Health Net 2009 Annual Report Download - page 5

West Operations Segment
Our West Operations segment includes the operations of our commercial, Medicare (including Part D) and
Medicaid health plans, the operations of our health and life insurance companies and our behavioral health and
pharmaceutical services subsidiaries in Arizona, California and Oregon. As of December 31, 2009, we had
approximately 2.5 million at-risk members and 0.5 million Medicare stand-alone Part D members in our West
Operations segment.
Managed Health Care Operations
We offer a full spectrum of managed health care products and services. Our strategy is to offer to employers
and individuals managed health care products and services that, among other things, provide comprehensive
coverage and manage health care costs. Our health plans offer members coverage for a wide range of health care
services including ambulatory and outpatient physician care, hospital care, pharmacy services, behavioral health
and ancillary diagnostic and therapeutic services. Our health plans include a matrix package, which allows
members to select their desired coverage from a variety of alternatives. Our principal commercial health care
products are as follows:
•HMO Plans: Our HMO plans offer comprehensive benefits generally through contracts with
participating network physicians, hospitals and other providers. When an individual enrolls in one of
our HMO plans, he or she may select a primary care physician (“PCP”) from among the physicians
participating in our network. PCPs generally are family practitioners, general practitioners or
pediatricians who provide necessary preventive and primary medical care, and are generally
responsible for coordinating other necessary health care services, including making referrals to
participating network specialists. We offer HMO plans with differing benefit designs and varying
levels of co-payments that result in different levels of premium rates. In California, participating
providers are typically contracted through medical groups. In those cases, enrollees in HMO plans are
generally required to secure specialty professional services from physicians in the group, as long as
such services are available from group physicians.
•PPO Plans: Our PPO plans offer coverage for services received from any health care provider, with
benefits generally paid at a higher level when care is received from a participating network provider.
Coverage typically is subject to deductibles and co-payments or coinsurance.
•Indemnity Plans: Our indemnity plans offer the member the ability to select any health care provider
for covered services. Some care management features may be included in these plans, such as inpatient
precertification, disease management programs and benefits for preventive services. Coverage typically
is subject to deductibles and coinsurance.
•POS Plans: Our POS plans blend the characteristics of HMO, PPO and Indemnity plans. Members can
have comprehensive HMO-style benefits for services received from participating network providers
with lower co-payments (particularly within the medical group), but also have coverage, generally at
higher co-payment or coinsurance levels, for services received outside the network.
As of December 31, 2009, with respect to our West Operations Segment, 36% of our commercial members
were covered by POS and PPO products, 62% were covered by conventional HMO products and 2% were
covered by fee-for-service products, including health plans such as consumer-directed health care plans.
We believe we are well positioned for further healthcare reform and a challenging economic environment.
Our strategy is to design products that address the growing need for affordable products with predictable costs,
low co-payments and limited or no deductibles. Our product portfolios and services include offerings such as:
• Narrow network health plans that address the need for lower cost product offerings and include
comprehensive benefits. Our HMO Silver plan in Southern California is an example of this type of
product.
• Salud Con Health NetSM, a family of affordable healthcare insurance products targeting the Latino
community in Southern California. These products are available in Los Angeles, Orange, San
Bernardino, San Diego, Riverside and Ventura counties and were developed by Health Net of
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