WASHINGTON — A House committee has accused New York of flouting federal law by failing to identify “risk levels” of Medicaid service providers that could be defrauding the taxpayer-funded program, according to a new report.
The House Energy and Commerce Committee has been probing New York and nine other states for potential fraud in the distribution of Medicaid or Medicare funding and concluded in a Tuesday report that the Empire State was “not complying with federal law by designating provider risk levels” for some of its state-level programs.
“New York’s counsel later disclosed to the Committee that it does not designate categorical risk levels of all Medicaid-only providers,” the 87-page report from the Republican-led panel found.
“Only recently did New York begin the process of elevating the three provider types that it does designate by risk level to the high risk category,” the report also noted. “It is deeply concerning that the nation’s second largest Medicaid program, which spent nearly $98.2 billion in FY 2024 and $12,528 per enrollee per year in FY 2023, is not complying with federal regulations.”
The Energy and Commerce Committee claimed that the Empire State, in response to the House investigation, ended up pausing enrollment for a six-month period in some programs such as home health care agencies, adult day cares and applied behavioral analysis, among others.
It’s unclear exactly how much taxpayer funding may have been diverted for fraudulent purposes, though Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz has been probing New York’s system.
Medicaid spending currently makes up the largest category of state budgets, with 30.7% set aside on average in funding for the programs, the House report added.
“Every dollar stolen from Medicare and Medicaid is a dollar taken from the seniors, children, pregnant women, and Americans with disabilities these programs were created to serve,” Committee Chairman Brett Guthrie (R-Ky.) said in a statement.
“Our findings expose the worst actors, but the accompanying recommendations also lay out commonsense steps to help CMS and the states stop fraud before it happens. We will keep fighting to hold criminals accountable, protect patients, and safeguard taxpayer dollars.”
In addition to New York, the House panel probed California, Colorado, Maine, Vermont, Massachusetts, Pennsylvania, Nebraska, Oregon and Washington State.
Many of the programs have ballooned in recent years — a fact that Health and Human Services Secretary Robert F. Kennedy Jr. attributed to lax safeguards.
Between January 2021 and January 2025, he said, just six employees staffed the Department of Health and Human Services’ program integrity office.
Even before those lapses, however, several state programs were experiencing surges in their Medicaid budgets.
The report cited California’s Medi-Cal spending as spiking from $83 billion annually in 2014 to $219.7 billion by 2027.
The committee found that non-emergency medical transportation, adult day care, applied behavioral analysis, treatment for substance use disorders as well as home and community based services were all “experiencing high rates of fraud.”
“States have rapidly expanded benefits under HCBS Section 1915(c) waivers, resulting in skyrocketing program costs and leaving Medicaid vulnerable to fraud without proper programmatic safeguards,” the report noted.
Also, “hospice, home health care services, DME [durable medical equipment], and genetic testing” have all been flagged for “elevated fraud activity” in Medicare programs too, per the report.
“The Oversight and Investigations Subcommittee is focused on rooting out fraud that threatens the future of Medicare and Medicaid,” said Rep. John Joyce (R-Pa.), who chairs the Energy and Commerce Subcommittee on Oversight and Investigations.
“These crimes hurt patients and steal from the American taxpayer. We will continue to expose those who exploit the system, hold fraudsters accountable, and advance commonsense recommendations that states can implement,” he added. “This cannot be solved alone. Protecting the integrity of these programs must be a shared goal, because millions of Americans are counting on us to get it right.”
The findings are similar to the fraud, waste and abuse uncovered by Vice President JD Vance’s task force.
So far, the White House anti-fraud task force has identified $96.4 billion in fraudulently obtained funding from HHS programs — and halted $46.2 billion from being improperly distributed.
Another $33.1 billion has been recovered by the Trump administration.
Reps for New York Gov. Kathy Hochul’s office did not immediately respond to a request for comment.
