Recently, Sherlock Company launched its sixth annual benchmarking study for Provider-Sponsored Health Plans. Fourteen plans serving more than four million members are participating in this year's performance benchmarking study in this peer group. Surveys are due back to Sherlock Company by the end of May and publication of the results is expected to begin in early July.
Recently, Sherlock Company launched its eleventh annual benchmarking study for Blue Cross Blue Shield Plans. Twenty-three Plans are participating in this year's performance benchmarking study, representing most of the 39 primary Blue Cross Blue Shield licensees. Surveys are due back to Sherlock Company by the end of May and publication of the results is expected to begin in early July.
Health plans are expecting premium rate increases in 2008 of 7.4%, 0.8 percentage points lower than last year’s expectation of 8.2%. This is the fourth consecutive decline in the rate of premium growth.
The median administrative costs of larger health plans were $25.14 Per Member Per Month (PMPM) in 2006. This equated to 8.8% of premium equivalents, as detailed in Sherlock Company's SEER benchmarks.
The median administrative costs of independent, Provider-Sponsored health plans were $27.73 Per Member Per Month (PMPM) in 2006. This equated to 9.3% of premium equivalents, as reported in Sherlock Company's benchmarks.
Median administrative costs for selected Blue Cross Blue Shield Plans were $25.90 per member per month (PMPM) in 2006, according to Sherlock Company’s recently published performance benchmarks. This equated to 11.9% of premiums or equivalents.
Sherlock Company’s 2005 Medicare Advantage performance benchmarks had a median administrative cost of $29.96 per member per month (PMPM) for total products. Medical and provider management had the lowest cost with $5.67. Marketing had the second lowest median cost with $7.13. Account and Membership Administration and Corporate Services had costs of $8.78 and $8.04, respectively.
Sherlock Company’s performance benchmarks for Medicaid-Oriented health plans showed median administrative costs of $18.35 per member per month (PMPM) for all products in 2005. Marketing had the lowest costs with $2.35, followed by Medical and Provider Management with $4.47. Account and Membership Administration and Corporate Services had costs of $5.61 and $5.94, respectively. Total administrative cost excluding marketing and miscellaneous business tax was $15.19.
Health plans nationwide report that premium rate increases in 2007 will be 8.2%, 0.2 percentage points lower than last year. Before buy-downs, premium rate increases are expected to be 10.4% down from 11.1% last year. We estimate that the difference between before and after buy-down rate increases implies an 18.6% increase in employee contribution for 2007.
Health plans nationwide report that premium rate increases in 2006 will be 8.4%, 0.9 percentage points lower than last year. Before buy-downs, premium rate increases are expected to be 11.1% down from 11.3% last year. We estimate that the difference between before and after buy-down rate increases implies a 21.2% increase in employee contribution for 2006.
The growth of health plan administration declined to 2 percent in 2004 per member, down significantly from increases in 2003, according to Sherlock Company’s performance benchmarks..
Health plans report that premium rate increases, before the effects of buy-downs, are expected to be 11.3% in 2005, well below last year’s increase of 12.8%. Plans reported an expected increase in their health benefits ratios of 0.6 percentage points, the second consecutive year of projected increases. The average expected buy-down spread of 2.1% was the same as last year.
A comparison between the administrative expenses of Provider-Sponsored plans and larger Blue Cross Blue Shield and Public plans indicates that Provider-Sponsored plans run leaner. On average, Provider-Sponsored plans have administrative expenses of $18.64, 76% of their larger peers costs of $24.37. The lower costs are apparent when analyzed by product or by major functional area.
The Sherlock Expense Evaluation Report (SEER), Blue Cross Blue Shield Edition, shows that median PMPM costs for comprehensive products were $24.30 in 2003. The 18 Plans included in this study serve 27.9 million members or 31% of the membership served by Blue Cross Blue Shield Plans.
Sherlock Company's recently published benchmarks for health plans report median costs of $24.30 for all comprehensive products in 2003. The reporting firms, eighteen Blue Cross Blue Shield Plans, reported expenses which ranged from $18.80 for POS (ASO) to a high of $42.26 for Medicare Advantage. Full Release
The Sherlock Expense Evaluation Report (SEER), Larger Plans Edition, shows that administrative expenses for Larger Plans' insured commercial products were 11.29% of premiums, or $23.28 per member per month (PMPM) in 2002.
Sherlock Company's recently published benchmarks for health plans report median costs of $22.46 for all comprehensive products. The reporting firms, seventeen Blue Cross Blue Shield Plans, reported expenses which ranged from $15.17 for indemnity and PPO (ASO) to a high of $48.70 for Medicare + Choice. Full Release
How have administrative cost trends been relative to medical cost inflation? What administrative costs have shown the most growth? The least growth? Sherlock Company has performed a longitudinal study based on the aadministrative expenses of participants in the SEER reports over recent years that answers these and other questions. Full Release
Health plans report that premium rate increases are expected to be 15.2% in 2003, narrowly below last year's record setting pace of 15.6%. Results from publicly traded multi-state health plans corroborate these results, expecting premium rate increases of 16.5% on average. Full Release
Detailed financial benchmarks for health plan administrative expenses will be shortly published by Sherlock Company. The Sherlock Expense Evaluation Reports (SEER) are unique in their timeliness, detail and breadth of their universes. This is the fourth year that Sherlock Company has compiled these studies. Full Release
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