Digital engagement now typifies the Medicare Advantage experience

MA remains the largest value pool¹Neha Patel and Shubham Singhal, “What to expect in US healthcare in 2023 and beyond,” McKinsey, January 9, 2023. for payers and is projected to continue growing rapidly in coming years. This is leading to increased competition and investment to enhance MA product offerings. Beneficiaries have access to an average of 35 Medicare Advantage prescription drug (MA-PD) plans per county, up from 28 in 2021. In 2023, 82 percent of counties will have additional plan options, and 57 percent will have entirely new payers participating. With the number of plans increasing, payers are investing to differentiate their products and add new benefits, leading more beneficiaries to enroll in MA rather than traditional Medicare. MA penetration is rising rapidly—a trend that is projected to continue.²“Baseline projections: Medicare,” Congressional Budget Office, May 2022.

Payers continue to actively market their products, especially during the fourth-quarter annual enrollment period (AEP), the primary shopping period for MA plans. Media spending, which excludes direct mail, has increased by 5 percent annually since 2016; growth, however, has not been equal across channels. Digital media (such as search engines and online ads) has emerged as a leader, growing by 33 percent annually from 2016 to 2021 and rising to represent 17 percent of total 2021 media spending. This comes as payers transition away from legacy media channels such as magazines (declining 13 percent annually to 1 percent of the total) and newspapers (declining by 8 percent annually to 9 percent of the total). Alongside this diversification into digital media, payers continue to use direct mail.

For their part, beneficiaries said email, TV, and online advertisements were the most informative methods of marketing, highlighting the value of an omnichannel strategy. Less than 10 percent of members reported valuing radio, posters, or billboards as sources of information. Alongside these digital investments, beneficiaries still reported receiving more than ten pieces of marketing outreach during the AEP alone, highlighting the pervasive challenge payers face in standing out and differentiating themselves from competitors.

Concurrent with the expansion of digital-marketing efforts, beneficiaries are increasingly using online sources to shop for and compare plans. These online sources include payer websites, self-service options on brokers’ websites, and the Medicare website, which the Centers for Medicare & Medicaid Services (CMS) is investing in to enhance. According to our survey, online search tools were the most important source of plan information during the most recent AEP. The percentage of members who say they value information from payer websites has more than doubled, increasing from 14 percent in 2020 to 29 percent in 2022. For payers, websites are the highest-value sales channel, with no external commissions and with generally higher lifetime values.

Television ads targeted at beneficiaries often feature senior-aged celebrities discussing the potential benefits of MA. The ads’ messaging often highlights the most compelling elements of the product design, such as comprehensive dental coverage, pharmacy flex cards, and Part B givebacks (money back in beneficiaries’ Social Security checks). The ads have proved to be successful in driving immediate inbound calls via a toll-free number displayed on the screen, which directs callers to targeted call centers boasting high conversion rates. Initiated by e-brokers, this approach is increasingly being used by payers and other brokers. The approach, with its rapid conversions, has driven beneficiaries to complain to Medicare in an effort to buy time to reevaluate their options, and is the focus of new CMS regulations requiring call recording and other efforts to ensure quality. Despite concerns and challenges, the effectiveness of these efforts has raised the bar for payers to clarify their messaging, include clear calls to action, and adopt an omnichannel mix. Members say they’re interested in getting help from the e-broker (telephonic or digital broker) channel, with e-brokers an existing or potential resource for 40 percent of beneficiaries. Notably, payers must remain omnichannel in engagement, as beneficiaries also highlight the important role of primary care physicians (59 percent use or have an interest in using), specialists (41 percent), and family and friends (45 percent) in the decision-making journey.

Delivering a distinctive member experience begins with onboarding. More beneficiaries now want digital onboarding, including more communication via email, streamlined online-account creation, an introduction to mobile apps, and more. Digital offerings are viewed as increasingly important in the plan selection process, yet only 48 percent of members reported being fully satisfied with online features during onboarding.¹Marina Ivanenko, Dan Jamieson, and Cara Repasky, “What Medicare Advantage members want from their onboarding experience,” McKinsey, April 18, 2022. This presents an opportunity for digital enhancements to better meet member demand and improve the new-member experience. Payers have made progress with digital adoption, as demonstrated by the increase in the proportion of members who receive emails from plans: 42 percent in 2022, up from 31 percent in 2020. Although the increases are substantial, most members do not report receiving these emails.

Attracting and onboarding beneficiaries to an MA plan is an enduring challenge, but it is only the beginning of the overall effort to deliver strong health outcomes and a distinctive customer experience. MA beneficiaries increasingly expect a seamless omnichannel experience akin to those they routinely enjoy when engaging with other industries, creating a need for payers to integrate digital, mobile apps, and self-serve tools throughout the healthcare journey.¹Marina Ivanenko, Dan Jamieson, and Cara Repasky, “What Medicare Advantage members want from their onboarding experience,” McKinsey, April 18, 2022. With rising customer acquisition costs, retention has also taken on greater importance. In addition, CMS changed its methodology for calculating MA quality scores to reflect the importance of member experiences.² Stephanie Carlton, David Malfara, Kevin Neher, and Cara Repasky, “New Stars ratings for Medicare Advantage prioritize customer experiences,” McKinsey, October 15, 2022.

Payers and brokers are finding it necessary to modernize their data management capabilities. This comes as beneficiaries report an increasing openness to sharing health data and as regulators introduce new compliance requirements. Members are most willing to share health and demographics data for the purposes of finding the right plan, connecting to providers, and qualifying for incentive payments. Barely one-quarter of seniors reported they would not allow their health data to be shared, highlighting opportunities for payers, brokers, and others to enable plan matching, close Stars gaps, improve engagement, and more by gathering analytical insights from member data.