Aetna 2009 Annual Report Download - page 34

Annual Report – Page 28
aspects of the relationships between us and employers who maintain employee benefit plans subject to ERISA. Some
of our administrative services and other activities may also be subject to regulation under ERISA.
DOL regulations under ERISA set standards for claim payment and member appeals along with associated notice and
disclosure requirements. Certain final and proposed regulations would require additional disclosures to employers of
certain types of indirect compensation we receive. We have invested significant resources to comply with these
standards, which represent an additional regulatory burden for us.
ERISA generally preempts all state and local laws that relate to employee benefit plans, but the extent of the
preemption continues to be reviewed by courts. For example, the United States Supreme Court may consider a lawsuit
regarding a local mandate which allows the City of San Francisco to require that City employers must either provide
health benefits to their employees or pay into a City fund. This lawsuit challenges the current application of ERISA
preemption to employers in their administration of benefits.
Certain Large Case Pensions and Group Insurance products and services are also subject to potential issues raised by
certain judicial interpretations relating to ERISA. Under those interpretations, together with DOL regulations, we may
have ERISA fiduciary duties with respect to certain general account assets held under contracts that are not guaranteed
benefit policies. As a result, certain transactions related to those assets are subject to conflict of interest and other
restrictions, and we must provide certain disclosures to policyholders annually. We must comply with these
restrictions or face substantial penalties.
Federal Employees Health Benefits (“FEHB”) Program
Our subsidiaries contract with the Office of Personnel Management (“OPM”) to provide managed health care services
under the FEHB Program in their service area. These contracts with the OPM and applicable government regulations
establish premium rating arrangements for this program. The OPM conducts periodic audits of its contractors to,
among other things, verify that the premiums established under its contracts are in compliance with the community
rating and other requirements under FEHB Program. The OPM may seek premium refunds or institute other sanctions
against health plans that participate in the program if the health plan is found to be non-compliant with the program
requirements.
Medicare
Our Medicare products are regulated by CMS. CMS regularly audits our performance to determine compliance with
CMS contracts and regulations and the quality of services being provided to Medicare beneficiaries. The regulations
and contractual requirements applicable to us and other participants in Medicare programs are complex and subject to
change. Although we have invested significant resources to comply with these standards and believe our compliance
efforts are adequate, our Medicare compliance efforts will continue to require significant resources. If we fail to
comply with the standards, CMS may prohibit us from continuing to market and/or enroll members in one or more
Medicare products.
As a result of funding and other reforms contained in the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (the “Medicare Act”):
 In each year from 2005 through and including 2009, we elected to expand our participation in the Medicare
Advantage program in selected markets. However, we decided to cease offering Medicare Advantage plans in
certain geographic areas in 2010. We sold mainly individual PFFS plans in these geographic areas and the
decision was made in anticipation of the changes in the PFFS network requirements which will become
effective in 2011. Our market reductions resulted in the non-renewal of approximately 48,000 Medicare
Advantage members.
 In January 2006, we began offering PDP products in all 34 CMS designated regions; and
 In 2007, we began to offer PFFS plans in select markets for individuals and PFFS plans for employer groups
that can cover retirees nationwide.
 In 2008, we began to offer a Medicare Advantage Special Needs Plan in select markets to individuals who are
eligible for both Medicare and Medicaid benefits.
 In 2009, we elected to expand our Medicare PPO and HMO offerings in a number of geographic areas.