Dual Eligible Special Needs Plans: Unrealized Potential

This is the second post highlighting some key findings from the Kaiser Family Foundation’s September 2011 Data Spotlight on Special Needs Plans (a subset of Medicare Advantage plans). The first post focused on overall enrollment.

While enrollment in dual eligible Special Needs Plans (SNPs) has risen, the distribution of such enrollees is unequal, both geographically and across health plans. Around 2% of Medicare beneficiaries are in SNPs. However, there are 8 states in 2011 with no SNPs of any type, while 5 states and the district of Columbia have 15+% of their Medicare beneficiaries enrolled in SNPs. Around 80% of SNP enrollees are in dual eligible plans which are the most common type SNPs in all states where such plans are offered. The 8 states with no SNP enrollees of any type in 2011 are: Alaska, Montana, Wyoming, North and South Dakota, Vermont, New Hampshire and West Virginia.

In addition to geographic variation, a relatively small number of insurance firms are heavily involved in offering SNPs. Virtually all insurance companies had more dual eligible SNPs as compared to institutional or chronic condition plans, with only two insurance providers (see table A5 in the brief) having more patients in other types of plans.

The concentration of dual eligible SNP enrollees into a relatively small number of private insurance companies is consistent with a story of specialization of services to treat the complicated and numerous needs of dual eligibles. However, to this point, most dual eligible SNPs have not lived up to their potential. From the brief:

…coordination between the Medicare and Medicaid programs is more a goal than a reality, posing challenges for SNPs and for enrollees who receive coverage under both programs. While existing dual SNPs will be required to contract with state governments by 2013, it is not clear how this requirement will be implemented and how effective it will be…. Dual SNPs also face enormous challenges in providing appropriate services to enrollees with heterogeneous and often highly‐specialized and diverse needs, ranging from younger beneficiaries with debilitating mental disabilities to older enrollees, with physical and cognitive impairments, living in nursing homes or trying to maintain their independence at home.

The health and social needs of the dual eligibles are complex, and so far SNPs represent mostly unrealized potential in seeking to reduce the cost of their care while improving quality.


Marsha Gold, Gretchen Jacobson, Anthony Damico and Tricia Neuman. Special Needs Plans: Availability and Enrollment, Kaiser Family Foundation Program on Medicare Policy. h/t and thanks to Adam Coyne and Amy Berridge of Mathematica Policy Research for providing me with this brief and other information on SNPs.

Dual Eligible Special Needs Plans-Enrollment

Kaiser Family Foundation has a useful Data Spotlight on Special Needs Plans (Sept 2011), a subset of Medicare Advantage plans that cover dual eligibles (Medicare and Medicaid), persons living in institutions like nursing homes, and individuals suffering from chronic, disabling conditions such as congestive heart failure.

Such plans have provided increased opportunities for high need/high cost Medicare beneficiaries to have private insurance options in lieu of traditional Medicare. I am going to do several posts focusing on dual eligibles and Special Needs Plans (SNP): enrollment, concentration of beneficiaries across plans, evidence that SNPs could reduce costs and/or improve quality, and questions about setting premiums and risk adjustment, following on recent posts on efforts to reduce cost and increase the quality of care for the duals. There are two polar opposite approaches to dealing with the care of the dual eligibles: federalizing Medicaid, and moving them into private plans. Of course a hybrid approach is most likely, and interest is reforming the care of dual eligibles and evaluation of same is likely to remain a high priority.

SNPs were enabled by the Medicare Modernization Act of 2003, and beneficiary enrollment of dual eligibles in SNPs has risen steadily in spite of a decline in the number of plans offered after 2008.

