New York’s Delivery System Reform Incentive Payment (DSRIP) program: Transitioning to payments based on performance measures

On April 14, 2014, the Centers for Medicaid and Medicare Services (CMS) approved New York state’s groundbreaking DSRIP program through their Medicaid 1115 waiver amendment, allowing the state’s Department of Health (DOH) to reinvest $8 billion of federal savings generated by Medicaid Redesign Team (MRT) reforms. NY’s DSRIP incentive payments promote community-level collaborations in the form of “Performing Provider Systems” (PPSs) that implement innovative projects focused on system transformation, clinical improvement and population health improvement, with an overall statewide goal of reducing avoidable hospital use by 25 percent, over the program’s five years.

Now in the third year of the program (also known as Demonstration Year 2), the stakes are higher for all participants as payments transition from the initial program year’s rewards for developing institutional structures and accomplishing procedural milestones to a significantly heavier mix of performance based metrics.


Much of Demonstration Year 0 (April 2014 through April 2015), the first year following CMS approval, was spent planning, including the formation and selection of PPSs, and the design and approval of projects, with selected PPSs receiving planning grant funding. Demonstration Year 1, which, beginning on April 1, 2015, focused on implementation planning for approved projects and establishing processes and pay for reporting (P4R) structures, with PPSs assessed and paid mostly on P4R measures (successfully reporting measures within the required timeframe).

April 1, 2016 marked a major milestone in the NY DSRIP program. As the program entered Demonstration Year 2, PPSs began the transition from project planning to project implementation. PPSs no longer receive funding based only on reporting metrics. Rather, payments are increasingly based on achieving measurable patient outcomes associated with each of their chosen projects, chief amongst them being the reduction of preventable hospitalizations and preventable emergency department visits. PPS improvement on measures related to access to care, care transitions, care integration, and nationally recognized and validated disease-focused metrics are also tied to incentive payments. Each P4P measure has a predetermined statewide performance goal based on the 90th percentile of performance across the state. PPSs can earn incentive payments for results that meet or exceed the annual improvement target. Results for the first P4P period are scheduled to be released in March of 2017 with payment expected July 2017.

This P4P transition brings a new set of implementation challenges. The performance measures are subject to ongoing change and revision; they can impact policy decisions and have implications for the payment methodology and data systems. For example, when the National Committee for Quality Assurance (NCQA) updated guidelines for statin therapy for the treatment of cardiac disease, subsequent updates were required to the payment model, the program’s measure specification guide and data reporting requirements. Working closely with the state and other contracted vendors, PCG has helped to update and refine measure specifications and recommend measurement strategies based on changes to measures. Communication continues to be key to these efforts as PCG, state staff and other contracted vendors work together to ensure that resulting policy changes are effectively communicated across to the state’s participating providers.

The next major milestone arrives in Demonstration Year 3, starting April 2017, when the total amount of federal funding that is available to the state and for PPS incentive payments will be tied to performance toward a set of statewide measures, assessed on a pass or fail basis. If penalties are applied, federal funding will decrease and the state will be required to reduce funds in equal distribution across all DSRIP projects. This shift once again raises the stakes for all participants. Individual PPS success is not enough and it is in the best interest of PPSs to collaborate to ensure statewide success.

As the initial results from the outcome measures become available in early 2017, we will see how successful the efforts of the first two years have been and where adjustments need to be made to ensure statewide success by the end of the waiver in 2020.

More information about the NY DSRIP program is available here.

  1. […] Much of Demonstration Year 0 (April 2014 through April 2015), the first year following CMS approval, was spent…Read More […]


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