Comparing “Best-in-Class” Blue Cross Blue Shield Plans Against Their Peers

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Plan Management Navigator

thoughtSherlock

By Douglas B. Sherlock CFA

sherlock@sherlockco.com

This issue of Plan Management Navigator contains a summary of our analysis comparing “Best-in-Class” Blue Cross Blue Shield Plans and the other Plans that we refer to as “Peer” Plans.

Best-in-Class Plans operated with costs, excluding Sales and Marketing and Medical Management that were 32% lower than their Peers.

Low Staffing Ratios was the primary driver in the Best-in-Class cost advantage, while Staffing Costs per FTE and Non-Labor Costs per FTE were also lower.

The functional area of Information Systems was key in superior Best-in-Class performance. Economies of scale played no role in the ranking.

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Invitation to Participate in the 2016 Sherlock Benchmarking Study

Our highly valid, well-populated Benchmarks provide an unbiased ranking and helps prioritize activities that will have the greatest impact on improving your health plan’s overall operating performance.

The overwhelming proportion of health plans participating last year are participating this year, and we have added several plans. Please follow this link to see what last year’s participation looked like.

We will meet to finalize the content of the survey in February, distribute the survey forms in March, collect the completed surveys in May and publish beginning in late June or early July. Participation entails efforts on your part since useful outputs require relatively granular inputs. The cost is relatively modest.

Because of the calendar, if you are considering participation, please contact me as soon as convenient. We can answer questions and help get the paperwork out of the way.

Assessment

Thank you again for your continuing interest in the Sherlock Benchmarks. Please visit this link to find the January 2016 Plan Management Navigator.

Conclusion

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2 Responses

  1. Messrs. and Mesdames:

    The Blue Cross Blue Shield Plan administrative costs that are controllable by management increased at a median rate of 1.2% PMPM in 2015. This was essentially the same as the prior year’s 1.1% increase and is far lower than the 8.5% increase in 2013.

    Similar trends are apparent in many of the expense clusters and in staffing ratios. This trend suggests continued efforts by Blue Cross Blue Shield Plans to optimize their administrative activities.

    Competitive pressures, the MLR rules and taxes associated with the Affordable Care Act have catalyzed focus on administrative expense management. For instance, Miscellaneous Business Taxes now comprise 17% of total administrative costs.

    These results are excerpted from the Blue Cross Blue Shield edition of the 2016 Sherlock Expense Evaluation Report. The results are based on our detailed surveys of the 2015 operating parameters of 17 Blue Cross Blue Shield “primary licensees”, comprising approximately one-half of the U.S. total. The participants serve approximately 65% of the membership of Blue Cross Blue Shield Plans that are not publicly-traded.

    Douglas B. Sherlock CFA

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