Andy Beshear Set Out to Make Drug Treatment Widely Available in Kentucky. Fraud and Abuse Followed.

Kentucky Governor Andy Beshear aimed to make drug treatment more accessible in the state by loosening Medicaid restrictions following the COVID-19 pandemic. This decision led to a significant increase in Medicaid spending on drug treatment, with Kentucky spending over $2.3 billion on behavioral health and addiction services in 2024.

Experts warned that these changes resulted in providers billing excessively for subpar care, leading to worse outcomes for patients. Despite these concerns, the Beshear administration did little to address the escalating costs. A prominent provider, Addiction Recovery Care (ARC), was found to exploit the state's relaxed spending controls, potentially falsifying Medicaid billing.

In a recent settlement, the company was ordered to pay $16 million for Medicaid fraud involving false billing for services like peer support groups. The FBI is also investigating ARC for wire fraud and money laundering. Kentucky's overdose death rate has decreased significantly, but experts attribute this decline to factors other than Medicaid changes, such as declining opioid prescriptions, increased use of naloxone, and lower fentanyl levels.

Medicaid and behavioral health experts argue that some of the services billed by drug treatment companies did not contribute to the reduction in overdose deaths. The company's troubles have intensified, with the FBI's investigation and the recent FBI indictment of ARC's leader, Tim Robinson, for wire fraud and money laundering.