The lawsuit alleges the agency violated state law by decreasing provider reimbursement rates.

BY: KATELYN CORDERO

10/21/2025 05:12 PM EDT

ALBANY, New York — Early intervention service providers are suing the state Department of Health for “woefully inadequate” reimbursement rates that they claim violate state law.

Agencies for Children’s Therapy Services, an advocacy group that represents providers, and two of its member agencies filed the lawsuit Tuesday in federal court, requesting the state increase reimbursement rates from what it announced in July.

The New York early intervention program — which serves kids from birth to age three who have developmental delays or disabilities — is funded through a mix of state, federal and local dollars, but the payment rates are set by the state. The program has nearly 60 contracts with providers across the state. However, the lawsuit alleges that the state is not following its own regulations for setting reimbursement rates.

Dr. Michael Grossfeld, president of ACTS, said it’s become more and more of a challenge to deliver services under the current pay rates.

“In recent years, some member agencies have considered withdrawing from the early intervention program altogether or have opted to scale back the geographic areas within the state where they serve children,” Grossfeld said in a statement. “Some agencies have already withdrawn or reduced service areas because it’s simply not sustainable.”

Background: The state Department of Health announced reimbursement rates for the program on July 3. Telehealth reimbursement rates were decreased, and overall rates have remained flat since 2022.

Roger Bearden, the lead attorney representing the plaintiffs, said the group sent a letter to the state health department several weeks ago requesting the agency share its methodology for determining the 2025 rates, but they received no response, prompting them to move forward with the lawsuit.

Providers for the program say they have persistent issues with recruitment and retention of workers because of inadequate funding. They claim recruits often will participate in training but leave the field for higher paying roles, according to the lawsuit.

A spokesperson for the state Department of Health declined to comment on ongoing litigation and noted the agency has not been officially served and has not reviewed the lawsuit.

“The Department remains committed to supporting high-quality early intervention services that serve thousands of children across New York State,” Health Department spokesperson Cadence Acquaviva said in a statement.

Key context: The early intervention program came under fire after a report released last week by the Children’s Agenda — a policy think tank and advocacy group — found that thousands of children in New York are not receiving early intervention services as quickly as recommended by state and federal standards.

That comes after a 2023 audit by state Comptroller Thomas DiNapoli, which also found the department was not reaching many children that could benefit from the program’s services, or the services weren’t getting to them promptly. InFebruary 2024, DiNopoli followed upon the matter and found the agency had made progress, but said the health department needed to put in place more oversight of contractors. The 2024 report also found racial disparities, noting that Black children were less likely to receive services in the recommended time frame.

What’s next: The state Legislature twice, in 2022 and 2024, passed legislation requiring the state Department of Health to conduct a rate adequacy review and submit a report with its findings, but Gov. Kathy Hochul vetoed both measures, calling it an unfunded mandate.

The plaintiffs want the state conduct a formal review of provider rates enacted in July 2025 and update the reimbursements according to the methodology written into state law.

CORRECTION:A previous version of this report misspelled Roger Bearden’s name.

Original story here: https://subscriber.politicopro.com/article/2025/10/state-department-of-health-by-early-intervention-providers-for-inadequate-funding-00617583