AHCCCS halts payments to 100 providers as officials allege multi-million-dollar scam targeting Native Americans 

The Arizona Health Care Cost Containment System, better known as AHCCCS, suspended payments to more than 100 care providers suspected of scamming the state out of hundreds of millions of dollars while victimizing thousands of Native Americans, officials said on Tuesday. 

State, federal and tribal officials said operators of fraudulent sober living homes raked in taxpayer dollars by recruiting Native Americans to enter the facilities and then billing for treatment that was never provided.  

Rather than providing legitimate healthcare, the fraudulent facilities in many cases fed tribal members’ addictions or substance problems in order to keep them under control and at the facilities, officials including Gov. Katie Hobbs, Arizona Attorney General Kris Mayes and Navajo Nation Attorney General Ethel Branch said at a news conference. 

“For years, these providers have allegedly defrauded the state of millions of dollars, while creating a large-scale humanitarian crisis that disproportionately affects Arizona’s tribal communities,” Hobbs said. 

“Many of these predatorial behavioral health facilities have and continue to take advantage of populations that are most at risk, only to enrich themselves,” said Martin Harvier, president of the Salt River Pima-Maricopa Indian Community. 

It’s a known scheme that law enforcement and tribal leaders have struggled to contain in recent years, even as exploitation continued out in the open. 

Operators or associates of the sham healthcare centers may pick up people who are unhoused, low-income, alone or intoxicated, and transport them to residential centers after promising to provide food, housing and access to care. Perpetrators target Native Americans both on reservations and in urban areas like Phoenix. 

Family and friends of the victims often don’t know what’s happened and file missing person reports. Some have died in the facilities and others have suffered severe mistreatment. 

“For Hopi, it’s gotten so brazen where we’ve had – we call it the ‘white van syndrome.’ The predatory recruitment happening directly at our IHS (Indian Health Services) facility,” said Timothy Nuvangyaoma, chairman of the Hopi Tribe. 

Hobbs said that potentially thousands of people were victimized by the fraudulent health providers, but she said the practice of “ghost billing” means it’s difficult to determine how many real people were affected. 

Mayes said that a “stunning failure of government” had allowed the abuses to continue for years. 

“I don’t think it is too much to say that this is one of the biggest scandals in the history of the state of Arizona… Our office estimates that it is in the hundreds of millions of dollars – it could go higher than that,” the Attorney General said.  

AHCCCS Director Carmen Heredia said the state Medicaid agency would conduct a financial audit to review potentially fraudulent payments. AHCCCS suspended payments to 102 providers on Monday, per information on the agency’s website. It’s required to stop payment to providers after receiving a “credible allegation of fraud,” per state law. 

Calling the systemic abuse “atrocious,” Heredia said that AHCCCS would do things including vetting certain providers more closely in the future and paying particular attention to billing that differed from national guidelines. 

The agency suspended or terminated payments to another 49 providers earlier this year and has suspended or terminated more than 200 providers in total since late 2019. Those suspended this week have names like “Pinetop Behavioral Health,” “Embark Wellness Center” and “Bright Beginning Counseling Center.” 

Mayes indicated that her office intends to take matters further by prosecuting those responsible for the abuses. Already, there have been 45 indictments and $75 million seized or recovered, she said. 

For victims of the schemes, Branch, the Navajo Nation AG, said her office is setting up a program dubbed “Operation Rainbow Bridge” to provide assistance. 

“We’ll be here to receive our relatives and make sure that they are smoothly transitioned into licensed facilities where they’ll actually receive the services they believed that they would be receiving,” Branch said. 

Officials are also setting up a 2-1-1 hotline for victims to receive support or transportation back home. 

An unanswered question on Tuesday was how the abuse has continued for years even as some law enforcement officers have become aware of the practice. Mayes said attorneys in the AG’s office had uncovered cases of abuse and raised concerns with AHCCCS but suggested that the prior attorney general and governor didn’t do enough to uncover the full extent of the problems. 

“The previous administrations were… asleep at the wheel,” she said. 

Mayes cited rapid growth in AHCCCS payouts for outpatient behavioral health services, which ballooned from $53 million in fiscal year 2019 to $668 million in 2022. 

Heredia, who took over as head of AHCCCS earlier this year, said she didn’t know when AHCCCS officials first learned about the problem, saying: “that’s under investigation.” 

Sen. Theresa Hatathlie, D-Coal Mine Mesa, sponsored legislation this year that would have added rules surrounding transportation to behavioral healthcare facilities and required the families to notify family members of those taken into care. But the two bills didn’t move forward in the Senate. 

In an interview on Tuesday, Hatathlie said she decided not to push the measures after conversations with AHCCCS officials convinced her it was better to address the problems “from a rulemaking perspective.”