Sunday, November 2, 2003

HMOs Post First Ever Annual Decrease in Total HMO Enrollment

HMOs Post First Ever Annual Decrease in Total HMO Enrollment

(PRWEB) November 10, 2000

InterStudy Releases Latest Findings in its Updated HMO Industry Report

For Immediate Release

St. Paul, MN -- HMOs lost more than 400,000 enrollees from January 1, 1999 to January 1, 2000, representing the first annual decrease in total HMO enrollment since InterStudy Publications began tracking HMO enrollment in 1973. Total HMO enrollment in the United States dropped by 0.5%, decreasing from 81.3 million enrollees as of January 1, 1999 to 80.9 million enrollees as of January 1, 2000. These and other highlights appear in InterStudy PublicationsÂ’ latest HMO Industry Report 10.2, Part II of the InterStudy Competitive Edge series. Published as a companion piece to the recently released HMO Directory 10.2, this report provides comprehensive analysis of the HMO industry as of January 1, 2000.

The HMO Industry Report focuses on enrollment trends, lists the top 25 largest and fastest growing HMOs, analyzes sources of HMO enrollment growth or decline, and presents state-by-state enrollment information. In addition, the HMO Industry Report 10.2 provides data related to HMO pharmacy expenses and utilization, as well as an analysis of recent HMO finance and premium trends.

Total HMO Enrollment: Total HMO enrollment as of January 1, 2000 was 80,899,105. This represents an annual decrease of over 400,000 enrollees since January 1, 1999. The total number of HMOs dropped from 643 as of January 1, 1999 to 568 as of January 1, 2000, a decrease of almost 12.0%.

The semi-annual growth rate from July 1, 1999 to January 1, 2000 was just 0.10%, adding fewer than 75,000 enrollees in the second half of 1999. Between January 1, 1999 and July 1, 1999, HMO enrollment declined by 0.6%. Only three regions have shown enrollment losses in both reporting periods of the past year. The Mid-Atlantic, South Atlantic and East South Central regions each lost enrollment as of July 1, 1999 and as of January 1, 2000.

Medicare Enrollment: Growth in HMO Medicare enrollment slowed significantly in the past year, with just slightly more than 68,000 Medicare enrollees added to HMOs since January 1, 1999. As of January 1, 2000 there were 231 HMOs offering Medicare with a total of 6,567,743 enrollees, representing an annual growth rate of just 1.1% from January 1, 1999.

The number of HMOs offering Medicare dropped from 261 in January 1, 1999 to 231 as of January 1, 2000. According to the Health Care Financing Administration (HCFA), approximately 934,000 Medicare beneficiaries will be affected by managed care plans exiting the Medicare+Choice program in 2001. Of those affected by plan withdrawals, approximately 160,000 will be left with no other Medicare managed care providers to choose from. Medicare

Medicaid Enrollment: For the first time since January 1993, the annual HMO Medicaid growth rate dropped below 20%, falling to just 4.1% from January 1, 1999 to January 1, 2000. As of January 1, 2000 there were 220 HMOs with Medicaid products serving a total of 10,790,507 HMO Medicaid enrollees, representing an increase of over 400,000 enrollees since January 1, 1999. Over half of Medicaid enrollment is in very large plans, those with over 200,000 HMO members. Smaller plans, those with fewer than 50,000 enrollees, lost over 200,000 Medicaid enrollees in the year between January 1, 1999 and January 1, 2000.

New HMOs: Only eight new HMOs reported to InterStudy Publications between January 1, 1999 and January 1, 2000. These new HMOs accounted for just 469,182 enrollees, or 0.6% of total HMO enrollment.

HMO Finance and Premium Trends: HMOs with the worst profit margins experienced a 4.0% improvement in profitability between December 31, 1998 and December 31, 1999. In 1999, 39% of all HMOs reported positive profitability. This is similar to the 41% reporting profitability in 1998. However, nearly 90% of all HMOs were profitable in 1994.

Since 1996 HMOs have demonstrated high medical loss ratios of 85% to 90% for half of the plans. On average, the medical expense ratio increased from 1994 to 1996. After averaging a high of 89.2% in 1997, the medical expense ratio for half of the plans has held steady. In 1999 HMO administrative costs fell to 1994 levels after peaking in 1996. In the years preceding 1996, HMOs artificially held down premiums to gain market share, thereby reducing their administrative and operational efficiency. In recent years, several unprofitable HMOs have either exited the market or consolidated with other profitable health plans.

Since 1996, revenues per-member, per-month (PMPM) have kept pace with medical expenses PMPM. However, HMO profitability did not improve until 1998. In 1999, the PMPM total revenue and PMPM medical expenses grew at 10.0% and 8.0% respectively. The aggressive premium increases by HMOs in the last few years have contributed to overall HMO profitability since 1998.

The average national premium for traditional HMO coverage increased 6.0% from January 1, 1999 to January 1, 2000, rising from $464.00 to $493.00.

The Northeast region has the highest average monthly single and family rates for traditional HMO premiums, followed by the East North Central region. In the Northeast region, rates are approximately $49 higher than the national average single rate and $119 more than the national average family rate.

The Pacific region has the lowest monthly average rates for single and family traditional HMO premiums. This regionÂ’s average single pure HMO rate is $23 lower than the national average single rate of $168. The family rate for the Pacific region is $77 less than the national average family rate of $493.

HMO Pharmacy Information: Respondents were asked to indicate pharmacy expenses per-member, per-month (PMPM) for commercial members only. The average commercial pharmacy expense PMPM was $19.21 in 1999 and is expected to rise to $23.32 PMPM for 2001, a 21.4% increase.

Ninety-five percent of responding HMOs (231 of 244) require a co-payment for generic drugs, 87.7% (214 of 244) require a co-payment for preferred brand drugs and 63.1% (152 of 241) of responding HMOs require a co-payment for non-preferred brand drugs. These January 2000 percentages remain virtually unchanged since the questions were asked on the previous July 1999 National HMO Census.

For generic drugs, the most popular co-payment amount is $5.00, charged by 93 HMOs (44.5%). The second most popular co-payment amount for generic drugs is $10.00, charged by 56 HMOs (26.8%).

Fifty-seven of the 194 responding HMOs (29.4%) charge $15.00 co-payments for preferred brand drugs and another 53 HMOs (27.3%) charge $10.00 co-payments for these drugs. Forty-four HMOs (22.7%) charge enrollees $20.00 or more for preferred brand drug co-payments. Co-payments for non-preferred brand drugs are significantly higher than for generic or preferred brand drugs. Sixty-five HMOs (48.1%) charge $30.00 or more for non-preferred brand drug co-payments. The most popular co-payment amount for this drug type is $30.00, charged by 24.4% of responding HMOs.

The InterStudy Competitive Edge series is published semi-annually by InterStudy Publications, a publications firm specializing in research and reports for market driven health care. Part I, the HMO Directory 10.2, was published in September. Part III, the Regional Market Analysis, examines market structure and dynamics of metropolitan markets served by HMOs. The Regional Market Analysis 10.2 will be published in November.

The complete InterStudy Competitive Edge series (Parts I, II and III) is available from InterStudy for $525 (prepaid). Each book is also sold separately. The HMO Directory and Industry Report are available for $215 each (prepaid) and the Regional Market Analysis is available for $275 (prepaid). If you have any questions or would like to place an order, please call 800-844-3351, or visit our web site at www. interstudypublications. com.