How To Create And Use A Sliding Fee Scale

Apr
17
2012

Licensed Mental Health Counselor, Barbara Olson wrote in from Monroe, Washington talking about her own struggle to provide services to clients in need while also setting limits on how low she should slide on her fees . . . .

Dear Tamara,Man Looking for Money

I just wanted to drop you a note and tell you how wonderful your site is.  It’s very helpful. I especially appreciated your perspective on avoiding managed care and panels . . . .

I have had my own private practice (Monroe Counseling in Monroe, Washington) and have done well with pay-for-fee service or just being an out-of-network provider. I am just at that cross roads of trying to decide if I want to go onto panels, or just stay out of network.  Call after call want to use their insurance because the economy is so bad and they can’t afford out of pocket fees.

Would you share with me if you use a sliding scale in your practice and if so, how do you come up with the scale?

I am struggling with just how low a fee will I accept, and yet want to earn a living, and charge a respectable/fair fee for service...just not sure how to come up with that fee.

In WA, the market seems to be $85 – $125 per hour session . . .yet is that what they are really getting, or are they dropping it down for out of pocket clients…just thinking out loud!”

Barbara, thank you so much for your kind words! I’m so glad you are a part of our online community here at Private Practice from the Inside Out.

I do not use a sliding fee scale and I recommend that mental health professionals find a different way to help their clients meet their mental health needs.  I’ve address some of this in previous posts when I’ve talked to you about How I’ve Dealt with Clients’ Financial Needs, Reduced Fees, Sliding Scales, and Lessons Learned, and I’ve reminded you of some things you need to consider Before You Reduce Those Fees . . . . And, here’s a post where I’ve cautioned you about Setting Different Fees for Different Clients.

However, should you decide that you do want to create and use a sliding scale fee, here are the steps you need to take to do so.

Step 1 – To set your minimum fee on your sliding scale, identify the Usual and Customary Fee for mental health services in your geographic area.  Use this a starting point.

Step 2 – Identify all costs (both soft and hard) related to running your business for 12 months.

Step 3 – Add the annual salary that you desire to make to the costs above.

Step 4 – Add the numbers in Step 2 and 3.  Then divide by 12 to get the minimum monthly income you need to make in order to keep your business running.

Step 5 – Identify the number of clients that you have seen in the last 12 months. Then divide by 12 to get the average number of clients you see per month.

Step 6 – Divide the minimum monthly income you need to bring in from Step 4 by the average number of clients you see per month from Step 5.  This number will give you the minimum amount you can charge your clients without putting your business in jeopardy.

Note that most new professionals undervalue their services and often struggle to build a strong practice.  If you do not have enough clients coming in to see you, offering a sliding scale will not result in a bigger, stronger, healthy business.  You cannot give what you do not have.

Step 7 – You are now ready to create your sliding scale.  Determine what the breakdown of income levels and fees will be based on the high and low fee points you have calculated.  Many businesses use the Federal Poverty Guidelines as a starting point .  Here is an example of the 2011 U.S. Federal Poverty Guidelines and samples of sliding fee scales.

Step 8 – Remember that you cannot offer a sliding fee scale to some of your clients and not to others. Consider how you will gather and document your fairness in administering your sliding scale. One way of doing this is to create a form that gathers relevant information from each client. Such information may include proof of annual household income, number of dependents, chronic / debilitating illnesses, etc. (Remember to update this form regularly.)

If you have an example of a sliding fee scale that you have used, feel free to share it with us here!

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Comments

  1. You must have been reading my mind Tamara. I have been struggling with this issue or fees and how to approach financial aspects of therapy with clients. I take insurance and see clients for private pay. I have both folks who pay my full fee and folks who pay a discounted rate, and have struggled with how to decide this, and even whether or not I should reduce my rate. The group I am with sets the fees and there is a definite bottom (ranges from 65-95/hour). I was reading through some of the other posts you mentioned (always a great review) and I loved the ideas on how to accommodate clients who may be going through financial changes.

    I am wondering though, isn’t it quicker to build a practice if you reduce your rates in the beginning? Isn’t 65.00 better than no dollars? Or do I look long term (and my 0 balance in my checking account) and not reduce my fees at all?

    • Jill, there is absolutely nothing wrong with reducing your fees if you can afford to give your services away and the lower fee is not a reflection of your own self worth. How do you know if you can afford to give your services away? Ask yourself if you are still able to pay your bills and pay your salary. If you can do those two things, then you can afford to offer a reduced fee.

      How do you know if your lower fee is, at least in part, a reflection of your own self worth? Consider how it feels to ask for the full Usual and Customary Rate. (In Colorado, that is $85-125 / hour for licensed therapists.) If you find yourself hesitant to ask for that full fee, then the question becomes “Why?” If the answer you get back is something along the lines of . . . “I’m brand new , I just don’t have any experience, I’m only getting started, no one will pay me that much, or I’m not worth it,” you can bet that the lower fee you are thinking about charging for your professional services is not about the economy OR your concern for your client. It’s about your own self worth and FEAR.

      I’m working right now on a new project to help mental health professionals untangle their thinking related to money. Hope to have the details ready to share with you by mid-May!

