NY's Medicaid fraud unit ranked dead last. Feds cut its $60M.
Summary
HHS's inspector general denied recertification of New York's Medicaid Fraud Control Unit and suspended its $60 million annual federal grant, effective July 1, 2026. The finding: among the five states OIG treats as comparably sized, New York's unit secured the fewest fraud convictions, the fewest patient-abuse-and-neglect convictions, and a return on investment below the national average every year since 2021 -- while units in states with a fraction of its budget indicted far more fraudsters.
$60 million, 272 staff, last place
New York's MFCU oversees one of the largest Medicaid programs in the country⧉ -- 7 million beneficiaries, more than $100 billion a year -- backed by a staff of 272 and roughly $60 million in annual federal funding. Yet from 2023 to 2025 it secured just 53 total fraud convictions, ranking last of the five comparably sized units and coming in at less than half of the next-lowest state, California.
View data as table
| New York | 53 |
|---|---|
| California | 129 |
| Florida | 153 |
| Texas | 200 |
| Ohio | 270 |
Last place, every year
The indictment numbers tell the same story. New York's unit ranked dead last among its peer states for total criminal indictments⧉ in every year from 2021 to 2025 (10, 8, 9, 18, and 9), and secured fewer than 10 fraud-specific indictments in four of those five years (6, 8, 5, 17, and 7). A statement from the U.S. Attorney's Office for the Northern District of New York⧉ -- which, unlike 's letter, drew an explicit before/after comparison to New York Attorney General Letitia James's tenure -- said the Unit's own -reported data show it averaged only nine indictments a year from 2021 to 2025, down from more than 100 a year in 2016-2018. That statement also rebutted James's own public characterization of the funding suspension as a 'political distraction.'
View data as table
| New York ($60M budget, 272 staff) | 7 |
|---|---|
| Indiana (~$9M budget, 56 staff) | 38 |
| Arizona (~$6M budget, 31 staff) | 70 |
Smaller states, bigger results
The comparison sharpens against smaller states. Indiana's unit -- a $9 million budget, 56 staff, overseeing a $20 billion Medicaid program⧉ -- secured more than five times as many fraud indictments (38 to New York's 7), more fraud convictions, and more in civil recoveries than New York in FY2025. Arizona, with a $6 million budget and 31 staff, secured 70 indictments to New York's 9 total indictments -- roughly seven times as many, in 's own phrasing -- and nearly double the convictions. called the contrast 'stark' given New York's Medicaid program is more than $80 billion larger.
A 2015 strategy, still running in 2026
's onsite review traced the shortfall to a deliberate leadership choice⧉: a strategic plan dating to 2015, still governing decisions in 2026, that steered the Unit toward complex civil fraud cases over criminal prosecution. The trade-off didn't pay off on either side -- New York's total recoveries (criminal and civil combined) ranked only 3rd of 5 peer units over the last five years, while its return on investment trailed the 53-unit national average every year from 2021 to 2025, recovering $1.84 per dollar spent in 2025 against a $4.64 national average. ('s letter claims the shortfall held in 2020 too, but its own data table shows New York's 2020 return, $3.61, actually exceeded that year's $3.36 national average.)
also cited unresolved staffing imbalances, managed-care fraud referrals it first flagged in 2017 and the Unit still hadn't fixed nine years later, and a case backlog where over a third of open cases exceeded three years old -- alongside one mitigating note: the Unit's own newer data indicate its FY2026 criminal fraud performance is improving, though judged that improvement insufficient given the size of New York's Medicaid program.
The takeaway
- Dead last, by a wide margin. New York's 53 fraud convictions (2023-2025) trailed the next-lowest comparable state, California, by 76 -- and Ohio's 270 by more than fivefold.
- Smaller units did more with less. Indiana, with roughly a seventh of New York's budget, secured more than five times as many fraud indictments in FY2025 (38 to New York's 7); Arizona secured roughly seven times as many total indictments, per 's own comparison.
- The money stops unless New York fixes it. The $60 million suspension runs through September 30, 2026; if the Unit hasn't remediated staffing, referral, case-progression, and cooperation deficiencies by then, its FY2027 federal grant goes unfunded.
's letter credits New York's total recoveries -- criminal and civil combined -- as genuinely competitive with peer states ($110.5 million in 2025, ranking 2nd of 5, of which nearly $89 million came specifically from civil case judgments and settlements) and states this is not a case of the Unit doing nothing -- it is a case of a resourcing and strategy choice that concludes came at the direct expense of the Unit's statutorily required criminal enforcement mission. Two small inconsistencies appear within 's own letter and are disclosed rather than silently resolved: it cites New York's FY2025 fraud convictions as both 25 and 26 in adjacent sentences (Table 1 supports 25), and its claim that New York trailed the national ROI 'every year' is contradicted by its own data table for 2020. The Unit may formally contest these findings; if it does, must respond in writing within 30 days. It also has until September 30, 2026 to submit and show progress on corrective-action plans. This article reflects the state of the funding suspension as of the denial letter and does not reflect any later reconsideration may grant.
Sources(2) ▾
- HHS Office of Inspector General, Recertification Denial and Federal Grant Suspension Letter -- New York Medicaid Fraud Control Unit (2026-06-30) — Formal recertification-denial letter from Inspector General T. March Bell to NY Attorney General Letitia James and MFCU Director Amy Held, denying the Unit's 2026 recertification and suspending its federal grant. Includes five detailed performance tables comparing New York to California, Texas, Florida, and Ohio (the 's designated 'similar-sized' peer units) plus Indiana and Arizona. Fetched directly from oig.hhs.gov and converted with pdftotext -layout; read in full. oig.hhs.gov · original document
- U.S. Attorney's Office, Northern District of New York (DOJ), Statement on Federal Decertification of the New York Medicaid Fraud Control Unit (2026-07-02) — press statement confirming the funding suspension's effective date and summarizing -'s findings; cited only for its non-editorial, data-attributed claim about the Unit's 2016-2018 versus 2021-2025 average annual indictment counts, sourced to the Unit's own recertification reporting. Fetched via a Wayback Machine capture after a direct fetch returned 403. justice.gov · original document
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's inspector general formally denied recertification⧉ of New York's Medicaid Fraud Control Unit on June 30, 2026, and suspended its $60 million annual federal grant effective July 1 -- after conditionally recertifying the Unit on May 1 and then conducting a targeted onsite review the week of June 8 to understand its low criminal case outcomes. The reason: among the five states treats as comparably sized -- California, Texas, Florida, and Ohio -- New York's unit was, in 's words, 'the poorest performing Unit by a wide margin' on both fraud and patient-abuse-and-neglect enforcement from 2023 to 2025.