Vermont’s ABA Medicaid Reforms Spark National Interest Amid Provider Revenue Drops

The January 1 Changes

MONTPELIER, VERMONT — On November 10, 2025, the Department of Vermont Health Access released updated guidance and policy revisions for the applied behavior analysis Medicaid benefit, with an effective date of January 1, 2026. The changes, which took effect at the start of the year, fundamentally altered how ABA providers in Vermont bill Medicaid for their services—and the ripple effects have been felt across the state’s roughly 20 ABA providers and the 320 Medicaid members they serve.

The central change was the elimination of concurrent billing for CPT codes 97153 and 97155. Under the previous policy, ABA providers could bill Medicaid for both a behavior technician’s time (97153, adaptive behavior treatment by protocol) and a BCBA’s concurrent supervision or direction (97155, adaptive behavior treatment with protocol modification) during the same hour of service. In practice, this meant that when a BCBA observed or directed a behavior technician’s session with a child, the provider billed two codes for the same time period—generating higher reimbursement per hour of care delivered.

DVHA reviewed this practice against national American Medical Association coding guidelines and determined that it did not meet correct coding standards. The 2023 AMA CPT guidance clarifies that Medicaid can only reimburse for the child’s face-to-face time receiving services, and that two clinicians cannot bill for the same time period with one child. Grace Johnson, a Medicaid policy analyst for the Vermont Agency of Human Services, identified ABA as the primary area where the state was already acting to avoid potential federal investigations into Medicaid fraud, waste, and abuse.

The precedent was clear: in Wisconsin, the federal Office of Inspector General identified more than $18.5 million in Medicaid ABA overpayments tied to concurrent billing of codes 97155 and 97153 in the absence of a clear state policy. Vermont’s DVHA determined that it faced similar vulnerabilities and moved to align its billing rules with federal guidelines before an OIG review forced the issue retroactively—a scenario that could have exposed both the state and providers to significant financial penalties.

Wisconsin’s $18.5 million in Medicaid ABA overpayments from concurrent billing was the warning shot. Vermont moved proactively to eliminate the same vulnerability before the federal OIG came looking.

The Revenue Impact on Providers

The billing changes have had an immediate and material financial impact on Vermont’s ABA providers. Cortney Keene, a BCBA who founded and runs Keene Perspectives with her husband Chris Keene, told the Valley News that the clinic’s revenue dropped approximately 16 percent in January and February 2026. About half of the clinic’s client base are Medicaid patients, meaning the billing change directly affected half of the practice’s revenue stream.

The mechanics of the revenue impact are straightforward. Under the previous system, when a child attended a clinic for 10 hours per week and a BCBA supervised two of those hours alongside a behavior technician, the provider billed for all 10 hours of technician time plus two additional hours of BCBA supervision time—totaling 12 billable hours for 10 hours of child-facing service. Under the new rules, the provider bills 10 hours: the child’s face-to-face time, regardless of whether a BCBA was present during some of those hours.

The lost revenue does not mean the BCBA’s work disappeared. BCBAs still supervise behavior technicians, still write treatment protocols, still analyze data, and still provide clinical direction. The difference is that Vermont Medicaid no longer reimburses separately for the BCBA’s time when it overlaps with the technician’s direct service time. Providers argue that this effectively devalues the BCBA’s supervision work—the most clinically skilled and expensive component of ABA service delivery—by embedding it in the technician’s billing rate without compensating for it.

O’Flaherty at Little Royals, another Vermont ABA provider, stated that if this is the new reality, then there needs to be a rate change. The argument is logical: if the state eliminates a billing mechanism that compensated BCBA supervision, the per-hour reimbursement rate for technician services should increase to account for the supervision costs that are now embedded in that single code.

The Rate Study: Vermont’s Path to Quality-Linked Reimbursement

Vermont’s response to provider concerns about lost revenue is not to reverse the billing changes but to adjust reimbursement rates through a systematic rate study. The state legislature passed legislation requiring DVHA to conduct an ABA rate study to determine whether current payment rates are sufficient to sustain access to quality care. DVHA has pointed to this rate study as the appropriate mechanism for addressing provider concerns—arguing that if reimbursement was insufficient, the rate study would address that.

The rate study is significant because it creates a framework for linking ABA Medicaid reimbursement to quality and cost benchmarks rather than to the volume of codes billed. Vermont’s Department of Vermont Health Access has a dedicated Payment Reform Unit whose mission is to transition Vermont Medicaid’s revenue model from fee-for-service to value-based payments, in alignment with the Vermont All-Payer Accountable Care Organization Model Agreement with CMS. The ABA rate study fits within this broader strategic direction.

