Health Net 2014 Annual Report Download - page 80

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Year Ended December 31, 2013 Compared to Year Ended December 31, 2012
Total Western Region Operations enrollment at December 31, 2013 was approximately 2.4 million members, a
decrease of 4.1 percent compared with enrollment at December 31, 2012. Total enrollment in our California health plan
decreased by 2.8 percent to approximately 2.2 million members from December 31, 2012 to December 31, 2013.
Western Region Operations commercial enrollment declined by 12.0 percent from December 31, 2012 to
approximately 1.1 million members at December 31, 2013, primarily due to increasingly competitive markets and our
efforts to reposition our commercial book of business away from unprofitable full network large group accounts
towards smaller accounts and tailored network products. Enrollment in our large group accounts decreased by 19.0
percent or 153,000 members to 651,000 members, from December 31, 2012 to December 31, 2013. Enrollment in our
small group business in our Western Region Operations segment decreased by 7.8 percent, from approximately 346,000
members at December 31, 2012 to approximately 319,000 members at December 31, 2013. Enrollment in our
individual business in our Western Region Operations segment increased by 38.6 percent, from approximately 83,000
members at December 31, 2012 to approximately 115,000 members at December 31, 2013. As of December 31, 2013,
tailored network products accounted for 37.5 percent of our Western Region Operations commercial enrollment
compared with 35.0 percent at December 31, 2012.
Enrollment in our Medicare Advantage plans in our Western Region Operations at December 31, 2013 was
244,000 members, an increase of 4.3 percent compared with December 31, 2012. The increase in Medicare Advantage
membership was due to gains of approximately 8,000 members in California and 2,000 members in the Northwest.
Medicaid enrollment in California increased by 29,000 members or 2.7 percent to 1,113,000 members at
December 31, 2013 compared with 1,084,000 members at December 31, 2012. As of December 31, 2013, we had
approximately 4,000 Medicaid members in Arizona.
As of December 31, 2013, approximately 572,000 of our Medi-Cal members resided in Los Angeles County,
representing approximately 51 percent of our Medi-Cal membership and approximately 51 percent of our membership
in all California state health programs.
California Coordinated Care Initiative
In 2012, the California legislature enacted the CCI. The stated purpose of the CCI is to provide a more efficient
health care delivery system and improved coordination of care to individuals that are fully eligible for Medicare and
Medi-Cal benefits, or "dual eligibles," as well as to all Medi-Cal only beneficiaries who rely on long-term services and
supports, or “LTSS,” which includes institutional long-term care and home and community-based services and other
support services.
In participating counties, the CCI established a voluntary “dual eligibles demonstration,” also referred to as the
“Cal MediConnect” program, to coordinate medical, behavioral health, long-term institutional, and home- and
community-based services for dual eligibles through a single health plan, and will require that all Medi-Cal
beneficiaries in participating counties join a Medi-Cal managed care health plan to receive their Medi-Cal benefits,
including LTSS. The DHCS selected eight counties to participate in the CCI, including Los Angeles and San Diego
counties. On April 4, 2012, DHCS selected us to participate in the dual eligibles demonstration for both Los Angeles
and San Diego counties. In December 2013, Health Net Community Solutions, Inc., our wholly owned subsidiary,
entered into a three-way agreement with DHCS and CMS, which was subsequently amended on January 13, 2014 (the
“Cal MediConnect Contract”). Among other things, under the Cal MediConnect Contract we have received and expect
to continue to receive prospective blended capitated payments to provide coverage for dual eligibles in Los Angeles
and San Diego counties. These blended capitated payments are determined based on our mix of membership.
In January 2014, CMS and DHCS informed us that based on its readiness assessments, we were able to enroll
members beginning April 1, 2014, and could begin marketing for the dual eligibles demonstration in accordance with
the guidelines and time frames for Los Angeles and San Diego counties. Active enrollment in Los Angeles and San
Diego counties for the dual eligibles demonstrations commenced on April 1, 2014, and is scheduled to conclude at the
end of 2017. During the active enrollment period, dual eligibles in Los Angeles County are able to either choose among
us, the local health plan initiative, or one of three other health plans for benefits under the dual eligibles demonstration.
On July 1, 2014, DHCS began automatically enrolling dual eligibles in Los Angeles County who have not selected a
health plan, which we refer to as “passive enrollment.” Dual eligibles also may choose to “opt out” of the demonstration
at any time. Such dual eligibles will then continue to receive fee-for-service Medicare benefits but will receive Medi-
Cal benefits through a managed care health plan as required under the CCI. During the active enrollment period in San
Diego County, dual eligibles are able to select to receive benefits from any one of four health plan options, including us,
or “opt out” of the demonstration. Passive enrollment in San Diego County began on May 1, 2014. Based on our