Written by Aisha Ainsworth

Hospitals grapple with maintaining services for underinsured and uninsured Texans as DSRIP funding winds down.

Clinic visits at Memorial Medical Center in Port Lavaca increased by 500% from 2013 to 2018. Expanding the hospital’s scope over that time was key to meeting the increased demand for services.

The current clinic opened in 2016 with two providers and one OB-GYN. Today, it’s staffed with multiple nurse practitioners, physicians and surgeons whose specialties range from family medicine to internal medicine to orthopedics to pain management.

Memorial’s increased care capacity was made possible with funds from the Delivery System Reform Incentive Payment program through the Texas Medicaid 1115 Waiver.

DSRIP is a unique opportunity for Texas to draw down federal supplemental Medicaid payments to improve the infrastructure of the health care safety net and use innovative solutions to better meet the health care needs of Medicaid enrollees and uninsured Texans.

For a state with 254 counties that spans nearly 270,000 square miles, a one-size fits all health care approach simply does not work. Chronic disease management, care coordination and behavioral health care are consistent issues across the state. But how to best address those health issues varies greatly based on the specific needs of each community.

DSRIP incentivizes hospitals and other providers to collaborate regionally, through alliances known as regional healthcare partnerships, to drive transformation to meet the unique health care needs of their respective communities. Texas is divided into 20 RHPs.

Texas RHPs

Through DSRIP, a clinic serving a populous urban area can extend its hours to ensure care for the large volume of patients seeking it. A rural community, on the other hand, can deploy mobile clinics to reach and treat patients who lack access to reliable transportation.

For patients in Port Lavaca, DSRIP funding allowed Memorial to start an outpatient behavioral health program geared toward older adults and expand its cardiac rehabilitation program. Memorial receives $1.2 million in annual DSRIP funds to support these and other initiatives.

Diane Moore

“The programs we’ve been able to launch because of DSRIP funding have had very positive impacts in our community,” said Diane Moore, chief financial officer for Memorial Medical Center.

Since 2012, DSRIP has injected more than $20 billion in state and federal payments into Texas’ health care safety net.

Since 2017, Texas’ DSRIP allotment has totaled $3.1 billion annually. The terms of the 1115 Waiver, however, require DSRIP to wind down.

On Oct. 1, 2019, DSRIP funding decreased by $200 million to $2.91 billion. By Oct. 1, 2020, funding will decrease another $420 million to $2.49 billion. By the end of September 2021, DSRIP funding will be eliminated entirely.

Today, Texas hospitals are working with the state, other health care providers and stakeholder groups to identify opportunities to extend and sustain delivery system reforms after DSRIP funding is gone.

Finalizing a Transition Plan

Just before Oct. 1, 2019, the Texas Health and Human Services Commission submitted its DSRIP plan to transition to the Centers for Medicare & Medicaid Services. The plan lays the groundwork to develop strategies, programs and policies to sustain successful DSRIP activities and for emerging areas of innovations in health care. Hospital administrators provided input to help shape that plan.

THHSC will work with CMS to finalize the plan by March 2020. Any programs, initiatives or funding mechanisms to support the DSRIP work will be subject to further review and approval by CMS.

Some options being discussed include a program to provide a Medicaid rate increase for rural health clinics, adding money to an existing supplemental payment program to help compensate providers for the amount that Medicaid underpays them and investing more dollars into the Medicaid program to make payments based on improved health outcomes.

While these options are a positive step forward, the transition plan does not address the uninsured individuals currently served through DSRIP.

Without additional funding for these populations, hospitals have little recourse: Scaling down DSRIP-funded services or tightening their budgets to cover a larger portion of the costs of providing care for the uninsured.

“Losing that money potentially could have devastating effects for our hospital,” Moore explained. “We’re trying desperately to see what we can do to expand and be better stewards of the resources we have so we don’t have to cut services. We’re analyzing every single thing we can.”

Addressing the Uninsured Population

During just four of its eight years, DSRIP served 11.7 million vulnerable Texans and provided 29.4 million encounters from Oct. 1, 2013, to Sept. 30, 2017.

Katherine Yoder

Because DSRIP primarily serves Medicaid enrollees and uninsured individuals, it is especially an asset for facilities and systems like Parkland Health & Hospital System in Dallas. Medicaid and charity care clients made up nearly 70% percent of the Parkland’s patient mix in 2018.

Although THHSC’s transition plan discusses opportunities to continue services for Medicaid clients, “it does not provide a specific plan to address the uninsured population that DSRIP serves,” said Katherine Yoder, vice president of government relations for Parkland Health & Hospital System. “Since many of Parkland’s patients who accessed care though DSRIP were the low income uninsured, we hope the new initiatives will address the care needs of that population.”

Kate Hendrix

CMS encourages the state to build DSRIP successes into Medicaid managed care, but it has not indicated a willingness to use Medicaid dollars to cover the uninsured.

“That leaves a monumental gap in the plan to ensure access to care for all individuals currently served by DSRIP,” said Kate Hendrix, senior director of policy for the Texas Hospital Association.

Texas hospitals’ priorities for the transition are straightforward.

  • Ensure access to care for the uninsured and build DSRIP successes for Medicaid enrollees into existing Medicaid managed care structures, including the Uniform Hospital Rate Increase Program.
  • Preserve federal payments for hospitals and other providers.
  • Leverage existing delivery system reforms and reward collaboration and partnerships among local providers.

As THA works with the state on these priorities, Texas hospitals are encouraged to consider and share opportunities to achieve these goals.

Jeremy Walker

Hendrick Health System in Abilene, for instance, has joined with surrounding providers to propose a “transition program that provides regional payments for quality initiatives that would be negotiated with managed care organizations, providers and THHSC,” said Jeremy Walker, chief financial officer at Hendrick Health System.

Walker noted that Hendrick’s RHP “serves a high volume of Medicaid and uninsured individuals, and it is critical to identify alternative funding to continue providing interventions and improving patient outcomes.”

The Anticipated Impact of Eliminating DSRIP Funds

Of Texas' 254 counties, 70% are considered rural. RHP 11—which covers Abilene and the surrounding areas northeast and northwest of it—is one of the largest rural areas in the state. Every county in RHP 11 has a medically underserved area designation.

“We have the continued threat of rural hospitals and health care facilities closing every year across our state and within our own RHP,” Walker said. “Eliminating DSRIP funding without alternative payment sources for these initiatives will be detrimental to our neighbors across the region and throughout the state.”

But few facilities have alternative funding or revenue streams to offset the financial loss of DSRIP completely or even partially. Various hospitals cite moderate to major impacts, including layoffs of five to more than 20 full-time staff, one to three key service line closures and potentially even hospital closures.

Jennifer Banda

“Through DSRIP, Texas hospitals have transformed the way care is delivered to Medicaid enrollees and the uninsured. To lose that progress would be devastating for patients and providers alike,” said Jennifer Banda, J.D., vice president of advocacy and public policy at the Texas Hospital Association.

The path to continue DSRIP successes and build on the needed delivery system transformations requires consistent collaboration with THHSC and other providers.

Moore is confident Memorial will find the right approach to continue its operations without impacting patient services.

“We’re trying to see what we can expand, what we can do to continue the same programs,” she said. “At this point, we’re not planning on cutting anything, but we still haven’t finished analyzing the numbers.”