MEDICARE SPECIAL 

NEEDS PLANS

CMS Should Improve 

Information Available 

about Dual-Eligible 

Plans’ Performance

Report to Congressional Requesters

September 2012

GAO-12-864

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United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-864, a report to 

congressional requesters

September 2012

MEDICARE SPECIAL NEEDS PLANS

CMS Should Improve Information Available about 

Dual-Eligible Plans’ Performance

Why GAO Did This Study

About 9 million of Medicare’s over 

48 million beneficiaries are also eligible 

for Medicaid because they meet 

income and other criteria. These dualeligible beneficiaries have greater 

health care challenges than other 

Medicare beneficiaries, increasing their 

need for care coordination across the 

two programs. In addition to meeting 

all the requirements of other MA plans, 

D-SNPs are required by CMS to 

provide specialized services targeted 

to the needs of dual-eligible 

beneficiaries as well as integrate 

benefits or coordinate care with 

Medicaid services. GAO was asked to 

examine D-SNPs’ specialized services 

to dual-eligible beneficiaries. GAO 

(1) analyzed the characteristics of 

dual-eligible beneficiaries in D-SNPs 

and other MA plans, (2) reviewed 

differences in specialized services 

between D-SNPs and other MA plans, 

and (3) reviewed how D-SNPs work 

with state Medicaid agencies to 

enhance benefit integration and care 

coordination. GAO analyzed CMS 

enrollment, plan benefit package, 

projected revenue, and beneficiary 

health status data; reviewed 15 D-SNP 

models of care and 2012 contracts with 

states; and interviewed representatives 

from 15 D-SNPs and Medicaid agency 

officials in 5 states. 

What GAO Recommends

To increase D-SNPs’ accountability, 

GAO recommends improving D-SNP 

reporting of services provided to dualeligible beneficiaries and making this 

information available to the public. In 

its comments on a draft of GAO’s 

report, CMS generally agreed with our 

recommendations.

What GAO Found

About 9 percent of the dual-eligible population is enrolled in 322 Medicare dualeligible special needs plans (D-SNP), a type of Medicare Advantage (MA) plan. 

All dual-eligible beneficiaries are low income, but those in D-SNPs tended to 

have somewhat different demographic characteristics relative to those dualeligible beneficiaries in other MA plans. On the basis of the most current data 

available (2010-2011), compared to those in other MA plans, dual-eligible 

beneficiaries in D-SNPs were more frequently under age 65 and disabled, more 

likely to be eligible for full Medicaid benefits, and more frequently diagnosed with 

a chronic or disabling mental health condition. In spite of these differences, the 

health status of D-SNP enrollees as measured by their expected cost to 

Medicare was similar to the health status of dual-eligible enrollees in other MA 

plans in 2010. 

D-SNPs provide fewer supplemental benefits—benefits not covered by Medicare 

fee-for-service (FFS)—on average, than other MA plans. Of the 10 supplemental 

benefits offered by more than half of D-SNPs, 7 were offered more frequently by 

other MA plans and 3 were offered more frequently by D-SNPs. Yet D-SNPs 

spent proportionately more of their rebate—additional Medicare payments 

received by many plans—to fund supplemental benefits compared to other MA 

plans, and less to reduce Medicare cost-sharing, which is generally covered by 

Medicaid. The models of care GAO reviewed, of 107 submitted for 2012, 

described in varying detail how the D-SNP planned to provide specialized 

services, such as health risk assessments, and meet other requirements, such 

as measuring performance. However, the Centers for Medicare & Medicaid 

Services (CMS), which administers Medicare and oversees Medicaid, did not 

require D-SNPs to use standardized measures in the models of care, which 

would make it possible to compare the performance of D-SNPs. While D-SNPs 

are not required to report that information to CMS, such information would be 

useful for future evaluations of whether D-SNPs met their intended results, as 

well as for comparing D-SNPs.

CMS stated that contracts between D-SNPs and state Medicaid agencies are an 

opportunity to increase benefit integration and care coordination. Our review of 

the contracts indicated only about one-third of the 2012 contracts contained any 

provisions for benefit integration, and only about one-fifth provided for active care 

coordination between D-SNPs and Medicaid agencies, which indicates that most 

care coordination was done exclusively by D-SNPs, without any involvement of 

state Medicaid agencies. However, some D-SNP contracts with state Medicaid 

agencies specified that the agencies would pay the D-SNPs to provide all or 

some Medicaid benefits. Representatives from the D-SNPs and Medicaid officials

from the states GAO interviewed expressed concerns about the contracting 

process, such as limited state resources for developing and overseeing 

contracts, as well as uncertainty about whether Congress will extend D-SNPs as 

a type of MA plan after 2013, and the implementation of other initiatives to 

coordinate Medicare and Medicaid benefits for dual-eligible beneficiaries that 

could replace D-SNPs.

View GAO-12-864. For more information, 

contact James C. Cosgrove at (202) 512-7114 

or CosgroveJ@gao.gov.
Page i GAO-12-864 Dual-Eligible Special Needs Plans

Letter 1 

Background 6

Dual-Eligible Beneficiaries in D-SNPs Had Similar Health Status to 

Other Dual-Eligible Beneficiaries 12

D-SNPs Typically Offer Fewer Supplemental Benefits Than Other 

MA Plans, and Information on Planned Services Is Not 

Comparable 18

Although Some D-SNP Contracts with State Medicaid Agencies 

Expressly Provide for Benefit Integration or Care Coordination, 

Most Do Not 25

Conclusions 31

Recommendations for Executive Action 32

Agency and Other External Comments and Our Evaluation 33

Appendix I Comments from the Department of Health & Human Services 36

Appendix II GAO Contact and Staff Acknowledgments 41

Tables

Table 1: Legislation Establishing and Modifying Authority for 

Special Needs Plans (SNP) to Operate under the Medicare 

Advantage (MA) Program 7

Table 2: Percentage of Rebate Allocated to Supplemental Benefits, 

Reducing Cost Sharing, and Premium Reduction, 2012 22

Figures

Figure 1: Enrollment of Dual-Eligible Beneficiaries by Plan Type, 

2011 13

Figure 2: Characteristics of Dual-Eligible Beneficiaries in D-SNPs 

Compared with Dual-Eligible Beneficiaries in Other MA 

Plans and FFS 15

Figure 3: Average Risk Scores of Dual-Eligible Beneficiaries by 

Characteristic and Plan Type, 2010 17

Figure 4: Supplemental Benefits Offered by More Than Half of 

Dual-Eligible Special Needs Plans (D-SNP) Compared 

with Other Medicare Advantage (MA) Plans, 2012 20

Contents
Page ii GAO-12-864 Dual-Eligible Special Needs Plans

Figure 5: Dual-Eligible Special Needs Plans (D-SNP) Integration of 

Medicaid Benefits, 2012 27

Abbreviations

CMS Centers for Medicare & Medicaid Services

C-SNP chronic condition special needs plan 

D-SNP dual-eligible special needs plan 

ESRD end-stage renal disease

FFS fee-for-service 

FIDESNP fully integrated dual-eligible special needs plan

HCPP health care prepayment plan 

HEDIS Healthcare Effectiveness Data and Information Set

HHS Department of Health and Human Services

I-SNP institutional special needs plan 

MA Medicare Advantage

MedPAC Medicare Payment Advisory Commission

MIPPA Medicare Improvements for Patients and Providers Act 

 of 2008

MMA Medicare Prescription Drug, Improvement, and

 Modernization Act of 2003 

NCQA National Committee for Quality Assurance

PACE Program of All-Inclusive Care for the Elderly

PPACA Patient Protection and Affordable Care Act

SNP special needs plan

SSA Social Security Act

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Page 1 GAO-12-864 Dual-Eligible Special Needs Plans

United States Government Accountability Office

Washington, DC 20548

September 13, 2012

The Honorable Sander Levin

Ranking Member

Committee on Ways and Means

House of Representatives

The Honorable Henry A. Waxman

Ranking Member

Committee on Energy and Commerce

House of Representatives

The Honorable Pete Stark

Ranking Member

Subcommittee on Health

Committee on Ways and Means

House of Representatives

About 9 million of Medicare’s over 48 million beneficiaries are also eligible 

for Medicaid, a joint federal-state program that finances health insurance 

coverage for certain categories of low-income adults and children.1 In 

2007, these individuals, referred to as dual-eligible beneficiaries, made up 

18 percent of all Medicare beneficiaries but accounted for 31 percent of 

Medicare spending.2 In the same year, dual-eligible beneficiaries were 

about 15 percent of Medicaid enrollees but accounted for nearly 

40 percent of Medicaid spending.3

 

1

Medicare is the federally financed health insurance program for persons 65 years of age 

or over, certain individuals with disabilities, and individuals with end-stage renal disease 

(ESRD). Medicare fee-for-service (FFS), also known as original Medicare, includes 

Medicare Parts A and B. Medicare Part A covers hospital and other inpatient stays. 

Medicare Part B is optional insurance, which covers hospital outpatient, physician, and 

other services and requires a monthly premium. Medicare Part B beneficiaries have the 

option of enrolling in a Medicare Advantage (MA) plan—a private plan alternative to 

Medicare FFS that operates under Medicare Part C—to receive their Parts A and B 

benefits. In addition, all Medicare beneficiaries may opt to receive prescription drug 

coverage under Medicare Part D either through a separate Part D plan or through an MA 

plan. 

Disproportionate spending for these 

2

Medicare Payment Advisory Commission (MedPAC), A Data Book: Health Care 

Spending and the Medicare Program (Washington, D.C.: June 2011). 

3

Kaiser Family Foundation, Dual Eligibles: Medicaid Enrollment and Spending for 

Medicare Beneficiaries in 2007 (Washington, D.C.: December 2010).

 
 

Page 2 GAO-12-864 Dual-Eligible Special Needs Plans

individuals is largely because dual-eligible beneficiaries are more likely 

than other Medicare beneficiaries to be disabled; report poor health status 

and limitations in their activities of daily living, such as bathing and 

toileting; and have cognitive impairments, mental disorders, and certain 

chronic conditions such as diabetes and pulmonary disease. In addition, 

dual-eligible beneficiaries’ health care services must be coordinated 

across Medicare and Medicaid, and each program has its own set of 

covered services, provider networks, regulations, and payment policies.

