Mental Health Update
Article from Crains On Medicaid Carve-Out
Great work by the NYS Council of Community Behavioral Health Care in holding a press conference and a series of meetings yesterday on the issues of the Medicaid Carve-Out.
Listed below is an article from Crains.
Behavioral Health Groups Lobby to leave Medicaid Managed Care System,
Citing Millions in Savings
Behavioral health providers are making an end-of-legislative-session push to exempt themselves from the Medicaid managed care system — a move they say would save the state $400 million in administrative fees to insurers and improve patients’ access to care.
Mental health and substance-use provider groups lobbied lawmakers at the state Capitol on Tuesday to pass a measure that would carve them out of Medicaid Managed Care, a program that deploys third-party private insurers to coordinate services for Medicaid enrollees and pay providers. The legislation would move outpatient behavioral health services to a fee-for-service model, restoring a payment system that was in effect until a decade ago.
Under the proposal, the state would be required to reinvest savings from the switch into the mental health and substance-use system.
The push comes as other providers, including home care agencies and school-based health centers, maneuver to get out of Medicaid’s managed care system, which was designed to control high Medicaid spending by coordinating services and unnecessary expenses. Critics argue that the system has not only failed to reduce costs and improve services, but has also placed strain on providers and worsened access to care.
The legislation to carve behavioral healthcare providers out of the managed care program, sponsored by mental health chairs Sen. Samra Brouk and Assemblywoman Jo Anne Simon, was not included in Gov. Kathy Hochul’s executive budget nor the legislature’s one-house budget proposals, making it unlikely to pass this session.
Still, providers and the bill sponsors are continuing to advocate for the bill before the end of the legislative session in mid-June, saying that reforms are urgently needed to ensure vulnerable New Yorkers have access to services and treatment.
“The reality is that managed care has broken our system,” said Lauri Cole, executive director of the New York State Council for Community Behavioral Healthcare, a lobbying group that has led the campaign to exempt mental health and substance-use services from the Medicaid Managed Care Program.
New York shifted most mental health and substance-use services into the Medicaid managed care system in 2015. The move stemmed from a recommendation by former Gov. Andrew Cuomo’s Medicaid Redesign Team, which was convened to control the state’s growing Medicaid costs.
Behavioral health providers have for years called attention to financial challenges they’ve faced since the shift to Medicaid Managed Care. Many of those challenges stem from insurance claims delays and denials, with managed care organizations denying claims at three times the rate of providers in the fee-for-service system, according to the New York State Council for Community Behavioral Healthcare.
Patients can appeal claims denials, and arbitrators overturn the decisions 64% of the time for substance-use services in New York, a report from the People’s Action Institute.
Even so, the delayed payments have placed financial burdens on providers and created long waitlists for care, Cole said, adding that access to care across the state has become a “unicorn.”
The insurance industry pushed back on claims that returning to fee-for-service would improve the mental health system. Eric Linzer, president and CEO of the New York Health Plan Association, a lobbying group that represents managed care organizations, said the carve-out would “neither save money for the state nor improve care for patients.”
“The previous fee-for-service structure provided no oversight or accountability of services and little if any coordination of care for individuals with behavioral health challenges and acute or chronic conditions,” Linzer said.
Cole recognized that more work is needed to get the proposal across the finish line but encouraged lawmakers and the governor’s office to examine the issue. Nicolette Simmonds, a spokesperson for Hochul, said the governor will review any legislation that passes both houses.
“Gov. Hochul did not make the decision to employ for-profit insurers to manage care for vulnerable New Yorkers,” Cole said. “She has a track record of prioritizing mental health and substance-use issues. … This is her opportunity, this is lawmakers’ opportunity, to make this right.”
Nutrition Startup Nourish Lands $100M to Expand Dietitian, Physician Workforce
Nutrition counseling startup Nourish raised $100 million to hire more dietitians and doctors, the company said Tuesday, aiming to meet rising demand as more patients with chronic diseases seek nutrition services.
The Flatiron-based startup provides virtual nutrition counseling and in some cases, weight-loss drugs, to help patients treat metabolic diseases and other chronic illnesses. The new capital will fuel Nourish’s hiring spree of dietitians and doctors, as the startup shifts from a dietitian-only model to employ more physicians to prescribe GLP-1s to patients with higher acuity illnesses, said CEO and co-founder Aidan Dewar.
Nourish will also use the new funding to invest in AI agents to help patients with scheduling and care coordination, as well as expand partnerships with health plans, hospital systems and employers, Dewar said.
The Series C funding round, led by California-based investment firm Menlo Ventures, brings Nourish’s total raised to $215 million. Other investors include Thrive Capital, Index Ventures and J.P. Morgan’s venture arm.
Dewar co-founded Nourish in 2021 with Stephanie Liu and Sam Perkins, the company’s chief technology officer and president, respectively. The company offers sessions with a registered dietitian as the first point of care, but deploys doctors to order labs and prescribe medications to patients that need them.
Patients can access services through their insurance. Nourish partners with insurers that cover more than 200 million lives, such as UnitedHealth, Cigna and Blue Cross Blue Shield.
Nourish has hired more than 10,000 dietitians since it was founded, but began expanding its clinical workforce to include physicians during the first quarter of this year, Dewar said. The startup has hired a few dozen physicians so far but is seeking to scale the workforce to treat the hundreds of thousands patients that Nourish serves, he added.
City Adds More 3-K Seats Despite Stagnant Demand
Mayor Zohran Mamdani says his administration will add 700 more 3-K seats this fall on top of roughly 1,300 that were already announced, even as application data released Tuesday shows interest in the publicly subsidized program remained essentially flat over the last year.
