Delivery System Reform Incentive Payment (DSRIP) Program Details Still Emerging But Deadlines Already Looming

CMS has provided final approval of a Medicaid Waiver to provide over $8 billion for reforming the delivery of healthcare in New York, including the establishment of a new, comprehensive Delivery System Reform Incentive Payment (DSRIP) program.  Though details regarding the implementation of, and applications to participate in these Medicaid Waiver  programs have only just begun to be provided, some DSRIP deadlines are already imminent.

The Medicaid Waiver Funds will be comprised of three funds:

  • $6.42 Billion for DSRIP payments, including DSRIP Planning Grants, DSRIP Provider Incentive Payments, and DSRIP Administrative Costs and DSRIP-related Workforce Transformation.
  • A $500 million Interim Access Assurance Fund (IAAF), available for a limited period of time to certain large general public hospitals, and hospitals that are “safety net providers” that are financially distressed to allow them to participate in the DSRIP program. The IAAF Fund is comprised of $250 million for specific large public hospitals and $250 million for non-public hospitals.
  • $1.08 Billion for other Medicaid Redesign purposes including support of Health Home development, and investments in long term care workforce and enhanced behavioral health services.

The DSRIP Program is intended to transform the payment for and delivery of healthcare to Medicaid beneficiaries and the uninsured in New York. Providers who want to participate in the DSRIP Program will need to form a Performing Provider System (PPS) together with other providers within a given service area. Participating providers will be required to design and then collaborate with the providers within its PPS in the implementation of 5 to 10 selected DSRIP improvement projects across a range of project planning domains.

Each PPS will have a lead applicant, who will be primarily responsible for ensuring that the coalition of providers within the group meet all requirements of the PPS, including submitting an initial letter of intent to participate in a PPS, a Design Grant application and DSRIP Project Plan application for the PPS, and satisfying reporting obligation to the state and CMS.  It is generally expected that hospitals will be the lead organizations for PPS applications, although DOH recently confirmed that any qualifying DSRIP “safety-net provider,” including FQHCs and other types of providers, may be the lead.

The $6.42 Billion in DSRIP Funds will be allocated to each PPS based on a complicated methodology that takes into account a variety of factors including the types and number of projects being implemented, the providers within a group, the Medicaid beneficiaries attributed to the PPS, and a grading system still under development that will consider the likelihood of achieving improvements. The methodology for attribution of Medicaid beneficiaries to a given PPS is similarly complex.

Providers whose PPS Design Grant application is approved will initially receive funds for designing and planning the governance, financing, and other systems necessary for the PPS. This process will require each PPS to engage in, and account for, a community needs assessment and meetings with community stakeholders, among other things. At a later time, funds will be allocated based on the infrastructure changes and implementation of the project plans and then the performance of the PPS on a collective basis relating to certain established DSRIP goals, such as the reduction of preventable admissions.  Certain funds may be placed at risk not only if an individual PPS fails to satisfy its DSRIP milestones, but if the state as a whole fails to meet certain state-wide DSRIP targets.

In order to receive DSRIP funds for participation in a PPS, a PPS will generally be expected to serve a high proportion of Medicaid and uninsured and thus the majority of providers within a PPS will generally need to qualify as safety net providers.

To be considered a safety net provider, hospitals must meet one of the three following criteria:

1.         Must be a public hospital, Critical Access Hospital or Sole Community Hospital, OR

2.         Must pass two tests:

a.         At least 35 percent of all patient volume in their outpatient lines of business must be associated with Medicaid, uninsured and Dual Eligible individuals; and

b.         At least 30 percent of inpatient treatment must be associated with Medicaid, uninsured and Dual Eligible individuals; OR

3.         Must serve at least 30 percent of all Medicaid, uninsured and Dual Eligible members in the proposed county or multi-county community. The state will use Medicaid claims and encounter data as well as other sources to verify this claim. The state reserves the right to increase this percentage on a case by case basis to ensure that the needs of each community’s Medicaid members are met.

Non-hospital based providers, not participating as part of a state-designated health home, must have at least 35 percent of all patient volume in their primary lines of business and must be associated with Medicaid, uninsured and Dual Eligible individuals in order to be considered a safety net provider.

The state will consider exceptions to the safety net definition on a case-by-case basis if it is deemed in the best interest of Medicaid members, but such exceptions must be approved by CMS. Currently, there are three types of allowed reasons for granting an exception:  (1) a community will not be served without granting the exception because no other eligible provider is willing or capable of serving the community; (2) a hospital is uniquely qualified to serve based on services provided, financial viability, relationships within the community, and/or clear track record of success in reducing avoidable hospital use; and (3) state designated health homes.

Providers that do not qualify as a safety net provider can participate in Performing Provider Systems, but are generally limited to receiving DSRIP payments totaling no more than 5 percent of a project’s total valuation. CMS can approve payments above this amount if it is deemed in the best interest of Medicaid members attributed to the Performing Provider System.

The rollout of the program has been fast-paced, yet the information regarding the DSRIP program is still emerging and remains fluid.  For instance, details regarding the letter of intent and draft IAAF Fund and DSRIP Design Grant applications were only recently provided, but the deadlines are just around the corner.

The lead applicant will need to submit a non-binding letter of intent to form a PPS and participate in the DSRIP Program by May 15, 2014 and submit a detailed DSRIP Design Grant application by June 17, 2014.

Providers who may be eligible for IAAF Funds will need to submit an IAAF application, including providing all necessary supporting documents by May 30, 2014.

The Department of Health DSRIP webpage can be found Here:

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Garfunkel Wild P.C. has formed a DSRIP team to assist our health care clients in all aspects of the DSRIP program. If you are considering participation in a PPS and have any questions or need assistance regarding your eligibility or the application process, please contact the GW attorney with whom you regularly work to be connected with a member of our DSRIP team.

~Submitted by SP Klein