The Trump administration has intensified its efforts to combat fraud in state Medicaid programs by launching a new investigation in New York, just a week after freezing nearly $260 million in Medicaid funding in Minnesota for similar allegations.
The initiative is part of a broader national strategy to rein in fraud, waste, and abuse in public healthcare programs, which federal officials argue is necessary to control spending and protect taxpayers.
Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Mehmet Oz, a former celebrity heart surgeon, announced the probe on Tuesday.
He cited concerning trends in New York’s Medicaid program and instructed state officials to provide detailed explanations of how they are handling fraud, waste, and abuse within 30 days or risk deferred payments.
“Heart surgeons are trained to look at the numbers,” Oz said in a video announcement. “Right now, the numbers coming out of New York’s Medicaid program don’t add up.”
Political Reactions and Controversy
The probe has sparked immediate criticism from Democratic officials, who argue that the federal government is politically targeting states led by Democrats.
New York Governor Kathy Hochul described the investigation as a politically motivated move that threatens the healthcare safety net for millions of low-income residents.
In a letter to Governor Hochul, Oz highlighted concerns about New York’s oversight of Medicaid services, particularly the high proportion of beneficiaries receiving personal care services such as bathing, grooming, and meal preparation.
He called for immediate corrective action, enhanced transparency, and an investigation into spending patterns.
Hochul responded to reporters, asserting that the administration’s efforts are partisan. “I will have to stand up and show them the truth and show them the facts, that they’re wrong.
When there is fraud, I will help them fight it,” she said. Her office stated that the investigation threatens healthcare access for everyday New Yorkers.
Medicaid Spending Challenges in New York
New York has long struggled with rising Medicaid costs. The program covered approximately one-third of the state’s population and cost $115.6 billion in the 2025 fiscal year, making it the most expensive Medicaid program per person in the country.
Previous administrations, including Governor Andrew Cuomo’s, grappled with escalating costs due to an aging population and expanded benefits.
Governor Hochul has attempted to address cost challenges through reforms to home healthcare programs, aiming to improve oversight and efficiency. Despite these efforts, the state’s spending and program scale have attracted federal scrutiny.
National Anti-Fraud Efforts and Precedents
The New York investigation follows a federal crackdown in Minnesota, where CMS froze Medicaid payments over alleged fraud at day care centers operated by Minneapolis-area Somali residents.
CMS promised to release the funds only after Minnesota implements a comprehensive corrective action plan. Governor Tim Walz called the freeze “targeted retribution,” and Minnesota has filed a lawsuit and appealed the withholding of $2 billion in annual Medicaid funding.
The Trump administration has previously used fraud allegations to withhold funding from Democratic-led states, including for child care subsidies, social services, and the Supplemental Nutrition Assistance Program. In many cases, courts have temporarily ordered the continued flow of funds while disputes are resolved.
Vice President JD Vance has been tasked with spearheading a national “war on fraud,” part of a broader effort to demonstrate fiscal responsibility ahead of upcoming midterm elections.
Federal officials argue that the crackdown is necessary to prevent runaway spending, while critics maintain that the actions are politically motivated and risk harming vulnerable populations.
The expansion of Medicaid fraud investigations to New York underscores the tension between federal oversight and state autonomy, particularly in politically contested states.
While the Trump administration emphasizes cost control and anti-fraud measures, Democratic leaders warn that such actions may jeopardize healthcare access for millions of residents.
The coming weeks will reveal how New York responds and whether federal-state cooperation can address fraud without compromising essential services.
FAQs
Why is New York being investigated for Medicaid fraud?
CMS identified concerning trends in spending and oversight, particularly for personal care services, prompting a 30-day federal review.
Could Medicaid funding be withheld from New York?
Yes. If the state fails to provide detailed reports or take corrective action, federal payments could be deferred, similar to Minnesota.
How are Democratic leaders responding?
Governor Hochul and other officials argue the probe is politically motivated and promise to fight fraud while protecting healthcare access.