Medicaid Autism Therapy Costs Explode 47,000%

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North Carolina’s Medicaid autism therapy spending exploded from $1.4 million to over $660 million in just five years—a staggering 47,000% increase that state auditors warn signals rampant waste, fraud, and abuse draining taxpayer dollars while private equity firms reap record profits.

Story Snapshot

State Auditor Dave Boliek launched an emergency audit after Medicaid autism therapy costs skyrocketed 47,000% since 2019, threatening to hit $1.1 billion by 2027.
Over 80 providers collected more than $1 million each in 2025, with private equity-backed firms like Utah-based ABS Kids billing $64.91 million alone.
Legislators responded by passing House Bill 696, banning out-of-state providers, limiting telehealth, and requiring monthly reverification for high-intensity treatment plans.
The spending surge far outpaces autism diagnosis increases, raising red flags about potential fraud mirroring similar scandals in Minnesota and other states.

Explosion in Medicaid Spending Raises Fraud Concerns

North Carolina taxpayers are footing a bill that has spiraled out of control. When the state began covering Applied Behavioral Analysis therapy for autism through Medicaid in 2019, annual costs stood at roughly $1.4 million. By 2025, that figure ballooned to over $505 million in combined state and federal funds, with projections reaching $1.1 billion by 2027. State Auditor Dave Boliek described the 47,000% increase as a “tremendous spike” demanding immediate investigation. The growth dwarfs the rise in autism diagnoses, suggesting factors beyond legitimate patient need are driving the explosion.

The surge has concentrated among a small number of providers, many entering the market after 2020. In 2025, more than 80 therapy providers each billed Medicaid over $1 million. ABS Kids, a Utah-based firm backed by private equity, topped the list with $64.91 million in billings. Hopebridge, another major player, pulled in $14.63 million. These newer entrants often out-billed established providers, raising questions about billing practices. Researchers at the Private Equity Stakeholder Project noted that private equity firms have targeted Medicaid-funded autism therapy, a sector already plagued by fraud investigations in states like Minnesota.

Legislative Action Imposes Strict New Guardrails

Alarmed lawmakers grilled the North Carolina Department of Health and Human Services during a March 10, 2026, joint oversight committee meeting. Deputy Secretary Melanie Bush cited increased autism awareness, a 15% reimbursement rate hike in 2024, and rising beneficiary enrollment from 3,844 children in 2022 to 13,447 in 2025 as contributing factors. Yet these explanations fell short of justifying the explosive cost growth. Legislators moved swiftly, passing House Bill 696, which Governor signed into law on April 30, 2026. The bill imposes aggressive restrictions on providers.

House Bill 696 bans out-of-state autism therapy providers unless they operate within 40 miles of North Carolina’s border, curtails telehealth services, mandates technician certification, and enforces strict treatment-to-supervision ratios. Providers must also obtain monthly reverification for children receiving more than 16 hours of therapy weekly. A second phase, set for December 2026, will prohibit self-diagnosis and self-referrals, a practice critics argue allows providers to inflate patient rolls and billings. These measures aim to curb the unsustainable trajectory of costs while rooting out bad actors exploiting the system.

Taxpayers Bear the Burden of Unchecked Growth

The financial strain on North Carolina’s Medicaid budget affects everyone. With spending projected to exceed $1 billion annually, taxpayers shoulder the burden of a program whose costs have spiraled beyond control. The average beneficiary cost roughly $37,600 in 2025, a figure that seems excessive without clear evidence of proportional therapeutic outcomes. Federal officials have also taken notice; the Health and Human Services Office of Inspector General is conducting nationwide probes into improper Medicaid ABA payments, signaling systemic vulnerabilities across states.

Families of children with autism find themselves caught in the crossfire. While many rely on ABA therapy as a lifeline for their children’s development, others have sued DHHS over proposed 10% rate cuts intended to control costs. A November 2025 court injunction temporarily halted those cuts, highlighting tensions between fiscal responsibility and access to care. The North Carolina Attorney General’s office has pushed for clearer policies to prosecute fraud, arguing that vague regulations have allowed unscrupulous providers to operate with impunity. Legitimate providers fear the new restrictions will disrupt care, but the alternative—unchecked exploitation of public funds—poses a greater threat to the program’s sustainability.