By the end of 2020, Kentucky’s newly elected Gov. Andy Beshear had one goal above all others: Keep people alive. The state was battling two merciless threats. COVID-19 was killing hundreds of people each month, and deadly drug overdoses were among the highest in the nation. Calling addiction a disease that breeds in isolation, Beshear worried people would stop seeking treatment for fear of contracting COVID-19.

So Beshear set out to make drug treatment easier to access. Kentucky joined more than 40 other states in lifting some restrictions on Medicaid, which served most of the Kentuckians enrolled in substance abuse programs: Recovery centers were allowed to offer expensive treatment to clients without seeking approval from state Medicaid insurers.

By 2023, as the pandemic waned, other states restored Medicaid requirements that treatment centers gain prior approval before providing addiction treatment. Kentucky stayed the course. That year, providers offered more than 1,100 spots for people seeking long-term treatment that allows them to live in a facility, a state record and more slots per capita than any other state.

But as the Medicaid bills for all that treatment started piling up, so did the warnings.

In 2024 letters to Beshear’s administration and in at least three public meetings, experts across the health industry said that as a result of the 2020 changes, drug treatment providers were billing too much for subpar care that was leading to worse outcomes. By December 2025, the Kentucky attorney general’s office said Medicaid fraud in drug treatment had become a primary “area of concern.”

Despite the warnings, the Beshear administration did little to rein in the skyrocketing state spending.

Almost all those warnings came true.

In a February 2025 meeting about soaring Medicaid costs, Kentucky Medicaid Commissioner Lisa Lee said the previous year’s spending on behavioral health and addiction treatment had reached an unprecedented $2.3 billion. Stuart Owen, who works for a Kentucky Medicaid insurer, told a state advisory committee months earlier that much of that spending was driven by the drug treatment industry, including “unscrupulous providers who are exploiting the heck out of that for money.”

The payout was especially lucrative for one company, Addiction Recovery Care. ARC was Kentucky’s largest drug treatment provider and the largest recipient of state funds between 2019 and 2025. This spring, the Lexington Herald-Leader, in partnership with ProPublica, reported on how ARC exploited Kentucky’s loosened spending controls and may have falsified billing.

Beshear has been unapologetic about state spending on drug treatment. In an interview in early June with ProPublica and the Lexington Herald-Leader, he pointed to the continued decline in drug overdose deaths as proof that he made the right choice when he did not force treatment centers to show that costly drug recovery services were medically necessary before treating people for addiction.

“If we’d gone back in time too early and changed things too drastically, how many more people would have died that we’ve saved? With four straight years of drug overdose decreases, they can throw blame at me,” Beshear said. “We’ll talk about dollars, but there are people’s kids that are still alive today because they were able to get addiction treatment services and get them quickly.”

While Kentucky’s overdose deaths declined significantly between 2020 and 2025, experts said the drop was not unique. Other states hit hard by the opioid epidemic also saw year-over-year decreases in fatal overdoses, including states that didn’t loosen Medicaid billing rules, like Tennessee and West........

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