Key Takeaways
- Spending under scrutiny. North Carolina’s Medicaid spending on ABA surpassed $505 million in 2025 and is projected to reach $639 million in fiscal 2026, with the number of children receiving the therapy up 54 percent in a single year. That growth has pulled lawmakers, the health department, and the State Auditor into a coordinated review.
- A new oversight law. House Bill 696, signed April 30, 2026 as Session Law 2026-1, directs the state to rewrite its ABA coverage policy to limit paraprofessional telehealth, require in-person assessments, and route any treatment plan above 16 hours per week through monthly reapproval. It also bars out-of-state enrollment for behavior analysts and sets escalating penalties for noncompliance.
- A live comment window. The draft Clinical Coverage Policy 8F, posted May 15, 2026, is open for public comment through June 14, 2026, a compressed 30-day period because it implements an act of the General Assembly. A final policy would follow the comment period and federal approval.
- What comes next. The revisions still require sign-off from the Centers for Medicare and Medicaid Services, and provider groups are pressing for alternatives to the 16-hour threshold and monthly reviews. A separate State Auditor performance audit of NC Medicaid is funded to begin in the 2026-2027 fiscal year.
North Carolina’s HB 696 overhauls Medicaid ABA oversight, and a draft Policy 8F open for comment through June 14 would limit telehealth and tighten supervision.
North Carolina has changed its strategy for reining in Medicaid spending on applied behavior analysis (ABA), trading a blunt rate cut for a detailed rewrite of how the therapy is supervised and authorized. On April 30, 2026, Governor Josh Stein signed House Bill 696 into law as Session Law 2026-1. The measure moved $319 million from the Medicaid contingency reserve to fund the program through the end of the fiscal year and, in Section 3C.18, directed the Division of Health Benefits to overhaul the state’s ABA coverage rules and seek federal approval for the changes.
What House Bill 696 Changes for North Carolina Medicaid ABA
The law follows a turbulent year. Last fall the state imposed across-the-board Medicaid reductions, including a roughly 10 percent cut for ABA, that a court halted and the administration reversed in December under pressure from a lawsuit brought by families of children with autism. Acuity covered that rate cut and its reversal as the series reached North Carolina. With a rate reduction off the table, the state pivoted to utilization and program-integrity controls.
Section 3C.18 instructs the state to amend Clinical Coverage Policy 8F, which governs Research-Based Behavioral Health Treatment, the service line that covers ABA. The directives are specific. Paraprofessional services may not be delivered by telehealth absent documented exceptions, a limit that lands amid an unsettled ABA telehealth landscape. Assessments by licensed qualified autism service providers must be conducted in person, and any individualized service plan exceeding 16 hours of services per week must be approved by a health plan or the department and reapproved monthly. The law also sets a supervision floor (supervisory observation must make up at least 10 percent of paraprofessional services, and no more than 20 percent for high-volume cases absent documented medical necessity), requires RBT or ABAT certification after a 120-day grace period, and bars board-certified behavior analysts and qualified autism service practitioner supervisors from enrolling as out-of-state providers. Repeated noncompliance can trigger recoupment or a suspension from billing of one to two years.
North Carolina’s Policy 8F Rewrite and the June 14 Comment Window
The rewrite is now public. The Division of Health Benefits posted the draft Policy 8F on May 15, 2026, opening a public comment period that closes June 14, 2026, a shortened 30-day window because the changes implement an act of the General Assembly. A final version would follow the comment period and review by the Centers for Medicare and Medicaid Services. The sequence mirrors how other states have paired tighter ABA telehealth and documentation rules with their own public-comment windows.
Why North Carolina Is Tightening ABA Oversight
State officials describe the spending as unsustainable. Medicaid ABA spending surpassed $505 million in 2025, up 65 percent year over year, as enrollment grew 54 percent to 13,447 children and the program paid an average of nearly $37,600 per patient. House Bill 696 also directs the State Auditor to conduct a performance audit of NC Medicaid, and Auditor Dave Boliek has said his office is already examining the spending surge. The scrutiny tracks a federal audit wave that has flagged improper ABA payments in other states and cost-control reforms reshaping Medicaid ABA in states like Indiana. Provider groups, including the Autism Society of North Carolina, say they support accountability but are pressing for alternatives to the 16-hour threshold and the monthly authorization reviews, which they warn could interrupt medically necessary care. For families and providers, the June 14 comment window is the immediate pressure point, the last chance to shape the rules before federal sign-off.
