Three Big Fixes for New York’s Consideration: Big ideas to deliver for New Yorkers in 2025

Post Written by Jason Helgerson, Founder and CEO, and Juliette Price, Chief Solutions Officer

As New York State leaders wind down the budget process, which helps set the state’s priorities for the next year, here are some big ideas HSG thinks those in power should consider as investments in New York State’s health care ecosystem, providing for greater access, quality, and outcomes for all New Yorkers.

We’re at that point in early spring where New Yorkers can feel two things–first, that spring weather is right around the corner, and second, that the New York State budget process is coming to a close. As in all states, the budget process sets New York’s public policy priorities for the coming year. Here are our three big ideas for how New York can prioritize the health of its health care system to ensure all New Yorkers have a healthy future. 

1- Prioritize Keeping Independent Physicians Independent: Ask any independent physician–times are tough right now for those practicing outside of large hospital systems. As the sector continues its slow march towards consolidation, fewer and fewer physicians operate independently–nationally, only 46% of providers are independent today, down from 60% in 2012. At this rate, fewer than 1-in-3 physicians will be independent in ten years. 

Why does it matter? Independent physicians are more cost-efficient than hospital-employed physicians. Studies consistently show that physician services cost more when the provider is employed at a hospital; a 2019 study in Health Affairs found that hospital-based physicians bill insurers 14.1% more than independent physicians for the same services. Since hospitals can charge facility fees, this increases the cost of care for patients even further. Hospitals also have higher administrative cost structures, leading to higher health care spending rates. As the hospital sector consolidation continues, increased market dominance will lead to ever-higher reimbursement rates from insurers, leading to higher patient costs. 

New York should care deeply that the mix of independent and hospital-based providers does not continue to diminish, as all New Yorkers end up paying higher prices for health care services when this mix is allowed to diminish. 

The Big Fix: The recently approved Managed Care Organization (MCO) Tax creates a unique opportunity to invest in independent physicians, their IPAs, and their ACOs. New York State could establish an Independent Physician Investment Fund that would be funded with $150 million per year in MCO Tax proceeds. Independent Physicians or their partner IPAs/ACOs would apply for the funds, which could be used to make investments in technology to support quality improvement, expanded service offerings for patients, fund risk reserves to help providers enter more advanced value-based contracts, fund IPA or ACO operations during a transition period to full-risk contracts, or provide bonuses for staff who support quality improvement and cost containment efforts. This investment fund would encourage independent physicians to remain independent and organize into highly successful groups that will be well-positioned to improve patient outcomes and lower overall health care costs.

2- Turbo-Charge New York State’s Transition to Value-Based Payment Models: As the saying goes, to understand health care, you have to follow the money. The longer New York State supports the outdated Fee-For-Service payment model, the longer New Yorkers will face rising health care costs. Transitioning to a value-based payment model is the fastest way for New York to reign in higher health care costs while delivering higher quality care and supporting the health care workforce. 

New York has already started this transition, with over 80% of the state’s Medicaid spending transitioning to basic forms of value-based payment. However, only 35% of that spending is in more advanced and transformative models. But this isn’t enough–more aggressive work is needed to keep this transition moving. 

The Big Fix: New York can catapult this work by refocusing on this important strategic objective. First, New York State should continue to advance the work that has been started by creating a new Value-Based Payment Roadmap with more options for insurers and providers. Next, New York should set new Value-Based Payment adoption goals for the state, moving beyond the 80% adoption threshold to include more advanced goals, including setting a Moonshot goal of 75% of health care spending in full-risk, total cost of care arrangements. 

This goal could be supported by the re-opening and expansion of the VBP Innovator Program, an existing program that New York State introduced in 2017 but has not been accepting new applicants. Additionally, providers in Innovator contracts are meeting resistance from health insurers–this should be stopped by requiring MCOs to sign these transformational contracts that are fair to physicians and good for patients. 

3- Get Ahead by Dropping AHEAD: Residents of the State are facing a true cost-of-living crisis, with rising health care costs being a significant component of what ails family budgets. New York State should confront this challenge by seeking to reduce the cost of health care by investing in non-hospital-based options. Unfortunately, the State is committed to participating in CMS’ AHEAD program. This hospital global budget program locks up potential shared savings within the four walls of hospital facilities instead of allowing the marketplace of ideas to drive innovation and cost reduction. Participation in this program will lead to independent physicians again being left behind and unable to bring down the cost of care for all New Yorkers. Additionally, the program creates a permanent institutional bias in the health care system, discouraging innovation, reducing costs, and improving patient outcomes.

The Big Fix: Renegotiate New York State’s participation in the AHEAD model with the new federal administration. Create or participate in full-risk, total cost-of-care models that allow hospital systems to participate but not at the expense of independent physicians or smaller groups. Incentivize participation in these models by reducing other health care mandates for those who participate. 

This year’s New York State budget presents a unique opportunity for state policymakers to demonstrate their commitment to improving the health care system. This commitment should be rooted in a belief that independent physicians should remain independent. Such independence is good for taxpayers as well as patients, providers, and New York as a whole.

About the Authors: Jason Helgerson is the founder and CEO at HSG, and was previously the Medicaid Director for New York State. Follow him on X and connect with him on LinkedIn. Juliette Price is the Chief Solutions Officer at Helgerson Solutions Group. Connect with her on LinkedIn.