D-SNP MOUs: How to Navigate the State Medicaid Agency Coordination Requirement

What a D-SNP MOU Is and Why CMS Requires It

Under 42 CFR 422.107, a Medicare Advantage plan that offers a Dual Eligible Special Needs Plan (D-SNP) product must maintain a Memorandum of Understanding with the state Medicaid agency in each state where the D-SNP operates. The MOU is a legally binding agreement between the health plan and the state that governs how the plan will coordinate Medicare and Medicaid benefits for dual-eligible members, how the plan will share information with the state, and how the plan will meet the state's specific requirements for dual-eligible care coordination. CMS uses the MOU as a condition of D-SNP contract approval — without a valid, executed MOU on file, CMS will not approve the plan's D-SNP designation for the upcoming contract year.

The rationale for the MOU requirement is structural: D-SNPs serve a population that receives benefits from both federal Medicare and state Medicaid programs, and effective care coordination for dual-eligible members requires active coordination between the plan and the state Medicaid agency. The MOU is the mechanism through which the state Medicaid agency affirms that the plan meets the state's standards for serving dual-eligible members and agrees to coordinate with the plan on coverage transitions, eligibility verification, and care coordination activities. States have significant authority over MOU content — within CMS's minimum requirements — which is why D-SNP network and compliance teams must engage each state individually rather than applying a uniform national approach.

Who Executes the MOU — and Who Owns the Network Adequacy Commitments Within It

The MOU is executed between the health plan (the MA organization holding the CMS contract) and the state Medicaid agency — typically the state Department of Health or the state Medicaid Director's office. Plan leadership (CEO or COO level) typically signs for the health plan; the State Medicaid Director or a designated deputy signs for the state. The network ops team does not execute the MOU and is rarely involved in the final signature process. However, network ops owns the substance of the MOU's network adequacy provisions — the commitments the plan makes about its provider network in the D-SNP service area — and is responsible for ensuring that those commitments are operationally achievable and accurately reflected in the HPMS adequacy filing.

The most common failure mode is a disconnect between what plan leadership commits to in the MOU and what the network ops team has actually built. If the MOU commits to a specific number of Federally Qualified Health Centers in a county, or to specific time-and-distance standards for behavioral health providers that are more stringent than CMS's minimum standards, the network adequacy filing must reflect those commitments. Network ops teams that are not involved in MOU negotiations risk discovering — at HPMS filing time — that they are being held to network standards they did not know existed. The solution is early and ongoing involvement of network ops in the MOU development process, even though the final execution is a plan leadership and government affairs function.

MOU Content That Relates to Network Adequacy

D-SNP MOUs contain several categories of content that directly affect network adequacy operations. The most operationally significant are:

• Network access standards: Many states specify minimum network composition standards in the MOU that go beyond CMS's HSD table requirements. These may include minimum counts of specific provider types (e.g., minimum number of contracted FQHCs, minimum number of providers accepting new Medicaid patients), specific time-and-distance standards for dual-eligible-specific care needs, or requirements that certain types of providers in the network be culturally and linguistically competent for the dominant non-English-speaking population in the service area.
• Provider directory sharing: Most MOUs require the plan to share its provider directory with the state Medicaid agency on a regular basis (typically quarterly), and to notify the state of material network changes (provider terminations, new provider additions) within a specified timeframe. These requirements interact with the plan's credentialing and provider data management operations.
• Care coordination commitments: MOUs typically require the plan to have care coordination protocols for dual-eligible members that are aligned with the state's Medicaid care coordination programs. This may include requirements to coordinate with the state's long-term services and supports (LTSS) system, behavioral health managed care entities, or social services programs.
• Integrated care requirements: In states with Fully Integrated Dual Eligible Special Needs Plans (FIDE-SNPs) or Highly Integrated Dual Eligible Special Needs Plans (HIDE-SNPs), the MOU will contain additional integration requirements that go significantly beyond basic coordination — including full integration of Medicare and Medicaid benefits under a single plan authority.

Negotiating Timeline: Expect 6 to 12 Months for New MOUs

For a plan entering a new D-SNP market — a state where it does not already have an executed MOU — the MOU negotiation timeline is typically 6 to 12 months from first contact with the state Medicaid agency to final execution. This timeline reflects the state agency's bandwidth (Medicaid agencies are typically understaffed relative to their policy obligations), the complexity of the plan's proposed D-SNP model, and the political and procedural dynamics of state government. Some states have established D-SNP MOU templates that dramatically accelerate the process for plans willing to accept the template terms. Other states negotiate each MOU individually and have extensive internal review processes that cannot be compressed.

