Health Net 2015 Annual Report Download - page 4

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October 23, 2015, our stockholders approved the adoption of the Merger Agreement and Centene’s stockholders approved
the issuance of the shares of its common stock forming part of the merger consideration.
The completion of the Merger is not conditioned on receipt of financing by Centene. The Merger is expected to close
in the first quarter of 2016, subject to the receipt of the remaining required regulatory approvals and satisfaction or waiver
of other closing conditions. For additional discussion of the risks and uncertainties associated with the Merger, see “Item
1A. Risk Factors.”
Segment Information
We have two reportable segments for 2015: Western Region Operations and Government Contracts. We also have
a Corporate/Other segment that is not a business operating segment but is added to our reportable segments to reconcile
our consolidated results. For additional financial information regarding our reportable segments, see “—Results of
Operations” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and
Note 14 to our consolidated financial statements included as part of this Annual Report on Form 10-K.
Western Region Operations Segment
Our Western Region Operations segment includes the operations of our commercial, Medicare, and Medicaid
health plans as well as the operations of our health and life insurance companies and certain operations of our
behavioral health and pharmaceutical services subsidiaries, primarily in Arizona, California, Oregon and Washington.
As of December 31, 2015, we had approximately 3.3 million risk members in our Western Region Operations segment.
Managed Health Care Operations
We offer a full spectrum of managed health care products and services. Our strategy is to create affordable and
tailored customer solutions by (i) seeking to provide product offerings that both anticipate and respond to current and
emerging market demands; (ii) pursuing innovative provider relationships that effectively manage the cost of care; and
(iii) building alliances with other stakeholders in the health care system to identify and implement changes to help
improve the quality and accessibility of the health care system. The pricing of our products is designed to reflect the
varying costs of health care based on the benefit alternatives in our products. Our health plans offer members coverage
for a wide range of health care services including ambulatory and outpatient physician care, hospital care, pharmacy
services, behavioral health and ancillary diagnostic and therapeutic services. Our health plans include a matrix package,
which allows employers and members to select their desired coverage from a variety of alternatives. Our principal
commercial health care products are as follows:
• HMO Plans: Our health maintenance organization or HMO plans offer comprehensive benefits generally
for a fixed fee or premium that does not vary with the extent or frequency of medical services actually
received by the member. We offer HMO plans with differing benefit designs and varying levels of co-
payments at different premium rates. These plans are offered generally through contracts with participating
network physicians, hospitals and other providers. When an individual enrolls in one of our HMO plans, he
or she selects a primary care physician (“PCP”) from among the physicians participating in our network.
PCPs generally are family practitioners, general practitioners or pediatricians who provide necessary
preventive and primary medical care, and are generally responsible for coordinating other necessary health
care services, including making referrals to participating network specialists. In California, participating
providers are typically contracted through medical groups and independent physician associations. In those
cases, enrollees in HMO plans are generally required to secure specialty professional services from
physicians in the group, as long as such services are available from group physicians. A significant majority
of our California membership is in HMO plans.
• PPO Plans: Our preferred provider organization or PPO plans offer coverage for services received from
any health care provider, with benefits generally paid at a higher level when care is received from a
participating network provider. Coverage typically is subject to deductibles and copayments or coinsurance.
• POS and EOA Plans: Our point of service or POS plans and our elect open access or EOA plans blend the
characteristics of HMO, PPO and indemnity plans. Members can have comprehensive HMO-style benefits
for services received from participating network providers with lower copayments (particularly within the
medical group), but also have coverage, generally at higher copayment or coinsurance levels or with
coverage limitations, for services received outside the network.
• EPO Plans and HSP: Our Exclusive Provider Organization or EPO plans and Healthcare Service Plans or
HSPs similarly blend elements of traditional HMO and PPO plans. Referrals are not required for in-