Hannah Bassett Arizona Center for Investigative Reporting
In the 10 months since Arizona officials announced their investigation into massive Medicaid billing fraud, they have maintained that the abuse was largely confined to a small portion of Arizona’s health care cost containment system. In other words, it was a behavioral health provider who misused the department’s fee-for-service funds. schedule.
However, the agency acknowledged this week that the fraud also extended to managed care organizations, which oversee 90% of AHCCCS services. This means that the crisis ultimately affected the agency’s entire provider ecosystem, not just the organization highlighted as the epicenter of the scandal.
This was announced by Governor Katie Hobbs’ office. Azseal It said this week that similarities in suspected patterns of fraud exist in both fee-for-service and managed care, but “the full extent of this crisis remains difficult to determine.”
This revelation follows a series of AZCIR investigations to better understand AHCCCS’ decisions to quietly waive critical provider screening requirements and other safeguards during the pandemic, including several , which the authorities did not disclose for almost two years while it was in force.
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According to documents obtained by AZCIR, the changes loosen standard protocols for vetting AHCCCS providers and allow many types of providers other than behavioral health providers to undergo standard tests, such as fingerprint checks and on-site visits. It is now possible to receive a taxpayer-funded refund without receiving a refund. AHCCCS has also chosen to suspend regular audits and license verifications to detect and remove ineligible providers.
Fraudulent claims have cost Arizona taxpayers at least $2 billion, and the scandal and the state’s response have harmed more than 7,000 people and disproportionately impacted Native communities. But the true scope remains unclear, in part because state leaders managing the response have not openly consulted the public, including lawmakers.
The agency’s lack of transparency has raised questions about how effectively the agency is addressing the root causes of what Attorney General Chris Mays called one of the biggest scandals in state history. It also undermines trust in the systems designed to support the state’s most vulnerable people.
Since state officials began investigating in May 2023, the agency’s leader, Carmen Heredia, has publicly said she does not believe managed care was compromised. When she addressed state lawmakers in January, she did not mention any changes in the coronavirus era that may have contributed to fraud or the crisis in managed care.
The Attorney General’s Office declined to comment on the policy change or its impact, citing the ongoing investigation.
Alan Johnson, chief assistant state attorney for Florida’s 15th Judicial Circuit, said there is an urgent need for a meaningful explanation of this crisis and its origins. For eight years, Mr. Johnson and his colleagues have fought against corrupt addiction treatment providers and state neglect.
“We know the mess when we see it,” he said, urging policymakers to examine where the licensing and regulatory system is broken. “Arizona is in chaos.”
Medicaid agencies use screening measures such as site visits and fingerprint checks to protect against bad actors, especially for types of health care providers considered to be more prone to fraud, waste, and abuse. These issues were the leading cause of inadequate Medicaid payments nationwide in the years leading up to the pandemic, costing taxpayers an additional $10 billion.
When the federal government declared COVID-19 a public health emergency in March 2020, it allowed AHCCCS and Medicaid programs across the country to waive certain pre-admission testing.
AHCCCS adjusted its provider registration portal in June accordingly. This eliminates the need for medium- to high-risk health care providers, from hospice and behavioral health facilities to attendant care and non-emergency medical evacuations, to undergo on-site visits and fingerprint checks. The agency also disabled the ability to terminate providers whose licenses have expired within 180 days.
According to an internal document obtained by AZCIR, AHCCCS Chief Information Officer Dan Lippert, who approved the changes to the portal, said the adjustments will allow minimally vetted providers to enter the system unless authorities intervene. It is shown that he was aware that he would remain there for a “long time”.
However, AHCCCS was unable to fully detail changes to managed care organizations, which account for the majority of member services. By May 2022, AHCCCS had already resumed standard provider vetting and enrollment protocols when it finally distributed a “messaging toolkit” that it hinted at suspending provider suspensions for about two years. .
This means that nearly two years have passed since AHCCCS notified managed care organizations of changes that will allow malicious providers to more easily infiltrate and continue operating within AHCCCS’ provider portals. To do. Had they been fully informed about the policy change, they could have considered implementing additional fraud prevention measures, such as more frequent audits.
AHCCCS’s key internal departments, such as the agency’s Office of Inspector General and Member Provider Services Division, may also have conducted additional checks, such as prepayment reviews. However, despite repeated pressure from AZCIR, the agency did not say whether it had alerted staff at these offices about the changes.
AHCCCS’ decision to suspend reviews, audits and other safeguards coincides with a surge in enrollment, as federal law prohibits removing members from the Medicaid program during the public health emergency. did.
At the time, public health officials believed the benefits of increasing access to health care outweighed the potential harms of temporarily relaxing restrictions. Connecting vulnerable people to care was particularly urgent in the early months of the pandemic in Arizona, where local tribal communities were among the hardest hit in the country.
