The autism therapy industry is a growing target for government enforcement. As I discussed recently in Emerging Target: Federal Enforcement Comes to the Autism Therapy Industry, Applied Behavior Analysis (ABA) therapy — currently the dominant type of autism therapy — has all the markers for healthcare fraud enforcement: explosive reimbursement growth, low barriers to entry, thin oversight, and a wave of HHS-OIG audits, False Claims Act settlements, and criminal prosecutions that is already underway.

On August 5, the Centers for Medicare & Medicaid Services (CMS) furthered that theory by releasing a 173-page State Medicaid and Children’s Health Insurance Program Applied Behavior Analysis Toolkit, a comprehensive guide designed to help states tighten oversight of the same billing practices federal investigators have increasingly focused on.

Why CMS Acted

As the toolkit describes, Medicaid and Children’s Health Insurance Program (CHIP) spending on ABA increased 421% between 2021 and 2025, far outpacing the growth in the number of children with an autism diagnosis receiving services. That mirrors the trajectory noted in recent Wall Street Journal reports — direct Medicaid payments to ABA providers grew from $660 million in 2019 to $2.2 billion in 2023, making ABA the fastest-growing service line in the entire Medicaid program.

CMS is explicit that the toolkit doesn’t create new federal requirements, doesn’t reduce coverage obligations, and doesn’t endorse a single treatment model. And it emphasizes that the toolkit is guidance, not a mandate. But the substance of that toolkit mirrors the same factors that regulators and prosecutors are likely to consider in any enforcement action.

The Billing Practices CMS Now Flags as Red Flags

The toolkit addresses fact patterns similar to those that have arisen in the Department of Health & Human Services – Office of Inspector General (HHS-OIG) audits and federal court cases, including:

• Overlapping treatment sessions,
• “[E]xcessive service hours… that continue without documented improvement in outcomes,”
• Identical documentation copied across different patients,
• Group therapy billed as if it were individual, and
• High staffing ratios “without clinical justification (e.g., two ABA providers working with one child at a time).”

It also suggests that 40 or more hours of ABA per week raises audit risk, recommends caps on consecutive billable units, and discourages consolidating 15-minute units under a single claim line — a practice that obscures whether a child actually received continuous therapy. One data point CMS highlights: The highest-billing ABA provider in the country reported service quantities as high as 3,300 units, or 825 hours, in a single encounter.

The toolkit also imports a Stark Law-style standard for diagnosing clinicians who refer patients to ABA providers they have a financial relationship with — barring compensation tied to referral volume and calling for audit-based monitoring of outlier referral patterns.

The Enforcement Record Behind the Guidance

The toolkit’s own citations reflect the enforcement landscape. It references the four oft-cited HHS-OIG state audits — Colorado ($77.8 million in improper payments), Indiana ($56 million), Wisconsin ($18.5 million), and Maine ($45.6 million) — that account for a total of at least $198.4 million in improper Medicaid payments identified so far. It also references a Connecticut criminal sentencing and additional federal fraud charges that were detailed at length in the Emerging Target article.

Congressional Investigations Underway

CMS isn’t the only body focused on ABA therapy issues. In July, the U.S. House of Representatives’ Committee on Education and Workforce opened its own inquiry, sending a letter to Simcha Bendet, founder of the autism therapy provider The Perfect Child, LLC, demanding billing-and-reimbursement records going back to 2020 following another Wall Street Journal report on alleged overbilling and aggressive collection practices. The congressional oversight is premised on protecting ERISA-governed and employer-sponsored health plans from abuse but raises similar issues as the earlier Medicaid-focused OIG and DOJ activity.

What This Means for Providers

Collectively, the CMS toolkit, the OIG audit series, recent DOJ activity, and congressional investigations all point in the same direction: ABA billing practices are getting more scrutiny. Key issues include:

• Documentation that doesn’t individualize treatment,
• Treatment plans defaulting to maximum allowable hours,
• Billing structures that obscure actual time spent, and
• Referral arrangements with financial strings attached

Providers of autism therapy should be proactive in reviewing their processes and updating their compliance protocols. While early enforcement activity often focuses on obvious bad actors, that focus typically turns to legitimate providers that nonetheless come on the radar due to billing patterns or whistleblower complaints. Given the increased scrutiny, no provider should be complacent about ensuring it is following the most recent guidance.