Medicare Advantage's Hidden Headline

The fastest-growing MA plans and what's behind the 2x growth in enrollment and profit margin.

It’s no secret that Medicare Advantage payers are facing multiple market pressures: rising costs, higher utilization and the CMS payment model changes that HealthLeaders recently analyzed.

Amidst these pressures, one type of MA plan is doing just fine: Special Needs Plans, or SNPs.

These plans “restrict enrollment to specific types of beneficiaries with significant or relatively specialized care needs, or who qualify because they are eligible for both Medicare and Medicaid.”

In 2024, 6.64 million members were enrolled in SNPs (Kaiser Family Foundation-KFF). That number alone might not warrant a headline. But 88% of SNP enrollees are in D-SNPs, plans for members who are dually enrolled in both Medicare and Medicaid. KFF notes that these plans “have increasingly become the main source of Medicare Advantage coverage for dual-eligible individuals,” with nearly 30% enrolled in D-SNPs.

SNPs are the fastest-growing plans

There are three main MA categories: individual plans, employer/union-sponsored group plans and SNPs. Individual plans are still the largest segment of MA — 20.5 million, or nearly two-thirds of all enrollees in 2024. But they have declined as a share of total MA enrollment (71%) since 2010 (KFF).

SNPs are now the fastest-growing category, with enrollment growing:

• more than 2x since 2019
• 16% between 2023 and 2024
• to 20% of total MA enrollment in 2024

This trend continues. Among 2025 plan offerings, D-SNPs have grown 8% and C-SNPs by 21% — with United, Aetna and Devoted Health “all growing their D-SNP plan counts by double-digits” (Milliman).

How D-SNPs are doubling growth — and profit margins

More dual-eligibles with greater access to more plans with attractive benefits is driving D-SNP growth.

“Insurers use public CMS Medicare enrollment data to identify where there are dual-eligible beneficiaries but low D-SNP plan penetration,” says Jeannie Fuglesten Biniek, KFF’s Associate Director-Program on Medicare Policy. “They can capitalize with relatively low start-up costs.”

“This benefits members but can also make choosing a plan harder,” she adds. “A person may not need 43 plans to choose from but may need more than one or two to get the kind of targeted benefits that will attract them.”

All of these factors affect MA payer strategies and market decisions (e.g., changing benefit design to anticipate higher utilization). KFF looks for these “sticky levers,” says Fuglesten Biniek — as well as market exits — when analyzing MA plan offerings.

This includes D-SNPs, which are attractive to payers for two reasons:

1. Coding risk adjustments work in their favor. D-SNP members tend to have more health conditions, giving payers more opportunities to increase coding intensity. So, while CMS’s payment formula updates hurt other MA plan types, not so with D-SNPs.
2. It’s not more expensive to administer SNPs. This is true despite their added benefits (e.g., OTC, meals, transportation).

The last reason seems counter-intuitive. Given how difficult it is to keep healthcare efficient and cost-effective, how could this be easier for members with special needs? Fuglesten Biniek weighs in.

“It’s an open question whether plans are actually better at managing these populations or if the payment is so generous that it gives plans more room financially.”

“Yes, the risk model includes indicators for people with dual-eligible status which can increase payments beyond costs,” she adds. “Conversely, there is evidence that even people with more complex health status who enroll in Medicare Advantage are lower utilizers than similar people in traditional Medicare and for a variety of reasons” (e.g., the impact of referrals, prior authorizations).

The result is lower plan costs with bigger profit margins. Fuglesten Biniek notes that SNP margins are often double those of other plan types: 7.5% for D-SNPs compared to 3.6% on average for MA plans overall (2022 data; MedPAC’s March 2024 Report to Congress).

This is great news for payers but what about members?

While multiple sources have flagged D-SNP growth among MA trends, few have explored what happens when a growing and vulnerable SNP population is increasingly in the hands of fewer MA payers.

We’ll explore the far-reaching implications in our final article of this series. Stay tuned!