The Minnesota. hmo Profile. The Minnesota HMO Profile: Analysis of Enrollment, Financial, and Quality Data. February h ealth e conomics p rogram

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1 The Minnesota hmo Profile The Minnesota HMO Profile: Analysis of Enrollment, Financial, and Quality Data February 2002 h ealth e conomics p rogram

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3 The Minnesota hmo Profile The Minnesota HMO Profile: Analysis of Enrollment, Financial, and Quality Data February 2002 h ealth e conomics p rogram Health Policy and Systems Compliance Division Health Economics Program PO Box St. Paul, Minnesota (651) i

4 ii The Minnesota HMO Profile

5 Table of Contents Table of Illustrations Executive Summary v vii Introduction 1 Minnesota Licensed HMOs 1 Overview of Minnesota s HMO Industry 3 Base of Operations and Geographic Areas Served 3 Ownership/Affiliation 3 Product Lines 3 Accreditation 4 Sources of Data for This Report 5 For More Information 5 HMO Enrollment 6 Enrollment Trends by Product 6 Market Shares by Plan 10 Geographic Distribution of Enrollment 11 HMO Financial Trends 14 Overall Financial Performance 14 Financial Performance by Product Line 15 Selected Trends in HMO Revenues and Expenses 17 Quality of Preventive Care 21 HEDIS Data Collection Methodologies 21 NCQA Measure Rotation 21 How to Read the Figures and Tables in This Section 21 Comparisons Across HMOs 22 Comparisons Over Time 22 iii

6 Comparisons Across Product Lines 22 Cervical Cancer Screening 23 Comprehensive Diabetes Care 24 Prenatal and PostpartumCare 26 Childhood Immunization Status 28 Well-Child Visits and Adolescent Well-Care Visits 32 Appendix 1 - HEDIS Measures Collected by Minnesota HMOs for Calendar Year Appendix 2 - HEDIS Measure Definitions 40 iv The Minnesota HMO Profile

7 Table of Illustrations Table 1 - HMOs Active in Various Minnesota Product Markets, Table 2 - Trends in Fully-Insured HMO Enrollment, By Product Line 6 Figure 1 - Distribution of Fully-Insured HMO Enrollment by Product Line, 1995 and Figure 2 - Private Market Trends: Fully-Insured and Self-Insured HMO Enrollment 8 Table 3 - Fully-Insured Enrollment by HMO and Product Line, 1999 and Figure 3 - Share of Fully-Insured Enrollment by HMO, 1995 and Figure 4 - Geographic Distribution of Fully-Insured HMO Enrollment, Figure 5 - Geographic Regions 11 Table Fully-Insured HMO Enrollment by Plan and Geographic Region 12 Figure 6 - Twin Cities and Greater Minnesota Trends in HMO Fully-Insured Enrollment: Table 5 - Summary of HMO Financial Trends (in millions) 14 Table Net Income by HMO 14 Figure 7 - Minnesota HMO Net Income by Product Line, (millions of dollars) 15 Table 7 - HMO Spending and Premiums per Member Month, by Product Line 16 Table 8 - HMO Industry Revenue and Expense Sources, Figure 8 - Prescription Drugs as a Percentage of Medical/Hospital Spending, Figure 9 - Share of Medical/Hospital Expenses Paid Through Capitation, Table 9 - HMO Administrative Expenses by Product Line 19 Figure 10 - Cervical Cancer Screening, v

8 Table 10 - Diabetes Care Measures, Figure 11 - Timeliness of Prenatal Care, Figure 12 - Postpartum Care, Figure13 - Child Immunization Rate, Combo 1, PMAP 28 Figure 14 - Child Immunization Rate, Combo 2, PMAP 29 Figure 15 - Child Immunization Rate, Combo 1, MinnesotaCare 30 Figure 16 - Child Immunization Rate, Combo 2, MinnesotaCare 31 Figure 17 - Six or More Well-Child Visits, Age 0-15 Months, PMAP 33 Figure 18 - Six or More Well-Child Visits, Age 0-15 Months, MinnesotaCare 34 Figure 19 - One or More Well-Child Visits, Ages 3-6 Years, PMAP 35 Figure 20 - One or More Well-Child Visits, Age 3-6 Years, MinnesotaCare 36 Figure 21 - Adolescents, Age Years, One Comprehensive Well-Care Visit, PMAP 37 Figure 22 - Adolescents, Age Years, One Comprehensive Well-Care Visit, MinnesotaCare 38 Appendix 1 39 vi The Minnesota HMO Profile

9 HMO Enrollment Trends: Executive Summary 39 percent of Minnesotans were enrolled in HMOs in HMOs provided fully-insured health insurance coverage for 25 percent of all Minnesotans in 2000, while HMO administered selfinsured group plans covered another 14 percent of the population. Fully-insured HMO enrollment continued to decline in 2000, as it has each year since Selfinsured enrollment administered through HMOs, which had been increasing for several years, declined 12 percent. Public programs account for an increasing share of HMO fully-insured enrollment. In 2000, public program enrollment (PMAP, PGAMC, MinnesotaCare, and Medicare) accounted for 35 percent of total HMO fully-insured enrollment, compared to 32 percent of the total in 1999 and 22 percent in In recent years, HMO enrollment in Greater Minnesota has been rising, in contrast to the trend in the Twin Cities metro area. In 2000, however, enrollment declined in Greater Minnesota as well as in the Twin Cities. Financial Trends: The Minnesota HMO industry earned about $71.7 million in net income in 2000, which was the highest net income for the industry since Net income for 2000 was equal to about 2.2 percent of the industry s total revenue. The state-administered public programs, PMAP, PGAMC, and MinnesotaCare, have, in recent years been the most profitable product lines for Minnesota s HMOs. From 1995 through 2000, Minnesota s HMOs earned a net income of $113 million from the public programs, which represents about 75 percent of the industry s total net income over that period. The HMOs commercial products recovered from a $20 million loss in 1999 to show a net income of approximately $27 million in HMO spending for administration, taxes and assessments accounts for 10.6% of total spending in 2000, a slightly higher share of the total than during the mid and late 1990s. Quality of Preventive Care: In general, commercial enrollees receive preventive care at higher rates than public program beneficiaries of Prepaid Medical Assistance Program (PMAP) and MinnesotaCare. Rates of delivery of preventive care for some measures, such as prenatal care, meet or exceed the MDH 2004 community health goals for some populations. However, improvement still needs to be made in increasing the rates at which Minnesotans receive preventive health care in accordance with recommended standards. vii

