Long-Stagnant Fee-for-Service Rates in Autism Therapy Stunting Industry’s Potential

Long-stagnant fee-for-service rates in the autism therapy space could stunt its potential as an industry and lock out innovation. 

With key exceptions, autism therapy providers across the board have seen payer rates trending flat for years with some payers attempting to push rates down, according to more than a dozen provider, investment, legal and accreditation executives Behavioral Health Business interviewed at the Autism Investor Summit.

Flat rates have effectively acted as rate cuts, given the inflationary pressures that have plagued the economy and been disastrous for some in the autism therapy space. A handful of leading organizations buckled under the pressure last summer and fall and closed practices or laid off staff.

“The fee-for-service rates are unsustainable and inappropriate at this time in the majority of situations,” Helen Mader, founder and CEO of Behavior Frontiers, told BHB. “We’ve been an [applied behavior analysis] provider for almost 20 years. The rates have been stagnant and flat for many, many years.”

El Segundo, California-based Behavior Frontiers was founded in 2004 and now operates in 12 states and holds insurance contracts allowing it to operate in 20 states.

Behavioral health has been a long-underappreciated segment of the health care system regarding payer rates, Mader noted. This is especially true for the applied behavior analysis (ABA) space. ABA is the leading therapy for those with autism and similar conditions in the U.S.

Julie Kornack, chief strategy officer of the Centers for Autism and Related Disorder (CARD) and founding board member of the National Coalition for Access to Autism Services (NCAAS), told BHB that payers generally get away with paying lower rates and not building similar rate escalators as seen in other segments of health care due to lax enforcement of federal parity laws.

“There’s just a lot of bad behavior or a disconnect between understanding what mental health parity means in terms of rates and access for your patients,” Kornack said.

Kornack pointed to a now-famous study by the firm Milliman that finds health plan members go out-of-network between seven and 11.5 times the rate for behavioral health office visits that they do for primary care visits.

The prevalence of out-of-network use is a proxy of network adequacy, Kornack contends. Further, it shows that typically lower in-network rates simply don’t align with behavioral health providers’ needs, she said.

“What we’ve found is that rates are not going anywhere,” Sara Litvak, the CEO of the autism accreditation body the Behavioral Health Center of Excellence (BHCOE) and co-founder of the Autism Investor Summit, told BHB. “What we heard definitively from payers is that unless there is clear evidence that patients are making progress, or that organization and differentiating themselves in a broader way, there’s really no incentive for payers to budge on rates.”

What drives reimbursement rates?

While reimbursement rates have been flat historically across the autism therapy industry, some organizations have been able to get rate increases. But providers argue those rates didn’t just happen due to a company’s innovations or quality improvement: They had to fight for them.

It’s also critical to understand a fundamental dynamic in health care.

“Our system is not looking to spend any more on health care,” Ben Matz, managing director at investment bank B. Riley Securities, told BHB.

Payers often see it as their duty — and key to their bottom lines — to mitigate spending and cost growth where possible. National health expenditures grew 2.7% to $4.3 trillion in 2021, according to federal data. The U.S., far and away, has the highest rate of health care spending globally.

“If you’re going to get rate increases, particularly in the current environment, where there’s pressure, you are going to have to manage your pair of relationships to get those increases, they’re not going to happen by default,” Matz said.

The key actions include aggressively pursuing rate increase, demonstrating differentiation and proving the value-proposition of doing so.

There’s just a lot of bad behavior or a disconnect between understanding what mental health parity means in terms of rates and access for your patients.

Julie Kornack, chief strategy officer of the Centers for Autism and Related Disorder (CARD) and founding board member of the National Coalition for Access to Autism Services (NCAAS)

Chatsworth, California-based autism therapy and support service company 360 Behavioral Health has recently seen rates increase due largely to an aggressive contracting team, Rob Marsh, CEO of 360 Behavioral Health, told BHB.

Further, the company is trying to build leverage by coordinating other autism therapy providers in rate negotiations with payers. For example, the company is negotiating treatment rates in the Los Angeles Unified School District and is encouraging providers to stand in solidarity for a cost-of-living increase to reimbursement rates.

360 Behavioral Health operates 17 locations in California.

Proving value

Kornack similarly called for additional advocacy at the national and state level to ensure parity laws are strengthened and enforced.

Litvak identified three potential differentiators for autism therapy providers — a differentiated care model that consolidates services into the same setting, building genuinely new capacity to serve underserved populations in rural or other underrepresented populations, and differentiated care models with provable quality and consistent workforces.

“No one’s going to give an increased rate just to give an increased rate,” Litvak said. “There needs to be some proof points that there’s something happening above and beyond what other providers are doing to get preferential treatment.”

Companies such as San Diego-based Cortica and Voorhees, New Jersey-based NeurAbilities Healthcare operate care models that include ABA as well as a spectrum of related behavioral health, habilitative/rehabilitative and medical services. Thus, they provide a wide range of care for patients with autism in addition to being able to treat a wide range of neurodivergent conditions. Leaders at both companies say they’ve successfully secured higher reimbursement rates.

“The key really is to work with the payers to prove your value to [payers], to be able to say, ‘not only can we provide these services but we’re worth this higher rate,'” Kathleen Stengel, CEO of NeurAbilities Healthcare, told BHB.

The company has been pushing for value-based case contracts and has leaned into tracking both care outcomes as well as process measures that hint at an indication of quality. So far, this has translated into something short of true value-based care contracts such as capitation; it’s led to enhanced rates depending on performance on three measures.

These measures are utilization as measured by the percent of prescribed hours provided, access to care as measured by speed to care from the time of diagnosis, and patient satisfaction.

“Those aren’t the only three measures I’m taking,” Stengel said. “Those are the three that I can take them to the payers that they care about, that I care about and that, at the end of the day, families find value in.”

Neil Nattangadi, CEO of Cortic, reflected a similar sentiment. The company has been able to strike value-based care deals that are predicated on care and process outcomes. And that comes as part of a wider effort to prove the value of Cortica’s care model.

“The challenge on providers is to go to plans but make a win-win argument for why rates should improve,” Nattangadi said.

Autism therapy held back by low rates

Despite all the talk and interest on the part of payers about improving value and assessing care and coverage as a grand whole, value-based care is nearly nonexistent in the autism therapy space.

And these discussions seem to distract from the real and present issue providers face with stagnant rates.

“Those need to be rightsized first — before value-based discussions begin,” Mader said.

Although they focus on value-based care, Corica and NeruAbilities Healthcare still operate primarily on fee-for-service contracts.

The results of problematic payer rates have been struggles in providing attractive and retentive pay rates for care providers. That has a cascading effect that decreases a company’s revenue, drives up hiring costs, limits growth potential and, ultimately drives down the company’s value.

The reimbursement rate-pay rate tension worsens the shortage of autism therapy services in the U.S. Already, waitlists for autism therapy are months long, if not worse, in some metros.

“Ten out of 10 folks that we speak to in this market are experiencing a shortage of staffing because the demand is so high,” Mike Moran, co-founder and executive advisor of the Calabasas, California-based firm M&A Healthcare Advisors, told BHB.

Providers see patient access and demand issues as a point in favor of industry-wide rate increases but also a move that’s in the self-interest of payers.

Chris Tillotson, CEO of Prospera Healthcare, pointed to low Medicaid rates in Texas especially compared to the volume of autism patients.

“That population just can’t get the service because there’s not enough of a reimbursement to justify it for the providers,” Tillotson said. “The demand, meaning the number of children with autism, is growing at such a high rate. Eventually, the Medicaid [plans] are going to have to pay a reasonable amount or their clients just aren’t going to be able to get services.”