Ghosted by Medicaid

When Arizona’s Medicaid system cut off two of the state’s largest autism therapy providers, hundreds of families were told there were other options.

Months later, many are still scrambling to find them.

Some families have already lost coverage, and others are scheduled to lose it later this month.

In response, the parents of 11 children with autism signed onto a class action lawsuit against AHCCCS, the state Medicaid system, and they want a judge to force the state agency to reinstate coverage at their children’s providers.

Their legal argument turns on a dry piece of Medicaid policy that has life-altering consequences for families: AHCCCS can’t let health plans cut off providers unless patients still have enough other places to get care.

The families impacted by the autism service cuts say that the standard wasn’t met.

Last week, about 100 people showed up at the state Capitol to protest the loss of autism therapy services. Janelle Guffey, one of eight mothers who spoke about the fallout from losing care, said Mercy Care — her Medicaid insurer — has done little to help since it stopped covering the autism therapy center her 5-year-old son attends.

Only two providers lost Medicaid contracts: Action Behavior Centers, or ABC, which operates 42 therapy centers in Arizona, and Centria, which has 17 locations statewide.

But plaintiffs in the class action suit say they can’t find comparable providers for the specialized autism services those centers offer.

Their attorneys allege that fewer than 5% of the 127 providers Mercy Care offered as alternatives have immediate openings, and that the insurer is padding its list with providers who are not actually available in order to make the network seem stronger than it is.

AHCCCS says it adequately carried out the detailed regulatory process that comes with ending Medicaid contracts.

But families say they were sent to “ghost networks.”

While Applied Behavior Analysis, or ABA, is the most commonly used therapy for autism spectrum disorder, there is plenty of debate over how effective it is.

But parents now facing the loss of coverage say the therapy at centers like Centria and ABC helped their children make progress they once were not sure was possible, from speaking their first words to learning empathy and engaging with other kids.

Centria CEO David Harbour told us he’s “pissed off” about losing the Medicaid contracts, though he also acknowledged how expensive the therapy can be. He estimated it can cost up to $80,000 a year per child, but said the price is worth it for early intervention that can alter the course of a child’s life.

The problem for the state’s Medicaid system is that costs are rising faster than the caseload. AHCCCS paid about 43% more for ABA therapy in fiscal year 2025 than it did the year before, even though enrollment grew by 29%, according to KJZZ.

That helps explain why Mercy Care and Arizona Complete Health, two AHCCCS-contracted managed care organizations, or MCOs, dropped two major ABA providers.

But when an MCO cuts providers from its network, AHCCCS has to make sure the families losing care can actually be absorbed elsewhere.

The families allege that the state agency instead “did nothing but rubberstamp the MCOs’ cost-cutting efforts.”

In court filings, AHCCCS describes a thorough review process in which Mercy Care had to show it could transition members to other providers before dropping ABC and Centria.

Mercy Care and AHCCSS argue that nearly every displaced family has another provider within 15 minutes and that members are being steered into new care through “warm handoffs.”

Throughout their lawsuit, the parents report a very different experience.

One parent said her family moved from the home they had lived in for 20 years to be closer to an ABC center in a rural area. But after Mercy Care canceled its Medicaid contract with ABC, she said, there is no comparable option nearby.

Another said Mercy Care suggested three replacement providers after ending her 3-year-old son’s coverage. One was in a different town, one was out of network and the third had not taken a new patient in more than a year.

More than 10 parents, in declarations filed as part of the lawsuit, testified to the larger problem at the heart of the lawsuit’s ghost network claims: provider networks that may appear adequate on paper, but include care that families cannot actually access.

To support their ghost network allegations against Mercy Care, plaintiffs brought in Dr. Simon Haeder, a health policy researcher at Ohio State.

Using data collected by ABC staff after they called providers on Mercy Care’s list late last year, Haeder found that only six had immediate openings. By February, most of those providers had waitlists.

And while a Mercy Care network planning document said the insurer had about 1,700 Board Certified Behavior Analysts — the credential needed to oversee ABA therapy — state records showed only about 1,300 analysts were registered in Arizona in February.

The concept of ghost networks has drawn growing scrutiny in recent years.

Federal watchdogs documented the issue in a study published in October last year. The Office of Inspector General looked at Medicaid plans across 10 counties in five states, including Arizona’s Maricopa and Santa Cruz counties, and found more than a quarter of behavioral health providers listed under Medicaid managed care plans were inactive.

In May, the mother of an Arizona man filed a wrongful death lawsuit against an AHCCCS MCO, alleging its provider directory falsely made mental health care through his plan appear available when it was not. And last month, New York’s Attorney General secured a $2.5 million settlement with a health insurer over its behavioral health ghost network.

We asked Mercy Care Chief Administrative Officer Deborah Hillman about the ghost network allegations. She sent a generic company statement that said, in part, “there have been no changes to Mercy Care’s coverage of medically necessary ABA services, which continue to be delivered through contracted network providers.”

The families’ class action case against AHCCCS is still pending. But the courts may not be especially eager to sort this out.

When Centria filed its own lawsuit against Mercy Care in December, the judge ruled that “AHCCCS has discretion when determining network adequacy,” and not the judicial branch. In other words, policing Medicaid policy is an administrative role for AHCCCS and the federal Centers for Medicare & Medicaid Services — not the courts.

That legal analysis could change now that AHCCCS itself, and not Mercy Care, is being sued.

Still, the autism therapy providers have a few more moves left.

Harbour, the Centria CEO, said about 145 formerly Mercy Care-covered children at his centers still have nowhere else to go. His staff is trying to help families find other options.

He said he has not received much response from Mercy Care, so he is trying a different route: appealing to a higher authority.

Mercy Care operates under the umbrella of two Catholic-affiliated health systems: Dignity Health and Ascension Care Management. Harbour said he is now working to set up a meeting in Washington, D.C., with representatives of the Catholic Church.

On a slightly less divine track, lawmakers are weighing in, too.

Republican Sen. Hildy Angius’ SB1629 passed a final vote in the Senate on Thursday.

The bill would require MCOs like Mercy Care to give 90 days’ notice before ending contracts with high-volume behavioral health providers and to submit a network adequacy study showing they can still meet coverage requirements afterward.

Beth Kohler, CEO of the Arizona Association of Health Plans — whose members include Mercy Care and other MCOs — said the bill could slow AHCCCS’ ability to cut bad providers from its network by forcing the agency through additional procedural hurdles.

Whether the answer comes from a judge, a lawmaker or the Catholic Church, parents say they are not just looking to restore coverage for their own children, but permanent changes to the system that allowed it to be taken away.