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Opportunities, Risks, and Updates with the Delivery System Reform Incentive Pool (DSRIP)

California’s public hospital system serves 2.5M patients annually and provides about half of all hospital care to the state’s 7M uninsured, according to the California Association of Public Hospitals (CAPH). The Delivery System Reform Incentive Pool (DSRIP) under the §1115 Waiver provides California’s 21 hospitals with an opportunity to reform their delivery systems over the next five years. DSRIP provides up to $3.3B in matching funds, but the terms are ambitious and risky. Successful reform will require monumental effort and dedication from the hospitals over the next five years.

The Ambition
There are three goals to DSRIP: Improve population health, enhance the patient experience, and reduce/control the cost of care. While large-scale overhauls can take a decade or more to achieve, DSRIP requires that California’s 21 hospitals reach an average of 217 milestones in four categories within five years. The categories include:

  • Category 1: Infrastructure Development (i.e. implementing disease registries in order to identify individuals who are due for appointments and avoid urgent care)
  • Category 2: Innovation and Redesign (i.e. expanding medical homes as pilots to inform the rest of the healthcare industry)
  • Category 3: Population-Focused Improvement (i.e. reporting screening/prevention care and re-admission rates)
  • Category 4: Urgent Improvement in Care (i.e. taking necessary steps to reduce infection and mortality rates)

This chart from CAPH breaks down the major initiatives within each category and the number of hospitals who have set those initiatives as a required milestone.

The Risks
California’s 21 public hospitals took a huge risk by submitting their DRSIP plans to the state back in March for two major reasons. First, funding is tied to the success of other aspects of the waiver. The DSRIP could be reduced if the presumed savings from the SPD shift into managed care are not met. Second, the “pay for performance” model means that if the hospital fails to meet its annual milestones after putting forth the necessary resources to try, they will not receive their incentive payment. At the end of “Year 1” (May, 2011), all public hospitals had achieved their Year 1 milestones.

The Goal
DSRIP will allow hospitals to reform and innovate in preparation for implementation of health reform in 2014. For example, hospitals can begin reducing occurrences of “never-events” (i.e. hospital-acquired infections), for which they will not be paid under reform. Many of their frequent users will be given a choice or provider in 2014, so it is important that the hospitals become the provider of choice for these patients. In addition, DSRIP will allow other states and other healthcare delivery systems to learn from efforts made by California’s public hospitals to control costs and improve quality of care.

Read more about DSRIP in this policy brief from CAPH.

ITUP thanks CAPH for their briefing on the Delivery System Reform Incentive Pool, which provided information for this blog.