Six Phoenix-area hospitals received federal warning notices or requests for corrective action plans over compliance with hospital price transparency requirements, according to a report released by the health care watchdog group Hospital Watch.
The facilities named were Banner Gateway Medical Center, BH Newco Hospital LLC, College Medical Center Phoenix, Phoenix Specialty Hospital, Quail Run Behavioral Health, and Valley Hospital.
BH Newco Hospital operates as Via Linda Behavioral Hospital in Scottsdale. Banner Gateway Medical Center is located in Gilbert, while the remaining facilities serve patients in Phoenix.
The six Arizona facilities were among 519 hospitals nationwide that received letters from the Centers for Medicare and Medicaid Services (CMS) between April and early June, according to a national list obtained by the Associated Press.
The list included hospitals in every state except Alaska. Texas had the most facilities receiving letters with 42, followed by California with 38, and Indiana with 34.
The letters included warning notices and, in cases CMS considered more serious, requests for hospitals to submit formal corrective action plans. Hospitals that fail to address cited deficiencies can face civil monetary penalties that may reach approximately $2 million annually, depending on the size of the facility.
“Patients should not have to guess what a hospital visit is going to cost,” Hospital Watch spokesman Adam Buckalew said. “If hospitals are serious about affordability, they should start by following the basic transparency rules already on the books. Instead, too many major hospital systems are hiding prices, protecting inflated rates, and leaving families to deal with surprise bills they cannot afford.”
TODAY: @HouseCommerce is looking for solutions to increase price transparency across the healthcare industry. Any honest conversation about healthcare affordability must look at the #1 culprit preventing it: corporate hospital systems.
Federal hospital price transparency rules have been enforced since Jan. 1, 2021. Most hospitals are required to publish a comprehensive machine-readable file containing their gross charges, discounted cash prices, rates negotiated with individual insurers, and the highest and lowest negotiated prices for each service.
Hospitals must also provide a consumer-friendly display covering at least 300 services that patients can schedule in advance, or all such services if the hospital offers fewer than 300. The display must include plain-language descriptions and pricing information or be provided through an online cost-estimator tool.
CMS can issue a warning, require a corrective action plan, impose a civil monetary penalty, and publicly identify hospitals that remain out of compliance.
The public list of hospitals receiving letters does not by itself disclose the specific deficiency identified at each Phoenix-area facility or establish whether the issue has since been corrected. Hospitals elsewhere on the list have said their notices involved technical or formatting problems rather than missing price information.
The University of Texas MD Anderson Cancer Center, for example, told the Associated Press that its notice concerned a date-field formatting issue that was corrected. Ascension said letters sent to several of its hospitals involved a minor technical error. CMS later accepted corrected documentation from some facilities.
A 2024 audit by the Department of Health and Human Services Office of Inspector General found that 37 of 100 sampled hospitals failed to meet one or more federal transparency requirements. The office estimated that 46 percent of the 5,879 hospitals covered by the rule were not fully compliant at the time of the audit.
Hospital Watch said inaccessible or incomplete pricing information prevents patients, employers, and families from comparing costs before receiving care. The organization also called for greater federal enforcement and additional scrutiny of hospital consolidation in the Phoenix market.
“The hospital market in the Phoenix area is dominated by a handful of powerful systems,” Buckalew added. “When hospitals buy up competitors and face little real competition, patients lose. Prices go up, premiums rise, and families are left with medical bills they cannot afford.”
A January report from the Arizona Health Care Cost Containment System (AHCCCS) identified Banner Health as the state’s largest hospital system with 18 hospitals, followed by Dignity Health and HonorHealth. AHCCCS listed Abrazo/Tenet among 11 hospital systems operating at least three facilities in Arizona.
Hospital Watch said private insurers and patients frequently pay hospitals approximately three times the rates paid by Medicare.
A nationwide RAND Corporation study found that employers and private insurers paid hospitals an average of 254 percent of Medicare rates for comparable services at the same facilities in 2022. Inpatient facility prices averaged 254 percent of Medicare rates, while outpatient hospital facility prices averaged 279 percent.
Hospital industry representatives have argued that commercial payments help cover costs that Medicare and Medicaid reimbursement rates do not fully address. The American Hospital Association has also said most hospitals comply with federal requirements and has called for clearer, more standardized rules that produce information patients can readily use.
“We need real enforcement of hospital price transparency and stronger scrutiny of hospital consolidation,” Buckalew said. “Sunlight is the first step toward accountability. Patients and employers deserve to know what they are being charged, why prices are so high, and whether hospitals are giving them a fair deal.”
