High Medicare Advantage Plan Ratings Don't Guarantee High Member Retention
Updated: Dec 28, 2021
A High Medicare Advantage Plan Rating is Not Enough to Ensure Plan Re-Enrollment. Customer Service Done Right is Even More Important. Three Takeaways for Medicare Plan Leaders.
Fifty-one or about 11 percent of all Medicare Advantage plans rated by CMS received both the highest 2022 Overall Stars Rating of 5 Stars Rating as well as a perfect score on their Health Plan Rating measure (which is measured via the annual CAHPS survey). Yet despite this considerable achievement, these plans are seeing wide differences in their member retention rates and annual growth. The plans were perfect by these important Stars measures, but when it comes to retention, it is not enough. With 70 percent of all Medicare Advantage plans (covering about 90 percent of enrollees) securing the coveted 4 or higher Stars rating and qualifying the plans for CMS rebates, Plan leaders are seeing that the hundreds of millions of dollars and disproportionately high executive mindshare spent annually to secure high Stars ratings, do not easily translate into high retention rates and enrollment growth.
With 70 percent of all rated Mediare Advantage plans receiving 4 or more Stars, plans find that they need to do more to win on member retention.
To win here, plans need to go beyond health plan ratings, which are aggregate measures, and understand the true drivers of member retention decisions. Predict Health, a member experience, and growth analytics Company, analyzed the ratings and retention behaviors of tens of thousands of Medicare Advantage members at hundreds of MA plans using the company's unique National Medicare database, Predict360. Using predictive analytics, the company found that health plan ratings are incomplete and imprecise predictors of member retention decisions, and plan enrollment growth. In fact, other measures such as certain customer service experience measures that when analyzed together with health plan ratings, are far better and more accurate predictors of member retention and growth. By focusing on the right measures, plans can accurately predict retention risk at the member level and take action to address dis-enrollment. In this article, we outline these insights and list the clear takeaways for plans looking to maintain and improve their Star ratings and their member retention and growth rates.
Medicare Advantage plans compete aggressively to attract new members and retain existing ones. It is estimated that an average of 12-15 percent of members actively switch plans annually (we call them “active shoppers”). Based on our data, we estimate that between 25 to 30 percent of all members privately consider switching plans and are open to a better offer (we call them “passive shoppers”). This fact should be concerning for any Medicare plan leader knowing that a third of the membership could switch if given the right offer. As online plan marketplaces and digital brokers grow in popularity it is becoming easier by the day for more seniors to find and switch plans - this is showing up in the uptick in retention issues that plans are seeing in the market today. To continue to win their members and grow, plans need to adapt.
Medicare plans use several metrics to understand and predict member plan switching and retention decisions. The most popular metrics include Plan Satisfaction ratings and Net Promoter Scores. Some of these measures are used by the Centers for Medicare & Medicaid Services (“CMS”) (captured through the annual CAHPS member survey) to calculate and report a plan’s Star ratings. Plans use these ratings to assess the quality, allocate resources, and predict the likelihood of retention and member retention risk for themselves and their competition (for marketing and targeting purposes). Analyzing thousands of Medicare Advantage members across multiple years, using Predict's unique Medicare member database, shows a strong, but incomplete relationship between health plan rating and stated intent to re-enroll.
It has been conventional wisdom for many years that the highest plan ratings imply high retention rates and plans would focus on achieving the highest plan ratings. This however is no longer true. Plan executives can no longer assume that a high health plan rating will guarantee retention. Given how increasingly easy it is to switch plans, an incorrect assumption of plan retention can be very costly for plans today. Our data shows that a surprisingly large percentage of members who give their plan high ratings are considering switching plans. In the table below, we show how health plan satisfaction ratings correspond to dis-enrollment/re-enrollment intention. In other words, we find that a high satisfaction rating is not sufficient for a renewal decision.
What is surprising with this result is that for even members who rate their plans an "8" or higher - which is an extremely high score - almost 30 percent are considering disenrolling from their plans. This finding should be extremely worrisome for Medicare plan leaders in today’s markets.
What is going on here is that plan satisfaction scores and overall plan ratings are aggregate measures of member value and only capture a general sentiment. These metrics tend to be blunt measures and while they may have worked in the past when plan switching costs were high, they are no longer as predictive in the new environment. Plans need to move beyond aggregate measures and look at the drivers of a re-enrollment decision.
There are a number of factors that influence a member’s decision to re-enroll. Analyzing factors directly under the control of health plan, we find that a specific Customer Service experience is a key factor influencing dis-enrollment among those who rate their plans highly. Specifically, we find that the member's perception of how easy (or difficult) it was to resolve the member's customer service issue makes customers more (or less) likely to re-enroll even when they rate the overall quality of their plan highly. In other words, two members who give their plan the same high health plan rating will likely have differing intentions to re-enroll/disenroll based on their perceptions of how difficult it was to resolve their customer service issues.
The plot above shows the relationship between overall plan rating and probability of strong intent to re-enroll broken out by the member's perception of how easy the plan made it to handle the customer's issue. Those who gave their plan an overall rating of 10, but strongly disagree that it was easy to handle the issue only have a predicted probability of strong intent to re-enroll of about 50% compared to nearly 90% for those who indicated that the plan made it very easy to solve the issue. This implies that plans should consider monitoring how easy members perceive it to be for customer service to handle their issues. Measuring and improving the perceptions of ease with which customer service issues are handled offers a new lens and opportunity for health plans to differentiate themselves and improve their retention rates. In subsequent posts, Predict Health will share best practices and insights on how plans can improve customer service and member perceptions around them to directly improve Star ratings and member retention rates.
Here are three key takeaways.
High health plan satisfaction ratings do not guarantee high re-enrollment rates. Health plan satisfaction ratings are increasingly poor predictors of member re-enrollment decisions.
To accurately assess which segments of the population are at risk of dis-enrollment, plans need to go beyond simple aggregated satisfaction measures and understand the incidence of specific member re-enrollment decision drivers in those segments.
Customer service is a key measure of retention even for highly-rated plans. Plans should understand how members perceive their handling of customer service issues and optimize how easy they make it for members.
If you are interested in learning more about this work, contact the authors by emailing Shub Debgupta at firstname.lastname@example.org.
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