Beyond DSRIP 1.0 Success: What’s New in New York’s DSRIP 2.0 Proposal

Update: This overview was posted in December 2019 and is no longer up to date — in February 2020, CMS issued a formal letter which denied the state’s request.

In May 2020, an emergency 1115(a) request was submitted in response to the COVID-19 pandemic. An overview of that request is available here: https://medium.com/@kalinscott/new-yorks-2-75-billion-request-taking-a-look-at-the-state-s-covid-19-ask-3ffa5b4f4eaf

Last month, the New York State Department of Health (DOH) submitted a formal amendment request to the Centers for Medicare and Medicaid Services (CMS), requesting a new $8 billion investment and four more years for the next phase of the state’s Delivery System Reform Incentive Payment (DSRIP) program. Since that time, DOH walked through its proposal in a public webinar, and CMS last week deemed the state’s request complete, opening up the federal public comment period.

What are the major takeaways from these latest developments?

· DSRIP in New York has resulted in significant success: the program has led to a 21% statewide reduction in avoidable hospital use, and a shift to 70% of Medicaid managed care spending in value-based payment (VBP) arrangements.

· While the state’s new amendment request has significantly evolved from its concept paper released earlier this year, the focuses on expanding best practices, increasing adoption of risk-based value-based payment (VBP) arrangements, and investing in social determinants of health (SDoH) remain central priorities.

· The state’s $8 billion ask is broken into two phases: the first extends the majority of the existing program for one year using existing funds, and the second conceptualizes a new approach and includes $8 billion in performance payments, incentives, and investments for the following three years.

· The new investment will be primarily awarded to Value Management Organizations (VMOs), Social Determinants of Health Networks (SDHNs) and Managed Care Organizations (MCOs).

· Much remains uncertain, as the program is subject to CMS approval, and — if approved — extensive negotiations will be necessary to determine agreement around funding amount and purposes, program scope, and timeline.

A quick recap, if DSRIP is new to you

New York based its first DSRIP request on the demonstrated success of the state’s Medicaid program in bending the cost curve after the state generated $17 billion in federal savings and improved quality outcomes through Medicaid Redesign Team (MRT) initiatives dating back to 2011. CMS approved the initial DSRIP request in April 2014 and committed $8 billion of federal investment to DSRIP and DSRIP-related programs through March 2020 — which brings us to today.

New York’s current DSRIP program, now in its final months, focuses on transforming the state’s health care delivery system and rewarding value over volume by reducing avoidable hospital use across the state, creating integrated delivery systems, and supporting the move toward value-based payment arrangements. 25 Performing Provider Systems (PPS) — collaboratives of providers and community-based organizations assigned to specific regions in the state — are currently implementing population health, clinical improvement, and system transformation projects at a local level. The PPS earn performance payments once they achieve and report specific milestones and metrics. In addition, New York committed to shift 80–90% of all Medicaid managed care payments to value-based arrangements by March 202), as outlined in the state’s VBP Roadmap. The program included a planning year (Year 0), five years of DSRIP program implementation, and ends in just a few months, in March 2020. Over the course of its implementation, New York worked with other states interested in implementing and expanding delivery reform system efforts, and Washington, Massachusetts, North Carolina, New Hampshire and Rhode Island have since received federal approval to implement similar programs.

New York has been incredibly successful in achieving the main goals set out in the state’s DSRIP program: reducing avoidable hospital use and shifting Medicaid managed care from fee-for-service to value-based payment. While the recent headline in the program has been the 21% reduction in avoidable hospital use, many PPS have seen greater success. 11 PPS have seen more than a 25% reduction of avoidable admissions and readmissions, and 5 PPS have reduced potentially preventable admissions by 38%.

Also significant, the state reports that approximately roughly seventy percent of the state’s Medicaid managed care funding is in VBP arrangements — with roughly 45% contracted in higher-level risk-sharing arrangements. As required by the state’s VBP Roadmap, these higher-level arrangements all include SDoH interventions and engagement of community-based organizations. The adoption of these arrangements serve as a path to sustainability for the DSRIP efforts to date.

DSRIP has been successful in incentivizing local, place-based collaboratives of health and social care providers and moving to value. These efforts have resulted in improved outcomes for Medicaid members, reshaped New York’s health care delivery system, and garnered attention from across the world.

