Health Net 2015 Annual Report Download - page 13

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retired Reserve members may purchase TRICARE Retired Reserve (“TRR”), also a TRICARE Standard benefit. TRR
members have the same costs as retired service members. TRICARE Young Adult (“TYA”) is available for purchase by
eligible young adults under age 26. TRICARE currently offers a TYA Standard plan and a TYA Prime plan.
On April 1, 2011, we began delivery of administrative services under our T-3 contract. The T-3 contract was awarded
to us on May 13, 2010, and included five one-year option periods. On March 15, 2014, the DoD exercised the last of these
options, which extended the T-3 contract through March 31, 2015. In March 2015, the DoD modified our T-3 contract to
add three additional one-year option periods and awarded us the first of the three option periods, which allows us to
continue providing access to health care services to TRICARE beneficiaries through March 31, 2016. If the two remaining
option periods are ultimately exercised, the T-3 contract would conclude on March 31, 2018. On April 24, 2015, the DoD
issued its request for proposal for the next generation TRICARE contracts (the "T-2017 contracts"), which will reduce the
three existing TRICARE regions to two. On February 16, 2016, we submitted our response to the DoD's request for
proposal. The DoD has stated that it expects to award the T-2017 contracts in the first half of 2016, with health care
delivery expected to commence on April 1, 2017. If we are not successful in securing a contract on favorable terms during
the rebidding process, our business, results of operations, cash flows and financial condition could be adversely impacted.
For additional information regarding our T-3 contract for the North Region, see “Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations” and “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.”
Military and Family Life Counseling Program.
Our wholly owned subsidiary, MHN Government Services, is party to a MFLC contract that was awarded by the
DoD 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 three option periods
under the contract, and the third option period is scheduled to end on August 14, 2016. If the fourth option period is
exercised, that option period would end on August 14, 2017. 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 Program
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 October 1, 2015, VA exercised option period 2 which commenced on October 1, 2015 and is
scheduled to end on September 30, 2016. In addition to the one-year option periods, VA will have the ability to extend the
PC3 Program contract an additional two years and six months based on VA's needs.
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 and 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.