Business Reasons for Part D Players to Reach Healthy, Reluctant Seniors

Contact: Richard Hamer, 612-436-8318.

Deft Research’s Part D National Segmentation Study helps plans reach seniors. It captures service preferences, economic concerns, coverage concerns, demographics, health conditions, and health behaviors. It is the only widely available study that explains senior skepticism and provides market segmentation by insurance status, psychographics, and risk scores. The full study may be accessed by subscribers through Deft’s on-line interface.

People are saying good things about Deft Research.

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In a nutshell, Deft’s Part D National Segmentation Study has shown us that the Post-Awareness, Part D market is wide open. Established players and new market entrants have solid chances for success. But, before seniors decide what to do, they have concerns and questions that are not answered by today’s typical market message.

The Part D program was set up with the expectation that those whose need for drug coverage is not great, would enroll along with those whose need is greater. Convincing healthy seniors to join Part D, many of whom currently get along without drug coverage, is the central pivot on which the success of the program rests.

Below are three business reasons for making a strong effort to reach healthy reluctant seniors.

1. Plans need premiums from healthy seniors. CMS’ risk scoring formula gives healthy seniors who’ve spent $0 or little on drugs a risk score. Technically, if they didn’t spend anything, their risk score should be nearly zero, but it is not. To balance that, the risk formula assigns a lower risk score to seniors with many conditions and high expenses. If plans only enroll the neediest persons and fail to attract healthy, low cost seniors, reimbursement will not be as high as desirable, and for some members there will be a significant loss for the plan.
    
2. Avoid premium inflation. If the above scenario plays out across the country and healthy seniors avoid the program while sicker seniors enroll, the cost per enrollee will be higher than expected – as much as 40% higher. The average bid for 2007 and the resulting average premium will reflect this. Healthy seniors who didn’t want the program before will be even less attracted by future high prices.
    
3. Slow growth is a bad signal. In most cases, slow enrollment growth will be a signal that healthy seniors are not being reached. If that’s true, poor monthly cashflow and gain-loss performance is likely. The presence of the coverage gap in the standard package means that the annual claim liability will hit plans early in the year. Enrollees with higher drug spending, will use their entire benefit and be in the coverage gap within 6-8 months. But your plan’s reimbursement for these enrollees is spread over 12 months. If your enrollment doesn’t happen until May, you’ll wind up with 7 months of premium but a full year of claims expense. And, when the new year starts, the program “re-sets” so you’ll never recover the loss.

Our business reasons emphasize that reaching healthy, low cost seniors is important for your plan and for the Part D program.

Below are more comments about Deft Research from Part D Plans:

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The Deft Research Service is a subscription service providing the most exciting Part D research available. The research is conducted by experienced professionals and PhD level analysts. We’d like you to subscribe. We have an introductory offer you won’t want to turn down.

The synopsis we’ve prepared to send you FREE of charge will capture your imagination. It gives you important top line results that will make you want to get your hands on this information and put it to use. To receive your free synopsis, respond to this email with the word ‘synopsis’ in the subject line.

Call 612/436-8318 for free temporary access to the on-line interface.

The Deft Research Service

Subscribers to Deft’s Annual Part D Subscription receive the following:

• Access to a password protected web site.
   
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