Which of the following is true regarding the cost structure of a health plan?

Claims processing being considered an indirect variable cost reflects an important aspect of healthcare financial management. In health plans, the cost associated with claims processing varies with the volume of claims processed. Therefore, as the number of claims increases, the overall cost associated with processing those claims typically rises as well. This characteristic aligns with the definition of variable costs, which change in proportion to production or business activity levels.

Moreover, claims processing is indirect because it supports the core function of the health plan—servicing claims—without being directly tied to the direct provision of care. Understanding this classification is crucial for health plans as it helps in analyzing and managing operational expenses, leading to more accurate budgeting and strategic decision-making in the competitive healthcare marketplace.

In this context, recognizing the nature of these costs aids in a comprehensive understanding of the overall cost structure, assisting financial professionals in developing effective strategies to control expenses while ensuring operational efficiency.