Are Over The Counter Benefit Plans Worth It Featured Image

Are Over The Counter Benefit Plans Worth It?

The medical world and the insurance world are irremovably interwoven. Because of this, over the counter benefit plans are both a medical and insurance-based change.

But why exactly are OTC benefit plans exploding in popularity, and is it actually a good thing? Let’s find out.

What are OTC Benefits and Why Are They Becoming More Popular?

OTC stands for “Over the Counter.” over the counter benefits allow patients to get OTC products they may need such as bandages, cold treatments, allergy medicines, pain relievers, and supplements or vitamins. Many plans available to patients require calling a toll-free number or filling out a mail-in order form to have OTC items of the patient’s choice shipped directly to their home.

Benefits vary significantly from insurance plan to insurance plan, but on average benefits allow up to $100 in OTC items every three months for a total yearly benefit of $400. The benefit amount does not typically roll over from quarter to quarter in most cases. Again, this may depend on one’s particular insurance plan, but the typically OTC benefit plan requires patients to pay $0 copays for covered OTC items, medications, and products up to the available benefit limit each insurance quarter. Plans may or may not cover the cost of shipping.

OTC Product List

Eligible OTC items, which usually include medications or products that alleviate, treat, or provide pain relief for injuries or illness, typically include the following:

  • Allergy relief
  • Acetaminophen
  • Aspirin
  • Acid reducers
  • Antacid tablets
  • Gas relief tablets
  • Yeast infection medication
  • Anti-diarrheal medications
  • Anti-nausea meds
  • Bisacodyl
  • Laxatives
  • Stomach relief medications
  • Stool softeners
  • Ibuprofen
  • Naproxen sodium tablets
  • Arthritis pain relief tablets
  • Hot and cold patches
  • Topic pain relief medication
  • Bladder control items such as underpays and adult disposable briefs
  • Cough drops
  • Cold and fun relief medication
  • Diphenhydramine
  • Mucus relief tablets
  • Nasal decongestant medications
  • Vapor rub
  • Denture adhesives
  • Denture cleaners
  • Toothpaste
  • Toothbrushes
  • Dental floss
  • Toothache relief
  • Ear wax drops
  • Ear syringes
  • Artificial tears
  • Fiber supplements
  • Bandages
  • Supportive pads and wraps
  • Stockings
  • Diabetic care medication and legwear
  • Blood pressure monitors
  • Braces
  • Canes
  • Corn and callus medicine
  • Cotton balls and swabs
  • Thermometers
  • First aid kits
  • Gauze and sponges
  • Humidifiers
  • Hydrogen peroxide
  • Oximeters
  • Safety benches
  • Surgical tape
  • Bathroom rails
  • Toilet seats
  • Headache relief medication
  • Hemorrhoid treatment
  • Lactase enzymes
  • Lice treatment
  • Motion sickness tablets
  • Sleep aids
  • Nicotine gum and patches
  • Antibiotic creams
  • Anti-itch creams
  • Baby and diaper rash ointment
  • Petroleum jelly
  • Sunblock
  • Multivitamins and supplements

Typically, one does not need to provide a statement from a medical provider or indicate a diagnosis and do not require a letter of medical necessity from a physician. However, many medical plans will try to encourage their members to have appropriate discussions with their medical providers and have their providers explicitly recommend over the counter items for specific diagnosable conditions prior to purchasing or ordering.

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Medicare Advantage and OTC Benefit Plans

The rise of these plans have been generated in part by U.S. government attempts to strengthen the Medicare Advantage (MA) program, and it has seen unprecedented growth. According to an analysis of signup data from the Centers for Medicare and Medicaid Services, membership to Medicare Advantage has increased by 31% in the past four years. Plans are continuing to take advantage of Medicare Advantage’s popularity, and MA accounts for nearly 36% of 2019 Medicare enrollment overall.

One element that has contributed to this growth of Medicare Advantage has been the increased adoption of the over the counter supplemental benefit features that are within Medicare Advantage services. This particular benefit has exploded to over 50% market penetration and has seen a significant uptick in 2019.