10 viii The Minnesota HMO Profile

11 The Minnesota HMO Profile Introduction Health maintenance organizations (HMOs) provided fully-insured health insurance coverage for approximately 25 percent of Minnesotans in 2000, including people with private health insurance and coverage through public insurance programs. Some of Minnesota s HMOs also provide administrative services (third-party administration) to self-insured health benefit plans. Approximately 14 percent of Minnesota s population in 2000 was covered through these self-insured/hmo-administered arrangements. Together, HMOs were directly or indirectly involved in providing health insurance coverage for 39 percent of all Minnesotans during This report provides an overview of trends in Minnesota s HMO industry. It examines trends in HMO enrollment, financial performance, and quality of care measures. The data presented in this document were compiled from reports that HMOs are required to file with state regulators, and all of the data is available to the public. Minnesota Licensed HMOs in 2000 Altru Health Plan Mayo Health Plan 3065 DeMers Avenue st Street NW Grand Forks, ND Rochester, MN (701) (507) Blue Plus Medica Health Plans 3535 Blue Cross Road 5601 Smetana Drive Eagan, MN Minneapolis, MN (651) (952) First Plan of Minnesota Metropolitan Health Plan (MHP) th Avenue 822 South Third Street, #140 Two Harbors, MN Minneapolis, MN (218) (612) Group Health Plan PreferredOne Community Health Plan th Avenue South 6105 Golden Hills Drive Minneapolis, MN Golden Valley, MN (952) (763) HealthPartners Sioux Valley Health Plan th Avenue South 1200 N. West Avenue Minneapolis, MN Sioux Falls, SD (952) (605) UCare Minnesota 2000 Summer Street NE Minneapolis, MN (612)

12 2 The Minnesota HMO Profile

13 Overview of Minnesota s HMO Industry In this report, the term HMO industry refers to the aggregated operations and activities of all of the health maintenance organizations listed above, regardless of the variety or type of coverage and services they offer. Minnesota s HMO industry is a complex mix of firms and product offerings with three large companies predominating, but not in every product line. Minnesota s HMOs are a diverse group, ranging from those that operate solely as health insurance carriers to others that directly provide medical care at owned or affiliated clinics and hospitals. Some operate statewide, while others serve a single county or region. Base of Operations and Geographic Areas Served Although most of the HMOs are headquartered within the state, two HMOs are based outside of Minnesota. Altru Health Plan conducts business from Grand Forks, North Dakota and Sioux Valley Health Plan s base of operations is Sioux Falls, South Dakota. Two HMOs operate from Greater Minnesota; First Plan of Minnesota, Minnesota s first HMO, is located in Two Harbors, and Mayo Health Plan is located in Rochester. Blue Plus, HealthPartners, Group Health Plan, Medica Health Plans, Metropolitan Health Plan (MHP) and UCare Minnesota have their headquarters in the Minneapolis/St. Paul area. Four HMOs (Altru, First Plan, Mayo, and Sioux Valley) exclusively serve residents of Greater Minnesota. Blue Plus, Group Health, HealthPartners, Medica, PreferredOne and UCare serve residents of both Greater Minnesota and the Twin Cities metropolitan area while MHP serves primarily Hennepin County. Ownership/Affiliation Several of Minnesota s HMOs are owned by or affiliated with larger parent corporations. First Plan is affiliated with Blue Cross Blue Shield of Minnesota, which also owns and operates Blue Plus. Group Health Plan and HealthPartners are separately licensed HMOs within HealthPartners Incorporated. During 2000, Medica was part of the Allina Health System, although these two organizations are currently in the process of separating. MHP is an operating unit of Hennepin County government. Mayo Health Plan is an operating unit of the Mayo Foundation, which also owns the Mayo Clinic. Altru Health Plan is affiliated with Nordian (formerly Blue Cross Blue Shield of North Dakota). Many of Minnesota s HMOs own or have linkages through parent corporations with hospitals and medical practices. Despite this base of affiliated providers, a common denominator among many of Minnesota s HMOs is that they share overlapping provider networks. Product Lines HMOs report data separately for different types of coverage that they sell. There are seven different product lines which are reported, including fully-insured commercial plans, Medicare Plus Choice plans, other Medicare coverage, Prepaid Medical Assistance Program (PMAP), Prepaid General Assistance Medical Care (PGAMC), MinnesotaCare (MNCare), and Minnesota Senior Health Options demonstration project (MSHO). Table 1 provides an illustration of which HMOs offered coverage in each product line during

14 Table 1 HMOs Active in Various Minnesota Product Markets, 2000 Medicare Other HMO Name Commercial Plus Choice Medicare PMAP PGAMC MNCare MSHO Altru X X X X Blue Plus X X X X X First Plan X X X X X Group Health X X X X X HealthPartners X X X X X Mayo X X Medica X X X X X X X MHP X X X X PreferredOne X Sioux Valley X X UCare X X X X X Two HMOs, MHP and UCare, primarily serve the publicly financed populations enrolled in the PMAP, PGAMC, MNCare, and MSHO programs. UCare also provides coverage to Medicare beneficiaries. MHP, as an operating unit of Hennepin County government, also provides coverage to Hennepin County employees under a unique self-insurance arrangement. In addition to offering fully-insured health coverage, Blue Plus, HealthPartners, and Medica provide thirdparty administration services to self-insured groups. Accreditation HMO accreditation is voluntary in Minnesota, and the state does not require plans to be accredited in order to participate in publicly-financed health care programs. Plans seeking accreditation apply to the National Committee for Quality Assurance (NCQA). NCQA s accreditation process evaluates not only the core systems and processes that constitute a health plan s operations, but also the results the plan has actually achieved on key dimensions of care and service. During 2000, five of Minnesota s HMOs were NCQA-accredited: HealthPartners, Group Health Plan1, Medica, Blue Plus, and Sioux Valley Health Plan. During the accreditation process, HMOs receive a status designation rating their performance in relation to NCQA standards. In its most recent accreditation, Blue Plus received an Excellent rating for its commercial and PMAP products; HealthPartners/Group Health received an Excellent rating for its commercial product and a Commendable rating for its Medicare product line; and Medica received an Excellent rating for its commercial product line and Commendable ratings for its Medicaid and Medicare products. 2 Sioux Valley is accredited under NCQA s separate standards for accreditation of new health plans. 1 HealthPartners and Group Health have received joint accreditation from NCQA with HealthPartners listed as the accredited entity. 2 An Excellent rating is NCQA s highest rating and is granted to plans that demonstrate levels of service and clinical quality that meet or exceed NCQA s requirements for consumer protection and quality improvement; plans earning this rating must also achieve HEDIS results that are in the highest range of national or regional performance. A Commendable rating is awarded to plans that demonstrate levels of service and clinical quality that meet or exceed NCQA s requirements for consumer protection and quality improvement. 4 The Minnesota HMO Profile

