Auditor Uncovers $660 Million Autism Therapy Scam

A child arranging colorful chalk sticks on a table

A staggering 47,000% explosion in autism therapy Medicaid billings over five years has North Carolina’s state auditor sounding the alarm on potential fraud that threatens to drain nearly $1.1 billion from taxpayers by 2027.

Story Snapshot

North Carolina Medicaid spending on autism therapy skyrocketed from $1.4 million to over $660 million in just five years, raising red flags about waste and fraud
State Auditor Dave Boliek launched a comprehensive audit after discovering the explosive growth far exceeds the pace of new autism diagnoses
Lawmakers passed emergency legislation banning out-of-state providers and imposing strict oversight after finding 80 providers each billed over $1 million in 2025
Private equity-backed firms dominate the market, with Utah-based ABS Kids alone billing $64.91 million while federal investigators probe similar schemes nationwide

Unchecked Spending Explosion Defies Logic

State Auditor Dave Boliek discovered North Carolina Medicaid payments for Applied Behavioral Analysis autism therapy surged from $1.4 million to over $660 million between 2019 and 2025. The 47,000% increase prompted immediate audit action after lawmakers questioned the North Carolina Department of Health and Human Services in March 2026. Spending projections indicate costs could reach $1.1 billion by 2027, threatening to become one of Medicaid’s largest expenditures. While beneficiaries increased from 3,844 children in 2022 to 13,447 in 2025, the spending growth vastly outpaced enrollment, raising concerns about systemic exploitation of taxpayer-funded programs.

Private Equity Firms Dominate Suspicious Billings

Analysis reveals over 80 providers each billed North Carolina Medicaid more than $1 million in 2025, with a small number of firms controlling the bulk of payments. Utah-based ABS Kids, a private equity-backed company, led all providers with $64.91 million in billings, while Hopebridge collected $14.63 million. Many of these high-billing providers entered the market after 2020, coinciding with a 15% reimbursement rate increase in 2024 that further fueled growth. Research from the Private Equity Stakeholder Project identified patterns suggesting these firms exploit Medicaid through aggressive expansion tactics similar to schemes flagged in Minnesota and other states under federal investigation.

New Regulations Target Fraud Vulnerabilities

Governor signed House Bill 696 into law on April 30, 2026, imposing strict requirements to curb abuse. The legislation bans out-of-state providers unless they operate within 40 miles of North Carolina’s border, limits telehealth services, and mandates technician certification with specific treatment-to-supervision ratios. Providers must now obtain monthly reverification for treatment plans exceeding 16 hours per week. Phase two regulations taking effect in December 2026 will prohibit self-diagnosis and self-referrals, closing loopholes that incentivize over-diagnosis. The North Carolina Attorney General’s office pushed for these policy clarifications, noting vague rules previously hampered fraud prosecutions despite clear evidence of improper billing practices.

Taxpayers Face Billion-Dollar Burden

The average cost per patient reached $37,600 in 2025, with total spending hitting $505 million in combined state and federal funds. This places enormous strain on North Carolina’s Medicaid program, which serves approximately two million residents. Deputy Secretary Melanie Bush acknowledged the growth concentrated among a small number of providers, though officials initially attributed increases to rising awareness and legitimate demand. The audit’s findings suggest otherwise, revealing patterns consistent with nationwide Medicaid ABA fraud investigations by the Department of Health and Human Services Office of Inspector General. Federal investigators note ABA therapy has become Medicaid’s fastest-growing expense category, with similar red flags emerging across multiple states.

While families of children with autism filed lawsuits seeking continued access to therapy after proposed 10% rate cuts in 2025, the evidence points to a system gamed by opportunistic providers rather than families in need. A November 2025 court injunction temporarily halted the cuts amid ongoing legal battles. The new regulations aim to preserve access for legitimate patients while eliminating fraudulent billing that threatens program sustainability. Auditor Boliek’s investigation continues as lawmakers balance protecting vulnerable children against safeguarding taxpayer dollars from what appears to be systematic exploitation of a well-intentioned benefit program.