Medicare Advantage plans can’t afford to overlook the importance of over-the-counter benefits. Many have added or are thinking of offering this kind of coverage;
in fact, more than half of all MA beneficiaries currently have access to OTC benefits. Unfortunately, these benefits are often offered in a cursory manner, to check a box and ensure the plan has the same features as its competition. Alternatively, plans that are investing in an OTC benefit should consider better leveraging this benefit to advance their strategic goals.
Common strategic goals for health plans include:
- enrollment growth
- improved revenues and member retention (reduction in churn rates)
- lower costs of care for targeted chronic conditions
- attention to social determinants of health
- higher Star program ratings
- higher member satisfaction
Member satisfaction in particular is critical for MA plans to thrive in an increasingly crowded marketplace. Therefore, MA plans must craft their benefits to maximize customer satisfaction and to include products that are meaningful to members and provide something they can actually use.
This can be accomplished with:
- incentives and wellness initiatives
- nutrition education
- fall prevention programs
- clinical engagement with a focus on chronic conditions
- solutions and services that address social determinants of health
- a robust OTC benefit offering
Research shows that higher utilization by members of the plan’s OTC benefit program contributes to improved member health, satisfaction and reductions in costs of care.
Higher ratings and member satisfaction:
“Comprehensive, integrated OTC programs tend to result in highly satisfied members,” says Jonathan Starr, executive vice president of Convey Health Solutions. Flexibility is also important, so plans can focus their efforts on measures that directly affect ratings, such as fall prevention and bladder-control products. This is key for market share goals as well, as Navigant has found a one-star improvement correlates with an 8% to 12% enrollment increase.
Satisfaction with an OTC benefit is especially important among members with chronic illness, as survey results show the majority of MA plan members feel their health plans aren’t doing enough to help them manage their conditions. This includes lack of personalization for concerns related to specific conditions, which leads to poor follow-through on the recommendations the plan does give. Plans should be aware that beginning in 2019, CMS expanded the definition of “primarily health-related” to consider an item or service as primarily health related if it is used to diagnose, compensate for physical impairments, acts to ameliorate the functional / psychological impact of injuries or health conditions, or reduces avoidable emergency and healthcare utilization. In 2020, MA plans should be taking full advantage of the opportunity to tailor OTC benefits to chronically ill members and other specific populations to better serve their needs and conditions, while ensuring they do so in compliance with CMS regulations.
Deft Research’s 2019 Medicare Shopping and Switching study has indicated supplemental benefits are a significant consideration in MA plan shopping. An analysis by Pareto Intelligence, an affiliate of Convey Health Solutions, found that in the annual enrollment period, OTC benefits were the most popular supplemental benefit for Medicare Advantage patients, with more than 51% of the MA population having access to an OTC benefit in their plan. “Plans that offered an over-the-counter benefit saw growth of 4.8% during the annual enrollment period, while those that did not offer this kind of benefit shrank by 1.2%,” said Tom Pelegrin, Convey’s senior vice president and chief revenue officer.
Higher retention and revenue:
“Retention is also substantially higher among MA plan members with an OTC benefit,” notes Starr. That retention and growth in turn translate to significant savings and higher revenue for plans. Medicare Advantage members may contribute revenue of over $10,000 a year, per member, which adds up quickly. The lifetime value of an MA member is more than three times the value of a large-group member. Retention is especially important now, as MA members have more choices than ever and the ability to change plans if they are unsatisfied with their initial choice. This year, more than 2,700 MA plans were available nationwide, and switching rates are higher among younger MA members, at 12% for those ages 65 to 75, compared with 7% for those ages 85 and older.
Lower care costs:
OTC benefits can also help health plans control rising care costs. Research has shown that every $1 spent on OTC care brings more than $7 in savings in health care costs. Plans can realize significant savings if they tailor OTC benefits to members with chronic illness and those who have had recent surgery or certain inpatient treatments. For example, UPMC Health Plan notes about 25% of its Medicare Advantage members have diabetes. These members can benefit from OTC products like diabetic socks and sugar-free cough syrup to improve health outcomes and avoid the negative consequences of poorly managing their conditions. “An OTC benefit should also offer clinical support to assist in treatment of certain conditions and adherence, and plans should leverage the OTC benefit to support other health plan benefits, such as wellness assessments,” Pelegrin says.
Addressing Social Determinants of Health (SDOH):
Social determinants of health have been in the spotlight in recent years, as data show addressing these factors can both improve health and reduce health disparities among plan members. As a result, plans are increasingly integrating programs to address social determinants of health among seniors, and an OTC benefit can be designed to address specific social determinants as well as conditions that are more prevalent among certain populations. This could involve providing equipment to improve living conditions for homebound or elderly people, medical devices like braces and muscle stimulators to help with pain relief and mobility, and smoking cessation products like gum and patches. An OTC benefit also helps members with limited income, as it can bring savings of at least 40% on OTC medicines and products.
Research suggests health plans that optimize technology for administrative functions with end-to-end approaches, automation and other changes could achieve cost savings of up to 40% in some areas. A simple starting place is to consolidate vendors and partner with those that offer integrated solutions as an avenue to save money, streamline technology, improve data flow and provide more coordinated offerings. For example, Convey provides comprehensive, integrated OTC technology, member management support and operational software. It also supports sales and marketing initiatives, including member communications and sales events. Convey is currently working with plans to expand into transportation, meals and wellness incentives for further coordination and optimization.
Many Medicare Advantage plans are already offering an OTC benefit due to their high popularity among members. However, they may not be making the most of their opportunity to leverage these benefits to achieve strategic business goals. Plans that seize this opportunity will not only improve immediate health outcomes for members, they will also improve the health of the plan and its ability to continue meeting member needs.
Convey Health Solutions focuses on building specific technologies and services that can uniquely meet the needs of government-sponsored health plans. Convey provides member management, supplemental benefit management and advisory solutions for the rapidly changing health care world. To learn more about how Convey is the right OTC benefit partner for your health plan, please visit our Miramar:OTC page.