DSRIP Financing of Medicaid: TX, NY and CA We’ll talk about today: History of DSRIP in California The intersection with other value-based Initiatives in California Where DSRIP is headed next Core challenges and lessons learned How health IT can help providers with core challenges today and set them up for future success. Lisa Chan-Sawin, Consultant Evan King, EVP, COPE Health Solutions

What is DSRIP? DSRIP stands for “Delivery System Reform Incentive Payment.” A Medicaid effort operated under a Section 1115 Medicaid waiver program that provides provider financial incentives to: Support delivery systems changes to meet the triple aim; Address gaps in care delivery; Develop local care coordination & transition protocols; Improve operations; and, Increase care capacity and population health. States leverage federal dollars with a match. Budget Neutrality rules apply. DSRIP supports California’s hospitals on cost and quality issues by asking hospitals to submit 5-year plans

Providing incentives for infrastructure & Outcomes DSRIP is fundamentally an incentive payment model. FFS and managed care payments still happen. DSRIP programs: Incentive payments for meeting relative progress measurements, growing more difficult overtime. Some states allow partial recognition for partial achievement; others do not. Payments in early years are generally for process measures; outcome measures in later years. Beyond improved health outcomes, goals include: Better IT integration Provider integration (health & social services) Clinical redesign DSRIP is new work for better outcomes. Medicaid has a long history of providing supplemental payments for volume of care. The entire point of DSRIP is to move past notions of a federal subsidy (like DSH). For providers to receive DSRIP payments, they must develop a detailed plan and implement a series of projects. These projects must be new or significantly different initiatives that do not currently have a funding stream. It can’t supplement existing programs It can’t replace existing program funding These projects must be detailed in a project plan that include specific metrics and milestones: Payment is contingent in providers meeting these metrics and milestones Requires providers to: Identify areas for improvement from a set of allowable projects (allowing flexibility for each hospital to meet its unique needs), and Provides incentives for achieving measurable benchmarks in those target areas. Each target area must have its own specific measures. Projects must use metrics that are nationally recognized measures (ex: CHART, HEDIS, NQF, etc.). Measures can also be process measures, to show changes in that result in learning, adaption and progress. Each hospital’s plan must include projects in each area: Infrastructure Development – to strengthen a hospital’s ability to provide services through the use of technology, tools and human resources. Innovation & Redesign – to support new models of care and ways to improve the patient’s experience. Population-focused Improvement – to ensure quality of care improves through data reporting. Urgent Improvement in Care – to improve the efficiency and performance of interventions.

Outcome Metrics & Avoidable Hospitalization Population Health Measures How do dsrip payments work? Process Metrics Outcome Metrics & Avoidable Hospitalization $ Time Population Health Measures Other states have a similar financial framework minus the population health measures

Public & Private Providers Comparing dsrip programs nationally CA MA TX KS NM NJ NY Program Participants: Public Public & Private Providers Hospitals Only X Health Care Service Providers X** Health & Social Service Providers Standardization: Menu of Projects Shared Metrics & Milestones Some Projects Developed for: Individual Providers Groups of Providers Tie to Other State or CMS Goals: Public Health Measures Payment Reform X*** Approved: Nov 2010 Dec 2011 2012 Jul 2013 Aug 2013 Feb 2014 DSRIP States (Implemented)* Smaller programs include: Kansas – limited program involving 2 safety net hospitals, limited standardization of metrics and milestones Massachusetts – limited program involving 7 public and private safety net hospitals; limited standardization of metrics or projects; a significant focus on payment reform or alternative payment strategies New Mexico – limited to sole community providers and state teaching hospitals; protocols still in development but each provider has own set of projects Larger programs: California – 21 public hospitals generally in large, urban counties; limited standardization of metrics or projects New Jersey – 63 hospitals, however hospitals “strongly” encouraged to work in partnership with other providers; highly tailored menu set of projects & metrics; providers asked to choose a public health goal that all projects had to be linked to New York – broad program involving a large number of collaborations (40+) including social service providers, very tailored menu set, statewide goal of reducing avoidable hospitalization by 25% Texas – broad program involving 20+ regional groups, menu of projects still broad but attempt to standardize metrics and milestones Trends: * Arizona’s program was never implemented. Florida and Oregon operate DSRIP-like programs, but don’t seem to be considered full DSRIP by CMS. ** New Jersey hospitals encouraged (not required) to work with downstream providers and share payments. *** New York has a linked statewide 25% reduction in avoidable hospitalization goal that reduces all provider payments if the entire state does not reach that goal.

