BILL NUMBER: S8309A
SPONSOR: BROUK
 
TITLE OF BILL:
An act to amend the social services law, in relation to returning outpa-
tient mental health, substance use disorder, residential and rehabili-
tation services to Medicaid fee-for-service
 
PURPOSE:
This legislation would return outpatient mental health and substance use
disorder services to Medicaid Fee-For-Service (FFS) for reimbursement.
 
SUMMARY OF PROVISIONS:
Section 1: Amends the social services law to require that outpatient
mental health and substance use disorder services are reimbursed under
FFS Medicaid, subject to federal approval.
Section 2: Amends the social services law to require that the savings
realized from the return of outpatient mental health and substance use
disorder services back to FFS Medicaid are reinvested in community based
behavioral health services overseen by the Office of Mental Health and
the Office of Addiction Services and Supports. This section also
requires that information regarding the funds available for reinvestment
from the return of these services to FFS Medicaid be included on the
State Department of Health's website and itemized in the annual state
budget beginning April 1, 2027.
Section 3: Establishes the effective date.
 
JUSTIFICATION:
The State began carving in behavioral health services into the state's
Medicaid managed care program in 2015. This shift has been a failure
with serious negative outcomes. Managed care means that middlemen
(managed care plans) are paid to reimburse providers for Medicaid bene-
fits for vulnerable New Yorkers with mental health and substance use
disorder service needs. Many managed care plans have been found to
violate state laws, regulations or contract provisions while New Yorkers
wait to obtain care from a community-based provider that has to employ
full-time staff who do nothing but deal with health plans and chase
reimbursement from delinquent insurers. When plans fail to reimburse
providers on time and in full, providers are unable to pay adequate
wages to staff, increase the amount of care they provide to match
demand, or manage ever increasing operating expenses associated with
running these programs.
New York State could save hundreds of millions of dollars per year by
carving out outpatient mental health and substance use disorder services
from the state's Medicaid managed care program where managed care plans
are permitted to keep (at a minimum) 11% of the funds they are paid by
the state for profit and 'administrative expenses' despite the fact that
there is no value add associated with employing these companies.
This savings from returning these services to FFS Medicaid should be
properly directed to actual mental health and substance use disorder
services for New Yorkers, not to health insurance plan administration
and profits. It is urgent that New York State carve outpatient behav-
ioral health service reimbursement out of Medicaid managed care as this
legislation provides.
 
LEGISLATIVE HISTORY:
S.8309 of 2025 - referred to Health
 
FISCAL IMPLICATIONS:
This legislation will save the state hundreds of millions of dollars by
no longer paying managed care plans to reimburse for outpatient behav-
ioral health services.
 
EFFECTIVE DATE:
This act shall take effect October 1, 2026.

Statutes affected:
S8309: 364-j social services law, 364-j(3) social services law, 365-m social services law
S8309A: 364-j social services law, 364-j(3) social services law, 365-m social services law