In January, CMS approved an amendment to New York’s section 1115 demonstration that will provide significant investments in advancing health equity and supporting the delivery of health-related social need (HRSN) services. A central component of the approved amendment is the establishment of a hospital global budget initiative that will provide up to $2.2 billion in incentive payments over 4 years to financially distressed non-profit safety net hospitals. Eligible hospitals are those with a high Medicaid and uninsured patient mix in areas with significantly adverse health risk factors and outcomes. The incentive payments are to be used to make improvements to population health and health equity, as well as overall improvements in quality of care. Notably, the payments are not considered payments for services and, therefore, are not offset against Medicaid DSH or other expenditures related to care. To qualify, hospitals must participate in a global budget initiative, which is intended to align with the Center for Medicare and Medicaid Innovation’s (CMMI) State Advancing All-Payer Health Equity Approaches and Development (AHEAD) model, announced by CMMI in November 2023. If New York is selected to participate in AHEAD, participating hospitals will receive global budgets that include Medicaid and Medicare funding. Otherwise, hospital global budgets will be limited to Medicaid under the amendment.
In addition to the hospital incentive payments, to accomplish the waiver’s health equity goals, CMS has authorized:
- $3.173 billion to provide HRSN services, including housing supports, nutrition supports, and case management, among others;
- $500 million to establish Social Care Networks, which will develop networks of HRSN providers and will contract with managed care plans to deliver HRSN services;
- $125 million to establish a statewide Health Equity Regional Organization (HERO) to design and develop regionally-focused approaches to reduce health disparities, advance health equity, and support the delivery of HRSN services; and
- $694 million in workforce-related investments, including student loan repayment for qualified providers and career pathways training.
As a condition of allowing New York to obtain expenditure authority for designated state health programs (DSHPs), which include the HERO, new HRSN services, HRSN infrastructure, and $694 million in new workforce investments, the state is required to invest $200 million in provider rate increases over the course of the demonstration and to maintain provider rates at 80 percent of the Medicaid-to-Medicare payment ratio for primary care, behavioral health, and obstetrics.
New York’s section 1115 demonstration amendment is available here.