Arizona’s Medicaid program isn’t giving suspected fraudsters due process, critics say

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[MM Curator Summary]: Some providers are getting caught in the crossfire as the state tries to deal with the humanitarian crisis / fallout from the sober homes fraud last year.


Stephanie Innes

Arizona Republic

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The number of people publicly criticizing Arizona’s Medicaid fraud crackdown appears to be growing and protesters say they won’t stop until state leaders address their concerns.

About 60 people, carrying signs with slogans such as “All Tribes Lives Matter” and “Our Struggle Is Real,” gathered Tuesday in front of the Arizona Health Care Cost Containment System offices at 801 E. Jefferson St. in Phoenix on to criticize the way the agency has responded to rampant fraud involving its American Indian Health Program.

A much smaller group of protesters gathered a week ago in front of the state health department.

State officials have said the fraud involved fake behavioral health clinics billing the state for services they never provided and that the clinics preyed on Indigenous people struggling with substance use disorder.

In some cases, clinics in the Valley were using white vans to kidnap people from indigenous reservations and take them to bogus treatment facilities, sometimes holding them against their will, investigators have said.

Navajo Nation President Buu Nygren on June 20 declared the fraud a humanitarian crisis on the Operation Rainbow Bridge Facebook page. The fraud reportedly spread to tribes in other states, including Montana, where the Blackfeet Nation in August declared an emergency over the scam, the Associated Press reported.

The Navajo Nation launched Operation Rainbow Bridge to help people who were caught up in the scams get home or find the services they need.


But critics say that the state’s effort to punish fraudsters and prevent more theft of taxpayer dollars has caused an increase in homelessness and unemployment, and left some people without the treatment they need. At least 102 providers were suspended from the AHCCCS program in May, and others have since been suspended in connection with the alleged fraud.

Patients are suffering and in some cases are dying because they aren’t getting the help they need, said Ashley Adams, an attorney who attended the protest. She said she is representing some of the providers who have either been suspended or otherwise harmed by the state crackdown.

“The bad actors set the tone for everyone else,” Adams said. “Anyone who got into this business at a certain time is assumed to be bad … (AHCCCS) is not doing investigations, they are not interviewing employees or looking at records. They are making assumptions.”

A big part of the problem, Adams said, is that much of the fraud began during the height of the COVID-19 pandemic, when demand for behavioral health and substance use disorder treatment was increasing and the health system in general was trying to improve access for patients.

But the state’s response after discovering the scam clinics and money loss was to have a “knee-jerk reaction” and now all providers of services through the American Indian Health Program are assumed to be fraudulent, she said.


“There are solutions to be found aside from suspending everybody,” she said. “They are suspending providers that were doing good work.”

Protest organizer André Miller, a pastor, mayoral candidate and behavioral health provider from Mesa, said his group is trying to meet with Arizona Gov. Katie Hobbs to outline its concerns but that so far they’ve bene unable to to secure any of her time. Hobbs’ office did not respond Tuesday to a request for comment. Miller said his group will continue its public protests until state leaders respond.

Hobbs’ office issued a statement last week when the protesters were outside the Arizona Department of Health Services that said her administration “has worked relentlessly to crack down on fraud, protect taxpayer dollars and end the humanitarian crisis created by fraudulent sober living homes that have endangered some of Arizona’s most vulnerable.”

The statement emailed by Hobbs spokesperson Christian Slater said the administration has been working to get resources for those affected, “providing 13,700 nights of temporary lodging and transportation for over 750 people affected, and directly serving over 4,000 individuals.”

Investigators have said the scam primarily targeted indigenous Arizonans through the AHCCCS American Indian Health program, which allows providers to bill AHCCCS directly as fee-for-service rather than to managed care organizations, which is how most of the agency’s billing is handled.

Miller and some other providers say they they’ve been forced to fire employees, not because they were suspended, but because payments from AHCCCS are delayed because of extra checks and balances the agency put in place to prevent more fraud.

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AHCCCS was allegedly bilked for “hundreds of millions of dollars,” Arizona Attorney General Kris Mayes announced in May at a multi-agency news conference led by Hobbs. The scam was a “stunning failure of government,” Mayes said at the time.

Newfound Hope Wellness & Detox Center in Tempe, which serves primarily indigenous patients, was suspended from AHCCCS payments in February because of suspected fraud, though the owners, who attended Tuesday’s protest, say there’s no evidence any fraud occurred.

Tara Sutherland is living at a facility operated by Newfound Hope with her four children and is fearful that if the organization doesn’t get its provider suspension lifted soon, she’ll be without a place to live. Sutherland, 50, is Navajo and is getting help for substance use disorder involving drugs and alcohol. She and her children were homeless for two months in the spring after a sober living home where they were residing closed.

“We were living in my van and my car. We were parking here and there, maybe staying overnight at friends’ houses, it was hard,” Sutherland said. “Now they are starting in new schools and I don’t want them to keep transferring.”

AHCCCS officials on Tuesday did not have any comment other than to reiterate what they said last week, which is that the agency continues to investigate and suspend behavioral health providers for credible allegations of fraudulent billing, and that its top priority is the health and safety of enrolled members.

Reach health care reporter Stephanie Innes at or at 480-313-3775. Follow her on X, formerly known as Twitter @stephanieinnes.

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