WV potentially paid $32M to provide Medicaid to ineligible people, including some who were deceased

by Amelia Ferrell Knisely, West Virginia Watch
October 9, 2025

The state is working to recover up to $32.4 million after it came to light that it may have mistakenly paid Medicaid participant fees for thousands of ineligible individuals who were incarcerated or dead, a new audit revealed. 

West Virginia uses managed care organizations to manage Medicaid services for most of the state’s Medicaid users and pays per enrollee. Most inmates are not eligible to receive Medicaid under federal guidelines, yet from 2019 to 2022, the state’s Bureau of Medical Services potentially overpaid those MCOs for 117,447 cases of incarcerated individuals — approximately $31.7 million in capitation payments.

The state also may have overpaid the organizations for 15,346 cases involving deceased people, approximately $770,000 in capitation payments.

The audit of the bureau was performed by the Legislature’s Post Audit Division and noted errors and inconsistencies in BMS data were a challenge in the project. 

“During the audit, significant delays in completing our objectives were incurred due to various issues with obtaining reliable data from BMS,” said Mike Jones, audit manager for the state’s Post Audit Division. He presented the report to lawmakers Tuesday at the state Capitol.

BMS is currently working to correct the overpayment issue. 

“BMS has already made notable progress in correcting errors,” Jones said. “As a result, the $32.4 million identified is likely decreasing due to the continued efforts of BMS.”

Cindy Beane, commissioner for BMS, said that they’d already begun correcting the issue prior to the audit. Approximately $2.37 million has been recouped at this point. 

“We paid the MCO when we shouldn’t have paid the MCO,” Beane said. “At the same time they started the audit, we were already in the process of getting money back from the MCOs and fixing it.”

BMS contracts with Mountain Health Trust and its MCOs to manage  services for 87% of the state’s Medicaid users. The services are delivered through three MCOs — Aetna, The Health Plan and Unicare — and they receive monthly capitation payments based on a per-member-per-month basis. Medicaid eligibility is based on data provided by the state. 

Jones explained that audits in other states revealed payments were made for incarcerated or deceased individuals to the same MCOs used by West Virginia, prompting the state’s own audit to see if the issue was happening here. 

Beane said that there had been issues in getting accurate data about who was eligible for Medicaid, adding that the COVID-19 pandemic impacted the state’s data accuracy at the time over the possible overpayments. 

She told lawmakers that it will be a slow process — likely months — to recoup the remaining roughly $30 million as they verify data and vital statistics of Medicaid users. She said they’re also evaluating how much they are actually owed from the MCOs.

Real-time data about who is incarcerated is still a problem, prompting Del. Tristan Leavitt, R-Kanawha, to question if there could be more money that hasn’t been recovered.

“Since this incarceration issue wasn’t spotted until the audit … Can you get back to us on why we also wouldn’t believe, say from 2105 to 2018 there may not be another $30 million there that hasn’t been recovered?” he asked. 

Beane maintained that they now have better communication with the state’s corrections division and their own internal controls to prevent future overpayment. 

“I don’t think there are additional large sums of payments overpaid,” Beane said. “I think we’ve put safeguards in place moving forward.”

The audit recommended that BMS report in writing to the legislative auditor and lawmakers on the Post Audits Subcommittee once the overpayments have been corrected.

West Virginia Watch is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. West Virginia Watch maintains editorial independence. Contact Editor Leann Ray for questions: info@westvirginiawatch.com.