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Medicare Advantage (MA) is a government-sponsored program offering an alternative to traditional fee-for-service (FFS) Medicare, where benefits are provided to Medicare beneficiaries by private health plans, otherwise known as Medicare Advantage organizations (MAOs). MAOs offer plan designs with varying benefits and premiums. In the Milliman MACVAT®, each MA plan’s benefit offerings and premium are evaluated to create an associated “value added,” Milliman’s proprietary measurement of plan value.

This white paper highlights changes in value added and key benefit trends in the MA market from 2023 to 2024. This discussion focuses on dual-eligible special needs plans (D-SNPs), that is, plans that target beneficiaries who are dually eligible for both Medicare and Medicaid. A separate paper discussing general enrollment plans can be found here.

Average value added of D-SNP MA plans continues its upward trajectory

Figure 1 shows the average annual growth in value added (total, Part C, and Part D) from 2021 to 2024. It also shows the Part C and Part D benefit values included in the total value added calculation.

Growth in D-SNP value added continues to increase year over year. From 2023 to 2024, the total value added of D-SNP MA plans grew by about $50 per member per month (PMPM), mainly due to enhancements in the Part C (medical) benefit. This is more than the observed growth of about $30 to $35 PMPM from 2021 to 2022 and 2022 to 2023, respectively.

Growth in the D-SNP Part D value added is slowing relative to previous years. Because D-SNPs generally target the LIPSA and offer a defined standard Part D benefit design, Part D value added is nonzero only if a plan includes lower cost sharing than the low-income subsidy (LIS) copays (or no cost sharing). A no-cost-sharing approach is generally, but not always, administered through the Value-Based Insurance Design (VBID) program Part D LIS copay waiver to ensure D-SNP beneficiaries pay no cost sharing for their medications. This strategy was adopted in 2021, for the first time, by United Healthcare, and in 2022 and 2023 there was much wider adoption by the market, resulting in year-over-year growth of about $2 PMPM. While VBID participation is still on the rise¹ in 2024, the majority of the nationwide players offering D-SNPs were already offering this benefit design on their D-SNPs prior to 2024, resulting in a lower market increase of $0.78 PMPM as smaller MAOs adopt this design in 2024.

Part C value added is key to D-SNP beneficiaries and continues to increase significantly from 2023 to 2024. Growth in Part C value added slowed from 2022 to 2023, relative to the surrounding years. In the 2023 final rule,² the Centers for Medicare and Medicaid Services (CMS) mandated “the MOOP limit in an MA plan (after which the plan pays 100 percent of MA costs for Part A and Part B services) must be calculated based on the accrual of all cost-sharing in the plan benefit, regardless of whether that cost-sharing is paid by the beneficiary, Medicaid, other secondary insurance, or remains unpaid (including cost-sharing that remains unpaid because of State limits on the amounts paid for Medicare cost-sharing and dually eligible individuals' exemption from Medicare cost-sharing).” Previously, D-SNPs could continue collecting cost sharing from the state Medicaid program beyond the MOOP, and thus this regulatory change increased plan liability starting in 2023. This financial headwind may have contributed to more modest increases to supplemental benefit offerings from 2022 to 2023.

From 2023 to 2024, continued enrichment of cash-like benefits such as over-the-counter (OTC) benefit cards, food benefits, and utilities benefits is a significant driver of the high increase in Part C benefit value. The growth of these benefits is discussed in detail below.

D-SNP plans continue to enhance key supplemental benefits

MA plans typically offer additional benefits not provided under FFS Medicare, referred to as supplemental benefits. This discussion focuses on mandatory supplemental benefits and excludes optional supplemental benefits, for which members elect coverage and pay an additional premium. Dental, vision, hearing, and over-the-counter (OTC) benefit cards have consistently been the most popular uniformly offered supplemental benefits offered by D-SNPs, and this remains true in 2024.³ Figure 2 shows the average annual limits for dental, vision hardware, and hearing hardware benefits in 2023 and 2024. For plans with shared limits across preventive and comprehensive dental services, the shared limit is included in both the average preventive limit and average comprehensive limit calculation.

