Health Net 2014 Annual Report Download - page 13

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Military Family and Life Counseling Program.
Our wholly owned subsidiary, MHN Government Services, is party to a MFLC contract that was awarded by the
Department of Defense to implement, administer and monitor the non-medical counseling MFLC program. The contract
was initially awarded in August of 2012 and is a second-generation contract under the MFLC program. The contract has
a five-year term that includes a 12-month base period and four 12-month option periods. The DoD has exercised the
first and second option periods under the contract, and the second option period is scheduled to end on August 14, 2015.
For the year ended December 31, 2014, revenues from the MFLC contract were $119.7 million. For additional
information on the risks associated with our MFLC contract, 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 programs, or if we experience a significant reduction in revenues from these
government programs, it could have a material adverse effect on our business, financial condition or results of
operations.”
Patient Centered Community Care Program
In September 2013, VA awarded HNFS a contract under its new Patient Centered Community Care (“PC3”)
program. The PC3 program provides eligible veterans coordinated, timely access to care through a comprehensive
network of non-VA providers who meet VA quality standards when a local VA medical center cannot readily provide the
care. We support VA in providing care to veterans in three of the six PC3 program regions. These three regions, Regions
1, 2 and 4, encompass all or portions of 37 states, the District of Columbia, Puerto Rico and the Virgin Islands. The PC3
contract term includes a base period of performance through September 30, 2014 and four one-year option periods that
may be exercised by VA. On September 23, 2014, VA exercised option period 1 which commenced on October 1, 2014
and is scheduled to end on September 30, 2015. In addition to the one-year option periods, VA has the ability to extend
the PC3 program contract an additional two years and six months based on VA's need.
In August 2014, VA expanded our PC3 contract to include primary care services for veterans who are unable to
obtain primary care at a VA medical center in the three PC3 regions in which we operate. In addition, in November
2014, we modified our PC3 contract to further expand our services with VA in support of the Veterans Access, Choice
and Accountability Act of 2014 (“VACAA”). VACAA allows eligible veterans who live more than 40 miles from a VA
facility or are unable to get a VA appointment within 30 days of their preferred date, or within 30 days of the date
determined medically necessary by their physician, to obtain approved care in their community instead. The VACAA
modification to our PC3 contract (the "VACAA modification") expires no later than September 30, 2017. The VACAA
modification includes, among other things, the production and distribution of the new Veterans Choice Card, which
allows veterans to elect to receive care outside of VA when they qualify. As a result, approximately 5 million veterans
have been provided with a Veterans Choice Card. Moreover, in connection with the VACAA modification, we operate a
call center to assist veterans in determining their eligibility to use the card, and to help educate them on the VACAA.
We also assist eligible veterans in obtaining an appointment with a community provider meeting VACAA requirements.
We provide these services in the three PC3 regions in which we operate.
For the year ended December 31, 2014, revenues from the PC3 contract were approximately $24.7 million. For
additional information on the risks associated with our PC3 contract, 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 programs, or if we experience a significant reduction in revenues from these
government programs, it could have a material adverse effect on our business, financial condition or results of
operations.”
Divested Operations and Services Segment
Prior to the first quarter of 2012, our Divested Operations and Services reportable segment included the
operations of our businesses that provided administrative services to UnitedHealth Group and its affiliates in connection
with the Northeast Sale, which was completed on December 11, 2009. For information about the Northeast Sale, see
Note 3 to our consolidated financial statements included as part of this Annual Report on Form 10-K (our "consolidated
financial statements").
Due to the sale of our Medicare stand-alone prescription drug plan business on April 1, 2012, starting with the
first quarter of 2012, Divested Operations and Services reportable segment included transition-related revenues and
expenses related to the sale of our Medicare PDP business to an affiliate of CVS Caremark.
As of December 31, 2012, we had substantially completed the administration and run-out of both of our divested
businesses.