Shock Audit: Autism Therapy Spending Skyrockets 47,000%

North Carolina’s Medicaid spending on autism therapy exploded by 47,000% in just five years—from $1.4 million to over $660 million—as state auditors and lawmakers scramble to uncover whether taxpayers are footing the bill for massive fraud orchestrated by out-of-state providers and private equity firms.

Story Snapshot

State Auditor Dave Boliek flags 47,000% surge in Medicaid autism therapy billings from 2019 to 2025, projecting costs to hit $1.1 billion by 2027.
North Carolina lawmakers passed House Bill 696 in April 2026, banning out-of-state providers and imposing strict oversight to combat suspected waste and fraud.
Private equity-backed firms like ABS Kids billed $64.91 million in 2025 alone, raising red flags about self-referrals and overbilling tactics.
Federal investigators are probing similar Medicaid ABA fraud nationwide, with North Carolina’s crisis mirroring patterns seen in Minnesota and other states.

Auditor Sounds Alarm on Runaway Medicaid Costs

State Auditor Dave Boliek announced an immediate audit in March 2026 after identifying a staggering 47,000% increase in Medicaid billings for Applied Behavioral Analysis therapy for autism since 2019. Spending rocketed from $1.4 million to over $660 million annually, with projections reaching $1.1 billion by 2027. Boliek told lawmakers the surge suggests potential waste, fraud, and abuse, not just increased demand. Only 3,844 children received ABA therapy in 2022 compared to 13,447 in 2025, yet spending ballooned 347% in that period alone. The auditor’s warning triggered a Joint Legislative Oversight Committee hearing where state officials faced tough questions about accountability and oversight failures.

Private Equity and Out-of-State Providers Dominate Billings

Analysis of 2025 Medicaid data reveals more than 80 providers each billed over $1 million, with a small number of firms capturing the bulk of payments. ABS Kids, a Utah-based private equity-backed provider, led all billers with $64.91 million, while Hopebridge collected $14.63 million. Many high-billing providers entered the market after 2020, coinciding with expanded telehealth access and a 15% reimbursement rate increase in 2024. Ryan Leitner, a researcher at the Private Equity Stakeholder Project, noted private equity firms are exploiting Medicaid programs nationwide, using aggressive marketing and self-referrals to maximize revenue. North Carolina’s explosion mirrors problems in Minnesota, where federal audits uncovered widespread ABA billing fraud.

Lawmakers Crack Down with New Regulations

Governor signed House Bill 696 into law on April 30, 2026, imposing strict new requirements to curb suspected fraud. The law bans out-of-state ABA providers unless they operate within 40 miles of North Carolina’s border, sharply limits telehealth services, and mandates technician certification and treatment-to-supervision ratios. Providers must now obtain monthly reverification for therapy plans exceeding 16 hours per week. Phase two of the law, effective December 2026, prohibits self-diagnosis and self-referrals, closing loopholes that critics say private equity firms have exploited. The North Carolina Attorney General’s office pushed for clearer policy guidelines, arguing vague rules have hampered prosecution of fraudulent billers. These reforms aim to protect taxpayer dollars while maintaining access to legitimate therapy for children with autism.

Federal Probes and National Implications

The Department of Health and Human Services Office of Inspector General is conducting nationwide investigations into improper Medicaid payments for ABA therapy, with North Carolina’s crisis serving as a cautionary tale. Federal officials note ABA has become one of the fastest-growing Medicaid expenses nationally, driven by rising autism diagnoses and aggressive provider expansion. North Carolina Deputy Secretary Melanie Bush acknowledged spending growth is concentrated among a small number of providers, many new to the market. Families of children receiving therapy have sued the state over proposed 10% rate cuts, winning a temporary injunction in November 2025. While parents and advocates emphasize ABA’s transformative benefits, regulators warn unchecked growth threatens Medicaid solvency and diverts resources from other critical services, underscoring the tension between access and fiscal stewardship.

Taxpayers Left Holding the Bag

North Carolina taxpayers and their federal counterparts are bearing the cost of this explosion, with state and federal funds combined exceeding $505 million in 2025 alone. The average cost per beneficiary reached approximately $37,600, far exceeding initial projections when Medicaid ABA coverage began in 2019 under federal mandates. Critics argue the government failed to implement adequate safeguards before opening the floodgates to reimbursements, allowing opportunistic providers to game the system. The Auditor’s ongoing investigation seeks to quantify how much of the spending represents legitimate care versus fraudulent or wasteful billings. If the reforms succeed in curbing abuse without harming access, North Carolina could provide a blueprint for other states grappling with similar crises, proving limited government oversight and accountability can protect both vulnerable children and hardworking taxpayers from exploitation by profiteers.