HMS (HMSY) 10-Q 9 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 03, 2015
Document and Entity Information
Entity Registrant Name	HMS HOLDINGS CORP
Entity Central Index Key	1,196,501
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		86,008,337
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 144,804	$ 133,116
Accounts receivable, net of allowance for doubtful accounts of $2,672 and $1,898, respectively, and estimated allowance for appeals of $2,650 and $4,824 at September 30, 2015 and December 31, 2014, respectively	174,152	157,101
Prepaid expenses	10,624	11,810
Prepaid income taxes		5,142
Deferred tax assets	5,703	7,811
Other current assets	2,477	2,639
Total current assets	337,760	317,619
Property and equipment, net	99,429	116,027
Goodwill	361,468	361,468
Intangible assets, net	59,352	74,578
Deferred financing costs, net	5,394	6,957
Other assets	4,568	4,339
Total assets	867,971	880,988
Current liabilities:
Accounts payable, accrued expenses and other liabilities	43,588	54,549
Estimated liability for appeals	34,892	36,799
Income taxes payable	4,182
Total current liabilities	82,662	91,348
Long-term liabilities:
Revolving credit facility	197,796	197,796
Deferred tax liabilities	41,180	50,853
Deferred rent	6,188	5,037
Other liabilities	2,375	2,864
Total long-term liabilities	247,539	256,550
Total liabilities	$ 330,201	$ 347,898
Commitments and contingencies (Note 9)
Shareholders' equity:
Preferred stock-$0.01 par value; 5,000,000 shares authorized; none issued
Common stock - $0.01 par value; 175,000,000 shares authorized; 95,186,707 shares issued and 86,008,337 shares outstanding at September 30, 2015; 94,511,444 shares issued and 87,985,139 shares outstanding at December 31, 2014	$ 951	$ 943
Capital in excess of par value	327,084	313,214
Retained earnings	279,749	263,947
Treasury stock, at cost: 9,178,370 shares at September 30, 2015 and 6,526,305 shares at December 31, 2014 (Note 10)	(70,014)	(45,014)
Total shareholders' equity	537,770	533,090
Total liabilities and shareholders' equity	$ 867,971	$ 880,988

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 2,672	$ 1,898
Accounts receivable, estimated allowance for appeals (in dollars)	$ 2,650	$ 4,824
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	175,000,000	175,000,000
Common stock, shares issued	95,186,707	94,511,444
Common stock, shares outstanding	86,008,337	87,985,139
Treasury stock, shares	9,178,370	6,526,305

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Revenue	$ 118,444	$ 113,796	$ 345,702	$ 331,064
Cost of services:
Compensation	42,330	42,375	127,359	132,426
Data processing	10,023	9,825	30,506	29,223
Occupancy	4,188	4,467	12,001	13,115
Direct project costs	13,895	9,878	37,945	27,464
Other operating costs	6,552	6,817	20,443	18,215
Amortization of acquisition related software and intangible assets	7,041	7,160	21,135	21,480
Total cost of services	84,029	80,522	249,389	241,923
Selling, general and administrative expenses	21,399	19,334	63,564	54,846
Total operating expenses	105,428	99,856	312,953	296,769
Operating income	13,016	13,940	32,749	34,295
Interest expense	(1,948)	(1,961)	(5,842)	(5,979)
Interest income	11	11	34	47
Income before income taxes	11,079	11,990	26,941	28,363
Income taxes	4,217	5,040	11,139	12,022
Net income and comprehensive income	$ 6,862	$ 6,950	$ 15,802	$ 16,341
Basic income per common share:
Net income per common share-basic (in dollars per share)	$ 0.08	$ 0.08	$ 0.18	$ 0.19
Diluted income per common share:
Net income per common share-diluted (in dollars per share)	$ 0.08	$ 0.08	$ 0.18	$ 0.19
Weighted average shares:
Basic (in shares)	87,299	87,736	88,019	87,660
Diluted (in shares)	87,792	88,233	88,451	88,145

CONSOLIDATED STATEMENTS OF SHAR

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Common Stock	Capital in Excess of Par Value	Retained Earnings	Treasury Stock	Total
Balance at Dec. 31, 2014	$ 943	$ 313,214	$ 263,947	$ (45,014)	$ 533,090
Balance (in shares) at Dec. 31, 2014	94,511,444			6,526,305
Increase (Decrease) in Shareholders' Equity
Net income and comprehensive income			15,802		15,802
Stock-based compensation expense		10,208			10,208
Purchase of treasury stock				$ (25,000)	(25,000)
Purchase of treasury stock (in shares)				2,652,065
Exercise of stock options	$ 7	4,181			4,188
Exercise of stock options (in shares)	577,559
Vesting of restricted stock units, net of shares withheld for employee tax	$ 1	(636)			(635)
Vesting of restricted stock units, net of shares withheld for employee tax (in shares)	97,704
Excess tax benefit from exercise of stock options		1,477			1,477
Shortfall due to exercise of stock options and vesting of restricted stock units		(384)			(384)
Deferred tax asset reversal for unexercised stock options		(976)			(976)
Balance at Sep. 30, 2015	$ 951	$ 327,084	$ 279,749	$ (70,014)	$ 537,770
Balance (in shares) at Sep. 30, 2015	95,186,707			9,178,370

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Operating activities:
Net income	$ 15,802	$ 16,341
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment	23,228	24,459
Amortization of intangible assets	15,226	15,572
Amortization of deferred financing costs	1,563	1,563
Stock-based compensation expense	10,208	9,095
Excess tax benefit from exercised stock options	(1,477)	(870)
Deferred income taxes	(8,925)	(9,322)
Allowance for doubtful accounts and bad debt write-offs	(31)	(6,549)
Loss on disposal of fixed assets	40	191
Change in fair value of contingent consideration		17
Changes in operating assets and liabilities:
Accounts receivable	(23,964)	(14,054)
Prepaid expenses	1,186	2,666
Prepaid income taxes	6,619	7,662
Other current assets	162	(2,189)
Other assets	(229)	125
Accounts payable, accrued expenses and other liabilities	(8,174)	8,978
Income taxes payable	4,182	9,841
Estimated liability for appeals	5,037	16,269
Net cash provided by operating activities	40,453	79,795
Investing activities:
Purchases of land, property and equipment	(5,903)	(16,594)
Investment in capitalized software	(1,985)	(2,726)
Net cash used in investing activities	(7,888)	(19,320)
Financing activities:
Repayment of revolving credit facility		(35,000)
Purchase of treasury stock	(25,000)
Proceeds from exercise of stock options	4,188	3,279
Excess tax benefit from exercised stock options	1,477	870
Payments of tax withholdings on behalf of employees for net-share settlement for restricted stock awards and units	(635)	(1,128)
Payments on capital lease obligations	(907)	(1,241)
Payments on contingent consideration		(428)
Net cash used in financing activities	(20,877)	(33,648)
Net increase in cash and cash equivalents	11,688	26,827
Cash and cash equivalents at beginning of period	133,116	93,366
Cash and cash equivalents at end of period	144,804	120,193
Supplemental disclosure of cash flow information:
Cash paid for income taxes	13,619	3,541
Cash paid for interest	5,295	4,438
Supplemental disclosure of noncash activities:
Accrued property and equipment purchases	392	974
Equipment purchased through capital leases		20
Decrease in appeals liability for lost appeals offset with a reduction in accounts receivable	$ 6,944	$ 23,206

