Governor Hochul signed a workers’ compensation budget amendment earlier this year that rewrites New York’s without-prejudice payment rules for disputed medical claims. The Workers’ Compensation Board published proposed implementing regulations in late July 2026, opening a 60-day comment period before the statute’s January 1, 2027 effective date (NY WCB bulletin).
Under the prior version of Workers’ Compensation Law Section 21-a, provisional payment without admitting liability was available only for indemnity benefits and prescribed medication. A self-insured employer facing a disputed medical-only claim had two options: pay and risk implying liability, or deny and absorb litigation costs. Starting January 1, 2027, a third path opens. An employer may begin paying disputed medical costs under Section 21-a by sending written notice to both the claimant and the Board that payments do not constitute an admission of liability (Goldberg Segalla analysis).
The provisional window runs for up to 365 days. To close it without accepting the claim, the employer must issue a termination notice within five days of the final payment and file a formal dispute within that 365-day window. If neither step is taken, the claim converts automatically to accepted liability without adjudication.
Who it affects
New York self-insured employers in every sector, public entity programs including cities, counties, school districts, and transit authorities, and captives writing New York WC exposure. Any program currently denying disputed medical-only claims pending investigation will need to evaluate whether the provisional option changes the cost calculus on a case-by-case basis.
For broader context: New York approved a 22% WC rate cut effective October 2026, its sixth consecutive year of declines. That rate environment may push programs to shade reserve assumptions downward. The Section 21-a compliance clock pulls in the opposite direction for any program that begins using the provisional option.
The reserve mechanism
Medical-only claim reserves are where case adequacy problems hide longest in self-insured NY programs. Individual dollar amounts attract less scrutiny, but the counts accumulate into material IBNR exposure.
The amendment creates a structural break in the NY medical-only development triangle starting January 1, 2027. Before that date, every paid medical claim had a settled liability status: admitted or denied. After that date, a third classification enters the data: provisional payment, liability unresolved. An actuarial model built on pre-2027 payment patterns will misread post-2026 experience if the TPA’s data extract does not tag provisional payments separately from admitted-liability payments.
The auto-conversion risk adds a severity tail that does not appear in the pre-2027 historical triangle at all. A claim that converts to accepted at day 366 because no termination notice was filed may carry a larger ultimate than one managed through a formal admission, since the employer loses the ability to contest medical necessity retroactively after conversion. For how payment classification shifts ripple through development factors, see Case Reserve Strengthening.
For programs using chain-ladder or Bornhuetter-Ferguson methods on NY WC medical triangles, the WC IBNR framework for self-insured employers covers how to structure a pre/post-2027 segment split within the actuarial opinion.
What this means for your next review
Before year-end, confirm whether your TPA system will tag Section 21-a provisional medical payments distinctly from admitted-liability payments in data extracts. If your program plans to use the provisional payment option starting in 2027, ask your actuary now how the new payment category will be handled in the IBNR model and whether a separate development pattern will be warranted. The implementing regulations are still in the comment period; watch the NY WCB for final procedural guidance, including notice forms and termination filing requirements, before January 1.