The real fraud isn’t in Medicaid — it’s in the profits of corporate insurers - West Virginians for Affordable Health Care

The real fraud isn’t in Medicaid — it’s in the profits of corporate insurers

Originally published October 23, 2025 in WV Watch.

Congress loves to talk about “waste, fraud and abuse” in government health programs. It’s the all-purpose excuse for pushing through the largest cuts to health care in history. But the truth is that the real waste and abuse aren’t coming from poor families on Medicaid or from overworked state officials. It’s coming from the corporate insurers who profit from the very programs Congress claims to be protecting.

Take the recent West Virginia audit that discovered about $32 million in overpayments related to people who were ineligible — including some who were incarcerated or deceased. Yes, this is significant and must be corrected. Eligible West Virginians should not be denied access to health care based on administrative inconsistencies and errors.

As reported by West Virginia Watch, according to Cindy Beane, Commissioner of the West Virginia Bureau for Medical Services, the state mistakenly made payments to the managed care organization (MCO) for ineligible people. Medicaid eligibility determinations rely on data provided by the state, and the bureau contracts with Mountain Health Trust and its MCOs to oversee care for roughly 87% of West Virginia’s Medicaid enrollees Those services are delivered through three MCOs — Aetna, The Health Plan and Unicare — which receive monthly capitation payments for each enrolled member. Beane noted that the agency was already working to recover the mistaken payments when the audit took place.

The $32 million pales when compared to multi-billion-dollar abuses, improper payments, overbilling and overcharging by private insurers that are documented in dozens of cases across the U.S.

Here are real examples:

In August 2024, Humana, a major insurer, agreed to pay $90 million to settle a whistleblower lawsuit that claimed it overcharged the federal government in its Medicare Part D drug program. The accusations included misrepresenting costs to get a more favorable contract, which led to higher payments from taxpayers.
Earlier in 2025, the U.S. Department of Justice filed a False Claims Act complaint against three national insurers — Aetna, Elevance Health and Humana — and three large broker organizations. The government alleges that from 2016 through at least 2021, these insurers paid hundreds of millions of dollars in illegal kickbacks to brokers in exchange for enrolling people into their Medicare Advantage plans. These kickbacks apparently skewed enrollments away from people who might be costlier to cover, including those with disabilities.
There are “ghost networks” in provider directories: directories that insurers are required to maintain but are misleading. For example, in New York, an investigation found that 86% of mental health provider entries in some insurers’ directories were “ghosts” — providers either unreachable, not accepting patients, or not in-network in practice. One insurer, MVP, was forced to pay a settlement and reimburse members.
Insurers are also using diagnosis coding strategies (“upcoding”) and questionable documentation to receive higher payments from Medicare. For instance, Medicare Advantage organizations have been accused of submitting inflated diagnoses for enrollees — some of which have little or no basis in the patients’ records — in order to make patients appear sicker and thus receive higher payments from Medicare. Some of these practices reportedly cost billions.

These are not isolated mistakes. They are systemic practices by large private entities profiting from public dollars and public needs.

Unlike public programs, which are accountable to taxpayers and lawmakers, private insurers are accountable only to their shareholders. Their incentives are backward: every claim denied, every appointment delayed, every patient discouraged from seeking care is a win for the bottom line. Studies routinely show that administrative waste and inefficiency within private insurance add up to tens or even hundreds of billions of dollars every year — a staggering sum compared to the $32 million mistake in West Virginia.

So when Congress says it’s cutting “waste, fraud and abuse” and state lawmakers use audits like West Virginia’s to justify slashing health care programs, what they’re doing is redirecting attention away from the big money abuses that they seldom touch. The moral framing gets flipped: those insisting on safety nets are painted as wasteful; the profit-seeking firms pulling strings behind the scenes are barely scrutinized.

The West Virginia audit shouldn’t be weaponized to slash care. Oversight should be intensified against insurers, not increased burdens placed on patients. Reforms should target kickback schemes, inflated diagnosis codes, ghost networks, denials of care and massive administrative waste. And before any more cuts are made to health care programs for vulnerable populations, there must be full accountability for where the real losses are happening.