Health Net 2013 Annual Report Download - page 23

21
dividends and other distributions. In addition, some state insurance laws require regulated companies to provide to the
insurance regulator, upon request, a summary description of its enterprise risk management framework, to undertake an
Own Risk and Solvency Assessment ("ORSA") and to provide information on the entity's capital and solvency position.
While there are state-by-state variations, HMO regulation generally is extremely comprehensive. Among the
areas regulated by these HMO regulatory agencies are:
• Adequacy of financial resources, network of health care providers and administrative operations;
• Sales and enrollment requirements, disclosure documents and notice requirements;
• Product offerings, including the scope of mandatory benefits and required offerings of benefits that are
optional coverages;
• Procedures for member grievance resolution and medical necessity determinations;
• Accessibility of providers, handling of provider claims (including out-of-network claims) and adherence to
timely and accurate payment and appeal rules;
• Linguistic and cultural accessibility standards, governance requirements and reporting requirements; and
• Implementation of some provisions of the ACA.
PPO regulation also varies by state, and while these regulations generally cover all or most of the subject areas
referred to above, the regulation of PPO products and carriers tends to be less intensive than regulation of HMOs.
Variations in state regulation also arise in connection with the intensity of government oversight. Variations
include: the need to file or have affirmatively approved certain proposals before use or implementation by the health
plan; the degree of review and comment by the regulatory agency; the amount and type of reporting by the health plan
to the regulatory agency; the extent and frequency of audit or other examination; and the authority and extent of
investigative activity, enforcement action, corrective action authority, and penalties and fines. In addition, as discussed
in further detail above under the heading "—Health Care Reform Legislation and Implementation," the ACA requires
the establishment of health insurance exchanges that act as markets for the purchase of subsidized health insurance.
States were given the option of establishing these exchanges on their own or allowing the federal government to fully or
partially operate the exchange. California, Washington and Oregon have each chosen to operate their own exchanges
while Arizona has elected the establishment of a federally-facilitated exchange. Participation in these and other
exchanges in the states in which we operate is conditioned on the approval of the applicable state or federal government
regulator. The factors considered for inclusion on the exchanges may be subject to additional changes in future years,
which could impact some carriers’ decision on participation in the exchanges. HNOR is not qualified to identify itself
as an Oregon HMO, or offer products identified as "HMO". As a result HNOR changed the name of its HMO products
(in-network benefits only, except for emergency services) to EPO. HNOR has a health care service contractor license in
Oregon, which allows HNOR to offer EPO, PPO and indemnity insurance in Oregon. So HN does not have an HMO
entity, or products by that name, in Oregon.
State regulations also may be more stringent than federal regulations that are applicable to us, and various health
insurance reform proposals have been implemented at the state level, including laws and regulations that implement
portions of the ACA. The interaction of new federal regulations and the implementation efforts of the various states in
which we do business will continue to create substantial uncertainty for us and other health insurance companies about
the requirements under which we must operate. For additional information, see “—Segment Information—Government
Regulation—Health Care Reform Legislation and Implementation.”
Intellectual Property
We have registered and maintain various trademarks that we use in our businesses, including marks and names
incorporating the “Health Net” phrase, and from time to time we apply for additional registrations of such marks. We
utilize these and other marks and names in connection with the marketing and identification of products and services.
We believe such marks and names are valuable and material to our marketing efforts.
Employees
As of December 31, 2013, Health Net, Inc. and its subsidiaries employed 7,565 persons on a full-time basis and
94 persons on a part-time or temporary basis. These employees perform a variety of functions, including, among other
things, provision of administrative services for employers, providers and members; negotiation of agreements with
physician groups, hospitals, pharmacies and other health care providers; handling of claims for payment of hospital and