Health Net 2010 Annual Report Download - page 9

health, substance abuse and employee assistance programs (“EAPs”) on an insured and self-funded basis to
groups in various states and is included as a standard part of most of our commercial health plans. MHN’s
benefits and services are also sold in conjunction with other commercial and Medicare products and on a stand-
alone basis to unaffiliated health plans (including the northeast health plans covered under the United
Admistrative Services Agreements) and employer groups. In 2010, MHN continued to implement, administer
and monitor the non-medical counseling program for the U.S. Department of Defense (“Department of Defense”)
under the Military Family Counseling Services program. See “—Government Contracts Segment—Other
Department of Defense Contracts” for a description of this contract. MHN also holds contracts with the U.S.
Department of State (“State Department”) and the U.S. Agency for International Development (“USAID”) to
provide EAP counseling services tailored for State Department and USAID employees and family members
while posted overseas.
MHN’s products and services were provided, including pursuant to the United Administrative Services
Agreements, to approximately 5.4 million individuals as of December 31, 2010, with approximately 137,000
individuals under risk-based programs, approximately 2.2 million individuals under self-funded programs and
approximately 3.1 million individuals under EAPs, including those who are also covered under other MHN
programs. For additional information regarding the United Administrative Services Agreements, see
“—Northeast Operations Segment.” In 2010, MHN’s total revenues were $383.5 million. Of that amount, $40.6
million represented revenues from business with MHN affiliates and $342.9 million represented revenues from
non-affiliate business.
Dental and Vision. We do not underwrite or administer stand-alone dental or vision products other than the
stand-alone dental products that we underwrite in Oregon and Washington. During 2010, we made available to
our current and prospective members in Arizona and California private label dental products through a strategic
relationship with Dental Benefit Providers,Inc. (“DBP”) and private label vision products through a strategic
relationship with EyeMed Vision Care LLC (“EyeMed”). Those stand-alone dental products were underwritten
and administered by DBP and the stand-alone vision products were underwritten by Fidelity Security Life
Insurance Company and administered by EyeMed affiliated companies. DBP also administers dental products
and coverage we provide to our members in Oregon and Washington. Liberty Dental Plans of California, Inc.
serves as the underwriter and administrator for the dental services we provide to our Medi-Cal and Healthy
Families program enrollees. Vision Service Plan (VSP) serves as the underwriter and administrator for the vision
services we provide to our Medi-Cal and Healthy Families vision program enrollees in California.
Government Contracts Segment
Our Government Contracts segment includes our current TRICARE contract for the North Region, our new
“T-3” contract for the North Region and other health care, mental health and behavioral health government
contracts that we administer for the “Department of Defense” and the U.S. Department of Veterans Affairs.
Certain components of these contracts are subcontracted to unrelated third parties.
Under government-funded health programs, the government payor typically determines beneficiary fees and
provider reimbursement levels. Contracts under these programs are generally subject to frequent change,
including changes that may reduce or increase the number of persons enrolled or eligible, or the revenue received
by us for our administrative or health care costs. The amount of government receivables set forth in our
consolidated financial statements represents our best estimate of the government’s liability to us under TRICARE
and other federal government contracts. In general, government receivables are estimates and are subject to
government audit and negotiation. See “Item 1A. Risk Factors—A significant reduction in revenues from the
government programs in which we participate could have an adverse effect on our business, financial condition
or results of operations.”
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