CMS Probes New York Adult Daycare Boom Amid Medicaid Fraud Concerns
Federal health officials at the Centers for Medicare and Medicaid Services have opened a probe into New York's rapid expansion of social adult day care centers amid concerns about Medicaid billing and oversight.[1]
CMS Administrator Dr. Mehmet Oz formally asked Governor Kathy Hochul to supply detailed records on enrollments, payments and oversight of the centers, the agency said.[1] CMS said the inquiry could lead to audits and changes in how the federal government approves reimbursements tied to those services.[1]
In October 2024, federal prosecutors charged eight people in an alleged scheme that siphoned $68 million from New York Medicaid through two Brooklyn social adult day care centers. In February 2026, prosecutors charged two Flushing men in an alleged $120 million Medicare and Medicaid fraud that investigators say involved kickbacks to seniors and questionable pharmacy billing. Also in February 2026, the New York state comptroller released an audit that found unsupported claims, capacity violations, and weak oversight, and referred findings to law enforcement. New York made $2.4 billion in social adult day care payments from January 2019 through October 2024, and state health authorities have referred hundreds of centers for investigation, with roughly one-third escalated to the attorney general.
Flushing, Queens has 64 social adult daycare centers within a one-mile radius, the densest cluster in the country.[1] Medicaid paid adult daycare providers $3.35 billion nationwide in 2024, with about 17 percent of that total going to New York's 375 facilities.[1]
The mainstream summary does not mention the significant structural issues identified in the New York State Comptroller's audit, which revealed over $285 million in questionable payments to social adult day care providers, including funds disbursed to those terminated for fraud or abuse. This audit highlights how the Managed Long Term Care (MLTC) system's reliance on easily falsifiable documentation and inadequate oversight has contributed to the rampant fraud in the sector, suggesting a deeper systemic problem than just isolated incidents of misconduct. According to the audit, these vulnerabilities allow for questionable payments to persist, which could explain the dramatic rise in adult day care centers in New York, from just 40 statewide in 2013 to nearly 400 today, driven by economic incentives tied to daily reimbursements of around $85 per enrollee.[2]
Additionally, the summary overlooks the demographic context in which these adult day care centers operate. As of March 2023, New York City had over 636,000 Medicaid enrollees aged 65 and older, representing 14% of the city's total Medicaid enrollment. This demographic trend underscores the potential for increased scrutiny and the systemic pressures driving the expansion of these facilities, as the elderly population continues to grow and demand services that may not be adequately monitored.[3]
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📊 Relevant Data
New York State made $2.4 billion in payments for Social Adult Day Care services from January 2019 through October 2024.
Medicaid Program – Oversight of Social Adult Day Care Programs — New York State Comptroller
As of March 2023, New York City had 636,472 Medicaid enrollees aged 65 and older, representing 14% of the city's total Medicaid enrollment.
Older Adults in New York City: Demographic and Service Trends — New York State Comptroller
In February 2026, federal prosecutors charged two Flushing residents with operating two social adult day care centers as part of an alleged $120 million Medicare and Medicaid fraud scheme involving kickbacks to beneficiaries.
Two Queens Men Charged with $120M Adult Day Care and Pharmacy Fraud — U.S. Department of Justice
A February 2026 New York State Comptroller audit found over $285 million in questionable encounter payments to Social Adult Day Care providers terminated from managed long-term care networks, including more than $28.6 million to providers terminated for cause such as fraud, waste, and abuse.
Medicaid Program – Oversight of Social Adult Day Care Programs — New York State Comptroller
📌 Key Facts
- Medicaid paid adult daycare providers $3.35 billion nationwide in 2024, with 17% going to New York’s 375 facilities.
- Flushing, Queens has 64 social adult daycare centers within a one-mile radius, the densest cluster in the country.
- From 2018 to 2024, billed seniors at Flushing centers rose about 390% while the local Medicaid-eligible senior population grew about 20%.
- Since 2021, New York’s Health Department has referred 387 centers for investigation, with roughly one-third escalated to the state attorney general.
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