Health Net 2014 Annual Report Download - page 14

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Provider Relationships
The following table sets forth the number of primary care physicians, specialist physicians and other health
professionals contracted either directly with our HMOs or through our contracted participating physician groups
(“PPGs”) as of December 31, 2014. We have a number of physicians and other health professionals who are contracted
providers for both HMOs and PPOs in our Western Region Operations, as follows:
Primary Care Physicians (includes both HMO and PPO physicians)...................................... 27,207
Specialist Physicians (includes both HMO and PPO physicians) ........................................... 61,882
Health Professionals - Other (includes both HMO and PPO).................................................. 35,029
Total......................................................................................................................................... 124,118
Under our California HMO, EPO, HSP and POS plans, all members are required to select, or otherwise will be
assigned to, a PPG and generally also a primary care physician from within the PPG. In our other plans, including all of
our plans outside of California, members may be required to select a primary care physician from the broader HMO
network panel of primary care physicians. The primary care physicians and PPGs assume overall responsibility for the
care of members. Medical care provided directly by such physicians includes the treatment of illnesses not requiring
referral, and may include physical examinations, routine immunizations, maternity and childcare, and other preventive
health services. The primary care physicians and PPGs are responsible for making referrals (approved by the HMO's or
PPG's medical director as required under the terms of our various plans and PPG contracts) to specialists and hospitals.
Additionally, our tailored network products utilize a network that is smaller than our broader HMO network but
contains a comprehensive array of physicians, specialists, hospitals and ancillary providers. Certain of our HMOs offer
enrollees “open access” plans under which members are not required to secure prior authorization for access to network
physicians in certain specialty areas, or “open panels” under which members may access any physician in the network,
or network physicians in certain specialties, without first consulting their primary care physician.
PPG and physician contracts generally are for a period of at least one year and are automatically renewable unless
terminated, with certain requirements for maintenance of good professional standing and compliance with our quality,
utilization and administrative procedures. In California, PPGs generally receive a monthly capitation payment for every
member assigned to it. The capitation payment represents payment in full for all medical and ancillary services
specified in the provider agreements. For these capitation payment arrangements, in cases where the capitated PPG
cannot provide the health care services needed, such PPGs generally contract with specialists and other ancillary service
providers to furnish the requisite services under capitation agreements or negotiated fee schedules with specialists.
Outside of California, most of our HMOs reimburse physicians according to a discounted fee-for-service schedule,
although several have capitation arrangements with certain providers and provider groups in their market areas. A
provider group's financial instability or failure to pay secondary providers for services rendered could lead secondary
providers to demand payment from us, even though we have made our regular capitated payments to the provider
group. Depending on state law and the regulatory environment, it may be necessary for us to pay such claims.
In our PPO plans, members are not required to select a primary care physician and generally do not require prior
authorization for specialty care. For services provided under our PPO products and the out-of-network benefits of our
POS products, we ordinarily reimburse physicians pursuant to discounted fee-for-service arrangements.
HNFS maintains a network of qualified physicians, facilities, and ancillary providers in the prime service areas of
our T-3 contract for the TRICARE North Region. Services are provided on a fee-for-service basis. As of December 31,
2014, HNFS had 223,222 physicians, 3,862 facilities and 20,693 ancillary providers in its TRICARE network. HNFS
also maintains a provider network comprised of approximately 49,270 providers in Regions 1, 2, and 4 in support of
VA’s PC3 program.
Our behavioral health subsidiary, MHN, maintains a provider network comprised of approximately 58,811
psychiatrists, psychologists and other clinical categories of providers nationwide. Substantially all of these providers are
contracted with MHN on an individual or small practice group basis and are paid on a discounted fee-for-service basis.
Members who wish to access certain behavioral health services contact MHN and are referred to contracted providers
for evaluation or treatment services. If a member needs inpatient services, MHN maintains a network of approximately
1,384 facilities.
In addition to the physicians that are in our networks, we have also entered into agreements with various third
parties that have networks of physicians contracted to them (“Third Party Networks”). In general, under a Third Party
Network arrangement, Health Net is licensed by the third party to access its network providers and pay the claims of
these physicians pursuant to the pricing terms of their contracts with the Third Party Network.