March 18, 2026
The U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) recently released a concerning audit concluding that Colorado made at least $77.8 million in improper Medicaid fee‑for‑service payments for Applied Behavior Analysis (ABA) services provided to children in 2022 and 2023.
For whistleblowers, compliance officers, and the attorneys who represent them, this audit is a roadmap for the most common and actionable types of Medicaid fraud occurring in the rapidly growing ABA industry. It also highlights how lax oversight creates fertile ground for False Claims Act cases and state‑level Medicaid Fraud Control Unit referrals.
Applied Behavior Analysis is a therapeutic approach used to help children with autism spectrum disorder develop communication, adaptive functioning, and behavioral regulation. ABA programs typically involve structured behavioral interventions designed to reinforce positive behaviors and reduce behaviors that interfere with daily living skills. Treatment plans are generally created and overseen by clinicians such as Board Certified Behavior Analysts, while hour-by-hour therapy sessions are often delivered by Registered Behavior Technicians or similar paraprofessionals working under supervision.
Autism diagnoses among 8-year-olds climbed to one in 31 by 2022, from one in 150 in 2000. As diagnoses have increased, so has Medicaid spending. The Colorado audit cites several years of rapid growth in Medicaid ABA spending, jumping from $60.1 million in 2019 to $163.5 million by 2023, a trend mirrored nationally. State Medicaid programs spent $2.2 billion on autism therapy in 2023, up from $660 Million in 2019, making ABA the fastest-growing service in Medicaid.
As we have noted in the past, explosive growth in heavily regulated industries can create fertile ground for fraud. ABA presents one of the most active areas for enforcing the False Claims Act. The Colorado audit illustrates several key drivers of fraud:
With reimbursement rates high and demand skyrocketing, ABA providers have strong financial incentives to maximize billable hours. Billing records analyzed by the Wall Street Journal show some providers receiving Medicaid payments of up to $800 per hour for routine therapy services. In Indiana, one provider received roughly $340,000 per child in Medicaid payments for ABA therapy in a single year.
Medicaid is a highly regulated program with strict billing requirements, and ABA billing is particularly documentation-dependent. Providers must maintain detailed session notes and supporting records demonstrating the specific therapeutic interventions delivered during each billed unit of time. The HHS OIG audit found widespread failures in this area, identifying 93 sampled enrollee months in which documentation requirements were not met, including incomplete or unreliable session notes.
Improper staffing is another significant compliance risk in the ABA industry. The OIG audit identified 18 sampled enrollee months in which services were provided by individuals who lacked the required credentials or appropriate supervision. While the audit was not specific about the conduct, Medicaid often require ABA services to be delivered or supervised by a properly certified professional, such as a Board Certified Behavioral Analyst. Submitting claims for payment that unqualified individuals delivered could lead to False Claims Act liability.
The audit also found instances in which documentation suggested that children were engaged in activities that may not qualify as billable ABA therapy: recreational activities, day care, or custodial care, as well as time spent on meals, breaks, or naps.
The OIG explicitly attributed Colorado’s improper payments to ineffective oversight of ABA billing. According to the report, Colorado did not provide sufficient guidance to ABA facilities regarding documentation requirements, billing rules, and credentialing standards, and it had not conducted a statewide post-payment review of ABA claims.
Based on its sample, the OIG estimated that the State of Colorado made at least $77.8 million in improper payments for ABA services in 2022 and 2023. The report also identified an additional $207.4 million in payments that may have been improper. Most notably, all 100 sampled enrollee‑months contained at least one improper or potentially improper claim.
The Colorado audit is not an outlier. It is the fourth in a series of HHS OIG audits examining Medicaid payments for ABA services across multiple states, including Maine, Wisconsin, and Indiana. Each of those reviews identified significant documentation deficiencies and improper, or potentially improper, payments within the sample.
The federal government has identified ABA fraud as a top enforcement priority. Centers for Medicare and Medicaid Services administrator Mehmet Oz identified it as “a massive problem.” In parallel, the Department of Justice brought criminal charges against the owners of a Minnesota-based ABA center.
The growing federal focus on ABA billing reflects the systemic weaknesses identified in the Colorado audit. The report found that improper payments were driven not only by provider conduct, but also by gaps in oversight, including limited post-payment review of ABA claims. To address these issues, the OIG recommended several reforms, including periodic statewide post-payment reviews of ABA claims and medical records.
Even with these reforms, government reviews typically examine only small samples of claims, and insiders remain the most effective source of information about systemic billing problems. Given the OIG’s ongoing multi‑state review of ABA programs and the explosive growth of the industry, whistleblowers with inside knowledge of ABA billing practices are more important than ever—and well-positioned to make a meaningful impact through the False Claims Act.
If you have insider knowledge of Medicaid fraud in the ABA space, reach out to us. We have expertise and want to help.