Medicare Advantage (MA) is a government-sponsored program offering an alternative to fee-for-service (FFS) Medicare, where benefits are provided to Medicare beneficiaries by private health plans, otherwise known as Medicare Advantage organizations (MAOs). This paper discusses a specialized type of MA plan called an institutional special needs plan, or an I-SNP, and highlights four key takeaways in the 2024 market:

1. I-SNP enrollment continues to rise despite a decrease in the number of I-SNPs offered from 2023 to 2024.
2. Most I-SNPs offer premiums at or below the low-income premium subsidy amount (LIPSA), allowing low-income beneficiaries to enroll in these plans without paying a member premium.
3. National and regional MAOs¹ offering I-SNPs differ significantly in their mandatory supplemental benefit coverage and combined benefit coverage. Some benefits are offered more frequently by national MAOs, while others are offered more frequently by regional MAOs.
4. Special Supplemental Benefits for the Chronically Ill (SSBCI), which are available to members with certain chronic conditions, are a growing area of focus in the I-SNP market, especially among regional MAOs.

What are I-SNPS?

I-SNPs are MA plans that enroll beneficiaries who have had or are expected to need the level of services provided in a long-term care (LTC) facility, such as a skilled nursing facility (SNF), nursing facility (NF), intermediate care facility for individuals with intellectual disabilities (ICF/IDD), or an inpatient psychiatric facility, for 90 days or more.²

An I-SNP must be designated as one of the following three subtypes:

• Institutional (Facility) plans offer coverage to beneficiaries living in LTC institutions, such as those listed above. In this paper, we refer to these plans as “Institutional only.”
• Institutional Equivalent (Living in the Community) plans offer coverage to beneficiaries who do not live in an LTC facility, but rather live in the community (such as at home or in an assisted living facility). These beneficiaries must still require an institutional level of care to be eligible to enroll. Institutional Equivalent plans are sometimes referred to as IE-SNPs. In this paper, we refer to these plans as “Institutional Equivalent.”
• Institutional (Facility) and Institutional Equivalent (Living in the Community) plans offer coverage to beneficiaries residing in both facilities and in the community. In this paper, we refer to these plans as “Institutional or Institutional Equivalent.”

Throughout this paper, the term “I-SNPs” refers to all three of these plan types.

I-SNP market landscape and growth

I-SNPs are a relatively small MA market segment. There are 177 I-SNPs in 2024 relative to 5,817 total individual MA plans³ nationwide, and the average county with at least one I-SNP has two I-SNP offerings in total. Figure 1 displays the count of I-SNPs by institutional plan type from 2021 to 2024, as well as the number of MAOs offering I-SNPs over this same time period.

The total number of I-SNPs increased from 2021 to 2023 but dropped in 2024. Growth in the number of I-SNPs was driven by plans targeting Institutional Equivalent beneficiaries from 2021 to 2023, but the number of I-SNPs dropped in 2024 across all institutional plan types. The decrease in I-SNPs is partially due to national organizations cross-walking multiple plans into one plan from 2023 to 2024, in addition to both national and regional organizations dropping I-SNPs.

The number of MAOs offering I-SNPs decreased from 2022 to 2024. From 2021 to 2022, the number of I-SNP MAOs remained level, as two MAOs (one regional, one national) exited the market and two regional MAOs entered. From 2022 to 2023, three regional MAOs exited and one national MAO entered. From 2023 to 2024, four regional MAOs exited the I-SNP market and none entered, making this the first year in recent history that no organizations chose to launch in the I-SNP market.

Figure 2 displays I-SNP enrollment by institutional plan type from 2021 to 2024.

I-SNP enrollment continues to rise despite a drop in the number of plan offerings, with about 7% total enrollment growth year-over-year from 2021 to 2024. Institutional-only plans are the largest enrollment segment but experience a slower growth rate than Institutional Equivalent plans. The number of individuals eligible for an Institutional Equivalent plan in a given area tends to be small, because these individuals do not live in a facility but must demonstrate that an institutional level of care is required in order to enroll.

Much of the enrollment growth in the I-SNP market is driven by a single large national MAO with about 56% of total I-SNP enrollment in 2024. The second-largest MAO has less than 6% of I-SNP enrollment.

I-SNP enrollment is growing more rapidly in rural areas than urban areas. Rural I-SNP enrollment grew by double-digit percentages in each year from 2021 to 2024, outpacing rural enrollment growth across the total individual MA market. Urban I-SNP enrollment growth is lower than in rural areas and is similar to urban enrollment growth across the total individual MA market. The majority of I-SNP enrollment remains in urban areas but shrunk from 77% to 73% of total I-SNP enrollment from 2021 to 2024 due to more rapid growth in rural areas.

