Gov. Katie Hobbs (D-AZ) has unveiled measures to narrow in on a fraudulent Medicaid scam targeting Native Americans through billing for outpatient health services to alleged criminal activity.
The Hobbs administration was joined by 13 representatives from indigenous tribes and the director of Arizona Health Care Cost Containment System, or AHCCCS, to announce they will suspend payments to over 100 providers and can expect more.
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Behavioral health companies are suspected of billing for mental health treatment and addiction rehabilitation that was never supplied.
“I have heard stories of the pain and suffering that these exploited individuals have gone through — desperate people struggling with addiction picked up off the street and dropped in a home with drugs, alcohol, and no treatment available,” Hobbs said.
The FBI and the U.S. Attorney’s Office joined the investigation, which rounded up at least 45 indictments and seized or recovered $75 million.
“We have suspended payments to approximately 100 Medicaid providers based on credible allegations of fraud,” AHCCCS Director Carmen Heredia said.
Attorney General Kris Mayes said the Medicaid fraud was so extreme that the accused was billing people who were in jail, dead, or not residing in Arizona, and “some of these scammers didn’t even bill [the Arizona Health Care Cost Containment System] for people they were in contact with.”
“They simply purchased lists of names and dates of birth of people and used those to bill AHCCCS,” Mayes said.
Representatives also called for AHCCCS to be held responsible, as this crisis has been silently going on for years under former Director Jami Snyder. Heredia currently serves as the director of AHCCCS and Arizona’s Medicaid and CHIP Program after being appointed by Hobbs in December 2022.
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“AHCCCS also needs to be held accountable for allowing this to happen for the last three years,” said Thomas Cody, executive director for Navajo Divisional Social Services.
The investigation announcement came weeks after Hobbs and the legislature permitted Arizona’s Medicaid program to spend more than $1.6 billion in federal funding for the rest of the fiscal year. A bill provided $3.36 billion in funding requested by the AHCCCS, ensuring the system can cover expenses for the year.
The Hobbs administration announced in the press conference its plans to continue to investigate and prosecute criminal cases while considering systemic changes to prevent a high level of fraud like this from recurring.
