New York's Medicaid Waiver: Remaking Medicaid in NY

Last Spring, Governor Andrew M. Cuomo announced that New York finalized an agreement with the federal gNew York State Sealovernment for a groundbreaking waiver that will allow the state to re-invest $8 billion in federal savings generated by Medicaid Redesign Team (MRT) reforms. The goals of the MRT waiver amendment are nothing short of transforming the state-funded healthcare system.

The waiver is offered through a Delivery System Reform Incentive Payment (DSRIP) program. The DSRIP program seeks to promote community-level collaborations and focus on system reform. The reinvestment dollars will be earned by achieving a goal of a 25% reduction in avoidable hospital use over five years. To achieve this, so called "safety net providers" will be required to collaborate to implement innovative projects focusing on system transformation, clinical improvement and population health improvement. Single providers are not eligible to apply. All DSRIP funds will be based on performance linked to achievement of project milestones.

The DSRIP program is not unique to New York. It has been approved in several other states—including Texas, New Jersey, Pennsylvania and Kansas—as an alternative to more traditional waiver-funded supplemental payment programs. Program details vary by state, but generally provide federal and local funding for projects that further the “triple aims” of better care for individuals, better population health and lower cost through improvement and innovation. Participating providers receive funding to design and implement certain projects from a pre-approved “menu” provided as part of the MRT Waiver and are eligible for incentive payments if the programs meet or exceed certain performance metrics.

For NY, the funds represent a matching fund, not a grant. And the money is in no way assured. It will be contingent some of the state’s most financially challenged medical institutions—its five public hospital systems (the New York City Health and Hospitals Corporation, SUNY, Westchester Medical Center, Nassau University Medical Center and Erie County Medical Center) - to achieve most of the program milestones. For the first few years, the milestones are largely process-related, marking such things as reporting and work plans. The more “transformative” milestones required by the federal government kick in during the third year. But that’s also where the bulk of the money comes in. There will be a report card produced that grades the state as a whole for the performance of its parts.

The state’s waiver plan calls for the majority of the state’s match, $6 billion, to come from Intergovernmental Transfers - likely from the same five public hospital systems participating in the program.

The $8 B program is divided as follows:

  • $6.42 Billion for the DSRIP Program. The primary focus of the MRT Waiver is a rewards-based program that provides significant funding to eligible providers through planning grants, provider incentive payments and payments to fund administrative costs and related workforce transformation costs associated with innovative reform projects. The DSRIP program shares many features with existing federal and state reform initiatives and grant opportunities, but is unique in that it encourages meaningful collaboration among providers within a geographic area.
  • $500 Million for Interim Access Assurance Fund (“IAAF”). This time-limited funding will ensure that Medicaid safety net hospitals remain financially viable as they prepare for, commit to and participate fully in the DSRIP program transformation process.
  • $1.08 Billion for other Medicaid Redesign Purposes. Unrelated to the DSRIP program, this “other” funding provided by the MRT Waiver will support ongoing state Medicaid reform initiatives, including: (i) Health Home sustainability; (ii) investments in workforce for Medicaid Long-Term Care plans (“MLTCs”); and (iii) the transition of individuals with mental health and substance abuse diagnoses into Medicaid managed care plans.

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