The Medicare Prescription Drug, Improvement, and Modernization Act of 

2003 (MMA) authorized the creation of a type of Medicare Advantage 

(MA) plan referred to as a special needs plan (SNP), to address the 

unique needs of certain Medicare populations.4 About 1.2 million of the 

dual-eligible population is enrolled in dual-eligible SNPs (D-SNP),5 which 

are SNPs exclusively for dual-eligible beneficiaries. Dual-eligible 

beneficiaries may also choose to enroll in other types of SNPs for which 

they are eligible, including institutional SNPs (I-SNP) for individuals 

residing in nursing facilities or institutions, chronic condition SNPs 

(C-SNP) for individuals with severe or disabling chronic conditions, or 

other MA plans, or remain in Medicare fee-for-service (FFS).6 In addition 

to meeting all the requirements of other MA plans, all SNPs, including 

D-SNPs, are required by the Centers for Medicare & Medicaid Services 

(CMS)—the agency in the Department of Health and Human Services 

(HHS) that administers Medicare and oversees Medicaid—to provide 

specialized services targeted to the needs of their beneficiaries, including 

a health risk assessment and an interdisciplinary care team for each 

beneficiary enrolled.7

 

4

Pub. L. No. 108-173, § 231, 117 Stat. 2066, 2207 (codified at 42 U.S.C. §§ 1395w21(a)(2)(A) and 1395w-28(b)(6)). 

5

This number includes 233,902 dual-eligible beneficiaries in Puerto Rico.

6

Throughout this report, “other MA plans” refers to MA plans that are not SNPs. 

Enrollment in MA plans, including D-SNPs, is voluntary, but dual-eligible beneficiaries are 

allowed to change plans each month, whereas most other Medicare beneficiaries may 

change plans only during the annual open enrollment period. 

7

Throughout this report, “specialized services” refers to services CMS requires SNPs to 

provide, such as health risk assessments, as well as supplemental benefits, which are 

benefits not provided under Medicare FFS that may be offered by MA plans.
 

Page 3 GAO-12-864 Dual-Eligible Special Needs Plans

You asked us to examine the extent to which D-SNPs provide unique 

services for dual-eligible beneficiaries and how D-SNPs and states work 

together to serve these beneficiaries. In this report, we (1) describe the 

characteristics and health status of dual-eligible beneficiaries in D-SNPs 

and how they compare to those of dual-eligible beneficiaries in other MA 

plans and Medicare FFS, (2) determine the extent to which D-SNPs’ 

specialized services differ from those offered by other MA plans, and 

(3) describe how D-SNPs work with state Medicaid agencies to enhance

benefit integration and care coordination for dual-eligible beneficiaries.

To describe the demographic characteristics of dual-eligible beneficiaries 

in D-SNPs and how they compare to those of dual-eligible beneficiaries in 

other MA plans and Medicare FFS, we analyzed July 2011 enrollment 

data from CMS. To compare the mental health characteristics and health 

status of dual-eligible beneficiaries in D-SNPs with dual-eligible 

beneficiaries enrolled in other MA plans and FFS, we analyzed CMS data 

on 2010 beneficiary risk scores, which measure expected Medicare costs 

for each beneficiary on the basis of demographic and diagnosis data.8

Specifically, we calculated the average risk scores for dual-eligible 

beneficiaries in D-SNPs, other MA plans, and FFS in 2010.9

To determine the extent to which D-SNPs’ specialized services differed 

from services offered by other MA plans, we used CMS’s 2012 plan 

benefit data to compare D-SNPs’ supplemental benefits, such as dental 

and vision coverage, that are outside the original Medicare FFS benefit 

In all of these 

analyses, we used enrollment and plan benefit data to identify the type of 

plan (D-SNP, other MA plan, or FFS) in which each beneficiary was 

enrolled.

 

8

Risk scores are a relative measure of projected Medicare costs for each beneficiary—

with lower scores indicating lower expected costs—and are expected to be the same for 

beneficiaries with the same health conditions and demographic characteristics. In this 

report we use lower risk scores as a proxy for better health status. We report average risk 

scores in 2010 because 2010 was the year for which the most recent risk score data were 

available. 

9

We excluded enrollees with ESRD, those living outside of the United States, and new 

enrollees from our calculations of average risk scores for each plan type. We adjusted all 

average risk scores to account for CMS’s normalization factor of 1.041 in 2010; 

additionally, we adjusted the risk scores for D SNPs and other MA plans downward by 

3.41 percent to account for CMS’s estimate of the diagnostic coding differences between 

MA and FFS. (This is likely a conservative estimate. See GAO, Medicare Advantage: 

CMS Should Improve the Accuracy of Risk Score Adjustments for Diagnostic Coding 

Practices, GAO-12-51 [Washington, D.C.: Jan. 12, 2012].) 
 

Page 4 GAO-12-864 Dual-Eligible Special Needs Plans

package, with the supplemental benefits offered by other MA plans.

10 We 

also used CMS’s 2012 bid pricing tool data, which contain information MA 

plans submitted to CMS on their projected revenue requirements for 

providing Medicare-covered services to enrolled beneficiaries, to 

understand how D-SNPs and other MA plans fund the supplemental 

benefits they offer. Additionally, we interviewed officials from 15 D-SNPs 

that had enrolled at least 100 dual-eligible beneficiaries in both 2010 and 

2011 to discuss what services are available to dual-eligible beneficiaries 

in D-SNPs and, when applicable, whether differences exist between the 

care coordination services they offer in their D-SNPs and their MA 

organization’s other MA plans. We judgmentally selected these D-SNPs 

to cover a range of geographic regions and plan sizes. We also reviewed 

the 2012 models of care submitted to CMS by these 15 D-SNPs—

representing 14 percent of the 107 models of care we received from 

CMS.11 The model of care provides a narrative description of how the 

D-SNP will address certain clinical and nonclinical elements, such as a 

health risk assessment and an adequate provider network. We focused in 

particular on how D-SNPs identified the most-vulnerable 

subpopulations—beneficiaries that need the most-intensive care—and 

how they planned to meet these care needs.12

To describe how D-SNPs worked with state Medicaid agencies, we 

analyzed all of the 124 contracts between D-SNPs and state Medicaid 

agencies that were submitted to CMS for 2012 to determine whether the 

contracts contained provisions expressly addressing benefit integration 

and care coordination for dual-eligible beneficiaries between the D-SNP 

 

10We focused our analysis on the following types of MA plans: health maintenance 

organizations, local preferred provider organizations, regional preferred provider 

organizations, private fee-for-service plans, and provider-sponsored organizations. We 

excluded one type of MA plan—medical savings accounts—because they are not allowed 

to offer mandatory supplemental benefits. Mandatory benefits must be provided for every 

person enrolled in the plan, whereas optional supplemental benefits are available to those 

enrollees who elect and pay for them. In addition, we excluded plans that only provided 

Medicare Part B benefits and plans that restricted enrollment to members of an employer 

group or religious fraternal benefit society.

11An individual model of care may cover multiple D-SNPs offered by a single MA 

organization.

12According to CMS, the most-vulnerable beneficiaries include, but are not limited to, 

those beneficiaries who are frail, disabled, or near the end of life.
 

Page 5 GAO-12-864 Dual-Eligible Special Needs Plans

and the state Medicaid agency.13 We supplemented this analysis with 

interviews of officials from five state Medicaid agencies judgmentally 

selected to cover a range of geographic areas,14

We assessed the reliability of the data we received from CMS by 

performing appropriate electronic data checks and by interviewing agency 

officials who were knowledgeable about the data. This allowed us to 

determine that the data were suitable for our purposes. We did not 

independently verify the statements of interview respondents or the 

statements in documents, such as models of care that were submitted by 

D-SNPs.

and with officials from 

our sample of D-SNPs.

Our analysis has several limitations. We limited our analysis to the 

50 states and the District of Columbia.15 Although most of the analysis is 

based on 2012, the demographic data are from 2011, and the health 

status data are from 2010, the most recent years available. The contracts 

between D-SNPs and state Medicaid agencies we reviewed are limited to 

contracts submitted to CMS for 2012. Because only 40 percent of all 

D-SNPs were required to submit contracts in that year, these contracts 

may not represent the full range of possible D-SNP arrangements with 

state Medicaid agencies. Additionally, because we judgmentally selected 

the state Medicaid agencies and D-SNPs for our interviews, we cannot 

generalize the findings from these interviews to all states and all D-SNPs.

We did not assess the quality of care provided by D-SNPs.

 

13For 2012, only new SNPs and those expanding their plan service areas were required to 

contract with the state Medicaid program. See 42 C.F.R. § 422.107(d) (2011). Our review 

may not account for relevant terms that may have been incorporated by reference into the 

contracts. CMS reviewed and approved these contracts for compliance with federal law 

and CMS regulations.

14The states in our sample were Alabama, California, Massachusetts, Minnesota, and 

Oregon.

15We excluded D-SNPs and dual-eligible beneficiaries in Puerto Rico from our analyses 

because Medicare enrollment, cost, and use in Puerto Rico are different than in the states, 

including a far greater proportion of Medicare beneficiaries enrolling in MA plans. In 

addition, the CMS enrollment data we received did not include dual-eligible beneficiaries 

in Puerto Rico (they were coded as “low-income territory beneficiaries” and were not 

included in the data extracts).
 

Page 6 GAO-12-864 Dual-Eligible Special Needs Plans

We conducted this performance audit from September 2011 through 

September 2012 in accordance with generally accepted government 

auditing standards. Those standards require that we plan and perform our 

work to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our research objectives. 

We believe that the evidence obtained provides a reasonable basis for 

our findings and conclusions based on our audit objectives.

