New York State lawmakers have declined to adopt Governor Kathy Hochul’s proposed changes to the state’s system for resolving surprise medical billing disputes. The Senate and Assembly left out the governor’s suggested revisions in their one-house budget plans released Monday. The rejected reforms targeted the independent dispute resolution (IDR) process, which is used when insurers and out-of-network providers cannot agree on payment amounts for medical services.
Under the current system, a neutral third party arbitrates these disputes to determine reimbursement rates. Governor Hochul’s proposal aimed to exclude Medicaid from this arbitration process and incorporate the Empire Plan, which covers state employees, into the framework. The Budget Division estimated these changes could save the state $56 million annually.
Another key aspect of the governor’s plan was to adjust the benchmark rates used in arbitration. The proposal would base payments on average private insurer rates rather than provider charges. Supporters argue this approach better reflects market values. However, the legislature’s decision to omit these reforms reflects ongoing tension between medical providers and insurers.
Insurance companies have supported Hochul’s proposals, citing rapid increases in out-of-network reimbursement rates. Conversely, doctors and hospitals oppose changes they say would restrict access to arbitration and reduce fair compensation for services. The legislature’s move suggests continued debate over how to balance costs, provider payments, and patient protections in New York’s health care system.