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2015
Basis of Presentation
Basis of Presentation	1. Basis of Presentation The accompanying unaudited Consolidated Financial Statements of HMS Holdings Corp., its subsidiaries and its affiliates (“we,” “our” and “us”) have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary for a fair presentation of our financial position at September 30, 2015, the results of our operations for the three and nine months ended September 30, 2015 and 2014 and cash flows for the nine months ended September 30, 2015 and 2014. Interim unaudited financial statements are prepared on a basis consistent with our annual financial statements. The financial statements included herein should be read in conjunction with the financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2014, which we refer to as our Annual Report. There have been no significant changes to our critical accounting policies since December 31, 2014. The preparation of our unaudited consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, intangible assets, accrued expenses, estimated allowance for appeals and estimated liability for appeals, the disclosure of contingent liabilities at the date of the unaudited consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Our actual results could differ from those estimates. These unaudited consolidated financial statements include our accounts and transactions and those of our wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications were made to prior period amounts to conform to the current period presentation.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2015
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies As of September 30, 2015, we have accrued an estimated liability for appeals and estimated allowance for appeals based on our historical experience with this activity under our customers’ contracts. Any future changes to any of our customer contracts, including further modifications to the transition plan for incumbent Medicare Recovery Audit Contractors (“RAC”), may require us to apply different assumptions that could affect our estimated liability for future periods. We similarly accrue an allowance against accounts receivable related to fees yet to be collected, based on the same estimates used to establish the estimated liability for appeals of fees received. Our inability or failure to correctly estimate or accrue the estimated liabilities and allowance for appeals or accounts receivable could adversely affect our revenue in current or future periods. Estimated liability for appeals and estimated allowance for appeals as of September 30, 2015 are as follows ( in thousands ): Balance, December 31, 2013 $ Provision Appeals found in providers’ favor (1) ) Balance, December 31, 2014 (2) Provision Appeals found in providers’ favor (1) ) Balance, September 30, 2015 (2) $ (1) Includes appeals, closures or other adjustments. (2) Includes $2,650 and $4,824 related to estimated allowance for appeals that apply to uncollected accounts receivable as of September 30, 2015 and December 31, 2014, respectively. In the first nine months of 2015 and 2014, within our estimated allowance for appeals found in favor of providers, $6.0 million and $22.2 million, respectively, was activity associated with our Medicare RAC contract with the Centers for Medicare & Medicaid Services. Allowance for doubtful accounts as of September 30, 2015 is as follows ( in thousands ): Balance, December 31, 2013 $ Provision Recoveries ) Charge-offs ) Balance, December 31, 2014 Provision Recoveries ) Charge-offs and other ) Balance, September 30, 2015 $ Our financial instruments are categorized into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. In the event the fair value is not readily available or determinable, the financial instrument is carried at cost and referred to as a cost method investment. The evaluation of whether an investment’s fair value is less than cost is determined by using a disclosed fair value estimate, if one is available, otherwise, it is determined by evaluating whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment (an impairment indicator). We are not aware of any identified events or change in circumstances that would have a significant adverse effect on the carrying value of our cost method investments. Financial instruments recorded at fair value on our unaudited consolidated balance sheets are categorized as follows: · Level 1: Observable inputs such as quoted prices in active markets; · Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and · Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The carrying amounts for our cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term nature of their maturities. The carrying value of our revolving credit facility approximates fair value based upon the variable rate terms. Goodwill, representing the excess of acquisition costs over the fair value of assets and liabilities of acquired businesses, is subject to a periodic assessment for impairment in accordance with Accounting Standards Codification (“ASC”) 350—Intangibles, Goodwill and Other. We assess goodwill for impairment on an annual basis as of June 30 of each year or more frequently if an event occurs or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our assessment of goodwill impairment is at the HMS Holdings Corp. entity level as we operate as a single reporting unit. We have the option to perform a qualitative assessment to determine if impairment is more likely than not to have occurred. If we can support the conclusion that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then we would not need to perform the two-step impairment test for that reporting unit. If we cannot support such a conclusion, or we do not elect to perform the qualitative assessment, then the first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. There are no impairment charges related to goodwill for any of the periods presented. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that amends the FASB ASC by creating a new Topic 606, Revenue from Contracts with Customers . The new guidance will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance on revenue recognition throughout the Industry Topics of the Codification. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. In addition, an entity should disclose sufficient qualitative and quantitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017, including interim periods within such annual reporting periods, with early adoption permitted to the original effective date of January 1, 2017. This amendment is to be either retrospectively adopted to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In July 2015, the FASB approved the option to defer this new revenue recognition standard by one year and allow early adoption as of the original effective date, but has not issued an ASU to effect this change. We continue to evaluate the impact of the adoption of this guidance to our consolidated financial statements. In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 brings consistency to the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. Effective January 1, 2015, we adopted the provisions of ASU 2014-12. The adoption of this guidance did not have a material effect on our consolidated financial statements. In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. In August 2015, FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”). ASU 2015-15 clarifies the presentation and measuring of debt issuance costs incurred in connection with line-of-credit arrangements given the lack of guidance on this topic in ASU 2015-03. For line-of-credit arrangements, an entity can continue to present debt issuance costs as an asset and amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. ASU 2015-03, as amended, is effective for annual reporting periods beginning after December 15, 2015, including interim periods within such annual reporting periods with early adoption permitted. ASU 2015-03 is to be retrospectively adopted to each prior reporting period presented. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements. In April 2015, FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”). ASU 2015-05 provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement and clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within such annual reporting periods with early adoption permitted. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements.

Intangible Assets

Intangible Assets	9 Months Ended
	Sep. 30, 2015
Intangible Assets
Intangible Assets	3. Intangible Assets Intangible assets consisted of the following at September 30, 2015 and December 31, 2014 ( in thousands ): Gross Value Accumulated Amortization Net Book Value Useful Life September 30, 2015 Customer relationships $ $ ) $ 5-10 years Restrictive covenants ) 3-7 years Trade name ) 3-5 years $ $ ) $ December 31, 2014 Customer relationships $ $ ) $ 5-10 years Restrictive covenants ) 3-7 years Trade name ) 3-5 years $ $ ) $ Estimated amortization expense for intangible assets is expected to approximate the following ( in thousands ): Year Ending December 31, Remainder of 2015 $ 2016 2017 2018 2019 Thereafter For the three and nine months ended September 30, 2015, amortization expense related to intangible assets was $5.0 million and $15.2 million, respectively. For the three and nine months ended September 30, 2014, amortization expense related to intangible assets was $5.2 million and $15.6 million, respectively.

Accounts Payable, Accrued Expen

Accounts Payable, Accrued Expenses and Other Liabilities	9 Months Ended
	Sep. 30, 2015
Accounts Payable, Accrued Expenses and Other Liabilities
Accounts Payable, Accrued Expenses and Other Liabilities	4. Accounts Payable, Accrued Expenses and Other Liabilities Accounts payable, accrued expenses and other liabilities at September 30, 2015 and December 31, 2014 consisted of the following ( in thousands ): September 30, 2015 December 31, 2014 Accounts payable, trade $ $ Accrued compensation Accrued operating expenses Total accounts payable, accrued expenses and other liabilities $ $

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2015
Income Taxes
Income Taxes	5. Income Taxes Our effective tax rate decreased to 38.1% from 42.0% for the three months ended September 30, 2015 and 2014, respectively, and decreased to 41.3% from 42.4% for the nine months ended September 30, 2015 and 2014, respectively, primarily due to changes in state apportionments and permanent differences. The principal differences between the statutory rate and our effective rate are state taxes and permanent differences. In April 2015, legislation was signed changing New York City tax law, which resulted in us recognizing approximately $0.6 million in discrete tax expense during the second quarter of 2015. This discrete item had no impact on the effective tax rate for the three months ended September 30, 2015 and a 1.3% impact for the nine months ended September 30, 2015. During the three and nine month period ended September 30, 2015, the Company recorded a discrete income tax benefit of $0.3 million from the release of an accrued liability for unrecognized tax benefits due to lapse in statute of limitations. This discrete item had an approximate tax rate impact of 2.8% and 1.1% for the three and nine months ended September 30, 2015, respectively. During the nine months ended September 30, 2015, we utilized $4.0 million in tax deductions arising from stock-based compensation, which resulted in an excess tax benefit of $1.5 million that was recorded to capital in excess of par value and an offsetting reduction to taxes payable. As of September 30, 2015 and 2014, the total amount of unrecognized tax benefits was approximately $1.1 million and $1.6 million, respectively (net of the federal benefit for state issues) that, if recognized, would favorably affect our future effective tax rate. As of September 30, 2015 and 2014, the accrued liability for interest expense and penalties related to unrecognized tax benefits was $0.4 million and $0.3 million, respectively. We include interest expense and penalties in the provision for income taxes in the unaudited Consolidated Statements of Comprehensive Income. The amount of interest expense (net of federal and state income tax benefits) and penalties in the unaudited Consolidated Statements of Comprehensive Income for the nine months ended September 30, 2015 and 2014 was immaterial. We do not expect any significant change in unrecognized tax benefits during the next twelve months. We file income tax returns with the U.S. Federal government and various state jurisdictions. We are no longer subject to U.S. Federal income tax examinations for years before 2012. We operate in a number of state and local jurisdictions, most of which have never audited our records. Accordingly, we are subject to state and local income tax examinations based upon the various statutes of limitations in each jurisdiction. We are currently being examined by the State of New York.

