by Jonathan Eberle | Oct 10, 2025 | News
By Jonathan Eberle |
Arizona House Republican leaders are demanding answers after learning that the Chief Medical Officer of the state’s Medicaid program, AHCCCS, has been serving with an expired medical license.
According to records from the Arizona Medical Board, Dr. Theresa Costales, a psychiatrist appointed as Chief Medical Officer in January 2025, failed to renew her license, which was due April 9. The statutory grace period ended on August 9, leaving the license fully expired. Despite this, Dr. Costales continues to advise on state health policies that impact more than 2 million Arizonans.
House Speaker Steve Montenegro called the lapse “a failure of oversight” by Governor Katie Hobbs’ administration. “A lapse like this should never happen in a healthcare agency responsible for millions of people,” he said. “The public deserves accountability when even the most basic standards aren’t met.”
House Majority Leader Michael Carbone echoed the concern, noting that license verification is a simple process. “Any citizen can look this up in minutes. That it slipped through the cracks at the highest level of medical leadership is completely unacceptable.”
House Majority Whip Julie Willoughby, who is also a healthcare professional, questioned whether key policy decisions were made without proper credentials in place. “You cannot have a Chief Medical Officer without an active license—it’s that simple,” she said. She raised particular concern about the recent rollout of the controversial Home and Community-Based Services (HCBS) assessment tool, asking whether decisions tied to the program were made under expired authority.
Republican leaders also pointed to other state agencies, such as the Department of Corrections, that explicitly require valid medical licenses for their top medical positions. They argue AHCCCS should be held to the same standard, given its role in overseeing care for vulnerable populations.
Speaker Pro Tempore Neal Carter said the situation undermines public confidence. “Governor Hobbs’ administration has failed once again to ensure competence and accountability in state government. This isn’t a small oversight—it undermines trust in one of Arizona’s largest healthcare agencies.”
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
by Jonathan Eberle | Oct 7, 2025 | News
By Jonathan Eberle |
State Senator Carine Werner is escalating her oversight push against Arizona’s Medicaid agency, AHCCCS, after a tense committee hearing revealed what she called “catastrophic failures” in the state’s health care system.
As chair of the Senate Health and Human Services Committee, Werner convened an October 1 hearing that uncovered widespread fraud, lapses in oversight, and significant coverage disruptions for vulnerable Arizonans. Lawmakers heard testimony that outlined nearly $2.8 billion in estimated fraud, more than 140,000 unenrollments since September 2024, and deep impacts on Native American communities.
“This is about far more than numbers on a page—it’s about lives shattered and trust broken,” Werner said after the hearing. “Families lost coverage, providers were driven out by retaliation and red tape, and patient brokers were allowed to exploit Arizonans in need. We cannot allow the Governor’s state agencies to hide behind vague answers.”
Witnesses described fraudulent brokers shifting patients from Medicaid into federally subsidized marketplace plans, leaving families at risk of losing access to necessary care. Providers also reported delayed or denied payments that have forced some to close their practices, while law enforcement confirmed that just 91 arrests have been made despite widespread patient brokering schemes.
The committee also heard that Native American communities have been disproportionately affected by lapses in Medicaid coverage, with families struggling to find replacement providers or navigate bureaucratic hurdles.
In response, the committee issued a formal list of follow-up questions to AHCCCS. Lawmakers are seeking precise information on how many licensed behavioral health providers are actively serving patients, what actions are being taken to restore access to care in Native American communities, how much taxpayer money has been lost and recovered, and whether AHCCCS has held staff accountable for oversight failures.
Werner stressed that the requests are non-negotiable. “Governor Hobbs and AHCCCS owe Arizona’s taxpayers and families straight answers. The days of vague promises are over. This committee expects deliverables that prove action is being taken.”
The committee has given AHCCCS 30 days to provide a full set of responses and supporting data. A follow-up hearing is scheduled within 45 days, where lawmakers will publicly review the agency’s progress.
“Arizona deserves a health care system that protects the vulnerable instead of enabling fraud,” Werner said. “We will keep pressing until every loophole is closed, every fraudulent actor is held accountable, and every Arizonan can access care without fear of exploitation.”
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
by Staff Reporter | Oct 3, 2025 | News
By Staff Reporter |
Republican lawmakers pushed for reforms to the state’s disability assessment policies before they took effect this week.
