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Federal Employees' Health Program: Reasons Why HMOs Withdrew in 1999 and 2000

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Report Type Reports and Testimonies
Report Date May 2, 2000
Report No. GGD-00-100
Subject
Summary:

In plan years 1999 and 2000, 136 health maintenance organizations (HMO) withdrew from the Federal Employees' Health Benefits Program. The factors most often cited for HMO withdrawals from the program in those two years were insufficient enrollments, unpredictable plan use/excessive risk, and noncompetitive premium rates. An adequate enrollment base is perhaps one of the most important requirements for a plan to sustain its operations. Plan enrollment information showed that 46 of the 62 HMOs that withdrew from the program in 2000 actually increased enrollments between 1998 and 1999, 12 plans lost enrollment those years, and four plans only had enrollment data for one year. Of the 46 HMOs that increased enrollments, these increases numbered less than 100 enrollees for 26 of them. In addition, of the 62 plans that withdrew in 2000, 26 had fewer than 300 enrollees--a level at which the Office of Personnel Management has authority to terminate a plan's participation in the program.

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