Enrollment in Medicare-risk HMOs increased substantially in 1998, despite highly publicized pullouts by health plans from markets with low reimbursement rates, according to a report released last week by the A.M. Best Co. insurance rating service.
Enrollment in Medicare managed-care plans jumped 20% last year to more than 6 million enrollees and has more than doubled since 1993, the report said. However, Best said changes in federal reimbursement policies will make it difficult for Medicare HMOs to continue offering the enhanced benefits that have historically fueled much of their growth. As a result, the firm predicts that profit margins in the Medicare-risk segment will continue to shrink.
"Large, established Medicare-risk players will be able to maintain their market positions by changing their benefit structures," Best officials said. "Smaller plans or new entrants, however, may have difficulty competing."