NYAPRS Note: Much is left unknown still about the extra funds allocated to the DSRIP program, including where the money was found, how it will be allocated, and what expectations CMS will place on the new allocation. As community based providers continue to struggle to implement activities that promote best practice and integration, an apparent windfall to downstate hospital systems that serve few recipients of Medicaid and public assistance is shocking to advocates. An appropriate financial investment is the only way to ensure success of the DSRIP program, however more information is needed to understand whether this sudden financial investment will meet the healthcare needs of New York’s most vulnerable individuals.
After Frantic Appeal, State Adds $1B to Medicaid Program
Capital New York; Dan Goldberg, 5/27/2015
On Thursday, May 7, health systems across the state received much-anticipated valuation letters from the state health department, which let them know how much money they’d be receiving from New York’s Medicaid waiver program.
The waiver is Governor Andrew Cuomo’s signature Medicaid initiative, a $8 billion effort to change how health care is delivered to a third of the state’s population.
But many hospitals were shocked to discover they were allocated much less than anticipated, a mistake owing, in part, to the creation of a special project—dubbed, intriguingly, Project 11—that was unavailable to many downstate hospitals. The hospitals had underestimated how much their ineligibility would cost them.
The news set off a panic. Over the course of a frantic weekend, according to multiple sources, Greater New York Hospital Association president Ken Raske and representatives from the Healthcare Association of New York State engaged in heated conversations with state officials as they sought to procure additional funds.
By Monday, May 11, the problem was solved, and the state had come up with an additional $1 billion, helping to make the downstate hospitals whole, a figure first reported by Crain’s.
The reasons hospitals and health systems underestimated their allocations (in some cases, by as much as 50 percent) are not entirely clear but are almost certainly related to the complexities of the program, whose rules read like an experimental novel with a can of alphabet soup dumped onto it.
The Delivery System Reform Incentive Payment (DSRIP) program is run through 25 Performing Provider Systems (PPS) which chose from a menu of projects that are to be funded with DSRIP dollars. These projects are intended to reduce hospital use by 25 percent over five years, the length of the DSRIP program.
The Performing Provider Systems are made up of hospitals, physicians, health centers, community-based providers, long-term care facilities and other providers, with the hospital—because of its size and resources—usually taking the lead. There are two consequential decisions that must be made before a PPS can be awarded its share of the $6.4 billion allotted to the DSRIP program.
The first is how much each project on the menu is worth. The second is how many lives, or Medicaid patients, for which each health system will be responsible. In certain parts of the state, that’s easy to deduce because one PPS covers an entire region. But downstate, where there is a great deal of overlap among health systems and PPS systems, it is much more challenging to calculate.
When state health officials, led by Medicaid director Jason Helgerson, were putting this together they ran into another significant problem: About half of Medicaid patients are considered low utilizers or non-utilizers, meaning they rarely, if ever, interact with the medical system. There are also more than 1 million uninsured patients in the state. How should they be counted?
The answer became known as Project 11.
The goal of the project was to promote activation and engagement, because experts believed that low-utilizing patients could receive better, cheaper care if they regularly saw a doctor rather than wait for an emergency.
Project 11 was available only to public hospitals, except in regions where there were no public hospitals. That gave an advantage to private hospitals in places such as the Finger Lakes, the Adirondacks, and to any PPS that wasn’t situated in Albany, Buffalo, Westchester, New York City or Nassau County.
Private hospitals downstate failed to appreciate just how much this extra project would be worth.
The 14 PPS systems that took on Project 11 were awarded additional money both for the project and partly because they were responsible for the uninsured and low utilizers.
That increased their valuations, and because this all came out of one pot of money, the 11 other PPS systems, made up mostly of downstate providers, were awarded far less than they expected.
That set off a panic, which was only resolved when the state promised to (and did) find $1 billion.
The state health department is refusing to answer questions about the new valuation letters, how much additional money is being allocated, how this will affect the DSRIP program or what the Centers for Medicare and Medicaid Services thinks of New York’s sudden generosity, much of which went to health systems that serve relatively few Medicaid patients.
That some of these relatively well-off hospitals are even part of the DSRIP program has irked Medicaid advocates who have often complained that the Medicaid waiver money should be allocated mostly to the providers who care for the most Medicaid patients. That was the original intent of the program.
Hospitals and other providers were supposed to qualify only if they met certain criteria, such as having at least 30 percent of their patients be Medicaid recipients, uninsured or dual-eligible. The problem is some of the state’s leading health systems, those with the infrastructure and expertise to affect the kind of change state officials hoped to see, generally don’t serve a high percentage of Medicaid patients. And many physicians and nursing homes thought to be important for delivering the kind of integrated care the state desires also do not treat many Medicaid or uninsured patients. And so the definitions of “safety net” and “vital access provider” were broadened.
The state’s position has always been that the DSRIP program cannot go forward without the downstate health systems. Judging from the speed with which the administration found additional funds for the waiver program, they really believe it.