Indiana’s state government plans to impose steep cuts to Medicaid rates for some autism therapy services. The move is out of step with present rate trends but may be a harbinger for other cuts as payers nationwide seek to bring growing autism therapy spending to heel.

In Indiana alone, Medicaid spending on autism therapy services has increased by an average of more than 50% each year from 2019 to 2022. 

If made effective, autism therapy providers may need to partially or altogether stop treating patients with Medicaid, potentially restricting an already hard-to-get service for an especially vulnerable population.

While autism therapy insiders say the move stands out as somewhat of an anomaly among other state Medicaid programs, the sharp rise in inflation over the last five years effectively transformed stagnant rates into rate cuts.

“Generally, we’re not seeing states decrease rates,” Mariel Fernandez, a board-certified behavioral analyst (BCBA) and the regulatory affairs specialist for BlueSprig Pediatrics, told Behavioral Health Business. “We’re seeing rates remain the same, increase, or an analysis occur to determine if there is a need to propose new rates.”

BlueSprig Pediatrics, headquartered in Houston, Texas, operates 137 centers in 15 states, according to its website. The company offers applied behavioral analysis (ABA) therapy in centers, patient’s homes, schools, virtually, and other community settings. It does not have offices in Indiana.

Colin Sheridan, president of the South Bend, Indiana-based autism therapy provider Lighthouse Autism Center, echoed a similar sentiment. Lighthouse operates 30 centers in Illinois, Indiana, Iowa and Michigan, 22 of which are in Indiana.

“No other states that Lighthouse operates in and no other states that I am aware of are considering cuts in reimbursement rates for ABA services,” Sheridan told BHB. “We know that states that have not increased their reimbursement rates have seen a decrease in access to ABA services due to providers making the decision to close their ABA centers in those states.”

Many providers have struggled with rate stagnation amid the increase in inflation. This has caused several of the nation’s largest autism therapy providers to cut center locations and pivot their businesses.

Sheridan pointed to Oregon and Colorado as examples of where this has happened.

Last year, the Henderson, Nevada-based Center for Autism and Related Disorders (CARD) started closing its operations in Oregon and nine other states. A little more than six months later, the company filed for bankruptcy after failing to find an out-of-court deal to shore up the company’s finances. The bankruptcy court approved a deal that sells most of CARD’s locations back to its founder.

In Colorado, two large autism therapy providers — Indianapolis-based Hopebridge and Doylestown, Pennsylvania-based Invo Healthcare — shuttered locations, citing major disruptions to their business that stemmed from the coronavirus pandemic. The pandemic interrupted the business operations of thousands of businesses and helped set off the run of inflation facing the U.S. now. 

Invo Healthcare decided to shutter its in-home and center-based operations, paring the company down to just school-based ABA and other behavioral health services.

Hopebridge announced it would close six out of its eight locations and end ABA services altogether. At that time, Hopebridge CEO David McIntosh cited Medicaid rates as a motivator for the move. It faces a worse situation — a dramatic rate cut — in Indiana.

The cuts could run especially deep for Hopebridge. The company was founded, is headquartered, and operates the largest share of its centers in Indiana. Of its 122 locations, 21 are in Indiana.

“As the largest ABA provider in Indiana, one of the largest in the country, and with our headquarters and founding location in the state, we have made our concerns known to [the state of Indiana],” McIntosh told BHB. “As the state continues to assess the feedback provided — not only from Hopebridge but all the providers in the state — we hope they will settle on a fair rate that is sustainable to meet the high demand for services.

“We are committed to keeping the focus on what is best for our patients and their families.”

What’s going on in Indiana?

On August 8, the Office of Medicaid Policy and Planning (OMPP) of the Indiana Family and Social Services Administration (FSSA) published a fixed fee schedule for services rendered by registered behavior technicians (RBTs) and doctors or other qualified clinicians. Those rates are $55.16 per hour and $103.77 per hour, respectively.

In the first quarter of 2023, Indiana Medicaid paid an average of $100.97 per hour for RBT services and $143.65 per hour for ABA services provided by other clinicians. The new fixed rates amount to 45% and 28% reductions, respectively.

This is the first time Indiana has set a dollar amount for Medicaid reimbursement for these services. When Medicaid started to cover ABA services in 2016, it paid providers 40% of whatever they billed the state.

It’s common for states to have no fee schedule for ABA therapy reimbursement, Fernandez said.

