The $260 billion budget proposal introduced by Gov. Kathy Hochul (D-NY) in January included a significant increase to Medicaid spending. However, the governor’s election-year budget won’t quiet accountability calls regarding an alleged Medicaid abuse scheme by the state of New York and concerns over a possible cover-up by the Hochul administration. It appears to include shady financial dealings that have been under congressional investigation for a month — and could land the governor in some hot water.
On Jan. 16, House Committee on Oversight and Government Reform Chairman James Comer (R-KY) wrote a letter to Centers for Medicare and Medicaid Services Administrator Mehmet Oz over reports that, during Hochul’s time in Albany, along with previous Democratic administrations, the state of New York appears to have intentionally failed to “properly match Medicaid funds” as required by federal law, a misappropriation that, if true, disproportionately affects hospitals that handle low-income patients and billions in Medicaid funding. Comer wrote to Oz seeking a staff briefing, among other things, according to a release.
“According to recent reports, the State has been withholding or clawing back Medicaid funds from local, low-income hospitals in order to buoy its failing balance sheet,” read Comer’s letter. “As part of its investigation into these allegations of financial impropriety, the Committee requested documents and communications from the New York Executive Chamber regarding the State’s Medicaid program and use of federal funds for the Disproportionate Share Hospital (DSH) payments program.”
Comer provided some details of the alleged scheme involving New York’s Medicaid program, including the suggestion that it is illegally using funds from the public hospitals themselves to match the federal funds as part of the Disproportionate Share Hospital program. New York has repeatedly told CMS that the matching funds were sourced from the state’s General Fund, and 100% of the money would go to the hospital.
Comer also suggested such corruption predates Hochul’s administration, insofar as “the State has engaged in this behavior for more than 20 years.” In one specific example, at Nassau University Medical Center, this scheme appears to have resulted in losses exceeding $1 billion.
“The Committee is concerned that the State, and likely other states too, are failing to follow federal law by misrepresenting the source of the non-federal share that the State is responsible for providing to trigger federal dollars under the Medicaid DSH program,” wrote Comer. “Whistleblowers report that the State has concocted a scheme by which it has forced a safety net hospital to reimburse the State’s portion of the Medicaid match, despite telling the federal government the DSH funds had gone to the hospital. Reports on this scheme indicate that the State has engaged in this behavior for more than 20 years, costing taxpayers over $1 billion for one hospital alone, Nassau University Medical Center (NUMC).”
Nassau University Medical Center is located in East Meadow, New York, and is the largest hospital on Long Island. The mission of the medical center is to provide elite healthcare services to patients without regard to their finances, socioeconomic status, or ability to pay. It serves about 270,000 patients annually, according to reports, of whom more than 80% are believed to be on Medicaid.
Comer’s letter to Oz and public reporting also reference extensive efforts to cover up the state’s malfeasance. A Nov. 2025 report revealed that former Nassau University Medical Center CEO Megan C. Ryan discovered the aforementioned scheme. The whistleblower was eventually terminated from her position after filing lawsuits against the state to stop the practice and bring awareness to the alleged corruption.
Additionally, Comer emphasized that “lawsuits were filed on behalf of NUMC (Nassau University Medical Center) to recoup funds improperly sent to the State via DSH intergovernmental transfers (IGT), reports have shown that New York’s legislature, at the direction of Governor Kathy Hochul, passed a budget with provisions allowing for a hostile takeover of the Nassau Healthcare Corporation Board, the parent entity of NUMC.”
“This hostile takeover also removed control of the public benefit corporation hospital from Nassau County executive Bruce Blakeman and the firing of NUMC CEO Meg Ryan and other top NUMC executives,” read the letter. In August, the Hochul administration withdrew the pending lawsuits related to the Medicaid abuse allegations.
Last year, Ryan responded to Hochul’s takeover of the hospital: “[O]ur team has worked tirelessly to restore financial accountability, clinical excellence, and community trust,” according to a letter written by Ryan regarding the financial discrepancies she discovered. “Despite these gains, powerful interests have spent years trying to undermine this institution and distort my record [through leaks to the press alleging mismanagement]. Their intent is not to improve healthcare but to consolidate political power.”
“They were literally cheating the most at-risk patients out of the aid to which they were legally entitled,” a spokesperson for Megan Ryan’s team told the Washington Examiner. “The fact that both Oversight and CMS are taking this situation so seriously is a vindication for our client, Ms. Ryan, who has been retaliated against in unprecedented fashion by the Hochul administration. We hope that Chairman Comer and Dr. Oz’s efforts will give other safety-net hospital administrators in New York and across the country the courage to come forward with similar abuses by their states.”
MAMDANI ENDORSES HOCHUL FOR REELECTION, TOUTING PARTNERSHIP WITH GOVERNOR
Meanwhile, Comer stated that the HOC investigation initiated on July 2, 2025, requested documents and communications from the Hochul administration “concerning New York State’s Medicaid DSH program.” He mentioned that “nowhere near all” the documents were sent over.
Comer’s letter about the possible massive fraud in New York’s Medicaid system comes after the recent revelations of fraudulent abuse in state subsidies for child care programs in Minnesota. “The investigation into this program is part of the Committee’s larger investigation of fraudulent state and federal programs,” read a press release.
If these allegations are true, syphoning money from hospitals in impoverished areas is the lowest of lows, even for Democrats. These are people who need all the help they can get and are regularly receiving subsidized healthcare due to their economic conditions. Shady financial dealings violate every possible moral boundary. Moreover, given the gravity of the allegations, Congress and the Trump administration should heed Comer’s concerns and expedite their efforts to address this apparent corruption.