According to the most recent edition of The Competitive Edge HMO Industry Report released by InterStudy Publications, healthcare maintenance organizations (HMOs) lost almost four million enrollees between July 1, 2001 and July 1, 2002. Total HMO enrollment has now dropped to 74.2 million, an all time low. This drop is mainly due to plan closures, mergers, and acquisitions.

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 the 13.1 version of the Industry Report, there are special sections on pharmacy information and provider reimbursement.

Pharmacy Information

Of the 154 HMOs that provided pharmacy expense data for both 2001 and year-to-date 2002, 137 plans (91.3%) saw a decrease in per-member, per-month (PMPM) pharmacy expenses from 2001 to 2002. The average decrease for these 137 plans was $3.16 PMPM. The highest PMPM decrease was $15.97.

"Our latest pharmacy data shows that there has been 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," says Tammy Lauer, Research Director for InterStudy Publications. "These efforts help control pharmaceutical expenses for the health plans while placing more of the cost directly on consumers."

Provider Reimbursement

InterStudy data from July 2001 indicated that 62.1% of HMOs reimbursed hospitals in some portion through diagnosis related groups (DRGs), which was an increase from 55.3% reported in July 2000. Current data from July 2002 indicates the continuation of this trend with 86% of HMOs indicating that some portion of hospital services are reimbursed through DRGs.

"In terms of provider reimbursement, we're seeing a continuing trend toward fee-for-service reimbursement for primary and specialty care physicians and hospital services and away from capitation," says Lauer. "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 used by HMOs in the past."

About Competitive Edge

InterStudy publishes the InterStudy Competitive Edge series semi-annually. The HMO Directory is the first of this three-part series on HMOs. Part II, The HMO Industry Report, analyzes plan growth and characteristics associated with growth in HMOs. Part III, The Regional Market Analysis, examines market structure and dynamics of metropolitan markets served by HMOs.

About InterStudy Publications

InterStudy Publications, a division of Decision Resources, offers data, directories, and analyses of the ever-evolving managed care industry. InterStudy tracks changes and trends in HMO and PPO services, enrollment, and profitability. Visit InterStudy Publications at

About Decision Resources

Decision Resources, Inc., is a world leader in research publications, advisory services, and consulting designed to help clients shape strategy, allocate resources, and master their chosen markets. The company provides strategic information services, and assesses international pharmaceutical and health care industry trends. Visit Decision Resources at

All company brand or product names contained in this document may be trademarks or registered trademarks of their respective holders.

  For more information, contact:    Meg Schmidt    InterStudy Publications    1-800-844-3351     Elizabeth Marshall    Decision Resources    781-296-2563 

SOURCE: Decision Resources, Inc.

CONTACT: Meg Schmidt of InterStudy Publications, +1-800-844-3351,; or Elizabeth Marshall of Decision
Resources, +1-781-296-2563,

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