A major change in risk-adjustment methodology that went into effect for 2017 alleviated a deep concern of many Medicare Advantage plans with large percentages of dual eligibles. But topping their wish list this year is permanent authorization of the Special Needs Plan program, better alignment of the Medicare and Medicaid programs as they apply to dual eligible SNPs (D-SNPs) — which comprise 90% of SNP enrollees overall — and additional adjustments to star quality ratings to account for social risk factors, according to trade groups and consultants that work with many duals plans.

Originally unveiled in an October 2015 memo and finalized in the 2017 payment notice and Call Letter released by CMS last April, the agency instituted a new six-category risk-adjustment system designed to pay more for MA plans’ members who are disabled or full Medicare-Medicaid dual eligibles and less for other enrollees (MAN 4/7/16, p. 1). “For full benefit duals in particular, if CMS had not made that adjustment, I think we would have seen a number of D-SNPs increasingly in trouble and some beginning to leave the market,” remarks The SNP Alliance’s Rich Bringewatt. Moreover, 2016 showed sustained growth in SNP enrollment, with an overall increase of 8.5% to more than 2.3 million SNP enrollees (see table, below).

Institutional SNPs (I-SNPs), however, took a big hit on payment due to a recalibration of the institutional segment of the MA coding model for 2017. “One thing that caught us by surprise last year is there weren’t any fundamental changes being made to the institutional risk model, but beside restructuring how they did the risk model CMS also updated it with data that was three years more current, and that new data ended up basically creating a 10% reduction in institutional risk scores,” explains Eric Goetsch, a principal and consulting actuary with the Milwaukee office of Milliman. As a result, I-SNPs had to make some “pretty fundamental changes” to account for the reduction, he says. But the change didn’t result in a large exodus of I-SNPs from the market, and the number of I-SNPs offered actually grew from 79 in 2016 to 81 this year, points out Bringewatt (see table, below).

Trade Groups Hope for SNP Permanency

Meanwhile, trade groups like The SNP Alliance, which is an initiative of the National Health Policy Group, and the Association for Community Affiliated Plans (ACAP), which has many SNP operators, identify their members’ main priority as SNP permanency. SNPs were authorized under the Medicare Modernization Act of 2003 to serve institutionalized, dual-eligible or severe/disabled chronically ill patients through 2008, and have since gone through a series of brief reauthorizations, most recently with a provision in the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 that allows them to operate through 2018.

“That may seem far in the future, but [it] represents considerable uncertainty for managed care organizations that are trying to plan their business in advance,” asserts Meg Murray, CEO of ACAP. “Given the general atmosphere of bipartisan support for D-SNPs we expect that Congress will, in fact, reauthorize the program. But this bears a discomfiting resemblance to the annual ‘doc fix’ which the last Congress brought to a merciful end [through MACRA]. We’d hope that they would do likewise for D-SNPs and grant the program permanent authorization.”

A Senate Finance Committee bill introduced in the last Congress sought to permanently authorize the program, and Bringewatt says The SNP Alliance is confident that it will be reintroduced in some form this year, pointing out that Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) are “very committed to this” and the Alliance doesn’t see “any reason for them backing off.”

In addition, a priority cited by both organizations is advancing dual integration. “We’d like to see the Medicare-Medicaid Coordination Office [MMCO] at CMS be dedicated by the agency to address misalignments between the Medicare and Medicaid programs as they apply to D-SNPs,” says Murray. “The staff there have a strong understanding of the points of friction between the two programs and under Tim Engelhardt’s leadership they have really become a terrific resource for all of us with an interest in better alignment of the two programs.”

Plans Need Better Integration

MMCO currently administers the Financial Alignment Initiative, in which plans in 10 states entered into a three-way contract with CMS and state Medicaid agencies to test the coordination of care for dual-eligible beneficiaries in Medicare-Medicaid plans (MMPs) through 2020. “There’s been some good work done by the MMPs, which we also represent, and I think there’s been some good progress on the administrative alignment,” remarks Bringewatt. “But we still have a long ways to go before there’s really the infrastructure that’s necessary to serve that population in an efficient way and provide ease of enrollment and navigation for the beneficiary.”

The CMS-backed duals demo is authorized by the Center for Medicare and Medicaid Innovation (CMMI), which is under threat of being removed by House Speaker Paul Ryan (R) and congressional Republicans. If that happens, however, CMS would theoretically lose its authority to make the demonstrations permanent without action from Congress, suggests Bob Atlas, president of the EBG Advisors unit of health care law firm Epstein Becker & Green, P.C.

“States are going to continue to look for ways to get the duals population into Medicare managed care plans,” Atlas predicts. And while states can’t mandate that a Medicare beneficiary join a Medicare managed care plan — leading to uninspiring enrollment figures in the CMS-backed duals demonstrations — another trend that’s likely to continue is “mandatory enrollment of Medicaid beneficiaries, including dual eligibles, into Medicaid managed long-term supports and services [MLTSS] plans,” he says. Once dual eligibles are in the MLTSS plans, they can be encouraged or enticed to enroll in companion MA plans, he explains. For example, states could add a few extra benefits to the Medicaid plans for people who enroll voluntarily in D-SNPs operated by the same sponsors.

Murray adds that ACAP would like to see a “number of other fixes” for the D-SNP program. These include “apples-to-apples comparisons and better-refined quality measures for the purposes of star ratings, reporting out ratings at the plan level rather than the contract level and unified appeals and grievance procedures.”

CMS in 2016 made an interim adjustment to address socioeconomic status in the star quality ratings. But the change, which adjusted for within-contract disparities based on an MA contract’s percentages of dual eligible/low-income subsidy beneficiaries, boosted the overall ratings of only 15 out of 364 plans, while 96% of contracts saw no change in their overall star ratings (MAN 11/3/16, p. 1). Bringewatt suggests that new research from the HHS Office of the Assistant Secretary for Planning and Evaluation released last month, which noted key differences in stars performance for duals vs. non-duals, makes a strong case for the influence of social risk factors on health outcomes and could lead to further adjustments in the ratings.

2016 Showed Sustained Growth in Special Needs Plan (SNP) Enrollment

SNP Type

January 2016

December 2016


Dual SNP




Chronic SNP




Institutional SNP




Total SNP




SOURCE: The SNP Alliance, CMS Comprehensive SNP Report: January and December 2016

Special Needs Plans (SNPs) Operating in 2017

SNP Type

2016* Number of Contracts

2016* Number of Plans

2017** Number of Contracts

2017** Number of Plans

Chronic or Disabling




















*As of December 2016. CMS Comprehensive SNP Report: http://tinyurl.com/jeulzyx

**Does not include sanctioned contracts or plans. 2017 SNP Landscape File: http://tinyurl.com/za5rgha

SOURCE: The SNP Alliance