The Trump administration this week acknowledged a significant factual error at the heart of its March 3rd Medicaid program integrity investigation of New York State. The Center for Medicare & Medicaid Services (CMS) admitted to the Associated Press (AP) that the real number of New Yorkers receiving personal care services last year was approximately 450,000—between 6% and 7% of total enrollees—not the nearly 5 million (three-fourths of enrollees) that Administrator Dr. Mehmet Oz claimed in his letter to Governor Hochul and accompanying social media video. The admission comes one week after the State submitted its 70-page response on April 3rd, which directly challenged the 75% figure as inaccurate, and when combined with additional factual misrepresentations identified by New York and independent advocates, arguably weakens the federal enforcement posture and vindicates the State’s strategic approach.
THE CMS ADMISSION
CMS spokesman Chris Krepich told the AP that the agency “misidentified New York’s approach to applying billing codes and had since refined its methodology” – the first public acknowledgment of the error. The 75% figure was not a peripheral detail but the headline statistic Dr. Oz used to justify the entire investigation, telling viewers “that level of utilization is unheard of” and demanding that New York “come clean about its Medicaid program.” The Fiscal Policy Institute’s Michael Kinnucan, who first flagged the inaccuracy, captured the problem in stark terms: the numbers “could have been cleared up in a phone call, so it’s really slapdash.” Governor Hochul’s office responded directly by stating “the initial claim by CMS was patently false, and we are glad they now admit it,” while DOH senior public information officer Cadence Acquaviva characterized Oz’s initial mischaracterizations as “a targeted attempt to obscure the facts.”
The AP reporting also identifies at least one additional factual error: Oz had claimed New York made personal care eligibility screening “more lenient by allowing problems like being ‘easily distracted’ to qualify for a personal care assistant,” a claim the Legal Aid Society’s Rebecca Antar directly refuted by noting the State’s September 2025 rule change actually made program requirements more stringent. In fact, the State’s April 3rd response documented that effective September 1, 2025, a heightened minimum needs standard now applies to both Personal Care Services (PCS) and the Consumer Directed Personal Assistance Program (CDPAP) – requiring either a dementia or Alzheimer’s diagnosis with supervision needs for more than one activity of daily living, or at least limited assistance with physical maneuvering for more than two Activities of Daily Living (ADLs) – the opposite of the “more lenient” screening Oz described.
THE NYS APRIL 3rd RESPONSE
The State’s response was submitted by Medicaid Director Amir Bassiri and Acting Medicaid Inspector General Frank Walsh, and it is a 70-page document that is aggressive, legally sophisticated, and deploys several strategic frames that have now been validated by CMS’s own admission. The response opens by flatly accusing CMS of mischaracterizing data by asserting that only about 6% of Medicaid beneficiaries received personal care services in 2025, a position CMS’s subsequent admission confirms. From that foundation, the State develops a “growth is not fraud” frame, arguing that CMS conflates program growth with fraud and reframing expansions in behavioral health and Home and Community-Based Services (HCBS) spending as legitimate implementation of federal policy priorities including Certified Community Behavioral Health Clinics (CCBHC) expansion, post-COVID mental health demand, and CMS’s own telehealth and 988 suicide and crisis lifeline expansions.
The State also deploys CMS’s own Payment Error Rate Measurement finding, which placed New York’s Medicaid improper payment rate at 1.43 percent, which is well below the national rate of 5.09% and nearly four times better than the national average. The response further documents over $15 billion in cost savings and recoveries over five years, the Office of the Medicaid Inspector General’s (OMIG) 480-plus staff, more than 3,600 finalized audits and 9,100 investigations from 2021–2024, 757 provider enrollment application reviews initiated in 2024 alone, and new AI and machine learning analytics capabilities developed through OMIG’s Advanced Analytics Unit. The State also cited the Department of Health & Human Services Office of Inspector General’s own March 2026 Medicaid Fraud Control Units Annual Report, which ranked New York’s Medicaid Fraud Control Unit (MFCU) among only four state units responsible for half of all civil recoveries in FY 2025 and among only three units responsible for 54% of all nonglobal civil recoveries – an external federal data point that independently validates the State’s enforcement infrastructure claims.
