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Arizona cutting off funding to over 100 fraudulent medical providers

A series of AHCCCS and Medicaid frauds have cost Arizona potentially hundreds of millions of dollars, preying on vulnerable Native American communities.

PHOENIX — Arizona has a problem. Illegitimate group homes have been taking advantage of vulnerable Native American people, and defrauding the state of potentially hundreds of millions of dollars in federal funding.

On Tuesday, Gov. Katie Hobbs and Attorney General Kris Mayes announced that they were immediately cutting off Arizona Health Care Cost Containment System (AHCCCS) payments to over 100 fraudulent medical providers.

The exact scope of the fraud remains unclear, but Gov. Hobbs suspects that the number of people who were taken advantage of is in the thousands. Mayes called the problem one of the biggest scandals in Arizona history.

RELATED: Police investigating Indigenous people getting 'recruited' to check into Phoenix rehab centers

These fraudulent providers would allegedly recruit Native American people in crisis. They'd be taken from vulnerable populations to participate in "treatment" at outpatient clinics with promises of food, cash payments, or rental assistance, Mayes explained. 

Once there, the patients were pressured to sign up for AHCCCS to pay for treatment, but that treatment was nowhere near what was promised. Often, it would never arrive.

Instead, people reportedly were placed into group homes with drugs and alcohol available and often cut off from their families. Gov. Hobbs described how people frequently had to jump fences in the night just to get access to a phone to call their loved ones for help.

All the while the provider would draw from the Medicaid system, "using [the patient] to overbill AHCCCS for treatment services they did not render or were grossly misrepresented," Mayes said.

In some cases, these homes would bill AHCCCS for people they weren't even in contact with, officials said. Fraudulent services were billed for people who were deceased, incarcerated, or confirmed to be living in another state.

During the investigations, the state found that a 4-year-old was supposedly getting 13 hours of alcohol rehab counseling a day. Mayes stressed that there was no way this was really happening.

"It has been a game of whack-a-mole," Mayes said of the process for shutting down these homes. Mayes accused the Ducey administration of ignoring the problem and neglecting to make systemic changes.

"At a minimum, hundreds of millions of dollars have been lost to these fraudulent schemes, but the impact could be higher," Mayes said. "This never should have been allowed to happen. The previous administrations were asleep at the switch -- asleep at the wheel."

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In response to the scams, AHCCCS is making some big changes. They'll be conducting a third-party forensic audit of all claims since 2017, implementing a new reporting system for AHCCCS claims that raise concerns, and pursuing new methods of fraud prevention.

Solari Crisis and Human Services has implemented a hotline for those affected by the closure of a behavioral health residential facility or sober living home, please call 2-1-1 and select option 7.

Officials say this is just the first step in eradicating abuse fraud by opportunistic providers.

"It will be a fight, but one that my administration and I are fully committed to," Gov. Hobbs said.


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