Kentucky Reverses 4% Medicaid Cut Before ABA Rates Drop

The cut is off

FRANKFORT, KENTUCKY – The 4% Medicaid rate cut Kentucky ABA providers spent the summer preparing for will not take effect.

Gov. Andy Beshear announced the reversal on July 22, less than two weeks before the reduction was scheduled to begin. One day later, Department for Medicaid Services Commissioner Lisa D. Lee sent providers a letter confirming that the previously announced cut “has been reversed.”

The letter said the reduction “will not be implemented at this time” and reimbursement rates “will remain at their current levels.” Licensed behavior analysts were included among the provider groups receiving the notice.

The news resolves the immediate question raised in BreakingNewsABA’s July 21 report. However, it does not resolve the larger budget problem that put the rates at risk.

What ABA providers avoided

The planned reduction covered 46 fee-for-service provider types. It was not aimed specifically at ABA, but it included licensed behavior analysts, behavioral health service organizations, and behavioral health multispecialty groups.

For ABA providers, CPT code 97153 would have fallen from $12.18 to about $11.69 per 15-minute unit. CPT code 97155 would have dropped from $21.99 to about $21.11 per 15-minute unit, according to BreakingNewsABA’s earlier reporting.

Those rates will now remain at $12.18 and $21.99 because DMS is keeping the current fee schedule in place.

Families and providers organized around the deadline. Hogg Therapy Pediatrics and Marshall Pediatric Therapy collected more than 275 letters from parents, according to prior BreakingNewsABA reporting. Hundreds of Kentuckians with disabilities and their advocates also rallied in Frankfort on July 17, according to the Kentucky Lantern.

Those efforts came before the reversal, but the state identified unexpected revenue as the mechanism that made it possible. The timing shows the pressure surrounding the decision, not proof that advocacy alone caused it.

An unexpected surplus closes the gap.

Beshear’s office said Kentucky received an unexpected influx of corporate income tax payments totaling more than $350 million, along with a $476 million unbudgeted surplus.

The governor directed $255 million of those funds toward the Medicaid gap. The package also funds existing Michelle P. Waiver slots that had been underfunded, adds $4 million to the senior meals program for fiscal year 2027, and deposits more than $400 million into the state’s Budget Reserve Trust Fund.

The new revenue changed the immediate math. It did not create a permanent source of money for Medicaid reimbursement.

Beshear told the Kentucky Lantern that he did not know which company made the unexpected tax payment and cautioned against treating it as recurring revenue. He also said the fiscal changes apply only through the state fiscal year ending in June 2027.

A temporary solution

DMS was direct about the limits of the reversal.

“This action provides a temporary solution,” Lee’s July 23 letter said.

The department said it will continue working with the Governor’s Office, the Cabinet for Health and Family Services, and the General Assembly on a longer-term path for Medicaid funding.

For ABA operators, that means the August rate change is off the table, but long-term planning remains difficult. Practices can budget around the current fee schedule for this fiscal year. They still do not have a permanent guarantee that those rates will remain in effect beyond June 2027.

The original reduction followed House Bill 500, Kentucky’s two-year budget. BreakingNewsABA previously reported that the measure funded Medicaid at nearly $700 million less than Beshear requested.

Beshear said lawmakers will “absolutely” need to reopen the budget when the General Assembly returns in January, according to the Kentucky Lantern.

That makes January the next major decision point for ABA providers and other Medicaid-funded services. The letter campaigns, provider coalitions, and family advocacy built during the summer may be needed again.

Ultimately, Kentucky’s ABA providers avoided a cut that was days away from reaching their claims. However, the reversal came from unexpected revenue, not a lasting funding commitment. The rates are safe for this fiscal year. What happens after that still depends on a budget that the state has not yet written.

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