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In the wake of healthcare reform, administrative cost cutting has been a primary strategy deployed by healthcare payers as a result of caps put on how fast payers can raise premium rates and new compliance costs associated with implementation of the ACA. However, administrative cost cutting alone is not a sustainable fix. Administrative costs account for only 15% of the total medical loss ratio (MLR) for large plans and only 20% for small plans. Therefore, while Healthcare organizations have aggressively focused on reducing the administrative cost side, it only represents a small part of a much larger problem.
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