Private Payers News

4 Ways Payers Can Stay Competitive with Medicare Advantage Plans

As consumers increasingly seek out Medicare Advantage plans, how can payers stay competitive in a crowded market?

How can payers stay competitive with Medicare Advantage

Source: Thinkstock

By Jesse Migneault

- With an aging population and soaring healthcare costs, the public interest in Medicare Advantage (MA) plans has been steadily increasing.   As the marketplace becomes crowded with plan options and insurers, payers must understand how to remain competitive by addressing four critical areas of member satisfaction: consumer-centric offerings, robust customer service, manageable costs, and a sterling reputation.  

More than 90 percent of consumers are satisfied with their Medicare Advantage plans, says a recent survey by AHIP, due largely to the fact that MA offers increased financial security by placing a cap on annual out-of-pocket expenses.   

For seniors, retirees and people with qualifying disabilities, the choice of a Medicare supplement plan is a critical component of their healthcare strategy. 

Currently, over 18 million American seniors and people with disabilities, or close to 30 percent of Medicare beneficiaries in the nation, are enrolled in a Medicare Advantage health insurance plan.  The plans have seen a 60 percent growth in enrollment since 2010.

The four most popular types of MA plans include Health Maintenance Organization (HMO) Plans, Preferred Provider Organization (PPO) Plans, Private Fee-for-Service (PFFS) Plans, and Special Needs Plans (SNPs).

READ MORE: Medicare Advantage Plans Decrease Avoidable Hospitalizations

In order to keep their MA plans competitive, payers should consider where they stand in these four categories.

Make it consumer-centric

The sheer number of MA plans and options, all with differing out-of-pocket costs and coverage exemptions, has created an information overload that can be difficult for consumers to absorb.  The solution is for payers to make it easier for members to access policy information. 

“Many plans have a multitude of product design features and provide technical manuals of 20 pages or more,” said Valerie Monet, director of the insurance practice at J.D. Power. “Expecting members to become experts across the broad range of services and benefits offered is ultimately a losing battle for both the plan and the member.”

The move towards a more customer-centric approach should begin at enrollment. Payers should offer a user-friendly way for members to determine which benefits they need and how to understand costs and services.   

READ MORE: Cigna Re-enters Medicare Advantage Market With CMS Approval

“Members are looking for their plan to be a trusted partner, and that begins at enrollment,” Monet said. “They are expecting their plan to provide guidance, ranging from assistance in selecting a doctor to helping them understand costs for prescriptions.” 

The difficulty of navigating this maze of supplement plans has even spawned a new type of business.  The internet is full of websites dedicated to helping enrollees choose a Medicare supplement plan that works best for them - and more importantly how and where to get it. 

Deliver effective customer service

This essential element can truly separate an average insurer from a great insurer.  It can also turn an enthusiastic member – and brand ambassador - into a disgruntled ex-customer who can’t wait to tell their friends and neighbors about how horrible their experience was. 

Perhaps most importantly, customer service is often the only direct contact a member will have with a payer. 

READ MORE: The Impact of Medicare Advantage Plans, ACOs, Payment Reform

When a member reaches out to an insurer, they not only expect an immediate response, but also a resolution to their problem.  If a member perceives a lack of concern from the payer, that has a direct impact on plan satisfaction.

In a 2016 J.D. Power survey,  41 percent of members indicated they were required to provide the same information more than once in order to receive a resolution during a call to their payers’ customer service centers.

When inquiring about the costs of prescription drugs, only 35 percent of members stated they received all the information they needed from customer service.

For a payer to maximize their customer service offerings, they should consider expanding their available hours, hiring local agents, and leveraging existing relationships. 

Members need to be able to reach customer service representatives, not sales reps, at reliable and convenient hours.  This primarily involves contact by phone, either through the member calling a contact center, or being called by a plan representative.  There are also members who prefer an in-person visit with an agent or payer representative. 

Perhaps the most influential extension of customer service is when payers build upon an existing relationship.

Ongoing relationships can also help payers develop business for other products. For large payers that offer additional verticals, the bundling of those products with MA plans can be an advantageous way to leverage existing product lines.  The availability of additional bundled products at discounted rates can be an incentive for a member to work with a insurer.

Control costs and offer price transparency

Price is a primary consideration when shopping for any type of product.  For individuals on fixed incomes or facing retirement, a thorough understanding of the financial impacts of their healthcare decisions is essential.

“Members who have a greater understanding of the costs—how much they are paying and what those costs cover—see the value their plan provides and, thus, are more satisfied with their health plan provider,” said Monet.

This does not only include premiums, but also out-of-pocket expenses.  According to JD Power, the greatest factor in driving down member satisfaction with an MA plan are unknown additional costs attached to using the policy.  This is something that payers can remedy with better communication during the pre-enrollment period.

Base premium prices for members can vary greatly between different insurers, something that consumers definitely consider when shopping for a plan.   The variance in premiums can stem from factors such as age, location, and medical underwriting, as well as any discounts that are applied to the premium.

Develop an impeccable reputation

Consumers can often choose from multiple payers when purchasing a Medicare supplement plan.  A company’s reputation is often the determining factor for consumer decision-making.

Consumers can take advantage of the CMS star rating system when evaluating their options.

The five star rating tool is used to determine the overall quality of a Medicare supplement plan.  The star ratings are critical components of the reputation of an insurer and their Medicare supplement products. 

For MA plans, the star ratings measure five key categories: availability and delivery of preventive care and screenings, how well patients are able to manage their chronic diseases, quality of customer service, member experiences, and complaints or issues with the company.

Still, the strongest recommendations for a product such as health insurance come from the family and friends of the potential member.    

For members of MA plans who reported high overall satisfaction scores, nine out of ten planned to renew.  The same number stated they would refer the plan to a friend or family member. 

When member satisfaction was just marginally decreased, renewal rates and potential referral rates dropped to 71 and 66 percent, respectively. 

The opportunities for growth in offering MA plans are abundant, but must be measured with an understanding that competition is also growing. Payers that can offer satisfactory customer service, price transparency, and reasonable costs while maintaining a good industry reputation will have an edge over their peers as the Medicare Advantage marketplace continues to grow.