On Non-Emergency Medical Transportation (NEMT) specifically, the State documented that since March 1, 2024, new transportation providers have been required to obtain a letter of support from Medical Answering Services, the State’s transportation broker, before enrolling – a front-end control that has produced a significant decrease in new transportation provider enrollment applications and that directly addresses CMS’s flagged 121% spike in T2003 encounter payments. The State’s CDPAP defense frames the transition from over 600 fiscal intermediaries to a single Statewide Fiscal Intermediary as a proactive fraud, waste, and abuse mitigation measure.
BROADER CONTEXT
The AP reporting situates the New York probe within a broader federal enforcement campaign, noting that CMS has launched similar investigations in at least four other states—California, Florida, Maine, and Minnesota—with Florida’s inclusion notably complicating the narrative that these probes exclusively target Democratic-led states. Health analysts are now publicly questioning whether CMS’s methodological errors in New York may have infected other state investigations, which could become relevant to the pending Minnesota federal lawsuit challenging CMS’s deferral authority under the Administrative Procedures Act and the Fifth Amendment. Separately, President Trump last month signed an executive order creating an anti-fraud task force across federal benefit programs led by Vice President J.D. Vance, elevating the initiative from a CMS-specific effort to a whole-of-government priority and meaning that even if CMS retreats tactically on the New York probe, the broader political pressure on state Medicaid programs is unlikely to abate.
Notably, Krepich told the AP that CMS’s probe remains ongoing and that the agency “still has concerns with New York’s oversight of personal care services” while it reviews the State’s response, though his additional statement that CMS “will continue to work closely with New York to validate data and strengthen program integrity oversight” represents a significant tonal shift from the adversarial March 3rd letter – suggesting CMS may be pivoting toward collaborative engagement rather than enforcement escalation, at least in the near term.
STRATEGIC IMPLICATIONS
The strategic implications cut in several directions. The CMS admission and the State’s response significantly weaken any near-term pathway to a Minnesota-style noncompliance finding or funding deferral, since any escalation would now have to overcome a documented, publicly acknowledged CMS factual error at the center of the investigation – a serious credibility problem in any administrative hearing or federal court proceeding. The admission also converts the State’s defensive posture into a political asset heading into the 2026 gubernatorial race, complicating Republican attack lines on Medicaid oversight.
At the same time, CMS has not closed the investigation, and the agency’s remaining concerns regarding per-beneficiary spending above the national average, per-resident spending nearly 80% higher, and the scale of the personal care workforce have not been retracted and remain on the table. Exposed flanks persist as well, including OMIG’s acknowledged audit protocol gaps in behavioral health – specifically Applied Behavior Analysis, Certified Community Behavioral Health Clinics, Children’s HCBS, Children and Family Treatment and Support Services, and Adult Day Health Care, all of which OMIG disclosed are still in protocol development—and the relatively low number of payment suspensions (24 over five years). The outcome of Minnesota’s pending federal lawsuit over CMS’s deferral authority is now even more consequential, as it will determine whether CMS retains this enforcement tool at all, and a ruling in Minnesota’s favor would further constrain CMS’s options regarding New York.
WHAT TO WATCH
Going forward, the key developments to watch include CMS’s formal reply to the State’s April 3rd response and whether its tonal shift toward collaboration holds, any ruling in the Minnesota federal lawsuit on the temporary restraining order and preliminary injunction requests, whether CMS reopens or revises its methodology in the parallel California, Florida, Maine, and Minnesota probes in light of the New York error, and provider-level impacts including enhanced OMIG audit activity, accelerated behavioral health protocol development, and intensified Electronic Visit Verification (EVV) compliance expectations regardless of the CMS factual correction.
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