New York Health Act: Summarizing the Proposed Single-Payer Bill

Health Update

Editor’s Note: The proposed New York Health Act, which would establish a single-payer healthcare system for New York State, has been the focus of substantially more serious consideration following the midterm elections and the emergence of a strong Democratic majority in the state Senate. With the bill recently amended and reintroduced, Manatt has created an updated summary of its provisions. Highlights are captured below. Click here to download the full summary.

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The proposed New York Health Act would replace all private and public (including Medicare and Medicaid) health insurance coverage for New York State residents with state-sponsored health coverage funded through new state payroll and other taxes. The coverage would include all the healthcare services covered by Medicare, Medicaid and commercial health insurance—including, under the most recent amendments, long-term care services—and would not require the payment of any deductibles, copayments or coinsurance.

Summary of 2019 Changes

The bill introduced in 2019 contains a number of amendments to the 2018 version, including: 

  • Exemption from associated taxes for New Yorkers with incomes below $25,000/year;
  • Immediate inclusion of long-term care benefits under the plan;
  • Direction to the New York State Department of Health (DOH) to implement the act irrespective of federal waiver approvals;
  • Possible creation of a Medicare Managed Care plan as an alternative method to obtain federal funds;
  • New unemployment benefits to workers displaced by implementation of the act;
  • Expanded range of providers eligible for collective negotiation of terms with the state and the addition of a mediation process; and
  • Removal of managed long-term care (MLTC) plans as entities explicitly listed as eligible to render care coordination for enrollees.

1. Overview of the Bill’s Approach

The bill incorporates three principal components: universal coverage, a comprehensive set of covered benefits and a single payer to deliver those results. In lieu of individual or employer premiums paid to obtain coverage, the proposal envisions a tax-supported insurance plan for all New Yorkers, titled the “New York Health” program. The government would collect payroll taxes plus taxes on certain income (other than wages subject to the payroll tax). Revenues from those two taxes would fund coverage under the new program. All New York residents would be entitled to enroll for coverage in New York Health.

The bill proposes that Medicare and Medicaid coverage would be delivered via coverage under New York Health. Pursuant to waivers, the Centers for Medicare & Medicaid Services (CMS) would make payments to the New York State DOH under an agreed formula to constitute the federal payment of claims costs for Medicare beneficiaries enrolled in New York Health. Similarly, waivers would be sought so that CMS would make payments to the DOH under an agreed formula constituting the federal matching fund payments for New York’s Medicaid expenditures. The 2019 plan adds the flexibility to create a Medicaid managed care plan.

The DOH (or its usual claims-paying agent for the conventional Medicaid program) would pay all the claims. There would be no role for health plans. However, the bill does not prohibit not-for-profit health plans from serving as care coordinators.

2. Organization and Governance

The program would be established under the Public Health Law and administered by the DOH.1 There would initially be a temporary commission to focus on implementation. It would consist of 15 members appointed by the Governor and legislative leaders.2 There would also be a permanent board of trustees, consisting of 26 representatives (appointed by the Governor) of consumer groups, providers, labor organizations and employers.3 There would be another 14 representatives appointed by the legislative leaders.4 The board would include the DOH, the New York State Department of Financial Services and the Division of the Budget. The DOH would propose regulations regarding New York Health, but the board would need to approve them.5

There also would be six regional advisory councils. Each regional advisory council would have at least 27 members appointed by the legislative leaders.6 The regional councils could form committees and must have a committee for each borough in NYC.7 The regional councils would develop a community health improvement plan for the region as well as provide general advice.

