delivery system reform incentive payment program

An Overview of the Delivery System Reform Incentive Payment Program (DSRIP)

Learn more about DSRIP and how different states are using it.

What is DSRIP?

Delivery System Reform Incentive Payment programs (DSRIP) are a type of supplemental payment that provides incentive payments for hospitals and other providers to undertake delivery system transformation efforts. The goal of the DSRIP program is to enhance care for Medicaid patients. This includes several aspects of patient care delivery, including a patient's health outcomes, the quality of care a patient receives, and a patient’s access to care. All of these goals promote better overall population health and lower healthcare costs. Each hospital or provider seeking DSRIP funds must hit certain milestones or measures metrics.

Section 1115 Waiver

DSRIP isn’t like other value-based healthcare reimbursement programs created by the Centers of Medicare and Medicaid Services (CMS). This program isn’t available in every state and requires the use of a Section 1115 Waiver.

Federal Section 1115 Law permits the secretary of the Department of Health and Human Services to approve experimental, pilot or demonstration projects that test and evaluate state-specific policy changes in Medicaid and CHIP programs to improve care, increase efficiency and reduce costs without increasing federal Medicaid expenditures. (CHIP stands for the Children’s Health Insurance Program.) These waivers vary state-to-state in scope as the needs and issues facing patient populations differ across the country. A Section 1115 Waiver allows a state to address the issues and needs of its unique patient populations as it deems necessary.


Section 1115 Waivers also require a project be budget neutral to the Federal government. This means that during the course of the demonstration project (DSRIP is considered a demonstration project by CMS), Federal Medicaid expenditures will not be more than the Federal spending without the demonstration. Simply put, implementing the project can’t cost more than operating without the project.

DSRIP In Action

California, Texas, and Massachusetts were the first three states to have their DSRIP measures approved and implemented in 2010 and 2011; New Jersey and Kansas implemented DSRIP in 2012; New York joined them between 2014 and 2015. As of 2018, thirteen states have approved DSRIP programs.

Each state has a different focus based on the needs of their populations. States such as New Hampshire, Rhode Island, and Washington focused on recruiting primary care providers, behavioral health specialists, nursing facilities and home- and community-based service providers to collaborative networks.

New Jersey, New York, and Texas have placed a greater emphasis on their behavioral health programs through DSRIP. Arizona, New Hampshire, and Rhode Island enhanced their services for those with with mental health and substance use disorders. Rhode Island DSRIP focused on developing comprehensive and specialized Medicaid Accountable Care Organizations (ACOs) to address the behavioral health of their patient populations.

Ultimately these states need to prove that their DSRIP initiatives are hitting certain measures and delivering on their value-based care benchmarks.

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