2017-11-15T09:55:11-06:00 2016-12-31 PricewaterhouseCoopers LLP 101 SEAPORT BOULEVARD BOSTON MA 02210 990 2016-01-01 042452600 HARVARD PILGRIM HEALTH CARE INC % BETH CREAVIN HARV 7812636000 93 WORCESTER STREET WELLESLEY MA 024819181 CHARLES R GOHEEN TREASURER 7812636000 2017-11-14 true GWEN SPENCER P00641463 6175305000 155.201.188.2 04363820173195000004 2017-11-15 P BF1FE25100CDBE53BD0118B5B753D4D4D69E51B4 00C87E99527E2332A8997F658CF042F3B5F40496 2016 2021-01-29 14:40:06Z ERIC H SCHULTZ 93 WORCESTER STREET WELLESLEY MA 024819181 2090967937 false X www.harvardpilgrim.org X 1969 MA SEE SCHEDULE O 12 11 1270 0 239574026 -4217512 41478344 54327420 1758496615 1865661559 30785590 51484383 3141773 3675824 1833902322 1975149186 6220994 6333505 1550231914 1623711214 66096315 69551688 0 0 0 245677244 254533279 1868226467 1954129686 -34324145 21019500 958882498 905859841 473885211 449057784 484997287 456802057 X SEE SCHEDULE O false false 1856869500 6333505 1866407339 TO IMPROVE THE QUALITY AND VALUE OF HEALTH CARE FOR THE PEOPLE AND COMMUNITIES WE SERVE. AT 12/31/16, HPHC, INC. HAD 287,462 FULLY INSURED MEMBERS, AMBULATORY ENCOUNTERS WERE 2,308,418 AND HOSPITAL DAYS INCURRED WERE 81,284. 54327420 THE HARVARD PILGRIM HEALTH CARE INSTITUTE, LLC PERFORMS RESEARCH AND RESEARCH ADMINISTRATION FOR GRANTS AND CONTRACTS AWARDED TO HPHC, INC. 1911196920 true true false true false false false false false false true true false true true true true true false false false false false false false false false true false true false false false false false false false false false false false false true true true true true false true 24123 0 true 1270 true true true false false false false false false false false false X 12 11 true false false false false false false true true false false true true true true true true true true false MA X BETH CREAVIN 6175095692 93 WORCESTER STREET Wellesley MA 024819181 X MARY ANN TOCIO CHAIRMAN/DIRECTOR 5.0 0.0 X 30100 0 0 JOYCE A MURPHY VICE CHAIR/ DIRECTOR 5.0 0.0 X 29776 0 0 SUSAN V DUPREY DIRECTOR 3.0 0.0 X 27900 0 0 EARL W BAUCOM DIRECTOR 5.0 0.0 X 31754 0 0 JOSEPH F O'DONNELL MD DIRECTOR 3.0 2.0 X 24900 0 0 MICHAEL J SHEA DIRECTOR 5.0 0.0 X 31576 0 0 SHELBY M CHODOS DIRECTOR 3.0 0.0 X 29100 0 0 SCOTT S HARTZ DIRECTOR 3.0 0.0 X 26700 0 0 HEDWIG V WHITNEY DIRECTOR 5.0 0.0 X 29176 0 0 MYECHIA MINTER-JORDAN MD DIRECTOR 3.0 0.0 X 26700 0 0 RAYMOND PAWLICKI DIRECTOR 3.0 0.0 X 23417 0 0 ERIC H SCHULTZ PRESIDENT/CEO/DIRECTOR 35.0 15.0 X X 2077902 0 310060 CHARLES R GOHEEN TREASURER 40.0 10.0 X 872345 0 146810 TISA K HUGHES SECRETARY AND CLERK 40.0 10.0 X 675163 0 136733 MICHELLE J CLAYMAN ASSISTANT TREAS. (AS OF 5/16) 40.0 10.0 X 354396 0 50018 DEBORAH A NORTON CHIEF INFORMATION OFFICER 50.0 0.0 X 735576 0 136461 RICHARD WEISBLATT CHIEF OF INNOVATION & STRATEGY 40.0 10.0 X 527466 0 112475 BETH A ROBERTS SR VP