Medicaid Autism Costs Skyrocket, Auditor Warns Fraud

A torn dollar bill revealing the word 'Medicaid'

North Carolina’s Medicaid autism-therapy billings didn’t just rise—they exploded so fast that the state auditor says taxpayers may be staring at a waste-and-fraud problem hiding inside a program meant to help vulnerable kids.

Quick Take

North Carolina’s state auditor flagged a jump in Medicaid ABA autism-therapy spending from about $1.4 million to more than $660 million in five years.
Lawmakers say the growth rate far outpaces the increase in autism diagnoses and demanded answers from DHHS as an audit begins.
2025 spending topped $505 million and projections warned costs could reach about $1.1 billion by 2027 without changes.
House Bill 696, signed April 30, 2026, added new guardrails, including limits on telehealth and restrictions on some out-of-state providers.

Auditor’s alarm: a fiscal surge that doesn’t pencil out

State Auditor Dave Boliek told lawmakers that Medicaid spending on Applied Behavioral Analysis (ABA) therapy surged from roughly $1.4 million to over $660 million in five years, prompting his office to launch a formal audit. Legislators pressed the North Carolina Department of Health and Human Services (DHHS) on March 10, 2026, looking for explanations that match the pace of growth. DHHS cited higher demand and policy changes, but the numbers remain difficult to reconcile.

Program data show rapid growth in both utilization and costs, but not on a scale that automatically explains the spending curve. In 2022, North Carolina reported $121.7 million in ABA spending for 3,844 children. By 2025, spending surpassed $505 million with 13,447 beneficiaries. That is a major enrollment increase, yet the spending increase is steeper—raising questions about billing intensity, hours authorized, provider practices, and oversight in a Medicaid environment where state and federal dollars are both at risk.

What changed: rates, providers, and the private-equity footprint

DHHS and other observers pointed to multiple drivers: more autism diagnoses, more families seeking services, and a 15% reimbursement increase in 2024. The provider market also changed quickly, with many ABA businesses entering after 2020. Reporting indicated that spending became concentrated among a relatively small number of providers, including large firms, some with private-equity backing. In 2025, the top provider cited in coverage—ABS Kids—billed $64.91 million, highlighting how quickly new scale can form inside Medicaid.

None of these facts prove wrongdoing by any specific provider, but they do show why lawmakers are demanding hard documentation. Rapid growth plus complex billing rules can create a perfect storm: honest providers struggle to keep up with compliance, while bad actors can exploit confusion. North Carolina’s attorney general’s office also raised concerns that vague policies can make fraud cases harder to prosecute, which is a red flag for taxpayers who already suspect government systems are designed to be opaque.

HB 696: tighter rules to protect taxpayers without cutting off care

House Bill 696, signed April 30, 2026, aims to slow the cost spiral while keeping medically necessary care available. As described in coverage, the law restricts some out-of-state providers unless they operate close to the border, limits telehealth use, and requires stronger credentialing and supervision standards for technicians. It also adds monthly reverification for treatment plans exceeding 16 hours per week. A second phase scheduled for December 2026 targets referral and diagnostic practices, seeking to reduce conflicts and gaming.

The political pressure point: “help kids” vs. “stop the bleeding”

Families rely on ABA and many describe it as life-changing, which is why blunt cost-cutting can backfire quickly. North Carolina already saw litigation after proposed rate reductions, and a court injunction in late 2025 temporarily blocked a planned cut. That history matters because it shows the narrow path policymakers must walk: protect children’s access while still acting like stewards of public money. When government fails at basic oversight, the result is predictable—services become a political football and trust collapses.

The audit’s findings will likely shape what happens next, including whether DHHS needs better prior-authorization controls, stronger data analytics, clearer enforcement standards, or even structural reforms to reduce incentives for runaway billing. The broader national context also matters: federal watchdogs have been probing improper Medicaid payments tied to autism services in other states. If North Carolina’s numbers are as out-of-line as they appear, the state could become a case study in how well-intended mandates can be overwhelmed by rapid-market growth and weak guardrails.

For conservatives who are tired of overspending and “too big to manage” bureaucracy, the key question is straightforward: can government run a high-cost, high-need benefit without inviting waste? For liberals focused on fairness and access, the question is equally pressing: can Medicaid keep services available if costs keep spiking toward $1.1 billion? The answer depends on whether North Carolina’s audit and new rules restore basic accountability—transparent standards, enforceable documentation, and consequences when anyone treats public funds like a blank check.