Credit Agreement

Credit Agreement	9 Months Ended
	Sep. 30, 2015
Credit Agreement
Credit Agreement	6. Credit Agreement In May 2013, we entered into a $500 million five-year, amended and restated revolving credit agreement (“2013 Credit Agreement”) with certain financial institutions and Citibank, N.A. as Administrative Agent . No principal payments were made against our revolving credit facility during the nine months ended September 30, 2015. During the nine months ended September 30, 2014, we made principal payments of $35.0 million. The $197.8 million principal balance of our revolving credit facility is due in May 2018. The 2013 Credit Agreement provides for an initial $500 million revolving credit facility, and, under specified circumstances, the revolving credit facility can be increased or one or more incremental term loan facilities can be added, provided that the incremental credit facilities do not exceed in the aggregate the sum of (a) $75 million plus (b) an additional amount not less than $25 million, so long as our total secured leverage ratio, calculated giving pro forma effect to the requested incremental borrowing and other customary and appropriate pro forma adjustment events, including any permitted acquisitions, is no greater than 2.5:1.0. The amount available to borrow is based on certain borrowing base calculations found in our 2013 Credit Agreement. The 2013 Credit Agreement is collateralized by our assets. The 2013 Credit Agreement contains certain customary representations and warranties, affirmative and negative covenants and events of default. The 2013 Credit Agreement requires us to comply, on a quarterly basis, with certain principal financial covenants, including a maximum consolidated leverage ratio of 3.25:1.00 and a minimum interest coverage ratio of 3.00:1.00. As of September 30, 2015, we were in compliance with all of the terms of the 2013 Credit Agreement. The interest rates applicable to the revolving credit facility are, at our option, either (a) the LIBOR multiplied by the statutory reserve rate plus an interest margin ranging from 1.50% to 2.25% based on our consolidated leverage ratio, or (b) a base rate (which is equal to the greatest of (a) Citibank’s prime rate, (b) the federal funds effective rate plus 0.50% and (c) the one-month LIBOR plus 1.00% plus an interest margin ranging from 0.50% to 1.25% based on our consolidated leverage ratio). The applicable interest rate was 2.08% at September 30, 2015. We pay an unused commitment fee on the revolving credit facility during the term of the 2013 Credit Agreement ranging from 0.375% to 0.50% per annum based on our consolidated leverage ratio. Our obligations under the 2013 Credit Agreement may be accelerated upon the occurrence of an event of default, which includes customary events of default including, without limitation, payment defaults, failures to perform affirmative covenants, failure to refrain from actions or omissions prohibited by negative covenants, the inaccuracy of representations or warranties, cross-defaults, bankruptcy and insolvency related defaults, defaults relating to judgments, defaults due to certain ERISA related events and a change of control default. The interest expense and the commitment fees on the unused portion of our revolving credit facility are as follows (in thousands): Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Interest expense $ $ $ $ Commitment fees $ $ $ $ At September 30, 2015 and December 31, 2014, the unamortized balance of deferred origination fees and debt issue costs were $5.4 million and $7.0 million, respectively. For the three months ended September 30, 2015 and 2014, we amortized $0.5 million of interest expense related to our deferred origination fees and debt issue costs in each of the respective periods. For the nine months ended September 30, 2015 and 2014, we amortized $1.5 million and $1.6 million of interest expense related to our deferred origination fees and debt issue costs in each of the respective periods. Although we expect that operating cash flows will continue to be a primary source of liquidity for our operating needs, the revolving credit facility may be used for general corporate purposes, including acquisitions, if necessary. As part of our contractual agreement with a customer, we have an outstanding irrevocable letter of credit for $3.0 million, which we established against the revolving credit facility. The letter of credit will expire on June 30, 2016.

