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Arizona Gov. Katie Hobbs signed an increase in surveillance of solitary lives two years after state officials announced that the Medicaid fraud scheme targeted Native Americans seeking treatment for drugs and alcohol.
The bill, sponsored by three Republicans, amends state laws on the regulation and licensing of a calm living home. While it has placed new demands on the Arizona Department of Health Services, Navajo lawmakers have expressed concern that the bill has not progressed well enough in addressing the root causes of fraud.
Hobbs’ office announced late Friday that the bill expected to come into effect in the fall is among the dozens she has signed the law. The governor did not explain her decision to sign the law, but she has spoken out in support of reforms over the past two years as authorities “chasing bad actors.”
The legislative passage comes after Propobrica and the Arizona Investigation Reporting Center reported in January that former state Medicaid officials had failed for years to stem the $2 billion fraud scheme despite repeated warnings. Since around 2019, people have been seduced by substance abuse treatment programs and, according to patients, have been housed in plain living rooms where patients can continue to use drugs and alcohol. Meanwhile, many providers have overcharged the state’s American Indian Health Program, Medicaid insurance available to tribal citizens.
As the crisis escalated, at least 40 people died in calm households from spring 2022 to summer 2024 to summer 2024, records from Maricopa County Medical Inspectors reviewed by the news organization showed. Supporters of the victims say they are confident that the scheme will cost much higher. In an interview, the victim’s parents told Propobrica and Azsil that they were left in the dark about the circumstances of their loved one’s death.
“I believe this bill will set the standard,” Phoenix Democrat Cesar Aguilar said before voting for the measure. “It forces businesses to actually help the most vulnerable people.”
The Arizona City and Town Federation is a nonprofit that lobbyed on behalf of local governments and supported the measure, and in a news release said in a news release that a notable component of the bill includes “timely reporting” in Arizona’s health services. The health department must also notify the local government when a new license is issued to the operator of the calm living room. The league says it will “improve transparency and community awareness.”
Under the bill, the Ministry of Health Director will set standards and requirements for a calm living home to maintain a drug-free environment and promote health and addiction recovery. Health officials may revoke or suspend their license, depending on the severity of the violation, in response to a fine of up to $1,000 for each day the violation is not declared.
At the very least, the health department will conduct annual inspections of the facility and report to lawmakers about the number of complaints received regarding facilities that are not licensed or licensed, as well as the number of complaints that have been investigated or other enforcement actions taken.
The bill received bipartisan support. However, critics said they have not addressed additional factors that contribute to fraud schemes. Many victims remained in unauthorized facilities, and despite warnings, the state’s Medicaid agency, Arizona’s healthcare cost containment system was slow to grasp the scope of the fraud and stop it.
It wasn’t until May 2023 that AHCCCS and the governor, who took office that year, published an investigation into hundreds of facilities and launched a hotline to help victims who were recruited or evacuated for fraudulent programs after the suspension of payments to businesses. The agency subsequently enacted a series of reforms in response to the fraud. In an interview last year, the Associate Director of AHCCCS also acknowledged that the agency’s American Indian Health Program does not have fraud protections.
Supporters of this year’s bill are promoting support from the tribe.
Reva Stewart, Diné and advocate for the victims of the plan and their families, opposed the bill. She expects the measure to make it even more burdensome to help those seeking treatment, but she has not been able to stop unlicensed homes where most of the harm was done. Propublica and Azcir have discovered that officials’ failed response to the crisis will lead Native Americans to lose access to the behavioral health services they are offering.
Sen. Teresa Hatasselee, a Democrat with Navajo Colemine Mesa, was also critical of the law. She voted against it. She noted that the bill she sponsored her final session required more accountability not only from the health department related to home monitoring, but also from the Arizona Corporation Committee, which requires businesses to be registered.
Idaho has given families $50 million to spend on private education. It then ended the $30 million program used by public school families.
Hatasley, who died in one of the homes, said this year’s Republican Silent Family Law sponsors did not include her in her arguments.
“We haven’t really solved the problem,” she said last month in a Senator’s floor vote. “So, when we still die and get lost in the system, it’s enough now to say that it’s enough now. These are my relatives. These are my family.”
Sen. Frank Carroll, the bill’s lead sponsor, did not immediately respond to emails or calls requesting comment.
Maria Polletta, Senior Reporter and Associate Editor at Azcir, contributed to the report.