ENTERPRISE SALES & MKTG 35.0 15.0 X 426487 0 58928 VINCENT CAPOZZI Sr VP Sales & MKTG(UNTIL 3/16) 40.0 10.0 X 704598 0 46648 PRANAV MEHTA SVP PROD& BUS PLAN(UNTIL 3/16) 40.0 10.0 X 320930 0 42780 MICHAEL S SHERMAN MD SR VP CMO 40.0 10.0 X 544092 0 55483 CYNTHIA RING CHIEF HUMAN RESOURCES OFFICER 40.0 10.0 X 399311 0 111850 Richard Platt EXEC DIR OF HPHC INSTITUTE 50.0 0.0 X 411477 0 23446 JONATHAN EDWARDS SALES EXECUTIVE 40.0 10.0 X 367573 0 63963 COLLEEN MCGRORY VP SALES 40.0 10.0 X 395748 0 33267 THOMAS F MALONEY INTERIM LEGAL OFF (UNTIL 3/14) 40.0 10.0 X 274888 0 50324 JOHN F LANE CHIEF HR OFFICER (UNTIL 1/15) 0.0 0.0 X 223462 0 0 SCOTT ALLEN SENIOR ACTUARIAL CONSULTANT 7.0 7.0 X 235765 0 0 9858278 0 1379246 351 true true false DELL MARKETING LPNTT DATA SERVICES 2300 W PLANO PARKWAY PLANO TX 75075 SEE SCHEDULE O 117832827 ORACLE AMERICA INC 500 ORACLE PARKWAY REDWOOD SHORES CA 94065 IT CONSULTING 6633680 TERADATA OPERATIONS INC 125 HIGH STREET BOSTON MA 02110 CONSULTING 3088179 HILL HOLLIDAY LLC 53 STATE STREET BOSTON MA 02109 ADVERTISING 1827144 C2 CONSULTING INC 373 MAIN STREET HINGHAM MA 02043 IT CONSULTING 1859335 416 42260717 12066703 54327420 MEMBER PREMIUMS & FEES 524114 1626244712 1626244712 PPO PREMIUMS (FULLY INSURED) 524298 239416847 239416847 1865661559 13178247 -50059 13228306 0 0 3288497 358453 2930044 0 2930044 207238 2722806 118606963 35159470 112035873 3424425 6571090 31735045 38306136 38306136 0 0 0 0 0 0 0 0 0 PROVIDER SETTLEMENT & OTHER 900099 745780 745780 745780 1975149186 1626990492 239574026 54257248 X 6333505 6333505 0 0 1623711214 1623711214 8046876 6437501 1609375 784439 627551 156888 44501727 35601382 8900345 3309750 2647800 661950 8035601 6428481 1607120 4873295 3989293 884002 0 429166 429166 3803178 3803178 1855351 1855351 0 395039 395039 18261472 18261472 4088897 4088897 3971640 3177312 794328 59978443 47982754 11995689 0 5657075 4525660 1131415 1186777 1186777 0 168345 168345 2607456 2085965 521491 0 21583257 17266606 4316651 0 FEDERAL & STATE ASSESSMENTS 22387843 22387843 PREMIUM TAX EXPENSE 3615878 3615878 BROKER FEES 44283528 44283528 RESEARCH GRANT EXPENSE 57682763 54327420 3355343 2577171 2061736 515435 1954129686 1911196920 42932766 0 66903364 60336886 10457206 6987069 0 0 125612812 99799921 0 0 0 0 0 0 0 0 3364254 3837196 441074783 413372202 29766589 27702581 137291911 143346136 400082368 310647774 0 0 0 0 185403994 253202278 958882498 905859841 257322414 247855773 0 0 0 0 0 0 0 0 0 0 29000000 29000000 0 0 187562797 172202011 473885211 449057784 X 0 0 0 0 484997287 456802057 484997287 456802057 958882498 905859841 X 21019500 -62208428 12993698 X X false true X true true true X 39383858 38820660 40901467 41478344 54327420 214911749 1792048879 1661588555 1523957313 1540268502 1626244712 8144107961 0 0 0 1831432737 1700409215 1564858780 1581746846 1680572132 8359019710 1783862 