In the ever-evolving landscape of healthcare, Medicare Advantage plans face a critical challenge: member retention. With an average annual churn rate of 10%, health plans are losing significant revenue – as much as $120 million for a plan with 100,000 members. However, even a modest reduction in this churn rate can lead to substantial financial gains. This article delves into the impactful strategies that can be employed to curb this trend.
- On average, about 10% of your Medicare Advantage members churn each year (Kaiser Family Foundation).
- Let’s assume that you have 100,000 members and you average $1,000 per member per month (PMPM) in Medicare payments and premiums to your health plan. At a 10% churn rate, you are losing 10,000 members and $120 million in plan reimbursements!
- Now, let’s look at it a different way. Let’s assume that it’s unreasonable to expect that you can reduce the entire 10% churn. So, let’s evaluate the impact of a 1% reduction in churn.
- When you reduce your Medicare Advantage dis-enrollment by 1%, you grow your revenue by $12 million dollars per year.
- It’s easy to see the financial benefits you will enjoy with even a modest improvement in your member retention rate. So, what can you do to start reducing member churn? Here are three key steps:
Step One – Understand Your Churn
- The first step is to understand why your members are leaving. According to the Kaiser Family Foundation, the main reasons are cost and quality. Here are the key statistics:
- 29% of churners faced a premium increase of $40 or more (24% faced an increase of $30-$40)
- Med Advantage switchers saved more than $17 per month on average and paid less in out-of-pocket expenses
- 14% of switchers decided to leave plans with 2 or 2.5 stars, while only 9% of switchers left 4 to 4.5 star plans
- While these stats are useful at a high level, the churn drivers for your members and your market are even more important. You must conduct your own analysis and your own market research to determine why members are leaving your plans for your competitors.
- If you discover that your plans are perceived to be at a significant disadvantage, you should strongly consider a reassessment (using conjoint research) and redesign of your plans to make them more competitive in your unique market.
Step Two – Predict Your Churn
- The second step is to accurately predict which members are most likely to churn. To do this, you need a combination of your historical member data, consumer data appends, and predictive analytics.
- Done correctly, you can score your existing Med Advantage members and rank them by their likelihood to churn. Those with the highest scores (most at-risk) should receive greater attention from you throughout the year.
Step Three – Reduce Your Churn
- The third step is to make the appropriate improvements and to carefully communicate with your members who are most likely to churn. Your research will tell you what you need to fix. Perhaps you need to modify your plans considering your competitive position and star rating. Perhaps you need to ensure that your members are aware of your unique advantages and benefits. In any case, you simply must put more effort into your communications and engagement levels with your highest risk members.
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