The return of the Medicare Open Enrollment Period (OEP) was fraught with uncertainty. No one knew how many Medicare Advantage (MA) members would use this year’s January 1-March 31 time period to switch plans or insurers, but now health plans can use the results of what happened to determine what to do during next year’s OEP as well as the traditional annual enrollment period (AEP). Here is what we’ve learned.
1. The market was more active than predicted–and could be a precursor of things to come
To get a sense of how many seniors were even aware of the OEP and the opportunity to switch plans or carriers after they enrolled, Deft Research included a question in its Medicare member experience survey in August 2018. At the time, only 1 out of 4 seniors knew the OEP existed, according to George Dippel, senior VP of client services, Deft Research, LLC., one of the speakers at RISE’s recent webinar, Medicare’s OEP: What Happened and Why. As a result, the research firm estimated that the OEP would produce a 3 percent switch rate among MA members.
But by April 2019–when the firm conducted its 2019 OEP Supplement Study as an add-on to its Medicare Shopping and Switching Study–two-thirds of seniors were aware of the OEP. Awareness ballooned over the eight-month period between the studies, Dippel said, which led to exaggerated shopping and switching.
How did consumers learn about the OEP? Some heard about it through agents, some read about it in the news or Medicare.gov, and others said they saw it on television. Although no ads could mention OEP, direct response ads indicated consumers still had time to select plans. The awareness led to a total switch rate of 4.5 percent, and Dippel believes next year’s OEP might see a higher switch rate.
2. It’s time to rethink the lifetime value of a member
The Deft research also found that that among members who switched during the AEP, 25 percent of those members also switched during the OEP. “The folks most active were those who made the change three months prior,” he said, adding that of those members, 15 percent switched insurers.
That 15 percent figure is sobering considering how much it takes to get someone to enroll in a health plan during the AEP. “It’s a 1 out of 7 loss rate,” Dippel said. The high switch-out rate means carriers must rethink the return on investment and lifetime value equations of members. “We spend a lot of money marketing for every application. We may have to rethink this if it means 1 out of 7 will leave three months later.”
Other key findings from the research:
- If a member didn’t switch carriers or plans during the AEP, they likely would not shop and switch during the OEP. “If you have a member from January 1 through October 15 and he doesn’t switch out on December 7, he’ll stay loyal to you during the OEP,” Dippel said. The takeaway? During the OEP, make sure you fortify your relationship with these hard-fought members.
- At the end of the AEP period, the industry crossed 35 percent MA participation for the first time. But by the end of the OEP, that number dipped to 34.7 percent. “Clearly CMS wants to see MA penetration grow. They have a lofty goal of 50 percent by 2025,” Dippel said. But that will be difficult to achieve, he said, if every OEP the industry loses a quarter point of AEP penetration that it fought so hard to earn in the fall.
3. Supplemental benefits helped sway members to switch plans, carriers
One out of eight consumers who switched plans during the OEP said they did so because of the new supplemental benefits offered, according to Dippel. But only 1 out of 5 carriers were able to work new supplemental benefits into their 2019 design. This means that consumers may not have understood what was available this year and which insurers offered those plans during the AEP, but they were aware of them in January.
Dippel predicts that supplemental benefits will play an even greater role in the 2020 AEP and 2020 OEP as more carriers incorporate them into their offerings.
4. Television advertising may have influenced switchers
The increase in OEP awareness that Deft noted in its research may have a lot to do with the amount of money marketplace advertisers spent on television ads, according to Renée Mezzanotte, EVP/client engagement, DMW.
“TV definitely saw a significant increase in activity. Year over year–January to March–saw an increase of 28 percent. And it wasn’t just national advertising–local advertising increased as well,” she said during the webinar. Mezzanotte added that DMW’s clients realized the benefits of increasing their direct response television (DRTV) presence. Overall, clients achieved a 37 percent decrease in their DRTV cost per lead.
Her advice: Plans should increase their “CMS-compliant market presence” to attract new members.
5. But long-term loyalty is based on how well members understand their benefits
Consumer satisfaction is often tied with how well carriers help them understand their long-term benefits, according to Dippel.
If 1 out of 4 consumers is confused about benefits on January 1 that is a concern because that means that one consumer can now walk out of his or her chosen plan, Dippel said. “In the past you had time to help folks understand their benefits. Now you don’t. We have to do a better job on January 1 or before January 1 to help them understand their benefits, otherwise we are at risk of losing them. Now we have a zero-day grace period,” Dippel said.
His advice: Don’t wait until January 1 to educate members about their benefits. Start the orientation as soon as the application comes in. The more time consumers have to understand the plan, the more loyal they are to the plan.
6. That means the member onboarding experience must be top notch
Many members won’t have had any experience with your carrier so any perceived mistake could lead them to leave during the OEP, Jameson Keller, VP of strategic development, AgencyRM, said during the webinar.
Therefore, the enrollment team must ensure members have a seamless enrollment and onboarding experience, he said. Indeed, agents heard from clients who were upset with the enrollment process or onboarding experience, and as a result they often decided to switch plans. In some cases, clients felt there was no acknowledgement of their enrollment, so they panicked, which caused them to shop and switch.
Consumers are no longer stuck for a year with a plan they don’t like, so Keller encouraged carriers to spend as much time and money on the enrollment process as they do sales and marketing to retain members.
7. Winning member retention strategies may require a multi-prong approach
Kortney Cruz, director, Medicare sales and marketing, Independence Blue Cross, said her health plan decided to use the AEP and new OEP to focus on education and retention of members within five counties in Southeastern Philadelphia. This involved making sure to use the onboarding process so new members understood plans, cost-sharing responsibilities, and what they could expect from their overall experience. It also meant looking for other ways to engage them beyond the traditional orientation phone call, which it renamed “hug calls.”
The carrier sent out thank you cards to build connections with their members and incorporated personalized touches in email or mail to engage them. Cruz said the team used educational tools, guides, whitepapers, and blogs to encourage members to attend health plan on-site events and webinars. Other strategies focused on digital promotions, including posts on Facebook and educational blogs to tout Independence’s supplemental benefits. The insurer also used gamification, such as puzzles that members collected along the way and when they came up with the final answer, they could call telesales to win a gift card.
The result: strong member participation and enrollment that was on par with what the insurer experienced in Q1 2018. “That is a win,” Cruz said because there was no negative OEP affect. Now the health plan intends to do deeper research to identify whether the OEP was not as big an issue in the five-county area or whether the tactics Independence employed during the AEP and OEP were factors in their decision to remain with their selected plans.
Editor’s note: RISE is making the 70-minute webinar on the 2019 Medicare OEP available to all members. To access the webinar, click here and use the password DMW2019.