Blue Cross Blue Shield administrative costs spike by nearly 6% in 2017
Increases were found in all areas, except for claims and customer service functions.
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Blue Cross Blue Shield plans' administrative costs increased 5.9 percent in 2017, the biggest increase since 2013, according to a recent study.
Last year's increase was only 0.6 percent, according to the Navigator analysis from the 2018 Blue Cross Blue Shield Plan edition of the Sherlock Benchmarks. The Sherlock Company of Pennsylvania provides health plan financial management.
The benchmarking study analyzes surveys of 14 Blues plans serving over 37 million members.
Medicare Advantage was the fastest growing product.
Staffing ratios were slightly higher while outsourcing remained stable. Compensation increased partly due to inflation but also because the key areas of staffing growth employed higher cost full-time employees.
Per member costs grew by 5.1 percent compared with 0.8 percent the prior year.
Only customer services and claims functions declined in cost increases.
Account and membership administration increased by 3 percent per member, slower than overall administration, the study said. Rating and underwriting, corporate executive, association dues, provider network management and services, medical management and actuarial all increased, sometimes sharply.
These increases excluded the effect of Affordable Care Act-related and other taxes, which plummeted, and led to total administrative expense decline of 2.3 percent.
Increases are calculated for continuously participating plans, after taking into account the effect of mix changes. A shift in mix to a less expensive product meant that reported expenses appeared to increase by less than if the mix was constant.
Health plans that optimize their administrative costs amplify their operating profits and decrease operating losses, the study said.
Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com