While the rate study is not a value-based contract in the traditional sense—it does not pay providers based on clinical outcomes—it represents the first state-level effort to systematically evaluate ABA Medicaid rates against quality and efficiency benchmarks. If the study results in rate adjustments that incorporate clinical quality metrics—such as treatment plan outcomes, family satisfaction, or clinician retention—Vermont will have created the template for quality-linked ABA Medicaid reimbursement that other states can follow.

Vermont’s existing Medicaid infrastructure supports this approach. The state already uses case-rate payment for Medicaid-only ABA members, requiring monthly tier request form submissions that identify the level of service intensity. This case-rate structure—where providers are paid based on the tier of service rather than individual CPT code volume—is closer to bundled payment or prospective payment than traditional fee-for-service. It provides a natural foundation for value-based refinements.

Vermont’s rate study is not just about raising rates to offset lost concurrent billing revenue. It is the first state-level effort to evaluate ABA Medicaid reimbursement against quality benchmarks—a framework that other states will replicate.

The Telehealth Restrictions

The January 2026 changes also addressed telehealth delivery of ABA services. During the COVID-19 public health emergency, Vermont expanded telehealth flexibilities for ABA, allowing a broader range of services to be delivered virtually. DVHA’s review of the evidence found that telehealth can work for some children with established skills, but that in-person care is more effective and appropriate for many neurodivergent children. In particular, initial assessments require in-person evaluation for accuracy, and intensive services at ratios like 3:1 (three hours of direct service for every hour of supervision) are more effectively delivered in person.

Vermont adopted a hybrid model, allowing three specific ABA service types to continue via telehealth while requiring all other services to return to in-person delivery. The state also reinforced the requirement for proper supervision of behavior technicians—a requirement that is more difficult to verify and enforce in a purely telehealth environment. These restrictions align with a broader national trend of states walking back pandemic-era telehealth flexibilities for behavioral health services, particularly for services involving children.

The Federal Enforcement Context

Vermont’s proactive approach must be understood in the context of escalating federal enforcement activity targeting Medicaid ABA services. Under the current federal administration, Medicaid fraud, waste, and abuse are top enforcement priorities. The HHS Office of Inspector General has specifically targeted Medicaid ABA services for review, with state-level audits underway or completed in Wisconsin, Maine, and other states.

The financial stakes are significant. If the OIG determines that a state’s ABA billing practices resulted in improper payments, the state and its providers face retrospective liability—the obligation to repay federal funds that were improperly claimed, potentially spanning years of historical billing. Wisconsin’s $18.5 million finding demonstrates the scale of potential liability. For a small state like Vermont, with a Medicaid ABA program serving only 320 members, the absolute dollar amount may be smaller—but the proportional impact on providers could be devastating.

DVHA’s decision to eliminate concurrent billing proactively, before an OIG investigation forced the issue, is a defensive strategy that protects both the state and its providers from retrospective financial exposure. It is also a signal to other states: the coding practices that were acceptable during the rapid expansion of ABA Medicaid benefits may not survive federal scrutiny, and states that do not align their billing rules with AMA coding guidelines are at risk.

Which States Are Next

Vermont’s reforms are being watched closely by state Medicaid administrators across the country. The states most likely to follow Vermont’s model share several characteristics: active or pending OIG audit activity, significant ABA Medicaid expenditure growth, and state-level payment reform infrastructure that supports value-based or bundled payment models.

Michigan, which approved SPA MI-25-0020 in February 2026 to expand ABA access for early-intervention children effective June 1, 2026, is simultaneously modernizing its Medicaid ABA framework. Maine, which has already been subject to HHS-OIG audit activity, faces pressure to align its ABA billing with national standards. Oregon, which operates its Medicaid program through Coordinated Care Organizations with capitated payment structures, has a natural platform for incorporating ABA quality metrics into its value-based contracts.

The broader trend is clear: the era of unconstrained fee-for-service ABA Medicaid billing is ending. States are moving—whether proactively like Vermont or reactively in response to OIG findings—toward billing structures that align with national coding standards, reduce fraud vulnerability, and create frameworks for quality-linked reimbursement. Vermont’s 320-member program is small, but its reforms are the template that larger states will scale.

AT A GLANCE

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