New York Intensifies Medicaid Oversight of Adult Day Care Providers

New York is escalating oversight of its Medicaid-funded Social Adult Day Care (SADC) program through a coordinated state and federal initiative targeting suspected fraud, waste, and abuse. Governor Kathy Hochul directed the New York State Department of Health to strengthen payment oversight and conduct a comprehensive review of the program. The investigation, described by the state as a months-long effort involving a complex healthcare fraud case, focuses on more than 100 SADC providers suspected of possible fraud or other unlawful activity. It brings together state Medicaid oversight and fraud-control offices, federal investigators, and a coalition of more than a dozen federal, state, and local partner entities.

The announcement builds on years of state enforcement and program monitoring. In 2025, the New York State Department of Health assessed regulatory compliance at 418 SADC programs. Between 2021 and 2025, the New York State Office of the Medicaid Inspector General (OMIG) investigated 387 entities or individuals connected to SADC operations and referred approximately 100 cases to the New York State Attorney General’s Medicaid Fraud Control Unit for possible criminal prosecution. The state also cited recent cases involving alleged large-scale schemes: two people in Brooklyn pleaded guilty earlier in 2026 in a case tied to $68 million in SADC services, while state and federal investigators announced separate charges concerning an alleged $120 million fraud scheme. These figures signal that scrutiny is not limited to the newly announced investigation.

For SADC operators and contractors supporting Medicaid services, the immediate procurement and compliance implication is increased exposure to payment reviews, audits, investigations, and potential enforcement. Organizations that provide billing, claims administration, program management, or other operational support should review how services are documented, how claims are substantiated, and whether internal controls can demonstrate that billed services were delivered and eligible. The announcement specifically identifies possible suspensions and tighter compliance requirements. Contractors should also consider whether their current operating procedures, subcontractor oversight, and record-retention practices can respond to requests from state or federal reviewers.

New York’s next policy milestone is a set of recommendations for Governor Hochul, due by December 31, 2026. Medicaid Director Amir Bassiri said, “Estamos comprometidos a evaluar todas las opciones disponibles y a presentar recomendaciones que protejan a los beneficiarios de Medicaid, preserven el acceso a servicios adecuados y aseguren que el dinero de los contribuyentes se utilice de manera eficaz y responsable.” In English, he said the state is committed to evaluating available options and making recommendations that protect Medicaid beneficiaries, preserve access to appropriate services, and ensure taxpayer funds are used effectively and responsibly. The recommendations could affect program operations, provider requirements, and the services contractors are positioned to deliver. A moratorium on new SADC providers remains in effect through January 2027 and may be extended, constraining near-term market entry and expansion. This is a regulatory and program-integrity development—not a solicitation or contract award—so businesses should monitor policy decisions rather than treat the announcement as an immediate bid opportunity.

• More than 100 SADC providers are the focus of a coordinated investigation into suspected fraud or unlawful activity.
• The New York State Department of Health is to strengthen payment oversight and conduct a comprehensive review of the Medicaid SADC program.
• In 2025, the department assessed regulatory compliance at 418 SADC programs.
• From 2021 through 2025, OMIG investigated 387 entities or individuals linked to SADC operations and referred approximately 100 cases for possible criminal prosecution.
• Two people in Brooklyn pleaded guilty in 2026 in a case involving $68 million in SADC services; a separate alleged scheme involved $120 million and resulted in announced charges.
• Providers and support contractors should validate claims documentation, service records, billing controls, and compliance processes in anticipation of heightened reviews and possible suspensions.
• Recommendations to Governor Hochul are due December 31, 2026; their outcome could change provider obligations, program operations, or the service model.
• The moratorium on new SADC providers continues through January 2027 and may be extended, limiting near-term entry and expansion.
• The investigation includes state and federal partners, including the U.S. Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.