New York has 30 days to give federal regulators a plan for tighter oversight of its Medicaid social adult day care benefit, after a joint federal and state fraud investigation targeted more than 100 centers. The state set out the investigation and its own response in a release from Gov. Kathy Hochul's office on Oct. 20, 2026; CBS New York and Fierce Healthcare reported the CMS warning letter that followed on Oct. 21.
What happened this week
- Oct. 20: raids and a state review. Federal and state investigators executed search warrants at adult day centers in New York City. The governor's office said the months-long investigation involves the state Health Department, the Office of the Medicaid Inspector General (OMIG), the Attorney General's Medicaid Fraud Control Unit, HHS's Office of Inspector General, the FBI and more than a dozen other partners. Hochul directed state health officials to require health plans to put social adult day claims through prepayment review and to pursue payment suspensions. She also asked the Health Department for recommendations by Dec. 31. One option on the table is phasing the benefit out.
- Oct. 21: first charges. The Staten Island district attorney announced charges, including health care fraud, against the owner and program director of a Staten Island center. Prosecutors allege about $530,000 in billing for services that were never provided between April and August 2026, including claims for seniors who had died or were out of the country. Both women deny the charges, CBS New York reported.
- Oct. 21: the CMS letter. CMS sent a letter to New York's Medicaid director demanding a corrective action plan within 30 days. Dan Brillman, who directs Medicaid at CMS, said the state is not doing enough to oversee the managed long-term care plans that run the benefit. "The governor needs to take a hard look and make hard decisions," he said, as quoted by Fierce Healthcare. We could not find the letter posted on CMS's website as of Oct. 22, so its details here come from those reports.
The program in numbers
All figures are from the governor's Oct. 20 release.
| Item | Figure |
|---|---|
| Social adult day programs | More than 400 |
| Medicaid members served | About 45,000 |
| Estimated yearly cost | More than $500 million |
| Managed long-term care plans that oversee the centers | 35 |
| Programs the Health Department reviewed in 2025 | 418 |
| OMIG investigations tied to the program, 2021–2025 | 387 subjects; about 100 cases referred for possible prosecution |
| Moratorium on new providers | Announced July 2026; in effect until January 2027 and may be extended |
Why the health plans are in the middle
Social adult day care is a non-medical benefit. It offers daytime supervision, meals, social activities and personal care in a group setting, and it is available only through New York's managed long-term care program. The centers are not enrolled Medicaid providers themselves. Plans contract with them, pay them and are responsible for overseeing them. That is why CMS aimed its letter at plan oversight, and why the state's new prepayment review runs through the plans. Under prepayment review, a plan checks the claim and its records before paying, instead of auditing after the money has gone out.
The fraud-unit backdrop
New York's own fraud prosecutors are under federal review too. In an Oct. 1 letter, HHS's Office of Inspector General said the state's Medicaid Fraud Control Unit had improved but remains uncertified. Its fiscal 2026 federal grant stays suspended, and it can't draw fiscal 2027 funds for now. OIG said it will review the unit's progress each month through Dec. 31, 2026. We covered the June denials of New York's and Hawaii's units when they happened.
CMS has already held back Medicaid money from Minnesota and California this year, including the additional $1.2 billion in California personal care funds it announced this week.
What this means for providers and DSPs
- This is about one benefit, for now. The state's directive names only social adult day care for older adults. Day services for people with intellectual and developmental disabilities, such as day habilitation, are a different service and are not part of the order.
- Honest centers will feel it too. Prepayment review means legitimate claims also wait while plans check them, and staff still have to be paid on time. Centers should expect plans to ask for attendance records, assessments and service plans, and to hold claims that don't match.
- Attendance records are the first line of defense. The alleged schemes involve billing for people who weren't there. In any home and community-based services setting, a sign-in sheet or service note written on the day, by the direct care worker who was there, is what protects both the person served and the agency.
- People may need new services. If New York phases the benefit out, about 45,000 members would have to move to other supports. The Health Department says protecting older adults and keeping care going will remain its priority. Home care agencies and other day programs could see new referrals.
- Federal oversight is moving fast. In Minnesota, California and now New York, CMS has acted against services that grew quickly or drew fraud complaints. Providers in other states should assume high-growth services will get the same scrutiny.
Dates to watch
- About Nov. 20: New York's corrective action plan is due to CMS (30 days from the Oct. 21 letter).
- Dec. 31: the Health Department's recommendations to the governor are due, and OIG's monthly reviews of the state fraud unit end.
- January 2027: the moratorium on new social adult day providers is set to end unless the state extends it.