Company Website:
http://www.healthnet.com
LOS ANGELES -- (Business Wire)
Health
Net, Inc. (NYSE:HNT) today announced that it has entered into a
master services agreement with Cognizant Healthcare Services, LLC, an
indirect, wholly owned subsidiary of Cognizant Technology Solutions
Corporation (NASDAQ:CTSH) (Cognizant), a leading provider of information
technology, consulting and business process services.
Health Net previously announced on August 6, 2014, that it had signed a
Letter of Intent with Cognizant as part of Health Net’s commitment to
address its scale issue and reduce administrative costs.
Under the terms of the seven-year master services agreement, Cognizant
will provide consulting, technology and administrative services to
Health Net in the following areas: claims management, membership and
benefits configuration, customer contact center services, information
technology, quality assurance, appeals and grievance services, and
medical management support. As part of the agreement, Cognizant will be
responsible for meeting specific targets for improving the quality,
effectiveness and efficiency of many of Health Net’s operating metrics.
Such metrics include claims processing and routing times, customer
contact center response times, and contact center customer satisfaction
targets.
Under the agreement, the services Cognizant will provide must meet all
regulatory compliance requirements, which will be monitored through
Health Net’s dedicated governance and oversight structure.
In addition, Health Net and Cognizant have entered into an asset
purchase agreement for the sale of certain Health Net software assets
and related intellectual property to Cognizant, including Health Net’s
technology platform. Cognizant expects to use and develop this
technology platform to provide enhancements to Health Net’s operations.
The master services agreement is currently expected to generate
approximately $150 to $200 million in annual general and administrative
and depreciation expense savings by 2017. During its third quarter 2014
earnings conference call on November 3, 2014, the company will provide
more details as to the timing of the expected savings.
The master services agreement is expected to accomplish several goals:
-
Continue and enhance Health Net’s delivery of high service levels for
Health Net’s members and providers;
-
Create new opportunities for innovation in Health Net’s products and
services;
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Strengthen Health Net’s technology platform;
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Allow Health Net to more efficiently use its capital resources; and
-
Enhance Health Net’s ability to effectively meet all regulatory and
health care reform compliance requirements.
“What’s important about this new agreement with Cognizant is that there
are specific, measurable outcomes that we believe will contribute to
reduced administrative costs and support future growth and innovation,”
said Jay Gellert, president and chief executive officer of Health Net.
“Once implementation begins, we will pay Cognizant on a fixed fee basis.
We will eventually pay Cognizant on a per member per month basis. With
such predictable costs for us, we believe we will achieve the necessary
scale advantages to enhance our product development and service
capabilities, thus strengthening our competitive position for the long
term,” he added.
The transaction, including the related asset purchase, is expected to
close in the first half of 2015, subject to receipt of required
regulatory approvals.
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 5.9 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. 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 releases, in presentations, filings with the
Securities and Exchange Commission (“SEC”), 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, health care
reform and other increased government participation in and taxation or
regulation of health benefits and managed care operations, including but
not limited to the implementation of the Patient Protection and
Affordable Care Act and the Health Care and Education Reconciliation Act
of 2010 (collectively, the "ACA") and related fees, assessments and
taxes; the company’s ability to successfully participate in California’s
Coordinated Care Initiative, which is subject to a number of risks
inherent in untested health care initiatives and requires the company to
adequately predict the costs of providing benefits to individuals that
are generally among the most chronically ill within each of Medicare and
Medi-Cal and implement delivery systems for benefits with which the
company has limited operating experience; the company’s ability to
successfully participate in the federal and state health insurance
exchanges under the ACA, which have experienced technical challenges in
implementation and which involve uncertainties related to the mix and
volume of business that could negatively impact the adequacy of our
premium rates and may not be sufficiently offset by the risk
apportionment provisions of the ACA; increasing health care costs,
including but not limited to costs associated with the introduction of
new treatments or therapies; our ability to reduce administrative
expenses while maintaining targeted levels of service and operating
performance, including through our master services agreement with
Cognizant; whether we receive required regulatory approvals for
Cognizant’s provision of services to us and any conditions imposed in
order to obtain such regulatory approvals; our ability to recognize the
intended cost savings and other intended benefits of the Cognizant
transaction; and the risk that Cognizant may not perform contracted
functions and services in a timely, satisfactory and compliant manner;
negative prior period claims reserve developments; rate cuts and other
risks and uncertainties affecting the company’s Medicare or Medicaid
businesses; the company’s ability to successfully participate in
Arizona’s Medicaid program; trends in medical care ratios; membership
declines or negative changes in our health care product mix; unexpected
utilization patterns or unexpectedly severe or widespread illnesses; the
timing of collections on amounts receivable from state and federal
governments and agencies, including collections of amounts owed under
the T-3 contract; 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; changes
in economic or market conditions; 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; 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 release.
Contacts:
Investor Contact:
The Abernathy MacGregor Group
David
Olson, 818-917-1469
dwo@abmac.com
or
Media
Contact:
Health Net, Inc.
Brad Kieffer, 818-676-6833
brad.kieffer@healthnet.com
Source: Health Net, Inc.
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