670272 2454134 158993588 35731402 46237943 44558194 55733052 341254179 160777450 36401674 46237943 44558194 55733052 343708313 8015311397 26701263 25536284 24954982 19379312 16466744 113038585 0 26701263 25536284 24954982 19379312 16466744 113038585 0 672396 797805 584921 849393 745780 3650295 1858806396 1726743304 1590398683 1601975551 1697784656 8475708590 0.94568 0.92059 0.01334 0.01426 X SCHEDULE A, PART III, LINE 12 THIS LINE IS COMPOSED OF PROVIDER SETTLEMENT/OTHER INCOME FOR 2012, 2013, 2014, 2015, AND 2016. RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED false true false false false false true 629994 false true 1374451 2004445 false FORM 990, SCHEDULE C, PART II-B, LINE 1 During the year, HPHC paid $1,374,451 in membership dues allocable to lobbying activities. Of the amount shown, $35,635 was paid to the Maine Association of Health Plans, $534,005 was paid to America's Health Insurance Plans, $773,704 was paid to the Massachusetts Association of Health Plans and $31,107 was paid to the firm of Robinson and Cole for the Connecticut Association of Health Plans. HPHC hired a number of consulting firms to advise them on strategies for addressing pending legislation and to provide legislators with information regarding the impact of pending legislation on HPHC's activities. Of the amount shown, $414,900 was paid to consulting firms. HPHC also has internal staff who lobby. Of the amount shown, $149,094 represents the portion of the employee's salary spent on lobbying activities. On behalf of Harvard Pilgrim Health Care of New England Harvard Pilgrim Health Care, Inc., paid $66,000 to a consulting firm for lobbying costs. 4000000 4000000 38161672 19073096 19088576 398913111 394299106 4614005 27702581 US GOVT & AGENCY SECURITIES 129377872 C CORPORATE DEBT SECURITIES 181269902 C 310647774 INVESTMENTS IN AFFILIATES 180027923 SPECIAL DEPOSITS 1384983 DUE FROM AFFILIATES 19418996 OTHER INVESTED ASSETS 52370376 253202278 0 UNEARNED GROUP PREMIUM 54385605 DUE TO AFFILIATES 4994673 LIAB FOR AMTS UNDER UNINSURED PLANS 88018021 BORROWED MONEY & INTEREST THEREON 24803712 172202011 X 1833220897 1833220897 141928289 141928289 1975149186 1814767820 1814767820 139361866 139361866 1954129686 PART X, LINE 2 THE CONSOLIDATED FINANCIAL STATEMENTS OF HARVARD PILGRIM HEALTH CARE, INC. AND AFFILIATES INCLUDE THE FOLLOWING ENTITIES: HARVARD PILGRIM HEALTH CARE, INC. ("HPHC, INC."), HARVARD PILGRIM HEALTH CARE OF NEW ENGLAND, INC. ("NEW ENGLAND"), HARVARD PILGRIM HEALTH CARE OF CONNECTICUT, INC. ("HPHC OF CT"), HARVARD PILGRIM HEALTH CARE FOUNDATION, INC. (THE "FOUNDATION"), HARVARD PILGRIM HEALTH CARE INSTITUTE, LLC (THE "INSTITUTE"), HPHC INSURANCE AGENCY (THE "AGENCY"), HPHC INSURANCE COMPANY, INC. (THE "INSURANCE COMPANY"), HPHC HOLDING CORPORATION AND SUBSIDIARY ("HOLDINGS"), AND HEALTH PLANS, INC. AND SUBSIDIARIES ("HPI"). FOLLOWING IS THE RELEVANT PORTION OF THE FIN 48 FOOTNOTE FROM HARVARD PILGRIM HEALTH CARE, INC. AND AFFILIATES CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES THAT APPLIES TO THE FILING ORGANIZATION. HPHC, INC., NEW ENGLAND, HPHC OF CT, AND THE FOUNDATION ARE TAX-EXEMPT ORGANIZATIONS UNDER INTERNAL REVENUE SERVICE REGULATIONS. THE INSTITUTE HAS NO TAX STATUS AND THEREFORE FOLLOWS THE TAX-EXEMPT STATUS OF HPHC, INC. AS ITS SOLE MEMBER. HARVARD PILGRIM DID NOT HAVE ANY UNRECOGNIZED TAX BENEFITS AS OF DECEMBER 31, 2016 AND 2015. PART XI, LINE 4B ASO FEES 83,379,622 GRANT & FACULTY TEACHING REVENUE 54,327,420 RENTAL & OTHER INCOME 3,675,824 HARVARD PILGRIM HEALTH CARE INSTITUTE LLC INVESTMENT INCOME 545,423 ____________ TOTAL 141,928,289 PART XII, LINE 4B ASO FEES 83,379,622 RENTAL & OTHER INCOME 3,675,824 GRANT & FACULTY TEACHING EXPENSES 52,306,420 ___________ TOTAL 139,361,866 true HARVARD PILGRIM HEALTH CARE FOUNDATION INC 93 WORCESTER ST WELLESLEY MA 024819181 042708004 501(C)(3) 6333505 FUND OPERATIONS 1 SCHEDULE I, PART I, LINE 2 HARVARD PILGRIM HEALTH CARE (HPHC) INC. MAKES GRANTS TO ITS SUPPORTING ORGANIZATION, HPHC FOUNDATION (THE FOUNDATION), WHOSE PURPOSE IS TO MAKE COMMUNITY GRANTS AND MONITOR THEM IN ACCORDANCE WITH HPHC'S TAX-EXEMPT MISSION. THE FOUNDATION MAKES MINI GRANTS OF $500 EACH THAT ARE APPROVED BY APPOINTED COMMITTEE MEMBERS PRIOR TO BEING ISSUED. MINI GRANTS OF $500 EACH ARE RECOMMENDED BY EMPLOYEES WHO FILL OUT A DETAILED APPLICATION REGARDING PURPOSE OF FUNDS, AND MUST PROVE THAT FUNDS WILL GO TO A LEGAL, NOT-FOR-PROFIT ORGANIZATION, WHERE THE EMPLOYEE LIVES OR WHERE HPHC DOES BUSINESS. THE FOUNDATION STAFF REVIEWS THESE APPLICATIONS FOR ACCURACY OF PURPOSE AND LEGITIMACY OF THE ORGANIZATION. THE FOUNDATION STAFF RECOMMENDATIONS ARE REVIEWED BY A NON-STAFF APPOINTED COMMITTEE. REPORTS ON THESE GRANTS ARE COLLECTED FROM A SAMPLE OF THESE ORGANIZATIONS. THE FOUNDATION'S INTERNAL MANAGEMENT REPORTS A SUMMARY OF THIS INFORMATION TO THE FOUNDATION'S BOARD. OTHER MORE SIGNIFICANT COMMUNITY GRANTS MADE BY THE FOUNDATION REQUIRE A CONCEPT PROPOSAL TO BE SUBMITTED AND APPROVED BY AN APPOINTED COMMITTEE. ONCE THE GRANTS ARE APPROVED, THE FOUNDATION EMPLOYEES PERFORM SITE VISITS AND REGULAR EVALUATIONS OF THE GRANTS. IN ADDITION, THE FOUNDATION HIRES AN INDEPENDENT EVALUATION GROUP TO REVIEW GRANT RESULTS. ADDITIONALLY, FORMAL FISCAL REPORTING OF ALL GRANTS IS PERFORMED AND REVIEWED BY EMPLOYEES OF THE FOUNDATION. X true true X X X X true true false false false false false true false ERIC H SCHULTZ PRESIDENT/CEO/DIRECTOR 956950 0 1098050 0 22902 0 283700 0 26360 0 2387962 0 639600 0 CHARLES R GOHEEN TREASURER 472465 0 374356 0 25524 0 115200 0 31610 0 1019155 0 226320 0 TISA K HUGHES SECRETARY AND CLERK 411487 0 252212 0 11464 0 105200 0 31533 0 811896 0 123273 0 MICHELLE J CLAYMAN ASSISTANT