North Carolina’s ABA Therapy Bill Exploded. Alliance Health Signed Cortica to Rein It In

MORRISVILLE, NORTH CAROLINA – Alliance Health has contracted with Cortica to treat children with autism in the Raleigh and Charlotte areas, the two organizations said in August. Alliance is the public managed care organization that runs the Medicaid Tailored Plan, the plan for people with intellectual and developmental disabilities, serious mental illness, and other complex needs, in seven counties that include Raleigh, Durham, Charlotte, and Fayetteville. It says it is the first North Carolina Medicaid managed care plan to sign the San Diego company, whose physician-led model wraps ABA inside medical care rather than relying on it alone.

The announcement names rising costs as one reason for the arrangement. The deal, it says, aims to improve quality, reduce “sole reliance” on ABA, and “impact unsustainable costs of care that have skyrocketed over the past two years.” “Alliance is committed to this type of innovative approach to services, and is not solely reliant on fraud, waste and abuse prevention to address spending concerns,” CEO Rob Robinson said in the release.

The Numbers Behind the Timing

North Carolina Medicaid’s spending on research-based behavioral health treatment (RB-BHT), the benefit that covers ABA and is mostly ABA, rose from $121.7 million in fiscal 2022 to $544.4 million in fiscal 2025, up 347%, according to a March 10 presentation the state health department gave to the legislature’s Medicaid oversight committee. The number of beneficiaries receiving the service rose from 3,844 to 13,447. Children ages 1 to 6 accounted for 70% of fiscal 2025 spending, and the department projected annual spending of $1.14 billion in fiscal 2027.

Sen. Jim Burgin, a Republican whose district includes Harnett County, one of Alliance’s seven, said at the March 10 hearing, “I’m extremely concerned about the dollars versus the services they’re actually getting.” In May, The New York Times reported that Compleat Kidz, a North Carolina chain, had collected about $130 million from Medicaid since 2019, and that North Carolina Medicaid opened an investigation of the company after the Times shared its findings. Compleat Kidz told the Times it does not overprescribe care and that its average patient attends 18 hours of therapy a week. The same investigation described current and former workers at clinics across the country saying families were told their children would not be enrolled unless they agreed to 25, 30, or sometimes 40 hours a week. A spokesperson for the State Auditor’s Office told Carolina Journal in early June that a statewide review of ABA was underway.

Lawmakers and the health department then moved on several fronts. The state budget Gov. Josh Stein signed July 7 requires Medicaid health plans to develop and maintain closed networks for RB-BHT and peer support; a closed network lets a plan choose the providers it contracts with instead of taking every qualified provider that applies, and plans still have to cover the service out of network when their own network cannot deliver it, according to NC Medicaid’s guidance on the law. Brian Perkins, Alliance’s senior vice president for strategy and government relations, briefed the plan’s board on the change August 6, the day of the Cortica announcement. A separate bill, House Bill 34, would tighten Medicaid provider screening and other program-integrity controls, and its Senate-passed version carries its own closed-network language for peer support and RB-BHT; it does not freeze new provider enrollment. The Senate passed it 45 to 0 on June 23, and the bill history still shows it in the House Rules Committee, where it was referred June 25 after returning for a concurrence vote.

New state rules also took effect in early August. Telehealth is no longer allowed for technician-delivered RB-BHT services (codes 97152 to 97154). For new and renewed authorizations, treatment plans totaling more than 16 hours a week of RB-BHT services now get up to 90 days before they must be reauthorized, and plans at or below 16 hours get up to 180 days; existing authorizations keep their original end dates, and the threshold counts all RB-BHT services without capping anyone’s hours. Existing uncertified technicians have 120 days from August 1 to earn the RBT (registered behavior technician) credential or the QABA board’s ABAT credential, and new hires have 120 days from their start date; uncertified staff must work under a licensed provider’s supervision in the meantime, and their sessions are not reimbursable once the grace period ends. A separate rule effective August 2 requires out-of-state licensed autism service providers and certified qualified professionals seeking to enroll in NC Medicaid to enroll as in-state providers.

