For the past 12 years, Deft Research has tracked Medicare consumer shopping and switching behavior during each fall’s annual enrollment period, or the fall AEP. The results of these national studies have many uses including predictive modeling, but most people first become familiar with them through the annual report Medicare Shopping and Switching.
The Breakdown
During the 2018 AEP, the rate at which seniors switched health plans or insurers was 9% or almost one in ten. This is an almost identical rate to the year before; and overall, part of a trend in which we have observed switching rates to be declining since 2015.
Medicare Advantage members switched at higher rates than did MedSupp customers. The switching rate for MA members was 11% compared to only 6% for MedSupp customers.
Top reasons for switching include the senior consumer’s health status and their own sense of future health services usage. Seniors who switched were more likely, in the past year, to have visited an emergency room, needed more doctor’s visits, or to have more chronic conditions. Almost two-thirds of all switchers had a greater need for doctor’s visits.
Another top driver of switching was dissatisfaction with the cost and coverage of brand name drugs. Nearly 60% of those who eventually switched said they started their shopping journey as a quest for better brand drug coverage.
The Story
This short set of highlights can’t tell the whole senior shopping and switching story, but this part of the story points to changing and complicated health situations that, in turn, lead to negative experiences with insurance and providers. When seniors are battling more than one chronic condition or health situations of increasing complexity and instability, drug therapy is almost always a first line of treatment.
And, while we have discussed elsewhere how changing CMS reimbursement is no longer driving consumer switching, in 2017, the shopper and switcher story does indeed include annual changes in coverage. Although not widely reported or generally discussed, a constant across the years has been that drug formularies always change.
Each year the major pharmacy formularies serving most Medicare seniors are adjusted. Express Scripts and Caremark, for example, removed more than 80 drugs from their 2018 formularies. And they added almost 20 previously excluded drugs back. Sometimes changes coincide with publicized stories: for example, the cost of the EpiPen triggered Express Scripts to take it off formulary; the opioid crisis has led to many changes in how these drugs are covered. At other times, the reasons for change may be less accessible to any of us. New information about effectiveness, or a better financial deal from the pharmaceutical’s manufacturer are two reasons for changing a formulary.
Perennial changes in formularies lead to disruption in health consumers’ health regimens and in their personal finances. If a consumer’s health status worsens, a new prescription might cost hundreds of dollars per month and this often completely changes the consumers’ perception of the adequacy and fairness of their coverage.
Formulary and health changes account for much of the explanation for why brand drug coverage is at the top of the list of reasons for senior shopping and switching.
A related issue has to do with the relationships between health plans, seniors, and physicians. The University of Michigan recently published a “National Poll on Healthy Aging”. The study found that most seniors and doctors do not discuss the cost of the drugs they are being prescribed. But, according to the study, when seniors did have a conversation about drug costs with their doctor, in two out of every three cases, they received a prescription for a lower cost drug.
The high prevalence of dissatisfaction with drug coverage could be addressed by encouraging seniors to ask physicians about drug prices and their total out-of-pocket costs for all the drugs they are taking. Given the Michigan study, it is likely, that without needing to switch health plans, a better cost and benefit situation can be prescribed and satisfaction with the coverage restored.
The health plan plays an important role in helping physicians to ascertain drug costs and in helping them find alternatives. More than anything, health plan communications should encourage these conversations and re-prescribing. Not only will this help stem the loss of membership to competitors, it will contribute to a better member experience and through that measure, possibly higher quality ratings.