WASHINGTON — In the ongoing effort to combat fraud, the Centers for Medicare and Medicaid Services (CMS) has taken action against what appears to be widespread misuse of federal funds in New York.
During a press briefing on Wednesday, CMS officials provided updates on their initiatives to address fraud, waste, and abuse within Medicare and Medicaid programs. They issued a formal warning to New York as investigations continue to uncover numerous fraudulent healthcare centers in the state.
Dan Brillman, the Director of Medicaid and Deputy Administrator at CMS, announced that a compliance warning letter was sent due to New York’s inadequate oversight of its Medicare and Medicaid programs. The state has a month to respond and 90 days to comply with the demands outlined by the agency, Brillman explained to the assembled media.
“If New York can’t come up with a corrective action plan, then we have to question whether this can be fixed at all, and whether it should keep going as it is,” Brillman stated. “The governor needs to truly assess the situation and consider making tough decisions, because this requires serious action.”
He highlighted that New York currently spends the most on Medicare and Medicaid programs per capita—about $126 billion annually.
“What I expressed yesterday during our visit really upset me,” Brillman said.
CMS Deputy Director Kim Brandt mentioned that audits of 15 “Social Adult Daycare Centers (SADCS)” revealed improper Medicare and Medicaid billing for individuals who weren’t participants at these centers.
One center even submitted claims for wheelchairs and disability assistance.
“But there were no wheelchairs present,” Brillman pointed out during the briefing. “And these SADCS don’t provide any medical care.”
T. March Bell, the Inspector General for Health and Human Services, joined the briefing to announce an enhanced law enforcement presence aimed at tackling fraud, stating that over one hundred personnel are now involved in the ongoing New York investigation.
Search warrants have been issued by investigators from the Office of the Inspector General, HSI, and the FBI to investigate the fraudulent Social Adult Daycare Centers in New York, Bell noted.
“These are dedicated investigators,” he added. “They sometimes work incognito as clients to see what’s really happening.”
Bell indicated to the Daily Caller News Foundation that his team estimates “tens of thousands” of fraudulent healthcare centers across the nation.
He also mentioned that auditors from his office have successfully recovered 45 million dollars daily for Medicare and Medicaid fraud trust funds.
In response to an inquiry from the DCNF, CMS Administrator Dr. Mehmet Oz stated that the agency has sent notices to more than half of the social adult daycare centers in New York.
“We’ve issued over one hundred different types of notices,” Oz said. “Some individuals have been arrested, others will be banned from billing in Medicare or Medicaid and will be excluded from the federal system.”
Oz added that the agency is applying what they call the “Hawthorne Effect.”
“When we inform you that we suspect you’re cheating, if you are, you’ll likely stop because you know we’re monitoring you,” he explained.
Oz also referenced a recent announcement from the White House Fraud Task Force about a “1 percent” whistleblower initiative, allowing those who report systemic fraud to receive compensation.
During the briefing, Oz reiterated President Donald Trump’s call for media involvement in uncovering fraud.
“We genuinely want people to report problems to us,” Oz emphasized. “Much of the pressure on these illegal activities initially has come from tips from outsiders.”
He also acknowledged that significant insights about the extent of fraud have come from people within the healthcare sector.
“It’s the folks who realize that appropriate personal care services are essential, or else the entire program could be lost,” he noted.
To further raise awareness, CMS announced an upcoming 28-minute documentary that will be live-streamed on X, highlighting the impact of fraud on the healthcare system nationwide.