Earnings per Share

Earnings per Share	9 Months Ended
	Sep. 30, 2015
Earnings per Share
Earnings per Share	7. Earnings Per Share Basic income per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted income per share is calculated by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding during the period. Our dilutive common share equivalents consist of stock options and restricted stock awards and units. The following table reconciles the basic to diluted weighted average common shares outstanding using the treasury stock method ( in thousands, except per share data ): Basic and diluted Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Net income $ $ $ $ Weighted average common shares outstanding — basic Plus: net effect of dilutive stock options Plus: net effect of dilutive restricted stock awards and units Weighted average common shares outstanding — diluted Net income per common share — basic $ $ $ $ Net income per common share — diluted $ $ $ $ For the three months ended September 30, 2015 and 2014, 3,708,228 and 2,251,303 stock options, respectively, and 71,581 and 2,367 restricted stock units, respectively, were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive. For the nine months ended September 30, 2015 and 2014, 3,490,887 and 2,395,158 stock options, respectively, 169,682 and 79,947 restricted stock awards and units, respectively, were not included in the diluted earnings per share calculation because the effect would have been anti-dilutive.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2015
Stock-Based Compensation
Stock-Based Compensation	8. Stock-Based Compensation Total stock-based compensation expense charged as a selling, general and administrative expense in our unaudited Consolidated Statements of Comprehensive Income related to our stock compensation plans was $3.1 million and $2.9 million for the three months ended September 30, 2015 and 2014, respectively, and $10.2 million and $9.1 million for the nine months ended September 30, 2015 and 2014, respectively. Stock Options Presented below is a summary of our stock option activity for the nine months ended September 30, 2015 (in thousands, except for weighted average exercise price and weighted average remaining contractual terms): Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Terms Aggregate Intrinsic Value Outstanding at December 31, 2014 $ Granted Exercised ) Forfeited ) Expired ) Outstanding at September 30, 2015 $ Expected to vest at September 30, 2015 — Exercisable at September 30, 2015 $ $ For awards subject to service-based vesting conditions, we recognize stock-based compensation expense, net of estimated forfeitures, equal to the grant date fair value of stock options on a straight-line basis over the requisite service period, which is generally the vesting term. For awards subject to both performance and service-based vesting conditions, we recognize stock-based compensation expense using the straight-line recognition method when it is probable that the performance condition will be achieved. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The fair value of each option grant with service-based vesting conditions was estimated using a Black-Scholes option-pricing valuation model. The performance share awards granted in 2014 and 2015 are market condition awards as attainment is based on the performance of our common stock for the relevant performance period. These awards were valued on the date of grant using a Monte Carlo simulation model. Expected volatilities are calculated based on the historical volatility of our common stock. Management monitors stock option exercises and employee termination patterns to estimate forfeiture rates within the valuation model. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected holding period of options represents the period of time that options granted are expected to be outstanding. The expected terms of options granted are based on our historical experience for similar types of stock option awards. The risk-free interest rate is based on U.S. Treasury Notes. The weighted average grant-date fair value per share of the stock options granted during the three months ended September 30, 2015 and 2014 was $3.80 and $7.24, respectively. We estimated the fair value of each stock option grant on the date of grant using a Black-Scholes option-pricing valuation model and the weighted-average assumptions set forth in the following table: Nine months ended September 30, 2015 2014 Expected dividend yield — — Risk-free interest rate Expected volatility Expected life 4.90 years 4.81 years During the three months ended September 30, 2015 and 2014, we issued 105,462 shares and 36,016 shares, respectively, of our common stock upon the exercise of outstanding stock options and received proceeds of $0.8 million and $0.1 million, respectively. For the three months ended September 30, 2015 and 2014, stock-based compensation expense for stock options was $1.4 million and $1.7 million, respectively. We recognized excess income tax benefit of approximately $21,000 and $17,000 from the exercise of stock options in our unaudited Consolidated Statement of Shareholders’ Equity for the three months ended September 30 , 2015 and 2014, respectively. During the nine months ended September 30, 2015 and 2014, we issued 577,559 shares and 352,057 shares, respectively, of our common stock upon the exercise of outstanding stock options and received proceeds of $4.2 million and $3.3 million, respectively. For the nine months ended September 30, 2015 and 2014, stock-based compensation expense for stock options was $4.5 million and $5.3 million, respectively. We recognized excess income tax benefit of $1.5 million and $0.9 million from the exercise of stock options in our unaudited Consolidated Statement of Shareholders’ Equity for the nine months ended September 30 , 2015 and 2014, respectively. As of September 30, 2015, there was $11.1 million of total unrecognized compensation cost, adjusted for estimated forfeitures, related to stock options outstanding, which is expected to be recognized over a weighted-average period of 1.16 years. The total intrinsic value of options exercised (the difference in the market price of our common stock on the exercise date and the price paid by the optionees to exercise the options) for the three months ended September 30, 2015 and 2014 was $0.2 million and $0.6 million, respectively. The total intrinsic value of options exercised for the nine months ended September 30, 2015 and 2014 was $5.9 million and $3.9 million, respectively. Restricted Stock Units Our non-employee members of our Board of Directors and certain employees have received restricted stock units under the Fourth Amended and Restated 2006 Stock Plan (the “2006 Stock Plan”). The fair value of restricted stock units is estimated based on the closing sale price of our common stock on the NASDAQ Global Select Market on the date of issuance. The total number of restricted stock units expected to vest is adjusted by estimated forfeiture rates. Shares withheld to pay taxes upon the vesting of restricted stock units are retired. For the three months ended September 30, 2015, we granted 5,642 restricted stock units with an aggregate fair market value of approximately $49,000. For the three months ended September 30, 2014, we granted 14,518 restricted stock units with an aggregate fair market value of $0.3 million. For the three months ended September 30, 2015 and 2014, stock-based compensation expense for restricted stock units was $1.7 million and $1.2 million, respectively. For the nine months ended September 30, 2015, we granted 665,326 restricted stock units with an aggregate fair market value of $11.1 million. For the nine months ended September 30, 2014, we granted 261,282 restricted stock units with an aggregate fair market value of $5.3 million. For the nine months ended September 30, 2015 and 2014, stock-based compensation expense for restricted stock units was $5.7 million and $3.7 million, respectively. At September 30, 2015, 1,240,052 restricted stock units remained unvested and there was $15.8 million of unamortized compensation cost related to these restricted stock units, which is expected to be recognized over the remaining weighted-average vesting period of 1.29 years. A summary of the status of our restricted stock units and of changes in restricted stock units outstanding under the 2006 Stock Plan for the nine months ended September 30, 2015 is as follows ( in thousands, except for weighted average grant date fair value per unit ): Number of Units Weighted Average Grant Date Fair Value per Unit Outstanding balance at December 31, 2014 $ Granted Vesting of restricted stock units, net of shares withheld for taxes ) Shares withheld for taxes ) Forfeitures ) Outstanding balance at September 30, 2015 $ Restricted Stock Awards We did not issue restricted stock awards during the three and nine months ended September 30, 2015 and 2014. There was no stock-based compensation expense related to previously granted stock awards for the nine months ended September 30, 2015. Stock-based compensation expense related to previously granted restricted stock awards was $0.1 million for the nine months ended September 30, 2014, which was recorded in the first quarter of 2014.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2015
Commitments and Contingencies
Commitments and Contingencies	9. Commitments and Contingencies Legal Proceedings From time to time, we may be subject to investigations, legal proceedings and other disputes arising in the ordinary course of our business, including but not limited to regulatory audits, billing and contractual disputes and employment-related matters. We record accruals for outstanding legal matters when we believe it is probable that a loss will be incurred and the amount can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, we do not establish an accrued liability. We believe that none of our accruals for outstanding legal matters are material in the aggregate to our financial position. Our contractual relationships, including those with federal and state government entities, subject our operations, billing and business practices to scrutiny and audit, including by multiple agencies and levels of government, as well as to frequent transitions and changes in the personnel responsible for oversight of our contractual performance. From time to time, we may have contractual disputes with our customers arising from differing interpretations of contractual provisions that define our rights, obligations, scope of work or terms of payment, and with associated claims of liability for inaccurate or improper billing for reimbursement of contract fees, or for sanctions or damages for alleged performance deficiencies. Resolution of such disputes may involve litigation or may require that we accept some amount of loss or liability in order to avoid customer abrasion, negative marketplace perceptions and other disadvantageous results that could adversely affect our business, financial condition, results of operations and cash flows. Kern Health Systems : In August 2011, in the Superior Court of the State of California, County of Los Angeles, Kern Health Systems (“KHS” or “Plaintiff”) sought to recover in excess of $7.0 million exclusive of interest, attorneys’ fees and costs, against Allied Management Group Special Investigation Unit, Inc. (“AMG”), Dennis Demetre and Lori Lewis (collectively, “Defendants”), jointly and severally, on causes of action for breach of contract, professional negligence, intentional misrepresentation, negligent misrepresentation and unfair business practices under the California Business and Professions Code. On June 9, 2014, the jury issued its verdict in favor of all Defendants, and against KHS, on all causes of action except negligent misrepresentation. On that cause of action, the jury issued a verdict against all Defendants, jointly and severally, in the sum of $1.38 million. The negligent misrepresentation verdict was based on representations to KHS allegedly made by AMG and former owner Dennis Demetre in the spring of 2008, prior to our acquisition of AMG. We believe that the jury erroneously awarded damages based on an error inasmuch as the jury unanimously found that Defendants (through Demetre) made the negligent misrepresentation to KHS while having reasonable grounds for believing the representation to be true. Based on the jury’s verdict, we believe we are properly characterized as the prevailing party on the breach of contract claim. AMG has filed an appeal of the verdict and is seeking to recover its attorneys’ fees and costs in the sum of approximately $2.3 million. We have not recorded an obligation on this matter at this time, as we have appealed this decision and believe it is probable that we will prevail on the appeal of this matter, although there are risks and uncertainties related to any litigation, including appeals, and neither we nor our counsel can assure litigation results. Pending the appeal process, we were required to obtain a surety bond in the amount of 150% of the final judgment amount, or approximately $2.2 million, which was collateralized by a cash deposit and is reflected in Other current assets on our unaudited Consolidated Balance Sheet at September 30, 2015. Dennis Demetre and Lori Lewis : In July 2012, two of AMG’s former owners, Dennis Demetre and Lori Lewis (the “Plaintiffs”), filed an action in the Supreme Court of the State of New York, claiming an undetermined amount of damages alleging that various actions unlawfully deprived the Plaintiffs of the acquisition earn-out portion of the purchase price of AMG under the applicable Stock Purchase Agreement (the “SPA”) and that we had breached certain contractual provisions under the SPA. The Plaintiffs filed a second amended complaint with two causes of action for breach of contract and one cause of action for breach of implied covenant of good faith and fair dealing. Although the Plaintiffs have also alleged an action based on fraud, the court dismissed that claim and further denied their subsequent appeal to resurrect the dismissed claim. We filed a counterclaim for breach of contract arising out of the Plaintiffs’ failure to indemnify us for costs, including attorneys’ fees arising out of our defense of the Kern Health Systems matter described above and for fraud and negligent misrepresentation arising out of the Plaintiffs’ misrepresentations concerning capabilities of their software platform. On July 13, 2015, the court granted in part and denied in part the Plaintiffs’ motion to dismiss our counterclaims, allowing our counterclaim for breach of contract to proceed but dismissing our counterclaims for fraud and negligent misrepresentation. This case continues in the discovery phase. We believe we have a meritorious defense and will continue to defend this matter vigorously, although there are risks and uncertainties related to any litigation. Restrictive Covenants, Trade Secret, Contract and other Causes of Action in Texas and New York : We are the plaintiff in lawsuits filed in August 2014, entitled HMS Holdings Corp., et al. v. Public Consulting Group, Inc., James Gambino and Jason Ramos, in the District Court of Dallas County, Texas, Cause No. DC-14-09047 (the “Texas Action”), and HMS Holdings Corp., et al. v. Matthew Arendt, Sean Curtin and Danielle Lange, in the New York State Supreme Court, Albany County, Index No. A00754/2014 (the “New York Action”). In July 2015, we filed a third lawsuit, entitled HMS Holdings Corp., et al. v. Elena Moiseenko and Joseph Flora, in the New York State Supreme Court, Albany County, Index No. 900859/2015 (the “Second New York Action”). These suits allege that, in violation of their respective contractual, statutory and common law obligations to us, defendants Public Consulting Group, Inc. (“PCG”), Joseph Flora and former HMS employees Gambino, Ramos, Arendt, Curtin, Lange and Moiseenko unlawfully misappropriated our confidential, proprietary and trade secret information and committed other wrong doing. Flora is a former Director of the Bureau of Third-Party Liability at the New York State Office of the Medicaid Inspector General (“OMIG”) who was subsequently hired as a so-called consultant by PCG and provided an unredacted copy of our third-party liability (“TPL”) contract, containing our confidential information, to PCG while being paid as a so-called consultant by PCG. The lawsuits seek damages and injunctive relief and assert causes of action including breach of contract, breach of fiduciary duty and misappropriation of trade secrets. Through discovery and forensic investigation in the lawsuits, we uncovered the wrongful destruction of evidence by one or more defendants and sought judicial relief in the New York Action against those defendants. On May 19, 2015, the New York court concluded that defendants Curtin and Lange engaged in egregious misconduct and issued an order granting our motion for spoliation of evidence, which ordered that Curtin and Lange repay our associated attorneys’ fees and costs without reimbursement by defendant PCG and that Lange was reported to the New York State Bar Association for professional misconduct. After a motion from Curtin and Lange seeking reargument, the New York court amended its May 19, 2015 order to allow Curtin and Lange to seek reimbursement or indemnification of the awarded attorneys’ fees and costs from PCG. We are seeking reimbursement of approximately $0.45 million from Curtin and Lange pursuant to the court’s sanction order. We also have sought injunctions in both the Texas and New York Actions. On July 10, 2015, the court in the Texas Action issued an order granting a temporary injunction against PCG, Gambino and Ramos. The Texas court found that we had proved the existence of unlawful conduct and had demonstrated a probable right to recovery at trial regarding our claims against PCG, Gambino and Ramos, including claims involving the misappropriation of our confidential, proprietary and trade secret information and the improper solicitation of our employees in violation of our agreements with PCG. The Texas court further found that an injunction was necessary to avoid imminent and irreparable harm to us. As such, the Texas court entered a temporary injunction that enjoined, in pertinent part: (i) PCG from accessing or using any of our confidential or proprietary information, including, but not limited to, in order to solicit, divert or take away the TPL business of any State Medicaid or other healthcare agency; (ii) PCG from using the services of Curtin or Lange (who are defendants in the New York Action as discussed herein) to solicit, review, prepare or submit proposals for, or to in any way provide services related to TPL for PCG; (iii) PCG from using certain of its prior Request for Proposal (“RFP”) responses that contain or were prepared using our confidential information in its preparation of any future PCG TPL response; (iv) Gambino and Ramos from using any of our confidential information or from developing, assisting or advising on PCG TPL proposals for our customer RFPs; and (v) PCG from soliciting any of our employees except as may be permitted under prior agreements between us and PCG (the “Texas Injunction”). The Texas Injunction was ordered to remain in place through the time of trial in the Texas Action, which the court has initially set for March 2016. As a condition to obtaining the Texas Injunction, we were required to post a surety bond in the amount of $0.5 million. On August 3, 2015, we filed an appeal of the Texas Injunction to, among other things, expand upon the relief the trial court awarded to include an injunction against PCG’s providing TPL services to State Medicaid agencies through the time of trial. PCG, Gambino and Ramos filed a cross-appeal which we are opposing. On August 14, 2015, PCG filed a counterclaim against us in the Texas Action claiming damages for alleged business disparagement and for tortious interference with an existing contract and prospective business relations. Our answer to PCG’s counterclaim was filed on September 8, 2015 denying the counterclaim. Additionally, on October 6, 2015, PCG moved for partial summary judgment on our claims related to certain PCG TPL proposals. We intend to file a response opposing PCG’s motion. On July 14, 2015, the court in the New York Action issued its decision and order on our motion for a preliminary injunction. The New York court found that our trade secret protection had not been waived and that we were entitled to continued protection, and that we had successfully established a likelihood of prevailing on our non-solicitation claims against Curtin, Lange and Arendt and on our trade secret misappropriation claims against Curtin and Lange; however, the court held that injunctive relief in the New York Action was not necessary due to the Texas Injunction. The court’s order also preserved our right to again seek injunctive relief in the New York Action in the event of a change of status regarding the Texas Injunction. The New York court has set a tentative trial date for June 2016. On August 4, 2015, the court in the Second New York Action issued an order to show cause and entered a temporary restraining order against defendants Moiseenko and Flora enjoining them from using, disclosing or otherwise misappropriating our confidential, proprietary and trade secret information pending the court’s final determination of our motion for a preliminary injunction in this matter, which is still pending. This Action, along with the Texas and New York Actions, continue in the discovery phase. As previously disclosed, on July 17, 2015, we received notice that re-procurement of the TPL contract with the New Jersey Department of Human Services had been awarded to PCG. After document production issues are resolved with the New Jersey Department of Human Services, we intend to file a protest with the State of New Jersey Division of Purchase and Property (the “Division”) challenging the contract award to PCG. Pursuant to chapter 12 of the New Jersey Administrative Code, “[i]f the contract award is protested . . . the Division shall not award the contract in question until a final decision is rendered by the Director [of the Division] on the merits of the protest. The Director [of the Division] may award the contract, notwithstanding the receipt of a protest . . . if the failure to award the contract will result in substantial cost to the State or if public exigency so requires. In such event, the Director [of the Division] shall notify all interested parties.” N.J.A.C. 17:12–3.3(c). As previously disclosed in our Current Report on Form 8-K filed with the SEC on October 1, 2015, we entered into a 60-day extension on our current contract through November 29, 2015. In addition, as previously disclosed in our Current Report on Form 8-K filed with the SEC on August 24, 2015, we received notice that following a competitive re-procurement process, the New York State OMIG had selected us for award of the new Medicaid Third Party Liability Match and Recovery Services contract. On September 23, 2015, PCG filed a protest of the award with the New York Office of the State Comptroller. On October 8, 2015, we filed a response opposing PCG’s protest. While we believe our legal claims are meritorious, there are inherent uncertainties in any litigation, and there can be no assurances that we will ultimately prevail at trial or with the protests, or that the rulings in these proceedings are or will be adequate to protect our confidential or trade secret information. Letter of Credit During the second quarter, the letter of credit was amended (see Note 6). The required balance was reduced from $4.6 million to $3.0 million. The expiration date of the letter of credit is June 30, 2016.

