Arizona's Medicaid Fraud Isn't Over — It's Just Better Hidden, and Tribes Want the Law Rewritten

Reva Stewart spends her days doing something no state agency has fully managed: watching for the vans. The Diné activist, who founded Turtle Island Women Warriors, tracks recruiters who still work reservations and border towns in Arizona, promising Native people housing, treatment, and a ride to a “sober living home” that turns out to be none of those things — just a body to bill AHCCCS, Arizona’s state Medicaid program, for services nobody delivered.

That scheme, run through the American Indian Health Program between 2019 and 2023, cost the state an estimated $2.5 to $3 billion. The Department of Justice has called it the largest fraud scheme targeting a single demographic group in recent U.S. history. At least 40 people died in these unlicensed homes, some of them reportedly kept drunk or high so they couldn’t leave.

270 open investigations in August 2025 is not zero, and no press release from AHCCCS changes that until tribes — not the state, not its managed-care contractors — control who gets referred into recovery housing.

The state’s own numbers back that up. New investigations dropped from roughly 1,400 at the 2023 peak to 270 by last August — real progress, not nothing. But as Stewart put it in a recent interview: “Despite public exposure, investigations, lawsuits, media coverage and legislative attention, the same harmful practices remain active.” Recruitment, she said, “is happening in plain sight. It is ongoing, it is organized, and it is being used to funnel people into unstable, unsafe and exploitative environments for financial gain.”

That’s the backdrop for a legislative push tribal leaders are now driving directly. Tao Etpison, Vice Chairman of the San Carlos Apache Tribal Council, wants lawmakers to “close the loopholes, enforce real penalties, place tribes at the center of decision making and restore integrity to a system that must once again serve life and not exploit it.” His ask is specific: sovereignty built into statute, not a discretionary courtesy AHCCCS extends when convenient.

Meanwhile the agency insists the worst has passed. “We know that we’re not completely out of the woods,” said AHCCCS Deputy Director Marcus Johnson, “but we have really gotten through the acute crisis phase.” State Sen. Carine Werner, who chairs oversight, is blunter about what that acute phase cost the system’s credibility: “I do believe the system is so broken that there’s no going back.” Three AHCCCS directors — Jami Snyder, Carmen Heredia, and now Virginia Rountree — have exited since the scandal broke, which is its own answer to whether the agency has stabilized.

Legitimate providers are still absorbing the fallout. Aimee Graves, CEO of The Haven, a Tucson recovery center for women, says her organization is owed more than $375,000 for care it already provided to Native members caught in the state’s fraud dragnet. “There is a severe and persistent access to care (issue) for Native and Indigenous women that we have seen at the Haven,” she told AZPM. The structural fix on the table, a managed-care contract restructuring under SB1611, doesn’t take effect until October 2027.

That timeline does nothing for whoever a recruiter is loading into a van this week. What’s real right now: investigators opened roughly a fifth as many new cases last year as they did at the 2023 peak, which means the state’s fraud unit and people like Stewart are still finding and closing homes, one at a time, without waiting for SB1611. Read more Arizona Watch coverage, including our reporting on the crackdown on unlicensed beds. Sovereignty isn’t a compliance clause you phase in on a fiscal calendar — it’s who answers the door when AHCCCS finally calls.