15 Sources of Data for this Report Data for this report were compiled from four components of the HMO annual filings with MDH. The first source is an Annual Statement filed in April using the National Association of Insurance Commissioners (NAIC) financial reporting standards for that year. Second, MDH also requires HMOs to file supplemental reports that allocate revenue, expense and net income to each of the seven product lines. The third data source for this report was HMOs product line enrollment reports filed in July of each year. Fourth, each HMO is required to submit data on quality of care to MDH through NCQA each July using the definitions and standards of the Health Plan Employer Data and Information Set (HEDIS). For More Information The Minnesota HMO Profile is published by the Health Economics Program within the Minnesota Department of Health. For questions related to this report, please call us at (651) This report summarizes only a portion of the data filed with the Minnesota Department of Health and Minnesota Department of Commerce by the HMOs. All data from the annual filings by Minnesota s HMOs are available to the public; for information about obtaining the data, please call the Minnesota Department of Health s Managed Care Systems section at (800)

16 Enrollment Trends by Product HMO Enrollment At the end of 2000, about 1.25 million Minnesotans were enrolled in a fully-insured HMO product. Table 2 presents fully-insured HMO enrollment by product line for 1995 through During 2000, total enrollment declined by 1.3 percent; commercial enrollment declined by 5.2 percent and enrollment in public programs increased by 7.1 percent. Total fully-insured enrollment declined in each of the past few years, following an 11.7% increase in During this period, commercial enrollment declined in most years and public program enrollment increased in each year except Table 2 Trends in Fully-Insured HMO Enrollment, By Product Line Enrollment in Fully-Insured HMO Products Commercial 959, , , , , ,263 Public Programs Medicare Plus Choice 57,889 55,885 55,377 55,152 47,246 46,633 Other Medicare 64,160 64,939 74,420 67,729 51,450 63,356 PMAP 138, , , , , ,593 PGAMC 12,506 17,383 13,092 12,882 12,021 12,004 MinnesotaCare 0 83,867 98, , , ,520 Public Programs, Total 272, , , , , ,106 Total 1,232,714 1,376,950 1,371,608 1,335,092 1,262,336 1,246, Percent Change From Previous Year Avg. Annual Change Commercial 3.9% -3.0% -4.4% -6.9% -5.2% -3.2% Public Programs Medicare Plus Choice -3.5% -0.9% -0.4% -14.3% -1.3% -4.2% Other Medicare 1.2% 14.6% -9.0% -24.0% 23.1% -0.3% PMAP 14.0% 3.5% 4.6% 6.0% 2.6% 6.1% PGAMC 39.0% -24.7% -1.6% -6.7% -0.1% -0.8% MinnesotaCare na 16.9% 5.8% 6.0% 11.4% n/a Public Programs, Total 39.2% 6.4% 1.5% -2.1% 7.1% 9.5% Total 11.7% -0.4% -2.7% -5.4% -1.3% 0.2% Enrollment figures in this table include enrollees who are not Minnesota residents. n/a=not applicable The recent decline in commercial fully-insured HMO enrollment is related to two main factors. First, some employers have shifted from HMOs to other types of health plans, such as preferred provider organizations (PPOs). In Minnesota s private fully-insured market as a whole, HMOs share of premium revenue declined from 58.7 percent in 1995 to 49.5 percent in Second, the percentage of Minnesotans with private coverage who are enrolled in self-funded health plans has grown. 4 In 1993, self-funded enrollment accounted for approximately 43 percent of Minnesota s private health insurance market; by 2000 this figure had risen to 57 percent. 5 3 Source: Minnesota Department of Commerce, MCHA premium database. 4 A self-funded health plan, as opposed to a fully-insured plan, is one in which an employer retains financial risk for medical claims rather than passing it on to an insurer. Many employers with self-funded plans contract with third-party administrators to run their plans. Federal law exempts self-funded plans from state regulation. 5 Minnesota Department of Health, Health Economics Program. 6 The Minnesota HMO Profile

17 The distribution of HMO enrollment by product line has shifted over time, as shown in Figure 1. Despite enrollment declines in recent years, commercial enrollment still accounts for the largest share of fullyinsured HMO enrollment (65 percent). The percentage of fully-insured enrollment in PMAP increased from 11 percent to 15 percent between 1995 and MinnesotaCare, which had no enrollment in HMOs in 1995, accounted for 10 percent of fully-insured HMO enrollment in Figure 1 Distribution of Fully-Insured HMO Enrollment by Product Line, 1995 and % 90% 80% PMAP 11% Other Medicare 5% Medicare+Choice 5% GAMC 1% MinnesotaCare 10% PMAP 15% GAMC 1% 70% Other Medicare 5% Medicare+Choice 4% 60% 50% 40% 30% Commercial 78% Commercial 65% 20% 10% 0%

