MA Plans Should Pivot Due to COVID, Election Impact This Fall

Reprinted with AIS Health permission from the April 27, 2020, issue of Health Plan Weekly

Bids for the 2021 Medicare Advantage and Part D plan year are due June 1, and new research on the 2020 Annual Election Period (AEP) suggests that seniors are flocking to MA plans primarily because of enhanced supplemental benefits such as over-the-counter (OTC) allowances and dental coverage, as well as $0 premium options, with notable growth in $0 PPO selections. But while lessons from the prior AEP can inform benefit design and marketing approaches for the next enrollment cycle, plans this fall will be challenged by the double whammy of a presidential election and a predicted second outbreak of COVID-19, industry experts observed during a recent webinar hosted by Gorman Health Group (GHG), a Convey Health Solutions company.

Growth of Individual PPOs Heats Up

Although individual HMO products continue to enroll the bulk of MA enrollees, one clear trend coming out of this recent AEP is the accelerated growth in individual PPO plans. According to a recent analysis of CMS data from Convey company Pareto Intelligence, enrollment in individual PPOs climbed 10.25% between November and January to more than 4.8 million enrollees, outpacing individual HMO growth of 5.43% to nearly 11.3 million members. About two-thirds of that growth was led by UnitedHealth Group and Humana Inc. — both of which followed Aetna Inc.’s 2019 lead by investing in individual PPO products — and most of that growth was in a $0 premium product, noted Diane Hollie, vice president of sales and marketing strategy with GHG, during the April 14 webinar, “Lessons Learned From the 2020 AEP.”

“We see strong growth in the $0 PPO game,” said George Dippel, senior vice president of client services with Deft Research, who also spoke during the webinar. “For the most part, this is a national play. In fact, if you looked at all the consumers this year who moved into a novel $0 PPO plan, 86% of them went to United, Humana, Aetna. We even saw Cigna move into the $0 PPO space in some markets, keeping in mind that for the most part they were a strict $0 HMO game.”

While these products exist across the country, with the strongest enrollment growth taking place in some of the central states and the Southeast, Deft Research predicts that the $0 PPO movement is “really just in its first innings,” said Dippel. Pointing to results from Deft’s 2020 Medicare Shopping and Switching Study, he observed that awareness of $0 PPO products has room to grow. Nearly half (47%) of current MA members who live in a county where such products exist have never heard of them, and as many as eight out of 10 Original Medicare consumers don’t know about them.

Seniors Value Word of Mouth

“Logic tells us that over time more consumers will hear about these products, the awareness numbers will come down…and we will begin to hit a critical mass of $0 PPO enrollment that will boost future cycles’ enrollment,” predicted Dippel. And previous Deft research has indicated that seniors feel most comfortable considering or selecting a new product if they know someone who has experience with it. With roughly one million seniors choosing a $0 PPO over the last two years, according to the 2020 study, “that’s another million more seniors who can socially bless $0 PPO products not just to their senior friends but to the age-in group of boomers who will come in over the next two to three years,” added Dippel.

And while it’s mainly existing MA enrollees who are migrating to new $0 PPO plans, Dippel noted that 2% of Medicare Supplement (MedSupp) customers who knew about $0 PPOs and lived in a county that offered such products moved to one for 2020. While that percentage may sound low, “that’s 2% of 15 million individual MedSupp consumers, [i.e.,] 300,000 MedSupp consumers [who] defected to MA and specifically to $0 PPO MA,” he pointed out. But the really “eyebrow-raising” statistic Deft observed is that 6% of people in Original Medicare only (i.e., in traditional Medicare with no MedSupp product) who had such a product available to them enrolled in a $0 PPO.

With those figures in mind, plans should “look at the complete product mix” — including Special Needs Plans and Employer Group Waiver Plans (EGWPs) if they make sense for your market — as a necessary step to attract non-MA enrollees, advised Hollie. And in most cases, plans will need to have a PPO product to get into the EGWP market, she added.

Speakers at the webinar advised that plans not be afraid to lower PPO cost sharing for out-of-network coverage from current rates of between 45% and 55% down to 20%, because GHG has seen “a minimal amount of out-of-network claims for PPO products” and the lower cost share may remove an element of fear for a consumer who’s considering switching to a PPO.

On top of $0 PPO products, plans should of course consider enhancing their supplemental benefits to the extent possible, keeping in mind that comprehensive dental coverage and OTC allowances were “really strong benefits this past AEP,” said Hollie. Additional analysis from Pareto showed that plan benefit packages featuring either comprehensive dental or OTC benefits experienced 27% enrollment growth this past enrollment cycle.

But while there was a higher-than-normal percent of consumers switching during the 2020 AEP, things could be very different this fall with a hotly contested election and what public health experts are warning could be another surge in COVID-19 cases once the current pandemic levels off this summer.

To that end, Hollie recommended that plans take the following into consideration:

  • Communication is key. “The one thing that we have found, especially with COVID-19, is that communication today with members is a must.…Make sure that communications are consistent in both tone and brand and that means throughout the process, whether it’s online, in email, mail, or coming from customer service or your care manager.”
  • In addition to making some strategic marketing investments in the “pre-AEP” period of Aug. 1 to Sept. 30, “you really need to be in the market between Oct. 1 and Nov. 3” when Medicare marketing will be going up against elections. “Understand your market — What elections are going on in the service area? Where are the dollars being spent in the service area? Will you have the dollars for TV? Or [will you] spend more on direct mail?”
  • Adopt a nimble marketing strategy. “Be prepared to readjust and pivot your marketing and sales strategy. Analytics are more crucial than ever before to help you drive the proper channels and list selections for your direct mail….Pressure test your call center [especially in the event that person-to-person sales events may not take place in the fall]. Is it really able to sell and not just be an order taker? Between the election and COVID-19, there is a lot of fear that you’re going to have to overcome this Annual Election Period to get switchers to move.” Also, test your online capabilities and be prepared for “DIY enrollment this AEP,” added a member of GHG’s senior leadership team.

by Lauren Flynn Kelly

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