Featured in Health Business Daily, Dec. 19, 2017

Blues Plans See More Competition in Medicare As National Players Invest in MA, Drug Plans

Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry. Subscribe today!

By Jane Anderson
October 2, 2017Volume 27Issue 34

Blue Cross and Blue Shield plans should prepare for a competitive Medicare Annual Election Period (AEP) as national insurers begin to shift resources from individual commercial marketplaces in various states to the more profitable, more secure Medicare Advantage (MA) and Part D markets, marketing analysts say.

“We think there’s going to be more competition this fall,” says Cary Badger, principal at HealthScape Advisors, LLC, in Chicago. “National plans [including Anthem, Inc., Cigna Corp., Aetna Inc., and Humana Inc.] are going to be more aggressive since they’re not going through mergers and acquisitions. There’s [also] going to be a lot more people shopping because there’s no [presidential] election.”

In addition, marketing budgets have increased from 2016, Badger says. “Plans are in a growth mode. Our impression is that virtually all MA plans will be more aggressive, including Blue plans. Local strategies will differ based on historical performance, but growth and competitive positioning is high on everyone’s list.” With the stock market at an all-time high, more people are retiring, presenting opportunities to lure new members, he says. “Blue plans should expect a different level of response and a much different mix of enrollment than in past years.”

Health Plan Week

Blues Face More Rivals in MA Space

Linda Armstrong, executive vice president and practice leader for marketing firm DMW Direct in Chesterbrook, Pa., agrees that there will be more competition for MA, Part D and Medicare supplemental members this year. “From some DMW Direct pre-AEP intelligence, we are seeing that the national carriers are expanding their market footprints in many of the Blues markets with extremely competitive products,” Armstrong tells AIS Health. “This will definitely make this year different from last year, which was relatively quiet....Since many of these national carriers are getting out of the many [Affordable Care Act] markets, they are using those dollars to come after the lucrative Medicare Advantage market.”

As a result, Armstrong has worked with her Blues clients this year “to emphasize their localness and longevity as well as the power of having a Blue plan,” she says. “The Blues are headquartered in the markets they serve and have served those areas for over half a century. These are key differentiators for them.”

In markets where DMW Direct has been able to gain some intelligence about competitors’ products, “the Blues we work with will be showcasing those benefits where they are able to compete most aggressively with the nationals,” Armstrong says. “Plans are holding to the $0 premium wherever possible — both Blues and the nationals — so with that as a level playing field they will need other benefits to attract the attention of seniors. Rx copays and drug formularies are always of interest to seniors. MOOP [maximum out-of-pocket spending] has also become a point of interest...in recent years.”

Carriers Still Rely on Direct Mail

Direct mail continues to be the foundation of AEP marketing plans, Armstrong says, and direct response television marketing “remains a significant support and lead-generating media.” Badger agrees, although he adds a caveat: “Direct mail is a staple and gets high readership by seniors. But there are challenges with clutter and diminishing returns for higher membership attainment, which requires a more sophisticated mix of traditional and non-traditional media.”

“Overall, we see our clients being much more focused on segmentation of the market and alignment to the shopping channels preferred by their customers,” Badger says. With the increasing population of baby boomers entering the MA market, “there is a renewed interest in multichannel shopping experiences that can be co-navigated — net, media, direct, telephone and chat — in addition to...brokers and agents.” Social media builds awareness, but it hasn’t been fully leveraged yet by MA consumers for ratings, reviews or referrals, he says.

Meanwhile, Armstrong says Blues plans that have tried “over-the-top” (OTT) marketing campaigns that are delivered as part of direct-streamed television programming “have been pleased with the results. Although seniors are often not considered savvy enough to use OTT, the results prove that it works. Boomers and those seniors to whom cable has become cost-prohibitive are likely to become cord cutters or cord shavers,” she says.

“The part digital media plays in the AEP — as well as throughout the year — continues to grow dramatically,” Armstrong says. “Facebook ads, SEM [search engine marketing] and re-targeting are all an integral part of any AEP campaign we put together and a significant part of the budget.” Digital ads gobble up an ever-increasing amount of the budget, she says. “As new forms appear in digital, we are testing out their value such as the lead ads in Facebook. This new development for last year proved itself and will be a part of this year’s campaign. Facebook ads continue to work well for the 65+ market.”

ACA Repeal Debate Could Sow Confusion

Badger says the continuing debate — and therefore public confusion — over repeal of the Affordable Care Act may even drive some shopping behavior among Medicare enrollees, who won’t realize they aren’t affected by efforts to replace the ACA. Many Blues plans are major players in their states’ individual exchanges, and so if MA enrollees hear on the news that their local Blue plan is pulling out of the exchange, those MA enrollees may mistakenly think they need a new plan, he says. HealthScape Advisors has recommended that clients ramp up communications to members in response.

DMW Direct also is working with clients to “create awareness that Medicare itself is not a part of what’s going on,” Armstrong says. “We also make [beneficiaries] aware that the plans they use to fill Medicare’s gaps do change every year and they need to check and see if they have the right plan.”

In addition, she notes that retention is definitely a part of the AEP, as well as a year-long focus. “With the increased competition this year, we encourage our clients to send out post-ANOC [annual notice of change] mailings to members. These arrive at the beginning of the AEP and accomplish two things: (1) summarize in easy-to-understand language what their benefits are for the upcoming year; and (2) serve as a retention device by reminding the member of the wise choice they made in having coverage with the plan. The mailing also encourages them to sit back and enjoy the AEP — they are covered and needn’t look anywhere else.”


Get timely, objective business, financial and regulatory news of the health insurance industry each week with your own subscription to AIS's Health Plan Week. Learn more and subscribe today!

Copyright © 2017 Managed Markets Insight & Technology, LLC. All Rights Reserved.

It's quick and easy to sign up for FREE access to AISHealth.com!

Why do I need to register?