The state of Texas has published a draft extension application requesting an additional five years of its 1115 Medicaid Waiver, which began in 2012 and will expire in September 2016 without an extension.  Providers implementing projects under the current waiver will need to understand how programmatic changes in this extension may impact their operations and implementation moving forward. Here are five key takeaways from the draft waiver extension application:

1. Definitive results on the effectiveness of the DSRIP program are still pending

In requesting its waiver extension, the Health and Human Services Commission (HHSC) must make a case to Centers for Medicare and Medicaid Services (CMS) that the program brings value to CMS, the uncompensated care and Medicaid patients.  However, HHSC notes in the application that the majority of patient impact occurs in demonstration year 4 (DY4) and demonstration year 5 (DY5), and data for DY4 will not be available to the state until October of 2015.

Preliminary results are available and HHSC hopes that CMS will see that the Delivery System Reform Incentive Program’s (DSRIP) infrastructure investments are starting to produce results to justify continuing the program.

In demonstration year 3 (DY3), DSRIP projects provided over 2 million additional patient encounters and served 950,000 additional individuals compared to previous service levels. Further, over 230 outcome measures (10 percent of all DSRIP outcome measures) reported achievement over baseline measures. Strong successes were seen in all-cause hospital readmissions, patient navigation, behavioral health and primary care clinic integration, emergency department visits for ambulatory care sensitive conditions, HbA1c control, controlling high blood pressure, influenza immunization, and adult emergency department utilization.

2. HHSC requests to maintain the DY5 funding levels for DSRIP

The only change requested to the Standard Terms and Conditions for DSRIP is to continue the DY5 funding for each year of the extension. DY5 funding currently sits at $3.1 billion; however, since not all projects will continue into the next waiver, HHSC has proposed alternative uses for remaining funds, including:

• Establishing a shared performance pool from unearned funds over the course of the extension period. One proposed model will reward all providers in a region if the region improves on key outcome metrics.
• Allowing alternate transformative projects (including cross-regional projects and special projects for rural regions)
• Bringing smaller projects up to minimum valuation
• Performing providers with projects that are discontinued are permitted to retain the DSRIP value and offer replacement transformative projects from a narrow menu

Projects doing well will also be expected to expand in scope or scale and take the next step in transformation. For example, a successful primary care clinic project may evolve into a patient-centered medical home project.

3. The majority of current DSRIP projects are expected to continue, while incorporating opportunities for consolidation and lessening of the administrative burden. All projects must meet standards for continuing in good standing.

With this extension request, HHSC is giving its providers more time to demonstrate DSRIP project outcomes. Texas intends to continue the majority of the current 1,458 DSRIP projects. Some projects will not be allowed to continue if they are doing poorly according to HHSC’s independent assessor or do not meet criteria for being in good standing.

HHSC has also learned that DSRIP brings a heavy administrative burden for itself and its providers; in this next iteration, efficiencies will be made. These may include:

• Standardizing milestone language
• Only allowing quality and performance improvement (QPI) milestones
• Allowing certain projects to be combined into a single project (cross-regional health partnership (RHP) projects by same provider, smaller projects with smaller valuations, similar projects by same provider in same region)
• Reducing period for carry-forward achievement but allow partial achievement (similar to Category 3 measures)
• Better alignment of Category 3 measures with projects
• Reducing the period for allowable achievement carryforward

4. There will be a push towards alignment with managed care organizations and value-based payment

Integration with managed care and value-based payment has always been a goal of the 1115 Waiver in Texas. With the extension, HHSC will continue to take steps toward pushing the alignment between Medicaid providers and managed care organizations (MCOs).

In the existing waiver, HHSC defined the potentially preventable events (PPEs) for Category 4 reporting to mirror the PPE methodology for the MCO Pay-for-Quality program. In this next waiver, HHSC has proposed to potentially:

• Require DSRIP projects to report Medicaid IDs of patients; this would allow for further collaboration and outcomes reporting between DSRIP and MCOs.
• Develop a quality alignment/value-based payment roadmap
• Require hospitals to provide emergency department admission, discharge and transfer data
• Provide global trend data to CMS on PPEs
• Align DSRIP and managed care quality measures even further

5. Non-DSRIP 1115 waiver programs

HHSC will ask to expand the current UC pool to $5.8 billion for FFY2017, $6.6 billion for FFY2018 and $7.4 billion/year for FFY2019 to FFY2021. The requested pool size is based on the estimates of the total UC burden outlined in the extension application.

The coverage expansions for the STAR, STAR+PLUS and dental maintenance organizations will not change.

If the waiver extension is approved, performing providers with strong DSRIP projects can look forward to additional time to demonstrate outcomes and the impact of their initiatives. A concerted effort to reduce the administrative burden will streamline some initiatives, while a push toward alignment with managed care and value-based payments will become more and more important.   Further, attaining achievement on the projects will become more difficult as outcomes, and project payment values, will become more dependent on achieving higher performance Category 3 metrics.  This reflects CMS’ overall strategy to achieve the goals of the Triple Aim: better care, for more patients, at a lower cost.

COPE Health Solutions can help your organization evaluate your current DSRIP projects and understand how to best prepare for the waiver extension. Our team has extensive experience in the current Texas waiver from planning to implementation to measurement. Additionally, our subject matter experts can help your system move toward its long-term strategic goals, using the waiver as a path to success. For more information about how COPE Health Solutions is helping clients in Texas take advantage of the current waiver and prepare for the renewal, contact DSRIP@copehealthsolutions.com.