One of the choices every practitioner in private practice has to make is how to set your fees.
Karlaye from Arizona writes . . .
. . . I set my base fee at $ 125 per hour . . . but the insurance companies that I work for set it at $85-95. If I have a private patient, its fine, but when I have a client that wants to use their insurance, I can only set it at that price. Is that correct?”
And, Jason from Colorado asks . . .
Is it OK to charge my cash-paying clients $85 / hour and charge my insurance- paying clients $100 / hour? It’s the only way I can see surviving in this economy.”
When setting your fees, you need to be careful. Health care providers are the most common perpetrators of insurance fraud. Sometimes such fraud occurs out of greed; however, it is much more likely that you may be engaging in fee-related practices that are illegal and not even know it.
If you have chosen to work with insurance companies, make sure that you are not charging you cash-paying clients a different rate than those who are filing on their insurance. Regardless of your intent, charging different clients different fees for the same service (based only on whether or not your client pays cash / uses insurance) is not OK.
Look for a future post when I discuss reduced fees and sliding scale fees.
This is an interesting topic that I have talked to a colleague of mine about on occasion. What about the issue of health care providers charging insurance patients more than the contracted rate?
Hi, Jill! Thanks for asking! If you have contracted with a client to charge a certain fee, you are not allowed to charge your client more that that contracted rate. Neither can you collect a higher co-payment than the amount you initially agreed upon. Such practices are illegal, unethical, and would probably cost you both clients and referrals in the long run.
A better practice would be to read the fine print with each managed care contract that you are considering and make sure that you agree to each requirement in it. If you cannot understand all the legalese that is sometimes in the contracts, then take the time and spend the money to have an attorney review them for you. Under no circumstances should you sign a contract that you do not understand or fully agree with. It could be a costly mistake.
Plz address the need for and differences between NPI and Caqh.
thx.
Kristene
Hi, Kristene! I’m not familiar with the acronym, CAQH. Can you please tell me what this stands for or refers to? Then, perhaps I can help.
Hi Tamara, as a new practitioner, I too struggle with the issue of setting fees. I’m looking forward to hearing about reduces fees and sliding scale fees.
Love the website and all the information!
Many thanks.
Dianne
Thanks, Dianne, for checking back in. If you can tell me what you are struggling with concerning the issue of setting fees, perhaps I can help!
I charge on a sliding scale based on income. I rely on an honesty system where no proof of income is required. I’ve found that people are honest and that the fees from my higher income clients compensate for the reduced fees paid by my lower income clients.
Hi, Paul! Thanks for dropping in and sharing your comments here! So you don’t ask for any “proof” of income and that seems to work well for you. How do you decide where people fall on your sliding scale? Do you have some type of formal matrix or how does that work for you?
Hello,
I was a little confused on the above comment. I charge $115 and ins. companies usually allow between $53-$65. I charge my cash paying clients $65. Is that appropriate? I didn’t think it was fair to charge out of pocket clients $115 and the insurance company doesn’t pay $115.
Hi, Brenda! It’s good to hear from you and I’m glad you dropped back in to ask for clarification. No, if I am understanding your situation, what you are doing is illegal. A mental health professional cannot charge cash paying clients one fee and insurance-paying clients a different fee. You need to rectify this immediately by charging both these groups the same fee for the same service.
If $115 is the usual and customary fee in your area, then you should charge that for everyone. And, if you have contracted with managed care for a discounted rate for reimbursement, then you know you will only get paid a fraction of that UCR. But that doesn’t mean you charge less; it just means that you have agreed to accept less.
In fact, I want to suggest that you contact a mental health attorney in your state to ask you how to best go about correcting this practice so that you don’t get into trouble with the insurance companies or your clients down the road. Paying for 15 minutes of good advice over the phone is a good investment in your own risk management. If you do speak with an attorney, I hope you’ll drop back in here to tell us what you learn and which attorney you used.
I will be starting a postdoc position at a group psychology practice. I will be meeting with my future supervisor soon to finalize the details of my contract, which will last for one year. What contract negotiation information can you offer me? I know that I want to highlight my neuropsychological testing experience. I’m currently completing my pre-doctoral internship. Thanks.
