HMOs last year showed the biggest one-year drop in enrollment in at least a decade as they continued to shift from capitation to fee-for-service payments to physicians, according to a report released today by InterStudy Publications.
From July 1, 2001, to July 1, 2002, the latest measured date, HMO enrollment dropped by 4 million to 74.2 million, the St. Paul, Minn.-based company says.
That is a big chunk of the total of 6.9 million enrollees that HMOs have lost since their peak in 1999, InterStudy reports.
The company says HMO enrollment rose steadily from 1993 to Jan. 1, 1999, when it stood at an all-time high of 81.1 million.
While HMO enrollment has shrunk, PPO enrollment has been rising steadily. InterStudy says estimated PPO enrollment--a more difficult figure to pinpoint--stood at 192.5 million in December 2001, the latest measured date, well over twice that of the HMOs.
Nicki Novak, a resources specialist at InterStudy, attributed the decline in HMO enrollment to HMOs leaving geographic areas that were unprofitable. While Medicare HMOs in particular have been fleeing many areas, Novak says most of the drop came from commercial HMOs.
Turning to the shift in physician payment, Novak says 53.7% of HMOs say they pay capitation to at least some of the their primary care physicians, while 81.4% pay fee-for-service to at least some PCPs.
Measuring a somewhat different sample in July 1, 1999, InterStudy found that 65.7% of HMOs paid capitation to at least some of the their primary care physicians, while 53.7% paid fee-for-service to at least some primary care physicians, Novak reports.
"Physicians have been highly successful over the past several years in negotiating contracts based on fee-for-service payments rather than more stringent capitation contracts," says Tammy Lauer, an InterStudy research director, in the release.
Meanwhile, 91.3% of HMOs tell InterStudy they saw a decrease in pharmacy expenses from 2001 to 2002, with an average drop of $3.16 per member, per month.
Lauer attributes this trend to "an increase in HMO drug-cost shifting in the form of higher copayments and an increase in the use of three-tier drug formularies and coinsurance."