New Study Shows Medicare Advantage OTC Benefits Programs Help Enrollees and Health Plans

OTC programs strengthen member acquisition, retention, satisfaction, and care management strategies
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(WASHINGTON, D.C.) — The Consumer Healthcare Products Association (CHPA), the national trade association representing leading manufacturers in the personal healthcare products industry, released the results of research showing that over-the-counter (OTC) medicine supplemental benefits programs offered by Medicare Advantage (MA) plans do not only help enrollees, they also benefit health plans. The new CHPA report, “Using the Medicare Advantage Over-the-Counter (OTC) Medicines Program as a Consumer Engagement Tool,” is the result of research conducted by Pareto Intelligence and HealthScape Advisors showing that enrollees who use OTC program benefits have greater healthcare needs, and health plans see lower medical costs, reduced utilization, and improved outcomes for many OTC benefits users. The full report is available for free at

The report highlights that 80 percent of MA plans offer OTC allowances as one of their top five supplemental benefits, along with dental, hearing, fitness, and vision. Now 18 million consumers have access to MA plans with OTC benefits. The study also notes that, on average, OTC benefit allowances are $400 per enrollee per year totaling more than $7 billion in allowances for OTC medicines and other covered products.

The report found that using these benefits is an attractive option for current and prospective enrollees, and increasingly attractive to the health plans that offer them. Overall healthcare spending for OTC benefit users is equivalent to non-users, but the Centers for Medicare & Medicaid Service (CMS) Risk Score is lower for OTC benefit users compared to non-users. Additionally, certain populations that use OTC benefits show lower medical costs, reduced hospital utilization, and better health outcomes. For example, medical costs among OTC benefit users with obesity were 62 percent lower than non-benefit users, and 29 percent lower for those with substance abuse disorders. Additionally, OTC benefit users who purchased eye and ear care products had, on average, 13 percent lower hospital admissions and 8 percent lower medical costs than non-users. Enrollees with a current or recent stroke diagnosis had 10 percent fewer admissions and 23 percent lower prescription drug costs on average.

However, typically only 30 percent of OTC allowances are actually used by eligible enrollees each year, leaving $5 billion unused in aggregate. “There’s a lot of benefit left on the table,” says David Spangler, senior vice president for legal, government affairs and policy at CHPA. “When we see so many advantages in terms of real cost to health plans and systems, like reduced per member per month medical and utilization costs, health plans should do all they can to get enrollees to use this benefit.”

Competitive dynamics and growth in the MA market are driving health plans to seek new ways to enhance plan offerings, improve enrollee experience, and evolve their care management strategies. As the CHPA report illustrates, health plans are looking more and more to supplemental benefits like OTC programs which benefit consumers and health plans alike. According to Zain Jafri, vice president for innovation and analytics at Pareto Intelligence and primary investigator for the CHPA study, “There is a real opportunity for health plans, consumer health organizations, manufacturers, and policymakers to collaborate to take better advantage of OTC benefits programs.” View the full report and join the conversation at a virtual webinar on November 10. Visit to get the full report and register for a free webinar to learn more about the study findings and implications.

Study Methods: Researchers analyzed over 35,000 Medicare Advantage enrollees for a regional health plan for a single benefit year — 2020 — and calculated core cost, utilization, and risk measures for the enrollee popula­tion at an individual enrollee level. Researchers segmented the population between OTC benefit users vs. non-users, and analyzed various medical conditions using the CMS HCC Risk Ad­justment Model used for Medicare Advantage, and analyzed various categories of OTC products purchased. Validity was tested on a raw and risk adjusted basis to account for differences in morbidity across various cohorts, and accounted for outliers.

HealthScape Advisors is a management consulting firm dedicated to helping health plans, provider organizations, specialty health organizations and investors navigate the continuously evolving healthcare landscape. HealthScape Advisors supports clients as they embark on their most important initiatives, helping them grow profitably, improve performance and transform their businesses. HealthScape Advisors is part of the Convey Health Solutions family of companies. Visit

Pareto Intelligence is a leading healthcare technology company modernizing the way health plans and providers succeed in value-based care. We deliver analytics, technology and advisory solutions to help our clients achieve complete and accurate revenue, communicate critical patient information seamlessly, activate clinical and claims data, and make more informed strategic decisions. Our solutions are supported by artificial intelligence-enabled predictive models and proprietary algorithms, powered by advanced data science, that help our clients capture 5:1 to over 20:1 return on investment. Through this, Pareto demystifies complex healthcare data, and delivers actionable insights to improve outcomes. Visit

The Consumer Healthcare Products Association (CHPA), founded in 1881, is the national trade association representing the leading manufacturers and marketers of consumer healthcare products, including over-the-counter (OTC) medicines, dietary supplements, and consumer medical devices. CHPA is committed to empowering self-care by ensuring that Americans have access to products they can count on to be reliable, affordable, and convenient, while also delivering new and better ways to get and stay healthy. Visit