States crack down on Medicaid autism therapy amid fraud concerns

Clinics chasing Medicaid dollars have turned autism therapy into one of the fastest-growing and most scrutinized corners of child health care. As payments for behavioral therapy services climbed from about $660 million in 2019 to roughly $2.2 billion in 2023, federal auditors began finding the same pattern across states: thin documentation, missing assessments, and billing that appeared to reward volume more than outcomes.

Medicaid sits at the center of the market because it covers more than 83 million low-income children and adults, and the federal EPSDT benefit is supposed to guarantee comprehensive, preventive care for beneficiaries under 21. That promise has made autism treatment a major public health issue, especially for preschoolers whose families rely on early intervention to support language, behavior and school readiness. But the financing structure has also created pressure for long, intensive services that can strain state budgets and push providers toward aggressive billing.

The U.S. Department of Health and Human Services Office of Inspector General has now completed autism-services audits in Indiana, Wisconsin, Maine and Colorado, and its work plan says the broader series includes eight projects. In Indiana, auditors found at least $56 million in improper fee-for-service Medicaid payments for applied behavior analysis services. The state’s ABA spending jumped from $14.4 million in 2017 to $101.8 million in 2020, the second-highest in the nation. In Wisconsin, the office found at least $18.5 million in improper payments. In Maine, it identified at least $45.6 million in improper Medicaid payments for autism-related rehabilitative and community support services. In Colorado, auditors found at least $77.8 million in improper ABA payments.

The findings point to a system where financial incentives can distort care. Federal auditors have cited missing assessments and incomplete records, while providers and investors have built large clinic networks around intensive therapy models that some children attend for as many as 40 hours a week. Critics say that structure can encourage more visits, more billing units and more revenue, even when outcomes for individual children are unclear.

States are now tightening oversight and cutting payments as they try to preserve access while reducing fraud. That balancing act is especially fraught for families who already face long waits, limited provider choice and uneven insurance coverage. As states and the federal government pull back on questionable billing, the challenge is making sure children who genuinely need ABA and other autism services do not lose care because the payment system failed to distinguish treatment from throughput.