©2015 Caradigm. Confidential. Evolving DSRIP programs California Texas New York Program Title Delivery System Reform Incentive Program (DSRIP) Delivery System Reform Incentive Pool (DSRIP) Delivery System Reform Incentive Payment (DSRIP) Program Waiver Approved November 2010 December 2011 February 2014 CMS Approval of DSRIP Framework March 2011 Sept 2012 Protocols still in development CMS Approval of Individual Plans June 2013 Jan-Mar 2014 Duration 5 Years 5.5 Years Federal Funding Available $3.3B $5.7B $6.9B Participating Entities 21 Public Hospitals 20 Regional Healthcare Partnerships (330 public & private providers) 20-40 Performing Provider Systems (thousands of public & private providers) DSRIP Category Title Infrastructure Development Innovation and Redesign Population-Focused Improvement Urgent Improvement in Care LIHP HIV Transition Program Innovation and Redesign Overall Project Progress System Transformation Clinical Improvements Population-Wide Strategy Implementation Project Menu Size 298 Milestones 1,322 Projects, varying milestones 44 Projects with specific milestones Comparison of DSRIP CA, TX & NY ©2015 Caradigm. Confidential.

DSRIP Challenges Showing Progress: Choosing the right metrics/populations can be challenging Patient care and health outcome measures may take longer to achieve than anticipated Achievability of certain metrics need to be tied to a realistic view of your population Data, Reporting and Timelines. Reporting timeless were a little over 60 days apart Lack of electronic health records, and the dependence on paper record system, posed a challenge for many public hospitals (CA) Limited data sharing capabilities made reporting and care coordination extremely difficult (NY, TX) Workforce Capacity Current staff took on additional DSRIP responsibilities with no/little additional resources. As new care team models and protocols were created, organization and retraining of staff (including upstream/downstream providers) became burdensome without dedicated funding streams 17 DSRIP plans (LA County Department of Health Services includes a 4 hospital network) were approved, with all 21 DPHs participating. The plans are diverse and cover the range of projects in the four categories All benchmarks were met in Year 1 Lack of primary care workforce – many hospitals are having to divert from specialty and urgent care resources. Reporting and resource issues– many hospitals are working from a paper system or have administrative challenges to contracting for reporting resources. Comparability of data across systems – waiver offers lots of flexibility which means not all hospitals are collecting the same data.

Lessons learned Leadership: Executive sponsorship critical for buy-in and alignment with strategic goals Understand the State & CMS’s goals for DSRIP and align with them Identify champions for each project Create multiple communication channels to ensure everyone understand the strategic direction and moving towards the same goals Strategic Planning: Create dedicated clinical teams for each project Be cautious and thoughtful in selecting goals – they should be a reach but attainable Dedicated Attention to detail: Create a PMO or have dedicated staff track DSRIP policy, projects and progress Dedicate resources to IT, Workforce Retraining and Clinical Staff Plan up front how your org & partners will share data for reporting & clinical decision making Institute a process for rapid cycle evaluation, learning and dissemination of information

PRIME, DSRIP 2.0 Current 1115 Waiver expired in October 2015, but extended until December 31, 2015. New waiver agreement in concept with CMS. Total initial federal funding in the renewal is $6.218 billion. Possible additional federal funding in GPP to be determined after year one. Major components include: Global Payment Program (GPP) for services to the uninsured in designated public hospital systems (DPH).  Delivery system transformation and alignment incentive program for DPHs and district/municipal hospitals (DMPH), known as PRIME (Public hospital Redesign and Incentives in Medi-Cal). ($3.3B over 5 years for DPHs, $466.5M over 5 years for DMPHs) Dental transformation incentive program ($750M over 5 years) Whole Person Care Pilot (WPC) program which would be a county-based, voluntary program to target providing more integrated care for high-risk, vulnerable populations. ($1.5B in federal funds over 5 years) Independent assessment of access to care and network adequacy for Medi-Cal managed care beneficiaries. Independent studies of uncompensated care and hospital financing. The GPP converts existing DSH and Safety Net Care Pool (SNCP) uncompensated care funding – which is hospital-focused and cost-based-- to a system focused on value and improved care delivery.  The funding of the GPP will include 5 years of the DSH funding that otherwise would have been allocated to DPHs along with $236M in initial federal funding for one year of the SNCP component.  SNCP component funding for years two through five would be subject to an independent assessment of uncompensated care.   The federal funding of PRIME for the DPHs is a total of $3.2655 billion over the five years of the Waiver, which includes $700 million for each of the first three years, $630 million in year four, and $535.5 million in year five. The federal funding for the DMPHs is a total of $466.5 million over the five years of the Waiver, which includes $100 million for each of the first three years, $90 million in year four, and $76.5 million in year five. CMS generally has moved towards: Narrower menu of projects with pre-approved metrics and milestones. Collaboration with, and inclusion of, a broad range of providers, including social service providers. Stretch goals. DSRIP accountability bar is being set higher in each state. DSRIP goal is statewide payment reform. More upfront planning—with CMS planning funds. Standardized and streamlined data reporting. Opportunities outside of the 1115 Waiver CMMI Innovations Grants Accountable Communities for Health Medicaid & Other Plan incentives

Thank you! Lisa Chan-Sawin, lisa@websawin.com Evan King, eking@copehealthsolutions.org