Using a Sliding Fee Scale: Some Do's and Don'ts
by Legal and Regulatory Affairs Staff
From time to time, practitioners encounter clients who are unable to afford the services they need. Many psychologists faced with this situation consider reducing their fee. Charging clients different amounts reflecting their ability to pay is commonly referred to as using a sliding fee scale. This approach may carry significant legal risk if not instituted correctly.
Some do’s and don’ts to help practitioners navigate this area include:
Do follow your managed care contract.
You cannot charge an insured client less (or more) than you have contractually agreed to with his or her managed care company. The vast majority of managed care contracts prohibit practitioners from waiving or reducing copayments or deductibles. If this issue is covered in your contract, then you must contact the managed care company for permission to waive or reduce the copayment or deductible. Unfortunately, this interaction is likely to be a complicated and time-consuming endeavor.
Do create a paper trail.
Require written documentation of need from those clients who will be paying an adjusted rate. Documentation can include pay stubs and income tax returns.
One approach involves charting a payment scale based on annual household income and the number of dependents. Consider basing adjusted fees on the poverty levels of your state. For example, some psychologists offer a reduced fee to those clients whose incomes are less than a certain percentage above the poverty level.
If a Medicare beneficiary cannot afford the charges for copayments or deductibles the practitioner must ask the beneficiary to sign a waiver explaining the financial hardship.
If the beneficiary fails to sign the waiver the practitioner must document that he or she made a good faith effort to collect the charges.
Don’t waive copayments or deductibles to induce clients to come to you.
Offering to waive copayments or deductibles for Medicare or Medicaid patients can be considered fraud. In some states, fraud is not just limited to those who entice Medicare and Medicaid clients but may apply more broadly.
Your state psychological association likely has information about applicable state laws and regulations.
Don’t reduce fees or waive coinsurance on a routine basis.
There are two issues raised when practitioners routinely reduce fees and/or waive coinsurance. First, when practitioners regularly discount their fees, they risk having payers reduce their payments. Most government programs and managed care companies pay practitioners based on the lesser of the practitioner’s charge or the payer’s fee schedule amount. For example, if a practitioner’s charge is $120 an hour and the Medicare fee schedule amount for that service is $100, Medicare pays the practitioner 80 percent of the $100 (with the client paying the remaining $20 as copayment). If the practitioner routinely discounts his or her fee by half for non-Medicare clients, Medicare could argue that the practitioner’s usual and customary rate is $60 per service hour, not $120, and, therefore, Medicare should be paying the practitioner 80 percent of $60.
Many managed care companies could make a similar argument, depending on how the payment provisions in the contract are worded. For this reason, practitioners should reduce their fees only on an occasional basis and when they have documented the need for the reduction.
In addition, frequent reduction of copayment or deductible amounts for Medicare or Medicaid patients could be seen by the government as an attempt by the practitioner to induce patients to use that practitioner’s services, which is illegal under federal law and many state laws.
The Office of the Inspector General for the U.S. Department of Health and Human Services has made clear that "non-routine, unadvertised waivers of copayments and deductibles based on individualized determinations of financial need" is a an exception to this prohibition.
Therefore, it is important that practitioners waive copayments or deductibles on an occasional basis only and not advertise their waiver program in a way that is intended to induce people to use their services -- for example, by indicating that Medicare beneficiaries are routinely entitled to a specified discount.
Many psychologists who prefer not to institute a sliding fee scale are still concerned about helping those who need psychological services but are hard-pressed to pay. One option to consider is allowing those clients to pay their bill over time. Another option is to keep your full fee but offer a limited amount of pro-bono services in the community. You can contact local social services agencies to be placed on a referral list for clients in need.
In the event that you are unable to provide the needed services at a cost some clients can afford, be sure to provide them with several referral options from an up-to-date list of lower cost but competent providers, such as community-based mental health centers in the area.
Please note: This article does not constitute legal advice. If you need a legal opinion, you should work with an attorney with appropriate experience.
UsingASlidingFeeScale-SomeDosandDonts.pdf
(79.15 Kb)
