Health Net 2013 Annual Report Download - page 6

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As of December 31, 2013, our total membership was comprised of approximately 44% commercial risk, 10%
Medicare Advantage and 46% Medicaid. As of December 31, 2013, our commercial risk enrollment was comprised of
approximately 60% large group, 29% small group and 11% individual accounts. Our membership in individual accounts
increased from 7% as of December 31, 2012, driven in large part by the rollout of the ACA’s health insurance
exchanges, which are further described below under the heading “—Western Region Exchanges”. As of
February 25, 2014, we have enrolled approximately 136,000 active new individual members through the California,
Arizona and Oregon exchanges, including 85,000 in our Silver tier HMO product, CommunityCare.
The following table sets forth certain information regarding our employer groups in the commercial managed care
operations of our Western Region Operations segment as of December 31, 2013:
Number of Employer Groups 28,703
Largest Employer Group as % of commercial enrollment 11.6%
10 largest Employer Groups as % of commercial enrollment 26.3%
Detailed membership information regarding our health plan operations in Arizona, California, Oregon and
Washington health plans is set forth below. See “Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations—Results of Operations—Western Region Operations Reportable Segment—Western Region
Operations Segment Membership” for a discussion on changes in our membership levels during 2013.
Arizona. Our Arizona health plan operations are conducted by our subsidiaries, Health Net of Arizona, Inc.,
Health Net Access, Inc. and Health Net Life Insurance Company (“HNL”). Our commercial membership in Arizona
was 108,227 including 5,186 tailored network members, as of December 31, 2013. Our Medicare Advantage
membership in Arizona was 43,263 as of December 31, 2013. Our Medicaid membership in Arizona was 3,936 as of
December 31, 2013. We began administering benefits in Maricopa County, Arizona, as of October 1, 2013 pursuant to a
Medicaid contract awarded to us in March 2013.
California. In California, our health plan operations are conducted by our subsidiaries Health Net of California,
Inc. (“HN California”), Health Net Community Solutions, Inc. (“HNCS”), and HNL. HN California, our California
HMO for commercial and Medicare Advantage programs, and HNCS, our California HMO for Medicaid programs,
together constitute one of the largest HMOs in California as measured by total membership and together have one of the
largest provider networks in California. Our commercial membership in California as of December 31, 2013 was
909,253, including 398,413 tailored network members. Our Medicare Advantage membership in California as of
December 31, 2013 was 153,151. Our Medicaid membership in California as of December 31, 2013 was 1,112,677
members.
Northwest. The Northwest includes our Oregon and Washington health plan operations, which are conducted by
our subsidiaries, Health Net Health Plan of Oregon, Inc. (“HNOR”) and HNL. Our commercial membership in Oregon
was 53,808 including 3,258 tailored network members, as of December 31, 2013. Our commercial membership in
Washington was 13,915 as of December 31, 2013. Our Medicare Advantage membership in Oregon and Washington
was 48,010 as of December 31, 2013. We did not have any Medicaid members in Oregon or Washington as of
December 31, 2013.
Medicare Products
We provide a wide range of Medicare products, including Medicare Advantage plans with and without
prescription drug coverage 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 program authorized under Title XVIII of the Social Security Act of 1935, as amended.
On April 1, 2012, our subsidiary HNL sold substantially all of the assets, properties and rights of HNL used
primarily or exclusively in our Medicare stand-alone prescription drug plan ("Medicare PDP") business to Pennsylvania
Life Insurance Company, a subsidiary of CVS Caremark Corporation ("CVS Caremark") and CVS Caremark assumed
certain related liabilities and obligations of HNL as set forth in the related Asset Purchase Agreement. In connection
with the transaction, we were not permitted to offer Medicare PDP for one year following the closing, subject to certain
exceptions. This noncompete agreement ended on April 1, 2013. We continue to provide prescription drug benefits as
part of our Medicare Advantage plan offerings. In addition, we provided Medicare PDP transition-related services to
CVS Caremark in connection with the transaction through the first quarter of 2013.
As a result of the sale, the operating results of our Medicare PDP business, previously reported within the
Western Region Operations reportable segment, have been reclassified as discontinued operations in our consolidated