Arizona suspends payments to providers accused of millions in Medicaid fraud

PHOENIX — Arizona leaders on Tuesday announced that the state has suspended payments and will audit providers accused of engaging in Medicaid fraud in the state.

Gov. Katie Hobbs, alongside Attorney General Kris Mayes and others, said in a press conference that over 100 Medicaid behavioral health residential and outpatient treatment service providers were believed to be involved.

“Hundreds of millions of dollars” of taxpayer money has been lost as a result and vulnerable individuals, especially in tribal communities, were victimized, Hobbs said.

Mayes called it “one of the biggest scandals in Arizona history.”

“We have shut off the flow of cash to fraudulent billers that have allowed thousands of Native Americans and others to be victimized and exploited,” Mayes said.

Hobbs and Mayes placed the blame on former Gov. Doug Ducey, a Republican, for the scope of the fraud in the Arizona Health Care Cost Containment System.

Fake providers were billing patients for services that weren’t being supplied, a practice the Democrats said Ducey didn’t do enough to combat during his tenure from 2015 to 2023.

“Prior to my administration, AHCCCS had taken a piecemeal approach to targeting these fraudulent providers,” Hobbs said. “Under my administration this will change.”

Mayes called the Ducey administration “at best negligent,” a claim refuted by Daniel Scarpinato, a former Ducey staffer:

The investigation revealed today has been underway for several years, well before the current occupants took office. It was even stated that over the past three years 40-plus individuals have been indicted and $75 million has been recovered. Today’s grandstanding reveals a lack of interest in actual governing. They should just do their jobs.

The investigation has resulted in at least 45 indictments by the AG’s office, according to Mayes.

Anyone who thinks they have been affected by the scheme should call the helpline at 211 and press 7.

KTAR News 92.3 FM’s Colton Krolak and Taylor Tasler contributed to this report.

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