MORE FRAUD: Colorado Made at Least $77.8 MILLION in Improper Autism Therapy Payments

A new federal audit has identified significant improper payments within Colorado’s Medicaid-funded autism therapy system, adding to a growing pattern of oversight failures in public healthcare spending. 

The findings, released by the Office of Inspector General, focus on Applied Behavior Analysis (ABA), one of the most widely used therapies for individuals diagnosed with autism spectrum disorder.

ABA therapy is designed to improve communication, social interaction, and behavioral functioning, and it has become a central component of autism treatment nationwide. 

As demand has increased, so has government spending. In Colorado, fee-for-service Medicaid payments for ABA rose sharply from $60.1 million in 2019 to $163.5 million in 2023. That rapid expansion, however, has not been matched by adequate oversight.

The audit examined Medicaid payments made in 2022 and 2023 and found systemic noncompliance with federal and state requirements. 

Every single one of the 100 sampled enrollee-months reviewed included at least one claim that was either improper or likely improper. That finding alone signals a structural issue rather than isolated billing errors.

Improper payments in this context do not necessarily mean intentional fraud in every instance, but they do indicate that providers billed for services that were not properly documented, not eligible under program rules, or not supported by sufficient clinical justification. 

In large government programs, those distinctions matter less than the outcome: taxpayer dollars were spent without meeting the required standards.

The financial scope is substantial. The OIG is recommending that Colorado refund approximately $42.6 million to the federal government for payments that clearly violated requirements. 

Beyond that, auditors estimate that as much as $112.5 million in additional payments may also be improper and require further review. If even a portion of that amount is confirmed, the total exposure could exceed $150 million.

The underlying issue appears to be weak administrative controls rather than a single policy failure. The audit highlights gaps in documentation standards, unclear billing guidance, inconsistent credentialing requirements, and insufficient post-payment review. 

In practice, that means providers may not have had clear instructions on what qualifies as billable therapy time, what documentation is required to justify services, or how to properly record treatment sessions.

To address these problems, the OIG issued five recommendations. These include requiring the state to return improper funds, strengthening documentation and billing guidance for providers, conducting regular post-payment audits, reviewing authorization procedures, and thoroughly reexamining tens of millions of dollars in potentially improper claims.

The Colorado Department of Health Care Policy and Financing has agreed with most of the recommendations and outlined steps to improve oversight, though it disputed one of the findings. 

That partial disagreement is not unusual in audits of this scale, but it does not change the broader conclusion: the system allowed large volumes of questionable payments to pass through without sufficient verification.

This case reflects a broader challenge in Medicaid administration. As programs expand rapidly—especially in specialized areas like autism services—oversight mechanisms often lag behind spending. The result is a system where funding increases are not matched by proportional accountability.

Autism therapy is an essential service for many families, and ensuring access should remain a priority. However, access without accountability creates long-term risks. If states fail to enforce clear standards, the financial burden grows, and public trust erodes.

Colorado’s audit offers a clear warning: expanding healthcare programs without strengthening oversight does not simply increase costs—it increases the likelihood of systemic failure.

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