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,
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 ethically.
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 the current U.S. Federal Poverty Guidelines and samples of sliding fee scales. [Updated 06-17-19]
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!
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!
Hi Tamara, I read through your website for advice and direction from time to time. Goodness, how I wish you could provide supervision in Minnesota! I just read your response to Jill on reduced fees and regarding supervisors saying, “You just need to jump back onto the agency wagon,” and “Cut your teeth like the rest of us.” It is frustrating and hearing you say this is a breath of fresh air. Thank you for the support you give. I am also considering how to integrate a low number of spots for sliding scale, and appreciate everyone’s contributions, I also work with several low SES families. I am also going to maybe apply to one panel. I am thinking if I am on the panel, that could get messy with a sliding scale, and my income could drop more if reimbursements are not similar to my fees. What are your thoughts? Thank you!
Thanks, Kim, for taking the time to drop in to chat here!
If you are considering offer services that are accessible to those clients with fewer resources, I would encourage you to consider Open Path Psychotherapy Collective as an alternative to offering a sliding sale.
Check it out and let me know what you think!
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.
Thanks, Jennifer! I couldn’t find where Jena had posted a link to my website but . . . thanks, Jena, for thinking of us! Jennifer, I’m working on that post right now!
Hi Tamara,
Did you post that blog? I would love a link to keep reading.
Jennifer, I think you are referring to a post but I can’t tell what you are asking for exactly. Can you please explain?
“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!”
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
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.
Thank you for writing and linking your articles! They were ever so helpful!
Zaena, you’re so welcome! Glad to have your voice here in the community! Let me know how I / we can best support you on your journey!
I have read through much of the Q&A here and I’m still stuck with a question: I have just graduated with my MS in Psychology and Counseling. I have applied to my state (FL) to become a Registered Intern. I must obtain 1500 hours of face-to-face counseling/or two years, which ever is longest prior to receiving my license (LMHC). I cannot take insurance because insurance companies don’t seem to like new practitioners.
How do I go about making any money if not for Sliding-Scale. (I’m working in a private practice that my supervisor owns). If I volunteer to see insured patients for only their co-pay I’d be taking food out of another counselor’s mouth.
How do I advertise whatever services I can charge for?
Thanks much
Rich
Hi, Richard! I’m sorry that I didn’t see your questions until just now. You’re bringing up some really common concerns. Let’s start with . . . do you have a website?
Hi Tamara,
I will be launching my private practice in the next month or so. I am currently working on my website (Revivecounselingcenter.com) so it is currently under construction…Anyway I am STUCK on what to do: My area of focus is the Latino Population as I am Spanish speaking and there is such a need in my community. My issue at hand is most children will have Medicaid however the parents will be uninsured and CANNOT pay $100 session. I am open to charge less (sliding fee scale) with the understanding that I cannot go broke doing my business and my work is valuable! How can I make accepting insurance and a sliding fee scale work-LEGALLY!? I understand you cannot charge less than an insurance your paneled on pays you. So what if I have one insurance that pays $75, another $80, and another $90, am I okay to have my lowest sliding fee scale be $75/per hour? Thank you!
Hi, Norma! Welcome to Private Practice from the Inside Out!
I’m not sure where you are geographically but I know of nothing that dictates how low you set your fees. Where did that information come from?
Hi Tamara,
I also have somewhat the same question. I will be opening up a group practice in a few months and have the concern that the population I will work with (low income Latino population) will not be able to afford the full fee. What do you suggest in regards to this dilemma?
I am just about to open my own practice and am SO excited, however, the only damper is getting on insurance panels. Knowing that the going rate is around $100, I worry that if I go private pay until I can get on insurance panels, no one will come. What has been your experience with people being able to pay privately those prices?
Hi, Sheila!
Congrats to you on gearing up for private practice!
Happy to celebrate with you!
I think most of us worried in the beginning that “no one will come.”
But, since I work with therapists every day, I can tell you with confidence that whether you work on insurance panels or are a cash-only practice, if clients aren’t coming, it’s not likely to be about this choice.
I know many practitioners who work directly with insurance and many who do not who are equally successful in their businesses; I think a more important step to insure your success is to be making the choice to work or not work directly with insurance based on your own values and preferences.
There are lots of ways to assist clients with their financial needs; none are perfect.
If your preference is to work as a preferred provider with managed care, you can absolutely do that with confidence that you can succeed; you will likely need to work more hours with more clients for a lesser hourly rate than your peers who are running cash-only practices.
Conversely, if you preference is to work with fewer clients and possibly for fewer hours at a higher hourly rate, you can choose to do that.
You’ll likely market differently based on these choices but what I know is that between your family members and mine . . . between your friends and mine . . . between your neighbors and mine . . . and, between your colleagues and mine, there are PLENTY of people out there that need our services.
It’s simply a matter of getting known –> liked –> and trusted by them so that they can and will pick up the phone to book those appointments with us.
This is entirely 100% do-able for you!
Best wishes on your journey!
It took me about 2 months to get on Cigna, 3 months for Horizon Blue Cross Blue Shield, 4 months to get on United Healthcare and still waiting for Aetna since August 2021. I paid someone to assist me but did not get 100 % so I ended up completing the credentialing. It is not hard to do it if you have to the time to seat and apply to each insurance panel you want to work with. Once you have been accepted it is another story learning how insurance works. I use simple practice and had to enroll for each insurance company and still waiting for 3 now. You have to just hang in there but it is not an easy process. I find that it takes time when dealing with insurance. I will probably hire a billing person in the near future as I want to spent my weekends doing things with my family. I also take cash clients depending on their financial situation but it is between 65 to 125 per hour. Good luck and Congratulations. I just opened my private practice October 2021 and glad to have my husband’s financial and emotional support.
