Aetna 2013 Annual Report Download - page 36

Annual Report- Page 30
• Suspend or limit our authority to market products;
• Regulate many aspects of the products and services we offer, including the pricing and underwriting of
many of our products and services;
• Audit us and our performance of our contracts;
• Assess damages, fines and/or penalties;
• Terminate our contract with the agency;
• Impose retroactive adjustments to premiums and require us to pay refunds to the government, customers
and/or members;
• Restrict our ability to conduct acquisitions or dispositions;
• Require us to maintain minimum capital levels in our companies and monitor our solvency and reserve
adequacy;
• Regulate our investment activities on the basis of quality, diversification and other quantitative criteria; and/
or
• Exclude our plans from participating in Public Exchanges if they are deemed to have a history of
“unreasonable” premium rate increases or fail to meet other criteria set by the U.S. Department of Health
and Human Services (“HHS”) or the applicable state.
Our operations, current and past business practices, current and past contracts, and accounts and other books and
records are subject to routine, regular and special investigations, audits, examinations and reviews by supervisory
agencies as well as state attorneys general and offices of inspector general, the Office of the Inspector General (the
“OIG”), the Office of Personnel Management (the “OPM”), HHS, the U.S. Department of the Treasury
(“Treasury”), the U.S. Department of Labor (“DOL”), the U.S. Food and Drug Administration (the “FDA”) and
other state and federal government authorities. In addition, from time to time we receive, and expect to continue to
receive, subpoenas and other requests for information from CMS, HHS, various state insurance and health care
regulatory authorities, state attorneys general and offices of inspector general, the CCIIO, the OIG, the OPM, the
DOL, committees, subcommittees and members of the U.S. Congress, the U.S. Department of Justice (the “DOJ”),
the U.S. Federal Trade Commission (the “FTC”), U.S. attorneys and other state, federal and international
governmental authorities regarding, among other things, certain of our business practices. For example, certain of
our Medicare Advantage plans are currently under review for, among other things, compliance with coding and
other requirements under the Medicare risk adjustment model. These government actions may, among other things,
prevent or delay us from implementing planned premium rate increases and have resulted, and may result in
restrictions on our business, changes to or clarifications of our business practices, retroactive adjustments to
premiums, refunds to members or the government, payments under insurance policies prior to those payments being
due under the terms of the policy, assessments of damages, civil or criminal fines or penalties (including under the
federal false claims act (the “False Claims Act”)), or other sanctions, including the possible loss of licensure or
suspension or exclusion from participation in government programs.
Health Care Reform, enacted in March 2010, has changed and will continue to make broad-based changes to the
U.S. health care system which could significantly affect the U.S. economy and we expect will continue to
significantly impact our business operations and financial results, including our pricing, our MBRs and the
geographies in which our products are available. Health Care Reform presents us with new business opportunities,
but also with new financial and regulatory challenges. Since its enactment in 2010, key components of Health Care
Reform have been phased in, including required minimum MLRs in commercial products, enhanced premium rate
review and disclosure processes, reduced Medicare Advantage payment rates to insurers, and linking Medicare
Advantage payments to a plan's CMS quality performance ratings or “star ratings.” The effects of these changes are
reflected in our financial results.
While key components of Health Care Reform will continue to be phased in through 2018, the most significant
changes during that time will occur in 2014, making 2014 a uniquely challenging year. The components of Health
Care Reform that take effect in 2014 include: Public Exchanges, Medicare minimum MLRs, the individual
coverage mandate, guaranteed issue, rating limits in the individual and small group markets, and significant new
industry-wide fees, assessments and taxes. We are dedicating and will continue to be required to dedicate material
resources and incur material expenses during 2014 to implement and comply with Health Care Reform as well as