Medicare Advantage organizations (MAOs) can offer different types of Medicare Advantage Prescription Drug (MAPD) plans targeting different member populations, including general enrollment (GE) plans or special needs plans (SNPs). SNP types include dual-eligible SNPs (D-SNP), chronic condition SNPs (C-SNP), and institutional SNPs (I-SNP).

Each C-SNP serves members who have been diagnosed with the same qualifying chronic condition. As of January 1, 2026, C-SNPs may target 1 of 22 chronic conditions¹ or approved groupings of these conditions that are comorbid and clinically linked. Through 2024, the C-SNP market has been concentrated into a small subset of these conditions, with over 95% of members enrolled in C-SNPs targeting members with diabetes, congestive heart failure, and/or cardiovascular disease.²

When evaluating whether to offer a C-SNP, an MAO will need to consider:

• What are the advantages or disadvantages for an existing member enrolling in a C-SNP versus a different plan (such as a GE plan or D-SNP)? What makes a C-SNP attractive to an eligible member? Is there a risk of losing current members to a competitor that offers a C-SNP?
• Do we believe we can attract additional new members?
• What plans would we be competing against by offering a C-SNP, both within and outside of our organization?
• Can we effectively manage the target condition(s)?
• Do we have a competitive advantage in our market for chronic members, such as contracted providers specializing in the target condition, disease management plans, targeted benefits, and/or formularies?
• Do we have the internal operational capacity for the additional Centers for Medicare and Medicaid Services (CMS) administrative requirements?
• Do we currently offer Special Supplemental Benefits for the Chronically Ill (SSBCI), and would a C-SNP make this more efficient to administer?
• Are C-SNP members more engaged in their own healthcare, which makes it easier to manage?
• Are there opportunities in any of the newly eligible C-SNP conditions (the number of pre-approved condition categories increased from 15 in 2025 to 22 in 2026, listed in footnote 1)?

The following sections discuss the attributes unique to C-SNPs and next steps for MAOs to consider.

Unique C-SNP attributes for MAOs to consider

Risk scores for new members

To account for the increase in morbidity for these members as compared to the GE population, CMS uses increased age/sex risk score coefficients for new to Medicare members enrolled in C-SNPs. Though there are 22 C-SNP conditions, CMS uses one set of coefficients for all C-SNPs for these members.

As an example, a 65-year-old female new to Medicare who is neither disabled nor Medicaid-eligible receives a 0.532 risk score if they are enrolled in a GE plan, but a 0.900 risk score if they are enrolled in a C-SNP, under the 2024 CMS-HCC Part C risk score model (before normalization). This is almost a 70% increase in risk-adjusted revenue for this member.

Risk score accuracy for continuing members

Since members are required to have a qualifying condition to enroll in the plan, each continuing C-SNP member (those not assigned a new enrollee risk score) should generally be diagnosed with at least one HCC corresponding to the C-SNP plan’s target chronic condition. Thus, plans can review the targeted chronic condition HCC (or HCCs) for continuing members as an easy check to confirm at least one HCC is captured. There may be a small portion of members who did not have the diagnosis coded in the prior year (for example, if the condition was recently acquired and the member is newly eligible for the C-SNP), and thus will not have the HCC coded in the base year.

Claims/revenue timing misalignment

A risk to C-SNPs (both for Parts C and D) is the timing of claims expenses and revenue due to CMS's prospective risk adjustment methodology. Under prospective risk adjustment, plans are paid based on diagnoses for chronic conditions submitted for their members from the prior year.

This timing risk is greater for conditions that have acute cost episodes, such as cancer. A member could develop cancer mid-year, change plans from a GE plan to a cancer C-SNP, and receive substantial medical services in the same year. To stay in the C-SNP, the individual must continue to have a qualifying cancer diagnosis during the next year (the year that their risk score reflects the diagnosis).

There is less of a claims/revenue timing mismatch risk for chronic conditions that are treated with long-term care management, such as diabetes, because they are more likely to continue to be diagnosed with these conditions over time.

Year-round enrollment

Medicare members may enroll in a C-SNP at any time year-round, outside of the normal Annual Enrollment Period (AEP) process, as long as the member is eligible (e.g., has the required chronic condition).

SSBCI

MAOs may offer supplemental benefits through the SSBCI program. With termination of VBID, SSBCI remains the only avenue to offer non-primarily health related supplemental benefits, such as a healthy food allowance. SSBCI can only be offered to members who meet the following CMS definition of chronically ill.³

1. Has one or more comorbid and medically complex chronic conditions that are life threatening or significantly limit the overall health or function of the enrollee
2. Has a high risk of hospitalization or other adverse health outcomes
3. Requires intensive care coordination

Although this definition differs from the eligibility criteria for enrolling in a C-SNP, since each member must have a chronic condition to enroll, the C-SNP may have an easier time documenting that a member qualifies for the SSBCI criteria, as C-SNP members are more likely to meet the three SSBCI requirements.

Strategic market positioning

C-SNPs enable targeted marketing to specific populations, which allows MAOs a way to differentiate themselves from the competition.

Targeting GE or dual members

Some MAOs have offered two flavors of a given C-SNP, one targeting non-dual-eligible members and another targeting dual-eligible members. Each can be developed to compete against the non-C-SNPs that target these members. When deciding on what plans to offer, consider that:

• CMS does not apply the D-SNP lookalike test (the test to check if a Medicare Advantage plan is enrolling a high proportion of dual eligible members) to SNPs, including both C-SNPs and I-SNPs (and of course D-SNPs).
• Unlike D-SNPs, C-SNPs are still subject to Total Beneficiary Costs (TBC) testing, including dual-targeting C-SNPs.
• In November 2025, CMS commented that it is monitoring the growth in C-SNP and I-SNP plans that enroll dual-eligible members and is requesting industry comments on this issue. We recommend that any MAO offering or considering a C-SNP monitor CMS policy for changes that pertain to enrolling dual eligible members in C-SNPs.