I-SNP member premiums

Some MA plans charge a monthly medical premium to their beneficiaries. For low-income beneficiaries, the federal government covers the member premium up to the low-income premium subsidy amount (LIPSA), which varies by region and is set by the Centers for Medicare and Medicaid Services (CMS) each year. Plans targeting low-income beneficiaries tend to set premiums equal to or less than the LIPSA, thereby providing coverage to these beneficiaries at no cost to the member.

Figure 3 displays 2024 I-SNP member premiums by institutional plan type in relation to the LIPSA. We use $0 premiums and the LIPSA as break points in this analysis. Note that the lowest I-SNP premium greater than $0 in 2024 is $15, making the $0 premium plans distinctly different from plans offering premiums between $0 and the LIPSA.

Most I-SNPs target premiums equal to the LIPSA, but many offer lower premiums.

• Institutional-only plans tend to enroll primarily low-income beneficiaries, and thus do not set their premiums above the LIPSA in any case in 2024. Institutional-only plans are the least likely to offer premiums below the LIPSA, which reduces the plan’s premium revenue without offering any benefit to low-income beneficiaries.
• Institutional or Institutional Equivalent plans are the most diverse in their premium strategies, with plans offering premiums at all levels. This may be because these plans enroll the widest variety of beneficiaries by income status.
• Institutional Equivalent plan premiums are also never above the LIPSA in 2024. These plans are about as likely to set their premium to the LIPSA as they are to offer a reduced or $0 premium.

I-SNP supplemental benefits

MA plans typically offer additional benefits not provided under traditional Medicare, referred to as supplemental benefits. This discussion focuses on mandatory supplemental benefits and excludes optional supplemental benefits, for which each individual beneficiary within a plan can elect optional supplemental coverage and pay an additional premium. Dental, vision, and hearing benefits have consistently been the most popular supplemental benefits offered in the general MA market.⁴ Figure 4 displays the percentage of I-SNP beneficiaries with coverage for dental, vision, and hearing benefits in 2024 split between national and regional MAOs. For this analysis, we classified CVS, Elevance, Humana, and UnitedHealthcare as national MAOs⁵ in the 2024 I-SNP market. We classified all other MAOs as regional carriers.

All beneficiaries enrolled in national I-SNPs in 2024 have dental, vision, and hearing coverage, with regional I-SNPs covering these benefits less frequently. About 90% of beneficiaries in regional I-SNPs have vision and hearing coverage in 2024, but only about 50% have dental coverage, a significant difference. The national I-SNPs appear to mirror the general MA market, where dental, vision, and hearing are covered by nearly all plans. Lower dental coverage in regional I-SNPs may be due to more customized benefit designs at the facility or region level than national MAOs consider. For example, some institutional facilities offer dental services through other vendors, and I-SNPs targeting beneficiaries in those facilities do not offer dental coverage, as it would be duplicative. Additionally, some I-SNPs may not offer dental coverage because dental coverage is provided by the state Medicaid program. From a marketing perspective, however, beneficiaries may find national I-SNP coverage of dental, vision, and hearing more attractive.

Figure 5 shows the percentage of beneficiaries with coverage of other supplemental benefits most frequently offered by I-SNPs, again split between national and regional I-SNPs.

National I-SNPs offer podiatry, over-the-counter (OTC) drug card, and transportation benefits to 100% of beneficiaries in 2024, again mirroring the general MA market. Regional I-SNP coverage of these benefits is lower, ranging from 66% to 89%.

Beneficiaries enrolled in regional I-SNPs are more likely to have in-home support services, fitness, health education, and acupuncture benefits than those in national I-SNPs. Regional I-SNPs appear to take a more tailored approach with their supplemental benefits than the national I-SNPs, which focus on the same supplemental benefits as the general MA market. Regional I-SNPs may have a closer relationship with their beneficiaries due to serving a much smaller group of individuals in specific areas or facilities, which allows them to deeply understand the needs of their beneficiaries and design benefit packages most in line with those needs. Additionally, regional I-SNPs are often co-owned by the facilities where the beneficiaries reside, giving the plan greater access and control over the management and administration of these benefits within the facility than a national MAO would have.

Combined benefit packages are frequently offered in 2024 by national I-SNPs, but rarely by regional I-SNPs. 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. 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. Approximately 60% of I-SNP beneficiaries are enrolled in a plan with a true combo benefit in 2024, largely due to national MAO offerings. I-SNPs with combo benefits frequently include an OTC card benefit paired with a benefit of home and bathroom safety, fitness, or SSBCI.

