AHCCCS has broad authority to exclude participating providers from its program. For example, AHCCCS may terminate a provider’s AHCCCS participation agreement if the provider fails to comply with their provider participation agreement, or with federal and state laws, rules, or regulations. AHCCCS must also suspend payments pending an investigation of a “credible allegation of fraud” against the provider.
In recent months, AHCCCS has demonstrated a focused interest in investigating its behavioral health providers. After becoming “aware of potential fraudulent billing practices, including significant increases in billing for outpatient behavioral health services,” the AHCCCS Office of Inspector General and the Arizona Attorney General’s Office initiated a multi-agency review and investigation of potential fraud, waste, and abuse. Ultimately, AHCCCS suspended payments to more than 100 registered behavioral health providers based on credible allegations of fraudulent billing activities on May 15, 2023. Since that time, the number of provider payment suspensions has swelled to over 250.
After these historic suspensions, effective as of July 3, 2023, AHCCCS proposed emergency rulemaking (the “New Rules”) expanding its exclusion authority. The New Rules are intended to target individuals who “pose an undue risk of fraud, waste, and abuse, and to “specifically delineate the basis of provider exemption beyond general federal regulation and state statute.” The New Rules allow AHCCCS to investigate and exclude individuals or entities affiliated with suspended providers. In its Notice of Emergency Rulemaking, AHCCCS explained that individuals or entities affiliated with suspended providers have reconstituted themselves “in the form of different providers or provider entities” and continued to “perpetuate their fraudulent activities.” AHCCCS cited a desire to “prevent this pattern from recurring” as the basis for the New Rules.
Under the New Rules, AHCCCS can investigate and exclude:
- “Any individual who is or was a managing employee or a person with an ownership or control interest who participated in, condoned, or was willfully ignorant of any action or failure to act of an entity which was or could have been the basis for exclusion or the entity.”
- “Any individual who was an organizer, leader, manager, or supervisor of any entity activity which was or could have been the basis for exclusion of the entity.”
- “Any individual or entity which has failed to comply with any requirement, term, or condition set forth in any agreement” with AHCCCS.”
AHCCCS characterized the New Rules as “narrowly drawn.” However, the New Rules are far from narrow in scope; AHCCCS has the extraordinarily broad authority to exclude “Any individual or entity in order to protect the health of members.” The implementation of the New Rules may result in the exclusion of healthcare providers in numbers that pale in comparison to those seen over the summer.
If you have questions or would like additional information about this topic, please contact Chelsea Gulinson at 602-792-3520, or your primary Milligan Lawless attorney.
 See 42 C.F.R. § 455.23.
 See AHCCCS Suspends Payments to Behavioral Health Providers Based on Credible Allegations of Fraud, AHCCCS (May 16, 2023), available at https://www.azahcccs.gov/shared/News/PressRelease/PaymentSuspensions.html.
 See Notice of Emergency Rulemaking, Arizona Secretary of State, 29 Ariz. Admin. Reg. 1578-79 (July 14, 2023).