What constitutes the direct or variable costs in a health plan?

Claims and case management costs are considered direct or variable costs in a health plan because they fluctuate with the number of members and the volume of services utilized. As more individuals enroll in the health plan or as their healthcare needs change, the costs associated with processing claims and managing care will directly increase or decrease. This relationship highlights how variable costs are tied to the level of activity within the health plan, making these expenses essential for managing the financial health of the organization.

In contrast, marketing and administrative costs are typically classified as fixed costs since they generally do not change with the volume of services provided. Exempt staff salaries and equipment costs that vary with volume fall into different categories. Salaries tend to be fixed costs unless they vary significantly based on staff engagement levels, while equipment costs that fluctuate with volume could also be viewed through the lens of variable costs if they directly align with service demand. However, claims and case management are more directly linked to the delivery of care and member utilization, making them the best fit for direct or variable costs within a health plan.