By Staff Reporter |
The federal government may withhold Medicaid payments toArizona for failure to comply with annual audit requirements.
Arizona failed to file its Fiscal Year 2025 Single Audit Report by the March 31 due date. As of this report, the audit report has yet to be filed.
The Department of Health & Human Services (HHS) sent a letter toGov. Katie Hobbs in mid-July notifying her of the state’s noncompliance.
As mentioned by HHS Assistant Secretary for Financial Resources Gustav Chiarello in that notification letter, Arizona has failed every year under the Hobbsadministrationto file its annual audits on time. The fiscal year 2024 report was filed more than a year late, and the fiscal year 2023 and 2022 reports were both filed nearly nine months late.
“These substantially late submissions leave Arizona’s Federally funded programs with significant gaps in oversight, heightening the risks to program integrity and to the individuals and families who depend on these critical health and human services programs,” stated Chiarello.
HHS gave Hobbs until July 31 to either provide proof of the audit report submission or a proposed corrective action plan. The latter would require HHS approval in order for the agency to release payments.
The Arizona Health Care Cost Containment System (AHCCCS) manages Medicaid in the state. AHCCCS has operated without stable leadership since Hobbstook office. Hobbs appointed Carmen Heredia to serve as director shortly after she took office, but Heredia resigned in April 2025 amid legislative dispute over her appointment.
Lawmakers accused Heredia of mismanaging AHCCCS regarding Medicaid contracts. Hobbs maintained that Heredia’s directorship was a success, citing nearly $1 billion in Medicaid fraud recoveries in addition to years of cost savings.
Hobbs appointed Virginia “Ginny” Rountree late last September, but Rountree resigned just five months later in early February of this year.
AHCCCS is led currently by interim director Roberta Harrison.
AHCCCS has undergone intense scrutiny by lawmakers regarding Medicaid waste, fraud, and abuse, as well as testimonies of program disruptions impacting providers and services since Hobbstook office.
State Sen. Janae Shamp, former senate majority leader who has focused heavily on oversight of Arizona’s Medicaid program, questioned the history of audit report delays under Hobbs and whether the governor had submitted an acceptable action plan to HHS.
Shamp hosted a press conference last summer warning of Medicaid waste, fraud, and abuse under the Hobbsadministration. Shamp revealed that only 23% of enrollees in recent years underwent proper eligibility vetting. One-third of that 23% failed verification, and more than 49,000 enrollees were also enrolled in other states’ programs.
“More than three-quarters of Arizonans enrolled toreceive this public benefit did not get the necessary review to determine if they were qualified toreceive it,” said Shamp.
In a statement, Shamp said that her three years of Medicaid scrutiny relating to the state budget have only incurred ire from the Ninth Floor.
“Last time I pressed it during budget discussions, I was accused of trying to sabotage the budget process even though a whistleblower confirmed billions in improper payments in the same programs these audits are supposed to oversee,” said Shamp.
Last week, Treasury Secretary Scott Bessent announced that its Financial Crimes Enforcement Network had identified approximately $17.5 billion in potential healthcare fraud spanning all 50 states as well as Puerto Rico, Guam, and the Virgin Islands.
