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This is the second installment of our 3-part blog series discussing challenges and opportunities for health plans to administer Dual Special Needs Plans (D-SNPs), which are an emphasis for both the Centers for Medicare and Medicaid Services (CMS) and individual states. Part 2 of our series dives into the process of claims and benefit adjudication鈥攖he importance of coordination between Medicare and Medicaid, which affects benefit packages, integration of services, pricing, encounter reporting and which CMS D-SNP model a plan offers for this unique population.

Embracing the opportunity

Coverage of the dual-eligibles is an expanding opportunity for managed care plans. CMS and half of the states have a strategic, bi-partisan interest in integrating Medicare and Medicaid coverage into single coverage entities. However, managing the complexities of integrated coverage can be an operational challenge. The answers to the following questions will help develop a clear strategy and uncover potential investment needs:

• What system and administrative modifications need to be made?
• What technology will be needed for the operation of the D-SNP program?
• Are there highly specialized services required for D-SNP coverage operations that can be outsourced?
• Does my plan have reliable partners that can support D-SNP operational gaps?

A generous but complicated combination

If you did not have the opportunity to catch the first blog in this series on operational strategies for D-SNP eligibility and enrollment, it is recommended to review that material prior to continuing. As discussed in the "Operational Strategies for Effective D-SNPs 鈥� Eligibility & Enrollment" blog, Medicare allows certain categories of covered individuals to enroll in Medicare Advantage 鈥淪pecial Needs Plans鈥� (SNPs) addressing their particular care situations. The most popular type of SNP is designed for Medicare enrollees whose limited income and assets make them eligible for concurrent Medicaid benefits. Such 鈥渄ual eligibles,鈥� whose income is low enough for full Medicaid coverage, are categorized as 鈥淨ualified Medicare Beneficiaries鈥� (QMB).

QMB dual eligibles receive both types of coverage because:

• Medicare pays for acute care, hospital and post-acute care, time-limited services in skilled nursing facilities, and most prescription drugs under Part D drug coverage.
• Medicaid pays for Long-Term Services and Supports (LTSS) helping people stay at home, or for lengthy or permanent skilled nursing facilities, which Medicare doesn鈥檛 cover, including Medicare copays and deductibles. Additional Medicaid benefits incorporate dental and vision services, more extensive behavioral and substance abuse treatment, and services limited by Medicare.

Receiving Medicare and Medicaid coverage provides dual eligibles a generous medical benefit package, more extensive than commercial or employer coverage. D-SNP member drug coverage is also substantial. QMB duals automatically qualify to receive Low Income Subsidies under Medicare Part D drug coverage, limiting copays to $1.60 or less for generic drugs and $4.80 or less for brand name drugs. The few drugs excluded by Part D, such as drugs prescribed specifically for weight loss, are covered separately by Medicaid in many states. This broad coverage is needed by dual eligibles because they often have disproportionately high needs for medical care and daily assistance due to disabilities, cognitive impairments, mental disorders and chronic conditions. More than one-third of the dual-eligible population requires a level of care equivalent to a nursing home.

While an integrated D-SNP鈥檚 combination of extensive Medicare and Medicaid coverage might appear simpler to administer, this isn鈥檛 exactly the case compared to commercial and standard Medicare Advantage plans. Medicare and Medicaid each have distinct structures and rules, which complicate the coverage. The two programs have diverse features, including varying benefit structures, provider reimbursement and network credentialing requirements, different payment structures from the two government levels to the plans, and distinct appeal and grievance procedures. This variation can confuse enrollees, challenge providers and complicate plan administration.

CMS and state integration initiatives

To improve coverage of dual eligibles, CMS has launched policy opportunities over the past decade, improving D-SNP benefit coordination and integration. One initiative, authorized by the Affordable Care Act, was the CMS Financial Alignment Initiative, where CMS and states entered into joint contracts with new types of D-SNPs called Medicare-Medicaid Plans (MMPs). MMPs had groundbreaking authority to integrate the two programs. At their peak in 2022, 39 MMPs in nine states covered over 400,000 dual eligible enrollees.

