$68 Million CDPAP Fraud Indictment Unsealed Amidst Industry Changes
On October 9, 2024, the United States Attorney’s office in the Eastern District of New York unsealed an indictment alleging that eight defendants defrauded Medicaid of approximately $68 million.1 The alleged scheme involved two adult day care programs and a home care financial intermediary, all owned and controlled by the same individuals, as well as several marketers for the companies. These companies were involved in New York’s Consumer Directed Personal Assistance Program (CDPAP), a program that is undergoing significant change, legal challenges, and continued scrutiny for compliance concerns.
CDPAP Background
Under CDPAP, Medicaid recipients can hire almost anyone to be their home health aide, including friends and family members except spouses. The consumer or the person acting on the consumer’s behalf assumes responsibility for hiring, training, supervising, and terminating the employment of persons providing the home care services. Under CDPAP, the home health aide is not an employee of a home care agency but is instead an independent contractor, who is paid wages and benefits by a “fiscal intermediary” (FI). The FI’s, of which there are several hundred in New York State, provide administrative, compliance, and payroll-related services, acting as intermediaries between the Medicaid-backed plans and the patients and caregivers.
Indictment Allegations
The recent federal indictment highlights fraud and oversight issues that critics of the CDPAP program have lodged for years. The indictment alleges that, in exchange for kickbacks and bribes, marketers referred Medicaid recipients to the adult day care programs and/or the FI. The indictment also alleges that marketers in turn paid kickbacks and bribes to Medicaid recipients for adult day care and CDPAP services that the adult day care companies and the FI billed to Medicaid but were not provided or were induced by kickbacks and bribes. In addition, the marketers would allegedly attend medical evaluations with Medicaid recipients and pretend to be the patient’s family member or caregiver, to assist the recipients in getting approved for services.
Changes to CDPAP
The indictment comes at a time of change to and continued criticism of New York’s CDPAP program. Governor Hochul has called CDPAP a racket, even citing TikTok ads which reportedly attempt to recruit individuals at $37 an hour to care for their own relatives who may not actually need care.
New York State is changing aspects of the CDPAP program. Perhaps the most notable change is that New York is moving to a single statewide FI in place of the several hundred that exist across the state.2 On October 1, 2024, the Department of Health awarded the contract for the statewide FI. Several lawsuits and appeals are challenging the transition to a statewide FI, which stakeholders and counsel must closely monitor. Proponents of the statewide FI say it will reduce rising costs, streamline administration, and improve oversight of the public fisc.
While the federal indictment and TikTok ads raise obvious red flags, the compliance issues can often be more subtle. For example, in both CDPAP and the broader home care industry, business development tactics and rate-setting that directly or indirectly favor enrollment or recruitment of “low intensity” cases raises compliance concerns. For a variety of reasons, consumers in CDPAP and home care agencies are often at a disadvantage and unaware when these issues arise. Stakeholders in the industry including CDPAP providers, FI’s, home care agencies, and health plans in this space, should be continually monitoring both the obvious and less obvious compliance concerns, particularly as CDPAP is under increased scrutiny.
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