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Minnesota Autism Reimbursements Surge Amid Fraud Probes and Nationwide Cost Controls

MINNEAPOLIS — Minnesota's Medicaid reimbursements for autism services have exploded from approximately $1.1 million in 2017 to $343 million in 2024, marking a staggering increase driven by expanded coverage, rising diagnoses, and widespread fraud allegations. Federal audits have uncovered up to $608 million in improper or potentially improper payments for autism services across multiple states, including $198 million in confirmed errors, prompting payment holds, rate adjustments, and investigations that are reshaping access to care nationwide. In Minnesota, the surge has been linked to schemes involving fake diagnoses, unqualified staff, and kickbacks, with federal prosecutors charging multiple providers in ongoing cases.


The growth accelerated after 2018 with the expansion of the Early Intensive Developmental and Behavioral Intervention (EIDBI) program, which provides therapies such as Applied Behavior Analysis (ABA) for children with autism spectrum disorder (ASD). However, by 2025, reimbursements declined amid intensified oversight, including unannounced site visits and prepayment reviews, following revelations of massive fraud. A January 2026 Optum report, commissioned by the Minnesota Department of Human Services (DHS), analyzed $9.4 billion in claims from January 2022 to October 2025 and identified $1 billion in potential overpayments across 14 high-risk services due to ambiguous policies, with $703 million tied specifically to autism centers—over 90% of EIDBI claims not aligning with rules. Additionally, $52.3 million in claims violated explicit policies, though not all discrepancies indicate fraud.

Federal investigators estimate up to $9 billion in Minnesota Medicaid fraud since 2018, including autism-related schemes. High-profile cases include Smart Therapy Center, which billed $31.8 million from 2021-2025 but was approved for only a fraction of that amount, and Star Autism Center, which was charged with defrauding over $6 million through unqualified staff and inflated billing. The FBI raided several centers in 2024, uncovering ties to the $250 million Feeding Our Future nutrition fraud scandal.


Updated Reimbursements and Beneficiaries Data

Legitimate drivers include increased ASD prevalence, from 1 in 68 children in 2017 to 1 in 31 by 2022, per CDC data. However, fraud has amplified costs, with provider numbers jumping from 41 in 2018 to 439 by 2024. The table below summarizes annual reimbursements, with 2025 estimates reflecting declines due to holds and closures following 270 compliance visits and 85 investigations. Beneficiary numbers are approximate, based on program growth trends (e.g., more than tripling from 2020-2023), but stabilized in 2025 amid scrutiny.

Year

Number of Beneficiaries (approx.)

Reimbursements (M$)

Year-over-Year Increase (%)

2017

~700

$1.1M

-

2018

~800

$2.2M

100

2019

~1,000

~$20M

809

2020

~1,500

$32M

60

2021

~2,500

$81M

153

2022

~3,500

$133M

64

2023

~4,500

$201M

51

2024

~5,000

$343M

71





Sources: DHS reports, FBI affidavits; discrepancies in 2024 figures (some sources cite $228M actual payments) may reflect billed vs. reimbursed amounts.


State and Federal Crackdowns

In June 2025, DHS classified autism services as "high risk," implementing fingerprint checks, unannounced visits, and claim preapprovals, leading to 54 voluntary closures and 18 terminations. By January 2026, enrollments froze in 13 categories, with provisional licensing required by May. These measures have caused payment delays, straining legitimate providers; some report being owed hundreds of thousands, threatening closures and disrupting care. The Autism Society of Minnesota faces a $500,000 shortfall, risking programs like camps and education.

Federally, the Centers for Medicare & Medicaid Services (CMS) reported Minnesota's 2025 improper payment rate at 2.2%, below the 6.1% national average, but broader audits flagged issues. In February 2026, the Trump administration withheld $259.5 million in Medicaid funds to Minnesota over fraud concerns, part of a "war on fraud" targeting unsupported claims. Similar improper payments were identified in other states: Indiana ($56M), Wisconsin ($18.5M), Maine ($45.6M), and Colorado ($77.8M).


Nationwide Comparisons: 2024 Spending Trends

Minnesota's trends reflect a national surge in ABA utilization, up 267% from 2019-2024, with Medicaid growth at 298%. States are responding with rate cuts and caps amid budget pressures and looming $900 billion federal Medicaid reductions under the One Big Beautiful Bill Act. Minnesota's per-enrollee spending is 51% above the U.S. average. The table below compares 2024 autism/ABA Medicaid spending for states with over $100 million in reimbursements, including percentage growth from 2017, where data is available:

State

2024 Spending ($M)

Percentage Growth from 2017 (%)

Key Notes

Minnesota

$343M

31,082

Explosive growth tied to fraud; payment holds and investigations ongoing.

Indiana

$445M

2,019

Down from $611M in 2023 after rate standardization; proposed 30-hour weekly caps and further cuts.

North Carolina

$329M

N/A

Up 170% from 2022; projected $639M in 2026; 10% rate cut paused by lawsuit.

Florida

$1,630 M (partial year est.)

N/A

Anticipated $1.52B but revised to $1.63B for July-Feb; total FY25 projected at ~$2.63B amid caseload adjustments and managed care shifts.

Pennsylvania

~$600M

~10,809

Skyrocketed from $5.5M seven years prior; under scrutiny for rapid growth and potential red flags in spending.

Sources: State audits, federal reports; estimates for some states due to fiscal year variations and partial data. Growth calculations based on available baselines (e.g., Minnesota: $1.1M in 2017; Indiana: $21M in 2017; Pennsylvania: ~$5.5M circa 2017).


This data suggests that there is a growing need for tighter oversight and more investigations of fraud and abuse are needed.


Political and Broader Implications

Critics blame oversight lapses under Gov. Tim Walz's administration, while defenders highlight expanded access amid rising needs. The federal withholding of funds adds urgency, with experts warning that fraud erodes trust and diverts resources from vulnerable children. "It's not just money—it's denying help to kids who need it," noted a recent analysis. As investigations continue and reforms like provisional licensing roll out, Minnesota's experience serves as a cautionary tale for balancing access and accountability in autism care. Families and advocates call for stable funding to ensure services reach those in need without stigma or disruption.


Sources HHS finds up to $600m 'improper' payments for autism services in four states - https://nypost.com/2026/03/03/us-news/hhs-finds-up-to-600m-improper-payments-for-autism-services-in-four-states

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