Impacts of Medicare Policy Changes on Dual Eligible Individuals and State Operations: A California Perspective

Integrated programs aim to improve the quality of care for dually eligible individuals and draw from Medicare and Medicaid policies, standards, and regulations while also relying on oversight and support from both federal and state agencies. In the Health Affairs article, Innovating Without Compromising Integration: Considerations for Medicare, Aurrera Health Group discusses several of the Centers for Medicare & Medicaid Services (CMS) CY 2025 Medicare Advantage (MA) and Part D Final Rule requirements intended to benefit dual eligible individuals that may present challenges for states exploring integrated care options. Understanding CMS policy changes and engaging with federal partners is crucial for states to develop and meet the unique requirements of integrated care programs. California recognizes this and continues to make significant efforts to ensure that the integration process is rooted in shared federal and state knowledge and collaboration.

The Rise of Dual Eligible Special Needs Plans (D-SNPs)

Dual Eligible Special Needs Plans (D-SNPs) are a type of MA plan that provides specialized care and wrap-around services to dual eligible individuals. D-SNPs have become the mainstay integrated care option for states, such as in California, particularly as more states transition from federal Financial Alignment Initiative (FAI) demonstrations to other types of integrated care programs for dual eligible individuals. D-SNPs are required to maintain contracts with both CMS and state Medicaid agencies and have more robust requirements than Medicare or Medicaid alone due to the need to integrate and coordinate care.

Nationally, of the total 12.8 million dual eligible individuals, 5.85 million were enrolled in a D-SNP in 2024. In California, almost a quarter (1.4 million) of Medicare beneficiaries were dually eligible for Medicare and Medi-Cal (California’s Medicaid program) in 2022. Given the rise in D-SNPs across the country, it is critical that states partner with CMS to promote policy implementation that will benefit both the members and the state’s integrated care model.

The Value of Medicare Expertise within State Medicaid Agencies

For over ten years, Aurrera Health has worked closely with the California Department of Health Care Services (DHCS) on a variety of initiatives and programs focused on integrating Medicare and Medi-Cal for dual eligible individuals through strategic planning, policy development and implementation, and stakeholder engagement. It is through this relationship and collaboration that Aurrera Health understands the importance of states having a dedicated team with robust Medicare expertise embedded within state Medicaid agencies. In California, the DHCS Office of Medicare Innovation and Integration (OMII) leverages their understanding of Medicare requirements and foundation in Medi-Cal policies and operations to provide a comprehensive perspective crucial to designing policies and programs that shape the health care experiences of dual eligible individuals.

Engaging Stakeholders in Integrated Care Policies

Aurrera Health supports DHCS OMII in their commitment to bolster and improve upon integrated care programs and policies by thoroughly and regularly engaging with key stakeholders. In 2021, soon after OMII was launched at DHCS, the CalAIM Managed Long Term Services and Supports (MLTSS) and Duals Integration Workgroup was established based on requirements in state statute. These quarterly workgroup meetings serve as a venue for federal, state, and local partners to discuss CalAIM MLTSS initiatives and integrated care policies for dual eligible individuals (including D-SNPs). Aurrera Health supports DHCS OMII on the CalAIM MLTSS and Duals Integration Workgroup series and DHCS uses stakeholder feedback shared during these meetings to help inform future policy considerations and development.

California’s robust approach to stakeholder engagement also allows DHCS to inform stakeholders of the federal changes that are impacting dual eligible individuals in the state. For example, DHCS’ communications regarding the CMS CY 2025 updates to the Special Enrollment Periods (SEPs). As discussed in the Health Affairs article, the quarterly SEP was replaced by a monthly SEP for dual eligible individuals. As this policy was being rolled out, DHCS regularly presented updates and answered questions from stakeholders during the CalAIM MLTSS and Duals Integration workgroups. Staff from CMS’ Medicare-Medicaid Coordination Office (MMCO) are often in attendance to serve as a resource to DHCS and stakeholders and to gain insight into state perspectives. Following these workgroups, DHCS works closely with CMS MMCO to ensure that stakeholder feedback is integrated into the state’s policies for D-SNPs.   

Priorities for the Future

The recent Medicare developments outlined in the Health Affairs article may improve the quality of care dual eligible individuals receive, as they offer flexibility and add transparency for individuals simultaneously navigating both the Medicare and Medicaid health care delivery systems. However, to ensure these successful policy outcomes exist with minimal burden, it is vital that states invest in staff, resources, and initiatives that prioritize staying current on federal rulemaking and understanding how new Medicare policies impact dual eligible individuals. Reinforcing these efforts with intentional stakeholder engagement and collaboration with CMS allows for the successful development of integrated programs. Other states can look to California’s DHCS as an example for bolstering state and national partnerships aimed at developing innovative policies that support dual eligible individuals.

CMS is soliciting public comments on theCY2026 MA Policy and Technical ChangesProposed Rule here until 5pm ET on January 27, 2025. We encourage states to submit comments to ensure CMS understands the full implications of potential requirements. If you are interested in learning more about Medicare and Medicaid policy development or stakeholder engagement, please reach out to Kristal Vardaman.

Juliet Kohli [Policy Consultant]

Camilla Barbaduomo [Policy Associate]