18 As shown in Figure 2, commercial fully-insured HMO enrollment has declined each year since Selfinsured enrollment in HMOs, which had been increasing steadily in the mid to late 1990s, declined 12 percent between 1999 and While this decline may be partly a reflection of the shift in health insurance markets toward less tightly managed health plans, one of the main reasons for the decline in HMO self-insured enrollment in 2000 was likely the shift of the Buyers Health Care Action Group (BHCAG) to a non-hmo administrator. The reduction due to BHCAG s shift was partially offset by an increase in selffunded HMO enrollment associated with the State Employee Group Insurance Plan s (SEGIP s) shift to self-funded status in Figure 2 Private Market Trends: Fully-Insured and Self-Insured HMO Enrollment 1,200,000 1,000,000 Number of Members 800, , , , Fully-Insured Self-Insured Enrollment Trends by Plan Table 3 provides a detailed description of enrollment by HMO for each product line in 1999 and While total fully-insured HMO enrollment declined by about 1.3 percent, the change in enrollment varied by health plan. Group Health experienced the largest percentage decrease in enrollment (40.5 percent), nearly all of which occurred in its commercial enrollment. 8 The Minnesota HMO Profile

19 Table 3 Fully-Insured Enrollment by HMO and Product Line, 1999 and 2000 Commercial Medicare + Choice Other Medicare* PMAP PGAMC MinnesotaCare TOTAL % Change Altru 1,334 1, ,236 2, % Blue Plus 89,950 75, ,104 5,357 29,087 32,062 1,592 1,819 55,053 64, , , % First Plan 5,057 5, ,535 1,533 1,837 2, ,179 1,409 9,927 10, % Group Health 77,641 39,177 17,225 16, ,508 57, % HealthPartners 355, , ,571 21,555 22,563 23,790 1,699 1,799 10,567 12, , , % Mayo 7,395 6, ,868 6, % Medica 322, ,139 19,960 11,362 20,600 33,015 71,004 68,931 4,133 3,695 20,334 17, , , % Metropolitan Health Plan ,170 16,447 1,839 1,926 1,625 1,908 20,020 20, % PreferredOne 0 25, ,159 n/a Sioux Valley 1,710 2, ,710 2, % UCare ,061 18, ,094 38,686 40,446 2,318 2,339 20,349 24,092 72,195 86, % Total 860, ,263 47,246 46,633 51,450 63, , ,593 12,021 12, , ,520 1,262,336 1,246, % % Change from % -1.3% 23.1% 2.6% -0.1% 11.4% Enrollment figures in this table include non-minnesota residents. n/a=not applicable * Includes MSHO 9

20 PreferredOne offered an HMO product for the first time in 2000; its enrollment of about 25,000 was equal to about 2 percent of total fully-insured HMO enrollment. Sioux Valley and UCare, which also have relatively small shares of the total market, experienced increases in enrollment of 30 percent and 20 percent, respectively, in Market Shares by Plan As shown in Figure 3, the HMO market in Minnesota continues to be dominated by 3 large companies: Medica, HealthPartners/Group Health, and Blue Plus, which together have 87 percent of fully-insured HMO enrollment in the state. (Group Health Plan and HealthPartners are separately licensed HMOs within HealthPartners Incorporated.) Although the market remains consolidated, the percentage of enrollment held by these three companies has declined from previous years; in 1995, they held 92% of the market. Figure 3 Share of Fully-Insured Enrollment by HMO, 1995 and % 90% 80% 70% 60% 50% UCare 3% Blue Plus 6% HealthPartners Group Health 38% All Others 5% UCare 7% Blue Plus 14% HealthPartners Group Health 37% All Others 6% 40% 30% Medica 48% 20% Medica 36% 10% 0% Blue Plus and UCare more than doubled their market share between 1995 and This partially reflects overall market changes, with Blue Plus and UCare experiencing large increases in public program enrollment. About 80 percent of the total growth in public program enrollment from 1995 to 2000 occurred at Blue Plus and UCare. For Blue Plus, the increase in market share can also be attributed to rising commercial enrollment, despite declines in total commercial HMO enrollment in Minnesota. 10 The Minnesota HMO Profile

21 Geographic Distribution of Enrollment Figure 4 shows the distribution of HMO enrollment by geographic region. Fully-insured HMO enrollment is concentrated in the Twin Cities metro area, 6 which accounts for nearly three-fourths (72 percent) of statewide enrollment. Figure 5 provides an illustration of how the geographic regions of Minnesota are defined for this report. Figure 4 Geographic Distribution of Fully-Insured HMO Enrollment, 2000 West Central 2% Central 10% Northeast 5% Northwest 2% Southeast 6% Southwest 3% Twin Cities 72% Figure 5 Geographic Regions 6 The Twin Cities metro area includes the seven counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington. 11

22 Table 4 provides a breakdown of fully-insured enrollment by region and plan. Fully-insured enrollment as a percentage of the population is highest in the Twin Cities metro area, at 33 percent. In other regions of the state, fully-insured HMO enrollment ranges from 11 percent to 21 percent of the population. Overall, 25 percent of Minnesotans are enrolled in fully-insured HMOs. Table Fully-Insured HMO Enrollment by Plan and Geographic Region Carrier Central Northeast Northwest Southeast Southwest Twin Cities West Central Total in MN Altru 0 0 1, ,128 Blue Plus 28,183 22,711 12,662 30,381 25,866 44,461 13, ,837 First Plan , ,375 Group Health 13, , ,457 HealthPartners 26,390 1, ,182 2, ,135 1, ,236 Mayo , ,530 Medica 46,965 26,464 3,202 7,440 5, ,040 10, ,340 MHP , ,645 PreferredOne 4, , , ,451 Sioux Valley , ,051 Ucare 6,249 2, ,296 4,125 65, ,583 Total 126,456 63,638 18,510 75,825 39, ,237 26,063 1,219,633 % Population Enrolled 21% 20% 11% 11% 14% 33% 12% 25% Enrollment figures in this table include Minnesota residents only. 12 The Minnesota HMO Profile

23 In recent years, fully-insured HMO enrollment has been rising in Greater Minnesota and declining in the Twin Cities. Between 1999 and 2000, however, both regions experienced declines (0.5 percent in the Twin Cities and 2.6 percent in Greater Minnesota). Trends in fully-insured HMO enrollment in the Twin Cities and Greater Minnesota from 1995 to 2000 are shown in Figure 6. Figure 6 Twin Cities and Greater Minnesota Trends in HMO Fully-Insured Enrollment ,600,000 Number of Members 1,400,000 1,200,000 1,000, , , , ,000 TOTAL Twin Cities (7 County) Greater MN

