CHPA Chat - The Untapped Potential in Medicare Advantage Plans

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Episode Summary

Those of us in consumer healthcare don't often think about insurance coverage for OTC medicines, but more and more health plans are offering this benefit. As of 2021, nearly 18 million people have OTC benefits included in their Medicare Advantage health insurance plan. In this episode of CHPA Chat, we'll explore what new research is telling us about this and why the Medicare Advantage health insurance market is a big opportunity for the growth of self-care.



Episode Transcript

Anita Brikman: Those of us in consumer healthcare don't often think about insurance coverage for OTC or over-the-counter medicines, but more and more health plans are offering this benefit, using it as a recruiting tool to entice new members and keep enrollees happy. In this episode of CHPA Chat, we'll explore what new research is telling us about this and why the Medicare advantage health insurance market is a big opportunity for the growth of self-care.

Speaker 2: Welcome to CHPA Chat, conversations in the consumer healthcare industry with Anita Brikman.

Anita Brikman: Welcome everyone. And let's start with some numbers. As of 2021, nearly 18 million people have some kind of OTC benefit included in their Medicare advantage health insurance plan with an average of about $400 in OTC allowances per enrollee. Now that's not small potatoes, yet only about 30% of the allowances are spent every year leaving nearly 5 billion dollars on the table. Wow. Joining me now is David Spangler, general counsel and SVP legal government affairs and policy at the Consumer Healthcare Products Association, and my dear colleague, who spearheaded a study into how OTC benefits are utilized, by whom, and what that means for health outcomes and medical costs. David welcome.

David Spangler: Thanks Anita.

Anita Brikman: Let's start with the concept of OTC. What is exactly included in this benefit if a health insurance plan says you have an OTC allowance?

David Spangler: Right. Perfect question to get started here. You know, I'm a food and drug lawyer. So when I hear OTC, I think of something with a drug facts label, right? I think of treat, cure, mitigate disease available without a prescription. That's not so when you're talking about the Centers for Medicaid and Medicare Services. When they say OTC, they mean something different. They mean you can get it on your own without a prescription. So in the OTC covered benefit, yes, there are lots and lots of OTC medicines, not all, but lots. There are also a number of vitamin and mineral supplements and there are a lot of devices, and also durable medical equipment that would also frequently be in the OTC bucket. So it's more than just medicines.

Anita Brikman: So if somebody needed some sort of special physical therapy wraps or crutches, things like that?

David Spangler: Wraps, crutches, bandages, pill minders. So lots of things.

Anita Brikman: Interesting.

David Spangler: Yeah.

Anita Brikman: So a lot's included there. And we're going to talk about why people aren't utilizing it to the full extent of what they can. But just to level set, there may be some of our listeners who don't really understand how Medicare Advantage works. Let's set the stage on that.

David Spangler: Sure. So we're all familiar with Medicare, because some of us are getting towards that age and others of us have parents or grandparents. So we all know Medicare.

Anita Brikman: Oh, you don't say David.

David Spangler: Yeah. Right. Well we talk about Medicare. Everybody knows Part A that's your hospital insurance. Everybody knows Part B that's your basic medical insurance. So that's when you go to see your doctor. We also know Part D because that gets lots of attention. That's the prescription drug benefit. And you're sitting there saying, wait a minute. I think I know my alphabet and I don't remember hearing a C. We never talk about C as C because that's not how it's branded or labeled. But within Medicare, there is provision for private insurers to contract with the Centers for Medicare and Medicaid service and then those private insurers administer the Medicare benefit directly through what's called Medicare Advantage. So that's the private market alternative to your traditional Medicare. And that's where these supplemental benefits live.

These supplemental benefits are something then that the private insurers can offer that traditional Medicare does not incentivize people to try that. So when you think of, if you've turned on CNN in the morning and you see Joe Namath's ads again and again and again, talking about Medicare Advantage, that's what he's talking about. So this all fits in there and what happens is the Medicare Advantage provider, that private insurer, they, when they're giving a bid to CMS, they have to build in what supplemental benefits they're going to do, price those out, include those in their bid. And then they get a partial rebate from CMS that they then roll back into the plan to help afford those benefits. I hope that makes sense.

Anita Brikman: It does make sense, but this seems like a competitive market.

David Spangler: That's right. That's right. It is. So those bids are sealed. We don't know what's in those bids. I don't know how many times I've thought to myself well, can't we just send an email to CMS and figure out how people are using this OTC benefit. No, that's private information. That's between the plan in its closed bid and CMS. But they do have to roll back dollars back into those supplemental benefits. That's one of the reasons, I'll get into the study more later, but that's one of the reasons we had a hard time finding a partner to get their data and why we can't disclose what insurer's data we were looking at.