Equity

Equity	9 Months Ended
	Sep. 30, 2015
Equity
Equity	10. Equity Repurchases of Shares of Common Stock On July 30, 2015, our Board of Directors approved a share repurchase program authorizing the repurchase of up to $75 million of our common stock from time to time on the open market or in privately negotiated transactions. The repurchase program is authorized through July 30, 2017, and may be suspended or discontinued at any time. Repurchased shares will be available for use in connection with reissuance under our stock plans and for other corporate purposes. Repurchases may also be made under a Rule 10b5-1 plan, which would permit shares to be repurchased when we might otherwise be precluded from doing so under insider trading laws. The timing and amount of any shares repurchased under the program will be determined by our management based on its evaluation of market conditions and other factors. During the current quarter, we repurchased $25 million of our common stock pursuant to this authorization and a 10b5-1 plan. The summary of our repurchases of our common stock through the date hereof is as follows: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program July 1, 2015 to September 30, 2015 $ $

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2015
Subsequent Events
Subsequent Events	11. Subsequent Events In connection with the preparation of these unaudited Consolidated Financial Statements, an evaluation of subsequent events was performed through the date these unaudited Consolidated Financial Statements were issued. On October 28, 2015, the Compensation Committee of the Board of Directors authorized stock option awards and restricted stock units to be granted on November 11, 2015 to our employees and the non-employee members of our Board of Directors. The stock options and restricted stock units vest over a range of one to four years. On October 31, 2015, we entered into a separation, waiver and general release agreement (the “Separation Agreement”) with Eugene V. DeFelice, pursuant to which he resigned as Executive Vice President, General Counsel and Secretary, effective November 15, 2015. In exchange for Mr. DeFelice’s commitments under the Separation Agreement, including his commitment to provide post-employment transition and cooperation assistance regarding currently pending litigation and other ongoing legal matters as we reasonably request, extended non-compete and non-solicitation terms, a general release of claims and additional non-disclosure obligations, Mr. DeFelice is entitled to receive (i) up to two years base salary continuation, (ii) up to two times his annual target bonus amount, (iii) the premium costs associated with 18 months of continued group medical insurance coverage and (iv) continued vesting of currently outstanding equity awards under the terms of, and at the regular vesting schedule applicable, under our equity incentive plans and his prior equity incentive awards. There are no other events that have occurred that would require adjustments to or disclosure in our unaudited Consolidated Financial Statements.