The city is adding the seats in part by opening childcare centers that have long sat vacant.
The mayor announced that the city will open the doors to the previously built childcare center at 129 Van Brunt St. in Brooklyn’s Columbia Waterfront neighborhood, along with eight similar locations the administration has resurrected since taking office.
Many of the centers were planned under the de Blasio administration, but the Adams administration never sought to open them, citing limited demand in some neighborhoods. The Van Brunt Street facility completed a $12 million renovation in 2023 but has yet to welcome students.
The revamped 3-K expansion is part of Mamdani’s broader push — and key campaign promise — to expand early childcare across the city.
The effort has been made possible by $1.2 billion in state funding to expand 3-K and launch a new program for two-year-olds. Gov. Kathy Hochul, who appeared at Tuesday’s event, announced the funding alongside Mamdani during his second week in office, and the boost remains perhaps the largest tangible step the mayor has made toward fulfilling his populist campaign pledges.
However, despite the additional seats and an aggressive outreach campaign by the mayor’s office to encourage enrollment, new city data suggests interest from families is flat.
The city received 42,640 3-K applications for 2026, compared to 43,227 for 2025, meaning still only about 50% of eligible children applied, according to city data. Pre-K applications were similarly flat, rising only slightly to 51,785 from 51,613 last year.
The city extended 99,921 total offers across 3-K and Pre-K, including 43,083 3-K offers and 56,838 Pre-K offers.
Mamdani and Hochul are touting the expansion as a success nevertheless. One reason for that is placements are being made significantly closer to families’ homes.
The average 3-K placement in 2025 was 1.97 miles from a child’s home. This year, that number fell to 1.12 miles.
“Families are traveling shorter distances, more children are receiving offers to their top-choice programs, and fewer parents are being forced to choose between unaffordable private care and leaving the city they love,” Mamdani said in his announcement. “This is what government excellence looks like.”
City officials also said more families received offers to programs they actually ranked. This year, 70% of families received their top 3-K choice, up from 65% last year, while 84% received one of their top three choices, up from 80%. The share of families placed at programs they did not rank fell from 15% to 12%.
Roughly 700 of the newly added seats became available after the application update period closed April 24 and will be filled through the waitlist process. City officials said families can continue adding themselves to program waitlists and may receive offers at sites closer to home.
The administration has argued that the expansion is less about immediately increasing the total number of applicants than about making existing seats more usable for families. In past years, families have sometimes been offered seats miles from home or outside their borough, making the program difficult to accept even when a seat was available.
Last year, 720 families received 3-K offers outside their home borough, with most placements more than three miles from home. This year, fewer than 200 families received out-of-borough offers, and all placements were within three miles of home, according to City Hall.
The Series C funding round comes after Nourish raised a $75 million Series B in April 2025.
Op-ed:
How Anthem and Mt. Sinai Reached a Deal
By: Victor DeStefano
New York’s healthcare system is under pressure from two directions at once: rising costs and growing administrative complexity.
In this environment, employers struggle to maintain employee health benefits without straining their bottom lines. Unions work to keep medical spending from eroding workers’ take-home pay. Even big hospital systems face the challenge of providing affordable benefits to their own employees. Meanwhile, care providers of all sizes operate in a healthcare system fraught with manual processes, fragmented data and billing errors, all of which drive up costs for everyone. We cannot address costs without improving simplicity and accountability.
That tension sat at the center of our recent negotiations with Mount Sinai.
We agreed to payment increases consistent with those of other major health systems in New York. We also resolved outstanding financial issues and preserved a long-standing contractual relationship that supports employer-sponsored coverage and Medicaid members.
But the negotiation ultimately turned on something more fundamental than rates.
It came down to whether we would abandon core tools — including clinical review, billing validation and cost-management safeguards — that help ensure appropriate care, accurate billing and sustainable healthcare spending for employers and working families.
We would not.
Many describe those tools as administrative processes. In reality, they are essential controls. Without them, errors go unchecked, unnecessary services increase, and costs rise quickly across employer-sponsored plans. Billing that is erroneous, wasteful or even fraudulent remains a persistent problem in our industry, including in New York City. It is a health plan’s role to minimize these issues. At Anthem, we take that responsibility seriously.
The challenge is addressing those problems without adding to providers’ administrative burden. That is why we are investing in solutions such as Health OS, designed to improve how information moves across the healthcare system. Today, Health OS serves as Anthem’s proprietary digital hub for patient authorizations and streamlined payment processes.
Health OS connects clinical information from multiple sources and enables secure, near-real-time data exchange between providers and health plans. As a result, providers and plans can make decisions more quickly and with better information.
The results are already promising. In collaboration with health systems, these capabilities have reduced administrative work, improved turnaround times for care decisions and given clinicians more time to focus on patients instead of paperwork.
This is the path forward. We appreciate that Mount Sinai chose to work with us on advanced technology, and we are confident our shared commitment to a simpler provider and patient experience will move this work ahead.
New York does not need fewer safeguards. It needs smarter ones. It needs systems that reduce friction for providers while maintaining accountability for quality and cost.
Without that balance, the consequences are real: higher premiums for employers, increased out-of-pocket costs for workers, and growing pressure on public programs.
The goal should be straightforward: build a healthcare system in which providers have support, patients receive timely and appropriate care, and all stakeholders manage costs responsibly.
Reaching that goal will require continued collaboration, a willingness to modernize, and a shared commitment to long-term sustainability.
That is the standard we will continue to hold.
Victor DeStefano is the commercial president of Anthem Blue Cross and Blue Shield in New York.
