Director of Arizona Medicaid Agency Resigns Following Fraud Scheme Response

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This week, the director of Arizona’s troubled Medicaid agency resigned just as she faced scrutiny from lawmakers over her handling of a major fraud scheme that targeted Native Americans. Arizona Governor Katie Hobbs, a Democrat, announced on Wednesday that she had accepted the resignation of Carmen Heredia, who led the Arizona Health Care Cost Containment System. The governor praised Heredia’s leadership but blamed Republican lawmakers for politicizing the confirmation process, leading to her resignation.

Republican Senator Jake Hoffman criticized Heredia’s response to the fraud scheme, citing poorly executed suspensions of hundreds of behavioral health providers. Heredia had been leading AHCCCS without Senate confirmation since early 2023, following a period when the fraud likely began under the previous Republican administration. Records indicated that officials were aware of the fraud’s impact on patients before Heredia took over, but failed to take significant action until she alerted the public in May 2023.

During Heredia’s tenure, AHCCCS withheld payments to over 300 businesses accused of fraudulently billing Medicaid for services not rendered. The investigation revealed that patients were left without proper treatment while business owners profited from fraudulent billing practices. Heredia expressed sadness over her resignation, attributing it to a partisan agenda that subjected professionals to damaging hearings.

The fraud scheme involved businesses in Arizona, particularly in Phoenix, exploiting Medicaid reimbursements by enrolling Native Americans and overbilling for services. Attorney General Kris Mayes highlighted more than 100 indictments and 25 convictions related to the scheme, with expectations of more to follow. AHCCCS emphasized patient safety as a top priority and established support services for victims affected by the scheme.

Heredia’s swift response to the crisis, while necessary to address fraud, raised concerns about the accessibility of behavioral health care, especially for Native Americans. Senator Hoffman criticized Heredia’s management, stating that vulnerable populations were affected by the collapse of the system.

Apart from Heredia, Jennifer Cunico, the director of the Arizona Department of Health Services, also resigned this week before facing a confirmation hearing. Cunico cited the lack of confirmation prospects as the reason for her withdrawal. Governor Hobbs defended Heredia’s efforts to combat fraud and praised both Heredia and Cunico for their contributions to improving the healthcare system in the state.

In conclusion, the resignations of Heredia and Cunico, amid political turmoil, have impacted the leadership of healthcare professionals in Arizona.