The First 30 Days of Card Issuance:What Healthcare Professionals Can Learn from the Payments Industry in Driving Engagement

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Prepaid debit cards continue to grow in importance

across a range of health insurance plans and

programs in the United States. And it’s for good

reason: debit cards tied to member accounts have

huge potential to streamline how plan members pay

for services and related medical expenses, all while

simplifying the claims administration process.

Today, these payment tools are viewed as a business imperative from an operational standpoint both in plan benefits and member servicing. This is due to a few reasons:

• They provide secure, fast and convenient access to funds.

• Cards eliminate the need for members to pay out of pocket and wait for reimbursement.

• They reduce the hassle of submitting paperwork for manual claims.

In addition to member benefits, the growth of payment cards across a range of healthcare plans also serve as an important revenue stream for those in the payments ecosystem — specifically, health plans, bankcard issuers and processors. Health Savings Accounts (HSAs) for example, which come with a triple tax break for members — a deduction for contributions, tax-free growth and tax-free withdrawals for qualified health care spending — have doubled in growth over the past six years. As reported by Devenir in a 2018 independent study, it’s estimated the HSA market exceeded $50 billion in fund assets covering more than 25 million accounts through the end of 2018.

Since the implementation of the Affordable Care Act (ACA), the healthcare industry has also seen changes in how consumers pay for routine medical expenses. High deductible health plans have fueled the consumer-driven healthcare approach, where patients have greater control over their own health budgets and how healthcare payments are managed. As a result, the adoption of healthcare prepaid debit cards has greatly expanded beyond traditional HSAs, Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs) and transit or commuter benefits. In fact, they have also become important tools with the increased popularity of wellness incentive programs.

30

25

20

15

10

5

02013

10.7

2018

25.1

2017

22.2

2016

20.3

2015

HSA Account Growth(Millions)

16.8

2014

13.8

Source: Devenir 2018 Study

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Under the ACA, wellness programs have grown

in importance as the industry looks to support

healthier lifestyles and workplaces by encouraging

annual checkups, exercise and proper diet.

The law enabled health plans and employers to offer financial incentives for members who participate in wellness programs or meet certain health-related targets. As healthcare costs in the United States continue to rise, the greatest potential lies in reducing preventable conditions and investing more dollars in programs to encourage healthy lifestyles. After all, it’s no surprise that healthy members cost less.

Many wellness programs today are structured to reward certain activities (annual physicals, health risk assessments, flu shots, exercise, etc.) with incentive dollars loaded on a prepaid debit card. The move to open-loop payment cards allows for greater program utility, as programs

can be designed as needed while directing spend to qualifying merchant categories and specific retailers. Motivating members to regularly earn and redeem those incentives is critical to the engagement cycle and is only accomplished through strong card adoption.

This white paper is designed to give health plans and program managers insights on how to improve member engagement through the implementation of an Early Month on Book (EMOB) strategy for card adoption during the first 30 days of card issuance.

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Mapping the Customer Journey

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2 Growth Period This is the important phase of the life cycle, with a focus on analyzing spend data and creating communications that reinforce the card’s value proposition to build a customer’s relationship with the brand.

1 Early Month on Book Generally, the first 90 days of account acquisition are where welcome kits are provided to new customers, promoting product benefits and terms of the cardholder agreement.

3 Risk/RetainCredit card accounts are revolving credit lines, and lenders use this period to actively monitor and manage accounts to mitigate losses with delinquencies and defaults.

The three key stages are as follows:

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Customer Life Cycle

Growth PeriodEarly Month on Book(The First 90 Days)

Risk/Retain

Evaluate Apply Activate Use Maximize Control Protect Switch Pay Settle

The payments industry, among others, has long used a journey map to better understand and track the customer life cycle once a new credit card account is acquired. Card portfolio managers at banking institutions view the journey map as a powerful tool to provide a holistic and graphical overview of the various stages and touch points a customer will experience from day one. Product and marketing teams are then able to pinpoint customer expectations and needs along a timeline continuum and align those with the objectives of the organization.

The illustration below highlights an example of a member journey for a sample consumer credit portfolio and includes three key stages plotted during the customer life cycle:

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The Importance of Early Month on Book

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Financial services issuers use

portfolio management tools, such as

risk models and advanced analytics,

to maximize the profitability of their

credit card products.

Financial services issuers use portfolio management tools, such as risk models and advanced analytics, to maximize the profitability of their credit card products. Within those efforts, most issuers will also develop an ‘Early Month on Book’ (EMOB) strategy and invest more resources during the early months of acquisition to influence customer behavior. During this period, print and electronic communications are used to target key segments and promote the benefits and features of the credit card product to drive adoption and build long-term loyalty. While communication is essential during all stages of the customer journey, there is strategic importance during EMOB — particularly with driving card activation.

Early communication with new cardholders is the best way to reinforce the value of the card product, and card activation is the first step toward driving card adoption for new cardholders. Recent TSYS data reveals the following metrics with card activation:

• 86% of new cardholders who activate do so within the first 90 days

• Of those who activate, only 5% activate after 90 days

• Cardholders who activate within the first 30 days have 30% higher spend

During each phase of the cardholder journey, analytics are used to segment customers into similar groups to support portfolio optimization through targeted communications. At times, some financial institutions will offer cash incentives or other perks for opening up a new account. The EMOB approach has a direct application to the healthcare industry.