24 Overall Financial Performance HMO Financial Trends Financially, the Minnesota HMO industry showed a positive net income in As shown in Table 5, the industry earned nearly $72 million in net income, which is the largest net income since 1995 and more than triple the 1999 figure. Also, the industry s net income as a percent of revenue, which was 2.2 percent, was the highest since However, financial performance of individual HMOs varied. Table 6 shows that net income as a share of revenue ranged from a 15.6 percent loss at Mayo Health Plan to a 6.3 percent gain for Blue Plus. Table 5 Summary of HMO Financial Trends (in millions)* HMO Industry Revenue $2,268.7 $2,474.7 $2,638.5 $2,878.6 $3,019.8 $3,323.6 Expenses $2,206.0 $2,465.8 $2,644.3 $2,886.4 $2,998.0 $3,251.8 Net Income $62.6 $8.8 -$5.9 -$7.8 $21.8 $71.7 Net Income as a % of Revenue 2.8% 0.4% -0.2% -0.3% 0.7% 2.2% *Minnesota products only. Table Net Income by HMO* Net Income as a % of Net Income Revenue Altru $254, % Blue Plus $25,387, % First Plan $1,180, % Group Health $3,834, % HealthPartners $4,712, % Mayo ($2,522,260) -15.6% Medica $27,483, % Metropolitan $4,048, % PreferredOne $1,936, % Sioux Valley ($280,966) -7.4% UCare $5,714, % Industry Total $71,746, % *Income for Minnesota products only. 14 The Minnesota HMO Profile

25 Financial Performance by Product Line Some product lines for Minnesota s HMOs are more profitable than others, as is shown in Figure 7. Plans continued to show losses in Medicare Plus Choice in 2000, while the commercial product line recovered from losing money in 1999 to show a net income of about $27 million in However, over the past several years, the most profitable product lines have consistently been the state-administered public programs, PMAP, PGAMC, and MNCare, which produced a combined net income of $34 million in 2000 for the Minnesota HMOs. Figure 7 Minnesota HMO Net Income by Product Line, (millions of dollars) $80 $70 $60 $50 $62.6 $71.7 $40 $30 $20 $10 $0 -$10 -$20 -$30 $34.0 $30.1 $26.9 $26.8 $22.4 $20.4 $19.7 $15.4 $11.4 $3.7 $2.2 $3.0 -$6.6 -$17.3 -$19.8 $6.8 $4.0 $3.9 $0.6 $21.8 $8.8 -$3.5 -$5.6 -$5.9 -$7.4 -$8.1 -$7.8 -$13.1 Commercial PMAP, PGAMC, MNCare Medicare Plus Choice Other Medicare Total* * Total includes dental products not shown separately. 15

26 Premiums and spending per member month vary by product line, as shown in Table 7. The Medicare products are the most expensive for the HMOs because of their higher-risk populations. The Medicare programs also have the highest premium revenue; however, in recent years the premiums have not been high enough to cover costs. Commercial premiums per member month grew faster than spending in 2000, while the premium revenue per member month for the state-run public programs grew slightly less than the spending per member per month. Overall, growth in premiums and spending per member accelerated between 1998 and 2000 compared to the mid 1990s. Table 7 HMO Spending and Premiums per Member Month, by Product Line Total Spending per Member Month Commercial $130 $135 $137 $154 $169 $185 PMAP, PGAMC, MNCare $182 $177 $161 $176 $193 $223 Medicare Plus Choice $395 $445 $484 $501 $540 $595 Other Medicare & MSHO* $215 $217 $226 $260 $260 $305 Total $154 $159 $161 $178 $194 $220 Change in Spending per Member Month Commercial 3.6% 1.3% 12.8% 10.1% 9.1% PMAP, PGAMC, MNCare -2.6% -9.2% 9.7% 9.3% 15.5% Medicare Plus Choice 12.6% 8.9% 3.5% 7.8% 10.2% Other Medicare & MSHO* 1.2% 4.0% 15.2% 0.0% 17.3% Total 3.5% 0.9% 11.0% 8.8% 13.3% Premium Revenue per Member Month Commercial $118 $119 $124 $136 $151 $166 PMAP, PGAMC, MNCare $195 $182 $160 $175 $199 $228 Medicare Plus Choice $403 $445 $472 $486 $519 $563 Other Medicare & MSHO* $214 $218 $222 $206 $238 $279 Total $147 $148 $151 $162 $181 $203 Change in Premium Revenue per Member Month Commercial 0.7% 4.1% 9.7% 11.2% 10.1% PMAP, PGAMC, MNCare -6.5% -12.0% 9.1% 13.7% 14.8% Medicare Plus Choice 10.4% 6.1% 2.9% 6.8% 8.4% Other Medicare & MSHO* 1.6% 2.0% -7.2% 15.5% 17.0% Total 0.9% 1.8% 7.4% 11.7% 12.2% *MSHO represented about 6% of enrollment and 15% of spending in the combines "Other Medicare & MSHO" category in The Minnesota HMO Profile

27 Selected Trends in HMO Revenues and Expenses Premiums are a decreasing portion of total revenue for the HMOs, as shown in Table 8, but they are still by far the largest source, accounting for 90 percent of revenue. Fee-for-service revenue, which includes revenues of physician clinics and/or hospitals owned by an HMO, has increased as a share of total revenue, primarily due to HMOs acquisitions of providers. HMOs are also receiving a smaller share of revenue from investments compared with past years. Table 8 HMO Industry Revenue and Expense Sources, (millions of dollars) Total Revenue, by Source Premiums $ 2,104.2 $ 2,292.8 $ 2,482.8 $ 2,622.2 $ 2,797.7 $ 3,005.2 Fee-for-Service $ 46.7 $ 50.2 $ 56.3 $ $ $ Investments $ 55.6 $ 57.9 $ 48.5 $ 52.7 $ 39.6 $ 44.6 Other Revenue $ 62.2 $ 73.7 $ 50.8 $ 85.5 $ 48.5 $ Total Revenue $ 2,268.7 $ 2,474.7 $ 2,638.5 $ 2,878.6 $ 3,019.8 $ 3,323.6 Percent of Total Revenue, by Source Premiums 92.8% 92.7% 94.1% 91.1% 92.6% 90.4% Fee-for-Service 2.1% 2.0% 2.1% 4.1% 4.4% 4.9% Investments 2.5% 2.3% 1.8% 1.8% 1.3% 1.3% Other Revenue 2.7% 3.0% 1.9% 3.0% 1.6% 3.3% Total Expenses, by Source Medical and Hospital $ 1,984.9 $ 2,210.2 $ 2,391.4 $ 2,600.0 $ 2,681.1 $ 2,907.1 Administration, Taxes & Assessments $ $ $ $ $ $ Total Expenses $ 2,206.0 $ 2,465.8 $ 2,644.3 $ 2,886.4 $ 2,998.0 $ 3,251.8 Percent of Total Expenses, by Source Medical and Hospital 90.0% 89.6% 90.4% 90.1% 89.4% 89.4% Administration, Taxes & Assessments 10.0% 10.4% 9.6% 9.9% 10.6% 10.6% 17

