Medicaid Cuts in 2025: How ABA Providers Can Stay Profitable

The One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025, cuts Medicaid spending by more than $1 trillion over the following ten years. The result is a sharp decline in funding, coverage, and reimbursement rates, particularly for ABA (Applied Behavior Analysis) providers who depend significantly on Medicaid and insurance income. Let's dissect it and figure out how to safeguard your profits.

Medicaid and Its Role in ABA Therapy

Evolution of Coverage

Medicaid didn’t always cover ABA. Early on, providers treated it more like an educational service, so families paid out of pocket or waited for private insurance mandates. Advocacy, legal wins, and the Affordable Care Act shifted that view.ABA is now covered by the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit in the majority of states, which has opened doors for thousands of kids.

Benefits for ABA Providers and Families

What this means is:

• Broader access: Families avoid crushing bills and long waitlists.

• Steadier revenue: Clinics can plan growth, hire staff, and refine programs with confidence.

• Evidence of success: The industry's capacity to demonstrate ABA's efficacy and obtain reimbursement increased along with demand.

However, because each state runs its own Medicaid program, coverage varies—and so does the risk when budgets tighten.

National Impact: A New Reality for ABA Providers

According to Congressional Budget Office (CBO) estimates, across the United States:

• 10–11 million Americans will lose Medicaid coverage.

• 7.6 million will become fully uninsured due to tougher eligibility rules and new work requirements.

These changes hit low‑income families and medically complex patients hardest. For ABA providers, that translates into:

• Fewer clients are under Medicaid health insurance coverage.

• Increased denial rates as eligibility checks become stricter.

• Longer reimbursement cycles, squeezing cash flow.

Medicaid cuts aren’t just numbers on a spreadsheet—they’re families unable to access essential therapy.

How ABA Therapy Clinics Are Affected by State Caps and Reimbursement Cuts?

Across the country, state leaders are pulling back. Some have capped ABA therapy at just 30 hours per week—and only for three years. In Indiana, audits exposed payment issues, pushing the state to enroll more qualified providers. Even high-Medicaid states like California and New York are tightening eligibility and reimbursement rules to stay financially afloat. For providers, this shift means smarter ABA billing services, tighter credentialing processes, and staying ahead of every policy change to avoid revenue loss.

California’s Domino Effect

Medi-Cal, covering 40% of Californians, is in the crosshairs. If OBBBA passes:

• Federal funding could drop by $10–20 billion.

• Healthcare jobs—up to 217,000—are at risk.

• Economic fallout: $37 billion hit to the state’s output and up to $1.7 billion in lost tax revenue.

What It Means for ABA Clinics

• Increased competition as more families shift to private pay.

• Staffing struggles in an already tight labor market.

• Rising costs, with clinics forced to absorb more or renegotiate rates to stay afloat.

The landscape is changing fast—and not in favor of providers.

Rural Healthcare on the Edge

In many rural communities, Medicaid keeps the lights on—literally. For some hospitals, it makes up 80% of their revenue. But under OBBBA, that financial support could collapse, triggering a ripple effect that hits both general healthcare and specialized services like ABA therapy.

The numbers are sobering:

• $87 billion in losses are projected over the next decade.

• 153 rural hospitals have already shut down since 2010.

• 338 more are on the brink of closure.

A proposed $50 billion Rural Health Fund might help, but it only covers 37% of the projected cuts—and it disappears after 2032.

The Reality for Rural ABA Clinics

For ABA providers in these areas, the fallout is real.

• Fewer local hospitals mean fewer referral sources and professional partnerships.

• Families must travel farther, often out-of-network, driving up both time and transportation costs.

• Telehealth services are at risk, especially if states pull back on remote care reimbursements.

This combination of financial strain and shrinking access leaves rural ABA clinics in a tough spot—trying to deliver care in communities where the infrastructure is vanishing, and support systems are wearing thin. It's not just difficult. It’s unsustainable.

Political Backlash and Public Opinion

Medicaid cuts have become a flashpoint in the 2025 elections:

• Polls show 55% of Americans oppose the OBBBA only 29% support it.

• The Democratic National Committee’s rural billboard campaign—blaming hospital closures on the law—underscores the high stakes.

For ABA providers, political turbulence means:

• Uncertain policy reversals might emerge mid‑implementation.

• Advocacy opportunities to partner with associations and lobby for “medically needed” carve‑outs.

• Brand risk, as clients may view providers as aligned with or against certain policies.

Implementing Change: Practical Steps for ABA Clinics

Audit Your Revenue Sources: Identify what percentage comes from Medicaid vs. private insurance. Pinpoint high‑denial CPT codes: 97153, 97155, 97156.

Improve Credentialing Processes: Update your CAQH profile, verify your Medicaid enrollments, and utilize credentialing software to track expirations and automate submissions.

Tackle Denials Strategically: Identify frequent denial reasons—eligibility issues, missing documentation—and build a denial management workflow. A strong appeals process can recover up to 40% of rejected claims.

Strengthen Telehealth Delivery: Stay aligned with your state’s Medicaid telehealth rules. Train your team on the tech and the protocols to maintain compliance and consistency.

Seek Grants and Funding: Look into behavioral health grants. Partner with nonprofits that support underserved and disabled communities to bolster long-term funding.

How ABA Providers Can Stay Profitable

Strengthen Billing & Compliance: Audit every step—from note-taking to claim submission. Use modern ABA billing software or partner with RCM experts to reduce denials. Staff members are kept up to date on evolving Medicaid billing regulations through regular training.

Diversify Income: Avoid over-reliance on Medicaid. Offer private-pay packages, sliding-scale rates, or tiered ABA billing services. Get ABA billing with commercial insurers and pursue behavioral health grants.

Focus on Clean Claims: With reimbursement dropping to $38–$42/hour, aim for a clean claim rate (CCR) above 97% and denials below 3%.

What Your ABA Practice Gains by Partnering with Cube for Billing

Let’s be real—2025’s Medicaid cuts are putting serious pressure on ABA providers. You can’t afford delays, rejections, or administrative slowdowns. That’s where Cube comes in.

One multi-specialty facility teamed up with Cube after facing nonstop denials and out-of-network setbacks. In just 120 days, Cube processed over 150 provider files, cut denials by 55%, and increased reimbursements by 30%.

What made the difference? Deep payer know-how, fast enrollments, and smart compliance tracking.

If you want to keep revenue steady through these changes, precision and speed matter. Cube helps you stay approved, aligned, and paid—so you can focus on your clients.

FAQ

1. What is the biggest issue with Medicaid cuts?

The biggest concern is losing access to care. Cuts increase denials, slow reimbursements, and overwhelm ABA billing services—especially for providers already stretched thin with credentialing, authorizations, and payment delays.

2. Does Medicaid cover ABA therapy in Indiana?

Yes, Indiana Medicaid covers ABA therapy for children with autism. But getting paid correctly requires expert ABA therapy billing and staying updated with changing codes, credentialing rules, and prior authorizations.

3. Who is eligible for Medicaid?

Medicaid eligibility is based on disability status, household size, and income. For ABA providers, staying compliant means accurate credentialing services and clear ABA billing to ensure clients receive uninterrupted coverage.

Conclusion

For ABA providers, Medicaid cuts in 2025 completely change the game. But by diversifying revenue, leveraging telehealth, and tightening operations, you can offset losses—maybe even emerge stronger. This isn’t about weathering the storm; it’s about charting a new course for profitability and resilience.