North Carolina ABA Therapy 2026: New Budget Guardrails and the Medicaid Settlement Explained

North Carolina families relying on Medicaid for Applied Behavior Analysis (ABA) therapy are facing two major developments at once this week. A proposed legal settlement would keep ABA reimbursement rates frozen through the end of the fiscal year that just closed, while a brand-new $34.4 billion state budget headed for votes this week would add significant new guardrails on how ABA therapy is authorized and delivered going forward. Here is what North Carolina families need to know right now.

A Court Settlement Would Keep ABA Medicaid Rates Frozen, For Now

The story starts in 2025, when the families of 21 children with autism sued the North Carolina Department of Health and Human Services (DHHS) and Secretary Devdutta Sangvai over planned cuts to Medicaid reimbursement for Research-Based Behavioral Health Treatment (RB-BHT) services, the category that includes ABA therapy. Facing a $319 million Medicaid budget shortfall after the state legislature failed to pass a complete budget for the 2025-26 fiscal year, the Stein administration had proposed cutting RB-BHT rates by 10 percent, a steeper cut than the 3 to 8 percent reductions applied to most other Medicaid services.

A Wake County Superior Court judge, Vince Rozier, issued an order temporarily freezing the rate cut while the case proceeded, with a trial originally scheduled for September 21, 2026. This week, attorneys for both sides filed a proposed consent order that would end the lawsuit before trial. Under the agreement, DHHS commits that it "will not reduce N.C. Medicaid reimbursement rates for RB-BHT services, including ABA therapy, for the remainder of the 2025-2026 fiscal year, up to and including through June 30, 2026." DHHS also agrees to make coverage decisions in compliance with the North Carolina Persons with Disabilities Protection Act and not to discriminate against Medicaid recipients on the basis of disability, including autism.

Two things are important for families to understand about this settlement. First, it is not yet final. Judge Rozier still has to approve the consent order before it takes effect, and the families would dismiss their claims without prejudice, meaning they could refile if the state violates the agreement. Second, and more importantly for families planning ahead, the rate protection in the settlement only runs through June 30, 2026, the last day of the fiscal year the cut was originally proposed for. The agreement does not address what happens to RB-BHT rates in the new fiscal year that began July 1.

A New State Budget Adds Fresh Guardrails on ABA Therapy

That question is being answered separately, through the budget process. On June 30, North Carolina lawmakers released a long-awaited $34.4 billion state budget for the 2026-27 fiscal year, with votes scheduled in the House and Senate this week before it heads to Governor Stein for his signature. The budget follows months of scrutiny over the explosive growth in RB-BHT spending: Medicaid payments for these services climbed from roughly $6 million in 2021 to close to $660 million in 2025, an increase North Carolina Health News and other outlets have described as roughly 11,000 percent in four years. State projections put RB-BHT spending on track to exceed $1 billion in the 2027 fiscal year if utilization trends continue.

To rein in that growth, the new budget adds several oversight measures specific to ABA therapy:

• In-person assessments required. ABA therapy assessments would need to be conducted in person rather than remotely.
• More frequent reapproval above 16 hours a week. Treatment plans involving more than 16 hours of therapy per week would face more frequent reauthorization review.
• Service plan approval. Care plans would require sign-off from either a prepaid health plan or DHHS directly.
• Closed provider networks. RB-BHT, along with Peer Support and Community Support Services, would move to closed networks intended to strengthen Medicaid oversight of high-growth service categories.

These provisions build on House Bill 696, the mid-year Medicaid funding bill lawmakers passed with strong bipartisan support in late April 2026 to close the original $319 million shortfall. That bill already introduced telehealth limits, stricter supervision requirements, and updated provider credentialing standards for ABA services. The new budget goes further by tying authorization directly to hours of care and moving to a closed-network model.

What This Means for North Carolina Families Right Now

Between the pending consent order and the pending budget, North Carolina's ABA Medicaid landscape is genuinely in flux this week. A few practical takeaways:

• Rates were protected through June 30, but the new fiscal year is a different question. Whether rates hold, change, or face a new proposed cut for 2026-27 will depend on what the legislature finalizes and what DHHS does administratively once the budget is signed.
• Expect more paperwork if your child receives more than 16 hours a week of ABA. If the budget passes as written, plans above that threshold will need more frequent reapproval, so keeping your BCBA's documentation and progress data current will matter more than ever.
• Ask your provider whether they will remain in-network. A move to closed networks means not every current RB-BHT provider will necessarily be included going forward. If your family relies on Medicaid, it is worth asking your provider directly whether they expect to remain part of the network once these changes take effect.
• Watch for the in-person assessment requirement. Families who have relied on telehealth for initial ABA assessments should expect that option to close if the budget is signed into law as proposed.

How to Protect Your Child's Access to ABA Therapy During Policy Changes

Regulatory shifts like these can feel overwhelming, but there are concrete steps families can take:

• Keep a paper trail. Save authorization letters, treatment plans, and any correspondence with your managed care plan or DHHS.
• Talk to your BCBA about documentation. Ask how your child's treatment plan and progress notes support continued medical necessity, especially if your child receives more than 16 hours a week.
• Confirm network status regularly. Network rosters can change quickly during a transition like this one. Check directly with your provider and your Medicaid managed care plan rather than relying on older listings.
• Know your appeal rights. If a service is denied or reduced, North Carolina Medicaid recipients have the right to request a fair hearing. Ask your provider or your plan's member services team how to start that process.
• Explore your options if a provider exits the network. If your current provider is not included in a closed network, you will need to find another in-network provider quickly to avoid a gap in care.

North Carolina's situation is a reminder that ABA therapy coverage is not static, particularly for families relying on Medicaid. Staying informed and connected to a provider who communicates clearly about billing and authorization is one of the best ways to weather these changes.

If you are looking for an ABA therapy provider in North Carolina, or want to compare options in case your current provider's network status changes, you can search ABA Navigator's directory to find providers near you, filter by insurance accepted, and read verified reviews from other families.