How Medicare Advantage Plans Can Increase Consumer Satisfaction

Medicare Advantage plans are more likely to achieve high satisfaction scores when they offer a consistent product message and brand experience and have control over the delivery of care, according to a J.D. Power study. Members frequently choose a plan they understand and find easy to work with. The study measures member satisfaction with Medicare Advantage plans based on six factors in order of importance: coverage and benefits (26%); customer service (20%); provider choice (15%); cost (14%); information and communication (13%); and claims processing (13%).

Improving communications with enrollees is one of the greatest opportunities for health plans to improve member satisfaction. It’s the only factor in the study that has not seen a significant improvement in member satisfaction. Valerie Monet, director of the insurance practice at J.D. Power, said that many plans have multiple product design features and come with technical manuals that are 20 pages or longer. Expecting members to be experts on these services and benefits is a losing battle for the plan and the member. Members expect their plan to provide guidance, ranging from assistance in selecting a doctor to helping them understand prescription costs.

Forty-eight percent of members agree strongly that their health plan is a trusted partner in their health and wellness, which increases satisfaction by 166 points. Satisfaction is 136 points higher among the 89% of members who completely understand how to find a doctor under the plan. Satisfaction is 110 points higher among the 88% of members who say their doctor spends the right amount of time with them.

Members expect immediate attention or advice when they call their health plan provider. Forty-one percent of those who called their plan had to give the same information more than once to get their issue resolved. Only 35% of members said that customer service provided all of the information they needed on the costs of prescription medications. Ninety-one percent of customers who are delighted with their Medicare Advantage plan (satisfaction scores of 901 or higher), say they will definitely renew their policy, and 89% will definitely recommend their plan to family and friends. Loyalty drops to 71% and advocacy to 66% among members who are pleased with their plan (scores of 751-900). Plans garnered the following member-satisfaction scores:

  • Kaiser Permanente 851
  • Highmark 791
  • Humana 782
  • UnitedHealthcare 775
  • Cigna 774
  • Aetna 773
  • Anthem 765
  • Health Net 756
  • WellCare 742

In 2016, members reported an average increase of $117 in annual premiums to $1,497. They also have more out-of-pocket expenses. On average, member deductibles are $1,705 in 2016, a $310 jump from 2015. Satisfaction is 136 points higher when members completely understand their out-of-pocket costs. Monet said that members are more satisfied and see the value of their plan when they have a better understanding of how much they are paying and what the costs cover.” For more information visit http://www.jdpower.com/resource/us-medicare-advantage-study.

HMOs Beat PPOs on Cost and Quality

HMO

California’s commercial HMOs outperform commercial PPOs on most clinical quality measures. They also consistently provide less costly care. The average yearly cost is $4,245 per HMO enrollee versus $4,455 per PPO enrollee, according to the California Regional Health Care Cost & Quality Atlas. The report comes from the Integrated Healthcare Assn., the California Health Care Foundation, and the California Health and Human Services Agency. Differences in benefit designs don’t explain the cost variation since the total cost of care includes enrollee cost-sharing (deductibles and coinsurance) as well as insurance payments to providers.

HMOs may be performing better because they rely on integrated care networks, which generally accept capitation (fixed per-member, per-month payments). So they are accountable for the patients’ health and are generally rewarded for it, according to the report. So why is HMO enrollment declining? PPOs are often less costly for employers since they reduce premiums with higher enrollee cost-sharing, such as deductibles and coinsurance. But employers should look at the whole picture since HMOs produce superior results when you consider quality and the total cost of care, according to the report.

Quality of Care
California’s commercial HMOs perform better than their national counterparts on every clinical quality measure except asthma medication management. At the same time, California’s commercial PPOs perform worse than the national average on five of the six measures.

When Kaiser Permanente is removed from the analysis, the difference in clinical quality between HMOs and PPOs is cut by about half. Also, the performance difference on risk-adjusted total cost of care narrows substantially, but HMOs still outperform PPOs.

Quality is highest in Northern California, solid in Southern California, and weakest in Central California. The study reveals these regional differences is quality:

  • Northern California outperforms Central and Southern California on clinical quality.
  • Central California falls below the statewide average on key clinical measures for cancer, diabetes, and asthma.
  • The lowest performing region is the Eastern region 13, which includes Central California counties Mono, Inyo, and Imperial.
  • The highest performing region is Contra Costa County region in Northern California.
  • Clinical quality scores vary significantly on some measures. For example, 33% of commercial enrollees with diabetes in Alameda County region six have poorly controlled blood sugar, compared to 75% in the Eastern region 13.
  • In Southern California, San Diego County region 19 is the highest performing region, outperforming Northern California regions: San Mateo County region eight and San Francisco County region four.

