The Trump administration issued new federal guidelines on Tuesday aimed at curbing rising Medicaid expenditures tied to autism therapy, amid concerns of overprescription and potential misuse across the country. Medicaid officials characterized the rapid increase in spending as unsustainable and flagged the emergence of profit-driven providers as a key factor.

Medicaid spending on autism treatment has surged to $10 billion in 2023, a fivefold rise from $2 billion in 2021. The amount spent per child also more than doubled over the same period, increasing from a median of $8,903 to $21,203. This growth has outpaced the 67 percent rise in autism diagnoses, raising questions about the underlying drivers. Caprice Knapp, a senior Medicaid official, said the administration aimed to ensure that financial incentives do not override patients’ interests.

An investigation found that thousands of autism clinics have expanded rapidly with minimal oversight. Some clinic employees reported practices such as recommending excessive therapy hours and, in some instances, encouraging families to withdraw children from school to increase billable treatment time. Private equity firms have entered the market, acquiring or opening hundreds of clinics nationwide, some of which reportedly prescribe 40 hours of weekly therapy to very young children—not based on medical necessity but rather on availability.

The administration released a 173-page "toolbox" of best practices intended to help states better regulate providers. The guidelines call for limiting the total number of billable therapy hours before requiring breaks, instituting prior authorization for high volumes of care, and improving outcome tracking. They also challenge the industry norm espoused by groups like the Council of Autism Service Providers, which recommends 30 to 40 hours of treatment per week as optimal.

The new recommendations highlight that such intensive treatment lacks clear evidence of superior outcomes and may interfere with children’s daily activities such as eating or resting. Medicaid typically reimburses therapy in 15-minute increments, creating incentives for clinics to maximize session length and minimize breaks. Investigations revealed instances where short nap times were allowed during sessions simply to maintain billing eligibility for a full unit.

In addition, government audits of Medicaid programs in Indiana, Colorado, Wisconsin, and Maine found billing for nontherapeutic activities including lunchtime and playground breaks. The guidelines urge states to scrutinize documentation and billing practices more closely, especially for clinics that bill maximum hours for the majority of patients or grow rapidly after joining Medicaid.

Several states are already implementing policies consistent with the federal recommendations. North Carolina, where autism therapy spending is projected to reach $1 billion next year—up from $121 million in 2022—recently passed legislation mandating special reviews of treatment plans recommending over 16 hours weekly.

Dan Brillman, overseeing Medicaid policy for the administration, emphasized that the challenges are widespread and bipartisan, noting the federal guidance was designed to assist state officials and governors in developing appropriate regulatory responses.