TREAS. (AS OF 5/16) 286743 0 62043 0 5610 0 18065 0 31953 0 404414 0 0 0 THOMAS F MALONEY INTERIM LEGAL OFF (UNTIL 3/14) 227218 0 45531 0 2139 0 21200 0 29124 0 325212 0 0 0 JOHN F LANE CHIEF HR OFFICER (UNTIL 1/15) 0 0 196481 0 26981 0 0 0 0 0 223462 0 101931 0 DEBORAH A NORTON CHIEF INFORMATION OFFICER 391921 0 318131 0 25524 0 101200 0 35261 0 872037 0 188600 0 RICHARD WEISBLATT CHIEF OF INNOVATION & STRATEGY 339791 0 162151 0 25524 0 90224 0 22251 0 639941 0 43050 0 BETH A ROBERTS SR VP ENTERPRISE SALES & MKTG 314706 0 104260 0 7521 0 21200 0 37728 0 485415 0 0 0 VINCENT CAPOZZI Sr VP Sales & MKTG(UNTIL 3/16) 108960 0 305325 0 290313 0 21200 0 25448 0 751246 0 0 0 PRANAV MEHTA SVP PROD& BUS PLAN(UNTIL 3/16) 64064 0 59096 0 197770 0 10769 0 32011 0 363710 0 0 0 MICHAEL S SHERMAN MD SR VP CMO 416536 0 104654 0 22902 0 21200 0 34283 0 599575 0 0 0 CYNTHIA RING CHIEF HUMAN RESOURCES OFFICER 282167 0 115830 0 1314 0 74281 0 37569 0 511161 0 39087 0 Richard Platt EXEC DIR OF HPHC INSTITUTE 382353 0 0 0 29124 0 21200 0 2246 0 434923 0 0 0 JONATHAN EDWARDS SALES EXECUTIVE 89340 0 277682 0 551 0 20326 0 43637 0 431536 0 0 0 COLLEEN MCGRORY VP SALES 193395 0 185907 0 16446 0 21200 0 12067 0 429015 0 0 0 SCOTT ALLEN SENIOR ACTUARIAL CONSULTANT 235765 0 0 0 0 0 0 0 0 235765 0 0 0 SCHEDULE J, PART I, LINE 1a 3 OFFICERS WERE PROVIDED TAX GROSS-UP PAYMENTS ALONG WITH SUPPLEMENTAL RETIREMENT PAYMENTS TO COMPENSATE FOR RETIREMENT CONTRIBUTION LIMITATIONS. THESE PAYMENTS WERE REPORTED AS TAXABLE INCOME. SCHEDULE J, PART I, LINE 4A VINCENT CAPOZZIS EMPLOYMENT WITH HPHC TERMINATED IN MARCH 2016. PURSUANT TO THE TERMS OF HIS SEVERANCE AGREEMENT WITH HPHC, MR. CAPOZZI WAS ELIGIBLE TO RECEIVE A CONTINUATION OF HIS BASE SALARY AND BENEFITS AND INCENTIVE COMPENSATION. IN 2016 HE RECEIVED SEVERANCE PAYMENTS OF $270,577. PRANAV MEHTAS EMPLOYMENT WITH HPHC WAS TERMINATED IN MARCH 2016. PURSUANT TO THE TERMS OF HIS SEVERANCE AGREEMENT WITH HPHC, MR. MEHTA WAS ELIGIBLE TO RECEIVE A CONTINUATION OF HIS BASE SALARY AND BENEFITS. IN 2016 HE RECEIVED SEVERANCE PAYMENTS OF $194,115. JOHN LANES EMPLOYMENT WITH HPHC TERMINATED IN JANUARY 2015. PURSUANT TO THE SEVERANCE PROVISION OF HIS CONTRACT, MR. LANE WAS ELIGIBLE TO RECEIVE A CONTINUATION OF HIS BASE SALARY AND BENEFITS AND INCENTIVE COMPENSATION. IN 2016 HE RECEIVED SEVERANCE PAYMENTS OF $26,981 AND INCENTIVE COMPENSATION OF $196,481. SCHEDULE J, PART I, LINE 4B LONG TERM INCENTIVE PLAN HPHC ADOPTED A LONG-TERM INCENTIVE PLAN FOR ITS CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER, CHIEF LEGAL OFFICER, CHIEF INFORMATION OFFICER, CHIEF INNOVATION AND STRATEGY OFFICER, AND CHIEF HUMAN RESOURCES OFFICER FOR 2013-2015 AND FOR 2016-2018. THE PLANS ARE BASED ON A VARIETY OF PERFORMANCE MEASURES AND AMOUNTS ARE EARNED OVER A THREE YEAR PERIOD. SOME OR ALL OF THE DEFERRED COMPENSATION AMOUNTS