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Unpacking CMS’s 2025 DSNP Changes: Considerations for Medicare Advantage Organizations

As part of its 2025 Medicare Advantage and Part D Final Rule (the Final Rule), the Centers for Medicare & Medicaid Services (CMS) made a number of enrollment changes impacting dual eligible special needs plans (DSNPs). The goal of these changes is to promote integration of Medicaid and Medicare services for full benefit dually eligible (FBDE) individuals. While stakeholders support the overall goal of better integration, the new policies are complex and may discourage Medicare Advantage Organizations (MAOs) from participating in Medicaid managed care programs in certain regions. They also highlight how a federal DSNP regulation that is tied to how a state contracts with entities that offer Medicaid benefits can result in different impacts in different states.

Central to these changes is the idea that DSNPs whose parent organization also operates an affiliated Medicaid managed care plan that enrolls FBDE individuals in the same service area (an Affiliated Medicaid Plan) must have exclusively aligned enrollment. 

What Does This Policy Change Exactly Mean for DSNPs? 

CMS’s requirement for exclusively aligned enrollment will limit enrollment for those DSNPs with Affiliated Medicaid Plans. Specifically, effective 2027, the only individuals who will be able to enroll in a DSNP with an Affiliated Medicaid Plan are those FBDE individuals who are enrolled in or who are in the process of enrolling in the DSNP’s Affiliated Medicaid Plan. By 2030, DSNPs with an Affiliated Medicaid Plan will have to disenroll any dual eligible individuals who are not also enrolled in the Affiliated Medicaid Plan. Further, if a parent organization operates an Affiliated Medicaid Plan in a region, that parent organization may only offer one DSNP in the same service area, subject to certain exceptions. 

Of note, these limitations only apply to DSNPs whose parent organization operates an Affiliated Medicaid Plan. Meaning, if a MAO operates DSNPs and has no Affiliated Medicaid Plans, CMS will not limit who may enroll in the DSNP. As discussed below, however, states have the ability to limit DSNP enrollment through their State Medicaid Agency Contracts (SMACs).

What Are the Benefits of Operating Affiliated Medicaid Plans? 

CMS acknowledges that, on its face, this policy may introduce perverse incentives and may discourage MAOs or their affiliates from participating in Medicaid managed care programs. To combat this enrollment limitation, CMS is providing a monthly special enrollment period (SEP) available only to those DSNPs with an Affiliated Medicaid Plan. Under the Final Rule, FBDE individuals may no longer enroll into any DSNP of their choosing on a monthly or quarterly basis. Rather, the monthly SEP is only available to FBDE individuals enrolled in or enrolling into a Medicaid managed care plan, so that they may concurrently enroll into the affiliated DSNP during any month of the year.

Another advantage to operating Affiliated Medicaid Plans is that states are increasingly limiting enrollment in to DSNPs through the SMAC. To participate as a DSNP, an MAO must obtain a SMAC from the Medicaid agency. Some states only offer SMACs to DSNPs with an Affiliated Medicaid Plan. Other states, such as Tennessee, still offer SMACs to DSNPs without an Affiliated Medicaid Plan but prohibit FBDE individuals from enrolling into DSNPs, unless the DSNP has the Affiliated Medicaid Plan. To date, only a minority of states limit SMACs for DSNPs. Therefore, as MAOs think through the future of their DSNP products, MAOs need to consider whether this SEP is attractive enough to overcome the enrollment limitations.

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Tara advises managed care organizations, pharmaceutical services providers such as PBMs, and integrated delivery systems, and companies that invest in them, on matters relating to compliance with federal health care program regulations, federal and state fraud, waste and abuse laws and plan benefits.
Lauren advises pharmacies, PBMs, managed care organizations, and other payors on transactional, regulatory, and fraud and abuse matters, drawing upon her experience working for the Federal Coordinated Health Care Office.
Madison M. Castle is an Associate at Mintz who focuses her practice on health care regulatory, transactional, and enforcement defense matters. She represents clients across the health care sector, including hospitals, physician organizations, and health care systems.