Humana 2014 Annual Report Download - page 124

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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appear to equate each Medicare Advantage risk adjustment data error with an “overpayment” without reconciliation
to the principles underlying the FFS Adjuster referenced above. We will continue to work with CMS to ensure that
MA plans are paid accurately and that payment model principles are in accordance with the requirements of the Social
Security Act, which, if not implemented correctly could have a material adverse effect on our results of operations,
financial position, or cash flows.
At December 31, 2014, our military services business, which accounted for approximately 1% of our total premiums
and services revenue for the year ended December 31, 2014, primarily consisted of the TRICARE South Region contract.
The current five-year South Region contract, which expires March 31, 2017, is subject to annual renewals on April 1
of each year during its term at the government’s option. On January 27, 2015, we received notice from the Defense
Health Agency, or DHA, of its intent to exercise its option to extend the TRICARE South Region contract through
March 31, 2016.
The loss of any of the contracts above or significant changes in these programs as a result of legislative or regulatory
action, including reductions in premium payments to us, regulatory restrictions on profitability, including by comparison
of our Medicare Advantage profitability to our non-Medicare Advantage business profitability and a requirement that
they remain within certain ranges of each other, or increases in member benefits without corresponding increases in
premium payments to us, may have a material adverse effect on our results of operations, financial position, and cash
flows.
Our state-based Medicaid business accounted for approximately 2% of our total premiums and services revenue
for the year ended December 31, 2014. In addition to our state-based Medicaid contracts in Florida and Kentucky, we
have contracts in Illinois and Virginia for stand-alone dual eligible demonstration programs serving individuals dually
eligible for both the federal Medicare program and the applicable state-based Medicaid program. We began serving
members in Illinois in the first quarter of 2014 and in Virginia in the second quarter of 2014. In addition, we began
serving members in Long-Term Care Support Services (LTSS) regions in Florida at various effective dates ranging
from the second half of 2013 through the first quarter of 2014.
On June 26, 2013, the Puerto Rico Health Insurance Administration notified us of its election not to renew our
three-year Medicaid contracts for the East, Southeast, and Southwest regions which ended June 30, 2013. Contractual
transition provisions required the continuation of insurance coverage for beneficiaries through September 30, 2013 and
also required an additional period of time thereafter to process residual claims.
Legal Proceedings and Certain Regulatory Matters
Florida Matters
On December 16, 2010, an individual filed a qui tam suit captioned United States of America ex rel. Marc Osheroff
v. Humana et al. in the Southern District of Florida, against us, several of our health plan subsidiaries, and certain other
companies that operate medical centers in Miami-Dade County, Florida. After the U.S. government declined to
intervene, the Court ordered the complaint unsealed, and the individual plaintiff amended his complaint and served the
Company on December 8, 2011. The amended complaint alleged certain civil violations by our CAC Medical Centers
in Florida, including offering various amenities such as transportation and meals, to Medicare and dual eligible
individuals in our community center settings. The amended complaint also alleged civil violations by our Medicare
Advantage health plans in Florida, arising from the alleged activities of our CAC Medical Centers and the codefendants
in the complaint. The amended complaint sought damages and penalties on behalf of the United States under the Anti-
Inducement and Anti-Kickback Statutes and the False Claims Act. On September 28, 2012, the Court dismissed, with
prejudice, all causes of action that were asserted in the amended complaint. On November 19, 2013, the individual
plaintiff appealed the dismissal of the amended complaint. On January 16, 2015, the Court of Appeals for the Eleventh
Circuit affirmed the dismissal of the amended complaint.
On January 6, 2012, the Civil Division of the United States Attorney’s Office for the Southern District of Florida
advised us that it is seeking documents and information from us and several of our affiliates relating to several matters
including the coding of medical claims by one or more South Florida medical providers, and loans to physician practices.
On May 1, 2014, the U.S. Attorney's Office filed a Notice of Non-Intervention in connection with a civil qui tam suit