New York State’s 1115 Waiver Renewal: Summary of OHIP Webinar

NY State Government: Week in Review

On November 18, 2020, the New York State Department of Health (DOH) Office of Health Insurance Programs (OHIP) convened an informational webinar regarding the renewal of the state’s 1115 waiver. Below, please find a summary of the key points shared during this presentation.

Background. New York State’s 1115 waiver, also known as the Medicaid Redesign Team (MRT) waiver, provides the authority for a significant portion of New York State’s Medicaid program, including authorization for Medicaid managed care and facilitated enrollment. The waiver is set to expire on March 31, 2021.

Late last year, the state submitted an application to the Centers for Medicare & Medicaid Services (CMS) seeking an extension of the state’s Delivery System Reform Incentive Payment (DSRIP) program, which was set to expire on March 31, 2020. The application included a four-year waiver amendment, which included a one-year continuation of the DSRIP program from April 1, 2020, to March 31, 2021, and a conceptual agreement for an additional three years, beginning April 1, 2021, for a so-called “DSRIP 2.0.” The state’s vision for DSRIP 2.0 was wide-ranging and expensive: $8 billion to build upon the “promising practices” developed by the Performing Provider Systems (PPSs) created by the DSRIP program, transform these PPSs into “value-driving entities” (VDEs) that include additional providers and community-based organizations as well as managed care organizations, fund workforce development, and create “social determinants of health networks” (SDHNs) to deliver socially focused interventions linked to value-based purchasing (VBP).

CMS declined to negotiate and, in February of this year, denied New York’s application in total. DOH reported this denial was in large part due to the need for the state’s expenditures to be rebased for purposes of determining budget neutrality—until New York rebases, CMS indicated that it was unwilling to consider larger renewals or a DSRIP program extension.

In May 2020, amid the COVID-19 pandemic, New York State applied for an administrative extension; this too was denied, and CMS advised DOH to proceed with the formal renewal process.

Current Approach. In light of the impending expiration of the waiver, DOH intends to apply for a three-year extension of the existing 1115 waiver, in the hopes that this expedites and simplifies the approval process. DOH stressed the importance of ensuring the waiver is extended in advance of expiration, as it serves as the primary authority for many aspects of the state’s Medicaid program. 

The current extension proposal includes three components:

  1. A three-year extension of the existing special terms and conditions (STCs) and funding authorities under the current waiver;
  2. The transition of the pharmacy benefit from Medicaid managed care to fee-for-service (FFS); and
  3. The transition of the transportation benefit from managed long-term care (MLTC) to FFS.

The renewal application is intended to preserve the current STCs in order to enable the Medicaid program to continue operating without interruption. Under this approach, current programs authorized by the waiver, including Medicaid managed care, MLTC, certain children’s Home- and Community-Based Services (HCBS) and other programmatic features, would remain intact. DOH noted that the pharmacy and transportation carveouts are being included in the extension request, as their implementation dates align with the timing of the waiver renewal; both provisions currently have an April 1, 2021 effective date and require a waiver amendment to be implemented. 

While preserving the current STCs is the priority, DOH also indicated an extension would give the state time to consider several significant, shifting dynamics:

  • The long-standing effects of the COVID-19 pandemic on the healthcare delivery system and the potential need for additional 1115 waiver amendments to manage accordingly. 
  • The upcoming changes in the federal administration and resulting shifts in priorities at CMS.

Priorities Post-Extension. DOH indicated its intention is to pursue other initiatives that require 1115 waiver authority after this extension proposal is approved. The extra time will be used to advance currently pending amendments and assess priorities for future amendments, such as:

  • Long-term COVID-19 pandemic responses
  • Additional MRT II actions
  • Resubmission of the Criminal Justice Reform waiver 

Next Steps. DOH is currently reviewing its proposed renewal application with CMS to ensure that it is complete. Once that review is concluded, DOH is planning to undertake the following:

  • Publish the application in the State Register for public comment, which DOH anticipates will occur on December 16.
  • Commence the 30-day public comment period, which will likely begin on December 16 and end on January 15, 2021. 
  • Convene two virtual public hearings on January 21 and January 27, 2021.

The state plans to submit the formal application to CMS in early March 2021. If CMS does not approve the extension by April 1, 2021, DOH is anticipating that CMS will grant a temporary extension, which would preserve the current STCs while the waiver application is pending. In the past, temporary extensions have been granted if the renewal application was submitted in advance of the waiver’s expiration. However, DOH cautioned it does not yet have confirmation of how the Biden administration will proceed in this circumstance. 

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We will continue to monitor developments in the state’s application process and share updates as we learn more. If you have any questions, please contact a member of the Manatt team.

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