The Colorado Association for Behavior Analysis and 11 providers sued the state of Colorado on Tuesday, alleging that a requirement that they get advance permission to bill Medicaid is violating the law by making it harder to get mental health care.
Colorado faced a $783 million budget gap after H.R. 1, colloquially known as the “Big Beautiful Bill,” passed Congress. The state’s tax laws automatically adjust to stay in line with federal rules, and while lawmakers reversed some of the changes, they left it to Gov. Jared Polis to come up with about $252 million in cuts and sweeps from unused state funds. About one-third of the affected dollars came from Medicaid.
The state estimated that one of the cuts, requiring prior authorization for applied behavior analysis and opening up the possibility of reclaiming improper payments, would save about $7 million. Prior authorization is when a provider must get permission from an insurer — in this case, Medicaid — before the insurer will agree to pay for specific care.
Another cut would reduce rates for providers of applied behavior analysis to 95% of the average paid in comparable states, saving about $2.7 million.
Applied behavior analysis, or ABA, attempts to teach life skills to autistic kids by breaking down the steps to perform daily tasks. Parents of kids with more severe autism credit it with helping them learn tasks such as getting dressed, while autistic advocates raise concerns that it focuses too much on making them appear neurotypical.
Eight parents and guardians of people who receive ABA services also joined the lawsuit, which alleges Polis and the Colorado Department of Health Care Policy and Financing are unfairly targeting a type of mental health care. It also argues that the legislature couldn’t legally delegate decisions about spending to the governor.
“Defendants’ actions violate state and federal laws that require parity for mental and behavioral health services covered by Colorado Medicaid… by unlawfully singling out pediatric autism therapy services for reductions in coverage and reimbursement,” the complaint said.
The governor’s office and the Department of Health Care Policy and Financing declined to comment, citing the pending litigation.
The department previously alleged misconduct or fraud by some ABA providers owned by private equity firms. It said in August that some providers were billing for services provided by unqualified staff members or the time children spent napping.
Private equity firms borrow money to buy other companies, restructure them and resell them at a profit. Research on their investments in health care suggests they often raise costs without improving care quality, though.
In 2023, ABA providers said they struggled to stay open under the rates Medicaid paid in Colorado. The legislature’s Joint Budget Committee approved an emergency rate increase in 2024, leading some providers to open new locations and take on more clients.
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