OGDENSBURG — Congresswoman Elise Stefanik wants the Trump administration to look into how the New York state Department of Health has handled Medicaid funding, an apparent result of her efforts to investigate how the state has handled the hospital as it tries to transition itself to a new way of doing business.

On Monday, Stefanik sent a letter to Attorney General Pamela Bondi at the U.S. Department of Justice, requesting that the department look into her claims that New York’s Health Department is withholding Medicaid funding that was due years ago to Claxton-Hepburn’s owners, the North Star Health Alliance.

Stefanik alleges in her letter that Gov. Kathy Hochul is playing ‘political games’ with the hospital in her Congressional district, driving the facility and others in the region towards financial collapse and closure.

In her letter, Stefanik alleges that the state has thus-far refused to provide payments missed by Claxton-Hepburn as far back as February 2024, when the national healthcare payment processing company Change Healthcare was hit with a cyberattack. Hospitals everywhere, including North Star facilities, were unable to process claims and payments through the vital Change network, and that included Medicaid payment requests. Stefanik says there’s no evidence to suggest that the state moved to adjust missing payments for Claxton-Hepburn or other statewide hospitals impacted by the hack.

Stefanik said this issue, which would not be directed at Claxton-Hepburn directly but rather impact all hospitals with Medicaid patients in the state, demonstrates how Hochul is missing the mark on healthcare and risking rural residents first. She noted that a hospital closure in Ogdensburg would be particularly detrimental because the city’s 10,000 residents have no other nearby hospitals, and traveling to other healthcare centers in the winter months can be difficult.

She also seemed to overstate the North Country’s winter weather somewhat, suggesting that northern New York roads have “icy and snow-covered roads for ten months out of the year,” in normal conditions.

This letter seems to be the result of her investigation into an ongoing financial problem brewing at Claxton-Hepburn, which she announced her office would be undertaking about two weeks ago when hospital officials first sounded the public alarm they were headed towards a fiscal cliff.

That issue revolves around long-term funding provided to the hospital as its owners, North Star Health Alliance, attempt to reconfigure the hospital into two separate facilities on one campus; Claxton Hepburn Medical Center to run the mental health ward, and Claxton Hepburn Medical Campus to run a 25-bed general hospital and the rest of the facility. That smaller size means the hospital can enjoy a better reimbursement rate for Medicare patients, among other benefits.

That complex transition required North Star to essentially shut down Claxton-Hepburn in its original form and reopen it as two new hospitals. For months, they’ve been unable to bill insurance companies for care they’ve provided because they weren’t fully processed through the federal, state and corporate bureaucracies. Some Claxton-Hepburn patients will have noticed they’ve only recently gotten bills for care they received as long ago as November 2024, because the hospital was not able to bill for that care until recently.

In a timeline provided by the Congresswoman, she asserts that strained relations between the hospital system and the state Department of Health started in the fall of 2024, when the Department accidentally double-counted weekly expenses in a cash flow report being provided as a part of the state’s agreement to provide operational financial support through the transition. She said that was fixed by Jan. 15, 2025, when the Health Department acknowledged they’d been mistaken and acknowledged the needs of the hospital.

Stefanik says that between the summer of 2024 and April of this year, nearly the entire North Star Health Alliance accounting department left the company, which she says contributed to a delay in them providing the Department with relevant data.

By the spring of this year, she said relations got worse, with the state DOH asking for large and complex datasets. On May 28, the New York Health Department stopped its weekly meetings with North Star Health Alliance executives, citing an inability to answer data requests. They eventually resumed.

Into the summer, Claxton Hepburn started to struggle financially. Stefanik said this is when the Alliance started deferring vendor payments and asking the Health Department for urgent assistance. In August, Stefanik said a further broad list of data requests was sent over, which required North Star to dedicate more in-house staff to answering state DOH questions. On Aug. 4, the state again stopped weekly meetings with North Star, and kept those meetings paused for another four months.

The issue hit a fever pitch in late November, when it became evident North Star didn’t have the money to pay the Claxton-Hepburn salaries due in the second week of December. That’s when Stefanik and area lawmakers state Senator Mark Walczyk, R-Sackets Harbor and Assemblymen Scott Gray, R-Watertown and Ken Blankenbush, R-Black River, took the issue public. With the blessing of North Star’s executives, they issued a press release and Stefanik and Walczyk launched investigations out of their respective legislative offices.

By Friday, North Star announced they’d managed to find a way to pay the hospital’s bills for the week, through great effort. Some senior staff took a pay cut to free up money for others, and a number of the hospital’s local vendors deferred their regular bills. Members of the community donated to the hospital, and altogether about $5.5 million were sent to hospital staff.

That seemed to irk the Hochul administration — her senior spokesman said this was evidence that the issue was wholly overblown and being used as a political pawn piece. Stefanik is running to unseat Hochul, and the campaign has been particularly hostile and personal.

At the same time, it looks like the state health department is comfortable sending cash to the Alliance again. On Tuesday, the hospital system announced it had been awarded $4.9 million in a state DOH transformation grant, aimed at helping them modernize technology at Claxton-Hepurn, Carthage Area Hospital and Meadowbrook Terrace assisted living facility. That’s not related to the overall move to transition the Claxton-Hepburn in its entirety, but is part of larger efforts to improve care across North Star’s medical centers.

A spokesperson for the Governor on Tuesday said that Stefanik’s latest allegations, that the state systematically underpaid hospitals for Medicaid patients during the Change Healthcare hack, are baseless, as they have countered all claims the Congresswoman has leveled at them regarding this situation.

“New York state is not withholding federal Medicaid funding,” a spokesperson for the Governor said, before turning the issue back on Stefanik. As they have done throughout the weeks-long back and forth over the hospital issue, Hochul’s team pointed out that Stefanik voted for a bill in Congress, the “One Big Beautiful Bill,” to enact the core Trump agenda that is projected to risk closure of up to five hospitals in northern New York, including Claxton-Hepburn.

By voting to shrink eligibility for Medicare and Medicaid, alongside her general lack of support for the Affordable Care Act, Hochul’s team argues that Stefanik has voted to cut the number of insured, low-income people in her district, which will drive up the rates of uninsured patients seeking care at local hospitals. Those bills go unpaid, or drastically reduced, and the hospitals end up losing a significant proportion of their already thin revenue streams.

“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,” Hochul’s spokesperson said. “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. 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.”

A spokesperson for North Star said on Tuesday that the group continues to cooperate with the state DO,H specifically on their funding needs.

“We’re encouraged by the ongoing conversations,” they said.

The hospital group had no response to questions about Stefanik’s request to the Department of Justice to open an investigation.