Hospital Watch launched in February as a project of Better Solutions for Healthcare. The group advocates for hospital price transparency, limits on facility fees and markups, and increased oversight of hospital consolidation.
Gov. Katie Hobbs vetoed legislation that would have established financial transparency requirements tied to an alleged pay-to-play scandal involving her administration.
Hobbs called the legislation, SB 1186, a “political stunt” against her in a veto letter. The governor issued her veto last Friday as part of her office’s regular legislative action updates.
The governor also claimed that her proposed amendment to the financial disclosure reform bill — carried by Senate Minority Leader Priya Sundareshan (D-LD18) — was superior to what was vetoed by her.
“As I have made clear, this proposal is a political stunt that applies only to one elected official, when what we really need is real transparency and accountability for all elected officials, campaigns, and affiliated political committees,” said Hobbs. “Transparency and accountability are priorities I have acted on from day one.”
The Hobbs-Sundareshan amendment would have restricted lawmakers from receiving donations from state contract bidders.
Senate President Pro Tempore T.J. Shope (R-LD16), the bill sponsor, explained to Capitol Media Services that the governor’s office, not the legislature, handles procurement, and that the amendment would have weakened the legislation.
SB 1186 would have required companies holding or seeking state contracts and certain grants to disclose anything of value provided in the preceding five years to the governor or the governor’s campaign-related entities, inaugural funds, joint fundraising committees, and organizations supporting the governor or opposing the governor’s political opponents.
The bill also would have prohibited state agencies and employees from destroying contract proposal evaluation notes. Contracts tied to improperly destroyed records would be subject to resolicitation.
Multiple entities are investigating Hobbs for the alleged pay-to-play scheme, which involved $400,000 in campaign donations from group home operator Sunshine Residential Homes and a unique, multibillion-dollar rate increase contract nearly 40 percent above the average for other peer contractors, as awarded by the Arizona Health Care Cost Containment System (AHCCCS).
Hobbs was also the only Arizona candidate to receive contributions from Sunshine Residential Homes CEO Simon Kottoor and his wife, Elizabeth Kottoor, during the 2022 and 2024 election cycles.
Several investigations into this alleged scheme are occurring simultaneously: one by Attorney General Kris Mayes, one by Maricopa County Attorney Rachel Mitchell and Auditor General Lindsey Perry, and one by an advisory team within the Arizona House.
The agency told Capitol Media Services that the contract occurred because Sunshine Residential Homes threatened to increase intake of migrant children at the expense of the state’s foster children if it didn’t receive additional funding.
The Arizona Senate GOP stated in a press release that Hobbs had rejected essential safeguards to prevent government officials from rewarding financial supporters with taxpayer-funded contracts.
Shope accused Hobbs of denying Arizona taxpayers the right to transparency from their elected leaders.
“Arizona families work hard for every dollar they send to the government. They have every right to know whether companies seeking millions or even billions of taxpayer dollars have financial or political ties to the Governor’s inner circle before contracts are awarded, not after another scandal makes headlines,” said Shope. “If state contracting decisions are truly being made fairly and on merit alone, transparency should not be controversial.”
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Arizona’s Republican state lawmakers are challenging Gov. Katie Hobbs to sign into law a government transparency bill amid the ongoing “pay-to-play” scandal involving the governor.
This past week, the Republican-led legislature sent SB 1186 to Hobbs’ desk. The legislation was inspired partly by ongoing legal challenges to the legality of the Arizona Medicaid program’s contract award system, and partly by ongoing allegations that Hobbs arranged for a unique rate increase to one of her top campaign donors.
Sunshine Residential Homes, a group home operator, donated more than $400,000 collectively to Hobbs’ gubernatorial campaign, Hobbs’ inaugural fund, and the Arizona Democratic Party.
Once Hobbs took office, the Arizona Department of Child Safety gave Sunshine Residential Homes a 30% rate increase, though no other group homes received rate increases and over a dozen contracts were terminated. This was reported initially by the Arizona Republic in 2024, along with another key detail indicating a close relationship between the governor and the company: Hobbs fine dining at the mansion of Sunshine Residential Homes CEO Simon Kottoor.
Hobbs’ inaugural fund — which reached nearly $2 million — was another funding source that was shrouded in secrecy. The inauguration event cost about $200,000, leaving the million-plus as a nonprofit source of funds to be spent at Hobbs’ discretion.
Attorney General Kris Mayes, a fellow Democrat, has maintained that her investigation into the alleged pay-to-play arrangement remains ongoing. Hobbs has yet to take Mayes up on her request for an interview.
