Aetna 2012 Annual Report Download - page 77

Annual Report- Page 71
contracts with providers generally may be terminated by either party without cause on short notice. The failure to
maintain or to secure new cost-effective health care provider contracts may result in a loss of or inability to grow
membership, higher health care or other benefits costs (which we may not be able to reflect in our pricing due to
rate reviews or other factors), health care provider network disruptions, less desirable products for our customers
and/or difficulty in meeting regulatory or accreditation requirements, any of which could adversely affect our
operating results.
In addition, some providers that render services to our members do not have contracts with us. In those cases, we
do not have a pre-established understanding with these providers about the amount of compensation that is due to
these providers for services rendered to our members. In some states, the amount of compensation due to these
non-participating providers is defined by law or regulation, but in most instances it is either not defined or it is
established by a standard that is not clearly translatable into dollar terms. In such instances providers may believe
that they are underpaid for their services and may either litigate or arbitrate their dispute with us or try to recover
from our members the difference between what we have paid them and the amount they charged us. For example,
during 2012, we settled litigation with non-participating providers, and during 2009, we settled a matter with the
New York Attorney General that caused us to transition to different databases to determine the amount we pay non-
participating providers under certain benefit plan designs. The outcome of these disputes may cause us to pay
higher medical or other benefit costs than we projected.
ACO's, consolidation among and by integrated health systems and other changes in the structures that physicians,
hospitals and other health care providers choose may change the way these providers interact with us and may
change the competitive landscape in which we operate. These changes may affect the way we price our products
and services and estimate our medical and other covered benefits costs and may require us to change our operations.
While we believe ACOs and other new organizational structures present opportunities for us, the implementation of
our ACS and ACO strategies may not achieve the intended results, which could adversely affect our operating
results, financial condition and cash flows.
Certain of these matters are described in more detail in “Litigation and Regulatory Proceedings” in Note 18 of
Notes to Consolidated Financial Statements beginning on page 125.
We must demonstrate that our products and processes lead to access by our members to quality care by their
providers, or delivery of care by us.
Failure to demonstrate that our products and processes (such as disease management and patient safety programs,
provider credentialing and other quality of care and information management initiatives) lead to access by our
members to quality care by providers or delivery of quality care by us or certain of our vendors, including CVS
Caremark, would adversely affect our ability to differentiate our product and/or solution offerings from those of
competitors and could adversely affect our operating results.
Sales of our products and services are dependent on our ability to attract, retain, motivate and provide
support to a network of internal sales personnel and independent third-party brokers, consultants and
agents.
Our products are sold primarily through our sales personnel, who frequently work with independent brokers,
consultants and agents who assist in the production and servicing of business. The independent brokers, consultants
and agents generally are not dedicated to us exclusively and may frequently also recommend and/or market health
care benefits products of our competitors, and we must compete intensely for their services and allegiance. Our
sales could be adversely affected if we are unable to attract, retain or motivate sales personnel and third-party
brokers, consultants and agents or if we do not adequately provide support, training and education to this sales
network regarding our product portfolio, which is complex, or if our sales strategy is not appropriately aligned
across distribution channels. This risk is heightened as our business model evolves to a more consumer-centric
focus, such as competing for sales on Insurance Exchanges.
In addition, there have been a number of investigations regarding the marketing practices of brokers and agents
selling health care and other insurance products and the payments they receive. These investigations have resulted
in enforcement actions against companies in our industry and brokers and agents marketing and selling those