Why Are States Cutting Medicaid Funding for ABA Therapy?

Autism diagnosis rates are at an all-time high, with roughly every 1 in 31 children being diagnosed with ASD in 2022. That’s up from 1 in 150 children in 2000. Naturally, this has necessitated increased ABA programs such as ours at Bright Pathways. The therapy has been proven to be among the most effective autism treatments and, in many cases, is crucial for the development of children with autism. 

Of course, that hasn’t stopped Big Government from exercising its impressive ability to save money while jeopardizing the people. In many states across the US, ABA therapy is in serious danger of losing some or all of its state funding. The reasons given are numerous and manifold, but they all have the same effect: saving money and forcing the children to live with the consequences.

I’ve done some research into several states that have already cut funding for ABA therapy, as well as some others for whom ABA may as well already be on the chopping block. Here, I will endeavor to shine a light on these states and the ostensive reasons as to why they have implemented the cuts. 

Deep Cuts – The States That Have Already Cut Funding for ABA Therapy and Their Reasons

While I’ve discovered several states’ ABA funding hanging in the balance, several have already found themselves on the chopping block. In these cases, the states have already introduced plans to cut Medicaid funding for ABA for a variety of reasons: budget concerns, fraud prevention, and federal mandates. However, they all have the same effect: restricting children’s access to therapy that may be crucial for their wellbeing.

Naturally, I am not alone in my disappointment and outrage. In many of the cases I’ve outlined below, the public outcry has been deafening, not to mention the many legal “challenges” that such proposals have had to work through in order to take effect, in spite of their “official”, corporate-speak reasoning. 

This has, fortunately, provided some reprieve for Medicaid users who rely on ABA therapy and delayed certain cost-reduction policies from taking effect, but the writing is on the wall: ABA is in dire straits. 

Texas – Separating Benefit from State 

In the Lone Star State, ABA therapy was eliminated in 2016 in a policy that would last six years, until 2022. Officials there argued that ABA therapy was not a federally required mandated benefit of Medicaid. 

More than likely, this argument is a scapegoat to cut costs and save state funds. After all, autism rates have only continued to grow, necessitating the need for such solutions as ABA, which remains the gold standard when it comes to autism care – often with a price tag to match. 

However, Texas Medicaid does provide other forms of autism treatment, which more or less address its symptoms rather than the root cause. These treatments include speech, occupational, and speech therapies, which have still managed to secure a place in the ever-growing landscape of autism treatment. 

Florida – Cost Containment and Fraud

The day that Medicaid benefits for ABA were announced to be cut was a dark day for the Sunshine State. The Agency for Healthcare Administration proposed the cuts in 2019 to the tune of 51%, ostensibly in order to “realign” the current rates with new data while also ensuring that such benefits were provided by “the right providers”. 

Of course, while the AHCA acts with the public’s best interests in mind, there was another reason for the removal of ABA benefits, one we’ve encountered before and which we will no doubt encounter again: money. 

You see, the announcement of the proposed changes only came after “cracking down on fraud in South Florida”, with officials seemingly aiming to prevent overbilling and reduce the number of ABA claims overall. 

Naturally, this series of events sparked plenty of backlash from the folks down in the Sunshine State, and Medicaid’s director there – Mary Mayhew – announced that no rates would be changed – for the time being. That was in 2019.

Colorado – Building a “Better” Budget

The state of ABA and Medicaid in Colorado has been better than some other states, but there have been some troubling discussions surrounding the issue. 

This began as recently as 2023 when the Joint Budget Committee implemented an emergency 20% rate increase in an effort to retain certain providers and dissuade them from leaving the program. While this had a positive impact in the short term, it didn’t take long for this plan to fall apart. 

The very next year, Colorado officials announced the “difficult decision” to make several budget cuts specifically targeted toward ABA. The cuts would roll back the increases they implemented the previous year, but officials noted that rates would remain “slightly above” those previous levels. 

In other words, the good folks down in the Centennial State tried to implement something without fully thinking it through, ultimately ending up right back where they started. 

Louisiana – Historic Rates–and Growing Diagnoses

The situation in Louisiana may be more troubling than some of the other cases I’ve already digressed, if only due to just how cutthroat many of the cuts seem to be. 

ABA has been in a tenuous position since as early as 2016, when Medicaid proposed cuts of up to 25% for rates, largely imitating those made by private insurers. However, the cuts were postponed by the Governor, mostly at the urging of various advocacy groups, in order to keep the rates at “historical levels”.

Fast-forward to 2024, and the situation has become dire once more. Medicaid’s Optum plan aims to cull certain ABA providers, essentially limiting children’s access to the care they need in an effort to contain costs. Their opinion is that ABA is “financially unsustainable”, despite its proven effectiveness at treating autism. 

The exact extent of their plans remains to be seen, but certain internal documents have suggested that up to 40% of ABA provider groups will be excluded from the network – a move that will restrict up to 19% of children on Medicaid from receiving the help they need. 

