Testimony of Bill Hammond

Senior Fellow, Empire Center for Public Policy

Before the U.S. Congress Joint Economic Committee

June 24, 2026

The heavy utilization and high cost of Medicaid-funded home care in New York State have long raised concerns about overuse, abuse and fraud.

Those suspicions were seemingly confirmed last week when the Justice Department filed a Medicaid fraud lawsuit focused on New York’s Consumer Directed Personal Assistance Program, or CDPAP, a form of Medicaid-funded home care that has grown explosively over the past decade.

The suit was not focused on low-level criminals operating in the shadows. Instead, it targeted two top officials in the state Health Department – Commissioner James McDonald and Medicaid Director Amir Bassiri – along with one of New York’s largest Medicaid contractors, Public Partnerships LLC.

The contractor, known as PPL, is charged with systematically overbilling for services related to CDPAP. McDonald and Bassiri are accused of rigging the bidding process to favor PPL and covering up the company’s alleged fraud. All three have denied wrongdoing.

While the case raises obvious questions about the top-level management of CDPAP – and corruption in state government – it leaves many of the program’s structural weaknesses and vulnerabilities unaddressed.

The program’s budget has increased more than ten-fold over the past decade, from less than $1 billion in 2016 to more than $11 billion in 2024. That has helped push the state’s per capita employment of home health aides to almost three times the national average, far out of proportion to the size of its elderly and disabled populations.

Meanwhile, the share of New Yorkers living in nursing homes remains higher than average, indicating that the state’s heavy spending on CDPAP and other forms of home care is failing to achieve its stated purpose of keeping people out of institutions.

CDPAP plays an invaluable role in the lives of many disabled New Yorkers, but it has also fallen prey to widespread waste, abuse and fraud. With better management and oversight – both in Albany and Washington – it should be possible to protect taxpayers while continuing to provide this crucial service.

Background

The Consumer Directed Personal Assistance Program is a form of home care within New York’s Medicaid system. People using this benefit hire, train and manage their own caregivers, who can be friends or family members, and Medicaid pays their wages. The caregivers are not licensed professionals, and they provide the mostly non-medical services known as “personal assistance” – including help getting in and out of bed, bathing, eating, shopping and housekeeping.

Aides receive their wages through contractors known as fiscal intermediaries, which handle payroll processing and other clerical duties on behalf of the state. As with traditional agency-based home care, the amount of service provided through CDPAP can range from a few hours per week to 24 hours a day.

Launched in 1995, CDPAP was originally aimed at helping severely disabled younger people move out of institutions and live in the community. To qualify, recipients had to be mentally capable of managing their own care. In the early days, fiscal intermediaries were typically non-profit organizations dedicated to supporting people with disabilities.

A “redesign” of New York Medicaid in the 2010s brought key changes to CDPAP. The program was expanded to recipients with mental disabilities who relied on “designated representatives” to manage their care. The list of relatives eligible to work as paid caregivers was expanded to include parents whose disabled children were over 21.

Meanwhile, the state outsourced management of Medicaid’s home health benefits, including CDPAP, to insurance companies known as managed long-term care plans, or MLTCs. Officials encouraged these companies to offer CDPAP because it was typically less expensive than agency-based home care.

As CDPAP enrollment grew, hundreds of new fiscal intermediaries popped up, many of them for-profit companies. Both managed long-term care plans and fiscal intermediaries had financial incentives to sign up as many people as possible – especially those who were less disabled and would need fewer hours per week of service. Some intermediaries launched advertising campaigns in subway cars and on TV, explaining that people could get paid for taking care of their elderly relatives.

Those changes led to a period of rapid growth. According to state figures released in early 2020, the state’s share of CDPAP costs soared by more than 800 percent over five years, from $287 million in fiscal year 2015-16 to a projected $2.8 billion in 2020-21 – or about $5.6 billion with federal matching aid included.

In early 2020, lawmakers enacted tighter eligibility standards for Medicaid-funded personal care, including CDPAP. However, officials were obliged to postpone implementing those standards due to federal “maintenance of effort” rules during the official pandemic emergency, which lasted until the spring of 2023.

As of 2024, spending on CDPAP alone had soared to $11.2 billion, or roughly double the total for all personal care services from three years before.

That year, Governor Kathy Hochul and the Legislature agreed on a new reform plan: replacing the program’s hundreds of small fiscal intermediaries with a single, statewide contractor.

Later that year, the state awarded a five-year, $1 billion contract to PPL, which took full charge of the program in August 2025.