I-SNP SSBCI offerings

Through both the Value-Based Insurance Design (VBID) demonstration program and the benefit flexibilities known as Uniform Flexibility (UF) and SSBCI, MAOs can provide reduced cost sharing and/or additional supplemental benefits for enrollees based on condition and, under VBID only, socioeconomic status.⁶ Only one I-SNP each offers VBID⁷ or UF, so we focus our discussion on SSBCI.

Of beneficiaries enrolled in regional I-SNPs, 50% have SSBCI coverage in 2024, relative to only 2% of beneficiaries in national I-SNPs. These benefits are a key focus for regional plans and may make them more attractive to beneficiaries than large national competitors.

I-SNPs offering SSBCI tend to list many qualifying chronic conditions, seemingly with the goal of providing these benefits to the largest subset of their plan’s population as possible. Individuals requiring an institutional level of care may be more likely to have at least one chronic health condition than the general MA population, so plans may be able to qualify most of their beneficiaries to receive SSBCI through this approach.

Figure 6 shows the most common SSBCI⁸ offered by I-SNPs in 2024.

Social Needs Benefit is the most frequently offered SSBCI by I-SNPs in 2024, followed by Food and Produce and Non-Medical Transportation.

Plans can offer custom SSBCIs, as evidenced by the beauty and barber shop benefit in Figure 6, which is not a standard option in the MA plan benefit package (PBP). This is an example of a benefit designed to meet a very specific need among the I-SNP population. Other custom SSBCI offerings observed in 2024 for I-SNPs are non-Medicare-covered restorative nursing, pet assistance, travel care assistance, nonfood grocery, and memory activity box.⁹

Bid considerations for 2025 and beyond

Regulatory implications

In 2025, the Inflation Reduction Act (IRA) is anticipated to transfer more Part D liability to plan sponsors, ^{10, 11, 12} potentially leading to an increase in the direct subsidy. This shift may have a considerable impact on LIPSAs by region, which are a premium target for many I-SNPs. Additionally, because a large share of I-SNP members hit the catastrophic phase of the Part D benefit, I-SNPs may face significant fluctuations in Part D costs. CMS is expected to update the Part D risk score model for 2025 to account for liability changes under the IRA, but this new model framework is unknown at this time. Part C risk model changes¹³ may also increase revenue pressures for I-SNPs, as CMS is currently in the process of transitioning to a clinically revised CMS-Hierarchical Condition Category (HCC) risk score model for Medicare Advantage payments, which could result in meaningful changes for plan revenue. Plans should work to understand these program changes and their implications in the 2025 bid process.

Additionally, under the 2025 CMS Proposed Rule, starting with contract year (CY) 2026 plans would be required to demonstrate at the time of bid submission through “relevant acceptable evidence” that any SSBCI service offered has a reasonable expectation of improving or maintaining the health or overall function of a chronically ill beneficiary.¹⁴ This more stringent regulation could make offering niche SSBCI services more challenging, as research on their impact may be limited.

Market growth and competition

I-SNPs are likely to remain a relatively small portion of the MA market in the near term, but year-over-year enrollment increases indicate there are still growth opportunities available in this space. Understanding beneficiary needs and offering tailored benefit packages are key for regional players to effectively compete with their large national counterparts.

Pressure from dual-eligible special needs plans (D-SNPs)

Many low-income institutional beneficiaries are eligible for both Medicare and Medicaid, and thus eligible to enroll in D-SNPs. These plans tend to offer very rich supplemental benefits, including high OTC benefit card limits, or food and utilities allowances through the VBID program.¹⁵ These benefit packages may entice institutional members away from I-SNPs, placing additional strain on I-SNP enrollment. To combat this, I-SNPs should highlight how their institutional model of care is well-suited to the care coordination of institutional beneficiaries and, for some institutional plan types, how their benefits are tailored specifically to members residing in facilities. They should also understand the benefit designs of competing D-SNPs in their areas when making benefit decisions and marketing their plans.

Methodology

To perform these analyses, we relied on detailed information on MA benefits, premiums, and enrollment as released by CMS and summarized in the 2024 Milliman Medicare Advantage Competitive Value Added Tool (Milliman MACVAT®), which is available for external license. 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 plans. We also relied on the Office of Management and Budget¹⁶ to distinguish between urban and rural county indicators.

The data above was summarized and analyzed in the following groupings:

• Plan type
• Regional versus national organizations
• National MAOs in the 2024 I-SNP market are CVS, Elevance, Humana, and UnitedHealthcare. The other organizations in the I-SNP market are regional.

