Health Net 2007 Annual Report Download - page 10

HNPS focuses its effort on encouraging appropriate use of medications to enhance the overall member
outcome while controlling overall cost to the health plan, member and employer. A committee of internal and
external physicians and pharmacists select medications by therapeutic class that offer demonstrable clinical
value. A cost effective option is then selected from equivalently effective options.
HNPS provides affiliated health plans various services including development of benefit designs, cost and
trend management, sales and marketing support, and management delivery systems. HNPS outsources certain
capital and labor-intensive functions of pharmacy benefit management, such as claims processing and mail order
services.
The number of seniors and other Medicare members for which HNPS manages pharmacy benefits is
expected to continue to grow with our participation in the Part D Prescription drug benefit. We are offering the
Part D benefit in all 50 states.
Behavioral Health. We administer and arrange for behavioral health benefits and services through our
subsidiary, Managed Health Network, Inc., and its subsidiaries (collectively “MHN”). MHN offers behavioral
health, substance abuse and employee assistance programs (“EAPs”) on an insured and self-funded basis to
groups in various states and is included as a standard part of most of our commercial health plans. They are also
sold in conjunction with other commercial and Medicare products and on a stand-alone basis to unaffiliated
health plans and employer groups. During 2007, MHN continued to expand and enhance its product portfolio
services and client base. For example, additional products focusing on wellness and behavioral change programs
were introduced and are available as part of MHN’s commercial EAP solutions. In addition, MHN provided its
workplace and work-life services to members of Health Net affiliated medical plans, including Medicare
members. MHN’s EAP services extend internationally to certain countries to cover eligible employees of
domestic companies who are located abroad.
In 2007, MHN was awarded a five-year contract to develop, administer and monitor the non-medical
counseling program for Department of Defense members and families under the Military Family Counseling
Services program. See “—Government Contracts Segment—Other Department of Defense Contracts.” MHN
also holds contracts with the U.S. Department of State and the U.S. Agency for International Development
(“USAID”), respectively, to provide EAP counseling services tailored for State Department and USAID
employees and family members while posted overseas.
MHN’s products and services were being provided to over 7.0 million individuals as of December 31, 2007,
with approximately 1.8 million individuals under risk-based programs, approximately 1.6 million individuals
under self-funded programs and approximately 3.5 million individuals under EAPs, including those who are also
covered under other MHN programs. In 2007, MHN’s total revenues were $238 million. Of that amount, $118
million represented revenues from business with MHN affiliates and $120 million represented revenues from
non-affiliate business.
Dental and Vision. In 2003, we sold our dental and vision subsidiaries and, as a result, we no longer
underwrite or administer stand-alone dental and vision products. However, 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 affiliated companies. Safeguard serves
as the administrator for the dental services we provide to our Medi-Cal and Healthy Families program enrollees.
Government Contracts Segment
Our Government Contracts segment includes our TRICARE contract for the North Region and other health
care related government contracts that we administer for the U.S. Department of Defense (the “Department of
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