Indiana’s Updated Medicaid Policy for ABA Therapy: What You Need to Know
In February 2025, Indiana’s Family and Social Services Administration (FSSA) introduced a revised Medicaid policy for Applied Behavior Analysis (ABA) therapy. The updated plan is designed to balance rising healthcare costs with the need to provide meaningful, medically necessary care to children with Autism Spectrum Disorder (ASD).
Why the Change?
Medicaid spending on ABA therapy in Indiana has surged in recent years—from $276 million in 2021 to more than $639 million in 2023. To manage these costs, FSSA originally proposed strict caps, including a 30-hour weekly limit and a three-year lifetime maximum. However, strong pushback from families, advocates, and providers prompted the agency to revise its plan.
The New Tiered Coverage System
Rather than a one-size-fits-all limit, the updated policy introduces a tiered model that aligns therapy hours with the child’s level of need. Coverage tiers are based on the severity of the autism diagnosis:
- Level 1 ASD: Up to 30 hours per week
- Level 2 ASD: Up to 32 hours per week or as prescribed by a healthcare provider
- Level 3 ASD: Up to 38 hours per week or as prescribed by a healthcare provider
- Other Disabilities: Up to 38 hours per week if ABA is deemed medically necessary
This flexible model is meant to preserve individualized care while maintaining some control over Medicaid expenditures.
What About the Lifetime Limit?
The revised rule still includes a 36-month (three-year) lifetime limit on comprehensive ABA therapy. Importantly, this limit will not be applied retroactively. Every individual’s count will start on April 1, 2025, when the rule goes into effect. After reaching the limit, individuals may still qualify for focused, behavior-specific ABA services if medically necessary.
Mixed Reactions from the Community
Some lawmakers and families view the changes as a step in the right direction. State Representative Robb Greene, whose son receives ABA therapy, called the revisions “a compassionate, child-first model.” Advocacy organizations like The Arc of Indiana welcomed the tiered approach but continue to push for the removal of the lifetime cap, arguing that many children require therapy beyond three years to reach their full potential.
Next Steps for Families and Providers
For families, it’s critical to speak with healthcare providers about how these changes may impact therapy plans. Understanding the child’s diagnosis level and the medically necessary hours of treatment will help prepare for the upcoming shift.
Providers will need to adjust treatment planning and documentation practices to align with the tiered model. Proactive communication with families and case coordinators will be essential to ensure services remain consistent and effective.
Conclusion
Indiana’s new Medicaid policy for ABA therapy aims to create a more sustainable system while still supporting children with ASD and related conditions. While the tiered model offers a more individualized framework, ongoing conversations between providers, families, and state officials will be crucial—especially around the long-term impact of the lifetime cap. The success of this policy will depend not only on cost control but on whether it truly meets the needs of the children it’s meant to serve.
