Invitation to the Sherlock Benchmarks, 2027 Cycle

Whatever the Business Environment, Optimized Administrative Costs Are Necessary for Success

Changes in political leadership affect government and employer benefit plans, requiring adaptation, even through corporate finance strategies. But the need to know whether your administrative costs are competitive does not change.

This page describes the value of participation, our quality assurance and support, the reports you will receive, and the commitments of participation, including cost and confidentiality.

No matter what the environment, optimizing administrative costs is necessary for success. The Sherlock Benchmarks are a valuable tool to achieve this.

A Changing Environment

Changes in program rules, payment rates, eligibility processes and oversight could affect government-sponsored and employer-sponsored health benefit plans. Plans adapt to changes through their administration: Enrollment / Membership / Billing, Customer Services, Claim and Encounter Capture and Adjudication, and Information Systems.

A plan that knows the cost and staffing of each function against its peers can better measure what a new requirement adds and where it can be met efficiently. Moreover, keeping administrative expenses at optimal levels promotes operational flexibility.

Membership Volatility from Public Benefit Programs

Public program membership has swung widely, reflecting changes in program rules. According to the Kaiser Family Foundation’s Medicaid enrollment tracker, 73.2 million people were enrolled in Medicaid and CHIP as of June 2026, a decline of 5.1 million, or 7%, from June 2025. Among the Medicaid-focused plans continuously participating in the Sherlock Benchmarks, Medicaid membership declined at a median of 3.5% in 2025. In the Marketplace products, plan selections during open enrollment fell from 24.3 million for 2025 to 23.1 million for 2026, according to CMS. However, Medicare Advantage moved the other way: 35.2 million beneficiaries were enrolled in 2026, an increase of 1.1 million.

When membership falls, costs that do not fall with it are spread over fewer members, and per member costs rise. When membership grows quickly, capacity in Enrollment, Customer Services and Claims has to keep pace to assure quality. Either way, the question of whether each function is staffed and otherwise operates like those of efficient peers becomes more pressing.

Business Combinations and Divestitures

Sometimes adaptation is achieved through corporate finance strategies. Health plans combine, affiliate, acquire and divest. An acquirer needs to know the underlying cost of what it is buying; a combined organization needs to know where integration should produce savings; a plan that sells or exits a line of business needs to resize what remains. Participants have told us they use the Sherlock Benchmarks for each of these: 26% for the integration of an acquired health plan, 22% for quantifying the administrative requirements of a new business line and 17% for due diligence on an acquisition candidate.

The Constant

Through all of this, the plans in the Sherlock Benchmarks have managed their costs. Figure 1 shows the 2025 experience of each universe, as published in various editions of the Plan Management Navigator, illustrating that “you manage what you measure.” In 2025 Blue Cross Blue Shield Plans held growth to 0.3%. With costs at 8.1% of premium equivalents, it was the lowest in 20 years.

About the Sherlock Benchmarks

The Sherlock Benchmarks are the “gold standard” of health plan administrative benchmarks. The Sherlock Benchmarks are a unique window for health plans to gauge with accuracy and granularity whether their administrative costs are competitive with their peers. With the Benchmarks, plans can measure their costs relative to others that are similar in business model, product focus and business mix. They can prioritize the functions that contribute to those differences and identify cost factors such as staffing ratios, compensation levels and non-labor costs that affect those functions.

The results are granular in order to be actionable: operations are segmented into functions, whose performance is calculated to eliminate distortions from differences in product mix between you and your peers. The functions are mutually exclusive and collectively exhaustive. Drivers of variances, such as staffing ratios and compensation levels, are identified and quantified.

The Sherlock Benchmarks reflect nearly 1,100 health plan years of experience spanning twenty-nine consecutive years.

The Sherlock Benchmarks enjoy broad acceptance. Health plans serving more than 198 million Americans have been licensees or participants in the Sherlock Benchmarks since June 2023.

