As we get further into 2025, Applied Behavior Analysis (ABA) therapy providers are facing a period of heightened financial uncertainty. At the center of the conversation are the proposed Medicaid cuts — federal and state-level decisions that could have lasting effects on access, reimbursement, and the operational sustainability of behavioral health services in the United States. While the extent of the cuts has not been finalized, for practices that rely heavily on Medicaid funding, the time to prepare is now.
Medicaid and Its Role in ABA Therapy
Medicaid has long been a vital source of healthcare coverage for low-income families, acting as an alternative to private insurance that enables access to essential medical services, including behavioral health treatments for children diagnosed with Autism Spectrum Disorder (ASD).
Initially, because ABA therapy was seen as more of an educational service than a medical necessity, it was not covered under Medicaid, limiting access to this critical intervention for many children with developmental needs. Over time, however, growing clinical evidence, persistent advocacy, and key legal decisions helped shift that perspective.
The recognition of ABA therapy as a medically necessary treatment for autistic children gained traction, bolstered by the Affordable Care Act (ACA) and state-level mandates that expanded coverage. As a result, Medicaid began including ABA services under the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit, opening the door for thousands of families to receive consistent, reimbursable care.
For families, this policy evolution has meant greater access to life-changing therapy without the burden of excessive out-of-pocket expenses. And many children who had also previously faced long waitlists or insurance barriers could now receive the consistent intervention they needed to thrive.
These changes were just as beneficial for ABA therapy providers. Medicaid’s expanded role has strengthened the industry by increasing demand for services, broadening patient reach, and providing a clearer framework for providers to receive reimbursement. Due to the improved financial stability that Medicaid reimbursements provide, more clinics have been able to scale their operations, hire the additional staff they need, and refine their treatment methodologies.
However, because Medicaid is state-administered, coverage and reimbursement policies vary widely, and as budget pressures mount, changes to ABA therapy access and funding are again on the table.
Medicaid Cuts in 2025: Cause and Effect
Despite the hard-fought wins that expanded Medicaid ABA coverage, this year is bringing new fiscal and political pressures that threaten to reshape how — and if — families can access these services. One of the most concerning developments is the proposed cap on ABA therapy hours, which could limit the amount of therapy a child can receive to 30 hours each week for a maximum of three years. For families who rely on consistent, intensive intervention, these restrictions could mean delayed progress, interrupted treatment plans, and fewer opportunities for children to develop essential life skills.
So, why is this happening? At the federal level, proposed budget plans include sweeping Medicaid reductions, most notably, a House-backed proposal aiming to cut the Medicaid budget by $880 billion over the next decade. While this proposal is still under debate, it signals a growing intent to scale back public health expenditures, putting millions of Americans at risk of losing Medicaid coverage, not just those in need of behavioral therapy.
Meanwhile, several states are pursuing their own cost-control measures. Indiana, for example, is considering hard caps on ABA therapy hours and more stringent provider enrollment standards. Other states, including New York and California, are reassessing ABA therapy funding, potentially reducing reimbursement rates or tightening eligibility criteria. These policy shifts are aimed at curbing program expenditures, but risk reducing access to care for Medicaid-dependent families.
The immediate effect of these developments is already apparent. Providers in affected regions report longer waitlists, delayed authorizations, and increased administrative burdens — all of which can disrupt continuity of care.
What Are the Potential Implications of Capping ABA Therapy Support?
While Medicaid has played a vital role in expanding access to ABA therapy, the proposed funding cuts and service limitations introduce new challenges that could reshape how care is delivered. If therapy caps or stricter Medicaid eligibility criteria are enforced, both families and providers will need to navigate a new landscape of restricted resources, financial adjustments, and operational shifts.
How the Caps Could Affect Patients
Limiting the number of weekly therapy hours or the duration of care eligibility poses clear clinical risks. ABA therapy is most effective when delivered intensively and consistently, particularly in early childhood. The proposed caps may force families to ration the services they receive, interrupt the current progress they have made, or forgo therapy altogether. Children who require long-term or high-frequency intervention are especially vulnerable under these models.
The Impact of Medicaid Cuts for ABA Therapy Providers
From a provider standpoint, the ripple effects of these cuts are multifaceted. Lower reimbursement rates may make it financially unfeasible to continue serving a Medicaid-heavy caseload. Many practices may be forced to reduce therapy hours, downsize their staff, or limit the intake of publicly funded clients.
At the same time, compliance demands are intensifying. Following a federal audit that uncovered $56 million in improper ABA-related Medicaid payments in Indiana alone, billing accuracy is one of the areas under scrutiny. Documentation must now be airtight, with clear justifications for every session and service provided. Denials and audits are also becoming more common, increasing operational strain.
How ABA Therapy Providers Can Prepare
With Medicaid tightening regulations, imposing therapy caps, and increasing audits, ABA therapy providers must take proactive steps to safeguard their operations and ensure continued patient access.
The financial and administrative landscape is shifting rapidly, and failing to adapt could result in denied claims, lost revenue, and service limitations. Below are a few key strategies to help ABA practices prepare.
Strengthen Your Billing and Compliance Practices
Medicaid audits and stricter billing rules mean that even minor documentation errors could result in payment delays, financial loss, or regulatory penalties. ABA therapy providers need to refine their billing workflows to ensure compliance and protect their reimbursement streams. This means auditing their current billing practices to make sure that every claim meets the updated Medicaid criteria. This could include investing in billing software or expert revenue cycle management support to help prevent denials, automate compliance tracking, and streamline reimbursement workflows. At the same time, staff should be trained on evolving Medicaid policies to reduce potential errors and administrative burdens that could slow down payments.
Reducing Dependence on Medicaid Workflows
With Medicaid funding becoming more volatile, relying solely on government reimbursements presents clear financial risks. Expanding private pay models, forming partnerships with commercial insurers, or securing grant funding can help offset revenue fluctuations.
Some ABA clinics are exploring tiered service models, offering different intensity levels of therapy at varied price points, ensuring that families can access support even if Medicaid coverage changes.
Advocating For Policy Protections
Advocacy has always been an integral part of medical care. The Medicaid cuts and therapy caps aren’t set in stone yet, and ABA providers have a voice in shaping policy. By joining autism advocacy organizations, participating in legislative discussions, and collaborating with trusted provider networks, clinics can help push for fair reimbursement rates and preserve access to care for families in need.
Partner With a Medicaid Billing Expert Alternative Funding
Medicaid policy shifts can be overwhelming, and even well-established ABA therapy providers may struggle with compliance. Your Missing Piece specializes in revenue cycle management for ABA therapy, helping clinics streamline their billing practices, reduce administrative stress, and maximize reimbursements, even with the continuing evolution of Medicaid policies.
How Missing Piece Can Help
As Medicaid continues to evolve, ABA therapy providers must remain adaptable, informed, and financially strategic to preserve access to critical autism care for the families that need it. Missing Piece specializes in ABA therapy billing solutions, ensuring that your practice remains compliant, financially stable, and prepared for policy shifts.
From claims management and pre-authorization assistance to compliance strategies that minimize denials, we help ABA therapy providers optimize their billing operations so they can focus their energy on delivering care, leaving the complex administrative tasks to us.
Partner with Missing Piece to secure the resources, expertise, and strategies you need to keep your ABA services accessible.