Haris Ashley
Health Net is an insurance company that provides health coverage for individuals, regardless of their age, income, or health status. The company has had a turbulent past, with lawsuits and settlements, as well as mergers and acquisitions. Health Net offers a range of plans, including Medicare and Medicaid services, and provides additional benefits such as discounts on acupuncture, chiropractic care, and weight management programs. With a focus on customer satisfaction and accessibility, Health Net aims to provide comprehensive health coverage for its members.
| Characteristics | Values |
|---|---|
| History of Compliance Issues | In November 2010, the Centers for Medicare and Medicaid Services (CMS) suspended Health Net for marketing and enrolling new members due to compliance issues. The sanctions were lifted in August 2011. |
| Medicare Prescription Drug Plan (PDP) | In January 2012, Health Net sold its PDP business to CVS Caremark Corp. (CVS) for approximately $160 million. |
| Acquisition by Centene Corporation | In July 2015, Centene Corporation announced its acquisition of Health Net for $6.8 billion, completed in March 2016. |
| Health Net Federal Services (HNFS) | Became a separate subsidiary of Centene after the acquisition. |
| Arizona Operations | In 2018, Health Net in Arizona was merged into other Centene holdings to form Arizona Complete Health, led by Plan President and CEO Martha Smith. |
| Lawsuits | In 2007, a California patient sued Health Net for wrongful termination of care during chemotherapy. The court ruled in the patient's favor, ordering Health Net to pay $9 million in damages. In September 2012, the Los Angeles County Medical Association and two patients sued Health Net for denying medically necessary treatment, including cancer care. |
| Additional Benefits | Health Net offers discounts on acupuncture, chiropractic, massage therapy, in-home care services, hearing aids and screenings, and weight management programs. |
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What You'll Learn
Health Net's suspension by CMS in 2010
Health Net, LLC, a subsidiary of Centene, is an American healthcare insurance provider. It offers health plans for individuals, families, businesses, and people with Medicare and Medicaid. In November 2010, the Centers for Medicare and Medicaid Services (CMS) suspended Health Net for marketing and enrolling new members due to compliance issues. The suspension was imposed after a CMS audit revealed that Health Net had continued to improperly administer the Medicare drug benefit in its national prescription drug plan (PDP) and local Medicare Advantage prescription drug plan (MA-PD) contracts.
The CMS found that Health Net did not provide proper oversight of sales agents, who misled beneficiaries about network providers. This resulted in delays in treatment and potential risks to patient health and safety. As a result, Health Net was required to immediately suspend marketing and enrolling new beneficiaries into their prescription drug and Medicare Advantage plans. The sanctions were imposed to ensure beneficiaries' access to essential Medicare services and protect them from misleading marketing practices.
Approximately 660,000 Medicare beneficiaries were enrolled in Health Net's national and local plans across California, Oregon, Washington, and Arizona. The suspension was not the first time Health Net had faced issues with compliance and legal matters. In 2007, a California patient sued Health Net, claiming wrongful termination of her care during chemotherapy treatments. The court ruled in the patient's favor, ordering Health Net to pay over $9 million in damages.
In 2008, Health Net agreed to pay $215 million to settle allegations of unfair reimbursement practices between 1995 and 2007. The sanctions imposed by CMS on Health Net in 2010 were lifted in August 2011. Following the resolution of the issue, Health Net continued to provide prescription drug plans as part of its Medicare Advantage plans.
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Health Net's sale of its Medicare business to CVS in 2012
Health Net, Inc. announced on January 9, 2012, that it had agreed to sell its Medicare stand-alone prescription drug plan (PDP) business to a subsidiary of CVS Caremark (CVS) for approximately $160 million in cash. The sale was completed on April 3, 2012, with Health Net expecting to realise approximately $145 million in net cash proceeds from the transaction.
Health Net's PDP business had around 400,000-425,000 members enrolled in 49 states and the District of Columbia, with annual sales of $490 million in 2011. Despite selling its PDP business, Health Net stated that it would continue to provide prescription drug coverage to members through its Medicare Advantage Plan business.
The sale of the Medicare PDP business was part of Health Net's efforts to focus on its core businesses and improve its financial condition. Health Net, through its subsidiaries, provides health benefits to millions of individuals across the country, including Medicare, Medicaid, and other programs.
It is worth noting that Health Net has faced several legal and compliance issues in the years leading up to the sale. In 2007, a California patient sued Health Net, claiming wrongful termination of care during chemotherapy treatments. In 2008, Health Net was sanctioned by the Centers for Medicare & Medicaid Services (CMS) for issues with out-of-network reimbursements and compliance. These issues were resolved before the sale to CVS, with sanctions lifted in August 2011.
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Health Net's acquisition by Centene Corporation in 2016
Health Net, a managed health care provider based in Woodland Hills, California, was acquired by Centene Corporation in 2016. Centene, a Fortune 500 company, provides managed health care services to government-sponsored programs, focusing on the under-insured and uninsured.
