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Arizona governor and AG announce crackdown on massive Medicaid fraud

Arizona Gov. Katie Hobbs has announced the state has been the victim of massive fraud in its health care program and is taking action against more than 100 Medicaid service providers.

The behavioral health residential and outpatient treatment service providers are accused of defrauding the state out of hundreds of millions of dollars. 

Hobbs said they targeted Native Americans, making false promises of food, treatment and housing.

“I have heard stories of the pain and suffering that these exploited individuals have gone through — desperate people struggling with addiction picked up off the street and dropped in a home with drugs, alcohol and no treatment available," Hobbs said.

Attorney General Kris Mayes joined Hobbs for a press conference on Tuesday. She said some providers billed the state for services for "patients'' who were dead, in jail, or clearly not in Arizona at the time.

Hear AG Kris Mayes on The Show with host Mark Brodie

mayes-show-MB-20230517.mp3

“Some of these scammers didn’t even bill [the Arizona Health Care Cost Containment System] for people they were in contact with," Mayes said. "They simply purchased lists of names and dates of birth of people and used those to bill AHCCCS.”

Mayes said her office is conducting thorough criminal investigations and will aggressively prosecute those cases. AHCCCS has also suspended payments to those providers.  

Hobbs said she is also considering systemic changes to keep this from happening again, but says she won’t entertain any policies that will make it harder for people to participate in Medicaid.

Daniel Scarpinato, who served as chief of staff for Hobbs’ predecessor, Republican Gov. Doug Ducey, was critical of the announcement of the crackdown.

“The investigation revealed today has been underway for several years, well before the current occupants took office,” Scarpinato said.

Hobbs and Mayes appeared at a news conference that also included representatives of 13 tribes from around the state.

Associated Press contributed to this report.

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Senior field correspondent Bridget Dowd has a bachelor’s degree from Arizona State University’s Walter Cronkite School of Journalism and Mass Communication.