THE CASE FOR CSNP MARKET ENTRY: A strategic case for health plans to enter the chronic special needs plan market

By: John Cole, Talha Bhatti, Harbinder Raina, Pritpal Virdee

Note: This is the first in a three-part article series on the considerations of a health plan to enter the CSNP market. Stay tuned for parts two and three, where we will cover how a plan can assess their readiness and how to implement their CSNP strategy.

Executive summary:

Medicare Advantage (MA) plans are entering a different growth cycle. After years of broad market expansion, overall MA enrollment growth has slowed, while Chronic Condition Special Needs Plans (CSNPs) continue to grow from a relatively small base. There is a timely opening for health plans that already serve large numbers of members with diabetes, cardiovascular disease, congestive heart failure and other qualifying chronic conditions, but have not yet built a product and operating model specifically around them. This article argues that CSNP entry should be viewed as a strategic growth, retention and care-model decision rather than a narrow product expansion.

We explore the opportunity that matters now, how the strategic path differs for non-SNP health plans, DSNP sponsors and plans with both MA and Medicaid managed care assets, and what capabilities must be in place to enter responsibly. Plans that move deliberately can use CSNPs to better serve existing chronic members, strengthen provider and broker relationships, improve documentation and care coordination, and build a more defensible high-acuity Medicare platform; plans that wait risk allowing competitors to define the market before they are ready to compete.

Our recommendation is clear: health plans with significant chronic membership should begin a structured CSNP readiness assessment now.

For plans that already operate a DSNP, the path to CSNP entry is particularly efficient: the Model of Care infrastructure, NCQA approval processes, care management workflows, and Stars governance programs required for CSNP are largely the same as those already in place for DSNP, making incremental entry faster, lower-cost, and lower-risk than a de novo build.

1. Why CSNP and why now?

The Medicare Advantage market is decelerating. MA enrollment growth slowed to 4% in 2025, the lowest rate since 2007, and millions of members have been displaced by plan terminations in consecutive years. Against that backdrop, CSNP enrollment has grown at ~43% per year on average since 2022 and surged 71% in a single year from 2024 to 2025. This is not a rounding error in a flat market; it is the fastest-growing segment in Medicare Advantage.

The opportunity begins with your existing membership. Approximately two-thirds of Medicare Advantage members have at least one of the chronic conditions that qualify for CSNP enrollment. Those members are already in your plan — the question is whether you are serving them through a product and care model designed for their needs, or whether a CSNP competitor will. The question is whether your plan is capturing the revenue and delivering the care model those members warrant or leaving both to competitors.

National carriers are not waiting. UHG, Humana and Elevance have already captured more than 75% of the national CSNP market, and CSNP plan counts grew sharply from 2025 to 2026 across all major entrants. Plans that delay entry are ceding clinical infrastructure, broker relationships and provider loyalty to competitors building moats now.

Three structural advantages make CSNP attractive relative to both standard MA and DSNP: no Medicaid contract is required; the member population is clinically defined and homogeneous, enabling more targeted care management; and the payback period on clinical infrastructure investment is faster than DSNP entry. A fourth advantage applies specifically to plans that already operate a DSNP: the CSNP can be built on the same operational chassis. The Model of Care, NCQA approval process, care management infrastructure and Stars governance required for CSNP are the same four domains already running in a DSNP. For these plans, CSNP entry is not a new build — it is an extension of infrastructure already in place, making it the most capital-efficient path to expanding high-acuity market coverage.

2. The strategic case by plan profile

Profile A: Non-SNP MA plans (no SNP)

Your chronic members receive benefits designed for an average population. A CSNP would be designed specifically for this group and paid more accurately.

The structural mismatch

A standard MA plan is built for a broad Medicare population. Members with chronic conditions are included in that pool, but the benefits, care management model and clinical workflows are not always designed around their specific needs. For members managing diabetes, cardiovascular disease or heart failure, that can create a real gap. This population may need more coordinated support than the standard MA model provides, and the plan may not be capturing the full clinical picture through HCC documentation.

