Medicaid fraud and abuse are hitting unthinkable levels

In Indiana, spending on a single Medicaid program for behavioral therapy for autistic children rose 30-FOLD in six years; the state spends $75,000 per child per year.

With Medicaid spending now over $1 trillion a year, the program’s fraud and abuse are exploding.

The latest example comes from Indiana. In 2017, the state’s Medicaid program spent $21 million on behavioral therapy for autistic kids. By 2023, that spending had risen 30-fold, to over $600 million. Indiana spent even more per capita on autism therapy than Minnesota, where prosecutors have found rampant fraud.

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(Unreported Truths: way less than $1 trillion! And there’s no fraud here.)

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Even compared to other Medicaid and healthcare spending, behavioral health programs like autism treatment and drug rehab are wide open to abuse and fraud.

They can generate huge revenues, between $50,000 and $100,000 annually per child for the autism programs — usually paid by the government with minimal oversight. Yet they do not require big up-front investments, so they can run out of small centers that lack institutional oversight and whose owners fear few repercussions if they are caught.

In Minnesota, prosecutors have charged the Somali migrants at the heart of the fraud there with paying kickbacks of up to $1,500 a month to parents who enrolled their children in autism programs. A 28-year-old migrant led a scheme to steal $14 million from 2019 to 2024, prosecutors say.

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($14 million here, $14 million there, pretty soon you’ve got real money!)

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In so-called “behavioral analysis” programs, therapists — usually working one-on-one — try to train autistic children to speak, and answer questions and recognize simple objects, offering them a reward if they succeed.

In most states, the therapists providing the therapy need only a high school diploma and a week or two of training. Yet the programs are shockingly expensive. In most states, Medicaid funds up to 30 hours a week of this therapy, at $50 to $70 per hour — as much as $2,000 a week per child, often for years on end.

And the programs have at best spotty evidence to support them. But the government funding backstop means that neither ineffectiveness nor cost has slowed their growth.

The autism therapy explosion is part of a much larger issue. Since the Obama administration required private insurers and Medicaid to cover behavioral health like other medical care, waste, fraud, and abuse have exploded — across states and program types.

The playbook is generally the same. Lobbying generates new honeypots by creating or vastly increasing access to government-funded health programs. These programs, particularly when they are behaviorally rather than medically focused, often have dubious or easily manipulated criteria for entry and require minimal participation from physicians. They usually also have no copays or deductibles.

Healthcare “entrepreneurs” then rapidly find ways to take advantage of a program’s loose rules and enroll stunning numbers of new patients.

Spending on Nebraska’s autism program rose even faster than Indiana’s — from $4.6 million to $82.8 million in four years. Revenue at one provider, Above and Beyond ABA, rose 90-fold over the same period, from $300,000 to $28 million.

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(Amber waves of autism!)

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Meanwhile, fraudsters — often in tight-knit religious and migrant communities that rely on and are expert in exploiting government programs — go further, abandoning any pretense of doing work.

In its January 2024 annual report on Medicaid fraud and abuse, the state of Florida reported that its Miami field office had made 162 “site visits” to behavioral health services providers not linked to a specific physician enrolled with Medicaid.

Of those, 117 — or 72 percent — “were not operational at their service address of record.” Yes, 72 percent of the groups didn’t even bother to have a working office.

Florida has struggled with out-of-control autism therapy fraud, especially in Miami, for most of a decade. From 2018 to 2022, the state barred new providers from joining the program in South Florida. Yet the crisis is only getting worse.

Florida spent almost $2.6 billion on autism therapy last year, up from about $1.5 billion only two years ago. And about half of all the spending was in Miami-Dade County, which has only about 13 percent of the state’s population.

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But as billing accelerates, state administrators usually have little choice but to process payments and hope to recover them later if they can prove misbilling or fraud.

Only if prosecutors decide to get involved do fraudulent providers face any real risk — and bringing federal or even state criminal cases against dozens (or more) of individual defendants is time-consuming and expensive. And even when prosecutors win, unless a program’s rules are significantly tightened, new operators will emerge to scalp it, maybe this time with lawyers and lobbyists involved to be sure they are working just inside the lines.

Medicaid’s sheer size makes getting away with crime even easier. Against the backdrop of a program that now costs more than $1 trillion and has endless leaks, even a $10 million a year fraud may hardly grab a prosecutor’s interest — though it is more than enough to change the life of the person committing it.

Worse, the autism therapy programs do not clearly work. The academic evidence on them is limited and mixed. So is the anecdotal evidence. Some parents say their kids have benefitted notably, others see few gains. Some even report that their children dislike the repetitive nature of the programs and had to be removed from them.

As researchers wrote in a 2015 paper in the Journal of Autism and Developmental Disorders, “Children typically are often unmotivated to be involved in the teaching sessions, frequently exhibiting escape-motivated disruptive behaviors.”

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(Escape from legacy media!)

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As far as I can tell, no national spending figure for Medicaid autism therapy exists.

But given the fact that Florida, which has about 1/15th of the United States population, topped $2.5 billion in spending last year, an estimate of $25 billion for 2026 appears conservative. (It could be very conservative, since per-capita spending is likely higher in blue state Medicaid programs like New York. But those states are such mismanaged black holes that even getting basic figures is difficult.)

The extraordinary expansion in these programs raises a serious question about the societal wisdom of spending an average American’s annual pay — or the cost a year at Harvard University — for a program which at best may teach a severely autistic child a few words after months or years of repetitive training.

But even if the answer to that question is yes, the fraud is untenable — and writ large across other programs will ultimately lead Americans to ask why they are spending $1 trillion — $3,000 per person — on Medicaid.