SNPs, including D-SNPs, have been reauthorized several times since 

their establishment was first authorized in 2003. For example, the 

Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) 

and the Patient Protection and Affordable Care Act (PPACA) both 

contained provisions reauthorizing and modifying SNPs. See table 1 for a 

summary of legislation establishing and modifying SNPs.

Background 

Special Needs Plans
 

Page 7 GAO-12-864 Dual-Eligible Special Needs Plans

Table 1: Legislation Establishing and Modifying Authority for Special Needs Plans (SNP) to Operate under the Medicare 

Advantage (MA) Program

Legislation Specific provisions

The Medicare Prescription Drug, 

Improvement, and Modernization Act of 

2003

Authorized the establishment of MA coordinated care plans that exclusively serve 

individuals in three classes of special needs: (1) beneficiaries entitled to Medicare and 

Medicaid (dual-eligible beneficiaries), (2) beneficiaries with severe or disabling chronic 

conditions, or (3) institutionalized beneficiaries.

a

Authorized HHS to designate other MA plans that disproportionately serve special 

needs individuals as new SNPs.

Authorized SNPs to restrict enrollment to individuals in the classes of special needs 

through December 31, 2008.

The Medicare, Medicaid and SCHIP 

Extension Act of 2007

Beginning on January 1, 2008, and extending through December 31, 2009, established 

a moratorium on the authority of HHS to designate other MA plans disproportionately 

serving special needs individuals as SNPs and to permit enrollment of individuals in a 

new or expanding SNP (which was not subsequently extended). 

b

Extended authority for SNPs to restrict enrollment to individuals in the classes of 

special need through December 31, 2009.

The Medicare Improvements for Patients 

and Providers Act of 2008c Effective January 1, 2010, requires all D-SNPs to have contracts with state Medicaid agencies to provide—or arrange to provide—benefits to eligible individuals under 

Medicaid. Made an exception through December 31, 2010, for existing plans not 

expanding their service areas.

 (MIPPA) 

Extended the moratorium on the authority of HHS to designate other MA plans that 

disproportionately serve special needs individuals as SNPs through December 31, 

2010, but lifted the moratorium on new SNPs and existing SNPs at the end of 2009.

Extended authority for SNPs to restrict enrollment to individuals in the classes of 

special need through December 31, 2010.

The Patient Protection and Affordable Care 

Act (2010)d Effective January 1, 2012, and subsequent years, required all SNPs to be approved by 

the National Committee for Quality Assurance (NCQA) based on standards established 

by HHS.

 (PPACA) 

Extends the exception for existing D-SNPs that do not expand their current service 

areas to continue operating without contracts with state Medicaid agencies through 

December 31, 2012.

Authorized special payment rules for fully integrated SNPs for dual-eligible 

beneficiaries.

Extended authority for SNPs to restrict enrollment to individuals in the classes of 

special need through December 31, 2013.

Source: GAO analysis.

a

Pub. L. No. 108-173, § 231, 117 Stat. 2066, 2207.

b

Pub. L. No. 110-173, § 108, 121 Stat. 2492, 2496. The acronym SCHIP stands for the State 

Children’s Health Insurance Program.

c

Pub. L. No. 110-275, § 164, 122 Stat. 2494, 2571.

d

Pub. L. No. 111-148, § 3205, 124 Stat. 119, 457.
 

Page 8 GAO-12-864 Dual-Eligible Special Needs Plans

In 2012, 322 D-SNPs are operating in 38 states and the District of 

Columbia.

16 CMS pays D-SNPs the same way that it pays other MA 

plans; that is, a monthly amount determined by the plan bid—the plan’s 

estimated cost of providing Medicare Part A and Part B benefits—in 

relation to a benchmark, which is the maximum amount the Medicare 

program will pay MA plans in a given locality. CMS then adjusts the 

monthly payments to MA plans on the basis of beneficiaries’ risk scores.17

If an MA plan’s bid exceeds the benchmark, the plan must charge each of 

its beneficiaries an additional premium to make up the difference. If a 

plan’s bid is less than the benchmark, a proportion of the difference is 

returned to the plan as additional Medicare payments called rebates, 

which must be used to reduce premiums, reduce cost sharing, or provide 

mandatory supplemental benefits, such as vision and dental care.18

Beginning in 2012, CMS has begun to phase in PPACA-mandated 

modifications in the rebate amount and introduced varied rebate amounts 

based on CMS’s assessments of plan quality.19

 

16Of these 322 D-SNPs, 17 have been designated by CMS as fully integrated dual-eligible 

special needs plans (FIDESNP). A FIDESNP is a CMS-approved D-SNP that (1) enrolls 

special-needs individuals entitled to medical assistance under a Medicaid state plan; 

(2) provides dual-eligible beneficiaries access to Medicare and Medicaid benefits under a 

single managed care organization; (3) has a capitated contract with a state Medicaid 

agency that includes coverage of specified primary, acute, and long-term care benefits 

and services, consistent with state policy; (4) coordinates the delivery of covered Medicare 

and Medicaid health and long-term care services using aligned care management and 

specialty care network methods for high-risk beneficiaries; and (5) employs policies and 

procedures approved by CMS and the state to coordinate or integrate member materials, 

enrollment, communications, grievance and appeals, and quality improvement. 42 C.F.R. 

§ 422.2 (2011). In addition, there are 8 D-SNPs operating in Puerto Rico in 2012.

For 2012, rebates ranged 

from 66.67 percent of the difference between a plan’s bid and benchmark 

17In 2012, FIDESNPs will be eligible for increased payments when certain requirements, 

such as having a similar average level of frailty as the Program of All-Inclusive Care for 

the Elderly (PACE) program, are met.

18Under each category of supplemental benefits, plans can provide coverage for a variety 

of individual services, such as eye exams, eyeglasses, or contact lenses under a vision 

benefit; however, plans do not have to provide coverage for all individual services under a

supplemental benefit category.

19CMS assesses plan quality using a five-star rating scale based on measures of clinical 

quality, patients’ reported care experience, and contract performance. Once fully phased 

in after 2014, the revised rebates will range from 50 percent of the difference between a 

plan’s bid and benchmark for plans with the lowest quality ratings to 70 percent of the 

difference for plans with the highest quality ratings. See Pub. L. No. 111-148, Title III, 

Subtitle C, 124 Stat. 442, as amended by the Health Care and Education Reconciliation 

Act of 2010, Pub. L. No. 111-152, § 1102, 124 Stat. 1029, 1040.
 

Page 9 GAO-12-864 Dual-Eligible Special Needs Plans

for plans with the lowest quality ratings to 73.33 percent of the difference 

for plans with the highest quality ratings.

D-SNPs must meet the same requirements as other MA plans, such as 

submitting an application to CMS. And like other MA plans, D-SNPs that 

meet minimum enrollment requirements are also required to submit data, 

such as the Health Effectiveness Data and Information Set (HEDIS) 

quality measures.20 In addition, they must conduct quality improvement 

activities, which include the reporting of certain structure and process 

measures, such as describing how they manage medication reconciliation 

associated with patient transitions between care settings.21

CMS requires D-SNPs to develop a model of care that describes their 

approach to caring for their target population.22

 

20MedPAC attempted to analyze the quality of SNPs, but found isolating results for SNPs 

is difficult because of the way organizations that sponsor SNPs report HEDIS quality 

measures. Most HEDIS data are reported across all of an organization’s plans (i.e., both 

SNPs and other MA plans) rather than reported separately for SNPs. SNPs do report 

separately on a subset of 12 of 45 HEDIS measures. When comparing these measures, 

MedPAC found in general that SNP performance was poorer than other MA performance, 

but there was wide variation across plans. See MedPAC, Report to the Congress: 

Medicare Payment Policy (Washington, D.C.: March 2012), 328-329.

The model of care must 

describe how the plan will address 11 clinical and nonclinical elements 

established in CMS guidance: (1) describing the specific target 

population, (2) tracking measurable goals, (3) describing the staff 

structure and care management goals, (4) providing an interdisciplinary 

care team, (5) establishing a provider network that has specialized 

expertise and describing the use of clinical practice guidance and 

protocols, (6) training plan employees and the provider network on the 

model of care, (7) performing health risk assessment, (8) creating 

individualized care plans, (9) establishing a communications network, 

(10) providing care management for the most vulnerable subpopulations, 

and (11) measuring plan performance and health outcomes. These 

models of care are reviewed and approved by NCQA—a private health 

care quality organization—on the basis of scoring criteria developed with 

CMS that emphasized the inclusion of in-depth descriptions or case 

studies. In their MA applications, D-SNPs must also “attest” that they 

21See 42 C.F.R. § 422.152(g)(2)(iii) (2011).

2242 C.F.R. § 422.101(f) (2011).
 

Page 10 GAO-12-864 Dual-Eligible Special Needs Plans

meet a total of 251 subelements related to the 11 elements in their model 

of care.

New and expanding D-SNPs are required to contract with state Medicaid 

agencies in 2012, and beginning in 2013, all D-SNPs will be required to 

have contracts with state Medicaid agencies.23 According to CMS, the 

contracts are an opportunity to improve the integration of Medicare and 

Medicaid benefits, and the agency has implemented this requirement with 

the goal of “increased integration and coordination” for dual-eligible 

beneficiaries.

24

D-SNPs do not cover the same categories of dual-eligible beneficiaries, 

but their chosen category(ies) must correspond to those under the 

Medicaid program in the state in which the D-SNP is being offered. Dualeligible beneficiaries fall into two main categories. One group, termed fullbenefit dual-eligible beneficiaries, may receive the entire range of 

Medicaid benefits, including long-term care. The other group, partialbenefit dual-eligible beneficiaries, does not receive Medicaid-covered 

health care services, but Medicaid covers Medicare premiums or costsharing, or both, for these beneficiaries. Some D-SNPs limit enrollment to 

full-benefit dual-eligible beneficiaries, while others are open to all dualeligible beneficiaries. Additionally, some D-SNPs are open only to 

disabled beneficiaries under age 65, whereas others are open only to 

those aged 65 and over.

