The HSM Group - Medicare Retention: Relationships

Resource Center

Focus on Relationships Increases Medicare Retention

by Dana H. Felthouse, MBA

The following article was published in the June 1998 issue of On Managed Care.

It’s expensive to enroll new members into an HMO—$1,000 per enrollee, by most estimates. When a plan doesn’t retain the new members, it not only can’t recover the initial recruiting costs, but also must spend again to replace the disenrollees.

Building Medicare member retention and loyalty is dependent on nurturing relationships. National research with three Medicare-risk plans in markets with increasing levels of managed care penetration illustrates that strong relationships between a plan and its members and providers are critical to reducing disenrollment rates.

Bayer Corporation funded research grants for The HSM Group, Ltd. to conduct disenrollment research in three Medicare-risk plans in 1997. Disenrollment rates varied widely among the plans and were influenced by the maturity and the competitive environment of the markets in which the plans were located. In-depth interviews of disenrolled and continuing members at each plan were conducted to understand the plan-specific drivers of voluntary disenrollment. Regression analysis ranked the drivers of disenrollment to help the participating health plans understand the most important issues to address to increase retention in their Medicare populations.

An aggregation of these three Medicare disenrollment studies points to some significant issues for Medicare-risk plans to address. Some major problems emerged consistently across the plans.

Problems with seniors being able to see their preferred primary care physician. Members were unable to see their PCP of choice because of closed panels or because the plan network did not include popular providers in the community.

Approval time for a specialist office visit. Difficult or lengthy referral processes that cause delays in scheduling specialist appointments drove disenrollment. Referral restrictions are universally disliked and are associated with both dissatisfaction and disenrollment.

Members’ perception of the quality of specialists’ care. Members’ perception of the outcome of specialists’ care was critical to retention. Disenrolled members were more likely than continuing to perceive a specialist’s treatment did not improve their health.

Members’ inability to have problems solved. Disenrolled members perceived that they were unable to have their problems solved by either the plan (i.e., member services staff, call-center personnel) or the PCP office.

Gaps between seniors’ expectations about the plan and plan performance. Disenrolled members were far more likely than continuing members to cite an experience of unmet expectations, although some research shows these disenrollments actually may have resulted from member misunderstanding or below-average plan performance.

Issues with the prescription drug benefit. Disenrolled members had problems with the administration and communication of the prescription drug benefit in addition to their well-documented concerns about benefit maximums, plan design and formulary exclusions.

Plan-specific research, based on the causes of disenrollment for a specific product and population, must drive the selection of loyalty and retention strategies to ensure retention targets are met. It is critical to track the causes of voluntary disenrollment on an ongoing basis to guide improvements in areas and processes most important to retaining members. Resources should be invested in management information systems to capture data at the member level to measure results. A thorough synthesis of the HSM research shows that the most effective retention strategies improve and enhance:

Provider-member relationships (PCPs and specialists alike)

Plan-member relationships

Plan-provider relationships

The number of Medicare-risk plans doubled- from 154 to more than 300- between 1994 and 1997. Over the next two years, the U.S. Health Care Financing Administration projects it will review as many as a thousand applications for provider-sponsored organizations, the new Medicare+Choice option authorized last year. Medicare-risk plans will be increasingly challenged to implement loyalty-focused strategies to retain their members in the face of increasing competition.

Strengthening plan relationships with members and providers through research-based retention strategies drives retention levels upward, resulting in sustained market share and favorable economic results for Medicare-risk plans.

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