At A Glance
- Learn how healthcare practices can create a sliding fee schedule to help uninsured or underinsured patients afford services. This involves determining usual fees, calculating expenses and desired salary, estimating client numbers, and setting minimum and maximum fees.
- The sliding fee is then based on the patients’ income level compared to the Federal Poverty Guidelines.
- The sliding fee schedule must be applied consistently among all patients and reviewed annually. Even insured patients may need assistance with their fees, so a process for handling this issue should also be established.
Whether financial catastrophe has struck or the problem is simply a lack of insurance, you will always have clients with difficulties paying for their health services. But where does that leave you?
Do you turn a patient away because they can’t pay full price, or do you accept a lesser fee to provide care to a patient in need?
The answer is up to you. However, if you do decide to offer a discount to patients in need, there are steps you must take to protect your practice financially and to stay within regulatory guidelines.
One way you can offer a financial break to both low-income and self-pay patients is to create a sliding fee schedule. This type of fee schedule provides a discount based on a family’s income in comparison to the Federal Poverty Guidelines.
Below is the step-by-step process to create a sliding fee schedule for your health practice and help patients get the services they need at a fee they can afford.
Step 1: Determine usual and customary fees
The first step is to determine the usual and customary health service fees in your geographic area. For example, fees may range from $90 to $150 per hour in Texas, while in New York usual fees could be $140 to $200. You have to do your research. This will give you a baseline to work with when setting up your sliding scale.
Step 2: Add up expenses
Next, you will need to make a list of all expenses involved in running your practice for 1 year. Don’t overlook costs such as interest expenses for loans, employee salaries, liability/malpractice insurance, lease fees, ancilarly services (like cleaning expenses), and software.
Step 3: Set your salary
Now, you 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.
Step 4: Break it down
After adding your salary and expenses to come up with the total amount of income necessary to run your practice for 1 year, divide the number by 12 to determine the minimum amount of income you need in a month to make your practice successful.
Step 5: Estimate client numbers
Now, you will look at your records for the previous year to determine how many clients you’ve seen in the past 12 months. Take this yearly number and divide by 12 for the average number of client visits you have per month.
Step 6: Find your minimum fee
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 fee you can charge for your services and still pay all expenses associated with your practice, including your salary.
You should never charge less than this amount. Some therapists will offer services at a fee less than this to help their patients. While this goal is admirable, you put your business and livelihood in jeopardy when you do this. Furthermore, you can’t support patients if you aren’t able to keep your practice up and running.
Step 7: Set your schedule
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.
|Federal Poverty Level||Fee|
|100 – 200% FPL||$70|
|200 – 300% FPL||$110|
Step 8: Develop a sliding fee policy
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.
Step 9: Determine advertising
Your next step is to decide how you will advertise your sliding fee discount program to your patient population. Will it be posted on your website? Will you have signs in your office?
The following is an example of appropriate signage:
NOTICE TO PATIENTS:
This practice serves all patients regardless of inability to pay.
Discounts for essential services are offered based on family size and income.
For more information, ask at the front desk or visit our website.
AVISO PARA PACIENTES:
Esta práctica sirve a todos los pacientes, independientemente de la incapacidad de pago.
Descuentos para los servicios esenciales son ofrecidos dependiendo de tamaño de la
familia y de los ingresos.
Usted puede solicitar un descuento en la recepción o visita nuestro sitio web.
Step 10: Create and application
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.
Step 11: Set a process for patients with insurance
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.
Step 12: Apply your sliding fee schedule consistently
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.
Step 13: Update and assess
Update your policy annually to reflect changes in your expenses and income needs as well as changes in the Federal Poverty Guidelines.
It’s also important to assess your patient’s eligibility annually to re-certify their eligibility for the program.
Serving the needs of your patients
The key points you must take away from all of this are to always apply your sliding fee schedule policy consistently across your patient population and that while reducing your fees to better serve your patients can be a valuable tool to help your patients, you must never take less than the minimum you need to achieve practice success.
By creating a sliding fee schedule using the 13 steps above, you are helping patients in need of mental health services get the care they need while maintaining your practice's financial viability.