 

23Social Security Act (SSA), § 1859(f) (requirement for contract); Pub. L. No.110-275, 

§ 164(c)(2), 122 Stat. 2573 (temporary exemption for certain SNPs) as amended by Pub. 

L. No. 111-148, § 3205(d), 124 Stat. 458 (extending temporary exemption through 2012). 

CMS regulations require that contracts between D-SNPs and states include 

documentation of (1) the MA organization’s responsibility, including financial obligations, 

to provide or arrange for Medicaid benefits; (2) the category(ies) of eligibility for dualeligible beneficiaries to be enrolled; (3) the Medicaid benefits covered; (4) the cost-sharing 

protections covered; (5) the identification and sharing of information on Medicaid provider 

participation; (6) the verification of enrollees’ eligibility for both Medicare and Medicaid; 

(7) the service area covered; and (8) the contract period. 42 C.F.R. § 422.107(c) (2011).

Although such contracts will be required for D-SNPs to operate within a state, there is no 

requirement that a state enter into such a contract.

24CMS, Common Contracting Issues and Discussion (Baltimore, Md.: revised September 

2011).
 

Page 11 GAO-12-864 Dual-Eligible Special Needs Plans

Recently, the federal government, states, researchers, and advocates 

have focused increased attention on care coordination for dual-eligible 

beneficiaries. PPACA required HHS to establish the Federal Coordinated 

Health Care Office (generally known as the Medicare-Medicaid 

Coordination Office) within CMS to more-effectively integrate Medicare 

and Medicaid benefits and to improve federal-state coordination for dualeligible beneficiaries to ensure that they receive full access to the items 

and services to which they are entitled.25

The Medicare-Medicaid Coordination Office, working with the Center for 

Medicare & Medicaid Innovation (called the Innovation Center), is 

beginning a financial alignment initiative that is expected to enroll up to 

2 million beneficiaries in 26 states and is intended to align Medicare and 

Medicaid services and funding so as to reduce costs while improving 

beneficiaries’ care.

Experts believe that, in addition 

to benefiting dual-eligible beneficiaries, more-effective benefit integration 

and care coordination can generate significant savings by, for example, 

lowering emergency room use.

26

 

25Pub. L. No. 111-148, § 2602, 124 Stat. 315.

Through these demonstrations, the federal and state 

governments expect to realize savings from aligning the payments and 

integrating care. Under existing coordination efforts, integrating benefits 

requires an investment of resources from states to work with D-SNPs, or 

other stakeholders, but according to experts most of the financial savings 

accrue to Medicare, because most savings result from services that are 

largely paid for by Medicare, such as reductions in the number or length 

of hospital stays. Under the financial alignment initiative, savings will be 

shared by Medicare and Medicaid without reference to whether the 

savings are achieved in Medicare or Medicaid services, although the 

allocation of these savings between Medicare and Medicaid has not yet 

been finalized. Two models will be tested: a managed FFS model, under 

which payments are adjusted retrospectively, and a capitated model 

under which one payment is made to an MA plan under a three-way

contract among Medicare, the state Medicaid agency, and the plan.

26In 2011, the Medicare-Medicaid Coordination Office, in partnership with the Innovation 

Center, entered into contracts with 15 states for up to $1 million each to design state 

demonstrations. Furthermore, in July 2011 CMS issued a letter calling for additional state 

Medicaid agencies to submit letters of intent to participate in the demonstrations to better 

align Medicare and Medicaid funding.

Other Initiatives for Care 

Coordination for DualEligible Beneficiaries
 

Page 12 GAO-12-864 Dual-Eligible Special Needs Plans

The initiative is being conducted under the demonstration authority of the 

Innovation Center, under which the Secretary of HHS may conduct 

evaluations that analyze both quality of care and changes in spending.27

For purposes of testing models under this authority, budget neutrality—

which would require that no more be spent under the demonstration than 

is currently being spent on care for dual-eligible beneficiaries—does not 

apply. The Secretary can expand the demonstrations nationwide if the

demonstrations are determined to reduce spending without reducing the 

quality of care or improve the quality of care without increasing 

spending.

28

The state demonstrations under the financial alignment initiative do not 

necessarily include D-SNPs, and in some cases may replace D-SNPs. As 

of June 2012, all 26 states had submitted their proposals for the 

demonstrations. Decisions about implementation of these designs had 

not been announced as of July 2012 yet implementation of these models 

is expected to begin by January 2013 and continue into 2014.

The demographic and mental health characteristics of dual-eligible 

beneficiaries enrolled in D-SNPs in 2011 differed from those of dualeligible beneficiaries in other MA plans and, to a lesser extent, from those 

of dual-eligible beneficiaries in FFS.29 Despite these differences, dualeligible beneficiaries in D-SNPs and dual-eligible beneficiaries in FFS and 

other MA plans had very similar health status in 2010, the year for which 

the most recent data were available, as measured by Medicare risk 

scores.

 

27SSA, § 1115A.

28The demonstration may be expanded through rulemaking if (1) the Secretary determines 

that the expansion would reduce spending without reducing the quality of care or improve 

the quality of care without increasing spending; (2) the CMS Chief Actuary certifies that 

the expansion would reduce or not increase net program spending; and (3) the Secretary 

determines that the expansion would not deny or limit the coverage or the provision of 

benefits for applicable individuals. SSA, § 1115A(c).

29Data on mental health characteristics are based on the 2010 risk score data.

Dual-Eligible 

Beneficiaries in 

D-SNPs Had Similar 

Health Status to Other 

Dual-Eligible 

Beneficiaries 
 

Page 13 GAO-12-864 Dual-Eligible Special Needs Plans

Dual-eligible beneficiaries in D-SNPs (9 percent of all dual-eligible 

beneficiaries in 2011, as shown in fig. 1) were most similar to dual-eligible 

beneficiaries in FFS, but differed substantially from dual-eligible 

beneficiaries in other MA plans on certain demographic and mental health 

measures.30

Figure 1: Enrollment of Dual-Eligible Beneficiaries by Plan Type, 2011

Notes: Percentages are based on 9,188,828 dual-eligible beneficiaries in Medicare and Medicaid as 

of July 2011. Data sources include CMS’s 2011 enrollment data, 2011 plan benefit package data, and 

2010 risk score data (used only to determine residence). Data exclude dual-eligible beneficiaries in 

Puerto Rico and those living outside of the 50 states and the District of Columbia in 2010.

a

Other MA plans include non-SNP health maintenance organizations (including point of service 

options), local and regional preferred provider organizations, provider-sponsored organizations, 

private fee-for-service plans, and medical savings account plans.

b

 

30Demographic data refer to dual-eligible beneficiaries in July 2011. Mental health data 

refer to dual-eligible beneficiaries in July 2010 and are based on 2009 diagnosis data. 

Both sources exclude beneficiaries in Puerto Rico and those living outside of the 50 states 

and the District of Columbia in 2010.

Program of All-Inclusive Care for the Elderly (PACE), which provides a range of integrated 

preventative, acute care, and long-term care services for the frail elderly.

Dual-Eligible Beneficiaries 

in D-SNPs Had 

Characteristics That Were 

Generally Similar to Their 

FFS Counterparts but 

Differed in Key Respects 

from Such Beneficiaries in 

Other MA Plans
 

Page 14 GAO-12-864 Dual-Eligible Special Needs Plans

c

Cost plans provide original Medicare services, but enrollees can receive covered services outside of 

the health maintenance organization or competitive medical plan network. Health care prepayment 

plans (HCPP) are union- or employer-sponsored plans that provide or arrange for some or all of Part 

B Medicare benefits on a prepayment basis, while payments for Part A services are made on a FFS 

basis.

d

Institutional special needs plan (I-SNP).

e

Chronic condition special needs plan (C-SNP).

A larger proportion of dual-eligible beneficiaries in D-SNPs, as well as 

dual-eligible beneficiaries in FFS, were under age 65 and disabled in 

2011 compared with those in other MA plans (see fig. 2). Additionally, 

similar proportions of dual-eligible beneficiaries in D-SNPs and dualeligible beneficiaries in FFS (15 and 16 percent, respectively) were 

diagnosed with a chronic or disabling mental health condition such as 

major depressive disorder or schizophrenia, compared with just 

10 percent of dual-eligible beneficiaries in other MA plans. Among the 

characteristics in our analysis, the largest difference between D-SNPs 

and other MA plans was the proportion of full-benefit beneficiaries in each 

plan type: 80 percent of dual-eligible beneficiaries in D-SNPs and 

75 percent of dual-eligible beneficiaries in FFS were eligible for full 

Medicaid benefits, compared with just 34 percent of dual-eligible 

beneficiaries in other MA plans.
 

Page 15 GAO-12-864 Dual-Eligible Special Needs Plans

Figure 2: Characteristics of Dual-Eligible Beneficiaries in D-SNPs Compared with Dual-Eligible Beneficiaries in Other MA 

Plans and FFS

Notes: Sources include CMS’s 2011 enrollment data, 2011 plan benefit package data, and 2010 risk 

score data. Percentages for demographic data are based on about 851,000 dual-eligible beneficiaries 

in D-SNPs, 882,000 in other MA, and 7.3 million in FFS as of July 2011. Percentages for chronic or 

disabling mental health conditions are based on about 755,000 dual-eligible beneficiaries in D-SNPs, 

757,000 in other MA, and 7.1 million in FFS for whom risk score data were available as of July 2010, 

the most recent year available, and are based on 2009 diagnosis data. Actual totals vary for each 

characteristic due to missing data. Data exclude beneficiaries in Puerto Rico and those living outside 

of the 50 states and the District of Columbia in 2010.

a

Under 65 and disabled does not include beneficiaries with ESRD.

b

A chronic and disabling mental health condition is defined as a diagnosis of schizophrenia; 

schizoaffective disorder; or major depressive, bipolar, or paranoid disorders.

c

Refers to beneficiaries who lived in an institution during July 2011.

d

Racial or ethnic minorities include Black, Hispanic, Asian, and North American Native beneficiaries, 

and beneficiaries who reported “Other” race; however, CMS’s enrollment data have limitations in 

accurately identifying beneficiary race and ethnicity, resulting in an underreporting of Hispanics, 

Asian/Pacific Islanders, and American Indian/Alaskan Natives.
 