“It was a tradeoff that we had to make at that point,” said Naomi Fenner, director of population health at Families USA, a nonprofit health advocacy group that has supported Medicaid expansion. “We had to make some really difficult decisions with very little information.”
The scale of Arizona’s behavioral health crisis became clear in May 2023, when state and federal leaders came together to announce a thorough investigation into Medicaid fraud. They say scammers were exploiting the American Indian Health Plan and taking advantage of the fee-for-service plan’s unique reimbursement structure to reap huge profits under the guise of treatment.
From 2020 to 2022, AHCCCS membership increased by more than 30% to 2.5 million people, and behavioral health claims soared from $132 million to $668 million over the same period. But while the agency’s staffing levels remain flat, AHCCCS lacks the personnel to investigate fraudulent claims in a timely manner, one official said. 2022 Board of Audit Report.
Melissa Lumley, a spokeswoman for the U.S. Department of Health and Human Services Office of Inspector General, said the large-scale fraud scheme being perpetrated by the bad actors is “the largest targeting a single population in recent U.S. history.” It’s from.”
The state stopped payments to nearly 300 behavioral health providers due to suspected fraud. AZCIR was previously discovered Leaders were unable to fully predict the impact of the resulting closures, putting already vulnerable populations at further risk of relapse, abuse, homelessness and even death.
Given that Arizona funnels more general funds to AHCCCS than anything other than education, it’s not surprising that scammers targeted the agency, said the University of Arizona Public Health, Medicine and Nursing Department. said Professor Dan Derksen, Ph.D.
Coupled with coronavirus-era healthcare trends, such as the shift to telemedicine, this policy change has created an environment where “people can fill gaps in services” that were never provided, Dirksen said. Stated.
“This is a large program and a lot of money is being invested,” Dirksen added. “It’s like, why rob a bank? That’s where the money is.”
Gary Alexander, director of the Paragon Health Institute, a health policy research group founded by former Trump administration officials, said the rapid expansion of AHCCCS’ membership has made the agency even more vulnerable to abuse.
“The bigger and more complex something is, the greater the potential for fraud,” Alexander said, noting that while flexibility helps, AHCCCS is “taking a scalpel” to monitor improper billing. I should have included it,” he added.
In June 2021, one year after the waiver went into effect, the Centers for Medicare and Medicaid Services (CMS) announced how states should increase oversight and oversight of managed care organizations and provider screening protocols. issued a bulletin outlining theguidance I followed the report The Government Accountability Office is calling on CMS to better coordinate with states to implement the requirements.
AHCCCS provider screening requirements remained relaxed for the next 10 months.
Officials are still grappling with the effects of coronavirus-era decisions to relax registration and testing protocols.
When AHCCCS returned to pre-pandemic policies in April 2022, it identified 13,702 providers without valid licenses on file, according to agency spokeswoman Heidi Capriotti. The agency then removed more than 44,000 providers who were unable to revalidate their registrations on the provider portal.
To prevent inappropriate payments, AHCCCS has suspended new registrations for four of the 17 types of health care providers that could be registered without a home visit, including behavioral health outpatient clinics and residential facilities. The freeze on these providers will continue until June 8, 2024.
Although the agency has publicly maintained that the fraud was primarily confined to AHCCCS’s fee-for-service division, the managed care organization received more fraud last year than at any time since at least 2016, according to agency data obtained by AZCIR. Reporting incidents of suspected fraud, waste, or abuse.
This trend began to rise in 2019, three years after AHCCCS took over oversight of behavioral health services from the Arizona Department of Health Services. Capriotti said AHCCCS does not have data showing that interagency transfers directly contributed to the increase in fraud.
In 2024, Arizona lawmakers introduced new legislation aimed at increasing oversight and enforcement of behavioral health providers by overhauling some definitions and increasing penalties for violations. But Alan Johnson, Florida’s chief assistant attorney general who has handled similar fraud cases, cautioned against enacting reforms before the crisis and its causes are fully understood.
“If you do it haphazardly, you’re going to have unintended consequences,” Johnson said. “You’re going to have (treatment providers) that weaken the effectiveness of the law.”
Natasha Murphy, director of health policy at the Center for American Progress, said AHCCCS and federal public health experts are confident that provider vetting and enrollment flexibility will be fully extended to the program once agencies update their membership rosters. He said they are likely to begin investigating the impact on gender.
Some initiatives have already begun. In late 2022, the Government Accountability Office released a report examining the risks posed by provider registration exemptions and flexibility. The report concluded that CMS should maintain, rather than abandon, fingerprint-based criminal background checks in future public health emergencies.
A report by CMS assessing the impact of the coronavirus-era waivers is expected to be released in the summer or fall of 2024.
