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The Rise in Imposters: When Health Plans for Medically Complex Individuals Don't Live Up to Their Promises

New federal rules propose to stem the tide of health plans that purport to coordinate coverage but in reality sow confusion. But unofficial look-alike plans are undermining coordination efforts.

Choosing a health plan is tough — even for the most seasoned health care economist. Now imagine how difficult it is for typical individuals who are elderly, ill, or disabled and need to select a plan that is best suited to meet their medically complex needs. The complicated maze of premiums, deductibles, cost-sharing, and provider networks can stump even the most well-researched patient.

These complications are especially acute for the approximately 12 million people in the United States who get their health insurance through two publicly funded programs: the federally run Medicare and the state-operated Medicaid programs. These so-called “dual eligibles” often have significant clinical and social service needs, and while they only make up a fraction of the people covered in the two programs, they account for more than 30 percent of both program’s health care spending.

To ease the challenges of navigating two different coverage programs, lawmakers have expanded special arrangements called Dual Eligible Special Needs Plans (D-SNPs). These are a special type of Medicare Advantage plan tailored to minimize confusion and meet the needs of dual eligible individuals.

D-SNPs are required to have a contract with the Medicaid program in each state in which they operate, to outline how to coordinate Medicare and Medicaid coverage. Those contracts vary in how much they actually require plans to coordinate, but the trend is toward more coordination. D-SNPs currently enroll more than 2 million people and represent one of a few promising approaches to organizing care.

However, as the number of D-SNPs has increased, so too have imposter plans. These look-alike plans are marketed to dual-eligible individuals, but they don’t have a formal relationship with the Medicaid program. These D-SNP look-alikes attract people who are dual eligible to enroll in their plan but do not have to meet all the additional requirements of being a D-SNP, such as offering Medicaid benefits through the same plan or arranging for Medicaid benefits to be provided in some other way.

These plans confuse consumers and their advocates, undermine state and federal policymakers’ efforts to improve care coordination between Medicare and Medicaid, and pilfer enrollment from D-SNPs and other coverage options that seek to align Medicare and Medicaid coverage.

Look-alike plans aren’t new, but they’re growing. The number of traditional Medicare Advantage plans with 50 percent or more dual-eligible enrollees more than doubled in less than two years, from 44 in 2017 to 95 in 2019. This growth occurred after Medicare Advantage plan payment structures were changed to remove disincentives for enrolling dual-eligible individuals. Also, as states have put more requirements on health plans to coordinate with Medicaid to be designated as D-SNPs, plans have initiated look-alikes as a way to retain membership without meeting those state contract requirements.

This bait-and-switch is preventable. Last week, regulators at the Centers for Medicare and Medicaid Services (CMS) proposed new rules that would stem the continued spread of D-SNP look-alike plans across the country.

If the rules are finalized, a plan that does not have a contract with the state will not be approved if a significant share of its current or projected enrollees are entitled to Medicaid benefits.

In addition, CMS is trying to clarify its marketing and broker requirements to avoid driving member enrollment in non-integrated options during open enrollment this fall. These moves are in line with the suggestions of the Medicare Payment Advisory Commission (MedPAC), a nonpartisan legislative branch that advises Congress on Medicare, although MedPAC’s proposal is more aggressive, subjecting plans with 50 percent actual or projected enrollment of dual eligibles to these new requirements, versus CMS’ proposal of 80 percent.