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Regulatory Compliance

Changing Delivery and Spending of Medicaid through DSRIP

Well, folks, here’s another acronym for you to add to your healthcare dictionary…DSRIP. DSRIP, or more formally known as the Delivery System Reform Incentive Program, is a demonstration program through the Centers for Medicare and Medicaid Services (CMS) that is designed to result in achieving the triple aim: better care for individuals, better health for the population, and lower costs by transitioning hospital funding to a model where payment is contingent on achieving health improvement goals1.Changing Delivery and Spending of Medicaid through DSRIP

CMS is using the Section 1115 Waiver of the Social Security Act, which gives the Secretary of Health and Human Services authority to approve experimental, pilot, or demonstration projects that support the objective of Medicaid programs2, to encourage hospitals to build innovative service delivery systems. Hospitals may qualify to receive incentive payments for implementing quality initiatives within their community and achieving measurable, incremental clinical outcome results demonstrating the initiatives’ impact on improving their states health care system3.

The program’s main goals are to:

  1. Develop a program that supports hospitals’ efforts to enhance access to healthcare, the quality of care, and the health of patients and families they serve.
  2. Develop a program rooted in intensive learning and sharing that will accelerate meaningful improvement.
  3. Ensure individual hospital DSRIP plans are consistent with their mission and quality goals, as well as, CMS’ overarching approach for significantly improving health care through the concurrent pursuit of the triple aim.

Growing Need for DSRIP

Medicaid is a government program designed to help the neediest of our countries citizens. Primary oversight of the program is handled at the federal level, but each state establishes its own eligibility standards, determines the type, amount, duration, and scope of services, sets the rate of payment for services, and administers its own Medicaid program4. Unfortunately, for the past decade or so, the well-intentioned program has become a major budgetary issue for many states, taking up almost 25% of their budget5. Each state is feeling the impacts of the increased spending and associated debt, but maybe none harder than the state of New York (NY). According to the Public Policy Institute of New York State, “Medicaid spending is strangling the taxpayers and undercutting the quality of medical care6.” They elaborate by stating:

  • Our Medicaid program has emerged as a monstrous, $24.5 billion budget-buster at both the state and local levels
  • Supporting Medicaid costs the average family of four in this state over $5,000 a year
  • Our spending on Medicaid is far out of line with every other state’s; it’s about 2.25 times the national average
  • If New York were able to find a way to reduce its Medicaid spending per capita to merely twice the national average, that would save taxpayers about $2.7 billion a year.
  • The two larger states, California and Texas, have almost three times our population–but combined; they spend only a bit more than New York on Medicaid

DSRIP to the Rescue?

New York is in desperate need of a restructuring how they deliver care to their approximately 5 million Medicaid beneficiaries. Enter DSIRP? In his article, “In Medicaid waiver, a challenge to connect, collaborate and create6” Anthony Brino, does a great job summarizing the details of how DSIRP may be able to help the New York Medicaid population and in turn reduce associated costs and increase payment: “Gov. Andrew Cuomo, has received a waiver from CMS to invest $8 billion in a larger redesign over the next five years, using money from what is estimated to be $17 billion in federal shared savings. The bulk of the waiver, $6.42 billion, is for the DSRIP program, which has the ambitious goal of reducing avoidable admissions for Medicaid patients by 25 percent over 10 years. More broadly, it’s trying to ensure that Medicaid beneficiaries can access integrated medical and behavioral health services across primary care practitioners, community-based organizations, home health visits, specialists and hospitals, through a single system of effective care management. In the $6.4 billion DSRIP program, participating providers applying for grants will choose from 25 different initiatives or propose their own to try new models of primary and hospital care, prevention and chronic disease management and community-based outreach and co-location.6

There will be many challenges along the way as New York and many other states jump on the DSRIP train hoping to improve the care they deliver to their Medicaid populations. However, if these States are able to stay the course and overcome the challenges and prove to be successful using programs like DSRIP to implement innovative mechanisms of care delivery, the resulting impact could be just the change the U.S. needs to reduce the cost of caring for our most valuable asset…our citizens! Only time will tell…stay tuned, this story’s just about to get interesting.

What do you think? Do you think programs like DSIRP will prove to be successful? What challenges do you see States facing with implementing such programs?


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Priyal Patel

Priyal Patel is a healthcare industry expert, strategist and senior solutions architect for Perficient. With more than 10 years of healthcare industry experience, Priyal is a trusted advisor to C-level executives, senior managers and team members across clinical, business, and technology functions. Priyal has a proven track record of helping providers and health plans execute enterprise-level transformation to drive business, clinical, financial and operational efficiencies and outcomes.

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