Humana 2014 Annual Report Download - page 29

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Our business may be materially adversely impacted by the adoption of a new coding set for diagnoses.
Federal regulations related to the Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA),
contain minimum standards for electronic transactions and code sets, and for the privacy and security of protected
health information. ICD-9, the current system of assigning codes to diagnoses and procedures associated with hospital
utilization in the United States, was scheduled to be replaced by ICD-10 code sets on October 1, 2014. However, on
April 1, 2014, The Protecting Access to Medicare Act of 2014 was signed into law, delaying implementation of ICD-10
until at least October 1, 2015. For dates of service on or after the date of final implementation, health plans and providers
will be required to use ICD-10 codes for such diagnoses and procedures. While we have prepared for the transition to
ICD-10, if unforeseen circumstances arise, it is possible that we could be exposed to investigations and allegations of
noncompliance, which could have a material adverse effect on our results of operations, financial position and cash
flows. In addition, if some providers continue to use ICD-9 codes on claims after the final implementation date, including
providers in our network who are employees, we will have to reject such claims, which may lead to claim resubmissions,
increased call volume and provider and customer dissatisfaction. Further, providers may use ICD-10 codes differently
than they used ICD-9 codes in the past, which could result in lost revenues under risk adjustment. During the transition
to ICD-10, certain claims processing and payment information we have historically used to establish our reserves may
not be reliable or available in a timely manner. If we do not adequately implement the new ICD-10 coding set, or if
providers in our network do not adequately transition to the new ICD-10 coding set, our results of operations, financial
position and cash flows may be materially adversely affected.
We are involved in various legal actions and governmental and internal investigations, any of which, if
resolved unfavorably to us, could result in substantial monetary damages or changes in our business practices.
Increased litigation and negative publicity could increase our cost of doing business.
We are or may become a party to a variety of legal actions that affect our business, including breach of contract
actions, employment and employment discrimination-related suits, employee benefit claims, securities laws claims,
and tort claims.
In addition, because of the nature of the health care business, we are subject to a variety of legal actions relating
to our business operations, including the design, management, and offering of products and services. These include
and could include in the future:
• claims relating to the methodologies for calculating premiums;
• claims relating to the denial of health care benefit payments;
• claims relating to the denial or rescission of insurance coverage;
• challenges to the use of some software products used in administering claims;
• claims relating to our administration of our Medicare Part D offerings;
• medical malpractice actions based on our medical necessity decisions or brought against us on the theory
that we are liable for providers' alleged malpractice;
• claims arising from any adverse medical consequences resulting from our recommendations about the
appropriateness of providers’ proposed medical treatment plans for patients;
• allegations of anti-competitive and unfair business activities;
• provider disputes over compensation or non-acceptance or termination of provider contracts or provider
contract disputes relating to rate adjustments resulting from the Balance Budget and Emergency Deficit
Control Act of 1985, as amended (commonly referred to as “sequestration”);
• disputes related to ASO business, including actions alleging claim administration errors;
• qui tam litigation brought by individuals who seek to sue on behalf of the government, alleging that we, as
a government contractor, submitted false claims to the government including, among other allegations,
resulting from coding and review practices under the Medicare risk-adjustment model;
• claims related to the failure to disclose some business practices;
• claims relating to customer audits and contract performance;