Colorado is back in the headlines for the wrong reason. A group of parents, providers, and advocacy organizations have filed a lawsuit against Governor Jared Polis and the state’s health department, arguing that recent Medicaid budget cuts to autism therapy violate both state and federal law.
For ABA business owners, this story matters because it’s not just about one state. It’s a clear example of what happens when Medicaid systems try to fix budget problems by reducing behavioral health services — something that could easily ripple into other states.
What the Lawsuit Is About
The complaint argues that Colorado’s recent...
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- State-level parity laws that require behavioral health to be treated the same as physical health.
- The federal Mental Health Parity and Addiction Equity Act, which prevents payers from imposing stricter limits on behavioral care.
- The state’s own legal obligation to maintain access to medically necessary treatment for children on Medicaid.
According to the lawsuit, around $10 million in cuts were made to programs that serve children receiving behavioral therapy. Parents and advocates say these reductions were made without proper justification and have left kids without care.
The suit also points out that many families who rely on Medicaid already face long waitlists for ABA. With fewer providers able to afford to stay open, access has dropped even more.
The Bigger Picture: Colorado’s Ongoing ABA Funding Problem
If you’ve followed Colorado over the last few years, this didn’t come out of nowhere. The state’s Medicaid system — known as Health First Colorado — has been struggling to keep behavioral therapy rates sustainable for a long time.
Here’s the timeline most providers point to:
- Low rates and provider exits ABA reimbursement rates have been so low that several large and mid-sized providers have left the state or shut down completely. Families in Denver and Colorado Springs have reported waitlists stretching over a year.
- Prior authorization reinstated The state recently moved to bring back prior authorization requirements for therapy beyond certain hour limits. Officials say it will save roughly $6 million, but providers say it creates delays and paperwork that make services harder to deliver.
- Temporary rate increases Earlier this year, the Department of Health Care Policy and Financing (HCPF) approved a short-term rate bump to keep services from collapsing. That helped some providers stabilize, but the relief wasn’t permanent.
- Budget cuts follow When new state budget shortfalls appeared, those same behavioral therapy lines were targeted again. That’s what triggered this lawsuit.
The case now hinges on whether the court agrees that these cuts violate parity and access laws.
What This Means for ABA Businesses
From a business perspective, this story highlights several key points every ABA owner should pay attention to — even if you’re not in Colorado.
1. Medicaid rate changes can happen fast
Even when things seem stable, states can quietly pull back funding through budget adjustments or policy “clarifications.” What’s happening in Colorado could happen anywhere. Keep a close eye on your own state’s Medicaid policy updates and rate review cycles.
2. Legal action may slow things down, but it won’t fix the system overnight
If the lawsuit succeeds, the court could temporarily stop the cuts. But that doesn’t guarantee higher rates or smoother authorization processes. Providers still need to build sustainable business models that don’t depend entirely on Medicaid margins.
3. Expect more audits and paperwork
Colorado is also reinstating prior authorization reviews, which almost always lead to more documentation demands. Practices should be training their teams now on how to manage these processes efficiently — clear clinical rationales, supporting data, and updated treatment plans are the key.
4. This could set a national precedent
If courts rule that budget cuts to autism services violate parity laws, it could give other states a reason to rethink their Medicaid policies. For providers, that could be good news — but it depends on how the decision is written and whether it’s broad enough to apply beyond Colorado.
5. Build advocacy connections now
The providers that weather policy shifts best are usually the ones with relationships in the right places — local associations, legislative committees, and Medicaid advisory groups. If you don’t have someone monitoring those meetings for your business, make that a priority.
A Closer Look at the State’s Position
The Colorado Department of Health Care Policy and Financing has said the cuts were necessary to balance the budget after unexpected cost overruns. They argue that access will not be affected and that the changes bring ABA in line with other therapy benefit structures.
Providers disagree. Many say the math doesn’t work — with current rates and overhead, it’s already difficult to maintain staff. Adding prior authorization, rate reductions, and increased administrative costs only makes it worse.
This argument is familiar to anyone running an ABA business: funders often say “access won’t change,” but when staffing shortages and turnover go up, clients feel it immediately.
What ABA Practice Owners Should Do
While this case plays out, here’s how practice owners can stay proactive:
- Review your payer mix. If Medicaid is more than 50% of your revenue, you’re at higher risk during policy shifts. Explore other payers, school contracts, or private pay options to reduce dependence.
- Track legislative updates. Bills that affect Medicaid budgets or parity laws can move quickly. Assign someone to monitor them weekly.
- Document every hour. If your state uses prior authorization, ensure notes clearly show progress, barriers, and continued medical necessity.
- Educate families. Parents often have strong voices with legislators. Keep them informed and ready to advocate if access is threatened.
Why This Matters Beyond Colorado
Whether or not you operate in Colorado, this case signals what’s coming next for ABA businesses nationwide. States are under financial pressure, and Medicaid budgets are often the first place they look to cut. Autism therapy is expensive, and when lawmakers don’t understand its long-term value, it’s an easy target.
The bigger concern is that these decisions can create a domino effect — fewer providers, longer waitlists, and eventually, worse outcomes for children who could have been helped earlier.
ABA practice owners can’t afford to wait for the system to “figure it out.” The smart move is to stay informed, keep operations lean, and build strong relationships with policymakers and advocacy networks now.
Final Thoughts
The lawsuit in Colorado won’t solve the broader problems with Medicaid reimbursement overnight. But it’s an important reminder that ABA providers are often on the front line of policy changes that don’t make the news until it’s too late.
Stay connected to your state associations, prepare your financial models for rate changes, and keep your documentation strong. The states watching this lawsuit will be paying attention to how ABA providers respond — and how well they continue to serve families despite the uncertainty.
Sources
- The Denver Post — “Parents, advocates sue Gov. Polis and state over cuts to autism services” (Oct. 1, 2025)
- Colorado Politics — “Lawsuit targets Medicaid cuts to autism therapy” (Oct. 1, 2025)
- Denver7 News — “Families push state to increase funding to autism service providers as several pull out of Colorado”
- CBS Colorado — “Emergency reimbursement change helps child autism services rebound”
- CPR News — “Colorado lawmakers consider Medicaid rate hike for autism care”
- The Journal — “Providers say Colorado’s Medicaid system contributes to burnout and closures”
