Arizona Medicaid agency and inspector general describe large-scale billing fraud tied to American Indian Health Program

Chairwoman Warner convened the Senate Health and Human Services Committee to hear testimony about a multi-year fraud scheme that Access Arizona officials say inflated spending in the American Indian Health Program, disrupted care and exposed gaps in oversight.

"The fraud we have seen ripped through the behavior health landscape is staggering," Marcus Johnson, deputy director of Access, said in his opening remarks. Johnson told the committee that Access identified a steep increase in fee‑for‑service payments to the American Indian Health Program between April 2020 and roughly March 2023 — rising from the tens of millions of dollars to the hundreds of millions of dollars in the period shown on the agency's charts.

Why it matters: committee members were told the scheme carried two kinds of harms — large taxpayer losses and direct harm to members. Witnesses described people being recruited into unlicensed or unsafe facilities, denied choice and basic needs, and in some cases moved across state lines.

How the scheme worked and how Access responded

Access staff and the agency's inspector general said bad actors used recruitment, patient brokering and false enrollments to shift people into the American Indian Health Program and to bill Medicare/Medicaid for services that were never provided. Marcus Johnson said the agency saw an increase in paper check payments and in members switching from managed care into the American Indian Health Program during the period of concern. He told the committee the agency found both non‑Native individuals enrolled improperly and large per‑member payments that far exceeded prior norms.

Vanessa Templeman, inspector general, described site visits and investigations that found people living in squalid or controlled conditions, denied choice of provider and, in some locations, locked in rooms. "We've seen patients denied their patient choice and their right to choose what provider they want to see," Templeman said, and added investigators found "billing for services that members were never even there" and "billing for excessive hours, more hours than can exist within a 24 hour period."

Access described a multi‑pronged response: hundreds of "credible allegation of fraud" (CAF) payment suspensions, a temporary provider‑enrollment moratorium for several provider types, tighter verification for the American Indian Health Program, additional documentation and prepayment reviews for outlier claims, and new data‑analysis systems to identify patterns.

Johnson summarized humanitarian and remediation steps the agency took while investigations were underway: temporary lodging and counseling for people the agency identified as victims, a dedicated hotline that the agency said fielded tens of thousands of calls, and transport for a number of individuals back to their home states. He also said Access commissioned an external audit and adjusted reimbursement and coding rules to reduce the opportunity for abuse.

Numbers presented to the committee

Access presented trend charts showing a rise in fee‑for‑service payments to AIHP between 2020 and 2023 and large swings in per‑member payments. Johnson and Templeman gave the committee a set of enforcement and outcome totals: the agency reported hundreds of CAF suspensions since mid‑2023, dozens of state fair hearings, and more than 100 rescinded suspensions after appeals or additional documentation. On the Office of Inspector General's cost‑avoidance slide, Johnson showed year‑by‑year figures the OIG identifies as cost avoidance and recovery: the presentation named roughly $32 million for fiscal year 2022, about $272 million for a later year, and a figure near $945 million in the most recent year shown. Committee staff requested documentation for all of those numbers during questioning.

What's next

Committee members pressed Access for further documents and for specific staffing and timing information. Several lawmakers asked for detailed provider lists, staffing charts and the accounting trail for large payments that have been reported in the media. Access officials said some details are the subject of ongoing litigation and that other specific financial breakdowns would be provided to the committee after follow up.

Ending

The committee left the session with follow‑up requests for documentation about all elements of Access's response, including provider suspension counts and timelines, details of the AIHP verification process, and the agency's plans for the new pre‑ and post‑payment review system planned for 2026.