Health Net 2015 Annual Report Download - page 76

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Year Ended December 31, 2015 Compared to Year Ended December 31, 2014
Total Western Region Operations enrollment at December 31, 2015 was approximately 3.3 million members, an
increase of 4.5 percent compared with enrollment at December 31, 2014. Total enrollment in our California health plan
increased by 8.0 percent to approximately 3.0 million members from December 31, 2014 to December 31, 2015.
Western Region Operations commercial enrollment decreased by 6.0 percent from December 31, 2014 to
approximately 1.1 million members at December 31, 2015, primarily due to membership decreases in our Arizona and
Northwest individual lines of businesses.
Enrollment in our large group accounts decreased by 6.8 percent or 37,000 members to 510,000 members, from
December 31, 2014 to December 31, 2015, primarily due to competitive pricing in California. Enrollment in our small
group business in our Western Region Operations segment decreased by 4.2 percent, from approximately 313,000
members at December 31, 2014 to approximately 300,000 members at December 31, 2015. Enrollment in our
individual business in our Western Region Operations segment decreased by 6.6 percent, from approximately 332,000
members at December 31, 2014 to approximately 310,000 members at December 31, 2015 primarily due to declines in
Arizona as a result of competitive pricing on the individual exchange. As of December 31, 2015, tailored network
products accounted for 50.5 percent of our Western Region Operations commercial enrollment compared with 49.8
percent at December 31, 2014. For additional information on our tailored network products, see "Item 1. Business—
Segment Information—Western Region Operations Segment—Managed Health Care Operations."
Enrollment in our Medicare Advantage plans in our Western Region Operations at December 31, 2015 was
269,000 members, a decrease of 2.2 percent compared with December 31, 2014. The decrease in Medicare Advantage
membership was due to losses of approximately 8,000 members in Arizona and 7,000 members in California, partially
offset by a gain of 9,000 members in the Northwest. These decreases were driven by our exit from certain under-
performing counties in our Medicare business.
Medicaid enrollment in California increased by 231,000 members or 14.5 percent to 1,826,000 members at
December 31, 2015 compared with 1,595,000 members at December 31, 2014, primarily as a result of new members
added from Medicaid expansion. Medicaid enrollment in Arizona decreased by 16,000 members or 19.8 percent to
approximately 65,000 members at December 31, 2015 compared with approximately 81,000 members at December 31,
2014. On February 4, 2015, we received a notice from the AHCCCS Division of Health Care Management that stated
that we were in violation of our Medicaid contract in Maricopa County. As a result, we are currently subject to sanctions
that include a cap on member auto assignment under the contract effective as of February 13, 2015 until further notice.
See "Item 1A. Risk Factors" for additional information on these sanctions.
We are the sole commercial plan contractor with DHCS to provide Medi-Cal services in Los Angeles County,
California. As of December 31, 2015, approximately 996,000 of our Medi-Cal members resided in Los Angeles County,
representing approximately 55 percent of our Medi-Cal membership. As part of our 2012 state settlement agreement
with DHCS, DHCS agreed, among other things, to the extension of all of our existing Medi-Cal managed care
contracts, including our contract with DHCS to provide Medi-Cal services in Los Angeles County, for an additional five
years from their then existing expiration dates. Accordingly, our Medi-Cal contract for Los Angeles County is scheduled
to expire in April 2019. For additional information on our settlement agreement with DHCS, see Note 2 to our
consolidated financial statements under the heading "Health Plan Services Revenue Recognition."
As more fully described below, in 2012, the California legislature enacted the Coordinated Care Initiative, or
“CCI.” CCI is being implemented in seven counties, including Los Angeles and San Diego counties. In participating
counties, CCI established a voluntary “dual eligibles demonstration,” and in April 2012, DHCS selected us to
participate in the dual eligibles demonstration for both Los Angeles and San Diego counties. Active enrollment in Los
Angeles and San Diego counties for the dual eligible demonstrations commenced on April 1, 2014. As of December 31,
2015, we had approximately 22,000 members in the dual eligibles demonstration compared to 16,000 members as of
December 31, 2014. See "—California Coordinated Care Initiative," below for more information on CCI and the dual
eligibles.
Year Ended December 31, 2014 Compared to Year Ended December 31, 2013
Total Western Region Operations enrollment at December 31, 2014 was approximately 3.2 million members, an
increase of 29.1 percent compared with enrollment at December 31, 2013. Total enrollment in our California health plan
increased by 26.0 percent to approximately 2.7 million members from December 31, 2013 to December 31, 2014.
Western Region Operations commercial enrollment increased by 9.9 percent from December 31, 2013 to
approximately 1.2 million members at December 31, 2014, primarily due to an increase in our individual business as a