Nebraska hearing: Medicaid ABA spending surged; DHHS cuts rates, pledges oversight as providers warn of access losses

Nebraska lawmakers and health officials spent a full-day interim hearing examining a steep rise in Medicaid spending on applied behavior analysis (ABA) and state actions to contain costs while trying to preserve access to care.

Chairman Brian Harden, senator and chair of the Health and Human Services Committee, opened the Sept. interim hearing on LR 191, the committee study of ABA sustainability, saying the review grew out of concerns about payment levels, program integrity and workforce stability.

The Department of Health and Human Services told the committee that between 2020 and 2024 Medicaid payments for ABA in Nebraska rose from 4,600,000.0 to 85,600,000.0 — an increase department witnesses described as extraordinary — and that the state adjusted service definitions in January and reduced reimbursement rates effective Aug. 1 to bring Nebraska closer to surrounding states. “Between 2020 and 2024, Medicaid payments for ABA services in Nebraska increased from 4,600,000.0 to 85,600,000.0, an increase of nearly 1800%,” said Matthew Ahern, deputy director for the Division of Medicaid and Long Term Care, Department of Health and Human Services.

Why it matters: the federal Office of Inspector General (OIG) has identified improper payments for ABA in other states, and large, rapid spending increases raise the risk of federal audit findings and potential repayment obligations. Department witnesses said rate reductions and clarified service definitions are intended to protect beneficiaries and state taxpayers while preserving medically necessary care.

What the state has done - In January the department published revised ABA service definitions that tightened medical-necessity criteria and added utilization guardrails, including hour thresholds and supervision expectations. Those definitions set maximums that can be exceeded only with documented medical necessity. - After a comparative rate study, Nebraska reduced Medicaid payment rates effective Aug. 1 and submitted a state plan amendment to the Centers for Medicare & Medicaid Services (CMS), department officials said. - The department said it is working with managed care organizations (MCOs) to strengthen utilization management and program integrity audits and will monitor access to services closely.

“Those steps serve to balance our two main priorities of ensuring beneficiaries get the care they need while protecting Nebraska taxpayers’ hard-earned dollars from irresponsible use,” Ahern told the committee.

Provider, research and advocacy testimony - Amy Nordness, associate dean and director of the Munroe Meyer Institute (MMI) at the University of Nebraska Medical Center, described MMI’s role as a longstanding nonprofit clinical training center that employs more than 120 ABA providers including about 40 BCBAs. Nordness said the Aug. rate changes will require business adjustments at MMI and could lead to changes in payer mix, caseloads and supervision models, but she emphasized a commitment to maintaining quality care. - Dr. Corey Kords, founder of the Nebraska-based provider Radical Minds, said the prior high-rate environment incentivized billing-driven delivery models in some cases and encouraged default high-hour packages that are not always clinically indicated. “When therapy is stretched to maximum hours without meaningful oversight, it risks drifting from individualized intervention to something closer to custodial care,” Kords testified. - Mariel Fernandez of the Council of Autism Service Providers (CASP), a national trade association, said CASP does not oppose rate changes but that Nebraska’s reductions appear to have moved below a practical threshold for many providers and risked network contractions. CASP reported a preliminary survey showing 135 Nebraska children experienced an interruption in services after Aug. 1; roughly 90% of those affected were Medicaid beneficiaries. - Kristen Rose, a licensed counselor from Sydney, Nebraska, and a public-policy leader for the state counseling association, described rural delivery challenges such as long travel times and thin local staffing; she warned that lower reimbursement could further reduce rural provider availability. - Dr. Addie (Adi) Angelov of the Paramount Health Data Project, who testified from Indiana, urged Nebraska to adopt clear oversight and accountability for stand‑alone ABA clinics, citing Indiana’s OIG report documenting improper payments and program weaknesses.

Numbers and clarifications offered to the committee - DHHS said Nebraska served about 1,500 unique Medicaid members with ABA services in the most recent reporting period and that units per member and per‑member spend rose substantially in the 2020–24 window. - Witnesses reported earlier maximum billable rates of up to $144.44 per hour for technician-level ABA services before Aug. 1; department testimony said approximately 25% of billed hours were at that high rate prior to the August adjustments. - MMI testified it provides approximately a 120 clinical visits a year (as presented at the hearing) and employs over 120 ABA clinicians including about 40 board-certified behavior analysts (BCBAs). - CASP’s preliminary data cited 357 licensed behavior analysts physically residing in Nebraska, estimated minimum Medicaid demand for LBAs at 438, and a combined statewide need across funding streams of roughly 1,624 LBAs.

Program‑integrity and federal risk Several witnesses referenced recent OIG reports in Indiana and Wisconsin that found excessive or improperly documented ABA billing in other states. Department officials said Nebraska had not, as of the hearing date, been the subject of an OIG audit but that the state’s spending trends and the national focus on ABA prompted the rate and policy changes. The department said it had not received a federal “nasty gram” and called its changes a pre‑emptive effort to avoid the compliance and repayment risks seen elsewhere.

Access and workforce concerns Providers, the university clinic and trade groups said the rate cuts may force some organizations to reduce services or exit the Nebraska market, potentially disrupting care for Medicaid and privately insured families alike. Several providers said quality supervision and on‑site BCBA presence are important to clinical fidelity and would be harder to sustain under reduced reimbursement. Rural providers described travel burdens and thin local labor pools that make service delivery more expensive than a straight urban comparison.

Distinguishing discussion from decision - Formal policy decisions the committee recorded: DHHS published revised ABA service definitions earlier in the year and implemented rate adjustments effective Aug. 1. The department has submitted a state plan amendment to CMS and told lawmakers it will track access metrics and work with MCOs on audits. - Discussion items included whether the reductions were an overcorrection, whether background checks and enrollment requirements were sufficient for technicians, and whether cap limits or accreditation programs should be required for stand‑alone clinics.

What’s next DHHS said it will continue to monitor access to ABA services and report data from MCOs; providers and advocacy groups asked the state to reconsider specific code-level adjustments (notably for the BCBA supervision code, 97155, and the 1:1 technician code, 97153) and to work with stakeholders on accreditation, utilization controls and outcome measures. Several witnesses urged the Legislature to use this interim study to consider guardrails such as accreditation, stronger documentation templates, and targeted supports for rural provider recruitment.

Lawmakers closed the hearing with a request for continued updates and for DHHS and outside researchers to return with data that shows how the rate and definition changes affect access, outcomes and federal compliance risk.

Ending note: The committee’s interim review continues; DHHS said it will report access and utilization metrics and that the department and providers should continue negotiations on practical implementation details as the state seeks to balance program integrity with uninterrupted care for children and families.