HMO/PPO List16inches/1stjc/mark2nd

BEN SULLIVAN Staff Reporter

The remarkable thing about this year's List of health maintenance organizations serving Los Angeles County is how little the various plans have changed in ranking over the past 12 months.

Ten of the top 15 HMOs hold the same position on the List this year as they held in 1996 and another two simply swapped spots despite one of the most rough and tumble years in the industry's history.

Even so, retabulating the List just a few months from now would likely reveal a significantly different landscape because of mergers in the works that were initiated last year.

If successful, proposed unions between Health Systems International and Foundation Health Corp. and between PacifiCare Health Systems Inc. and FHP International Corp. will, for the first time, lead to three HMO plans each with more than 1 million enrollees in Southern California.

The Pacificare-FHP hybrid would hold the No. 2 spot with roughly 1.5 million members, while the HSI-Foundation plan would have just over 1.1 million enrollees.

Both would still exist in the shadow of behemoth Kaiser Permanente, which has 2.4 million Southern California enrollees.

Overall, membership in the top 15 HMOs in Southern California grew by about 330,000 last year, or 4 percent, while gross local revenues of those reporting jumped 13 percent, from $8.7 billion to $9.9 billion.

Not bad for a year in which roughly half of California voters endorsed bills to strictly regulate the HMO industry.

While ultimately unsuccessful, the year-long campaigns sent a wake-up call to local and statewide HMOs that consumers demanded better treatment from managed care.

"Consumer advocates and others have spoken aloud and certainly gained the attention of health care providers," said Alan Tomiyama, a spokesman for the California Association of Health Maintenance Organizations.

As a practical result, he noted, more HMOs in Los Angeles and elsewhere are cooperating in third-party "report card" programs that rate HMO quality, have offered easier access to specialist physicians, and even embrace alternative medicine as a way to keep enrollees happy.

That same desire to give the people what they want has been reflected in preferred provider organizations serving L.A. County, PPO officials say.

"Consumers are going to continue to ask for and expect a lot more choice, not just which primary care physician they can use," said Ron Williams, president of No. 3 Blue Cross's PPO in Woodland Hills.

While dismissed by critics as an industry that, with the ascendance of HMOs, is in decline, "The reports of the PPO's demise are greatly exaggerated," Williams insists.

With roots in the indemnity insurance industry, PPOs are managed care plans that allow enrollees access to a far wider range of physicians than most HMOs. Instead of being assigned a single primary care physician, a member can choose from any of what are usually hundreds of doctors that belong to participating networks.

The bad rap HMOs got in 1996 worked to the PPO industry's advantage, according to John Schwerin, director of provider relations for No. 9 Blue Shield Preferred Plan. He said that the company's plan might otherwise have had a larger net loss in membership last year.

Williams agrees. "There's a lot more interest in PPOs" since the HMO public relations nightmare of 1996, he said. "As people are better able to understand the choice-price trade off that a PPO offers, they're more willing to pay a little more for more choice."

"In our case, our PPO products are growing substantially," Williams said.

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