Guide to creating a sliding fee scale (with free worksheets)

Not every patient can afford the full cost of care — especially those who are uninsured, underinsured, or facing financial hardship. But as a healthcare provider, you’re often left with a difficult choice:

Do you turn patients away, or do you find a way to offer care at a lower cost?

If you choose to offer discounted rates, it’s critical to do so in a way that protects both your patients and your practice. A sliding fee schedule — also known as a sliding fee discount program — helps you offer reduced fees based on household income and family size, following the the Federal Poverty Guidelines.

Here’s a step-by-step guide to create a compliant, sustainable sliding fee scale that supports patients in need while keeping your practice financially sound.

In today’s healthcare environment, especially in behavioral health, mental health services, and independent health centers, many self-pay patients and uninsured patients struggle to afford care. Whether facing financial hardship, lacking insurance, or dealing with high-deductible health plans, these patients often postpone or skip necessary treatment.

As a healthcare provider, you want to offer compassionate, affordable care — but you also need to keep your practice viable.

A sliding fee scale gives patients access to discounted services based on their financial situation while helping your practice stay compliant and financially healthy. But to be effective, your sliding fee discount program must be structured, consistent, and well-documented.

A sliding fee scale, also referred to as a sliding scale fee or sliding fee discount program, is a structured approach healthcare practices use to reduce costs for patients who qualify based on patient eligibility, including household income, family size, and their position relative to the Federal Poverty Guidelines. Instead of charging a single flat rate, your practice adjusts fees to reflect each patient’s income and ability to pay.

These programs are commonly used in behavioral health, mental health services, and community health centers to promote equitable access to care — especially for uninsured or underinsured patients.

Start by identifying the usual and customary fees for your healthcare services in your geographic area. This serves as the top end of your sliding scale.

For example:

Setting this baseline ensures your sliding fee discount program remains aligned with market rates and the realities of your revenue cycle management.

List all annual costs associated with running your healthcare practice:

Include costs for patient scheduling tools, automated reminders, and other services that support patient engagement.

Now, you — as the healthcare provider — need to think about yourself. How much do you want to make this year? What will be your take-home salary? Add this number to the total expenses you determined above.

Add your total expenses and desired salary together. Divide by 12 to calculate the minimum monthly revenue needed to operate your healthcare practice sustainably.

Review your patient data from the last 12 months:

This helps you understand the realistic number of billable sessions that support your reimbursement goals.

Now, divide the minimum monthly income necessary for a successful practice from Step 4 by the average number of monthly client visits in Step 5. 

This is the minimum sustainable fee you can charge for your services and still pay all expenses associated with your practice, including your salary.

Important: Never set your sliding fee scale below this minimum. While offering discounts to self-pay patients, uninsured patients, or underinsured patients is a valuable service, undercharging below your break-even point puts your healthcare practice at risk.

Using the U.S. Federal Poverty Guidelines, you will determine what fees you will charge based on your patient’s income and the minimum and maximum fees you have determined. This will allow you to create your sliding fee schedule. 

Patients at or below 100% of the Federal Poverty Level (FPL) will pay the minimum fee you determined while patients above the FPL will pay incrementally more until you reach your maximum set fee based on the usual and customary fees you determined in Step 1.

Here is an example of a sliding scale based on a minimum fee of $30 per hour and maximum fee of $150.

To maintain fairness and compliance, clearly outline:

When defining your sliding fee discount program, it’s critical to consider patients who are:

These factors should be reflected in your patient eligibility requirements and documentation process to ensure fairness and compliance.

You will now need to develop a written policy to lay out the process by which patients will qualify and re-certify for your reduced fees as well as the type of documentation you will require they provide. 

These can include proof of insurance (or lack thereof), proof of income (payroll stubs, tax returns, or unemployment benefits forms), family or household size, and proof of residency.

Your sliding fee policy should explain:

Post your policy where patients can easily access it — on your website, in your waiting room, and in patient onboarding materials.

NOTICE TO PATIENTS:
This practice serves all patients regardless of ability to pay. Discounts for essential healthcare services are offered through a sliding fee discount program based on patient eligibility, including household size, patient’s income, and qualifying factors such as Medicaid eligibility, Social Security income, or uninsured status. For more information, please ask at the front desk or visit our website.

Ensure your administrative staff understands:

Consistent application of your sliding fee discount program is essential to avoid compliance issues and ensure fairness.

Your next step is to set up a system for assessing income and household size for all patients to assist patients in determining whether they are eligible for your sliding fee discounts. 

The eligibility determination process must be conducted in an efficient, respectful, and culturally appropriate manner to ensure that administrative operating procedures for such determinations do not themselves present a barrier to care. 

Patient privacy and confidentiality must be protected throughout the process.

Even patients whose insurance provides coverage for their mental health services may need help with their fees. You will need to set up a process for handling this issue. In such cases, subject to potential legal and contractual limitations, the fee charged for each pay class should be the maximum amount an eligible patient in that pay class is required to pay for service, regardless of insurance status.

For example, John Doe, an insured patient, receives a service for which you have established a maximum fee of $150. Based on John Doe’s insurance plan, his co-pay would be $90. You have also determined, through an assessment of his income and family size that he is at 150% of the Federal Poverty Guidelines and therefore qualifies for your sliding fee discount program.

Based on the sample sliding fee schedule above, a patient at 150% of the Federal Poverty Guidelines would pay $70. Rather than the $90 co-pay, you would normally charge John Doe; you will now charge no more than $70 out-of-pocket, consistent with your sliding fee schedule, as long as this is not precluded by the insurance contract terms.

Don’t forget to consult with your third-party payers and/or private legal counsel regarding the permissibility of discounting patients’ out-of-pocket costs relative to the terms and conditions of your private payer contracts.

Once you have adopted a sliding fee schedule, you must apply it consistently and fairly. You cannot offer it to some clients and not others. One way to ensure the fairness of your administration is to create a form that gathers relevant information such as proof of household income and number of dependents from each patient.

Stay compliant and financially sustainable by:

Whether you run a behavioral health practice, a solo mental health services office, or a community health center, a well-designed sliding fee discount program helps you balance patient care with financial sustainability.

Ready to improve patient engagement, reduce no-shows, and make your billing process easier for both your team and your patients?

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