States are moving to reduce Medicaid payments for applied behavioral analysis therapy as spending on the autism treatment surges, KFF Health News reported Dec. 23.
Applied behavioral analysis therapy, or ABA therapy, is a research-based behavioral therapy for children with a variety of health conditions, including autism spectrum disorder. The treatment aims to increase positive behaviors and decrease negative behaviors by reinforcing the former, according to the Cleveland Clinic website. Services typically range from 10 to 40 hours per week.
Demand for the therapy has surged, and Medicaid reimbursement rates for the services are typically higher than other behavioral health treatments, according to the report. States began covering autism treatments in 2014, though ABA therapy was not fully covered until 2022.
Medicaid spending on the therapy has surged. North Carolina’s spending rose from $122 million in fiscal 2022 to a projected $639 million in fiscal 2026 — a 423% increase. Nebraska reported a 1,700% increase in spending in recent years, while Indiana saw a 2,800% rise.
Several states have moved to cut or consider cuts to ABA reimbursement rates, according to KFF Health News. North Carolina’s health department attempted to institute a 10% reduction for providers that was challenged in court; the state’s governor has since ordered the department to restore the reimbursement rates. Nebraska implemented cuts ranging from 28% to 79% depending on the service, and payment reductions have also been discussed in Colorado and Indiana.
Nebraska also implemented a 30-hour-per-week cap on services.
A recent study found higher ABA therapy hours were not associated with improvements in communication, socialization or daily living skills among children with autism, challenging guidelines recommending 30 to 40 hours of therapy per week.
“These results reinforce the idea that autism care should be individualized, not driven by one-size-fits-all hour recommendations,” Doreen Samelson, EdD, Catalight’s chief clinical officer and lead author of the study, said in a news release from the organization. “For some children, increased hours may support short-term learning of specific skills. But more hours alone do not guarantee broader adaptive gains.”
Corey Cohrs, CEO of Omaha, Neb.-based Radical Minds, has also criticized the blanket recommendation of 40 hours of services per child per week, likening it prescribing chemotherapy to every cancer patient regardless of severity, according to the KFF Health News report.
Some programs have been flagged for improper payments related to autism treatment.
In January, a report reviewing Maine’s 2023 fee-for-service Medicaid claims for rehabilitative and community support services from the HHS Office of Inspector General estimated $45.6 million in improper Medicaid payments for services intended for children with autism.
Common issues included missing comprehensive assessment or those lacking required signatures (81 enrollee-months), session notes that did not meet documentation requirements (64), treatment plans without parent or guardian signatures (30) and missing provider credentials (20).
In December 2024, an audit found Indiana’s Medicaid program made at least $56 million in improper payments for autism treatment.
In March 2026, an audit found Colorado’s fee-for-service Medicaid payments for ABA therapy did not fully comply with federal and state requirements, resulting in $77.8 million in improper payments.
Separately, the FBI raided two Minnesota autism treatment centers as part of an investigation into alleged fraud.
The payment scrutiny comes as private equity firms have expanded their footprint in autism care, acquiring more than 500 therapy centers across the U.S. in the past decade. Nearly 80% of those transactions occurred between 2018 and 2022.
The developments also come amid the federal government’s focus on identifying the “root cause” of autism.
In January 2026, HHS Secretary Robert F. Kennedy Jr. named 21 members to the Interagency Autism Coordinating Committee to align national policy around autism. An independent committee formed in response; its members stated that many of the government’s committee members “propound the false narrative that childhood vaccines cause autism.”