Average dental, vision hardware, and hearing hardware limits decreased from 2023 to 2024 among D-SNP plans offering these benefits, for which over 90% of beneficiaries have coverage in 2024. This may have been due to the desire to fund other non-uniformly offered benefits, discussed later in this paper, or due to other current or anticipated MA program headwinds. This is in contrast to the general enrollment market where, on average, limits for these services increased from 2023 to 2024. While plans can offer separate preventive and comprehensive dental limits, many choose to offer a combined limit across all dental services. About 57% of D-SNPs are offering a combined dental limit in 2024.

Figure 3 shows the average annual monthly limit for OTC benefit cards for 2021 through 2024.

Average OTC benefit card limits increased from 2023 to 2024 similar to previous years, with an average limit equating to just under $150 per month. This is in contrast to the general enrollment market where, on average, limits for OTC benefit cards stayed level from 2023 to 2024. Plans can choose the periodicity of their OTC benefit card (monthly, quarterly, annually) and choose whether the benefit rolls over to the following period or not. Over 98% of D-SNP beneficiaries have an OTC benefit covered in 2024.

Combined benefit offerings continue to grow in 2024

Combined benefits, or “combo” benefits, are designed to include multiple supplemental benefits in one package and may have a total dollar limit across all benefits in the package. Many different combinations of benefits are offered through this design. While shared preventive and comprehensive dental limits fall into the combo benefit category when filed in the plan benefit package (PBP), we do not include them in this discussion—we focus on “true” combo benefits, which include multiple types of unrelated benefit types. Figure 4 shows the percentage of D-SNPs in 2023 and 2024 offering specific benefit combinations for the most common combined benefit structures.

Dental, vision, and hearing benefits are a common combined benefit structure. While the prevalence of dental, vision, and hearing benefits alone decreased from 2023 to 2024, the shift toward plans offering these three benefits plus an OTC benefit card accounts for most of the decrease. A similar trend is observed in the general enrollment market.

Combined benefits including an OTC benefit card increased from 2023 to 2024. About 30% of D-SNPs are combining OTC with a VBID or Special Supplemental Benefits for the Chronically Ill (SSBCI) offering in 2024, which is often either a food and/or utilities benefit. One large national carrier is offering plans that include OTC combined with home and bathroom safety devices in 2024, which is driving the significant increase in the ”OTC and Other” category from 2023 to 2024 (and which applies to the general enrollment market as well). Other benefits often combined with OTC include dental, vision, hearing, fitness, and transportation.

The percentage of beneficiaries with at least one true combo increased over 20 percentage points, from 65% to 86% from 2023 to 2024. The largest increase in true combined benefit prevalence occurred from 2021 to 2022, with an increase from 8% to 52%. This significant increase of true combo benefit prevalence in the D-SNP market indicates plans now consider combined benefits table stakes in the D-SNP market and believe members find value in benefits allowing choice and flexibility. As combo benefits become more prevalent in the MA market, member understanding of how these designs work and how to use them may improve as well, leading to increased utilization of these benefits.

Non-uniformly offered benefit offerings through the VBID program are table stakes for D-SNPS

Through both the VBID demonstration program and the benefit flexibility known as SSBCI, MAOs can provide reduced cost sharing or additional supplemental benefits for enrollees based on condition and, under VBID only, socioeconomic status.⁴ In the 2024 D-SNP market, various additional benefit flexibilities are very common through VBID offerings, while SSBCI participation decreased.

The percentage of beneficiaries with coverage through VBID will increase 4% from 2023 to 2024, while the percentage of beneficiaries with coverage through SSCBI will decrease 5%. About 93% of D-SNP beneficiaries will be enrolled in a D-SNP utilizing the VBID program, the highest in any year since the program’s inception. SSBCI benefits are still offered by some D-SNPs, but with the lowest frequency since 2021, at 22% of beneficiaries in an SSBCI plan. This signals the VBID program is considered critical for offering a competitive D-SNP.

The percentage of members with access to food/produce, general supports for living (generally utilities and rent), and the low-income subsidy (LIS) copay reduction ($0 Rx cost sharing) is near or at 90%. While food/produce coverage has remained fairly steady in the percentage of beneficiaries with access to this benefit since 2022, general supports for living has experienced double-digit growth in every year since 2021, with 2024 coverage at 90%. MAOs appear to be offering these benefits on their D-SNPs in order to remain competitive.

Methodology

To perform these analyses, we relied on detailed information on MA benefits, premiums, and enrollment as released by CMS. Enrollment used to calculate weighted averages is from February of each year, with the exception of 2024, which relies on September 2023 enrollment cross-walked to 2024.

