Humana 2012 Annual Report Download - page 37

vary from state to state and could impose additional penalties. Violations of HIPAA or applicable federal or state
laws or regulations could subject us to significant criminal or civil penalties, including significant monetary
penalties. Compliance with HIPAA and other privacy regulations requires significant systems enhancements,
training and administrative effort.
American Recovery and Reinvestment Act of 2009 (ARRA)
On February 17, 2009, the American Recovery and Reinvestment Act of 2009, or ARRA, was enacted into
law. In addition to including a temporary subsidy for health care continuation coverage issued pursuant to the
Consolidated Omnibus Budget Reconciliation Act, or COBRA, ARRA also expands and strengthens the privacy
and security provisions of HIPAA and imposes additional limits on the use and disclosure of protected health
information, or PHI. Among other things, ARRA requires us and other covered entities to report any
unauthorized release or use of or access to PHI to any impacted individuals and to the U.S. Department of Health
and Human Services in those instances where the unauthorized activity poses a significant risk of financial,
reputational or other harm to the individuals, and to notify the media in any states where 500 or more people are
impacted by any unauthorized release or use of or access to PHI. ARRA also requires business associates to
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 subsidiaries 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 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
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