The state claims this has led to unsustainable expenses for the Medicaid program. Expenses for ABA therapy have increased on average by 52% from 2019 to 2022. In 2022, Indiana Medicaid paid $420 million, about 2.5 times as much as 2019.

“The goal is to transition away from individual reimbursement amounts that are essentially set by providers and move to transparent statewide ABA rates that promote uniform access for families and allow providers to retain a stable workforce, while ensuring sustainability for Indiana’s Medicaid program,” Indiana FSSA states on its website.

Indiana FSSA has held stakeholder meetings since introducing the rate and has completed soliciting feedback from the public. Next, the department must take the new rate structure to a state budget committee for consideration. The new rates could be implemented in the fourth quarter of this year or the first of 2024.

While reimbursing by percentage before setting a fixed rate isn’t considered a cut, the lower reimbursements to providers will have that effect, Fernandez said.

How does the new Indiana Medicaid ABA rate compare?

Setting the rate at a level equivalent to a cut moves out of step with national trends. In some places, states are increasing their Medicaid rates for ABA therapy to incentivize existing providers and attract new providers to serve children covered by Medicaid. Such a move is meant to help providers raise rates or hire more providers during a national behavioral health labor shortage.

In 2022, a coalition of ABA therapy providers lobbied the Louisiana legislature for a rate increase; they succeeded. Hourly rates for RBTs jumped from about $38 per hour to $50.

A national average of hourly rates for RBT services totals $59.38, while an average rate for services from other providers totals $93.34, according to data provided by the Autism Legal Resource Center. The average rates for the neighboring states of Illinois, Kentucky, and Ohio are $49.25 and $76.41.

Providers who aim to increase access to behavioral health care for Medicaid patients are especially sensitive to rate changes or stagnant rates. Fernandez said she has seen a “mass exodus” of providers from Indiana. She added that the stagnant reimbursement rate from Medicaid and troubles with the electronic visit verification system for ABA providers working in a community-based setting.

Sheridan said the state has flaws in its methodology for setting the rates, especially when including the cost of reimbursement for long-term support services provided in the home or other community settings.

“That role is designed to help give the primary caregiver in a home a break,” Sheridan said. “They’re comparing ABA medical treatment to these respite roles, which are important, but we see that they’re vastly different in terms of projected outcome and what’s involved in each role.”

Now what?

Apart from waiting for the process to play out in the coming months, advocates in and out of the state are seeking to pressure the Indiana FSSA into reconsidering its rate decision.

For example, Indiana Autism Care and Therapy for Families, a nonprofit advocacy organization, has sent open letters to state officials, including Indiana Gov. Eric Holcomb. It has rallied families and providers while launching a radio advertising campaign asking Holcomb to intercede. Demonstrators protested near his home in Indianapolis. 

Earlier in the month, Holcomb said the new rate would set “some standards” for ABA reimbursement and that they were “long overdue,” according to local media reports.

Since then, the state’s Lt. Governor Suzanne Crouch has encouraged the state to slow its roll on the ABA therapy rate, calling for that rate discussion to be delayed until a consensus can be developed by state regulators, lawmakers and families and providers.

“If the proposed rate is adopted, I am fearful that ABA providers will no longer be able to serve the already underserved Medicaid community in Indiana, and children with [autism] will experience greatly diminished access to care when they are at their most vulnerable,” a copy of the letter obtained by BHB states. “The issue is too important to Hoosier families to get wrong.”

Sheridan noted shortsightedness in the rate cut, arguing that it could result in much larger and longer-lasting expenses for the Medicaid program later if ABA therapy is restricted in Indiana.

“A long-term goal of ABA therapy is to provide an environment and therapy so that these children, as they grow into adults, can lead as independent a life as they can,” Sheridan said. “Without ABA therapy, that level of independence may be less, and, therefore, they may be more dependent on the state for the long term to help provide them with services and care that we don’t believe they would have needed if they had ABA therapy at a younger age.”

He concedes that a rate must be set to ensure access to ABA therapy via Medicaid. Indiana FSSA has been open to meeting and hearing from providers and hopes the conversation will continue.

Lighthouse Autism Centers will have to look at if and how his company would be able to care for children with Medicaid, Sheridan said. It brings into question the sustainability of the business’s ability to continue care on a large scale. And, in areas with a large Medicaid population, Lighthouse and other providers may have to close unsustainable locations altogether, impacting all children.

He also says many providers hope to see a flat fee schedule in the future, because the current billing system “is not working.”

“We just need to make sure that the rate works for the state and for the providers and the kids we support,” Sheridan said.