“We are pleased that, working together with California’s Department of Health Care Services, we have been able to reach this new ground-breaking agreement covering our state health plans,” said Gellert.

The agreement has the following key components:
  1. Resolves and releases the state from outstanding Health Net litigation related to Medi-Cal rate disputes for rate years prior to 2011/2012.
  2. Five-year extensions on each of Health Net’s four existing Medi-Cal contracts covering seven counties. These contracts are now extended through 2018 to 2022, depending on the individual contract.
  3. Effective January 1, 2013, a new process consistent with DHCS’s existing actuarial targets that Health Net believes will help promote greater financial stability and predictability for both parties.

In addition, Health Net and DHCS have agreed to work toward developing an alternative rate dispute resolution process.

A detailed description of the terms of the agreement is included in the company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on November 5, 2012.

CONSOLIDATED RESULTS

Health Net’s total revenues increased 3.3 percent in the third quarter of 2012 to $2.8 billion from $2.7 billion in the third quarter of 2011.

Health plan services premium revenues increased by 3.7 percent to $2.6 billion in the third quarter of 2012 compared with $2.5 billion in the third quarter of 2011.

Health plan services expenses increased by 6.1 percent to $2.3 billion in the third quarter of 2012 from $2.1 billion in the third quarter of 2011.

WESTERN REGION OPERATIONS SEGMENT

Health Plan Membership

Total enrollment in the Western Region at September 30, 2012 was approximately 2.6 million members, a decrease of approximately 1.0 percent compared with enrollment at September 30, 2011. Total enrollment in the company’s California health plans decreased approximately 1.5 percent from September 30, 2011 to September 30, 2012.

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