The Trump administration is scrutinizing New York’s Medicaid spending and threatening to withhold payments for the health insurance program unless the state complies with its demands.
In an eight-page letter to Gov. Kathy Hochul and state health officials on March 3, the head of the agency that oversees Medicaid and Medicare posed dozens of questions about how New York stops wasteful or fraudulent charges and about several specific types of costs that have ballooned. The letter demands a response within 30 days.
The fraud investigation was trumpeted on social media with a video by Mehmet Oz, the former TV personality known as Dr. Oz who now leads the Centers for Medicare and Medicaid Services. He previously sent similar letters and posted similar videos in connection with probes in three other states with Democratic governors: California, Minnesota and Maine.
“Heart surgeons are trained to look at the numbers,” Oz says at the opening of his two-minute video. “When something doesn’t add up, you don’t ignore it — you investigate. And right now, the numbers coming out of New York’s Medicaid program don’t add up.”
He then outlines New York’s high spending and questionable increases before closing with a warning: “Governor Hochul has a month to share a reasonable corrective action plan to fix the fraud, waste and abuse in New York State, or CMS will start deferring payments to protect Medicaid.”
How is NY responding to the Oz letter?
State health officials defended their Medicaid oversight and accused the administration of playing politics in a statement to USA TODAY Network-New York.
“New York’s Medicaid programs are a lifeline for millions of people who depend on them for access to critical care, which is why the governor and the department have taken strong action in recent years to control costs and root out abuses while preserving and improving quality of care,” said Cadence Acquaviva, a Department of Health spokeswoman.
She added: “While some in Washington want to score political points at the expense of vulnerable New Yorkers, they should instead look to us as a model for how to improve these programs and encourage their colleagues to restore cuts that have forced millions of Americans off ACA (Affordable Care Act) programs.”
Some 6.7 million New Yorkers, or roughly a third of the state’s population, are enrolled in Medicaid, which provides health coverage for the poor, elderly and disabled. Enrollment surged during the pandemic, peaking at 7.9 million in 2023, but has since declined.
The federal government and all 50 states split Medicaid’s cost, along with a local contribution in New York. New York’s spending totaled nearly $119 billion in its last fiscal year, with a $69.2 billion federal share, a $37.7 billion state cost, and $8.7 billion borne by New York City and the 57 counties outside the city.
New York spends far more on Medicaid on a per capita basis than any other state, as the Hochul administration noted in her budget proposal this year. It said New York’s $4,755 per capita expense was 44% higher than the $2,657 national average.
New York investigates suspected fraud through its Office of the Medicaid Inspector General, an independent agency within the Department of Health that has more than 400 employees working in seven regional offices. Fraud cases are prosecuted by a special unit of the state Attorney General’s Office that makes up the largest section of its criminal division.
Which NY Medicaid expenses are the feds questioning?
The Oz letter zeroed in on five types of Medicaid spending that have spiked in New York.
The biggest area was “personal care” assistants for Medicaid enrollees who need help with daily activities such as dressing and bathing. Roughly $45 billion was spent on personal care services over more than two years, according to the letter, which questions why about three out of four Medicaid enrollees used those services.
Oz said another “major area of concern” was New York’s spending on adult day care for the elderly, which rose to $650 million in 2024 from $571 million in 2023.
The other three expense types his letter questioned were: home health aides; non-emergency medical transportation; and behavioral health services.
The White House recently launched a Medicaid fraud crackdown led by Vice President JD Vance, who joined with Oz in announcing an opening thrust against Minnesota on Feb. 25. Minnesota has since sued to stop the administration from withholding $243 million in Medicaid payments.
Chris McKenna covers government and politics for The Journal News and USA TODAY Network. Reach him at CMcKenna@usatodayco.com.
This article originally appeared on Rockland/Westchester Journal News: Agency led by Dr. Oz launches fraud probe into N.Y. Medicaid spending
Reporting by Chris McKenna, New York State Team / Rockland/Westchester Journal News
USA TODAY Network via Reuters Connect
