Alliance Alert: A recent article highlights the growing tension between federal oversight efforts and state administration of Medicaid at a time of significant uncertainty and change. As federal agencies increase scrutiny and advance policy shifts that impact funding and program structure, it is critical that these actions do not result in eligible individuals losing access to essential services.
The Alliance continues to closely monitor the effects of federal policy changes and inquiries into New York’s Medicaid system to ensure that people do not lose needed coverage while they remain eligible for services. Medicaid is a lifeline for millions of New Yorkers, including those accessing mental health and substance use services, and any disruption to coverage can have serious consequences for individuals, families, and providers.
We are particularly concerned about how broader federal policy shifts, including changes tied to H.R. 1 and evolving federal oversight approaches, may create additional administrative burdens or barriers to services if not carefully managed.
We encourage our community to join us at next week’s Alliance Executive Seminar, where we will hear directly from OMH staff about how the state is working to mitigate harm from federal policy changes. Alliance staff will also provide a comprehensive overview of recent federal developments and what they mean for New Yorkers receiving services and the providers who support them.
Register Today:
2026 Alliance for Rights and Recovery Executive Seminar Tickets, Thursday, Apr 16 from 9 am to 4 pm | Eventbrite
Staying informed and engaged is critical as these issues continue to evolve.
New York pushes back against allegations of widespread Medicaid fraud
By Katelyn Cordero | Politico | April 7, 2026
ALBANY, New York — Gov. Kathy Hochul’s administration defended the integrity of New York’s $124 billion Medicaid program in a response to a letter from Centers for Medicare & Medicaid Services Administrator Mehmet Oz accusing the state of allowing fraud, waste and abuse, the state Department of Health confirmed to POLITICO.
Oz focused his “fraud-busting” campaign on New York last month when he issued a scathing letter claiming the state’s “elevated costs” reflect “potential fraud, expansive benefit structures, and excessive provider payment levels,” citing two recent criminal indictments of home care providers.
The state Health Department refuted the claims and set the record straight on some concerns outlined by CMS, according to agency spokesperson Cadence Acquaviva. However, the agency declined to release the letter sent to CMS.
“The fundamental mischaracterizations and misinformation outlined in the letter by the Centers for Medicare and Medicaid Services is a targeted attempt to obscure the facts,” Acquaviva said in a statement to POLITICO. “The bottom line is New York’s Medicaid program advances longstanding federal objectives while maintaining rigorous, results-driven controls to identify, investigate and prevent waste, fraud and abuse, realizing more than $15 billion in cost savings and recoveries in the past five years alone.”
Context: New York has the second largest Medicaid program in the U.S., surpassed only by California in total cost, and spends significantly more per person than most other states, public data shows. About 6.8 million mostly low-income New Yorkers — roughly a third of the state’s population — were enrolled in Medicaid as of February, according to the state Department of Health.
Hochul recently visited Oz in Washington to secure a waiver to continue providing low-cost health care coverage to 1.3 million New Yorkers enrolled in the state’s Essential Plan. Oz also approved an extension of the state’s lucrative health plan tax and a $212 million grant for the state’s rural health care system, providing a welcome boost to the state’s coffers.
Setting the record straight: The state alleges that CMS mischaracterized the Hochul administration’s effort to combat waste, fraud and abuse. Specifically, the health department corrected a CMS claim that 75 percent of Medicaid beneficiaries received personal care services in 2025. In reality, that figure is closer to 6 percent.
The state also pushed back on the idea that the program’s growth is an indicator of fraud, noting that many of the concerns in the letter reflect intentional reforms — such as changes to Non-Emergency Medical Transportation and the Consumer Directed Personal Assistance Program, as well as behavioral health investments — not fraud.
In addition, state health officials highlighted strengthened oversight measures and more than $15 billion in savings and recoveries of state funding over five years, along with recent changes to streamline programs like CDPAP in an effort to reduce opportunities for abuse.
CMS did not immediately respond to a request for comment.