Sober Living scandal: GOP state lawmaker proposes changes to American Indian Health Plan

Sober Living: AZ state senator proposes reform

In recent years, we have been covering the multi-billion dollar sober living scheme, and now, a member of the Arizona State Senate has proposed a bill that aims to combat waste. Not all, however, agree with the bill. FOX 10 Investigator Justin Lum reports.

PHOENIX - On Jan. 29, the Arizona State Senate held another oversight hearing regarding the state's Medicaid agency, where a Republican lawmaker offered harsh words for the Arizona Health Care Cost Containment System (AHCCCS), and revealed a big proposal.

"AHCCCS is not equipped to safely and effectively serve as an operational health plan for the American Indian Health Plan," said State Sen. Carine Werner (R-Dist. 4).

What we know:

Werner, who finished her fourth oversight hearing on AHCCCS, has proposed Senate Bill 1611, which would require AHCCCS to outsource the management of the American Indian Health Plan (AIHP) to an outside contractor. Those administrative duties include maintaining program integrity and care management—responsibilities the bill would strip away from AHCCCS.

Big picture view:

The proposal follows nearly three years of scrutiny after a massive crackdown on fraud.

"This fraud did not happen overnight," said advocate Reva Stewart. "It has been occurring since at least 2019, and any government agencies can't keep blaming each other. And it continues to this day."

Stewart, like many others, is fed up. A majority of the victims targeted in the scheme were Native Americans enrolled in the AIHP. Victims were shuffled through unlicensed sober living homes without receiving actual treatment at allegedly fraudulent behavioral health facilities.

Bad actors billed AHCCCS for billions of dollars. In 2023, AHCCCS suspended payments to over 300 providers. While the fraud peaked during the pandemic under former Governor Doug Ducey’s administration, Werner believes AHCCCS has since overcorrected under the current leadership.

"My focus has been on the overcorrection because that’s where the lives were lost," Werner said. "It’s absolutely tragic what happened and I would say that there’s probably five pieces to the whole AHCCCS fraud, waste, and abuse situation."

The other side:

Unlicensed sober living homes continue to be an enforcement issue for the Department of Health. Meanwhile, lawmakers are questioning why legitimate providers are facing long waits for payments, forcing some to shut down.

New AHCCCS Director Virginia Rountree attended her second hearing since taking the role last September. Her staff reports that 87% of claims are currently being paid, and that employees are working to help providers resolve declined claims.

"I also talked about bringing in an external claims vendor to help process claims, so that was an important piece to help us get through the backlog of claims," Rountree said.

However, after Werner proposed SB 1611 to conclude the hearing, AHCCCS officials walked out. Rountree declined to answer questions regarding the proposal or the current administration's progress, stating only, "No comment right now."

While Rountree was reportedly briefed on the bill this week, some members of the committee were caught off guard.

"I would like to have known," said State Senator Sally Ann Gonzales, D-District 20. "I would have liked to be able to work at things and for the new director of AHCCCS to be able to work out these wrinkles that she got in her hand when she took the job."

Other Democratic lawmakers, including State Senator Theresa Hatathlie, expressed openness to the change.

"Under the umbrella of AHCCCS, the way that this has been functioning isn’t going to work going forward, so I do support the reform," Hatathlie said.

Werner emphasized that the ultimate goal is ensuring members have the services they need to live a normal life.