State Officials, Health Systems Want More Time For Medicaid Reform Effort
By Dan Goldberg, Amanda Eisenberg Politico September 23, 2019
The Cuomo administration’s request to renew the state’s massive Medicaid reform program reveals a subtle but important shift in New York’s priorities as it hopes the federal government will keep paying health systems billions of dollars to change their business model.
The Delivery System Reform Incentive Payment program began in 2014 with the promise of reducing unnecessary hospitalizations by 25 percent over five years — a target the state has not yet hit, although state officials say it is within reach.
DSRIP 2.0, which the state debuted in a concept paper last week , doesn’t make any headline-grabbing promises to keep people out of the hospital or pledge to improve health metrics by a defined amount. Instead, the state wants $8 billion to focus on increasing the number of value-based contracts, the kind that reward health care providers for keeping patients away from a hospital.
The state’s request comes even as New York's 25 Performing Provider Systems — the organizations tasked with carrying out projects focused on specific health outcomes — sit on $1.2 billion from the first iteration as of the end of March, according to the Public Consulting Group, the independent assessor tasked with monitoring the state’s progress. It’s a problem that has bedeviled the state since the program’s earliest days, as state officials have continually prodded organizations to spend the money they‘ve earned.
Greg Allen, director of program development and management for the state Department of Health’s health insurance programs office, said the state is making a “concerted effort to make sure that all of the earned funds are flowed consistent with funds flow distribution plan.”
Officials from these Performing Provider Systems say the numbers can be misleading because millions might be allocated but not yet spent. But it also appears true that many of the Performing Provider Systems appear reluctant to part with their cash until they know whether the Trump administration will approve an extension.
“All of these institutions were scared s---less that DSRIP would disappear so they hung on to the money,” said Steve Berger, a member of the Project Approval and Oversight Panel for DSRIP.
Arthur Gianelli, president of Mount Sinai PPS, said the cash on hand isn’t necessarily an indictment of how the program was run. In fact, he said, it may prove their success.
“We try to budget conservative — and budget with the assumption of performing less well than we actually did — so we would ensure that we had funds to take us through the entire DSRIP period,” he said. “We did better than we thought, so there’s more money.”
While the state’s request is for $8 billion over four years, the money is front-loaded so that $4 billion would be received in the first year, twice as much as during any year in the first iteration.
There will be plenty of negotiation with the Trump administration and the numbers may change, but, for the moment, the state is proposing a risky proposition: Half the money will be tied to performance metrics in a year when new partnerships are being formed and new rules implemented. It’s the opposite of what the state did five years ago when much of the money was awarded for what amounted to paperwork and administrative goals
But the world looks a lot different than it did in 2014. Back then “Happy” topped the charts, Gov. Andrew Cuomo and Mayor Bill de Blasio were still holding joint press conferences and Donald Trump was being mocked for toying with the idea of running for governor.
Now, it’s Trump‘s crew that will decide the fate of New York’s multibillion-dollar request. The state, in its outline, echoed some of the Trump administration’s priorities, particularly regarding opioids and serious mental illness. There is also a nod to the Trump administration’s efforts to have providers assume risk through different population-based models in Medicare. And the state asserts that these new models will make financial sense without government support by the third year of the new program, intimating that the Cuomo administration, which would be in its fourth term by the time this waiver ends, does see an off-ramp in the near future.
But there are some land mines for the Cuomo team to navigate, including explaining to CMS where the state’s share of the money will come from. New York, in order to draw down federal funding, must put up a dollar-for-dollar match. The Trump administration no longer allows “designated state health programs,” which New York used to fund about one-quarter of DSRIP’s first iteration. The Cuomo administration could rely more heavily on intergovernmental transfers — a process by which the state’s public hospitals would provide $8 billion of their own money.
A spokesperson for NYC Health + Hospitals, which would be expected to bear the brunt of that program, said it’s too soon to tell what it might mean for the nation’s largest public system.
The Cuomo administration is also going to face a time crunch. Public comment period for the concept paper runs through Nov. 4. The state will then send in a formal request at the end of the month, giving CMS about 120 days to negotiate before the end of the current waiver.
In 2014, the state asked for $10 billion and the Obama administration agreed to an $8 billion waiver, but Cuomo had a much better relationship with his fellow Democrat than he has with his fellow New Yorker, and he was in regular contact with then-HHS Secretary Kathleen Sebelius.
State officials have not had any detailed conversations with CMS about the renewal request, Allen said.
“It’s anybody’s guess how these negotiations will go,” he said.
Officials from CMS did not respond to a request for comment.
The Cuomo team can point the Trump people to successes, including an increase in value-based contracts. Roughly 60 percent of Medicaid managed care spending is now directed through those types of financial arrangements. The second iteration, they say, is needed to keep the number climbing.
“There’s still a lot more work that needs to be done ... to get value-based payments right in the Medicaid space to entice the providers to shift more dramatically from some older payment models to value-based-payment models,” Gianelli said. “The evidence around the programs that have been adopted is not that mature where we have that concrete level of understanding of what the return on investment on those programs are.”
While DSRIP is an accelerant, some of the state’s largest health systems are likely to work toward the state’s goals with or without a share of the savings, Gianelli said.
“Obviously if there’s money behind it, it helps us to do it,” he said. “If for whatever reason we aren’t able to secure this waiver, it’s not like we would all of a sudden stop undertaking the work to improve how we deliver care to Medicaid patients.”
One shortcoming the state appears to be attempting to correct in DSRIP 2.0 is that insurers, many believed, played too small a role during the first five years. The state’s concept paper says insurer “engagement and partnership now need to be more meaningfully integrated.” It is an effort to jump-start the kind of risk-based contracts the state believes are key to lowering costs. It's also designed to encourage hospitals, doctors, social workers, community-based organizations and insurance companies to come up with a model that allows them all to earn as much from a patient staying healthy as they do from a patient becoming ill.
Providers will be required to bring insurers in the region into the management and operational structure.
“We brought the [insurers] assertively into this partnership as a required manager of the overall structure,” Allen said. “Health care is a team sport.”
The state’s concept paper boils down to a request for more time, which Berger said was reasonable given the scale of change being pursued and the relatively small amount of money being used to pursue it.
The first two years of DSRIP were mostly administrative work, he noted.
“The notion that you would change behavior — first for providers and then [patients] — in what is really three years of implementation is not realistic,” Berger said. “Eight billion over four or five years is not quite bupkus, but it ain’t far from it.”