Health Net 2013 Annual Report Download - page 75

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Western Region Operations commercial enrollment declined by 12.0 percent from December 31, 2012 to
approximately 1.1 million members at December 31, 2013, primarily due to increasingly competitive markets and our
efforts to reposition our commercial book of business away from unprofitable full network large group accounts
towards smaller accounts and tailored network products. Enrollment in our large group accounts decreased by 19.0
percent or 153,000 members to 651,000 members, from December 31, 2012 to December 31, 2013. Enrollment in our
small group and individual accounts increased by 1.2 percent, from 429,000 members at December 31, 2012 to 434,000
members at December 31, 2013. As of December 31, 2013, tailored network products accounted for 37.5 percent of our
Western Region Operations commercial enrollment compared with 35.0 percent at December 31, 2012. For additional
information on our tailored network products, see "Item 1. Business—Segment Information—Western Region
Operations Segment—Managed Health Care Operations."
Enrollment in our Medicare Advantage plans in our Western Region Operations at December 31, 2013 was
244,000 members, an increase of 4.3 percent compared with December 31, 2012. The increase in Medicare Advantage
membership was due to gains of approximately 8,000 members in California and 2,000 members in the Northwest.
Medicaid enrollment in California increased by 29,000 members or 2.7 percent to 1,113,000 members at
December 31, 2013 compared with 1,084,000 members at December 31, 2012. In March 2013, we were awarded a
contract by the Arizona Health Care Cost Containment System ("AHCCCS") to administer Medicaid benefits in
Maricopa County, Arizona, which began on October 1, 2013. As of December 31, 2013, we had approximately 4,000
Medicaid members in Arizona.
We are the sole commercial plan contractor with DHCS to provide Medi-Cal services in Los Angeles County,
California. As of December 31, 2013, approximately 572,000 of our Medi-Cal members resided in Los Angeles County,
representing approximately 51 percent of our Medi-Cal membership and approximately 51 percent of our membership
in all California state health programs. As part of our 2012 settlement agreement with DHCS, DHCS agreed, among
other things, to the extension of all of our existing Medi-Cal managed care contracts, including our contract with DHCS
to provide Medi-Cal services in Los Angeles County, for an additional five years from their then existing expiration
dates. Accordingly, our Medi-Cal contract for Los Angeles County is scheduled to expire in April 2019. For additional
information on our settlement agreement with DHCS, see "—State-Sponsored Health Plans Rate Settlement
Agreement" below.
Year Ended December 31, 2012 Compared to Year Ended December 31, 2011
Total Western Region Operations enrollment at December 31, 2012 was approximately 2.6 million members, a
decrease of 1.1 percent compared with enrollment at December 31, 2011. Total enrollment in our California health plan
decreased by 1.3 percent to approximately 2.2 million members from December 31, 2011 to December 31, 2012.
Western Region Operations commercial enrollment declined by 9.7 percent from December 31, 2011 to
approximately 1.2 million members at December 31, 2012, primarily due to increasingly competitive markets and our
strategy to reposition our commercial book of business. Enrollment in our large group account decreased by 15.6
percent or 149,000 members to 804,000 members, from December 31, 2011 to December 31, 2012, primarily due to our
commercial strategy. Enrollment in our small group and individual account increased by 3.9 percent, from 413,000
members at December 31, 2011 to 429,000 members at December 31, 2012. Membership in our tailored network
products increased by 0.9 percent, or 3,900 members, from December 31, 2011 to December 31, 2012. As of
December 31, 2012, tailored network products accounted for 35.0 percent of our Western Region Operations
commercial enrollment compared with 31.3 percent at December 31, 2011.
Enrollment in our Medicare Advantage plans in the Western Region Operations at December 31, 2012 was
234,000 members, an increase of 14.1 percent compared with December 31, 2011. The increase in Medicare Advantage
membership was due to gains of approximately 20,000 members in California, 7,000 members in the Northwest and
2,000 members in Arizona.
Medicaid enrollment in California increased by 75,000 members or 7.4 percent to 1,084,000 members at
December 31, 2012 compared with 1,009,000 members at December 31, 2011. The increase in the Medicaid
membership included the impact of our participation in California's mandatory enrollment of SPDs into managed care
programs such as ours. On November 2, 2010, CMS approved California's Section 1115 Medicaid waiver proposal,
which, among other things, authorized mandatory enrollment of SPDs in managed care programs to help achieve care
coordination and better manage chronic conditions. The mandatory SPD enrollment period began in June 2011 and
ended on May 31, 2012. As of December 31, 2012, we had approximately 115,000 total SPD members, of which 87,000
were from the newly mandated transition of those members to managed care that began in June 2011.