New York Gov. Kathy Hochul has directed the state Department of Health to consider ending the state’s Medicaid social adult day care benefit.
The directive came on the same day that state and federal investigators carried out a crackdown on providers suspected of fraud, and on the same day that Hochul announced 16 arrests in a separate auto insurance fraud investigation.
Hochul, a Democrat, stated at an Oct. 20 press conference that she had told the department to look at “all options to eliminate continued fraud, waste and abuse.” Those options include phasing out the benefit and moving participants to other services for older New Yorkers. The department’s recommendations are due by Dec. 31.
Social adult day care is a non-medical benefit offered through New York’s Medicaid managed long-term care program.
It provides daytime supervision, meals, social activities, and personal care in a community setting. More than 400 programs serve about 45,000 Medicaid members at an estimated cost of more than $500 million a year, according to the governor’s office. The federal Centers for Medicare & Medicaid Services (CMS) approves the benefit and helps fund it.
The announcement followed what the governor’s office called a months-long investigation targeting more than 100 providers. The state Department of Health, the state Office of the Medicaid Inspector General, and the state attorney general’s Medicaid Fraud Control Unit worked with the FBI and the federal Health and Human Services inspector general.
FBI agents and state officials raided programs across New York City on Oct. 20. CMS Administrator Dr. Mehmet Oz called the operation the largest enforcement action of its kind.
Hochul said she had gone to Washington to meet with Oz to discuss working together against Medicaid fraud, and that the investigation is targeting providers suspected of money laundering, kickbacks, and improper billing.
“We will find you, we will prosecute you, and we will hold you accountable,” Hochul said.
At the same press conference, Hochul announced that a joint investigation by the State Police and the Department of Financial Services had led to 16 arrests in auto insurance fraud cases.
The cases involved nearly $500,000 in attempted fraudulent claims in New York City and Suffolk, Onondaga, Monroe, and Erie counties. Hochul said New Yorkers pay about $4,000 a year for auto insurance, almost $1,500 more than the national average, and that she expects the arrests and insurance reforms in this year’s state budget to start lowering rates.
Reviewing Adult Day Care Claims
Regarding the crackdown on adult day care fraud, Hochul ordered the department and the state Medicaid inspector general to require health plans to review social adult day care claims before paying them and to pursue payment suspensions. A moratorium on new providers that the department imposed in July remains in effect until January 2027 and may be extended.
State Health Commissioner Dr. James McDonald said the department will advise Hochul on whether further reforms can deliver accountability or whether participants would do better under other services.
“Medicaid is a lifeline for millions of New Yorkers,” Hochul said in a statement. “Protecting that lifeline means defending access to care and defending the integrity of the programs that provide it.”
The program has drawn scrutiny before. A February audit by state Comptroller Thomas DiNapoli found that managed care plans paid $2.4 billion for adult day care services from January 2019 through October 2024. Payments rose more than 141 percent from 2021 to 2023.
Auditors identified $285 million in questionable payments to centers for dates after at least one plan had dropped them from its network. That included more than $28.6 million to centers terminated for cause, such as fraud.
In one case, a center that one plan cut for fraud, waste, and abuse in 2021 stayed in the networks of 18 other plans and was paid more than $12.9 million afterward.
Auditors also found that a Flushing center with a legal capacity of 323 billed for 530 people on a single day in September 2022.
In its response to the audit, the Health Department said the comptroller’s sampling method could overstate how widespread the problems were. The comptroller’s office called that statement misleading.
Earlier this year, two people in Brooklyn pleaded guilty to a $68 million adult day care fraud scheme, according to the governor’s office.
Asked whether ending the benefit would require federal approval and what services the participants would move to, the state Health Department referred The Epoch Times to the governor’s announcement.
Hochul faces Republican Bruce Blakeman in the Nov. 3 governor’s race.
Blakeman’s campaign and CMS did not respond to a request for comment from The Epoch Times before publication.
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