If you’ve been paying attention for the past few years, many of the macro market trends in the 2022 Medicare Advantage (MA) annual enrollment period (AEP) will be familiar. Overall the market grew 9%, similar to growth rates in 2021 and 2020. PPO plans continued to make gains (making up 40% of the total enrollment, compared to 37% in 2020). Demand continued to grow for DSNP plans (22% growth in 2022, compared to 16% growth in 2020). But we’re also seeing nuances in how different companies performed, with perhaps more variation than we have seen in previous years.
This year we saw:
- Insurtech companies making some serious gains - Clover Health and Devoted Health saw huge jumps in their membership
- Unexpected results for a few national players - Humana and Cigna missed their forecast of membership growth; Aetna and Centene beat theirs
- Market playing out differently at a local level - Regional plans like SCAN Health Plan and BCBS NC successfully attracted more seniors, while plans such as UPMC lost members
Many factors could be at play in the higher-than-expected differential performance at the health plan level, but since health plans are currently in the process of designing and planning for next year, we wanted to study the impact of benefits on the 2022 AEP outcome. We utilized public use files (benefits and monthly enrollment files) from the Centers for Medicare & Medicaid Services (CMS) to conduct the analysis. We conducted our analysis for all non-SNPs and then separately for HMO and PPO plans.
We found that financial features—a plan’s monthly premium, in-network maximum out-of-pocket (MOOP) cost and annual drug deductible (in that order)—are the key features that drive MA members’ plan choice. For HMO plans, premiums and in-network MOOPs are equally important, followed by annual drug deductibles, whereas for PPO plans, premiums have significantly higher importance compared to MOOPs and annual drug deductibles.
The findings on the impact of specific benefits were even more interesting. When we looked at the impact benefits (including traditional, extended and special supplemental benefits for chronically ill (SSBCI)) made on the enrollment among plans with similar cost elements (MOOPs, premiums and deductibles), we found out that give back benefits, nutritional/dietary benefits, additional sessions of smoking and tobacco cessation counseling and transport services affected plan selection the most for HMO plans. For PPO plans, remote access to technologies, over-the-counter (OTC) items, give back benefits and additional sessions of smoking and tobacco cessation were the top four most important benefits.
Our analysis shows the key choice drivers are still predominately related to cost. Which means health plans need to find ways to further manage risk or cost and share the improvement in MLR with the customers via enhanced benefits, specifically the benefits that directly put money back into member pockets (e.g., give back benefits). Give back benefits probably also became more appealing this year because CMS increased the Part B premium by 14.5% this year.
To make the benefit analysis more specific to each health plan, benefit design teams can use the following techniques:
- Conduct product and benefit impact analyses at the geographic level - Product and benefit choices patterns may differ by geography because of income levels, literacy rate, access to health, etc. Health plans can run similar choice driver analyses for geographies of interest to understand which product and benefit combination is best suited for a particular geography.
- Drivers of choice by customer segments - Product and benefits analyses can be further refined by including information about customer segments. Understanding product and benefit preferences by segments will help in both product refinement and marketing the right product to the right customer segment.
- Collect feedback from agents - Along with using product and enrollment data analyses to determine the impact product and benefits have on enrollment, health plans should consider using other sources of information to get inputs on product preferences. Agents and call center reps are the main source of this information. Agents generally have a wealth of information about the product design elements and benefits driving customer choice.
Product and benefits will continue to play a key role in MA member buying decisions and could cause nuances between plan performances like what we saw during the 2022 AEP. A deeper understanding of product features at the geographic and customer-segment level will have a significant impact on member acquisition and retention. Health plans that have the tools and infrastructure to study the impact of product features during AEP and OEP will be best positioned to make the right product and benefit decisions before June, for next year's plans.