Rep. Elise Stefanik (R-NY) pressed Attorney General Pam Bondi to step in for upstate New York hospitals to prevent “economic devastation” because of alleged Medicaid abuse in the state.
Stefanik, who is running for governor in 2026, accused Gov. Kathy Hochul (D-NY) of using Medicaid contributions “like a personal slush fund for her own benefit” in a letter shared with the Washington Examiner.
Stefanik wrote that New York has refused to pay out Medicaid funds owed to North Star Health Alliance hospitals for services provided “years ago.” She said those hospitals “are now on the brink of closure” and any withholding of funds would be “devastating” in terms of economic and health outcomes.
The hospitals confirmed the funding pause, with North Star CEO Rich Duvall saying, “Despite achieving final milestones in collaboration with the DOH and federal regulatory agencies, financial support has stalled at a critical point. This transformational plan for the North Country is in jeopardy, clearly threatening Safety Net Hospitals, its employees, and the patients who trust us for their care.”
The funds are being withheld, Stefanik said, due to the mismanagement of the state’s Direct Payment Template programs. She said DPT relies entirely on paid claims flowing through Medicaid managed care organizations, and the system is vulnerable to errors because payments only go through when they are paid by a Medicaid managed care plan.
“Any interruption in claim submission, routing, adjudication, or payment results in a direct loss of DPT dollars,” Stefanik wrote. “There is no automatic reconciliation mechanism in New York to compensate hospitals,” when there are interruptions in the process.
Stefanik said she is concerned that the withheld funds will affect upstate New York hospitals in St. Lawrence and Jefferson counties. Residents of Ogdensburg in the former county would have to drive more than 45 minutes to the nearest acute care facility if their only hospital were to close, Stefanik said.
She said she is also concerned that Fort Drum, which houses the Army’s 10th Mountain Division, will suffer consequences because personnel rely on North Star facilities.
“The closing of North Star facilities would leave a significant gap in services for Fort Drum, compromising military readiness, disrupting continuity of care, and threatening the health and stability of military families across the region,” Stefanik wrote.
Stefanik said, at best, a cyberattack on Change Healthcare/Optum last year created a “clear mechanism” for the hospitals to be underpaid due to the DPT system, and legal problems could arise. She added that structural changes that took place at North Star, “with the state’s knowledge and rhetorical support,” also drew additional unpaid services that result in further DPT underpayments.
However, at worst, Stefanik alleged Hochul has used “federal tax dollars to selfishly further her own political aspirations.” She then accused the governor of using the money as a “personal slush fund” and asked the Justice Department to require New York to pay the hospitals and begin an investigation into the alleged mismanagement of the funds by New York’s government.
Hochul’s office denied any allegations that the state has withheld federal Medicaid funding and slammed Stefanik.
“These claims are baseless. New York State is not withholding federal Medicaid funding,” a Hochul spokesperson told the Washington Examiner. “Thanks to Elise Stefanik, more than 57,000 North Country residents will lose their health insurance, healthcare providers will incur an additional $96 million in uncompensated care cost and critical funding programs for safety net hospitals will be cut.”
“Since 2024, Governor Hochul has provided more than $9.5 billion in supplementary funding to safety net hospitals statewide, including $142 million for Carthage and Claxton-Hepburn,” they added. “If Elise Stefanik cared about patient care in her community, she would join us in fighting to restore the health care access and funding to hospitals that she and her Republican colleagues brazenly cut.”
Stefanik is running against Hochul for governor in 2026, but will first have to go through her primary opponent, Nassau County Executive Bruce Blakeman, who has stirred the pot in the race with his entry. President Donald Trump has shown indecision in choosing between the two candidates.
Democrats accused Stefanik earlier this year of devastating rural hospitals in New York by voting for the One Big Beautiful Bill Act, Trump’s government funding legislation. The bill cut billions of dollars toward Medicaid, worrying rural hospitals that their budgets would be stretched too thin.
The Department of Justice confirmed receipt of the letter but declined to comment further.