United Healthcare 2002 Annual Report Download - page 59

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UnitedHealth Group
GOVERNMENT REGULATION
Our business is regulated at federal, state, local and international levels. The laws and rules governing our
business are subject to frequent change, and agencies have broad latitude to administer those regulations.
State legislatures and Congress continue to focus on health care issues as the subject of proposed legislation.
Existing or future laws and rules could force us to change how we do business, restrict revenue and
enrollment growth, increase our health care and administrative costs and capital requirements, and increase
our liability related to coverage interpretations or other actions. Further, we must obtain and maintain
regulatory approvals to market many of our products.
We are also subject to various ongoing governmental investigations, audits and reviews, and we record
liabilities for our estimate of probable costs resulting from these matters. Although the results of pending
matters are always uncertain, we do not believe the results of any of the current investigations, audits or
reviews, individually or in the aggregate, will have a material adverse effect on our consolidated financial
position or results of operations.
13 SEGMENT FINANCIAL INFORMATION
Factors used in determining our reportable business segments include the nature of operating activities,
existence of separate senior management teams, and the type of information presented to the company’s
chief operating decision-maker to evaluate our results of operations.
Our accounting policies for business segment operations are the same as those described in the Summary
of Significant Accounting Policies (see Note 2). Transactions between business segments principally consist of
customer service and transaction processing services that Uniprise provides to UnitedHealthcare and Ovations,
certain product offerings sold to Uniprise and UnitedHealthcare customers by Specialized Care Services, and
sales of medical benefits cost, quality and utilization data and predictive modeling to UnitedHealthcare,
Ovations and Uniprise by Ingenix. These transactions are recorded at management’s best estimate of fair value,
as if the services were purchased from or sold to third parties. All intersegment transactions are eliminated in
consolidation. Assets and liabilities that are jointly used are assigned to each segment using estimates of pro-rata
usage. Cash and investments are assigned such that each segment has minimum specified levels of regulatory
capital or working capital for non-regulated businesses. The “Corporate and Eliminations” column includes
costs associated with company-wide process improvement initiatives, net expenses from charitable contribu-
tions to the United Health Foundation and eliminations of intersegment transactions. In accordance with
accounting principles generally accepted in the United States of America, segments with similar economic
characteristics may be combined. The financial results of UnitedHealthcare, Ovations and AmeriChoice have
been combined in the Health Care Services segment column in the tables presented on the next page because
these businesses have similar economic characteristics and have similar products and services, types of
customers, distribution methods and operational processes, and operate in a similar regulatory environment,
typically within the same legal entity. Substantially all of our operations are conducted in the United States.