That gap becomes more exposed when a CSNP competitor enters the market. A plan offering condition-specific benefits, clearer care coordination and a more targeted member experience has a strong value proposition for chronic members. Once those members move, they can be difficult to win back, particularly if the new plan builds stronger provider relationships and becomes the default option for that population.

The financial case

CSNP operating margins averaged 7.4% in 2022, compared to 3.6% for typical MA plans (this is the most recent year for which published plan-level margin data is available; although decreasing more recently, trends are consistent with this benchmark and estimate that CSNP operating margins are roughly double typical MA plans). This reflects more complete HCC capture for a clinically defined population, combined with higher county benchmark rates that apply to CSNP-eligible conditions, which are set separately from standard MA rates and generally reflect the higher expected cost of serving a clinically complex population. Plans achieving 4+ Stars receive an additional 5% benchmark uplift, which is more attainable for plans with concentrated CSNP populations, as the homogeneity of the member mix and focused care management model can support stronger performance on the chronic condition quality measures that drive Stars scores. The financial case for a well-operated CSNP is compelling from year one.

In many cases, a CSNP should be implemented under an existing HMO H-contract with the highest Star rating unless there is a significant difference between the PPO and HMO Star ratings. This allows plans to leverage its current Medicare platform while building the required SNP application, Model of Care and condition-specific operating capabilities.

MA-only plans have one structural entry advantage that competitors cannot quickly replicate: an existing enrolled chronic membership. Internal conversion of members who already qualify offers a substantially lower acquisition cost. A further financial advantage applies in Year 1: CMS uses a blend of plan-specific and MA-wide risk scores for new enrollees, but CSNP plans benefit from a more favorable risk adjustment methodology in their initial year of operation because the enrolled population is clinically defined by condition, which typically supports stronger HCC documentation and more complete risk capture from the outset.

Bottom line

Your chronic members likely need a more targeted care model than standard MA can provide, and their acuity may not be fully reflected in current documentation. A CSNP will give the plan a cleaner way to serve that population, support better risk adjustment and protect members who competitors are already targeting with more tailored products.

Profile B: Plans with DSNP, no CSNP

You have an established plan that has the MOC infrastructure, care management workflows and Stars discipline that can transfer directly toward a CSNP plan.

Built to expand

CSNP and DSNP share the same four Models of Care domains required by CMS, as well as the same NCQA approval process. Your DSNP care management team, Stars governance program and specialist network are all directly reusable. The primary additions are condition-specific eligibility verification and tailored benefit design, which represent an administrative increment relative to your existing infrastructure.

CSNP can typically be added to an existing H-contract. For DSNP plans with MOC infrastructure already in place, the preparation timeline is significantly shorter than for a de novo entrant, providing a meaningful competitive advantage given the fixed application cycle.

The population DSNP cannot reach

DSNP serves full-benefit dual eligibles. CSNP serves an adjacent, larger population: Medicare beneficiaries with serious chronic conditions who are not Medicaid-eligible and partial duals with lower social complexity. Adding CSNP means covering three high-acuity segments with one coherent clinical model, and a product portfolio competitive with national carriers.

Bottom line

You have already built much of the infrastructure a CSNP would require. Adding CSNP is not a ground-up effort; it is an extension of the capabilities you already use to serve high-acuity members. That makes the incremental cost of entry lower, while opening access to a broader chronic population that your DSNP alone cannot reach.

Profile C: Plans with MA and a Medicaid MCO, no CSNP

Your Medicaid contract is the scarce asset that excludes every MA-only competitor from DSNP that you can lead with

The strategic position you already hold

Plans that operate both MA and Medicaid managed care start from a stronger position than most competitors. They possess two capabilities that define the ceiling of SNP strategy: (1) Medicare clinical infrastructure and (2) Medicaid integration depth. In States with restrictive DSNP integration requirements — note that these apply to DSNP, not CSNP, which does not require a Medicaid contract; however, where state DSNP rules effectively require a Medicaid relationship for DSNP market access, that same relationship becomes a structural barrier competitors cannot replicate, your Medicaid contract may be the requirement that makes market entry possible.

