Humana 2013 Annual Report Download - page 17

inpatient diagnoses as well as diagnosis data from ambulatory treatment settings (hospital outpatient department
and physician visits) to establish the risk-adjustment payments. Under the risk-adjustment methodology, all
health benefit organizations must collect from providers and submit the necessary diagnosis code information to
CMS within prescribed deadlines.
At December 31, 2013, we provided health insurance coverage under CMS contracts to approximately
2,068,700 individual Medicare Advantage members, including approximately 415,200 members in Florida.
These Florida contracts accounted for premiums revenue of approximately $6.0 billion, which represented
approximately 27% of our individual Medicare Advantage premiums revenue, or 15% of our consolidated
premiums and services revenue for the year ended December 31, 2013.
Our HMO and PPO products covered under Medicare Advantage contracts with CMS are renewed generally
for a calendar year term unless CMS notifies us of its decision not to renew by May 1 of the calendar year in
which the contract would end, or we notify CMS of our decision not to renew by the first Monday in June of the
calendar year in which the contract would end. All material contracts between Humana and CMS relating to our
Medicare Advantage products have been renewed for 2014, and all of our product offerings filed with CMS for
2014 have been approved.
Individual Medicare Stand-Alone Prescription Drug Products
We offer stand-alone prescription drug plans, or PDPs, under Medicare Part D, including a PDP plan co-
branded with Wal-Mart Stores, Inc., or the Humana-Walmart plan. Generally, Medicare-eligible individuals
enroll in one of our plan choices between October 15 and December 7 for coverage that begins on the following
January 1. Our stand-alone PDP offerings consist of plans offering basic coverage with benefits mandated by
Congress, as well as plans providing enhanced coverage with varying degrees of out-of-pocket costs for
premiums, deductibles, and co-insurance. Our revenues from CMS and the beneficiary are determined from our
PDP bids submitted annually to CMS. These revenues also reflect the health status of the beneficiary and risk
sharing provisions as more fully described in Item 7. – Management’s Discussion and Analysis of Financial
Condition and Results of Operations under the section titled “Medicare Part D Provisions.” Our stand-alone PDP
contracts with CMS are renewed generally for a calendar year term unless CMS notifies us of its decision not to
renew by May 1 of the calendar year in which the contract would end, or we notify CMS of our decision not to
renew by the first Monday in June of the calendar year in which the contract would end. All material contracts
between Humana and CMS relating to our Medicare stand-alone PDP products have been renewed for 2014, and
all of our product offerings filed with CMS for 2014 have been approved.
We have administered CMS’s LI-NET prescription drug plan program since 2010. This program allows
individuals who receive Medicare’s low-income subsidy to also receive immediate prescription drug coverage at
the point of sale if they are not already enrolled in a Medicare Part D plan. CMS temporarily enrolls newly
identified individuals with both Medicare and Medicaid into the LI-NET prescription drug plan program, and
subsequently transitions each member into a Medicare Part D plan that may or may not be a Humana Medicare
plan.
Medicare and Medicaid Dual Eligible and Long-Term Care Support Services
Medicare beneficiaries who also qualify for Medicaid due to low income or special needs are known as dual
eligible beneficiaries, or dual eligibles. The dual eligible population represents a disproportionate share of
Medicaid and Medicare costs. There were approximately 9 million dual eligible individuals in the United States
in 2013, trending upward due to Medicaid eligibility expansions and individuals aging in to the Medicare
program. These dual eligibles may enroll in a privately-offered Medicare Advantage product, but may also
receive assistance from Medicaid for Medicaid benefits, such as nursing home care and/or assistance with
Medicare premiums and cost sharing. The dual eligible population is a strategic area of focus for us and we are
leveraging the capabilities of our integrated care delivery model, including care management programs
particularly as they relate to chronic conditions, to expand our services to this population. As of December 31,
2013, we served approximately 312,300 dual eligible members in our Medicare Advantage plans and
approximately 954,900 dual eligible members in our stand-alone prescription drug plans.
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