New York’s $1.2 Billion Medicaid Mess: What the CDPAP Scandal Really Shows

By Michael Phillips | NYBayNews

A viral claim circulating online this month alleges a $1.2 billion New York healthcare fraud scandal, described as “ten times worse than Minnesota,” and often attributed to a report by Sean Hannity. The reality is more complicated—but no less troubling.

At the center of the controversy is New York’s Consumer Directed Personal Assistance Program (CDPAP), a Medicaid-funded initiative that allows elderly and disabled residents to hire family members or acquaintances as paid in-home caregivers. Designed with flexibility and compassion in mind, CDPAP has instead become a cautionary tale of explosive growth, weak oversight, and massive taxpayer exposure.

How CDPAP Ballooned Out of Control

Once a relatively modest program, CDPAP spending surged from roughly $2.5 billion in 2019 to more than $12 billion annually by 2025, making it one of the largest and fastest-growing components of New York’s Medicaid budget.

State officials—including Kathy Hochul—have repeatedly acknowledged the problem, with Hochul calling CDPAP “one of the most abused programs in New York history” and warning of a looming fiscal crisis if reforms were not enacted.

Investigations and prosecutions over the past several years revealed a consistent pattern:

• Caregivers billing for services never provided
• Payments for patients who were hospitalized, deceased, or living far away
• Kickbacks and fake claims enabled by loosely regulated middlemen
• Fiscal intermediaries charging excessive administrative fees with minimal accountability

Individual cases alone reached staggering sums—$100 million here, $68 million there—long before broader estimates of systemic waste came into focus.

Where the $1.2 Billion Figure Comes From

The headline-grabbing $1.2 billion number does not represent a single busted conspiracy. Instead, it reflects a combination of:

• Hundreds of millions in documented fraud and theft tied directly to CDPAP cases over the past decade
• Roughly $1 billion in estimated waste, largely attributed to unregulated “fiscal intermediaries” who handled payroll and administration while allegedly enabling abuse

A former Medicaid fraud prosecutor, Richard Harrow, summed it up bluntly in reporting cited by the New York Post: “If you think Minnesota is a big deal, multiply that by ten.”

That quote fueled the viral narrative—especially online—but it is more accurately understood as commentary on scale and dysfunction, not a literal comparison of total dollar losses across states.

The Minnesota Comparison—Useful, but Misleading

Minnesota has its own massive fraud scandals, including the infamous Feeding Our Future case and broader Medicaid and social services abuses. Federal prosecutors there have described losses potentially exceeding $9 billion across multiple programs.

In other words, Minnesota’s total losses may actually be higher. The “ten times worse” framing highlights New York’s lack of controls and runaway spending, not a definitive accounting ledger.

Reforms Came—Late and Under Fire

Facing mounting criticism, New York enacted sweeping CDPAP reforms in its FY 2025 budget. The most controversial change consolidated hundreds of fiscal intermediaries into a single statewide administrator, Public Partnerships LLC, an out-of-state firm.

The goal: eliminate middlemen, strengthen oversight, and save up to $1 billion annually. The rollout, however, was rocky—marked by lawsuits, protests, and payment delays—raising new concerns about competence and transparency.

As of early 2026, the new system is operational statewide, but scrutiny remains intense.

Why This Matters Beyond New York

This is not just a blue-state embarrassment or a cable-news talking point. It is a warning about what happens when massive government programs expand faster than accountability mechanisms.

The federal government has ramped up healthcare fraud enforcement nationwide, but Medicaid remains uniquely vulnerable because it is state-administered, politically sensitive, and often shielded from aggressive oversight in the name of compassion.

The lesson from CDPAP is clear: protecting vulnerable populations does not require tolerating fraud—or ignoring basic fiscal discipline.

Bottom Line

The viral claims exaggerate some details, but the underlying story is real and serious. New York allowed a well-intentioned Medicaid program to grow into a multi-billion-dollar liability riddled with abuse. Taxpayers are now paying the price, and trust in public stewardship has taken another hit.

Whether the recent reforms actually fix the problem—or simply rearrange it—will determine whether this scandal becomes a turning point, or just another chapter in Albany’s long history of preventable failures.