Aetna 2015 Annual Report Download - page 147

Annual Report- Page 141
validate coding practices and supporting medical record documentation maintained by health care providers and the
resulting risk adjusted premium payments to the plans. CMS may require us to refund premium payments if our risk
adjusted premiums are not properly supported by medical record data. The Office of Inspector General (the “OIG”)
also is auditing risk adjustment data of other companies, and we expect CMS and the OIG to continue auditing risk
adjustment data.
CMS revised its audit methodology for RADV audits to determine refunds payable by Medicare Advantage plans
for contract year 2011 and forward. Under the revised methodology, among other things, CMS will project the error
rate identified in the audit sample of approximately 200 members to all risk adjusted premium payments made
under the contract being audited. Historically, CMS did not project sample error rates to the entire contract. As a
result, the revised methodology may increase our exposure to premium refunds to CMS based on incomplete
medical records maintained by providers. Since 2013, CMS has selected certain of our Medicare Advantage
contracts for contract years 2011 and 2012 for audit. We are currently unable to predict which of our Medicare
Advantage contracts will be selected for future audit, the amounts of any retroactive refunds of, or prospective
adjustments to, Medicare Advantage premium payments made to us, the effect of any such refunds or adjustments
on the actuarial soundness of our Medicare Advantage bids, or whether any RADV audit findings would cause a
change to our method of estimating future premium revenue in future bid submissions to CMS or compromise
premium assumptions made in our bids for prior contract years or the current contract year. Any premium or fee
refunds or adjustments resulting from regulatory audits, whether as a result of RADV, Public Exchange related or
other audits by CMS, the OIG, HHS or otherwise, including audits of our minimum medical loss ratio rebates,
methodology and/or reports, could be material and could adversely affect our operating results, financial position
and cash flows.
Other Litigation and Regulatory Proceedings
We are involved in numerous other lawsuits arising, for the most part, in the ordinary course of our business
operations, including claims of or relating to bad faith, medical malpractice, non-compliance with state and federal
regulatory regimes, marketing misconduct, failure to timely or appropriately pay or administer claims and benefits
in our Health Care and Group Insurance businesses (including our post-payment audit and collection practices and
reductions in payments to providers due to sequestration), provider network structure (including the use of
performance-based networks and termination of provider contracts), provider directory accuracy, rescission of
insurance coverage, improper disclosure of personal information, anticompetitive practices, patent infringement and
other intellectual property litigation, other legal proceedings in our Health Care and Group Insurance businesses and
employment litigation. Some of these other lawsuits are or are purported to be class actions. We intend to
vigorously defend ourselves against the claims brought in these matters.
Awards to us and others of certain government contracts, particularly in our Medicaid business, are subject to
increasingly frequent protests by unsuccessful bidders. These protests may result in awards to us being reversed,
delayed or modified. The loss or delay in implementation of any government contract could adversely affect our
operating results. We will continue to defend vigorously contract awards we receive.
In addition, our operations, current and past business practices, current and past contracts, and accounts and other
books and records are subject to routine, regular and special investigations, audits, examinations and reviews by,
and from time to time we receive subpoenas and other requests for information from, CMS, the U.S. Department of
Health and Human Services, various state insurance and health care regulatory authorities, state attorneys general
and offices of inspector general, the Center for Consumer Information and Insurance Oversight, OIG, the Office of
Personnel Management, the U.S. Department of Labor, the U.S. Department of the Treasury, the U.S. Food and
Drug Administration, committees, subcommittees and members of the U.S. Congress, the U.S. Department of
Justice, the Federal Trade Commission, U.S. attorneys and other state, federal and international governmental
authorities. These government actions include inquiries by, and testimony before, certain members, committees and
subcommittees of the U.S. Congress regarding certain of our current and past business practices, including our
overall claims processing and payment practices, our business practices with respect to our small group products,
student health products or individual customers (such as market withdrawals, rating information, premium increases
and medical benefit ratios), executive compensation matters and travel and entertainment expenses, as well as the