Taking a Look at New York’s $17B Medicaid Ask:

Promoting Health Equity, Value-Based Payment and Building on DSRIP Success

Yesterday, the New York State Department of Health submitted a concept paper to the Centers for Medicare and Medicaid Services (CMS) outlining a Medicaid 1115 waiver demonstration request for $17 billion over 5 years. If approved, this would be the biggest infusion of federal funds into delivery system reform in the nation’s history. This is a big deal — stakeholders in New York have been eager to see the state’s thinking and approach for months, and the concept paper outlines significant detail on initiatives that would be funded through this substantial effort.

The state proposes that waiver funds would be focused on an overall approach to delivery system reform and describes a specific mission to reduce health disparities that were exacerbated during the covid-19 pandemic. Key takeaways from the state’s request include a focus on promoting health equity, continued commitment to value-based payment (VBP) in Medicaid, recognition of the successful results of New York’s Delivery System Reform Incentive Payment (DSRIP) program, and continued efforts to invest in and expand strategies to invest in social determinants of health (SDoH.)

Building on DSRIP Success

While the request is not a proposal for DSRIP 2.0, it builds on the achievements of DSRIP, and provides new detail on overall DSRIP performance The state’s DSRIP program, which operated from 2014–2020, set overarching goals to reduce avoidable hospital use by 25% and move 80–90% of all Medicaid managed care contracts away from fee-for-service and into VBP arrangements. Results reflected in the concept paper emphasize the success of DSRIP: by year 5 of the program, New York saw a 26 percent reduction in Potentially Preventable Admissions (PPAs) and an 18 percent reduction in Potentially Preventable Readmissions (PPRs.) The state also met and exceeded its VBP goals: by 2020, more than 80% of all Medicaid managed care contracts were in VBP Level 1 arrangements, and more than 35% were in upside and downside (Level 2 and 3) arrangements. The state also cites that Medicaid spending per recipient in 2019 was less than in 2011, as a result of DSRIP, VBP, and other Medicaid Redesign initiatives. This in itself is cause to celebrate — these results are incredibly impressive, demonstrating the success of the program and reflecting on the efforts of more than 80,000 providers across the state.

What are the goals of this new 1115 waiver program?

The state focuses its ask on addressing health disparities through the promotion of health equity, and this goal is incorporated into nearly every program element outlined in the document. New York points out the devastating impact of the COVID-19 pandemic across the state, and the detrimental impacts on specific populations in the Medicaid population, including Black and Latino/Latinx communities, aging adults, mothers & children, individuals with intellectual/development disorders, people experiencing homelessness, criminal-justice involved populations, individuals with substance use disorder, and individuals with severe mental illnesses.The concept paper outlines a series of initiatives which would utilize waiver funding to integrate health and social care while addressing health disparities and promoting health equity.

Four specific goals are outlined in the state’s ask:

1. “Building a more resilient, flexible and integrated delivery system that reduces racial disparities, promotes health equity, and supports the delivery of social care;
2. Developing supportive housing and alternatives to institutions for the long term care population;
3. Redesigning and strengthening health and behavioral health system capabilities to provide optimal response to future pandemics and natural disasters; and
4. Creating statewide digital health and telehealth infrastructure.”

What is the major takeaway?

Significantly, the state’s commitment to value-based payment (VBP) now and in the future is reinforced and made abundantly clear. The state outlines that investments in VBP models will be a key component of the waiver program, and identifies a number of related strategies.

Incentive funding will be made available both to providers and Medicaid managed care organizations (MCOs) to encourage the adoption of advanced VBP models. NYS DOH will also seek to expand attribution methodologies and award funding to broader groups of providers engaged in VBP arrangements focused on complex populations. The state will promote the evolution of VBP arrangements to move into more advanced models including prepaid capitation, broader provider networks, and ensuring integration of social care to address social needs. VBP arrangements will continue to incentivize plans and providers that meet quality improvement outcomes, and will expand beyond traditional HEDIS/QARR measures to also incentivize health equity measure improvement. The state also indicates its interest in evolving its risk adjustment in Medicaid to reflect both health and social risk.

In addition to Medicaid VBP models, the state also requests authority from CMS to allow global prepayment options across Medicaid FFS/managed care, Medicare FFS/managed care, and/or commercial for certain regions where a provider or system plays an integral role. Meaning, there may be opportunities for providers to receive a global payment across payers for a specific region, overseeing care delivery and partnering with local providers to improve outcomes and control costs.

