PHOENIX — When Carmen Heredia got to the inauguration, people already knew she had a new job.
Heredia had accepted the job as CEO of AHCCCS, Arizona's Medicaid agency. She was at the state capitol to watch Katie Hobbs be sworn in as Arizona governor.
"A community member said, congratulations, you've got this job," Heredia said of being Hobbs' selection. "She said people are being trafficked...and kind of gave me the high points. And it sounded absolutely outrageous."
Heredia spoke to 12News for the first time last week about the scope of a now-infamous Medicaid fraud scheme that incorporates alleged human trafficking and widespread overbilling to the tune of hundreds of millions of dollars.
In a press conference in May 2023, Arizona Attorney General Kris Mayes laid out five years of AHCCCS billing under the Native American insurance code. That code was billed for tens of millions one year. By 2023 that number had shot up to hundreds of millions a year. Adding up Mayes's numbers, it equals more than a billion dollars.
"We might be talking about even more than that," Heredia said. "It is a lot."
12News has reported for almost a year on rehab facilities with questionable practices, patients who overdosed after "graduating" from some of them. Neighbors have seen white vans shuttling Native Americans off the reservations to sober living houses and treatment facilities. In one case, patients were being housed at a hotel in Eloy, Arizona that had multiple police calls for things like drugs, violence and even sexual assault.
AHCCCS has been conducting an audit to find out the scope of the problem. But Heredia said until she came to AHCCCS, there was nothing in the state's billing system that would automatically flag suspected abuse.
For instance, if a provider billed for 23 hours of treatment in one day, as numerous providers are accused of doing, the system would not notify anyone or flag the payment.
“Those flags were not written to catch those things," Heredia said. "Now, we've built them since learning of them.”
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Heredia said no one at AHCCCS has been fired over this scandal. However, she said numerous people had retired, left the agency or are now in positions where the supervision has been increased.
"We've also done a reorganization and put people under new oversight," she said. "And so there's there's new oversight, there's a lot of cultural change that we've done."
During her State of the State speech last week, Gov. Hobbs said she had a slate of bills that she would be introducing to address some of the loopholes that allowed the fraud to take place.
Heredia said AHCCCS has worked with the governor's office to help craft those bills.
“It all really sits more with the Department of Health," Heredia said. "The Department of Health is in charge of health care facility licenses. And the majority of the package really is regulation that really focuses on their ability to enact, and they really need that teeth to be able to do licensing differently.”
Since the AHCCCS fraud scandal came to light, the state has suspended more than 300 providers suspected of fraud. Some, Heredia said, have settled, but none of the cases the state has brought have been thrown out.
Heredia said more are still being suspended. Until those cases are solved, she said, it's impossible to know the full dollar amount of the fraud.
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