Health Net 2004 Annual Report Download - page 9

MHN’s products and services were being provided to over 7.3 million individuals as of December 31, 2004, with approximately
2.3 million individuals under risk-based programs, approximately 2.3 million individuals under self-funded programs and
approximately 2.8 million individuals under EAP.
In 2004, MHN’s total revenues were $231 million. Of that amount, $153 million represented revenues from business with MHN
affiliates and $78 million represented revenues from non-affiliate business.
Dental and Vision. As a result of the sale of our dental and vision subsidiaries in 2003, we no longer underwrite or administer
stand-alone dental and vision products. We continue to make available to our current and prospective members in Arizona, California
and Oregon, private label dental products through a strategic relationship with SafeGuard Health Enterprises, Inc. (“SafeGuard”) and
private label vision products through a strategic relationship with EyeMed Vision Care LLC (“EyeMed”). The stand alone dental
products are underwritten and administered by SafeGuard companies and the stand alone vision products are underwritten by Fidelity
Security Life Insurance Company and administered by EyeMed.
Government Contracts Segment
Our Government Contracts segment includes government-sponsored managed care plans through the TRICARE program and
other health care-related government contracts. Our Government Contracts segment administers one large, multi-year managed health
care government contract and other health care related government contracts. Certain components of these contracts are subcontracted
to unrelated third parties.
TRICARE
Our wholly-owned subsidiary, Health Net Federal Services, Inc. (“HNFS”), administers a large managed care federal contract
with the U.S. Department of Defense (the “Department of Defense”) under the TRICARE program in the North Region. Through the
TRICARE program, HNFS provides eligible beneficiaries with improved access to care, lower costs and improved quality. We have
been serving the Department of Defense since 1988 under the TRICARE program and its predecessor programs. We believe we have
established a solid history of operating performance under our contracts with the Department of Defense. We believe there will be
further opportunities to serve the Department of Defense and other governmental organizations in the future.
During 2004, we began the transition from our old TRICARE contracts to our new TRICARE contract for the North Region.
Our old TRICARE contracts were comprised of three contracts covering five regions:
• Region 11, covering Washington, Oregon and part of Idaho
• Region 6, covering Arkansas, Oklahoma, most of Texas, and most of Louisiana
Our TRICARE contract for the North Region is one of three regional contracts awarded by the Department of Defense in August
2003 under the TRICARE Program. The North Region contract is a five-year contract and covers Connecticut, Delaware, Illinois,
Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, Rhode Island, Vermont, Virginia, West Virginia, Wisconsin and the District of Columbia. In addition, the contract
covers a small portion of Tennessee, Missouri and Iowa. Under the TRICARE contract for the North Region, we provide health care
services to approximately 2.9 million Military Health System (“MHS”) eligible beneficiaries (active duty personnel and
TRICARE/Medicare dual eligible beneficiaries), including 1.8 million TRICARE eligibles for whom we provide health care and
administrative services and 1.1 million other MHS-eligible beneficiaries for whom we provide administrative services only.
HNFS began health care delivery on the TRICARE contract for the North Region on July 1, 2004 for the area that was
previously TRICARE Regions 2 and 5 (now referred to as the Mid-Atlantic and Heartland sub-
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• Regions 9, 10 and 12, covering California, Hawaii, Alaska and part of Arizona