Following Governor Hochul's October 20, 2026 directive, New York Medicaid managed long-term care (MLTC) plans must now put social adult day care (SADC) claims through prepayment review and pursue payment suspensions where the federal credible allegation of fraud standard is met. For a program, prepayment review means a claim sits until the plan has reviewed the supporting documentation, before payment rather than after. A payment suspension under 42 CFR 455.23 is a different and harsher step, and it can run for the length of an entire investigation.
What Prepayment Review Changes
Under prepayment review, an MLTC plan examines a claim and its supporting records, which for an SADC claim means the participant's individual assessment, written service plan, and documentation of service delivery required under 9 NYCRR 6654.20, before releasing payment rather than auditing it afterward. The state has ordered plans to apply this review across SADC claims as a blanket condition, independent of any fraud finding against the specific program under review, similar to the documentation standard other New York home and community-based services already face in federal HCBS audits. The practical effect for a program is a recurring cash-flow delay on every claim subject to the review.
The Federal Standard for a Payment Suspension
Under 42 CFR 455.23, a state must suspend Medicaid payments to a provider on a credible allegation of fraud for which an investigation is pending, unless good cause exists not to, and may do so without advance notice to the provider. The state must then send notice within five days of suspending payment, or up to thirty days if law enforcement asks in writing to delay it, a delay law enforcement can renew in writing up to a combined ninety days. The notice must describe the general nature of the allegation, state that the suspension is temporary, identify the affected claim types, and inform the provider of its right to submit written evidence for consideration. A suspension ends only when the state finds insufficient evidence of fraud or the legal proceedings on the allegation are completed, and the state must refer the matter to the Medicaid Fraud Control Unit in writing no later than the next business day. Good cause to limit or lift a suspension exists in defined circumstances, covered in a separate article on good cause exceptions to a Medicaid payment suspension.
A payment suspension under 42 CFR 455.23 is temporary by definition, but it can last as long as the investigation behind it.
Managed Care Plans Carry the Same Suspension Duty
A separate rule, 42 CFR 438.608, requires each managed care contract to include a provision for the MLTC plan's own suspension of payments to a network provider where the state determines a credible allegation of fraud exists under 455.23. An MLTC plan does not apply its own, separate fraud standard to suspend a program's payments; its suspension authority tracks the state's determination under 455.23, which is why the state's October 2026 directive to pursue suspensions runs through the plans as well as through OMIG directly.
The Records a Reviewer Will Request
Whether a claim is in prepayment review or a program is responding to a suspension notice, the records at issue are largely the same ones 9 NYCRR 6654.20 already requires every SADC location to keep: each participant's individual assessment, written service plan, and documentation of service delivery, together with the current OMIG SADC certification every location under an MLTC contract must complete. A plan or the state can request these for a single claim or across a sample period, and the completeness of that production is what determines how quickly a prepayment review resolves.
How a Program Should Respond
A program facing prepayment review or a suspension notice should retain counsel before responding, produce a complete and accurate set of the records requested, and never create, alter, or backdate a record to fill a gap after the fact. Every deadline in the notice, including the window to submit written evidence and any audit appeal deadline that follows a subsequent recoupment determination, should be tracked and met. A payment suspension does not resolve, and does not pause, any parallel criminal investigation behind it, and records or statements produced to satisfy a plan's document request can also surface in that investigation.
Why Early Legal Counsel Is Critical
It is critical that social adult day care programs promptly retain experienced healthcare defense counsel upon receiving a prepayment review request, a payment suspension notice, or any other government inquiry. Early legal intervention can protect the program's rights, ensure an accurate and complete response to a document request, avoid inadvertent admissions, and preserve the right to submit written evidence within the deadlines a suspension notice sets. 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 social adult day care programs through prepayment review, payment suspension notices, and the underlying audit or investigation behind them. 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 a prepayment review request or a payment suspension notice, contact Health Law Alliance's Medicaid audit defense attorneys for a free, confidential consultation.
