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Georgia Duplicate Premium Payments
9 Months Ended
Sep. 30, 2012
Georgia Duplicate Premium Payments [Abstract]  
Duplicate Premium Payments
Georgia Duplicate Premium Payments
As previously reported in the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2011, the Georgia Department of Community Health ("GA DCH") completed a comprehensive review of their membership files and merged duplicate member records, identifying premium overpayments impacting periods as far back as the start of the Medicaid managed care program in 2006. Previously GA DCH had used these duplicate members in the determination of premium rates. GA DCH revisited the premium rate calculations using a revised count of membership to account for the cumulative effect of previously uncorrected duplicate members for state fiscal years 2007 through 2011. As a result of this activity, the Company and GA DCH agreed to the value of a premium adjustment due to the Company in recognition of revised premium rates. Based on this agreement, which was subject to approval by the Centers for Medicare & Medicaid Services ("CMS"), the Company recorded premium revenue during the three and nine months ended September 30, 2011 of approximately $14.0 million.
During the three and nine months ended September 30, 2012, the Company was notified by GA DCH that the agreement between GA DCH and the Company was not approved by CMS for premium adjustment in recognition of revised premium rates for state fiscal years prior to 2011. GA DCH issued a revised agreement covering a shorter period of premium rate revision as deemed by CMS to be a period for which CMS would approve such revision. The revised agreement expressly reserved the Company's right to continue to pursue premium rate revision on the remaining unsettled period. However, as collectability is not reasonably assured for the prior periods that were not approved, representing approximately $10.0 million of the recorded receivable, the Company recorded a provision for bad debt in this amount during the three and nine months ended September 30, 2012, which is reflected in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income. GA DCH is in the process of evaluating waiver and/or appeal options with CMS for the prior periods that were not approved. The Company is pursuing alternate avenues of recovering amounts owed by GA DCH as the Company continues to believe these amounts represent appropriate claims against GA DCH.