Capital Update May 8, 2026
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The State Legislature and the Governor are closing in on a final agreement on the State Budget, and Budget bills may begin to be considered next week. In this regard, it is imperative that physicians immediately communicate to their legislators on the several pressing State Budget health care policy issues under negotiation that will exacerbate the significant challenges facing physician care delivery across the State if they are adversely decided.
Urge Your Legislators to Reject Steep Increases in Medical Liability Costs.
Please urge the Legislature to reject the Governor’s proposal to impose $40 million in new costs to the 16,000 physicians who receive Excess Medical Malpractice Insurance coverage by requiring them to pay 50% of the coverage cost. Reject Physician Cost-Share.
Urge Your Legislators to Protect Access to a Fair Dispute Resolution Process.
Please urge the rejection of the Executive Budget proposal that threatens immediate specialty care availability in Emergency Departments across New York State by upending New York’s innovative IDR payment resolution process for non-participating provider claims, altering the criteria to make it one-sided towards health insurer interests and eliminating ability to appeal out of network Medicaid Managed Care disputes to IDR. Protect Fair IDR Process.
Urge Your Legislators to Preserve Physician-Led Team Care.
Please urge the rejection of the Executive Budget proposal to permit many Physician Assistants (PAs) to practice without any defined physician supervision after 8,000 hours practice, despite a law implemented last year giving PAs significantly more care responsibilities. Preserve Physician-led Care.
Urge Your Legislators to Preserve County Medical Society Peer Review.
Please urge the rejection of the Executive Budget proposal to eliminate the historical vetting role of the county medical society in recommending physicians to participate in the Workers’ Compensation program. Preserve Workers’ Compensation Peer Review
Urge Your Legislators to Enact Meaningful Reduction in Prior Authorization Hassles. Support Prior Authorization Reform
Please urge the inclusion of the Executive Budget proposal supported by MSSNY to: prohibit health insurers from requiring a prior authorization more than once per year for treating a chronic health condition; requiring greater transparency of health plan formularies; requiring greater transparency of prior authorization denials; and to provide a 90-day transition period for a patient to continue to be treated by that patient’s physician if the patient changes their health plan coverage.
MSSNY has joined with 15 other medical and dental advocacy organizations in a letter to legislative leaders and the Governor to express opposition to proposals under serious discussion in the State Budget that would significantly alter the Pass-Through Entity Tax (PTET) credit used by many business partnerships and S Corporations, including physician practices.
Specifically, the State Senate one-House Budget proposal contains provisions to reduce the PTET credit to 90% across New York State, and the Assembly one-House Budget proposal contains provisions for the reduction of the PTET credit in New York City, limiting it to 75%. Governor Hochul has expressed her strong opposition to any reduction in the PTET credit.
The current state/local tax structure permits owners of pass-through businesses to claim a federal deduction that is roughly equivalent to the full, pre-cap State and Local Tax (SALT) deduction. Normally, income earned through a pass-through business is taxed directly to the owner on the owner’s individual return. The PTET works by shifting that tax payment to the business level, so that what would otherwise be a capped personal SALT deduction instead reduces the business income passed through to the owner, with the owner then receiving a corresponding state tax credit.
MSSNY and other organizations have raised concerns that the tax change would essentially be causing double taxation, for both the business and personal income tax payments. It would be one more factor accelerating the closure of community-based medical practices, as physicians increasingly find the financial challenges of running a practice leave them no choice but to become a health system employee. The medical and dental associations letter notes that “The proposed reductions, limiting the credit below 100%, would fundamentally alter that structure. What was intended as a neutral, dollar-for-dollar mechanism would instead become a real tax increase on professional income that has already been taxed at the entity level. For the many professionals operating small practices and managing rising equipment and staffing costs, this change would directly reduce the resources available to reinvest in patient care, staff compensation, technology, and community services.”
Please remain alert for further updates.
Both the Healthcare Association of New York State (HANYS) and Greater New York Hospital Association (GNYHA) have written to the New York Department of Financial Services (DFS) urging that DFS direct Anthem to rescind a policy slated to go into effect July 1 that would penalize hospitals with a 7.5% reduction in payments if an out-of-network physician is involved in the patient’s treatment. The HANYS and GNYHA letters note that the misguided policy is inconsistent with existing provider contracts and violates several long-standing sections of New York state insurance law that prohibit health insurance plans from linking the hospital’s network status to the status of a staff physician.
MSSNY also recently issued a statement objecting to this new Anthem/Elevance policy, noting it will significantly harm patient access to often-urgently needed care by limiting physicians available at hospitals to deliver care, and by harming the many financially stretched hospitals across our state. MSSNY’s statement noted that “The end result of this short-sighted policy will be further consolidation in our healthcare system, and/or reduced patient access to immediately needed care at in our hospitals across the State, including in already overstressed emergency departments. Our policymakers must step in to make sure it is not permitted to go forward before patient access to care is harmed.”
New York is the latest state where Anthem/Elevance has attempted to implement this short-sighted policy that could exacerbate existing healthcare shortages by potentially limiting the availability of physicians to provide patient care in hospitals. The California Hospital Association recently announced that it was suing Anthem to prevent it from implementing this policy.
Please remain alert for further updates on this issue.
The New York State Senate passed legislation this week (S.4867A- Fahy) that prohibits the use of “step therapy,” also known as “fail first” protocols for coverage of treatments for serious mental health conditions.
Step therapy requires patients to try a sometimes less costly and usually less effective treatment than the one prescribed by a patient’s physician, and to “fail first” before the insurer will cover the original, prescribed therapy. This often leads to patients taking medications they previously tried without success, often enduring lengthy waits for approval to switch to the correct medication and frequently suffering serious side effects. As a result, these policies often have the opposite intended impact of saving money and actually increase costs due to patients needing special care including hospitalization and emergency room visits to stabilize. For people suffering from serious mental health conditions, the consequences can be dire.
The Assembly version of the bill (A.7522A-Lavine) was referred to the Assembly Insurance Committee. MSSNY will continue to track and provide updates as they become available.
