Aetna 2013 Annual Report Download - page 49

Annual Report- Page 43
Federal and State Reporting
We are subject to extensive financial and business reporting requirements, including penalties for inaccuracies and/
or omissions, at both the state and federal level. Health Care Reform significantly expands these reporting
requirements and adds additional penalties for inaccuracies and omissions. In some instances, our ability to comply
with these requirements will depend on receipt of information from third parties, particularly employers, that we do
not receive today and that may not be readily available or reliably provided in all instances. We are and will
continue to be required to modify our information systems, dedicate significant resources and incur significant
expenses to comply with these requirements. However, we cannot eliminate the risks of unavailability of or errors
in our reports.
Fraud, Waste and Abuse Laws
Federal and state governments have made investigating and prosecuting health care fraud, waste and abuse a
priority. Fraud, waste and abuse prohibitions encompass a wide range of activities, including kickbacks or other
inducements for referral of members or for the coverage of products (such as prescription drugs) by a plan, billing
for unnecessary medical services by a health care provider, improper marketing, and violations of patient privacy
rights. Companies involved in public health care programs such as Medicare, Medicaid and dual eligible programs
are required to maintain compliance programs to detect and deter fraud, waste and abuse, and are often the subject
of fraud, waste and abuse investigations and audits. The regulations and contractual requirements applicable to us
and other participants in these public-sector programs are complex and subject to change. Although our compliance
program is designed to meet all statutory and regulatory requirements, our policies and procedures are frequently
under review and subject to updates, and our training and education programs continue to evolve. We have invested
significant resources to comply with Medicare, Medicaid and dual eligible program standards. Ongoing vigorous
law enforcement and the highly technical regulatory scheme mean that our compliance efforts in this area will
continue to require significant resources.
Federal and State Laws and Regulations Governing Submission of Information and Claims to Agencies
We are subject to federal and state laws and regulations that apply to the submission of information and claims to
various government agencies. For example, the False Claims Act provides, in part, that the federal government may
bring a lawsuit against any person or entity who the government believes has knowingly presented, or caused to be
presented, a false or fraudulent request for payment from the federal government, or who has made a false statement
or used a false record to get a claim approved. There also is False Claims Act liability for knowingly or improperly
avoiding repayment of an overpayment received from the government. The federal government, whistleblowers
and some courts have taken the position that claims presented in violation of other statutes, such as the federal anti-
kickback statute, may be considered a violation of the False Claims Act. In addition, Health Care Reform may have
expanded the jurisdiction of, and our exposure to, the False Claims Act to products sold on Public Exchanges,
which began to operate in 2014. Violations of the False Claims Act are punishable by treble damages and penalties
of up to a specified dollar amount per false claim. In addition, a special provision under the False Claims Act
allows a private person (for example, a “whistleblower” such as a disgruntled current or former competitor, member
or employee) to bring an action under the False Claims Act on behalf of the government alleging that a company
has defrauded the federal government and permits the private person to share in any settlement of, or judgment
entered in, the lawsuit.
A number of states, including states in which we operate, have adopted their own false claims acts and
whistleblower provisions that are similar to the False Claims Act. From time to time, companies in the health and
related benefits industry, including ours, may be subject to actions under the False Claims Act or similar state laws.
Product Design and Administration and Sales Practices
State and/or federal regulatory scrutiny of life and health insurance company and HMO product design and
administration and marketing and advertising practices, including the filing of insurance policy forms and the
adequacy of disclosure regarding products and their administration, is increasing as are the penalties being imposed
for inappropriate practices. Medicare, Medicaid and dual eligible products and products offering more limited
benefits, such as those we issue and sell through Strategic Resource Company and some of our student health plans,
in particular continue to attract increased regulatory scrutiny.