Understanding the Cost of Early Intervention Services in Illinois

Growing caseloads. Shrinking numbers of providers. Increasing wait times for services. Like many states, Illinois’s Early Intervention (EI) system has been under strain in recent years. While no one factor is responsible for all of these challenges, the ability to recruit and retain a sufficient workforce plays a significant role.

Illinois’s EI leaders had heard from providers that payment rates were not competitive—they were lower than private insurance or many neighboring states, for instance. But this feedback alone did not paint the full picture of the underlying challenges EI providers face in Illinois. Why are the rates not competitive? What can be done to reduce the burden on providers? Are there holistic system changes and strategies that could improve provider participation or reduce workforce attrition?

To explore these questions, Illinois contracted with our team at Afton Partners to create a cost model. The state wanted to better understand the decline of EI providers in Illinois and quantify what it would take to expand the supply of providers. We had previously supported Illinois with cost models for other early childhood services, such as child care. Across early childhood, cost modeling is an increasingly popular tool to understand the cost necessary to deliver services and align funding accordingly.

In EI, many states periodically conduct rate studies to inform their payment rates. Cost models and rate studies seek to answer similar questions: What expenses do providers have when delivering EI services? How much time does it take them to prepare for, travel to, and document the services they provide, outside the time they spend with the child? What rates are required to cover these expenses and time?

A cost model is different from a rate study in that it creates a flexible tool that the state can use to evaluate the impact of future changes: for example, reducing caseloads for service coordinators, or implementing a new technology system that reduces the amount of time that providers spend on documentation. While a rate study captures information at a point in time to recommend what payment rates should be at that moment, a cost model can be used as an ongoing tool to answer questions about the financial impact of changes over time. A cost model is also a living, breathing resource that can be honed and updated as more information is gathered about the field, and as assumptions are tested.

Participants in a cost modeling process often want to know what the “big number” is: how much does it all cost? But the best use of a cost model is not that single number. Cost estimates will change depending on the choices made about compensation, policy priorities, and system changes. Cost modeling is an invaluable tool to be used alongside engagement with the field to evaluate the costs of proposed policy changes, inform prioritization decisions, weigh trade-offs between different choices, and understand the long-term costs of high-quality services.

To build Illinois’s cost model, we started with in-depth engagement with the EI field, especially providers. A model is only as good as the data that informs it, so it was essential to collect updated data that accurately reflected providers’ experiences. Through focus groups with hundreds of providers and families and survey data, we learned more about the challenges facing the field and what providers value in the current EI system structure. Providers reported on the expenses they face, including the costs of benefits, taxes, facilities, travel/mileage, and supplies. We then conducted a time-use study, which asked several hundred EI providers to track their time in 15-minute increments for ten working days, giving us detailed data about the work needed to provide services to children and families.

The time-use study revealed that in the current EI system structure, providers spend nearly two hours preparing, traveling, documenting, and billing for every hour that they spend directly working with a family. Because Illinois pays providers on a fee-for-service basis, this means that the rate for that hour of service does not presently cover all the supplemental work involved to deliver that hour of service.

One of the most critical steps in building a cost model is to choose a benchmark for compensation. Across the early childhood field, salaries and compensation are typically the largest driver of costs. How should the cost model account for this?

Illinois settled on using average salaries for people with similar credentials in Illinois, as reported by the Bureau of Labor Statistics (BLS). We also considered other wage benchmarks, such as the MIT Living Wage and average salaries for people with bachelor’s and master’s degrees in the state, but settled on BLS wages because they reflect what providers could earn in another setting, such as a school or hospital, if they were not working in EI, and they take into account differences in labor markets based on education and credentials.

The cost model used these competitive salaries as a foundation, then added in other expenses (such as benefits and non-personnel costs) to calculate a competitive rate for each hour worked. To translate this into a rate for each service provided, we used the percentage of the provider’s time that is billable (spent working directly with a family or in Individualized Family Service Plan [IFSP] development), as collected in the time-use study. Billable rates differed between providers who are independent contractors and those who work for an agency, largely because providers working in an agency are not responsible for their own billing. (Illinois has a high percentage of EI providers who work as self-employed independent contractors who directly bill private insurance and the state’s Central Billing Office. Some providers also work under agencies, which are businesses of various sizes that handle billing and other administrative functions on providers’ behalf.) Examples of how these costs translate into billable rates are shown in the tables below:

Overall, in Illinois’s current EI system structure, Illinois’s current direct service rates are approximately half of the modeled cost to provide each service, meaning that EI providers are earning about half of what they could earn in other settings with similar credentials. This is valuable information for Illinois’s decision makers, and raises questions for further discussion around factors like technological efficiencies, regional cost differences, and additional supports needed in areas where there may be unequal access to EI services.

In addition to rates per service, the cost model can also estimate costs for the Child and Family Connections (CFC) offices, which provide service coordination in Illinois, and for system infrastructure such as training, billing, and provider credentialing.

A cost model is not a panacea; rather, it is a new tool in a state’s toolkit to understand options for how to improve EI services. Payment rates are one tool for attracting providers into the EI field, but they are limited: providers still need information, support, and training about how to work in EI, for instance. Payment rates are also a very limited tool for improving quality or changing a provider’s practice when working with a family.

Illinois continues to work to better understand what families of children with delays or disabilities need from EI. As part of its transition to the new, unified Illinois Department of Early Childhood, the state is launching an engagement process to hear from families of children under three about what they need across systems - including EI, child care, and family support. Cost modeling will be used as a tool to support the recommendations that emerge from this process.

Illinois’s EI leadership undertook the cost modeling process with a deep commitment to transparency. Implementing the recommendations that came out of this process will take time, but Illinois’s EI leadership feels strongly that gaining a full understanding of the true costs and competitive landscape of EI services was necessary to address the underlying challenges facing the system. Rates and payment are not the only tools needed to improve a complex system like EI, but they are a key lever. Cost modeling can be a critical tool in a state’s toolkit to improve access to services and set more children on a path to thrive.