Health Net 2014 Annual Report Download - page 11

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and management delivery systems. HNPS outsources certain capital and labor-intensive functions of pharmacy benefit
management, such as claims processing, mail order services and pharmacy network services.
Behavioral Health
We administer and arrange for behavioral health benefits and services through our subsidiary, Managed Health
Network, Inc., and its subsidiaries (collectively “MHN”). MHN offers behavioral health, and substance abuse programs
on an insured and self-funded basis to groups in various states, and these programs and services are included as a
standard part of most of our commercial health plans. MHN's benefits and services are also sold in conjunction with
other commercial and Medicare products and on a stand-alone basis to unaffiliated health plans and employer groups. In
addition, MHN administers employee assistance programs (“EAPs”) for groups in several states. Through our EAPs, we
assess and refer employees of employer groups to a variety of non-medical services and information designed to
improve workplace productivity. MHN also holds contracts with the U.S. Department of State (“State Department”) and
the U.S. Agency for International Development (“USAID”) to provide EAP counseling services tailored for State
Department and USAID employees and family members while posted overseas. In addition, effective January 1, 2014,
we are required to administer certain mental health outpatient benefits to all our Medi-Cal members, including those
newly eligible as a result of Medicaid expansion.
MHN's products and services were provided to approximately 7.1 million individuals as of December 31, 2014,
with approximately 147,000 individuals under risk-based programs, approximately 2.8 million individuals under self-
funded programs and approximately 4.1 million individuals under EAPs, including those who are also covered under
other MHN programs. In 2014, MHN's total revenues were $46.6 million. Of that amount, $3.0 million represented
revenues from business with MHN affiliates and $43.6 million represented revenues from non-affiliate business. The
foregoing excludes results and information related to MHN's administration and monitoring of the non-medical
counseling program for the Department of Defense under the DoD sponsored Military Family and Life Counseling
(“MFLC”) program formerly Military Family and Life Consultant program, which is reported in our Government
Contracts reportable segment. See “—Government Contracts Segment—Other Department of Defense Contracts.”
Dental and Vision
We do not underwrite or administer stand-alone dental or vision products other than the stand-alone dental
products that we underwrite in Oregon and Washington. During 2014 our current and prospective group plan members
in Arizona and California had the option to elect private label dental products through a strategic relationship with
Dental Benefit Providers, Inc. (“DBP”) and private label vision products through a strategic relationship with EyeMed
Vision Care LLC (“EyeMed”). Those stand-alone dental products were underwritten and administered by DBP
affiliated companies and the stand-alone vision products were underwritten by Fidelity Security Life Insurance
Company and administered by EyeMed affiliated companies. DBP also administers dental products and coverage we
provide to our members in Oregon and Washington, as well as to Medicaid enrollees in Arizona. Liberty Dental Plans of
California, Inc. serves as the underwriter and administrator for the dental services we provide to our Medi-Cal
enrollees. Vision Service Plan serves as the underwriter and administrator for the vision services we provide to our
Medi-Cal enrollees in California and Medicaid enrollees in Arizona.
Government Contracts Segment
Our Government Contracts segment includes our government-sponsored managed care federal contract with the
DoD under the TRICARE program in the North Region and other health care and behavioral health government
contracts. On April 1, 2011, we began delivery of administrative services under the Managed Care Support Contract
(“T-3 contract”) for the TRICARE North Region. Under the T-3 contract for the TRICARE North Region, we provide
various types of administrative services including: provider network management, referral management, medical
management, disease management, enrollment, customer service, clinical support service, and claims processing.
Our Government Contracts segment also includes other health care and behavioral health government contracts,
and subcontracts that we administer for the DoD, the U.S. Department of Veterans Affairs (“VA”) and certain other
federal, state and local government entities. Certain components of these contracts are subcontracted to unrelated third
parties.
Amounts receivable under government contracts are comprised primarily of contractually defined billings,
accrued contract incentives under the terms of the contract and amounts related to change orders for services not
originally specified in the contract. In general, government receivables are estimates and are subject to government
audit and negotiation. See “Item 1A. Risk Factors—Government programs represent an increasing share of our
revenues. If we are unable to effectively administer these programs, if we do not effectively adapt to changes to these