By Staff Reporter |

The state ceased imposing mandatory guardrails for parent caregiver payouts nearly a year ago.

The year of potentially runaway spending may have wasted nearly half a billion dollars, a new report from the auditor general revealed. 

The audit found that the Arizona Health Care Cost Containment System (AHCCCS) and the Department of Economic Security (DES) had failed to implement cost-control requirements to the Arizona Long Term Care Services (ALTCS) program, within which is one of the biggest program costs: the Parents as Paid Caregivers (PPC) service delivery model.

PPC was established during COVID with substantial funding from the federal government, initially with the intent of being a temporary program. However, stakeholders desired permanence for the program when those pandemic dollars ran out. Gov. Katie Hobbs received approval from the Biden administration to make PPC permanent in 2024, which required Arizona to cover more than a third of the costs.

 According to the audit, AHCCCS and DES leadership acted contrary to state law in order to implement laws how and when they saw fit, not how and when it was required of them. 

One of the main cost-control requirements the agencies failed to implement was the standardized assessment tool.

AHCCCS suspended the tool in mid-October 2025, 16 days after initiating it according to state law. Those assessments made between Oct. 1 and 16, 2025, were reversed. 

As a consequence, the auditor general estimated that the agency failed to realize between $133 million and $493 million in potential cost reduction “risking additional cost increases and shortfalls.” 

DES was forced to request $83 million in supplemental appropriation from the state legislature for fiscal year 2026 as a consequence. 

The threat of legal action reportedly prompted the agency to buck state law.

“AHCCCS reported that it halted implementation due to the threat of litigation and instead of implementing the policies it created it decided to engage in emergency rulemaking,” reported the audit. 

The auditor general did assess that the tool lacked the ability to contain costs in the long term, and suggested legislative changes and federal approval. 

The audit also reported that AHCCCS and DES failed to fully implement other cost-control measures, including executing processes to ensure parents reside in the state for at least six months prior to becoming paid caregivers, and prohibiting payments for parent-provided services between 10 p.m. and 6 a.m. and when the child isn’t home. 

Further, AHCCCS and DES were found to have not enforced the 40-hour limit on parent-provided care until April of this year. The agencies were required to implement that limit back in July 2025. The audit found this delay caused DES to overpay some parents. 

AHCCCS and DES ignored the law by delaying the limit for 10 months to avoid penalizing parents. 

“[D]espite lacking the authority to do so, [the agencies] delayed enforcing the requirement because [they] sought to increase compliance through an educational and not punitive approach,” stated the audit.  

The audit also found that DES was inconsistent about maintaining member records and ensuring the accuracy of member assessments. The auditor general warned that the former could result in unsupported service authorizations and impair payment oversight, and the latter could result in incorrect payments, waste, and mismatched service authorizations. 

The auditor general issued 11 recommendations:

• Implement the required standardized assessment tool
• Continue developing a formally documented Extraordinary Care Review process
• Develop and implement a procedure to seek legal counsel prior to programmatic changes
• Develop and implement all required cost controls and oversight processes to ensure functionality
• Update monitoring processes to ensure timely oversight of compliance with contractual and statutory obligations related to ALTCS and PPCG
• Require provision of timely access to utilization and vendor payment records
• Develop and implement regular assessments of the 40-hour limit 
• Establish corrective action requirements for lack of enforcement concerning 40-hour limit
• Conduct an analysis to identify additional cost-control measures to improve ALTCS finances
• Implement any additional cost controls for ALTCS as discovered with aid of governor’s office and CMS
• Notify the legislature of analysis results and plan of action

Roberta Harrison, AHCCCS interim director, responded that she disagreed with the auditor general’s findings but promised to implement the 11 recommendations. Harrison cited federal Medicaid requirements, legal and procedural considerations, data limitations, and implementation timelines as hindering agency compliance. 

DES agreed with one of the findings, that required cost-control measures weren’t fully implemented, and disagreed with the other three. DES agreed to implement all but five of the 20 recommendations.

The auditor general’s office plans to follow up with AHCCCS and DES in six months’ time.

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