If all commercially insured Californians got the same quality of care as top-performing regions, nearly 200,000 more people would have been screened for colorectal cancer and 50,000 more women would have been screened for breast cancer in 2013. If care is provided to all Californians at the same cost as in San Diego, the cost of care would decrease 10% for commercially enrolled people. Many factors contribute to regional performance, including socioeconomic characteristics and the availability of medical services.

Medicare Advantage
The quality and cost of care varies widely for seniors enrolled in Medicare Advantage. For example, in North Bay counties, 91% of women have gotten appropriate breast cancer screening compared to 70% in the Eastern region 13. The average annual per-enrollee total cost of care for Medicare Advantage enrollees ranges from $11,500 in San Diego County to $14,500 a year in Los Angeles region.

Cost of Care
Geographic variation in cost of care is dramatic—a difference of $1,800 in the average annual per-enrollee total cost of care between the most costly and least costly regions. With one exception, all Northern California regions have higher annual per-enrollee costs than the statewide commercial average of $4,300 while all Southern California regions fall below the statewide average. Central California regions show mixed results on cost. HMOs have a lower average total cost of care than do PPOs in 12 of the 18 regions. More tightly managed care in HMOs may contribute to a lower cost of care. Yet, inpatient bed days and readmission rates are similar for HMOs and PPOs. Emergency department visit rates are actually higher for HMOs. The statewide average annual per-enrollee cost of care for commercially insured Californians is $4,300. Kern County is the least costly HMO region. It’s $1,800 per enrollee, per year less than in Santa Clara County, which is the costliest HMO region. The least costly PPO region is Los Angeles at $2,400 less than San Francisco County, which is the costliest PPO region.

Obamacare Significantly Reduces Cost of Mental Health Care for Young Adults

The Affordable Care Act (ACA) has significantly reduced out-of-pocket behavioral health care costs for adults 19 to 25, according to a study published in the Psychiatric Services Journal. Young Latinos, African Americans, and other racial and ethnic minorities saw the greatest reduction in out-of-pocket behavioral health expenses. This demographic often has higher unemployment and lower salaries, so they are less likely to seek behavioral health services. The ACA’s dependent coverage provision has reduced the number of uninsured young adults by at least three million. The ACA allows young adults to remain on their family’s health plans until they turn 26. Because of this, the expansion of health care access is also expected to increase the number of users of mental health and substance abuse treatment services. Behavioral health conditions often emerge during the 19 to 25 year age range. Also, this age group has a higher rate of serious mental illness than other adults.

The Cost Implications of Private Exchanges

Private exchanges could encourage employees to select less-generous plans, according to a report by Rand. This could expose employees to higher out-of-pocket costs, but premium contributions would drop substantially, so net spending would decrease. On the other hand, employee spending may increase if employers decrease their health insurance contributions when moving to private exchanges. Most employers can avoid the ACA’s Cadillac tax by reducing the generosity of their plans, regardless of whether they move to a private exchange. There is not  enough evidence yet to determine whether private exchanges will become prominent and how they will affect employers and their employees.

Workers who choose less-generous plans could risk higher out-of-pocket costs. But their net spending would drop because premiums would drop substantially. Average employee spending could increase if employers lower their health insurance contributions when moving to private exchanges. Private exchanges are unlikely to significantly affect the ACA’s Small Business Health Options Program (SHOP) Marketplaces.

Americans Greatly Underestimate the Cost of Homecare

The average American underestimates the cost of in-home care by almost 50%, according to a Genworth study. Thirty percent say that home care costs less than $417 a month when the national median rate is $3,861 a month for an in-home aide or $3,813 a month for homemaker care. Homemaker costs are up 2.6% from 2015, marking the highest year-over-year increase across all care categories. In comparison, home care aide services rose modestly at 1.25% since 2015. Over the past five years, home maker costs have risen 11% and 6.6% for health aides.

Interestingly, people who stand to be affected most by long term care events are more likely to underestimate the cost of care. This includes women (who are more likely to enter caregiving roles), single adults (who may not have a partner to rely on for caregiving needs), and younger adults (aged 25 to 45), who are more likely to deal with the reality of a parent needing care).

The national median cost of care rose across all care settings, except adult day care, which decreased slightly. The monthly cost of a private nursing home room is $7,698, up 1.24% from 2015. The cost of a semi-private room is up 2.27% to $6,844 a month. Assisted living communities saw a slight increase in costs of .8% to $3,628 a month. Adult day care costs fell 1.25%.

