Medicaid Cuts in Idaho and Colorado: What ABA Practice Owners Need to Know

Posted 22 hours ago      Author: 3 Pie Squared Marketing Team

Medicaid has long been a lifeline for families seeking Applied Behavior Analysis (ABA) services. For many children with autism, Medicaid is the only way their families can access therapy. Across the U.S., however, states are tightening budgets, and ABA providers are being asked to do more with less.

In just the past year, troubling headlines have emerged in multiple states. Florida providers have struggled with delayed Medicaid payments, creating cash flow crises that threaten their ability to serve families. North Carolina rolled out new Medicaid rates that left many practices questioning whether they could keep their doors open. Nebraska’s rate...

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cuts left providers scrambling to cover wages and overhead, with parents fearing reduced access to services.

Now, Idaho and Colorado are the latest states announcing Medicaid reductions. In Idaho, leaders are proposing a 4% cut to Medicaid provider rates. In Colorado, Governor Jared Polis announced sweeping budget cuts, with Medicaid and higher education both on the chopping block.

For ABA practice owners , these stories are more than news—they signal a growing national trend that could directly impact your business and your clients.

The Bigger Picture: Why Medicaid Cuts Keep Coming

To understand what’s happening, we have to step back. Medicaid is one of the largest line items in every state budget, often second only to education. When revenues shrink, Medicaid becomes an easy target—even though these cuts hit the most vulnerable communities hardest.

The reasons behind the cuts are consistent across states:

  • Budget pressures – Slower tax revenue growth and inflation are straining state budgets.
  • Federal funding changes – States are adjusting to the end of enhanced federal Medicaid funding provided during the COVID-19 pandemic.
  • Competing priorities – States must balance Medicaid alongside education, infrastructure, and other needs.

For ABA providers, the stakes are high. Margins are already thin due to staffing costs, training, and compliance requirements. Even small cuts in reimbursement can force practices to make difficult decisions about staffing, wages, and service capacity.

Idaho: A 4% Across-the-Board Cut

According to reporting from KTVB , the Idaho Department of Health and Welfare has proposed a 4% across-the-board cut to Medicaid provider reimbursement rates in order to address state budget shortfalls .

For ABA practices in Idaho, this proposal raises immediate questions:

  • How will practices maintain competitive wages for Registered Behavior Technicians (RBTs) and Behavior Analysts if reimbursement shrinks?
  • Will smaller or rural providers be able to sustain operations under lower rates?
  • What happens to families if providers reduce capacity or close altogether?

Idaho already struggles with provider shortages in many communities. A 4% cut may sound modest on paper, but in practice it could significantly limit access to ABA services for families who rely on Medicaid support .

Colorado: Budget Cuts and an RBT Extension

In Colorado, Governor Jared Polis recently announced hundreds of millions in budget cuts , including reductions to Medicaid and higher education . These cuts are a response to a projected $1.2 billion state revenue shortfall following the passage of H.R. 1 at the federal level .

One piece of encouraging news for ABA providers: Colorado Medicaid has granted an extension on the **Registered Behavior Technician (RBT) certification requirement until October 31, 2025**. This gives practices a few extra months to get their RBTs credentialed, which will help many businesses dealing with staffing shortages. However, the timeline is still tight, and for agencies with many staff in training, the deadline could prove challenging.

At the same time, legal experts at Polsinelli point out that the cuts include significant changes for Medicaid providers [oai_citation:0‡colorado-budget-cuts-hit-home-for-medicaid-providers.pdf](file-service://file-8TZCFpRVzU4LPzHyyMnRmy):

  • Reimbursement rollbacks : The 1.6% payment increase slated for FY 2025–26 has been halted. Pediatric behavioral therapy codes are being reduced to 95% of benchmark rates.
  • New claim requirements : All pediatric autism therapy codes will face pre- and post-claim reviews, with the state projecting $7 million in savings [oai_citation:1‡colorado-budget-cuts-hit-home-for-medicaid-providers.pdf](file-service://file-8TZCFpRVzU4LPzHyyMnRmy).
  • Prior authorizations : Outpatient psychotherapy and definitive drug testing now require prior authorization, with an estimated $7.7 million in savings [oai_citation:2‡colorado-budget-cuts-hit-home-for-medicaid-providers.pdf](file-service://file-8TZCFpRVzU4LPzHyyMnRmy).
  • Total impact : Health care providers in Colorado will bear $89.5 million in cuts , with behavioral health and developmental disability providers hit hardest [oai_citation:3‡colorado-budget-cuts-hit-home-for-medicaid-providers.pdf](file-service://file-8TZCFpRVzU4LPzHyyMnRmy).

