Humana 2015 Annual Report Download - page 14

6
Medicare
We have participated in the Medicare program for private health plans for over 30 years and have established a
national presence, offering at least one type of Medicare plan in all 50 states. We have a geographically diverse
membership base that we believe provides us with greater ability to expand our network of PPO and HMO providers.
We employ strategies including health assessments and clinical guidance programs such as lifestyle and fitness programs
for seniors to guide Medicare beneficiaries in making cost-effective decisions with respect to their health care. We
believe these strategies result in cost savings that occur from making positive behavior changes.
Medicare is a federal program that provides persons age 65 and over and some disabled persons under the age of
65 certain hospital and medical insurance benefits. CMS, an agency of the United States Department of Health and
Human Services, administers the Medicare program. Hospitalization benefits are provided under Part A, without the
payment of any premium, for up to 90 days per incident of illness plus a lifetime reserve aggregating 60 days. Eligible
beneficiaries are required to pay an annually adjusted premium to the federal government to be eligible for physician
care and other services under Part B. Beneficiaries eligible for Part A and Part B coverage under traditional fee-for-
service Medicare are still required to pay out-of-pocket deductibles and coinsurance. Throughout this document this
program is referred to as Medicare FFS. As an alternative to Medicare FFS, in geographic areas where a managed care
organization has contracted with CMS pursuant to the Medicare Advantage program, Medicare beneficiaries may
choose to receive benefits from a Medicare Advantage organization under Medicare Part C. Pursuant to Medicare Part
C, Medicare Advantage organizations contract with CMS to offer Medicare Advantage plans to provide benefits at least
comparable to those offered under Medicare FFS. Our Medicare Advantage plans are discussed more fully below.
Prescription drug benefits are provided under Part D.
Individual Medicare Advantage Products
We contract with CMS under the Medicare Advantage program to provide a comprehensive array of health insurance
benefits, including wellness programs, chronic care management, and care coordination, to Medicare eligible persons
under HMO, PPO, and Private Fee-For-Service, or PFFS, plans in exchange for contractual payments received from
CMS, usually a fixed payment per member per month. With each of these products, the beneficiary receives benefits
in excess of Medicare FFS, typically including reduced cost sharing, enhanced prescription drug benefits, care
coordination, data analysis techniques to help identify member needs, complex case management, tools to guide
members in their health care decisions, care management programs, wellness and prevention programs and, in some
instances, a reduced monthly Part B premium. Most Medicare Advantage plans offer the prescription drug benefit under
Part D as part of the basic plan, subject to cost sharing and other limitations. Accordingly, all of the provisions of the
Medicare Part D program described in connection with our stand-alone prescription drug plans in the following section
also are applicable to most of our Medicare Advantage plans. Medicare Advantage plans may charge beneficiaries
monthly premiums and other copayments for Medicare-covered services or for certain extra benefits. Generally,
Medicare-eligible individuals enroll in one of our plan choices between October 15 and December 7 for coverage that
begins on the following January 1.
Our Medicare HMO and PPO plans, which cover Medicare-eligible individuals residing in certain counties, may
eliminate or reduce coinsurance or the level of deductibles on many other medical services while seeking care from
participating in-network providers or in emergency situations. Except in emergency situations or as specified by the
plan, most HMO plans provide no out-of-network benefits. PPO plans carry an out-of network benefit that is subject
to higher member cost-sharing. In some cases, these beneficiaries are required to pay a monthly premium to the HMO
or PPO plan in addition to the monthly Part B premium they are required to pay the Medicare program.
Most of our Medicare PFFS plans are network-based products with in and out of network benefits due to a
requirement that Medicare Advantage organizations establish adequate provider networks, except in geographic areas
that CMS determines have fewer than two network-based Medicare Advantage plans. In these areas, we offer Medicare
PFFS plans that have no preferred network. Individuals in these plans pay us a monthly premium to receive typical
Medicare Advantage benefits along with the freedom to choose any health care provider that accepts individuals at
rates equivalent to Medicare FFS payment rates.