you how're you baking that into the.
Away that you're modeling a recipe here.
Yeah. So we're as you as you can guess we are lagged right. So there's a lag between data service tend to date the claims plate paid by our client no matter, if it's government or.
Or health plan, and then there's a lag sometimes for us to get the data, though usually it's as we as we've always the daily weekly or monthly depending on the client.
We have seen it yep, and overall expenditures and and volume, but the <unk> <unk> <unk>, we expect to say probably starting and files. We receive in June is that reopening up of what is the somewhat pent up demand. So.
You know dentists offices are opening we had <unk>, we have the sharpest decline in decimal planes course, they're small dollars, but large volume we will see those start to rise again, we've seen a increase in Beirut behavioral health claims and that's obviously just.
Everybody dealing with the Grayson stress of this pandemic, but we expect to see with outpatient surgery centers and hospitals opening up for what are more elective surgeries, we expect to see a climbing that claim files, we start to see in June. So that's what we can tell right now.
And that's what's being model that or forecast of course, we're taking a measured approaches and go through the year.
Okay. Thank you.
Don't ask the question because I'm, Dave Winningly with Jeffrey's.
Hi, Good morning, Thanks for taking my question kind of a follow up to Jamie's question on utilization, but.
But the part that hasn't been asked is around tele medicine, and how that changes.
Changes the claim value or the the you know the error rate things that would drive opportunity for you I know as you mentioned with with dental I know the dollar value is probably pretty small and not really.
You know majority of what you would you would collect but I'm just wondering as we evolved toward seemingly have all toward more telemedicine, how does that impact your business.
[noise]. Thanks, Dave that's a good question in fact, it's very timely make us in the last two weeks, we've gotten imbalance from some of our client, saying that they believe there could be an uptick and potential fraud or erroneous coding for tell him tell health and they'd like us to start to look at that.
So you know obviously, if you have a cold that diagnosis code, you're going to be paid more and so they're really I'm starting to worry about the large increase in tomahawk utilization and if we're going to be able to detect any fraud wrapper and patterns.
We believe that's going to happen I don't think it dramatically other than plan to have weighed co pay costs.
It's still a paid claim right. So it's kind of come through our systems, and we expect that and and I'll just mention on dental while a desolate claim is rather small and of course and Medicaid.
Even smaller.
We recover multi millions of dollars and Medicaid coordination of benefits all throughout the nation. So when that.
Comes back and comes back strong.
And as you know also with.
Hospitals are looking to put additional chefs and the surgery wings.
We expect to see a pretty steep climb once pent up demand is starting to be themselves.
Okay, Great appreciate that I I suppose maybe another question is a follow up on on the.
A P.H.M. business and just want to try to understand a little bit better the balance between.
The consumer engagement activity that is I suppose more standard traditional type type things that you're mentioning that maybe some clients put on the shelf versus kind of crisis engagement that I think you know in the past prior to cope with you would have talked about that as being functional capability euro.
Or a value out of the consumer engagement platform I guess I'm I'm, just trying to understand the balance a little bit because I'm a little surprised that the plans would not have wanted to really you know pound the communication on the crisis.
Engagement that would've actually made that revenue go up instead of down thanks.
Well I mean, so so you got you have to kind of getting into mind set up the plan as they're trying to serve their members and yes. We had hoped for more than 7 million members. During outreach. Some of the clients are doing ongoing outreach with us right. So as the messages the messaging obviously has.
Change and it has to be geographic base, which is what we do but when you're going through a crisis like this it's the same thing as if we were going through a large Nash match natural disaster. Our plans typically say in fact, we even you know we have weather maps that show us as if there is kind of.
V.A. hurricane hitting Florida.
They want us to let members know that their pre approved for early refill what to do unsafe for safety during evacuations make sure you bring your meds, but they don't Wanna pepper them with a lot of other things like you know you need to go onto your mammogram your child needs a flu shot those are things that they want to put aside.
A crisis and we've seen the same thing happen here with the pandemic. So they want us to communicate regarding the pandemic, they and and anything that might be related to that or anything related to fluent in general but for some of the other things that are not as important at least for that.
