NY advocates push for behavioral health carveout

Advocates and provider organizations in New York are urging state lawmakers to remove community-based mental health and substance use disorder services from Medicaid managed care for fiscal year 2026. This proposed carveout aims to address concerns over access, provider reimbursement, and administrative burdens linked to the current managed care model.

Challenges in the managed care system

Currently, Medicaid contracts with private insurance plans to oversee behavioral health services. Critics argue that this structure has created significant obstacles for providers and recipients. Common issues include delayed care access, inadequate provider payment rates, and complex authorization processes that increase operational costs. Provider groups say these factors contribute to long waitlists and strain an already pressured system.

Advocates further assert that managed care plans divert funds away from frontline providers to administrative overhead, limiting resources available for direct services. These challenges have fueled calls for reform to improve both financial stability and service delivery in the behavioral health sector.

Expected benefits of a carveout

Supporters of the carveout estimate potential annual savings of up to $400 million by reallocating funds directly to safety-net providers instead of intermediaries. This financial shift is anticipated to strengthen service capacity and enhance outcomes for individuals with mental health and addiction needs.

The carveout proposal also aims to increase transparency by simplifying funding flows and reducing bureaucratic hurdles. Proponents believe this will enable a more responsive behavioral health system better equipped to handle growing demand.

Broader context and implications

The push for a carveout reflects wider concerns about Medicaid’s ability to meet behavioral health needs amid funding constraints and workforce shortages. As state budget discussions for 2026 advance, the carveout remains a focal point for stakeholders prioritizing improved access and sustainability.

Ultimately, removing behavioral health services from managed care could reshape New York’s approach to funding and delivering care for vulnerable populations. The proposal underscores the ongoing efforts to optimize Medicaid programs in response to evolving healthcare challenges.