Some might say the story was "expanded," yet "altered" is a more appropriate word since there are some overt alterations to the narrative as told by Alexie in the short story. For one thing, Thomas says his father was killed in World War II and his mother died giving birth to him--both very tragic events to surround a boy's introduction into the world (and significantly symbolic of the singular importance of Thomas's story telling, i.e., prophesying).
My father, he died on Okinawa in World War II, died fighting for this country, which had tried to kill him for years. My mother, she died giving birth to me, died while I was still inside her. ... I have only my stories .... I learned a thousand stories before I took my first thousand steps. They are all I have.
In the film interpretation, Thomas's parents die together in a fire in their house while he alone is rescued. There is something of the same symbolism relating to his isolation and stories but nothing of the association of stories to the isolation from the white man's world that they originate within.
In addition, the film portrays Thomas as a high school nerd (implying high intelligence highly developed) when in the short story Thomas speaks a decidedly non-Standard idiolect of English:
"Don't worry about the money," Thomas said. "It don't make any difference anyhow ... I know you ain't going to treat me any better than you did before."
I suppose in the film director Chris Eyre and screenplay writer Sherman Alexie were attempting to connect stories, which are prophesies, with higher mental attributes. However in the short story, Thomas's unimpressive intellectual accomplishments are part of the idea of the primacy of his stories:
We are all given one thing by which our lives are measured, one determination. Mine are the stories which can change or not change the world.
The story of "This is What it Means to Say Phoenix, Arizona," is expanded in a number of different ways. First, we are given the back story of how Thomas-Builds-the-Fire's parents are killed in a house fire. The reservation on which they live is also shown in more depth. There is a long sequence involving Victor and Thomas's bus ride to Phoenix. Once they arrive there, they meet a neighbor friend of Victor's father who becomes the catalyst in which Victor learns about his father and comes to forgive him.