Updated: Sep 11, 2019
This past week I had the opportunity to speak at the Private Care Association National conference in Orlando, Florida. My talk at the conference focused on a number of different long-term care issues.
One of the main issues I talked about was the necessity of Providers understanding and taking an assignment of benefits from their clients. For those who are not familiar with the assignment of benefits, often times referred to as an AOB, the AOB is an agreement or arrangement between an insured and the Provider, by which the insured directs the insurance company pay the benefit directly to the provider, and to allow the provider access to all policy information necessary to perfect the claim. In the context of long term care, the AOB removes the client from the complicated approval and billing process.
Throughout my career in the long-term care space, I’ve come across a multitude of providers who for a variety of reasons, refuse to take an assignment of benefits from their clients. Often providers tell me that taking assignment adds to their back-office costs and negatively affects cash flow, or they argue that collecting payment from their client rather than from the insurance company directly is just easier to handle. “Let the client deal with the insurance company” is a common sentiment in the industry. While I understand that the assignment of benefits can seem daunting and these views on taking the assignment may have some merit to a provider that is not proficient in claim submissions and processing, I argue that failing to take the assignment is a serious error on the part of providers.
So why should providers provide care under an assignment of benefits?
The simple answer is because it is good and smart business. An AOB is a legal device that gives providers rights that that they otherwise would not have. The AOB gives providers legal standing to bring direct legal action against the insurer for denial or short payment of claims. Instead of worrying about collecting from the client you now can take recourse yourself directly against the insurance company. This not only creates extra protection for the provider’s receivables, but it also removes the possibility of having to bring legal action against a client, which no provider ever wants to do. In many states there is an added benefit that if legal action is required against the insurance company and you prevail, the insurance company will have to cover your legal costs. Taking an assignment is the smartest insurance policy you can have.
Lastly and arguably the most important benefit of taking an AOB is that doing so allows a provider to remain competitive in their market. If your competition isn’t taking an AOB but you will, potential clients will see significant value in that. No client wants to be a middle man, particularly a client who is trying to simplify her life rather than complicate it. As such, an AOB brings convenience to them which most clients will pay a premium for. Alternatively, if you are in a local market where taking assignment is common place but you for whatever reason have not yet committed to doing so, then you are leaving money on the table. Don’t let your competition get ahead just because you don’t want to handle the assignment.