Humana 2013 Annual Report Download - page 79

Comparisons of our operating cash flows also are impacted by other changes in our working capital. The
most significant drivers of changes in our working capital are typically the timing of receipts for premiums and
payments of benefits expense. We illustrate these changes with the following summaries of receivables and
benefits payable.
The detail of total net receivables was as follows at December 31, 2013, 2012 and 2011:
Change
2013 2012 2011 2013 2012 2011
(in millions)
Medicare ...................................... $576 $422 $ 336 $154 $ 86 $120
Commercial and other ............................ 405 346 315 59 31 (53)
Military services ................................ 87 59 468 28 (409) 41
Allowance for doubtful accounts .................... (118) (94) (85) (24) (9) (33)
Total net receivables ..................... $950 $733 $1,034 217 (301) 75
Reconciliation to cash flow statement:
Provision for doubtful accounts ................. 37 26 31
Receivables from acquisition .................. (3) (51) 0
Change in receivables per cash flow statement resulting
in cash from operations ......................... $251 $(326) $106
Medicare receivables are impacted by revenue growth associated with growth in individual and group
Medicare membership and the timing of accruals and related collections associated with the CMS risk-
adjustment model.
Military services receivables at December 31, 2013 and 2012 primarily consist of administrative services
only fees owed from the federal government for administrative services provided under our current TRICARE
South Region contract. Military services receivables at December 31, 2011 primarily consisted of estimated
claims owed from the federal government for health care services provided to beneficiaries and underwriting fees
under our previous TRICARE South Region contract. The $409 million decrease in military services receivables
from December 31, 2011 to December 31, 2012 primarily resulted from the transition to our current TRICARE
South Region contract which we account for similar to an administrative services fee only agreement. As such,
beginning April 1, 2012, payments of the federal government’s claims and related reimbursements for the current
TRICARE South Region contract are classified with receipts (withdrawals) from contract deposits as a financing
item in our consolidated statements of cash flows.
The increases in commercial and other receivables as well as the allowance for doubtful accounts in 2013
and 2012 primarily are due to growth in the business. In addition, commercial and other receivables for 2013,
2012, and 2011 include $178 million, $166 million, and $144 million, respectively, of patient services
receivables related to Concentra which was acquired in December 2010. Also related to Concentra, the allowance
for doubtful accounts increased $33 million from 2010 to 2011 as a result of the requirement to record acquired
balances at fair value at the acquisition date. Commercial and other receivables also reflect the timing of
reimbursements from the Puerto Rico Health Insurance Administration under our Medicaid contracts that
terminated effective September 30, 2013.
As discussed above, we expect receivables to increase in 2014 as a result of the commercial risk adjustment,
risk corridor, and reinsurance provisions of the Health Care Reform Law effective in 2014.
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