Annual report pursuant to Section 13 and 15(d)

Medical Claims Liability

Medical Claims Liability
12 Months Ended
Dec. 31, 2011
Medical Claims Liability [Abstract]  
Medical Claims Liability

10. Medical Claims Liability

The change in medical claims liability is summarized as follows:


     Year Ended December 31,  
     2011     2010     2009  

Balance, January 1,

   $ 456,765      $ 470,932      $ 384,360   

Incurred related to:


Current year

     4,390,123        3,652,521        3,283,141   

Prior years

     (65,377     (68,069     (53,010










Total incurred

     4,324,746        3,584,452        3,230,131   










Paid related to:


Current year

     3,788,808        3,203,585        2,819,591   

Prior years

     384,718        395,034        323,968   










Total paid

     4,173,526        3,598,619        3,143,559   










Balance, December 31,

   $ 607,985      $ 456,765      $ 470,932   











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 $5,313 and $6,180 at December 31, 2011 and 2010, respectively, included in premium and related receivables.