Encouraging Medicare Advantage Enrollees to Switch to Higher Quality Plans: Assessing the Effectiveness of a “Nudge” Letter

There are considerable quality differences across private Medicare Advantage insurance plans, so it is important that beneficiaries make informed choices. During open enrollment for the 2013 coverage year, the Centers for Medicare & Medicaid Services sent letters to beneficiaries enrolled in low-quality Medicare Advantage plans (i.e., plans rated less than 3 stars for at least 3 consecutive years by Medicare) explaining the stars and encouraging them to reexamine their choices. To understand the effectiveness of these low-cost, behavioral “nudge” letters, we used a beneficiary-level national retrospective cohort and performed multivariate regression analysis of plan selection during the 2013 open enrollment period among those enrolled in plans rated less than 3 stars. Our analysis controls for beneficiary demographic characteristics, health and health care spending risks, the availability of alternative higher rated plan options in their local market, and historical disenrollment rates from the plans. We compared the behaviors of those beneficiaries who received the nudge letters with those who enrolled in similar poorly rated plans but did not receive such letters. We found that beneficiaries who received the nudge letter were almost twice as likely (28.0% [95% confidence interval = 27.7%, 28.2%] vs. 15.3% [95% confidence interval = 15.1%, 15.5%]) to switch to a higher rated plan compared with those who did not receive the letter. White beneficiaries, healthier beneficiaries, and those residing in areas with more high-performing plan choices were more likely to switch plans in response to the nudge. Our findings highlight both the importance and efficacy of providing timely and actionable information to beneficiaries about quality in the insurance marketplace to facilitate informed and value-based coverage decisions.