Aetna 2015 Annual Report Download - page 82

Annual Report- Page 76
or among our competitors, changes in Medicare and/or Medicaid reimbursement levels to health care providers
(including reductions due to the ATRA and sequestration), and increasing revenue and other financial pressures on
providers, including ongoing reductions by CMS and state governments (including reductions due to the ATRA and
sequestration) in amounts payable to providers, particularly hospitals, for services provided to Medicare and
Medicaid enrollees.
The breadth and quality of our networks of available providers and our ability to offer different provider network
options are important factors when customers consider our products and services. Our customers, particularly our
self-insured customers, also consider our hospital and other medical provider discounts when evaluating our
products and services. For certain of our businesses, we must maintain provider networks that satisfy applicable
access to care and/or network adequacy requirements. Regulators also consider the breadth and nature of our
provider networks when assessing whether such networks meet network adequacy requirements which, in some
cases, are becoming more stringent. Our 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, including as a result of our
efforts to integrate our provider networks following the completion of the Proposed Acquisition, 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.
We may experience increased medical and other benefit costs, litigation risk and customer and member
dissatisfaction when providers that do not have contracts with us render services to our members.
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 as to the amount of compensation that is due to them 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 the difference
between what we have paid them and the amount they charged us from our members, which may result in customer
and member dissatisfaction. For example, since 2007, we have been in class litigation with non-participating
providers over our payments to them, 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. Such disputes may cause us to pay higher medical or other benefit costs than we
projected.
Certain of these matters are described in more detail in “Litigation and Regulatory Proceedings” in Note 19 of
Notes to Consolidated Financial Statements beginning on page 139.
We could become overly dependent on key service providers, which could expose us to operational risks and
cause us to lose core competencies. If their services become unavailable, we may experience service disruptions,
reduced service quality and increased costs and may be unable to meet our obligations to our customers.
We contract with various third parties to perform certain functions and services and provide us with certain
information technology systems. These third parties include our PBM services suppliers, information technology
system providers, independent practice associations, accountable care organizations and call center and claim and
billing service providers. Certain of these third parties provide us with significant portions of our requirements, and
we could become overly dependent on key vendors, which could cause us to lose core competencies. Certain third
parties to whom we delegated selected functions, such as independent practice associations and specialty services
providers, have experienced financial difficulties, including bankruptcy. Furthermore, certain legislative authorities
have in recent years discussed or proposed legislation that would restrict outsourcing. A termination of our
agreements with, or disruption in the performance of, one or more of these service providers could result in service