What’s the ask for DSRIP 2.0?

As described in the amendment request, New York seeks more time to leverage the best practices and success stories from those pockets of the state that have seen above-average improvements, and support statewide goals to continue to reduce avoidable hospital use, manage population health, and design sustainable efforts through increased adoption of VBP arrangements.

PPS have done incredible work in the most recent years of the DSRIP program, demonstrating significant results in improving value, developing new care models, and leading to significant outcomes. The United Hospital Fund’s DSRIP Promising Practices report catalogues specific PPS successes and case studies over the course of DSRIP and serves as a foundational document guiding the state’s plan for DSRIP 2.0.

Has anything changed since the DSRIP 2.0 concept paper?

If you’re familiar with the concept paper released for public comment earlier this year, VDEs are off the table, PPS may be able to receive performance payments for an additional year, and the state is proposing a much more detailed approach to implementation. After a stakeholder engagement process, the state has evolved its approach to a program with two phases: the first phase would keep the program much like it is for the first year, and the second phase would follow for the next three years with new entities eligible for funding, and significant changes to program requirements and structures.

What is the state asking for related to financing and timing?

The proposed program is broken into two phases — and significant change isn’t expected until 2021. The total request for new federal investment remains at $8 billion. Phase 1 will bridge the one-year period between the end of DSRIP 1.0 (March 2020) and the expiration date of the state’s overall 1115 waiver (March 2021), and Phase 2 will encompass a three-year period beginning in March 2021, which is also projected to begin a new 1115 waiver period. In both phases, DSRIP will focus on ‘higher-value’ Promising Practices from the current efforts that have been successful with PPS and also align with federal priorities.

In Phase 1, PPS efforts will continue, in a “streamlined fashion” — which remains to be defined. The current PPS will remain in place, will focus on both scaling Promising Practices through existing PPS structure and supporting adoption of VBP arrangements, and will need to submit an updated implementation plan to the state. In addition, PPS would support stakeholder engagement as preparation for the second phase of DSRIP 2.0. The funding for this phase would come from the unspent/unearned funds for the current DSRIP period — currently projected to be $625 million.

In Phase 2, proposed to start in 2021, Value Management Organizations (VMOs) and Social Determinants of Health Networks (SDHNs) will be the driving forces in moving DSRIP 2.0 forward. VMOs and SDHNs will also support the scaling of successful Promising Practices, aligning efforts with federal priorities, and expanding the DSRIP program’s reach to populations not currently served by the program. Medicaid Managed Care Organizations (MCOs) will also be eligible for receiving incentive funding aligned with VBP efforts as part of this new phase.

Funding breaks out as follows:

· $625 million (approximately) in year 1 of DSRIP 2.0 — for targeted interventions based on performance (this is existing, currently authorized DSRIP funding that has not been earned by PPS during DSRIP 1.0, and is proposed to be repurposed),

· $5 billion for VMOs in years 2–4 of DSRIP 2.0 — for targeted interventions based on performance, and support of regional and DSRIP program-wide activities,

· $1.5 billion for Social Determinants of Health Networks — this would be the largest investment by any state to date in SDOH ,

· $1 billion for workforce development — including focuses on both expanding the prevalence of community health workers, and continuing to invest in long term care workforce efforts, and

· $500 million for Interim Access Assurance Fund purposes — to support safety net providers in alignment with the goals of the program — similar to the IAAF program included in year 1 of DSRIP 1.0. The state will develop updated criteria and funding distribution details.

As it relates to the technical details around financing, some specifics are made clear in the amendment request: the state indicates it will work out the financing details with CMS, but anticipates intergovernmental transfer will be the likely path for financing the waiver. Budget neutrality requirements are also met in the state’s request.

What are the projected roles of VMOs, SDHNs, and MCOs?

VMOs can be existing PPS with updated membership and governance, and can also be new entities that bring a regional network of providers and these stakeholders together. The state will designate and hold contracts with each VMO.

VMOs will have broader governance and more expanded voting membership than current PPS structures — including MCOs, a broader range of providers (health systems, IPAs, Behavioral Health Care Collaboratives, LTC providers, ACOs), SDHN and community-based organization (CBO) representation, local departments of health and public health, Medicaid members, and engagement with Qualified Entities (QEs) — regional organizations supporting data exchange across New York.