28 Although the HMOs are not required to report spending for prescription drugs, many provide this data voluntarily, and this is shown in Figure 8. The amounts spent on prescription drugs range from 10 to 20 percent of medical and hospital spending for the HMOs that provide the data. Figure 8 Prescription Drugs as a Percentage of Medical/Hospital Spending, 2000 Altru 10.1% Ucare 11.4% PreferredOne 13.1% First Plan 13.9% Medica 14.4% Mayo 14.4% Sioux Valley 17.7% Blue Plus 19.7% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 22.0% 18 The Minnesota HMO Profile

29 Capitation is a form of provider payment where a monthly amount is paid to a provider group on behalf of each member. The provider group then assumes the risk for the cost of delivering care to the patient. Capitation accounted for 33.0 percent of the HMO industry s medical and hospital spending in 2000, down slightly from 34.5 percent in The capitation expenses for Minnesota HMOs ranged from 0 percent for Preferred One and Sioux Valley to 100 percent for HealthPartners, as shown in Figure 9. Figure 9 Share of Medical/Hospital Expenses Paid Through Capitation, % 90% 13% 80% 70% 60% 50% 40% 100% 100% 99% 96% 94% 93% 91% 90% 86% 87% 100% 67% 30% 20% 10% 0% PreferredOne Sioux Valley 1% First Plan Mayo 4% 6% 7% 9% 10% Medica Group Health Blue Plus Metropolitan UCare 14% Altru HealthPartners 33% HMO Industry Capitation Other HMO spending for administration, taxes and assessments accounted for 10.6 percent of total spending in 2000, as shown in Table 9. Administrative costs for commercial product lines have slowly been creeping up between 1995 and 2000, rising from 9.4 percent in 1995 to 11.5 percent in The public programs, PMAP, GAMC and MNCare, as well as Medicare Plus Choice and other Medicare, saw a slight decrease in administrative costs as a share of total spending for the same period. Table 9 HMO Administrative Expenses by Product Line Administration,Taxes & Assessments As % of Spending Commercial* 9.4% 9.6% 9.0% 9.7% 11.3% 11.5% PMAP, PGAMC, MNCare 10.7% 11.5% 10.4% 10.1% 9.8% 9.5% Medicare Plus Choice 8.7% 9.7% 8.0% 8.6% 7.3% 7.7% Other Medicare & MSHO 16.6% 16.1% 15.7% 13.7% 11.8% 12.0% Industry Total 10.0% 10.4% 9.6% 9.9% 10.6% 10.6% * 1995 through 1999 commercial administrative expenses have been corrected from previous versions of this report. 19

30 20 The Minnesota HMO Profile

31 Quality of Preventive Care Minnesota HMOs are required to collect data and report on standard clinical performance measures developed by the National Committee for Quality Assurance (NCQA). This report publishes some of the 1999 and 2000 NCQA measures data collected for Minnesota HMO enrollees in fully-insured commercial plans and in two public programs, PMAP and MinnesotaCare. Other public programs are not reported due to the limited amount of data available where sample sizes are very small. This report includes data for cervical cancer screening, comprehensive diabetes care, prenatal care in the first trimester of pregnancy, postpartum care, childhood immunizations, and well-child visits. Where possible, this report includes a comparison of rates of delivery of preventive services between 1999 and 2000; however, definitions and data collection methods for some measures changed in 2000, making the 2000 data not comparable to earlier years. A complete list of the HEDIS measures collected for Minnesota HMOs for 2000 is included in Appendix 1. Appendix 2 provides more information on how each measure that is included in this report is defined. HEDIS Data Collection Methodologies Measures presented in this report follow data definition and data collection standards specified for HEDIS (Health Plan Employer Data and Information Set) by NCQA. Standard NCQA methodologies for some of the HEDIS measures have changed over time. The changes are made to improve the usefulness of the measures and may result from gaining practical experience with the measure, or from changes in medical or community health practices that allow the measure to be improved or updated. In preparing HEDIS reports, HMOs choose from two general methods of data collection: one is from administrative records (encounter claims, lab results, etc.), and the other is from medical records (including audits of patient charts). Measures based on administrative records usually reflect the status of every eligible member. Measures from medical records reflect an estimate of the occurrence of a service based upon review of a sample of eligible members medical charts. For each HEDIS measure included in this report, HMOs have the option of using either of these data collection methods or a hybrid combination of the two. NCQA Measure Rotation Starting in 1999, NCQA implemented a measure rotation schedule to help reduce the reporting burden for the HMOs and to address high priority areas for measure development. For collection of 2000 data, the HMO commercial product measures for childhood immunization status, well-child visits 0-15 months, well-child visits 3-6 years, and adolescent well-care visits were on rotation, so data are not reported for these measures in commercial products for calendar year How to Read the Figures and Tables in This Section In the following figures, which include 1999 and 2000 rates related to preventive care, the MDH 2004 community health goals, where appropriate for comparison, are shown as a solid bold line with large dots. 21

