HMO ENROLLMENT SHOWS DECREASE; REPORT RANKS PERFORMANCE, QUALITY

Premiums paid by Missouri residents enrolled in HMOs decreased by nearly 8 percent across the state in 1996, according to a report by the Missouri Department of Insurance.

And Southeast Missouri had one of the lowest percentages in the state for HMO enrollees, according to the report.

The report details the performance and enrollment of the 26 HMOs (health maintenance organizations) licensed to serve in the state in 1996.

By October 1997, 33 HMOs were licensed to operate in Missouri.

Roughly 40 percent of the 4.5 million Missourians with health insurance are enrolled in HMOs, said Randy McConnell, a spokesman for the Department of Insurance.

Membership in HMOs has more than doubled in the last five years.

In 1992, 572,048 Missourians were enrolled in HMOs. By the end of 1996, that total had climbed to 1.3 million, including 205,086 Medicaid members and 59,289 Medicare members.

Premium related revenues from Missouri HMOs totalled $1.7 billion in 1996 -- up from $686.3 million in 1992.

The 1996 total includes $229.9 million in Medicaid premium-related revenue, $215.2 million from Medicare and $1.28 billion in commercial revenues.

The HMOs licensed to operate in Missouri paid out $5.5 billion in total medical and hospital expenses nationally in 1996.

HMO expenditures in Missouri were not included in the report.

HMOs that did most of their business -- 60 percent or more -- in the state in 1996 paid out $1,727,410,762 in medical and hospital expenses in 1996 -- roughly the same amount they took in premiums on a statewide basis.

HMOS are "a tremendous value for consumers because they were paying out almost as much in medical costs as they were taking in in premiums," McConnell said.

Premiums for all other types of accident and health insurance totalled $2.7 billion in Missouri in 1996, McConnell said.

Across the state, the average commercial premium paid per member per month decreased by 7.9 percent from $118.96 in 1995 to $109.54 in 1996.

In that same period, commercial premiums increased by 8 percent from $1,199,157,964 to $1,295,167,104.

Enrollment in HMOs increased by 24.9 percent from 1995 to 1996, from 1,058,731 to 1,321,826.

United HealthCare of the Midwest, Inc., which is based in St. Louis, led Missouri's HMO market in 1996, with 452,578 enrollees, or 33.19 percent of the state's HMO enrollees.

Most of Missouri's HMO enrollees are in the St. Louis region. The outstate regions "only account for single-digit percentages of persons covered," McConnell said.

Eastern Missouri, which includes Ste. Genevieve County, accounted for 64.3 percent of the state's HMO enrollees in 1996.

Southeast Missouri, on the other hand, had only 1.6 percent of the total, or 20,362 enrollees.

But Northeast, South Central and Northwest Missouri combined had only 0.6 percent of the state's total enrollees -- or 8,484 people.

HMO Missouri, Inc., which does business as BlueChoice, led the market share of all HMOs operating in Southeast Missouri, with 14,891 members, or 73.1 percent of the HMO enrollees in the region.

All but 18 of BlueChoice's Southeast Missouri members were in point-of-service plans -- the HealthNet Blue product.

MedAmerica HealthNet, Inc., the provider network in partnership with HealthNet Blue filed for bankruptcy Dec. 31. Alliance Blue Cross Blue Shield, BlueChoice's parent company, is looking for new providers and other product options for HealthNet Blue enrollees.

The other 18 BlueChoice members were enrolled in true HMOs.

The majority of Southeast Missouri's HMO enrollees -- 19,326 -- were in point of service plans. POS plans differ from standard HMOs by providing members the option to see providers outside the designated provider network.

By contrast, 959 people in Southeast Missouri were enrolled in standard HMOs. There also were 76 Medicaid enrollees and 1 Medicare enrollee in the region.

In addition to BlueChoice, other HMOs operating in Southeast Missouri in 1996 were United HealthCare of the Midwest, Prudential Health Care Plan, Inc., Humana Health Plan, Inc., HealthCare USA of Missouri, L.L.C., Principal Health Care of Kansas City, Inc., Mercy Health Plans of Missouri, Inc., Principal Health Care of St. Louis, Inc., Medical Center Health Plan, d/b/a Partners HMO, Alliance for Community Health, Inc., and CIGNA HealthCare of St. Louis, Inc.

HMOs are a rapidly changing market in the insurance industry, McConnell said, and the report indicates not all of Missouri's HMOs are turning profits.

But that's to be expected for what is essentially a new segment of the market, he said.

"Many of them are essentially start-up companies; therefore, there's heavy investments that are made that aren't going to be recouped up front," he said. "It's like any business. GM didn't show a profit in the second quarter back '06."

Customer choice will drive HMO growth in the future, said Mary Cronin-Doyle, commercial product manager for Blue Cross Blue Shield of Missouri.

"I do not see the very traditional gatekeeper type of HMO membership increasing because of that choice issue, and also a lot of the legislative changes have kind of an anti-closed system aspect to them," Cronin-Doyle said. "They're trying to open up those choices."

In areas long served by traditional gatekeeper HMOs, such as California and the East Coast, the traditional model will stay in place, because providers and patients are accustomed to them, she said, "and they've found that it's a way to get a quality product at the very lowest price."

"There's always a tradeoff between quality and price," she added, pointing out that if patients have more choices, they will pay higher premiums.

"In the Midwest, we've never had that mature of a market," Cronin-Doyle said. She expects point-of-service HMOs to continue to grow, along with preferred provider organizations (PPOs), which like POS plans allow customers to go outside the network for medical care, but which don't require patients to get referrals to see specialists.

In order for an HMO to work, everyone has to agree on what service is being provided at what cost, she said.

"Those things in the dynamic tend to feed off each other. But it does begin with the insurers and the providers agreeing they want to deliver quality care at a lower price and agreeing to the discipline it requires," Cronin-Doyle said.

HMO members "adapt to the plan and stay with it," she said.

HMOs are still "trying to find a balance between effective competition and effective rates," McConnell said. "It's not a Missouri phenomenon."