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Survey: Administrative Costs Fall At Blues Plans

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Blue Cross and Blue Shield companies may have increased their efficiency in 2006.

The Blues plans that participated in a benchmarking program run by Sherlock Company, Gwynedd, Pa., told the firm their median expenditure on administrative costs fell to $25.90 per member, per month in 2006, down from 2% from the 2005 median.

Administrative costs amounted to about 12% of premium revenue and equivalent types of revenue in 2006, Sherlock researchers report.

The researchers note that the apparent decrease may be due in part to the fact that the number of Blues plans participating in the benchmarking survey increased to 23 in 2006, from 17 the year before.

Medicare Advantage plans were the most efficient in terms of the percentage of premium revenue going to pay for administrative costs: administrative costs ate up only 8.1% of Medicare Advantage plan revenue

But, for insured commercial plans, the actual dollar cost of administration was lowest for indemnity and preferred provider organization plans. There, the median administrative cost was only $28.98, the researchers report.


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