Featured Health Business Daily Story, Jan. 9, 2016

MA Shoppers Were Busy This AEP, But May Have Delayed Selections

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. Sign up for an $87 two-month trial subscription today.

By Lauren Flynn Kelly, Managing Editor
December 15, 2016Volume 22Issue 24

An earlier version of this story incorrectly stated that Connecture was formerly DestinationRx. Connecture in 2013 acquired DRX (formerly known as DestinationRx) to create an integrated online health plan distribution platform. The reference has been removed from this version for clarity.

In a preliminary look at the outcome of the recently concluded Medicare Advantage Annual Election Period (AEP), observations gathered from marketing experts indicate that shopping among MA and Part D consumers was active but that enrollees were slow to pull the trigger on narrowing down a plan. This could have been due to a variety of factors, from overall concerns about the cost and complexity of benefits to “noise” surrounding the Nov. 8 presidential election.

According to an analysis posted Dec. 6 by Connecture, Inc., which provides a web-based consumer shopping, enrollment and retention platform for health insurance distribution, overall shopping for MA and Part D plans increased 17% from last year’s AEP. That includes shopping sessions across all private client websites, including single carrier, call center and multicarrier broker sites. Moreover, shopping through multicarrier brokers was up 27%, and the share of all enrollments through multicarrier brokers grew 8.4% to 38.2%.

However, while the firm observed an increase in shopping activity, more consumers appeared to delay their selection and enrollment, as evidenced by a “surge” in enrollment on the last day of the AEP, reports Jim Yocum, senior vice president of federal programs with Connecture. In an interview with MAN, Yocum suggests that Prescription Drug Plan (PDP) enrollees may have been biding their time while considering a switch to an MA product, especially since monthly MA premiums continue to drop while Part D premiums are inching upward.

Medicare Advantage News

CMS in late September reported that the average monthly MA premium would fall by $1.19 in 2017, from $32.59 in 2016 to $31.40 next year, and that 67% of all MA beneficiaries would not face a premium hike, up from 59% for 2016 (MAN 9/29/16, p. 1). Meanwhile, CMS projected that the Part D average basic premium in 2017 would be $34 per month, or about $1.50 higher than the actual average basic Part D premium in 2016.

Additionally, Connecture observed that call center volume across all channels rose by 56%. And while that figure doesn’t reflect the last week of open enrollment, Yocum says Connecture found it to be an “early indication that people were reacting sharply to increased premiums,” he says. Coupling their early findings with the observed Dec. 7 flood of sign-ups, Yocum adds that it’s clear people were taking longer to evaluate their options and “feeling the financial pinch that gave them incentive to take time and do their shopping.”

Shoppers Are Advised to Consider Total Cost

Connecture observes that historically when there is a significant increase in Part D costs, beneficiaries need more time to identify their “best-fit” plans and make meaningful comparisons. That’s because even though cost-comparison tools like the ones provided by Connecture allow a beneficiary to go in and select a plan based on the total estimated annual cost (based on their drug usage, claims history, etc.), “many beneficiaries will still focus on that monthly premium cost,” asserts Yocum. “Unless they sit down with a cost-estimating tool that’s accurate, the next feedback they’ll get is when they actually go to the drugstore or go to the doctor and see what their out-of-pocket cost is, and over time, that will add up,” he explains.

Connecture in a previous study aggregated the total annual cost for a sample population of 50,000 Medicare beneficiaries and found that this group spent $172 million in total premium and out-of-pocket costs, or about $1,870 per beneficiary. If those same consumers signed up for plans based only on the lowest possible premium, their out-of-pocket costs would have been $2,229, or 16% higher than the sample, observes the firm. “So we’ve made the case multiple times and our argument is that beneficiaries should be making their evaluations based on total annual cost…which [in most cases] lead them to an enroll in an overall cheaper plan,” he adds.

Wunderman Health, which provides data analytics and technology-enabled marketing and helps several MA plans with their annual campaigns, also observed strong levels of early shopping and lead volume in September and October. Meanwhile, “the election and overall fatigue seemed to have lowered activity in the back half of the AEP,” reports Peter Rodes, senior vice president of strategy and consulting with Wunderman Health, a division of Wunderman.

Moreover, the firm saw a “rather significant drop in switching behavior,” with early reports from clients indicating an overall market drop anywhere from 15% to 25%, says Rodes. And that decline was widespread among its plans and across geographies.

Retention Efforts Are Critical

“Smart marketers are growing wise to this trend and we are increasingly counseling our clients to focus on lock-in marketing, products and retention initiatives,” observes Rodes. “These types of initiatives can help marketers meet and exceed net growth targets in this environment. Also, we are helping our clients, particularly those with dual eligibles, ramp up their retention efforts to improve it by 20% or more.”

Another factor that may have played into busier shopping this year, suggests Yocum, was CMS’s decision to halt the approval of new “seamless conversion” requests by insurers that wanted to transfer members from non-Medicare products into their MA plans once they became eligible (MAN 11/3/16, p. 5).

CMS in an Oct. 21 memo said it would temporarily stop taking new seamless enrollment proposals and review its policies. “I can’t speak for CMS, but I think this is a move to evaluate what the effect of removing the shopping component [for certain beneficiaries] has been on total program costs,” remarks Yocum. “So that’s one thing that might bear some fruit once CMS makes its decision known.”

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