Given the current environment in the Medicare marketplace, we’re likely headed for one of the most disruptive AEPs in recent years.
The warning comes from Rob Lourenço, VP of client services, Deft Research, this year’s keynote for the AEP Medicare Readiness Summit, which takes place June 26-27 at the Hyatt Regency Coral Gables, Florida. He’ll kick off the conference with a presentation offering insights for AEP readiness.
Last AEP, the industry saw 13 percent of Medicare eligibles switch into new coverage–the highest rate since 2015. Lourenço also expects elevated churn this AEP due to a second year of reimbursement rate cuts, which will result in leaner benefit designs and higher costs.
“With less CMS dollars flowing in the system, carriers have less to work with and have to really tighten their belts when it comes to benefit design. As they do that, members are going to start looking around to see who else is out there that may have something better,” Lourenço told RISE during an interview about his upcoming presentation.
Lourenço also says that he is expecting a tumultuous AEP based on recent earning calls of large national carriers. For instance, one mentioned it was going to cut supplemental benefits six times during its call and another has stated it will exit certain Medicare Advantage markets and focus on profit margin instead of growth or market share.
In addition, Lourenço says he is looking ahead to the next round of changes in the Medicare market, particularly for Part D beneficiaries, due to the Inflation Reduction Act. In 2025, Part D beneficiaries will have a $2,000 cap on their annual out-of-pocket prescription drug costs. The benefit design changes will inevitably lead carriers to raise costs in other areas, he says. Beneficiaries with first-dollar coverage may now face a drug deductible for the first time, higher premiums, or an increase in cost sharing. “These are major changes,” Lourenço says
So how do marketers prepare for the upcoming AEP? “Pulling out the old playbook and doing what we typically do is probably not the best bet,” Lourenço says.
Given that a third of Medicare Advantage (MA) members do not read their Annual Notice of Changes (ANOC), health plans should consider getting ahead of the disruption by creating appealing, user-friendly marketing pieces targeting populations at substantial risk of switching plans, he says. Even those who don’t read their ANOC will eventually learn about negative plan changes when they use their coverage in the new year.
“If we don’t go out of our way to get a ‘friendly ANOC’ to our members, highlighting the positive changes to their plan, we may be in for more churn than we bargain for,” he says.
Some of the most likely populations to shop and switch plans, Lourenço says, are low-tenure members (on the plan for less than a year), younger seniors, and seniors with lower incomes.
“You can’t hand hold everyone, but if you know who tends to be more likely to move, a targeted member engagement or member loyalty campaign may help you keep some of these consumers you fought so hard to win,” he says.
Lourenço will present more insights into AEP during his keynote on Wednesday morning, June 26, the first day of the two-day AEP Medicare Readiness Summit at the Hyatt Regency Coral Gables, Florida. Click here for the full agenda, roster of speakers, and how to register.