Annual report pursuant to Section 13 and 15(d)

Medical Claims Liability

v2.4.0.8
Medical Claims Liability
12 Months Ended
Dec. 31, 2013
Medical Claims Liability [Abstract]  
Medical Claims Liability
Medical Claims Liability
 
The change in medical claims liability is summarized as follows:
 
Year Ended December 31,
 
2013
 
2012
 
2011
Balance, January 1,
$
815,161

 
$
518,840

 
$
456,765

Incurred related to:
 
 
 
 
 
          Current year
9,072,867

 
6,836,177

 
4,256,645

          Prior years
(78,226
)
 
(55,096
)
 
(65,377
)
         Total incurred
8,994,641

 
6,781,081

 
4,191,268

 
 
 
 
 
 
Paid related to:
 
 
 
 
 
          Current year
7,975,367

 
6,024,720

 
3,744,475

          Prior years
722,726

 
460,040

 
384,718

         Total paid
8,698,093

 
6,484,760

 
4,129,193

 
 
 
 
 
 
Balance, December 31,
$
1,111,709

 
$
815,161

 
$
518,840



Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. In addition, claims processing initiatives yielded increased claim payment recoveries and coordination of benefits related to prior year dates of service. Changes in medical utilization and cost trends and the effect of medical management initiatives may also contribute to changes in medical claim liability estimates.  While the Company has evidence that medical management initiatives are effective on a case by case basis, medical management initiatives primarily focus on events and behaviors prior to the incurrence of the medical event and generation of a claim. Accordingly, any change in behavior, leveling of care, or coordination of treatment occurs prior to claim generation and as a result, the costs prior to the medical management initiative are not known by the Company. Additionally, certain medical management initiatives are focused on member and provider education with the intent of influencing behavior to appropriately align the medical services provided with the member's acuity. In these cases, determining whether the medical management initiative changed the behavior cannot be determined. Because of the complexity of its business, the number of states in which it operates, and the volume of claims that it processes, the Company is unable to practically quantify the impact of these initiatives on its changes in estimates of IBNR.
 
The Company had reinsurance recoverables related to medical claims liability of $10,427 and $9,094 at December 31, 2013 and 2012, respectively, included in premium and related receivables.

The Company periodically reviews actual and anticipated experience compared to the assumptions used to establish medical costs. The Company establishes premium deficiency reserves if actual and anticipated experience indicates that existing policy liabilities together with the present value of future gross premiums will not be sufficient to cover the present value of future benefits, settlement and maintenance costs.