The $10 billion babysitter: How Medicaid turned autism therapy into a free-for-all

The scale of Minnesota’s welfare fraud has stunned American taxpayers. “The largest Medicaid autism fraud case ever,” as put by the Justice Department, was among the schemes uncovered. The perpetrators built a yearslong operation that netted $46.6 million by exploiting autism therapy known as applied behavior analysis.The Centers for Medicare and Medicaid Services recently released a 173-page “tool kit” prompted by “the rapid growth in utilization and costs” of ABA and by many states’ “significant fiscal and oversight concerns.” Minnesota is hardly an aberration — as the CMS tool kit demonstrates, Medicaid ABA spending is compromised nationwide, not only in “the Land of 10,000 Frauds.”ABA subsidies suffer from an absence of postpayment verification of services combined with fluid definitions of what counts as “therapy.” This is a flaw of design, to which both federal and state guidelines contribute. Providers have every incentive to convert more minutes of purported therapy into revenue, and states have little incentive to police them. States administer funds supplied largely by taxpayers across the nation, imposing little discipline on their outlays. Parents whose children are insured by Medicaid incur no out-of-pocket costs for ineffective or never-occurring ABA treatment. If the state reimburses the cost of de facto babysitting, paying many times the going rate, parents are unlikely to object. Medicaid spending on ABA skyrocketed from roughly $2 billion in 2021 to $10 billion in 2025, a 400% increase. State Medicaid programs burned through taxpayer money so quickly, fueling a threefold increase in the number of providers billing Medicaid for ABA, that the federal government could not help take notice. The number of children with autism receiving Medicaid’s ABA funding grew by 189%, while the number of children diagnosed with autism on Medicaid grew by only 67%. State-specific findings help elucidate how Medicaid spending on ABA grew by 421% nationwide — more than six times as fast as the number of diagnosed children.Medicaid spending on ABA and related autism services surged from $600,000 in 2018 to more than $400 million in 2025 in Minnesota; from $1.9 million in 2020 to $505 million in 2025 in North Carolina, where it is projected to exceed $1 billion annually by 2027; and from $21 million in 2017 to $611 million in 2023 in Indiana, where, in the latter year, one ABA provider received $29 million for just 84 Medicaid patients, roughly $340,000 per patient, or more than 10 times higher than the national average. Nine of the 10 ABA providers nationwide with the highest per-patient spending billed Indiana’s Medicaid program, whose ABA payment design has become the “epitome of abuse.” One provider’s “entire business model” was built “off of Medicaid.” Instead of fixed rates, Indiana reimbursed ABA providers 40% of whatever they billed. And bill they did, for years, escaping scrutiny, and at prices that pushed average annual ABA spending for each child to about $75,000 in 2023.Likewise indicative of profligate spending on ABA, tens of millions of dollars in estimated improper payments to ABA providers, likely much more, have surfaced in every state Medicaid program audited: Indiana, Maine, and Wisconsin. But Colorado dwarfs them all. Federal watchdogs examined $610,933 in randomly sampled payments to Colorado’s ABA providers and found that $862, or 0.14%, were certainly legitimate. The rest was either improper or potentially improper.MMR DOESN’T CAUSE AUTISM. STOP PRETENDING THE VACCINE DEBATE IS OVERColorado’s Medicaid program lacked elementary payment verification, a failure that went undetected for years, resulting in payments for many hours of therapy that lacked adequate documentation, were performed by unqualified providers, were provided to children without a diagnosis, or amounted to nontherapy “babysitting” time, among myriad other problems. After paying providers, Colorado never checked the validity of ABA payments: whether the conditions for costly therapy reimbursements were met, whether services were provided as claimed, or whether they were facially erroneous — such as when multiple claims were submitted for services supposedly occurring simultaneously.Minnesota’s failure to police unscrupulous ABA providers and practices culminated in “industrial-scale” fraud in the state, but the industry operates at various degrees nationwide. The culprit is Medicaid’s broken design.Vladlena Klymova is a policy analyst at the Taxpayers Protection Alliance.