Summary of Significant Accoun18

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2015
Summary of Significant Accounting Policies
Revenue Recognition And Estimated Liability And Allowance For Appeals And Doubtful Accounts	As of September 30, 2015, we have accrued an estimated liability for appeals and estimated allowance for appeals based on our historical experience with this activity under our customers’ contracts. Any future changes to any of our customer contracts, including further modifications to the transition plan for incumbent Medicare Recovery Audit Contractors (“RAC”), may require us to apply different assumptions that could affect our estimated liability for future periods. We similarly accrue an allowance against accounts receivable related to fees yet to be collected, based on the same estimates used to establish the estimated liability for appeals of fees received. Our inability or failure to correctly estimate or accrue the estimated liabilities and allowance for appeals or accounts receivable could adversely affect our revenue in current or future periods. Estimated liability for appeals and estimated allowance for appeals as of September 30, 2015 are as follows ( in thousands ): Balance, December 31, 2013 $ Provision Appeals found in providers’ favor (1) ) Balance, December 31, 2014 (2) Provision Appeals found in providers’ favor (1) ) Balance, September 30, 2015 (2) $ (1) Includes appeals, closures or other adjustments. (2) Includes $2,650 and $4,824 related to estimated allowance for appeals that apply to uncollected accounts receivable as of September 30, 2015 and December 31, 2014, respectively. In the first nine months of 2015 and 2014, within our estimated allowance for appeals found in favor of providers, $6.0 million and $22.2 million, respectively, was activity associated with our Medicare RAC contract with the Centers for Medicare & Medicaid Services. Allowance for doubtful accounts as of September 30, 2015 is as follows ( in thousands ): Balance, December 31, 2013 $ Provision Recoveries ) Charge-offs ) Balance, December 31, 2014 Provision Recoveries ) Charge-offs and other ) Balance, September 30, 2015 $
Fair Value of Financial Instruments	Our financial instruments are categorized into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. In the event the fair value is not readily available or determinable, the financial instrument is carried at cost and referred to as a cost method investment. The evaluation of whether an investment’s fair value is less than cost is determined by using a disclosed fair value estimate, if one is available, otherwise, it is determined by evaluating whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment (an impairment indicator). We are not aware of any identified events or change in circumstances that would have a significant adverse effect on the carrying value of our cost method investments. Financial instruments recorded at fair value on our unaudited consolidated balance sheets are categorized as follows: · Level 1: Observable inputs such as quoted prices in active markets; · Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and · Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The carrying amounts for our cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term nature of their maturities. The carrying value of our revolving credit facility approximates fair value based upon the variable rate terms. Goodwill, representing the excess of acquisition costs over the fair value of assets and liabilities of acquired businesses, is subject to a periodic assessment for impairment in accordance with Accounting Standards Codification (“ASC”) 350—Intangibles, Goodwill and Other. We assess goodwill for impairment on an annual basis as of June 30 of each year or more frequently if an event occurs or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our assessment of goodwill impairment is at the HMS Holdings Corp. entity level as we operate as a single reporting unit. We have the option to perform a qualitative assessment to determine if impairment is more likely than not to have occurred. If we can support the conclusion that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then we would not need to perform the two-step impairment test for that reporting unit. If we cannot support such a conclusion, or we do not elect to perform the qualitative assessment, then the first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. There are no impairment charges related to goodwill for any of the periods presented.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) that amends the FASB ASC by creating a new Topic 606, Revenue from Contracts with Customers . The new guidance will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance on revenue recognition throughout the Industry Topics of the Codification. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. In addition, an entity should disclose sufficient qualitative and quantitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017, including interim periods within such annual reporting periods, with early adoption permitted to the original effective date of January 1, 2017. This amendment is to be either retrospectively adopted to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. In July 2015, the FASB approved the option to defer this new revenue recognition standard by one year and allow early adoption as of the original effective date, but has not issued an ASU to effect this change. We continue to evaluate the impact of the adoption of this guidance to our consolidated financial statements. In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 brings consistency to the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. Effective January 1, 2015, we adopted the provisions of ASU 2014-12. The adoption of this guidance did not have a material effect on our consolidated financial statements. In April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). ASU 2015-03 simplifies the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by ASU 2015-03. In August 2015, FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements (“ASU 2015-15”). ASU 2015-15 clarifies the presentation and measuring of debt issuance costs incurred in connection with line-of-credit arrangements given the lack of guidance on this topic in ASU 2015-03. For line-of-credit arrangements, an entity can continue to present debt issuance costs as an asset and amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. ASU 2015-03, as amended, is effective for annual reporting periods beginning after December 15, 2015, including interim periods within such annual reporting periods with early adoption permitted. ASU 2015-03 is to be retrospectively adopted to each prior reporting period presented. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements. In April 2015, FASB issued ASU 2015-05, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2015-05”). ASU 2015-05 provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement and clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU 2015-05 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within such annual reporting periods with early adoption permitted. We do not expect the adoption of this guidance to have a material effect on our consolidated financial statements.

Summary of Significant Accoun19

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2015
Summary of Significant Accounting Policies
Schedule of estimated liability of appeals and estimated allowance for appeals, and allowances for doubtful accounts	Estimated liability for appeals and estimated allowance for appeals as of September 30, 2015 are as follows ( in thousands ): Balance, December 31, 2013 $ Provision Appeals found in providers’ favor (1) ) Balance, December 31, 2014 (2) Provision Appeals found in providers’ favor (1) ) Balance, September 30, 2015 (2) $ (1) Includes appeals, closures or other adjustments. (2) Includes $2,650 and $4,824 related to estimated allowance for appeals that apply to uncollected accounts receivable as of September 30, 2015 and December 31, 2014, respectively. Allowance for doubtful accounts as of September 30, 2015 is as follows ( in thousands ): Balance, December 31, 2013 $ Provision Recoveries ) Charge-offs ) Balance, December 31, 2014 Provision Recoveries ) Charge-offs and other ) Balance, September 30, 2015 $

Intangible Assets (Tables)

Intangible Assets (Tables)	9 Months Ended
	Sep. 30, 2015
Intangible Assets
Summary of intangible assets	Intangible assets consisted of the following at September 30, 2015 and December 31, 2014 ( in thousands ): Gross Value Accumulated Amortization Net Book Value Useful Life September 30, 2015 Customer relationships $ $ ) $ 5-10 years Restrictive covenants ) 3-7 years Trade name ) 3-5 years $ $ ) $ December 31, 2014 Customer relationships $ $ ) $ 5-10 years Restrictive covenants ) 3-7 years Trade name ) 3-5 years $ $ ) $
Schedule of estimated amortization expense of intangible assets	Estimated amortization expense for intangible assets is expected to approximate the following ( in thousands ): Year Ending December 31, Remainder of 2015 $ 2016 2017 2018 2019 Thereafter

Accounts Payable, Accrued Exp21

Accounts Payable, Accrued Expenses and Other Liabilities (Tables)	9 Months Ended
	Sep. 30, 2015
Accounts Payable, Accrued Expenses and Other Liabilities
Schedule of accounts payable, accrued expenses and other liabilities	Accounts payable, accrued expenses and other liabilities at September 30, 2015 and December 31, 2014 consisted of the following ( in thousands ): September 30, 2015 December 31, 2014 Accounts payable, trade $ $ Accrued compensation Accrued operating expenses Total accounts payable, accrued expenses and other liabilities $ $

Credit Agreement (Tables)

Credit Agreement (Tables)	9 Months Ended
	Sep. 30, 2015
Credit Agreement
Schedule of interest expense and commitment fees on unused portion of revolving credit facility	The interest expense and the commitment fees on the unused portion of our revolving credit facility are as follows (in thousands): Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Interest expense $ $ $ $ Commitment fees $ $ $ $

Earnings per Share (Tables)

Earnings per Share (Tables)	9 Months Ended
	Sep. 30, 2015
Earnings per Share
Schedule of basic and diluted earnings per share	The following table reconciles the basic to diluted weighted average common shares outstanding using the treasury stock method ( in thousands, except per share data ): Basic and diluted Three months ended Nine months ended September 30, September 30, 2015 2014 2015 2014 Net income $ $ $ $ Weighted average common shares outstanding — basic Plus: net effect of dilutive stock options Plus: net effect of dilutive restricted stock awards and units Weighted average common shares outstanding — diluted Net income per common share — basic $ $ $ $ Net income per common share — diluted $ $ $ $