3. Enrollment and Covered Benefits

All New York residents would be eligible to enroll, regardless of immigration status.8 Colleges could purchase coverage for any students who are not otherwise residents of New York.9 Retiree coverage could be included, but the bill defers the details to be developed at a later date (although the 2019 bill includes new provisions for public-sector retirees).10 Claims payments would be made for members, newly arrived residents and others who have not yet had a “reasonable opportunity” to enroll in New York Health.11

Covered benefits must include all benefits currently covered by Medicaid, Medicare, Child Health Plus and the New York State employees health benefit plan, or mandated under the insurance law for health plans.12 There would be one benefit package for all enrollees, with no deductibles, copayments or coinsurance to be paid by the patient.13 The 2019 bill adds coverage of long-term care.14

Care coordination would be a covered benefit. Care coordinators could be primary care physicians (PCPs), providers of gynecological care or specialty practitioners for chronic care.15 Care coordinators could also be hospitals, home care agencies, mental health facilities, Accountable Care Organizations (ACO) or Taft-Hartley funds (the 2019 bill expands this to include all labor unions).16 The 2019 bill removes MLTCs from the list of possible care coordinators. Care coordinators also could be not-for-profit agencies or governmental entities.17 All enrolled members must have a care coordinator at all times.18

4. Role of Providers and Methods of Compensating Providers

Providers already participating in Medicaid or Medicare are deemed to be qualified for New York Health, although they may need to complete paperwork (such as credentialing applications or participating provider agreements) to participate in the New York Health program.19

The only express references in the bill to organized networks of providers for purposes of contracting directly with New York Health are ACOs and Taft-Hartley funds,20 which the bill classifies as “healthcare organizations.”21 These healthcare organizations must be not-for-profit or governmental entities. The ACOs must be formally licensed under New York’s ACO statute.

The DOH would establish reimbursement rates and fee schedules for reimbursing providers. The rates would be, at least initially, on a fee-for-service basis. The exception would be care coordination, which would be on an alternative basis, such as a fixed fee per month.22 Payment for prescription drugs would be pursuant to the existing statute23 except where the Section 340B program applies. Reimbursement rates would be payment in full with no balance billing permitted.24

The provision stating that rates shall be on a fee-for-service basis “until and unless another payment methodology is established” implies that value-based payments and other alternative payment methods are envisioned.25 The reference to ACOs as one of only two types of provider network arrangements authorized to contract with New York Health reiterates that conclusion.

The bill establishes a minimum statutory standard for rate setting for providers. The rates must be “reasonable and reasonably related to the costs of efficiently providing the healthcare service and assuring an adequate and accessible supply of healthcare service.”26 The bill leaves it to the DOH and the board to set rates.

The bill authorizes collective negotiations by otherwise unaffiliated providers with New York Health in regard to reimbursement rates and other key factors.27 A significant change for 2019 is that the collective negotiations can now be with any type of provider.28 (The 2018 version included only physicians). The 2019 bill also adds mediation procedures in the case of an impasse.29 However, providers are prohibited from striking.30

5. Medicare and Medicaid

Both Medicare beneficiaries and Medicaid beneficiaries would utilize a New York Health ID card instead of a typical Medicare or Medicaid ID card. The DOH would apply for all waivers from CMS necessary to obtain such funding.31 If the preferred form of waivers is not received, the DOH is authorized to undertake alternative approaches to maximize federal funding under various existing payment streams.

For 2019, the bill expresses the intent that New York Health is intended to proceed even in the absence of the waivers.32 An addition for 2019 is the authority to create a Medicare Managed Care plan (or other entity) as a vehicle for receiving federal Medicare payments, with the role of the health plan to be as minimal as possible.33

6. Funding and Funds Handling

In addition to the federal funds described above, revenues at the state level would be from two key sources:34

  • A “payroll premium” on all payroll and self-employed income; and
  • A “non-payroll premium” assessed on taxable income not subject to the above payroll premium, such as interest, dividends and capital gains.

Under the 2019 bill, there would be no tax (payroll or nonpayroll) for persons with incomes under $25,000.35

All the various receipts (including those from CMS) would be placed in a New York Health Trust Fund, newly created under the State Finance Law.36 It appears the DOH (or its claims-paying agent) would pay all claims.

The sponsor’s memorandum accompanying the bill does not project a total cost of the program. Therefore, the projected computations of a net aggregate cost decrease (or increase) are not clearly on the table for evaluation. Without cost projections, it is also difficult to predict the net impact on subsets of the covered populations, such as employers (and their employees) who currently pay for health plan coverage and would transition to the taxation payment model under New York Health.