Supplemental Benefit Augmentation: What Costs Are Being Covered?

In a groundbreaking 2018 CMS final rule change, flexibility was added to Medicare Advantage plans in the determination of supplemental medical and non-medical benefits available to beneficiaries of insurance plans.

This major change allowed Medicare Advantage plans to provide benefits for specific medical problems, illnesses, and patient needs, to improve overall preventative care and reduce health complications and costs in the long-term.

This list of benefits is growing steadily in popularity, and these features have been implemented to make plans more likable, especially to the elderly:

  • Over the counter benefit programs
  • Telehealth options, which are used to prevent unnecessary movement or travel for disabled patients
  • Home improvement installation for things such as wheelchair ramps, bathroom grab bars, special toilet seats, etc.
  • In-home support services for disabled or elderly patients.
  • Home meal delivery services
  • Transportation options for medical appointments and physical therapy sessions
  • Adult daycare services and supervised safety-focused visits
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Because there is such lax of guidance on supplemental benefits like this, it allows more extensive Medicare Advantage plans to be offered in the insurance market. This is currently leading to improved product innovation, intensified competition, and improved overall care management across the consumer engagement model for patients and Medicare beneficiaries.

Are OTC Benefit Packages Increasing the Cost of Medicare Advantage?

CMS’s new increase in typical plan payments rose from 1.84% in the proposed rule to 2.53% in the 2020 Rate Announcement and Call Letter (officially released on April 1st, 2019). This phenomenon may encourage insurance plans to invest in widening beneficiary access to supplemental services.

While regulatory shifts are currently enabling expanded benefits, this switch in reimbursement from CMS makes offering over the counter benefits and other supplemental benefits more attractive.

Senior shopping preferences have also impacted Medicare Advantage OTC benefit plan membership enrollment. According to the recent 2019 Medicare Shopping and Switching study, which goes into great detail about current Medicare member preferences, the availability of supplemental benefits such as OTC benefits appears to be a substantial motivating factor for shopping.

OTC pharmacy allowances, such as a $50 monthly allowance for over the counter pharmacy products like cold or allergy medications, vitamins, or diabetic socks, rank as one of the most popular benefits across a total of seventeen supplemental and over the counter benefits studied. When it comes down to it, OTC benefits are extremely attractive to Baby Boomers and elderly Medicare Advantage members, which has directly lead to an increase in these benefit packages.

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In a review of the 2019 Annual Enrollment Period Supplemental Benefits, it was made apparent that the growth of over the counter benefit plans and programs far surpass and outmatch those of other newly expanded supplemental benefits in the form of plans and packages. Astoundingly, over 51% of Medicare Advantage beneficiaries are enrolled in over the counter benefit coverage in over a whopping 2,000 Medicare Advantage products. This means that over the counter coverage is one of the most attractive benefit packages across all new supplemental benefits packages, which is reinforcing the market research findings from George Dippel that we mentioned earlier.

Are OTC Benefit Plans a Good Idea?

On the member or beneficiary side of things, over the counter benefit plans are a godsend. For elderly or disabled insurance beneficiaries, spending and shopping habits are wildly different from spending and shopping habits of healthy Millennials or those without serious disabilities. The insurance benefit of purchasing and shipping household medical goods can make lives infinitely easier. This is especially true for patients who cannot easily travel or leave their homes/hospices.

Offering an over the counter benefits program to Medicare Advantage members, or members of other insurance plans can is imperative for healthcare plans interested in remaining competitive. In order to gain market share and improve member retention rates, it may become commonplace for all insurance plans to have an over the counter benefit package available.

The real challenge, though, rests in determining how one’s health plan can effectively create and support an over the counter benefits program that can bring coveted results that Medicare has seen – all without experiencing the overhead and administrative burden that often comes along with managing and building an over the counter benefits program.

Contact us to learn about Over The Counter Benefits Management, and how it can help you be the best Medicare Advantage Plan in your service area.
Photo source: Pixabay

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