Medicare Plans’ Administrative Expenses Accelerated in 2023

In 2023, Medicare plan per member administrative costs grew by 6.2% compared to 1.9% in 2022. These comparisons hold constant the set of reporting plans and calculations eliminate the effect of product mix differences. Median PMPM costs for all reporting plans were $52.53.

The results are published in Plan Management Navigator posted at sherlockco.com/navigator. The Navigator excerpts from the 2024 Medicare plan edition of the Sherlock Benchmarks. It summarizes in-depth surveys of 11 plans serving 1.7 million Medicare Advantage members or 16% of MA members not served by the largest five plans.

Account and Membership Administration expenses accelerated to 5.1% from 3.7% in 2022. Sales and Information Systems grew most rapidly and contributed most to the increase, respectively. Customer Services grew nearly as rapidly. Plan Staffing Ratios increased, especially in Medical Management.

We will discuss the results via a free web conference on Tuesday, October 8^th, from 2:00 PM to 2:45 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 Sherlock Benchmarks are the health plan industry’s “gold standard” metrics of administrative activities, costs and operational drivers. They reflect 27 consecutive years and more than 1,000 health plan years of experience. Health plans use the Sherlock Benchmarks to determine whether their administrative costs are optimal and to prioritize improvements among numerous specific activities. Other applications include informing strategic corporate planning and cost-benefit analyses.

This year, collectively, Benchmark participants serve 52 million Americans in Medicare and other plans. Other universes include Blue Cross Blue Shield, Independent/Provider-Sponsored and Medicaid plans. Health plan users of the Sherlock Benchmarks serve over 200 million members since June 2021.

Sherlock Company (www.sherlockco.com), based in Gwynedd Valley, 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.

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