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New Opportunities and Requirements for Integrated Managed Care Models for Medicare-Medicaid Dually Eligible Individuals Served by Health Plans

This week, our In Focus section provides a high-level overview and an analysis for how health plans should consider two related and significant policy statements from the Centers for Medicare & Medicaid Services (CMS) about opportunities to further integrate care for dually eligible individuals.  Specifically, the CMS April 24, 2019, State Medicaid Director letter (SMDL) outlines new opportunities for states, largely working with health plans, to test models of integrated care, including opportunities to continue current financial alignment initiatives (FAIs).[i] CMS also issued final rules related to Medicare Advantage Dual Eligible Special Needs Plan (D-SNP) definitions and requirements for Medicare-Medicaid integration activities and unified grievances and appeals for calendar year 2021.[ii] Together, these guidance documents should present greater opportunities for health plans to partner with CMS and states to integrate care for dual eligible beneficiaries.[iii]

Options for Health Plans Following New CMS Rules and Policy Guidance

Health plans have three new options to offer integrated Medicare-Medicaid products as a result of the CMS April 24, 2019 SMDL and MA CY 2020 and 2021 Final Rule. They build on existing integrated managed care models administered through health plans including:

  • Medicare-Medicaid financial alignment initiative (FAI) capitated model with Medicare and Medicaid services provided by Medicare-Medicaid plans (MMPs).
  • Aligned Medicaid managed long-term services and supports plans (MLTSS) and Dual Eligible Special Needs Plans (D-SNPs) with dual integration requirements in state Medicaid contracts (SMACs) that D-SNPs must follow in order to operate in a state.[iv]
  • Medicare Advantage Fully Integrated Dual Eligible Special Needs Plans (FIDE SNPs) that provide Medicare and required Medicaid benefits by a single health plan entity.

The CMS April 24, 2019, SMDL further expands current integrated managed care model options. It encourages states to partner with CMS to offer the following models through health plans:

  • Revise or continue current FAI capitated models via multi-year extensions and expand to new geographic areas within the state.
  • Initiate new capitated FAI programs.
  • Pursue state-specific models based on the FAIs or other delivery system reforms (e.g., alternative payment methodologies, value-based purchasing, or episode-based bundled payments).

The CMS April 2019 SMDL additionally highlighted state integration opportunities that do not require states to seek CMS demonstration authorities or waivers. They include integrating care through D-SNPs and other options included in the CMS December 18, 2018 SMDL.

For calendar year (CY) 2021, the Medicare Advantage (MA) CY 2020 and 2021 Final Rule identifies three types or levels of D-SNPs health plans may offer, subject to obtaining SMACs and CMS application approval. All participating health plans must coordinate the delivery of Medicare and Medicaid services for eligible individuals. Each option has varying service provision, integration, and unified grievance and appeals requirements:

  • Highly Integrated Dual Eligible (HIDE) SNP: A D-SNP offered by a Medicare Advantage organization whose parent organization or another entity owned or controlled by the parent organization covers Medicaid LTSS and/or behavioral health services, as required under capitated contract with the state. HIDE SNPs with exclusively aligned enrollment must maintain clinical and financial responsibility for the provision of Medicare and required Medicaid benefits and conduct unified grievances and appeals.[v]
  • FIDE SNP: A D-SNP under capitated contract with the state that must cover specified primary care, acute care, behavioral health, and long-term services and supports consistent with state policy, and cover nursing facility services for a period of at least 180 days during the plan year through the same entity that contracts with CMS to operate as a Medicare Advantage plan. It is required to:
    • coordinate the delivery of covered Medicare and Medicaid services using aligned care management and specialty care network methods for high-risk beneficiaries; and
    • coordinate or integrate enrollee beneficiary communication materials, enrollment, communications, grievance and appeals, and quality improvement.
  • D-SNPs that are not HIDE SNPs or FIDE SNPs: The D-SNP must meet additional state Medicaid agency contract requirements for integration, which include sharing data on hospital and skilled nursing facility admissions for at least one group of high-risk full-benefit dual eligible individuals enrolled in the D-SNP. States have the authority to identify the high-risk group. D-SNPS may also provide coverage of Medicaid services, including long-term services and supports and behavioral health services for eligible individuals.

Health Plan Considerations for Integrated Medicare-Medicaid Offerings

Plans currently operating MMPs and D-SNPs, and those planning expansion and entrance into new markets, will need to assess new CMS requirements, current state integration models, and state capacity to continue or develop and oversee new integrated programs. Planning for entrance into potential new integrated markets requires a thorough assessment of plan capabilities to meet new federal and state requirements; state interest, readiness and capacity given other priorities; and input provided by stakeholders.  Further considerations include:

  • Medicare Advantage best practices to serve the dual eligible population and achieve high Star Ratings.
  • Success with current capitated FAI programs in each state and interest in continuing and expanding the current program with refinements and possible geographic expansion. What have states and CMS grappled with to ensure enrollment and retention of members, financial viability of the program and ability to achieve appropriate utilization of services and costs savings?
  • State interest in and capacity to move to or establish a Medicaid MLTSS program with D-SNP integration requirements. What would the state gain over the current status quo and what are the available state resources to design and oversee different types of D-SNPs with varying levels of required integration and unified grievances and appeals?
  • Medicare Advantage market dynamics and penetration.
  • State interest in and capacity to establish its own state-specific model. What experience does the state have with delivery system reform and internal expertise to build a new or hybrid model using alternative payment strategies?

Specific to assessing readiness to enter the MMP and integrated MLTSS and D-SNP markets, health plans must consider the following:  Does the plan have separate Medicare and Medicaid teams that currently collaborate on market strategy, product design, and plan management? What experience does the plan have serving dual eligible populations and establishing a provider network to meet the unique needs of the population? What experience does it have in financial modeling for these products? What expertise must the plan demonstrate, build or acquire to effectively operate in the integrated managed care market?

Stakeholder engagement will be critical as planning moves forward to better meet the needs of the over 12 million dually eligible individuals across the country. Health plans can be important partners to states and CMS in obtaining stakeholder input to inform refinement of current integrated managed care models and design and implementation of new models.

For more information, please contact Sarah Barth, Principal, HMA.


[i] CMS State Medicaid Director Letter #19-002 Three New Opportunities to Test Innovative Models of Integrated Care for Individuals Dually Eligible for Medicaid and Medicare, April 24, 2019.

[ii] Medicare Advantage, Medicare Prescription Drug Benefit, Program of All-inclusive Care for the Elderly, Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021; Policy and Technical Changes (CMS-4185) (MA 2020 and 2021 Final Rule).

[iii] Please look for a forthcoming, separate HMA update on the current regulatory landscape and considerations for the Program of All-Inclusive Care for the Elderly (PACE).

[iv] D-SNPs must have SMACs in order to operate in states, providing leverage to states to include contract provisions related to D-SNP integration activities and other requirements such as reporting and data sharing.

[v] Exclusively aligned enrollment occurs when the state Medicaid agency limits a D-SNP’s membership to individuals with aligned enrollment. Aligned enrollment occurs when a full-benefit dual eligible individual is a member of a D-SNP and receives coverage of Medicaid benefits from the D-SNP or from a Medicaid managed care organization that is:

  • The same organization as the MA organization offering the DSNP;
  • Its parent organization; or
  • Another entity that is owned and controlled by the D-SNP’s parent organization.

Only entities with exclusively aligned enrollment can hold clinical and financial responsibility for the provision of Medicare and Medicaid benefits (FIDE SNPs and HIDE SNPs with exclusively aligned enrollment) MA 2020 and 2021 Final Rule.