The state also builds its VBP approach on previous programs. Current VBP Innovators may be eligible for additional funding to support VBP arrangements incorporating meaningful health equity focuses and measures. The guiding document for the last five years, New York’s VBP Roadmap, will continue to outline the state’s VBP strategy. Updates including new arrangements, attribution methodologies, quality and outcome measures, along with additional detail on risk adjustment are all proposed to be reflected in the document to align with the state’s overall goals.

What else is included in the waiver concept paper?

Two new types of organizations, Health Equity Regional Organizations (HEROs) and Social Determinants of Health Networks (SDHNs) would both be created under the waiver initiatives.

HEROs would serve as regional planning organizations, and the paper suggests that one HERO would be approved through an application process for each of the state’s seven regions. DOH gives itself room to adjust and subdivide those regions if necessary. One region of interest will be the greater New York City area — under this program that region would include all five boroughs along with Rockland and Westchester counties. Under DSRIP, 13 Performing Provider Systems overlapped with at least part of that footprint.

HEROs would not receive substantial waiver funding, but would be eligible for planning grants. Responsibilities would include building a governance structure representing various provider and stakeholder groups in the region, identifying the region’s health and social needs, facilitating social risk assessments among Medicaid members in the region and building consensus among areas of focus for health equity measures and advanced VBP arrangements. HEROs can be led by collaboratives of providers, former or existing PPS, or local departments of health, among other examples cited by the state.

SDHNs would serve as coordinated networks of community-based organizations (CBOs.) SDHNs would also apply to the state in the seven regions outlined for HEROs, would receive direct funding from the state to provide evidence-based interventions to address social needs, and would coordinate with regional HEROs and MCOs to advance VBP arrangements aligned with the state’s updated VBP Roadmap, and focused on meeting the specific health and social needs of Medicaid members within their region.

In the waiver document, the state also describes other key areas of focus and investment including pandemic response and redesign (investments in safety net & financially distressed hospitals and systems in planning for future response needs), workforce and training (building on the existing Workforce Investment Organization (WIO) infrastructure), supports for criminal-justice involved population (an area of focus for NY Medicaid in previous waiver requests), investments in supportive housing (another key area of focus in NY’s Medicaid program over the last decade), and funding for the state’s digital and telehealth infrastructure, including an Equitable Virtual Care Access Fund to support telehealth and virtual care initiatives as a strategy for addressing health disparities and promoting equity.

How does this relate to previous requests from NYS DOH?

This concept paper has significantly evolved from its 2019 and 2020 requests: however, 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.

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.

Is this program DSRIP 2.0?

No. The state previously submitted what was referred to as a ‘DSRIP 2.0’ request — a waiver request to restructure and continue DSRIP programs and funding — in November 2019, which was not acted upon by CMS under the Trump administration. This request does not continue funding for DSRIP programs, but it does build on the success of DSRIP initiatives, leverages the VBP Roadmap, and includes proposed roles for DSRIP-created structures, like Workforce Investment Organizations (WIOs) and PPSs.

How detailed is the request?

The concept paper outlines the key goals and elements outlined above, but doesn’t provide specific detail on the financial breakout of the $17B — how the funding would be spent — or sources of funding for the local match. As negotiations between CMS and the state begin, these details will be hashed out.

What’s next?

This is the starting point of a conversation between New York and CMS. The document released today is a concept paper, not a formal waiver request. Concept papers are intended to socialize ideas with CMS and allow the state and CMS to begin discussions on the state’s ask and approach, along with an opportunity to address CMS’s questions and feedback. There is no guarantee that CMS will grant this (or any) request — but the CMS team will likely review and discuss with the state. If there is interest, CMS and the state will begin to negotiate program and financial elements, the state will build this approach out in much more granular detail, and at some point, the state will submit a formal waiver/waiver amendment request.

How can you be involved and learn more?

The state shared its concept paper with stakeholders today through its MRT listserv and provided context on the overall ask. At this time, the state is not requesting public feedback.

Typically, new 1115 waiver demonstrations and amendments to 1115 waivers require states to follow CMS public transparency requirements — which include a 30-day public comment period. While the state has not initiated that process at the moment, it’s very likely the opportunity to share comments will be available in the future.

To learn more, watch this space! I’ll break down other components of the state’s ask into more detail in the coming days. In the meantime, if you have specific questions, areas you’d like to learn more about, or want to share your own take on the state’s request, get in touch at kalin.scott@hsg.global or find me @kalinscot on Twitter.