House Majority Whip Julie Willoughby and State Senator Janae Shamp issued a press release on Tuesday raising concerns about the reasonableness and evidence basis for the latest assessment policies from the Arizona Department of Economic Security (DES) and Arizona Health Care Cost Containment System (AHCCCS).
Per Willoughby and Shamp, coalitions of parents, advocates, and direct care workers reported having little opportunity for meaningful discussion or improvement regarding the new assessment policies, which they described as “extreme and unsustainable.”
Stakeholders allege the new assessment model from DES and AHCCCS will cause bigger burdens for everyone across the board: families, health care providers, and the state. As one example, they argue against the shift of habilitation services to an age basis instead of a skill basis, citing the long-term costs and setbacks from late intervention.
“Lives are at stake, and we must act now to ensure our disability support system functions for the best possible outcomes,” said Shamp.
The main source of contention concerns rollbacks to a program that paid families to be caregivers to their own children with special needs, the Parents as Paid Caregiver (PPCG) service model. Under the policy changes, children under 10 years old won’t qualify for state-backed attendant care. The changes also implement age limits on habilitation.
“We are urging DES and AHCCCS to pause these harmful changes and sit down with families and providers to develop an approach that works,” said Willoughby and Shamp in a joint statement. “Creating this tool is a huge responsibility, and we need people at the table who have real-life experiences and expertise to ensure the best possible outcomes for our people.”
DES and AHCCCS hosted two public forums earlier this month to review policy updates. Details, including the slideshow and a recording, of that meeting were posted online.
In a joint statement, DES and AHCCCS said the updates were made to address medical necessity and cost effectiveness concerns.
“AHCCCS revised its assessment tools and service policies in collaboration with Managed Care Organizations, providers and stakeholders. These updates are in response to conditions in the Centers for Medicare and Medicaid Services (CMS) waiver approval and to comply with House Bill 2945, which was signed into law in April 2025, and provided the supplemental funding for DDD. Initial proposed policy and procedural revisions were open for public comment from May 9, 2025 through July 9, 2025.
As a part of the policy changes, AHCCCS also updated the assessment tools used to determine eligibility for medically necessary Home and Community-Based Services (HCBS) for individuals under age 18 enrolled in Arizona Long Term Care System (ALTCS), which includes the Developmental Disabilities (DD) and the Elderly and Physically Disabled (EPD) programs. These tools now include standardized developmental milestone metrics to help case managers and support coordinators assess whether a child’s needs meet the definition of extraordinary care and should be further assessed for certain tasks/supports. This may include changes in the number of service hours children are approved to receive. The new assessment tool will take effect on October 1, 2025, and will be applied during each member’s regularly scheduled quarterly review thereafter.”
A spokeswoman for Governor Katie Hobbs said the policy changes were necessary to ensure the state funded appropriate treatments for children with special needs. Hobbs promised there would be alternatives beyond PPCG for families who relied on that service model.
“These changes were made to ensure services remain clinically appropriate for children while protecting the long-term viability of critical programs,” said Hobbs press secretary Liliana Soto. “We also recognize the need for additional support beyond these assessed services and our office, in collaboration with AHCCCS and DES, is actively exploring solutions to provide connections for families navigating these transitions.”
AZ Free News is your #1 source for Arizona news and politics. You can send us news tips using this link.
by Ethan Faverino | Sep 4, 2025 | Education, News
By Ethan Faverino |
The Phoenix Union High School District (PXU) is set to vote on a proposed Memorandum of Understanding (MOU) with Chicanos Por La Causa (CPLC), an Arizona-based nonprofit, at its upcoming school board meeting.
The agreement, effective from July 1, 2025, to June 30, 2027, aims to provide substance abuse prevention and mental health services to students at Carl Hayden High School, Bostrom High School, and Maryvale High School.
However, the proposal sparked debate among board members and community advocates, with concerns about the scope of services and their alignment with student needs.
The MOU outlines CPLC’s role as a subgrantee of the Arizona Health Care Cost Containment System (AHCCCS) under the federal Substance Abuse Prevention and Treatment Block Grant (SABG). The SABG targets groups such as pregnant women, drug users, and individuals with HIV/AIDS, alongside primary prevention services for substance abuse.