Page 16 GAO-12-864 Dual-Eligible Special Needs Plans

While dual-eligible beneficiaries in D-SNPs were generally similar to 

those in FFS, there were several demographic measures on which dualeligible beneficiaries in D-SNPs differed from both those in FFS and other 

MA plans. A smaller proportion of dual-eligible beneficiaries in D-SNPs 

lived in institutions (e.g., nursing facilities, intermediate care facilities, or 

inpatient psychiatric hospitals) in July 2011 compared with dual-eligible 

beneficiaries in FFS, and, to a lesser extent, other MA plans. D-SNPs 

also enrolled a smaller proportion of dual-eligible beneficiaries who were 

85 or older compared with the other plan types, as well as a larger 

proportion of beneficiaries who were racial or ethnic minorities.31

Dual-eligible beneficiaries in D-SNPs had very similar health status as 

measured by their 2010 risk scores, the year for which the most recent 

data were available, when compared with dual-eligible beneficiaries in 

FFS and other MA plans.32 As shown in figure 3, the average risk score—

which predicts Medicare costs—of dual-eligible beneficiaries in D-SNPs 

(1.29) was similar to the average scores for dual-eligible beneficiaries in 

FFS (1.35) and other MA plans (1.34).33

 

31Racial or ethnic minorities include Black, Hispanic, Asian, and North American Native 

beneficiaries, and beneficiaries who reported “Other” race. CMS’s enrollment data have 

limitations in accurately identifying beneficiary race and ethnicity, resulting in an 

underreporting of Hispanics, Asian/Pacific Islanders, and American Indian/Alaskan 

Natives.

Just under 20 percent of dualeligible beneficiaries in D-SNPs and dual-eligible beneficiaries in FFS and 

other MA plans were expected to cost Medicare at least twice as much as 

the average Medicare FFS beneficiary, and less than 10 percent in each 

plan type were expected to cost at least three times the average.

32We report data on health status based on dual-eligible beneficiaries enrolled in Medicare 

and Medicaid as of July 2010. These data are not linked to beneficiaries’ demographic 

characteristics in 2011.

33Average risk scores for D-SNP enrollees and dual-eligible beneficiaries in other MA 

plans and FFS were even-more similar when comparing only the risk scores for 

beneficiaries who lived in the community in July 2010 (D-SNP=1.27, other MA=1.29, 

FFS=1.28). This is true in part because a larger proportion of dual-eligible beneficiaries 

who were considered to be long-term institutional (i.e., those who resided in an institution 

for at least 3 months) enrolled in FFS than in D-SNPs in 2010. CMS calculates the risk 

scores of these institutional beneficiaries using a different model than it does for 

community beneficiaries, and the resulting risk scores for the two groups are different. 

Institutionalized dual-eligible beneficiaries in D-SNPs, other MA plans, and FFS had 

similar risk scores in 2010 (D-SNP=1.95, other MA=1.98, FFS=2.00). 

Health Status of DualEligible Beneficiaries in 

D-SNPs Was Similar to 

That of Dual-Eligible 

Beneficiaries in FFS and 

Other MA Plans
 

Page 17 GAO-12-864 Dual-Eligible Special Needs Plans

Figure 3: Average Risk Scores of Dual-Eligible Beneficiaries by Characteristic and Plan Type, 2010

Notes: Sources include CMS’s 2010 enrollment data, plan benefit package data, and risk score data. 

Data exclude new enrollees, beneficiaries with ESRD, and those living in Puerto Rico and outside of

the 50 states and the District of Columbia. We adjusted all average risk scores to account for CMS’s 

normalization factor of 1.041 in 2010; additionally, we adjusted average risk scores of D-SNPs and 

other MA plans downward by 3.41 percent to account for diagnostic coding differences between MA 

plans and FFS.

a

A chronic or disabling mental health condition is defined as a diagnosis of schizophrenia; 

schizoaffective disorder; or major depressive, bipolar, or paranoid disorders.

b

Racial or ethnic minorities include Black, Hispanic, Asian, and North American Native beneficiaries, 

and beneficiaries who reported “Other” race; however, CMS’s enrollment data have limitations in 

accurately identifying beneficiary race and ethnicity, resulting in an underreporting of Hispanics, 

Asian/Pacific Islanders, and American Indian/Alaskan Natives.

c

Refers to beneficiaries who were considered to be “long-term institutional” (i.e., living in an institution 

for at least 3 months) as of July 2010.

The average risk scores of dual-eligible beneficiaries in each plan type 

also generally were similar across demographic groups. However, there 

were some differences between plan types. Dual-eligible beneficiaries in 
 

Page 18 GAO-12-864 Dual-Eligible Special Needs Plans

D-SNPs who were eligible for full Medicaid benefits had lower average 

risk scores than those of similar beneficiaries in other MA plans and 

FFS.34 Dual-eligible beneficiaries in D-SNPs with a chronic or disabling 

mental health condition also had lower average risk scores than those in 

other MA plans. Additionally, partial-benefit dual-eligible beneficiaries in 

D-SNPs had higher average risk scores than their counterparts in other 

MA plans and FFS.

Dual-eligible beneficiaries in D-SNPs do not necessarily get more benefits 

than those in other MA plans, although D-SNP representatives told us 

their care coordination services are more comprehensive than other MA 

plans. D-SNPs and other MA plans varied in how frequently they offered 

supplemental benefits—benefits not covered by FFS—and MA plans 

offered more of these supplemental benefits than D-SNPs. While the 

models of care we reviewed described in varying detail how the D-SNPs 

plan to provide other services, such as health risk assessments, to 

beneficiaries, most D-SNPs did not provide—and are not required to 

provide—estimates of the number of dual-eligible beneficiaries that would 

receive the services.

D-SNPs provide fewer supplemental benefits, on average, than other MA 

plans. Of the 10 supplemental benefits offered by more than half of 

D-SNPs, 7 were offered more frequently by other MA plans and 3 were 

offered more frequently by D-SNPs.35

 

34However, when taking into consideration the large proportion of FFS beneficiaries who 

lived in institutions compared to D-SNP beneficiaries, full-benefit dual-eligible beneficiaries 

in D-SNPs and FFS had similar average risk scores (1.25 and 1.29, respectively).

(See fig. 4.) These 3 supplemental 

benefits were offered much more frequently by D-SNPs compared to 

other MA plans: they offered dental benefits one-and-a-half times more 

35We examined a total of 20 supplemental benefits offered by D-SNPs and other MA 

plans. In addition to the categories listed in fig. 4, we also examined the following 10 

supplemental benefits categories offered by fewer than half of D-SNPs: (1) podiatry, 

(2) meal benefits, (3) chiropractic, (4) acupuncture, (5) point-of-service or out-of-network 

option, (6) home infusion, (7) inpatient psychiatric hospital/facility, (8) U.S. Visitor/Travel 

program, (9) cardiac/pulmonary rehabilitation, and (10) outpatient drug benefit. Of these 

additional 10 benefits, 5 were offered less frequently by D-SNPs compared to other MA 

plans. We limited our analysis to plans with no premium because 99 percent of D-SNPs 

have no Part C premium, and in our interviews with D-SNPs, representatives emphasized 

the importance of zero-premium plans for the dual-eligible population.

D-SNPs Typically 

Offer Fewer 

Supplemental 

Benefits Than Other 

MA Plans, and 

Information on 

Planned Services Is 

Not Comparable

D-SNPs Offered Fewer of 

Their 10 Most-Common 

Supplemental Benefits 

Than Other MA Plans
 

Page 19 GAO-12-864 Dual-Eligible Special Needs Plans

often, over-the-counter drugs nearly twice as often, and transportation 

benefits almost three times more often. However, a smaller proportion of 

D-SNPs compared to other MA plans offered hearing benefits, as well as 

benefits for certain inpatient settings and outpatient services. For some of 

the services D-SNPs offered less frequently, dual-eligible beneficiaries 

may receive some coverage through Medicaid. In addition, according to 

CMS, some of the benefits offered more frequently by other MA plans 

(e.g. international outpatient emergency) are not necessarily as useful a 

benefit for D-SNPs.36

 

36For 2013, CMS will allow certain D-SNPs that meet integration and performance 

standards to offer additional supplemental benefits beyond those CMS currently allows all 

MA plans to offer, where CMS finds that the offering of such benefits could better integrate 

care for dual-eligible beneficiaries. Such benefits are subject to CMS approval, but may 

include nonskilled nursing services, personal care services, and other long-term care 

services and supports designed to enable beneficiaries to remain in the community. 

D-SNPs must offer these additional supplemental benefits at no additional cost to the 

beneficiary.
 

Page 20 GAO-12-864 Dual-Eligible Special Needs Plans

Figure 4: Supplemental Benefits Offered by More Than Half of Dual-Eligible Special Needs Plans (D-SNP) Compared with 

Other Medicare Advantage (MA) Plans, 2012

Notes: Source data are for the 2012 contract year. The following types of MA plans are included: 

health maintenance organizations, local preferred provider organizations, regional preferred provider 

organizations, private fee-for-service plans, and provider-sponsored organizations. We excluded 

plans that charged a Part C premium.

a

Vision benefits can include coverage for routine eye exams, contact lenses, or eyeglasses (lenses 

and frames).

b

Preventive health care benefits can include screenings and immunizations beyond what Medicare 

fee-for-service (FFS) covers, as well as health education and fitness club membership.

c

Dental benefits can include oral exams, teeth cleanings, fluoride treatments, dental X-rays, or 

emergency dental services.

d

Transportation benefits can include travel from a beneficiary’s home to medical appointments.

e

International outpatient emergency benefits can include additional services beyond what Medicare 

FFS covers.

f

Over-the-counter drug coverage can include nonprescription medicines not covered under Medicare 

Part D.

g

Outpatient blood benefits can include units of blood received as an outpatient or as part of a Part B–

covered service for the first three units not covered by Medicare FFS.

h

Hearing benefits can include coverage for hearing tests, hearing aid fittings, and hearing aid 

evaluations.
 

