Amid Federal Autism Funding Boom, States Crack Down on Medicaid Fraud in Therapy Services

Federal Funding Meets State Oversight

Congress approved record FY2026 funding for autism research and services, while states like North Carolina and Minnesota are implementing stricter fraud prevention measures for Medicaid-funded autism therapies. The dual approach reflects growing bipartisan consensus on supporting autism programs while ensuring accountability.

In North Carolina, lawmakers are pushing new rules to eliminate Medicaid fraud in applied behavioral analysis (ABA) therapy after the state spent over $505 million on these services in 2025 alone. ABA therapy, a widely used but sometimes controversial intervention, focuses on improving specific behaviors like social skills and communication through reinforcement strategies. Meanwhile, a Minnesota audit found the state's Department of Human Services failed to adequately investigate kickback schemes among ABA providers - where clinics illegally paid for patient referrals, often hiding payments as 'consulting fees'.

The Oversight Challenge

Medicaid fraud in autism services typically involves:

• Billing for services never rendered (e.g., charging for therapy sessions that didn't occur)
• Exaggerating treatment hours (reporting 40 hours/week when only 20 were provided)
• Kickbacks for patient referrals (illegal payments between providers)

North Carolina's proposed measures include:

• Mandatory provider accreditation through national ABA oversight bodies
• Real-time billing verification using Medicaid claims software
• Increased audit frequency (quarterly instead of annual reviews)

At the federal level, Health and Human Services Secretary Xavier Becerra appointed new members to the Interagency Autism Coordinating Committee in January 2026 to guide research priorities. The appointments coincide with renewed funding through the Autism CARES Act, which supports:

• Early screening programs (like CDC's 'Learn the Signs' initiative)
• Professional training for diagnosticians
• Adult services research (addressing a critical gap)

Balancing Access and Accountability

Advocates warn that fraud crackdowns mustn't create barriers to legitimate care. "We need oversight that protects both taxpayers and access to effective therapies," said one committee member speaking anonymously to NC Newsline, noting that some families already face 6-month waitlists for ABA services.

Minnesota's audit suggests middle ground: better fraud detection without reducing services. Their recommendations include:

• Cross-checking provider credentials against state licensing boards
• Automated billing alerts for unusual patterns (e.g., identical treatment hours daily)
• Whistleblower protections for staff reporting fraud

With federal funding secured through 2026, attention now turns to implementation. As one parent advocate told Minnesota Reformer: "Every dollar lost to fraud is a dollar that could've helped my child - but new rules shouldn't make therapists quit Medicaid either." Early data from NC shows 12% of ABA providers have left the program since audits began.