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Early October 2010 Edition

By Douglas B. Sherlock, CFA

In this edition of Plan Management Navigator, we summarize the cost benchmarks of health plans focused on Medicaid.

Administrative Expenses

Core administrative expenses for selected Medicaid focused health plans was 8.4% of premiums in 2009, both overall and in the Medicaid HMO product itself. Comprehensive products had total PMPM costs of $24.90 and the Medicaid HMO product had total PMPM costs of $22.77.

The median values for core administrative expenses for the Medicaid HMO products offered by these health plans were 7.5% of premium and $21.30 PMPM.

Core Costs 

Core costs declined by 5.2% PMPM on an as-reported basis compared with a decline of 1.4% last year. Holding product mixes constant, costs declined by 5.8% PMPM compared with a PMPM decline of 1.4% PMPM. Central to the decline was a 13% PMPM decline in Account and Membership Administration costs.

The peer group in this analysis consisted of ten Medicaid plans, which together served 3.9 million members. Of these members, 2.8 million were Medicaid HMO, and this product comprised on average 70.8% of the total.

HealthCare Reform 

Health care reform is expected to have a dramatic effect on plans serving Medicaid-eligible members as Medicaid eligibility is expected to increase by 16 million members. But, this takes place in a weak economy which contributes to membership growth while federal and state tax revenues are under pressure. Medicaid health plans are heavily committed to the management of administrative expenses.

Web Conference

We will host a web conference on Tuesday, October 12^th from 2:00 PM to 3:00 PM East Coast Time to discuss the summary results. I will offer a brief presentation, followed by questions and answers.

To participate register here:  https://www2.gotomeeting.com/register/995011459.

Once registered, dial-in information and a link to connect to the web will be provided in a confirmation email.

Assessment

Link:  Navigator Early October 2010

I hope that you find this month’s Navigator of interest and we look forward to your participation on Tuesday.

Sherlock Company
sherlock@sherlockco.com
Ph:  215-628-2289
Fax: 215-542-0690

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Filed under: Alerts Sign-Up, Career Development, Health Economics, Health Insurance, Healthcare Finance, Sponsors | Tagged: CFA, Douglas B. Sherlock, healthcare reform, Medicaid, Medicaid HMO, Plan Management Navigator | 2 Comments »