Public Payers News

NY’s Medicaid Payment Reforms Aim to Reduce Hospital Use

When it comes to DSRIP programs and payment reforms within the Medicaid program, it is vital to create the right measures that illustrate whether providers are advancing care for Medicaid beneficiaries.

By Vera Gruessner

The state of New York is undergoing significant payment reforms within its Medicaid program. In 2014, Governor Andrew Cuomo finalized negotiations with federal agencies to create a waiver that would allow New York to renew $8 million in federal savings that came from the Medicaid Redesign Team (MRT) transformations. The federal investment would be used to develop payment reforms through the Delivery System Reform Incentive Payment (DSRIP) program.

Delivery System Reform Incentive Payment Program

A brief from the Henry J. Kaiser Family Foundation discusses how the funding from Delivery System Reform Incentive Payment programs could be used to transform how hospitals deliver medical care to Medicaid beneficiaries. Early results show that DSRIP programs are bringing more collaboration and innovation to the healthcare industry.

When it comes to DSRIP programs and payment reforms within the Medicaid program, it is vital to create the right measures that illustrate whether providers are advancing care for Medicaid beneficiaries.

The DSRIP program will also need to strengthen Medicaid managed care systems, the brief from the Kaiser Family Foundation states. The relationship between managed care plans and DRIP-funded provider networks remains cloudy, but the state of New York has shown the most progress in this aspect.

Deborah Bachrach, Partner at Manatt Phelps & Phillips, spoke with HealthPayerIntelligence.com about the payment reforms taking place in New York and its development of the Delivery System Reform Incentive Payment program.

HealthPayerIntelligence.com: How is the state of New York redesigning their Medicaid program and healthcare payment systems?

Deborah Bachrach: “New York is moving forward with a district waiver. It’s a delivery system reform improvement initiative. Under the district waiver, New York has set out three goals. One is to reduce avoidable hospital use by 25 percent and its second goals is to move managed care payments among providers to value-based payment methods. It’s a very significant transformation.”

“In order to accomplish its goal of reducing unnecessary  hospital utilization, New York set up something called the preferred provider system. Under the preferred provider system, these are integrated delivery networks. These integrated delivery networks are led by safety net hospitals, but they incorporate community-based providers and social services organizations.”

“These PPS can fully manage and take responsibility for the care of their population. The third goal under the district waiver was to improve health and reduce costs through a sustainable delivery model. Those are the three goals and the drivers of this are the performing provider systems.”

HealthPayerIntelligence.com: Is the Delivery System Reform Incentive Payment program likely to improve cost transparency and coordination between payers and providers? In what ways?

Deborah Bachrach: “One of the payers here is New York state Medicaid, which is the ultimate payer. A great deal of what’s going on is looking to collect and share data between the state and managed care plans and between the state and the PPS. One of the objectives is better data sharing between and among the state health plans and the providers, mainly the integrated delivery networks.”

HealthPayerIntelligence.com: What could other states learn from New York’s reforms to its Medicaid program?

Deborah Bachrach: “I think some of the early learnings are that, first, it’s very important to start out with clear goals and objectives. Secondly, there is an appropriate balance to get between the metrics and the reporting so that you’re able to track progress without overburdening the delivery system in terms of reporting. Hitting that right balance is very important.”

“The third is that the more the rules can be defined up front, the more likely it is that the providers will be able to respond to and meet the objective. The fourth - and I think this is absolutely critical for sustainability - is that, as part of the process where you’re investing dollars upfront, you also need a strategy to ensure that the transformation is sustainable over the long-term once the investment dollars have dried up.”

“I think that is key to any transformation. Initially, when there are dollars to invest in transformation, those dollars flow outside of the reimbursement system. The trick to have sustainability is to develop value-based purchasing methods that will continue to permit investment and transformation through the regular reimbursement model rather than through investment or dollars that flow outside of the reimbursement system.”

HealthPayerIntelligence.com: How will population health management be used to reduce Medicaid costs in the Delivery System Reform Incentive Payment program?

Deborah Bachrach: “It will be achieved through the PPS or integrated delivery networks. Because the PPS is responsible for ultimately covering cost and outcome, it is anticipated that providers and health plans will invest dollars in non-reimbursable, social services. While they aren’t reimbursed directly by Medicaid, the impact of investing or paying for such services and interventions that address social determinants will ultimately improve the health and bring down the cost of the population for whom the PPS and the health plan is responsible.”

 

Dig Deeper:

MACRA Rule Revolutionizes the US Healthcare Payment System

Medicaid Challenges with Value-Based Care Payment Models