Spending on autism therapy in North Carolina’s Medicaid program is projected to exceed $1 billion within the next two years, prompting state lawmakers last week to raise alarms and press health officials to explain the rapidly rising costs.
At a March 10 meeting of the Joint Legislative Oversight Committees on Health and Human Services and Medicaid, lawmakers reviewed new data showing that spending on applied behavioral analysis (ABA) and related therapies is climbing rapidly.
North Carolina Department of Health and Human Services (DHHS) data shows ABA spending will surge by roughly 425%, from $121.7 million in 2022 to a projected $1.1 billion by 2027. This rapid escalation threatens to overwhelm the state’s Medicaid budget and become one of its largest fiscal expenditures.
Medicaid data presented to lawmakers also showed spending surged 347% between 2022 and 2025, as the number of children receiving services grew from 3,844 to 13,447 and the intensity of care increased, with average patient hours rising from 47.5 to 54.1 per month.
Lawmakers say these spending trends raise urgent questions about how North Carolina will manage both the financial and policy challenges posed by this unprecedented growth.
“Nothing here can answer the question of where that growth rate is coming from,” state Sen. Ralph Hise, R-Mitchell, said during the meeting.
DHHS officials say several factors are contributing to the spike:
- A 15% Medicaid reimbursement rate increase in 2024
- A growing number of providers entering the market
- Increased demand as more families seek diagnosis and treatment
North Carolina began covering autism therapy under Medicaid in 2019, making it a relatively new and rapidly expanding benefit.
Despite these explanations, the department’s report indicates that these factors do not fully account for the surge. The DHHS report also found that providers may sometimes use therapy when less intensive options are available, and that the increase in the number of new patients receiving treatment far outpaces the rate of new autism diagnoses.
“I’m extremely concerned about the dollars versus the services they’re actually getting,” said state Sen. Jim Burgin, R-Harnett.
Providers acknowledged variation in quality.
“There is a lot of variation in the quality of providers,” said Matt Filer, CEO of Mosaic Pediatric Therapy.
ABA therapy is an intensive, individualized treatment designed to help children with autism develop communication, behavioral, and daily living skills. Sessions often include teaching children to follow directions, practice everyday tasks, and build communication abilities. Because treatment is individualized, the definition is broad and difficult to standardize.
Registered behavior technicians — hourly employees who complete 40 hours of training and are only required to have a high school diploma — typically deliver therapy and provide direct care, while more highly trained behavior analysts design and supervise treatment plans.
Despite heightened scrutiny of spending and services, both families and providers emphasize that the therapy can be transformative, particularly when delivered early. More than 70% of children receiving services are age 6 or younger.
North Carolina’s experience reflects a broader national pattern. According to the Centers for Medicare & Medicaid Services, ABA therapy has become one of the fastest-growing Medicaid expenses nationwide. Recent federal policy changes require states to cover autism-related services under Medicaid.
In response to the national spending spike, the US Department of Health and Human Services’ Office of Inspector General has launched a state-by-state investigation into Medicaid autism therapy billing, focusing on improper payments and documentation failures.
So far, audits in Maine, Wisconsin, Indiana, and Colorado have uncovered widespread problems.
In each state reviewed, auditors examining samples of ABA claims found errors, including:
- Auditors found payments despite missing documentation.
- Providers billed for therapy sessions when children were napping or watching videos.
- The price per hour of treatment drastically increases when covered by Medicaid.
Reflecting these federal concerns at the state level, State Auditor Dave Boliek and his office have launched a detailed review of North Carolina’s autism therapy spending.
“That was one area that we did identify that needed a really, really, really close look,” Boliek added. “We’re not asleep at the wheel. We are looking at it very hard.”
Boliek said the investigation is part of a broader effort to identify unusual spending patterns across state government.
“The first thing we did was scan across our government to look for spikes that would be clearly obvious that our team would need to go and take immediate audit action on,” said Boliek.
“Our team has identified an area that has spiked in North Carolina, and that is the provision of ABA services in the autism arena,” he said. “There’s been a tremendous spike in the amount of money that Medicaid spends in that particular area. Our team has begun a detailed look at that.”
In response to these trends and the core fiscal concerns, DHHS has proposed reforms to strengthen oversight, enhance accountability, and preserve access to medically necessary autism therapy.
Proposals include:
- Strengthening individualized treatment requirements
- Increasing documentation and utilization review
- Enhancing credentialing standards
- Aligning services more closely with clinical guidelines
The Carolina Journal previously reported that the state is also facing an ongoing lawsuit over Medicaid reimbursement rates for autism services.
The lawsuit was filed by families of more than 20 children with autism after the governor proposed reimbursement cuts of up to 10% for applied behavioral analysis therapy, reductions steeper than those applied to most other Medicaid services.
Parents argued the cuts unfairly singled out children with autism and could disrupt medically necessary treatment, particularly for those relying on intensive, long-term care.
A Wake County Superior Court judge issued a preliminary injunction blocking the cuts, finding that families were likely to succeed in their claims.
In his order, the judge warned that the reductions could result in denial of care, delayed access to services, and increased risks of isolation or institutionalization for affected children.
The dispute stems from a broader budget conflict. The governor proposed to implement the cuts amid a Medicaid funding shortfall after lawmakers failed to reach a budget agreement.