New York Healthcare Community - DSRIP (Part Two)

April 2014

By Patrick Pilch, Cortney Marcin and Arthur Webb

The idea of transformation is a key element of the New York State Medicaid Waiver, and specifically the DSRIP program. System transformation projects—including those focused on creating integrated delivery systems, implementing care coordination and transitional care programs, and connecting settings—are a mandatory part of any provider groups DSRIP program.

Healthcare Transformation
The overall impact of the DSRIP program on the State’s healthcare system will likely be significant. And if the DSRIP program achieves its goal of reducing avoidable hospital use by rebalancing the delivery system, the program’s overall impact will be transformative.

A more coordinated safety net that can provide improved clinical and population services at a lower cost could, in turn, achieve savings in both the Medicaid and Medicare programs. Although the funding is aimed at the Medicaid population, these programs, innovations and cultural changes will impact the entire healthcare system.

Financial Transformation
Currently, provider reimbursement is predominantly fee-for-service. In other words, hospitals are rewarded with higher reimbursement rates for providing care in the hospital setting, whereas primary care and behavioral health providers often receive relatively less reimbursement. As a result, providers are not financially incentivized to provide coordinated care, which leaves them siloed.

Much like the Medicare Shared Savings Accountable Care programs and the Commercial Risk Reimbursement models, the DSRIP program is meant to transform the incentives created by the current fee-for-service reimbursement model. This is accomplished through incentivizing providers to coordinate care as well as allowing for the fundamental changes that have been limited in our fee-for-service environment.

Clinical Transformation
DSRIP includes specific funding focused on the Clinical Improvement Project, which is aimed at improving the health of the community through a focus on behavioral health, cardiovascular health, diabetes care, asthma and HIV, among others. DSRIP programs also include a focus on preventive health within the population that a provider community is serving, including the promotion of mental health care and chronic disease prevention.

DSRIP programs will also aid in the movement toward Patient Centered Medical Homes by expanding primary care capacity and capabilities such as the integration of delivery systems for population health or implementation of disease management systems. Some have argued that the State has an overreliance on institutional services (inpatient care, emergency room services and nursing home care) and an under-reliance on community-based services. DSRIP was developed to focus on re-balancing the delivery system to reduce avoidable hospitalizations and the associated costs.

Data Transformation
Providers with approved DSRIP programs are required to measure their progress based on three categories: project process metrics, outcome metrics and preventable hospitalization metrics. The State plans to implement a provider/plan data portal allowing for DSRIP providers to measure case mix adjusted avoidable hospitalization metrics at the local level using standardized definitions and eventually with real time updates.

Other Healthcare Transformation Capital Investments by the State
In many ways, healthcare transformation in New York State began with the actions and recommendation of the Medicaid Redesign Team. The DSRIP program should continue the transformation process, along with further support from the State through the Governor’s budget.

Governor Cuomo’s 2014–2015 Executive Budget incorporates capital funding for targeted investment to complement projects supported by the Waiver. A $1.2 billion capital program, tied to DSRIP funds, will support projects that improve the financial stability and increase efficiency through greater provider collaboration. The budget also sets aside $7 million to support Regional Health Improvement Collaboratives (RHICS). RHICS will function as neutral conveners of key healthcare stakeholders to identify regional healthcare challenges and implement recommended solutions. Additionally, the budget allocates up to $65 million to continue operational support for the State Health Information Network of New York (SHIN-NY) to establish a statewide electronic medical record system and an All Payer Claims Database (APCD).

The administrative, monitoring and reporting aspects of the DSRIP program are by no means simple. To stay ahead of these developments and help successfully plan and integrate the program’s many components, we encourage DSRIP applicants to familiarize themselves with all the necessary requirements and to seek outside guidance as early as possible.

Cortney Marcin is Manager with BDO Consulting. Arthur Webb is a BDO Senior Fellow. They can be reached at [email protected] and [email protected], respectively.

Is the New York Healthcare Community Ready for Rebalancing Under Delivery System Reform Incentive Payment (DSRIP)? (Part Two),” originally appeared on The Nonprofit Standard, the blog of BDO’s Nonprofit & Education practice, that offers thought leadership on the accounting, tax, and management challenges faced by nonprofit organizations, along with commentary on sector trends and developments.