Companies Continue to Negotiate 2006 HMO Rates

July 14, 2005 ( - HMO rates are averaging a 12.9% increase for 2006 compared to 13.6% at the same time last year and 17.5% in 2003, according to Hewitt Associates.

The company reported in June a 12.4% projected increase, the smallest increase in more than five years (SeeHMO Coverage Rate Hikes Seen Moderating in 2006 ). In its recent announcement, Hewitt says early results of negotiations show the average increase rate dropping to 11.7%, and employers are still negotiating.

Plan design changes reduced companies’ average rate increases about 2% in 2004 and 2005, according to Hewitt. F or 2006, about one-half of employers are requesting alternate plan designs compared to about one-third last year, that carry an average rate increase of 7.7% over existing 2005 rates, Hewitt says.

These alternate plan designs reflect the continuing trend in cost-sharing and include increases in Primary Care Physician and specialistcopays, prescription drug copays, and hospital copays.

Hewitt’s data came from the Hewitt Health Resource, a Web site that captures HMO rate information of 160 employers representing more than 1 million employees and annual premiums of nearly$4 billion.