United Healthcare 2011 Annual Report Download - page 12

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regulations on many key aspects of the ARRA amendments to HIPAA. In the conduct of our business, we may act, depending
on the circumstances, as either a covered entity or a business associate. Federal consumer protection laws may also apply in
some instances to privacy and security practices related to personal identifiable information. The use and disclosure of
individually identifiable health data by our businesses is also regulated in some instances by other federal laws, including the
Gramm-Leach-Bliley Act (GLBA) or state statutes implementing GLBA, which generally require insurers to provide customers
with notice regarding how their non-public personal health and financial information is used and the opportunity to “opt out” of
certain disclosures before the insurer shares such information with a third party, and which generally require safeguards for the
protection of personal information. See Item 1A, “Risk Factors” for a discussion of the risks related to compliance with HIPAA,
GLBA and other privacy-related regulations.
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 that is
subject to periodic interpretation by the DOL 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 DOL 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 FDIC has federal regulatory authority over OptumHealth 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 subject to increased operational expenses and
capital requirements, governmental oversight and monetary penalties.
State Laws and Regulation
Health Care Regulation. Our insurance and HMO subsidiaries must be licensed by the jurisdictions in which they conduct
business. 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. With the
amendment of the Annual Financial Reporting Model Regulation by the National Association of Insurance Commissioners
(NAIC) to adopt elements substantially similar to the Sarbanes-Oxley Act of 2002, we expect that these states will continue to
expand the scope of regulations relating to corporate governance and internal control activities of HMOs and insurance
companies. Certain states have also adopted their own regulations for minimum medical loss ratios with which health plans
must comply. In addition, a number of state legislatures have enacted or are contemplating significant reforms of their health
insurance markets, either independent of or to comply with or be eligible for grants or other incentives in connection with the
Health Reform Legislation. We expect the states to continue to introduce and pass similar laws in 2012, and this will affect our
operations and our financial results.
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 regulations require prior regulatory approval of acquisitions and material intercompany
transfers of assets, as well as transactions between the regulated companies and their parent holding companies or affiliates.
These laws may restrict the ability of our regulated subsidiaries to pay dividends to our holding companies.
In addition, some of our business and related activities may be subject to other health care-related regulations and requirements,
including PPO, managed care organization (MCO), utilization review (UR) or third-party administrator-related regulations and
licensure requirements. These regulations differ from state to state, and may contain network, contracting, product and rate, and
financial and reporting requirements. There are laws and regulations that set specific standards for delivery of services, payment
of claims, adequacy of health care professional networks, fraud prevention, the protection of consumer health information,
pricing and underwriting practices and covered benefits and services. State health care anti-fraud and abuse prohibitions
encompass a wide range of activities, including kickbacks for referral of members, billing unnecessary medical services and
improper marketing. Certain of our businesses are subject to state general agent, broker, and sales distributions laws and
regulations. Our UnitedHealthcare Community & State and UnitedHealthcare Medicare & Retirement businesses are subject to
regulation by state Medicaid agencies that oversee the provision of benefits to our Medicaid and CHIP beneficiaries and to our
dually-eligible Medicaid beneficiaries. We also contract with state governmental entities and are subject to state laws and
regulations relating to the award, administration and performance of state government contracts.
Guaranty Fund Assessments. Under state guaranty fund laws, certain insurance companies (and HMOs in some states),
including those issuing health, long-term care, life and accident insurance policies, doing business in those states can be
assessed (up to prescribed limits) for certain obligations to the policyholders and claimants of insolvent insurance companies