Kentucky Medicaid Cuts ABA Rates 4% Starting August 1

ABA on the 46-Type Cut List

FRANKFORT, KENTUCKY – Starting August 1, Kentucky Medicaid will pay fee-for-service providers 4 percent less. ABA providers are included in the cut.

On June 8, Department for Medicaid Services Commissioner Lisa D. Lee sent a letter to providers saying the agency “will implement a 4% reduction in Medicaid provider reimbursement rates” for the listed provider types, “effective August 1, 2026, or the earliest administratively feasible date thereafter.” The list includes 46 provider types, such as hospitals, physicians, dentists, home health agencies, and physical, occupational, and speech therapists. Licensed Behavior Analysts (provider type 63), behavioral health service organizations (PT 03), and behavioral health multi-specialty groups (PT 66) are also included.

In Kentucky, ABA providers are enrolled as type 63 for individuals and 639 for groups. They are licensed by the state’s Applied Behavior Analyst Licensing Board and reimbursed under 907 KAR 15:015. The 4 percent reduction applies to ABA services billed through the fee-for-service system, not those billed by managed care.

Lee’s letter blames House Bill 500, the two-year budget passed in the 2026 session, which she wrote: “did not provide sufficient funding for the Department to continue operating the Medicaid program at current service and reimbursement levels.” She added that “The Governor and his administration repeatedly warned the General Assembly about the painful impacts that would be felt by the unnecessary and harmful budget cuts, yet the legislature took no action.” Kentucky Public Radio reported the letter on June 23.

On June 22, DMS published Public Notice Transmittal 26-0005. This notice proposed changes to the reimbursement sections of Kentucky’s Medicaid state plan (4.19-A, 4.19-B, and 4.19-D) so rate-setting “can be adjusted to accommodate budget shortfalls.” The amendment affects every provider type paid under a rate-setting, non-cost-settled method. It has the same proposed August 1 effective date and requires CMS approval.

The Cut at the Code Level

Since April 1, Kentucky’s 2026 Behavioral Health fee schedule pays $12.18 per 15-minute unit for CPT code 97153, which covers adaptive behavior treatment by protocol delivered by technicians. With a 4 percent reduction, this drops to about $11.69, or $1.95 less per hour of ABA care from a registered behavior technician (RBT).

Codes billed by analysts are also reduced. For example, CPT 97155, which covers adaptive behavior treatment with protocol modification, pays $21.99 per 15 minutes at the Licensed Behavior Analyst rate. This will drop to about $21.11.

This reduction is smaller than the ABA-specific cuts that made national news in 2025. North Carolina ordered a 10 percent cut to ABA reimbursement in October, but Governor Josh Stein canceled the cuts in December. Nebraska cut payments to some ABA providers by nearly half, according to KFF Health News. Kentucky’s cut is different: it is a single 4 percent reduction across 46 provider types, which DMS says is due to the budget, not anything specific to ABA.

Managed Care Is Exempt, for Now

The cut does not affect Kentucky’s five Medicaid managed care organizations, which account for roughly 70 to 73 percent of the state’s Medicaid spending, according to Cabinet for Health and Family Services figures and KFF data. The remaining spending — roughly $5 billion in SFY 2024 — goes to fee-for-service claims, according to a Cabinet for Health and Family Services presentation cited by Kentucky Public Radio. ABA practices billing through managed care contracts are reportedly not affected, while ABA fee-for-service claims are reportedly included. Based on last year’s spending, the 4 percent cut totals about $200 million per year across the affected provider types.

This exemption is temporary. The same budget requires the administration to reduce payments to managed care organizations by 2.5 percent in 2028, which Kentucky Public Radio estimates at about $375 million per year. That money would go toward increasing fee-for-service rates. The reports do not explain how the five plans will handle the reduction or if network providers will see changes in their contracted rates.

House Bill 500 increased Medicaid funding compared to current levels, but it is nearly $700 million less than Governor Andy Beshear requested. The bill also set aside $290 million in a budget reserve trust fund, which could be used for benefits next year if needed.

Providers Organize Ahead of the Deadline

Providers responded immediately. Amy Staed, CEO of the Kentucky Association of Private Providers, told WKYT that agencies with margins near 5 percent cannot handle a 4 percent rate cut, and some are unsure how they will stay open. The same reduction also affects Kentucky’s home and community-based waiver programs, which serve people with intellectual and developmental disabilities. Doug Hoyt, CEO of Wendell Foster in Owensboro, said ongoing cuts could force providers to lower wages or close.

“When you’re operating on paper-thin margins, we’re talking five percent margins; a four percent cut is devastating.” – Amy Staed, CEO, Kentucky Association of Private Providers (2026)

Pediatric therapy practices are helping families get involved. Hogg Therapy Pediatrics and Marshall Pediatric Therapy, two providers in the Lexington area where Medicaid covers about 75 percent and 60 percent of patients, started a letter-writing campaign to ask lawmakers and the governor to reverse the cuts. By July 10, they had collected more than 275 letters from parents, according to WKYT. “The loudest voice is going to be from the family,” said Ashlee Dew, Hogg Therapy’s executive director.

State leaders in Frankfort are blaming each other. “They shorted this budget significantly, but they’re back in January, and they can provide the funding that can save some of these services,” Governor Beshear said in a June 18 video. House Speaker David Osborne replied that the administration chose rate cuts instead of cutting “outdated, ineffective, or duplicative programs that no longer meet the Commonwealth’s needs,” and warned that this “risks increasing costs over the long term through delayed care and reduced access to services.” Staed disagrees that only lawmakers can act, saying, “right now he is the sole person that has the ability to act,” she told Kentucky Public Radio. The cabinet did not answer the outlet’s questions before publication.

There are now three key dates. Written comments on Transmittal 26-0005 are due 30 days after its June 22 publication. The cut takes effect on August 1 or as soon as possible after that. The General Assembly meets again in January.

AT A GLANCE

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