Thank you, Caroline, for the reality check.
There are many individuals and businesses that “offer to help” therapist do a variety of things . . . .
Credentialing, billing, virtual assistance, coaching, web design and internet marketing are just a few that come to mind.
My advice is to move cautiously toward that assistance and vet them well just like a contractor you would hire to work on your house or fix your car.
Not all are equal.
Congrats to you, Caroline on opening your new private practice and best wishes on your journey!
I look forward to chatting with you here!
Hi! Really wonderful article, thanks so much for your wisdom! I just recently started a private practice and target mostly post-college graduates. Compounded by the pandemic-influenced job market for new grads, many of my potential clients will have very little expendable income, but they’re living back home with family (temporarily). To just start out, I accepted clients at a lower rate, and am now looking forward at establishing a more formalized sliding scale. My questions are: (1) do I need to obtain some proof of income, to verify their place on a sliding scale, or is it ethically okay to “take their word for it?” (I see trauma survivors so I always take every opportunity to model trust with them and would much prefer taking their word!), and (2) for my existing clients, how can I approach the topic of “raising rates?” Can I keep existing clients at the same (lower) rate, while proceeding to introduce the sliding scale for new clients, or do I need to discuss the newly established sliding scale with everyone, new and existing? The rate that I charge my current clients is the bottom of my (potential) sliding scale. I don’t want to lose anyone but also want to make sure above all else that I’m being fair and ethical! Thank you so much for your time in entertaining my thoughts! 🙂
Hi, Katie! Congrats to you on your new practice!
You are asking some really great questions here.
Through an ethical lens, it’s fine to “take their word for their household income” IF you mean that you take every client’s word at face value rather than some or most clients’ words.
But, what you cannot do is pick and choose who you believe.
For example, you cannot decide to make an exception and require proof of income from your client who travels to Italy for 3 weeks and then returns in his beautiful black Mazaratti (that he tells you he paid cash for).
What you offer to one, you must offer to all. And, standards for one, are the standards you must set for all to qualify for your reduced fees.
Here is what I learned to do when it’s time to raise your fees and this is what I learned about raising fees from my colleague Julie Hanks.
And, this tells you just about everything you need to know about how to go about raising your fees with your existing clients.
Katie, I hope you find this helpful and will let your colleagues and professors know about my blog as a resource.
Let me know if there is anything I left out!
I look forward to chatting with you again in the future!
Our office would love to move to self-pay but we are in a small area and that isn’t realistic. We don’t have a sliding scale but if a client doesn’t have insurance we charge $100 for the session. We came up with that amount by averaging the the amount we received from insurances.
We need to stay in that range and have a minimum set number of clients to work our office budget. We do not accept Medicaid because they pay too little. If we accepted Medicaid we wouldn’t make our budget.
Therapists need to decide how much they need to make to make office ends meet. This includes what the therapist needs to take home to survive as well.
Thank you, BE for sharing your experience here!
That’s so helpful for those new to private practice to hear from therapists other than me who are out in the field doing the actual work of running a practice!
I appreciate your voice and hope you return often to join the conversations here at Private Practice from the Inside Out.
Hello! Thank you for all the great information and for taking the time to help us!
I do have to say that I am a little bit confused about the fact that I cannot offer a sliding scale to some clients, it needs to be equal to all clients. I have worked in many group private practice before and nobody was using this rule. I am now very confused. So does this mean that I cannot have a full fee and a sliding scale based upon client’s financial situation? It’s either everyone pays the same fee (full fee) or everyone has a sliding scale?
I am in New York where I would say the average for an individual session is $200 a session. I was hoping to offer that as my full fee and offer the option of having clients pay between 150 and 200 depending on their financial situation. Is that not ethical? But then how do you prove that the $200 the client is paying is not a sliding scale fee then?
Thank you very much!
Hi, Lisa! I apologize for the confusion.
Here’s the deal . . . . Whatever you offer needs to be fair – not equal.
Some people need your reduced fee; others do not.
If you come up with your criteria for who “needs” that reduced fee and then you hold everyone to that same criteria, only the ones who meet that level of need, are granted your reduced fee.
Does that make sense?
Most non-profits and private agencies / practices create a checklist or table that says “if you have X number of dependents and you have a gross income of Y, you then qualify for a reduced fee of Z.
I hope that helps!
Hello, I don’t know if this thread is still active, but I would love to chat more about all this. I am new to private practice, and would like to understand how to implement a reduced fee for clients. Why do you advice against setting a sliding scale fee just for a couple of clients? Why do I have to offer a sliding scale to all my clients if they can afford my full fee? Thank you!
Hi, Lynn! It’s about a core value of fairness and, if you work with insurance companies (or your clients seek reimbursement from managed care companies for your services).
What you offer to one, you must offer to all.
And, I would ask you to consider why would you not offer a sliding scale to all of your clients if “some can and some cannot afford full fee?”
After all, clients who are able to afford full fee would not qualify for a sliding scale fee – right?
Let me know if I can help in some way, Lynn!
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!