      • Tamara thank you so much for your reply. I find myself thinking some of those thoughts sometimes (which I’m sure is a discussion for my own therapist or supervisor haha), and am definitely using my current situation as a learning experience myself as to how I want to handle various fee issues. I look forward to seeing your new project. I know it will be wonderful information. I know if decide not to lower my fees I will be going against office culture, which is probably part of it. Most folks there do offer lower fees of course I am still building my client base and most of them are full most of the time.

        • Jill, just remember that there is always more than one right way – ALWAYS. And, it is important to recognize when you need to resist and when you need to blend into your office culture. Perhaps this is one of those times to blend but it might also be a time to have a conversation about fees in the office, too – just to hear other perspectives or to hear your own mirrored back to you.

          Just remember that old and seasoned therapists have their issues about money, too. And, I’ve heard more than one mental health professional give the explanation (for how to do X) as “That’s the way we’ve always done it” or “I had to pay my dues . . . so you should have to pay yours, too.”

          Those are not the explanations that I hope you get. That’s why we have such burned out and used up therapists and a really sick public mental health system to boot. Hopefully, instead, you will get a variety of thoughtful and different answers from colleagues that have taken the time to take a look at their own relationships with money . . . and you’ll gain some respect from them for having the guts to bring up what is often a difficult dialogue and subject to process through!

          Best wishes on your journey, Jill!

  2. Shawn Williamson says:

    I remember reading a conversation (can’t locate it now, but I think it was on LinkedIn) about dealing with clients on medicaid when the therapist was a cash only business. The end result was this therapist dedicated two or three appointments slots per week to low-income clients. Rather than having a sliding scale, (and not dealing with medicaid or any other insurance) these clients simply had a set payment of $25. These clients’ treatment plan was designed around a brief intervention of four to six sessions only. If necessary, they would be referred elsewhere at the end of those sessions.

    I liked this plan because it offered a way for those who can’t afford services to receive them for a brief time. It eliminates the math of a sliding scale, and it lets you give to the community you serve by offering almost-free services for a select number of clients. But at the same time, it is limited to the number of clients you are willing to work with each week, whether it’s two or three, or some other number your finances can afford.

    • Hi, Shawn! I’m so glad that you took time out this morning to mention this as a possible solution for addressing client’s financial and mental health needs! I often recommend that therapists carve out a certain percentage of their work week to address these client needs rather than to volunteer (out of desperation) a sliding fee scale option to every potential client that calls . The dedication of X number of appointments per week for low-fee / no-fee paying clients is an excellent way to avoid having to deal with managed care, excessive paperwork, and still meet some of your community’s mental health needs.

      It is also reasonable to not offer life-long therapy to an individual client at a rate significantly lower than your Usual and Customary Rate. With that in mind, offering brief, time-limited, solution-focused therapy or crisis stabilization for these same clients can certainly fill a much-needed service gap in most communities. Just make sure that you are ethically meeting your clients’ needs and provide appropriate transitional support to another care provider when needed. What’s not OK is to simply fill your designated low-fee slots for 6 weeks and then to boot those clients out without proper support.

      This sounds like a win-win for a lot of therapists. Assuming you can afford to offer reduced-fee time slots, I would certainly support this as a healthy business decision that also serves to ethically and compassionately meet some individual’s needs.

      However, you still need to decide the criteria by which you are going to assess which of your clients gets those time slots.

      • How does a therapist introduce this concept to a client? If the client, during the initial conversation asks for the prices, do I present my regular rate and then follow through with “and by the way, if you can’t afford that, I can put you on a waiting list for *these other* spots…”?
        It seems confusing, because first of all I may or may not know that they are in financial need, and I worry that presenting a reduced price option alongside my regular sessions could result in families wanting to first “try out” these cheaper services before committing to regular services, which would take away the time from the families that truly would benefit from the reduced costs.

        • Jennifer, welcome to Private Practice from the Inside Out! I love speech therapists and, although we have several who lurk quietly in our community, you are the first, I think, to actually speak up! How did you find us?

          Thanks so much for dropping in this afternoon and asking how to address fees and financial needs with clients. You are asking a question that most of us in private practice fail to consider ahead of time and then struggle to address when first confronted with this issue. Good for you for thinking about this before you need to actually apply it!

          I want to write about this in a blog post so that I can give this topic the time and space it deserves. I hope you don’t mind. Let me work on this and try to get something posted in the next couple of weeks.

          And, if you get impatient, feel free to drop back in and nudge me!

          • Hello Tamara,
            Jena from Independent Clinician posted a link to your site, and I have been browsing and appreciative of the information you post and the questions from your readers.
            I would be happy to wait for a blog post addressing this question and concern. Thanks for taking the time to share this information and suggestions.

  3. Jessica Long says:

    I recently developed a sliding scale fee form but would appreciate ideas on bettering my form. Do you have an example form that I could view?

    Thanks in advance,
    Jessica Long

  4. You know it was really cool when I searched Sliding scale charts for counseling and yours was #3 on the normal search! Nice job. Besides that, I wanted to say thanks I love that you did not just give us a chart but you showed us how we can make it! I love it thank you!

    • Hi, Jocelyn! Thanks so much for dropping in! I tried to respond to this yesterday but apparently forgot to hit “reply.” Trying again!

      Thank YOU so much for taking time to let me know what you are finding useful. That’s the only way I’m going to know how to support you on your journey.

  5. Ann! What a surprise to find that you had linked to my post here! I’m honored and looking forward to finding some of your readers here, too!

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