United Healthcare 2007 Annual Report Download - page 12

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GOVERNMENT REGULATION
Most of our health and well-being services are regulated by federal and state regulatory agencies that generally
have discretion to issue regulations and interpret and enforce laws and rules. This regulation can vary
significantly from jurisdiction to jurisdiction. Changes in applicable laws, regulations and rules are continually
being considered, and the interpretation of existing laws and rules also may change periodically. New laws,
regulations and rules, or changes in the interpretation of existing laws, regulations and rules, could negatively
impact our business. We believe we are in compliance in all material respects with the applicable laws,
regulations and rules.
Federal Regulation
We are subject to various levels of federal regulation. Ovations and AmeriChoice Medicare and Medicaid
businesses are regulated by CMS. CMS has the right to audit performance to determine compliance with CMS
contracts and regulations and the quality of care being given to Medicare beneficiaries. Our Health Care Services
segment, through AmeriChoice and Ovations, also has Medicaid and SCHIP contracts that are subject to federal
regulations regarding services to be provided to Medicaid enrollees, payment for those services, and other
aspects of these programs. There are many regulations surrounding Medicare and Medicaid compliance. In
addition, the portion of Ingenix’s business that includes clinical research is subject to regulation by the U.S. Food
and Drug Administration.
HIPAA. The administrative simplification provisions of the Health Insurance Portability and Accountability Act
of 1996, as amended (HIPAA), apply to both the group and individual health insurance markets, including self-
funded employee benefit plans. HIPAA requires guaranteed health care coverage for small employers and certain
eligible individuals. It also requires guaranteed renewability for employers and individuals and limits exclusions
based on preexisting conditions. Federal regulations promulgated pursuant to HIPAA include minimum standards
for electronic transactions and code sets, and for the privacy and security of protected health information.
Standards for national health care provider identifiers are currently being implemented by regulators.
ERISA. The Employee Retirement Income Security Act of 1974, as amended (ERISA), regulates how goods and
services are provided to or through certain types of employer-sponsored health benefit plans. ERISA is a set of
laws and regulations subject to periodic interpretation by the U.S. Department of Labor as well as the federal
courts. ERISA places controls on how our business units may do business with employers who sponsor employee
benefit health plans, particularly those that maintain self-funded plans. Regulations established by the U.S.
Department of Labor provide additional rules for claims payment and member appeals under health care plans
governed by ERISA. Additionally, some states require licensure or registration of companies providing third-
party claims administration services for health care plans.
FDIC. The Federal Deposit Insurance Corporation (FDIC) has federal regulatory and supervisory authority over
Exante Bank and performs annual examinations to ensure that the bank is operating in accordance with federal
safety and soundness requirements. In addition to such annual examinations, the FDIC performs periodic
examinations of the bank’s compliance with applicable federal banking statutes, regulations and agency
guidelines. In the event of unfavorable examination results, the bank could be subjected to increased operational
expenses, governmental oversight and monetary penalties.
State Regulation
All of the states in which our subsidiaries offer insurance and HMO products regulate those products and
operations. These states require periodic financial reports and establish minimum capital or restricted cash
reserve requirements. Health plans and insurance companies are also regulated under state insurance holding
company regulations. Such regulations generally require registration with applicable state Departments of
Insurance and the filing of reports that describe capital structure, ownership, financial condition, certain
intercompany transactions and general business operations. Some state insurance holding company laws and
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