Medicare Advantage Plan Administrative Cost Growth Decelerated in 2019

PHILADELPHIA--(BUSINESS WIRE)--In 2019, Medicare Advantage plans reported median administrative cost increases of 5.2%, lower than the 6.4% pace in 2018. The 2019 trend in Account and Membership Administration was higher, 9.3% versus 7.0%, though it was lower when Behavioral Health and Pharmacy administration is excluded. This cluster of activities is the largest for health plans and its increase was higher than in the prior three years. These comparisons eliminate the effect of product mix differences between any two years.

The results are published in Plan Management Navigator, and are posted at sherlockco.com/navigator. It excerpts from the 2020 Medicare edition of the Sherlock Benchmarks. The source of the data used in the Navigator analysis is Sherlock Company surveys of eleven Medicare Advantage plans, collectively serving 1.5 million Medicare Advantage members, plus separate analyses of 0.8 million Medicare Advantage members in other Sherlock universes. Other products are also offered by these plans, representing 67% of total revenues.

Comparing actual cost trend with trends after eliminating the effects of product mix differences show a shift in favor of higher cost products, such as Medicare Advantage and Medicare SNP as Medicare Supplement declined.

We will discuss the results via free web conference on Wednesday, September 16^th from 2:00 PM to 3:00 PM EDT. 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 employment trends that are knock-on effects of COVID-19 create a volatile environment for health plans. The Sherlock Benchmarks can assist in adapting to this environment and achieving operational efficiency.

The Sherlock Benchmarks reflect 894 health plan years of experience spanning 23 consecutive years. They are “the gold standard” of benchmarks used to measure and manage health plan administrative activities. Planning, budgeting and cost benefit analyses are credibly informed by the Sherlock Benchmarks.

Besides the Medicare plans, other universes include Blue Cross Blue Shield Plans, Independent/Provider-Sponsored plans and Medicaid plans. Collectively, the 36 participating plans serve 67 million insured Americans.

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.