Wyoming lawmakers consider addressing health insurance fraud concern by Blue Cross

CHEYENNE — The state’s ability to curb a spike in fraudulent health care filings under Blue Cross Blue Shield of Wyoming is limited, but lawmakers agreed Thursday to do what they can to navigate this issue in their respective committees.

An “unusual uptick” in Native American health care enrollment set off alarm bells at Blue Cross Blue Shield of Wyoming (BCBSWY). As of March 2025, Native American enrollment in BCBSWY health care plans on the federal marketplace is up 500%, and Native American claims are up by more than 1,000%.

Overall, mental health and substance abuse disorder claims have increased over 300% in 2025.

Investigators suspect Wyoming is the latest target in a nationwide health care scam of illegal claim filings. “Body brokers” are scouting out homeless shelters to find victims and ship them to out-of-state facilities, where the insurance company is then billed for substance abuse treatment that is not actually being provided.

Stories collected by BCBSWY found that Wyoming victims are showing up in these fraudulent treatment centers, most of them in California, with others in Arizona and Florida. Furthermore, an internal investigation found many health insurance enrollees are not legitimate Wyoming residents.

Out of more than 1,500 potentially fraudulent enrollees identified in Native and non-Native federal health care plans, less than 40 have been confirmed as legitimate, according to a BCBSWY news release.

BCBSWY representatives raised this issue before state lawmakers during the Legislature’s Select Committee on Tribal Relations meeting in Fort Washakie. Co-Chairman Sen. Cale Case, R-Lander, found the situation alarming, and asked how the state can help.

“Awareness is the main reason that we’re here today,” said BCBSWY Government Affairs Principal and Privacy Officer Kelsey Prestesater. “We want to get this news out to as many people as we possibly can, and encourage individuals if they feel like they have fallen victim to this, or know somebody who has, to certainly reach out.”

Potential state solutions

Prestesater offered a few remedies for state lawmakers to pursue. One solution is to draft a bill that requires stronger oversight of licensing requirements for in-state behavioral health and substance abuse treatment facilities.

“Currently, there are virtually no regulations for these types of residential treatment centers,” Prestesater said. “While these treatment centers are not here now, we’ve seen a pattern where these treatment centers move from state to state, where they can find the least amount of regulation and begin to victimize those people.”

She also suggested revisiting a bill that was filed in the recent legislative session by the Joint Corporations, Elections and Political Subdivisions Committee, but failed to be introduced. House Bill 71, “Insurance fraud reporting,” would have required insurers to report suspected and known fraud.

“That would really help us and give us some teeth in being able to report these bad actors and provide a shield from civil liability,” Prestesater said.

Case, who is also co-chairman of the Joint Corporations Committee, said he will bring up HB 71 at the committee’s next meeting for consideration. He told the WTE in a phone call after the meeting “there’s more of an urgency now with the story out there.”

But it’s ultimately up to the committee, he said.

Sen. Eric Barlow, R-Gillette, who co-chairs the Joint Labor, Health and Social Services Committee, said he will speak with his co-chair about studying professional licensing requirements as an additional interim topic for the committee.

BCBSWY Vice President of Legal Services Rocky Redd suggested a third option, which is to allow a pause in claim payments to fraudulent actors if the insurance company finds credible evidence of fraud.

In Wyoming, the insurance company has 45 days to sift through thousands of pages of records before making a claims payment.

“Some of the other states have … passed legislation that would allow you to pause that, to take a little bit more time to look into it before you have to go ahead and pay them,” Redd said. Otherwise, Blue Cross risks getting sued for not making the payment by deadline.

A federal government issue

Since Native American health insurance is regulated only at the federal level, there is little action the state can take on this issue, Deputy Commissioner Tana Howard at the Wyoming Department of Insurance told the Wyoming Tribune Eagle earlier this week.

“The solution needs to come from the feds. It needs to come from (the Centers of Medicare & Medicaid Services), since they are the ones who regulate these plans,” Howard said.

From her understanding, Blue Cross cannot deny claims in question under federal law, as these are federally regulated plans. Howard said she was recently informed that the case was forwarded by CMS to the Center for Program Integrity, an internal division of CMS that detects fraud, waste and abuse.

North Dakota has reported a similar issue in health insurance fraud with its own Blue Cross insurance company, Howard added. The northern state implemented a waiver program in response that requires insured members to justify out-of-state health care.

But this isn’t a solution that would fit in Wyoming, she said.

“North Dakota is completely different than Wyoming. They have a lot more providers. They have a lot more hospital systems,” Howard said. “There are not very many facilities in Wyoming that really offer (substance abuse treatment). And so it’s not uncommon for it to go out of state.”

A similar situation

Cowboy State Daily reported a “mysterious” incident in 2023, where a dozen unhoused individuals were taken from Fremont County and dropped off at a homeless shelter in Casper.

Northern Arapaho Business Council Co-Chairwoman Kimberly Whiteman Harjo reminded lawmakers of this situation during Thursday’s meeting. She told committee members the scheme described by Blue Cross representatives reminded her of that incident.

“There are places in Riverton that will say that they help homeless people, but I don’t know what their rules are, the procedures,” Harjo said. “But a lot of our people were put out in the freezing cold during the wintertime, and it was at night.”

The Wind River Indian Reservation is a constant target of fraudulent companies, she said. Case recalled the incident when he later spoke with the WTE. The committee co-chairman said he was disappointed the “kidnapping,” as he referred to it, was not taken more seriously by local entities.

Authorities never discovered who was behind taking people and dropping them off at the Casper shelter, he said.

“People were rounded up, given promises (for treatment),” Case said. “And they were taken to Casper and kind of dumped off, and that just made me really angry.”

A Blue Cross spokesperson confirmed to the WTE this situation is not related to the health care insurance fraud reported by the insurance company.

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