State: ‘Sober’ homes get drunk on tax dollars | News


The state has suspended payments to over 100 behavioral health group home and outpatient treatment providers believed to be engaging in Medicaid fraud – including six in Gilbert.

“For years these providers have allegedly defrauded the state of millions of dollars while creating a large-scale humanitarian crisis that disproportionately affects Arizona’s tribal communities,” Gov. Katie Hobbs said at a May 17 news conference.

“It’s alleged that these providers target the most vulnerable people offering them the false promise that they will be given food housing and access to treatments at a group living home or rehab facility,” she continued.

“People are then left in these facilities without proper access to health care and treatment services. Instead they’re allowed and sometimes encouraged to continue using drugs and alcohol.”

Hobbs said often the people are prevented from leaving the facility or contacting relatives while the providers fraudulently bill the Arizona Health Care Cost Containment System, the state’s Medicaid program for additional treatments and other health care services.

Hobbs said the state was still working to assess the scope of people affected and it may be in the thousands. She was joined by Attorney General Kris Mayes, Salt River Pima-Maricopa Indian Community President Martin Harvier, AHCCCS Director Carmen Heredia, representatives from 13 tribal nations, and law enforcement.

The governor said the victims are picked up off the street and dropped into homes with drugs and alcohol and no treatment available, trapping them in a cycle of dependency by a “fraudulent medical provider.”

She said people have had to escape out of windows and jump over fences in the middle of the night just to access a phone to reach the outside world.

Hobbs said Heredia has taken to investigating these financial wrongdoings and “develop a comprehensive holistic plan to stop them,” working hand-in-hand with Mayes, law enforcement, tribal leaders and community partners.

Mayes estimated that in the past three years there has “hundreds of millions of dollars’’ lost due to fraud. But she declined to put a figure on it.

“We are going to prosecute existing bad actors,’’ Hobbs said.

She said moving forward, she wants AHCCCS to make several operational changes, including a third-party forensic audit of all claims since 2019.

“I want to stress that this is just the first step in the process of eradicating the abuse, fraud and corruption by these opportunistic providers,” Hobbs said. “We will take the actions necessary to bring an end not just to the fraudulent activity but also to the humanitarian crisis that it has created.”

According to Mayes, the unscrupulous providers have been “deceiving taxpayers for nearly three years.”

“To this date there have been more than 45 indictments and upwards of $75 million seized or recovered,” Mayes said.

She said the fake providers targeted those living on reservations or living on the streets.

“These vulnerable individuals were incentivized to participate in treatment at an outpatient clinic with offers of things like free food, cash incentives or free rent,” she said. “Keep in mind patients of these facilities could be in crisis and are extremely vulnerable making it all that much more heartbreaking.”

Mayes said that the Medicaid fraud had become so rampant that some of these scammers simply purchased lists of names and dates of birth of people and use those to bill AHCCCS.

She said in another instance a fraudulent provider billed AHCCCS over $1 million for alleged services to a woman and her two children over the course of one year.

“In some instances, services to deceased individuals have been billed to AHCCCS,” Mayes said, adding that services also have been billed on behalf of people who were in jail or who were verifiably living in another state.

Most of the more than 2.4 million Arizonans enrolled are in health care plans that are paid a flat fee of federal and state dollars for all care.

But under federal law, services to Native Americans are provided on a fee-for-service basis.

Mayes said that makes it attractive for sober living homes to seek out and sign them up for care.

The Gilbert providers on AHCCCS’s list of suspended payments include Good Neighbor Community Services, Harmony Healthcare PLLC, Elite Innovative Health LLC, About Desert Sage Healing, LLC, Heard Health Care, LLC and Samia Psychiatry IOP PLLC.

Group homes in general have become an issue of late in the Town of Gilbert.

In April 2021 a resident fatally beat another resident in a group home and within the past seven months, residents have begged the town for help with an adult behavioral health group home in their neighborhood.

They said that the residents, who were supposed to be there for substance recovery, sit out all day at a park drinking and that police haves shown up for calls that included aggravated assault and disorderly conduct.

The council finally held a study session in April on the topic and was informed that staff and legal counsel were going through the Town’s Land Development Code to see if Gilbert could exert more control via that avenue.

Recommendations are expected to come back at a future date.

There has been an increase in these facilities over the last year or so with over 150 group homes and over 25 recovery residences doing business in Gilbert.

Gilbert Sun News Managing Editor Cecilia Chan contributed to this report.


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