Medicaid Integrity Under Scrutiny: Federal Crackdown Targets Home Care in New York and Minnesota
Medicaid funding, a vital lifeline for millions of Americans, is facing increased scrutiny as the Centers for Medicare & Medicaid Services (CMS) intensifies its efforts to combat fraud and ensure responsible spending. Recent actions by the Trump administration, spearheaded by CMS Administrator Dr. Mehmet Oz, have focused on states with high Medicaid expenditures, particularly New York and Minnesota, raising concerns about the future of home and community-based services (HCBS) and access to care for vulnerable populations. The escalating tensions between federal regulators and state governments highlight a growing debate over Medicaid funding, program integrity and the role of the federal government in overseeing state-administered healthcare programs.
The current wave of scrutiny centers on allegations of widespread fraud within Medicaid programs, particularly concerning home care services. Dr. Oz, in a letter to New York Governor Kathy Hochul on Tuesday, March 3, 2026, requested detailed information regarding the state’s Medicaid integrity efforts, specifically calling out home care as an area of significant concern. This action follows a similar move against Minnesota, where the state has filed a lawsuit against CMS and the Department of Health and Human Services (HHS) to block the deferral of $259 million in federal Medicaid funds, citing concerns over alleged fraud. These developments occur against the backdrop of the One Big Beautiful Bill Act (OBBBA), which enacted reforms aimed at cutting federal Medicaid spending and potentially reducing enrollment.
The focus on home care is particularly noteworthy, as it represents a rapidly growing segment of Medicaid spending. Dr. Oz has indicated that the increase in the number of workers providing services to elderly New Yorkers in home care, adult day care, and personal care programs is a key driver of Medicaid’s overall growth. However, this expansion has also been accompanied by concerns about potential fraud and abuse, prompting the federal government to grab a more aggressive stance in oversight and enforcement. The situation is further complicated by the state of New York’s high Medicaid spending per resident, which is nearly 80% higher than the national average, according to data cited by Dr. Oz in his letter to Governor Hochul.
New York Faces Federal Inquiry Over Medicaid Spending and CDPAP
Dr. Oz’s letter to Governor Hochul specifically cited instances of alleged home care fraud totaling $68 million, according to reporting by the New York Post. The Post reported that Oz highlighted New York’s “expansive benefit structures and excessive provider payment levels” as contributing factors to the state’s high Medicaid costs. The inquiry also extends to the state’s Consumer Directed Personal Assistance Program (CDPAP), which has been plagued by controversy in recent years. Reform efforts in 2025 triggered significant upheaval among home care providers, leading to lawsuits and protests, and even attracting scrutiny from the U.S. Department of Justice. Home Healthcare News reported on the Department of Justice investigation in June 2025.
The CDPAP allows individuals with disabilities or chronic illnesses to self-direct their own care, hiring family members or other caregivers. While intended to empower patients and provide personalized care, the program has been vulnerable to fraud and abuse, with concerns raised about improper billing practices and the employment of unqualified caregivers. The state’s attempts to reform the CDPAP, aimed at tightening eligibility requirements and improving oversight, have faced strong opposition from both providers and consumer advocates. The ongoing federal investigation adds another layer of complexity to the situation, potentially leading to further changes in the program’s structure and operation.
Minnesota Sues Federal Government, Alleging Political Motivation
While New York faces a formal inquiry, Minnesota is taking a more confrontational approach, filing a lawsuit against CMS and HHS to challenge the deferral of $259 million in federal Medicaid funds. The state argues that the federal government is improperly withholding funds based on unsubstantiated claims of fraud and that the action is politically motivated. According to CMS, more than $164 million of the deferred funds relate to concerns about “questionable variances” in spending on practitioner, personal care, and home and community-based services. Home Healthcare News detailed the CMS announcement on February 25, 2026.
Minnesota officials contend that they have been diligently working to address concerns raised by CMS and that the federal government’s actions are disproportionate and unjustified. In their lawsuit, they allege that the federal government has “weaponized Medicaid against Minnesota as political punishment.” Dr. Oz, however, has expressed interest in the specifics of Minnesota’s case, stating that it is “a difficult challenge when a state doesn’t seem to have taken fraud seriously.” Axios reported on Dr. Oz’s comments on March 3, 2026. The legal battle in Minnesota underscores the growing tension between state and federal authorities over Medicaid funding and oversight.
Broader Implications for Medicaid and Home Care
The actions in New York and Minnesota are part of a broader trend of increased federal scrutiny of Medicaid programs across the country. The Trump administration has made it a priority to crack down on fraud and abuse in both Medicare and Medicaid, with a particular focus on home and community-based services. This crackdown is driven, in part, by concerns about the rising cost of healthcare and the need to protect taxpayer dollars. However, critics argue that overly aggressive enforcement measures could jeopardize access to care for vulnerable populations and disrupt the provision of essential services.
The One Big Beautiful Bill Act (OBBBA), enacted in 2025, has further complicated the landscape, enacting reforms designed to significantly cut federal Medicaid spending. This legislation has raised concerns among at-home care providers and advocacy groups, such as the National Alliance for Care at Home, who fear that it will lead to reduced enrollment and diminished access to care. The combined impact of the federal crackdown on fraud and the cuts mandated by the OBBBA could have far-reaching consequences for the Medicaid program and the millions of Americans who rely on it for healthcare coverage.
The future of Medicaid and home care remains uncertain as these legal and political battles unfold. The outcome of the lawsuit in Minnesota and the findings of the federal inquiry in New York will likely set precedents for other states and shape the direction of Medicaid policy for years to come. The ongoing debate highlights the fundamental challenges of balancing the need for program integrity with the imperative of ensuring access to affordable and quality healthcare for all Americans.
Key Takeaways:
- CMS is intensifying its scrutiny of Medicaid programs in states with high spending, particularly New York and Minnesota.
- Home care services are a primary focus of the federal crackdown on fraud and abuse.
- Minnesota has filed a lawsuit challenging the deferral of federal Medicaid funds, alleging political motivation.
- The One Big Beautiful Bill Act is expected to significantly reduce federal Medicaid spending and potentially limit enrollment.
- The outcome of these disputes will have significant implications for the future of Medicaid and access to care.
The next key date to watch is April 1, 2026, the deadline for New York’s state budget. The outcome of negotiations between Governor Hochul and the state legislature will determine the fate of Medicaid funding and the future of the CDPAP. We encourage readers to share their thoughts and experiences with Medicaid and home care in the comments below.
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