The Center for Medicare & Medicaid Services’ (CMS) recently released Contract Year (CY) 2027 Medicare Advantage (MA) and Part D Proposed Rule has significant implications for the future of integrated care models for dually eligible individuals (those with Medicare and Medicaid) and federal oversight of Special Needs Plans (SNPs). For example, the proposed rule highlights two issues that may cause concerns for states using dual eligible special needs plans (D-SNPs) to integrate care for dually eligible individuals.

CMS proposes to streamline or eliminate several federal reporting and oversight requirements for plans beginning in 2027.
CMS acknowledges the rapid growth of chronic condition special needs plans (C-SNPs) and, less significantly, institutional special needs plans (I-SNPs), many of which enroll large numbers of dually eligible individuals without the state coordination requirements applied to D-SNPs. The proposed rule includes a Request for Information (RFI) to explore policy options that could give states new authority in C-SNP contracting.

CMS’ future actions on the issues could reshape how states monitor plan performance, ensure coordination of Medicare and Medicaid benefits, and protect dually eligible individuals from receiving fragmented care. It is critical for states to engage directly with CMS through rulemaking and this year’s RFI process to help shape the direction of integrated care and avoid unintended shifts of oversight responsibilities onto state Medicaid agencies. Comments are due January 26, 2026.

Proposed Changes to Federal Reporting Requirements for SNPs

The proposed rule signals possible shifts in federal reporting and oversight requirements, which may have major implications for states. CMS is soliciting comments on whether to streamline or eliminate reporting requirements related to network adequacy, Medical Loss Ratio (MLR), benefit and utilization data (including supplemental benefits), and Model of Care (MOC) oversight. These reporting measures play a central role in how CMS monitors plan performance and enforces protections for dually eligible individuals. This federal oversight can be valuable for states, as it provides consistent, standardized information, some of which states can use to inform their own monitoring and policymaking. Additionally, many states depend on the federal reporting data because state agencies may lack the staff or resources to collect and analyze these data themselves. If CMS reduces its reporting requirements, states may face pressure from consumer advocates to take on that responsibility, while also balancing budget priorities and resourcing concerns. For states with limited capacity, this could introduce new burdens and complicate existing oversight processes.

CMS Seeks State Feedback on Implications of C-SNP Growth

SNPs are a type of MA product designed to serve specific populations: individuals with chronic conditions, those experiencing institutionalization, and individuals who are dually eligible for Medicare and Medicaid. While all SNPs must operate under a CMS-approved MOC, which outlines the plan’s care management and coordination processes, only D-SNPs are required to contract with both CMS and state Medicaid agencies through a State Medicaid Agency Contract (SMAC). This contracting structure gives states a formal role in setting additional care coordination requirements for D-SNPs and overseeing plan performance. In contrast, C-SNPs contract solely with CMS, leaving states without any authority to shape how these plans coordinate with Medicaid coverage to better serve dually eligible individuals. As a result, dually eligible individuals enrolled in C-SNPs may not receive the same level of integrated Medicare-Medicaid coordination that states can require in D-SNPs.

As CMS acknowledges in the proposed rule, C-SNPs have increasingly drawn enrollment away from highly integrated models such as Fully Integrated Dual Eligible Special Needs Plans (FIDE SNPs) and the Program of All-Inclusive Care for the Elderly (PACE). CMS is specifically asking for input on whether states should have new contracting authority over C-SNPs, whether to apply D-SNP look-alike contracting limitations to C-SNPs, and whether additional federal standards are needed to prevent the loss of integration. These questions reflect a broader concern that C-SNP growth without state oversight may undermine person-centered coordination, increase administrative complexity, and create unintended incentives for plans to shift enrollment away from more integrated products.

State Engagement in Rulemaking

Our 2024 Health Affairs Forefront article, Innovating Without Compromising Integration: Considerations for Medicare Policy, underscores that state engagement is crucial to ensuring federal MA policy strengthens rather than undermines integrated care, especially as federal decisions increasingly influence state Medicaid operations. Decisions around SNPs, reporting requirements, and state contracting authority will directly affect state operations and the experiences of dually eligible individuals. As CMS considers these potential changes, active state participation is essential to ensuring that regulations help to support state integrated care efforts and mitigate risks of recent MA market trends. By submitting comments on the proposed changes for 2027 and input on the RFI, states have two opportunities to influence the direction of federal policy. By engaging now, states and other policymakers can help protect integrated care strategies and ensure federal decisions reflect state operational needs and capacity constraints as well as the importance of consistent federal data collection.

If you are interested in support with your D-SNP policy strategy or preparing your comment letter, reach out to Kristal Vardaman to learn more about how we can help.