REPORTED HEREIN FOR THE POTENTIAL EARNINGS UNDER THESE PLANS MAY OR MAY NOT BE PAID TO THE EXECUTIVES BASED ON THE ACTUAL RESULTS OF THE PERFORMANCE MEASURES AS DETERMINED AT THE END OF THE APPLICABLE THREE YEAR PERIOD. THE FOLLOWING INDIVIDUALS WERE PAID THE FOLLOWING AMOUNTS FROM THE 2013-2015 PLAN DURING CALENDAR YEAR 2016: ERIC H. SCHULTZ - $639,600 CHARLES R. GOHEEN - $226,320 TISA K. HUGHES - $123,273 DEBORAH A. NORTON - $188,600 JOHN F. LANE - $101,931 RICHARD WEISBLATT - $43,050 CYNTHIA RING - $39,087 SCHEDULE J, PART I, LINE 7 EXECUTIVE INCENTIVE PLAN HPHC HAS AN EXECUTIVE INCENTIVE PLAN TO INCENT AND REWARD PARTICIPANTS AND PERMIT THEM TO SHARE IN SUCCESSFUL COMPANY FINANCIAL RESULTS, ENCOURAGE THEM TO WORK AS A TEAM AND PAY THEM COMPETITIVELY, CONSIDERING FINANCIAL CONSTRAINTS. ON AN ANNUAL BASIS, SUBJECT TO ORGANIZATION AND INDIVIDUAL PERFORMANCE, THE COMPANY PAYS ELIGIBLE PARTICIPANTS THEIR INCENTIVE COMPENSATION, PART OF WHICH (NO MORE THAN 40% OF THE GOAL) IS CONTINGENT ON ACHIEVING A CERTAIN OPERATING EARNINGS TARGET OF HPHC, INC. AND AFFILIATES (ON A COMBINED STATUTORY ACCOUNTING BASIS). DISCRETIONARY RETIREMENT PLAN HPHC OFFERS A 457(B) PLAN AS A RETIREMENT BENEFIT TO A SELECT GROUP OF MANAGEMENT OF HIGHLY COMPENSATED EMPLOYEES AND FACULTY MEMBERS OF HARVARD PILGRIM HEALTH CARE, INC. AND HARVARD PILGRIM HEALTH CARE INSTITUTE, LLC. THE PLAN PROVIDES ELIGIBLE PARTICIPANTS AN ADDITIONAL OPPORTUNITY TO DEFER PRE-TAX COMPENSATION FOR RETIREMENT. THE PLAN ALSO PROVIDES FOR EMPLOYER CONTRIBUTIONS (FOR NON-FACULTY PARTICIPANTS) AND RESTORATION CREDITS (FOR FACULTY MEMBERS) WHICH ARE INTENDED TO MAKE UP FOR THE SHORTFALL SOME PARTICIPANTS MAY EXPERIENCE UNDER THE HPHC-SPONSORED 401(K) PLAN DUE TO THE INTERNAL REVENUE CODE OR PLAN CONTRIBUTION LIMITS. HPHC MAKES UP FOR THIS SHORTFALL IN THE 401(K) PLAN BY FUNDING THE 457(B) ACCOUNT ON BEHALF OF THE ELIGIBLE EMPLOYEE UP TO THE 457(B) ANNUAL CONTRIBUTION LIMIT AND ANY AMOUNT ABOVE THIS LIMIT IS PAID TO THE PARTICIPANT IN CASH. SCHEDULE J, PART II, COLUMN F COMPENSATION REPORTED AS DEFERRED IN PRIOR FORM 990 FOR CERTAIN INDIVIDUALS LISTED ON SCHEDULE J, PART II, AMOUNTS CREDITED UNDER HPHCS 2016 2018 LONG TERM INCENTIVE PLAN ARE INCLUDED IN SCHEDULE J, PART II, COLUMN (C). AMOUNTS CREDITED AND DISCLOSED ON THE FORM 990 IN PRIOR YEARS THAT VESTED WERE PAID OUT IN CALENDAR YEAR 2016 FOR HPHCS 2013-2015 LONG-TERM INCENTIVE PLAN ARE REPORTED IN COLUMN (B) (III) AND IN COLUMN (F). FORM 990, PART I, LINE 1, AND PART III, LINE 1 ORGANIZATION MISSION HARVARD PILGRIM OPERATES AS A NOT-FOR-PROFIT HEALTH PLAN PROVIDING COMPREHENSIVE HEALTH BENEFIT PLANS, ACCESS TO HEALTH CARE AND OTHER RELATED SERVICES IN MASSACHUSETTS AND MAINE TO GROUP, INDIVIDUAL AND MEDICARE MEMBERS THROUGH CONTRACTS WITH PHYSICIANS, ESTABLISHED PRIMARY CARE AND MULTISPECIALTY PHYSICIAN GROUPS, HOSPITALS