Colorado HMOs See Competition Ease

By Staff Writer

November 15, 2002 at 07:00 PM

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NU Online News Service, Nov. 15, 11:13 a.m. – Colorado health maintenance organizations collected an average of $157.27 in premium revenue per commercial member per month in 2001, up 11% from the 2000 average, according to Allan Baumgarten, a Minneapolis managed care analyst.

Colorado HMOs were also able to cut the average ratio of medical claim losses to premium revenue to 88.8%. In the past, many HMOs reported medical loss ratios over 90%, Baumgarten says.

Baumgarten, who develops detailed market reports for states with large managed care industries, drew the Colorado information from data compiled for his Colorado Managed Care Review 2002.

Colorado HMOs are doing better in part because the level of competition is decreasing, Baumgarten says.

In the 1990s, for example, 10 HMOs competed for employer business in the Denver area, but now only six HMOs are still courting employers, Baumgarten says.

Although Colorado HMOs have more clout with employers, they are having trouble with hospitals.

HMOs once hoped to make their costs easier to predict by using "capitated" payment programs that would pay hospitals and some doctors a flat fee for each HMO member served, rather than a fee for each service provided.

But doctors and hospitals have complained that capitated payment programs make handling their own finances too complicated. In Colorado, use of capitated payments fell to 22% of payments in 2001, from 29% in 2000, Baumgarten says.

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