DHCS’s draft APL 26-XXX rewrites how Medi-Cal plans authorize ABA and behavioral health treatment for children. Stakeholders have until July 3 to comment.
Key Takeaways
- The proposal. On June 22, DHCS circulated a draft All Plan Letter that would replace APL 23-010 and significantly expand utilization management for behavioral health treatment, including applied behavior analysis, for Medi-Cal members under 21. The redline tracks a 2026-27 budget proposal to tighten oversight of ABA and BHT spending.
- The flashpoints. Autism advocates say the draft strikes the operative mental health parity directives, layers on documentation and step-down requirements, and lets plans demand independent confirmation of an autism diagnosis. They argue the cumulative effect raises hurdles to medically necessary care.
- The cost question. The draft tells families and providers to seek services through a school district before requesting plan authorization for treatment on a school site. Critics call that a cost shift to schools and Regional Centers with no matching cut to plan capitation, while DHCS frames the changes as coordination and avoidance of duplicative services.
- What happens next. Public comment closes at the close of business on July 3, submitted on a Feedback Matrix to DHCS. A finalized APL would give plans 90 calendar days to update their policies and procedures or attest that no changes are needed.
The California Department of Health Care Services is proposing one of the most consequential rewrites of its Medi-Cal behavioral health treatment rules in years, and it has given stakeholders less than two weeks to weigh in. On June 22, the department circulated draft All Plan Letter (APL) 26-XXX, “Responsibilities for Behavioral Health Treatment Coverage, Including Applied Behavioral Analysis, for Members Under 21 Years of Age,” to Medi-Cal managed care plans (MCPs) with a request for feedback by the close of business on July 3. Distributed with tracked changes against the current APL 23-010 (and a separate redline against an unfinalized 2025 draft), the proposal would reshape how plans authorize, document, and coordinate ABA and other BHT services for members under 21.
All Plan Letters carry unusual weight in California because they are the state’s main vehicle for directing Medi-Cal plans, including on BHT. The state only began standing up a fee-for-service pathway for some BHT in 2025, leaving APLs as the dominant source of direction for the managed care plans that cover most children. A change to the APL, in other words, is a change to the rules that govern day-to-day authorizations, and it lands atop other moving pieces in California’s Medi-Cal ABA program, from a pending rate-setting amendment to a new direct-billing route for providers.
The timing is not incidental. The draft operationalizes a utilization management proposal DHCS floated in its May 2026-27 budget revision, when the department released a fact sheet titled “Utilization Management for Applied Behavior Analysis (ABA)/Behavioral Health Treatment (BHT) and Transportation Services.” That proposal landed as California absorbs federal Medicaid reductions under H.R. 1 and the scheduled expiration of its managed care organization tax at the end of 2026.
Julie Kornack, Chief Government and Payor Relations Officer at the Center for Autism and Related Disorders, does not dispute that fraud exists, but cautioned that intensive ABA should not be confused with abuse. ABA “tends to be an easy target,” she said in an interview with Acuity, “because it’s easy to say a sentence that conflates intensity, 40 hours a week of any service, with fraud.” She pointed to federal Office of Inspector General audits of state Medicaid programs, which she said dwell on documentation shortcomings rather than fraud: “They don’t even use the word fraud one time.” Most flagged claims, she said, reflect clinical notes that fail to capture services that the underlying data shows were delivered. And ABA, she added, is “a small budget item compared to what we’re paying for other healthcare, such as cancer treatments and cardiology.”
Utilization Management Tightens Across Medi-Cal ABA Authorizations
Much of the draft reads as a detailed new utilization management framework. It would let plans establish tiered documentation requirements based on the total weekly hours requested, and would require those tiers once a request exceeds 25 direct treatment hours per week. Plans could ask for additional documentation whenever a provider recommends more than four hours of service per day. For higher-intensity requests, plans could require progressively more specific justification, including an explanation of why the requested intensity is the minimum necessary and why a lower intensity would be clinically insufficient. Advocates say these requirements are inconsistent with federal law, including the Mental Health Parity and Addiction Equity Act and the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) mandate for Medicaid enrollees under 21.
