Arizona never fully put in place the 2025 cost controls meant to rein in its program paying parents to care for children with disabilities, missing up to $493 million in potential savings. The Arizona Auditor General released the special audit of the Parents as Paid Caregivers model on July 30, 2026. Sjoberg Evashenk Consulting conducted it under contract, as required by Laws 2025, Chapter 93.
The model lets parents be paid to provide attendant care and habilitation to their minor children with disabilities through the Arizona Long Term Care System. Before the COVID-19 pandemic, parents could not be paid for that care.
Why costs drew scrutiny
According to the audit, costs for the developmental disabilities part of the long-term care program rose from about $2 billion in fiscal 2019 to nearly $4 billion in fiscal 2025, about 92%. Minors receiving attendant care or habilitation grew from 8,756 to 18,034, and average hours per member rose from 435 a year to 1,267. Rising costs contributed to the governor's requests for $109 million in supplemental state funding for fiscal 2025 and $83 million for fiscal 2026.
What the auditors found
The 2025 law required a new standardized assessment tool. AHCCCS, the state Medicaid agency, launched it on Oct. 1, 2025, then ordered it stopped on Oct. 16 because of the threat of litigation, missing an estimated $133 million to $493 million in potential savings in fiscal 2026. The governor's office had described the Oct. 16 pause as a response to families' concerns.
AHCCCS and the Department of Economic Security did not begin enforcing a 40-hour weekly limit on paid parent care until April 2026, although the law required it from July 2025. Other controls lacked oversight, including a six-month residency rule, a ban on paying for care between 10 p.m. and 6 a.m. and a ban on paying when the child is not home. In a review of 50 members, auditors found missing assessment records and inaccurate assessed hours.
Auditors noted that 39 other states pay parents of minor children and that many use enrollment or spending caps, which Arizona would need legislative changes or CMS approval to adopt.
The agencies' responses
AHCCCS disagreed with all four findings directed to it but plans to implement, or implement differently, all 11 recommendations. The Department of Economic Security agreed with three of four findings and plans to implement all but five of its 20 recommendations. A follow-up review is due in six months.
Why this matters for providers and DSPs
Arizona is likely to tighten rules on paid parent caregivers, which could shift more hours to agency DSPs. Providers should expect closer scrutiny of assessments and authorized hours.