New York has ordered Medicaid managed long-term care (MLTC) plans to tighten their review of social adult day care (SADC) claims, after Governor Hochul announced on October 20, 2026 that the state and federal government had opened a joint review of more than 100 SADC providers. Whether or not a program was named in that review, the practical exposure is the same: every SADC location is required to keep specific records under 9 NYCRR 6654.20, and a 2020 federal audit already found that most of the New York facilities it reviewed could not produce them. That gap is where today's reviewers will look first.
What the October 2026 Directive Requires
Governor Hochul directed the Department of Health (DOH) and the Office of the Medicaid Inspector General (OMIG) to require health plans to implement prepayment review of SADC claims and to pursue payment suspensions. DOH must deliver recommendations to the Governor by December 31, 2026, that may include phasing out the SADC benefit. A moratorium on new SADC providers, in effect since July 2026, continues until January 2027 and may be extended. More than 400 SADC programs currently serve approximately 45,000 Medicaid members statewide, at an estimated annual cost of more than $500 million. SADC is one of several New York home and community-based services now facing heightened documentation scrutiny, and New York is not alone in tightening oversight of community-based providers; Georgia runs its own Medicaid program integrity reviews of health care providers.
The Records 9 NYCRR 6654.20 Requires On File
New York's SADC regulation requires every program to maintain administrative and financial records, participant personal records (identifying information, emergency contacts, and medical information including the participant's physician, diagnosis, and medications), and service records, including the individual assessment, the written service plan, and documentation that each planned service was actually delivered. Programs must also complete a self-evaluation of their administrative, fiscal, and program operations at least annually, keep a copy on file, and document staff training and fire drills conducted at least twice a year. A participant's individualized service plan must be developed with the participant and reviewed at least annually.
What the Last Federal Audit Found Reviewers Check First
A 2020 audit by the HHS Office of Inspector General reviewed 20 adult day care facilities under New York's Medicaid managed care program and found that 18 of the 20 did not comply with health and safety requirements in the state's own managed care organization contracts. The audit documented 476 instances of noncompliance across four categories: staff training, physical environment and safety, emergency preparedness, and staff health status. The report attributed the gap to managed care organizations that did not adequately monitor their contracted SADC providers, and to a state that did not review the results of the site visits it required. Those four categories remain the starting point for any compliance review of an SADC program's records today.
The four categories a 2020 federal audit already flagged, staff training, physical environment and safety, emergency preparedness, and staff health status, are still where a Medicaid review starts.
The OMIG Certification Behind Every MLTC Contract
Every SADC location that contracts with an MLTC plan must certify, on a form filed separately for each location, that it meets the requirements of 9 NYCRR 6654.20, including a current certificate of occupancy, staff health and training documentation, participant assessments and service plans completed within 30 days, nutrition standards, emergency preparedness, and fire drills conducted twice yearly. OMIG's certification form states that a false statement on it may be prosecuted as a misdemeanor or felony under the New York Penal Law. Claims submitted while that certification is false can also raise civil exposure under the False Claims Act, separate from any recoupment on the underlying encounter.
A Practical Records Checklist Before Any Review
A program preparing for a Medicaid audit or an MLTC plan's prepayment review should be able to produce, location by location: the current OMIG SADC certification and certificate of occupancy; each participant's individual assessment and written service plan, signed and dated; daily attendance records tied to the billed units; transportation logs where transportation is billed separately; staff training files and health screening records; the program's most recent annual self-evaluation; and documentation of this year's fire drills. A missing record in any of these categories is what turns a routine audit appeal into a longer dispute over the underlying recoupment.
Why Early Legal Counsel Is Critical
It is critical that social adult day care programs promptly retain experienced healthcare defense counsel upon receiving an audit notice, a prepayment review request, or any other government inquiry. Early legal intervention can protect the program's rights, ensure an accurate and complete response to the specific records a reviewer is entitled to see, avoid inadvertent admissions during a site visit, and preserve defenses that are only available before a recoupment demand or a certification question becomes a referral. Delaying legal representation can significantly affect the outcome of a matter and expose the program to unnecessary risk.
How Health Law Alliance Can Help
Health Law Alliance's Medicaid audit defense attorneys represent home and community-based services providers in OMIG and state Medicaid agency audits, including the certification, documentation, and service-plan requirements that MLTC plans and state auditors are reviewing under heightened scrutiny. Health Law Alliance's attorneys have overseen 2,000+ audits and handled 5,000+ matters, with 25+ years of experience. If your program has received an audit notice, a prepayment review request, or a payment suspension, contact Health Law Alliance's Medicaid audit defense attorneys for a free, confidential consultation.
