HMO Enrollment Stabilizing, Medicaid Continues to Grow

InterStudy Releases Updated HMO Industry Report

ST. PAUL, Minn. (PRWEB) May 9, 2002 -- Total HMO enrollment continues to decline, though the rate of decline appears to be slowing. Once again, total HMO enrollment showed an annual decrease of 1.1%. As of July 1, 2001 there were 78.0 million HMO enrollees, down from 78.9 enrollees reported as of July 1, 2000. Though total HMO enrollment showed a small annual decrease, HMO Medicaid enrollment continues to grow. Close to one million Medicaid enrollees were added since July 1, 2000, bringing July 1, 2001 HMO Medicaid enrollment to 11.9 million. HMO Medicaid enrollment grew by 8.6% during this period.

These and other highlights appear in InterStudy Publications? latest HMO Industry Report 12.1, Part II of the InterStudy Competitive Edge series. Published as a companion piece to the recently released HMO Directory 12.1, this report provides comprehensive analysis of the HMO industry as of July 1, 2001.

The HMO Industry Report focuses on enrollment trends, lists the top 25 largest- and fastest-growing HMOs, analyzes sources of HMO enrollment growth and decline, and presents state-by-state enrollment information. In addition, the HMO Industry Report 12.1 provides data related to HMO pharmacy expenses and utilization, as well as an analysis of recent HMO provider reimbursement trends.

Total HMO Enrollment
HMOs lost just over one million enrollees between January 1 and July 1, 2001, representing a decrease of 1.3% during the first half of 2001. As of July 1, 2001 there were 78.0 million HMO enrollees, down from 78.9 million enrollees reported as of July 1, 2000, a 1.1% annual decrease.
The total number of full-service HMOs operating in the United States continues to decline. The total number of HMOs dropped to 531 as of July 1, 2001, down from 560 as of July 1, 2000. Every region in the United States, regardless of changes to HMO enrollment, lost more HMOs than they gained between July 1, 2000 and July 1, 2001.

Medicare Enrollment
Medicare enrollment showed an annual decrease for the second time since July 1, 1999. HMO Medicare enrollment dropped from 6.3 million as of July 1, 2000 to 5.9 million as of July 1, 2001, representing a decline of 6.6% for this period.
HMO Medicare Enrollment and Growth Rate: July 1992 to July 2001

HMO Medicare plans lost close to 250,000 enrollees in the first half of 2001, dropping by 4.0% from 6,097,481 enrollees as of January 1, 2001 to 5,852,112 enrollees as of July 1, 2001.
Medicare enrollment continues to decline within the younger HMOs. There are currently no HMOs under two years of age offering Medicare, indicating that new plans are not entering the Medicare market. This is of particular concern given the large number of established HMOs indicating plans to scale back or withdraw entirely from their Medicare service areas. According to the Centers for Medicare & Medicaid Services (CMS), over half a million Medicare beneficiaries are expected to be affected by partial or complete service area pull-outs of HMOs in 2002.

Medicaid Enrollment
HMO Medicaid enrollment continues to grow. Close to one million Medicaid enrollees were added since July 1, 2000, bringing July 1, 2001 HMO Medicaid enrollment to 11.9 million. HMO Medicaid enrollment grew by 8.6% during this period.
The most dramatic Medicaid enrollment growth occurred in the West South Central region, which grew by 25.9% from July 1, 2000 to July 1, 2001. All of the reported growth occurred in Texas, with AmCare Health Plans of Texas gaining over 20,000 Medicaid enrollees.

Provider Reimbursement Trends
Compared to a year earlier, as of July 1, 2001, more HMOs continue to rely on fee for service and fewer on capitation to reimburse some or all primary care and specialty care physicians. As of July 1, 2001, 79.6% of the responding HMOs reimbursed some or all of primary care physician services through fee for service. Similarly, 84.9% of responding HMOs reimburse some or all specialty care services through fee for service.

Approximately 45.0% of responding HMOs (131 of 294) reimburse primary care physicians exclusively through one type of reimbursement. A majority of these HMOs, 69.5% use fee for service. Close to 20.0% of the responding HMOs use capitation, followed by 9.9% that use a Relative Value Scale (RVS). Only 0.8% of responding HMOs reimburse primary care physicians exclusively using salary.
More than half (55.5%) of responding HMOs (162 of 292) use only one type of reimbursement for specialty care physicians. The majority of these HMOs (81.5%) rely on fee for service. The other 11.7% rely on RVS, while 6.8% use capitation exclusively to reimburse specialty care physicians. There are no HMOs that reimburse specialty care physicians solely through salary.
The use of a single reimbursement method is far less frequent among hospitals. Only 33 of 282 responding HMOs (11.7%) reimburse hospital services exclusively through one reimbursement method. Fourteen of these HMOs rely on per diem rates to reimburse hospital services.

HMO Pharmacy Information
Survey respondents were asked to indicate their average per-member, per-month (PMPM) pharmacy expenses for commercial HMO members for 2000 and year-to-date 2001 (the survey was administered in October 2001) and to project expenses for 2002.
Based on the responses from the 112 HMOs providing data for all three periods, average pharmacy expenses PMPM are expected to increase by 13.4% from 2001 to 2002, rising from an average of $25.32 PMPM to $28.71 PMPM.

In order to provide a more complete picture of the number of HMO enrollees with pharmacy benefits, InterStudy asked respondents to indicate the percentage of their commercial, Medicare and Medicaid enrollees that have a pharmacy benefit. Together, the 262 responding HMOs provide pharmacy benefits for over 36,403,470 commercial enrollees, or 60.4% of total HMO commercial enrollment.

Seventy-nine of the 174 HMOs offering Medicare answered the question about the percentage of Medicare members with pharmacy benefits. The 79 responding HMOs provide pharmaceutical coverage for 3.1 million HMO Medicare enrollees, or 53.3% of all HMO Medicare enrollment. Thirty-one of the 79 responding HMOs (39.2%) provide a pharmacy benefit for all of their Medicare enrollees.
In terms of prescription drug coverage for Medicaid HMO enrollees, 14 of the 84 responding HMOs (16.7%) do not provide prescription drug coverage for any of their Medicaid enrollees. Coverage of prescription drugs is determined by each state and not all states require managed care organizations to provide coverage for prescription drugs. Total Medicaid enrollment for the 14 plans with no pharmacy benefit for Medicaid members was 681,483 as of July 1, 2001, or 5.7% of all HMO Medicaid enrollment.
The 84 responding HMOs provide prescription drug benefits for 5.5 million Medicaid enrollees, or 46.5% of all HMO Medicaid enrollment.
Only nine of 233 responding HMOs indicated they do not have a formulary for commercial members (3.9%), while 24.6% of responding HMOs have no formulary for Medicare enrollees (28 of 114 plans) and 28.2% of HMOs have no formulary for Medicaid enrollees (35 of 124 plans).

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 12.1, was published in March. Part III, the Regional Market Analysis, examines market structure and dynamics of metropolitan markets served by HMOs. The Regional Market Analysis 12.1 will be published in May.

The complete InterStudy Competitive Edge series (Parts I, II and III) is available from InterStudy for $795 prepaid. The HMO Directory and HMO Industry Report are available for $285 each prepaid and the Regional Market Analysis is available for $315 prepaid. If you have any questions or would like to place an order, please call 1-800-844-3351, or visit our web site at www.interstudypublications.com.

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