CCA Clinical Care Partnership Manager Marissa Tribble (left), member Cynthia Monty and Hanane Taha, community advanced practice clinician, in Monty’s apartment.
When Commonwealth Care Alliance nurses visit Cynthia Monty’s home, she likes that they don’t talk rough.
Instead, the providers always ask about her cats and her art projects. The not-for-profit insurer’s employees ask what she needs. They never rush when taking her blood pressure. CCA paid for the 68-year-old’s walker, wheelchair and in-home hospital bed, which helps keep her feet elevated so they don’t swell up from chronic obstructive pulmonary disease while she sleeps. When Monty complained the bed was uncomfortable, CCA bought her a mattress cushion.
“I am just so thankful for CCA because I’d still be struggling if it wasn’t for them,” said Monty, a retired nurse’s aide from Boston who CCA connected to Modern Healthcare.
Monty is part of a small but quickly growing segment of the population made up of the nation’s most vulnerable patients: She is eligible for Medicare and Medicaid and is enrolled in CCA’s dual eligible special needs plan, or D-SNP.
While the rapid growth in general Medicare Advantage plans tends to get the most attention, D-SNPs are the driving force behind privatized Medicare’s increasing edge over the fee-for-service program.
During the past year, the number of D-SNPs on the market rose 16.4% to 703 plans, a growth rate more than twice that of general Medicare Advantage policies, according to Milliman. And in 2021, D-SNP offerings increased more than 10%. D-SNP enrollment rose 22% year-over-year to more than 4 million at the start of 2022, according to data from the Centers for Medicare and Medicaid Services.
Along with being the most vulnerable, dually eligible beneficiaries can be expensive. These enrollees made up 19% of the Medicare population yet accounted for 34%, or $275.9 billion, of Medicare spending in 2019, according to the most recent data from the Medicare Payment Advisory Commission and the Medicaid and CHIP Payment and Access Commission.
As health plans’ and patients’ interest in D-SNPs grows, experts worry about the potential for financial wrongdoing. At the same time, a number of state and federal policy changes could result in fewer plans, raising concerns about market competition.
The shifting regulatory environment could further complicate the experience for beneficiaries, who are often left to navigate the two systems on their own, said Allison Rizer, a principal at ATI Advisory.
“We’ve created this complex set of programs for individuals who are some of the most vulnerable in our nation,” Rizer said. “They are the lowest-income, they have high rates of social need. They have high rates of functional frailty, they have a lot of medical conditions. And we’ve now put them in the middle of an amazingly complex system.”
While D-SNPs fall under the Medicare Advantage umbrella, they’re distinct from other Medicare Advantage offerings because they require joint federal and state oversight.
The plans earned permanent authorization from Congress just six years ago, but insurers first entered the market in 2006. As a way to avoid the administrative burden of regulations and retain enrollees, Medicare Advantage insurers launched D-SNP “lookalikes,” said Dr. Cheryl Phillips, a geriatric physician and president and CEO of the SNP Alliance, an organization of insurers, providers and other groups.
These health plans were targeted at dually eligible beneficiaries but had no obligation to connect with states. This allowed insurers to receive extra reimbursement without having to deal with state regulators and adhering to their quality measures, Phillips said.
“They would go into communities that were predominantly low-income, dually eligible beneficiaries and enroll large numbers of people,” Phillips said, adding that insurers would often convert policyholders from their other special needs plans to these products.
75% Percentage of the special needs plan market controlled by four of the largest Medicare Advantage insurers.
CMS will shut down lookalike plans—any Medicare Advantage plan with more than 80% of a dually eligible population—in 2023, and those enrollees will be moved into D-SNPs. This looming shift has helped drive insurer interest in these plans, Phillips said.
A broader healthcare industry focus on addressing social determinants of health and advancing value-based care has also contributed to D-SNP growth, Rizer said.
The dual-eligible population, which tends to use more medical services than others, historically was averse to managed-care plans, but that may be changing, Rizer said. “The last few years, we have also seen a more innovative set of supplemental benefits that might be particularly attractive to dual-eligibles that could be driving growth,” she said.
States utilizing Medicaid managed care have also accelerated adoption of D-SNPs, Rizer said. An increasing number of states requires insurers bidding for Medicaid managed-care contracts to also offer D-SNPs. The aim is to better integrate care for dually eligible beneficiaries, she said.
Record Medicaid enrollment during the COVID-19 pandemic also sped up industry adoption of D-SNPs, said Nick Herro, a principal at the Chartis Group.
Insurers have a financial interest in offering these products, too.