The Drivers of Health Insurance Premium Changes for 2017

 

rising healthcare costs
The American Academy of Actuaries offers an early look at what’s driving changes in premium in the Affordable Care Act (ACA) individual and small group markets. Academy Senior Health Fellow Cori Uccello said, “Increased health care costs and the end of the ACA’s transitional reinsurance program are two of the biggest factors pressuring rates higher. The one-year moratorium of the health insurance provider fee will partially offset these increases.”

The issue brief identifies the following factors that will affect 2017 premiums:

  • The underlying growth of health care costs: Although increases in health care spending are still relatively low, prescription drug spending is expected to increase faster than other medical spending.
  • The sun-setting of the ACA’s transitional reinsurance program: Each year, the gradual reduction in the reinsurance program has increased premiums. The final impact will occur in 2017 when projected claims are expected to increase 4% to 7% due to the program ending in 2016.
  • The composition of the risk pool and any changes in the assumptions used in premium calculations: Insurers will revise their assumptions for underlying 2017 premiums if enrollment levels, risk profiles, or claims are different than expected when they developed 2016 premiums.
  • The one-year moratorium of the ACA health insurance provider fee: This will lower premiums by 1% to 3%.
  • The repeal of the ACA’s original expansion of the small group definition, and modifications to provider networks:Premium changes for individuals will reflect increases in age, and changes in geographic location, family status, or benefit design. If a consumer’s plan was discontinued, the premium change will reflect the increase or decrease resulting from being moved into a different plan. Average premium change information (released by insurers or states) could reflect consumers moving to different plans when their plan was discontinued.

Drug Spending Growth Reaches 8.5% in 2015

Total spending on drugs in the United States reached $310 billion in 2015, up 8.5% from the previous year, according to a report by the IMS Institute for Healthcare Informatics. The surge of new drugs remained strong last year, and demand for new brands was high. Savings were relatively low from branded drugs facing generic competition. Price increases on brands had a limited effect due to higher rebates and price concessions from manufacturers. Specialty drug spending reached $121 billion on a net price basis, up more than 15% from 2014. (Net-price spending does not relate to a patient’s out-of-pocket costs or the amount health plans pay for drugs. It estimates the amount received by pharmaceutical manufacturers so it reflects rebates, off-invoice discounts, and other price concessions that manufacturers make to distributors, health plans, and intermediaries.)

Manufacturers are accepting lower price increases on existing products. At the same time, spending on new brands continued at near-historic levels. Increasingly, healthcare is being delivered by different types of healthcare professionals and from different facilities while patients face higher out-of-pocket costs and access barriers. The study predicts mid-single digit growth for drug spending through 2020, driven by innovative treatments and offset by brands facing generic or biosimilar competition.

Heightened competition among manufacturers, along with more aggressive efforts by health plans and pharmacy benefit managers to limit price growth, resulted in significantly lower price increases than in prior years. The report also reveals the following:

  • Spending on specialty drugs has nearly doubled in the past five years, contributing more than two-thirds of drug spending growth from 2010 to 2015. Treatments for hepatitis, autoimmune diseases, and oncology drove increased specialty spending. The year 2015 saw a 21.5% spending increase for specialty drugs.
  • Forty-three new active substances were launched in 2015 with a third receiving orphan drug designations from the FDA. An additional 30 brands were launched last year, bringing new combination therapies, alternative dosing, and treatment administration options to patients. The strong momentum of breakthroughs and R&D productivity is reflected in the 2015 cohort of new drugs.
  • Total prescriptions dispensed in 2015 reached 4.4 billion, up 1% year over year. Demand was higher in some therapy areas, such as antidepressants and anti-diabetes, each of which increased about 10% in 2015.
  • Over the past five years, integrated-delivery networks have expanded their affiliations with healthcare professionals to increase negotiating power with insurers, save money, and drive pay-for-performance initiatives. More than 54% of healthcare professionals are affiliated with integrated-delivery networks. In the past five years, there has been a 115% increase in urgent care centers and pharmacy in-store clinics. The number of prescriptions written by nurse practitioners and physician assistants more than doubled over the past five years.
  • While brand price increases are expected to continue in the 10% to 12% range, they will be significantly offset by rebates, discounts, and other price concessions.
  • The are very bright prospects for innovative drugs becoming available through 2020. The late-phase pipeline holds 2,320 novel products, with an average 43 to 49 to be launched annually over the next five years.