T H E I M P O RTA N CE O F E A R LY M O N T H O N B O O K

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An Example: The Member Journey with Wellness Incentive ProgramsAs noted earlier, wellness incentive programs are growing in scale and importance in the United States, primarily to incent healthy lifestyles. With the goal of reducing long-term healthcare costs, this can only be accomplished when program participation is established and sustained over a period of time. The use of incentives tied to a prepaid debit card has increased in both importance and in dollar value in an effort to motivate behavior. As illustrated in the earlier example, mapping the customer journey with life cycle stages has a strategic value in healthcare for isolating member needs and driving member engagement. And, similar to the current practices in the payments industry, the use of targeted messaging is essential to stimulate behavior and card adoption.

The illustration below highlights an example of a member journey for a wellness incentive program, which includes four key life cycle stages plotted during a 12-month period.

The Member JourneyLife Cycle Stages

Launch Month(onboard)

Early Month on Book Program Familiarization Member Engagement Retain/Convert

Information Member Services Reminders and Updates Healthecare Options

Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12

Member Experience Journey

2 Program Familiarization For the next few months, plans use this stage to drive member education on plan and program benefits, such as how to earn and redeem dollars using their card.

1 Early Month on Book Generally, this is the first 60 days of account acquisition where plan information is provided to members. Prepaid debit cards are generally issued during this stage, and this sets the stage for program participation and card adoption.

The four key stages are as follows:

3 Member Engagement This is a critical phase where member activity tends to subside. Marketers use this phase to track member activity and use communications to send benefit reminders that sustain engagement.

4 Retain/Convert As plan coverage ends, or during open enrollment, health plans must communicate insurance coverage options and the benefits of program participation to retain its best customers.

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The First 30 Days

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Open enrollment and customer

onboarding is the annual period in

which health plans use the first two

months to welcome new members

and introduce them to their benefits

and plan services. The first 30 days

are especially important.

With the growth in high deductible health plans, the proliferation of wellness programs, and issuance of prepaid debit cards, the period now requires the development of an onboarding strategy for how best to communicate information to plan members.

EMOB should now be viewed and managed as the most critical stage of the member journey and supported by a comprehensive communications strategy, beginning with the first 30 days. It is during the first 30 days that communications (both print and digital) are designed to educate and familiarize members with their plan benefits and member services, but also with benefits related to their healthcare payments card. Early communication is essential to marketing the value of the healthcare payment card, and card adoption. Yet, it all begins with card activation.

TSYS conducted an analysis of a wellness incentives program and the impact of members who activated their card early. The study looked across two states with a comparative analysis of member engagement for those who activated their card within 30 days, and those who activated after 30 days.

General findings showed the members activating within 30 days had:

• Earned 11% more in terms of earned activity for the program

• Spent 12% more on the card as part of the program

• Measured a 5% higher overall engagement rate in term of program participation

Moreover, those members with the highest levels of engagement activated their cards within two weeks of the card mail date. While this is an example of a prepaid debit card for a wellness incentives program, benefits can be realized across other health plan programs.

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Conclusion

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For healthcare professionals, driving

member engagement is crucial to a

program’s success. When it comes to

using their payments card, today’s

plan members are expecting to have a

convenient and seamless experience

that includes everything from accessing

information to making informed decisions.

While this paper has highlighted the strategic value of early card adoption, it’s important to emphasize that there are four key steps that will help product teams optimize their portfolios to build and sustain profitable customer relationships:

1. Build out the Member Journey — A journey map tells the story of the customer’s experience from initial contact, through the process of engagement and into a long-term relationship. Ensure you focus resources during the EMOB period.

2. Leverage Analytics to Profile Members — Recognize that not every member is created equal. The use of analytics, segmentation and behavioral scoring will enable groups to better understand the customer base to deliver on the customer experience.

3. Establish and Ongoing Dialogue with Customers — Once a customer is acquired, the work begins to drive engagement and build a relationship with the brand. Use marketing automation tools to plan for frequent and personalized communications at all stages of the customer life cycle.

4. Ensure Measurability, but Measure What Matters — Avoid the trap of producing ‘volume metrics’ that deliver little insight. Establish performance metrics that can measure success along with metrics that enable users to evaluate and refine activities as needed.

Building customer loyalty requires a proactive approach, and for the healthcare industry, that first step begins during the first 30 days.

CO N CLUS I O N

A B O U T TSYS

TSYS® (NYSE: TSS) is a leading global payments provider, offering

seamless, secure and innovative solutions across the payments

spectrum — for issuers, merchants and consumers. We succeed

because we put people and their needs at the heart of every

decision to help them unlock payment opportunities. It’s an

approach we call People-Centered Payments®.

Our headquarters are located in Columbus, Ga., U.S.A., with

approximately 13,000 team members and local offices across

13 countries. TSYS generated revenue of $4.0 billion in 2018, while

processing more than 32.3 billion transactions. We are a member

of The Civic 50 and were named one of the 2018 World’s Most

Ethical Companies by Ethisphere magazine. TSYS is a member

of the S&P 500 and routinely posts all important information on

its website. For more, visit tsys.com.

©2019 Total System Services, Inc.® All rights reserved worldwide. Total System Services, Inc. and TSYS® are federally registered service marks of Total System Services, Inc. in the United States. Total System Services, Inc. and its affiliates own a number of service marks that are registered in the United States and in other countries. All other products and company names are trademarks of their respective companies. (06/2019)

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