TMCnet News

Health Net, CMS and DHCS Complete Dual Eligible Contract for Los Angeles and San Diego Counties
[January 22, 2014]

Health Net, CMS and DHCS Complete Dual Eligible Contract for Los Angeles and San Diego Counties


LOS ANGELES --(Business Wire)--

Health Net, Inc. (NYSE:HNT) today announced that its wholly owned subsidiary, Health Net Community Solutions, Inc., has entered into a contract with the Centers for Medicare & Medicaid Services (CMS) and the California Department of Health Care Services (DHCS) for the dual-eligible demonstration in Los Angeles and San Diego counties.

Under the terms of the contract, Health Net will provide managed care services in both Los Angeles and San Diego counties under the duals demonstration portion of California's Coordinated Care Initiative, known as Cal MediConnect. The company expects to begin implementation of its Cal MediConnect coverage in both counties no earlier than April 1, 2014.

The demonstration is expected to improve care coordination and health outcomes for those who are eligible for both Medi-Cal (California's Medicaid program) and Medicare (the federal health care program for those age 65 and over and the disabled).

"We look forward to improving the quality of care and service for those who are most in need of a truly integrated care delivery system," said Jay Gellert, president and chief executive officer of Health Net, Inc. "We believe that the rate setting methodology in this contract, which is based on the historical fee-for-service costs of providing care to this population, will provide the necessary resources to improve the delivery of care to these beneficiaries."

About Health Net

Health Net, Inc. is a publicly traded managed care organization that delivers managed health care services through health plans and government-sponsored managed care plans. Its mission is to help people be healthy, secure and comfortable. Health Net provides and administers health benefits to approximately 5.3 million individuals across the country through group, individual, Medicare (including the Medicare prescription drug benefit commonly referred to as "Part D"), Medicaid, U.S. Department of Defense, including TRICARE, and Veterans Affairs programs. Through its subsidiaries, Health Net also offers behavioral health, substance abuse and employee assistance programs, managed health care products related to prescription drugs, managed health care product coordination for multi-region employers, and administrative services for medical groups and self-funded benefits programs.

For more information on Health Net, Inc., please visit Health Net's website at www.healthnet.com.

Cautionary Statements

The company and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act ("PSLRA") of 1995, including statements in this and other press rleases, in presentations, filings with the Securities and Exchange Commission ("SEC (News - Alert)"), reports to stockholders and in meetings with investors and analysts. All statements in this press release, other than statements of historical information provided herein, may be deemed to be forward-looking statements and as such are intended to be covered by the safe harbor for "forward-looking statements" provided by PSLRA. These statements are based on management's analysis, judgment, belief and expectation only as of the date hereof, and are subject to changes in circumstances and a number of risks and uncertainties. Without limiting the foregoing, statements including the words "believes," "anticipates," "plans," "expects," "may," "should," "could," "estimate," "intend," "feels," "will," "projects" and other similar expressions are intended to identify forward-looking statements. Actual results could differ materially from those expressed in, or implied or projected by, the forward-looking information and statements due to, among other things, the risks inherent in the company's participation in California's Coordinated Care Initiative ("CCI (News - Alert)"). The CCI is a model of providing health care that is new to regulatory authorities and health plans in the State of California, and our success in the CCI will be subject to a number of risks inherent in untested health care initiatives. In addition, the individuals covered by the CCI (commonly referred to as "dual eligibles") are generally among the most chronically ill individuals within each of Medicare and Medi-Cal, requiring a complex range of services from multiple providers. If we do not adequately predict the costs of providing benefits to dual eligibles or if the rates under our agreement with the Centers for Medicare & Medicaid Services ("CMS") and the California Department of Health Care Services ("DHCS") do not prove to be adequate, our participation in the CCI may be unprofitable. Furthermore, under the agreement governing the dual eligibles demonstrations, the company is unable to challenge CMS or DHCS, or their actuarial contractors, over the actuarial soundness of the capitation rates set forth in the agreement. Our participation in the CCI also will require us to effectively design and implement the necessary modifications to the company's internal administrative and operations structure to meet the demands of the CCI, including, without limitation, changes to implement delivery systems for benefits with which the company has limited operating experience such as long-term services and support. There can be no assurance that our participation in the CCI will prove to be successful. Our failure to successfully participate in the CCI could have a material adverse effect on our business, financial condition and results of operation. For additional information regarding risks and uncertainties relating to the company's participation in the CCI, see the risks discussed in the company's filings with the SEC, including in the risk factor entitled "A significant reduction in revenues from the government programs in which we participate or other changes to these programs could have a material adverse effect on our business, financial condition or results of operations." in the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 and the risk factor entitled "If we participate in the California Coordinated Care Initiative in Los Angeles County and/or San Diego County, this business opportunity may prove to be unsuccessful for a number of reasons." in the company's Annual Report on Form 10-K for the year ended December 31, 2012.



In addition, the company's actual results could differ materially from those expressed in, or implied or projected by the forward-looking information and statements due to, among other things, health care reform and other increased government participation in and regulation of health benefits and managed care operations, including the ultimate impact of the Affordable Care Act, which could materially adversely affect the company's financial condition, results of operations and cash flows through, among other things, reduced revenues, new taxes, expanded liability, and increased costs (including medical, administrative, technology or other costs), and require changes to the ways in which the company does business; risks related to the company's ability to successfully participate in the Covered California health insurance exchanges and/or Arizona's Medicaid program; rising health care costs; the timing of collections on amounts receivable from state and federal governments and agencies, including collections of amounts owed under the T-3 contract; negative prior period claims reserve developments; membership declines; rate cuts and other risks and uncertainties affecting the company's Medicare or Medicaid businesses; trends in medical care ratios; unexpected utilization patterns or unexpectedly severe or widespread illnesses; litigation costs; regulatory issues with federal and state agencies including, but not limited to, the California Department of Managed Health Care, the Centers for Medicare & Medicaid Services, the Office of Civil Rights of the U.S. Department of Health and Human Services and state departments of insurance; operational issues; continued slow economic growth or a further decline in the economy; failure to effectively oversee our third-party vendors; noncompliance by the company or the company's business associates with any privacy laws or any security breach involving the misappropriation, loss or other unauthorized use or disclosure of confidential information; impairment of the company's goodwill or other intangible assets; investment portfolio impairment charges; volatility in the financial markets; liabilities incurred in connection with the company's divested operations; and general business and market conditions.

Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the "Risk Factors" section included within the company's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed with the SEC and the other risks discussed in the company's filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements. Except as may be required by law, the company undertakes no obligation to address or publicly update any forward-looking statements to reflect events or circumstances that arise after the date of this press release.


This release contains links to other sites that are not owned or controlled by Health Net. Please be aware that Health Net is not responsible for the contents linked or referred to from this release. Links to other websites are provided for the user's convenience. Health Net does not express an opinion on the content or the properties of such linked websites and disclaims any liability in connection therewith.


[ Back To TMCnet.com's Homepage ]