Health Net 2009 Annual Report Download - page 7

Arizona. Our Arizona health plan operations are conducted by our subsidiaries, Health Net of Arizona, Inc.
and Health Net Life Insurance Company (“HNL”). Our commercial membership in Arizona was 95,430 as of
December 31, 2009. Our Medicare membership in Arizona was 64,718 as of December 31, 2009. We did not
have any Medicaid members in Arizona as of December 31, 2009.
California. In California, our health plan operations are conducted by our subsidiaries Health Net of
California, Inc. (“HN California”), HNL and Health Net Community Solutions, Inc. HN California, our
California HMO, is one of the largest HMOs in California as measured by total membership and has one of the
largest provider networks in California. Our commercial membership in California as of December 31, 2009 was
1,226,069. Our Medicare membership in California as of December 31, 2009 was 137,604. Our Medicaid
membership in California as of December 31, 2009 was 857,388 members.
Oregon. Our Oregon health plan operations are conducted by Health Net Health Plan of Oregon, Inc. and
HNL. Our commercial membership in Oregon was 118,414 as of December 31, 2009. Of these members,
approximately 11% are covered under policies issued in Washington state. Our Medicare membership in Oregon
was 24,546 as of December 31, 2009. We did not have any Medicaid members in Oregon as of December 31,
2009.
Medicare Products
We offer a wide range of Medicare products, including Medicare Advantage plans with and without
prescription drug coverage, Medicare Part D stand-alone prescription drug plans (“PDP”), and Medicare
supplement products that supplement traditional fee-for-service Medicare coverage. Our subsidiaries have a
number of contracts with the Centers for Medicare & Medicaid Services (“CMS”) under the Medicare Advantage
and PDP programs authorized under the Medicare Prescription Drug Improvement and Modernization Act of
2003 (“MMA”).
Medicare Advantage Products
As of December 31, 2009, we were one of the nation’s largest Medicare Advantage contractors based on
membership of 232,935 members. We contract with CMS under the Medicare Advantage program to provide
Medicare Advantage products directly to Medicare beneficiaries and through employer and union groups. We
provide or arrange health care services normally covered by Medicare, plus a broad range of health care services
not covered by traditional Medicare, usually in exchange for a fixed monthly premium per member from CMS
that varies based on the geographic area in which the member resides, demographic factors of the member such
as age, gender and institutionalized status, and the health status of the member. Any additional benefits in our
plans are covered by a monthly premium charged to the enrollee or through portions of payments received from
CMS that may be allocated to these benefits, per CMS regulations and guidance.
Our portfolio of Medicare Advantage plans focuses on simplicity so that members can sign up and use
benefits with minimal paperwork and receive coverage that starts immediately upon enrollment. We also provide
Medicare supplemental coverage to 31,692 members through either individual Medicare supplement policies or
employer group sponsored coverage, as of December 31, 2009.
We currently offer Medicare Advantage plans in select counties in Arizona, California, Oregon, and
Washington. As a result of the Northeast Sale on December 11, 2009, we no longer offer Medicare Advantage
products in Connecticut, which resulted in the loss of 52,851 Medicare Advantage members. For additional
information regarding the Northeast Sale, see “—Northeast Operations Segment.” In addition, we did not renew
our contract with CMS to offer Private Fee for Service plans in any state or our regional PPO plan in Arizona for
2010, and we adjusted premium and benefits on our Medicare Advantage plans to address rate reductions from
CMS for the 2010 plan year. See “—Government Regulation—Federal Legislation and Regulation—Medicare
Legislation” and “Item 1A. Risk Factors—Our efforts to capitalize on Medicare business opportunities could
prove to be unsuccessful” for additional information regarding our Medicare program.
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