House Panel Accuses New York of Ignoring Medicaid Fraud Risks

A House committee has accused New York of failing to comply with federal law by not identifying risk levels for Medicaid service providers that could be defrauding the taxpayer-funded program. The House Energy and Commerce Committee, which has been investigating potential fraud in Medicaid and Medicare funding across several states, concluded in a report released Tuesday that New York has not been designating provider risk levels for some of its state-level programs.

According to the 87-page report, New York's counsel acknowledged that the state does not assign categorical risk levels to all Medicaid-only providers. The report noted that New York has only recently begun the process of elevating three provider types to a high-risk category. "It is deeply concerning that the nation’s second largest Medicaid program, which spent nearly $98.2 billion in FY 2024 and $12,528 per enrollee per year in FY 2023, is not complying with federal regulations," the committee stated.

The committee also claimed that New York, in response to the investigation, paused enrollment for a six-month period for certain programs, including home health care agencies, adult day care facilities, and applied behavioral analysis providers. The exact amount of taxpayer funding potentially diverted through fraudulent means remains unclear, although the Centers for Medicare and Medicaid Services Administrator has been probing New York's system.

Medicaid spending constitutes a significant portion of state budgets, averaging 30.7% of funding. Committee Chairman Brett Guthrie (R-Ky.) emphasized the impact of fraud, stating, "Every dollar stolen from Medicare and Medicaid is a dollar taken from the seniors, children, pregnant women, and Americans with disabilities these programs were created to serve."

The House panel's investigation also included California, Colorado, Maine, Vermont, Massachusetts, Pennsylvania, Nebraska, Oregon, and Washington State. The report highlighted that states have expanded benefits under Home and Community-Based Services (HCBS) Section 1915(c) waivers, leading to increased program costs and vulnerability to fraud without adequate safeguards. Specific areas identified as experiencing high rates of fraud include non-emergency medical transportation, adult day care, applied behavioral analysis, substance use disorder treatment, and home and community-based services.

Additionally, hospice, home health care services, durable medical equipment (DME), and genetic testing have been flagged for elevated fraud activity within Medicare programs. Rep. John Joyce (R-Pa.), chair of the Energy and Commerce Subcommittee on Oversight and Investigations, stated, "These crimes hurt patients and steal from the American taxpayer. We will continue to expose those who exploit the system, hold fraudsters accountable, and advance commonsense recommendations that states can implement."

The committee's findings echo those of other anti-fraud initiatives. The White House anti-fraud task force has identified significant amounts of fraudulently obtained funding from HHS programs, with billions recovered. Representatives for New York Governor Kathy Hochul's office did not immediately respond to a request for comment.