Improving Medicare Advantage Retention: One Member at a Time
With first-wave baby boomers now in their 70s and roughly 10,000 Americans turning 65 each day, Medicare Advantage plans are the fastest-growing segment of the health insurance market. In 2023, 30.8 million people are enrolled in a Medicare Advantage plan, accounting for just over half, or 51%, of the eligible Medicare population.
While this sounds like good news for payers, a key feature of Medicare Advantage is that members can change plans from year to year. A recent study analyzing disenrollment patterns found that 48.3% of 82.4 million people covered by Medicare Advantage between 2011 and 2020 had left their plan within five years, and 53.4% of dual-eligible beneficiaries, meaning those jointly enrolled in Medicare and Medicaid, had disenrolled.
The researchers surmised that while such high rates of disenrollment could cause plans to reconsider programs in which potential benefits “may take time to materialize” and thus “accrue to competing insurers,” they could also be indicative of a healthy marketplace, with beneficiaries freely switching contracts as better choices become available.
The Cost of “Churning”
The average Medicare beneficiary now has 43 Medicare Advantage plans to choose from, the largest number ever. This competitive landscape is ratcheting up pressure on plans to retain members.
One reason is that the cost of enrollees leaving a plan and switching to another, or “churning,” can be substantial. By one estimate, a plan with 75,000 members and 14% churn will lose nearly half a billion dollars in revenue and $71 million in projected gross profit.
High disenrollment rates also disrupt continuity of care, increase utilization of high-cost services, and reduce ROI in population health programs such as annual wellness visits, vaccinations, and disease management.
Finally, with competition becoming more intense, payers have heavily invested in expensive features and benefits such as vision and dental coverage, flex cards, enhanced pharmacy benefits, and programs to address social determinants of health like loneliness.
But now, these “extras” are becoming table stakes, and personalized engagement is emerging as the critical factor for maintaining member loyalty and attracting new customers.
Scaling Personalized Engagement
While humans are masters at personalized engagement, high-touch human support is not easily scalable. To create a sound strategy, payers need to understand individuals’ singular needs throughout of their Medicare journey.
But despite vast repositories of data, payer databases have been traditionally siloed. Companies often rely on standard reporting and ad hoc analytical processes that fail to fully leverage member-level data across departments and functions, resulting in missed opportunities to better understand and support members.
By contrast, AI-enabled predictive capabilities can create a comprehensive whole-person view of each member’s healthcare goals and objectives and their social determinants of health, consumer behaviors, and other factors. And with these insights at their fingertips, health plans can focus more proactively on members’ needs not as ID numbers but as real people with complex, even contradictory, expectations.
Balancing the Human + AI Equation
So, how can payers improve retention by combining technology with the human touch? An important precondition is resisting the muscle memory of siloed strategies that lack the depth and scale required for true engagement.
With that said, plans can push back against churn by:
- Getting to know each member in context. A digitally supported personalization outreach strategy— one with the right data inputs, persona models, and feedback—can aggregate a wealth of existing member data to deploy a high-touch experience where it matters most. Fortified with data, such as who members are, their reasons for joining a plan, and their expectations moving forward, health plans can drive more enriching interactions distinguished by relatability, customer service, and brand.
- Proactively cultivating trust. A new report by J.D. Power cited trust and resolving problems as the factors most highly correlated with members renewing their Medicare Advantage plans. Similarly, a healthcare consumer survey conducted by Accenture found that clear communication and ease of engagement had the greatest impact on trust. Today’s analytic models can proactively flag experiences that could undermine trust—such as unanswered questions, inconsistent information, and poor customer service—and help mitigate negative impressions before they lead to disenrollment.
- Developing experiences that stick. Plan designs should forge a path for personalized experiences that resonate with members. Leaders might ask themselves: Are some of the offerings more appealing to one group of consumers over another? Are the trade-offs among factors like affordability, supplemental benefits, network flexibility, and ease of doing business clear? This calculus will become even more necessary as the experiences of the aging population and members affected by social determinants of health move to the forefront.
- Prioritizing Star Ratings from day one. The Medicare Advantage Star Ratings system analyzes quality scores based in part on the number of members who choose to leave a plan. For Medicare Advantage plans, strong Star Ratings can increase enrollment rates by 8%-12%. A strategy of personalizing member engagement through data-driven insights can improve retention by tracking each member’s experience before, during, and after a healthcare event, and addressing feedback to make improvements. Notably, the health equity index (HEI), scheduled to take effect for 2027 Star Ratings, will reward plans for closing care gaps affecting low-income subsidy, dual eligible, and disabled enrollees, thus reinforcing demand for this level of transparency.
For health plans, winning and keeping beneficiaries’ loyalty isn’t just about keeping pace with the latest coverage and benefit offerings. It’s also about delivering highly personalized service to meet members’ changing needs and expectations. The challenge is doing this at scale without providing a fragmented, disjointed member experience. Breaking down silos with the right balance of data analytics, high-touch human support, and operations expertise will be a prerequisite to meeting this challenge as whole-person models of the member journey evolve.