  • After peaking in 2008, the number of SNPs has declined since; SNPs serving dual eligibles have always been the most common plan type, but they too have declined since 2008
  • The number of beneficiaries in dual eligible-SNPs has increased, even as plans have declined
  • The number of beneficiaries in institutional and chronic disease SNPs have declined along with the number of such plans offered
  • Patients in all SNPs are concentrated in a relatively small number of insurance firms/plans; 12% of the firms offering SNPs now enroll 83% of such patients

Around 11% of all dual eligibles are enrolled in dual eligible SNPs, but rates vary tremendously across the nation; no Medicare beneficiaries are enrolled in SNPs of any type in 8 states. There are many questions that need to be answered to determine the potential for such plans to improve quality of care while addressing the very large costs of caring for the dual eligibles and the body of evidence should make us skeptical about the ability of SNPs to reduce costs as compared to FFS Medicare. However, dual eligibles typically have large Medicaid costs as well, and substantial long term care needs that may be unmet, particularly for duals living in the community. A holistic assessment of costs and quality is needed. Answering these inter-related questions is a top priority since over 1 million dual eligibles are now enrolled in dual-SNPs, and cost and quality problems abound in how they are cared for now.


Marsha Gold, Gretchen Jacobson, Anthony Damico and Tricia Neuman. Special Needs Plans: Availability and Enrollment, Kaiser Family Foundation Program on Medicare Policy. h/t and thanks to Adam Coyne and Amy Berrige of Mathematica Policy Research for providing me with this brief and other information on SNPs.

Care Coordination for Dual Eligibles, ctd.

The June 2011 MEDPAC report provides important information about private insurance options to cover dual eligibles (persons covered by Medicare and Medicaid) amplifying yesterday’s post on care coordination.

The Medicare Modernization Act of 2003 created a category of Medicare Advantage plans called Dual-Special Needs Plans (D-SNP) that only cover dual eligibles. D-SNP are a subset of Special Needs Plans (SNPs) that are private insurance options for groups with unique and complex health care needs. SNPs have been created to cover Medicare beneficiaries living in a nursing home, or having chronic disabling conditions such as End Stage Renal Disease, HIV, and congestive heart failure. Table 5-2 (p. 128) from the MEDPAC report provides SNP enrollment:

There were around 1.05 million dual eligibles in D-SNP plans in February 2011 (11.4% of all duals), and nearly 1.3 million persons enrolled in all SNPs. SNPs differ from other types of Medicare Advantage plans in several ways (e.g. they must cover part D; you can enroll at any time and not only during open enrollment windows if such a plan is available in an area). Several quick thoughts:

  • The problem being addressed is the high cost and potentially non-optimal quality of the care provided to the dual eligibles.
  • The goal of proposals to federalize the Medicaid costs of the duals, as well as to move duals into private plans are to incentivize and empower one payer to decrease costs while improving quality for dual eligibles.
  • Austin and Aaron have pulled together lots of evidence showing that public payers have done a better job at restraining costs over time than private ones. Most of this literature predates D-SNPs. Studies showing slower cost inflation in Medicare than private insurance were obtained with the dual eligibles (a very expensive group) being cared for by FFS Medicare.
  • MEDPAC says that most of the D-SNP plans (p. 128) do not provide fully integrated and coordinated care to the degree believed to be optimal to duals, typically because they do not coordinate Medicaid benefits. Standards and regulation for these plans will expand due to aspects of the Affordable Care Act that will require quality assessments of plans (2012), and a requirement that D-SNPs have state contracts with Medicaid for the coordination of and provision of services (mostly LTC, by 2013).
  • There are other types of coordinated activities for dual eligibles described in the MEDPAC report that are implemented outside of the D-SNP approach (PACE, state carve outs, other demonstrations p.124-26 ). Overall, MEDPAC says 2% (p. 124) of dual eligibles are in fully integrated plans. This is not a subset of the D-SNPs but includes other options as well.
  • Finally, Austin’s point from last week that lowering spending may not be the appropriate question to ask about whether expanding private insurance options in Medicare is a good one to remember. It would be great to improve quality and reduce costs, but doing both will be hard. The current default for how care is financed for dual eligibles leaves room for improvement on both counts and we need to try and evaluate different options.