An audit of Social Adult Day Care (SADC) programs found questionable Medicaid payments, safety risks and compliance problems, according to State Comptroller Thomas P. DiNapoli. On Feb. 9, the U.S. Department of Justice announced the arrest of two Queens men. They were charged with allegedly defrauding Medicare and Medicaid of $120 million by paying illegal kickbacks and bribes and submitting claims for services that were never provided. DiNapoli's office had referred its audit findings and worked with law enforcement on the investigation.

"Many vulnerable New Yorkers rely on social adult day care services to help them stay in their own homes and communities. But without stronger oversight from the Department of Health, we risk both the well-being of these individuals and the misuse of taxpayer dollars," DiNapoli said. "My audit found some providers allegedly abusing the system and committing fraud, and we worked with law enforcement to hold them accountable. Rooting out waste, fraud and abuse is a top priority of mine. Through our audits, investigations and law enforcement partnerships, we will continue to safeguard these essential programs, push for systemic changes and protect taxpayer funds."

"Under the leadership of Governor Kathy Hochul and through the independent work of the Office of the State Comptroller and the Office of Medicaid Inspector General, New York State has among the strongest oversight and program integrity systems in the nation. Today's announcement further reflects the strength of those efforts," said New York State Commissioner of Health Dr. James McDonald. "This joint effort sends a clear message that the Empire State is committed to rooting out bad actors while ensuring the viability and sustainability of these vital Medicaid and Medicare programs. The Department remains committed to supporting critical health programs that deliver care to those who need it while also ensuring Medicaid dollars are being utilized efficiently through strong actions to prevent waste, fraud and abuse."

SADC programs, which provide personal care and other services in a structured setting for adults with chronic illnesses or disabilities, are overseen by the Department of Health (DOH).

Key audit findings:

• Questionable Medicaid Payments. Auditors identified $285 million in questionable payments to SADCs for service dates after they were terminated from at least one of the six Managed Long-Term Care (MLTC) networks reviewed, including $28.5 million paid to a SADC terminated for cause, which can include fraud, waste or abuse.
• Improper Payments for Services Lacking Documentation. SADCs regularly use member sign-in sheets as proof that services were provided, but at three SADCs, one with two locations in Gravesend and Coney Island, Brooklyn; another in Flushing, Queens; and a third in Freeport, auditors found claims totaling $672,147 that were not supported by this method or any other.
• Certificate of Occupancy Irregularities. SADCs are required to have sufficient space for services and activities and prevent hazards to personal safety. Auditors found multiple issues with occupancy. An SADC in Gravesend that opened in 2018 was issued a violation in June 2022 for not amending a certificate of occupancy from the building's prior tenant. At an SADC in Flushing with a legal capacity of 323 people, auditors identified 386 dates where it claimed attendance exceeded its capacity. For one day, the SADC submitted claims for services to 530 people, 207 over its legal limit, receiving $47,255 in payments for services provided that single day.
• Noncompliance in Assessments and Service Plans. SADC providers are required to complete an individual assessment of each person's functional capacities and impairments prior to them being admitted to a program. Providers must also complete a service plan within 30 days of admission and then annually or if needs change. Auditors reviewed a judgmental sample of 15 members' files and found incomplete or non-compliant assessments or service plans for 14 of the 15 members. They also found DOH did not review initial assessments or prior service plans during site visits.

DiNapoli's audit made several recommendations to DOH, including:

• Review the $285 million in encounter payments made to SADCs for services provided after termination from an MLTC's network, and determine an appropriate course of corrective action, including recoveries, prioritizing the $28.5 million paid to providers terminated for cause.
• Enhance monitoring of SADC services, including expanding the documentation reviewed during site visits; establishing uniform recordkeeping requirements to verify people receive services as outlined in their service plans; and using encounter claims data to identify occupancy violations.
• Notify all MLTCs of SADCs that are terminated for cause and ensure proper certificates of occupancy are in place before enrollment.

In its response, DOH officials outlined steps it is taking to address the audit's findings. The agency's response can be found in the audit.

Audit
Department of Health: Medicaid Program: Oversight of Social Adult Day Care Programs.