Federal authorities are investigating whether the rapid growth of Medicaid-funded social adult daycare centers in New York is indicative of fraud, Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz told CBS News.
"[It] begs the question: How many social adult daycare centers do you need?" Oz said.
The investigation comes as Medicaid spending on social adult daycare centers has climbed sharply, particularly in New York.
Medicaid paid providers about $3.35 billion nationwide in 2024, with roughly 17% of those payments going to 375 facilities in New York — more than any other state, according to CBS News.
Spending on the programs in New York has nearly quadrupled since 2018, significantly increasing costs to taxpayers.
In Flushing, Queens, there are 64 social adult daycare facilities within a one-mile radius.
Social adult daycare programs are designed to help eligible adults remain in their communities by providing daytime care, socialization and support rather than requiring more intensive institutional care.
Federal officials have not disclosed how many centers are under review or whether the investigation is focused on specific operators or the broader Medicaid program. Oz's comments suggest CMS is examining whether the industry's rapid expansion reflects legitimate demand or potential abuse of the Medicaid system.
The inquiry follows several recent enforcement actions in New York.
Earlier this year, federal prosecutors charged operators of Queens-based adult daycare centers and a pharmacy with participating in an alleged $120 million scheme involving false Medicare and Medicaid claims and illegal kickbacks.
In a separate case in Brooklyn, two defendants pleaded guilty to participating in a $68 million Medicaid fraud scheme involving social adult daycare centers and a home health care company. Prosecutors alleged the defendants paid kickbacks to Medicaid recipients and submitted claims for services that were not provided.
State officials also have raised concerns about oversight of the programs. A recent audit identified hundreds of millions of dollars in questionable Medicaid payments and cited compliance and safety issues at some social adult daycare centers.
The federal review is the latest effort by the Trump administration to crack down on alleged fraud in government health care programs. CMS has not announced a timeline for completing the investigation or said whether additional enforcement actions are expected.