Why All Health Plans Should Prioritize Member Retention

As health plans prepare for the fourth quarter push to close care gaps and improve member experiences, plans should not lose sight of the importance of the upcoming open enrollment periods. Medicare Advantage, Medicaid and Affordable Care Act (ACA) members will have the option to change coverage starting as early as October 1 in some markets. Whether they choose to stay or disenroll in their current plans could depend on their overall experiences with their plans. Even the loss of a small percentage of members can have major financial implications for health plans.

Delighting and engaging current populations is important all year, but especially in the fourth quarter when plan choices are made. Improving retention rates and preventing disenrollments will help safeguard next year’s budgets. Explore the relationship between member retention rates and health plan performance to guide member loyalty strategies.

How to Calculate Retention Rates

A member retention rate is the percentage of members who maintain enrollment with a plan from the start of the year to the end of the year. These rates do not account for members who temporarily lost coverage or re-enroll in plans later in the year, otherwise referred to as churning.

Retention rates are calculated by comparing the total membership from the start of the year to the end of the year, minus any new members who joined throughout the year.

Plans can use a simple formula to determine their retention rates:

The Benefits of Retaining Members

Maintaining enrollment numbers guarantees consistent revenue for health plans. Individual premiums and government funding provide monthly payments on a per member basis. Payment models like risk adjustment also provide additional revenue based on certain health conditions. With the cost of recruiting new members ranging from $200 for Commercial members to $800 for Medicare Advantage members, retaining members and reducing disenrollments is vital for safeguarding year-over-year revenue.

In some markets, member retention rates are also tied directly to quality scores and bonus payments. The Medicare Advantage Star Ratings enrollment measure calculates quality scores based on the number of members who choose to leave a plan and has historically been heavily weighted. When combined with the high-priority member experience measures, member loyalty plays a major role in achieving four or more Stars. While enrollment rates are not a factor in Medicaid quality measures, membership informs calculations for quality incentives in both withhold and pay-for-performance programs.

In addition, ACA plans need to have more than 500 members enrolled in a contract from July 1 to January 1 to be eligible for the Star Rating on the Health Insurance Marketplace® Quality Ratings System.

Member retention rates are an important component of health plan financial success and should be evaluated alongside quality incentives, healthcare utilization rates and market growth.

How Member Loyalty Affects Health Outcomes

The longer a member remains with a health plan, the more opportunities surface to improve health outcomes over time and strengthen quality scores. However, plans need to capitalize on these opportunities by improving member engagement in their healthcare from onboarding to re-enrollment.

The first few months after enrollment are critical for mobilizing members to start their health journeys on the right foot by selecting primary care providers, receiving preventive care and identifying chronic conditions or risk factors. Plans that begin engaging members earlier in the year have an easier time building loyalty and improving health outcomes. Continuing these efforts throughout the year sets plans up for stronger retention rates, better health outcomes and higher quality scores.

In contrast, disruptions in care, from a loss of coverage or voluntary disenrollment, can threaten these improvements, even if a member re-enrolls. A lack of continuous coverage can result in missed preventive visits, delays in treating serious conditions such as cancer or asthma, and an overall rise in healthcare costs.

Continuous coverage is extremely important for members with chronic conditions like diabetes or hypertension, which require ongoing medications, lifestyle changes, exercise and diet adjustments to manage their health. Lapses in coverage make it difficult for members to maintain treatment or adhere to medication, which contributes to higher emergency room utilization rates. Retaining these members allows plans to provide the right engagement, education and resources to enable them to manage their health.

What is a Good Retention Rate?

Healthcare member retention is naturally unstable. As members age, move, change jobs and experience hardships, their coverage will change. Different plan types will also experience these changes at different rates. Health plans ideally want a retention rate of 100%, but it is more realistic to minimize disenrollment rates and improve member loyalty based on industry averages.

While data on retention rates is sparse, plans should reference average disenrollment rates by plan type to guide interventions:

• Medicare Advantage: 17% as of a 2021 study, a 10% increase from 2017. The rise in disenrollment rates among seniors in recent years can be attributed to increased confidence in using online resources to shop for coverage.
• Medicaid: Researchers estimate that Medicaid redetermination could lead to between an 8% and 28% decline in enrollment. A rough analysis places the average disenrollment rate at 18%, but plans should look to their own state’s data to determine appropriate benchmarks.
• Commercial and ACA: 15-20% based on data from 2006-2018.
• Federal Employees Health Benefits Program: 12% of members change plans each year.