CMS pays Medicare Advantage insurers more for taking on D-SNP risk. In addition to receiving risk-adjusted payment based on the number of conditions members have, plans get enhanced payments to account for the complexity of taking care of this population, through a measure called a categorical adjustment index. Some state Medicaid agencies also offer Medicare Advantage insurers additional reimbursement for providing more benefits.
“Form follows finance,” Phillips said. “Most insurers have found that it is a way to enhance return because of the slightly bumped payments, and also because you can coordinate services and networks more efficiently.”
Four of the largest Medicare Advantage insurers control nearly 75% of the special needs plan market, with UnitedHealthcare, Humana, Centene and Anthem covering more than 3 million people combined, according to Chartis Group data. UnitedHealthcare is the market leader: The $12 billion insurer counted 1.6 million special needs plan members at the start of the year, the Chartis Group found.
While these numbers include individuals enrolled in every kind of special needs plan, Herro said D-SNPs account for the lion’s share, with beneficiaries enrolled in other types of SNPs making up less than 5%.
The growing patient population and potential for lucrative returns has attracted new entrants in addition to expansions by legacy insurers.
From 2021 to 2022, Aetna grew its special needs plan enrollment at the fastest rate in the industry, with the $5 billion insurer seeing enrollment rise 108.9% year-over-year to 130,573 members at the start of 2022.
Geographic expansion is the insurer’s primary growth strategy, said Laura Esslinger, national vice president of the dual-eligibles segment at Aetna. In 2019, the company operated D-SNPs in nine states. Today, it offers dual special needs plans in 28 states and counting.
To differentiate itself, Aetna extends benefits that supplement household budgets. The insurer offers healthy food cards, utility assistance, no copays for medications and an over-the-counter benefit enrollees can use to purchase specific health and wellness products at CVS retail outlets.
The insurer has also focused on improving its care model by hiring local care managers who help patients access community resources, such as affordable housing, Esslinger said.
Ricardo Maldonado, national director for Aetna Medicare Community Outreach, hands out produce for low-income families at the Wilson Park Apartments in Philadelphia.
Dually eligible beneficiaries have also attracted the interest of Bright Health Group, an insurtech startup. Over the past year, the insurer boosted its special needs plan enrollment at the third-fastest rate in the industry, increasing membership 45.5% year-over-year to 46,578. The company has generally grown by acquiring local special needs plans, and now those members make up nearly half of its total enrollment.
Some plans may need to exit the market in future years as certain states require more integration between D-SNPs and Medicaid, said Milliman actuary Nick Johnson, who nevertheless expects growth to continue.
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In 2022, 94% of beneficiaries live in a county with at least one dual eligible special needs plan, according to MedPAC, and just five states have no D-SNPs. The options can become overwhelming for beneficiaries. In Los Angeles, for example, dually eligible beneficiaries had at least 86 Medicare coverage choices for this year, including 70 Medicare Advantage plans, 11 D-SNPs and five Medicare-Medicaid Plans, according to CMS.
To complicate matters, D-SNPs span a wide spectrum of integration between Medicare and Medicaid.
Plans are considered fully integrated if they operate under single capitated contracts that require them to provide Medicare and Medicaid benefits, and in most cases, Medicaid long-term services and supports, and behavioral health coverage. Highly integrated plans include both Medicare and Medicaid contracts but with the option to run plans through separate entities controlled by the same insurers. And they must cover long-term care or behavioral health.
At minimum, D-SNPs need to contract with state Medicaid offices and coordinate with states when certain members are admitted to hospitals or nursing facilities. An estimated 58% of D-SNPs only meet these data coordination requirements in 2022, Milliman found. The majority of 2022 market growth came from an increase in coordination-only plans.
Congress and CMS have slowly raised the bar on integration requirements for dual-eligible plans, and MACPAC recommends Congress require states to develop their own integration plans. Still, states need support and assurances that integration is a good value proposition, said Arielle Mir, vice president of healthcare at the investment firm Arnold Ventures.
“D-SNPs have a lot of potential, but it’s all whether a D-SNP is a good D-SNP or not. That’s something where the states and CMS really have to hold (plans’) feet to the fire.” Georgia Burke, directing attorney at advocacy organization Justice in Aging
“If a state does a really great job of providing robust Medicaid benefits like home- and community-based services and that keeps beneficiaries out of the hospital, who saves money? Medicare does,” Mir said. “We’d really like to see states be able to see that financial incentive to stand up these innovative products.”
On the plan side, financial misalignment between Medicare and Medicaid remains the greatest impediment to integration, said ATI Advisory’s Rizer.