This analysis excludes all MA SNP types other than I-SNPs. References to the total individual MA market exclude Employer Group Waiver Plans (EGWPs), Program of All-Inclusive Care for the Elderly (PACE), and Prescription Drug Plans (PDPs).

Caveats, limitations, and qualifications

The information in this paper is intended to describe changes and trends in the Medicare institutional special needs plan 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 and conclusions 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.

The credibility of certain comparisons provided in this paper may be limited, particularly where the number of plans in certain groupings is low. Some metrics may also be distorted by premium and benefits in a few plans with particularly high enrollment. Future I-SNP experience may differ from the historical results presented in this paper.

Mary Yeh and Ivan Yen 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 Please reference the Methodology section below for the distinction between national and regional MAOs.

² CMS. Institutional Special Needs Plans (I-SNPs). Retrieved January 31, 2024, from https://www.cms.gov/medicare/enrollment-renewal/special-needs-plans/institutional.

³ When referring to the total individual MA market, we exclude Employer Group Waiver Plans (EGWPs), the Program of All-Inclusive Care for the Elderly (PACE), and Prescription Drug Plans (PDPs).

⁴ Laktas, J., Yeh, M., & Friedman, J.M. (March 21, 2023). Prevalence of Supplemental Benefits in the General Enrollment Medicare Advantage Marketplace: 2019 to 2023. Milliman White Paper. Retrieved February 1, 2024, from https://www.milliman.com/en/insight/prevalence-supplemental-benefits-general-enrollment-ma-marketplace-2023 .

⁵ We classified national MAOs as those with over 500,000 members. The other three national MAOs are Centene, Cigna, and Kaiser, which do not offer any I-SNPs.

⁶ 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 February 1, 2024, from https://www.milliman.com/en/insight/the-medicare-advantage-value-based-insurance-design-model-overview-and-considerations .

⁷ Five I-SNPs are participating in the VBID-Hospice program in 2024, which enables MA plans to provide hospice services to their beneficiaries.

⁸ Descriptions of each SSBCI offering are provided by CMS here: https://www.cms.gov/medicare/health-plans/healthplansgeninfo/downloads/supplemental_benefits_chronically_ill_hpms_042419.pdf .

⁹ These benefits are custom offerings and thus no official definitions of the services covered are available.

¹⁰ Cline, M., Karcher, J., Klaisner, J.K., & Klein, M. (August 2022). Weathering the Reform Storm: The Inflation Reduction Act’s Changes to Medicare and Other Healthcare Markets. Milliman Brief. Retrieved February 1, 2024, from https://www.milliman.com/en/insight/weathering-the-reform-storm .

¹¹ Ally, A.J., Berman, M., Klein, M., & Pierce, K. (September 30, 2022). The Inflation Reduction Act Passed, Now What? Retrieved February 1, 2024, from https://www.milliman.com/en/insight/the-inflation-reduction-act-passed-now-what .

¹² Berger, C.N., Engel, T., & Wanta, T.M. (August 30, 2023). Part D Redesign Under the Inflation Reduction Act. Milliman White Paper. Retrieved February 1, 2024, from https://www.milliman.com/en/insight/part-d-redesign-under-ira-potential-financial-ramifications .

¹³ Pipich, R., Cross, K., & Rothschild, M. (February 2023). High-Level Impacts of the Proposed CMS-HCC Risk Score Model on Medicare Advantage Payments for 2024. Milliman White Paper. Retrieved February 1, 2024, from https://www.milliman.com/en/insight/analysis-of-2024-cms-proposed-hcc-model .

¹⁴ CMS (November 6, 2023). Fact Sheet: Contract Year 2025 Policy and Technical Changes to the Medicare Advantage Plan Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and Programs of All-Inclusive Care for the Elderly, and Health Information Technology Standards. Retrieved February 1, 2024, from https://www.cms.gov/newsroom/fact-sheets/contract-year-2025-policy-and-technical-changes-medicare-advantage-plan-program-medicare .

¹⁵ Friedman, J.M. & Yeh, M. (January 16, 2024). State of the 2024 Medicare Advantage Industry: Dual-Eligible Plan Valuation and Benefit Offerings. Milliman White Paper. Retrieved February 1, 2024, from https://www.milliman.com/en/insight/state-of-the-2024-medicare-advantage-industry-dual-eligible .

¹⁶ U.S. Census Bureau. Delineation Files. Retrieved February 1, 2024, from https://www.census.gov/geographies/reference-files/time-series/demo/metro-micro/delineation-files.html .