State officials have come to view a Medicaid hospital-improvement initiative primarily as a source of supplemental payments for providers, according to the Medicaid and CHIP Payment and Access Commission.
MACPAC conducted a series of interviews with state and federal officials about a Medicaid hospital improvement initiative and uncovered a fundamental difference between what states and CMS officials understand about the purpose of the program.
The initiative, known as the Delivery System Reform Incentive Payment (DSRIP) program, is a waiver program that allocates federal Medicaid funding to create financial incentives for providers to pursue delivery-system reforms. Those reforms involve infrastructure development, system redesign, and clinical-outcome and population-focused improvements. The initial goal under these programs is to set up reform initiatives. In later years, the focus shifts to outcome-based metrics such as population health improvements.
Before the creation of DSRIP, states received various forms of supplemental funds from the CMS, including payments to subsidize uncompensated care. Many states view DSRIP programs as a way to preserve or make new supplemental payments. The CMS, however, considers the primary purpose to be delivery system transformation.
In 2010, California became the first state to win federal approval for and launch a DSRIP initiative as part of a broader Medicaid Section 1115 waiver. Additional CMS waivers, including DSRIP programs, were approved for Texas in 2012, Kansas in 2013, and New Jersey and New York in 2014. Similar provider incentive programs were approved in Massachusetts in 2011 and New Mexico in 2014.
The CMS has dedicated nearly $30 billion to the programs in those seven states. Alabama and Illinois have pending Medicaid waiver requests that include DSRIP programs.
MACPAC tapped the National Academy for State Health Policy, an independent organization of state health policymakers, to interview Medicaid officials in Massachusetts, New Mexico, New York and Oregon. It also conducted site visits in California, New Jersey and Texas, and and spoke with several CMS officials to better understand state and federal experiences with DSRIP implementation.
The interviews revealed just how differently states and the federal agency view the program.
“Although CMS describes DSRIP programs as a tool primarily intended to assist states in transforming their delivery systems in order to fundamentally improve care for beneficiaries, states have been candid that DSRIP programs have been pursued as a means to make supplemental payments,” the commission says in its June report to Congress.
The commission suggested HHS could clarify the purpose of the program with additional guidance on DSRIP policies and expectations.
The DSRIP initiatives typically are part of broader Medicaid transformation waivers that include other initiatives intended to produce savings.