Too Few Health Plans Offer D-SNPs.  What's Holding Them Back?

Too Few Health Plans Offer D-SNPs. What’s Holding Them Back?

Editor’s Note

This article is the latest in the Health Affairs Forefront major series, Medicare and Medicaid Integration. The series features analysis, proposals, and commentary that will inform policies on the state and federal levels to advance integrated care for those dual eligible for Medicare and Medicaid.

The series is produced with the support of Arnold Ventures. Included articles are reviewed and edited by Health Affairs Forefront staff; the opinions expressed are those of the authors.

Historically, there has been a lack of coordination between Medicare and Medicaid agencies for beneficiaries who are eligible for both programs (dually eligible individuals). Navigation of the complex benefit structures can be challenging for beneficiaries, and as a result efforts have been made by policy makers to encourage integration of benefits for this patient population. One strategy to align benefits for dual-eligible beneficiaries is through Medicare Advantage Dual-Eligible Special Needs Plans (D-SNPs), which in their most integrated structure allow beneficiaries to access both Medicare and Medicaid benefits through a single health plan.

Efforts to integrate care for dual-eligible beneficiaries are aimed at improving outcomes, reducing costs, and enhancing the health insurance experience of beneficiaries. However, to date, integration for dual-eligible beneficiaries has been slow to progress in part due to regulatory challenges at the state level but also due to hesitancy among health plans to develop D-SNPs and provide an on-ramp for dual-eligible beneficiaries into integrated benefit plans.

The State Of D-SNP Plans

As of 2019, there were 12.2 million dual-eligible beneficiaries across the country making up 19 percent of all Medicare beneficiaries, and as the baby boomer generation continues to age into Medicare that number will only grow. While other programs have been developed to integrate benefits for dual-eligible beneficiaries (such as the Financial Alignment Initiative and the Program of All-Inclusive Care for the Elderly), the D-SNP program is by far the largest program in terms of enrollment, with 3.8 million enrolled beneficiaries across 45 states and the District of Columbia. However, it’s estimated that only 15–20 percent of dual-eligible beneficiaries are enrolled in a dual-eligible special needs plans, leaving a significant percentage of dual-eligible beneficiaries unenrolled in an integrated benefit plan.

National progress toward integration has been slow despite the Centers for Medicare and Medicaid Services continuing to emphasize the importance of integration for dual-eligible beneficiaries. At Belong Health, we work with regional- and community-based health plans to develop D-SNP and other Medicare products that serve complex patient populations. Based on our conversations with health plans, we have found that there remains some hesitancy toward D-SNP due to policy uncertainty and operational concerns.

In this article, we highlight the perspective of many health plans as they weigh the policy and operational risks involved in deciding to pursue the development of a D-SNP plan. We offer recommendations for policy makers and health plan leaders to minimize those risks and enable the growth of D-SNP plans that will increase the number of dual-eligible beneficiaries who receive their health benefits through an integrated plan.

Policy Concerns Holding Back Health Plans

For many health plans, there is interest in investing resources into the development of a D-SNP; however, ambiguous regulations and shifting timelines at the state level have left health plans reluctant to fully invest in the program. Under law, D-SNP plans are required to contract with states for the Medicaid portion of the benefit, and each state develops its own set of policies regarding the degree and timeline of integration. For example, in Massachusetts, one of the first states to promote D-SNP integration, there are two distinct duals demonstration projects.

These projects include OneCare, which serves 20,000 younger than-65 dual-eligible beneficiaries in the disabled population, and Senior Care Options (SCO), which serves 54,000 patients. Both programs are managed separately. While SCO has existed since 2004 and OneCare since 2013, both programs are moving to version 2.0 under separate timelines. OneCare launched its 2.0 version in 2022; however, SCO has been slow to transition to the 2.0 model, leaving incumbent and new incoming plans in limbo. In another example, California is requiring managed Medicaid plans (Medi-Cal) to launch companion D-SNP plans by 2026. However, several plans have been able to negotiate an exception to the new D-SNP rules, which adds confusion for health plans as they think through timing the development and launch of a D-SNP plan.

