Health Net 2011 Annual Report Download - page 8

supplemental coverage to 25,414 members through either individual Medicare supplement policies or employer
group sponsored coverage, as of December 31, 2011.
We provide Medicare Advantage plans in select counties in Arizona, California, Oregon and Washington.
We also provide multiple types of Medicare Advantage Special Needs Plans, including dual eligible Special
Needs Plans (designed for low income Medicare beneficiaries) in Arizona and California, chronic condition
Special Needs Plans (designed for beneficiaries with congestive heart failure) in California, and chronic
condition Special Needs Plans (designed for beneficiaries with congestive heart failure and diabetes) in Arizona.
These plans provide access to additional health care and prescription drug coverage.
Medicare Part D Stand-Alone Prescription Drug Plans
As of December 31, 2011, we had 382,396 PDP members in 49 states (exclusive of New York) and the
District of Columbia. We provide PDPs covering basic benefits mandated by Congress, as well as plans
providing enhanced coverage with varying degrees of out-of-pocket costs for premiums, deductibles and
coinsurance. See above for a discussion of the proposed PDP Asset Sale.
Medicaid and Related Products
We are one of the ten largest Medicaid HMOs in the United States based on membership. As of
December 31, 2011, we had 1,008,915 members enrolled in Medi-Cal (California’s Medicaid program) and other
California state health programs. To enroll in our California Medicaid products, an individual must be eligible for
Medicaid benefits in accordance with California’s regulatory requirements. The State of California’s Department
of Health Care Services (“DHCS”) pays us a monthly fee for the coverage of our Medicaid members. See “Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of
Operations—Western Region Operations Reportable Segment—Western Region Operations Segment
Membership” for detailed information regarding our Medicaid enrollment.
Medi-Cal is a public health insurance program which provides health care services for low-income
individuals, and is financed by California and the federal government. As of December 31, 2011, through HNCS,
we had Medi-Cal operations in twelve California counties: Fresno, Kern, King, Los Angeles, Madera, Orange,
Riverside, Sacramento, San Bernardino, San Diego, Stanislaus and Tulare. We are the sole commercial plan
contractor with DHCS to provide Medi-Cal services in Los Angeles County, California. As of December 31,
2011, 467,626 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.
On November 2, 2010, CMS approved California’s Section 1115 Medicaid waiver proposal, which, among
other things, authorized mandatory enrollment of seniors and persons with disabilities (“SPD”) (also referred to
as the aged, blind and disabled) in managed care programs to help achieve care coordination and better manage
chronic conditions. California’s mandatory SPD enrollment began in June 2011 and will continue to be phased in
over a twelve month period. As of December 31, 2011, we had gained approximately 52,000 new Medi-Cal
members from California’s SPD program since June 2011.
HN California participates in the Children’s Health Insurance Program (“CHIP”), which, in California, is
known as the Healthy Families program. As of December 31, 2011, there were 136,436 members, including 275
Healthy Kids members, in our Healthy Families program. CHIP was designed as a federal/state partnership,
similar to Medicaid, with the goal of extending health insurance to children whose families earn too much money
to be eligible for Medicaid, but not enough money to purchase private insurance. Monthly premiums are
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