Dozens of people died in Az sober living homes as state officials fumbled Medicaid fraud response
Mulligan said fallout from the sober living crisis has made it hard to regain a patient’s trust. “People have been driven by the program to the liquor store. They drank with Behavioral Health Technicians and the managers of the household.” It’s all part of a scam in which people were promised free housing, food and medical care, as long as they are enrolled in the AIHP.
It was one of the dozens of providers accused of fraudulently billing the state’s Medicaid system. He declined an interview but said over the phone that the program is still operating from the same sober living home despite not being paid by AHCCCS. The head of Arizona’s Medicaid agency opens up about the AHCCCS scandal plaguing Arizona.
‘There has to be an end’: Head of AHCCCS gives insight on massive Medicaid fraud scandal in Arizona
- After hearing victim impact statements from a number of parents whose children suffered fatal and non-fatal overdoses, U.S.
- They operate by using people, often Indigenous people, as currency to overbill Medicaid, in some cases in excess of $1,000 per patient per day.
- People enrolled in Medicaid and benefitting from the health coverage are almost never the ones perpetrating fraud against it, according to research by KFF, an independent health policy research, polling and news site.
By the summer of 2022, Jeffrey Hustito was enrolled in Beyond4Wallz Health and Wellness. The new outpatient treatment program held classes in an office building in north Phoenix and placed its clients in houses throughout Phoenix, according to the owner. Anders Hustito did not yet know about the fraud in Arizona or that the programs might be enabling his son’s drinking, rather than helping him quit. But according to public records, there were signs of trouble within facilities and problems with providers’ licenses.
New law increases oversight of Arizona sober living homes
- The changes were not communicated beyond Snyder’s senior leadership team for nearly two years, according to documentation provided by an AHCCCS spokesperson.
- However, as sober living homes shut down, people are left on the streets.
- SB 1308 aims to close regulatory loopholes by setting clear licensing requirements and enforcement mechanisms.
- She voted against it, noting that a bill she sponsored last session would have required more accountability not only from the health department related to its oversight of the homes but also from the Arizona Corporation Commission, where the businesses must be registered.
- However, the witness said the sober living home was negligent because protocol meant sending someone to a detox facility when alcohol or drug abuse was suspected.
AZCIR and ProPublica found that officials’ botched response to the crisis resulted in Native Americans losing access to behavioral health services that were being provided to them. We have now the story of a scam that targeted some of society’s most vulnerable people. It was uncovered in Arizona, where dozens of operators are accused of setting up fake sober living homes as rehab facilities. Investigators say the scammers targeted people from Native tribes and defrauded taxpayers out of hundreds of millions of dollars. The series takes a deep look at the FBI’s investigation in claims of Native Americans in several states, including Arizona, who are being targeted in sober-living schemes.
At AHCCCS, staff received news in March of a death inside a residential treatment program, Adams said. In an interview, she could not recall details of the death or the facility where it occurred. But she said a health and safety committee reviewing the death discovered the facility did not have a health department license, a key detail that would repeatedly appear in later investigations. Meanwhile, word spread on social media that white vans were appearing on reservations and people with addiction were disappearing, said state Sen. Theresa Hatathlie, a Democrat from Coalmine Mesa on the Navajo Nation. Hatathlie said the behavioral health facilities’ tactics of sending vans to tribal communities grew increasingly aggressive as they recruited clients with promises of free food, housing and clothing. Police intervened but didn’t yet fully understand what was happening, the state senator said.
AZ man sentenced for role in Medicaid fraud scheme
From January through mid-August 2023, code enforcement has investigated 137 complaints of unlawful sober living homes, and has closed 111 cases. Data from March 2023 reveals there were 40 known sober living homes in Surprise, but not licensed by the city or state. “I would say pretty early in my term, mid to late January, I had a resident reach out earlier just inquiring about sober living homes and at that time we just really weren’t sure what was going on,” he said. This way, they can be “brokered” to behavioral health outpatient programs using their AHCCCS ID numbers to charge the state’s Medicaid agency. Nearly a year later, more than 300 behavioral health providers were suspended by AHCCCS over allegations of Medicaid fraud.
Like most other cases of Medicaid fraud, Arizona’s sober living crisis appears to have been perpetrated solely by providers. Farmers are dying by suicide at the third-highest rate by vocation in Utah. But after a federal program offering mental health support ran out of money, the state did not continue it. State records show the business, which received a state health department license in April 2021, was reimbursed $3.5 million from Medicaid that year. The next year, Beyond4Wallz’s Medicaid claims more than tripled, to $11.1 million. Jeffrey Hustito decided to seek treatment in Phoenix based on a recommendation from friends at Zuni Pueblo.
The scandal has hurt legitimate rehabilitation programs
The council adopted a short-term rental ordinance that prohibits those types of properties from being used as sober living homes. There’s also a group home licensing process that requires annual inspections and renewal fees. “At least 90% of them came from sober living homes,” Jeri Long with Stolen People, Stolen Benefits said. “The difference is, you see a lot of unsheltered relatives, and now they’re admitting that they were in a sober living home. How many sober living homes, they don’t know,” Stewart said. “They don’t know the names, they don’t know which clinic they went to or if they were ever in a clinic.” We joined Stewart on a night, a night like many others, trying to find relatives kicked out of shady sober living homes.
