Health Care: Charting the Path Forward to DSRIP for Long-Term Care Providers (8/14)

by Bond Schoeneck & King PLLC

Designed by New York State to seek a federal waiver for the expenditure of Medicaid funds, the Delivery System Reform Incentive Program (DSRIP) will allocate 6.42 billion dollars to health care providers in New York State to undertake system reform, clinical projects, and population health management. DSRIP seeks to reduce avoidable hospital readmissions by 25% and fundamentally restructure the state’s health care delivery system, with implications for all health care providers.

DSRIP is not just about hospitals. Although many hospitals will have a leading role in DSRIP, hospitals must team up with other providers to meet DSRIP’s goals and DSRIP funds will be available to participating providers. Providers identified as safety net providers based on the percentage of Medicaid, uninsured, and dual eligible patients they serve will be the primary recipients of DSRIP funds. However, other providers can receive funding, and more importantly, can participate in the Performing Provider Systems (PPSs) forming around the State to implement DSRIP. Providers have much at stake in their DSRIP arrangements. In addition to financial incentives and funding tied to participation, DSRIP plans must be designed for the five-year duration of the program and, ultimately, will provide the platform for integrated delivery systems across the State.

On December 16, 2014, organizations leading each PPS must submit detailed applications to the New York State Department of Health (DOH) specifying selected projects, governance, financial, clinical, and other elements of their DSRIP plan. Nursing homes, home care, and other long-term care providers will be integral to PPS entities emerging in their regions. As the mid-November deadline for PPS lead applicants to submit final partner lists to DOH approaches, long-term care providers should assess their participation, prepare for negotiations about their obligations and funding allocation, and enhance their capacity to carry out PPS projects.

Choosing a PPS. In some regions, a sole PPS will be formed. In other regions, providers may be able to choose between two PPS entities or participate in more than one. In evaluating potential PPS lead organizations, long-term providers should assess the organization’s financial strength, available capital, and PPS leadership. The PPS’ ability to meet its selected process measures and DOH metrics for PPS projects as well as its capacity to reduce preventable hospital admissions will be central to PPS success over the life of the project.

Each PPS lead organization will generate an agreement that specifies the rights and obligations of partners and other participating organizations. These agreements are likely to have substantial financial, operational, and clinical implications for participating providers.

Governance. DSRIP applications must include a detailed description of project governance. DOH has encouraged a shared governance model with centralized control of DSRIP projects. Each PPS must establish a Project Advisory Committee (PAC) that includes a managerial representative of each PPS partner with more than 50 employees as well as a representative of non-union or unionized employees. PPS partner organizations that have fewer than 50 employees have the option to select an organizational representative to participate in the PAC. PPS governance must therefore balance the demands of strong centralized governance, broad representation from partner organizations, and leadership in operations, finance, quality, and information systems necessary for PPS success.

Governance plans must also specify how the PPS will evolve from an affiliated group of providers into an integrated delivery system, and address how the PPS will manage poor performing partners, including progressive sanctions. It will be important for long-term care providers to understand the PPS governing structure, how governance will evolve to form an integrated delivery system, and their rights to information about PPS financial and clinical outcomes.

Financial Costs and Terms. All PPS entities must establish a joint budget among partner organizations, and a plan that specifies the methodology for distributing funds, consistent with federal and state fraud and abuse laws. Depending on how it is structured, some PPS entities may require a capital contribution from participating partners. Another financial consideration for providers is the cost of meeting PPS process and quality goals. Long-term care providers should understand the requirements participation will impose, and assess the changes in their operations, quality programs, data collection, and information technology capacity required to satisfy those obligations.

Affiliation Agreements. PPS entities must select projects from three categories: system transformation, clinical improvement, and population health. Specific projects may require affiliation agreements among PPS participants covering issues such as clinical protocols, care coordination, transfer agreements, and data sharing.

Quality Improvement, Data Reporting, and HIPAA Compliance. DSRIP programs require an unprecedented degree of clinical coordination among providers across the continuum of care. As required by DOH, PPS entities must collect quality metrics in a uniform and valid fashion across all partners in the PPS and must have a plan for data sharing. Contractual agreements with the PPS are likely to specify the data reporting and sharing requirements that apply to partners and other participants. Long-term care providers should assess the implications of the PPS’s plan for data reporting and use in relation to their information technology infrastructure and quality improvement program. All data sharing must comply with the privacy and security requirements of HIPAA and state privacy laws.

Medical Staff Bylaws. Participation in a PPS may require providers to amend their medical staff bylaws to align with the bylaws of other PPS entities or PPS goals. In particular, providers with bylaws based on a traditional notion of quality assurance focused primarily on retrospective review of adverse events should consider revisions that recognize medical staff obligations to participate in quality reporting, quality improvement, and training. These changes would also benefit long-term care providers as they seek to participate in other new forms of care delivery, such as accountable care organizations.

Credentialing. Some PPS organizations at the outset or over time may require certain procedures and standards as part of medical staff credentialing. In some cases, PPS entities may require partners to meet Joint Commission standards or transition to a centralized credentialing process.

Physician Contracts. As with medical staff bylaws, PPS participation may require revisions to Medical Director and affiliated and staff physician contracts to incorporate the performance goals and quality reporting established by the PPS. In addition, it may be advantageous for long-term care providers to offer physicians incentives aligned with PPS quality goals likely to determine funding allocation under DSRIP. Increasingly, facility reimbursement, through policies set by Medicare and Medicaid, will also depend on quality performance. Incentives to physicians and other professionals, including incentives to reduce hospital admission, must be scrutinized carefully to assure compliance with federal and state fraud and abuse laws.

Building Capacity to Attain DSRIP Success. Cutting across the complexity of the menu choices for DSRIP projects, the core goal of DSRIP is reducing preventable hospital admissions and readmissions by 25%. Long-term care providers should develop or enhance their capacity to analyze their referral pattern to hospitals, and implement interventions to reduce preventable admissions.

Studies have shown that certain conditions, such as congestive heart failure and pneumonia, account for a high number of preventable hospital admissions. In addition, weakness in policies to seek, record, and rely on advance directives and family decisions about end-of-life care also contribute to preventable admissions. Nursing homes should evaluate their policies and implementation of New York’s health care proxy law and Family Health Care Decisions Act as well as hospital transfer agreements in order to preserve treatment wishes. Likewise, home care providers should review their policies and procedures for advance directives and non-hospital do-not-resuscitate orders.

Conclusion. By design, DSRIP will have a profound impact on the health care system in New York State, restructuring reimbursement, care delivery models, and delivery systems across the State. While long-term care providers face time and other pressures to settle PPS participation, given the lasting impact of the arrangements, they should seek to understand, negotiate, and prepare for PPS participation as an enduring part of their future.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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