Local HMOs report year to date member growth

December 4, 2010
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Two health maintenance organizations based in Grand Rapids reported membership gains over the first three quarters of 2010, after seeing the number of people they serve shrink for several years, according to financial statements filed with the Michigan Office of Financial and Insurance Regulation.

Priority Health’s HMO, which comprises the majority of business for the health plan held primarily by Spectrum Health, has seen a nearly 12 percent gain in members since the start of the year, to 425,630. Much of that came in the first quarter, when more than 32,000 signed up for Medicare Advantage. Priority Health now has more Medicare Advantage members than competitor HMO Blue Care Network.

Group membership also is up by around 16,000 during 2010. CFO Greg Hawkins attributed the growth to Priority Health’s expanded footprint across most of the Lower Peninsula.

A year-to-date underwriting loss of $7.7 million, more than twice the loss that occurred in all of 2009, was offset by gains in investments during the third quarter. Net income through the third quarter was reported at $4.5 million, down from $9.4 million in 2009.

Hawkins said he was pleased that the HMO’s administrative spending was held in check even as membership grew. Priority Health’s HMO spends 92 percent of premiums on patient care, well within the rules that are going into effect under health care reform.

“We continue to work hard to keep premiums affordable, offering new benefit designs so employers can keep premiums affordable to their employees,” Hawkins said.

Grand Valley Health Plan has seen a small but steady membership increase during the first three quarters of 2010, to 7,783, or 2.9 percent. President and CEO Ron Palmer said that the HMO, which employs its own medical staff, for the first time is offering a plan that allows members to go to outside GVHP providers for care, albeit at extra expense.

The new GVHP offering that allows people to see doctors outside of its offices has been popular, Palmer said. It’s helped to attract people who like the GVHP approach but don’t want to give up access to specialists such as obstetrics and gynecology.

“Employers especially are becoming more concerned about the health status of their employees,” Palmer said. “People are getting more selective in terms of how they are looking at insurance.”

GVHP saw diminishing losses in underwriting compared to 2009, as well as lower administrative expenses. It reported year-to-date net income of $272,745.

At BCN, the HMO of Blue Cross Blue Shield of Michigan, membership has held relatively steady, gaining 2,726 over 2010’s first three quarters to 527,952. BCN saw underwriting gains through the third quarter that have already topped the gains for all of 2009, at $37 million. Net income was $58.3 million, a jump from $22.7 million in the same period last year.

CFO Sue Kluge said the slowdown in health care utilization has been kind to the HMO’s medical expenses.

“Our trends are down from 2009, primarily from fewer elective procedures,” Kluge said.

She said in 2009, workers were pushing to complete medical procedures because they expected to be laid off soon. That’s not happening in 2010, she said.

In addition, pharmacy costs jumped in 2009 with manufacturer price hikes.

“Pharmacy costs did not increase like they did last year,” she said. Pharmacy costs were down by more than $2 million.

“We started to experience some good news from the fourth quarter (of 2010),” Kluge said. “This year, it’s been a good year the whole year.”

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