Corridor, they want it to not put noise into the system, which makes absolute sense because people are bombarded with a lot of news about call a bit and they wanted to get accurate information out now not all plans signed up for it because they already had communication campaigns that they were they were operating but.
<unk> says of course, we we meet the member where they want to be communicated so.
And so some very large plans took us up on that and are doing recurring messaging as we speak.
Okay, great. Thank you appreciate the explanation.
You're a last question 'cause line of Stephanie Davis, Demko with S.B.B. leave me Leerink.
Hey, guys. Thank you for having me back and.
Ask a question on the call.
So the pandemic has highlighted I need for analytics across a healthcare and extract share with that in mind are you seeing any early traction in a conversation <unk> segment I could get that.
<unk> better than my significant rang gung bowing.
Yeah. So we've we've been talking to our clients about that we have started to run just against their data.
Our clients data trends and and we are in the process right now in our partnership with both the digital <unk> Research Centre in Australia, but also with the Stanford School of Medicine and their center for Biomedical Informatics research there were sorry.
And then that should have with them to evaluate cove at 19 in Medicaid claims and look at across the stage to identify which risk mitigation factory work.
It affects the Medicaid population given their high rates to co morbidity and of course, depending on the demographics of the of the member or patient their potential lack of ability is socially distance compared to other populations. Once that analysis is complete it's fed into a model that model is.
Incorporated into our L.A. product. So that's that's what we've been doing what we're also doing is asking more clients to allow us to load their data into this de identified research database that will help us further identify solutions to better predict the better predict which.
Actions has to be taken either during this pandemic or future while.
So are you seeing tracks from Florida area. So to say early day conversations as obviously plans have a lot about anything to focus on.
Yeah, it's early conversations, but we have we have some clients have asked us as you slice the data and you perform urinalysis and you give us any further insights into that one of the things. We did early on before there was an I.C.D.I.C.D. code for covert 19.
We started to see a trend individuals with flu with complications or flew with pneumonia, which gave us an early indicator that these were.
Free code that diagnose claims so we're able to look at that trend across our entire population and then for building distance or analytics, we're using this de identified data.
On 18 million people. So it's a very it's very rich database to build predictive models around there are as you can tell that everybody is trying to build something whether it's an tracing you name that we're trying to build predictive tools that help them.
Zero in on the patients that are going to need a mouse outreach the most attention and who's most likely to have a a real problem with coping 19 or some other pandemic. So they can do early on a bit early intervention in education.
God ads on the social at 10 minutes a house style.
[laughter], we have the directly.
We gather them or we we either gather them for the patient already derive them from demographic data that we use and that's factored into our rescoring to determine if a person that has a higher risk in really any disease stay for particularly covert 19.
Oh.
Are you also you've already done a great shoplifting or Washington Hot So one follow up on that fine.
Are there any pockets of coverage expansion or do you have any views on <unk> <unk>.
Well so.
They're in and you know <unk>. Unfortunately, sometimes we get some mixed messages out of D.C., but <unk> in realtime administrator [laughter].
Yeah, well you know the administration and Congress, though are looking for ways.
To make sure that healthcare coverage exists for people rather than the unemployment rank swelling. So of course Medicaid is that safety net you know we do have an have submitted many different proposals to both Congress and the administration of ways in which we can keep the employer spots.
<unk> network in place others <unk>, many tools that they can use that they choose to.
Reimbursing employers to pay for Cobra or pay for employee benefits, while someone is unemployed for a certain period of time. There are there are other measures that can be taken and they're being done differently on a state by state basis, and then of course there are some states that are.
A little more aggressive about getting people enrolled into Medicaid so that there at least covered by the safety net.
<unk> thinking about.
Sure.
Yeah.
There are no further questions at this time, Oh, and I like to turn the conference back to Mr last year.
Thank you Chelsea and thank you everyone for attending or call today. Please stay safe unhealthy and we look forward to speaking to you again on our second quarter call have a good weekend.
Ladies and gentlemen disclosed today's conference call. Thank you for participating you may now disconnect.
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