Hidden Fees: Federal Taxpayers on the Hook for Autism Fraud Through Medicaid

This story is the first in an ongoing series on the Cost of Fraud, as Open the Books tallies the hidden fees on American tax returns.

Taxpayers are unknowingly sponsoring bad actors’ multi-million-dollar Medicaid reimbursement scams for autism programs.

Fraud schemes targeting autism services cost government programs at least $21 million over six years (Nov. 2019-Dec. 2024), and investigators have recovered roughly $15.3 million so far. That still leaves taxpayers on the hook for about $5.6 million in confirmed fraud in just one program alone.

While taxpayer money is being burned on the misuse of federal dollars, Americans are waiting for paychecks to hit to buy groceries and pay rent or hoping for a tax return to help cover the rising costs of daily life.

Furthermore, federal audits in a series of key states demonstrate a repeated pattern of improper payments that reveal autism therapy is a growing field that’s ripe for plenty more fraudulent schemes.

The Office of the Inspector General at the Department of Health and Human Services found the scale of improper payments is much greater: almost $200 million through Medicaid in Colorado, Indiana, Maine and Wisconsin alone.

That amounts to $1.54 for every household in the United States, according to Federal Reserve data. Divided among taxpayers in these audited states, that translates to $34.77 per Colorado household, $20.70 in Indiana, $78.62 in Maine, and $7.77 in Wisconsin.

Open the Books is digging into the details of the confirmed fraud, the findings of improper payments through audits by the Department of Health and Human Services; and the overall spending on autism therapy through Medicaid, an expenditure that has soared in recent years.

Minnesota: Confirmed Cases of Fraud

Two Medicaid-covered autism services have found themselves the victims of fraud schemes: Applied Behavior Analysis (ABA) and Minnesota’s Early Intensive Developmental and Behavioral Intervention (EIDBI). They offer tailored treatment to those with autism spectrum disorder, such as children, to improve communication and social skills. Instead of benefiting only those who rely on these services, schemers are making hay with the lack of proactive oversight, ultimately resulting in defrauding the federal government of millions of taxpayer dollars.

Minnesota took the limelight when it rocked the nation with its widespread Medicaid fraud schemes, particularly in the state’s Somali community.

Asha Farhan Hassan and her co-conspirators at Smart Therapy LLC defrauded Minnesota’s EIDBI reimbursement funds of $14 million. To implement a successful campaign, the fraudsters needed children diagnosed with autism who had an individual treatment plan. They recruited children in the Somali community, incentivizing parents with a cash kickback. And if a child did not have an autism diagnosis, they worked to get the child qualified for autism services.

Kickback payments ranged from $300 to $1,500 per month, per child, technically contingent on the services DHS authorized a child to receive — i.e., the higher the authorization amount, the higher the kickback. Parents even made true on threats to leave Smart Therapy and take their children to other autism centers if they did not get paid higher kickbacks.

Many Medicaid reimbursement claims were fraudulently inflated, billed without providers’ knowledge, and for services that were not actually provided.

Another group of scammers at Star Autism Center LLC defrauded the same reimbursement funds of $6 million using the methods of its counterpart at Smart Therapy LLC — including employing unqualified teenage relatives as behavioral technicians.

Star Autism Center President & CEO Abdinajib Hassan Yussuf used his payout on a $100,000 Freightliner semi-truck and sent over $200,000 to Kenya. Hassan used her cut to purchase real estate in Kenya.

All told, these schemes captures roughly $21 million in tax dollars, while Hassan has agreed to pay back over $15 million.

NOTE: In another more run-of-the-mill fraud case, an Indiana autism therapy provider, Applied Behavior Center for Autism, submitted claims to Medicaid already paid by third-party sources. The center defrauded the Medicaid program of almost $350,000 and later agreed to pay $2 million to resolve the government’s allegations following the U.S. Attorney’s Office for the Southern District of Indiana’s investigation.

Improper Payments in Autism Services

But these were just two schemers who were caught in one state.

The Department of Health and Human Services’ internal watchdog is performing an ongoing audit of Medicaid ABA (Applied Behavior Analysis) services and has thus far identified almost $200 million in improper payments.

The initiative, which began in January 2022, has audited four out of a planned seven states in the series, looking into questionable billing patterns and noncompliance with federal and state requirements. The Office of the Inspector General (OIG) only announces which states are involved after the audit is complete.

NOTE: Improper payments are overpayments, underpayments, or payments where insufficient information was provided, under program rules. While it doesn’t equate to proven fraud, it demonstrates just how large fraudulent billing could be.

The estimated amount of improper Medicaid payments (across all billing categories) was $37.39 billion in the 2025 fiscal year.

