Medicaid Rate Cuts Spread: Pediatric Services Today, Primary Care Tomorrow

Primary Care Perspective - Texas Edition | Monday, December 29, 2025

Strategic intelligence for independent primary care physicians in Texas. Curated insights on Medicare policy, practice management, AI technology, and market dynamics.

Article 1: State Medicaid Cuts Target ABA Therapy - A Warning Sign for Texas Primary Care

North Carolina just slashed reimbursements for autism therapy by 10%. Nebraska cut payments nearly 50%. Families are losing access to services their kids desperately need. If you think this doesn’t affect your primary care practice, think again—you’re likely next in line.

Analysis

Applied behavior analysis (ABA) therapy is considered the gold standard for autism care, yet states facing budget shortfalls are dramatically cutting Medicaid reimbursements for these services. North Carolina cut rates 10%, Nebraska slashed some provider payments by nearly 50%, and therapy hours are being arbitrarily reduced—sometimes cut in half overnight.

For Texas primary care physicians, this should sound every alarm. The pattern is unmistakable: when states face budget pressure, Medicaid reimbursements get cut. The services targeted first are often specialized therapies and behavioral health—areas adjacent to primary care. But primary care is never far behind.

Texas has one of the nation’s largest Medicaid populations, and the state has historically maintained lower-than-average Medicaid reimbursement rates. While Texas hasn’t announced ABA therapy cuts yet, the state’s perennial budget battles and resistance to Medicaid expansion create a precarious funding environment. When neighboring states start cutting, Texas often follows—or goes further.

Here’s what makes this particularly relevant to your practice: many of you are managing patients with complex behavioral health needs, providing care coordination for kids with autism, or considering adding behavioral health integration (BHI) services to capture additional revenue. If states are willing to cut the “gold standard” therapy that families depend on, they won’t hesitate to reduce primary care rates when budget pressure intensifies.

The North Carolina situation reveals another critical issue: the cuts are arbitrary and data-free. Providers weren’t given analysis showing therapy was ineffective or overutilized. States simply needed to close budget gaps. Your Medicaid reimbursements could face similar arbitrary cuts regardless of your quality metrics or patient outcomes.

Smart practices are preparing now by diversifying their payer mix, building systems to capture every dollar of legitimate reimbursement, and positioning themselves for value-based contracts that aren’t subject to the annual Medicaid budget knife fight. Those still heavily dependent on traditional Medicaid fee-for-service are the most vulnerable.

This is also where technology becomes essential. When margins get squeezed, you cannot afford revenue cycle inefficiencies. Automated eligibility verification, AI-assisted coding to ensure optimal reimbursement, and real-time tracking of claim denials become survival tools, not nice-to-haves. But generic software won’t cut it—you need systems customized to your specific payer mix and patient population.

Key Takeaways

• State Medicaid budget cuts are spreading: North Carolina, Nebraska, and others are slashing reimbursements for essential services—primary care is always on the target list
• Texas practices are vulnerable: With one of the nation’s largest Medicaid populations and historically low rates, Texas could follow or exceed neighboring states’ cuts
• Diversification is protection: Practices heavily dependent on Medicaid fee-for-service face the highest risk when budget pressures mount
• Revenue cycle efficiency matters more than ever: When rates drop, you cannot afford to lose revenue to preventable denials, coding errors, or verification failures
• Data-driven operations are your defense: Knowing your true payer mix, reimbursement trends, and revenue per patient positions you to act before cuts devastate your bottom line

What Smart Practices Are Doing

Forward-thinking Texas practices are conducting payer mix analyses quarterly, implementing automated revenue cycle tools that capture every eligible dollar, and actively pursuing value-based contracts that provide budget stability independent of state Medicaid appropriations.

Position Your Practice for What’s Next

The practices that thrive through industry transformation share common traits: they leverage data strategically, automate intelligently, and make decisions based on market intelligence rather than gut instinct.

Whether you’re evaluating your contract portfolio, considering digital health programs, or planning for succession - having the right systems and insights makes the difference.

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