Humana 2008 Annual Report Download - page 57
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Comparisons of our operating cash flows also are impacted by other changes in our working capital. The
most significant drivers of changes in our working capital are typically the timing of receipts for premiums and
ASO fees and payments of benefit expenses. We illustrate these changes with the following summaries of
receivables and benefits payable.
The detail of total net receivables was as follows at December 31, 2008, 2007 and 2006:
2008 2007 2006
Change
2008 2007
(in thousands)
Military services:
Base receivable ................... $436,009 $404,570 $452,509 $ 31,439 $(47,939)
Change orders .................... 6,190 5,168 4,247 1,022 921
Military services subtotal ....... 442,199 409,738 456,756 32,461 (47,018)
Medicare ............................ 232,608 137,345 143,875 95,263 (6,530)
Commercial and other .................. 164,035 126,718 125,899 37,317 819
Allowance for doubtful accounts ......... (49,160) (68,260) (45,589) 19,100 (22,671)
Total net receivables ........... $789,682 $605,541 $680,941 184,141 (75,400)
Reconciliation to cash flow statement:
Provision for doubtful accounts ...... 5,398 28,922
Receivables from acquisition ........ (36,646) (14,267)
Change in receivables per cash flow
statement resulting in cash from
operations ......................... $152,893 $(60,745)
Military services base receivables consist of estimated claims owed from the federal government for health
care services provided to beneficiaries and underwriting fees. The claim reimbursement component of military
services base receivables is generally collected over a three to four month period. The timing of claim
reimbursements resulted in the increase in base receivables from 2007 to 2008 compared to a decrease from 2006
to 2007.
The changes in Medicare receivables over the last three years have been impacted by the growth in our
Medicare business and the timing of accruals and related collections associated with the CMS risk-adjustment
model.
The $37.3 million increase in Commercial and other receivables from 2007 to 2008 primarily was the result
of an increase in Puerto Rico Medicaid receivables, which were collected in January 2009.
The detail of benefits payable was as follows at December 31, 2008, 2007 and 2006:
Change
2008 2007 2006 2008 2007
(in thousands)
IBNR(1) .......................... $1,851,047 $1,695,088 $1,538,057 $155,959 $157,031
Military services benefits payable(2) . . . 306,797 341,372 430,674 (34,575) (89,302)
Reported claims in process(3) ......... 486,514 253,054 165,254 233,460 87,800
Other benefits payable(4) ............ 561,221 407,319 276,422 153,902 130,897
Total benefits payable ............... $3,205,579 $2,696,833 $2,410,407 508,746 286,426
Reconciliation to cash flow statement:
Benefits payable from acquisition ...... (96,021) (41,029)
Change in benefits payable in cash
flow statement resulting in cash
from operations .................. $412,725 $245,397
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