Independent/Provider-Sponsored Health Plan Administrative Cost Growth Accelerated in 2019

In 2019, Independent/Provider-Sponsored plans reported median administrative cost increases of 7.6%, higher than the 3.4% pace in 2018. The 2019 trend in Account and Membership Administration was also higher, 9.3% versus 4.7%. This cluster of activities is the largest for health plans and its increase was higher than in any of the past five years. These comparisons eliminate the effect of product mix differences between the two years.

The results are published in Plan Management Navigator, and are posted at sherlockco.com/navigator. It excerpts from the 2020 Independent/Provider-Sponsored edition of the Sherlock Benchmarks. The source of the data used in the Navigator analysis is Sherlock Company surveys of thirteen Independent/Provider-Sponsored Plans, collectively serving 8.3 million members in comprehensive products

Comparing actual cost trend with trends after eliminating the effects of product mix differences show a shift in favor of lower cost products, such as ASO, Medicaid and Medicare Supplement.

We will discuss the results via free web conference on Wednesday, July 15^th 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 employment trends that are secondary effects of COVID-19 create a volatile operating environment for health plans. The Sherlock Benchmarks can assist in adapting to this environment and achieving operational efficiency.

The Sherlock Benchmarks reflect approximately 895 health plan years of experience spanning 23 consecutive years. They are "the gold standard" of benchmarks used to measure and manage health plan administrative activities. Planning, budgeting and cost benefit analyses are credibly informed by the Sherlock Benchmarks.

Besides the Independent/Provider-Sponsored universe, other universes include Blue Cross Blue Shield Plans, Medicare plans and Medicaid plans. Collectively, the approximately 37 participating plans serve 68 million insured Americans.

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.