Colorado’s Medicaid program hemorrhaged at least $77.8 million in improper payments for autism therapy while the state simultaneously slashed benefits for low-income families, exposing a pattern of government mismanagement that should infuriate taxpayers forced to backfill bureaucratic incompetence with their hard-earned dollars.
Story Highlights
- Federal auditors found 100% of sampled autism therapy claims contained billing errors or lacked proper documentation, totaling $77.8 million in confirmed improper payments with an additional $207.4 million flagged as potentially improper.
- Colorado must refund $42.6 million to the federal government while facing a separate $1 billion Medicaid budget shortfall that triggered benefit cuts for disabled and low-income residents.
- Payments surged 172% from 2019 to 2023 despite minimal patient growth, driven by uncredentialed technicians billing for services and missing autism diagnoses in patient records.
- This marks the fourth state audit in a federal crackdown on Applied Behavior Analysis billing fraud, with Colorado posting the highest improper payment totals nationwide.
Federal Audit Exposes Systemic Billing Failures
The U.S. Department of Health and Human Services Office of Inspector General examined Colorado’s Medicaid payments for Applied Behavior Analysis therapy during 2022-2023, reviewing $289.5 million across more than one million claims. Auditors sampled 100 enrollee-months involving 96 children and 47 therapy centers, uncovering a 100% error rate where every single claim either violated federal compliance rules or lacked adequate documentation. The audit identified $77.8 million in confirmed improper payments, with another $207.4 million under scrutiny for potential violations, forcing Colorado to refund at least $42.6 million in federal matching funds.
Explosive Spending Growth Amid Budget Crisis
Colorado’s ABA therapy payments skyrocketed from $60.1 million in 2019 to $163.5 million by 2023, a 172% increase occurring while the state grappled with a $1 billion Medicaid shortfall that necessitated cutting services for vulnerable populations. This spending explosion stemmed from higher reimbursement rates and increased therapy hours rather than growing patient numbers, according to state reviews conducted before the federal audit. The broader pediatric behavioral health category ballooned 650% since 2018 to $287 million, raising red flags about questionable billing practices that state administrators failed to address despite early warnings from internal audits launched in July 2025.
Uncredentialed Providers and Missing Diagnoses Drive Violations
Federal investigators documented two primary compliance failures: payments to uncredentialed technicians providing therapy and reimbursements for children lacking formal autism diagnoses in their medical records. The 47 therapy centers involved received improper payments ranging from $1,200 to $15,000 monthly per patient, including facilities like Soar Autism Center and Action Behavior Centers. The Colorado Department of Health Care Policy & Financing disputes the full refund demand, arguing the $77.8 million figure represents an estimate and emphasizing corrective measures including post-payment audits and billing system upgrades initiated in mid-2025. However, federal regulators maintain their recommendation status as open and unimplemented pending full repayment.
Taxpayers Left Holding the Bag
This debacle exemplifies the fiscal irresponsibility plaguing government-run healthcare programs, where bureaucratic negligence forces taxpayers to cover losses while administrators resist accountability. Colorado families with autistic children face potential therapy disruptions as the state claws back payments from providers, yet the same officials who green-lit uncredentialed billing now lecture about enhanced oversight. The situation mirrors a broader pattern where government expands spending without proper controls, then punishes citizens through benefit cuts when the inevitable fraud surfaces. As the fourth state caught in this federal audit series, Colorado posted the worst numbers, demonstrating that when bureaucrats manage healthcare dollars without market discipline, waste and abuse become inevitable outcomes rather than unfortunate exceptions.
Sources:
Colorado wrongly spent $78M on autism therapy, Office of the Inspector General says
Federal audit finds $77.8M in improper Medicaid payments for Colorado autism therapy
Colorado wrongly spent $78M on autism therapy, Office of the Inspector General says
Federal Medicaid audit finds massive overpayment for autism therapy in four states
Colorado Medicaid ABA audit finds $77.8M in improper payments
OIG report finds $77.8M of improperly documented claim payments for ABA
