Florida Blues will push PPO option over HMO plan

A few insurers are deciding that it's just not worth their time to sell HMOs anymore.

One of the latest is BlueCross BlueShield of Florida. While the Florida Blues is not getting out of the HMO business completely, it is refocusing its sales team to push other plans instead. In particular, the insurer says it will be pushing its Blue Options plan, which is a PPO with a health savings account component.

"Our goal is to put the right products on the market to serve our clients," said John Kaegi, BlueCross BlueShield of Florida vice president of marketing. "We're going to continue our HMO product for as long as the market wants it, [but] we are migrating members to our Blue Options product."

The Florida Blues is finding that HMOs are an insurance plan that businesses and their employees don't want to buy. Florida's HMO membership has decreased by 35% in the last four years. About 22% of Florida residents, the lowest percentage in 10 years, belong to an HMO, according to the Florida Hospital Assn.

Nationwide, HMO membership is steadily declining. According to HealthLeaders-InterStudy, a company in St. Paul, Minn., that tracks managed health care, HMO membership peaked in 1999 with about 81.1 million members. That number decreased to about 69.2 million members in 2005.

Driving the change is patients' desire for more choice in their health plan, something an HMO, with its requirement for primary care referrals and preauthorizations of certain procedures, doesn't have.

"Patients have less choice in an HMO," said Fred Whitson, who is the director of medical economics with the Florida Medical Assn. "Doctors are in favor of giving consumers more choice and certainly do not oppose the shift from HMOs to consumer choice products which include health savings accounts."

The AMA is among many physician organizations supporting health savings accounts as a way to give patients more choice and more control over their health care dollars.

While the Florida plan is still offering its HMO product to consumers who ask for it, other Blues plans have outright eliminated HMOs from their list of offerings.

One of these is Regence BlueCross BlueShield of Oregon.

Bart McMullan, MD, president of Regence, said its HMO membership peaked in 1997 with about 450,000 members, but subsequent years of steady decline caused the company to rethink its HMO plan.

Today, the company has only about 55,000 HMO members as part of its Medicare program. That's because Regence eliminated its HMO product in 2004 as a result of declining enrollment and an increased emphasis on its beefed-up PPO offerings.

"The initial success of the HMO model hit a plateau," Dr. McMullan said. "Looking toward the future, we didn't see where it was going to work. We're moving towards a more consumer choice model, and we believe that's the way of the future."

Spokesman Chris Hamrick of the BlueCross BlueShield Assn. said that overall, HMO membership has remained steady within the Blues plans, but various plans have decided whether to retain or drop their HMO offerings depending on demand for the product in a particular region.

Since 2002, Blues' PPO membership has grown from 43.3 million to 57.5 million in 2004. But HMO membership has decreased only slightly, from 16.6 million in 2002 to 16.5 million in 2004, Hamrick said.

There are pockets of the country where HMOs remain alive and well.

Stanley Borg, MD, chief medical officer with Health Care Services Corp.-owned BlueCross BlueShield of Illinois, said its HMO model remains alive and is functioning well. It has about 850,000 members and is holding steady, he said. In fact, according to HealthLeaders-InterStudy, HMO enrollment actually was up in 2005, to 69.2 million members from 68.8 million members in 2004.

"We don't see our HMO going away," Dr. Borg said. "It's a strong product and we have a high demand for it. Health care is about providing choice and options."

Accountability will be the real change as we move forward, not what products are available," he said.