MMP鈥檚 generated high enrollee satisfaction, but few states and plans participated due to the significant effort required to establish the product. Additionally, federal payment was not more advantageous than received by regular D-SNPs and MA plans. In 2019 CMS created additional D-SNP models, and in 2022 decided to begin phasing out the MMPs. Lessons learned from MMPs shaped the three new models requiring integration through separate CMS and state contracts:

• Fully Integrated Dual Eligible (FIDE) SNPs: Cover all Medicare benefits and Medicaid primary and acute care, behavioral health, and long-term services and support benefits under a single legal entity. FIDE SNPs coordinate the delivery of Medicare and Medicaid services using aligned care management and specialty care network methods for high-risk beneficiaries, while coordinating or integrating beneficiary communication materials. FIDE SNPs are similar to MMPs.
• Highly Integrated Dual Eligible (HIDE) SNPs: Cover all Medicare primary, acute and inpatient benefits as well as Medicaid behavioral health or long-term services and support benefits under the same or separate plan entity under the D-SNP鈥檚 parent organization.
• Applicable Integrated Plans (AIP): A D-SNP health plan with an affiliated Medicaid managed care plan owned by the D-SNP or its parent organization and Medicaid plan covering primary and acute care and either home health, home health-related medical supplies or Medicaid nursing facility services.

These 3 models are in addition to traditional Coordination Only (CO) D-SNPs, which only provide Medicare coverage with Medicaid benefits separately provided directly by the state or another health plan. CO SNPs meet minimum CMS requirements to hold a contract with a state to coordinate state information sharing, such as when enrollees enter hospitals or nursing facilities.

These various D-SNP plan structures provide health plans and states more options for integrating coverage. The result is that 24 states now participate in some degree of D-SNP integration with CMS鈥攄ouble the rate of MMP participation.

Components necessary to structure D-SNP benefits

There are key considerations plans face in structuring a D-SNP to create value for enrollees and providers while meeting federal and state requirements:

Benefit coverage: Like Medicare Advantage plans, D-SNPs start with the foundation of full Medicare coverage. D-SNPs can offer Medicare supplemental benefits funded under their CMS bid, but on a limited basis since enrollees鈥� Medicaid eligibility provides them benefits that would be typically supplemental under Medicare (such as dental and vision). These supplemental benefits are usually limited to coverages Medicaid excludes, such as overseas travel and over-the-counter items.

The Medicaid coverage a D-SNP offers will vary somewhat by state, depending on what the state allows plans to provide. States allowing FIDE-SNPs will delegate full Medicaid coverage to the plans, including long-term services and support, behavioral health, dental and vision coverage. States with HIDE and AIP SNPs allow plans to provide a targeted subset of Medicaid coverage such as behavioral health or home health.

Structure and integration: Plans must decide whether and how to integrate Medicare and Medicaid in their claims adjudication systems. The level of integration impacts daily claim-operation costs and staffing, payment, care and utilization management, grievances/appeals and encounter processing.  

Integration is driven by what Medicaid coverage the plan offers. If the plan鈥檚 Medicaid benefit covers Medicare cost sharing and copays, then integration of coverage and claims processing is the most cost-effective approach. This avoids processing claims twice, thereby maximizing auto-adjudication. If a plan instead covers a narrow Medicaid scope of benefits, like home medical supplies or skilled nursing, integration is advantageous, since the plan can easily track its Medicaid costs among a limited number of services.

