Health Net 2004 Annual Report Download - page 133
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HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table shows the Company’s health plan services for capitated and non-capitated expenses for the years ended
December 31 (amounts in thousands):
Government Contracts
Year Ended December 31,
2004
2003
2002
(amounts in thousands)
Reserve for claims (a), beginning of period
$215,962
$193,038
$224,011
Incurred claims related to:
Current year
1,014,563
1,468,722
1,155,026
Prior years (b)
19,155
35,351
24,570
Total incurred
1,033,718
1,504,073
1,179,596
Paid claims related to:
Current year
981,471
1,294,327
1,031,533
Prior years
203,988
186,822
179,036
Total paid
1,185,459
1,481,149
1,210,569
Reserve for claims (a), end of period
64,221
215,962
193,038
Add:
Other costs payable under government contracts
54,998
40,047
26,416
Health care and other costs payable under government contrac
t
$119,219
$256,009
$219,454
(a) Consists of incurred but not reported claims and reported but unprocessed claims.
(b) For incurred claims related to prior years, the pre-tax income impact is 30% of the amounts shown, due to the risk sharing
features of the contracts. Additionally, health care change orders and/or bid price adjustments to revenue of $65.6 million in
2004, $12.5 million in 2003, and $30.1 million in 2002 had favorable impacts to pre-tax income, before risk sharing.
For the years ended December 31, 2004, 2003 and 2002, the Company’s capitated, shared risk, pharmacy and other expenses
represented 40%, 41% and 45%, respectively, of the Company’s total health plan services.
F-47
Health Plan Services
2004
2003
2002
Total incurred claims
$5,057,058
$4,453,886
$3,954,154
Capitated expenses and shared risk
2,429,461
2,403,971
2,575,125
Pharmacy and other
927,119
658,981
632,241
Health plan services
$8,413,638
$7,516,838
$7,161,520