Page 21 GAO-12-864 Dual-Eligible Special Needs Plans

i

Skilled nursing facility benefits can include waiving the 3-day inpatient hospital stay requirement in 

Medicare FFS.

j

Inpatient hospital acute benefits can include additional days beyond what Medicare FFS covers.

For the three most-common D-SNP supplemental benefits—vision, 

prevention, and dental—we analyzed the individual services covered 

under these benefits and found that D-SNPs’ vision and dental benefits 

were generally more comprehensive than those offered by other MA 

plans. For example, in their vision benefit, a larger proportion of D-SNPs 

compared to other MA plans covered contact lenses and eyeglasses. In 

addition, a larger proportion of D-SNPs compared to other MA plans 

included in their dental benefit coverage of oral surgery, extractions, and 

restorative services. However, D-SNPs were less likely than other MA 

plans to include membership in health clubs as part of their preventive 

health care benefits.

Despite offering these supplemental benefits somewhat less often than 

other MA plans, D-SNPs allocated a larger percentage of their rebates to 

supplemental benefits than other MA plans. (See table 2.) They were able 

to do so largely because they allocated a smaller percentage of rebates 

to reducing cost-sharing. Most dual-eligible beneficiaries will have their 

cost-sharing covered by Medicaid, so D-SNPs have less need than other 

MA plans to cover cost-sharing. We also found that D-SNPs tended to 

receive smaller rebates than other MA plans ($70 per member per month 

on average compared to $108).
 

Page 22 GAO-12-864 Dual-Eligible Special Needs Plans

Table 2: Percentage of Rebate Allocated to Supplemental Benefits, Reducing Cost 

Sharing, and Premium Reduction, 2012

Percent 

D-SNPs Other MA

Supplemental benefits 51 a 14

Reduce A/B cost share 19 b 53

Part B premium buy down 1 c 6 

Part D basic premium buy down 19 d 11

Part D supplemental premium buy down 10 e 15

Source: GAO analysis of CMS data.

Notes: Data are from CMS’s 2012 bid pricing tool. The following types of MA plans are included: 

health maintenance organizations, local preferred provider organizations, regional preferred provider 

organizations, private fee-for-service plans, and provider-sponsored organizations. We excluded 

plans that charged a Part C premium. Numbers may not add up to 100 percent due to rounding.

a

MA plans may use their rebates to offer supplemental benefits, which are benefits beyond the 

Medicare FFS package.

b

MA plans may use their rebates to reduce cost-sharing for Parts A and B.

c

Beneficiaries in MA plans continue to pay the Part B premium; however, MA plans may use their 

rebates to reduce beneficiaries’ Part B premiums.

d

MA plans may use their rebates to reduce the premium for the basic Part D drug benefit.

e

MA plans may use their rebates to reduce supplemental premiums for drug benefits beyond the 

basic Part D package.

Although the 15 models of care we reviewed described the types of 

services D-SNPs intended to provide, D-SNPs generally did not state in 

their models of care how many of their enrolled beneficiaries were 

expected to receive these services. The criteria D-SNPs are evaluated on 

in the approval process emphasize the inclusion of in-depth descriptions 

and case studies rather than details about how many beneficiaries would 

likely receive these services, for example, the number of beneficiaries 

that will use additional services targeted to the most vulnerable. CMS 

does not require D-SNPs to report that information in the models of care, 

although such information could be useful for future evaluations of 

whether D-SNPs met their intended goals,37

 

37CMS officials told us they plan to conduct a review of how 150 SNP models of care have 

been implemented in 2012. CMS also asks plans to collect information on certain 

measures related to the model of care as a part of their quality improvement program; 

however, this information is only required to be made available upon request and is not 

systematically reported to CMS or the public. CMS officials also told us about several SNP 

quality initiatives that are in operation or in planning stages; however, these activities were 

not equivalent to a full evaluation of the SNP program.

as well as for comparisons 

Models of Care Describe 

How D-SNPs Plan to 

Provide Specialized Health 

Care Services, but CMS 

Lacks Standard Measures 

Needed for Evaluation
 

Page 23 GAO-12-864 Dual-Eligible Special Needs Plans

among D-SNPs.38

Knowing the extent of the special services D-SNPs expect to provide 

would assist future evaluations of whether they met their goals, but most 

models of care did not include this information. For example, all 15 

D-SNPs stated in their models of care that they planned to conduct health 

risk assessments for beneficiaries within 90 days of enrollment and an 

annual reassessment, as they are required to do by CMS. However, only 

4 provided information on how many members had actually completed a 

health risk assessment or reassessment in prior years, with cited 

completion rates for 2010 ranging from 52 to 98 percent. In addition, none 

of the D-SNPs we reviewed indicated in their models of care how many 

beneficiaries were expected to receive add-on services such as social 

support services that were intended for the most-vulnerable beneficiaries. 

The models of care we reviewed did include, as required in the model-ofcare scoring criteria, information about how the D-SNP identifies the most 

vulnerable beneficiaries in the plan and the add-on services and benefits 

that would be delivered to these beneficiaries. D-SNPs’ models of care 

described a variety of methods used to identify these beneficiaries: health 

risk assessments (10 D-SNPs); provider referrals (9); and hospital 

admissions or discharges (7). However, the models of care generally did 

not indicate how many or what proportion of beneficiaries were expected 

to be among the most vulnerable, although one D-SNP’s model of care 

stated that complex-care patients constituted over one-third of its 

membership. Furthermore, it was sometimes unclear whether the 

services described as targeted to these beneficiaries were in addition to 

those available to all dual-eligible beneficiaries in the D-SNP. D-SNPs 

also described the services that they plan to offer to the most-vulnerable 

beneficiaries, the most frequent being complex/intensive case 

management (6 D-SNPs). Other services D-SNPs planned to offer the 

most-vulnerable beneficiaries included 24-hour hotlines, social support 

services, and supplemental benefits beyond what was planned to be 

offered to all dual-eligible beneficiaries in the D-SNP.

Three D-SNPs we interviewed told us that a lack of 

specificity in the model-of-care scoring criteria confused some D-SNPs; 

having more specific scoring criteria may also eliminate some uncertainty 

in the approval process.

 

38Improved collection of information allows an agency to meet its goals for accountability 

for effective and efficient use of resources, and is consistent with standards for internal 

control. GAO, Standards for Internal Control in the Federal Government, 

GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
 

Page 24 GAO-12-864 Dual-Eligible Special Needs Plans

CMS guidance also requires D-SNPs to describe how they intend to 

evaluate their performance and measure outcomes in achieving goals 

identified in their models of care, but CMS does not stipulate the use of 

standard outcome or performance measures in the model of care, such 

as measures of patient health status and cognitive functioning. As a 

result, it would be difficult for CMS to use any data it might collect on 

these measures to compare D-SNPs’ effectiveness or evaluate how well 

they have done in meeting their goals. Furthermore, without standard 

measures, it would not be possible for CMS to fully evaluate the relative 

performance of D-SNP models of care. While it is not required, an 

evaluation of D-SNPs could both help to improve the D-SNP program and 

inform other initiatives to better coordinate care for dual-eligible 

beneficiaries. The models of care we reviewed had little uniformity in the 

measures plans selected. Four D-SNPs discussed their approach to 

performance and health outcome measurement largely in general terms, 

such as describing which datasets they would use or the categories of 

outcomes that would be measured. The other 11 D-SNPs provided 

specific measurements, which included measuring items such as 

readmissions, emergency room utilization, and receipt of follow-up calls 

after inpatient stays. Were CMS to move to a standard set of performance 

and outcome measures, it could be less burdensome and no more costly 

than what some D-SNPs currently collect. Using standard measures 

could also streamline the models-of-care review process.

Of the 15 D-SNPs we interviewed, 9 were in organizations that offered 

both D-SNPs and other MA plans, and representatives from 7 of those 

D-SNPs told us that their care coordination services are different from 

those in their organization’s other MA plan offerings. For example, a 

representative from one D-SNP told us that while care coordination and 

case management were available in both types of plans offered by that 

organization, dual-eligible beneficiaries in the D-SNP are continuously 

enrolled in case management, whereas dual-eligible beneficiaries in other 

MA plans who need these services receive them for only a limited time. A 

representative from another D-SNP said that the plan provides care 

coordination services similar to those of other MA plans offered by its 

organization but that dual-eligible beneficiaries in the D-SNP who need 

these services are identified faster than are dual-eligible beneficiaries in 

the other MA plans. A representative of a third D-SNP said it has a 

community resource unit that is not available in other MA plans offered by 

its organization, which works with local agencies such as long-term care 

providers and adult protective services.

D-SNPs Reported MoreComprehensive Care 

Coordination Services and 

Greater Beneficiary

Interaction Than Other MA 

Plans
 

Page 25 GAO-12-864 Dual-Eligible Special Needs Plans

Multiple representatives of the 15 D-SNPs we interviewed described their 

care coordination services as being “high touch”—meaning that the plans, 

particularly the case managers, have frequent interaction with dualeligible beneficiaries in the D-SNP. For example, representatives from 

one D-SNP told us that its plan includes in-person meetings with case 

managers. Representatives from another D-SNP described several 

specific examples of care coordination successes, such as when a case 

manager followed up on a beneficiary’s Medicaid reenrollment application 

to ensure that the beneficiary did not lose eligibility, and another situation 

in which a case manager worked with the complex social and housing 

needs of a beneficiary who had both physical and mental health issues. 

Representatives from a third D-SNP noted that they have providers who 

conduct home visits to help prevent hospitalization.

CMS stated that contracts between D-SNPs and state Medicaid agencies 

are an opportunity to increase benefit integration and care coordination.39

However, only about one-third of the 2012 contracts we reviewed 

contained any provisions expressly providing for D-SNPs to deliver 

Medicaid benefits, thereby achieving benefit integration. Only about onefifth of the contracts expressly provided for active care coordination 

between D-SNPs and Medicaid agencies, which indicates that most care 

coordination was done exclusively by D-SNPs, without any involvement of 

state Medicaid agencies. Further, D-SNP representatives and state 

Medicaid officials expressed concerns about resources needed to 

contract with D-SNPs, and uncertainty about the future of D-SNPs.

