Joseph DeMarco was about to turn 19 when he first showed the signs of a severe mental health condition.
By then, his family had already switched insurance plans from TRICARE, a health plan for military personnel, retirees and their families, to Mercy Care, a large nonprofit insurer that contracts with AHCCCS, Arizona’s Medicaid program.
Joseph’s mother, Seetha DeMarco, said they never struggled to find mental health providers under TRICARE.
“There was a large list, the carrier was very easy to work with,” said DeMarco, a mother of three and a behavioral health professional. “I didn’t contact a provider that was no longer enrolled with TRICARE.”
Things changed after the switch, she said.
“Each and every time I’ve contacted Mercy Care to identify a provider in the network, they direct you to a website with a list,” she said. “It would take days to go through that list and find a provider that is active and enrolled with Mercy.”
She said they didn’t find a competent provider until 2025, nearly 10 years later.
The impact extends beyond inconvenience: without timely care, people with serious mental illness often experience worsening symptoms, instability or repeated crises.
DeMarco’s experience reflects what federal investigators have identified as “ghost networks.”
A “ghost network is really a directory of providers that’s just largely unreachable, out of network or doesn’t accept new patients,” said Meridith Seife, deputy regional inspector general and a co-author of the recent report from the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services.
Companies that operate private Medicare Advantage and Medicaid managed care plans have inflated and inaccurate lists of psychologists, psychiatrists, social workers and other mental health providers they say are available to subscribers, the report found.
That runs counter to federal rules requiring plans to keep their directories current. The Centers for Medicare and Medicaid Services mandates updates every quarter or within 30 days when a provider’s status changes.
Arizona is not new to the managed care model, which means the state does not directly provide or administer most care. The state pioneered Medicaid managed care by creating AHCCCS, the first mandatory statewide program, funded mainly by the federal government, with the remaining quarter covered by the state.
The program’s proposed budget for fiscal 2025 is approximately $22.3 billion. Private insurers that contract with AHCCCS to deliver most of the physical and behavioral health services to eligible Arizonans are paid monthly per-member capitation payments from those public funds.
“There was a significant percentage of providers that were inactive, meaning they had not provided a single service throughout an entire year,” Seife said. “Almost three-quarters of them should not have been listed in those network directories.”
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HHS-OIG reviewed plans across 10 counties in five states, sampling one urban and one rural county in each, targeting “geographically representative samples around the country.” Urban Maricopa and rural Santa Cruz counties in Arizona were included in the report. In the Medicare Advantage plans, 55% of listed behavioral health providers were inactive; in Medicaid managed care plans, 28% were inactive.
HHS-OIG surveyed providers to understand why they stop participating in Medicaid managed care and Medicare Advantage networks. Many described the administrative workload as overwhelming.
“Keeping up with them (administrative requirements) is nearly impossible and clinical staff feel like they are just cogs in a wheel versus clinicians,” Seife said.
Other providers cited reimbursement rates that do not cover the cost of care, making continued participation financially unsustainable.
To address these issues, HHS-OIG recommends steps to reduce the administrative requirements and create a centralized, nationwide directory that would be a “single place that providers could list all the insurance plans they participate in, their correct addresses,” Seife said.
In a written statement to Cronkite News, AHCCCS acknowledged the challenges and outlined ongoing efforts, stating the agency recognizes “that timely access to behavioral health services is critical to the well-being of our members, and we share the OIG’s commitment to improving transparency and accountability in provider networks.”
The AHCCCS statement highlighted ongoing efforts to improve care access, including increased monitoring of network adequacy, reducing administrative hurdles for providers, investing in behavioral health workforce development and exploring improvements to public-facing provider search tools.
The state agency noted that rural and tribal communities remain the most impacted by provider shortages.
Cronkite News reached out to a number of private insurance companies operating in Arizona; however, none had responded by the time of publication.
Seetha DeMarco said improvement must move beyond policy announcements.
“There’s going to be a time where I’m not going to be there to advocate for (my children) and for the level of care and support that they need. … This is a human crisis,” she said. “We’ve got great laws (in Arizona), we’ve got great policy, it just hasn’t been implemented.”
