The Donald Trump administration conceded it used the wrong numbers to help launch a Medicaid fraud investigation in New York, an admission that raised fresh questions about how federal anti-waste drives are being built and sold to the public. The reversal lands as the same administration is also pushing major payment shifts elsewhere in healthcare, including a net average 2.48% boost for Medicare Advantage plans in 2027— more than $13 billion in added payments —outlined in Medicare Advantage payments.
According to a report by the Associated Press, the error centered on personal care services in New York’s Medicaid program, after officials had cited figures suggesting usage on a scale that would have been extraordinary. The administration’s correction arrived after analysts flagged the claim as implausible based on how the state reports and bills for those services.
Truth Behind Inflated Medicaid Figures Revealed
The disputed statistic was tied to statements from CMS Administrator Mehmet Oz, who had pointed to roughly 5 million people receiving personal care help in a state with about 6.8 million Medicaid enrollees. Federal officials later said the actual count was about 450,000 people, or around 6% to 7% of enrollees.
CMS spokesperson Chris Krepich told the outlet the agency had mixed up how New York applies billing codes and said the methodology was adjusted. Krepich also said the investigation is still underway and that CMS is reviewing New York’s response to the letter that announced the probe.
New York officials framed the initial claims as politically aimed, with the state’s health department calling the early descriptions a “a targeted attempt to obscure the facts.” A spokesperson for Gov. Kathy Hochul (D) told AP that the original CMS assertion was “patently false” and argued the state can pursue fraud enforcement without distorting the underlying data.
The administration’s New York approach is part of a wider enforcement push that has also involved California, Florida, Maine, and Minnesota. As reported by the outlet, Vice President JD Vance is leading a federal task force focused on benefit-program fraud, and Minnesota has sued after the administration moved to pause $243 million in Medicaid funding tied to fraud concerns.
Is Medicare Advantage Truly Sustainable Long-Term?
The data misstep in New York comes as CMS is simultaneously making high-stakes decisions about Medicare dollars that directly shape insurer revenue, member premiums, and benefit design. On Monday, CMS set the 2027 Medicare Advantage payment update at a net average 2.48%, a sharp turn from the 0.09% increase floated in January that had rattled markets.
Oz cast the finalized Medicare Advantage rates as centered on consumers, saying, “Medicare Advantage and Part D should work for the people who rely on them.” He added, “These updates keep coverage affordable and ensure patients get real value from their plans.”
Markets reacted to the Medicare Advantage decision, with UnitedHealth Group Inc. (NYSE:UNH) and CVS Health Corp. (NYSE:CVS) each up more than 9% in after-hours trading on Monday. Humana Inc. (NYSE:HUM) rose about 12%, while Elevance Health Inc. (NYSE:ELV) gained nearly 6%.
Longer-term cost pressures remain a central issue for households and policymakers, with annual Medicare premiums projected to climb from about $2,440 per person to nearly $5,000 by 2035. Estimates also attribute about $450 of that increase to Medicare Advantage overpayments alone.
Hospital Financial Strain Sparks Urgent Reforms
This development comes as Medicaid cuts have significantly impacted hospitals nationwide, with reports indicating that 446 facilities are now at risk of closure or service reductions. According to billionaire investor Mark Cuban, the real issue lies not solely in government policy but in how hospitals manage their expenses, noting that many facilities spend heavily on consultants and often overpay for essential supplies.
This financial strain, exacerbated by reduced Medicaid funding, highlights the broader challenges facing healthcare providers, which may contribute to the scrutiny surrounding federal investigations like the one initiated in New York. As Cuban pointed out, the operational inefficiencies within hospitals are a crucial factor in their financial instability, potentially affecting access to care for millions of Americans in the long term, especially in underserved communities. Cuban’s concerns about healthcare spending echo the ongoing discussions about the sustainability of programs like Medicare Advantage.
How New Rules Aim To Curb Healthcare Costs
CMS has also pointed to administrative changes aimed at trimming costs, including a rule finalized in March that is expected to save taxpayers $782 million a year by shifting away from fax and paper toward standardized electronic claims transactions. Full compliance under that rule is required by May 2026.
In New York, Oz also drew criticism for other characterizations of eligibility standards for personal care services, including a suggestion that screening had become looser. Advocates countered that the state tightened requirements through a change that took effect in September, and said the cited example did not appear in the state’s standards.
Public anxiety about medical costs is also pushing the politics around these programs, with 61% of adults saying they worry “a great deal” about healthcare affordability in a Gallup poll. That backdrop has helped elevate anti-fraud messaging, even as the New York correction fuels scrutiny of how the administration is assembling the numbers used to justify investigations.
Recent Comments