Sober living crisis: Victims of AHCCCS Medicaid scam get clean at legitimate rehab

PHOENIX - The aftermath of Arizona’s massive Medicaid scandal is not over.

FOX 10 has shown you how vulnerable people with addictions have been displaced by shut down sober living homes. A majority of victims are Native Americans targeted for benefits from the American Indian Health Program, and that has been a major concern, with hundreds of Medicaid providers facing allegations of fraud. Meanwhile, suspensio0sn by Arizona Health Care Cost Containment System (AHCCCS) continue.

For those who have been victimized repeatedly by the sober living scheme, trust is broken.

"They just wanted to get paid and use you as a body, 'cause they would be able to keep their doors open," said Arlen Upshaw.

Imagine living at several different sober homes across the Phoenix area. For Upshaw, that was real. She felt devalued, and said she noticed a common theme.

No one was sober.

"All of us were getting drunk," said Upshaw. "All of us were getting high, so when they tested us, there was no way they were gonna kick us all out."

"A ticket off the street for me," said Joshua Smith, who experienced the same.

It’s all part of a scam in which people were promised free housing, food and medical care, as long as they are enrolled in the AIHP.

"People have been paid to go to programs," said Upshaw. "People have been driven by the program to the liquor store. They drank with [Behavioral Health Technicians] and the managers of the household."

The scheme cost Arizona nearly a billion dollars in fraud, and AHCCCS finally cracked down in 2023, suspending payments to more than 300 providers, shutting off funding and shutting down homes, leaving so many displaced.

"They’re getting dumped in the middle of the city with the worst habit, or another habit on top of what they’ve already been doing," said Smith.

At Soul Surgery Rehab, Upshaw and Smith say they’ve found sobriety, taking classes for life skills, receiving therapy, focusing on physical and mental health.

It was not easy, however.

"When I kind of shut my mouth and did the program and did the work, it worked for me," said Upshaw.

"We have structure here. We treat everybody fair, but firm," said Soul Surgery CEO John Mulligan.

Mulligan said fallout from the sober living crisis has made it hard to regain a patient’s trust.

"Trauma from the individual wanting to get help for a specific reason, and then the trauma of their experience of being in a sober living environment, that was not conducive to treatment," said Mulligan.

Mulligan said getting reimbursed by AHCCCS is much harder now, and audits are common.

"For every service we bill now, they are requesting documentation to support that service that you did with that specific patient," said Mulligan.

Mulligan, however, understands why, and patients are thankful.

"I’m realizing who I am now," said Smith. "I can look myself in the mirror. I’m happy, man."

AHCCCS suspensions have slowed down in the last two months. Meanwhile, Arizona Governor Katie Hobbs has indicated a package of bills to strengthen state standards on sober living homes, and increase penalties for bad actors.