The proposed legislation from Arizona’s Republican lawmakers would require companies that obtain state contracts or certain state grants to disclose anything of value provided in the previous five years to the governor, campaign-related entities, inaugural funds, and organizations making independent expenditures supporting or opposing the governor or their political opponents.
The legislation would also prohibit state agencies and employees from destroying notes created during the evaluation
The bill sponsor, State Sen. T.J. Shope (R-LD16), said financial disclosures should come before the state awards any contracts and grants, in order to ensure transparency and fairness in the process.
“Arizonans have watched one contracting controversy after another and are rightly asking whether political connections are influencing decisions involving billions of taxpayer dollars,” said Shope. “Governor Hobbs now has an opportunity to show Arizonans she supports transparency in government by signing this legislation.”
An advisory team was formed in the House to address this alleged pay-to-play scheme by Hobbs, and they also have their own investigation underway. The lawmakers hired outside counsel from out of state — Justin Smith with the Missouri-based James Otis Law Group — to conduct an independent investigation.
Smith led a battery and defamation lawsuit against E. Jean Carroll, an accuser of President Donald Trump.
That independent investigation initiated by lawmakers is ongoing. All findings from the outside counsel go to the advisory team and House leadership.
Maricopa County Attorney Rachel Mitchell and Auditor General Lindsey Perry are also coordinating on an investigation into the matter involving Hobbs and Sunshine Residential Homes. The House advisory team announced last year it would coordinate with Mitchell and Perry on their investigation.
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The Goldwater Institute is asking a federal judge to allow Maricopa County taxpayers to see how public funds have been spent during more than a decade of federal oversight of the Maricopa County Sheriff’s Office (MCSO).
In a friend-of-the-court brief filed on Tuesday, Goldwater urged the U.S. District Court to reconsider a 2014 order that keeps the federal monitor’s invoices confidential. Under that order, the court-appointed monitor, Warshaw & Associates, submits billing records exclusively to the judge, placing them outside public view.
Scrutiny of the court-appointed monitor has been growing in recent weeks. Over $300 million has been spent on oversight in the past 14 years, with approximately 10% going to the court monitor, Robert Warshaw, according to Maricopa County Board of Supervisors Chairman Thomas Galvin. The Board submitted a court filing in December asking the U.S. District Court for the District of Arizona to end federal oversight of MCSO. Maricopa County Attorney Rachel Mitchell agreed in a post to X, writing, “There is no defense for this ‘federal monitor.”
Vice President for Legal Affairs at the Goldwater Institute, Timothy Sandefur, explained, “That means Maricopa County taxpayers have no way of knowing how their tax dollars are being spent on one of the most important services the county provides.”
“Although the Goldwater Institute has repeatedly requested copies of these invoices, the county does not have itemized statements, and the federal monitor refused to produce them,” he added. “But as we point out in the brief we filed on Tuesday, the government should not be allowed to keep such information secret unless there’s good reason, and even then, they’re required to specify what those reasons are. The court in this case has never done so—and even if it had, circumstances have changed in the decade since the lawsuit began.”
The filing comes as Maricopa County separately argues that continued federal oversight of MCSO under the Melendres v. Arpaio ruling is no longer justified. In a pending motion, the county contends that the sheriff’s office has implemented substantial reforms and that the monitorship should be terminated.
In its brief, Goldwater argues that the continued sealing of the monitor’s invoices prevents taxpayers from knowing how their money is being spent and undermines transparency principles embedded in Arizona and federal law.
“History did not end in 2014, and continued federal oversight of MCSO cannot be based on decade-old facts,” the brief states. “It’s crucial that Maricopa County taxpayers be permitted to know where their tax dollars are going — and that’s hindered by the existing orders and continued federal oversight without a full public accounting.”
The court has not yet ruled on either Maricopa County’s motion to end federal oversight or Goldwater’s request for public access to the monitor’s billing records.
I recently conducted an informal survey among about 50 of my neighbors, asking them, “What do you think your City of Mesa utility payment is used for at the city?” Some said ‘water.’ Some said, ‘water and sewage.’ And a few said, “water, sewage, and trash.” But only 2 of 5o included ‘other city government services including police and fire.’ Those two individuals had been at an Encore Conservative Club meeting where we had discussed this exact subject.
I believe this simple survey is representative of the entire City of Mesa, where more than 90% of the residents are totally unaware that 30% of their utility bill is transferred from utility payments to the “General Governmental Fund” for the City.
