Aetna 2014 Annual Report Download - page 44

Annual Report- Page 38
For information regarding restrictions on certain payments of dividends or other distributions by our HMO and
insurance company subsidiaries, refer to Note 16 of Notes to Consolidated Financial Statements on page 126.
The holding company laws for the states of domicile of Aetna and certain of its subsidiaries also restrict the ability
of any person to obtain control of an insurance company or HMO without prior regulatory approval. Under those
statutes, without such approval (or an exemption), no person may acquire any voting security of an insurance
holding company (such as our parent company, Aetna Inc.) that controls an insurance company or HMO, or merge
with such a holding company, if as a result of such transaction such person would control the insurance holding
company. Control is generally defined as the direct or indirect power to direct or cause the direction of the
management and policies of a person and is presumed to exist if a person directly or indirectly owns or controls
10% or more of the voting securities of another person.
Our workers’ compensation business includes the comparison of medical claims data against the applicable state’s
fee schedule pricing, including applicable regulations and clinical guidelines. State fee schedules, which typically
represent the maximum reimbursement for medical services provided to the injured worker, differ by state and
change as state laws and regulations are passed and/or amended. Our workers’ compensation business also includes
PBM and care management services, both of which are regulated at the state level. Our workers’ compensation
customers include insurance carriers and TPA’s who also are regulated at the state level. The laws and regulations
applicable to us and other participants in the workers’ compensation business are extensive, complex and subject to
change. We have invested significant resources to comply with these standards, and our workers’ compensation
compliance efforts will continue to require significant resources. We may be subject to significant fines, penalties
and litigation if we fail to comply with those laws and regulations.
Audits and Investigations
We typically have been, are currently and may in the future be involved in various governmental investigations,
audits, examinations, reviews, subpoenas and other requests for information, the intensity and scope of which
continue to increase. These include routine, regular and special investigations, audits, examinations and reviews by,
as well as subpoenas and other requests for information from, CMS, HHS, various state insurance and health care
regulatory authorities, state attorneys general and offices of inspector general, the CCIIO, the Office of the
Inspector General (the “OIG”), the OPM, the DOL, the Treasury, the FDA, committees, subcommittees and
members of the U.S. Congress, the U.S. Department of Justice (the “DOJ”), the U.S. Federal Trade Commission
(the “FTC”), U.S. attorneys and other state, federal and international governmental authorities. For example,
certain of our Medicare Advantage plans are currently under audit for, among other things, compliance with coding
and other requirements under the Medicare risk adjustment model; our Commercial business is currently under
audit by both state and federal regulators related to Health Care Reform’s minimum MLR requirements; and our
Commercial business is subject to audits related to Health Care Reform’s risk adjustment and reinsurance data since
those programs were implemented in 2014. HHS also has begun to audit health plans, providers and other parties to
enforce HIPAA compliance, including with respect to data security. Such government actions may, among other
things, prevent or delay us from implementing planned premium rate increases and have resulted and may result in
restrictions on our business, changes to or clarifications of our business practices, retroactive adjustments to
premiums, refunds to members or the government, withholding of premium payments to us by government
agencies, payments under insurance policies prior to those payments being due under the terms of the policy,
assessments of damages, civil or criminal fines or penalties (including under the federal false claims act (the “False
Claims Act”)), or other sanctions, including the possible suspension or loss of licensure and/or suspension or
exclusion from participation in government programs. For example, effective April 2010 through June 2011, CMS
imposed intermediate sanctions on us suspending the enrollment of and marketing to new members of all Aetna
Medicare Advantage and Standalone PDP contracts.
A significant number of states are investigating life insurers’ claims payment and related escheat practices. For
additional information on these life insurance matters, refer to “Life and Disability Insurance” beginning on page
22.