Federal, state and city investigators raided more than 100 social adult day care providers across New York City on Tuesday, October 20, in the largest coordinated Medicaid fraud action yet aimed at the program, and the Centers for Medicare and Medicaid Services used the sweep to exercise, for the first time, authority it was granted only a week earlier to kick providers out of federal health care programs. CMS administrator Mehmet Oz, who personally delivered warning letters to centers in Queens, called the Social Adult Day Care program “a plague to the state” at a press conference on Wednesday. “It’s outrageous to see fraud, waste, and abuse demolishing programs that could have been helpful to seniors, especially those who are frail and suffering at home,” Oz said, as STAT reported.
The program under scrutiny is a non-medical Medicaid benefit delivered through New York’s Managed Long Term Care plans, offering daytime supervision, meals, social activities and personal care to adults with physical and cognitive impairments. More than 400 programs serve approximately 45,000 Medicaid members statewide at an estimated annual cost of more than $500 million, according to the governor’s office. An FBI audit found approximately $2.4 billion in Medicaid payments for the services between January 2019 and October 2024. Investigators are examining improper billing, including claims for absent or deceased clients, kickbacks and money laundering, and Particle News reported that at least two Staten Island operators were arrested and charged over about $530,000 in alleged fraud. The allegations are not findings, and a search or warning letter does not establish that a provider committed fraud.
The state response goes beyond the raids. Governor Kathy Hochul directed the Department of Health, working with the state Medicaid inspector general, to develop recommendations on the program’s future by December 31, with options that include strengthening oversight, suspending payments, reforming the program or phasing out the benefit and transitioning participants to other services. A moratorium on new providers, imposed in July, remains in effect until January 2027 and may be extended. CMS has separately demanded a corrective action plan from the state on a 30-day deadline, according to Particle News’s summary of the federal actions.
The structural point is why this program was exposed. Social adult day care providers are not themselves enrolled Medicaid providers; oversight sits with the managed long-term care plans that contract with them, a layer of delegation that auditors have criticised for years. The crackdown lands a week after CMS gained its exclusion authority and follows the pattern of the administration’s fraud campaign in other states’ home and community programs: a large audit number, a visible raid, and then pressure on the state to redesign or shrink the benefit. What happens to the 45,000 members if the benefit is phased out is the question the December 31 review has to answer.