Humana 2013 Annual Report Download - page 136

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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 outcome of litigation, 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 also affect our reputation.
16. SEGMENT INFORMATION
On January 1, 2013, we reclassified certain of our businesses to correspond with internal management
reporting changes and renamed our Health and Well-Being Services segment as Healthcare Services. Our
Employer Group segment now includes our health and wellness businesses, including HumanaVitality and
Lifesynch’s employee assistance programs, which had historically been reported in our Healthcare Services
segment. The Retail segment now includes our contract with CMS to administer the LI-NET prescription drug
plan program as well as our state-based contracts for Medicaid members, both of which had historically been
reported in our Other Businesses category. Prior period segment financial information has been recast to conform
to the 2013 presentation.
We manage our business with three reportable segments: Retail, Employer Group, and Healthcare Services.
In addition, the Other Businesses category includes businesses that are not individually reportable because they
do not meet the quantitative thresholds required by generally accepted accounting principles. 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, and includes our contract with CMS to administer the LI-NET prescription drug
plan program and contracts with various states to provide Medicaid, dual eligible, and Long-Term Support
Services benefits, collectively our state-based contracts. 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 voluntary benefit products, as well as administrative services only, or ASO, products
and our health and wellness products primarily marketed to employer groups. The Healthcare Services segment
includes services offered to our health plan members as well as to third parties including pharmacy, provider
services, home based services, and integrated behavioral health services. The Other Businesses category consists
of our military services, primarily our TRICARE South Region contract, Puerto Rico Medicaid, and closed-block
long-term care insurance policies.
Our Healthcare 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 operations of
RightSourceRx®, our mail order pharmacy business. These revenues consist of the prescription price (ingredient
cost plus dispensing fee), including the portion to be settled with the member (co-share) or with the government
(subsidies), plus any associated administrative fees. Services revenues related to the distribution of prescriptions
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