Provider Voices from Colorado

ABA providers in Colorado are already voicing concerns in professional forums and community discussions. Some of the comments we’ve seen include:

  • “Will our rates roll back on October 1st?”
  • “Pre- and post-claim reviews for autism codes will delay payment.”
  • “Going back to 95% of benchmark rates hurts us when costs keep rising.”
  • “This will push small practices out. Only PE-backed companies can survive this.”

These reactions highlight the real-world stress of running an ABA company in an environment where payers are reducing rates and increasing compliance requirements at the same time. For ABA Practice Owners , the RBT extension helps in the short term, but the bigger funding cuts and new oversight rules remain a serious concern.

What We’ve Seen in Other States

The Medicaid challenges in Idaho and Colorado echo what we’ve already seen elsewhere:

When you look at all these stories together, the pattern is hard to ignore. Medicaid is under pressure nationwide, and behavioral health—and especially ABA—often ends up on the chopping block. Cuts, audits, and delays put providers at risk while limiting access for families who rely on these services.

Practical Steps for ABA Practice Owners

If you’re an ABA provider working with Medicaid, this is the time to plan ahead. Here are some steps to consider:

1. Evaluate Your Contracts

Review your payer mix. How much of your revenue depends on Medicaid? What would a 4% or larger cut mean for your business model? Knowing the numbers today helps you prepare for tomorrow.

2. Prepare for Rate Negotiations in ABA

Don’t assume rates are fixed. When negotiating contracts, bring data to the table:

  • Outline your cost of service delivery, including staff wages, supervision, and compliance costs.
  • Highlight the workforce shortages and turnover challenges in your region.
  • Explain how reimbursement cuts impact family access to services.

3. Strengthen Revenue Cycle Management

With increased audits, claim reviews, and potential delays in payment, your billing systems must be as efficient as possible. At 3 Pie Squared , we provide ABA Billing Training and Revenue Cycle Management services at 2.99% —one of the lowest rates in the industry. If you’re looking for ways to reduce costs while protecting your revenue stream, outsourcing billing for ABA services is a great place to start.

4. Diversify Your Payer Mix

Relying solely on Medicaid is risky. Explore private insurance, TRICARE, or direct-pay models. Some practices are finding success with hybrid models that combine Medicaid-funded therapy with supplemental services families can purchase out-of-pocket.

5. Advocate Collectively

One provider’s voice may not sway policymakers, but a coalition can. Join your state ABA association or coalitions like COABA. As we’ve seen in Colorado, collective advocacy is critical when changes such as prior authorizations or reimbursement rollbacks are on the table.

Conclusion

Idaho’s proposed 4% Medicaid cut and Colorado’s sweeping reductions confirm what we’ve already seen in Florida, North Carolina, and Nebraska: states continue to target Medicaid as they balance budgets, and ABA is often directly affected.

The good news is that you’re not powerless. By understanding your contracts, preparing for rate negotiations in ABA , strengthening billing processes, diversifying payers, and joining advocacy efforts, you can position your practice to withstand these challenges. Colorado’s short-term extension for RBT certification until October 31 is a relief, but it’s also a reminder that regulations can change quickly. ABA practices must stay proactive, informed, and united to ensure services remain sustainable and ethical.

If you want to dive deeper, revisit our earlier coverage of Medicaid challenges across the country:

For more ongoing ABA Business News , check out the ABA Business Podcast. And if you’re looking for ways to strengthen your systems, reduce costs, and keep your practice sustainable, explore our resources at www.3piesquared.com — including handbooks, training, consulting, and our ABA Billing / RCM services at 2.99% .

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