Limited potential membership

Any Medicare-eligible member can enroll in a general enrollment plan. However, members must have a qualifying chronic condition to enroll in a C-SNP, and the MAO must receive documentation annually from each member’s provider confirming that they continue to have the targeted condition. This limits the members eligible to enroll in the C-SNP.

Pharmacy considerations

C-SNP members may use a different distribution of drugs than typical MAPD members. MAOs need to evaluate their PBM arrangements under this different drug mix, including formulary placement, discounts, and rebates. They will also need to consider the formulary design and whether a C-SNP should offer a formulary focusing on the targeted condition to both attract membership and encourage medication adherence.

MAOs also need to consider whether the Part D risk score model sufficiently funds the expense of the drugs its members are expected to use.

Model of Care

CMS requires that C-SNPs develop and implement a Model of Care (MOC) and complete an annual health risk assessment (HRA) for each member. This requires investment in additional staff, care protocols, and care management infrastructure.

Disease progression

C-SNP members with select conditions may progress at a higher rate towards more advanced disease categories, such as end-stage renal disease (ESRD). For example, a plan offering a C-SNP for members with diabetes should also review its experience for ESRD members and consider the impact that an increase in ESRD membership may have on their financial results, as the percentage of members with ESRD may grow over time.

Star Rating considerations

C-SNPs enroll many beneficiaries with complex chronic conditions and increased risk from social determinants of health (e.g., dual-eligible, low-income subsidy eligible, disabled). These populations often perform lower on certain clinical and medication-related measures that impact the plan’s Star Ratings. CMS has partially adjusted for this through the upcoming risk adjustment on Part D adherence measures and the member-mix adjustment to overall Star Ratings through the Categorical Adjustment Index (CAI).

Next steps for MAOs considering a C-SNP

The decision to offer a C-SNP requires careful analysis of an MAO's operational capabilities, risk tolerance, and market strategy. Below, we outline initial steps for evaluating if a C-SNP is a viable option.

Step 1: Review and model financial opportunities and risk

An MAO has various options to model projected C-SNP performance. These include:

1. Review the historical performance, population size, and profitability for current members who have the targeted conditions in the MAO’s existing plans.⁴ With a large enough membership pool, it may also be worth studying results by provider group. This analysis would provide a realistic view of results that could be achieved for these member cohorts.
2. Study Medicare Fee-For-Service (FFS) populations, costs, and risk scores using the Medicare Research Identifiable Files (RIF) data for members with the targeted conditions in the MAO’s service area. This may include reviewing changes over time, such as disease progression and migration into ESRD status (if applicable).
3. Quantify the financial impact on the overall block of business if the MAO’s current members migrate to the new C-SNP and/or if new membership is gained. This includes evaluating whether the risk-score lift from new members will have a material impact on the medical loss ratio (MLR) performance of those members.
4. Review the historical profitability for C-SNPs offered by other MAOs relative to non-C-SNPs via CMS’s release of bid values (though this information is typically lagged several years).
5. Various Part D analyses should also be considered, including MLR analysis for members with the targeted conditions and/or deeper formulary reviews, including discount and rebate analysis based on the mix of drugs that would be expected for the target population.

Step 2: Conduct a market assessment

An MAO should also assess the plans offered in its current market, including:

1. Identify existing GE, D-SNP, and C-SNP offerings, in particular, new or growing plans
2. Compare premium levels, benefit designs, supplemental benefits (e.g., SSBCI, dental/vision, over-the-counter [OTC], flex cards), and Star Ratings
3. Annually assess whether the offerings are competitive and/or if there are risks of losing existing members to other plans in the target market

Wrap up

C-SNPs can provide MAOs with an opportunity for membership growth, market differentiation, and mission-aligned service for members with complex health needs. However, success requires more than a competitive premium and benefit package; it requires financial modeling, market knowledge, robust clinical infrastructure, and an understanding of the MAO’s target market.

Milliman is well suited to assist MAOs considering a C-SNP through our deep actuarial and operational expertise and comprehensive data assets and tools. To discuss how these insights translate into actionable strategies for your organization, contact your Milliman consultant.

¹ See page 366 at Centers for Medicare and Medicaid Service. (2024, April 23). Federal register. Department of Health and Human Services. https://www.govinfo.gov/content/pkg/FR-2024-04-23/pdf/2024-07105.pdf.

² See Figure 5 at Yeh, M. (2024, April 15). Chronic condition special needs plans: 2024 market landscape and future considerations. Milliman. https://www.milliman.com/en/insight/chronic-condition-special-needs-plans-2024-market-landscape.

³ Centers for Medicare and Medicaid Services. (2019, April 24). Implementing supplemental benefits for chronically ill enrollees [Memorandum]. Department of Health and Human Services. https://www.cms.gov/medicare/health-plans/healthplansgeninfo/downloads/supplemental_benefits_chronically_ill_hpms_042419.pdf.

⁴ Koenig, D., Rodrigues, D., & Petroske, J. (2025, November 10). Disease prevalence in Medicare Advantage and Part D populations. Milliman. https://www.milliman.com/en/insight/disease-prevalence-cms-hcc-rxhcc-risk.