Humana 2011 Annual Report Download - page 38

comply with certain HIPAA provisions. ARRA also establishes higher civil and criminal penalties for covered
entities and business associates who fail to comply with HIPAA’s provisions and requires the U.S. Department of
Health and Human Services to issue regulations implementing its privacy and security enhancements.
Workers’ Compensation Laws and Regulations
In performing services for the workers’ compensation industry through our subsidiary Concentra Inc., we
must comply with applicable state workers’ compensation laws. Workers’ compensation laws generally require
employers to assume financial responsibility for medical costs, lost wages, and related legal costs of work-related
illnesses and injuries. These laws generally establish the rights of workers to receive benefits and to appeal
benefit denials, prohibit charging medical co-payments or deductibles to employees, may restrict employers’
rights to select healthcare providers or direct an injured employee to a specific provider to receive
non-emergency workers’ compensation medical care, and may include special requirements for physicians
providing non-emergency care for workers’ compensation patients, including requiring registration with the state
agency governing workers’ compensation, as well as special continuing education and training, licensing and
other regulatory requirements. To the extent that we are governed by these regulations, we may be subject to
additional licensing requirements, financial oversight, and procedural standards for beneficiaries and providers.
Corporate Practice of Medicine and Other Laws
As a corporate entity, Humana Inc. is not licensed to practice medicine. Many states in which we operate
through our subsidiary Concentra Inc. limit the practice of medicine to licensed individuals or professional
organizations comprised of licensed individuals, and business corporations generally may not exercise control
over the medical decisions of physicians. Statutes and regulations relating to the practice of medicine,
fee-splitting between physicians and referral sources, and similar issues vary widely from state to state. Under
management agreements between Concentra and its affiliated physician-owned professional groups, these groups
retain sole responsibility for all medical decisions, as well as for hiring and managing physicians and other
licensed healthcare providers, developing operating policies and procedures, implementing professional
standards and controls, and maintaining malpractice insurance. We believe that our health services operations,
including arrangements with Concentra’s affiliated professional groups, comply with applicable state statutes
regarding corporate practice of medicine, fee-splitting, and similar issues. However, any enforcement actions by
governmental officials alleging non-compliance with these statutes, which could subject us to penalties or
restructuring or reorganization of our business, may result in a material adverse effect on our results of
operations, financial position, or cash flows.
Anti-Kickback, Physician Self-Referral, and Other Fraud and Abuse Laws
A federal law commonly referred to as the “Anti-Kickback Statute” prohibits the offer, payment,
solicitation, or receipt of any form of remuneration to induce, or in return for, the referral of Medicare or other
governmental health program patients or patient care opportunities, or in return for the purchase, lease, or order
of items or services that are covered by Medicare or other federal governmental health programs. Because the
prohibitions contained in the Anti-Kickback Statute apply to the furnishing of items or services for which
payment is made in “whole or in part,” the Anti-Kickback Statute could be implicated if any portion of an item or
service we provide is covered by any of the state or federal health benefit programs described above. Violation of
these provisions constitutes a felony criminal offense and applicable sanctions could include exclusion from the
Medicare and Medicaid programs.
Section 1877 of the Social Security Act, commonly known as the “Stark Law,” prohibits physicians, subject
to certain exceptions described below, from referring Medicare or Medicaid patients to an entity providing
“designated health services” in which the physician, or an immediate family member, has an ownership or
investment interest or with which the physician, or an immediate family member, has entered into a
compensation arrangement. These prohibitions, contained in the Omnibus Budget Reconciliation Act of 1993,
commonly known as “Stark II,” amended prior federal physician self-referral legislation known as “Stark I” by
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