Of the effectively 32 U.S.-based Blue Cross Blue Shield primary licensees, twelve, serving 41.2 million members with Comprehensive products, participated in this year’s Sherlock Benchmarks for Blue Cross Blue Shield Plans. That is approximately 57% of all Blue members not served by public Blue companies.

Without duplication, 20 Blue Cross Blue Shield plans serving 56 million people have participated in the Benchmarks since June 2023. In addition, others licensed but did not participate. Of the BCBSA primary licensees, at least 69% are recent users or participants in the Benchmarks.

Twelve Independent / Provider-Sponsored plans, serving approximately 8.9 million members in 23 states, participated in this year’s Independent / Provider-Sponsored universe.

Without duplication, 19 Independent / Provider-Sponsored plans serving 13 million people have participated in the Benchmarks since June 2023. At least 14 of the more than 40 Health Plan Alliance members either participated in or licensed the Sherlock Benchmarks. Similarly, at least 12 of the 30 member plans of the Alliance of Community Health Plans are users of the Sherlock Benchmarks through license or participation since June 2023.

Eleven plans participated in the Medicare universe in 2026. Together they served 2.1 million Medicare Advantage and Special Needs Plan members. Including the Medicare Advantage members of Blue Cross Blue Shield and Independent / Provider-Sponsored participants outside this universe, the Sherlock Benchmarks compare plans serving 2.7 million Medicare Advantage members, not counting Special Needs Plans. Participants represented 18% of the Medicare Advantage membership not served by the five largest organizations, and approximately 24% including members served through other Sherlock Benchmarks universes.

Twelve plans participated in the Medicaid universe in 2026. They served 8.4 million people in comprehensive products, of whom 5.2 million were Medicaid HMO or CHIP members. Using Census Bureau estimates of coverage, that is about 9% of the 57.8 million Americans covered by Medicaid in 2025.

Quality Advantages of Sherlock Benchmarking

Sherlock Benchmarks are the “Gold Standard” by design. Our structural and process quality advantages make them reliable as a resource, promoting a high return on your investment in benchmarking.

Structural Advantages

Unbiased. Sherlock Benchmarks are produced by Sherlock Company as a stand-alone service, nearly exclusively. That means that we are free of conflicts of interest, and we support your use of the reports and your consultants’ use in service to you.

Well-established Panels. After 29 consecutive years and nearly 1,100 participant years, health plans know our excellent record of developing panels to achieve comparability.

Practice Effect. Among the Blue Plans participating in the 2026 cycle, ten of the twelve have ten or more years of experience, and the median Plan has participated for more than 20 years. Nine of the twelve Independent / Provider-Sponsored participants also participated the year before. Among the Independent / Provider-Sponsored plans in the 2026 edition, 83% have five or more years of experience and 67% have eight or more, so the median IPS plan has participated for at least eight years. This contributes to reporting accuracy and ultimately to Benchmark reliability.

Virtuous Cycle. Since the participating plans are self-selected, they may well be leaders in cost management. As plans learn from their peers, their performance is reflected in the Benchmarks, and they raise the performance bar for that peer group.

Process Advantages

Our processes also promote the quality of the Sherlock Benchmarks.

Clear, precise documentation. To assure accuracy, the definitions, calculations and any additional metrics are memorialized in the Common Guidelines, reflecting discussions of the health plan panels. It is searchable, and each cost classification defines its activity, lists examples of those activities, lists cost centers commonly included with those activities and identifies adjacent activities to be classified with other functions.

Because of our collaborative approach, the expense classifications and operational metrics tend to reflect common practices of health plans reporting for their internal purposes.

A feature introduced in 2026 and available to participants is a large language model AI capability that quickly provides round-the-clock detailed classification suggestions and definitions. It is available for no charge, upon request.

Validation processes. Checks are built into the Benchmark survey form, our visual review, statistical analyses and comparisons to audits.

Collaborative amendments. We assist in amending your survey if there are reporting outliers.

