PHILADELPHIA--(BUSINESS WIRE)--In 2014, operational administrative expenses under the control of management of Independent/Provider-Sponsored (IPS) plans decreased at a median rate 0.4% per member, the lowest in at least seven years. Account and Membership Administration costs increased by 1.1%, the lowest since 2008. These comparisons eliminate the effects of product mix and universe changes. The median total costs before Miscellaneous Business Taxes was $42.14 per member per month.
However, Miscellaneous Business Taxes increased by 992% to $4.82 per member per month because of taxes and fees associated with the Affordable Care Act, so total administrative costs per member increased by 11.1%.
Per member, Sales and Marketing costs declined by 3.4%. The growth in Medical and Provider Management and Corporate Services was 2.3% and 0.6%, respectively.
While Information Systems costs declined in growth to very low single-digit rates, Customer Services costs accelerated. Some participants call this a “surge” cost stemming from changes in the health insurance markets. Enrollment continued to decrease and the rate of growth in Claims processing also decreased.
Additional information was published yesterday in Plan Management Navigator, and is posted at www.sherlockco.com. We will discuss the results via free web conference on Wednesday, July 22 from 2:00 PM to 3:00 PM Eastern Daylight Time. Douglas Sherlock will offer a brief presentation, followed by questions and answers. To participate in the web conference, please register at sherlockco.com/webinar. Once registered, dial-in information and a link to connect will be provided in a confirmation email.
The Navigator analysis excerpts from the 2015 Independent/Provider-Sponsored Plan edition of the Sherlock Expense Evaluation Report (SEER). This benchmarking study analyzes in-depth surveys of 21 IPS Plans serving 9.5 million members. Surveyed plans include the most prominent of such plans and serve the lion’s share of their members.
A challenging economy and the Affordable Care Act make streamlining administrative costs a high priority for health plans. An express purpose of the MLR rule is to “create incentives … to become more efficient.” SEER provides the initial step in this process by helping health plans identify and prioritize cost variances.
Besides the Independent/Provider-Sponsored universe, other universes include Blue Cross Blue Shield plans, Medicare plans and Medicaid plans. Collectively, these organizations serve more 40 million insured Americans.
This is the 18th consecutive year of the Sherlock Benchmarks. With cumulative experience of 700 health plan years, they are “the gold standard” of benchmarks used to measure and manage health plan administrative activities.
Sherlock Company (www.sherlockco.com), based in North Wales, Pennsylvania, provides informed solutions for health plan financial management. Since its founding in 1987, Sherlock Company has been known for its impartiality and technical competence in service to its clients.