 

39The contracts were not required to address these goals. However, the contracts must 

document the Medicaid benefits, if any, to be provided by the D-SNPs. See, 42 C.F.R. 

§ 422.107(c) (2011).

Although Some 

D-SNP Contracts with 

State Medicaid 

Agencies Expressly 

Provide for Benefit 

Integration or Care 

Coordination, Most 

Do Not
 

Page 26 GAO-12-864 Dual-Eligible Special Needs Plans

The 2012 D-SNP contracts with state Medicaid agencies we reviewed 

varied considerably in their provisions for integration of benefits and state 

payments to D-SNPs for covering specific services. According to CMS, 

“[t]his variability is to be expected, as States and MA organizations can 

develop agreements for [D-SNPs] to assume responsibility for providing 

or arranging for a wide range of Medicaid services based on each State’s 

ability and interest in integrating its Medicaid program with Medicare via a 

SNP.”40 Thirty-three percent of the 124 D-SNP contracts with state 

Medicaid agencies for 2012 that we reviewed expressly provided for the 

delivery of at least some portion of Medicaid benefits, thereby integrating 

Medicare and Medicaid benefits. The contracts varied in the extent of the 

Medicaid benefits for which a plan was responsible. About 10 percent 

provided a limited number of Medicaid services, such as dental or vision 

benefits. In contracts where there was some integration of Medicare and 

Medicaid benefits, states contracted for the different services, making 

comparisons among the contracts difficult. Of the 23 percent that 

integrated most or all Medicaid benefits, 64 percent of D-SNPs provided 

all Medicaid benefits, including long-term care support services in 

community settings and institutional care; 25 percent provided most 

Medicaid benefits, including long-term support services in community 

settings but not institutional care; and 11 percent provided most Medicaid 

benefits but did not provide any long-term support services or institutional 

care. (See fig. 5.)

 

40CMS, State Resource Center: State Options for Designing Dual SNP Contracts with 

Medicare Advantage Organizations that Adhere to MIPPA Requirement (Baltimore, Md.: 

2009), 5.

Some Contracts Include 

Provisions to Address the 

Integration of Benefits or 

Meaningful Coordination 

of Services between 

D-SNPs and Medicaid 

Agencies, but Most Do Not

Benefit Integration
 

Page 27 GAO-12-864 Dual-Eligible Special Needs Plans

Figure 5: Dual-Eligible Special Needs Plans (D-SNP) Integration of Medicaid Benefits, 2012

Note: Percentages are based on 124 D-SNP/state Medicaid agency contracts for 2012 that were 

reviewed by GAO.

Sixty-seven percent of contracts between D-SNPs and state Medicaid 

agencies did not expressly provide for D-SNPs to cover Medicaid 

benefits. To carry out MIPPA’s requirement that each D-SNP contract 

provide or arrange for Medicaid benefits to be provided, CMS guidance 

has required that contracts list the Medicaid benefits that dual-eligible 

beneficiaries could receive directly from the state Medicaid agency or the 

state’s Medicaid managed care contractor(s).41

For D-SNPs contracting with state Medicaid agencies to provide all or 

some Medicaid benefits, the capitated payment reflected variation in 

coverage and conditions. One state that contracts for all Medicaid 

benefits except a limited number of services including long-term care 

services paid the D-SNP at a rate of $423 per member per month. 

Another state, which contracted for a limited number of benefits, including 

Medicare-excluded drugs, expanded dental coverage, and casemanagement services, paid the D-SNP $132 per member per month. This 

state’s Medicaid agency retained responsibility for inpatient hospital 

 

41CMS stated in its state contract training materials for 2013 D-SNP–state Medicaid 

agency contracting that contracts for 2013 must specify how Medicare and Medicaid 

benefits are integrated and coordinated.
 

Page 28 GAO-12-864 Dual-Eligible Special Needs Plans

services and long-term care coverage. Some contracts, rather than 

stating a single capitation rate, gave payment rates for different 

categories, including risk or acuity level, beneficiary age, and service 

location, as well as whether the beneficiary was designated as nursing 

home eligible and whether services for these beneficiaries were provided 

in the community or facility setting. Within one state, payment rates 

ranged from just under $170 per month for dual-eligible beneficiaries who 

were neither nursing home eligible nor had a chronic mental health 

condition and were living in the community to over $8,600 per month for 

dual-eligible beneficiaries residing in a nursing facility and requiring the 

highest level of care.

Some of the 2012 contracts providing for payments from state Medicaid 

agencies to D-SNPs did not address the direct provision of benefits, often 

providing for payments to the D-SNP for assuming the state’s 

responsibility for paying dual-eligible beneficiaries’ Medicare copayments, 

coinsurance, and deductibles. These payments ranged from $10 to $60 

per member per month.

While all contracts between D-SNPs and state Medicaid agencies for 

2012 provided for some level of care coordination to beneficiaries, 

approximately 19 percent expressly provided for active coordination of 

beneficiary services between the D-SNP and the state Medicaid 

agency.42

 

42For D-SNPs that provided all Medicaid benefits as part of their plan, coordination with

the state Medicaid agency was likely not needed as the plan provided all benefits.

Most active coordination occurs when dual-eligible beneficiaries 

transition between care settings or between Medicare and Medicaid. 

Thirteen percent of all contracts contained provisions requiring D-SNPs 

and the state Medicaid agency to coordinate the transition of beneficiaries 

between care settings (such as hospital to nursing home) within a given 

time frame. For example, one state’s D-SNP contracts directed the plans 

to notify the Medicaid service coordinators or agency caseworker, as 

applicable, no later than 5 business days after a dual-eligible beneficiary 

had been admitted to a nursing facility. The other 6 percent of contracts 

included provisions for providing different coordination activities such as 

requiring the plan to work with Medicaid staff to coordinate delivery of 

wrap-around Medicaid benefits.

Coordination of Services
 

Page 29 GAO-12-864 Dual-Eligible Special Needs Plans

The remaining 81 percent of all contracts did not specifically address 

D-SNPs’ coordination with state Medicaid staff, such as case managers. 

Rather, these contracts indicated that the D-SNP would coordinate 

Medicaid and Medicare services but did not specify the role of the state 

Medicaid agency in coordinating those services. Because D-SNPs are 

required by Medicare to provide care coordination services to dual-eligible 

beneficiaries, these services are often provided without reimbursement or 

payment from the state Medicaid agency.

D-SNP representatives and state Medicaid officials we spoke with 

reported that contract development and submission to CMS are resourceintensive. State officials reported that because they had limited resources, 

they needed to balance the benefits of the contract with the time and 

resources needed to develop and oversee it. As one state Medicaid 

official said, the state “bandwidth”—resources—was a challenge, and she 

was concerned about contracting with the large number of D-SNPs in her 

state. This official added that the state did not want to be in the position of 

making contractual commitments that could not be honored because of 

limited funds or other resources. In contrast, the plan representatives we 

interviewed expressed interest in continuing to operate D-SNPs and were 

therefore eager to contract with states despite any challenges that might 

exist. Beginning in 2013, D-SNPs will not be permitted to operate without 

state contracts.

Representatives from 12 of the 15 plans and officials from 3 of the 5 state 

Medicaid agencies we spoke with pointed out that establishing a contract 

between Medicaid and a Medicare plan highlights conflicts between 

federal and state requirements. A representative from one D-SNP told us 

that it was challenging for plans and state Medicaid agencies to agree 

about the characterization of dual-eligible beneficiaries because Medicare 

and some states have different definitions. Officials from one state 

Medicaid agency and D-SNP representatives reported difficulty 

reconciling the difference between the Medicare contracting cycle, which 

is based on the calendar year, and the fiscal year contracting cycle for 

their states. They reported that, if a contract would not cover the entire 

calendar year, CMS would not approve it. In one case, a state Medicaid 

official reported that CMS’s deadline of July 1, 2012, for 2013 contracts 

would occur before the state signed contracts for 2013. Sometimes nonD-SNP and State Officials 

Expressed Some Concerns 

about Contracting

Concerns about Resource 

Investment
 

Page 30 GAO-12-864 Dual-Eligible Special Needs Plans

Medicaid structures conflict with CMS’s contracting requirements for 

D-SNPs. A representative of one D-SNP told us that Medicaid benefits for 

individuals with developmental disabilities were managed through a 

contract with the state’s family services agency, not the state Medicaid 

agency. Therefore, to provide services to this population, the D-SNP had 

to become a subcontractor to the family services agency. The official said 

that the D-SNP and the state need to work with CMS to develop a 

subcontracting relationship that is acceptable.43

Beginning in 2013, D-SNPs must secure a contract with the state 

Medicaid agency in each state in their service area. To do this, D-SNPs 

may need to establish new relationships with state officials who, 

according to the D-SNP representatives we interviewed, sometimes have 

very limited knowledge of Medicare and its requirements. However, some 

states have experience with Medicaid managed care and in some cases, 

D-SNP representatives had previously worked with the state on Medicaid 

contracts, thereby somewhat easing the transition to working with 

D-SNPs.

State Medicaid officials 

and D-SNP representatives reported that they did not always have the 

resources or the administrative ability to resolve these types of issues 

before entering into a contract.

Plan representatives and state Medicaid officials told us that uncertainty 

about the future made them cautious in contracting. Authority for SNPs to 

restrict enrollment to special needs populations (such as dual-eligible 

beneficiaries) currently expires at the end of 2013; SNPs may not 

continue as a unique type of MA plan if Congress does not extend this 

authority. Were this to occur, states would lose any advantages they 

might have gained from investing their resources to work with D-SNPs to 

integrate benefits and coordinate care. Furthermore, uncertainty 

regarding the future of D-SNPs creates uncertainty for the states about 

how to continue to serve dual-eligible beneficiaries currently enrolled in 

D-SNPs.