There are three alternatives to integrated claims adjudication:

1. Full Integration combines the Medicare and Medicaid coverage into a single comprehensive benefit plan.   One adjudication is completed for each claim, or the claim system can process a first adjudication pass for Medicare, followed by a second pass for Medicaid. These approaches maximize auto-adjudication and simplify provider payment. However, this approach requires a plan tool or methodology to separately track or allocate federal Medicare and state Medicaid attributed costs, fee schedules and encounters.
2. Companion plan processing occurs where there are separate claim system domains for the Medicare and Medicaid coverage under the same plan. Claims covered by both plans must be processed sequentially with Medicare being the primary plan and Medicaid plan adjudication being secondary. Separate pricing on what each program pays providers must also be accounted for. While not as efficient as full integration, companion plan processing can be expedited using intelligent automation or middle-ware that interfaces separate adjudication systems, and/or through staff trained on both plans claims systems.  
3. Crossover claim processing involves the most segregated approach for adjudicating D-SNP claims. While it can be used for two plans under the same parent company, crossover pricing typically isn鈥檛 integrated. Like Coordination of Benefit claim processing for individuals with concurrent coverage (having Medicare and commercial coverage), D-SNP crossover processing has the Medicare plan adjudicate the claim first, then send an Explanation of Benefits statement to the wholly separate Medicaid plan to separately cover Medicare copays, limitations, or exclusions. Crossover processing typically takes longer than integrated and companion processing, delaying full provider payment.

FIDE-SNPs must use integrated or companion plan processing, while HIDE and AIP SNPs can use any of the above three structures. CO-DSPs do not have to entertain an infrastructure supporting integrated claims processing.

Pricing of Provider Payment: D-SNP payment levels are driven by provider contracts for Medicare coverage and the state鈥檚 fee schedule for Medicaid benefits. FIDE, HIDE and AIP SNPs typically pay network providers with at least two fee schedules, and out-of-network providers the Medicare fee schedule for Medicare services. An additional complication for FIDE, HIDE and AIP SNPs is the fee schedule applied for services covered by Medicare and Medicaid. For claims where Medicaid pays the Medicare copay or deductible, some states require Medicaid only pay a copay, as if the underlying fee paid for the entire service was under the Medicaid fee schedule, which is frequently less than Medicare reimbursement. As an example, instead of Medicaid covering $20 for 20% coinsurance on a $100 Medicare fee, state Medicaid rules may only pay a $15 copay or a fraction of the remaining Medicare fee. Similar pricing arrangements can apply for Skilled Nursing Facilities, where Medicaid per diem rates are typically less than Medicare. Such multi-faceted fees require intricate pricing functionality or skilled claim staff to account for the various pricing arrangements in any integrated D-SNP.

Provider Network: FIDE and HIDE SNP plan state contracts for Medicaid coverage must mirror the entire service area of the D-SNP鈥檚 Medicare providers, so the two programs鈥� regions align. Beyond Medicare providers, FIDE and HIDE and AIP SNP networks must include special service providers for the Medicaid coverage Medicare excludes, such as LTSS, additional behavioral and substance abuse, non-emergency transport, and meal providers.

Encounters: FIDE, HIDE and AIP plans providing Medicare and Medicaid benefits must submit each program鈥檚 medical encounters to the respective governing agency: CMS or state. This requirement, along with financial accounting and reporting, often makes plans apprehensive to integrate the two program benefits. A solution for this is a back-end encounter allocator tool, which segregates claims between the two programs for encounter submission and financial tracking. SS&C offers a Payment Allocator solution鈥攁 module used with our multiple claims systems, which has enabled accurate Medicare and Medicaid encounter submissions in multiple states for MMP, FIDE and HIDE SNPs. Contact us for information on our claims solutions for dual eligibles.

Part 3 of our series will focus on the importance of care management and care coordination for D-SNPs covering dual eligibles. Since QMB dual eligibles receive extensive coverage, with no benefit cost sharing, and typically have multiple chronic conditions, a critical D-SNP activity employs care management to assist enrollees in accessing the right care, ensure appropriate utilization and prevent overuse of emergency rooms and nursing homes. The final part of this series will discuss how intensive plan care management, undertaken in partnership with the enrollee鈥檚 primary care provider and local resources, is key to improving outcomes and quality of life for dual-eligible beneficiaries by reducing unnecessary care and managing costs.

SS&C Health offers operational solutions for all variations of D-SNPs through our expertise and technology strength. Contact us today to see how we can help your plan embrace the opportunity and succeed in serving dual eligibles.