7. Role of Health Plans and Subcontractors

There would be no role for health plans. The bill mandates that health insurers not issue coverage for benefit packages that duplicate the benefits covered under New York Health.37 Managed care organizations could not be a required vehicle to arrange New York Health coverage nor could managed care plans be an intermediary to receive New York Health claim payments.38 Health plans could possibly serve as care coordinators, but it appears must be not-for-profits.39

Specialty networks currently subcontracting with health plans to supply provider networks and/or care coordination for a limited range of clinical services (such as mental health only) appear to need ACO licensure under the New York ACO statute to qualify as network providers. To do so, they must be not-for-profit40 or become subcontractors to hospitals and other parties serving as care coordinators.41

The bill provides funds to assist in retraining or job transitions for employees of health plans who lose their jobs as a result of New York Health.42 The 2019 bill includes new provisions targeting former employees of health plans and billing staff previously employed by providers.

8. Out-of-State Situations  

State residents employed out of state would be included. If the employer is subject to New York law, the employer and employee would pay the payroll premium taxes as if the employee were in New York. If the employer is not subject to New York law, employees would pay themselves as if they were self-employed.43 Out-of-state residents employed in New York would not be covered but would be subject to the payroll premium taxes (and a credit would be applied in the amount of conventional health insurance premiums paid for that out-of-state resident).44

Coverage under New York Health would include some use of out-of-state providers. The DOH would set procedures and standards for using and paying out-of-state providers.45

9. Consumer and Provider Assistance

Funding to not-for-profit consumer assistance organizations would be provided.46 The assistance would include assistance to consumers, providers and care coordinators.

10. Effective Date

The bill would take effect immediately when signed by the Governor but would take time to implement. The DOH would determine when enrollment in New York Health would begin.47

1 Page 5, line 22, and page 3, line 34.

2 Page 24, line 39.

3 Page 7, line 12.

4 Page 7, line 41.

5 Page 7, lines 5–11. Also see page 14, line 23.

6 Page 17, line 50.

7 Page 19, line 13.

8 Page 5, line 19.

9 Page 5, line 51.

10 Page 6, line 34, and page 8, line 20. It is not clear how this would affect Medicare Advantage coverage under employer retiree benefit plans.

11 Page 9, line 10.

12 Page 8, line 40.

13 Page 9, line 8.

14 Page 2, line 10. LTSS are not defined but appear to be included as a result of deleting the exclusion in the 2018 bill.

15 Page 9, line 29.

16 Page 9, line 44. The 2019 bill removes a requirement that the Taft-Hartley funds must meet patient protection and provider protection criteria similar to what is required under the NY ACO statute.

17 Page 9, line 49.

18 Page 9, line 50.

19 Page 11, line 7.

20 Here all labor unions are not included in the definition. Unions were added in 2019 only as care coordinators.

21 Page 12, line 21, and page 4, line 19.

22 Page 11, line 32.

23 PHL Article 2-A, title 1; page 11, line 40.

24 Page 11, line 47.

25 Page 3, line 7.

26 Page 11, line 29.

27 Page 11, line 36, and page 21, line 39.

28 Page 22, lines 6–10.

29 Page 22, line 54.

30 Page 22, line 18.

31 Page 14, line 31.

32 Page 2, lines 37–39

33 Page 6, line 22.

34 Page 19, line 49, and page 20, line 9.

35 Page 20, line 19.

36 Page 24, line 7.

37 Page 5, line 39.

38 Page 6 line 16.

39 Page 9, line 49. None of the potential applicants listed in this paragraph include health plans, so the category of “any not-for-profit…” might possibly include health plans. Page 6, line 20 implies that health plans could be paid for care coordination. Also see page 10, line 12, where (for example) a hospital as the lead care coordinator is authorized to subcontract, and that reference might sweep in a health plan to provide key aspects of the care coordination.

40 Page 12, line 24. Healthcare organizations must be not-for-profit.

41 Page 10, line 12.

42 Page 16, line 39.

43 Page 20, line 45. Or the employer and employee could voluntarily pay the premium taxes.

44 Page 20, line 53.

45 Page 11, line 15, and page 12, line 13.

46 Page 16, line 28.

47 Page 5, line 35.