Reserve for Claims and Other Settlements (Tables)

12 Months Ended

Dec. 31, 2014

Reserves for Claims and Other Settlements [Abstract]

Reconciliation of changes in reserve for claims

The table below provides a reconciliation of changes in reserve for claims for the years ended December 31, 2014, 2013 and 2012.

	Health Plan Services Year Ended December 31,
	2014			2013			2012
	(Dollars in millions)
Reserve for claims (a), beginning of period	$	807.4		$	808.7		$	720.8
Incurred claims related to:
Current year (f)	5,613.0			4,666.0			4,950.9
Prior years (c)	(14.6		)	(56.2		)	34.5
Total incurred (b)	5,598.4			4,609.8			4,985.4
Paid claims related to:
Current year	4,443.2			3,872.5			4,156.6
Prior years	776.3			738.6			740.9
Total paid (b)	5,219.5			4,611.1			4,897.5
Reserve for claims (a), end of period	1,186.3			807.4			808.7
Add:
Claims and claims-related payable (d)	175.4			67.0			91.6
Other (e)	534.3			109.7			137.7
Reserves for claims and other settlements, end of period	$	1,896.0		$	984.1		$	1,038.0

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(a) Consists of IBNR claims and received but unprocessed claims and reserves for loss adjustment expenses.

(b) Includes medical claims only. Capitation, pharmacy and other payments (including, for example, provider settlements) are not included.

(c) This line represents the change in reserves attributable to the difference between the original estimate of incurred claims for prior years and the revised estimate. Negative amounts in this line represent favorable development in estimated prior years’ health care costs. Positive amounts in this line represent unfavorable development in estimated prior years’ health care costs. The net favorable development related to prior years that was recorded in the year ended December 31, 2014 consisted of $36.6 million in unfavorable prior year development primarily due to unanticipated benefit utilization in our commercial business arising from dates of service in the fourth quarter of 2013 as a result of an uncertain environment related to the ACA and a release of $51.2 million of the provision for adverse deviation held at December 31, 2013. The favorable development related to prior years that was recorded in the year ended December 31, 2013 resulted from claims being settled for amounts less than originally estimated. In 2013, this was primarily due to the absence of moderately adverse conditions. The favorable developments related to prior years that were recorded in 2014 and 2013 do not directly correspond to an increase in our operating results for those periods because any favorable prior period reserve development increases current period net income only to the extent that the current period provision for adverse deviation (see footnote (f)) is less than the benefit recognized from the prior period favorable development. The unfavorable development in estimated prior years' health care costs for 2012 primarily resulted from significant delays in claims submissions for the fourth quarter of 2011 arising from issues related to a new billing format required by HIPAA combined with an unanticipated flattening of commercial trends. See Note 2 under the heading "Health Plan Services Health Care Cost" for more information.

(d) Includes claims payable, provider dispute reserve, and other claims-related liabilities.

(e) Includes accrued capitation, shared risk settlements, provider incentives and other reserve items.

(f) Our IBNR estimate also includes a provision for adverse deviation, which is an estimate for known environmental factors that are reasonably likely to affect the required level of IBNR reserves. Such amounts were $77.7 million, $53.4 million and $53.4 million as of December 31, 2014, 2013 and 2012, respectively; the increase in the provision for adverse deviation from December 31, 2013 to December 31, 2014 was primarily driven by growth in our new products offered or programs administered under the ACA.

Schedule of Health Plan Services Capitated and Non-Capitated Expenses

The following table shows the Company’s health plan services expenses for the years ended December 31:

	Health Plan Services
	2014		2013		2012
	(Dollars in millions)
Total incurred fee for service claims	$	5,598.4	$	4,609.8	$	4,985.4
Capitated expenses and shared risk	4,256.8		3,108.0		3,128.1
Pharmacy and other	1,452.6		1,168.7		1,202.8
Health plan services	$	11,307.8	$	8,886.5	$	9,316.3