Getting Approved (and Paid) as a Provider of Applied Behavior Analysis (ABA)

As service providers, we are experts in supporting children with autism. Unfortunately, for those of us running an agency, we must also become versed in insurance – no easy feat.
 

This white paper provides a few practical tips to help service providers navigate the world of insurance – from the application process to claims.
 

If you have any information you would like to share, please email us at info@autismtrainingsolutions.com. We would be happy to update this document quarterly and build a more comprehensive understanding of the autism insurance provider space.

Before You Apply, Assess Your Cash Situation

There is a common theme that runs through this document – cash flow.
 

Although many people immediately see insurance companies as a new and lucrative funding source, it can be a financial burden due to increased administrative costs and long claims processes.
 

It is important that you create a rough estimate of these costs to ensure you have adequate cash on hand to cover both administrative costs and payroll.
 

1) Administrative Costs – After becoming a provider, your agency will incur new overhead costs associated with processing insurance claims.
 

In 2003, the New England Journal of Medicine researched the percentage of time and money spent by practitioners on administrative overhead.
 

·   Over 13% of medical practitioners’ time was spent on administrative functions  (including insurance claims)
 

·   Practitioners’ costs for clerical staff averaged 12.3% of their gross income               

Unfortunately, no data has been published (to our knowledge) on the average administrative overhead that an autism service provider will incur when processing insurance claims. That said, we believe it may exceed practitioner rates published above due to the fact that –
 

a.     Insurance companies don’t understand claims – Many insurance employees do not know how to properly process claims for Behavior Therapists; agencies will probably be told wrong details and have to reprocess (one, two or three times).
 

b.     Insurance companies don’t want to approve claims – Due to insurance legislation, many insurance companies are being forced to approve Applied Behavior Analysis and will not make this transition easy for providers and, in many cases, may stall payment.

2) Payroll – Expect to deliver services months before payment is made on your claims.  We have heard that many insurance companies are paying autism agencies 90-120 days after a claim is submitted. If you ramp up services once you become a provider (e.g., take on more cases, hire more employees/contractors), make sure you have enough cash on hand to cover the lag period.
 

In this simplistic example below, if you regularly provide and bring in $20,000 worth of services you are able to cover your expenses – no problem.
 

Once you become an insurance provider, you may steadily increase your caseload and number of employees. For example, if you increase your services (cost) from $20,000 to $70,0000 over the course of a few months, your revenue may not meet your expenses due to the overdue and denied claims associated with insurance companies. 

Services Billed vs. Claims Paid:
An Example of New Insurance Provider Cash Flow

As a new provider, you will want to use insurance to grow your client base but make sure you have enough cash on hand to cover expenses in the first year.

Application Process

It is relatively easy to become a provider. In fact, you can download most applications online and call headquarters for a Q&A session. Want to do a test run? Apply for Blue Cross Blue Shield. We hear they are easy to work with.
 

Once your application is processed, the real challenges come into play.

Negotiated Rates

Negotiating your billable rate is not easy but necessary. Many insurance companies offer unattractive rates that barely cover the cost of service (not to mention to administrative costs of claim processing you will shoulder).
 

The insurance company will market the value of its services to you. In return, you must also market your services to negotiate a higher provider rate. We can’t offer any solid advice on this process (people that have been successful doing this are not eager to share) but we have heard that agencies attract higher rates by:
 

1.     Providing quality autism intervention programs

2.     Standardizing employee training

3.     Maintaining reputable billing practices

Operations

Once you become an insurance provider, certain aspects of your business operations will need to be reviewed, including –
 

1.     Cash Flow – Here is that term again. . .  Do you have enough cash on hand to cover the lag in claim payments?
 

2.     Hiring Staff - Don’t ramp up staff immediately. Although becoming a provider is an exciting growth opportunity for your agency, it may take months to get paid in the beginning. The more staff you hire, the more cash you will need in the bank.
 

3.     Time Resources – Being a provider is time and resource intensive. Expect to be on the phone for several hours being passed around from one person to the next while being told different stories each time. One of our colleagues said he spent over eight hours on the phone to find the proper billing code.
 

4.     Audit – In some cases, the insurance company will complete an audit on your organization. Be sure you are providing quality services at all times and have efficient (and reputable) billing practices.

Handling Claims

Agencies can handle claims in-house or outsource these responsibilities to a third-party company.

Option #1: Do It Yourself

For those managing claims in-house, be sure to understand –
 

1.     1500 Claim Form – For those of you submitting paper claims, be sure to understand how to properly complete the 1500 Claim Form. Instructions can be found online at the National Uniform Claim Committee website.
 

2.     Online Billing Software – Many insurance companies also offer online billing software. Be sure you understand each step!
 

3.     Denied Claims – As we already mentioned, insurance companies are notorious for denied or late claim payments. The main reasons why claims are denied –
 

a.     Incorrect Claims – If every item on the claim form is not correct, the insurance company can and will return your claim, unpaid. The most common mistakes surrounding denied claims is the billing code.
 

In the perfect world, you would pick up the phone and ask the insurance company what code to use. This is not realistic. Many insurance companies do not have ABA-related codes. You will have to try to find the code for your services. We have seen claims fall under a wide array of subjects, including psychology. As we noted before, hours of conversations with multiple people may be necessary to uncover the correct billing codes.
 

b.     Denied Claims – If you are located in a state that recently passed autism insurance legislation (e.g., New York, Massachusetts, California) you may experience a high rate of denied claims because insurance companies 1) Don’t know how to process autism claims yet and 2) They don’t want to process these claims.
 

How can you reduce denied claims? Have the proper codes, be sure your client’s insurance plan will cover ABA and be persistent.
 

4.     Build Relationships with Insurance Companies – If you are going to hire someone to process claims in-house, seek candidates that already have relationships at insurance companies. This will help improve your claim turnaround time. If you decide to do it yourself, make an effort to build deep relationships with people inside the insurance firms. When you find someone with answers, ask for their direct line and email, send them a holiday card, and by all means, do not take your frustrations out on them over the phone.

Option #2: Third-Party Administrative Firm

Some agencies may elect a third-party firm to handle claims processing.
 

The cost is roughly 5-10% of every billable hour. This is a good alternative for agencies that can’t access the upfront capital/financing needed to become a provider (remember, a large amount of cash flow is needed to pay the bills!).
 

Even if you decide to handle claims in house, it is still costing you money and time. Run a cost analysis and find out if it will more effective – financially and mentally – to use an outside or inside claims program.
 

Third-Party vs. In-House Claims Processing

Insurance is a win-win for all involved. With the increase in insurance coverage, children are getting services not previously affordable or available to them before. Agencies are able to gain new funding sources to expand needed services to children on the autism spectrum.

You will be frustrated. Don’t’ give up. Be persistent.

In the end, you and the children you serve will come out on top.