New York’s primary Medicaid fraud watchdog is completing far fewer audits and recovering less money than it did several years ago, even as the state’s Medicaid program has grown dramatically, according to a new analysis from the Empire Center for Public Policy.
The Albany-based think tank reviewed annual reports from the state Office of Medicaid Inspector General and found that from 2019 to 2024, completed audits fell 62%, inflation-adjusted recoveries dropped 27% and referrals to other agencies declined 44%.
Over the same period, New York’s Medicaid spending increased 65%, from about $72 billion to $101 billion, while staffing at the inspector general’s office rose 17%, from 391 to 472 employees.
The Empire Center said that combination pushed audits per billion dollars of Medicaid spending to the lowest level in the agency’s 20-year history. Audits per full-time employee fell to the second-lowest level on record.
The Office of Medicaid Inspector General, commonly known as OMIG, was created in 2006 as an independent agency within the state Department of Health. Its mission is to identify and recover losses tied to Medicaid fraud, waste and abuse.
According to the Empire Center’s review, OMIG finalized 1,842 audits in 2019. By 2024, that number had fallen to 702.
Recoveries also declined. In inflation-adjusted 2024 dollars, OMIG recovered about $302 million in 2019 compared with $220 million in 2024.
Referrals to other agencies dropped from 768 to 431 during the same five-year period.
The report argues that those declines are particularly notable because the Medicaid program itself expanded substantially over the same timeframe.
New York’s Medicaid program is one of the largest in the country and provides health coverage to low-income residents, people with disabilities and other eligible populations.
The Empire Center said OMIG’s current output stands in contrast with the office’s earlier years, when it developed a reputation for aggressive enforcement under its first director, James Sheehan.
That approach changed after Andrew Cuomo became governor in 2011 and replaced Sheehan. The state subsequently moved toward what officials at the time described as a less adversarial audit model.
Staffing at OMIG declined through much of the Cuomo administration and reached a low point early in the COVID-19 pandemic.
The agency’s budgeted staffing has increased under Gov. Kathy Hochul, but the Empire Center said staffing remains about 9% below its 2011 peak.
The report also comes as federal officials have been pressing states to strengthen Medicaid fraud enforcement.
Earlier this year, the federal Centers for Medicare & Medicaid Services sent New York a series of fraud-related questions. In its response, the state Department of Health pointed to OMIG as evidence of what it described as robust oversight.
The department noted that New York is one of only three states with a Medicaid inspector general’s office dedicated specifically to fraud, waste and abuse, and said OMIG had more than 480 employees as of March.
The Empire Center said the state’s response did not address the decline in audits, recoveries or referrals.
The report also drew a connection to another Medicaid enforcement arm in New York — the attorney general’s Medicaid Fraud Control Unit.
The Empire Center previously found that enforcement activity in that unit had also declined in recent years when measured against the scale of New York’s Medicaid spending.
That issue has already drawn federal scrutiny, with the Trump administration suspending federal funding for the attorney general’s Medicaid fraud unit over what it described as weak performance.
Taken together, the Empire Center argues the data show a widening gap between the size of New York’s Medicaid program and the amount of enforcement activity aimed at fraud, waste and abuse.
The report does not establish that fraud itself has increased or that fewer audits necessarily mean more improper spending is going undetected. It does, however, show that several core measures of OMIG activity have fallen substantially while both program spending and agency staffing have increased.
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