On October 20, 2026, New York announced a coordinated state and federal initiative targeting potential fraud and illegal activity in the Medicaid Social Adult Day Care (SADC) program. The investigation involved more than 100 SADC providers suspected of potential violations.
As part of the initiative, the Department of Health (DOH) and the Office of the Medicaid Inspector General (OMIG) were directed to work with Managed Long Term Care (MLTC) plans to strengthen prepayment review of SADC claims and pursue payment suspensions where warranted. This does not mean that every SADC will automatically be placed on prepayment review or have its payments suspended. The announcement does not establish a blanket review of the entire SADC sector. It does, however, signal increased scrutiny of claims and provider operations.
What Prepayment Reviews Could Mean for SADC Providers
Prepayment review is different from a routine post-payment audit. Rather than receiving payment and addressing a claim issue later, a provider may have to establish that a claim meets applicable requirements before the plan pays it. Claims may be delayed or denied while the plan checks provider information, member eligibility, service plans, attendance, and potential conflicts with other services.
This presents a real concern for SADC providers. Even a legitimate program may experience payment delays because its records do not match information maintained by an MLTC plan or another agency. A missing service in a member’s plan, an outdated NPI address, or a discrepancy in reported service hours may affect payment even when the SADC properly provided and documented the services. Prolonged reviews and repeated denials can put pressure on a program’s ability to pay staff and continue serving members.
Prepayment review itself is not a finding of wrongdoing. The important distinction is that increased screening does not mean every provider is suspected of fraud or that every claim will be denied. Providers should nevertheless review their records now and address discrepancies before they affect payments.
What Could Cause Your Claims to Be Denied?
MLTC plans are expected to introduce automated claim edits that will deny claims when specified requirements are not met. SADC providers should pay particular attention to the following areas:
Contracts and provider information. Each claim must be covered by an active MLTC contract or valid single case agreement. A single case agreement is valid only when the program serves fewer than five members enrolled in that particular plan. Plans will also check whether the program has an active National Provider Identifier (NPI), whether its name and address match the plan’s records, whether the program or its owner appears on the OMIG exclusion list, and whether the plan previously terminated the program for cause. Claims may also be denied when attendance exceeds the site’s authorized occupancy under its certificate of occupancy.
Member service plans. Each member must have an active person-centered service plan that meets state and federal requirements and includes the information required by the State’s SADC template. The MLTC plan’s own service plan must also identify SADC as a service. SADC may be the member’s primary service, but it cannot be the only service listed.
Attendance documentation. Records must identify the member and member identification number, date of service, actual arrival and departure times, and specific service location. Plans will also verify that the member is living and actively enrolled.
Overlapping services. Claims may be denied if a member was in a hospital or nursing facility on the same day or received 12 or more combined hours of personal care, consumer directed personal assistance, or home health aide services within the same 24-hour period.
Billing practices. Plans will review compliance with current billing and coding guidance and use automated tools, including artificial intelligence where appropriate, to flag impossible time overlaps, sudden revenue increases, and other unusual billing patterns.
Some of these checks depend on information the SADC does not control. The MLTC plan maintains its own service plan, and other agencies may provide the home care hours that trigger a billing conflict. A provider may have accurate attendance records and still face a denial because information elsewhere does not match.
What Will MLTC Plans Review During Onsite Evaluations?
Increased oversight will extend beyond individual claims. MLTC plans are expected to conduct initial and annual onsite evaluations of each SADC location. These evaluations may include verification of active contracts, network records, annual OMIG compliance certifications, and NYC Aging registration, where applicable. Plans may also interview staff and members, review background checks and driving records for staff, volunteers, and contractors, and examine staffing levels and occupancy limits. The suggested staffing ratio is one staff member to seven members.
Plans will also examine whether multiple programs operating at the same address are genuinely separate operations, whether the NPI registry accurately reflects the program’s name, address, taxonomy, and ownership, and whether SADC remains an appropriate level of care for each member or a higher level of care, such as adult day health care, is necessary.
What SADC Providers Should Do Now
Providers should review their records before an MLTC plan identifies a problem or claims begin to be denied. Confirm that contracts and single case agreements are current, and review the contract provisions governing claim denials, notice, cure periods, termination, and dispute resolution. Make sure the program’s name, address, ownership, and taxonomy are consistent across the NPI registry, MLTC plan records, OMIG certification, and NYC Aging registration, where applicable.
Review member service plans to ensure they are current and contain the required information. Check attendance records for complete and accurate entries, and pay particular attention to overlapping services, billing requirements, and occupancy limits. Providers should also confirm that staffing levels, background checks, and driving records are in order.
Monitor remittance advice for new denial patterns and raise discrepancies with MLTC plans promptly. Do not alter or backdate records to fill documentation gaps. If a plan places the program on prepayment review, begins withholding payments, or threatens termination, the provider should promptly examine the basis for the action and the rights available under its contract.
The State has not announced a decision to eliminate the SADC benefit. It is considering options for the program, including possible changes to the benefit and the transition of members to other services. Until further action is announced, SADC providers should continue operating under existing requirements.
The coming months will bring closer scrutiny, and prepayment reviews may create serious financial challenges. But increased oversight does not mean every SADC is suspected of wrongdoing or that legitimate programs have no future. Providers that review their records, correct inconsistencies, and understand their contractual rights will be better prepared to respond to claim reviews and protect their operations.
MDRXLaw represents SADC providers in matters involving MLTC plans and New York Medicaid oversight. We assist with compliance reviews, MLTC contract disputes, claim denials, audit responses, payment suspension challenges, and contract terminations.
To discuss your program’s compliance or respond to an MLTC plan action, call 212-668-0200 or email info@mdrxlaw.com.
