Homecare ‘middlemen’ sue to stop Gov. Hochul’s proposed Medicaid program overhaul

Gov. Hochul’s plan to overhaul the fraud-ridden $9 billion Medicaid home care program — which allows New Yorkers to get paid to take care of elderly adults — is facing a legal challenge from the “middlemen” companies who work as a payroll agent between Medicaid and the caregivers.

The governor quietly rammed through a measure during state budget negotiations earlier this year to replace the hundreds of financial intermediaries that pay caregivers in the popular Consumer Directed Personal Assistance Program, or CDPAP, with a singular firm to be picked by the Department of Health.

A group representing the “middlemen” firms she is trying to cut out is now suing to halt the proposal.

“This sweeping change to an eight billion dollar per year program was quietly adopted in the final days of the State budget process without public dialogue, discussion, or debate, let alone input from stakeholders and participants in the Program,” lawyers for Save Our Consumer Directed Home Care Program wrote in the lawsuit. 

“It will have the effect of putting hundreds of New York state companies out of business, costing thousands of jobs, and significantly disrupting services and/or fully depriving Consumers of services within their homes, forcing them to be institutionalized,” it continues.

Under CDPAP, New Yorkers can be paid around $38,000 a year to provide care for family members or close acquaintances.   

Hochul’s proposal was floated as a way of ensuring oversight — and to cut down on the rapidly ballooning costs.

According to the latest Department of Health figures, spending on the program has ballooned to just over $9 billion last year. Almost 250,000 New Yorkers received care through the program in 2023 compared with around 13,000 in 2015.

However, the lawsuit argues the changes specifically target the fiscal intermediaries and violate their ability to do business under the state constitution, US constitution and federal Medicaid laws.

The contract to replace the hundreds of middlemen firms with a sole firm is currently set to be awarded by Oct. 1.

Meanwhile, critics of the proposal argue that the process for picking the new firm is being rushed without transparency — for example, by specifically excluding the state comptroller’s office from reviewing the new contract, as is standard.

Naysayers also have complained that any prospective firm has to meet extremely limiting criteria, such as having experience being a statewide fiscal intermediary in another state.

In a statement provided to The Post Monday, Hochul’s office said the plan will make more efficient use of taxpayer money.

“We’re committed to protecting home care patients, strengthening CDPAP and ensuring the program is sustainable,” a spokesperson said.

“Our reforms will advance that goal by making sure taxpayer dollars are effectively serving the patients who need them.”

The lawyers from Save Our Consumer Directed Home Care Program didn’t immediately respond to request for comment. Records with the New York State Department indicate the group was formed in June of this year.

Bryan O’Malley, Executive Director of the Consumer Directed Personal Assistance Association of New York State, was not involved in the lawsuit, but his group has also ripped Hochul’s proposal.

“Governor Hochul is trying to hand over a program that makes it possible for New Yorkers to receive critical care in the comfort of their own home to one out of state corporation,” O’Malley wrote in a statement Monday.

“This process has proven to be nothing more than a half-baked, $8 billion backroom deal, and it needs to be stopped before those it serves are forced into nursing homes,” he added.