Much of the Medicaid infrastructure already in place can support SNP operations. Community health worker programs, SDOH referral networks, care management teams and Medicare-Medicaid data sharing all align closely with what a strong SNP MOC requires. No competitor without both contracts can replicate this starting position.

The sequencing opportunity

For a plan with Medicaid capabilities, the recommended sequence is clear: launch DSNP first, then add CSNP once DSNP is operational.

Step 1: Establish your SNP foundation. Plans with a Medicaid managed care contract hold an asset that most MA-only competitors cannot quickly replicate. Leveraging that relationship to enter the dual-eligible market first allows you to build the Model of Care infrastructure, provider alignment and Stars governance that form the operational foundation for any SNP strategy. Where applicable, pursuing FIDE or HIDE SNP designation can provide additional per-member payment advantages and stronger positioning as integration requirements continue to evolve — though FIDE and HIDE designations carry meaningfully higher operational and integration requirements than a coordinated DSNP and should be evaluated carefully against the plan’s Medicaid integration depth and state partnership readiness.

Step 2: Extend to the broader chronic population. Once SNP infrastructure is in place, adding a CSNP extends your reach to the large chronic non-dual population — Medicare beneficiaries with qualifying conditions who are not Medicaid-eligible and cannot enroll in a DSNP. The shared MOC framework, care management team and quality infrastructure make incremental entry substantially faster and lower risk. Together, the two products allow a plan to serve the full high-acuity Medicare spectrum with a coherent clinical model.

Bottom line

A Medicaid contract will give you a path into a market that MA-only plans may not be able to access. Launching a DSNP first to establish SNP infrastructure, then adding CSNP in a subsequent plan year once DSNP operations are stable, is the logical sequence that will allow you to serve chronic members who do not qualify for DSNP. These are sequential steps, not concurrent launches — attempting both in the same application cycle would compress the MOC development timeline and increase operational risk. Together, the two products create a broader high-need Medicare platform built on infrastructure competitors cannot easily replicate.

3. Capability readiness: What it actually takes

Most plans underestimate the gap between standard MA operations and CSNP requirements. Two areas are especially critical and difficult to build quickly: PCP alignment and clinical data exchange. Without deep PCP relationships that support condition-verification workflows, and without structured bidirectional data exchange to support HCC documentation between visits, both revenue capture and Model of Care execution will perform below potential regardless of care management team quality.

Entry at insufficient operational maturity carries real regulatory risk: MOC scores below CMS thresholds result in limited approval periods or denial. The right approach is to assess current capability honestly before filing, invest in the gaps and enter with infrastructure that can sustain a multiyear approval.

ZS has developed a structured capability assessment framework across seven dimensions — from care management maturity and data exchange to broker readiness and Stars governance — that maps each plan’s current state, identifies the critical path to CSNP entry readiness and sizes the investment required. A companion article details the full assessment methodology, capability scoring framework and financial modeling approach. A third article in this series addresses go-to-market execution — including broker and distribution channel strategy, agent education and provider-assisted enrollment — as well as capability gap remediation and the end-to-end implementation roadmap from CMS application through first member effective date.

4. The cost of waiting

The CSNP market is growing faster than the broader Medicare Advantage market, and the underlying need is not going away. By 2030, roughly 40% of Medicare beneficiaries are expected to have three or more chronic conditions. Plans that want to compete for that population need to make decisions now, because CSNP entry is not immediate. Between the CMS application cycle, Model of Care development, provider alignment, data readiness and broker preparation, a plan that starts today may not see its first CSNP enrollment for close to two years.

That timing matters. Early entrants have more time to build broker confidence, secure provider participation and become the familiar option for chronic members before the market becomes crowded. National carriers are already moving. For regional and local plans, the window to establish a credible position is still open, but it is narrowing.

***Contact ZS to begin your CSNP Market Entry Assessment for market sizing, capability gap analysis, financial modeling and CMS application support.***

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This article reflects my personal views. They do not necessarily represent any official position of ZS.