Stefanik Demands Federal Investigation into Hochul’s NYS DOH Medicaid Mismanagement as North Country Hospitals Face Closure Following Funding Lapse

WASHINGTON, D.C. - Congresswoman Elise Stefanik (R-NY), Chairwoman of House Republican Leadership, sent a letter to U.S. Attorney General Pamela Bondi urgently requesting the Department of Justice (DOJ) to launch an immediate investigation into the New York State Department of Health (DOH) for potential mismanagement of federal Medicaid funds under Governor Kathy Hochul's failed leadership, which has left rural hospitals on the brink of closure just weeks before Christmas, including North Star Health Alliance (NSHA) hospitals, Carthage Area Hospital, and Claxton-Hepburn Medical Center/Campus.

"Seven million New Yorkers rely on Medicaid for healthcare services. North Star Health Alliance hospitals serve the geographically isolated St. Lawrence and Jefferson Counties, where Federal tax dollars support crucial programs for the surrounding population," Stefanik wrote. "The closure of Ogdensburg's only acute care hospital would have devastating economic impacts on the region as well. North Star officials have informed my office that 1,700 jobs are threatened in the event that the state forces a closure by not releasing funds owed." She continued, writing, "Additionally, North Star Health Alliance's hospitals and affiliates form a critical, integrated healthcare network that directly supports Fort Drum, home of the United States Army 10th Mountain Division."

"Governor Hochul has long used our taxpayers' Medicaid contributions like a personal slush fund for her own benefit. The State's refusal to release promised funding and resolve procedural delays is manufacturing a crisis that threatens the health, economy, and security of the North Country," she concluded.

Stefanik requests that the DOJ investigate the following to quantify the funds owed and expose DOH's willful systemic issues:

1. Claims Volume Shortfall: What was the shortfall in claims volume during February-April 2024, the period during and immediately following the cyberattack, versus expected Medicaid managed-care encounter volume?
   
   
2. Payment Lag Time: What was the lag time in payment of claims by MCOs, and how did this overlap with the DPT rating period deadlines to potentially deny funding?
   
   
3. DPT Application: Can it be shown in detail through MCO remittance data whether DPT add-ons were applied to specific late/adjusted claims?
   
   
4. Underpayment Evidence: Is there any other evidence of underpayment by the state compared to expected CMS-approved DPT amounts from the preprint caps?
   
   
5. MCO Disputes: Have there been any disputes or correspondence between the hospital and its Medicaid MCOs regarding missed supplemental payments, and were those ever resolved?
   
   
6. Binding Guidance: Has the state issued any binding guidance requiring MCOs to retroactively account for lost claims that does not appear in public documentation?

Timeline of Key Events and Hochul's Disengagement

The timeline includes months of alleged bureaucratic delays, inconsistent guidance, and withheld funding from DOH that have severely destabilized the hospitals. It also includes cyberattacks and staff turnover that compounded the financial strain on NSHA following a pattern of purposeful politicized disengagement from Hochul's DOH and frivolous data requests that ultimately halted the progress of a state-endorsed hospital transformation plan.

Background

The letter focuses on the state's alleged mishandling of the DPT programs. New York's DPT programs are Centers for Medicare & Medicaid Services (CMS)-approved add-on payments tied directly to paid Medicaid Managed Care claims. If a claim is not processed or paid, the DPT funding is not triggered. The February 2024 cyberattack on Change Healthcare, which processes up to 50 percent of all claims, created a clear and documented mechanism for DPT underpayment. DOH allegedly refused to accept that this incident or the structural changes at NSHA such as licensure, CMS approval, and credentialing delays would result in DPT underpayments-even though public sources confirm significant disruptions to claims.

Under Hochul's politicized disengagement, DOH declined to address the underpayment, and there is no public evidence that the NYS government directed Managed Care Organizations (MCOs) to retroactively apply DPT add-ons for claims affected by the outage.

Read the letter HERE.

Permalink: https://stefanik.house.gov/2025/12/stefanik-demands-federal-investigation-into-hochul-s-nys-doh-medicaid-mismanagement-as-north-country-hospitals-face-closure-following-funding-lapse