These rates have drastically fluctuated over the years due to a variety of factors, including changes in population sizes, economic instability and regulatory updates. For example, the enactment of the Affordable Care Act reduced churn among low-income Medicaid enrollees by strengthening the enrollment requirements and making it harder for members to lose coverage.

At a contract-level, disenrollment and retention rates are also misleading, as they do not always consider members who change plan types. This is more common for ACA plans, where members may disenroll because they became eligible for Commercial, Medicaid or Children’s Health Insurance Programs. What may appear as a loss for one contract could be a win for another. By building programs and services to help members seamlessly move between different contracts, plans can improve member experiences and minimize gaps in coverage.

How Plans Can Retain Members

Member loyalty relies on a plan’s ability to meet a member’s needs in a timely and appropriate manner to foster positive plan perceptions. When a member feels dissatisfied, ignored or mistreated by a plan, they can develop a negative perception and look elsewhere for coverage.

Members also have more insights into plan performance, quality ratings and benefits through publicly reported data. For example, Medicare Advantage members have become more tech-savvy at shopping for plans online and know they can take their care elsewhere if they’re unsatisfied. Improvements in enrollment processes have made it simpler for members to switch plans when it suits their needs.

Factors that help foster member loyalty include:

• Welcoming onboarding experiences
• Personalized outreach and care plans
• Easy access to care and healthcare information
• Engaging members throughout their care journeys
• Addressing feedback to improve member experiences
• Prescription drug and supplementary benefits
• Incentive programs
• Cost-sharing services

7 Tactics for Increasing Member Retention

Amidst the high costs of enrolling new members and increased marketplace competition, plans need to map out strategies for retaining members year-over-year.

Plans in all markets can improve member retention when they:

1. Understand member needs: Start by creating comprehensive and whole-person views of each member to inform engagement opportunities. With the right data inputs, persona models and feedback, plans can build customer-centric healthcare initiatives to foster positive member experiences from onboarding to re-enrollment.
   
   
2. Personalize member engagement: Members want to be understood and recognized through their interactions with plans. Presenting them with generic emails and letters will do little to help them feel seen by their plans or encourage them to complete healthy activities. Design outreach based on demographic and member-specific data to make interactions feel memorable.
   
   
3. Resolve member complaints: It is impossible to completely prevent member complaints, but plans should prepare strategies and processes to resolve issues before they escalate. Logging feedback in member records and addressing concerns with personalized outreach helps plans minimize negative plan perceptions.
   
   
4. Incentivize healthy behaviors: When combined with data-driven engagement, rewards go a long way to motivating members to interact with care programs, provide feedback and see providers. Tailor rewards to member needs and adjust programs each year to ensure members receive the right encouragement to remain with a plan.
   
   
5. Think proactively about analytics: Analyzing disenrollment and retention rates allows plans to identify trends in member behaviors and opportunities to build loyalty. Plans should leverage analytical models that predict member sentiments and help them proactively improve retention rates.
   
   
6. Share relevant resources: Members look to their health plans for guidance in navigating the healthcare system and getting the right care. In the Commercial sector, 70% of members want assistance from their plans in finding providers and 48% want more assistance understanding their healthcare options. As plans personalize outreach, they should also look for opportunities to educate members about their health and healthcare options by sharing the right resources.
   
   
7. Encourage digital interactions: Wherever possible, plans should expand their digital capabilities to help members receive care faster and more efficiently. Digital adoption skyrocketed during the pandemic and many members are searching for an Amazon-like experience from their health plans. Encourage digital engagement through emails, smart phone apps and websites to improve member satisfaction with their plans while reducing expenditures from call centers and mailers.

Implement Member Loyalty Initiatives With Healthmine

Unlike traditional care gap initiatives that focus on one issue at a time, improving member loyalty is an ongoing process that must be addressed at multiple angles. Plans need to invest in continuous member retention strategies, ongoing data collection, robust analytical models and continuous engagement to have a strong impact on retention rates.

Rather than relying on point solutions for each component, leverage Healthmine’s comprehensive digital suite to build and maintain member loyalty from onboarding to re-enrollment. Through our member engagement solutions, plans can guide members to the next best health action through omnichannel outreach, personalized care plans and health education resources. Member sentiment is easily accessible through digital-first survey tools that surface insights into member challenges and inform strategies to improve plan perception.

Succeed in a competitive marketplace by using powerful member engagement tools to improve experiences, loyalty and plan perception. Contact us for a demo.