Humana 2005 Annual Report Download - page 23

Physicians participating in our HMO networks must satisfy specific criteria, including licensing, patient
access, office standards, after-hours coverage, and other factors. Most participating hospitals also meet
accreditation criteria established by CMS and/or the Joint Commission on Accreditation of Healthcare
Organizations, or JCAHO.
Recredentialing of participating providers occurs every two to three years, depending on applicable state
laws. Recredentialing of participating physicians includes verification of their medical licenses; review of their
malpractice liability claims histories; review of their board certifications, if applicable; and review of any
complaints, including member appeals and grievances. Committees, composed of a peer group of physicians,
review the applications of physicians being considered for credentialing and recredentialing.
We request accreditation for certain of our HMO plans from NCQA and the American Accreditation
Healthcare Commission/Utilization Review Accreditation Commission, or AAHC/URAC. Accreditation or
external review by an approved organization is mandatory in the states of Florida and Kansas for licensure as an
HMO. Accreditation specific to the utilization review process also is required in the state of Georgia for licensure
as an HMO or PPO. Certain commercial businesses, like those impacted by a third-party labor agreement or
those where a request is made by the employer, may require or prefer accredited health plans.
NCQA performs reviews of standards for quality improvement, credentialing, utilization management, and
member rights and responsibilities. We continue to maintain accreditation in select markets through NCQA.
AAHC/URAC performs reviews for utilization management standards and for health plan and health
network standards in quality management, credentialing, rights and responsibilities, and network management.
We continue to maintain URAC accreditation in select markets and certain operations.
Humana has also pursued ISO 9001:2000 certification over the past several years. ISO is the international
standards organization, which has developed an international commercial set of certifications as to quality and
process, called ISO 9001:2000.
Sales and Marketing
We use various methods to market our Medicare, Medicaid, and commercial products, including television,
radio, the Internet, telemarketing, and direct mailings.
At December 31, 2005, we employed approximately 1,700 sales representatives, who are each paid a salary
and/or per member commission, and used approximately 62,900 licensed independent brokers and agents to
market our Medicare and Medicaid products in the continental United States and Puerto Rico. We also employed
approximately 500 telemarketing representatives who assisted in the marketing of Medicare and Medicaid
products by making appointments for sales representatives with prospective members. During 2005, we
expanded the number of ways we market our Medicare products, including, among others, strategic alliances
with Wal-Mart Stores, Inc., or Wal-Mart, State Farm®, and USAA. The alliance with Wal-Mart includes
stationing Humana representatives in the Wal-Mart stores, SAM’S CLUB locations and Neighborhood Markets
across the country providing an opportunity to enroll Medicare eligible individuals in person.
Individuals become members of our commercial HMOs and PPOs through their employers or other groups
which typically offer employees or members a selection of health insurance products, pay for all or part of the
premiums, and make payroll deductions for any premiums payable by the employees. We attempt to become an
employer’s or group’s exclusive source of health insurance benefits by offering a variety of HMO, PPO, and
specialty products that provide cost-effective quality health care coverage consistent with the needs and
expectations of their employees or members. We also offer commercial health insurance products to individuals.
At December 31, 2005, we used approximately 51,300 licensed independent brokers and agents and
approximately 700 licensed employees to sell our commercial products. Many of our employer group customers
are represented by insurance brokers and consultants who assist these groups in the design and purchase of health
care products. We generally pay brokers a commission based on premiums, with commissions varying by market
and premium volume. In addition to commission based directly on premium volume for sales to particular
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