As the date to submit final applications to participate in the Delivery System Reform Incentive Payment Program (DSRIP) approaches, the New York State Department of Health (DOH) continues to roll out new information, revised guidance, and webinars with critical information for lead and non-lead organizations. Most recently, DOH has delayed certain deadlines, released the application for $1.2 billion of capital project financing related to DSRIP projects, issued a revised DSRIP application, and provided guidance about beneficiary attribution. This memorandum summarizes major developments.

DSRIP Deadlines

DOH changed the deadline for Performing Provider System (PPS) leads to submit their list of participants from November 24 to December 1, 2014. The deadline for PPS leads to submit DSRIP applications has been changed to December 22, 2014. Applications for capital funding are also due on December 22.

DOH will post the submitted DSRIP applications on its website on December 24, with a public comment period that will end on January 26, 2015. DOH has indicated that it will provide implementation guidance in January 2015.

Regulatory Waivers

DOH has issued guidance on available regulatory flexibility (Regulatory Guidance Statement) setting forth potential regulatory waivers that DOH, the Office of Mental Health (OMH), the Office of Persons with Developmental Disabilities (OPWDD), and the Office of Alcoholism and Substance Abuse Services (OASAS) can grant to facilitate implementation of DSRIP projects (https://www.health.ny.gov/health_care/medicaid/redesign/docs/reg_flex_guidance.pdf). Only PPS lead organizations can apply for waivers to cover entities participating in the PPS. PPS leads are expected to submit waiver applications as part of the DSRIP application, but can also apply for waivers at a later date.

In general, applications for a waiver must be project specific and must:

• list the project plan components affected by the waiver;
• list the reasons the waiver is necessary;
• identify proposed alternatives to regulatory compliance; and
• describe the impact of the waiver on patient safety.

Waivers must be implemented in a way that does not create a dual standard of care for Medicaid and non-Medicaid beneficiaries. The Regulatory Guidance Statement also advises that waivers will not necessarily apply to all PPS participants. For this reason, lead organizations should identify waivers for projects they will undertake and all PPS participants that could benefit from a waiver necessary to carry out PPS projects. For their part, it is important for non-lead participants to identify waivers relevant to projects for which they will be participants, and reach out to the PPS lead organization to assure they are included in the waiver application. The benefits or limitations of any state waivers must take into account applicable federal regulations. For example, projects to integrate behavioral health and primary care may require a waiver for co-locating primary care and behavioral health services, but federal regulations that limit co-located space arrangements will still apply.

Based on the design application grants, many PPS lead organizations will undertake the project to create an integrated delivery system (Project 2.a.i). Depending on PPS plans, this project may require or benefit from many potential waivers, including but not limited to:

• application for a Certificate of Public Advantage (COPA) for relief from antitrust enforcement;
• numerous potential waivers related to certificate of need requirements (such as waivers for establishment, elimination, or expansion of services, construction, or renovation of facilities);
• waiver to allow revenue sharing between Article 28 established facilities and any entity that is not an Article 28 established provider;
• waiver to permit transfer from a hospital based on source of payment, which can include DSRIP funds; and
• waiver of regulations governing transfer and affiliation agreements.

Capital Funding

On November 19, 2014, DOH and the Dormitory Authority of the State of New York (DASNY) released the Capital Restructuring Financing Program (CRFP) Request for Application (RFA) for $1.2 billion of available grant funding for capital projects aligned with DSRIP goals. The RFA, including detailed instructions, can be found at: http://www.health.ny.gov/funding/. While much of the funding will be awarded through PPS lead organizations, the following providers may apply for capital funding:

• general hospitals;
• residential health care facilities;
• diagnostics and treatment centers;
• clinics licensed pursuant to the Public Health Law (PHL) or the Mental Hygiene Law;
• assisted living providers;
• primary care providers;
• home care providers certified or licensed under PHL Article 36;
• provider organizations which hold operating certificates issued by the DOH, OMH, OPWDD and OASAS; and
• OMH clinic programs, intensive psychiatric rehabilitation, treatment programs, continuing day treatment programs, day treatment programs, and personalized recovery oriented service programs.

As clarified by the RFA, providers participating in a PPS must apply through the PPS organization and cannot submit an independent application. The PPS will rank the projects in priority order in its application for funding.

Preferred Eligibility Criteria. DOH identified criteria for the CRFP applications, and listed the following criteria as preferential:

• applicants committing matching funds to the proposed project;
• applicants with projects that demonstrate transformational change to the health care delivery system from a fee-for-service system to a value-based system; and
• applicants that demonstrate significant financial need.

The RFA identified other criteria that will lead to a favorable project evaluation, including projects that will create or expand primary care capacity, promote care coordination and patient-centered care, and reduce avoidable hospital and nursing home admissions and emergency care visits.

Eligible Capital Projects. Eligible projects for capital funding must support DSRIP goals. Expenditures may include, among other purposes: asset acquisition; infrastructure improvement; development of primary care capacity, tele-health infrastructure, and coordinated co-located ambulatory care services; and development of an integrated delivery system, including consolidation of services and closures, mergers, and/or restructuring.

Certain expenses are excluded for payment by the capital fund, such as expenses for personnel costs, supplies, non-capital equipment, general operating costs, and working capital. The most recent Frequently Asked Questions from DOH stated that capital funds could not be used for information technology investments, although DSRIP performance payments could be used for this purpose. The RFA states that capital funds can pay for information technology infrastructure. At the conference about the RFA on November 21, DOH and DASNY stated that they would issue further guidance on December 5, 2014 to clear up this inconsistency.

Beneficiary Attribution

On a November 20 conference call held by DOH, numerous callers asked about the attribution of beneficiaries, and in particular the obligation of PPS lead organizations to assure that physicians and other primary care participants are not counted in more than one PPS for attribution purposes. DOH stressed that each PPS lead organization is responsible for having documentation to prove that a physician practice or Independent Practice Association that provided an attestation on behalf of individual physicians has the legal authority to do so. DOH also noted on the call that it will not assign providers who are not in a PPS or their attributed beneficiaries, unless the beneficiaries are otherwise assigned because there is a sole PPS in the region, or as a result of assignment based on a plurality of services.

Revisions to DSRIP Application

On September 29, 2014, DOH released the DSRIP application, followed by a revised application on November 14, 2014. The revisions emphasize the inclusion of community-based organizations (CBOs). Specifically, the revised application requires PPS lead organizations to: (i) describe contracts with CBOs as part of the governance structure; (ii) discuss CBO participation in the health literacy and cultural competence plans; and (iii) describe the distribution of funds to CBOs and other safety net providers, including adult care facilities, assisted living programs, licensed home care services agencies, and adult day health programs, in the PPS plan for funding allocation.

The compliance plan section of the application now requires PPS lead organizations to describe how community members, Medicaid beneficiaries, and uninsured individuals will know how to file a compliance complaint. The revised application also requires PPS leads to indicate how Medicaid beneficiaries and their advocates can provide feedback to inform the PPS process to oversee and remove poor performing providers. DOH revised the section on workforce strategy to require each PPS applicant to describe any workforce shortages that may impede DSRIP goals or projects, and identify the labor groups or other worker representatives consulted in developing the workforce strategy.