In the waning days of 2014 and the first weeks of 2015, key developments have continued to unfold for Performing Provider Systems and participating providers in the Delivery System Reform Incentive Payment Program (DSRIP). On January 15, 2015, the New York State Department of Health (DOH) posted on its website the applications submitted by the lead entities for the 25 Performing Provider Systems (PPS) seeking DSRIP funds. The applications provide valuable information for both PPS lead entities (PPS Organizations) and participating providers, including a detailed description of regulatory waivers that PPS Organizations are seeking on behalf of the PPS and Performing Provider Systems and participants in the participating providers. In a related DSRIP development, DOH, the Office of Alcohol and Substance Abuse Services (OASAS), and the Office of Mental Health (OMH) released joint regulations that would allow providers of primary care and behavioral health services to operate under a single license.

PPS Organizations continue to face new deadlines and challenges as they build health systems and roll out projects that are unprecedented in scale, provider participation, and goals. With the posting of the DSRIP applications, participating provider and social service organizations (Member Organizations) have significantly more information to assess emerging issues and plan their own participation. Given the ongoing demands and deadlines PPS Organizations face, Member Organizations would be best served by playing an active role at this point in the process. Specifically, they should assess how they can best position their organization to participate in and contribute to PPS initiatives regarding potential regulatory waivers, project implementation, and activities tied to project funding, among other key matters.

Posting of the DSRIP Applications

Twenty-five PPS Organizations submitted DSRIP applications on December 22, 2014 which were divided into organizational and project applications. (See New York State Department of Health PPS Applications). The organizational applications describe PPS plans for key governance and operational issues and set forth requests for regulatory waivers while the project applications discuss each project the PPS will undertake. For many Member Organizations, the applications provide the first opportunity to gain specific information about the plans of the PPS Organizations they have joined, ranging from governance to distribution of DSRIP funds, the assessment of community needs, and the process to sanction poor performing providers. In terms of fund distribution, three categories of funding distribution planned by PPS Organizations follow closely from DSRIP requirements: (i) payment for project implementation and costs; (ii) performance payments; and (iii) payments for lost revenue to providers in transition. Fund distribution beyond those categories differs by PPS, and even within the categories, the applications reflect differing emphasis and approaches. Among many other purposes, PPS Organizations are permitted to hold funds in reserve to provide financial support to Member Organizations facing financial distress.

DOH retained an "Independent Assessor" to evaluate the DSRIP applications. On February 3, 2015, DOH released the score allocated by the Independent Assessor for each project proposed by each of the 25 PPS Organizations.

Medicaid Enrollment and OMIG Certification

On January 6, 2015, DOH advised PPS Organizations that formed new corporations to operate the PPS, that the new entities must enroll in Medicaid by February 9, 2015, to receive DSRIP funds. Medicaid enrollment requires PPS Organizations to complete the Medicaid application, obtain a Federal Employer Identification Number, and most significantly, certify to the Office of Medicaid Inspector General by March 31, 2015, that they have established the mandatory elements of a compliance program, including but not limited to the appointment of a compliance officer, adoption of compliance policies and procedures, a training program (as required by DSRIP for the PPS Organization, Member Organizations and their staff), disciplinary policies related to compliance, and a system for investigating and reporting compliance issues.

Developing a code of conduct and compliance policies across a network that extends to hundreds of health care and social service providers presents novel challenges and issues for PPS Organizations. As they prepare a code of conduct and compliance policies, PPS Organizations must distinguish the role and scope of the PPS compliance program, with a focus on PPS activities and operations, from the code of conduct and compliance programs of Member Organizations that govern the operations, billing, and delivery of health care services by those providers. Reporting lines and obligations are also critical for both the PPS and Member Organizations so that the PPS Organization does not assume or become accountable for assessing and overseeing internal compliance matters at Member Organizations, and Member Organizations do not jeopardize the attorney-client privilege by reporting internal compliance matters to the PPS.

Regulatory Waivers

On September 18, 2014, DOH, OMH, OASAS and the Office of Persons with Developmental Disabilities (OPWDD) issued guidance about the regulatory waivers that the agencies could grant to facilitate implementation of DSRIP projects. (See Regulatory Guidance Statement). Only PPS Organizations can apply for waivers to cover providers participating in the PPS. According to DOH, PPS Organizations submitted over 500 waiver applications as part of their DSRIP organizational applications.

Significantly, the Regulatory Guidance Statement advised that waivers will not necessarily apply to all Member Organizations. More recent guidance from DOH underscores the importance of this policy for PPS and Member Organizations. Specifically, DOH advised in a meeting with PPS Organizations on January 16, 2015 that it would notify them of waiver approvals by February 6, 2015, and would be requesting a list of providers in the PPS for which each regulatory waiver is requested.

For this reason, PPS Organizations should identify all Member Organizations that meet requirements for a waiver and could contribute to implementing DSRIP projects, including the core project to build an integrated delivery system. For Member Organizations, it is critical that they identify regulatory waivers relevant to projects for which they will be participants, and reach out to the PPS Organization to assure they are covered by applicable waivers.

Regulatory waivers cover a broad range of areas that could facilitate PPS and provider operations, program expansion, and care coordination and integration. For example, waivers are available to: (i) add or expand services, provide services at a satellite location, or undertake construction without Certificate of Need or regulatory approvals that would otherwise be required; (ii) allow hospitals to take source of payment into account when discharging patients; (iii) permit primary care and behavioral health providers to share space; and (iv) waive regulations that govern transfer and affiliation agreements.

Proposed Regulations for Integrating Primary Care and Behavioral Health Services Under a Single License

All DSRIP applications must include at least one behavioral health project, reflecting DSRIP’s focus on this beneficiary population as a major driver of Medicaid costs. Launching a major policy initiative to enhance care coordination and management for this population of patients, DOH, OMH, and OASAS issued joint regulations (the Proposed Rule) on December 29, 2014, to permit providers that already hold a license for at least two of the covered services to apply to become an "integrated service provider." As such, a provider would be overseen by and report to only one of the three regulatory agencies and would operate under a single license.

The Proposed Rule presents three models:

• Primary Care Host Model – a diagnostic and treatment center or general hospital outpatient site as the host site, with DOH responsible for monitoring and oversight;
• Mental Health Behavioral Health Host Model – an Article 31 treatment program as the host site, with OMH responsible for monitoring and oversight; and
• Substance Use Behavioral Care Host Model – an Article 32 substance use disorder outpatient clinic as the host site, with OASAS responsible for monitoring and oversight.

The Proposed Rule specifies the requirements particular to each type of host site as well as the common requirements that apply to all sites, covering areas such as evaluation and treatment plans, patient screening, physical plant requirements, and identification of support and ancillary services. Providers must submit an application to the state agency designated as primary, depending on the nature of the host site, for approval to deliver integrated services.

The Regulatory Guidance Statement discussed above includes a waiver to allow providers of primary care and behavioral health services to operate under a single license. Providers participating in a PPS can therefore seek this option through a waiver granted to the PPS Organization that identifies them as a covered provider, or independently by following the application process set forth in the Proposed Rule. While the oversight agencies have not clarified the relationship of the Proposed Rule to DSRIP waivers, it is likely that the Proposed Rule requirements will apply to entities covered by a DSRIP waiver. Notably, the Proposed Rule does not establish an expedited or alternative means for providers to add services, e.g., for a primary care provider to add OASAS services. However, the addition of new services is a potential regulatory waiver under DSRIP, leaving open the possibility that through a PPS waiver Member Organizations could secure both the addition of new services and status as an integrated service provider.