Anita Brikman: Wow. Okay. So definitely some parameters there. What can you tell me about this study and its design? Like what were you looking for? How did it work? What can you tell me without revealing anything that's proprietary?

David Spangler: Sure. So we worked with a group of companies called The Convey Consulting firm. And in that network of their companies, they have a firm called Pareto Intelligence and a firm called HealthScape Advisors. And these folks work with plans every day. That's their bread and butter. And they know the Medicare Advantage space and these supplemental benefits up, down, and sideways. So they found one of their clients who was willing to share its claims data for part of 2019 and all of 2020, and a little bit of 2021. And then we were able to analyze that data, to see if there was a difference in outcomes, in spending on prescription medicines, on spending on doctor visits, and on utilization of the OTC benefit between those who used it and those who didn't. So that's kind of the gist of the study.

Anita Brikman: So what did you find?

David Spangler: Well I'd hoped naively when we went into this, that OTCs had the promise of bending the cost curve. They don't really. In essence what the OTC beneficiaries, those who took advantage of it versus those who didn't, it pretty much ended up as a tie in overall healthcare spending.

Anita Brikman: Interesting.

David Spangler: So we thought this isn't fun, but it is because a couple of things, one, it shouldn't have surprised us. If you think back to the old Little Caesar's pizza pizza commercials, one of their commercials featured an orangutan where they were giving him tests to see, did he want one banana or two bananas? Did he want one pizza or two pizzas? Well, needless to say he wanted two.

Anita Brikman: Of course.

David Spangler: So the point there is, is that if you're given this benefit, you're going to use it. And so you might not be saving money, right out of the shoot. However, three things we thought were very interesting. First, plans are constantly trying to engage their enrollees. You yes, you want to recruit them, but then you also want to help them access their care most efficiently, get the best outcomes. And sometimes the hardest to reach are those that use things but you don't necessarily know how they're using them. Why? When? This gives the plans the ability to understand people who are doing things on their own, when are they doing it? Why are they doing it? They can engage these people to figure out what is it we need to do for those enrollees to help them get a more efficient outcome. So it's a strong engagement tool for the plans. That's number one.

Number two, in a number of OTC categories, not all, but in a number of them, there were savings. So this tells us one, it tells the plan, this is efficient. Let's keep driving there. And from the manufacturer standpoint, this is an area rich in the opportunity to further engage with plans, to help them and society save money. So eye and ear care, cough, cold and allergy, leg and foot care, pain and fever, skin health. Those were all examples of where those using the OTC benefit were savers over those who did not. So that's number two.

Then number three, I do think a lot of these plans, some of them, they have like a giant catalog that you're selecting from, but others, this has been covered a lot in the press, Anthem and Walmart about something where they just they give you a debit card and you go for it. So that's going to be brand agnostic, unlike a catalog where you want to get into it. So there's opportunities for individual manufacturers to work with individual plans about their own offerings that maybe they can help shape something that helps the plan, helps its enrollees and helps the manufacturer.

Anita Brikman: Given how much of this benefit has been left on the table, is there an opportunity to encourage more plans to be more engaged, more aggressive in promoting it versus taking a passive role that maybe it's there when they're trying to get that enrollee in, but once they're there, maybe they don't do that much with it. Is there an opportunity to say you need to be promoting this more?

David Spangler: That cuts two ways. One, for sure, yes. The other part to remember though, is when they're doing their math, when they're putting in that bid, they've got estimates for how much people are going to use and engage with that benefit. So they don't necessarily, unless they see it coming, they don't want all that to go away, but is there room for some of that to go away for them to reconfigure their bids? Absolutely.

Anita Brikman: And what about the cost savings we saw in those certain categories? Can we conjecture that the use of some of these products or the availability and access to them that they are more affordable, helped these individuals be savers to the insurance plans because their conditions didn't get worse? Or am I just taking us too far down the road, David?

David Spangler: No. No. Oh, you definitely aren't. One of the things we looked at was hospital readmissions.

Anita Brikman: Right.

David Spangler: As well as just hospitalizations overall. So the hospital admits, these categories I mentioned, those five or six that I mentioned, they had slightly lower admissions than the non-users. And then they had even more in terms of a reduction in the readmissions. So the point is these higher utilizers saved money across the board with similar outcomes, if not better.

Anita Brikman: And what's in this for CHPA members. I know this is just the first iteration of this study, but what would you advise CHPA members to do?