The acquisition, announced in July 2015, was valued at approximately $6.8 billion, including the assumption of debt. Under the terms of the deal, Health Net shareholders received $28.25 in cash and 0.622 shares of Centene common stock for each share of Health Net common stock they held. Centene shareholders would own about 71% of the combined company, with Health Net shareholders owning the remaining 29%.
The acquisition was completed in March 2016, with the approval of shareholders and regulatory bodies. Health Net became a wholly-owned subsidiary of Centene, making Centene the largest Medicaid Managed Care Organization in the country. The combined company, with expected revenue of $40 billion in 2016, served 11.4 million members, making it the fourth-largest health insurance company in the US.
With the acquisition, Centene expanded its government program offerings, including Medicare Advantage, and increased its scale and geographic diversity. Centene also gained access to Health Net's commercial market in California and its presence in other states like Arizona, Oregon, and Washington. The acquisition aligned with Centene's commitment to the commercial insurance markets in the western region, focusing on operational efficiencies, cost-effectiveness, and fast implementation of new health plans.
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Lawsuits against Health Net for denying necessary treatments
Health Net, one of California's largest health care insurance providers, has been the target of several lawsuits for denying necessary treatments to its customers. In 2012, a lawsuit was filed in Los Angeles County Superior Court, accusing Health Net of unfair and unlawful business practices by routinely and illegally denying patients' claims to important and potentially life-saving medical treatments. The lawsuit was brought by two patient victims, Robert Mendoza and Kalana Penner, and the Los Angeles County Medical Association (LACMA), a nonprofit that represents more than 6,500 physicians in Los Angeles County.
Mendoza was diagnosed with a rare and aggressive form of prostate cancer, and his doctor recommended a radical procedure as the best chance to save his life. However, Health Net denied the claim, stating that the procedure was not medically necessary and failed to provide any evidence or medical qualification for its opinion. Penner suffered from debilitating pain for 10 years and found relief through a successful treatment of occipital nerve stimulation. However, Health Net turned down her request for a permanent device, a decision that was later reversed after the California Department of Insurance ruled that it should be covered.
In another case, Health Net agreed to settle a lawsuit in which a Riverside County jury ordered the company to pay $89 million for denying a costly, experimental treatment to a woman with breast cancer, Nelene Fox. Fox's husband pursued the lawsuit after she passed away at the age of 40, and the jury awarded the family $77 million in punitive damages and $12 million in compensatory damages. This case drew nationwide attention and highlighted the growing conflict over medical cost containment as more people join cost-conscious managed-care plans.
Health Net has also faced criticism and legal action for its handling of substance abuse treatment claims. A lawsuit claimed that Health Net refused to reimburse Sovereign Health for approximately $55 million in medical services deemed necessary by clinicians. Additionally, the company has been criticized for its controversial handling of patients' claims and its tendency to reject necessary medical treatments requested by its customers. Health Net has been publicly criticized and fined for its policies and practices, including providing bonuses to employees for revoking customer policies.
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Health Net's Medicare Advantage plans and additional benefits
Health Net offers a wide range of Medicare Advantage and Medicare Supplement products in specific geographic service areas. These plans provide excellent care and additional benefits to their clients.
Health Net's Medicare Advantage plans include prescription drug coverage, as the company continued to provide these plans even after selling its Medicare Prescription Drug Plan (PDP) business to CVS in 2012.
The Medicare Advantage plans also offer health and wellness programs with various discounts. These include discounts on acupuncture, chiropractic care, massage therapy, in-home care services, hearing aids and screenings, and weight management programs.
Additionally, Health Net's Silver&Fit program is an exercise and healthy aging initiative that provides members with either a no-cost membership at a participating local Silver&Fit fitness facility or membership in the Silver&Fit Home Fitness Program for those unable to access a fitness facility.
Health Net makes it easy for clients to find the right product to fit their needs, and they work with state and local agencies to provide access to doctors, hospitals, and more.
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Frequently asked questions
Health Net is an insurance company that provides health coverage for individuals, regardless of age, income, or health status.
Health Net is not Medicaid, but it does provide Medicare and Medicaid services. In 2015, Centene Corporation acquired Health Net, and it now operates as a separate subsidiary, Health Net Federal Services (HNFS).
Health Net offers a range of benefits, including discounts on acupuncture, chiropractic, massage therapy, in-home care services, hearing aids and screenings, and weight management programs. They also provide a Silver&Fit program, which offers fitness facility memberships or a home fitness program.
Yes, Health Net has been involved in several legal issues. In 2007, a California patient sued Health Net for wrongfully terminating her care during chemotherapy treatments. The court ruled in the patient's favor, and Health Net was ordered to pay $9 million in damages. In 2008, Health Net agreed to pay $215 million to settle allegations of unfair reimbursement practices. In 2012, the company was sued again, by the Los Angeles County Medical Association and two patients, for denying medically necessary treatment.
