Special Needs Plans (SNP) Growth A Relative Bright Spot For Medicare Advantage (MA)

March 24, 2025

SNPs are seeing huge growth despite the financial crisis hitting MA

The Medicare Advantage (MA) industry is going through very tough financial times. A variety of factors, including rate cuts, an increase in utilization, and a new risk scoring model, forced plans to reduce benefits and exit many geographies in 2024 and 2025. Even a proposed slight increase in rates in 2026 (unless changed by the new Trump administration) will likely lead to more benefit reductions and contraction in 2026.

What MA plans did was shed unprofitable geographies and products, including more rural and suburban areas of the country and certain more-expensive preferred provider organization (PPO) products. But along the way, MA plans have doubled down on Special Needs Plan (SNP) investments.

The investment in SNPs is driven by a few factors:

The Centers for Medicare and Medicaid Services (CMS) has sent a message that it will prioritize the further integration of Medicare and Medicaid and want to use SNPs to do so. This will bring complexity and costs, but further opportunity for plans that invest here. With the move to integrate the Medicare and Medicaid funding streams, health plans do not want to risk being left out of membership in either line of business. This includes the major focus in states on long-term managed healthcare.
CMS is targeting a reduction in the disproportionate costs dual eligibles drive in Medicare and Medicaid and improving overall poor outcomes for these populations. Dual eligibles represent 17% of Medicare beneficiaries and 14% of Medicaid enrollees but consume 33% of traditional Medicare spending and 32% of Medicaid spending. This is what CMS wants plans to tackle.
CMS has passed a number of regulations over the past few years that expand supplemental benefits for the chronically ill and those with social determinants of health barriers. These benefit expansions are not specific to SNPs, but MA plans are targeting many of these benefits to SNP plan benefit packages (PBPs). More on this below.
There also are significant financial opportunities with SNPs. SNP membership offers much greater per-member revenue due to various factors in the demographic portion of the rate-setting system (e.g., Medicaid status, frailty, etc.) as well as the clinical risk adjustment component (dual eligibles and SNP members tend to have multiple disease states). Done right, health plans can reduce costs dramatically against the traditional fee-for-service (FFS) program cost as long as they practice good clinical oversight and address social determinant barriers. If plans can reduce costs for SNP enrollees, the greater opportunity for margin.
Although MA continues to grow, SNP enrollment has outpaced MA enrollment growth overall.
Many of the plans are also in Medicaid and see natural synergies (including the spread of administrative costs) between the Medicaid and Medicare lines of business.

So, SNPs offer MA plans the ability to improve health outcomes while also registering a healthy margin. But more and more, SNPs are not for the faint of heart. Running a SNP product requires superb regulatory and clinical execution as well as acute sensitivity to the ever-changing integration between Medicaid and Medicare.

SNP types

There are three types of SNPs:

(1) Institutional SNPs or I-SNPs — the enrollee is a resident of a long-term care facility or at risk of institutionalization. While MA does not cover long-term care expenses, the model seeks to coordinate the primary Medicare medical services and usually Medicaid long-term care services.

(2) Chronic Condition SNPs or C-SNPs — the enrollee must have one or more specific disease states (from a list prescribed by CMS) to enroll in a plan tailored to his or her condition(s)

(3) Dual Eligible SNPs or D-SNPs – the enrollee must be eligible for both Medicare and Medicaid (either partial or full dual depending on the plan and state dictates).

It is often the case that those who enroll in I-SNPs or C-SNPs also are dual eligibles but choose those SNPs instead of D-SNPs given their individual circumstances.

There are also different types of D-SNPs from an administrative standpoint. There are:

Coordination-Only D-SNPs – Plans have very basic integration with state Medicaid agencies, including some reporting requirements such as inpatient admission notification. States can dictate various levels of integration here. Plans do have contracts with states calling out their obligations to the Medicaid agency.
Highly Integrated D-SNPs (HIDEs) — These plans have a contract with the state Medicaid program and meet the requirements of a coordination D-SNP. In addition, they must also have a Medicaid plan operating in the same counties as the D-SNP that provides integrated long-term care services (LTC) or behavioral health (BH). In this case, the LTC or BH benefits usually are provided by a separate plan owned by a common parent organization.
Fully Integrated D-SNP Plan (FIDE) – These plans have a contract with the state Medicaid program and meet the requirements of a coordination D-SNP. They provide Medicare and included Medicaid covered services through a single managed care organization (one plan). In some cases, certain Medicaid benefits may be provided by the state or by a different health plan. Starting in 2025, FIDE SNPs may only enroll full-benefit dual-eligible individuals if they are enrolled in both the FIDE SNP and the Medicaid plan sponsored by the same organization and must cover long-term care services and all Medicaid benefits.

A little on SNP history

It was not long ago that SNPs faced extinction. CMS felt MA health plans viewed SNPs as marketing tools rather than specialized plans to improve outcomes and save costs. Only last-minute extensions of the program allowed SNPs to continue to be offered. CMS began to come around and the program eventually was made permanent. At the same time, CMS laid out much more rigorous requirements and oversight. This has led to the burgeoning of the SNP rolls. D-SNPs dominate, but C-SNPs are now seeing major growth.

Regulatory trends explained

CMS has honed its audit protocol. It is still evolving but regulatory oversight has increased dramatically. Plans face close scrutiny in many areas, including health risk assessment completion, individualized care plan creation and issuance, the formation of an interdisciplinary care team for each member to drive health outcomes, and aggressive risk and health status change tracking and intervention. CMS is auditing against both the regulations in place as well as the filed Model of Care each plan must create and get approved by the National Committee for Quality Assurance (NCQA).

