Costs shrink for Medicaid plans

The administrative costs for Medicaid plans nationwide dropped 5.2 percent per member per month in 2009, significantly greater than the 1.4 percent decline in 2008, according to a new survey by Gwynedd, Pa.-based Sherlock Company.

The survey, part of Sherlock's annual "Expense Evaluation Report," covered 10 Medicaid plans nationwide, enrolling 3.9 million members. Of those, 70.8 percent were in a managed care plan.

Most Medicaid plans, the report noted, were laboring under the dual burdens of budget cuts on the state and federal levels and higher enrollment due to the poor state of the economy, forcing them to cut administrative costs.

"This year's decline in costs builds on last year's," said Doug Sherlock, the company's president. Sherlock noted that overall account and member administrative expenses declined 13 percent in 2009, more than double the 6 percent drop in 2008.

Overall, the participating plans said they spent $22.41 per member per month on core administrative expenses, with an additional $2.49 per member per month spent on marketing. However, there was a wide range of cost variations. Medicaid special needs plans (SNPs) that treat HIV/AIDS patients cost $105.67 per member per month to administer. Medicaid HMO plans were the least expensive to operate, costing just $22.77 per member per month to administer.

For more:
- read the Sherlock Company study
- read the Sherlock Co. press release