4th Annual Investor Conference May 16, 2001 HEALTH PLANS DIVISION Cora Tellez President.
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4th Annual Investor Conference May 16, 2001 HEALTH PLANS DIVISION Cora Tellez President
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Transcript of 4th Annual Investor Conference May 16, 2001 HEALTH PLANS DIVISION Cora Tellez President.
4th Annual Investor Conference
May 16, 2001
HEALTH PLANS DIVISION
Cora Tellez
President
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Positioned for Profitable Growth
Solid Operating Performance in 2000 and Entering 2001
New Products Introduced in 2000 and More Planned for 2001
Medicare Strategy That Focuses on Profitable Performance
3
Positioned for Profitable Growth
Solid Operating Performance in 2000 and Entering 2001
New Products Introduced in 2000 and More Planned for 2001
Medicare Strategy That Focuses on Profitable Performance
4
Health Plan Membership
California62%Arizona
9%
Oregon2%
Connecticut12%
New York7%
New Jersey7%
Pennsylvania1%
Health Plan Membership By State
5
Health Plan Membership
Health Plan Membership By Line of Business
Commercial76%
Medicare6%
Medicaid18%
6
Health Plan Revenue
Health Plan Premium Revenue By Line of Business
Commercial65%
Medicare24%
Medicaid11%
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2000-2001 Operating Performance
Q1 2000 v.Q1 2000 Q1 2001 Q1 2001
Membership 3,760,000 4,042,000 7.5%
Premium Revenue ($000s) 1,788,000$ 2,075,000$ 16.0%
Premium Revenue (PMPM) $152 $169 10.6%
Cost of Care (PMPM) $130 $144 10.4%
Medical Care Ratio (MCR) 85.2% 85.2% 0.0%
Health Plans Division
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Drivers of Membership Growth
Diversify the Product Portfolio
Diversify Market Segments
Pursue Niche Products
Provide Flexible Benefit Designs to Meet Consumers at the Price They Want to Pay
Expand Choice and Access
Price Ahead of Cost Trends
9
Membership Results By Line of Business
Membership* Growth Between Q1 2000 and Q1 2001
* Excludes Florida, Washington and Colorado Medicare Supp is in Medicare
Commercial Medicare Medicaid TotalHealth Plan Growth Growth Growth Growth
California 170,000 (3,000) 99,000 266,000
Arizona (8,000) (2,000) NA (10,000)
Oregon (5,000) NA NA (5,000)
Northeast 20,000 11,000 12,000 43,000
Health Plans Division 177,000 6,000 111,000 294,000
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Membership Results By Product
Commercial Membership* Growth Between Q1 2000 and Q1 2001
* Excludes Florida, Washington and Colorado Medicare Supp is in Medicare
HMO POS/PPO/ASO Total
Health Plan Growth Growth Growth
California 33,000 137,000 170,000
Arizona (15,000) 7,000 (8,000)
Oregon (14,000) 9,000 (5,000)
Northeast 20,000 0 20,000
Health Plans Division 24,000 153,000 177,000
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Membership Results By Market Segment
Commercial Membership* Growth Between Q1 2000 and Q1 2001
* Excludes Florida, Washington and Colorado Medicare Supp is in Medicare
Individual Small Group Large Group Total
Health Plan Growth Growth Growth Growth
California 19,000 77,000 73,000 170,000
Arizona (1,000) (10,000) 3,000 (8,000)
Oregon (4,000) 1,000 (2,000) (5,000)
Northeast NA 34,000 (13,000) 20,000
Health Plans Division 14,000 102,000 61,000 177,000
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Gradual and Planned Shift in Risk
Health Net of CaliforniaHMO Membership By Risk Type
59% 59% 57% 56%
52%
42%38%38%37%37%
6%5%5%4%4%
0%
10%
20%
30%
40%
50%
60%
70%
Mar. 2000 Jun. 2000 Sep. 2000 Dec. 2000 Mar. 2001
DualRiskSharedRiskFFS
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Inpatient Utilization Under Control As Risk Shifts
Health Net of California Commercial Inpatient Days Per 1,000 Members
183
184
185
186
187
188
189
190
1998 1999 2000
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Inpatient Utilization Under Control As Risk Shifts
Health Net of California Medicare Hospital Days Per 1,000 Members
1,350
1,400
1,450
1,500
1,550
1,600
1998 1999 2000
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Successfully Managing the Shift in Risk
Pricing Ahead of Medical Cost Trends
Claims Processing Under Control
– Claims Volume Increased 25% from 1999 to 2000 and is Projected to Increase 27% in 2001
– Successfully Managing Inventory - “Work on Hand” Consistently Under Five Days
– Increased Staff 25% Over Past 12 Months
– Expanded Outsourced Adjudication Capabilities
– Implemented Technology Enhancements - EDI, Auto Adjudication
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Positioned for Profitable Growth
Solid Operating Performance in 2000 and Entering 2001
New Products Introduced in 2000 and More Planned for 2001
Medicare Strategy That Focuses on Profitable Performance
17
Market Position: A Platform For Growth
HMO Market Position in Largest Markets
State
Rank in State - Number of Enrollees
Total Number of HMOs in State
California 3 32
Connecticut 1 9
New Jersey 3 11
New York 10 26
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Consistently Profitable Medicaid Program
Strong Growth Between Q1 2000 and Q1 2001
– California: 100,000 Members (21% Growth)
– Northeast: 12,000 Members (12% Growth)
Stable Performance
– Consistent Profitability
– Demographic Profile
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Maintaining Affordability: California Copay Strategy
New Copays & Copay Increases Across All Services
– $250-$350 Inpatient and Outpatient Surgery Copay
– $75 Emergency Room Copay and Option to Increase Physician Visit Copay
Maintains Product Affordability Through Cost Sharing
– Will Mitigate Premium Increases
– Should Stem Shift to Self-Insurance
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Maintaining Affordability: Northeast Copay Strategy
Introduced “Split Copay” Product - Differentiates Primary and Specialty Physician Copay
– Will Mitigate Premium Increases
– Well Received by the Market
Three-Tier Pharmacy Plans Offered on Every Renewal in 2000
– About 47% of Eligible Members Converted to 3-Tier in Q1 2001
– Will Mitigate Premium Increases
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Positioned for Profitable Growth
Solid Operating Performance in 2000 and Entering 2001
New Products Introduced in 2000 and More Planned for 2001
Medicare Strategy That Focuses on Profitable Performance
22
Medicare Product Line & Strategy
Medicare Profitability is Improving
Diligently Track Performance - Judicious in Evaluating Market Exits
Medicare Strategy:
– High AAPCC Counties
– Cost Effective Networks
– Medicare Supplemental Plans
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Medicare - West
24 Counties in the West
– 20 Counties in California
– 4 Counties in Arizona
Exited Five Counties: Fresno, Sonoma, Cochise, Gila and So. Pinal Impacting 11,000 Members
Benefit Reductions in 16 Out of 22 Counties
– Copay Increases
– Generics Only
– Lower Pharmacy Caps
MCR Improvement Seen in Q1 2001
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Medicare - Northeast
12 Counties in the Northeast
Exited Four Counties: Litchfield, Middlesex, Nassau and Suffolk Impacting 4,800 Members
Benefit Reductions in Connecticut
– Generics Only
MCR Improvement Seen in Q1 2001
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Health Net, Inc. Health Plans - Well Positioned For Growth
Solid Products
Strong Financial Base
Benefit Flexibility
Management Depth
Focus and Discipline Around Our “Vital Few”
Investment in Branding