Under the proposed agreement, CPLC would deliver primary substance abuse prevention services and counseling to referred PXU students, with a specific mention of “Health Masculinity Services for Self-Identified Males.”
The proposed MOU has drawn criticism from some PXU board members, notably Jeremiah Cota, who announced via X his intent to vote against the contract.
Cota expressed concerns that the agreement prioritizes services for self-identified males and potentially includes abortion-related support under the guise of “wrap-around” services, labeling CPLC a “leftist activist group.”
His stance has been amplified by Arizona State Representative Teresa Martinez, who praised Cota’s advocacy while criticizing PXU for ignoring student safety, particularly in light of recent discussions about reinstating school resource officers (SROs).
The SROs were removed from PXU campuses in 2020 following concerns about police interactions with minority students.
Despite recommendations from the district’s student safety committee in March 2023 to reinstate SROs, the board postponed the decision, opting for further study sessions and maintaining an off-duty officer model.
No SRO vote is scheduled for the upcoming meeting, intensifying the frustration among advocates, who argue student safety is being pushed aside.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
by Jonathan Eberle | Aug 20, 2025 | News
By Jonathan Eberle |
Lawmakers on the Arizona Senate Health and Human Services Committee held a tense hearing Monday as state officials faced questions over one of the largest Medicaid fraud scandals in state history, a scheme that exploited the American Indian Health Program and cost taxpayers an estimated $2.8 billion.
Committee Chair Sen. Carine Werner (R-LD4) opened the hearing by describing the fraud as “staggering” and said it exposed major lapses in licensing, monitoring, and fiscal safeguards. She noted that while corrective actions have been taken, the state’s response has sometimes harmed legitimate providers through delayed payments and abrupt regulatory shifts.
Officials from the Arizona Health Care Cost Containment System (AHCCCS), the state’s Medicaid agency, outlined how fraudulent providers recruited vulnerable Native Americans into unlicensed sober living homes. Investigators reported that some individuals were lured with alcohol or drugs, their Medicaid identification numbers used to bill the state for services never provided. In many cases, patients were moved repeatedly between facilities, deprived of food and basic necessities, and in some instances locked inside rooms. The schemes often involved “ghost billing,” duplicate charges, and shell companies.
Marcus Johnson, a deputy director at AHCCCS, told senators the abuse centered on the American Indian Health Program, a fee-for-service system that was exploited between 2020 and 2023. Spending through the program jumped from $84 million to $372 million in just three years, with average monthly costs per patient tripling. Johnson said the agency has since suspended payments to 327 providers and instituted stricter verification of tribal status to prevent non-eligible individuals from being enrolled.
Inspector General Vanessa Templeman detailed the human toll of the fraud. Her teams encountered patients living out of trash bags, denied medical choice, and stripped of personal belongings by facility operators. “Most disturbingly,” she said, “we have seen patients denied informed consent and locked in unsafe conditions.” Templeman emphasized her office has referred multiple cases to law enforcement and continues to work seven days a week investigating suspected abuse.
In response, AHCCCS described reforms that include pre-payment claim reviews, new documentation requirements, temporary provider enrollment moratoriums, and technology upgrades designed to detect suspicious billing patterns more quickly. Officials said the agency has fielded more than 36,000 calls through a dedicated victim hotline and provided emergency lodging to thousands displaced by fraudulent operators.
Despite these efforts, lawmakers pressed for answers on accountability. Chair Werner repeatedly asked who signed off on payments, including $650 million allegedly funneled to an individual in Pakistan. Johnson declined to provide specifics, citing ongoing litigation. Senators voiced frustration, with Werner warning that unanswered questions were unacceptable to taxpayers, providers, and patients still suffering the consequences.
Some members also raised concerns about the impact of heightened scrutiny on legitimate behavioral health providers. Senator Shope noted that reimbursement rates have not been updated in a decade, even as costs have risen, and questioned whether the appeals process for suspended providers is fair. AHCCCS officials maintained that due process is in place, pointing to 104 suspensions that were later rescinded after providers demonstrated compliance.
As the hearing closed, Werner pledged continued oversight, stressing that Arizona must both restore public trust and ensure that fraud prevention measures do not destabilize access to care. “We owe it to the people of Arizona,” she said, “to break the cycle of harm and build a behavioral health system that is transparent and resilient.”
Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.
