United Healthcare 2006 Annual Report Download - page 14

supplement traditional fee-for-service coverage, more traditional health-plan-type programs under Medicare
Advantage, Medicare Part D prescription drug coverage and discount card offerings, and special offerings for
chronically ill and Medicare and Medicaid dual-eligible beneficiaries.
Ovations has extensive capabilities and experience with distribution, including direct marketing to consumers on
behalf of its key clients — AARP, the nation’s largest membership organization dedicated to the needs of people
age 50 and over, state and U.S. government agencies and employer groups. Ovations also has distinct pricing,
underwriting and clinical program management, and marketing capabilities dedicated to risk-based health
products and services in the senior and geriatric markets.
CMS is overseeing a multi-year implementation of the 2003 Medicare Modernization Act, including the
introduction of the Medicare Part D prescription drug benefit in 2006 and a greater diversity in Medicare’s
product offerings. We believe that these changes create and expand opportunities for well-organized and focused
companies to better serve older Americans. We believe that Ovations is well-positioned to respond to these
opportunities.
We currently have a number of contracts with CMS, which primarily relate to the Medicare health benefit
program authorized under the Medicare Modernization Act. Beginning January 1, 2006, we began serving as a
plan sponsor offering Medicare Part D prescription drug insurance coverage. As a result of this contract and the
December 2005 acquisition of PacifiCare, premium revenues from CMS approximated 26% of our total
consolidated revenues as of December 31, 2006, a majority of which were generated by Ovations.
Insurance Solutions
Ovations offers a range of health insurance products and services to AARP members, and has expanded the
scope of services and programs offered over the past several years. Ovations provides Medicare Supplement and
hospital indemnity insurance from its insurance company affiliates to approximately 3.8 million AARP members.
Additional Ovations services include a nurse healthline service, a lower cost Medicare Supplement offering that
provides consumers with a hospital network and 24-hour access to health care information. Ovations also offers
an AARP-branded health insurance program focused on persons between 50 and 64 years of age.
Medicare Prescription Drug Benefit (Part D)
Effective January 1, 2006, Ovations provides the Medicare prescription drug benefit (Part D) to beneficiaries
throughout the United States and its territories. Among the several Part D plans it offers, Ovations provides a
Medicare prescription drug coverage plan branded by AARP. Ovations also provides Part D drug coverage
through its Medicare Advantage program, Special Needs Plans and stand-alone prescription drug plans. As of
December 31, 2006,including PacifiCare, Ovations had enrolled approximately 5.7 million members in the Part
D program, including approximately 4.5 million in the stand-alone prescription drug plans and approximately
1.2 million in Medicare Advantage plans incorporating Part D coverage.
Secure Horizons
The Ovations Secure Horizons division provides health care coverage for the seniors market primarily through
the Medicare Advantage program administered by CMS. Ovations offers Medicare Advantage HMO, preferred
provider organization (PPO), Special Needs Plans and Private-Fee-for-Service plans. Under the Medicare
Advantage programs, Ovations provides health insurance coverage to eligible Medicare beneficiaries in exchange
for a fixed monthly premium per member from CMS that varies based on the geographic areas in which members
reside. Most products are offered under the “Secure Horizons by UnitedHealthcare” brand name. In 2006,
Ovations’ Secure Horizons expanded its program and now offers Medicare Advantage products in all 50 states.
As of December 31, 2006, Ovations had approximately 1.4 million enrolled individuals in its Medicare
Advantage products, of whom more than 1.2 million will receive their Part D coverage through Secure Horizons.
Ovations began offering a regional PPO Medicare Advantage plan in three markets on January 1, 2006.
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