Accepting Medicare Advantage over-the-counter benefit cards: convenience for patients, opportunities for pharmacies

Independent pharmacy customers enrolled in Medicare Advantage can use prepaid debit cards to purchase over-the-counter (OTC) medicines like cold/cough/flu products, antihistamines and allergy sprays, antibiotic ointments, and pain relievers. But they can also use their OTC benefit cards to purchase hundreds of health-related everyday items like first aid supplies, personal care products, food scales and, in some cases, groceries at participating retailers.

These patients are ready, willing, and able to purchase items like these along with their medications, providing independent pharmacies with a golden opportunity to capture additional revenue, strengthen customer relationships, and build loyalty. 

Benefits too good to ignore

From a revenue perspective, independent pharmacies can expect patients who are Medicare Advantage enrollees to have access to health-plan funded and administered benefits with an average of $400² annually in OTC allowances.

Setting up your pharmacy to accept Medicare Advantage OTC benefit cards is not only good from a revenue standpoint, but it also creates accessibility to healthier choices for multiple subsets of customers.

“In a community where the pharmacy is the one stop shop, that pharmacy has the opportunity to service patients not just when they are sick but also by promoting healthy living,” says Maureen Showers, senior director of commercialization at Cencora.

^{1 Medicare Monthly Enrollment. Centers for Medicare & Medicaid Services. Accessed January 15, 2025.}

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^{2 Using the Medicare Advantage Over-the-Counter (OTC)  Medicines Program as a  Consumer Engagement Tool. Consumer Healthcare Products Association. Accessed January 23, 2025.  https://www.chpa.org/sites/default/files/media/docs/2021-10/MA%20OTC%20Full%20Report.pdf}

Healthy living items customers can purchase may include toothbrushes and toothpaste, vitamins, laxatives, Nicotine replacement therapy items, sunscreen, orthotics, foot care products, and many more. Even grocery benefits are available via certain Medicare Advantage Dual Special Needs Plans (SNPs) and Chronic Condition SNPs whose members can purchase healthy food items³ like fruits and vegetables, soup, canned and frozen foods, eggs, grains, flour, sugar, and dairy products, among other staples.

“When you talk about the grocery benefits of Medicare Advantage plans, they are meant to drive the food is medicine movement. Healthy eating is part of taking care of yourself,” Showers says.

According to Showers, who is connected with the community retail industry – specifically related to Good Neighbor Pharmacy members – knowing your customer base can help carve out a niche within healthy living OTC product offerings. 

“For senior customers, having nutritional supplements containing vitamins, minerals, protein, carbohydrates, and fat readily available is a relatively easy option. We have some Good Neighbor Pharmacy customers who are doing well with a full section of beans and grains, flour, and other similar healthy options which are shelf stable,” she says.

Managing your front-end is important to get the OTC items your customers want on your shelves. Contacting your Good Neighbor Pharmacy merchandising specialist or business coach is an easy way to find the latest information on popular products and get help setting up planograms and shelf talkers to help promote popular products.

You can then use the information garnered to develop a seasonal product bundle of approved OTC items and build a counter display or end cap to draw attention to top-selling OTC products along with higher-margin products in high-traffic areas.

Overcoming obstacles 

The more popular Medicare Advantage OTC benefit cards being used across the country include S3, Nations Benefits, OTC Network, and Soda Health. While these vendors have relationships with major retailers, there has been an industry movement to develop resources for independent pharmacies to accept their OTC benefit cards and overcome issues affecting full integration with point-of-sale (POS) systems. 

One solution for POS challenges is a handheld terminal, which independent pharmacists can use to process OTC benefit card purchases separate from their regular POS system. This employs a workflow wherein each item is rung up on the terminal for payment, then entered into the POS system for inventory and accounting purposes. Collaborating with your POS vendor to implement an OTC card payment option can simplify the process for your cashiers. 

To help with flow at checkout, some independent pharmacies dedicate a separate OTC transaction lane to prevent delays in regular checkout lanes.

^{3 Medicare Grocery Allowance: What to Know. U.S. News Health. Accessed January 15, 2025.  https://health.usnews.com/medicare/articles/medicare-grocery-allowance}

Training is important to get your pharmacy team comfortable with technology and processes used to accept OTC benefit cards; you can reach out to individual card vendors for help, as many offer training to help get started.

Aside from potential POS system challenges, the other obstacle toward successfully realizing the benefits of accepting Medicare Advantage OTC benefit cards is education about the cards themselves – both for patients and your pharmacy team.

“Patients using Medicare Advantage may not know they can use their OTC benefit cards to purchase health-related items, so it’s important to start that conversation,” Showers explains.

Training staff – including those working both inside counters and drive-thru windows – is key so they can ask patients about their OTC benefit cards and answer patients’ questions about what they can purchase with the cards.  You can make things easy for staff with talking points or a script to start a conversation such as in the example below.

Pharmacy staff: “Do you have a Medicare Advantage OTC benefit card?
If the answer is “I don’t know,” explore these possible card options and encourage them to confirm their benefits with their plan provider:

• “Popular cards on the market include S3, Nations Benefits, OTC Network, and Soda Health.”
• “You may have received a Medicare Advantage OTC benefit card from your plan provider. If you’re not sure, it’s easy to find out: just call the number on the back of your insurance card and ask about Medicare Advantage OTC benefit cards.”

If the patient confirms they have a Medicare Advantage OTC benefit card, and your pharmacy accepts that card, move the conversation forward:

• “Your Medicare Advantage OTC benefit card covers many common OTC items in our store. You can use your card to purchase approved items instead of paying out of pocket. Check the terms of your card. Some operate on a use it or lose it basis, and some allow your funds to roll over.

Your staff can then direct the patient to products within your pharmacy, even suggesting top-selling or seasonal products like cold and flu medicines, tissues, and even sunscreen.

Leverage marketing support

Implementing an OTC benefit card marketing strategy can further help your patients reap the full benefits of their Medicare Advantage enrollment. Good Neighbor Pharmacy offers marketing materials and strategies to help and can provide personalized support and recommendations. Social media and in-store marketing materials are available in the Medicare OTC Benefit Cards libraries in member tools like SOCi and Brand Central Station.

As a Good Neighbor Pharmacy member, you can easily access:

• Social media graphics
• Digital screen graphics
• Posters
• Bag stuffers
• Counter cards 
• Window clings
• Floor clings

Getting the word out into the community can further enhance efforts to capture patients using Medicare Advantage OTC benefit cards. This can include asking healthcare providers you have relationships with if you can display posters or flyers in their offices and spreading the word about OTC benefit cards at local events and health fairs.

“The front-end revenue and improved patient care opportunities are there for independent pharmacies who want to tap into Medicare Advantage OTC benefit cards,” says Showers. “It’s important to build this into 2025 plans now before customers slip away to a convenience store down the road or a big box retailer with an in-house pharmacy.”