As Health Insurers’ National Campaign Targets State Budget, Legislators Must Protect New Yorkers in Medicaid Managed Care
Across the country, the health insurance industry is running a coordinated campaign to dismantle the patient protections that limit its ability to underpay for emergency and specialty care. This effort is a multimillion-dollar lobbying push paired with a wave of lawsuits aimed at gutting Independent Dispute Resolution (IDR).
On the legal front, the industry keeps losing. In a three-week stretch this April, federal district courts in California, Florida, and Pennsylvania threw out IDR challenges brought by Anthem, Aetna, and UnitedHealthcare. As one judge put it, the fact that “the insurer does not like the way Congress mandated the protocol for resolving reimbursement disputes” is not grounds for a lawsuit.
In New York, the insurance industry is trying a different remedy: the state budget.
4.36 million New Yorkers—nearly a quarter of the state—are enrolled in Medicaid Managed Care (MMC) plans. For the third year running, the Executive Budget asks the Legislature to strip away a protection that ensures those patients can get emergency and specialty care when they need it most. The Senate and Assembly have again rejected the proposal, Part T of the Public Protection and General Government Article VII bill, in their one-house budgets. As final negotiations enter their last days, legislators must hold the line.
The stakes are not abstract. New York’s IDR process—the nation’s first, adopted more than a decade ago and the model for the federal No Surprises Act—is the only neutral mechanism that decides what insurers must pay providers for out-of-network emergency and hospital-based care. More than 75% of MMC IDR claims involve exactly that situation: emergency departments, on-call specialists, hospital admissions. Cases where an admitted patient cannot shop for an in-network doctor, and a heart attack does not check a provider directory.
Remove MMC from that process and the consequences follow predictably. UnitedHealthcare, Elevance Health’s Anthem, and Centene’s Fidelis gain unilateral power to set out-of-network payment rates. Providers who currently treat Medicaid Managed Care patients in emergencies will reconsider. Access narrows. The patients who lose first are the ones with the least leverage: residents of Black and Brown communities and the 1.9 million MMC enrollees Upstate who already depend on a thinner hospital network.
Defenders of Part T offer three justifications. None survive scrutiny.
The first is fiscal necessity. Staff in the Executive Branch warn of nearly $13 billion in annual federal Medicaid cuts. Total Medicaid and Essential Plan spending for FY 2027 is projected at $122.9 billion—a piece of a record $268 billion state budget. The expected savings from Part T? $28.5 million. That is 0.012% of Medicaid spending, or roughly two one-hundredths of one percent of the budget. It is not a savings measure. It is a transfer from providers to insurers.
The second is federal fraud enforcement. Some advocates have tried to argue that the Trump administration’s Medicaid fraud crackdown somehow implicates the state’s IDR process, which they have taken to calling a “glitch.” It is no such thing. The IDR process is the neutral arbiter that decides what insurers owe providers when a patient cannot choose her doctor. It has nothing to do with fraud. And federal officials have since acknowledged significant errors in the very numbers used to justify the New York probe. Tying IDR to that investigation is not policy. It is opportunism.
The third is the suggestion that Part T simply tidies up Medicaid Managed Care. The opposite is true. Part T would make New York a national outlier, one of only a small handful of states without a separate, independent process for hospitals and physicians to challenge MMC out-of-network payment disputes. And for the categories of claims that currently rely on IDR, Part T leaves no neutral process at all.
Plans would set the rates, providers would have no recourse short of litigation, and the physicians serving hospital patients with the least leverage would absorb whatever the plan decides to pay. That is exactly what the health insurance industry has been trying—and failing— to win in federal court: unchecked authority to set out-of-network payment with no neutral process to challenge it. That is the real glitch.
Assembly Speaker Carl Heastie put it plainly: “Budgets are supposed to be about money, not policy.” Part T fails both tests. It moves negligible money and makes consequential policy, a policy the Legislature has now rejected three years in a row.
Lawmakers should ensure it has no place in the final budget. 4.36 million New Yorkers are counting on them.
Christopher Sheeron is founder and president of Action for Health and the State Care Network
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