Aetna 2015 Annual Report Download - page 33

Annual Report- Page 27
• Suspend or exclude us from participation in government programs;
• Suspend or limit our authority to market products;
• Regulate many aspects of the products and services we offer, including the pricing and underwriting of
many of our products and services;
• Audit us and our performance of our contracts, which can, among other things, affect our Medicare
Advantage plans’ and Medicare Part D Prescription Drug plans’ (“PDPs’”) star ratings;
• Assess damages, fines and/or penalties;
• Terminate our contract with the government agency and/or withhold payments from the government agency
to us;
• Impose retroactive adjustments to premiums and require us to pay refunds to the government, customers
and/or members;
• Restrict our ability to conduct acquisitions or dispositions;
• Require us to maintain minimum capital levels in our companies and monitor our solvency and reserve
adequacy;
• Regulate our investment activities on the basis of quality, diversification and other quantitative criteria; and/
or
• Exclude our plans from participating in Public Exchanges if they are deemed to have a history of
“unreasonable” premium rate increases or fail to meet other criteria set by the U.S. Department of Health
and Human Services (“HHS”) or the applicable state.
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, federal, state and international
supervisory and enforcement agencies, attorneys general and other state, federal and international governmental
authorities and legislators. See “Audits and Investigations” beginning on page 38 for additional information on
these matters.
Health Care Reform, enacted in March 2010, has changed and will continue to make broad-based changes to the
U.S. health care system. We expect Health Care Reform and changes to Health Care Reform to continue to
significantly impact our business operations and financial results, including our pricing, our MBRs and the
geographies in which our products are available. Health Care Reform presents us with business opportunities, but
also with financial and regulatory challenges. Most of the key components of Health Care Reform were phased in
during or prior to 2014, including Public Exchanges, required minimum MLRs in Commercial and Medicare
products, the individual coverage mandate, guaranteed issue, rating limits in individual and small group products,
significant new industry-wide fees, assessments and taxes, enhanced premium rate review and disclosure processes,
reduced Medicare Advantage payment rates to insurers, and linking Medicare Advantage payments to a plan’s CMS
quality performance ratings or “star ratings.” The effects of these changes are reflected in our financial results.
Certain components of Health Care Reform will continue to be phased in until 2020.
We are dedicating and will continue to be required to dedicate significant resources and incur significant expenses
during 2016 to implement and comply with Health Care Reform and changes to Health Care Reform as well as state
level health care reform. While most of the significant aspects of Health Care Reform became effective during or
prior to 2014, significant parts of Health Care Reform, including aspects of Public Exchanges, nondiscrimination
requirements, reinsurance, risk corridor and risk adjustment, continue to evolve through the promulgation of
regulations and guidance at the federal level. It is likely that further changes will be made to Health Care Reform at
the federal and/or state level as issues arise and its practical effects become clearer. Growing state and federal
budgetary pressures make it more likely that any changes will be adverse to us. As a result, many of the specific
aspects and impacts of Health Care Reform will not be known for several years, and given the inherent difficulty of
foreseeing how individuals and businesses will respond to the choices afforded them by Health Care Reform, we
cannot predict the full effect Health Care Reform will have on us or the impact of future changes to Health Care
Reform. It is reasonably possible that Health Care Reform or changes to Health Care Reform, in the aggregate,
could have a significant adverse effect on our business operations and financial results.