Arizona’s Medicaid Agency Delayed Fraud and Abuse Investigations

October 5, 2022

By Corinne Murdock |

Last Thursday, the Arizona Auditor issued a report finding that the state’s Medicaid agency, the Arizona Health Care Cost Containment System (AHCCCS), failed to fulfill four major aspects of its services, including a year delay on average to investigate over half of fraud or abuse incidents. 

AHCCCS provides health care coverage to over 2.4 million Arizonans: about 33 percent of the population. 

In all, the audit report determined that AHCCCS also failed to: review health plans every three years as required, make correct eligibility determinations, ensure that health plans oversaw providers in two key areas, and establish oversight processes for its Housing Program and Administrator.

In order to remedy these issues, Auditor General Lindsey Perry issued 22 distinct recommendations. AHCCCS agreed to implement all 22 of Perry’s recommendations without contest. 

AHCCCS explained that no federal or state regulations mandated the completion of preliminary investigations within 3 months, like Perry recommended, but agreed it was best practice and would adopt that protocol. Likewise, AHCCCS explained it would adopt a self-auditing process to review eligibility determinations, despite there not being any federal or state regulations for such quality assurance reviews. 

AHCCCS also noted that its lack of eligibility reviews was due to understaffing caused by the COVID-19 pandemic. 

The audit may also result in a change to state law. AHCCCS noted that it wasn’t able to create a monthly report as required by statute. This report — which was to be sent to the governor, the house speaker, and the senate president — was meant to include Title XIX and non-Title XIX categories that outlined the persons served, the units of service, and the amount of funding provided for client services and the amount provided for regional behavioral health authority administration and case management expenses. 

In addition to the negative findings of the audit report, AHCCCS is facing a lawsuit filed by several federally-qualified health centers. The community health centers claim that AHCCCS is wrong to deny reimbursements for dentists, podiatrists, optometrists, and chiropractors. Earlier this month, the Ninth Circuit Court of Appeals reversed a decision dismissing the lawsuit.

Arizona Alliance for Community Health Centers sued AHCCCS, joined by Canyonlands Healthcare, Chiricahua Community Health Centers, Desert Senita Community Health Center, Mariposa Community Health Center, Marana Health Center, Mountain Park Health Center, Native Health, North Country Healthcare, Sun Life Family Health Center, Sunset Community Health Center, and United Community Health Center-Maria Auxiliadora.

Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to

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