According to the Oxford English Dictionary, there are two definitions of “transparency” that are relevant to this discussion: 1) the quality of something, such as a situation or an argument, that makes it easy to understand, and 2) the quality in something, such as an excuse or a lie, that allows somebody to see the truth easily. The current City of Mesa utility bill is not “transparent” according to these definitions because it does not make clear to those paying the bill what they are being charged for: 70% for city utilities and 30% for other government services. I would like to challenge the mayor, and city council to make Mesa utility bills more transparent by including exactly what is paid for. And I might also suggest that the 30% of utility bills for general governmental uses should not have sales tax applied to it.
Councilman Adams stated in the September 22nd council meeting that the City was transparent about this subject because “if you looked you could find it.” But I would argue based on the above informal survey that you have to know that you need to look and further, that you need to understand where to look! While I applaud the City posting a special link to proposed utility rate adjustments on its website, including dates of relevant city council meetings, an informative video, and an online comment card, the information is somewhat obtuse. A 164-page “Current Utility Rate Book” is not at all helpful for the average Mesa resident; the staff presentations from the September 22nd council meeting are helpful but take multiple steps in website navigation to find (if you know they exist there).
I want to be abundantly clear. I am not accusing anyone, council nor staff, of concealing or hiding anything. Council and staff are following the existing process. But it has taken me more than a year of making mistakes and misinterpretations to understand how the City works, including being politely but repeatedly corrected by city financial staff (thank you!). I am a former Director of Engineering who has managed budgets of millions of dollars. If it takes me this much effort to understand, what chance does the average resident have?
Even for those who know that their utility payments contribute to the general governmental fund, few understand the consequences of the rigid application of the 30%. Because it is a percentage applied to the total revenues, it means that there is an “automatic tax increase” due to the corresponding increase in General Funds Transfers every time there is a utility rate increase. The City Ordinance (#5559) does not require 30%, but both city council and staff very rigidly apply it each year. In past years, there has been no discussion of whether this tax increase is needed or not. It just happens. I would like to challenge the city council to hold that tax increase to zero (no increase, no decrease) for this upcoming year, rather than just applying the 30%; the net result will be 28.8% instead. This will have zero impact on utilities because their requested increases can be approved as requested.
But this proposal (to fix the Transfer to General Fund from Utility Fund) illustrates another complication: the value for the General Fund Transfer, currently shown as $147M, was set during the budget process in May/June of this year. So, any change now would require city staff to revise the budget. That’s not impossible but highly unlikely especially considering these funds are earmarked for public safety. Public safety funding can be held constant by using other funds such as Environmental and Sustainability.
Another place for unintended obfuscation is in the Debt Service Transfers, with a proposed increase of $18.7M or 16.1% for FY25/26. This line item covers paying for principal and interest on utility bonds. This is the biggest increase for this year and, all future years, based on the 5-year plan presented to the council. Debt Service Transfers total 38% over the next 5 years leading to a total projected increase of 51%! These bonds are approved in a wholly separate meeting in June by the council, so most of these increases are required or major construction projects will be stopped. Most residents of Mesa assume that they get to vote on “bonds,” which is true of bonds supported by secondary property taxes (and school bonds), but not utility bonds, which are approved by city council vote. What the average resident does not understand is that when utility bonds are approved at a council meeting in June, it is a commitment to increase utility rates for up to 30 years into the future. And we already have a commitment of 38% increases in the next 5 years!
Taken together, the General Fund Transfer increase ($9.3M), and the Debt Service Transfer increase ($18.7M) constitute 65% of the requested utility rate increase but are effectively pro forma because they were approved previously. While not at all hidden, is that transparent to the typical Mesa resident?
Finally, I do support the proposed “Water/Wastewater Capacity Fee,” which is related to the utility rate adjustments because if passed, it removes $400M in future utility bonds from current Mesa residents and instead charges developers and new growth users to pay for the additional capacity. If passed, this capacity fee will result in a smaller increase in this year’s adjustments but will reduce future increases even more.
One last picky comment: the utility rate adjustment presentations use a “typical user,” but the exact definition of which seems to be a pretty minimal water user. I would suggest that the city staff use a statistically significant definition by presenting a “median” user, someone for whom 50% of city water users pay (or use) more, and 50% pay (or use) less.
I hope there will be good conversations on these subjects at the city council meetings on November 17th, for introduction of the utility rate adjustments and December 1st, for the public meeting on utility rates.
David Winstanley is a retired Director of Engineering at Honeywell Aerospace, former Chair of LD15 Republicans, and a conservative activist for local issues in the East Valley.
