May 27, 2026
Following weeks of closed-door negotiations and our update last week after the Legislature passed two of the nine budget bills, the SFY 2026–27 budget process is finally drawing to a close. Late yesterday evening, the final budget bills were printed, and all remaining legislation is expected to be acted on before the end of the week.
While we will be sending a comprehensive Health/Mental Hygiene Final Budget Update later this week, key outcomes on proposals of interest to the Academy are outlined below.
Please let us know if you have any questions.
Expanded Physician Assistant Scope of Practice
Rejects the Executive Budget proposal to expand physician assistant scope of practice.
Transfer of Oversight from State Education Department to Health Department
Rejects the Executive Budget proposal to transfer oversight and licensing of physicians, physician assistants, and special assistants from the State Education Department to the Department of Health.
Exclusion of Medicaid from IDR
The Governor originally proposed replacing the current New York Independent Dispute Resolution (IDR) process by eliminating the existing framework directing arbitrators to “consider all relevant factors” and instead requiring IDR entities to select the offer closest to the “allowed benchmark,” defined as the 50th percentile of allowed amounts paid to participating providers, with a “maximum fee” capped at the 80th percentile.
This proposal would have applied to all disputes brought through the IDR process. The Executive Budget also proposed including all NYSHIP/state employee plans in IDR, which had previously been excluded.
The final language does the following:
- Preserves the existing IDR framework for commercial market disputes.
- Applies the “allowed benchmark” framework only to NYSHIP/state employee plan disputes, with a five-year sunset.
- Maintains the current commercial-market IDR methodology, allowing arbitrators to consider:
- Provider’s usual charge
- Usual and customary cost
- Gross disparity factors
- Existing reimbursement comparisons
- Includes an exception for hospital-employed physicians, requiring those disputes to continue under the existing IDR methodology, including NYSHIP disputes.
- Prohibits awards where:
- The health plan demonstrates an existing contract covering the same services at the same location; or
- Prior authorization disclosures identified the services as out-of-network.
- Requires the Department of Financial Services (DFS) to issue a report after four years regarding NYSHIP/state employee plan disputes, including aggregate outcomes by region and provider specialty.
Physician Excess Medical Malpractice Program
Rejects the Executive Budget proposal to cut and restructure the program and instead provides a one-year extension.
Doctors Across NY Funding
Includes level funding of $15.865 million.
AHEC Funding
Includes $2.2 million in Executive funding and an additional $500,000 legislative add, totaling $2.7 million.
Prior Authorization Reforms
Accepts the Executive’s prior authorization reforms with modifications clarifying that:
- For outpatient treatment of a chronic condition, utilization review may occur no more than once annually unless the attending provider recommends a change in treatment.
- New treatments, tests, or procedures not included in the approved treatment plan may still require separate prior authorization.
Healthcare Transactions
Rejects the Executive Budget proposal to strengthen Department of Health oversight of healthcare transactions.
Abortion Access
The final budget includes:
- $25 million to sustain the Reproductive Freedom and Equity Grant Program
- $20 million to support abortion service providers, including medication abortion care
- $1 million for additional services and expenses to expand patient access
- $10 million for capital grants supporting expanded reproductive health infrastructure, modernization, safety, and security
The capital funding is reduced from $15 million in SFY 2026.
Tax on Alternative Nicotine Products
Includes the Executive proposal to close New York’s tax loophole on alternative nicotine products, such as nicotine pouches like Zyn, and aligns taxation with existing tobacco product taxes.
Managed Care Organization (MCO) Provider Tax Amendment
This proposal authorizes the Department of Health Commissioner to apply for a CMS amendment and impose an amended MCO provider tax beginning January 1, 2027.
Subject to CMS approval, health plans would pay a tax equal to 0.35% of total premium revenue annually.
School-Based Health Centers
Includes language permanently carving school-based health centers out of Medicaid managed care.