Delivery System Reform Incentive Payment Programs

Publication Year: 2018
Population Focus: Medicaid beneficiaries
Intervention Type: Service redesign
Type of Literature: Grey

State and federal policymakers have expressed interest in reforming the healthcare delivery system to use resources more efficiently and direct resources in ways that improve health outcomes and population health. States have implemented various strategies for changing healthcare delivery in their Medicaid programs, including delivery system reform incentive payment (DSRIP) programs. Thirteen states have implemented DSRIP or DSRIP-like programs that invest in provider-led projects designed to advance statewide delivery system reform goals. California implemented the first DSRIP program in 2010. Since then, 12 additional states—Alabama, Arizona, Kansas, Massachusetts, New Hampshire, New Jersey, New Mexico, New York, Oregon, Rhode Island, Texas, and Washington—have implemented DSRIP or DSRIP-like programs. All of these efforts have been approved as part of broader demonstrations under Section 1115 of the Social Security Act (the Act). This brief describes the design and structure of these programs and how they have evolved over time. Our analysis draws on work published in MACPAC’s June 2015 report to Congress as well as newer information gleaned from key informant interviews conducted in 2016 and 2017 with officials from state Medicaid agencies, Medicaid managed care organizations (MCOs), and provider organizations, as well as site visits to New York and Massachusetts.

Insights Results

Overview of article/programs

  • Document provides an overview of the design, implementation, and learnings from the 13 DSRIP/DSRIP-like programs approved, providing a comparison between earlier programs and more recent programs


    • As of December 2017, 5 states (CA, MA, NJ, OR, TX) have completed interim evaluations and 3 (CA, TX, MA) have completed final evaluations. Results are from final evaluations are mixed. Most providers meet DSRIP targets, but there is little evidence of sustained cost savings from these efforts. There is some evidence that DSRIP programs are improving health outcomes and reducing hospital utilization, however, it’s difficult to isolate those effects from other policy changes. It’s also difficult to evaluate effect and whether or not similar gains would be achieved without DSRIP funding because of a lack of a control group

    Key takeaways/implications

    • In comparison to DSRIP programs approved before 2014, more recent program key policy changes include: 1) Increased focus on delivery system reform goals rather than preserving prior supplemental payments; 2) Increased use of provider partnerships; 3) Addition of statewide performance milestones; 4) Increased use of designated state health programs (DSHP) to finance DSRIP investments; 5) More standardized monitoring and evaluation requirements; and 6) Requirements to develop plans for sustaining DSRIP activities through value-based purchasing strategies in managed care
    • More recent DSRIP programs do not have a relationship with supplemental payment programs (e.g., Medicaid health homes, Innovation Accelerator Program). Rather, they are more focused on delivery system reform goals. For example, New Hampshire’s DSRIP program focuses on strengthening the state’s mental health and substance abuse disorder delivery system. The shift in focus is also reflected in decisions to distribute DSRIP payments to both hospitals and non-hospital providers
    • The structure of provider partnerships varies across states, but a common feature across many is that a lead entity typically establishes a governance structure and handles administrative functions related to DSRIP. Many states and providers express optimism towards the potential of partnerships to accomplish more than hospital-based projects alone, since multi-provider partnerships could address challenges of transitions in care across settings and address social determinants of health. However, governance challenges, including funding flow, remain
    • In newer DSRIP states, provider partnerships are beginning to take on some roles traditionally performed by managed care plans (e.g., care management for attributed populations). However, most of these partnerships do not want to take on financial risk
    • More recent DSRIP programs have higher proportions of outcomes-based milestones (e.g., improved health outcomes) rather than process milestones. However, all DSRIP programs include at least 1 year of pay-for-reporting before transitioning to pay-for-performance milestones. Some states also have statewide and provider-specific performance goals (e.g., New York will experience a reduction in available DSRIP funds if it fails to meet 4 statewide milestones related to delivery system improvement, project-specific and population-wide quality metrics, reduced growth of statewide Medicaid spending and managed care contracting. 6 other states have similar milestones)
    • States must consider the non-federal share of DSRIP payments, which may be supplied through general revenue funds, healthcare related taxes and intergovernmental transfers for public hospitals and local governmental entities. Federal funding may also be an avenue and by providing federal financing for previously state-funded programs, DSHP demonstrations make more state funding available to finance additional Medicaid spending on system transformation initiatives
    • More recent programs have included a standardized but more discrete set of measures for monitoring provider performance. In addition to measurements, most DSRIP evaluations include qualitative assessments of the program’s impact
    • Many conversations around the sustainability of DSRIP programs focus on how and to what extent Medicaid MCOs should adopt APMs. Some states, like Massachusetts, are also planning for provider partnerships that they create through DSRIP to become ACOs. However, some regional DSRIP provider partnerships may be too large to become ACOs and managed care plans are still developing the new types of APMs that they would use to sustain DSRIP