AND OTHER HEALTH CARE PROVIDERS. HARVARD PILGRIM'S MISSION IS TO IMPROVE THE QUALITY AND VALUE OF HEALTH CARE FOR THE PEOPLE AND COMMUNITIES WE SERVE. FOR MORE THAN 45 YEARS, HARVARD PILGRIM HAS BUILT A REPUTATION FOR EXCEPTIONAL CLINICAL QUALITY, PREVENTIVE CARE, DISEASE MANAGEMENT AND MEMBER SATISFACTION AND HAS CONSISTENTLY RATED AMONG THE TOP PLANS IN THE COUNTRY. PHYSICIAN PRACTICES IN MASSACHUSETTS, NEW HAMPSHIRE, MAINE, AND CONNECTICUT WILL RECEIVE GRANTS FROM HARVARD PILGRIM TO IMPROVE CLINICAL CARE, QUALITY AND SERVICE. HARVARD PILGRIM'S ANNUAL QUALITY AWARDS PROGRAM WILL FUND VARIOUS PHYSICIAN-GROUP INITIATIVES THAT FOCUS ON MANAGING CHRONIC AND PREVENTABLE DISEASES, INCLUDING PATIENT SATISFACTION AND SAFETY AND INCREASING PREVENTATIVE CARE. THE RESULTS OF THESE PROGRAMS WILL BE SHARED WITH OTHER HARVARD PILGRIM PROVIDERS SO THAT THEIR "BEST PRACTICES" CAN BENEFIT THE BROADER POPULATION. THROUGH THE HARVARD PILGRIM HEALTH CARE INSTITUTE (THE "INSTITUTE"),OUR SPONSORED EDUCATIONAL PROGRAMS AND RESEARCH AGENDA SEEK TO DISCOVER THE MOST EFFECTIVE WAYS TO DELIVER AMBULATORY MEDICAL CARE, REDUCE UNWARRANTED VARIATION IN PRACTICE, IMPROVE PATIENT SAFETY AND, WHENEVER POSSIBLE, IMPROVE PUBLIC HEALTH. THE "INSTITUTE" CHAMPIONS INNOVATIVE RESEARCH THAT DIRECTLY IMPROVES THE HEALTH AND SAFETY OF SOCIETY. FORM 990,PART VI, LINE 2 BUSINESS RELATIONSHIP - THE FOLLOWING INDIVIDUALS SERVE ON THE BOARDS OR ARE AN OFFICER OR KEY EMPLOYEE OF ONE OR MORE FOR PROFIT ORGANIZATIONS AFFILIATED WITH HPHC, INC.: ERIC H. SCHULTZ PRESIDENT/CEO CHARLES R. GOHEEN TREASURER TISA K. HUGHES - SECRETARY AND CLERK MICHELLE J. CLAYMAN - ASSISTANT TREASURER FORM 990, PART VI, LINE 11B ONCE HPHC, INC.'S FORM 990 IS COMPLETED WITH THE ASSISTANCE OF ITS OUTSIDE TAX ADVISORS, IT IS FIRST REVIEWED BY HPHC, INC.'S INTERNAL MANAGEMENT AND THEN HPHC, INC.'S AUDIT COMMITTEE CHAIRPERSON (AN INDEPENDENT MEMBER OF THE BOARD OF DIRECTORS OF THE ORGANIZATION). FOLLOWING THAT REVIEW, THE AUDIT COMMITTEE CHAIR AND OUTSIDE ADVISORS PRESENT THE FORM 990 TO THE AUDIT COMMITTEE. THE COMPLETED FORM 990 IS PROVIDED TO ALL MEMBERS OF THE BOARD OF DIRECTORS PRIOR TO THE FORM BEING FILED WITH THE IRS. FORM 990, PART VI, LINE 12C HPHC, INC.S DIRECTORS AND OFFICERS ARE SUBJECT TO HPHC, INC.S CONFLICTS OF INTEREST POLICY AS SET FORTH IN HPHC, INC.S BYLAWS. THE CONFLICTS OF INTEREST POLICY REQUIRES DIRECTORS AND OFFICERS TO DISCLOSE ON AN ONGOING BASIS THE OCCURRENCE OF ANY SITUATION WHEN THEIR PERSONAL INTERESTS OR RELATIONSHIPS MIGHT INFLUENCE, OR APPEAR TO INFLUENCE, THEIR ABILITY TO MAKE OBJECTIVE DECISIONS IN THE COURSE OF PERFORMING THEIR FIDUCIARY RESPONSIBILITIES, ARE PREJUDICIAL TO THE LEGITIMATE INTERESTS OF HPHC, INC., OR CAUSE THE USE OF HPHC, INC.S RESOURCES FOR OTHER THAN HPHC, INC. PURPOSES. IN ADDITION TO BEING SUBJECT TO HPHC, INC.S CONFLICTS OF