Top Reasons Behind Retail, Medicare Advantage Plan Partnerships

September 18, 2023 - Payers such as UnitedHealthcare, Priority Health, and Anthem have pursued Medicare Advantage plan partnerships with retail companies. What is the attraction to this type of partnership?

Plans that are co-branded with retail companies are not prolific, but between 2021 and 2023 a couple of major payers and disruptors have adopted this approach.

In January 2024, Select Health will join the ranks of payers with co-branded Medicare Advantage plans when it launches its Kroger Health co-branded plan. In an email interview with HealthPayerIntelligence, Jason Worthen, vice president of government markets at Select Health, explained what motivated the decision to create a co-branded plan and the factors that Select Health considered when choosing a retail partner.

Overlapping populations

The partners in a Medicare Advantage-retail company collaboration should share a target consumer profile, Worthen recommended. Otherwise, the companies’ goals will not align and the product will not gain traction.

“We…serve a lot of the same communities, which will help us provide more options to our broad base of shared customers within the regions where we operate,” Worthen shared.

Select Health serves over a million members in Utah, Nevada, and Idaho. The Medicare Advantage plan that is co-branded with Kroger will be available to residents in select counties in these states as well as Colorado.

Kroger already has four stores in these regions that are part of the Kroger Family of Company stores: City Market, Fred Meyer, King Soopers, and Smith’s.

However, having an overlapping population refers to more than geographic location. Select Health and Kroger consumers share demographic characteristics as well.

According to Insider, Kroger’s customer base across its more than 2,700 stores largely consists of Baby Boomers, who are between the ages of 59 and 77 as of January 2023 and are mostly eligible for Medicare. The retail company enjoys considerable loyalty from its consumers, with 87 percent of Kroger consumers in 2021 returning in 2022.

When working with a retail partner that has a similar target market and garners strong loyalty from those consumers, a Medicare Advantage plan is more likely to have the benefits members need and the name recognition to attract enrollees.

Similar missions

Along with ensuring that both companies share a target demographic, the partners should review their missions to assess alignment.

Select Health invested a lot of time in evaluating the two companies’ missions and, ultimately, found that they converged.

“Through our conversations, we realized we have a lot of alignment on our missions—addressing health at the point of interaction with the community,” Worthen said.

Kroger Health’s mission involves creating health and wellness solutions while meeting consumers on a personal level. Select Health’s mission revolves around partnering with consumers to help them be their healthiest selves while keeping care affordable.

“We spent a lot of time in the early stages ensuring alignment on our mission, looking at how we could do things creatively, and how we could differentiate ourselves so that we can serve our common customers and solve access issues,” said Worthen. “Now we are excited to implement it!”

However, Worthen also named mission alignment as one of the key challenges of co-branding because of the amount of time and planning it requires.

Select Health plan started collaborating with Kroger Health in early 2023 to prepare for the new co-branded plan’s launch in 2024. They dedicated much of that time to assessing each company’s mission, Worthen explained.

Finding alignment between two well-established companies may be difficult, depending on the organization.

Consumer savings

Partnerships with retail companies can allow Medicare Advantage plans to address social determinants of health in a more natural and direct manner, resulting in some savings for the consumer.

Around 15 percent of seniors expected to experience food insecurity in the next year, an Alignment Healthcare study found. Many valued a monthly grocery allowance more highly than digital benefits like 24/7 telehealth access or virtual care. Food insecurity and economic instability are two of the top three social determinants of health barriers that seniors face.

As a result, partnering with retailers that offer access to healthcare and groceries at an affordable price can simplify access to care and reduce a key social determinant of health barrier.

“The plan offerings will increase access to options and services that promote health and wellness, and provide customer savings on groceries and prescription medications, which are some key points for our Medicare Advantage members,” Worthen shared.

In the past, Kroger Health has worked with its Medicare Advantage plan partners to lower grocery costs for members. The retailer’s first co-branded plan with Anthem provided members with a grocery card that the payer refilled with $100 per month. At the time, the partners anticipated that this benefit would lower members’ out-of-pocket costs and support healthy lifestyles.

Access to care, medications

Retail partnerships can also help Medicare Advantage plans lower members’ prescription drug spending.

Prescription drug spending among seniors has reached dire levels. Over six in ten seniors tried to reduce their prescription drug spending in 2021 (65 percent). While sometimes these efforts include attempts to switch to generics or requests for larger prescription supplies, some seniors may take steps that negatively impact their own health in order to reduce costs, such as going into debt to cover costs, skipping doses, or delaying prescription fills.

To address this issue, other Kroger Health co-branded Medicare Advantage plans have included benefits that reduce members’ out-of-pocket costs at pharmacies outside of their networks. They have also issued allowances for over-the-counter products, including pain relievers.

Connecting members’ retail and Medicare Advantage companies may enable better access to medications.

Medication access is one of the key metrics for success that Select Health intends to track. The payer will also monitor community health.

While co-branded plans with retail companies remain less prevalent in the Medicare Advantage space, they may help payers seeking to reduce prescription drug spending and improve access to care for seniors.