(LANSING, MI) - Commissioner of Financial and Insurance Services Frank M. Fitzgerald today released third quarter financial statistics and trending analysis for Michigan's twenty-eight Health Maintenance Organizations (HMOs). The figures indicate that HMOs are showing a small profit for their Medicaid business in the third quarter, while posting losses on commercial business.

"The Michigan Office of Financial and Insurance Services (OFIS) continues to monitor HMO financial conditions on a daily basis," commented Fitzgerald. "While these trends show a year to date loss, on the whole the Michigan HMO industry is financially safe and sound."

As of September 30, 2001, the HMO industry, in total, reported a year to date loss of $28.2 million compared to a year to date profit of $44.4 million as of September 30, 2000. Thirteen out of twenty-eight* HMOs are reporting year to date net losses for the first nine months of 2001. Fifteen HMOs reported a decline in profitability in the first nine months of 2001 for a total of $89.7 million with Omnicare representing $46.1 million or 51% of the decline. Thirteen HMOs reported an increase in profitability for a total of $17 million.

Twenty-two of the twenty-eight HMOs report amounts for Medicaid business. For several of the HMOs, the financial results are actually the run-off of this business. These would include Blue Care Network, Family Health Plan, and PHP-South. In total, the HMOs reported a net income on the Medicaid HMOs of $3.4 million. Seven of the twenty-two HMOs reported a net loss on the Medicaid business totaling $23 million. However, Omnicare is 91 percent or $44.7 million of the total net losses reported by these entities - leaving the other fifteen HMOs to report a year to date profit of $26.4 million.

Eighteen out of the twenty-eight HMOs report writing commercial business. In total, the industry reported a net loss on the commercial business of $14.9 million. Thirteen of the eighteen HMOs report net losses on the commercial business for a total net loss of $55.2 million. The five profitable HMOs reported a total net income of $40.3 million.

Overall the HMOs' capital and surplus declined by $31.5 million in the first nine months of 2001. Eleven HMOs reported declining surplus of $95.2 million with Omnicare ($53.5 million), Blue Care Network ($19.5 million) and Physician Health Plan Mid-Michigan ($10 million) representing 87% of the decline. Seventeen HMOs reported an increase in surplus for a total of $63.7 million.

The per-member per-month (PMPM) revenue has increased as of September 2001 compared to September 2000. As of September 30, 2000, the PMPM revenue was $162.07 and as of September 30, 2001 it is $178.83, an increase of 10.34%. The PMPM medical expense has increased at a faster pace than revenue. As of September 30, 2000 PMPM medical was $143.97 and as of September 30, 2001 it is $163.52, an increase of 13.58%.

Eight out of the twenty-eight HMOs report writing MI Child coverage for a total net loss of $88,550. Five of the eight HMOs are reporting small profits on this business for a total net income of $211,719. The three remaining HMOs report a total net loss of $300,269 with Priority Health accounting for 66% of this total loss.

Seven out of the twenty-eight HMOs report writing Medicare coverage for a total net loss of $17.3 million. Six out of the seven HMOs are reporting net losses with Care Choices the only HMO reporting a small profit of $238,634 for Medicare business. However, this profit comes from the run-off of the business not from on-going operations. The three HMOs with the largest reported Medicare premium were HAP ($162 million), M-Care ($117 million) and BCN ($104 million) as of third quarter.

* Pro Care had an extension for filing their financial statement. Therefore, there are only 28 of the 29 Michigan licensed HMOs included in this analysis. Please note that Pro Care's financial information will be updated on the OFIS website within the week.

The information cited in this release was compiled from the FIS 317 financial statement as of September 30, 2001. These forms are filed with the Michigan Office of Financial and Insurance Services on a quarterly basis. OFIS will continue updating this information quarterly via similar releases and will continue to expand availability of information electronically.

Attachment: Excel spreadsheet (in Acrobat PDF format) of Michigan HMO financial statistics. Please note that this information has been updated to include ProCare.

In addition, OFIS is providing financial statistics and trending analysis for the 2000 reporting year. Please note that after the 2000 reporting year, Michigan started using the annual health statement as our reporting form. Information from 2001 forward will be the same and have the same format.

Attachment : Excel spreadsheet (in Acrobat PDF format)

Finally, annual and quarterly reports for Michigan HMO's are available at http://www.michigan.gov/cis/0,1607,7-154-10555_12902_18956---,00.html

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The Michigan Offices of Financial and Insurance Services (OFIS) is responsible for the regulation of Blue Cross Blue Shield, 29 HMOs, 145 banks, 175 domestic insurance companies, 291 credit unions, 1,300 foreign insurance companies, 1,583 investment advisers, 2,164 securities broker-dealers, 6,000 consumer finance lenders, 89,000 insurance agents, and 120,715 securities agents. OFIS is part of the Department of Consumer and Industry Services and is primarily fee-funded, requiring minimal public tax dollars for its regulatory and consumer assistance activities. OFIS has insurance, financial institutions and securities information available on the web at www.michigan.gov or on the OFIS home page at www.michigan.gov/ofis.

If you would like to receive OFIS press releases electronically, please e-mail ofis-info@michigan.gov.