Benchmarking Process

From your health plan’s perspective, we anticipate the following steps. We elaborate on them in the tentative calendar below.

1. 1.
   Execute mutual confidentiality agreement
2. 2.
   Meet to discuss the Benchmarks’ scope and content definitions *
3. 3.
   Pay participation fee
4. 4.
   Complete survey form based on meeting resolutions, above
5. 5.
   Participate in validation process, including reconciliation with audit
6. 6.
   Receive reports
7. 7.
   Present findings to you *

* This is optional, but most participants elect this.

We are always available to answer any questions you may have about our processes.

We Support Your Participation

Since participating plans help define the classifications, function classifications are intuitive and likely have strong similarities to your own plan classifications. Where they do not, we assist your harmonizing from plan cost classifications to those of your Sherlock Benchmarks panel in several important ways:

• •
  We supply extensive activity definitions in the form of our Common Guidelines.
• •
  As noted above, we provide additional support through a newly introduced large language model for classification questions.
• •
  During the survey period, we quickly respond to your questions.
• •
  In late February or early March of 2027, if the panels choose, we will host an organizational meeting to finalize the survey scope and definitions. This meeting has the additional benefits of immersing each plan in the nuances of the process and facilitates contacts for peer-to-peer discussions for implementation of the results of the study.
• •
  We host weekly conference calls during the survey period for your panel to address your questions arising from “emerging issues” or discovered after the annual organizational meeting.

Proposed Reports to Participants in 2027

The Sherlock Benchmarks are embodied in Reports. The Sherlock Benchmarks help health plans determine whether their costs are high, identify and prioritize sources of variance and note operating characteristics and activities associated with high costs.

Totaling more than 1,200 pages for each universe, the Sherlock Benchmarks report key activity metrics of health plans. They are provided in Excel, in PDF and in hard copy, upon request. The participant-specific Reports are identical to the licensed Benchmarks except that they include and highlight the participant’s results.

The following table describes the actual 2026 Reports. We expect the 2027 Reports to be substantially similar to those listed below, subject to the preferences of the panels, participation rates and modest changes in formatting and organization. The page counts link to each volume’s table of contents.

Expenses for each of more than 75 functions and subfunctions are segmented into as many as fourteen product lines. Market segment (e.g., small group, large group and individual, depending on universe, as available) costs are also segmented by function. Selected metrics of finance and accounting activities (e.g., days of accounts receivable), Information Systems costs allocated to supported functional areas, ASA and others are also reported. Participant characteristics show comparisons with your health plan.

Page counts are those of the 2026 General Editions, covers and contents included. Medical Management and Health Care Utilization are single volumes covering all universes.

Supplemental Reports

The participant editions of the Reports are identical to the general editions except they are tailored to contain your own data. But the inclusion of your data allows us to provide additional analyses to summarize and help you navigate to your most relevant sections of the Sherlock Benchmarks. Supplemental analyses are described below.

Financial Metrics Executive Summary - CFO Letter. This annotated summary of 86 figures and eleven appendices shows plan ranking against peers and ranks functions that are the sources of variances to prioritize them. Variances are adjusted to eliminate the effect of product mix differences and then factor analysis is applied, prioritizing staffing ratios, staffing costs per FTE or non-labor costs. It contains page and volume references to the Sherlock Benchmarks Reports described above.

Operational Metrics Executive Summary - COO Letter. We also provide an operationally focused counterpart to the CFO Letter. This letter summarizes performance using a few key metrics, widely available indicators of performance in selected functions such as Enrollment, Customer Services, Provider Services and Claims. The metrics in the COO Letter show performance on member use rates, productivity, unit cost and staffing ratios. Metric comparisons eliminate the effect of product mix differences and are annotated.

Presentation of Results. Many participating health plans find that Sherlock Company’s delivering a presentation can be helpful to inform the budget process or strategic initiatives, or to contribute to consensus among senior management as to how to enhance your health plan’s competitive position. A presentation also provides an opportunity to have questions answered. Presentations are conducted via web conference or in person.