When states calculate the flat fees they pay Medicaid managed-care carriers, they often do not consider what Medicare pays D-SNPs, Rizer said. This creates an environment in which plans can ask states to rebase their rates by arguing they’re losing money on these highly complex individuals.
D-SNPs can also offer supplemental Medicare benefits that overlap with Medicaid benefits and, in some cases, be paid twice for the same service. States’ limited oversight of supplemental Medicare Advantage and D-SNP benefits causes patient confusion, inability to access services and, in some instances, denied claims, according to a January report prepared by RTI International and the Center for Health Care Strategies for the Health and Human Services Department.
Additionally, because D-SNP insurers are subject to different medical loss ratio requirements under Medicare and Medicaid rules, health plans may inappropriately shift the costs from one program to another to ensure they hit MLR targets and maximize the public dollars they draw down.
“States are typically staffed and resourced to focus on Medicaid,” Rizer said. “They’re not staffed to focus on Medicare, and they already have a checklist that is 100 miles long of things to do.”
Quality measurement data for D-SNPs don’t offer much insight into how effective these plans are because of how Medicare Advantage quality is assessed, Mir said. “It is mind-blowingly difficult to get a signal on exactly what you’re enrolling in,” she said.
A 2021 HHS analysis found D-SNP beneficiaries were less likely to be institutionalized than those in regular Medicare Advantage plans. But performance data submitted by Medicare Advantage plans as part of the Healthcare Effectiveness Data and Information Set, known as HEDIS, shed little light on how D-SNPs perform relative to each other and to other forms of coverage for dually eligible beneficiaries, according to a MedPAC report published in March.
Encounter data could be a better source, but the information isn’t complete enough across Medicare Advantage plans to accurately compare utilization, MedPAC found.
States and CMS should hold plans accountable for quality coverage, said Georgia Burke, directing attorney at advocacy organization Justice in Aging. Not all Medicare insurers entering the market have the right Medicaid expertise to set up effective D-SNPs, and not all Medicaid insurers have the necessary Medicare experience.
“D-SNPs have a lot of potential, but it’s all whether a D-SNP is a good D-SNP or not,” Burke said. “That’s something where the states and CMS really have to hold (plans’) feet to the fire.”
Aetna Medicare colleagues Quiche Jones (left) and Michele Barroqueiro-Sims stand ready to help seniors with their laundry at the E-Laundryland in Camden, New Jersey.
CMS, in a recent proposal of several changes to D-SNP regulations, suggested allowing states to require that Medicare Advantage insurers establish separate contracts for their D-SNPs so the Star Ratings for those contracts only reflect dual-eligible plans’ local performance. CMS said this would help states and the federal government better evaluate and improve quality.
However, insurers worry D-SNP-only contracts would make earning quality bonuses more difficult, which could degrade supplemental benefits or increase premiums. D-SNPs with low enrollment could have a hard time reporting on some Star Ratings measures that have minimum sample size requirements, the insurance trade association AHIP wrote in a comment letter on CMS’ proposal.
Additionally, not all beneficiaries are thrilled about enrolling in D-SNPs, despite their growing popularity.
Dennis Heaphy, a policy analyst and disability advocate from Boston, is dually eligible and enrolled in his state’s Medicare-Medicaid Plan, One Care, which is designed for adults under age 65. In contrast to a special needs plan, One Care is run through a single contract between the state, CMS and the insurer, which enables completely integrated care.
These plans are part of a CMS demonstration that the agency is considering phasing out in favor of D-SNPs. Colorado and Virginia already ended their demonstrations, and and California will will transition its program into integrated D-SNPs next year.
Heaphy, who serves on MACPAC, appreciates CMS’ efforts to apply the demonstrations’ lessons to D-SNPs. But he is concerned that D-SNPs won’t match One Care’s robust patient protections, which include an ombudsman and an oversight panel that includes enrollees and providers.
“If One Care just becomes a homogenized care delivery system, I’d have to see what the benefits are of staying in it,” said Heaphy, 60. “Would I be better off in the fee-for-service system, without the perks?”
Monty, on the other hand, said her fully integrated D-SNP offers her the freedom to choose what she needs. She’s never had to worry about whether a benefit was paid for by Medicare or Medicaid, she said. Monty has one insurance card that she presents to every provider she visits.
Despite some uncertainty around the program’s effectiveness, most experts agree integrated D-SNPs could lead to better health coverage for a complex and vulnerable population.
The twofold push toward reducing health disparities and health spending should keep D-SNPs growing, said Erin Weir Lakhmani, senior researcher at Mathematica.
“There are a lot more folks focused on it than there used to be,” she said. “I think and hope that five or 10 years from now there will be even more people who have really dug in to do more for this population than we have today.”
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