Marketing was chiefly responsible for the modest increase in expenses, according to the report. Controlling for changes in product mix, per member marketing costs decreased by 5.2 percent versus 10.4 percent in the prior year. Administration of Medicare Advantage products comprised 8.1 percent of premiums in 2010.
Medicare-focused plans are under pressure to reduce administrative costs. Under healthcare reform, payments are expected to decline from earlier payment methodologies, and Medicare plans will be subject to the “minimum medical loss ratio” regulation starting in 2014.
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