Why Medicare Advantage Special Needs Plans are on the Rise

The United States continues to age, and as a result, the healthcare system must evolve to meet the needs of this graying population. Medicare, which observes its 55th anniversary in 2021, continues to be central to accomplishing that mission, as does Medicare Advantage, the private plan alternative.

Enrollment in Medicare Advantage, which dates back to 2006, has more than doubled in the last 10 years. Currently, 26.4 million of the 62.7 million Medicare enrollees are in MA plans. That’s 42 percent of the Medicare population, accounting for 46 percent of Medicare spending ($343 million).

Of those Medicare Advantage enrollees, some 15 percent -- 3.84 million people -- are enrolled in Special Needs Plans (SNPs), which are MA plans tailored to meet the needs of those with specific diseases. That makes SNPs, which originated in 2006, the fastest-growing of all plans.

Drilling down even further, it should be noted that enrollment in Dual SNPs (i.e., for those enrolled in Medicare and Medicaid) has risen steadily over the last decade, while the number of those enrolled in Chronic SNPs (for those with severe or disabling chronic conditions) has slipped. The numbers of those enrolled in Institutional SNPs (for residents in long-term care facilities and the like) has held steady in the meantime.

So the question is, what factors have led to the increase in popularity of SNPs?

The first reason is, as mentioned, an ever-increasing need. Roughly 10,000 Baby Boomers turn 65 every day, and the number of Americans that age or older is expected to rise from 14.5 percent of the total population now to 20 percent by 2030. Thirty years beyond that, the projected number of U.S. seniors is expected to reach 95 million — nearly twice as many as in 2018.

Moreover, 80 percent of those 65 and older suffer from at least one chronic condition, and 68 percent suffer from two or more.?

The Kaiser Family Foundation surmises that Institutional SNPs (I-SNPs) in particular are appealing to insurers, since such plans are the only available option in a given number of senior facilities, reducing the payers’ marketing costs.

There are currently 174 I-SNPs available —over twice as many as were available in 2017 (83). That reflects a larger trend that has seen the number of SNPs increase from 578 in 2017 to 975 at present. On average, Medicare beneficiaries have access to 33 such plans.

Other reasons that have been mentioned for their rise are state requirements and a desire on the part of the payer, Medicaid in particular, to provide more holistic care. Then there’s this: these plans seem to work.?

One study in particular, released in November 2020 by the Journal of the American Medical Association, concluded that Special Needs Plans improve outcomes from End-Stage Renal Disease (ESRD). Specifically, those enrolled in such plans showed a hospitalization rate of 11.05 per 100 patient months, and a fatality rate of 0.79 for the same timeframe. That contrasts with respective rates of 12.27 and 1.0 for those who were not enrolled in SNPs.?

Further, the study appears to have implications about the impact of SNPs on Hispanics, as those from that ethnic group encompass a significant portion of the studied demographic. While further study is required, other research appears to indicate much the same conclusion, as noted by the JAMA authors:

In combination, these data suggest that C-SNP enrollment may provide greater access to care for patients from minority groups with downstream effects on patient health and health care utilization. Additional studies are needed to validate this hypothesis.

This study is especially pertinent, given that the incidence of ESRD is expected to rise by as much as 18 percent by 2030. Moreover, ESRD is just one of 15 chronic diseases or conditions covered by Chronic SNPs. Alcohol/substance dependence, autoimmune disorders, cancer and cardiovascular disorders are just a few of the disorders that are listed.

Convenience and cost-effectiveness are seen as the biggest advantages of SNPs, as well as care coordination and personalization. Regarding the two latter points, certain plans allow for care coordinators to be assigned to a member who then educates the person in question about his or her condition and can tailor diets and other wellness dynamics to the member’s needs. In addition, all SNPs provide prescription drug coverage.

The appeal of special needs plans is clear, then. While their use is limited to a certain subset of Medicare Advantage enrollees, the advantages are many, and their efficacy is supported by scientific research. Small wonder they are being used in greater frequency, with the expectation that they will be used even more in the years ahead.