2023 New York State Legislative Preview: Health Care

NY State Government: Week in Review

While the primary focus over the next two months will be on the fall general election, planning for the next fiscal year (FY 24) and 2023 legislative session is underway. Looking forward, we expect the following issues impacting New York’s health care landscape to influence the upcoming New York State legislative session.

Health Care Leadership

The most significant change for the 2023 session will occur in the Assembly, where the current Assembly Health Committee chair, Assemblymember Gottfried, will retire at the end of this year after serving in this post for 35 years. While a successor for the position has not been announced yet, it is recognized that this change will have a significant impact on health policy and the budget process.

Health Care Staffing

Despite the FY 23 enacted budget including significant investments in the health care workforce and bonuses designed for recruitment and retention, health care staffing shortages continue to significantly impact the industry, with some hospitals having to reduce services due to the shortage. Temporary contract labor has increased strikingly as a percentage of total workforce expenses and is driving operating losses at health care providers. It is expected that additional efforts to address the shortage will be under consideration in 2023, including efforts to increase the supply of health care professionals, loan repayment programs, and additional scope of practice reforms to allow licensed professions to undertake additional functions under supervision.

Health Care Provider Licensure

While many of the executive orders issued during the COVID-19 pandemic have expired, Executive Order (EO) 4, continuing the Declaration of a Statewide Disaster Emergency Due to Healthcare Staffing Shortages, remains in effect. This EO provides flexibilities for health care providers, including allowing certain licensed out-of-state and foreign health care providers to practice in New York. As this licensure flexibility has assisted with the COVID-19 response as well as with addressing the current staffing shortages, it will be difficult for the Governor to allow it to expire without any other licensure mechanisms in place.

In the FY 23 Executive Budget, the Governor proposed adopting provisions of law allowing the state to enter both the Interstate Medical Licensure Compact (IMLC) and the Nurse Licensure Compact (NLC), as well as a process to issue temporary permits for high-need health care professionals to practice in New York while their applications for licensure are pending. While not enacted, it is expected that these proposals, as well as others addressing health care provider licensure, will be under consideration again in 2023.

Health Care Provider Financial Outlook

Health care providers face continued pressures and margin compression stemming from the pandemic, including lower utilization and increased agency staffing and permanent premium labor costs. Both historically financially stable and distressed health care providers will continue to face these financial pressures in the near term. While the FY 23-enacted budget included capital and operational investments for health care providers, including a 1 percent increase in Medicaid reimbursement, it is expected that many health care providers will need significant additional state support in the upcoming year as federal financial support for pandemic response runs dry. This need will likely place significant pressures on the FY 24 budget.

Please reach out to a member of the Manatt team should you have any questions.

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