Success of PPOs, OTC Coverage May Drive 2021 MA Offerings

Reprinted with AIS Health permission from the April 2, 2020, issue of RADAR on Medicare Advantage.

Although individual HMO plans continued to capture the bulk of enrollment in Medicare Advantage plans during the 2020 Annual Election Period (AEP), overall gains by individual PPO plans were not far behind those of the historically popular HMOs, according to a recent analysis from Pareto Intelligence, a Convey Health Solutions company. Based on CMS’s February data release (which reflects enrollments accepted through Jan. 1 and is regarded as demonstrating the final AEP figures), Pareto estimates that enrollment in individual PPOs climbed 10.25% during the AEP to more than 4.8 million enrollees, outpacing individual HMO growth of 5.43% to nearly 11.3 million members.

These and other granular insights from the AEP can help MA plan sponsors quickly turn around lessons learned from 2020 and incorporate them into benefit designs before bids are due for the 2021 plan year, suggests Jason Montrie, president of Pareto Intelligence. In an interview with AIS Health, Montrie reflects on some of Pareto’s key observations.

AIS Health: What do you think sets apart this recent AEP from others in terms of growth trends and/or product offerings you’ve observed?

Jason Montrie: Obviously, the market tailwind of Medicare Advantage continued to grow as everyone expected, but I think a couple things were unique. First, the individual PPO plans, and particularly those with $0 [premiums], kind of reentered the marketplace in a really meaningful way, largely led by Aetna. Historically we saw a lot of HMO offerings, and certainly HMOs were able to offer $0 plans that became very competitive and [had] higher enrollment. This year we saw a number of carriers, specifically Aetna, enter a $0 PPO plan and we saw significant growth in that [of about 140,000 lives]. And what we typically observe is once a large national [player] does something that has a high degree of success, the market quickly pays attention and usually has a following as an opportunity there.

The second really big thing that we saw was the growth of plans that offered supplemental benefits, specifically those with OTC [over the counter] and dental, significantly outperformed those that didn’t. We’ve seen supplemental benefits being a really hot topic and things that plans have been offering, and I think this is the first year that the data really show those that offered the supplemental benefits significantly outperformed those that didn’t — and specifically the usage of that benefit and the size of the benefit actually had a high correlation to the membership growth.

AIS Health: What specific observations did you make about OTC coverage this AEP that could inform MA sponsors’ future benefit design strategies?

Montrie: One of the things that we saw was that in the individual market, [plan benefit packages with an OTC benefit] grew by 7.26%, while those plans that did not offer OTC in 2020 actually shrunk by 1.7%. In a highly competitive marketplace where almost every plan is focused on growth, that is a significant driver that we saw.

Are all OTC plans created equal? What we saw was the plans that had an OTC allowance below $200 for a year grew by 0.4%, plans with a $200-$300 allowance actually grew by 7.49% and plans with over $300 annual allowances grew by 12%. So [that’s] really clear evidence that consumers are choosing plans that not only have the benefit, but the size of that benefit absolutely matters, and there’s a real preference for those plans that are going to have a higher benefit.

Those are things we know the market will look at and really take into account, because I think historically supplemental benefits and OTC have been an interesting marketing value-add.…Now it’s becoming not only table stakes but we have a lot of our customers that are studying the correlation between the OTC usage and the clinical benefit, and how can we really tie a curated benefit list to those folks who have specific disease states and really make a more [powerful] benefit that way.

AIS Health: Your analysis also showed that some of the venture-backed MA organizations performed well as they made some geographic expansions in 2020. Bright Health, for example, increased its membership by 36%. And Devoted Health nearly tripled in size, growing from 4,000 members to 16,000. What do you think their growth story tells other startups in the market?

Montrie: We continue to see the nationals do very well, in some pockets we saw the regional health plans do well and then we saw some of these new venture-backed plans also have some degree of success. We were interested in why some performed better than others, and I think some of them — whether it was Devoted, Bright or Clover Health — had different degrees of success. And some of the ones you mentioned had high percentage growth but with a low starting point. So what’s interesting is Alignment Healthcare in California was able to have 12,000-member growth and we know that they’ve really aligned themselves with some of the provider organizations and continued to invest in partnerships with different provider systems — as we’re seeing in other markets as national or regional plans do — and we think that helped drive a significant amount of enrollment for them. When you have a more integrated partnership with a delivery system, you’re able to use that organization and its connection to the community, and we know that resonates with the consumer. So I think we’re seeing that with Alignment, and I know Bright Health is a similar model where they look to partner with different providers and have more of a co-branded or really aligned partnership, and that seems to be something we’re seeing across the country at scale.

AIS Health: What new trends do you expect to continue to build over the next few years and add to the competitiveness of the market?

Montrie: As I mentioned before, I think we expect to see more of what we would consider the tailored products, so products and plans that are really targeting a specific cohort of people with specific conditions or disease states and really curate a plan design [for that group]. So not just design a health plan network but a social determinants of health network, kind of a broad community network that can really well care for these populations... And so I think the plans that are able to marry up the clinical information that they have with a population with the consumer use of OTC benefits and do that well are going to be ahead of the curve and attract more members.

By Lauren Flynn Kelly

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