Health Net 2011 Annual Report Download - page 75

weak employment levels. Enrollment in our large group segment increased by less than 1 percent or 3,000
members to 953,000 members at December 31, 2011. Enrollment in our small group and individual segment in
the Western Region Operations decreased by 4.6 percent, from 433,000 members at December 31, 2010 to
413,000 members at December 31, 2011 primarily due to pricing competition and overall weak employment
levels. Membership in our tailored network products increased by 35.1 percent, or 111,000 members, from
December 31, 2010 to December 31, 2011 as our customers increasingly made purchasing decisions based on the
financial value of the product rather than broader network choice in 2011. As of December 31, 2011, tailored
network products accounted for 31.3 percent of our Western Region Operations commercial enrollment
compared with 22.9 percent at December 31, 2010. For additional information on our tailored network products,
see “Item 1. Business—Segment Information—Western Region Operations Segment—Managed Health Care
Operations.”
Enrollment in our Medicare Advantage plans in the Western Region Operations at December 31, 2011 was
205,000 members, a decrease of 7.7 percent compared with December 31, 2010. The decline in Medicare
Advantage membership was due to a loss of 8,000 members in Arizona, 8,000 members in California and 1,000
members in Oregon. Membership in our Medicare PDP plans was 382,000 at December 31, 2011, a 10.5 percent
decrease compared with December 31, 2010. This decline in Medicare membership was primarily driven by our
inability to enroll new members due to the sanctions imposed against us by CMS.
Medicaid enrollment in California increased by 108,000 members or 12.0 percent to 1,009,000 members as
of December 31, 2011 compared with December 31, 2010. The increase in the Medicaid membership includes
the impact of our participation in California’s Seniors and Persons with Disabilities (“SPD”) program and
expansion into additional counties. We added approximately 52,000 new SPD members as of December 31,
2011. On November 2, 2010, CMS approved California’s Section 1115 Medicaid waiver proposal, which, among
other things, authorized mandatory enrollment of SPDs in managed care programs to help achieve care
coordination and better manage chronic conditions. The mandatory SPD enrollment began in June 2011 and will
continue to be phased in over a twelve month period.
We are the sole commercial plan contractor with DHCS to provide Medi-Cal services in Los Angeles
County, California. As of December 31, 2011, 468,000 of our Medi-Cal members resided in Los Angeles
County, representing approximately 54% of our Medi-Cal membership and approximately 46% of our
membership in all California state health programs. In May 2005, we renewed our contract with DHCS to
provide Medi-Cal service in Los Angeles County. On March 29, 2010, the DHCS executed an amendment to
extend our contract for a second 24-month extension period ending March 31, 2012. On December 1, 2011, our
contract with DHCS was extended for a third 24-month period ending March 31, 2014.
Our subsidiary, Health Net of California, Inc. (“HN California”), participates in CHIP, which, in California,
is known as the Healthy Families program. Commencing with the 2011-12 Healthy Families benefit year that
started October 1, 2011, HN California no longer offers the Healthy Families EPO product. As a result, over
1,500 Healthy Families EPO members have transitioned to other carriers in the counties we serve with this
product. In addition, HN California no longer offers the Healthy Families HMO in Marin County, California,
resulting in approximately 590 members being transitioned to other carriers.
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
Total Western Region Operations enrollment at December 31, 2010 was approximately 2.9 million
members, a decrease of 1.9 percent compared with enrollment at December 31, 2009. Total enrollment in our
California health plan remained the same at approximately 2.2 million members from December 31, 2009 to
December 31, 2010.
Western Region Operations commercial enrollment declined by 4.4 percent from December 31, 2009 to
approximately 1.4 million members at December 31, 2010. Enrollment in our large group segment declined by
5.1 percent or 51,000 members to 950,000 members at December 31, 2010. Enrollment in our small group and
individual segment in the Western Region Operations decreased by 1.6 percent, from 440,000 members at
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