Uncertainty about the implementation of state demonstrations under the 

CMS initiative to align Medicare and Medicaid services—financial 

alignment initiative—has made some states hesitant to enter into 

 

43For 2013, CMS issued guidance specifying criteria under which D-SNPs and states may 

enter into such subcontracting arrangements.

Uncertainty about D-SNPs and 

Other Initiatives for DualEligible Beneficiaries
 

Page 31 GAO-12-864 Dual-Eligible Special Needs Plans

contracts with D-SNPs. As of June 2012, all proposals had been made 

available for public comment but CMS had not finalized agreements with 

the states. Medicaid officials from two states told us that if their proposed 

financial alignment demonstrations were implemented, D-SNPs in their 

states would cease to exist.44 Some states were moving forward with 

D-SNP contracts while concurrently preparing to shift D-SNPs to a 

different type of managed care plan if their demonstration proposal is 

implemented. However, officials from one state told us that they did not 

have sufficient clarity about the direction of the state Medicaid program in 

relation to its proposed demonstration to enter into contracts. Even in 

those states where demonstrations would not eliminate D-SNPs, 

contracting challenges as well as potential financial incentives associated 

with the demonstrations from the financial alignment initiatives create 

disincentives for states to work with D-SNPs outside of the financial 

alignment initiatives and, therefore, leaves the future of D-SNPs in 

question in these states as well.

D-SNPs have the potential to help beneficiaries who are eligible for both 

Medicare and Medicaid navigate these two different systems and receive 

the health services that meet their individual needs. However, CMS has 

not required D-SNPs to report information that is critical to better holding 

plans accountable and determining whether they have realized their 

potential. Although the models of care D-SNPs must submit to CMS 

generally state what these plans intend to do, they do not all report the

number of services they intend to provide. For example, plans are not 

required to report the number of enrollees they expect to designate as 

most vulnerable, or how many and which additional services they will 

provide to these enrollees. Although D-SNPs are required to collect 

performance and outcome measures, they are not required to use 

standard measures such as existing measures of hospital readmission or 

patient health status and cognitive functioning. Further they are not 

required to report these measures to CMS, and, lacking standard 

measures, it would in any case be difficult to compare D-SNPs’ 

effectiveness. Standardizing these measures should have a minimal 

 

44As of July 2012, one additional state from our sample had proposed as part of its 

Financial Alignment Initiative proposals shifting D-SNPs into demonstration plans and, 

therefore, end D-SNPs in their state. An additional five states not included in our sample 

propose shifting D-SNPs into demonstration plans or otherwise ending D-SNPs in their 

states.

Conclusions 
 

Page 32 GAO-12-864 Dual-Eligible Special Needs Plans

effect on D-SNPs’ administrative efforts, because additional measures 

could replace some or all of the measures currently used as well as much 

of the narrative in models of care. Standardizing measures could also 

reduce CMS’s administrative efforts by streamlining review of D-SNPs. 

Additional standardized information would allow CMS to meet its goals for 

accountability for effective and efficient use of resources.

Further, CMS has neither evaluated the sufficiency and appropriateness 

of the care that D-SNPs provide nor assessed their effectiveness in 

integrating benefits and coordinating care for dual-eligible beneficiaries. 

Nonetheless, CMS is embarking on a new demonstration in up to 26 

states with as many as 2 million beneficiaries to financially realign 

Medicare and Medicaid services so as to serve dual-eligible beneficiaries 

more effectively. If CMS systematically evaluates D-SNP performance, it 

can use information from the evaluation to inform the implementation and 

reporting requirements of this major new initiative.

To increase D-SNPs’ accountability and ensure that CMS has the 

information it needs to determine whether D-SNPs are providing the 

services needed by dual-eligible beneficiaries, especially those who are 

most vulnerable, the Administrator of CMS should take the following four 

actions:

• require D-SNPs to state explicitly in their models of care the extent of 

services they expect to provide, to increase accountability and to 

facilitate evaluation;

• require D-SNPs to collect and report to CMS standard performance 

and outcome measures to be outlined in their models of care that are 

relevant to the population they serve, including measures of 

beneficiary health risk, beneficiary vulnerability, and plan 

performance;

• systematically analyze these data and make the results routinely 

available to the public; and

• conduct an evaluation of the extent to which D-SNPs have provided 

sufficient and appropriate care to the population they serve, and 

report the results in a timely manner.

Recommendations for 

Executive Action
 

Page 33 GAO-12-864 Dual-Eligible Special Needs Plans

We obtained comments on a draft of this report from HHS and the SNP 

Alliance, which represents 32 companies that offer more than 200 SNPs. 

CMS provided written comments, which are reprinted in appendix I, and 

technical comments that we incorporated where appropriate. 

Representatives from the SNP Alliance provided us with oral comments.

HHS concurred with our recommendation that CMS should require plans 

to explicitly state in their models of care the extent of services they expect 

to provide, and agrees that information about the extent to which D-SNPs 

provide certain services would increase accountability and facilitate 

evaluation. HHS also stated that CMS recently began to collect 

information on the completion of health risk assessments, but has not 

made it public because the information is relatively new. HHS did 

question the usefulness of quantifying the number of members expected 

to receive services described in the documents, stating that the model of 

care is a framework for indicating how the SNP proposes to coordinate 

the care of SNP enrollees. However, as we noted in the draft report, we 

believe such information could be useful in later evaluating whether 

D-SNPs met their intended goals.

HHS also concurred with our recommendation that CMS should require 

D-SNPs to collect and report standard measures relevant to the 

populations they serve, and stated that CMS is working to create new 

measures that will be relevant to dual-eligible beneficiaries in D-SNPs. 

HHS also stated that CMS currently collects a broad range of standard 

quality measures, including HEDIS, as well as structure and process 

measures. HHS included in its response a recent Health Plan System 

Management memorandum that CMS sent to MA organizations, including 

D-SNPs, which outlined updated reporting requirements for 2013. HHS 

also noted that in addition to the data it currently collects, CMS requires 

D-SNPs to conduct both a Quality Improvement Project and a Chronic 

Care Improvement Project, and asked GAO to note this in the final report. 

We did not include these because, as we noted in the draft report, quality 

and quality measures were not in the scope of our work.

HHS also concurred with our other two recommendations.

Agency and Other 

External Comments 

and Our Evaluation

HHS Comments
 

Page 34 GAO-12-864 Dual-Eligible Special Needs Plans

First, SNP Alliance representatives stated that the benefits D-SNPs 

provide most frequently are more meaningful to dual-eligible beneficiaries 

than some of the supplemental benefits provided more frequently by other 

MA plans. We note in the report that some of the supplemental benefits 

offered at lower rates by D-SNPs may be covered by Medicaid, thereby 

reducing the need for them to be covered by D-SNPs. Second, SNP 

Alliance representatives were concerned with our definition of FIDESNPs. 

They explained that CMS’s definition, which we used, limits FIDESNPs to 

those that integrate all Medicare and Medicaid benefits without any limits, 

such as the number of nursing home days covered. They contended that 

some D-SNPs may be considered fully integrated even though they do 

not include all benefits, such as nursing home care, and may have some 

limits. However, in reporting on CMS activities we have no basis for using 

different definitions than those formally applied by the agency. Third, SNP 

Alliance representatives stated that the ability of their D-SNP members to 

fully integrate benefits through contracting is limited by the capacity and 

interest of state Medicaid agencies. We note in the report that state 

Medicaid agencies we interviewed acknowledged limitations in their 

capacity for contracting. Fourth, SNP Alliance representatives had some 

concern with our emphasis on estimating how many beneficiaries are 

expected to receive the services described in the model of care, stating 

that all dual-eligible beneficiaries would have access to the services 

described based on need. However, as we stated in the draft report, 

information is not generally available on the number of beneficiaries that 

use these benefits. Finally, SNP Alliance representatives were supportive 

of the state demonstrations under the financial alignment initiative. They 

noted that D-SNPs are being used as a platform for half of the state 

demonstrations, with the remainder being based on a Medicaid model. 

They considered the adoption of the D-SNP model by many of the state 

demonstrations as evidence of D-SNPs’ success.

SNP Alliance representatives generally agreed with our 

recommendations. They said that they support better aligning reporting 

requirements with the models of care, and stated that D-SNPs need a set 

of core measures that are most relevant to the dual-eligible population 

they serve.

SNP Alliance Comments
 

Page 35 GAO-12-864 Dual-Eligible Special Needs Plans

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of HHS and 

to interested congressional committees. In addition, the report will be 

available at no charge on the GAO website at http://www.gao.gov. 

If you or your staff have any questions about this report, please contact 

me at (202) 512-7114 or CosgroveJ@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. GAO staff who made major contributions to 

this report are listed in appendix II.

James C. Cosgrove

Director, Health Care
Appendix I: Comments from the Department of 

Health & Human Services

Page 36 GAO-12-864 Dual-Eligible Special Needs Plans

Appendix I: Comments from the Department 

of Health & Human Services 
Appendix I: Comments from the Department of 

Health & Human Services

Page 37 GAO-12-864 Dual-Eligible Special Needs Plans
Appendix I: Comments from the Department of 

Health & Human Services

Page 38 GAO-12-864 Dual-Eligible Special Needs Plans
Appendix I: Comments from the Department of 

Health & Human Services

Page 39 GAO-12-864 Dual-Eligible Special Needs Plans
Appendix I: Comments from the Department of 

Health & Human Services

Page 40 GAO-12-864 Dual-Eligible Special Needs Plans
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 41 GAO-12-864 Dual-Eligible Special Needs Plans

James C. Cosgrove, (202) 512-7114 or CosgroveJ@gao.gov

In addition to the contact named above, Phyllis Thorburn, Assistant 

Director; Ramsey Asaly; George Bogart; Melanie Anne Egorin; Linda 

Galib; Giselle Hicks; Corissa Kiyan; Elizabeth T. Morrison; and Kristal 

Vardaman made key contributions to this report.

Appendix II: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(290983)
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