Bombshells from MedPAC on Medicare Advantage Retention

The Medicare Payment Advisory Commission (MedPAC ), the nonpartisan blue-chip Congressional uber-nerds on our favorite entitlement program, met this week and the staff report presented a couple bombshells on retention rates in Medicare Advantage (MA).

In the aggregate, the commission noted that in 2012 the voluntary disenrollment rate from plans was slightly below 10%. The vast majority of individuals who disenrolled — 80% — switched to another MA plan, with the remaining 20% going back to traditional Medicare.  Bombshell #1: we’re seeing an overall MA retention rate of roughly 98%, and speaks to the tremendous popularity of the program vs. “old school” coverage.

The commission also noted:

• When beneficiaries changed plans, a large majority picked another plan with a lower premium.
• Beneficiaries who elected to switch back to traditional Medicare from MA had higher average cost per beneficiary vs. those who stayed in MA.  Does this indicate that sicker beneficiaries feel they’ll get less hassles and/or better care in unmanaged fee-for-service Medicare? I doubt it.  More likely: once back in unmanaged Medicare they go on a wild utilization binge. Why? Because…
• Older MA enrollees are less likely to disenroll than younger ones. This is puzzling, given the finding above and the direct correlation between income, age and health status in the elderly.  Older beneficiaries are, on average, poorer and sicker than younger ones.

On a plan-specific basis, Star ratings also correlate positively with member retention. Bombshell #2: MA plans with 2 or less Stars experienced a 17% disenrollment rate, while plans with 4 Stars or higher had a disenrollment rate of 4.9%. That’s an incredible statistic, showing the rapid effectiveness of Stars impacting the member experience at the plan level in just a couple years.  Stars has truly become a game-changing indicator of quality across health plan functions.

All of this speaks to the fundamental triumph of Medicare Advantage: for those who know, it’s the far superior option for senior care.  And once they’re in, they don’t leave.

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To succeed in Medicare Advantage, plans must achieve higher quality and Star Ratings, surmount CMS and medical loss ratio (MLR) requirements, and develop member onboarding and retention capabilities, all while operating in a highly competitive market. Learn how GHG can help ensure your MA plan is positioned to make the most of the program’s opportunity. 

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