New York’s independent dispute resolution (IDR) process just changed significantly, which will have an impact on out-of-network providers. These sudden changes were passed at the eleventh hour as part of the budgetary process, which permits amending existing legislation as necessary to implement the budget. Set forth below is a summary of some major changes:
I. Medicaid Managed Care: Now Excluded from New York State IDR
Effective immediately, Medicaid managed care is excluded from New York State’s IDR process. Going forward, out-of-network providers delivering emergency services to Medicaid managed care patients will be reimbursed at the Medicaid fee-for-service rate, but Medicaid managed care plans have no obligation to reimburse out-of-network providers for elective services. This change should not impact IDR claims “submitted” before May 28, 2026.
II. Commercial Fully Insured Plans: No IDR Awards for Providers with In-Network Affiliations at the Same Location or for Prior Authorized Services
No IDR award may be issued if a fully-insured commercial health plan can demonstrate that it has an active contract with the provider – – or with a subsidiary or other entity owned or operated by the provider – – to provide the same service or services at the same location. The statute leaves key terms undefined, however, creating interpretive uncertainty; for example, the statute does not define what constitutes a “provider” for purposes of this exclusion.
The new language also prevents a provider from submitting a claim to IDR where the health care plan can demonstrate that it issued a prior authorization identifying the services as out-of-network.
These changes take effect 90 days after the law’s enactment. Disputes submitted before that date should continue to be governed by prior law.
III. Empire Plan: Two New Benchmarks Limit IDR Awards
Payment disputes involving the Empire Plan (NYSHIP) are now explicitly included under New York State’s IDR framework. The Empire Plan also can take advantage of two new benchmarks for determining IDR awards which can reduce potential IDR awards.
The two benchmarks that apply are based on FAIR Health data: the 50th percentile (Allowed Benchmark) and the 80th percentile (Maximum Fee) of all allowed amounts for the service by participating providers in the same or similar specialty and geographic area. The IDR entity must select whichever amount – – the plan’s payment or the provider’s fee – – is closest to the Allowed Benchmark. However, even if the IDR entity chooses the provider’s fee, the plan is not required to pay above the Maximum Fee.
For fully insured commercial health plans other than NYSHIP, the IDR entity will continue applying the existing multi-factor analysis, weighing gross disparity in fees, provider training and experience, case complexity, patient characteristics, median participating-provider rates, and usual and customary costs.
There are two exclusions to the new Empire Plan benchmarks:
1. The IDR entity may still choose the fee that is not closest to the Allowed Benchmark when:
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- Both fees are equidistant from the Allowed Benchmark; or
- The IDR entity determines that the Allowed Benchmark is not appropriate due to:
- The provider’s level of training, education, and experience;
- The circumstances and complexity of the particular case; or
- Individual patient characteristics.
If the IDR entity selects an amount other than the one closest to the Allowed Benchmark, it must issue a written decision explaining which permitted factors it considered.
2. Hospital-employed physicians and those employed by captive P.C.s are not subject to the new benchmarks; they remain under the existing criteria for determining a reasonable fee.
These changes take effect 90 days after the law’s enactment. Disputes submitted before that date should continue to be governed by prior law.
Other Key Changes
Also effective 90 days after the law’s enactment, the IDR entity now has 45 business days to issue a determination — an increase from the prior 30-day requirement.
Bottom Line: Out-of-network providers who have relied heavily on IDR awards, whether federal or state, should assess how these new changes impact their approach to the IDR process and how that may influence their decision to remain non-par. Additionally, this change may have public policy implications relating to access to care for NYS’s Medicaid population.
Should you have any questions regarding the above, please contact the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].