VMOs will serve as neutral conveners and will need to be capable of addressing regional needs, supporting the expansion of successful care models and relationships across health and social care providers, implementing Promising Practices, and enabling future sustainability through support for MCOs, providers, SDHNs and CBOs to engage collectively in the adoption of risk-based VBP arrangements. VMOs will be awarded funding from the VMO Performance Pool, based on attribution and performance — both at a VMO network level and also through a regional accountability mechanism.

VMOs will be evaluated on performance measures aligned with the state’s total cost for general population VBP measure set. In addition, some measures will focus on SDOH, expanding the state’s focus on measuring housing stability, food insecurity, and kindergarten readiness.

SDHNs will consist of a network of CBOs within each region of the state to provide interventions addressing housing instability, transportation, food insecurity, interpersonal safety, and toxic stress. The state will define regions and select a lead applicant within each region (which could be an existing CBO or a network entity made up of CBOs.) The lead entity will create a network of CBOs that will collectively deploy interventions focused on the above-mentioned areas and serve as a convener.

SDHNs can also choose to participate in VBP arrangements with MCOs and VBP contractors, and provide other services to support VMOs and MCOs in their efforts. SDHNs will also support the state’s efforts to measure and evaluate investments and outcomes in SDoH for the Medicaid population.

MCOs will be eligible to receive funding set aside for the VBP Incentive Pool, which is intended to fund eligible VBP arrangements that meet requirements such as the MCO has meaningful participation in one or more VMOs, the arrangement includes risk-sharing at Level 2 or higher, the provider network is inclusive of VMO-affiliated providers, the VMO provides ongoing support and/or administrative services, and the agreement meets data sharing, quality reporting, and financial risk management standards. VBP Incentive Pool funds may also be used to address financial security deposit requirements.

What else is new in this request?

The state’s 114-page request goes into great detail around updates in programmatic focus, priority focus areas that will align with the federal government’s strategy, and expanding into priority initiatives and populations including maternal mortality, substance use disorders, children’s health, and long-term care. The request also outlines five Promising Practices that will be required for all VMOs: (1) transforming and integrating behavioral health, (2) care coordination, care management, and care transitions, (3) addressing social needs, community partnerships and cross-sector collaborations, (4) addressing the opioid crisis, and (5) addressing high utilizers through rapid-cycle continuous improvement (such as the DSRIP 1.0 MAX series.)

The state proposes additional updates and enhancements to both DSRIP and the VBP Roadmap including an updated attribution strategy, meaningful data sharing requirements, new performance-based measure and domain approaches, and continued quality improvement activities. These updates reflect stakeholder feedback, lessons learned from DSRIP 1.0, and alignment with ongoing CMS efforts.

What happens next?

It’s important to keep in mind that what’s been released to date has been developed by the state and is still subject to approval by CMS. While CMS has deemed the state’s application to be ‘complete’, there’s no telling whether they will move to work with the state toward agreement, or deny the request. CMS Administrator Seema Verma said earlier this year that CMS would no longer approve “one-off DSRIP waivers” — does this apply to New York’s request? It remains to be seen.

Feedback from CMS is likely to significantly change the structure of the program if CMS agrees to work with the state toward DSRIP 2.0. As one of the principal negotiators on the state team for DSRIP 1.0, I remember very clearly how our original request evolved from a proposal with 13 separate programs to a completely different DSRIP program over the course of our two-year negotiation resulting inconceptual agreement. In the two-month window between conceptual agreement and amendment approval, we negotiated daily with the CMS team to design the special terms and conditions (STCs) that serve as the program and funding rules and requirements. The process for DSRIP 2.0 will also take significant time and effort on both the state and federal teams, even if a conceptual agreement is reached.

How can you stay involved?

If you want to stay up to date and/or provide feedback, there are multiple options. Submit public comment to CMS through January 10, sign up for the state’s listerv to receive future updates, and talk to your peers and colleagues in your community to learn more about what’s happening in your region.

And, of course, if you have questions, comments, are interested in more of a deep dive into the details, or just want to share your take, be in touch! You can find me at kalin@helgersonsolutions.com or on Twitter @kalinscot.