The New York State Department of Health (the State) has published a Full Public Notice requesting a five-year extension of the Section 1115(a) Medicaid Redesign Team demonstration, which expires March 31, 2027. While the State proposes to continue the full scope of Health-Related Social Needs (HRSN) services delivered through Social Care Networks (SCNs), two structural changes could fundamentally reshape the funding landscape for community-based organizations (CBOs): the end of federal infrastructure funding (including CBO capacity building grants) and a transition from non-risk payments to risk-based capitated funding controlled by Managed Care Organizations (MCOs). The public comment period closes August 21, 2026.
What the State Proposes to Continue
The extension request proposes to amend and continue its HRSN services initiative while “maintaining the full scope of HRSN services and eligible populations approved in the current demonstration, while making limited refinements to improve program alignment and sustainability”. Specifically, the State proposes to:
- Continue all approved HRSN services, including Care Management (Level One Navigation and Level Two Enhanced Population), Housing Services (Home Accessibility and Safety Modifications, Home Remediation, Asthma Remediation, Medical Respite, Rent/Temporary Housing, Utility Setup/Assistance, Pre-Tenancy Services, Community Transitional Supports, and Tenancy Sustaining Services), Nutrition Supports (Counseling and Education, Medically Tailored Meals, Food Prescriptions, and Pantry Stocking), Cooking Supplies, and HRSN Transportation Services.
- Maintain delivery of HRSN services through SCNs by preserving the existing regional network structure rather than shifting to direct MCO contracting.
- Request continuation of HRSN services expenditure authority into the five-year extension period (the current demonstration expires March 31, 2027).
- Roll over $1.5 billion in unspent Designated State Health Programs (DSHP) funds for continued use on the DSHP-funded initiatives approved in the current demonstration, including HRSN services, HERO and Workforce initiatives into the extension period.
What Changes and What It Means for CBOs
Payment Model Transition. The most consequential change for HRSN service providers is the State’s proposal to “maintain non-risk payments for HRSN services for one additional year, prior to transitioning to risk-based funding in April 2028”. A footnote in the Notice defines this: “Capitated payments are fixed, pre-paid, per-person payments for providing contracted services”.
Under the current non-risk model, OHIP provides earmarked PMPM funding through MCOs to SCN Lead Entities, which reimburse CBOs on a set fee schedule, such that MCOs bear no financial risk for HRSN service costs. Under the proposed risk-based model beginning April 2028, HRSN service costs would be incorporated into MCOs’ actuarially determined capitation rates, giving MCOs both financial risk and discretion over HRSN budgets. The Notice states this additional year will allow the State to “collect sufficient encounter, utilization, and cost data to support actuarially sound rate development and ensure compliance with managed care rate setting requirements”.
Infrastructure and Capacity Building Funding Ends. Under “Initiatives Proposed to Be Discontinued,” the Notice states: “HRSN Infrastructure: The State projects it will reach the expenditure cap for HRSN infrastructure by the end of the current demonstration and therefore does not request to continue expenditure for this initiative”. The SCN Operations Manual (Version 8, May 1, 2026) defines CBO capacity building funds as a component of infrastructure funding: “Infrastructure funds are used directly by the SCN Lead Entity and distributed to CBOs (CBO capacity building funds)”. This means the federal funding stream that currently supports CBO staff salaries, equipment, IT onboarding, training, and operational startup will not be renewed beyond March 2027.
Service and Population Modifications. The State proposes to remove coverage of real estate brokerage fees associated with housing services due to changes in state law and limited program utilization and to update the definition of enhanced HRSN populations by consolidating three child population categories into a single new category: “High-Risk Children under Age 18”.
Implications for HRSN Service Providers
CBOs operating within SCNs should note that while the service delivery model is preserved and HRSN services expenditure authority is proposed to continue, the underlying economics could shift materially:
- After March 2027, CBOs will no longer have access to capacity building grants and must sustain operations entirely through service reimbursement.
- After April 2028, MCOs, not OHIP, will control the HRSN funding pool within their capitation, creating the potential for rate compression, volume constraints, or preferences for larger integrated providers.
- The adequacy of future HRSN rates will depend on encounter and utilization data being collected now, making current-period service delivery volume and accurate claims submission critical to CBOs’ long-term financial sustainability under the program.
Key Dates and Public Comment
The public comment period is open now and closes August 21, 2026. The State has indicated it will consider all written and verbal comments received before finalizing the extension application.
- Public Comment Deadline – August 21, 2026
- In-Person Hearing – Friday, July 31, 2026, 1–4 PM — Empire State Plaza, Concourse, Meeting Room 2, Albany, NY 12242 (no pre-registration required)
- Virtual Hearing – Tuesday, August 11, 2026, 1–4 PM (pre-registration required; register with “SP” before your name; confirm via email to [email protected] by August 10 at 4 PM)
- Written Comments (Email) – [email protected]
- Written Comments (Mail) – Department of Health, Office of Health Insurance Programs, Waiver Management Bureau, 99 Washington Avenue, 8th Floor, Suite 826, Albany, NY 12210
Assistance
Our firm’s 1115 Waiver (NYHER) CBO-Focused Practice Group advises community-based organizations on compliance, contracting, reimbursement, and regulatory strategy within the Social Care Network program. We are actively monitoring the extension request and its implications for capacity building, payment model transitions, and CBO sustainability.
Should you have any questions regarding the above or wish to have your organization’s services evaluated for compliance with applicable laws, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].
Click here for a complete copy of the Full Public Notice.