New York State Department of Financial Services publishes Governor Hochul proposals to protect Essential Plan coverage and reform prior authorization

The New York State Department of Financial Services published Governor Kathy Hochul’s 2026 State of the State package of proposals to strengthen New York’s health care system, with measures spanning hospital financing, oversight of health care transactions, workforce policy, and health insurance reforms aimed at lowering costs and improving access. Delivery system measures include additional funding for the Safety Net Transformation Program, which has awarded more than USD 4.3 billion to support 14 partnerships, and new focus areas for partnerships centered on regional planning and the use of artificial intelligence (AI). The Department of Health (DOH) would establish a consortium of health care and AI experts, incentivize AI partnerships involving safety net hospitals, and develop systems to evaluate and deploy AI tools within DOH, Medicaid, and the Office of the Medicaid Inspector General. Oversight proposals would expand New York’s Material Transactions Law, which currently requires reporting of transactions that increase revenues by USD 25 million or more, to require ongoing reporting on the realized impacts of closed transactions and to introduce external reviews for high-cost, high-impact deals. On coverage and patient protections, the package includes an application to the Centers for Medicare and Medicaid Services to return the Essential Plan to a Basic Health Program to preserve coverage for 1.3 million people, negotiations to develop affordable options for the 450,000 expected to lose current Essential Plan coverage in the transition, direct negotiations with manufacturers for classes of high-cost drugs, and reforms to prior authorization and continuity of care including standardized formulary posting, longer validity for prior authorizations for designated chronic conditions, continuity of care expanded to 90 days for all conditions and the full postpartum period, and expanded insurer reporting on prior-authorization use and denials. Separate proposals would eliminate the special authorization process for providers treating workers’ compensation claimants. Several elements are framed as forthcoming legislation or DOH-directed actions, including measures to reduce reliance on temporary staffing agencies and to expand scope-of-practice authorities for specified clinicians. Timelines cited include the Health Care Access Loan Repayment Program awarding nearly USD 50 million in loan repayment in spring 2026 and the Career Pathways Training Program graduating thousands of new health workers during 2026.