Montana Investigation Reveals $23M Fraud Scheme in ACA Billing

The Montana Commissioner of Securities and Insurance recently concluded an investigation into a fraudulent billing operation exploiting Affordable Care Act provisions. Agents targeted Native American communities on reservations, resulting in over $23.3 million in fraudulent claims identified, with an additional $27 million pending, as Commissioner James Brown reported.

Collaborative Efforts Uncover Fraud

The investigation relied on a collaboration between health insurers, tribal representatives, and law enforcement agencies, including the FBI. The fraudulent activities took advantage of the ACA's provision allowing Native Americans to enroll in the federal marketplace without waiting for open enrollment periods. Perpetrators promised individuals free treatment at facilities in Southern California in exchange for switching from Medicaid to ACA plans.

Details of the Fraudulent Scheme

Agents set up booths on reservations across Montana to encourage enrolling in ACA plans. They offered treatment services that were either not provided or billed at rates as high as $9,000 per day. This fraudulent activity involved individuals being transported out of state under false pretenses, leading to significant financial harm.

Alert and Investigation

The initiative began in early 2025 when PacificSource Health Plans spotted unusual billing patterns related to substance abuse treatment in Southern California and the southwestern United States. As a result, PacificSource alerted the Commissioner’s office, prompting a comprehensive investigation. A team of four investigators spent seven months uncovering fabricated records, non-licensed agencies, and fake addresses.

Broader Implications for the Insurance Industry

Commissioner Brown noted the fraud's contribution to higher premiums, leading to the rescission of 80 policies with more under review. The resolution of outstanding claims depends on the Centers for Medicare and Medicaid Services. Additionally, the office aids victims in re-enrolling in Medicaid and collaborates with states like Arizona and Washington to prevent future fraud.

Erik Wood, spokesperson for PacificSource, thanked the state for its commitment to reducing marketplace fraud, underscoring the insurer's role in maintaining affordable and accessible healthcare. Advocating for additional resources to enhance investigative capabilities, the Commissioner’s office remains committed to protecting consumer interests and regulatory compliance.