The draft also formalizes a distinction between “active treatment” and “maintenance status,” and allows plans to authorize a reduced level of service once a member is deemed to be in maintenance. Behavioral treatment plans would have to include defined mastery criteria, step-down milestones, discharge criteria, and a projected treatment timeline, with providers documenting progress against each milestone at reauthorization. Where no progress toward step-down is shown across two or more consecutive authorization periods, a plan could determine that continued clinical benefit is not expected and modify or reduce services.
Other provisions reshape the edges of the benefit, and not all in the same direction. The draft would require a guardian participation plan with documented training and home generalization strategies, a notable shift given that current policy bars plans from requiring guardian participation. It notes an existing established-place-of-business requirement for board certified behavior analysts that DHCS says it intends to waive, through a future regulatory bulletin, for those who see clients from home. The draft also adds new guardrails: denials may not be based solely on artificial intelligence or automated tools and must be reviewed by a licensed professional, and plans must allow make-up sessions when those sessions conflict with weekly limits. Because California does not license behavior analysts, a board certified behavior analyst could not serve as that reviewer unless separately licensed in another profession.
Other current protections are pared back. The draft strikes language in APL 23-010 that flatly prohibits caps on the number of hours and bars limiting services on the basis of school attendance, substituting a framework under which plans may set service-intensity thresholds that trigger enhanced clinical review, with the caveat that such a threshold must not operate as a hard cap. DHCS continues to point plans toward Council of Autism Service Providers guidelines, which the draft cites for a range of 10 to 25 hours per week of focused ABA, alongside commercially available tools such as InterQual and Milliman Care Guidelines. That range sits in the middle of an ongoing debate over how many hours of ABA children actually need, though advocates say it disregards research showing better outcomes for children who receive 40 hours per week of ABA.
To Kornack, the draft reaches for blunt limits where targeted review would do. “We want our providers to be able to individualize their treatment decisions,” she said, “and that’s what the law requires.” Rather than focus on the specific cases where care is not individualized, she argued, the draft sets rules for everyone: “It’s lazy at best, where they’re just imposing an hour limit on everybody, imposing parent participation requirements on everybody, imposing a severity qualification on everybody, all these things that are prohibited by federal law, and some prohibited by state law.” The draft’s so-called soft caps, she added, are something “the managed care plans will always treat as hard caps.”
She was especially pointed about the guardian participation requirement. Conditioning treatment on a parent’s involvement, she said, “violates mental health parity law, violates EPSDT, and it’s just impractical,” because some families cannot take part owing to work, other children, or their own health. “Imagine a child with asthma, and we say, unless the parent wants to take a class on asthma, we’re not going to treat the asthma, or we won’t treat it as comprehensively,” she said. “That’s essentially what they’re saying about ABA.”
Mental Health Parity Language and the Autism Re-Diagnosis Question
The provision drawing the loudest objection is what the draft removes. In a widely circulated email shared with more than 100 stakeholders, Kristin Jacobson, chairman of the ADEC Foundation, urged recipients to read the redline and submit comments, arguing that the APL reverses access protections built over decades through federal mental health parity law, SB 855, and related measures. Advocates point to a struck paragraph that had directed plans to comply with parity and barred BHT treatment limitations more restrictive than the predominant limits on medical or surgical benefits.
Checked against current policy, the deletion runs deeper than a single paragraph. The draft strikes that standalone paragraph, the parallel directive in the policy section that had required parity compliance for BHT under APL 22-006, and a parity reference in the purpose statement. What survives is the background recital, carried over from APL 23-010, that federal parity law applies to BHT, rather than an operative command that plans comply. California’s SB 855 continues, independent of this APL, to require that medical necessity and utilization review track generally accepted standards of care, a backstop the draft references when it conditions the use of commercial tools on SB 855 compliance. The deletions also land at a moment when behavioral health parity enforcement has been receding nationally.
Kornack, who said advocates spent about five years getting DHCS to recognize that parity applied in the first place, called the reversal a shock. “We had to work for about five years to get DHCS to recognize that the mental health parity law applied to its managed care plans,” she said. The draft, in her account, “will supersede that APL and strikes any reference to mental health parity,” and “proposes numerous changes that would be inconsistent with federal law, including mental health parity and the Medicaid pediatric mandate, EPSDT.” She put it bluntly: “This APL is directing the managed care plans to violate federal law and to disregard the patient protections that have been in place for decades.”
