Humana 2011 Annual Report Download - page 129

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
extent that claimants seek punitive damages, which may not be covered by insurance in certain states in which
insurance coverage for punitive damages is not permitted. In addition, insurance coverage for all or certain forms
of liability has become increasingly costly and may become unavailable or prohibitively expensive in the future.
We record accruals for such contingencies to the extent that we conclude it is probable that a liability has
been incurred and the amount of the loss can be reasonably estimated. No estimate of the possible loss or range
of loss in excess of amounts accrued, if any, can be made at this time regarding the matters specifically described
above because the inherently unpredictable nature of legal proceedings may be exacerbated by various factors,
including: (i) the damages sought in the proceedings are unsubstantiated or indeterminate; (ii) discovery is not
complete; (iii) the proceeding is in its early stages; (iv) the matters present legal uncertainties; (v) there are
significant facts in dispute; (vi) there are a large number of parties (including where it is uncertain how liability,
if any, will be shared among multiple defendants); or (vii) there is a wide range of potential outcomes.
The outcome of any current or future litigation or governmental or internal investigations, including the
matters described above, cannot be accurately predicted, nor can we predict any resulting penalties, fines or other
sanctions that may be imposed at the discretion of federal or state regulatory authorities. Nevertheless, it is
reasonably possible that any such penalties, fines or other sanctions could be substantial, and the outcome of
these matters may have a material adverse effect on our results of operations, financial position, and cash flows
and may affect our reputation.
16. SEGMENT INFORMATION
During the first quarter of 2011, we realigned our business segments to reflect our evolving business model.
As a result, we reassessed and changed our operating and reportable segments in the first quarter of 2011 to
reflect management’s view of the business and to align our external financial reporting with our new operating
and internal financial reporting model. All respective amounts related to the segment change have been
retrospectively adjusted throughout the financial statements as discussed in Note 2. Our new reportable segments
and the basis for determining those segments are discussed below.
We currently manage our business with three reportable segments: Retail, Employer Group, and Health and
Well-Being Services. In addition, we include businesses that are not individually reportable because they do not
meet the quantitative thresholds required by generally accepted accounting principles in an Other Businesses
category. These segments are based on a combination of the type of health plan customer and adjacent businesses
centered on well-being solutions for our health plans and other customers, as described below. These segment
groupings are consistent with information used by our Chief Executive Officer to assess performance and
allocate resources.
The Retail segment consists of Medicare and commercial fully-insured medical and specialty health
insurance benefits, including dental, vision, and other supplemental health and financial protection products,
marketed directly to individuals. The Employer Group segment consists of Medicare and commercial fully-
insured medical and specialty health insurance benefits, including dental, vision, and other supplemental health
and financial protection products, as well as administrative services only products marketed to employer groups.
The Health and Well-Being Services segment includes services offered to our health plan members as well as to
third parties that promote health and wellness, including primary care, pharmacy, integrated wellness, and home
care services. The Other Businesses category consists of our Military services, primarily our TRICARE South
Region contract, Medicaid, and closed-block long-term care businesses as well as our contract with CMS to
administer the LI-NET program.
Our Health and Well-Being Services intersegment revenues primarily relate to managing prescription drug
coverage for members of our other segments through Humana Pharmacy Solutions®, or HPS, and includes the
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