Medicare Advantage Dual-Eligible Special Needs Plans: An Examination of Beneficiary Characteristics and Enrollment Decisions

Providing well-coordinated and efficient health care for individuals dually eligible for Medicare and Medicaid has been a persistent challenge in the US health care system. One proposed solution to this challenge is Dual-Eligible Special Needs Plans (D-SNPs) - a set of specialized plans within the Medicare Advantage program (MA) designed to increase dual-eligibles’ participation in managed care and potentially integrate Medicare and Medicaid coverage into a single benefit.

Despite the promise of this model and its recent permanent reauthorization by Congress, relatively little is known about how these plans operate and who chooses to enroll in them. This latter point is particularly important as, unlike Medicaid managed care programs, D-SNPs are voluntary. Dual-eligible beneficiaries can always elect to remain in their default fee-for-service (FFS) Medicare coverage, with no provider network restrictions and, often, full coverage of any cost sharing by Medicaid. As a result, the motivations for opting into a D-SNP are not immediately clear.

This study examines the characteristics of D-SNP enrollees and the extent to which favorable selection may exist in this market. We use several datasets, including the Medicare Consumer Assessment of Health Plans Survey (CAHPS) and Medicare claims, to examine the health and socioeconomic profile of D-SNP members at the time of enrollment in comparison to duals enrolled in FFS Medicare and regular MA plans. We use additional publicly-available datasets to examine a number of factors which may help explain duals’ demand for D-SNP coverage. Such factors include geographic variation in Medicaid managed care penetration, the generosity of Medicaid supplement benefits (e.g., dental and vision), and the popularity of regular MA in a given market. Finally, we study patient experience of care questions contained in the Medicare CAHPS survey to assess D-SNP performance on a number of plan quality dimensions related to care access and customer service.

Results will provide some of the first evidence regarding the composition of D-SNP beneficiaries, the prevalence of cream-skimming in the D-SNP market, and the experience of individuals enrolled in these plans. This information will help policymakers further understand D-SNPs and better consider the role of private insurers in providing coverage to dual-eligible beneficiaries—a medically complex and socioeconomically vulnerable population. It will also inform ongoing debates about payment policy and plan design for the dual eligible population, including the need for additional risk-adjustment to reduce insurer incentives to cream skim.