As the healthcare debate rages on in Washington, D.C., nine states have been implementing an ambitious and innovative Medicaid waiver initiative that is proving to be a game-changer in the way healthcare is delivered to this vulnerable, costly, and often overlooked population.

The Delivery System Reform Incentive Program, or DSRIP, requires states to reduce hospital utilization by 25 percent, improve clinical outcomes, and shift Medicaid providers to value-based contracts. The initiative involves providers, health systems, and patients. While the program is largely untested, some states are starting to see success and can now make the case for long-term cost reduction and sustainability.

It is also important to note that as Medicaid reform takes center stage in the healthcare debate, DSRIP is not a program that can be repealed or changed at this time.

DSRIP is made possible through Section 1115 of the Social Security Act, allowing the Department of Health and Human Services to approve pilot or demonstration projects that will improve healthcare for Medicaid and Children’s Health Insurance Program recipients. Section 1115 also provides states with the flexibility to expand access and services not typically covered by Medicaid and to implement new healthcare delivery systems to achieve the Triple Aim.

DSRIP provides financial incentives for states to transform their Medicaid delivery system through infrastructure development, system redesign, clinical outcome improvements, and population-focused improvements. Initially, the reform program is a one-time, five-year investment with the option to extend. The program’s funding, outcome requirements, and incentives are negotiated between the Center for Medicare & Medicaid Services and the individual state, and each state initiative is different.

Nine states have active DSRIP programs: California, Kansas, Massachusetts, New Hampshire, New York, New Jersey, New Mexico, Texas, and Washington. Virginia’s DSRIP is pending approval. Jointly, the states are investing nearly $17 billion to transform Medicaid delivery to millions of recipients.

New York, which operates one of the most ambitious DSRIP initiatives, has reached a pivotal year in its program: Its regional provider collaboratives must meet clearly defined program goals for reducing costs, improving outcomes, and shifting to value-based contracts in order to receive DSRIP payments. The Texas DSRIP created an integrated delivery system to provide a continuum of care for patients; one of its 15 initiatives has begun to provide health screenings and primary care through Mobile Health Teams. California designated 21 public healthcare systems to implement its program. The state has assigned more than 680,000 patients to a medical home and/or primary-care provider, and it has entered 1 million patients into disease registries for care management initiatives.

Each of the DSRIP states can boast about some success they have achieved. However, many states remain unwilling to take on the inherent risk the ambitious program holds. The national debate over sharp Medicaid cuts also makes states hesitant to take on a large-scale program.

To find out how other states are implementing DSRIP programs and what’s next for the elaborate program, click here to download the Decision Resources Group Executive Briefing “Nationwide Medicaid initiative transforming healthcare despite uncertain future.”


Follow Valerie E. Pillo on Twitter @ValeriePilloDRG

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