Medicare members are digitally savvy and have embraced technology in new ways since the COVID-19 pandemic. According to one survey, 61% of respondents noted that they have been using technology more during the pandemic, which has naturally accelerated the pace at which health plan providers are rolling out digital solutions.
In order to achieve acquisition and retention goals, Medicare Advantage (MA) providers must focus on the customer and their increasing digital expectations. Putting people first is critical to create a meaningful and suitable healthcare plan that covers customer health needs, however complex these may be.
The MA challenge for health plans is two-fold: a) differentiate against the noise on member acquisition and b) the second-sell, which happens each year to retain the member. To achieve a people-centric plan of engagement for both acquisition and retention, MA providers are considering how to create personalized experiences and leverage direct-to-consumer (D2C) marketing approaches.
Medicare Market Size and Opportunity
Enrollment in MA has steadily climbed for the past two consecutive years as baby boomers continue to age into the program. In fact, MA made up 42% of all Medicare recipients in 2021, and each day 10,000 boomers turn 65, thus becoming eligible customers in this healthcare segment. Enrollment in Medicare has nearly doubled over the past decade, from 12 million in 2011 to 26 million in 2021. These figures are expected to rise to 51% by 2030 as the Medicare market is attracting new entrants.
While the market size is increasing, so is the competition. In 2022, 20 new insurers entered the market for the first time. An average Medicare member has plenty of choices in selecting MA plans—there are around 30 plans per member, and more than 3,800 MA plans will be available across the U.S. in 2022. This growth in options is making member acquisition more important than ever.
While the opportunity is big, the differentiation challenge against the MA noise is even bigger.
Why Do Medicare Advantage Members Switch Plans?
Recent research shows that 42% of MA members stick with their plans, but 22% switch plans after just one year. The complexities of MA often drive members to seek answers elsewhere, but providers can increase retention by providing the clarity and resources they need up front. Here are four reasons why members tend to switch plans.
People don't understand how to choose a plan
People are constantly trying to learn about Medicare and its many changes each year. They often don't understand plan changes one year to the next, and whether changes are specific to their plan or Medicare in general.
Often customers don’t understand Medicare after coming from an employer plan as the plan shopping experience can be confusing. They are considering the premium, primary care provider (PCP) part of the plan, prescriptions covered and cost of drugs. In-network physicians and specialists near customers is also top of mind for those enrolling in Medicare. Thus, people often switch plans without enough research. A guided personalized experience may help customize plan selection and help people understand their plan particularly during pre-effective dates.
People may have complex healthcare needs
Plans may not meet the preferences of enrollees with significant chronic illness, which can create complications to measuring performance and risks of MA plans. Plan providers may find that enrollees with complex care needs leave the MA program. There is an opportunity to learn more about what is driving them away, perhaps with a higher-touch experience.
Value or perceived value influences people’s decision-making
Reasons for changing plans often center around value. Out-of-pocket costs are one of the biggest issues for all medically insured individuals, so an unexpected bill can drive a member to disenroll from a program. Other key factors determining retention rates are price, as it costs $0 for a MA member to switch plans, providers not in a network, unsatisfactory customer service, and members that don’t understand MA value or benefits.
Customer service is not always tailored to individual needs
Interacting with customers during enrollment can help them clearly understand plan benefits and make the right selection. Each Medicare member is unique and needs a mix of digital and human touch, such as agents and customer service support, to help shop for the right plan. The nature of the second-sell requires delivering on an unmatched experience that meets the unique needs of each member. Every interaction is a retention opportunity.
How Personalization Can Create ‘Delightful’ and ‘Sticky’ Customer Experiences
The “Delightful Phase”: How Health Plans Can Leverage Best-In-Class D2C Marketing Approaches for Acquisition
There are around 30 plans that a customer can choose from. From a payer’s standpoint, differentiating their value proposition on why someone should pick them is challenging. Currently, the bulk of payers’ business models are B2B, but there are good reasons why Medicare can be considered more B2C. The D2C approach is currently lowest on the maturity scale in terms of sales and marketing. This offers scope for innovative change and creating personalized experiences within a multifaceted influencer environment.
Customers are seeking information on products from not only the payers, but also the universe of influencers around them, such as family, friends, brokers and agents. The influence of agents is not to be underestimated. Nearly 20% of Medicare members worked with an agent in 2018, and those who work with an agent are six times more likely to switch plans than those who don’t work with one. In addition, 46% of all MA members who received help from agents or brokers cited the agent or broker as the guiding influence in their plan selection. The imperative in the year ahead is to think about broadening the aperture on how payers market their plans, and who they market to, creating an omnichannel approach that not only targets customers, but also their influencers.
To increase enrollment figures, payers are considering personalized guided experiences for members selecting plans during AEP (Annual Enrollment Period), based on member behavior within the digital sales portal, and building personalized bundled plans that address member health needs.
The “Sticky Phase”: What Loyal Customers Are Looking For And How This Can Inform Retention
For payers, the key to unlocking growth and differentiating among competition is to understand their client segment and deliver the best experience through a collection of interactions that drive consumer choice.
Payers are considering how a focus on people-centric direct to consumer marketing approaches can retain their members. One approach is to utilize social gamification and influencers. Providers are conducting research on where potential MA plan members spend their time while focusing on simple messaging on eligibility, benefits and differentiated value. There are many innovative ways to reach people and engage them. For example, many people play Wordle and Words with Friends, so this is one area and opportunity to make Medicare education personable and gamified.
Additionally, the voices of agents and brokers are not only important when selecting a plan, but also when shifting plans. Guided experiences based on consumer behavior could help with retention rates during AEP.
Inspiration for current digital solutions and areas for growth can be found in adjacent industries, those that have deep experience in the B2C funnel outside of the category. Here, companies are using automation and AI for testing and learning, as well as utilizing agile methodology for faster results.
Take for example one leading U.S. grocery chain wanting to improve customer experience and personalize marketing in a flexible, efficient way. With a new Customer Data Platform in place, the grocer was able to seize the opportunity for data monetization, enabling industry partners to build campaigns on the brand’s owned channels through a closed-loop digital platform. Ultimately, with a clearer picture of customer behavior data, the grocer was able to boost customer satisfaction, loyalty, and share of wallet. Similarly, a payer using a Customer 360 can take the opportunity to drive meaningful market share gains.
In the travel and hospitality industry, one airline consolidated data into one data management platform, digitally transforming their customer journeys and rolling out a holiday marketing campaign targeting high-value customers. This new cross-channel solution resulted in significant growth in conversions for the airline's audiences.
Publicis Sapient used machine learning to deliver hyper-targeted marketing and a new test-and-learn culture for a global restaurant chain. The new cloud-based platform enabled the dining and hospitality player to implement new ways of working for marketers. Machine learning and automation makes one-to-one personalization, and a rigorous method for applying it, a reality.
Creating a people-centric MA experience can deliver a more convenient, efficient and straightforward plan selection process for members. As the payer market within MA grows, it will be more important than ever for payers to build DTC strategies for acquisition and retention and stand out among their competitors. Payers that better understand their customers can drive valuable personalized experiences and unlock new areas for growth and loyalty.