States Are Failing to Police Medicaid’s Autism Therapy Spending

This op-ed was originally published in The Well News.

States have permitted Medicaid billing abuse associated with applied behavior analysis therapy to go unchecked. That much is clear from the stream of media coverage — investigations, criminal charges, and Medicaid audits — exposing states’ oversight failures. 

One of the latest such developments recently surfaced in Florida. According to Fox News, “Florida’s sweeping Medicaid fraud crackdown has helped drive a nearly $1 billion reduction in projected annual spending on behavioral therapy services alone.” State officials found that some Medicaid providers billed for more hours of service than exist in a single day and terminated or suspended many such providers as a result. And still, Florida’s expenditures on ABA therapy are projected to reach $2.88 billion in the next fiscal year — on a single service in a single state.

The states, primarily responsible for ensuring Medicaid integrity, have not sufficiently deterred grift. To tolerate barefaced abuses of a publicly funded program is to reveal implicitly that the objective to distribute benefits per se trumps the responsibility to steward taxpayer money well.

Granted, ABA has become the source of profiteering schemes even in the private sector. But the distinction between private and government-funded health care is that private insurance companies face a financial necessity to police fraud. Medicaid administrators should have implemented strong guardrails, which insurers exposed to market forces establish naturally, and made enforcement measures, already largely undertaken by commercial insurers, an administrative priority.

States, however, have failed to establish or enforce even the most elementary guardrails, letting nationwide spending on ABA rise by 421% in just four years, and spending $10 billion in 2025. 

Audits reveal, for example, that some states neither defined what counted as billable ABA time nor ensured that providers kept proper records substantiating what the treatment supposedly provided; session notes were often plainly inadequate. 

Repeatedly, ABA therapy was also billed as though provided by credentialed specialists when delivered by behavioral technicians instead. Prior authorization rules meant to verify that ABA therapy was necessary were laxly enforced. And, perhaps most negligently, states failed to conduct routine post-payment reviews; administrators in many cases never discovered violations that escaped initial screening.

Indiana went as far as to inadvertently design a mechanism virtually inviting providers to bill extravagantly by reimbursing 40% of providers’ billed charges until 2024, no matter how much they billed. “I don’t think Indiana really had any oversight, or not much,” one provider shared with The Wall Street Journal. The state had paid that provider $58 million for autism-therapy services at a rate of “as much as $640 an hour … for services that could be performed by a high-school graduate.”

As ABA billing soared, unanchored from the growth in autism diagnoses, states failed to question why. In the four states audited by a federal watchdog, sampled payments were predominately improper or potentially improper. In Colorado, only 0.14% of sampled spending was found to be beyond question. 

Of the states that have undertaken reforms earnestly, North Carolina stands out. Faced with projected annual spending exceeding $1 billion on autism-related behavioral health treatment by 2027, the state passed a bill requiring that treatment plans exceeding 16 hours per week be reauthorized every three months. Additional reforms sought to rein in unsupervised treatment and explicitly exclude activities such as ordinary childcare, nap time or transportation from ABA billing. 

Crucially, North Carolina now requires Medicaid managed-care plans to maintain closed provider networks. That reform (obvious and simple as it is) enables managed-care companies to decline additional providers if they believe their networks already have ample and properly vetted ABA providers.

North Carolina’s reforms should serve as a model for other states. The Centers for Medicare and Medicaid Services’ toolkit released earlier this year contains myriad options for states to bolster ABA payment integrity. Administrators must adopt modern technology, such as advanced analytics, unsurpassed in detecting abnormal billing patterns.