Leveraging Medicaid Rate-Setting Strategies to Promote Financial Integration in D-SNPs

This report was co-authored by Manatt Health and Milliman with financial support from Arnold Ventures.

Additional authors include Annie Hallum and Nicholas Johnson of Milliman

In the United States, over 12 million individuals are eligible for both Medicare and Medicaid (i.e., dual-eligible individuals). Many of these individuals are aged 65 or older, have complex health needs, and are racially diverse. Dual-eligible individuals also account for a disproportionate share of spending in each program, while receiving care in fragmented Medicare and Medicaid delivery systems with misaligned financial incentives.

To address challenges created by the disconnected systems, federal and state policymakers have implemented a number of approaches to better coordinate and integrate care and financing across Medicare and Medicaid, including through Medicare Advantage (MA) dual-eligible special needs plans (D-SNPs). Despite the recent growth of the D-SNP market, there is opportunity for states to pursue more integrated care models that promote financial integration and lead to improved access, care delivery and health outcomes for dual-eligible individuals.

In a January 2023 report supported by Arnold Ventures, Manatt Health highlighted two complementary strategies that state policymakers may deploy to improve financial integration of Medicare and Medicaid: (1) Benefit Design; (2) Medicaid Rate Setting. This follow-up report, co-authored by Manatt Health and Milliman with financial support from Arnold Ventures, explores the second strategy on Medicaid Rate Setting in more detail. It outlines federal opportunities, including potential CMS rulemaking and guidance, that can support states in implementing financial integration approaches, as well as state opportunities, with a focus on policy, actuarial and regulatory considerations for states and their actuaries to achieve financial integration. This report synthesizes discussions with diverse stakeholders, additional research, the Manatt Health authors’ Medicaid program and policy knowledge, and the Milliman authors’ actuarial experience working with state Medicaid agencies and health plans on Medicaid rate setting and Medicare Advantage bid development.

To read the full report, view here.



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