$2.8 Billion Fraud Allegations Put Spotlight on Arizona’s Medicaid System

Arizona State Senator Carine Werner, Chair of the Senate Health and Human Services Committee, is State Senator Carine Werner, Chair of the Senate Health and Human Services Committee, is leading an effort to improve accountability within Arizona’s Medicaid system after an October 1 oversight hearing revealed widespread management and fraud concerns.

The hearing, focused on the Arizona Health Care Cost Containment System (AHCCCS), uncovered potential fraud totaling nearly $2.8 billion. Lawmakers also learned that more than 140,000 Medicaid members have been disenrolled since September 2024. Senator Werner said those numbers represent a major breakdown in oversight and service.

“This is about more than numbers on a page—it’s about lives and trust,” Werner said. “Families lost coverage, providers faced retaliation and red tape, and fraud went unchecked. We expect clear answers and real accountability.”

Systemic Issues and Fraud Allegations

Testimony before the committee detailed how fraudulent patient brokers allegedly shifted Medicaid members into federally subsidized marketplace insurance plans. Lawmakers also heard about long delays in provider payments and the limited number of enforcement actions taken so far. Only 91 arrests have been made for patient brokering despite widespread reports of abuse.

Werner said that poor oversight has damaged access to care and driven ethical providers out of the system. “When good providers leave, patients pay the price,” she said.

Committee Demands and Oversight Questions

Following the hearing, the Health and Human Services Committee sent AHCCCS a list of follow-up questions and data requests. Lawmakers asked for specifics on:

• The number of licensed behavioral health providers currently seeing patients.
• Steps taken to restore healthcare access in Native American communities.
• Accountability measures for AHCCCS staff tied to oversight failures.
• The total amount of taxpayer money lost and the amount recovered.

Werner said AHCCCS must deliver “data, not generalities.” The committee expects complete answers within 30 days and will hold a follow-up hearing within 45 days to review the agency’s progress.

Bipartisan Support for Accountability

Lawmakers from both parties have voiced concern about the scope of the issues raised. Members agree that protecting taxpayer funds and ensuring reliable healthcare access must remain a bipartisan goal. Community leaders also raised alarms about the effect on low-income families and Native American communities that have lost coverage or faced reduced access to care.

Governor Katie Hobbs’ administration has faced growing pressure to explain how the agency plans to correct the problems identified. Lawmakers say that accountability must begin with transparency and prompt action.

Next Steps in Oversight

The Health and Human Services Committee will reconvene in November to evaluate AHCCCS’s compliance and determine whether additional legislation is needed. Werner said the hearing is part of a broader push to restore trust in Arizona’s healthcare system.

“Arizona deserves a Medicaid system that protects the vulnerable and respects taxpayers,” Werner said. “We’ll keep pressing until every loophole is closed and every Arizonan has access to care.”