The OIG found that in some cases therapy wasn’t actually provided. Providers billed for children napping, eating, playing on tablets, and watching movies.

In Colorado, one provider billed 151 hours of therapy in a single month.

Staff without credentials delivered therapy across multiple states.

Facilities submitted session notes that staff had photocopied, cloned between patients, or signed before sessions concluded.

Many children had never even received a valid diagnostic evaluation.

In one Indiana case, a child accumulated $677,448 in Medicaid payments from age 2 to 11 based on a single 2014 referral with no subsequent reassessment.

None of the four states had ever conducted a post-payment review of the claims before the federal audits. The programs operated, in effect, on an honor system without verification.

Findings & Recommendations

The first audit found that Indiana’s fee-for-service Medicaid payments for ABA were $14.4 million in 2017, but increased to $101.8 million by 2020 — the second highest in the nation. By sampling 100 enrollee-months, Indiana’s state agency made improper payments with an estimated $56.5 million price tag, or about 37% of all claims.

The $350,000 fraud by the aforementioned Applied Behavior Center for Autism was excluded from the Inspector General report because it did not specifically target ABA services.

Investigators’ audits of Wisconsin, Maine, and most recently, Colorado, turned up an estimated $18.5 million, $45.6 million, and $77.8 million in improper payments, respectively.

Colorado’s fee-for-service Medicaid payments for ABA were $60.1 million in 2019, but they skyrocketed to $163.5 million four years later. The HHS Inspector General recommended that the state refund $42.6 million to the federal government; exercise “reasonable diligence” to determine whether any of the estimated $112.5 million in potentially improper ABA payments complied with requirements; and refund the federal share of any improper payment amount to the federal government.

The state agency disagreed with the first recommendation, citing several reasons: auditors did not provide detailed billing records; nor did they review all documentation; and they applied requirements that are not state rules (e.g., the OIG reported flagged payments because behavior technicians weren’t certified, but state rules don’t actually require certification).

The OIG recommended that the four state health departments refund a combined $123 million to the federal government for FFS Medicaid ABA payments. So far, no state has done so in four years.

The four audits include the same compliance failures — e.g., auditors repeatedly found that providers could not produce records proving therapy occurred — suggesting the problem is structural to the Medicaid ABA program, not isolated misconduct.

Autism Therapy by the Numbers

As Open the Books previously reported, in February the Department of Health and Human Services dropped an unprecedented amount of new data to improve public transparency and reduce fraud: over 270 million payments made by Medicaid from 2018-2024. They amount to over a trillion dollars of taxpayer funds.

A series of particular billing codes are used to draw down Medicaid funds for applied behavior analysis, from assessing patients who might need autism therapy to their treatment and ongoing support for patient and family (codes 97151-97158):

• 97151: Adaptive behavior assessment.

• 97152: Behavior identification supporting assessment.

• 97153: Adaptive behavior treatment by protocol, one patient.

• 97154: Group adaptive behavior treatment.

• 97155: Treatment with protocol modification.

• 97156: Family adaptive behavior treatment guidance.

• 97157: Multiple-family group guidance.

• 97158: Group treatment with protocol modification.

Based on the data provided by Centers for Medicare & Medicaid Services (CMS), nationwide billing to these codes soared over the course of 5 years. In January 2019, $24.2 million was billed to this set of codes across 231,884 claims. By 2024, the monthly billing was routinely flirting with the $200 million-dollar mark. May 2024 saw a high of $191.6 million billed to the codes across 975,328 claims. That’s a 792% jump in monthly Medicaid billing.

In other words, autism treatment in 2024 was costing taxpayers nearly 8 times as much monthly as it did in 2019. The 2024 yearly total, with only a partial December on the record, reached almost $2 billion ($1,992,561,609.55).

Along with that surge in billing comes a presumed increase in fraud and other improper payments.

According to the Wall Street Journal, autism was Medicaid’s fastest-growing area of spending. Autism therapy is lucrative because Medicaid pays relatively high rates ($61/hr) for routine therapy for someone with a high school degree and certification vs. $75/hr for psychotherapy by someone with advanced degrees. The ease of certification and relatively high returns would make ABA billings a ripe target for fraud.

The report noted that providers found ways to charge up to $800/hr for work that could be done “by high-school graduates,” and that providers shifted faster than regulators could keep up, with some billing for up to 10 workers evaluating a single patient in a single day.

Explore the billings by individual provider here.

Conclusion

Across the line, autism-therapy programs were found vulnerable to fraud or improper payments due to a slew of issues — even simply including naptime or recess as therapy time can substantially inflate billable hours. But state Medicaid agencies are not adequately monitoring ABA providers amid a rapid growth in Medicaid spending, and taxpayers are getting the short end of the stick.

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