TMCnet News

Blue Cross Blue Shield Plan Operational Administrative Costs Increased by 1.1% in 2014, 18.4% after the Effect of ACA Taxes
[July 06, 2015]

Blue Cross Blue Shield Plan Operational Administrative Costs Increased by 1.1% in 2014, 18.4% after the Effect of ACA Taxes


In 2014, operational administrative expenses under the control of management of Blue Cross Blue Shield (Blue) Plans increased at a median rate 1.1% per member, the lowest in at least seven years. Account and Membership Administration costs increased by 3.0%, the lowest since 2011. These comparisons eliminate the effects of product mix and universe changes. The median total costs before Miscellaneous Business Taxes was $33.37 per member per month.

However, Miscellaneous Business Taxes increased by 369.1% to $6.08 per member per month because of taxes and fees associated with the Affordable Care Act, so total administrative costs per member increased by 18.4%.

Per member, Corporate Services1 costs declined by 1.4%. The growth in Sales and Marketing and Medical and Provider Management declined to 2.0% and 1.6%, respectively.

While Information Systems costs increased at low single-digit rates, Customer Services costs accelerated. Some participants call this a "surge" cost stemming from changes in the health insurance markets. Enrollment and Claims Processing costs also accelerated.

Additional information was published today in Plan Management Navigator, and is posted at www.sherlockco.com. We willdiscuss the results via free web conference on Wednesday, July 8 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 Blue Cross Blue Shield Plan edition of the Sherlock Expense Evaluation Report (SEER). This benchmarking study analyzes in-depth surveys of 16 Blue Licensees serving over 29 million members. Surveyed Plans comprise 55-60% of the members of single state Blue Cross Blue Shield Plans, and 47% of all U.S. Blue primary licensees.

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 Blue Cross Blue Shield universe, other universes include Independent/Provider-Sponsored 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.

1 Corporate Executive, Finance and Accounting, Actuarial, Association Dues and Licensing/Filing Fees, HR, Legal, Audit, Facilities, Purchasing, Imaging and some other sub-functions.


[ Back To TMCnet.com's Homepage ]