(LANSING, MI) - Commissioner of Financial and Insurance Services Frank M. Fitzgerald today released Michigan health maintenance organization (HMO) financial information for the first quarter of 2002. The majority of Michigan HMOs are reporting year-to-date profits and have improved financial performance over results from the first quarter 2001.

"For the 2002 first quarter, the HMO industry reported a year-to-date profit of $18.3 million compared to a year-to-date loss of $886,035 for the 2001 first quarter," said Fitzgerald. "Twenty-four of the twenty-eight HMOs licensed in Michigan are reporting year-to-date profit for the first quarter 2002 with eighteen HMOs improving profitability."

In 2002, one HMO surrendered its certificate of authority. Michigan now has a total of 28 licensed HMOs. Overall, HMOs capital and surplus increased in the first quarter 2002 by $7.1 million with twenty HMOs increasing their capital and surplus.

Sixteen out of the twenty-eight HMOs report writing commercial business. The HMO industry reported a profit on the commercial business of $12 million. Eleven of the sixteen HMOs reported a profit on the commercial business for a total net profit of $14.4 million. The five remaining HMOs reported a total net loss of $2.4 million.

Twenty-two of the twenty-eight HMOs report amounts for Medicaid business. For three of the HMOs, the financial results are actually the run-off of this business. These would include Health Alliance Plan, Physicians Health Plan of South Michigan, and Pro Care Health Plan. The HMO industry reported a net profit on the Medicaid business of $6.9 million. Eighteen HMOs are reporting a profit on the Medicaid business for a total net profit of $9.2 million. Four of the twenty-two HMOs reported a net loss on the Medicaid business totaling $2.3 million.

Seven out of the twenty-eight HMOs report writing MIChild coverage for a total loss of $21,782. Three of the seven HMOs are reporting small profits on this business for a total net profit of $47,369. The four remaining HMOs report a total net loss of $69,151.

Five out of the twenty-eight HMOs report amounts for Medicare coverage for a total net profit of $42,782. Three out of the five HMOs are reporting a total net loss of $619,190. The two remaining HMOs are reporting a total profit of $661,972. The HMOs with largest reported Medicare revenue were Health Alliance Plan ($37.6 million) and M-Care ($24.1 million).

The HMOs reported a year-to-date net loss of $1.3 million in the Fee-for-Service business and a net profit of $651,266 under "Other" business.
As of March 31, 2002, the HMO industry reported year-to-date net underwriting gains of $7.2 million for Medicaid, $5.5 million for Commercial, and $311,228 for Other. The industry reported year-to-date net underwriting losses of $18,747 for MIChild, $299,593 for Medicare and $1.3 million for Fee-for-Service.

The following is a breakdown of total revenue and medical expenses by line of business as reported in the first quarter 2002 Annual Revenue and Expense Report (in millions):

		Total Revenue			Medical Expenses
Commercial		$	1075.7		$	959.2
MIChild		$	.6		$	.5
Medicare		$	69.5		$	64.6
Medicaid		$	357.5		$	314.0
Fee-for-Service		$	(.7)		$	.3
Other		$	11.3		$	9.1
		$	1513.9		$	1357.7

(Immaterial differences are due to rounding.)


The HMOs reported prescription drug costs for each area of coverage as follows: Commercial - $178.0 million, MI-Child - $104,481, Medicare - $5.2 million, Medicaid - $57.6 million, Fee-for-Service - $88,171 and Other - $4.7 million.

As of March 31, 2002, member months were reported at 8,149,935 versus first quarter 2001 member months reported at 8,277,341, a decline of 1.5%.

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• Attachment - Financial spreadsheet information for Michigan's HMOs, 2002 1st quarter.
• 2000 through 2002 1st quarter Michigan HMO financial information is available at http://www.michigan.gov/cis/1,1607,7-154-10555_13222_13224-35889--,00.html.
• 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

The Michigan Office of Financial and Insurance Services (OFIS) is responsible for the regulation of Blue Cross Blue Shield, 28 HMOs, 144 banks, 285 credit unions, almost 1,500 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 online at the OFIS web site, www.michigan.gov/ofis, or at the Michigan government home page, www.michigan.gov. All information is also available through the OFIS toll free number, (877) 999-6442.

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