Health Net 2013 Annual Report Download - page 159

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-55
Note 14—Segment Information
Our reportable segments as of January 1, 2013 are comprised of Western Region Operations and Government
Contracts. Effective January 1, 2013, we closed out our Divested Operations and Services segment as discussed below.
Our Western Region Operations reportable segment includes the operations of our commercial, Medicare and Medicaid
health plans, our health and life insurance companies, our pharmaceutical services subsidiaries and certain operations of
our behavioral health subsidiaries. These operations are conducted primarily in California, Arizona, Oregon and
Washington. As a result of the classification of our Medicare PDP business as discontinued operations, our Western
Region Operations reportable segment excludes the operating results of our Medicare PDP business for the years ended
December 31, 2012 and 2011. Our Government Contracts reportable segment includes government-sponsored managed
care and administrative services contracts through the TRICARE program, the Department of Defense MFLC program
and certain other health care-related government contracts. For the year ended December 31, 2011, our Divested
Operations and Services reportable segment included the operations of our businesses that provided administrative
services to United in connection with the Northeast Sale. Beginning in the first quarter of 2012, our Divested
Operations and Services reportable segment also included the transition-related revenues and expenses of our Medicare
PDP business that was sold on April 1, 2012. As of December 31, 2012, we had substantially completed the
administration and run-out of our divested businesses. See Note 3 for more information regarding the sale of our
Medicare PDP business and the Northeast Sale.
The financial results of our reportable segments are reviewed on a monthly basis by our chief operating decision
maker ("CODM"). We continuously monitor our reportable segments to ensure that they reflect how our CODM
manages our company.
We evaluate performance and allocate resources based on segment pretax income. Our assets are managed
centrally and viewed by our CODM on consolidated basis; therefore, they are not allocated to our segments and our
segments are not evaluated for performance based on assets. The accounting policies of the reportable segments are the
same as those described in the summary of significant accounting policies (see Note 2), except that intersegment
transactions are not eliminated. We include investment income, administrative services fees and other income and
expenses associated with our corporate shared services and other costs in determining our Western Region Operations
and Divested Operations and Services reportable segments’ pretax income to reflect the fact that these revenues and
expenses are primarily used to support our Western Region Operations and Divested Operations and Services.
We also have a Corporate/Other segment that is not a business operating segment. It is added to our reportable
segments to provide a reconciliation to our consolidated results. The Corporate/Other segment includes costs that are
excluded from the calculation of segment pretax income because they are not managed within the segments and are not
directly identified with a particular operating segment. Accordingly, these costs are not included in the performance
evaluation of our reportable segments by our CODM. In addition, certain charges, including but not limited to those
related to our continuing efforts to address scale issues, as well as asset impairments, are reported as part of Corporate/
Other.