We offer our products and services to a broad range of customers, including large groups of more than 500 employees; middle market groups, ranging from 51 to 500 employees; small groups, ranging from two to 50 employees and individuals. Over one million of our members are covered through our national accounts, generally large, multi-state companies, including many Fortune 500 companies.
Our cost of benefits provided under capitated arrangements is not significant. Payments under capitated arrangements totaled $102.5 million for the year ended December 31, 2003, representing 2.5% of total cost of benefits provided.
The increase in commercial managed care enrollment was offset by a 19.3% decline in other insurance product and services enrollment. This decrease of approximately 155,000 members was due, in part, to the continued migration of members to commercial managed care products discussed above.
On a PMPM basis, premium for the year ended December 31, 2003 increased 10.0%, to $137.17, from $124.65 for the year ended December 31, 2002. Commercial managed care PMPM premium increased to $133.01 for the year ended December 31, 2003, from $120.90 for the year ended December 31, 2002 due to premium rate and retention increases. Excluding the New York City and New York State PPO, commercial managed care PMPM premium increased to $277.21 for the year ended December 31, 2003, compared to $250.72 for the year ended December 31, 2002 due to premium rate increases. Other insurance products and services PMPM premium increased to $164.30 for the year ended December 31, 2003, from $142.89 for the year ended December 31, 2002, due primarily to declining membership in unprofitable experienced rated products.
• Professional service fees increased $14.0 million as a result of the IBM outsourcing agreement. The outsourcing commenced on July 1, 2002; therefore 2003 reflects a full year of professional fees related to the agreement whereas 2002 reflects six months of professional fees.
Net cash provided by financing activities of $25.6 million includes net proceeds from the sale of common stock in the initial public offering of $28.0 million and payments made on capital lease obligations of $2.4 million for the year ended December 31, 2002. Cash used in financing activities of $1.9 million for the year ended December 31, 2001 reflects payments for capital lease obligations.
The ability of our insurance and HMO subsidiaries to pay dividends to us is subject to regulatory requirements, including state insurance laws and health department regulations and regulatory surplus or admitted asset requirements, respectively. These laws and regulations require the approval of the applicable state insurance department or health regulators in order to pay any proposed dividend over a certain amount. For example, any proposed dividend to WellChoice from Empire, which, together with other dividends paid within the preceding twelve-month period, exceeds the lesser of 10% of its surplus to policyholders or 100% of adjusted net investment income will be subject to approval by the New York Department of Insurance. The provisions of our Blue Cross and Blue Shield licenses also may limit our ability to obtain dividends or other cash payments from our subsidiaries as they require our licensed subsidiaries to retain certain levels of minimum surplus and liquidity.
We believe that the recorded unpaid claim liability is adequate to cover our ultimate liability for unpaid claims as of December 31, 2003. Actual claim payments and other items may differ from our estimates. Assuming a hypothetical 1% difference between our December 31, 2003 estimates of unpaid claims and actual claims payable for our prospectively rated business, net income from continuing operations for the year ended December 31, 2003, would increase or decrease by approximately $1.7 million and earnings per share would increase or decrease by approximately $0.02 per share.
We classify all of our fixed maturity and marketable equity investments as available for sale and, accordingly, they are carried at fair value. The fair value of investments in fixed maturities and marketable equity securities are based on quoted market prices. Unrealized gains and losses are reported as a separate component of other comprehensive income, net of deferred income taxes. The factors used to determine whether unrealized losses are considered other than temporary are the length of time the security has been in an unrealized loss position, the market to book value ratio and other relevant qualitative considerations. The amortized cost of fixed