INTEREST POLICY, HPHC, INC.S DIRECTORS, OFFICERS, AND KEY EMPLOYEES ARE ANNUALLY REQUIRED TO COMPLETE AND SIGN A CONFLICTS OF INTEREST DISCLOSURE SURVEY, AND ANY DISCLOSED POTENTIAL CONFLICTS ARE REPORTED TO THE BOARD OF DIRECTORS, IN ACCORDANCE WITH THE DISCLOSURE AND REVIEW PROCESS SET FORTH IN HPHC, INC.S BYLAWS. IN ADDITION, HPHC, INC.S EMPLOYEES ARE SUBJECT TO HPHC, INC.S CODE OF CONDUCT WHICH INCLUDES A CONFLICTS OF INTEREST POLICY. THE CONFLICTS OF INTEREST POLICY REQUIRES EMPLOYEES TO DISCLOSE ON AN ONGOING BASIS THE OCCURRENCE OF ANY SITUATION WHEN THEIR OUTSIDE ACTIVITIES, PERSONAL INTERESTS OR RELATIONSHIPS MIGHT INFLUENCE, OR APPEAR TO INFLUENCE, THEIR ABILITY TO MAKE OBJECTIVE DECISIONS IN THE COURSE OF PERFORMING THEIR JOB RESPONSIBILITIES, ARE PREJUDICIAL TO THE LEGITIMATE INTERESTS OF HPHC, INC., AND ITS AFFILIATES, OR CAUSE THE USE OF HPHC, INC. RESOURCES FOR OTHER THAN HPHC, INC. PURPOSES. EMPLOYEES COMMUNICATE DISCLOSURES TO THEIR SUPERVISORS AND TO THE COMPLIANCE PROGRAM OFFICE. THE COMPLIANCE PROGRAM OFFICE, IN COLLABORATION WITH THE LEGAL DEPARTMENT, MAKE A DETERMINATION IF SUCH DISCLOSURE IS MATERIAL AND NEEDS TO BE MANAGED, MITIGATED, OR ELIMINATED. FORM 990, PART VI, LINES 15A AND 15B HPHC,INC. HAS AN INDEPENDENT COMPENSATION COMMITTEE THAT ANNUALLY REVIEWS THE COMPENSATION OF THE CEO AND OTHER OFFICERS AND KEY EMPLOYEES. THE COMPENSATION COMMITTEE CONSIDERS MARKET DATA AND ANALYSES ASSEMBLED BY INDEPENDENT COMPENSATION CONSULTANTS. THE COMPENSATION COMMITTEE'S DELIBERATIONS ARE REFLECTED IN ITS MINUTES. FORM 990, PART VI, LINE 19 HPHC, INC. FURNISHES ITS GOVERNING DOCUMENTS, FINANCIAL STATEMENTS AND CONFLICT OF INTEREST POLICY TO THE PUBLIC UPON REQUEST. THE STATUTORY FINANCIAL STATEMENTS ARE AVAILABLE TO THE PUBLIC VIA THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS WEB SITE. FORM 990, PART VII, SECTION B ATTACHMENT 1 NAME: DELL MARKETING LP/NTT DATA SERVICES LLC DESCRIPTION OF SERVICES: IT CONSULTING AND BUSINESS PROCESS OUTSOURCING FORM 990, PART IX, COLUMN (D) THERE ARE NO EXPENSES FOR FUNDRAISING INCLUDED IN THE INCOME STATEMENT FOR HARVARD PILGRIM HEALTH CARE, INC. ANY COSTS INCURRED WITH THE ADMINISTRATION OF FEDERAL OR PRIVATE GRANTS ARE INCURRED BY THE INSTITUTE. THEY ARE TYPICALLY FUNDED BY THE INDIRECT COST RECOVERIES ON THOSE GRANTS. FORM 990, PART XI, LINE 9 CHANGE IN NON ADMITTED ASSETS 27,816,022 CHANGE IN SURPLUS NOTES (19,466,265) CHANGE IN PRIOR SERVICE COSTS AND RECOGNIZED GAIN FOR POSTRETIREMENT MEDICAL PLAN 4,643,941 ____________ TOTAL $12,993,698 ____________ FORM 990, PART XII, LINE 1 HARVARD PILGRIM HEALTH CARE, INC. FOLLOWS THE STATUTORY ACCOUNTING METHOD PRESCRIBED BY THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS' ACCOUNTING PRACTICES AND PROCEDURES MANUAL FOR STATUTORY ACCOUNTING PRINCIPLES. 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