Arizona Medicaid Scandal: Resignations Follow $2 Billion Fraud Targeting Native Americans

Arizona's Medicaid agency has been rocked by scandal and resignations amid a massive $2 billion fraud scheme targeting Native Americans. Carmen Heredia, director of the Arizona Health Care Cost Containment System (AHCCCS), resigned just before facing lawmakers about her response to the crisis. Under Heredia, AHCCCS suspended over 300 behavioral health providers accused of billing Medicaid for services never rendered. Many Native American patients were left homeless or without addiction treatment. Critics, including Republican Sen. Jake Hoffman, claim Heredia’s actions were mismanaged and left the system broken. However, Gov. Katie Hobbs defended Heredia, saying she worked to eliminate fraud and protect patients.

The fraud scheme exploited the American Indian Health Program, which had no billing caps. Despite setting up a victim hotline and temporary housing, AHCCCS lost track of thousands of displaced individuals, with at least 40 Indigenous people dying during the response. While some providers were later cleared, their patients still suffered disruptions. Attorney General Kris Mayes reported over 100 indictments and 25 convictions so far.

In a parallel resignation, Jennifer Cunico, head of the state health department, also stepped down. Hobbs blamed partisan politics for derailing confirmations and praised both women for improving healthcare access and fighting fraud.

Hudetz, M. (2025, May 2). Arizona Medicaid director resigns amid fallout from $2 billion fraud scheme. ProPublica. https://www.propublica.org/article/arizona-medicaid-fraud-carmen-heredia-resigns