AHCCCS News & Updates 
May 16, 2023

AHCCCS Suspends Payments to Behavioral Health Providers Based on Credible Allegations of Fraud

Ensuring member safety and access to needed health care services is top priority

Today, Governor Katie Hobbs and Attorney General Kris Mayes joined the Arizona Health Care Cost Containment System (AHCCCS) Office of Inspector General (OIG) to announce payment suspensions against more than 100 unique, registered behavioral health providers of Medicaid services based on credible allegations of fraudulent billing activities, in conjunction with the Arizona Attorney General’s Healthcare Fraud and Abuse Section, the Federal Bureau of Investigation, the US Department of Health and Human Services, the US Attorney’s Office, and the Internal Revenue Service.

Provider payment suspensions, known as Credible Allegations of Fraud (CAF) suspensions, are the first step of required action when Medicaid payment fraud is identified, and the beginning of multi-agency investigations.

“The State of Arizona is taking swift action to stop a humanitarian crisis, root out waste, fraud and abuse, and crack down on bad actors exploiting Tribal communities,” said Governor Katie Hobbs. “I’m proud of our law enforcement officials and AHCCCS for taking action to hold fraudulent billers accountable and protect some of our state’s most vulnerable communities."

“I am proud of the work done by the law enforcement officials, and in particular those at Arizona Attorney General’s Office in investigating fraud and abuse of taxpayer dollars,” said Attorney General Kris Mayes. “Fraudulent Medicaid billing harms taxpayers and puts vulnerable individuals at risk of not receiving needed health care services. Together, the Attorney General’s Healthcare Fraud and Abuse Section and AHCCCS will continue to disrupt organized fraudsters, apprehend them, and prosecute them to the full extent allowed by law.”

Under federal regulations (and unless good cause exists to not suspend payment per federal regulation) , AHCCCS is required to suspend all payments to a provider when it determines that a credible allegation of fraud exists. The agency makes a fraud referral to the Arizona Attorney General’s Office Healthcare Fraud and Abuse Section, or a federal law enforcement agency. This is a preliminary finding of fraud indicating that evidence of fraud has been identified as reliable. Suspended providers may continue to bill AHCCCS for services provided; the reimbursement they claim is withheld pending the outcome of further investigation.

“AHCCCS Office of Inspector General and the Arizona Attorney General’s Office became aware of potential fraudulent billing practices including significant increases in outpatient behavioral health services. AHCCCS was able to connect the irregular billing with alleged criminal activity targeting tribal communities and other Arizonans,” said Carmen Heredia, AHCCCS director. “As with any provider payment suspension, our immediate top priority is ensuring members are safe, sheltered, and receiving the health care services they need.”

“Health care fraud is often billed as a victimless crime, but that couldn’t be further from the truth in this case,” said Akil Davis, special agent in charge of the FBI’s Phoenix field office. “This scheme we are investigating negatively affects some of the most vulnerable in our society who rely on these services. The FBI and our law enforcement partners will continue to aggressively pursue all those who seek to unlawfully enrich themselves by manipulating the system with nothing but greed as their motivation.”

The FBI is seeking victims who may have been recruited to live in and receive services in group homes, and asking them to complete a form at https://forms.fbi.gov/phoenixgrouphomes/.

Ensuring AHCCCS members have continued access to health care services is the top priority any time a CAF payment suspension is issued. AHCCCS is working with its network of health plans, tribes, behavioral health partners, and other state agencies to contact all members for whom these providers have billed services and connect them with the resources they may need, such as:

“When Arizonans work together, with active collaboration among state, tribal and federal partners, we best protect the most vulnerable among us,” said United States Attorney Gary Restaino. “Our health care fraud investigations continue. Safety is paramount here, and we’ll be looking at the efforts of facilities to help ensure the orderly transfer of residential patients.”

”The Arizona Department of Health Services licenses sober living homes, behavioral health residential facilities, and outpatient clinics, among other facilities and we are utilizing our licensure oversight to support our partners in this effort,” said Jennie Cunico, interim director of ADHS. “We are working to implement measures to more easily find and eliminate bad actors from the behavioral health system. We encourage Arizonans to use AZCareCheck.com to review the status of all the facilities we license or our complaint portal, to submit a complaint.”

AHCCCS has enacted holistic, system-wide strategies to find and eliminate fraudulent billing, including recommendations from the Arizona Attorney General’s Office:

An ongoing and regularly updated list of registered providers subject to payment suspension or termination is posted on the AHCCCS Office of Inspector General Provider Suspensions web page. See more information in the Provider Payment Suspensions Fact Sheet.

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