Health Net Federal Services to Provide Health Care Cost Recovery Services to Texas Medicaid Program.

Business Editors/Health/Medical Writers

RANCHO CORDOVA, Calif.--(BUSINESS WIRE)--Aug. 18, 2003

Health Net Federal Services (HNFS) today announced that the Texas Health and Human Services Commission issued a Notice of Intent to implement health care cost recovery services for the state's Medicaid program through HNFS. Texas is the nation's third largest Medicaid program providing health care to more than 2.4 million recipients.

HNFS will expand its existing Texas-based operations to provide Diagnostic Related Groups (DRGs) Review and Recovery services to the state. Under the product name of Health Net Connections, these services identify DRG coding errors, billing errors and processing errors for Medicaid hospital claims. Currently, the state issues more than $1 billion each year in DRG-based payments to hospitals that participate in the Medicaid program.

"We are pleased the Texas Health and Human Services Commission selected us to provide this important service," said Jim Woys, president of Health Net Federal Services. "For years, we've been providing these types of services to the Department of Defense and to the Department of Veterans Affairs. We've produced measurable results for both entities - and look forward to doing the same for the Commission."

"We use proprietary software that can evaluate more than 500 DRGs and identify claims with the greatest potential for overpayment recovery," added Scott R. Kelly, senior vice president of HNFS. "In addition to identifying and recovering funds, the program helps to eliminate future overpayments."

The Commission is offering a two-year contract, which will allow up to a two-year extension at the Commission's option. Contract negotiations will begin immediately and, if successful, will most likely be finalized this fall. HNFS claims review operations are scheduled to commence either later this year or in early 2004.

HNFS is a subsidiary of Health Net, Inc. (NYSE:HNT), one of the nation's largest publicly traded managed health care companies. HNFS is the nation's oldest administrator of managed care programs for military families, currently serving more than 1.5 million eligible military dependents. HNFS currently administers TRICARE programs in 11 states, including Arkansas, Alaska, Arizona, California, Hawaii, Idaho, Louisiana, Oklahoma, Oregon, Texas and Washington. Its subsidiary, Health Net Connections, provides cost-recovery and cost-savings services to both private and public health care payors. For more information on Health Net Connections, please visit its Web site at www.hnconnections.com.