The consolidation shows signs of slowing CDPAP’s enrollment growth, and the Hochul administration has claimed it is saving more than $1 billion annually.

However, the overhaul also triggered widespread controversy and a lawsuit by the Justice Department. Filed on June 16, the suit alleges that the Health Department rigged the bidding process in favor of PPL, and that the company has been overbilling Medicaid in violation of its contract terms.

Structural vulnerabilities

For at least two decades, the Office of Inspector General in the Department of Health and Human Services has been warning about the risks associated with Medicaid-funded personal care.

The services are delivered by unlicensed caregivers with minimal training working in private residences with no on-site supervision except from their disabled clients.

In a 2021 advisory, the office said its dozens of previous audits had found “significant and persistent compliance, payment, and fraud vulnerabilities,” and as well as instances where patients had been harmed or neglected.

While patients might prefer to be cared for by friends and family members, they might also be reluctant to complain if someone they are close to fails to report for duty as scheduled.

With respect to CDPAP in New York, federal prosecutors have documented cases in which patients, caregivers and fiscal intermediaries have conspired to bill Medicaid for services that were never actually provided.

In a 2020 indictment, the U.S. Attorney for the Southern District of New York charged CDPAP care aides were being paid for hours when they were running personal errands, eating in restaurants, touring wineries or taking a Caribbean cruise

Prosecutions like that one, however, have been relatively rare in New York.

According to an OIG study in 2016, the state’s Medicaid Fraud Control Unit, or MFCU, a branch of the attorney general’s office, obtained just four convictions for personal care fraud from 2012 through 2015. That was 0.3 percent of the national total in a state that accounted for 6 percent of the U.S. population – and which was spending a disproportionately large amount on Medicaid personal care.

Overall enforcement by New York’s MFCU has remained low relative to the size of its Medicaid budget. Over the past five years, it has ranked 48th out of 50 states in terms of investigations per billion spent, 49th for indictments per billion and 50th for convictions per billion.

The state Health Department has also been slow to implement electronic visit verification, a method for double-checking that personal care aides have reported for duty as scheduled. A 2024 audit by the state comptroller found no electronic visit verification records for 44 percent of personal care claims over a 26-month period, involving $14.5 billion in payments.

Red flags

Given the risks associated with personal care, the rapid growth and large scale of New York’s overall personal care program should raise alarms.

While the state does not routinely report its spending on CDPAP or personal care as separate categories, the available statistics make clear that the cost of those programs – and of home-based long-term care in general – has increased far faster than the relevant indicators of need.

As discussed earlier, state spending on personal care generally – including both CDPAP and agency-based – increased by 178 percent from 2015 to 2021. During that same period, the size of New York’s over-65 population grew by just 17 percent, or one-tenth as fast.

According to data gathered by the Centers for Medicare & Medicaid Services, New York Medicaid spent $28 billion on home- and community-based services for the elderly and disabled in 2023. That equated to $1,440 for every resident of the state, which was 232 percent above the national average and the highest among the 50 states.

The CMS report relies on data as reported by the states, and some of its figures appear to be incomplete. However, there is little doubt that New York’s spending in this area is unusually high.

Another useful metric is employment data. According to 2025 occupation data from the Bureau of Labor Statistics, New York’s workforce included 663,140 home health and personal care aides. That equated to 33 aides per 1,000 residents – which was also the highest of any state and 163 percent above the national norm.

It should be noted that enrollment in Medicaid managed long-term care plans is heavily concentrated in New York City, which accounts for 80 percent of enrollees but about 43 percent of the state’s population. While comparable labor and spending data are not available at the local level, city’s home care employment and spending rates are clearly much higher than the statewide averages.

A final red flag is New York’s nursing home population. For every 1,000 residents of the state, five are living in nursing homes, which is a third higher than the national average. That’s a surprising and concerning result for a state with outlier levels of spending and employment in home care – a program that’s meant to keep elderly and disabled people out of nursing homes.

Reforms of 2020

While state officials have sometimes expressed alarm about the rising utilization of CDPAP, their efforts to contain the program have sputtered.

In early 2020, for example, then Governor Andrew Cuomo prevailed on the Legislature to tighten both the medical and financial eligibility criteria for Medicaid personal care.

At the time, state law vaguely and open-endedly authorized personal care when “determined to meet the recipient’s needs for assistance when cost effective and appropriate, and when prescribed by a qualified independent physician selected or approved by the department of health.”