Additionally, in many states confusion exists around the type of D-SNPs that will be supported and what additional requirements for integration will be necessary beyond the minimum requirements for integration. An added concern for many health plans is the lack of clarity around the enrollment process for beneficiaries. For states with managed Medicaid plans, the enrollment of beneficiaries into integrated benefit plans can take many forms, and more passive forms of enrollment can help to increase the number of beneficiaries who are enrolled in integrated plans. Health plans must make long-term strategic investments and planning decisions as they consider developing a D-SNP plan; therefore, delays and policy ambiguity can hinder decision making on the part of health plans as they wait for policy clarity.

Addressing Policy Concerns

To provide more regulatory clarity and encourage health plans to pursue D-SNP development, policy makers at the state level should focus on providing clear guidance regarding the timeline and integration standards for D-SNP plans. Implementing default enrollment into D-SNPs can help to increase enrollment in integrated plans while still allowing flexibility for beneficiaries to consider other alternatives. At the federal level, the Medicaid and CHIP Payment and Access Commission in their June 2022 Report to Congress pressed for legislators to require states to develop a strategy for integrating Medicare and Medicaid coverage within two years and provide federal funding to assist states with integration efforts. While there remain important questions regarding how such a requirement ought to be structured, a move at the federal level would significantly advance integration efforts by setting clear standards and providing necessary funding to bolster resources required at the state level.

Operational Risks Holding Back Health Plans

While many private health plans have experience managing risk for Medicaid populations and non-dual-eligible Medicare populations, the dual-eligible patient population is unique from a demographic and health risk profile. For instance, compared to non-dual-eligible Medicare beneficiaries, dual-eligible beneficiaries:

The picture that emerges is dual-eligible beneficiaries are a complex and diverse population of individuals with chronic medical needs, notable mental and cognitive health needs, and significant social needs that present a unique challenge to health plans unaccustomed to managing the health of higher-risk populations. Most health plans have limited experience with the needs of this population and often do not have the clinical and care management resources needed to support the complex needs of the population. For many health plans, this presents an operational challenge as they consider their ability to perform adequately relative to their other products.

Additionally, for the reasons stated above, the risk profile of a dual-eligible population is characteristically different from the risk profile of a non-dual-eligible Medicare population. This presents a challenge to the analytics and actuarial teams of health plans as they build out risk stratification and underwriting models for this population and attempt to integrate new data sources such as social determinants of health data—all while at the same time ensuring that risk stratification models do not create unintended biases based on race or ethnicity. An added challenge of developing strong analytic models for the dual-eligible population is access to high-quality population data that are specific to dual-eligible beneficiaries. Such data can be used to inform risk stratification models for population health and care management interventions. As a result, a health plan’s gaps in clinical and analytic experience with the dual-eligible population can significantly impact their willingness to develop a D-SNP.

Addressing Operational Concerns

Health plans that lack the operational resources to manage the risk of a dual-eligible population will either need to begin to invest internally in building out the clinical and analytic infrastructure within their own organization or partner with entities that specialize in the management of higher-risk populations. In some cases, developing resources internally can take the form of replicating the clinical and analytic services employed by the health plan for existing Medicare Advantage or managed Medicaid products. However, this approach is likely to underappreciate the unique needs of the dual-eligible population. Rather, efforts to address the dual-eligible population should be customized to meet the needs of beneficiaries with significant unmet social needs and complex chronic medical conditions.

Health plans will have to develop partnerships with local community benefit organizations and social services organizations and build pathways for beneficiaries to access necessary mental health services often in geographies that have limited access to mental health care. For health plans evaluating the operational risks of launching a D-SNP plan, insights can be gleaned from emerging high-risk care models and partners with expertise in managing dual-eligible populations.

Despite some hesitancy on the part of health plans, there remains a strong case for D-SNPs to deliver an enhanced health care experience for dual-eligible beneficiaries. By offering clearer regulatory guidance, policy makers can help alleviate uncertainty on the part of health plans. As health plans weigh the operational challenges of managing a uniquely high-risk population, they should look to evidence and partners with expertise to guide their approach.

Authors’ Note

Jordan Anderson and Gen Gillespie are employees of Belong Health, which partners with regional health plans to help them launch or grow Medicare Advantage and Special Needs Plans.

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