Manatt on Health: Medicaid Edition

Manatt on Medicaid: New Hampshire's Building Capacity for Transformation Initiative: Putting a New Stamp on DSRIP Waivers

Authors: Jocelyn Guyer, Managing Director | Deborah Bachrach, Partner, Healthcare | David Rosales, Director

On January 5, 2016, New Hampshire secured a five-year, $150 million Medicaid 1115 waiver to transform the state's delivery system for Medicaid beneficiaries with mental health and substance use disorders. Known as the "Building Capacity for Transformation Waiver" or "transformation initiative," the New Hampshire waiver supports the state's efforts to strengthen community-based mental health services, combat the opiate crisis, and drive delivery system reform. It is the latest in a series of delivery system reform waivers (typically referred to as Delivery System Reform Incentive Payment or "DSRIP" waivers) that the Centers for Medicare and Medicaid Services (CMS) has approved around the country.1 New Hampshire's waiver, however, is the first one in the country with an emphasis on mental health and substance use issues. It also goes to new lengths to put community-based organizations and providers "front and center" in delivery system reform, reflecting the recognition of the role of social determinants in health.

Key Elements of New Hampshire's Transformation Initiative

In applying for its transformation waiver, New Hampshire highlighted the opioid epidemic in New England and the severe capacity issues confronting its behavioral health system overall. This includes a shortage of community-based care and a striking lack of treatment and recovery options for those with substance use disorders. Recent state work to counteract these issues includes the expansion of Medicaid to more low-income adults in 2015 and the addition of a substance use disorder benefit for traditional Medicaid beneficiaries slated to go into effect in July of 2016. As CMS recognized by investing in New Hampshire's new DSRIP waiver, these two changes create a strong platform from which to tackle the challenges confronting New Hampshire's behavioral health system.

In its broad outlines, New Hampshire's new waiver follows an increasingly familiar pattern among DSRIP waivers—it offers fiscal incentives for networks of providers to improve care through more integrated delivery models. At the same time, it also includes several new and unique elements. As outlined in draft protocols2 submitted to CMS on March 1, 2016 and the terms and conditions of the waiver3, the key components of the waiver are as follows:

  • Integrated Delivery Networks: Over the next several months, New Hampshire will facilitate the creation of regionally-based networks of physical and behavioral health providers as well as social service organizations. These "integrated delivery networks" or "IDNs" will be responsible for changing the way that behavioral health services are delivered. New Hampshire has proposed that each IDN include primary care practices and clinics, community mental health centers, hospitals, Substance User Disorder (SUD) providers, public health officials, other local officials, and a broad array of community-based organizations that provide social services.
  • Pathways to Improve Behavioral Health. Each IDN will implement initiatives or "projects" to: 1) increase mental health and substance use disorder treatment capacity; 2) promote the integration of physical and behavioral health; and 3) improve care transitions for people with behavioral health issues. According to the draft protocols released March 1, 2016, IDNs will participate in a statewide workforce development project and related HIT initiative. They will also be expected to implement core standardized assessments and appropriate follow up for depression, substance use and medical conditions. Finally, each IDN will conduct a community needs assessment and use it as the basis for selecting additional community-driven projects from a menu of options. These could include anything from an initiative aimed at opioid users and other "high utilizers" to a focus on improving care transitions for people leaving jails to "InShape," a New Hampshire initiative that helps people with severe mental illness improve their physical fitness.
  • Focus on Performance and Statewide Accountability. Continuing a trend seen in other recent DSRIP waivers, New Hampshire will distribute incentive payments only to IDNs that make progress and demonstrate high performance. The initiative is not a grant program and, particularly after this year, IDNs must hit outcome targets in order to earn their fiscal incentives. These targets, which are still under development, might include, for example, a notable improvement in the rate of preventable hospitalizations for behavioral health conditions. As a state, New Hampshire also must meet statewide targets or face the prospect of losing some of its DSRIP funding. Beginning in 2018, up to 5 percent of the DSRIP funds are at risk if the state fails to meet statewide outcome measures, increasing to 15 percent in 2020.
  • Integration with Managed Care and Long-Term Sustainability. IDNs are networks of providers and community-based organizations that will receive funding to change how they work together and how they deliver care. Over time, the waiver envisions that managed care organizations (MCOs) will contract with IDNs to provide some of the care to Medicaid beneficiaries. New Hampshire is required to submit a roadmap to CMS by July of 2017 that outlines how it will modify its Medicaid managed care contracts to reflect the impact of the DSRIP waiver and move at least half of its Medicaid payments into alternative payment models in the later years of the waiver. These requirements, which are similar to ones included in New York's DSRIP waiver, reflect CMS's strong emphasis on finding sustainable ways to finance Medicaid delivery system reform after DSRIP waivers expire.
  • Financing. Under the terms and conditions of its waiver, New Hampshire can spend up to $150 million on its transformation initiative between 2016 and 2020, inclusive of fiscal incentive payments to IDNs and the costs that the state will incur overseeing and operating the waiver. This investment is expected to pay off in the form of higher quality care and a lower rate of growth in per capita Medicaid spending. As required by CMS, New Hampshire will need to ensure that its waiver is budget neutral to the federal government, a requirement that will be enforced via a per capita cap model. The waiver also allows New Hampshire to receive federal Medicaid matching funds on a limited number of "designated state health programs" or "DSHPs," which the state will use to support its share of the initial investment in the waiver.

While New Hampshire's DSRIP waiver shares common elements with existing waivers in New York, Texas and California, the Building Capacity for Transformation waiver represents New Hampshire's own stamp on DSRIP programs. New Hampshire's focus on behavioral health, emphasis on tackling the opioid epidemic, and prominent incorporation of community-based social service organizations represents a new direction for delivery system reform.

1See also: Gates, Alexandra, Robin Rudowitz, and Jocelyn Guyer, "An Overview of Delivery System Reform Incentive Payment (DSRIP) Waivers", Kaiser Family Foundation, October 2014, (accessed March 16, 2016); Guyer, Jocelyn, Naomi Shine, Robin Rudowitz, and Alexandra Gates, "Key Themes From Delivery System Reform Incentive", Kaiser Family Foundation, April 2015, (accessed March 16, 2016).

2New Hampshire Department of Health and Human Services, "New Hampshire Building Capacity for Transformation Section 1115(a) Medicaid Demonstration Attachment C: DSRIP Planning Protocol", March 2016, (accessed March 16, 2016); New Hampshire Department of Health and Human Services, "New Hampshire Building Capacity for Transformation Section 1115(a) Medicaid Demonstration Attachment D: DSRIP Program Funding and Mechanics Protocol", March 2016, (accessed March 16, 2016).

3Centers for Medicare and Medicaid Services, "New Hampshire Building Capacity for Transformation: Special Terms and Conditions", January 2016, (accessed March 16, 2016).



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