New York’s financial regulator last week issued guidance and a proposed regulation reshaping the state’s process for resolving billing disputes between out-of-network health care providers and insurers, implementing changes enacted in Governor Kathy Hochul’s fiscal 2027 budget.
The Department of Financial Services, led by Acting Superintendent Kaitlin Asrow, published a circular letter and a draft second amendment to 23 NYCRR Part 400 to carry out revisions to Financial Services Law Article 6, which governs the state’s independent dispute resolution, or IDR, system for emergency services and surprise bills. Hochul signed the underlying legislation, Part BB of Chapter 57 of the Laws of 2026, on May 28.
The amendments remove Medicaid Managed Care coverage from the IDR process for disputes filed on or after May 28. A dispute is considered filed when a provider or insurer enters it into the DFS online portal.
The revised law adds the Empire Plan and the Student Employee Health Plan, together the “State Plans,” to the IDR process for disputes filed on or after August 26. For those disputes, an IDR entity generally must select either the insurer’s payment or the provider’s fee, whichever is closest to an “allowed benchmark” defined as the 50th percentile of allowed amounts for the service in the same geographic area. Disputes involving physicians employed by certain Article 28 hospitals or affiliated entities are decided under separate criteria.
The measures also bar IDR entities from awarding fees in two situations: where the insurer had a contract with the provider covering the same service at the same location, or where a qualifying prior-authorization determination identified the service as out-of-network.
Under the changes, providers and insurers must pay the IDR entity’s full fee when they submit or respond to an application. IDR entities may not commingle those payments and must hold them in a separate account, refunding the prevailing party within 30 days of a determination or the applicant within 30 days of an ineligibility rejection.
The revisions also extend the decision window for IDR entities to 45 business days from receipt of all necessary information, up from 30 business days previously.
The draft regulation opens a 10-day preproposal comment period, followed by a 60-day public comment period once the proposal is published in the State Register. Because the law takes effect August 26, DFS said it will adopt the regulatory amendments on an emergency basis that day while the proposal advances through the rulemaking process.
