For many carriers, acquiring new Medicare Advantage subscribers is expensive. This investment in customer acquisition pays off if new subscribers persist for multiple years. However, if subscribers churn after a year or two, especially if they incur high costs during their membership, plans quickly become unprofitable. From an actuarial perspective, the key to Medicare Advantage profitability is leveraging data to create a more intelligent member acquisition and retention strategy.
As all actuaries and carriers know, diversifying risk is critical for profitable payor operations. Actuaries at health plans spend their time managing, quantifying, and mitigating risk. While standard practice in underwriting commercial plans, Medicare requires a different approach. Matt Halle, an actuarial consultant for health plans, explains, “Even if you can’t ask in Medicare, you can still apply actuarial thinking to the sales approach.”
Carriers have a wealth of data available but rarely utilize it. Enrollment data provides valuable insights into subscriber demographics and social determinants of health. While providers can’t use this data to pre-qualify and underwrite Medicare subscribers, they can use it in sales strategies.
“Zip codes are a big deal in actuarial work,” Matt says. “Higher income equals access to preventative care. It always works. Even if you aren’t healthy, if you have access to physician care, you will do better.” With this insight, carriers can proactively market their programs and recruit brokers and agents in the zip codes that diversify their risk pool.
With the correct data, recruiting agents and brokers can be more intentional as carriers target subscribers in specific geographic areas. Furthermore, carriers can tailor commission rates and incentives to appeal to agents and brokers that service those areas.
With a small portion of a payor’s member base contributing the majority of claims, it’s more important than ever to intelligently expand that base to include more healthy patients and diversify risk.
Many payors are not maximizing Medicare’s risk adjustment dollars for sicker patients because they don’t have consistent, easy-to-follow processes. Manually pulling records to review claims is a time-consuming and expensive methodology.
Savvy carriers are leveraging better, cleaner data from enrollment. They are using partners that allow them to ask the right questions upfront so they can easily identify subscribers who will qualify for risk adjustment. These same systems enable carriers to create simple processes to collect the necessary information for risk adjustment.
Many payors struggling to make Medicare Advantage profitable are facing a dilemma – should they grow or shrink their way to MA profitability? The actuarial recommendation is to do both, but use strong, reliable data. Strategically leveraging data can guide carriers in where to invest in Medicare Advantage while reducing marketing spend to obtain a more optimal subscriber base. The most forward-thinking carriers use data to provide a competitive edge. And more importantly, they are collecting the right data during enrollment to be proactive.
If your priorities include increasing Medicare Advantage profitability, you need the right data to do that. e123 has been serving the insurance distribution market for decades and can help carriers with enrollment and commissions data that drives strategic decision-making. Setup a free consultation.