Governor Hochul Announces Joint Effort to Protect Taxpayer Dollars and Crack Down on Fraud Within Social Adult Day Care Program

Governor Kathy Hochul today announced a coordinated state and federal crackdown on fraud, waste and abuse in New York's Medicaid Social Adult Day Care (SADC) program. As part of a months-long investigation into complex healthcare fraud, the New York State Department of Health, alongside the Office of the Medicaid Inspector General (OMIG) and New York State Attorney General's Medicaid Fraud Control Unit, has been working closely with the U.S. Department of Health and Human Services Office of the Inspector General, Federal Bureau of Investigation, and a coalition of more than a dozen federal, state, and local partners. The investigation targeted more than 100 SADC providers suspected of involvement in potential fraud or illegal activity.

The investigation follows the New York State Department of Health's years-long effort to improve oversight of the program and safeguard taxpayer dollars, including reforms, audits, investigations and enforcement actions involving providers. In 2025 alone, the Department reviewed 418 SADC programs for compliance. Between 2021 and 2025, OMIG investigated 387 subjects related to SADC operations and referred approximately 100 cases to the Attorney General's Medicaid Fraud Control Unit for potential criminal prosecution. Earlier this year, two individuals in Brooklyn pled guilty to a $68 million SADC fraud scheme and state and federal investigators also announced separate charges in an alleged $120 million Medicare and Medicaid fraud scheme connected to SADC and pharmacy services in Queens. In total over the past five years, New York's Medicaid program has realized more than $15 billion in cost savings and recoveries through program integrity efforts.

Since establishing SADC as a Medicaid benefit in 2013, New York State has repeatedly strengthened oversight to combat waste, fraud and abuse. These actions have included stricter eligibility requirements, imposing provider moratoriums, establishing additional certification requirements and strengthening compliance standards related to audits, recordkeeping, staffing and provider identification. Most recently, the Department of Health announced a moratorium on new SADC providers in July 2026 to address concerns about fraud and program integrity.

Currently, the SADC program is overseen and administered by the State's 35 Managed Long Term Care Plans, which are directly responsible for identifying, investigating, and preventing fraud, waste, and abuse. The state has already taken concrete steps to strengthen oversight of these centers. As part of the State's comprehensive strategy to address fraud, waste, and abuse in the Medicaid program, Governor Hochul has directed the State Department of Health and Office of the Medicaid Inspector General to take immediate actions to further strengthen oversight, including requiring health plans to implement prepayment review to ensure that SADC claims are appropriate and pursue payment suspensions, as well as to develop options for addressing the issues with the SADC program.

The Governor has directed the Department to consider all options to eliminate continued fraud, waste and abuse, including phasing out the benefit and transitioning participants to other services that support older New Yorkers. The Department will produce its recommendations to the Governor no later than December 31.

"New York has zero tolerance for fraud, and when bad actors take advantage of these critical programs, older New Yorkers in need lose out," Governor Hochul said. "This joint effort between state and federal agencies to uncover and crack down on bad actors in New York builds on years of efforts to improve program oversight regulations. Medicaid is a lifeline for millions of New Yorkers. Protecting that lifeline means defending access to care and defending the integrity of the programs that provide it, which is why I am directing the State Health Department to present options to implement additional reforms that will further ensure taxpayer dollars being used to provide necessary care are protected."

New York Attorney General Letitia James said, "Social adult daycare centers play valuable roles serving New Yorkers in need in their communities. These centers should be focused only on providing fulfilling and enriching programming, not generating fraudulent profits for their owners. In Fiscal Year 2026 alone, my office's Medicaid Fraud Control Unit has secured 59 indictments, 13 convictions, and more than $98 million in recoveries from dozens of civil settlements. We have been working in close coordination with our federal, state, and local partners to combat waste, fraud, and abuse at social adult daycare centers across multiple ongoing investigations and we look forward to continuing these efforts with our partners to shut down fraudulent schemes and return stolen funds to Medicaid."

New York State Health Commissioner Dr. James McDonald said, "New York has a responsibility to protect Medicaid members and ensure that every dollar is used to provide appropriate, high-quality care. The Department has taken significant steps over many years to strengthen oversight of Social Adult Day Care and address program integrity concerns. Building on that work, we will provide the Governor with recommendations on whether additional reforms can deliver the accountability New Yorkers expect or whether participants would be better served through alternative services. Throughout this process, protecting older adults and maintaining care will remain our priority."

New York State Medicaid Director Amir Bassiri said, "New York State has made significant progress in improving oversight and addressing waste, fraud and abuse of our Medicaid programs. That work continues as we evaluate the Social Adult Day Care program to identify whether meaningful reforms can strengthen accountability and improve outcomes for participants, or whether alternative service models would better serve older New Yorkers. We are committed to evaluating all available options and providing recommendations that protect Medicaid members, preserve access to appropriate services and ensure taxpayer dollars are used effectively and responsibly."

New York State Acting Medicaid Inspector General Frank Walsh said, "Under the leadership of Governor Hochul, my office will continue to work tirelessly with our law enforcement and program integrity partners to root out fraud, waste, and abuse in the Social Adult Day Care sector. This coordinated approach sends a clear message - and warning - to wrongdoers seeking to exploit the Medicaid program for personal gain: there is zero tolerance for fraud, and our enforcement efforts will be focused, data-driven, and responsive to hold them fully accountable."

SADC is a federally authorized Medicaid service approved, overseen and jointly funded by the federal Centers for Medicare & Medicaid Services (CMS). The benefit is available exclusively through the MLTC program and SADC providers are not enrolled Medicaid providers. MLTC plans are responsible for direct oversight of SADC providers.

Social Adult Day Care is a non-medical benefit available through New York's Medicaid Managed Long Term Care (MLTC) program. The program provides daytime supervision, meals, social activities and personal care services in a community setting. More than 400 SADC programs currently serve approximately 45,000 Medicaid members statewide at an estimated annual total cost of more than $500 million.

Under the Governor's directive, the Department of Health, in coordination with OMIG and other relevant agencies, will develop recommendations on the future SADC program, including options to strengthen oversight and reform the program or transition participants to alternative services to meet their needs while protecting taxpayer resources. The moratorium on new SADC providers remains in effect until January 2027 and may be extended as needed. Existing enforcement actions and compliance activities will continue while the Department develops its recommendations, which are due to the Governor by December 31.