Employer demands lower cost

A case study of premium negotiations between a health maintenance organization (HMO) and an employer group is presented. The employer HMO and employer had a well-established relationship for several years. In the fourth year of consecutive double-digit rate increases, the employer demanded a decrease in premiums. The ensuing negotiations included the employer's mandate of the HMO to make operational changes to effect cost reductions. The HMO was able to provide sufficient evidence supporting its position in the rate increase and subsequently a premium increase of 5 percent was negotiated. The case study is followed in subsequent articles by the opinions and commentary of executives in the managed care industry.