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2015
Stock-Based Compensation
Summary of stock option activity	Presented below is a summary of our stock option activity for the nine months ended September 30, 2015 (in thousands, except for weighted average exercise price and weighted average remaining contractual terms): Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Terms Aggregate Intrinsic Value Outstanding at December 31, 2014 $ Granted Exercised ) Forfeited ) Expired ) Outstanding at September 30, 2015 $ Expected to vest at September 30, 2015 — Exercisable at September 30, 2015 $ $
Schedule of weighted -average assumptions used for estimating fair value of each stock option grant on the date of grant	Nine months ended September 30, 2015 2014 Expected dividend yield — — Risk-free interest rate Expected volatility Expected life 4.90 years 4.81 years
Summary of status of restricted stock units	A summary of the status of our restricted stock units and of changes in restricted stock units outstanding under the 2006 Stock Plan for the nine months ended September 30, 2015 is as follows ( in thousands, except for weighted average grant date fair value per unit ): Number of Units Weighted Average Grant Date Fair Value per Unit Outstanding balance at December 31, 2014 $ Granted Vesting of restricted stock units, net of shares withheld for taxes ) Shares withheld for taxes ) Forfeitures ) Outstanding balance at September 30, 2015 $

Equity (Tables)

Equity (Tables)	9 Months Ended
	Sep. 30, 2015
Equity
Schedule of repurchases of common stock	eriod Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program July 1, 2015 to September 30, 2015 $ $

Summary of Significant Accoun26

Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands		9 Months Ended			12 Months Ended
		Sep. 30, 2015		Sep. 30, 2014	Dec. 31, 2014
Reconciliation of valuation and qualifying accounts
Estimated liability for appeals		$ 34,892			$ 36,799
Goodwill
Impairment of goodwill		0
Estimated liability for appeals and estimated allowance for appeals
Reconciliation of valuation and qualifying accounts
Balance at the beginning of the period		41,623	[1]	$ 55,791	55,791
Provision		9,670			16,822
Appeals found in providers' favor	[2]	(13,751)			(30,990)
Balance at the end of the period	[1]	37,542			41,623
Estimated liability for appeals		2,650			4,824
Allowance for doubtful accounts
Reconciliation of valuation and qualifying accounts
Balance at the beginning of the period		1,898		916	916
Provision		1,295			6,085
Recoveries		(100)			(17)
Charge-offs					(5,086)
Charge-offs and other		(421)
Balance at the end of the period		2,672			$ 1,898
CMS | Estimated liability for appeals and estimated allowance for appeals
Reconciliation of valuation and qualifying accounts
Appeals found in providers' favor		$ 6,000		$ 22,200
[1]	Includes $2,650 and $4,824 related to estimated allowance for appeals that apply to uncollected accounts receivable as of September 30, 2015 and December 31, 2014, respectively.
[2]	Includes appeals, closures or other adjustments.

Intangible Assets (Details)

Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2005	Sep. 30, 2004	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Intangible assets
Intangible assets, gross			$ 136,806		$ 137,755
Less: Accumulated amortization			(77,454)		(63,177)
Intangible assets, net			59,352		74,578
Amortization of intangibles
Remainder of 2015			5,044
2,016			19,933
2,017			16,613
2,018			15,993
2,019			1,582
Thereafter			187
Amortization expense	$ 5,000	$ 5,200	15,226	$ 15,572
Customer Relationships
Intangible assets
Intangible assets, gross			101,806		102,755
Less: Accumulated amortization			(53,909)		(44,020)
Intangible assets, net			47,897		58,735
Restrictive Covenant
Intangible assets
Intangible assets, gross			18,000		18,000
Less: Accumulated amortization			(13,939)		(11,394)
Intangible assets, net			4,061		6,606
Trade Names
Intangible assets
Intangible assets, gross			17,000		17,000
Less: Accumulated amortization			(9,606)		(7,763)
Intangible assets, net			$ 7,394		$ 9,237
Minimum | Customer Relationships
Intangible assets
Useful Life			5 years		5 years
Minimum | Restrictive Covenant
Intangible assets
Useful Life			3 years		3 years
Minimum | Trade Names
Intangible assets
Useful Life			3 years		3 years
Maximum | Customer Relationships
Intangible assets
Useful Life			10 years		10 years
Maximum | Restrictive Covenant
Intangible assets
Useful Life			7 years		7 years
Maximum | Trade Names
Intangible assets
Useful Life			5 years		5 years

Accounts Payable, Accrued Exp28

Accounts Payable, Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accounts Payable, Accrued Expenses and Other Liabilities
Accounts payable, trade	$ 5,592	$ 14,840
Accrued compensation	20,704	16,895
Accrued operating expenses	17,292	22,814
Total accounts payable, accrued expenses and other liabilities	$ 43,588	$ 54,549

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Effective income tax rate (as a percent)	38.10%		42.00%	41.30%	42.40%
Discrete tax expense due to change in tax laws	$ 300			$ 300
Discrete tax rate changes due to change in tax laws (as a percent)	2.80%			1.10%
Excess tax benefit from exercise of stock options	$ 21,000			$ 1,477
Tax deductions arising from stock-based compensation				4,000
Net unrecognized tax benefits	1,100		$ 1,600	1,100	$ 1,600
Accrued liabilities for interest expense and penalties related to unrecognized tax benefits	$ 400		$ 300	$ 400	$ 300
State and Local Jurisdiction [Member]
Discrete tax expense due to change in tax laws		$ 600
Discrete tax rate changes due to change in tax laws (as a percent)	0.00%			1.30%

Credit Agreement (Details)

Credit Agreement (Details) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	May. 31, 2013USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2014USD ($)	Sep. 30, 2015USD ($)item	Sep. 30, 2014USD ($)	Dec. 31, 2014USD ($)
Credit agreement
Repayment of revolving credit facility					$ 35,000
Revolving credit facility		$ 197,796		$ 197,796		$ 197,796
Interest expense				1,500	1,600
Unamortized balance of deferred origination fees and debt issue costs		5,400		5,400		$ 7,000
Amortization of financing cost		500	$ 500	1,563	1,563
Irrevocable letter of credit or Letter of Credit outstanding		3,000		$ 3,000
2013 Credit Agreement
Credit agreement
Principal borrowing capacity	$ 500,000
Period of revolving credit facility	5 years
Amount of incremental credit facilities under specified circumstances	$ 75,000
Line of Credit Facility, Covenant Compliance				As of September 30, 2015, we were in compliance with all of the terms of the 2013 Credit Agreement.
Minimum | 2013 Credit Agreement
Credit agreement
Additional amount of incremental credit facilities under specified circumstances	$ 25,000
Minimum interest coverage ratio	3
Maximum | 2013 Credit Agreement
Credit agreement
Secured leverage ratio	2.5
Maximum consolidated leverage ratio	3.25
Revolving credit facility
Credit agreement
Repayment of revolving credit facility				$ 0	35,000
Revolving credit facility		197,800		197,800
Interest expense		1,027	1,011	3,067	3,175
Commitment fees		$ 382	$ 380	$ 1,131	$ 1,085
Revolving credit facility | 2013 Credit Agreement
Credit agreement
Principal borrowing capacity	$ 500,000
Number of incremental term loan facilities that may be added | item				1
Interest rate of debts				2.08%
Revolving credit facility | Minimum | 2013 Credit Agreement
Credit agreement
Unused commitment fee on the revolving credit facility of the credit agreement (as a percent)	0.375%
Revolving credit facility | Maximum | 2013 Credit Agreement
Credit agreement
Unused commitment fee on the revolving credit facility of the credit agreement (as a percent)	0.50%
Revolving credit facility | LIBOR Rate | 2013 Credit Agreement
Credit agreement
Interest rate of debts	LIBOR
Revolving credit facility | LIBOR Rate | Minimum | 2013 Credit Agreement
Credit agreement
Interest rate margin (as a percent)	1.50%
Revolving credit facility | LIBOR Rate | Maximum | 2013 Credit Agreement
Credit agreement
Interest rate margin (as a percent)	2.25%
Revolving credit facility | Base rate | 2013 Credit Agreement
Credit agreement
Interest rate of debts	base rate
Revolving credit facility | Prime rate | 2013 Credit Agreement
Credit agreement
Interest rate of debts	prime rate
Revolving credit facility | Federal fund rate | 2013 Credit Agreement
Credit agreement
Interest rate of debts	federal funds
Interest rate margin (as a percent)	0.50%
Revolving credit facility | One month LIBOR rate | 2013 Credit Agreement
Credit agreement
Interest rate of debts	one-month LIBOR
Interest rate margin (as a percent)	1.00%
Revolving credit facility | One month LIBOR rate | Minimum | 2013 Credit Agreement
Credit agreement
Interest rate margin (as a percent)	0.50%
Revolving credit facility | One month LIBOR rate | Maximum | 2013 Credit Agreement
Credit agreement
Interest rate margin (as a percent)	1.25%