Supplemental Analyses. We provide the panels additional analyses to assist in the execution of their strategy. These include cost rankings by function, and an analysis that identifies the cost and operational characteristics of health plans achieving overall Best Practices.

Special Analyses and Additional Universes. Often plans request us to provide additional analyses to support their own investigations or insights. Special analyses include eliminating the effect of market segment differences and comparisons with subsets that share a common size, region or other selected attributes. Other analyses endeavor to measure the impact of one variable on another, such as medical management costs on health care costs. Special analyses may be used to foster communication between organizations that do not compete but wish to identify drivers and attributes that contribute to superior performance. While these analyses may be offered at additional cost, we execute them with great efficiency.

Additional Sherlock Benchmarks from universes other than the one you participate in are also available to participants at reduced cost. For instance, if a Blue Cross Blue Shield Plan wishes to be compared to all health plans in its region, it will require the Independent / Provider-Sponsored universe, which we make available at a 20% discount.

Commitments: Cost, Completion, Confidentiality

Participation entails three obligations: 1) your plan must appropriately complete the survey form; 2) we sign a mutual confidentiality agreement, which we will send to you; 3) there is a participation fee.

Mutual Confidentiality. The mutual confidentiality agreement commits Sherlock Company and each participant to protect each other’s confidential information. Also, the Sherlock Benchmarks are expressed to make it impossible for another user to know or reverse-engineer your plan’s attributes. This year’s CA is the same as the previous one, updated for the 2027 cycle.

Completion of the Survey Form. Plans are invited to participate if they are focused on health insurance, can provide information concerning the costs and other attributes of activities commonly performed by health plans, possess sufficient scale so that their activities are comparable to other plans and have staffing resources sufficient to complete the survey in accordance with your peer plans. The quality of your efforts in participation is rewarded with the insights you can gain from it.

If you are uncertain about your plan’s ability to complete the survey, we can send you a draft of the survey forms. We would be delighted to respond to any questions.

Also, Sherlock Company is sometimes engaged to complete the survey on the health plan’s behalf. This usually entails your providing granular cost information such as a trial balance as we complete the classification. We would be glad to speak with you if this might be of interest.

For those plans that are considering participation for the first time, please be assured that we enthusiastically support you while you participate. Our surveys are well supported through documentation, and we are happy to field inquiries in, more or less, real time.

Discounted Participation Cost. Participation is one-half the cost of licensing the materials. This includes all of the benchmark benefits cited in the previous section except for any special analyses or any additional universes that you may wish to license. We intend that the discount offset and incentivize the efforts of your participation.

While we will need to have your confidentiality agreement as soon as possible since we will be sending you draft materials, the participation fee is not due until the end of March of 2027.

If you are inclined to participate, we would be grateful if you would notify us as soon as possible of this intention. We will then send you the Confidentiality Agreement to sign and return. Our contact information is found below.

Calendar and Contact Information

Below is our anticipated calendar for the 2027 Sherlock Benchmarks cycle. Before participating in the various conference calls and meetings, to minimize the possibility of inadvertent dissemination of competitive information, we ask that you sign and return the confidentiality agreement. Accordingly, we will send the panels a more detailed memo regarding the dates, times, and access procedures for each event. That calendar may also provide a sense of commitment for your team to participate in the Sherlock Benchmarks. Please do not hesitate to contact us if you have any questions in the meantime.

To those who participated in 2026, we thank you again for your efforts and look forward to your participation in 2027. For those plans that are new to the Benchmarks, or have not participated for a while, we look forward to supporting your efforts. We pride ourselves on supporting our participants, so please reach out to us with any questions.

We hope that you will join us in the 30th annual Sherlock Benchmarks in 2027. You will be among good company.

Please notify us of your plan’s participation in 2027. Please send the signed confidentiality agreement to Sherlock Company via email or at the following mailing address.

Tentative Calendar