NY Gov. Hochul Directs Review of $500M Medicaid Adult Day Care Program Amid Sweeping Fraud Raids

New York Governor Kathy Hochul has directed the state Department of Health to evaluate options for the Medicaid Social Adult Day Care (SADC) program, including potential phase-out, following coordinated state and federal raids on providers suspected of fraud. The announcement came October 20, 2026, coinciding with searches at multiple NYC centers targeting billing for nonexistent services, kickbacks, and money laundering.

The program, serving about 45,000 Medicaid members across over 400 sites at more than $500 million annually, provides non-medical daytime supervision, meals, and activities. A prior state comptroller audit identified $2.4 billion in payments from 2019-2024, with $285 million in questionable claims, including to terminated providers. Hochul cited ongoing investigations involving over 100 providers and prior guilty pleas in multimillion-dollar schemes.

Federal involvement includes CMS Administrator Mehmet Oz, who described the operation as the largest of its kind and labeled the program a 'plague.' Specific arrests, such as two Staten Island operators charged with over $530,000 in fraud, underscore enforcement actions. Hochul emphasized protecting the program's integrity while a moratorium on new providers remains until at least January 2027. Recommendations are due by December 31.

This development highlights broader tensions in Medicaid oversight, with New York's per-enrollee spending significantly above national averages, raising stakes for safety-net sustainability amid election cycles.