Report: State Medicaid Payments Explode, Fraud Scandals Grow

In June, a Pennsylvania woman appeared in federal court in connection with a $1 million-plus home care fraud scheme. Hemal Patel was charged with wire fraud, aggravated identity theft, and conspiracy to violate the federal anti-kickback statute. The 59-year-old Bucks County resident, according to the U.S Attorney’s Office for Pennsylvania’s Eastern District, pocketed payments for referring patients to home care agencies. Patel and others schemed to fraudulently bill Medicaid for ghost home care services. 

The scam targeted Pennsylvania’s Community HealthChoices, which uses Medicaid funds to pay for home- and community-based personal assistance services for individuals with disabilities to help keep them out of nursing homes, according to court filings. Patel was one of hundreds of people charged in the Department of Justice’s National Health Care Fraud Takedown, the largest sweep of its kind covering some $14.6 billion in intended Medicaid losses.  

Payouts to personal assistance services have ballooned nationally. Between 2018 and 2024, Medicaid cash in the category grew by 144 percent, from $9.6 billion to almost $23.5 billion. But payments have absolutely exploded in  Pennsylvania — by more than 10,000 percent over the period, according to an analysis of new data from the Centers for Medicare and Medicaid Services (CMS). The massive data dump, reviewed by public spending tracker Open the Books, shows Medicaid-funded payments to Pennsylvania’s personal assistance services shot up from  $5.6 million in 2018 to $583 million in 2024. 

Source: Open the Books

The massive increases should be of particular interest for CMS Administrator Dr. Mehmet Oz, the former TV personality who claimed the Keystone State as his home state during his 2022 U.S. Senate run.

Amber Todoroff, Public Policy Researcher at OTB, said Pennsylvania Gov. Josh Shapiro’s office did not respond to the organization’s request for comment. Nor did the state health agency that administers the program, overseeing the 10,000 percent spike in payments. 

“Certainly they should be made to answer for this program,” Todoroff told me Tuesday on NewsRadio 1110 KFAN in Omaha. 

Amid escalating welfare fraud, particularly the multi-billion dollar ripoff in Gov. Tim Walz’s fraud-riddled Minnesota, CMS has released an unprecedented amount of data in the name of transparency. The data include north of 270 million payments made by Medicaid nationwide over the seven-year period, OTB reported. 

“Payment amounts generally increased over time, with a notable bump starting in 2020 in response to COVID-related spending and increased enrollment due to economic hardship caused by government-imposed economic shutdowns,” the government watchdog noted in its report, provided to The Federalist.  

Not surprisingly, New York, California, and Texas booked the highest amount of Medicaid payments. New York, for instance, paid out $142 billion-plus on 15.7 million claims over the period, according to OTB’s investigation. California topped $127.6 billion in Medicaid spending on 30.7 million claims, and Texas ranked third with $64.5 billion and 12.8 million claims. The top 10 states accounted for $605 billion in spending, more than half of all Medicaid spending during the period, Open the Books found. 

Source: Open the Books

But population isn’t always a driver, as the review notes. Massachusetts and New Jersey — with populations of 7 million and 9.5 million residents respectively, “have higher spending than more populous states like Florida and Pennsylvania,” the report notes. 

“Amid a series of fraud-related headlines, we can see where costs have exploded, which states and businesses receive the most federal dollars, and more,” Christopher Neefus, Open the Books’ vice president of communications, told The Federalist. “These findings are the tip of the iceberg in a single federal program.” 

Fat with Fraud

With so much taxpayer money pumped out, swindlers and scammers come out like ants on a picnic sandwich. 

In New York, the elderly and disabled may hire friends and family to serve as in-home personal care assistants — funded by taxpayer money. Lots and lots of taxpayer money.

“The scheme is especially popular in New York State, which has seen $72.7 billion in such spending from 2018-2024,” the OTB analysis states. “That’s the most of any state, and accounts for roughly half of all New York Medicaid spending.” 

It’s a program fat with fraud. 

State officials have identified at least 30 cases in which personal assistants billed patients “who were dead or hospitalized and five where assistants logged time worked even though they were out of the country,” according to City & State New York. 

A Justice Department complaint details the $120 million kickback scam in which the operators of Royal Adult Day Care in Flushing, Queens allegedly bribed patients to enroll. In the decade-long scheme, the two owners allegedly threatened senior citizens not to talk to other day care members about their cash cut, according to the New York Post. 

Recently on 77 WABC’s “Cats Roundtable” program, Oz pledged to ferret out fraudsters in New York’s massive Medicaid program. 

“In the beautiful city of New York and surrounding New York state, we know that there are a lot of people who are providing services that we don’t think are legitimate, that are costing the taxpayers a lot of money,” Oz said. 

A recent report from the Paragon Institute on the rampant waste, fraud, and abuse in Medicaid found home- and community-based services and non-emergency medical transportation “are especially vulnerable to fraud because decentralized care delivery, self-direction, low barriers to provider entry, and weak verification make it difficult to ensure services are actually provided as billed, particularly when Medicaid allows payments to family members with minimal oversight.”

Among other recommendations, the report urges CMS to consistently use existing enforcement powers “to withhold federal funds, recover misspent dollars, and ensure states lose money — not gain — when waste, fraud, and abuse occur.”

‘Rein in this State-Level Spending’

The personal assistance services industry is big business. Open the Books’ review found 11 providers hauled in at least $1 billion each over the period in Medicaid claims. The top-paid organization was Tempus Unlimited Inc. of Stoughton, Massachusetts. Tempus took in north of $6 billion in Medicaid payments. Nine of the 11 organizations are headquartered in New York State.

When looking at all Medicaid billing codes, the Los Angeles County Department of Mental Health raked in more than $7.3 billion in Medicaid payments, according to the investigation. 

Covid and the bonanza of pandemic relief cash it spurred drove a huge chunk of the Medicaid spending for in-home services. A recent report by KFF, formerly known as the Kaiser Family Foundation, found that between 2019 and 2023 the number of Medicaid home care users increased by over 750,000 people.

“A lot of regulations were loosened for people to join Medicaid, but the pandemic was over a long time ago,” Todoroff said. “It’s time to seriously look at these programs and rein in this state-level spending.”

Matt Kittle is a senior elections correspondent for The Federalist. An award-winning investigative reporter and 30-year veteran of print, broadcast, and online journalism, Kittle previously served as the executive director of Empower Wisconsin.