On an as-reported basis, per member costs increased by 4.5% compared with 0.1% in the prior year. Cost increases exclude the effect of ACA-related and other taxes, which plummeted, and led to total administrative expense decline of 4.6%.
After eliminating the effects of mix differences,
Marketing was the most rapidly growing function overall, as well as the most important source of growth for Medicare plans. Information Systems and Rating and Underwriting were also impactful sources of growth.
Staffing ratios were higher, while compensation increased moderately, and outsourcing was slightly higher than last year.
The median total costs for the universe were
Additional information was published recently in Plan Management Navigator, and is posted here.
We will discuss the results via free web conference on
The Navigator analysis excerpts from the 2018 Medicare edition of the Sherlock Benchmarks. This benchmarking study analyzes in-depth surveys of 11 health plans with a plurality of their business stemming from Medicare Advantage and collectively served 5.1 million comprehensive members.
Health plans that optimize their administrative costs amplify their operating profits and mute operating losses. “Managing what you measure” facilitates achievement of that goal. In a competitive environment, measurement implies comparison with the leaders in your industry.
The Sherlock Benchmarks reflect 818 health plan years of experience spanning 21 consecutive years. They are “the gold standard” of benchmarks used to measure and manage health plan administrative activities. Thus planning, budgeting and cost-benefit analyses are credibly informed by the Sherlock Benchmarks.
Besides the Medicare universe, other universes include Blue Cross Blue Shield Plan plans, Independent / Provider – Sponsored plans, and Medicaid plans. Collectively, the 40 participating plans serve 53 million insured Americans.