Humana 2015 Annual Report Download - page 136

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
128
17. SEGMENT INFORMATION
On January 1, 2015, we realigned certain of our businesses among our reportable segments to correspond with
internal management reporting changes and renamed our Employer Group segment to the Group segment. Our three
reportable segments remain Retail, Group, and Healthcare Services. The more significant realignments included
reclassifying Medicare benefits offered to groups to the Retail segment from the Group segment, bringing all of our
Medicare offerings, which are now managed collectively, together in one segment, recognizing that in some instances
we market directly to individuals that are part of a group Medicare account. In addition, we realigned our military
services business, primarily consisting of our TRICARE South Region contract previously included in the Other
Businesses category, to our Group segment as we consider this contract with the government to be a group account.
Prior period segment financial information has been recast to conform to the 2015 presentation.
We manage our business with three reportable segments: Retail, Group, and Healthcare Services. In addition, the
Other Businesses category includes businesses that are not individually reportable because they do not meet the
quantitative thresholds required by generally accepted accounting principles. These segments are based on a combination
of the type of health plan customer and adjacent businesses centered on well-being solutions for our health plans and
other customers, as described below. These segment groupings are consistent with information used by our Chief
Executive Officer to assess performance and allocate resources.
The Retail segment consists of Medicare benefits, marketed to individuals or directly via group accounts, as well
as individual commercial fully-insured medical and specialty health insurance benefits, including dental, vision, and
other supplemental health and financial protection products. In addition, the Retail segment also includes our contract
with CMS to administer the LI-NET prescription drug plan program and contracts with various states to provide
Medicaid, dual eligible, and Long-Term Support Services benefits, collectively our state-based contracts. The Group
segment consists of employer group commercial fully-insured medical and specialty health insurance benefits, including
dental, vision, and other supplemental health and voluntary insurance benefits, as well as administrative services only,
or ASO products. In addition, our Group segment includes our health and wellness products (primarily marketed to
employer groups) and military services business, primarily our TRICARE South Region contract. The Healthcare
Services segment includes services offered to our health plan members as well as to third parties, including pharmacy
solutions, provider services, home based services, and clinical programs, as well as services and capabilities to advance
population health. We will continue to report under the category of Other Businesses those businesses which do not
align with the reportable segments described above, primarily our closed-block long-term care insurance policies.
Our Healthcare Services intersegment revenues primarily relate to managing prescription drug coverage for
members of our other segments through Humana Pharmacy Solutions®, or HPS, and includes the operations of Humana
Pharmacy, Inc., our mail order pharmacy business. These revenues consist of the prescription price (ingredient cost
plus dispensing fee), including the portion to be settled with the member (co-share) or with the government (subsidies),
plus any associated administrative fees. Services revenues related to the distribution of prescriptions by third party
retail pharmacies in our networks are recognized when the claim is processed and product revenues from dispensing
prescriptions from our mail order pharmacies are recorded when the prescription or product is shipped. Our pharmacy
operations, which are responsible for designing pharmacy benefits, including defining member co-share responsibilities,
determining formulary listings, contracting with retail pharmacies, confirming member eligibility, reviewing drug
utilization, and processing claims, act as a principal in the arrangement on behalf of members in our other segments.
As principal, our Healthcare Services segment reports revenues on a gross basis including co-share amounts from
members collected by third party retail pharmacies at the point of service.
In addition, our Healthcare Services intersegment revenues include revenues earned by certain owned providers
derived from risk-based and non risk-based managed care agreements with our health plans. Under risk based
agreements, the provider receives a monthly capitated fee that varies depending on the demographics and health status
of the member, for each member assigned to these owned providers by our health plans. The owned provider assumes
the economic risk of funding the assigned members’ healthcare services. Under non risk-based agreements, our health
plans retain the economic risk of funding the assigned members' healthcare services. Our Healthcare Services segment
reports provider services revenues associated with risk-based agreements on a gross basis, whereby capitation fee