For MOU renewals — where the plan already has an executed MOU and is seeking renewal for the upcoming contract year — the timeline is typically 3 to 6 months if the plan has maintained a good relationship with the state Medicaid agency and is not proposing material changes to the MOU terms. Material changes (expanding the D-SNP service area, changing the plan's care coordination model, adding FIDE-SNP designation) can extend the renewal timeline to 6 to 9 months. Plans that submit renewal requests less than 3 months before the CMS submission deadline are operating without adequate margin for error.

The Biggest Mistake: Starting MOU Negotiations After the Network Build

The most costly mistake in D-SNP development is treating the MOU as a compliance document to be completed after the network has been built. Plans that follow this sequence — build the network, then negotiate the MOU — regularly discover that the state's MOU requirements impose network adequacy standards that the existing network does not meet, that the state requires provider types or access standards not included in the initial network design, or that the state requires specific provider directory formats or data sharing capabilities that the plan's systems do not support.

The correct sequence is to begin MOU negotiations in parallel with or before the network build. The MOU negotiation process reveals the state's specific network expectations, which should inform the network development plan from the outset. A plan that learns in month eight of a twelve-month network build that the state requires all contracted primary care providers to accept Medicaid patients has a very different remediation task than a plan that learned this in month one and recruited accordingly. Network development leads should be actively involved in early MOU discussions — at minimum, they should review draft MOU language for adequacy implications before the plan's government affairs team agrees to any network-related terms.

State-by-State Variation: What Network Ops Needs to Know

MOU requirements vary substantially across states, and network ops teams operating in multiple states cannot assume that one state's MOU terms are representative of another's. At one end of the spectrum, some states use a standardized CMS-template MOU with minimal additional requirements — the negotiation is brief and the network adequacy obligations are essentially identical to the CMS HSD table requirements. At the other end, states like New York, California, and Massachusetts have heavily negotiated MOUs with extensive integration requirements, specific network composition standards, and ongoing reporting obligations that go significantly beyond federal minimums.

States with significant dual-eligible populations and active managed care integration programs — such as those operating Medicare-Medicaid Plans (MMPs) or integrated D-SNP programs — tend to have the most demanding MOU requirements. Network ops teams entering these markets for the first time should engage state-specific regulatory consultants or experienced D-SNP compliance counsel to map the full scope of the MOU's network adequacy implications before beginning the network build.

Annual Renewal and the CMS Submission Timeline

MOUs must be renewed annually and submitted to CMS as part of the plan's annual contract application. CMS's submission timeline for annual contract applications typically requires MOUs to be in place (or documented as in negotiation with the state) by mid-to-late fall of the preceding year. Plans that have not begun their MOU renewal process by late summer are at risk of missing the CMS submission deadline. Late MOU submissions can result in CMS declining to approve the D-SNP designation for the upcoming contract year — effectively terminating the plan's ability to enroll new dual-eligible members until the MOU is resolved.

Plans should build a multi-state MOU calendar that maps every state's MOU expiration date, the target date to submit a renewal request to the state, the target date to receive an executed renewal from the state, and the CMS submission deadline. This calendar should be owned by the compliance function with network ops input on adequacy-related terms. The calendar should have buffer built in — state agencies regularly take longer than expected, and there is no mechanism to extend the CMS submission deadline because an MOU negotiation is taking longer than anticipated.

When MOUs Fall Through: What Happens to the D-SNP Filing

If a state Medicaid agency declines to execute or renew a D-SNP MOU — which, while uncommon, does occur — the plan faces a stark set of options. Without a valid MOU, CMS cannot approve the D-SNP designation, and the plan cannot offer a D-SNP product in that state for the upcoming contract year. Existing D-SNP enrollees must be transitioned to alternative coverage — either the plan's standard MA product (if the enrollee is Medicare-only eligible) or another D-SNP plan in the market. This transition is a member impact event with regulatory consequences and significant operational burden.

Plans that face MOU breakdown should immediately notify their CMS account manager and engage CMS's Center for Medicare (CM) enrollment and policy teams for guidance. In some circumstances, CMS may grant a temporary exception or transition period while MOU negotiations continue, but this is not guaranteed and depends on the specifics of the situation. The safest approach is never to reach the point of MOU breakdown — which means maintaining active state relationships, beginning renewal negotiations early, and escalating state-level impasses to plan leadership and government affairs well before the CMS deadline.