Earnings per share (Details)

Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Computation of basic and diluted earnings per share
Net income	$ 6,862	$ 6,950	$ 15,802	$ 16,341
Weighted average common shares outstanding - basic	87,299,000	87,736,000	88,019,000	87,660,000
Plus: net effect of dilutive stock options	94,000	272,000	157,000	293,000
Plus: net effect of dilutive restricted stock awards and units	399,000	225,000	275,000	192,000
Weighted average common shares outstanding, diluted (in shares)	87,792,000	88,233,000	88,451,000	88,145,000
Net income per common share-basic (in dollars per share)	$ 0.08	$ 0.08	$ 0.18	$ 0.19
Net income per common share-diluted (in dollars per share)	$ 0.08	$ 0.08	$ 0.18	$ 0.19
Stock Options
Computation of basic and diluted earnings per share
Anti-dilutive securities excluded from diluted earnings per share calculations (in shares)	3,708,228	2,251,303	3,490,887	2,395,158
Restricted Stock Units
Computation of basic and diluted earnings per share
Anti-dilutive securities excluded from diluted earnings per share calculations (in shares)	71,581	2,367	169,682	79,947

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Stock-Based Compensation
Stock-based compensation expense recognized related to stock compensation plans	$ 3,100	$ 2,900	$ 10,200	$ 9,100
Assumptions used to determine fair value of options granted
Weighted-average grant-date fair value per share of the stock options granted	$ 3.80	$ 7.24
Expected life			4 years 10 months 24 days	4 years 9 months 22 days
Additional disclosures
Proceeds from exercise of stock options			$ 4,188	$ 3,279
Tax benefit from exercise of stock options	$ 21,000		1,477
Stock options
Stock-Based Compensation
Stock-based compensation expense recognized related to stock compensation plans	$ 1,400	$ 1,700	$ 4,500	$ 5,300
Stock option activity
Options outstanding at the beginning of the period (in shares)			4,101,000
Granted (in shares)			1,274,000
Exercised (in shares)	(105,462)	(36,016)	(577,559)	(352,057)
Forfeitures (in shares)			(518,000)
Expired (in shares)			(317,000)
Options outstanding at the end of the period (in shares)	3,962,000		3,962,000
Options expected to vest at the end of the period (in shares)	2,410,000		2,410,000
Options exercisable at the end of the period (in shares)	1,498,000		1,498,000
Stock options, Weighted Average Exercise Price
Options outstanding at the beginning of the period (in dollars per share)			$ 18.72
Granted (in dollars per share)			16.67
Exercised (in dollars per share)			7.25
Forfeitures (in dollars per share)			21.61
Expired (in dollars per shares)			24.75
Options outstanding at the end of the period (in dollars per share)	$ 18.88		18.88
Options expected to vest at the end of the period (in dollars per share)	19.48		19.48
Options exercisable at the end of the period (in dollars per share)	$ 17.87		$ 17.87
Stock options, Weighted Average Remaining Contractual Terms
Options outstanding at the end of the period			4 years 9 months 26 days
Options expected to vest at the end of the period			5 years 10 months 28 days
Options exercisable at the end of the period			3 years 11 days
Stock options, Aggregate Intrinsic Value
Options outstanding at the end of the period	$ 1,794		$ 1,794
Options exercisable at the end of the period	1,794		$ 1,794
Assumptions used to determine fair value of options granted
Risk-free interest rate (as a percent)			1.55%	1.56%
Expected volatility (as a percent)			41.77%	38.11%
Additional disclosures
Proceeds from exercise of stock options	800	$ 100	$ 4,200	$ 3,300
Tax benefit from exercise of stock options		17,000	1,500	900
Unrecognized stock-based compensation, stock options	11,100		$ 11,100
Weighted-average period over which compensation will be recognized			1 year 1 month 28 days
Total intrinsic value of options exercised	$ 200	$ 600	$ 5,900	$ 3,900

Stock-Based Compensation (Det33

Stock-Based Compensation (Details 2) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Stock-Based Compensation
Granted, aggregate fair market value		$ 300,000
Recognized stock-based compensation expense	$ 3,100,000	$ 2,900,000	$ 10,200,000	$ 9,100,000
Restricted stock units and restricted stock awards
Granted (in shares)		14,518
Restricted Stock Units
Stock-Based Compensation
Granted, aggregate fair market value	$ 49,000		$ 11,100,000	5,300,000
Outstanding equity instruments other than options (in shares)	1,240,052		1,240,052
Recognized stock-based compensation expense	$ 1,700,000	$ 1,200,000	$ 5,700,000	$ 3,700,000
Unrecognized stock-based compensation, restricted stock	$ 15,800,000		$ 15,800,000
Weighted-average period over which compensation will be recognized			1 year 3 months 15 days
Restricted stock units and restricted stock awards
Outstanding, beginning balance (in units or shares)			910,000
Granted (in shares)	5,642		665,326	261,282
Vesting of restricted stock units, net of shares withheld for taxes (in shares)			(97,000)
Shares withheld for taxes			(37,000)
Forfeitures (in shares)			(201,000)
Outstanding, ending balance (in units or shares)	1,240,000		1,240,000
Restricted stock units and restricted stock awards, Weighted Average Grant Date Fair Value
Outstanding, beginning balance (in dollars per unit or share)			$ 22.84
Granted (in dollars per share)			16.69
Vesting of restricted stock units, net of shares withheld for taxes (in dollars per unit or share)			24
Shares withheld for taxes (in dollars per share)			24
Forfeitures (in dollars per unit or share)			21.91
Outstanding, ending balance (in dollars per unit or share)	$ 19.56		$ 19.56
Restricted Stock
Stock-Based Compensation
Recognized stock-based compensation expense			$ 0	$ 100,000

Commitment and Contingencies (D

Commitment and Contingencies (Details) - USD ($) $ in Thousands	Oct. 01, 2015	Jun. 09, 2014	Sep. 30, 2015	Jun. 30, 2015
Loss Contingencies [Line Items]
Irrevocable letter of credit or Letter of Credit outstanding			$ 3,000
Amended Letter of Credit
Loss Contingencies [Line Items]
Irrevocable letter of credit or Letter of Credit outstanding			3,000	$ 4,600
Subsidiaries | New Jersey Department of Human Services
Loss Contingencies [Line Items]
Contract extension	60 days
Subsidiaries | KHS v. AMG
Loss Contingencies [Line Items]
Loss contingency damages awarded, value		$ 1,380
Subsidiaries | Pending litigation | KHS v. AMG
Loss Contingencies [Line Items]
Loss contingency damages sought, value			2,300
Subsidiaries | Pending litigation | New York Action
Loss Contingencies [Line Items]
Loss contingency damages sought, value			$ 450
Subsidiaries | Pending litigation | Surety Bond | KHS v. AMG
Loss Contingencies [Line Items]
Surety bond amount required, percent of judgment			150.00%
Cash collateral			$ 2,200
Subsidiaries | Pending litigation | Surety Bond | Texas Action
Loss Contingencies [Line Items]
Cash collateral			500
Minimum | Subsidiaries | KHS v. AMG
Loss Contingencies [Line Items]
Loss contingency damages sought, value			$ 7,000

Equity (Details)

Equity (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Jul. 30, 2015
Treasury stock
Maximum aggregate purchase price of shares authorized for repurchase (in dollars)	$ 50,000,000	$ 50,000,000	$ 75,000,000
Purchase of treasury stock		$ 25,000,000
Number of shares repurchased	2,652,065
Average price of shares repurchased (in dollars per share)	$ 9.40

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Event - item	Oct. 31, 2015	Oct. 28, 2015
Separation Agreement | Mr.DeFelice
Number of months of premium costs continued group medical insurance coverage	18 months
Separation Agreement | Mr.DeFelice | Maximum
Number of years of base salary continuation	2 years
Number of times annual target bonus amount	2
Stock options and restricted units | Minimum
Vesting period		1 year
Stock options and restricted units | Maximum
Vesting period		4 years