Governor Braun signs Executive Order to contain soaring costs of ABA Therapy to Medicaid while maintaining Quality of Care

Governor Mike Braun today signed an executive order to contain rapidly rising Medicaid costs for Applied Behavior Analysis therapy while maintaining quality of care for thousands of Hoosier children and young adults who use the treatment.

Applied Behavior Analysis (ABA) is a therapy for the early treatment of autism, helping improve quality of life for the individual and their family and friends.

Indiana Medicaid payments for Applied Behavior Analysis exploded by a factor of 8 in a two year period from 2017 to 2019, from $14.4 million to $120 million. Payments are expected to increase by a factor of 5 over the next year, with $645 million projected to be spent on ABA for approximately 8,000 Hoosier children in 2026.

The U.S. Office of the Inspector General conducted an audit of Indiana’s ABA payments in 2019 and 2020 to determine why costs had soared so dramatically. The audit found Indiana made at least $56.5 million in improper Medicaid payments for ABA, largely due to problems with credentialing for providers and a lack of evaluations, referrals, and documentation.

“Indiana’s $1 billion Medicaid budget shortfall last year means we need to take bold action to contain costs where they are clearly getting out of hand. When the price our state pays for one service is soaring from $14 million to $120 million in just two years, with over $39 million of improper payments identified in an independent audit, something is clearly wrong and needs to be addressed immediately,” said Governor Mike Braun. “We’re taking decisive action to contain these massive cost increases while maintaining quality of care for the Hoosiers that rely on these treatments.”

Governor Braun’s executive order establishes a working group of parents, legislators, subject matter experts, physicians, and ABA therapy providers to find solutions that will contain the soaring costs of ABA to Medicaid without compromising care quality.

Specifically, the working group is tasked with evaluating the following solutions, and presenting Governor Braun with three actionable recommendations for ABA cost containment while maintaining quality:

• the best clinical care models to provide the right therapy, at the right ages, in the right setting, to best serve children and families;
• recommendations for a better coordinated experience for children who need ABA therapy services, but in a financially sustainable manner;  
• proper transitions for children as they grow in their educational, family and social settings;
• quality metrics for ABA therapy services;
• potential caps on hours of therapy services provided per week;
• potential caps on the number of months a child can receive therapy services;
• creating an appeals process for extenuating circumstances; and
• establishing new provider enrollment and billing requirements for ABA providers to address issues identified in the federal audit.