NewsArizona News


State uncovers massive Medicaid fraud targeting Native Americans

Katie Hobbs Title 42 presser
Posted at 5:48 PM, May 16, 2023
and last updated 2023-05-17 12:01:44-04

PHOENIX — Across Arizona's Indian Country, people started going missing.

The son of a constituent of State Representative Mae Peshlikai was one of them. Peshlikai recounted a conversation she had with his mother.

"My son called me," the Representative was told, "I wanted to let you know that he communicated to me that he was picked up at the local grocery store parking lot and he was down here in Phoenix."

It turns out the young man is one of potentially thousands of vulnerable Native Americans who were taken off the Reservation and driven to Phoenix with promises of food, shelter and treatment for their substance abuse by behavioral health companies who are allegedly scamming the Arizona Health Care Cost Containment System.

"We have credible reason to believe they have defrauded the state medical program out of 100's of millions of dollars," Governor Katie Hobbs said.

The governor said once the patients arrived at the treatment centers they weren't allowed to leave or contact family. Some escaped by climbing through windows and scaling fences.

Governor Hobbs and Attorney General Kris Mayes announced the state suspended payments to more than 100 health care providers.

All of them were accused of billing AHCCCS for services that were grossly misrepresented or never rendered.

"The Medicaid fraud became so rampant that some of the scammers didn't bill AHCCCS for people they were in contact with," Attorney General Kris Mayes said. "They simply purchased lists of names and date of births of people and used those to bill AHCCCS."

Mayes said that included one company billing more than 13 hours a day for alcohol rehabilitation services to a 4-year-old. And another company billed the state $1,000,000 for a mother and her two children who also did not receive care.

The governor and attorney general say the alleged fraud began during former Governor Doug Ducey's Administration.

According to Attorney General Mayes, despite warnings from AHCCCHS' Inspector General, the level of questionable billings grew exponentially.

In 2019, AHCCCS paid out $53 million. In 2020, the cost jumped to $132 million. In 2021, it ballooned to $291 million. Last year it rose to $668 million.

"The office of the Inspector General was raising alarm bells within AHCCCS about this to no avail," Mayes said, "The director of AHCCCS under Governor Ducey did nothing to stop the money flow."

The Attorney General says 45 indictments have been returned and more than $75 million has been seized or recovered. Earlier this month, the Attorney General's Office sent target letters to more than 100 companies alerting them that they are targets in a criminal investigation.

AHCCCS is now undergoing a forensic audit dating back three years, the time the agency believes the fraudulent billing started.

AHCCCS also established a dedicated hotline 2-1-1 (press 7) for individuals who have been impacted by the closure of a sober living home or residential facility.

It has also been arranged for mobile crisis teams to be ready to deploy when members need hands-on immediate health services.