CBO updates ACA cost projections

Over the next 10 years, the Affordable Care Act will cost $1.34 trillion, according to the Congressional Budget Office, up 11% from projections a year ago, mostly because of higher-than-expected enrollment in Medicaid. The law gave 22 million people access to coverage they otherwise would not have had, the report found, and the cost of providing that coverage from 2016 to 2019 will be $465 billion, 25% less than projected when the law was passed. The New York Times (free-article access for SmartBrief readers) (3/24), San Francisco Chronicle (free content)/The Associated Press (3/24)

Greater Insurer Competition Leads to More Satisfied Consumers

SatisfiedCustomer

Health plan members are most satisfied when there is more competition among health plans, according to a J.D. Power study. The study rated satisfaction on a 1,000-point scale. The study rates satisfaction as follows:

  • Cost: 610 in competitive markets versus 606 in markets dominated by a single plan.
  • Customer service:743 in competitive markets versus markets 740 dominated by a single plan.
  • Information and communication: 646 in competitive markets versus 641 in markets dominated by a single plan.

When one carrier controls more than 50% of the market, member satisfaction is significantly lower when it comes to communication and customer service. Greg Hoeg of J.D. Power said, “Carriers are shifting toward member satisfaction as they face more legal restrictions on profitability. Having a choice of providers boosts member satisfaction in markets with less competition. “Sometimes, having fewer, simpler plan choices makes it easier for the member,” says Hoeg.

The ACA’s medical-loss ratio has forced health insurers to focus on increasing their market share to compensate for slimmer margins. Carriers are paying particular attention to cost management. One way to do that is to combine with other carriers, says Hoeg. Traditional plans are merging to reduce costs and increase market power. Examples are the merger of blue plans, national deals like Aetna/Humana, and Anthem/Cigna, and major market-driven acquisitions for UnitedHealthcare/Optum. Many have speculated that Anthem’s proposed acquisition of Cigna will harm competition and consumers by reducing the ability of other health insurers to compete with Blue plans.

Member satisfaction averages 688 in 2016, up from 679 in 2015, and 669 in 2014. Driving increased satisfaction are coverage and benefits (+12 points), information and communication (+11), and customer service (+10). Nationwide, member satisfaction has improved nine index points in 2016 at 688. This follows a 10-point improvement in 2015. Member satisfaction with health plans reached a low in 2014, following the introduction of the health insurance marketplace as part of the Affordable Care Act (ACA).

Health plans with integrated delivery systems are poised for success as health insurance focuses more on member satisfaction. An integrated system includes a hospital organization, a multi-specialty medical care delivery system, the capability of contracting for any other needed services, and a payer. Integrated plans have an average satisfaction score of 746, which is 63 points higher than that of non-integrated plans.

There has been a slight decrease in members’ monthly premiums. On average, the monthly premium for a family plan is $355 in 2016, down from $374 in 2015 while individual plan premiums are $207, down from $216.

Satisfaction is highest among health plan members in California (707), Michigan (699), Mid-Atlantic states (698); Illinois-Indiana (697), and Northwest states (692). Satisfaction is lowest among members in the Southwest (661) and Minnesota–Wisconsin (666) regions.

What Consumers Look for In a Health Plan

When choosing a health plan, the cost of insurance premiums is the top concern for younger healthcare shoppers (under 45). In-network access to doctors ranks higher with older consumers (45 and over), according to a 2015 FAIR Health survey of more than 1,000 adults in the United States.

While older consumers place access to their doctors at the top of the list, all age groups are more concerned about whether certain doctors are in their plan’s network than they are about network size. This information comes at a time when more employers and health plans are introducing narrow and tiered networks to reduce healthcare costs. Consumers also have more access to health plan choices due to the growth of public and private healthcare exchanges.

“While consumers did not list the number of doctors in the network as a prime consideration when enrolling in a health insurance plan, if the primary care doctors consumers prefer are not in their network, it will factor into their decisions when selecting a plan,” said Robin Gelburd, president of FAIR Health.

Latinos, women, adults younger than 45, low-income households and people with children in their households are the most likely to say that cost usually or always influences their decisions when choosing a doctor:

  • 63% of Most Latinos (versus 48% of the general population) usually or always consider cost.
  • 56% of consumers with children in their household usually or always consider cost, versus 45% of respondents without children at home.
  • Sixty percent of those with annual household incomes under $35,000 always or usually consider cost, versus 48% of the general population.

Q: Which one of the following is your most important consideration when enrolling in a health insurance plan?

Age Monthly premiumcost Total out-of-pocket costs (Including co-pays and co-insurance) Primary care physician or family doctor accepts plan Deductible Number of doctors in the network
18-34 28% 25% 23% 12% 6%
35-44 28% 24% 16% 14% 9%
45-54 17% 22% 32% 9% 5%
55-64 20% 24% 32% 7% 4%
65+ 18% 18% 30% 4% 7%
Total Population 23% 23% 26% 10% 6%

Last Updated 11/18/2020

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