32 The bars in each figure represent the HMO-measured rate at which a service was provided for the particular year (1999 or 2000) and program (PMAP, MinnesotaCare, or commercial). Confidence intervals, or error bars, are shown as a capped line through the top of the bar for each rate estimate. Data are not reported in the charts when the sample size is less than 30. Below each bar in the figures, the data collection method used by the HMO is indicated by an A for administrative or an H for hybrid method. Comparisons Across HMOs Even if different HMOs use the same data collection method (administrative or hybrid) for similar member populations, differences across HMOs in covered benefits, provider networks, out-of-pocket payments, and in reporting practices make it difficult to make valid comparisons between HMOs. Demographic and geographic differences in the populations served also make it difficult to compare HEDIS results across HMOs. In some cases, particularly for public programs, the measured rates for a particular service may be lower than the true rates because some enrollees receive services through public health efforts or community clinics rather than from the HMO. The HEDIS measures in this report all are based on a specific period of continuous enrollment (usually 12 months) in the HMO in order for data for a particular member to be included. This NCQA criterion limits inclusion of data for some PMAP and MinnesotaCare members, since enrollment discontinuities are more common in these programs. However, PMAP and MinnesotaCare benefit sets are standard across HMOs and the populations enrolled in each HMO are comparable with regard to age and gender mix. Comparisons Over Time Because NCQA data collection guidelines allow HMOs to choose between two different methods of collecting data for most measures, comparisons over time within a plan are invalid if the plan has changed measurement methods. Evaluation of the change over time in an HMO s performance can only be done when an HMO uses the same measurement method across years within a particular product line. Comparisons Across Product Lines Comparing among programs (for example, commercial versus PMAP) is not advised. Because of differences in benefit sets, out-of-pocket payments, and demographics of enrolled populations, it is impossible to reliably make direct comparisons of plan-specific rates. What is important, however, is the comparison to 2004 MDH community health goals and the progress each HMO has made toward rates of preventive care. It is appropriate to observe whether an HMO s programs are meeting (or making progress toward meeting) the community health goals, and to note how well the HMO performed in preventive rates across all the populations it serves. 22 The Minnesota HMO Profile

33 Cervical Cancer Screening Cervical Cancer Screening - Cervical cancer is detectable in its early stages through regular screening with a Pap smear test. Death rates from cervical cancer have dropped dramatically since the 1950s as Pap smear use has increased. Many of the 44 cervical cancer deaths occurring on average in Minnesota each year could be prevented through this early detection method with follow-up treatment. Results of data collection for 2000 shown in Fig. 10 are that all plans have at least a 55 percent rate of screening for cervical cancer, with most plans achieving screening rates of 70 percent or better. Figure 10 Cervical Cancer Screening, 2000 Percent Women (21-64 yrs) Receiving Pap Smear 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Altru Blue Plus First Plan Group Health Health Partners Mayo Medica MHP Preferred One H/H/H H/H/H H/H/H H/H/A H/H/A A H/H/A H/H A H/H Method (A=Admin,H=Hybrid) UCare PMAP MNCare Commercial 23

34 Comprehensive Diabetes Care Comprehensive Diabetes Care - Diabetes is a major cause of blindness, renal (kidney) failure, lower-extremity amputation and congenital malformation, and also plays a significant role in the progression of heart disease. It was the sixth leading cause of death in Minnesota and the United States in Progression of the disease can be slowed with careful monitoring and active medical management. Six separate measures were implemented for Diabetes Care in 2000 data collection, compared to the one measure (for eye exams) used in These measures are represented in Table 10. The MinnesotaCare and commercial HMO populations have had generally higher rates of diabetes care than the PMAP populations. There are no MDH 2004 Healthy Minnesotans goals that correspond to the six diabetes measures; however, the American Diabetes Association s national goal is for 70% of persons diagnosed with diabetes (both Types I and II) to receive an annual retinal eye examination. For Hemoglobin A1c (HBA1c) testing, the service rates are above 70 percent in all plans and programs. For Poor Hemoglobin A1c (HBA1c) Control, a smaller percentage indicates a better result. For eye exams, and diabetic nephropathy, many of the plans have comparable or higher rates of service among their PMAP populations. For LDL-C screening, the rates for PMAP populations are all between about 45 and 55 percent, rates for MinnesotaCare populations are between about 70 and 80 percent, and rates for the commercial HMO populations are slightly more variable, ranging between about 65 and 85 percent. For LDL-C Controlled, the PMAP rates are between about 20 and 35 percent, the MinnesotaCare rates are between about 30 and 50 percent, and the commercial rates vary from about 36 percent to a high of 58 percent. 24 The Minnesota HMO Profile