CMS has passed a number of rules that seek to closely integrate Medicare and Medicaid funding streams and clinical oversight. This is applicable to D-SNPs. Most D-SNP plans meet what is the coordination requirement outlined above. CMS, though, would like all D-SNPs to become far more integrated, including ultimately to have all D-SNPs be FIDEs or HIDEs. Such plans have numerous additional regulatory requirements across enrollment, care management, authorizations, appeals, and grievances. Such plans will see strong and robust state Medicaid requirements built in as well.

CMS is also promoting the breakout of SNP contracts from plan master contracts so that SNP quality can be better evaluated. This could also lead to different Star quality measures over time for SNPs. Right now, there are just a few additive SNP measures. Otherwise, the SNP population is evaluated within the overall membership in a given plan contract.

CMS has encouraged a heavy focus on social determinants of health (SDOHs). This is most important with SNP populations. CMS looks to SNPs to screen for such social barriers and mitigate them to promote better health outcomes. Some studies suggest that social barriers can be a greater determinant of health outcomes than underlying disease states. Whether the focus will change with the return of the Trump administration is an open question. Trump already has pulled back on the focus on SDOH waivers in Medicaid.

CMS has also sought to rein in what it sees as continuing abuses by MA plans in the market related to dual eligibles as well as to foster further integration with Medicaid as described above. Recent rules adopted or proposed include:

Changes were adopted to rein in more liberal dual eligible special enrollment periods to allow enrollment only in integrated SNPs if outside the regular enrollment periods.
Changes were adopted to limit the number of D-SNP plan benefit packages an MA organization can offer in the same service area as an affiliated Medicaid managed care organization (MCO). This last stipulation also would apply to a parent organization or entity that shares a parent organization with the MA organization.
Changes were made to reduce the number of D-SNP look-alike plans.
While applicable to all plans, SNPs also need to perform outreach efforts on promoting the availability of supplemental benefits, create an individually customized mid-year analysis of supplemental benefits (benefits that were used and not used), and furnish to CMS evidence-based clinical criteria when proposing chronically ill supplemental benefits to ensure the benefit has a reasonable expectation of improving the health or overall function of chronically ill enrollees.
Changes are proposed to simplify healthcare access for members of an Applicable Integrated (Plan) Special Needs Plans (AIP SNP). These plans can be coordination only SNPs, HIDEs, or FIDEs but enrollment on the Medicaid and Medicare side match up exactly under agreements between plans and states. The rules would require integrated member identification (ID) cards that serve as the ID cards for both the Medicare and Medicaid plans in which an enrollee is enrolled. The MA plan would also have to conduct an integrated health risk assessment (HRA) for Medicare and Medicaid.
Changes are proposed to codify for integrated SNPs a number of HRA and care plan issuance policies that are applicable to SNPs generally elsewhere in regulation. These are on the timelines for an HRA, timely issuance of a care plan, and what must be included in care plans.

Enrollment growth

As of March 2025, SNP and related program enrollment stood at 7.586 million. That is a 106% growth since January 2020, when it stood at just 3.687 million. This is an increase of 3.899 million. This includes all three SNP types as well as the Medicare-Medicaid Plans (MMPs), which is a fully integrated pilot much like a FIDE. The pilot will sunset as of 12/31/2025, when most states will convert the membership to either HIDEs or FIDEs under the main MA SNP program.

As a comparison point, overall MA growth has been a robust 47% since January 2020, but SNP growth is well more than double that.

As can be seen in the table below, D-SNPs account for 6.060 million as of March 2025, or about 80% of all SNP enrollment (83% if you include the MMP lives). This is up from 2.833 million in January 2020, an increase of 3.227 million or 114%.

C-SNPs have seen major growth, moving from 0.369 million in January 2020 to 1.161 million in March 2025, an increase of 0.792 million or 215%.

I-SNPs have had a much more conservative growth since 2020, just 23%. Growth of MA overall from January 2024 to March 2025 was 4.8%, compared with 9.8% for SNPs during the same timeframe.

Overall, SNPs now represent about 21.6% of all MA enrollment.

What has MA’s recent contraction done to SNPs?

CMS says in 2025 the number of MA plans overall decreased by 2.8%, including a 6.5% decrease in individual MA plans and an 8.5% increase in SNPs. See the Better Medicare Alliance (BMA) graphic below for more details.

_{Source: Better Medicare Alliance}

BMA also finds that the availability of SNPs varies by state, with an increase in the number of SNPs in 29 states and a decrease in 7 states and Washington, D.C. in 2025. The contraction in those states was related to the financial issues in the industry.

_{Source: Better Medicare Alliance}

Actuarial and consulting firm Milliman, however, finds that the so-called “D-SNP value added” changed considerably between 2024 and 2025. It says the total value added shrunk by about $15 per member per month (PMPM), mainly due to benefit degradations in the Part C (medical) benefit. There was a value-added growth of about $27 and $44 PMPM from 2022 to 2023 and 2023 to 2024, respectively. The benefit pullback ties to the financial crisis and contraction seen in the industry for 2025 and bucks a growth trend of at least 10 years.

In terms of supplemental benefits, BMA reports that there were cutbacks in both regular MA plans and SNPs due to the financial crisis in the industry. Importantly, though, the percentage of SNPs offering at least one Special Supplemental Benefits for the Chronically Ill (SSBCI) increased from 66.2% to 86.8%. There was a slight decrease in the percentage of individual plans offering SSBCI: 15.8% of plans will offer at least one compared to 16.4% in 2024.

SNP winners and losers in 2025

Modern Healthcare did a nice analysis of winners and losers in terms of SNPs in the recent enrollment season. United Healthcare and Elevance Health (which were very bullish on 2025 growth due to better financial positions) gained SNP lives, while Humana, Aetna, and Centene (which are financially troubled and contracted a great deal) lost lives.