Arizona faces fraud crisis amid Medicaid scandal

PHOENIX — Arizona’s attorney general says one of the largest scandals in state history just got harder to fix.

Attorney General Kris Mayes says as much as $2 billion may have been stolen from AHCCCS, the state’s Medicaid program, in a long-running, widespread sober living fraud scheme.

The money, she says, was paid to fake or corrupt providers, many of whom targeted Native American communities, and may never be recovered.

And now, the state agency at the center of the crisis has no leader.

Carmen Heredia, the director of AHCCCS, resigned Wednesday rather than face a confirmation hearing before the Arizona Senate. 

Mayes criticized Republican lawmakers Thursday for how she says they’ve handled the confirmation process.

“Anything that harms our ability to prevent this fraud and save lives is, frankly, a travesty,” Mayes said.

Her comments came while she was awarding grants to new tribal sober living programs to compensate and otherwise help legitimate tribal sober living providers. 

Hundreds of providers are suspected of overbilling, billing for patients who were dead, or charging for services never rendered. Mayes cited one case where a provider billed for alcohol rehab for a four-year-old.

Mayes said most of the victims were Native Americans who needed help but never received it. Meanwhile, fraudulent providers collected payments through AHCCCS.

So far, Mayes’s office has issued more than 100 indictments, secured 25 convictions, and recovered roughly $100 million. 

Republican Sen. Jake Hoffman, who chairs the committee overseeing confirmations, previously called Heredia’s handling of the crisis “incredibly disturbing.” 

He declined to be interviewed on Thursday but has previously accused AHCCCS of shutting down facilities without arranging alternative placements for patients and suspending legitimate providers.

“If anything, we need to be more aggressive in cutting off these bad actors and prosecuting these bad actors, and for Jake Hoffman to suggest otherwise just demonstrates his ignorance,” Mayes said.

Mayes has issued more than 30 recommendations to AHCCCS on how to prevent further fraud. Some, she says, were implemented by Heredia. But with Heredia gone, someone else will have to take over.

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