Catholic Health, Healthfirst feud highlights rise in conflicts between providers and insurers

A dispute between Catholic Health and the insurer Healthfirst that may disrupt care for Long Island patients is the latest in a growing number of conflicts between health systems and insurance companies rooted in spiraling health care costs, experts say.

"Both sides are under real pressure" because of rising costs, said Rick Gundling, a senior vice president at the Healthcare Financial Management Association, which represents finance professionals who work for health systems, physician practices and insurance companies. "When both sides feel squeezed, negotiations become contentious and more public."

The current agreement between Catholic Health and Healthfirst ended on March 15, but state law mandates a two-month “cooling-off period” before policyholders must pay out-of-network rates, which typically are much higher than in-network costs.

Healthfirst sent letters notifying policyholders that its association with Catholic Health had ended and that patients must find a new in-network primary care provider by April 30 — causing consternation from Long Islanders worrying about losing trusted physicians.

Catholic Health and Healthfirst declined to say how many Healthfirst policyholders would lose coverage at Catholic Health’s six Long Island hospitals and its outpatient sites on May 15.

Healthfirst has more than two million New York members, mostly on Long Island and in New York City. Healthfirst members who purchased policies through the state’s Affordable Care Act marketplace, along with Medicaid, Essential Plan and Child Health Plus policyholders, are affected. Healthfirst Medicare Advantage policyholders are not.

Unlike most insurance companies, Healthfirst is nonprofit, and most of its policyholders are eligible for Medicaid or Medicare. Catholic Health also is nonprofit.

It’s unclear if, as in some past disputes between insurers and hospitals, the two sides may come to an agreement during the cooling-off period. Healthfirst spokesman Loren Riegelhaupt said in an email that negotiations began in November, when Catholic Health said it was seeking changes in its contract. "We remain in discussions with Catholic Health," he said.

But Catholic Health spokeswoman Lisa Greiner said in a statement that "Healthfirst made the decision to end negotiations."

Both sides agree that Catholic Health moved to change the contract. Greiner said that was because the previous terms were financially unsustainable.

Healthfirst "demanded significant reimbursement reductions," Catholic Health officials said in a statement, but Riegelhaupt said that Healthfirst had not proposed changing the terms of the contract, and that Catholic Health broke the contract before it expired to seek a better deal.

Other disputes

Anthem and the Mount Sinai Health System have still been unable to reach a contract agreement, and that led to more than 20,000 Long Island patients without in-network coverage at Mount Sinai as of March 4. Each side blames the other for a lack of agreement, but Anthem said in a statement on Tuesday that the insurer and Mount Sinai are meeting this week "and believe an agreement is within reach."

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

With health care costs continuing to climb for health systems and insurers, the stakes in the negotiations are higher for both sides, said Bradley Ellis, senior director for the U.S. health insurance sector for the credit rating agency Fitch Ratings.

"One of the reasons we’re seeing more disputes now is that the higher the costs get, the more severe the impact on overall budgets," he said.

Reimbursements from insurance companies haven’t kept pace with the increased costs health systems face, "so when contracts come up, providers are pushing harder for rate increases," Gundling said, "and insurers are under equal pressure to hold the line. That naturally leads to more visible disputes."

Some of that pressure comes from employers that push back on insurance companies’ proposed premium increases, he said.

Health care costs have been rising for years, and at a level much higher than the overall inflation rate. The cost of medical care rose 121% between 2000 and 2024, according to an analysis of federal data by the health policy nonprofit KFF.

But the financial crunch for health systems and insurers is intensifying, experts said.

The retirement of many doctors, nurses and other health care providers after the height of COVID-19 exacerbated existing shortages and helped lead to increased labor costs, said Kevin Holloran, senior director for the not-for-profit health care sector for Fitch.

New York health care systems’ labor costs increased 23% between 2022 and 2025, far above the general inflation rate, according to a November report from the Healthcare Association of New York, which represents health systems, hospitals and other institutions.

Drug costs also are up sharply, the report says, and that's a trend — driven in part by expensive weight-loss drugs, as well as expensive new treatments such as for sickle cell disease — that affects health systems and insurers alike, Ellis said.

About half of hospitals in New York, all of which are nonprofit, are losing money, the health care association report says.

Hospitals are also losing increasing amounts of money on Medicaid and Medicare recipients, because those reimbursements — long below costs — are also not keeping pace, said Wendy Darwell, president and CEO of the Suburban Hospital Alliance of New York State, which represents hospitals on Long Island and in the Hudson Valley.

Hospitals are bracing for Medicaid cutbacks from last year’s "Big Beautiful Bill," which will lead to more patients without insurance getting care they can't pay for, she said.

Darwell said area hospitals are reporting that insurance companies are "using much more aggressive tactics" to save money and increase profits, including requiring more prior authorizations for treatment and denying more claims.

"It’s a deny and delay strategy," she said.

Hospitals, in turn, are spending an increasing amount of money to pay employees to handle denials and other insurance company actions, she said.

Hospital chief financial officers surveyed in 2024 said the leading reason for increased tension between health systems and insurance companies was insurers' "intentional or systematic" efforts to increase denials.

But Ellis, of Fitch, said there’s no good data on whether denials are really up. And insurance company profit margins have been declining the past several years, he said. The net profit margin for the seven largest publicly traded insurers was 1.4% in 2025, compared with 3.6% in 2023, according to a Fitch analysis released March 11. The analysis, which Ellis co-authored, forecast a "deteriorating" financial outlook for health insurance companies.

The nation's largest health insurance company, UnitedHealthcare, saw its earnings fall sharply between 2024 and 2025 — but it still reported operating earnings of $9.4 billion in 2025, down from $15.6 billion in 2024.   

Insurers face state and federal regulations that require them to spend at least 82% of premium dollars on medical services, limiting potential profit, said Eric Linzer, president and CEO of the New York Health Plan Association, which represents insurers.

When health systems obtain significant price increases in contract negotiations, that will be reflected in higher premiums, he said.

"Ultimately it's going to be employers and consumers who shoulder the weight of these of these increasing costs," he said.

Yet despite the increased tension between insurers and health systems, the two sides have a symbiotic relationship, Ellis said. "Health insurers need places for their members to get care, and the hospitals realize that people simply cannot fund their own health care" and need insurance, he said.

"As much as they’re after each other’s throats all the time, they simply can’t live without each other," he said.

For patients, it can be disconcerting when they read that a health provider they trust and have seen for years may be dropped from their network, Gundling said.

"It is the patients who are caught in the middle," he said.

By David Olson

david.olson@newsday.com@DavidOlson11

David Olson covers health care. He has worked at Newsday since 2015 and previously covered immigration, multicultural issues and religion at The Press-Enterprise in Southern California.