The 2020 revisions to that statute limited the availability of personal care to recipients who needed help with at least three “activities of daily living” – a common benchmark for gauging disability – or with at least two activities of daily living for people with dementia.

The pre-existing rules for demonstrating sufficiently low income and assets were also relatively relaxed. Before approving Medicaid coverage for a nursing home, the state reviews five years’ worth of an applicant’s financial transactions – known as a “lookback” – to assure that they have not improperly transferred assets to family members or to a trust as a strategy for making themselves appear poor.

For home care, by contrast, the state imposed no lookback period. An applicant could theoretically transfer assets one day and qulify for Medicaid home care the next.

The 2020 legislation authorized a lookback for home care coverage of 30 months, or half the standard for nursing home coverage.

However, federal rules effectively prohibited the state from implementing any new eligibility restrictions during the pandemic emergency – and the state further delayed action after the emergency declaration expired in 2023.

The state began enforcing the tightened medical eligibility rules in the fall of 2025. It has not yet begun to enforce the 30-month lookback.

2024 consolidation

In the spring of 2024, Governor Hochul and the Legislature agreed on a different approach to containing CDPAP: As part of last-minute negotiations on the state budget, they ordered the Health Department to put the program under management of a single statewide contractor, which would replace the hundreds of smaller companies that were serving as fiscal intermediaries.

Officials said this approach would make the program easier to police for fraud while creating economies of scale. The new contract would also prohibit advertising in hopes of slowing enrollment growth.

Although a centralized structure for programs of this type was common in other states, New York’s reorganization faced heated opposition from CDPAP consumers, who raised concerns about disruptions to their care, as well as from existing contractors who were being put out of business.

The only major stakeholder to support the plan was the influential health-care union 1199 SEIU, which stood to gain thousands of dues-paying members by organizing caregivers employed by the new contractor.

The federal suit charges, among other things, that the Health Department rigged its selection process in favor of a particular company – Georgia-based Public Partnerships LLC, or PPL; that PPL falsified its bid by claiming to have software, personnel and financial reserves that didn’t actually exist, and – most crucially – that PPL fraudulently padded its fees in violation of the contract.

“Because CDPAP bills approximately 350 million hours of care to New York each year, even taking a few cents per hour as revenue would mean tens of millions of dollars in ill-gotten gains,” the filing says.

Prosecutors do not specify a dollar amount for the alleged over-billing, but they point to scenarios in which the total might have reached into the billions over the five-year term of the contract.

The state health commission and Medicaid director, meanwhile, stand accused of lying about the transition. Specifically, the suit says they violated a section of federal law that prohibits making “materially false, fictitious, or fraudulent statements” relating to a health care program such as Medicaid.

Both the company and the Health Department have denied wrongdoing. However, many of the allegations in the suit are consistent with information previously made public in lawsuits and through public records requests.

Enrollment in Medicaid managed long-term care has all but stopped growing since PPL took over, a sign that consolidated management – and the ban on advertising – are having their desired effect. However, the state likely could have achieved those same goals while conducting a fair bidding process, choosing a better qualified company and properly enforcing the terms of its contract.

Lessons and recommendations

New York’s Consumer Directed Personal Assistance Program is a popular and valuable part of Medicaid that obviously needs reform and repair.

State officials should:

• Cooperate with prosecutors to put a court-appointed receiver in charge of the PPL contract.
• Select a new contractor through a better-designed bidding process, preferably conducted by officials outside the Health Department.
• Commission an independent review of the actions of the accused Health Department officials and take appropriate disciplinary action.
• Conduct an in-depth survey of CDPAP’s enrollment and utilization patterns to identify areas of overuse and abuse.
• Conduct a parallel survey of the state’s nursing home population to identify residents, if any, who could live in the community with appropriate support.
• Monitor the impact of medical eligibility rules updated in 2025 to assure they are having the desired impact.
• Begin enforcing the 30-month financial lookback authorized in 2020 and consider whether it should be aligned with the 60-month standard for nursing home care.
• Make full use of electronic visit verification to discourage fraud – and consider supplementing that with a carefully designed system of home visits.
• Stiffen enforcement against CDPAP and personal care fraud by the Medicaid Fraud Control Unit and other oversight entities.

For its part, CMS should monitor New York’s response to the lawsuit and consider withholding federal aid if the state does not take sufficient steps to improve its management of CDPAP.

In conjunction with the Office of Inspector General of the Department of Health and Human Services, CMS should also develop a model policy for controlling waste and fraud in Medicaid personal care services – and a plan for assuring that the model is adopted by states.