A second contested change concerns diagnosis. The draft specifies that an ASD diagnosis be rendered by a Medi-Cal enrolled licensed physician, surgeon, or psychologist, where current policy does not require a diagnosis and has not required the licensed physician, surgeon, or psychologist to be enrolled in Medi-Cal, and a conflict-of-interest section would let plans require independent confirmation of the diagnosis where the diagnosing clinician is affiliated with the BHT provider. Advocates describe the combination as a path to de facto re-diagnosis. That direction cuts against AB 951, signed in July 2025 and effective January 1, 2026, which bars state-regulated commercial plans from requiring a previously diagnosed enrollee to undergo re-diagnosis to maintain coverage. Whether AB 951 reaches Medi-Cal managed care is unsettled, since it amends the Knox-Keene Act and the Insurance Code and appears to treat certain Medi-Cal contracts differently. The diagnosis provisions also track a broader pattern of state Medicaid programs tightening diagnostic authority.
On the diagnosis provisions, Kornack warned that the draft adds a diagnosis requirement “that’s not required right now” at a moment when, she said, “they have an inadequate network of diagnosticians to provide those diagnoses.” Absent a grace period or protection for children already in care, she said, the change “would be incredibly disruptive as families try to get their kids diagnosed by a Medi-Cal-enrolled provider.”
Behavioral Health Treatment, and Its Costs, Shift Toward Schools
The draft also redraws the line between health plans and schools. When a member needs BHT in a school setting, the treating provider or the guardian would have to request those services through the Local Educational Agency before seeking plan authorization for school-based services. Families and providers would submit a copy of the member’s Individualized Education Program or related plan with the authorization request, and plans would review it to confirm the requested services are not duplicative of what the school is already required to provide. The draft adds that if a school district fails to initiate an IEP amendment within 45 business days, the plan may pause or reduce services.
Critics read those provisions as a cost shift. They argue the school-first sequence pushes financial responsibility onto LEAs and Regional Centers without any reduction in the capitation the state pays plans, a combination that, in the advocates’ telling, increases plan margins while raising public spending elsewhere. DHCS frames the same language as coordination and avoidance of duplicative services, consistent with its position that plans hold primary responsibility for medically necessary BHT and must cover gaps when other entities do not. Notably, the draft strikes a sentence in current policy that bars plans from reducing a member’s medically necessary hours by the hours the member spends at school, replacing it with language that lets plans weigh a member’s total behavioral intervention across all settings when judging whether requested intensity reflects the minimum necessary level of service.
Kornack said the practical effect points the opposite way from the savings DHCS is chasing. Restricting where services can be delivered, she said, undercuts the work of helping children carry skills from one setting to another: “When you limit locations, you limit the ability to make sure that skills the patient’s acquiring in one location, say at home or clinic, are generalizing to other locations.” Treatment has to follow children into school, home, and community, she argued, because “you have to go where the children are.” Capping hours, in her telling, sets off a chain reaction: “less hours will mean that less skills will be acquired, and the child is less likely to bridge that developmental gap, and that means more support in public schools, less independence for the child, and more help from the regional centers across the lifespan of the child.”
Whether DHCS revises the draft before finalizing it may turn on the volume and substance of comments now being assembled. Stakeholders have until the close of business on July 3, days after this story publishes, to respond on the department’s Feedback Matrix; once an APL is finalized, plans have 90 calendar days to update their policies and procedures or attest that none are needed.
Kornack said her organization’s public comments run to a long list of objections, but the priority is narrow. “Our number one ask is to restore the mental health parity language,” she said. She also challenged the vehicle itself, arguing DHCS should not rewrite plan obligations through an All Plan Letter: “We believe that they need to go through the Administrative Procedures Act and not do this through an APL if they’re actually changing the obligations of the managed care plans. We don’t think this is the proper vehicle for that.” Her test for the final version is simple. “If they produce an APL that complies with federal parity law and with EPSDT, we’re in great shape,” she said. “We absolutely hope that we don’t have to spend the next five years fixing it, and that they’ll listen to us now.”