Surface Wounds – The States at Risk of Having Their Budgets Cut

Indiana – Imminent

In many of the cases that I’ve compiled here, it’s important to remember that the demand for ABA has skyrocketed over the past few years, which was always going to trigger alarm bells for certain providers and state governors. Indiana is a great example of how the mounting pressure for ABA providers to, well, provide has led to drastic measures being taken in terms of funding.

In just two years, Indiana Medicaid funding for ABA soared from $276 million to $639 million, an increase of just over 230%. Naturally, this had the big guys over at the state government falling out of their chairs, and they were forced to react quickly. The solution? Capping ABA at 30 hours/week for 3 years per child.

Their reasoning to the public was two-fold: first, the demand for ABA is unsustainable, and second, they had uncovered around $133 million worth of potentially improper claims, some of which may be cases of fraud.

These caps have now been formally proposed and are at risk of taking effect any day now. Of course, many families and advocates are fighting against the proposal, with some lawmakers taking a stance against it as well. 

Louisiana – Ongoing

Louisiana is already in the midst of making some cuts to ABA availability by limiting or culling certain providers from the network. However, there may yet be even more underhanded plans at work to cut ABA funding in half. 

Everything revolves around UnitedHealth/Optum, the largest Medicaid provider in the state. Leaked internal documents detail a “strategic playbook” used by the company that outlines plans and strategies to limit ABA access, primarily by way of freezing new providers in their tracks and outright dropping existing ones that have been deemed “too high cost” to maintain.

This would result in around 40% of ABA provider groups being dropped by the network, which equates to 1 in 5 children who currently receive therapy being denied. Of course, it’s all about the bottom line – UnitedHealth/Optum aims to maximize its profits via fixed Medicaid rates.

Of course, you shouldn’t expect the network to publicly comment on these “proposed” cuts, which have more or less been confirmed by credible sources, not until it suits them at least. Hopefully, the process can be delayed long enough for advocates to challenge them.

Arizona – Moderate

Fortunately, the state of Arizona has announced no plans to cut ABA funding directly, and no documents or memos seem to suggest that it will be targeted specifically. However, the risk of ABA funding being cut remains all the same due to one thing: trigger law. 

Arizona’s trigger law stipulates that, should federal Medicaid funding fall below 80% (say, in the event of a shortfall), then the state is authorized to dial back its Medicaid expansion. This could result in enrollments being frozen, benefits being reduced, and rates being lowered – all of which may affect ABA services. But that shouldn’t be a worry if the trigger law never comes into effect, right?

Unfortunately, Arizona Medicaid currently faces a $122 million shortfall in its disabilities program, an event that has raised the concerns of many. No direct cuts to ABA therapy have been announced, but state officials have warned that any cuts they do make could affect some 60,000 Arizonans. Additionally, if the federal budget does affect Arizona’s Medicaid, it could result in reduced services all across the state in a variety of different areas.

Of course, whether or not such cuts take place remains to be seen. Keep an eye on the horizon. 

Colorado – Moderate

Colorado’s budget situation (as outlined above) hasn’t exactly inspired much confidence in the people who rely on Medicaid services like ABA therapy. The state has already implemented cuts in that sector anyway, but as long as the budget is under pressure, there will always be a risk of further cuts as well.

Nothing official has been announced, and to the state’s credit, many officials are reluctant to implement further cuts (“certainly no decreases,” said one Budget Committee member). Still, the very fact that such a conversation is taking place has many Coloradans on edge.

Trends & Drivers

Now that we’ve established which states are most at risk of having their ABA funding cut (and those for whom cuts have already taken place), let’s take a look at the rationale behind it; the trends and drivers, as they were.

The most common reasons for ABA cuts include cost and budget concerns, rapid utilization growth (ABA services are more in demand than ever before), and policy changes. To put it frankly, the more ABA therapy is demanded, the more cuts you can probably expect. Consider Indiana, for example, where annual ABA spending has doubled in just two years. 

Of course, some cuts are politically motivated, especially in more conservative states like Texas. There, autism services, in general, were denied Medicaid coverage on the grounds that they weren’t “federally required”. Even in more progressive states like Colorado, ABA therapy is still at risk in times of budgetary crisis, suggesting that many policymakers and officials still don’t regard it as a necessity in a climate of growing ASD rates nationwide. 

Quick State-by-State Summary of ABA Medicaid Cuts

Crossroads – What does the future of ABA Therapy and Medicaid look like?

The truth of the matter is that ABA therapy and its Medicaid status currently sit at a crossroads. The more it’s demanded, the more funding it’s going to require – and the more pushback it’s going to receive. Fortunately, many states have strong fiscal health and disability support services, often legally protected. It’s in those states highlighted here that we’re all going to have to keep a close eye on going forward, consistently monitoring new data as it comes and keeping an eye ever on the horizon for changes in the political climate.