Health Net 2011 Annual Report Download - page 15

providers for services rendered could lead secondary providers to demand payment from us, even though we
have made our regular capitated payments to the provider group. Depending on state law, we could be liable for
such claims.
In our PPO plans, members are not required to select a primary care physician and generally do not require
prior authorization for specialty care. For services provided under our PPO products and the out-of-network benefits
of our POS products, we ordinarily reimburse physicians pursuant to discounted fee-for-service arrangements.
HNFS maintains a network of qualified physicians, facilities, and ancillary providers in the prime service
areas of our T-3 contract for the TRICARE North Region. Services are provided on a fee-for-service basis. As of
December 31, 2011, HNFS had 162,274 physicians, 3,344 facilities and 16,325 ancillary providers in its
TRICARE network.
Our behavioral health subsidiary, MHN, maintains a provider network comprised of approximately 51,580
psychiatrists, psychologists and other clinical categories of providers nationwide. Substantially all of these
providers are contracted with MHN on an individual or small practice group basis and are paid on a discounted
fee-for-service basis. Members who wish to access certain behavioral health services contact MHN and are
referred to contracted providers for evaluation or treatment services. If a member needs inpatient services, MHN
maintains a network of approximately 1,436 facilities.
In addition to the physicians that are in our networks, we have also entered into agreements with various
third parties that have networks of physicians contracted to them (“Third Party Networks”). In general, under a
Third Party Network arrangement, Health Net is licensed by the third party to access its network providers and
pay the claims of these physicians pursuant to the pricing terms of their contracts with the Third Party Network.
Hospital Relationships
Our health plan subsidiaries arrange for hospital care primarily through contracts with selected hospitals in
their service areas. These hospital contracts generally have multi-year terms or annual terms with automatic
renewals and provide for payments on a variety of bases, including capitation, per diem rates, case rates and
discounted fee-for-service schedules.
Covered hospital-based care for our members is comprehensive. It includes the services of hospital-based
physicians, nurses and other hospital personnel, room and board, intensive care, laboratory and x-ray services,
diagnostic imaging and generally all other services normally provided by acute-care hospitals. Our nurses and
medical directors are involved in a wide variety of medical management activities on behalf of our HMO and, to
a somewhat lesser extent, PPO members. These activities can include discharge planning and case management,
which often involves the coordination of community support services, including visiting nurses, physical therapy,
durable medical equipment and home intravenous therapy.
Ancillary and Other Provider Relationships
Our health plan subsidiaries arrange for ancillary and other provider services, such as ambulance,
laboratory, radiology, home health, chiropractic and acupuncture primarily through contracts with selected
providers in their service areas. These contracts generally have multi-year terms or annual terms with automatic
renewals and provide for payments on a variety of bases, including capitation, per diem rates, case rates and
discounted fee-for-service schedules. In certain cases, these provider services are included in contracts our health
plan subsidiaries have with PPGs and hospitals.
See “Item 1A. Risk Factors—If we are unable to maintain good relations with the physicians, hospitals and
other providers with which we contract, our profitability could be adversely affected” for additional information
on the risks associated with our provider relationships.
13