Centene Cites ABA Therapy as Major Driver of Medicaid Cost Increases

The Development

Centene Corp. (NYSE: CNC), a prominent managed care organization, has identified behavioral health services, with applied behavior analysis (ABA) therapy as a significant underlying factor, as the leading contributor to escalating costs within its Medicaid business. During its recent earnings call on February 6, Centene executives, including CEO Sarah London, stated that behavioral health was responsible for roughly 50% of the company’s excess costs during the fourth quarter. This trend mirrors findings from Centene’s Q2 and Q3 results, where behavioral health, alongside home health and high-cost pharmaceuticals, consistently emerged as primary financial pressure points.

In response to these persistent cost pressures, Centene established an ABA task force in 2025. The task force’s mandate is to meticulously analyze data, pinpoint specific utilization patterns, and ultimately enhance the quality of care delivered. Through its data analysis, Centene has highlighted a growing concern within the autism therapy sector: the prevalent practice of prescribing high volumes of ABA therapy hours, such as 40 hours per week, without clear evidence of corresponding improvements in patient outcomes. London specifically noted, “What we found were consistent patterns of outlier providers with volume versus outcomes-driven care patterns, where the maximum number of hours are prescribed for every patient instead of an individualized care plan.”

Furthermore, Centene’s analysis pointed to inadequate oversight of certified behavior technicians as another factor contributing to system costs. London emphasized that such practices not only inflate expenses but, more critically, serve as “red flags relative to the quality of patient care for a very vulnerable population.” To counteract these issues, Centene has initiated an ABA-specific engagement program for its members, which is spearheaded by doctorate-level board-certified behavioral analysts (BCBAs), aiming to ensure more individualized and outcomes-focused care.

Market Impact

Centene’s explicit focus on ABA therapy utilization and its associated costs signals a significant shift in payer scrutiny that will directly impact ABA providers, particularly those serving Medicaid populations. As the largest Medicaid insurer, Centene’s actions could set precedents for how ABA services are authorized, reimbursed, and monitored across the industry. Providers who prioritize high-volume billing over demonstrated outcomes may face increased challenges, including heightened audits, network re-evaluations, and potential payment reductions. The emphasis on individualized care plans, rather than a one-size-fits-all approach to therapy hours, will require providers to demonstrate clinical necessity and measurable progress more rigorously.

The formation of an ABA task force and the development of member engagement programs led by doctorate-level BCBAs underscore Centene’s commitment to driving quality and efficiency. This could lead to a greater demand for providers who can clearly articulate and demonstrate the effectiveness of their interventions, aligning with outcomes-based metrics rather than solely hourly billing. Providers with robust clinical oversight and data-driven treatment planning will likely be better positioned to navigate these evolving payer expectations. The concern over certified behavior technician oversight also suggests that providers may face increased scrutiny regarding staff training, supervision protocols, and adherence to ethical guidelines.

What’s Next

Looking ahead to 2026, Centene is intensifying its efforts to restore profitability within its Medicaid segment. The company’s health benefits ratio for Medicaid, while slightly improved in Q4 compared to Q3, still reflects the broader impact of rising healthcare expenditures. Centene’s strategy involves several key levers: optimizing its provider networks for both cost-effectiveness and quality, implementing new and enhanced clinical programs (such as the ABA-specific engagement initiative), engaging in rate advocacy with state partners, and collaborating on program reforms. The insurer also plans to increase vigilance in detecting and reducing unnecessary utilization and adopt a more aggressive stance against fraud within the provider ecosystem, all in service of protecting Medicaid program integrity.

Centene will also closely monitor membership dynamics influenced by eligibility redeterminations under the “One Big Beautiful Bill,” which has already led to a “low level of continued membership attrition through 2025” as states tighten criteria. The company is prepared to adjust its strategies based on state partners’ responses to rate pressures and potential market exits by competitors. Overall, Centene anticipates margin improvement throughout 2026 and beyond, indicating a sustained focus on cost management and quality improvement across all its service lines, with behavioral health and ABA therapy remaining a central area of attention.

Fast Facts

Expert Perspective

Centene’s findings underscore a critical industry pivot: payers are increasingly demanding evidence of outcomes and individualized care plans over high-volume service delivery in ABA.

Source: bhbusiness.com