Conflict between Catholic Health and HealthFirst highlights growing conflict between health care providers and insurers

The dispute between Catholic Health and insurer HealthFirst could disrupt care for Long Island patients, experts say, and is the latest in a growing number of disputes between health systems and insurance companies rooted in rising medical costs.

Rick Gundling, executive vice president of the Healthcare Financial Management Association, which represents financial professionals working in health systems, physician practices and insurance companies, said rising costs are “putting real pressure on both sides.” “Negotiations become more contentious and public when both sides feel squeezed.”

The current agreement between Catholic Health and HealthFirst ended March 15, but state law requires a two-month “cooling-off period” before policyholders have to pay out-of-network rates, which are much higher than in-network rates.

HealthFirst sent a letter to policyholders informing them that its partnership with Catholic Health is ending and patients must find a new in-network primary care provider by April 30, causing consternation among Long Islanders worried about losing a trusted doctor.

Catholic Health and HealthFirst declined to say how many HealthFirst policyholders will lose coverage at Catholic Health’s six Long Island hospitals and outpatient facilities on May 15.

Healthfirst has more than 2 million New York members, most of them on Long Island and New York City. HealthFirst members who purchased insurance through their state’s Affordable Care Act Marketplace, as well as Medicaid, Essential Plan, and Child Health Plus policyholders, are affected. Not so for Healthfirst Medicare Advantage policyholders.

Unlike most insurance companies, HealthFirst is a nonprofit organization and most of our policyholders qualify for Medicaid or Medicare. Catholic Health is also a nonprofit.

It is unclear whether the two sides will reach an agreement during the cooling-off period, as in some past disputes between insurance companies and hospitals. HealthFirst spokeswoman Lauren Riegelhaupt said in an email that negotiations began in November, when Catholic Health announced it was seeking changes to its contract, and that the company “continues to have discussions with Catholic Health.” However, Catholic Health spokeswoman Lisa Greiner said in a statement that “HealthFirst has decided to terminate negotiations.”

Both sides agree that Catholic Health moved to modify the contract. Greiner said this was because the previous terms were not financially sustainable.

Catholic Health officials said in a statement that HealthFirst “requested significant reimbursement reductions,” but Riegelhaupt said HealthFirst had not proposed changes to the terms of the contract and that Catholic Health terminated the contract before it expired to seek a better deal.

Other disputes

Anthem and Mount Sinai Health System have still not been able to reach a contract agreement, and as of March 4, Mount Sinai had more than 20,000 Long Island patients out of network. Both sides have accused the other of failing to reach an agreement, but Anthem said in a statement Tuesday that the insurance company and Mount Sinai had met this week and “believes an agreement is within reach.”

In other cases on Long Island, agreements were reached days before their contracts were scheduled to expire, such as Anthem’s last-minute deal with Memorial Sloan Kettering Cancer Center in late 2024, or during a cooling-off period, such as with United Healthcare and Stony Brook Medicine in July 2025.

Bradley Ellis, senior director of U.S. health insurance at credit rating agency Fitch Ratings, said the stakes in negotiations are higher for both sides as health care costs for health systems and insurers continue to rise.

“One of the reasons we’re seeing more disputes now is that the higher the cost, the more severe the impact on the overall budget,” he said.

Reimbursements from insurance companies haven’t kept up with the rising costs facing health systems, Gundling said, “so once contracts are struck, providers are pushing harder to raise rates, and insurers are under pressure to step in as well. That naturally leads to more visible conflicts.”

Some of that pressure is coming from employers who reject premium increases proposed by insurance companies, he said.

Health care costs have been rising for years, far outpacing the overall rate of inflation. Health care costs increased 121% between 2000 and 2024, according to an analysis of federal data by the health policy nonprofit KFF.

But experts say financial stress on health systems and insurance companies is intensifying.

Kevin Holloran, senior director of nonprofit health care at Fitch, said the retirement of many doctors, nurses and other health care providers after the coronavirus outbreak exacerbated existing labor shortages and led to higher labor costs.

New York health system payroll costs rose 23% between 2022 and 2025, far outpacing the general rate of inflation, according to a November report from the New York State Healthcare Association, which represents health systems, hospitals and other institutions.

The report said drug costs are also rising rapidly, driven by expensive weight-loss drugs and expensive new treatments such as sickle cell disease, a trend that is impacting both health care systems and insurance companies, Ellis said.

About half of New York’s hospitals are all nonprofit and loss-making, according to a report by the Medical Association.

Hospitals too Medicaid and Medicare beneficiaries are losing more money. This is because the redemption amount is significantly lower than the cost. Wendy Darwell, president and CEO of the New York State Suburban Hospital Alliance, which represents hospitals on Long Island and the Hudson Valley, said they haven’t kept up either.

Hospitals are bracing for Medicaid cuts from last year’s “Big Beautiful Bill,” which will leave uninsured patients receiving treatments they can’t afford. she said.

Darwell said area hospitals have reported that insurance companies are “employing more aggressive tactics,” such as requiring more prior authorizations for treatments and denying more claims, to save money and increase profits.

“It’s a strategy of denial and delay,” she says.

He said hospitals are also paying more to employees to deal with denials and other actions by insurance companies.

Chief financial officers of hospitals surveyed in 2024 said the primary reason for the heightened tensions between health systems and insurers was “deliberate or systematic” efforts by insurers to increase denials.

But Fitch’s Ellis said there is no good data on whether denials are really increasing. Also, insurance companies’ profit margins have been declining in recent years, he said. According to a Fitch analysis released on March 11, the net profit margins of seven publicly traded insurance companies will be 1.4% in 2025 and 3.6% in 2023. The analysis, co-authored by Ellis, predicts a “deteriorating” financial outlook for health insurers.

United Healthcare, the nation’s largest health insurance company, reported a significant decline in revenue from 2024 to 2025, but still reported operating profit of $9.4 billion in 2025, down from $15.6 billion in 2024.

Eric Linzer, president and CEO of the New York Health Plan Association, which represents insurance companies, said insurers face state and federal regulations that require them to spend at least 82% of their premiums on health care services, limiting potential profits.

If a health system obtains a significant increase in contract negotiations, that would be reflected in premium increases, he said.

“Ultimately, the burden of increased costs will be borne by employers and consumers,” he said.

But despite the growing tensions between insurance companies and the health care system, Ellis said the two have a symbiotic relationship. She said insurance is needed because “health insurance companies need a place for their members to receive care, but hospitals recognize that people cannot fund their care on their own.”

“They’re always chasing each other, but they can’t live without each other,” he said.

Gundling said it can be disconcerting for patients to learn that a health care provider they’ve trusted for years could be taken out of network.

“It’s the patients who are caught in the middle,” he said.