My question is this I have a Provisional Licence Clinical Social Work this allow me to see clients, my problem is i am having difficult getting clients despite the fact that my rate is very low compare to the other therapist so i am having second thoughts about during this private practice . despite the fact that this is what I would love to do. any suggestion .
Hi, Yolanda! Welcome to Private Practice from the Inside Out! You bring up a couple of thoughts for me . . . . One is too long to write here so I really need to write up a blog post on it concerning websites. But the other thought that occurs to me is that setting your fees too low can be just as off-putting to potential clients as setting your fees too high. So, the first thing to consider is . . . How did you decide what fee to charge? Trying to undercut the other therapist may just be making her appear to “The Good Therapist” and setting you up to be “Second Best Therapist.” I’m sure that’s not what you were trying to do but that is often the result of charging too little.
It’s also important to recognize that you may not be getting clients for other reasons . . . . Here’s some questions for you to consider before you even start adjusting your fees. Are potential clients actually finding you? If so, how? Once they find you, are they getting the information that they want? Are they booking appointments? Are they showing up for their appointments? Are they returning for follow up appointments?
See what I’m doing here, Yolanda? I’m following the path of your typical client. It’s critical that we identify where you are losing them – assuming they found you in the beginning. Once you know where you are losing them, it’s relatively simple to fix that “leak” and get those clients in the office. Most social workers didn’t get the business training they need to build a strong private practice. Let me know if you need additional information but, whatever you do, don’t throw in the towel too soon.
And, stay tuned for more info that may help you with your website, too!
Great Website. I have a question about this topic of different fees for different clients (ie insurance vs cash paying clients). Wouldn’t use of a sliding scale then be considered illegal if you are billing insurance one amount but reducing the fee for other cash paying clients?
Thanks, Linda, for dropping in to chat!
I’m not an attorney so I am not willing to provide legal advice. Having said that, I can say that what I have been told year after year is that it is unethical and it is illegal to charge clients without insurance one fee and to charge clients with insurance a different fee. I believe it is appropriate to have a written policy on fees that may afford a price break for those clients in financial need. The trick is to define “financial need” and “ability to pay” uniformly across all clients – whether they are paying with insurance or not. To do otherwise, is likely to fall under the category of “insurance fraud.”
I have been a contracted insurance provider for 10 years. One of my biggest insurance providers just reduced my reimbursement rates (again). I want to transition to private pay only because I am tired of insurance companies continually de-valuing my services. Do I have to drop from all the insurance panels so that I can charge clients privately who want to continue seeing me even though they have insurance?
Oh, Renee! I’m so very sorry that this is happening . . . to you and to a lot of other therapists, too. No, you do not have to resign from all insurance panels before you start accepting cash payments from some of your clients. However, cannot accept cash payments from your clients when you are currently under contract with their insurance companies and have agreed to do otherwise. Here’s a few things you need to consider . . . .
Most insurance companies require you to terminate your contract with them in writing. Some require as much as 6 months notice in writing. It is critical that you read the fine print in your contracts and abide by them. They will stipulate how you go about terminating your professional relationship with them. Should you wish to do otherwise, you will need to seek the advice of an attorney.
Many therapists who have been insurance-dependent for a while find it easiest to wean themselves off insurance money slowly. I suggest that you begin to terminate contracts based on their reimbursement rates – starting with the lowest and filling those time slots with cash-paying clients. As your income mix stabilizes, you can then terminate with additional companies.
If you have been relying on insurance companies for a significant amount of referrals, you may need to change the way that you market your practice. Hopefully, you are finding lots of info right here to help you attract new cash-paying clients. However, there are also other websites – both therapist and non-therapist focused sites – that can help you grow a strong and vibrant, insurance-free private practice.
If there is anything I can do, Renee, to support you in that transition, I hope you’ll let me know! Leaving managed care behind was the best and most important decision I have made to grow my private practice and build my confidence as a provider! Best wishes to you on your journey!