Lawmakers Address Surge in Fraudulent Health Insurance Claims

Wyoming is facing a significant challenge with a surge in fraudulent health care claims linked to Blue Cross Blue Shield of Wyoming (BCBSWY). There has been a dramatic increase in Native American enrollment in BCBSWY health plans on the federal marketplace, rising by 500% as of March 2025.

Concurrently, claims from this demographic have escalated by over 1,000%, while mental health and substance abuse disorder claims have increased by more than 300% this year. Investigations suggest that Wyoming might be part of a broader national scheme involving fraudulent insurance claims. "Body brokers" reportedly recruit vulnerable individuals, including homeless populations, and transport them to out-of-state substance abuse treatment centers, primarily in California, Arizona, and Florida, where false claims are then submitted to insurers.

An internal probe by BCBSWY identified that most of the over 1,500 suspected fraudulent enrollees in federal health care plans are not legitimate Wyoming residents, with fewer than 40 verified as genuine. Despite these concerns being raised in Wyoming's Legislature's Select Committee on Tribal Relations, actionable oversight is complicated by federal regulation of Native American health plans, limiting the state's direct intervention capabilities.

BCBSWY representatives and state lawmakers are exploring several policy solutions, including increased regulatory oversight of behavioral health and substance abuse licensing requirements, revisiting legislation to mandate insurance fraud reporting to protect insurers legally, and implementing mechanisms to pause claim payments during fraud investigations, mirroring efforts in other states. However, the Wyoming Department of Insurance notes limited state authority over federally regulated Native American plans, with anti-fraud enforcement primarily falling under the Centers for Medicare & Medicaid Services (CMS).

CMS has reportedly referred the matter to its Center for Program Integrity for further investigation. Parallels have been drawn to similar fraud issues in North Dakota's Blue Cross program, which adopted out-of-state healthcare justification requirements, though Wyoming's smaller provider network makes this solution less feasible. Incidents of vulnerable populations being transported under deceptive pretenses have raised additional concerns among tribal leaders and lawmakers about oversight and protection of Native communities.

This multifaceted issue highlights challenges in balancing federal oversight with state-level enforcement, insurer compliance, and protections against health insurance fraud targeting marginalized populations in Wyoming and potentially other states.