35 Table 10 Diabetes Care Measures, 2000 PMAP MNCare Commercial Margin of Margin of Margin of Rate Error Rate Error Rate Error HBA1C Tested Statewide Average: 71% 87% 85% Altru 94% +/- 8% Blue Plus 76% +/- 4% 86% +/- 3% 86% +/- 3% First Plan 84% +/- 12% 92% +/- 9% 85% +/- 7% Group Health 93% +/- 2% HealthPartners 85% +/- 4% 92% +/- 4% 90% +/- 3% Medica 59% +/- 5% 82% +/- 4% 80% +/- 4% MHP 74% +/- 6% 91% +/- 7% PreferredOne 87% +/- 4% Sioux Valley 91% +/- 10% UCare 79% +/- 4% 90% +/- 3% Poor HBA1C Control Statewide Average: 43% 37% 31% (lower rate indicates better performance) Altru 9% +/- 10% Blue Plus 46% +/- 5% 37% +/- 5% 39% +/- 5% First Plan 50% +/- 16% 41% +/- 16% 27% +/- 9% Group Health 15% +/- 3% HealthPartners 22% +/- 4% 22% +/- 6% 22% +/- 4% Medica 48% +/- 5% 58% +/- 6% 41% +/- 5% MHP 50% +/- 7% 34% +/- 12% PreferredOne 20% +/- 5% Sioux Valley 19% +/- 14% UCare 41% +/- 5% 39% +/- 5% LDL-C Screening Statewide Average: 50% 72% 79% Altru 82% +/- 13% Blue Plus 45% +/- 5% 72% +/- 4% 77% +/- 4% First Plan 53% +/- 16% 78% +/- 13% 76% +/- 8% Group Health 86% +/- 3% HealthPartners 49% +/- 5% 71% +/- 6% 83% +/- 4% Medica 51% +/- 5% 70% +/- 5% 76% +/- 4% MHP 51% +/- 7% 72% +/- 12% PreferredOne 67% +/- 6% Sioux Valley 66% +/- 16% UCare 55% +/- 5% 76% +/- 4% LDL-C Controlled Statewide Average: 29% 32% 46% Altru 58% +/- 17% Blue Plus 22% +/- 4% 33% +/- 5% 36% +/- 5% First Plan 29% +/- 14% 30% +/- 15% 41% +/- 10% Group Health 58% +/- 5% HealthPartners 32% +/- 5% 36% +/- 6% 52% +/- 5% Medica 28% +/- 4% 34% +/- 6% 42% +/- 5% MHP 32% +/- 6% 31% +/- 12% PreferredOne 44% +/- 6% Sioux Valley 44% +/- 17% UCare 35% +/- 5% 48% +/- 5% Eye Exam Statewide Average: 58% 60% 59% Altru 61% +/- 17% Blue Plus 53% +/- 5% 63% +/- 5% 59% +/- 5% First Plan 71% +/- 14% 84% +/- 12% 85% +/- 7% Group Health 73% +/- 4% HealthPartners 64% +/- 5% 59% +/- 7% 66% +/- 5% Medica 61% +/- 5% 57% +/- 6% 51% +/- 5% MHP 62% +/- 6% 50% +/- 13% PreferredOne 60% +/- 6% Sioux Valley 38% +/- 17% UCare 50% +/- 5% 54% +/- 5% Nephropathy (no average because methods differ) Altru 79% +/- 14% Blue Plus 45% +/- 5% 54% +/- 5% 57% +/- 5% First Plan 76% +/- 14% 76% +/- 14% 78% +/- 8% Group Health 56% +/- 3% HealthPartners 40% +/- 5% 55% +/- 6% 52% +/- 1% Medica 44% +/- 5% 48% +/- 6% 50% +/- 5% MHP 64% +/- 6% 74% +/- 11% PreferredOne 46% +/- 6% Sioux Valley 38% +/- 17% UCare 37% +/- 5% 40% +/- 5% All data collected using hybrid method, except all Nephropathy data from Group Health and HealthPartners are collected using administrative method. 25

36 Prenatal Care and Postpartum Care Prenatal Care in the First Trimester and Postpartum Care - Improved birth and postpartum outcomes influence many aspects of children s health and development. First trimester entry into prenatal care for an initial risk screening and assessment, and the initiation of health education, social services, and other appropriate referrals, are critical to preventing many problems in the developing fetus and young infant. In 2000, most plans achieved a 75 percent (or higher) rate of prenatal care in the first trimester (see Figure 11). For most plans, commercial rates were the highest, while PMAP and MNCare rates were slightly lower. Figure 11 Timeliness of Prenatal Care, % Altru Blue PlusFirst Plan Group Health Health Partners Mayo Medica MHP Preferred One Sioux Valley UCare 90% Percent Women Receiving Care 80% 70% 60% 50% 40% 30% 20% 10% 0% H H/H/H A/ /A H H/H/H A H/H/H H H H A/A Method (A=Admin, H=Hybrid) PMAP MNCare Commercial 26 The Minnesota HMO Profile

37 In 2000 postpartum care measures, shown in Figure 12, there is fairly large variation in the measures for different plan and program populations. Some plans have lower than 50 percent rates of postpartum care for their PMAP populations. Among the four plans which report rates of postpartum care for the MinnesotaCare program, the 2000 rates vary from 50 to 75 percent. Commercial HMO populations generally receive the highest levels of postpartum care, with rates between 70 and 85 percent. Figure 12 Postpartum Care, % Altru Blue Plus First Plan Group Health Health Partners Mayo Medica MHP Preferred One Sioux Valley UCare 90% Percent Women Receiving Care 80% 70% 60% 50% 40% 30% 20% 10% 0% H H/H/H A/ /A H H/H/H A H/H/H H H H A/A Method (H=Hybrid,A=Admin) PMAP MNCare Commercial 27

38 Childhood Immunization Status Childhood Immunization Status - Vaccinations are an easy and effective means for helping children stay healthy. Immunizations prevent serious contagious diseases such as diphtheria, tetanus, whooping cough (pertussis), mumps, measles, rubella, hepatitis B, polio, influenza, and chicken pox. The MDH 2004 community health goal is for 90% of infants to be up-to-date with their vaccinations within two months of the ages required by the current immunization schedule. The measure listed as Combo 1 is the rate of occurrence of a complete recorded vaccination status for Diphtheria, Tetanus, and Pertussis (at least 4 before age two years); Polio (at least 3 before age two years); Measles, Mumps, and Rubella (at least 1 between ages one and two years); H influenza type b (HiB, two before age two years with at least one between age one and two years); and Hepatitis B (three before age two years, with at least one between age six months and two years). The measure listed as Combo 2 is the rate of occurrence of a complete recorded vaccination status for the above five immunizations, with the additional requirement of having a record of the chicken pox vaccine (VZV) with at least one between ages one and two years. Figures 13 and 14 show the PMAP immunization rates for Combo 1 and Combo 2, respectively. (Due to NCQA rotation, data were not collected for commercial enrollees for 2000.) The Combo 1 rates generally fall between 45 and 60 percent. For Combo 2, the rates are lower (as would be expected), generally falling within a range of 30 to 50 percent. 100% 90% Figure 13 Child Immunization Rate, Combo 1, PMAP Average for PMAP Plans Reported Altru Blue Plus First Plan Group Health Health Partners Medica MHP UCare Percent of Two Year Olds with Vaccinations Complete 80% 70% 60% 50% 40% 30% 20% 10% 0% H H/H H/H H H/H H/H H/H H/H Method (H=Hybrid) MDH 2004 Target 28 The Minnesota HMO Profile

39 Figure 14 Child Immunization Rate, Combo 2, PMAP 100% Average for PMAP Plans Reported Altru Blue Plus First Plan Group Health Health Partners Medica MHP UCare Percent Two Year Olds with Vaccinations Complete (Incl. VZV) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% H H/H H/H H H/H H/H H/H H/H Method (H=Hybrid) MDH 2004 Target 29