The estimated value of the Part C and Part D benefits is evaluated using Milliman’s internal pricing models, including the 2024 Milliman Medicare Advantage Competitive Value Added Tool (Milliman MACVAT®), which is available for external license, calibrated to county-specific 2024 FFS costs with consistent medical management and population base assumptions for each county. This information is used in conjunction with plan-specific benefits, premiums, and benchmark revenue by county released by CMS to determine the value added for each plan.

This analysis excludes general enrollment, chronic SNP (C-SNP), institutional SNP (I-SNP), Prescription Drug Plans (PDPs), medical savings accounts (MSAs), Medicare-Medicaid Plans (MMPs), Program of All-Inclusive Care for the Elderly (PACE), Part B only, and Cost plans. We excluded all U.S. territories from these results.

2025 will usher in more unknowns as revenue pressures increase

The 2024 D-SNP market remains strong and is poised for additional growth; the number of SNPs has nearly doubled since 2019 and grew about 4% since 2023.⁵ In addition, a number of national organizations have publicly declared their support of long-term D-SNP growth.⁶ However, 2025 will almost certainly result in more significant benefit design changes, given the looming impacts of IRA, the 2025 proposed rule, star rating methodology changes, revenue pressures, and risk model changes, just to name a few.

MAOs and other stakeholders should understand local market implications of the anticipated market changes noted above on D-SNP competitor benefit designs. Those that are able to better understand these changes in relation to their own strategic objectives will be better equipped to capitalize on 2025 headwinds.

Caveats, limitations, and qualifications

The information in this paper is intended to describe changes and trends in the Medicare D-SNP market. It may not be appropriate, and should not be used, for other purposes.

We relied on publicly available enrollment and premium data from the Centers for Medicare and Medicaid Services (CMS) and the Milliman MACVAT® to support the data presented in this paper. If this information is incomplete or inaccurate, our observations and comments may not be appropriate. We reviewed the data for reasonability but did not audit the data.

Milliman has developed certain models to estimate the values included in this paper. The intent of the models was to estimate the value added of services above traditional Medicare for 2024 Medicare Advantage Prescription Drug (MA-PD) plans, as well as summarizing all benefits offered in the MA-PD market from 2021 through 2024. Milliman has reviewed the models, including their inputs, calculations, and outputs, for consistency, reasonableness, and appropriateness to the intended purpose and in compliance with generally accepted actuarial practice and relevant Actuarial Standards of Practice (ASOPs).

Julia Friedman and Mary Yeh are members of the American Academy of Actuaries and meet the qualification standards of the American Academy of Actuaries to render the actuarial opinion contained herein.

¹ CMS. Medicare Advantage Value-Based Insurance Design Model. Retrieved January 9, 2024, from https://www.cms.gov/priorities/innovation/innovation-models/vbid.

² The full text of the final rule is available at https://www.federalregister.gov/documents/2022/05/09/2022-09375/medicare-program-contract-year-2023-policy-and-technical-changes-to-the-medicare-advantage-and.

³ Laktas, J., Yeh, M., & Friedman, J.M. (March 21, 2023). Prevalence of Supplemental Benefits in the D-SNP Medicare Advantage Marketplace: 2019 to 2023. Milliman White Paper. Retrieved January 9, 2024, from https://www.milliman.com/en/insight/prevalence-supplemental-benefits-d-snp-medicare-advantage-marketplace-2023.

⁴ Murphy-Barron, C.M., Pelizzari, P.M., & Regan, B. (February 2019). The Medicare Advantage Value-Based Insurance Design Model: Overview and Considerations. Milliman White Paper. Retrieved January 9, 2024, from https://www.milliman.com/en/insight/the-medicare-advantage-value-based-insurance-design-model-overview-and-considerations.

⁵ Freed, M. et al. (November 15, 2023). Medicare Advantage 2024 Spotlight: First Look. KFF. Retrieved January 9, 2024, from https://www.kff.org/medicare/issue-brief/medicare-advantage-2024-spotlight-first-look/.

⁶ Kelly, L.F. (December 21, 2023). Investor Day Roundup: Centene, CVS, United See Promise of Duals Market in 2024 and Beyond. AIS Health. Retrieved January 9, 2024, from https://aishealth.mmitnetwork.com/blogs/radar-on-medicare-advantage/investor-day-roundup-centene-cvs-united-see-promise-of-duals-market-in-2024-and-beyond.