Claims Payable

12 Months Ended

Dec. 31, 2011

Claims Payable [Abstract]

Claims Payable

(8) Claims Payable

The following table presents the components of the change in medical claims payable for the years ended December 31:

	2011			2010			2009
Medical claims payable, beginning of the year	$	510,675		$	529,036		$	536,107
Health benefits expense incurred during the year:
Related to current year		5,365,247			4,828,321			4,492,590
Related to prior years		(92,988	)		(106,215	)		(85,317	)
Total incurred		5,272,259			4,722,106			4,407,273
Health benefits payments during the year:
Related to current year		4,823,667			4,359,216			4,007,789
Related to prior years		385,819			381,251			406,555
Total payments		5,209,486			4,740,467			4,414,344
Medical claims payable, end of the year	$	573,448		$	510,675		$	529,036
Current year medical claims paid as a percent of current year health benefits expense incurred		89.9	%		90.3	%		89.2	%
Health benefits expense incurred related to prior years as a percent of prior year medical claims payable as of December 31		(18.2	)%		(20.1	)%		(15.9	)%
Health benefits expense incurred related to prior years as a percent of the prior year’s health benefits expense related to current year		(1.9	)%		(2.4	)%		(2.3	)%

Health benefits expense incurred during the year was reduced for amounts related to prior years by $92,988, $106,215 and $85,317 in the years ended December 31, 2011, 2010 and 2009, respectively. Actuarial standards of practice generally require that the liabilities established for accrued medical expenses be sufficient to cover obligations under an assumption of moderately adverse conditions. A portion of the reduction in health benefits expense incurred during the year related to prior years was attributable to releasing most of the provision for moderately adverse conditions for prior years. The amounts released were $28,749, $32,178 and $34,414 for the years ended December 31, 2011, 2010 and 2009, respectively.

The remaining reduction in health benefits expense incurred during the year, related to prior years, of $64,239, $74,037 and $50,903 for the years ended December 31, 2011, 2010 and 2009, respectively, primarily resulted from obtaining more complete claims information for claims incurred for dates of service in the prior years. These amounts are referred to as net reserve development. The Company experienced lower medical trend than originally estimated in addition to increased claim payment recoveries and coordination of benefits in 2011, 2010 and 2009 related to prior year dates of services for all periods. These factors also caused the actuarial estimates to include faster completion factors than were originally established. The lower medical trend, increased claim payment recoveries and faster completion factors each contributed to the net favorable reserve development in each respective period.