47,000% Medicaid EXPLOSION – Auditor Suspects FRAUD

A stethoscope next to a puzzle piece labeled 'Medicaid'

A 47,000% spending explosion in just five years has North Carolina’s top watchdog convinced taxpayers are funding a Medicaid gold rush masquerading as autism care.

Story Snapshot

North Carolina Medicaid spending on autism therapy rocketed from $1.4 million to over $660 million in five years, with projections hitting $1.1 billion by 2027.
State Auditor Dave Boliek launched an investigation into potential fraud, waste, and abuse as the spending surge far outpaces actual increases in autism diagnoses.
Over 80 providers each billed more than $1 million in 2025, with private equity-backed firms dominating the market and one Utah-based company alone billing nearly $65 million.
New regulations signed into law in April 2026 ban out-of-state providers, restrict telehealth, and require monthly reverification for intensive treatment plans exceeding 16 hours weekly.

When Numbers Scream Louder Than Words

State Auditor Dave Boliek did not mince words when he brought the numbers before North Carolina lawmakers in March 2026. Applied Behavioral Analysis therapy for autism, covered by Medicaid since 2019, ballooned from modest beginnings to a budget-busting behemoth. The state paid $121.7 million in 2022 for 3,844 children. By 2025, that figure surged to over $505 million serving 13,447 beneficiaries. The trajectory points to $1.1 billion by 2027, a spending curve so steep it defies rational explanation by demographic growth alone.

Boliek’s alarm stems from basic math. Autism diagnoses have risen nationally to roughly one in 36 children, but this spending increase dwarfs any corresponding uptick in need. A 15% reimbursement rate hike in 2024 and the addition of new providers cannot account for costs multiplying by 425% in three years. Something else is driving the deluge of dollars, and the auditor suspects fraud, waste, and abuse are major culprits in a system ripe for exploitation.

Private Equity Finds a Medicaid Goldmine

The provider landscape tells a troubling story. More than 80 therapy outfits each billed over $1 million in 2025, with a small cadre vacuuming up the lion’s share. ABS Kids, a Utah-based operation, topped the list at $64.91 million, while Hopebridge pulled in $14.63 million. Many of these high-billing entities arrived after 2020, leveraging telehealth expansion and aggressive patient recruitment to capture market share. Private equity firms recognize Medicaid as a dependable revenue stream, and autism therapy offers particularly lucrative opportunities.

Ryan Leitner of the Private Equity Stakeholder Project noted that when private equity taps Medicaid, problems follow. National audits have uncovered rampant overbilling and self-referral schemes in states like Minnesota, where similar ABA fraud scandals erupted. North Carolina’s explosion mirrors these patterns, with newer providers outpacing established clinics in billing volume despite serving fewer years in the community. The concentration of spending among a handful of firms raises red flags about whether genuine patient need or corporate profit motives are steering treatment decisions.

Lawmakers Act to Plug the Leaks

The Joint Legislative Oversight Committees grilled NC Department of Health and Human Services officials in March 2026, demanding answers for the fiscal hemorrhage. Deputy Secretary Melanie Bush acknowledged the growth was concentrated among a small number of providers, but attributed much of the surge to increased awareness, demand, and federal mandates requiring coverage under Early and Periodic Screening, Diagnostic, and Treatment rules. Lawmakers were unconvinced that legitimate factors alone explained the spike.

By April 30, 2026, Governor signed House Bill 696 into law, imposing strict new guardrails. The legislation bans out-of-state providers unless they operate within 40 miles of the border, curtails telehealth flexibility, mandates technician certification, establishes treatment-to-supervision ratios, and requires monthly reverification for any child receiving more than 16 hours of therapy per week. A second phase set for December 2026 will prohibit providers from diagnosing and referring their own patients, closing a glaring conflict of interest loophole.

Families Caught in the Crossfire

Not everyone cheers these reforms. More than 20 families sued DHHS in 2025 over proposed 10% rate cuts, arguing the reductions threatened access to life-changing therapy for their children. A court injunction in November 2025 temporarily blocked the cuts, highlighting the tension between cost containment and service availability. Parents insist ABA therapy transforms outcomes for kids with autism, giving them communication skills and behavioral tools they would otherwise lack.

The average cost per beneficiary hit $37,600 in 2025, reflecting the intensive nature of ABA, which often involves dozens of hours weekly. Families fear that cracking down on providers will shrink options and force waiting lists to grow, leaving vulnerable children without critical early intervention. The emotional stakes are high, pitting fiscal responsibility against parental desperation for proven treatments in a system where both concerns carry moral weight.

A National Warning Shot

North Carolina’s reckoning with ABA billing sends ripples far beyond state lines. The federal HHS Office of Inspector General has launched probes into improper Medicaid payments for autism therapy nationwide, identifying ABA as one of the fastest-growing expenditure categories. States from Minnesota to others grappling with similar surges are watching how NC’s reforms perform, potentially adopting comparable restrictions to rein in runaway costs.

The auditor’s investigation continues, with findings expected to shed light on how much of the $660 million represents legitimate care versus fraudulent claims. Whatever the audit reveals, the episode underscores a broader challenge: ensuring that Medicaid serves those who genuinely need help without becoming a cash cow for opportunistic operators. Boliek’s willingness to sound the alarm reflects the kind of taxpayer stewardship voters expect, particularly in a state where fiscal conservatism and program integrity rank as core values.

Balancing Compassion With Common Sense

Autism therapy occupies a unique space in health policy, blending undeniable clinical benefit with vulnerability to abuse. Children with autism deserve access to evidence-based interventions, and ABA has proven effective for many. Yet the staggering spending trajectory in North Carolina suggests the system has been gamed by entities more interested in billing codes than behavioral outcomes. The challenge lies in preserving access for families while evicting bad actors who exploit a program designed for society’s most vulnerable.

House Bill 696 represents a common-sense first step, imposing accountability measures that should have existed from the start. Banning self-referrals, requiring monthly reviews for high-intensity cases, and restricting out-of-state providers with no local roots all align with prudent oversight. If these reforms trim fraud without harming kids, North Carolina will have charted a course other states can follow, proving that protecting taxpayers and serving children are not mutually exclusive goals.