From 2019 to 2023, AHCCCS was writing huge checks to scammers who were effectively buying and selling patients in need of drug and alcohol treatment, evidence shows. The scammers used taxpayer money to purchase expensive homes, jewelry, clothing and cars for themselves and disproportionately targeted Indigenous people. Arizona’s so-called sober living scandal was announced at a multi-agency news conference on May 16, 2023. The issue quickly gained national attention and by early 2024, the estimated cost of the fraud was up to $2.5 billion agency leaders said. Snyder did not mention the fraudulent facilities several days later when she went before a legislative committee to discuss a recent audit shortly before stepping down as AHCCCS director. The audit, conducted every 10 years, is used by legislators to evaluate the future of state agencies.
Fraud schemes involving phony behavioral health programs in metro Phoenix appear to start. They operate by using people, often Indigenous people, as currency to overbill Medicaid, in some cases in excess of $1,000 per patient per day. The overbilling is for drug and alcohol treatment that is often either subpar or never provided. Under that program, providers directly bill AHCCCS for whatever they charge for individual services. Kenneth Chatman dictated that confirmatory urine drug testing; duplicative saliva drug testing, DNA and allergy testing occur regardless of whether patients complained of allergies. These tests were medically unnecessary and not used to direct the treatment of patients.
The place where he stayed in Phoenix, a two-story house with a hot tub and swimming pool, looked like a mansion in the photos that Jeffrey Hustito shared in text messages, his sister, Katherine Hustito, said. She was pleased he seemed happy, though she was surprised the treatment program operators had helped him get an Arizona identification card and sign up for Medicaid in the state. Ariell Olivia Dix, 37, helped establish fake behavioral health treatment centers that defrauded the American Indian Health Program within AHCCCS. The Arizona Center for Investigative Reporting is the state’s only independent, nonpartisan and collaborative nonprofit newsroom dedicated to statewide, data-driven investigative reporting. Attorney General Kris Mayes indicts eight people on 25 charges related to fraudulent schemes against AHCCCS in connection with the sober living fraud. The city’s goal is to respond to a complaint on an unlicensed sober living home in less than 48 hours.
Stay up to date on the latest in Arizona by signing up to get FREE news delivered to your inbox. State prosecutors alleged Timmons and longtime Hacienda HealthCare Chief Financial Officer Joseph O’Malley bilked AHCCCS by orchestrating a complex billing scheme involving a series of connected businesses. At the same time Timmons and O’Malley were indicted, the facility was ordered to pay the state $11 million.
The team responsible for setting rates had determined that amount was in line with industry standards. She said she slept on a mattress on the floor of a rundown house and didn’t get the sober living fraud treatment she needed. The family knew they would miss him when he enrolled in the Phoenix treatment program. Gov. Katie Hobbs, a Democrat who took office in January 2023, blamed her Republican predecessor, Doug Ducey, for failing to relay the scale of the scheme that persisted for years under his leadership.
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She previously interviewed with FOX 10 about the death of her cousin, Carlo Walker, who allegedly went through the same experience as she did. When asked if people were allowed to drink and do drugs at the home, he said, “Yeah.” Stewart has seen people recruited outside the Phoenix Indian Medical Center, at bus stops and on streets across the city. As of November 2023, the rate is set at about $158 for one unit of service and the code can be billed just once a day.
It determined, among other findings, that AHCCCS could have made more than $1.7 billion in improper payments between 2019 and 2020 because it did not properly determine providers’ eligibility before making reimbursements. Meanwhile, Native Health and Native American Connections, two well-established providers in Phoenix, pressed authorities to do more. As Hobbs took office in January 2023, the organizations held a meeting with other community health centers, law enforcement, AHCCCS and state health officials to discuss human trafficking and Medicaid fraud. According to police, Jeffrey Hustito checked into another sober living home on Dec. 26, this one in the suburb of Glendale. He later smoked fentanyl with another resident and laid down to sleep around 1 a.m. People in the house found him unresponsive 45 minutes later, police said.
Magee said she had no ties to sober living homes Hustito entered after he was no longer her client, including the one where he died. Jeffrey Hustito was one of at least two Native Americans to die in sober living homes in December 2022 as AHCCCS tried to root out fraud by suspending payments to providers. At least 10 behavioral health providers, including Beyond4Wallz, received suspension notices from AHCCCS that month. Behavioral health outpatient clinics drove the most significant increase, with officials later saying that many of these facilities were part of the multilayered scheme to defraud Medicaid. The clinics would often coordinate with unregulated sober living homes to house patients eligible for the program. The clinics would then pay the homes for supplying patients, using a cut of the outsize profits they made billing the American Indian Health Program.
She’s giving insight into the fight against a fake rehab scheme targeting vulnerable people. The previous loophole allowed fraudsters to not only target Native Americans but all vulnerable people in need of free housing. For those who have been victimized repeatedly by the sober living scheme, trust is broken. Arizona is still reckoning with the largest fraud scheme in the state’s history.