Humana 2013 Annual Report Download - page 26

Physicians under capitation arrangements typically have stop loss coverage so that a physician’s financial
risk for any single member is limited to a maximum amount on an annual basis. We typically process all claims
and monitor the financial performance and solvency of our capitated providers. However, we delegated claim
processing functions under capitation arrangements covering approximately 116,200 HMO members, including
84,400 individual Medicare Advantage members, at December 31, 2013, with the provider assuming
substantially all the risk of coordinating the members’ health care benefits. Capitation expense under delegated
arrangements for which we have a limited view of the underlying claims experience was approximately $693
million, or 2.1% of total benefits expense, for the year ended December 31, 2013. We remain financially
responsible for health care services to our members in the event our providers fail to provide such services.
Accreditation Assessment
Our accreditation assessment program consists of several internal programs, including those that credential
providers and those designed to meet the audit standards of federal and state agencies as well as external
accreditation standards. We also offer quality and outcome measurement and improvement programs such as the
Health Care Effectiveness Data and Information Sets, or HEDIS, which is used by employers, government
purchasers and the National Committee for Quality Assurance, or NCQA, to evaluate health plans based on
various criteria, including effectiveness of care and member satisfaction.
Providers participating in our networks must satisfy specific criteria, including licensing, patient access,
office standards, after-hours coverage, and other factors. Most participating hospitals also meet accreditation
criteria established by CMS and/or the Joint Commission on Accreditation of Healthcare Organizations.
Recredentialing of participating providers occurs every two to three years, depending on applicable state
laws. Recredentialing of participating providers includes verification of their medical licenses, review of their
malpractice liability claims histories, review of their board certifications, if applicable, and review of applicable
quality information. A committee, composed of a peer group of providers, reviews the applications of providers
being considered for credentialing and recredentialing.
We request accreditation for certain of our health plans and/or departments from NCQA, the Accreditation
Association for Ambulatory Health Care, and the URAC. Accreditation or external review by an approved
organization is mandatory in the states of Florida and Kansas for licensure as an HMO. Certain commercial
businesses, like those impacted by a third-party labor agreement or those where a request is made by the
employer, may require or prefer accredited health plans.
NCQA reviews our compliance based on standards for quality improvement, credentialing, utilization
management, member connections, and member rights and responsibilities. We have achieved and maintained
NCQA accreditation in most of our commercial, Medicare and Medicaid HMO/POS markets with enough history
and membership, except Puerto Rico, and for many of our PPO markets.
Sales and Marketing
We use various methods to market our products, including television, radio, the Internet, telemarketing, and
direct mailings.
At December 31, 2013, we employed approximately 1,800 sales representatives, as well as approximately
1,100 telemarketing representatives who assisted in the marketing of individual Medicare and individual
commercial health insurance and specialty products in our Retail segment, including making appointments for
sales representatives with prospective members. We also market our individual Medicare products via a strategic
alliance with Wal-Mart Stores, Inc., or Wal-Mart. This alliance includes stationing Humana representatives in
certain Wal-Mart stores, SAM’S CLUB locations, and Neighborhood Markets across the country which provides
an opportunity to enroll Medicare eligible individuals in person. In addition, we market our individual Medicare
16