“Alliance is committed to this type of innovative approach to services, and is not solely reliant on fraud, waste and abuse prevention to address spending concerns.” – Rob Robinson, CEO, Alliance Health (2026)

Alliance’s own CEO had flagged the problem weeks before the deal. At a June 1 meeting of the plan’s consumer and family advisory committee, Robinson told members that the growth in ABA was unsustainable, that the plan had seen problems with both cost and quality, and that Alliance had been talking with CMS about the service, according to draft minutes of that meeting included in Alliance’s August board packet. On August 4, CMS published a toolkit urging states to match ABA hours to each child’s needs and tighten oversight. It reported that Medicaid and Children’s Health Insurance Program (CHIP) spending on ABA rose 421% from 2021 to 2025; over the same period, the toolkit says, the number of children with autism receiving ABA rose 189%, and the number receiving any Medicaid or CHIP service rose 67%. Alliance’s release says the deal aligns with that toolkit, which is guidance rather than a new federal requirement, and with a voluntary July 29 HHS pledge on behavioral health quality signed by medical societies, provider groups, and insurers.

What Cortica Brings

Cortica’s model wraps ABA inside physician-led medical care. Co-founders Suzanne Goh, a pediatric neurologist and BCBA who serves as chief medical officer, and Neil Hattangadi, a physician who serves as CEO, built the company around care led by a physician, with ABA as one of four coordinated pieces alongside medical care, developmental therapies such as speech and occupational therapy, and family support, and with progress tracked across all four disciplines. How much ABA a Cortica patient gets varies by program and child. The company’s site lists about 15 to 20 hours a week for its early-intervention program; BreakingNewsABA’s March profile reported 15 to 20 hours as typical delivery against a 25-to-40-hour range common in the industry; and Forbes wrote in August that Cortica sells “less than half the industry’s standard volume” of ABA. None of those is a fixed prescription, and the Alliance announcement sets no weekly dose for its members.

When BreakingNewsABA profiled the company in March, 17 of its 35 payer relationships were value-based contracts, which tie part of payment to outcomes. Forbes reported in August that Cortica earns a bonus when it hits agreed benchmarks on a scorecard spanning 10 domains of outcome measures and that health plans “reimburse it at higher rates” for that lower volume of ABA. Those accounts describe Cortica’s business model across its payers, not the terms of the Alliance deal.

Cortica operates clinics in Cary, outside Raleigh, and in Charlotte, both inside Alliance’s territory; it announced the Cary launch in September 2024 and scheduled Charlotte’s for that November. The release says Cortica’s network of pediatric neurologists and other physicians can deliver an autism diagnosis within 30 days, against waits that can run past six months at academic medical centers; it gives no wait-time data for the two North Carolina markets. The company has raised more than $250 million from investors that include CVS Health Ventures, Optum Ventures, Ascension Investment Management, and Morgan Health, according to its funding announcements; Forbes counted 27 clinics in eight states in August and reported that Cortica had recently added Medicaid partnerships with Mercy Care in Arizona and with Alliance.

A state health department policy paper circulated for comment last fall, with responses due November 27, 2025, pointed the same way. It proposed requiring plans to authorize ABA as part of a whole-person autism treatment plan, asked the legislature for closed-network authority, and said the department would explore value-based payment while noting the lack of standardized quality measures for ABA. Those were proposals, not adopted policy, and the paper said nothing about Cortica.

What the Deal Does Not Say

The public announcement leaves the money the financial arragement. It does not disclose payment rates, financial incentives, outcome targets, or how many Alliance members are expected to receive care, and Hattangadi’s line that Alliance is “rewarding outcomes over volume” is the only reference to the payment model; it does not establish the formula, or whether Cortica’s North Carolina pay is tied to outcomes the way about half its payer contracts were as of March. The announcement also says nothing about Alliance’s other ABA provider contracts.

For the operators behind North Carolina’s 409 autism therapy clinic locations, up from 61 in 2019 according to health economist Daniel Arnold and reported by the Times, the sequence matters. Alliance has added a provider built around integrated care in the same summer the state shortened authorization periods for treatment plans above 16 hours a week and ordered plans to close their RB-BHT networks. The announcement does not say Alliance will cut any member’s hours, drop existing providers, or save a particular amount. Burgin, who co-chairs the Senate Health Care Committee, endorsed the deal in Alliance’s release: “This partnership reflects North Carolina’s commitment to whole-person, evidence-based care that measures outcomes, improves the experience for families, and responsibly stewards taxpayer dollars.” Sean Schreiber, Alliance’s chief innovation and strategy officer, put the plan’s own reading on it: “At a time when ABA is under increased scrutiny, the partnership helps ensure access, in a cost-conscious manner, to effective care for ASD.”

The health department’s March forecast put statewide RB-BHT spending at $842.8 million for fiscal 2026, which ended June 30, and $1.14 billion for fiscal 2027. Those are projections, and a statewide total cannot show what one plan’s contract did. The first real test of the deal will be Alliance’s own numbers for the members Cortica treats: access, outcomes, and total cost, none of which the announcement provides.

AT A GLANCE

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