Health Net 2015 Annual Report Download - page 77

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result of new individual members from the ACA exchanges in California and Arizona, partially offset by declines in
large and small group membership.
Enrollment in our large group accounts decreased by 16.0 percent or 104,000 members to 547,000 members,
from December 31, 2013 to December 31, 2014, primarily due to increasingly competitive markets in California.
Enrollment in our small group business in our Western Region Operations segment decreased by 1.9 percent, from
approximately 319,000 members at December 31, 2013 to approximately 313,000 members at December 31, 2014.
Enrollment in our individual business in our Western Region Operations segment increased by 188.7 percent, from
approximately 115,000 members at December 31, 2013 to approximately 332,000 members at December 31, 2014. This
increase was primarily due to an increase in our individual business as a result of new individual members from the
ACA exchanges in California and Arizona. As of December 31, 2014, tailored network products accounted for 49.8
percent of our Western Region Operations commercial enrollment compared with 37.5 percent at December 31, 2013.
Enrollment in our Medicare Advantage plans in our Western Region Operations at December 31, 2014 was
275,000 members, an increase of 12.7 percent compared with December 31, 2013. The increase in Medicare Advantage
membership was due to gains of approximately 20,000 members in California, 8,000 members in the Northwest, and
3,000 members in Arizona.
Medicaid enrollment in California increased by 482,000 members or 43.3 percent to 1,595,000 members at
December 31, 2014 compared with 1,113,000 members at December 31, 2013, primarily as a result of new members
added from the expansion of Medicaid eligibility under the ACA to all individuals with incomes up to 133 percent of
the Federal Poverty Level. As of December 31, 2014, we had approximately 81,000 Medicaid members in Arizona
compared with approximately 4,000 members at December 31, 2013.
As of December 31, 2014, approximately 849,000 of our Medi-Cal members resided in Los Angeles County,
representing approximately 53 percent of our Medi-Cal membership.
California Coordinated Care Initiative
In 2012, the California legislature enacted CCI. The stated purpose of CCI is to provide a more efficient health
care delivery system and improved coordination of care to individuals that are fully eligible for Medicare and Medi-Cal
benefits, or "dual eligibles," as well as to all Medi-Cal only beneficiaries who rely on long-term services and supports,
or “LTSS,” which includes institutional long-term care and home and community-based services and other support
services.
In participating counties, CCI established a voluntary “dual eligibles demonstration,” also referred to as the “Cal
MediConnect” program, to coordinate medical, behavioral health, long-term institutional, and home- and community-
based services for dual eligibles through a single health plan, and will require that all Medi-Cal beneficiaries in
participating counties join a Medi-Cal managed care health plan to receive their Medi-Cal benefits, including LTSS.
CCI is being implemented in seven counties, including Los Angeles and San Diego counties. On April 4, 2012, DHCS
selected us to participate in the dual eligibles demonstration for both Los Angeles and San Diego counties. In December
2013, Health Net Community Solutions, Inc., our wholly owned subsidiary, entered into a three-way agreement with
DHCS and CMS, which was subsequently amended on January 13, 2014 (the “Cal MediConnect Contract”). Among
other things, under the Cal MediConnect Contract we receive prospective blended capitated payments to provide
coverage for dual eligibles in Los Angeles and San Diego counties. These blended capitated payments are determined
based on our mix of membership.
Active enrollment in Los Angeles and San Diego counties for the dual eligibles demonstrations commenced on
April 1, 2014, and is scheduled to continue through the duration of the demonstration, currently expected to conclude at
the end of 2017. During the active enrollment period, dual eligibles in Los Angeles County are able to either choose
among us, the local health plan initiative, or one of three other health plans for benefits under the dual eligibles
demonstration. Similarly, dual eligibles in San Diego County are able to enroll in one of four health plan options,
including us. Beginning on May 1, 2014 in San Diego County and on July 1, 2014 in Los Angeles County, dual
eligibles who had not selected a health plan were automatically enrolled in a health plan during a 12 month period that
we referred to as “passive enrollment.” Dual eligibles also may choose to “opt out” of the demonstration at any time.
Dual eligibles that opt out of the demonstration can receive their Medicare benefits through fee-for-service Medicare or
a Medicare Advantage plan, but will receive Medi-Cal benefits through a managed care health plan as required under
CCI. For the remainder of the demonstration, all dual eligibles, including newly eligible individuals, individuals who
have previously selected or been passively enrolled in a health plan and individuals who have previously opted out of
the demonstration, have the continuing option to select from the Cal MediConnect health plans available in their county