Heath-care law update: Delivery System Reform Incentive Payment (DSRIP) Program

New York state has been approved for up to $8 billion to fund the Delivery System Reform Incentive Payment (DSRIP) program. This program seeks to provide incentives for Medicaid providers to create and sustain an integrated, high performing health-care delivery system. The goal is to effectively and efficiently meet the needs of Medicaid beneficiaries and low-income uninsured individuals in their communities by improving health care and reducing costs.

The DSRIP program is focused on the following goals: (1) safety net system transformation at both the system and state level; (2) accountability for reducing avoidable hospital use and improvements in other health and public-health measures at both the system and state level; and (3) efforts to ensure sustainability of delivery system transformation through leveraging, managed-care payment reform, delivery system transformation through leveraging managed-care payment reform.

The lawyers at Bond Schoeneck & King, PLLC have established a DSRIP legal-support workgroup to help clients respond and participate in this program. Integrated legal support is necessary to guide health-care providers and their partners through the complexity of this five-year endeavor and into the future, working with a transformed health-care delivery structure.

The platform for participation funding is based on regional coalitions of safety net providers called “Performing Provider Systems” (PPS). The state will not fund a single provider, so everyone must work together.

The state will consider exceptions to the safety net definition on a case-by-case basis if it is deemed in the best interest of Medicaid members. Non-qualifying providers may participate in PPS, but no more than 5 percent of a project’s total valuation may be paid to non-qualifying providers as a group.

A PPS is intended to be a distinct legal entity, and although the state has not prescribed the legal structure, it is expecting a model that supports shared governance among all participants. The governance plan must include a process by which the PPS will progressively advance into becoming an integrated delivery system. The development of this legal and governance structure must be done in a manner that positions each PPS to achieve its objectives and carry out its purpose.

Coalitions must designate a health-care provider to serve as the leader who will be held responsible under the DSRIP for ensuring that the coalition meets all PPS requirements, including reporting to the state and CMS. The lead provider will submit the DSRIP project application and lead the PPS, most likely by serving as chair of the governing body of the PPS.

DSRIP project plans must be approved by the state and may be subject to additional review by CMS. Payments are made upon completion of project milestones and measures. There must be a clear business relationship between the PPS and its component providers, including a joint budget and funding-distribution plan that specifies, in advance, the methodology for distributing funding to participating providers.

The funding distribution plan must comply with all Medicaid program requirements and all applicable federal and state laws and regulations, including, but not limited to: the anti-kickback statute; the physician self-referral prohibition (Stark Law); the gainsharing and the beneficiary inducement civil monetary penalty (CMP Law); and federal and state antitrust laws.

Each PPS must also identify a proposed population for DSRIP of at least 5,000 individuals to be serviced. Data-sharing agreements must be put into place to share and manage data on systemwide performance. A PPS must include a comprehensive workforce strategy in the plan that identifies all workforce implications, including employment levels; wages and benefits; distribution of skills; and how workers will be deployed to meet patient needs in the new delivery system.

Each PPS is responsible for project activity that addresses:

1. The creation of appropriate infrastructure and care processes based on community need, in order to promote efficiency of operations, support prevention and early intervention;
2. The integration of settings through the cooperation of inpatient and outpatient, institutional and community based providers, in coordinating and providing care for patients across the spectrum of settings in order to promote health and better outcomes, particularly for populations at risk, while managing total cost of care; and
3. Population health management.

Once the state receives a DSRIP project plan and application, it will use a complex valuation formula to calculate the maximum amount a PPS could be paid. A PPS may receive less than the maximum amount if it does not meet metrics and/or if DSRIP funding is reduced because the state does not meet its statewide goals.

Community advisory committees will be created to oversee the implementation of the DSRIP project and will work closely with its PPS.

There is a great deal of work to be done now and over the next several months

Regina S. McGraw and Carolyn Shearer are senior counsels at Bond Schoeneck & King, PLLC in its health-care practice group. Contact McGraw at (315) 218-8694 or email: rmcgraw@bsk.com. Contact Shearer at (518) 533-3226 or email: cshearer@bsk.com. This viewpoint article is drawn and edited from a health-care law Bond information memo posted this month on the law firm’s website: www.bsk.com