For the first time, New York State will base its reimbursement payments to physicians and hospitals on the health of Medicaid patients - paying out more when the health of the patient improves. Erin Billups filed the following report.

It's a long awaited announcement. The state will soon detail how much doctors and hospitals will be reimbursed when the health of their Medicaid patients improves.

"We need to start reimbursing providers when they’re collectively are successful. The problem with today's the majority of how healthcare is paid for today is that the more you do the more you get paid, whether or not the patient got better," says Deputy NYS Commissioner and Medicaid Director Jason Helgerson.

Governor Andrew Cuomo announced the new initiative last year, the Delivery System Reform Incentive Payment, or DSRIP.

The goal is to reduce health care spending by giving doctors and hospitals the incentive to focus more on preventative care. 

Officials hope this new emphasis will reduce costly emergency room visits at least 25 percent by 2020.

Six-point-four billion dollars, savings generated through state Medicaid reforms, will fund this shift to so-called value-based payments which is also a goal of Obamacare.

"At the core, what DSRIP is about is trying to get providers to work together as a team. Not just healthcare providers, but broadening team to including community based organizations across the state," says Helgerson.

Speaking at a recent forum hosted by the publication City and State, the medicaid director said 25 of these Performing Provider Systems have formed across the state.

"A lot of the physicians I talk to find it very empowering, because now they are really looking at the complete needs of the patient and when they're successful they get to share some of the savings as opposed to being constantly in an incentive environment," says Helgerson.

One downside to all this change, there will be a loss of jobs in the health care sector.

"There's going to have to be closure of certain services and those services are going to be replaced by other services that better meet the needs of the community. I think we have no choice. We have to rebalance the delivery system one way or the other," says Helgerson.

The state health department says substantial funds are being devoted to retraining and redeployment of the healthcare workforce.