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Lawmakers shoot down plan to crack down on behavioral health facilities, advance alternative

Lawmakers are working to tighten the reins on fraudulent sober living homes after bad actors defrauded Arizona’s Medicaid agency out of billions of dollars. But one such bill was voted down Thursday evening in the House, while a less expansive version advanced.

Over the past few years, people have been taken into sober living homes and held there while enrolled in the American Indian Health Program under the Arizona Health Care Cost Containment System. 

Though the facilities didn’t treat the patients, they collected many thousands of dollars a day in federal funds. 

Sen. Teresa Hatathlie (D-Coal Mine Mesa) is the Legislature’s subject-matter expert on this crisis. She sponsored the voted down bill that would have imposed stringent requirements on the licensing and regulation of behavioral health facilities, and raised the monetary penalty for violations.

Hatathlie said that, as the law stands, a bad actor can collect dozens of licenses under various names and open as many sober living facilities as they like. When one gets shut down, they just make another. 

She wants to require things like fingerprinting and a minimum ratio of patients to health care professionals at facilities.

Legitimate behavioral health facilities and other medical groups aggressively opposed the bill, arguing that it goes too far and would destroy those who are trying to provide vital services to Arizonans.

There was also concern that the increased transparency requirements in Hatathlie’s bill would violate HIPAA and patients’ privacy.

Arizona Medical Association representative Christina Corieri spoke against the measure.

“It’s going to be cumbersome for people who are choosing whether they would like to relocate their practice to Arizona or another state, it also could affect whether or not they choose to participate in important federal programs,” she said. 

Hatathlie held a press conference with a bipartisan coalition of  lawmakers ahead of the vote, where she asked for support and accused opponents of the bill for not bringing her their solutions.

“I want to say to all the naysayers; come and bring me your language,” she said. “Let's have these difficult conversations. I challenge that to you. That's constantly my message, and I still await you in my office. You know where to find me.” 

Senate President Warren Petersen (R-Gilbert) said on X that Democratic Gov. Katie Hobbs opposed Hatathlie’s bill and worked behind the scenes to quash it. So did Democratic staffer Talonya Adams, who won a lawsuit against Hobbs for racial and sex-based discrimination. 

Hobbs’ spokesperson Christian Slater declined to say whether the governor opposed the bill. Instead he said in a statement, “Governor Hobbs thanks the legislators who are working diligently to address the fraud in a comprehensive way and remains committed to working with everybody to deliver solutions that will improve the standards of car, prevent fraud, and crack down on bad actors seeking to exploit vulnerable people for profits.”

A narrower bill also aimed at addressing the sober living crisis is still in play at the Legislature, and Hatathlie says she’ll continue to work on them.

In the meantime, the Arizona Attorney General’s Office is working with AHCCCS and DHS to crack down on the fraudulent homes, and several people have been indicted by a grand jury for patient brokering.

Camryn Sanchez is a field correspondent at KJZZ covering everything to do with state politics.