Sliding scale fees offer flexibility, convenience, and accessibility to clients seeking mental health services. This pricing system is based on each client's ability to pay for treatment, and they can be fit into any therapy practice.
Whether you're in the preliminary stages of opening your mental health practice or evaluating your current fee structure, it's important to consider the logistics of offering a sliding scale. In this article, we'll review the benefits and drawbacks of reduced rates, special considerations you need to keep in mind, and how to set your rates.
Do Therapists Need to Offer a Sliding Scale?
No.
While some mental health professionals provide sliding scale rates, this is not a hard requirement. You should only offer a sliding scale if it aligns with your values, financial needs, and overall health of your practice.
Before offering a sliding scale, it's helpful to ask yourself:
- How many sliding scale slots do I intend to have?
- How will I establish this rate?
- How will I assess if the sliding scale is financially sustainable for my own well-being?
- How will I adjust the sliding scale rate if needed?
Therapists who opt to provide sliding scales generally value being able to provide more affordable therapy to a wider range of clients. Furthermore, if you're a newer clinician, you might offer sliding fee scales to build your initial caseload, increase your reach, and network more effectively.
Can You Offer a Sliding Scale If You Accept Insurance?
In most cases, you can offer sliding scale rates if you accept insurance, but you must be aware of some inherent caveats, including:
Insurance Contracts
Every insurance panel requires you to sign a contract agreeing to their specific policies and set rates for covered services. These contracts typically prohibit therapists from charging a therapy cost that is more or less than this fixed rate.
Therefore, offering a reduced fee to insured clients may be perceived as "fee-forgiving," potentially violating the contract. You could be at risk for insurance fraud, so make sure to review your contracts carefully.
Non-Covered Services
In most cases, you can offer sliding scale therapy services if such services aren't covered by your client's insurance plan. For example, if their health insurance doesn't cover couples therapy, you can provide a sliding scale fee for that specific service.
Out-of-Network Healthcare Providers
You may still be able to offer sliding scale services as an out-of-network (OON) provider. In this case, the client may use superbills to receive direct reimbursement. Your client pays you the reduced fee, and they submit the claims to their insurance company. With that, insurance may only reimburse them based on a percentage of your standard fee- not the sliding scale cost.
Medicare and Medicaid Compliance
Medicare and Medicaid are government payers and have specific billing guidelines. You may not be able to offer sliding scale fee structures for any of these individuals. Confirm with your specific contracts in advance.
Should You Require Income Verification for Sliding Scale Clients?
It's not mandatory, and it's important to understand the pros and cons of asking clients to provide proof of their limited financial resources. On the one hand, income verification can ensure a sense of accuracy and objectivity. This may prevent clients with more adequate resources from taking advantage of you offering lower rates.
On the other hand, income verification can feel intrusive. Trust is an essential part of any therapeutic relationship, but money is often a private and even taboo matter. Clients may feel uncomfortable or embarrassed to show you the specifics of their financial situation.
How to Calculate Your Sliding Scale Fee Structure
Define your standard fee: Before establishing any sliding scale therapy, you need to clearly identify your standard session fee. This is the rate your full-fee clients will pay, and this is typically the rate you will advertise.
Define your ideal monthly or annual salary: Although this may be a ballpark number, it will help you evaluate how much income you need to earn.
Review your monthly and annual expenses: Your profit refers to the net income you earn after accounting for any expenses. This number may fluctuate, but you should have a clear understanding of what you're taking home regularly. This will help you determine whether a sliding scale is feasible for your practice, and it will also help you average out your various offerings.
Determine your ideal number of clients you want to see each week: How many slots will you have available, and how many days per week do you intend to work? Fees may feel much different for a therapist seeking a part-time income of 10 hours per week rather than a breadwinner fully supporting their family with their therapy practice.
Consider your sliding fee structure: Some therapists offer tiers for their sliding scales. For example, you might offer a set discount for clients with some financial challenges. You might also offer a more significant discount for your lowest-income earners. Other therapists build a more structured sliding scale pricing based on income brackets.
Designate how many sliding scale slots you will have at a given time: To avoid your own financial burden, it's important to establish how many reduced fees you will offer for clients. This number may fluctuate based on your own income and various life circumstances.
Legal and Ethical Considerations for Your Sliding Fee Scale
If you opt to honor a sliding scale, it's essential to determine this fee at the onset of therapy. However, you might also choose to adjust session fees if a client suddenly experiences financial hardship or other circumstances change.
Maintain clear documentation: Indicate your rationale for offering a sliding scale and define when fees will be revisited or renegotiated. If you require proof of a client's income, be sure to keep a clear copy of this in their file.
Beneficence and client welfare: Mental health professionals strive to do no harm and act in their client's best interest. Sliding scale services help people afford therapy if they can't use their insurance or other means. Therefore, in most cases, sliding scale therapy options align well with professional licensing boards.
Informed consent: Clearly discuss your sliding scale option at the beginning of therapy. Clients must be aware of how rates are determined and when their rates may be reevaluated. Consent may need to be revised regularly, particularly if their financial situation changes.
Alternatives to Sliding Scale Therapy
Sliding scales aren't the only option for therapists. Here are some other ways to give back to the community by lowering therapy costs:
Offer reduced mental health services through a directory or by paneling with insurance: If you feel concerned about setting your own fees or managing those logistics, consider advertising your services on a platform like Open Path Collective. Or, you may consider paneling with a few insurance companies to increase accessibility.
Adhere to a pay-what-you-can model: Pay-what-you-can therapy session costs are determined by the client instead of the therapist. At the beginning of therapy, you inquire about the client's ability to pay for treatment and honor that rate indefinitely (or when their financial situation changes).
Pro Bono therapy: This refers to free therapy, and some therapists reserve a few slots for this type of service in their practice.
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