On January 9, 2024, New York’s Department of Health received its long-awaited amendment to our Medicaid 1115 demonstration, newly rebranded NYHER (NY Health Equity Reform). It’s not as flashy nor as generously funded as the special purpose DSRIP (Delivery System Reform Incentive Payment) demonstration, but it’s likely to have a longer-lasting impact. DSRIP always had a beginning, a middle, and an end. NYHER is here to stay because NYHER is the 1115 that serves as the foundation of our Medicaid system. It’s been in place, in one form or another, since 1997.
Josh Rubin, MPP
NY Health Equity Reform has added a new cornerstone to New York’s Medicaid system. Now, in addition to healthcare services (always the core of Medicaid) and the later added behavioral health services (including HARP, CORE, and HCBS), we are adding services for health-related social needs (HRSN) to this policy authority that underlies our system. We are in the process of defining a certain set of human services as “medically necessary.” It might seem obvious that food and shelter are “medically necessary,” but it took Medicaid six decades to get there.
New benefits will include nutrition support, housing support, transitional housing, transportation, case management, and screening for HRSN. The benefits will be, however, limited to a subset of the Medicaid population, children, and people with complex and/or chronic health conditions and/or social complications. In 2027, the roughly $1.4 billion per year set aside to pay for medically necessary HRSN services will be rolled into the managed care capitation rate, a new stone in New York Medicaid’s foundation.
In addition to adding new services, the state is determined to add new providers. Somewhere between nine and 13 (NYC will have somewhere between one and five), new Social Care Networks (SCN) are currently being procured to create networks of community-based organizations (CBOs) that provide HRSN services. SCNs are intended to weave together the CBOs in a region, providing them with billing support, quality improvement processes, technology infrastructure, and (at least someday) negotiating leverage. Like lead health homes, independent practice associations (IPA), and regional health information organizations, they are designed to provide the connective tissue that enables healthcare services to function in an organized way. They are designed with a business model the state expects to outlive half a billion dollars of start-up funding. When the results of the SCN procurement are announced, we will know how attractive that business model is. I predict much interest.
Although funding for HRSN services and the SCNs that enable them is the largest portion ($3.7 billion) of the $6.7 billion investment, the amendment has other important components. $700 million has been set aside to address New York’s healthcare workforce crisis. $48 million is set aside to forgive loans for people working in the safety net system. An additional $646 million will be used to recruit new direct care workers and provide career ladder training to existing licensed, credentialed, and unlicensed care providers.
Importantly, the new approval makes a meaningful dent in the stigma baked into the Medicaid system when it was created in the 1960s, waiving something called the IMD (Institutions for Mental Diseases) exclusion, a rule as outdated as its name. Simply put, services that would otherwise be reimbursable by Medicaid haven’t been because they have been provided in a substance use disorder (SUD) setting (an IMD). Now, providers will be able to receive Medicaid revenue for these services even if they’re provided in a SUD setting. A waiver of the similarly archaic IMD exclusion for mental health settings is reportedly being processed.
Another significant investment ($2.2 billion) is being made to move some struggling hospitals from a fee-for-service payment system to a global budget model. In exchange for desperately needed operational support, these hospitals (about a dozen hospitals spread across four counties downstate) will have to move toward a global payment system, offering some financial certainty and predictability through an alternative payment model.
Lastly, the state’s proposal for healthcare planning infrastructure was approved, although somewhat diminished. The state had proposed a set of Health Equity Regional Organizations (HERO…the approval’s best acronym) echoing the SCN regions. While HERO still accounts for about 2% of the waiver dollars, only one HERO is approved to cover the whole state.
The approval has set off a race to utilize these dollars wisely, assess their impact, and plan for their sustainability…all before April 1, 2027. The SCN procurement is underway. Others are sure to follow. The Department of Health has an enormous amount of work to do for health equity reform, as do providers of different kinds across the state. It is going to be a busy three years.
Joshua Rubin, MPP, is Principal at Health Management Associates.