David Spangler: I would say, look at your specific product portfolio because not everything is going to fit to be a winner for you and the plan and its enrollees, but some of your products probably will. So think about where you've got a rich medical heritage, where you can go to the plan with your data on, on how this works, why it works and show them, paint a picture for them of how this is going to help them engage with their enrollees. And yeah, in the end, it's going to help you gain some share there as well, again, towards the ultimate benefit of those enrollees. Let me give you a for instance, in a plan that has a catalog, it's like, okay, what do I need to do to be in that catalog? If it's more the debit card, should I be marketing to seniors that I know that insurer is particularly prevalent in that community, which you would have reason to know. So I think there's some regional plays there as well. It's not going to be for every brand and every product.

Anita Brikman: What about the partnership you talked about with Anthem and Walmart? Do we see more of that coming down the pike?

David Spangler: You know, I don't know when I talk to our folks who did this study, the HealthScape advisors and the Pareto Intelligence, they definitely think this is a growing thing. And if you think of CVS and Aetna, that merger's now a few years old, but that's where the world seems to be heading, where there's more integration of retail delivery of healthcare with the healthcare system itself. And this is just one little piece of that, but a piece that is growing. There's now about 42 percent of the Medicare population is in a Medicare Advantage plan. And that's up significantly over about the last 10 years.

Anita Brikman: As more of these plans start to offer this benefit, is it a harbinger that self-care and the importance of it, not just for the individual, but also for reducing healthcare costs as an integral part of the healthcare system versus just the Rx side or treating of a serious ailment side. Is this a harbinger that self-care and its value to society is being recognized more?

David Spangler: I think so. And I also think, you can't have lived the last year and a half, two years in the COVID era and not recognize this isn't just about our members’ products. This is truly about the big picture of self-care and having to take action on your own and having to use non-traditional services. Think of the number of telehealth appointments, think of the number of times when you're calling the advice nurse and not even thinking about going into an office. Now, I recognize that's not self-care, but it's certainly a merger and an eye opening of what is possible that I don't think systems understood was possible pre-COVID. Let me give you one more example, think of the rapid COVID test that you can buy on your own. Do you think five years ago we could have possibly envisioned, oh yeah we're going to be able to just do that on our own. Nobody would've believed you, but here we are.

Anita Brikman: Nope. That's exactly right. And the widespread availability and what that can mean for transmission containment with that kind of powerful tool in people's hands. As far as retaining enrollees, in the executive summary of the study that I read it talked about this was a recruitment tool. Like this is one of these extra bennies we give you if you join our Medicare Advantage plan, but does this help retain people in those plans once they join? Did you see any evidence of that?

David Spangler: The study does not talk about that, but again, when I talk to the folks who put this together, as they're counseling their own clients on how to think about that, that is a lead because any of our members know the best customer is the repeat buyer, right? The acquisition cost of a new buyer is where you generate a lot of cost and once you have them, you want to keep them. So plans think that same way. And that's certainly something that the folks who worked with us in putting this study together, that's way up on their list of things to keep mining and understanding. We did not include that in our study. That's more of a plan-specific point.

Anita Brikman: Got it. And with 70 percent of the allowances going unused, is there anything industry can do about that?

David Spangler: Yeah, again, I think folks ought to be talking to plans or not all, about some of their brands and how to help the plans use those as a tool to engage members, think a little differently about where your products fit into the armamentarium of solutions, because they're not going to everywhere, but pain, post-procedural pain after if somebody has a dental appointment and they had to have some work done. Shouldn't they be starting with acetaminophen or ibuprofen or Naproxen as opposed to going straight to the script pad? Yes. So that's true for seniors, just as it is for non-seniors, and there's certainly an opportunity to talk to plans about that within the context of the OTC benefit.

Anita Brikman: Last question for you, David, what's ahead as far as this kind of research on the insurance payer/provider marketplace and where OTCs fit into all of this. What do you have planned at CHPA?

David Spangler: Well, we don't have planned to do a repeat of this just yet. I do think that's down the road. We will be doing a new study on OTC value overall. We talk a lot about every dollar in OTC spending gets over $7 in healthcare value. That data is now going to be about four years old by the end of next summer. So we'd like to refresh that and we look forward to getting that out in 2022 with the help of IRI.

Anita Brikman: And with the help of your communications department, David.

David Spangler: Maybe. Maybe.

Anita Brikman: David Spangler. Thank you for spending some time with me on CHPA Chat. Always a pleasure.

Speaker 2: Thank you for joining us here at CHPA Chat. For more information, and to hear our entire catalog of shows, please visit


David Spangler Headshot in suit and red tie
Senior Vice President, Legal, Government Affairs & Policy

The views expressed in this podcast are solely those of the speaker and do not necessarily represent the opinions of the Consumer Healthcare Products Association.

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