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Most clinicians genuinely want to make therapy accessible for people who cannot afford traditional private practice rates. But the economic realities of running a practice are complex.
While sliding scale work can be deeply meaningful, it can also become financially unsustainable if it makes up too much of a clinician’s caseload.
Because of this, many therapists aim for balance: offering a certain number of reduced-fee sessions to serve those in need while maintaining enough full-fee or insurance-based clients to keep their practices financially healthy.
A sliding scale for therapy is a flexible payment system that adjusts session costs to match each client’s financial situation. The rates are negotiated with the client after reviewing their income to ensure fees are affordable and accessible.
You may adjust fees for clients facing significant medical expenses, unemployment, or other financial hardships that are not reflected in gross income alone. You may also periodically review and adjust the scale to reflect changes in economic conditions or the client’s financial situation.
Offering sliding scale rates can make therapy more affordable for clients without health insurance. And if your practice is exclusively private pay or out-of-network, a sliding scale may make you more attractive to clients who would otherwise see an in-network therapist.
Before implementing sliding-scale rates at your therapy practice, you can do the math to ensure it’s financially sustainable.
Any decrease in your rates means a decrease in revenue. You should account for that potential loss before offering sliding scale:
The result is the amount of wiggle room you have—how much you can afford to lose by offering a sliding scale.
Use this as your guide as you set your sliding scale rates and determine how many clients you will offer sliding scale.
The opposite approach to this—one that is not sustainable—is setting sliding scale rates and making them available to clients without accounting for the potential loss. The result could be a dip in revenue that leaves you unable to cover operating costs or forces you to increase your caseload. That could lead to overwork and financial struggles, two factors contributing to burnout in private practice therapists.
If you’re on an insurance panel, there’s a good chance that your agreement with the insurer prevents you from charging fees lower than the ones you agreed to when you joined the panel. Before offering sliding scale fees to an insured client, check your contract with the insurance company. Some insurers are more lenient than others.
In order to offer sliding scale fees at your practice, you’ll need to draft a sliding scale plan and document every client application for sliding scale fees.
Your sliding scale plan is a written document outlining your purpose for offering sliding scale, eligibility criteria for clients, and the methods you use to calculate individual sliding scale rates.
It’s a good idea to revisit this plan at least once a year. You may need to make changes if your rates change. You may also need to modify your plan if it turns out that your current sliding scale rates are not financially sustainable.
To document each client applying for sliding scale, have them complete a written application and provide proof of their income level. Keep this information in your records.
You should also ensure that each client has the information they need to make their own decisions about fees. That means providing them a document that explains eligibility criteria and calculation methods. You should also specify that sliding scale rates are liable to change, and indicate you provide the same quality of care to clients who pay sliding scale fees as you do to those who do not.
It’s up to you to set a rate that both makes therapy more accessible for clients and allows your practice to earn a healthy income.
To ensure all clients get equitable treatment and to make your rate calculations transparent, you can tie sliding scale rates to the Federal Poverty Guidelines. These set the federal poverty level (FPL) for each state.
For instance, your sliding scale plan may specify that all clients earning 100% – 200% of the FPL in your state are eligible for therapy.
Once you’ve determined a client is eligible, you may decide to set their rates based on their income level. One common approach is to set fees at 0.001 times each client’s income. For instance, a client with an annual income of $30,000 would pay $30 per session.
When a client uses their out-of-network benefits to be reimbursed for the cost of therapy, you’re not bound to any contract with the insurance company. That means you’re free to offer sliding scale fees.
The most important point to note is that the superbill you provide your client should list the actual amount they paid, not your typical fee. For instance, if your typical fee is $140 per session, but a sliding scale client pays $70, the superbill should include the $70 rate.
Some therapists require clients with out-of-network benefits to pay their full fees, since those benefits effectively reduce the cost of care for the client. That allows the therapist to receive their full fee per session, giving them more financial leeway to offer sliding scale to clients who do not have benefits.
You should use your own discretion when determining whether clients with out-of-network benefits are eligible for sliding scale. The most important thing is that these eligibility criteria are documented, clearly communicated to clients, and applied equitably.
When it comes to clients covered by Medicare or Medicaid, there are rules you must follow when offering sliding scale fees.
Waiving or reducing deductibles or copayments for Medicare and Medicaid clients may be considered fraud. And if you routinely offer reduced fees specifically to clients with Medicare/Medicaid coverage, the government may consider it an attempt to induce those clients to use your services. In many states, that’s illegal.
However, the Office of the Inspector General for the US Department of Health and Human Services allows “non-routine, unadvertised waivers of copayments and deductibles based on individualized determinations of financial need.”
Meaning, if you occasionally charge these clients lower fees in order to make therapy more affordable, you won’t run afoul of the rules. The important thing is these reductions in cost are occasional and not routine.
Open Path was founded in 2012 by mental health therapist Paul Fugelsang, LCMHC. It is now a nationwide network of more than 40,000 mental health professionals dedicated to providing affordable in-office and online mental health care to clients in need.
The goal of Open Path is simple: to bridge the gap in access to mental health care. The platform allows therapists to list their services and connect with clients seeking affordable counseling. Open Path serves individuals who cannot afford market rates for therapy, lack adequate mental health insurance coverage, and have an annual household income below $100,000.
Therapists in the network agree to charge between $40 and $70 per session for individual therapy and between $40 and $80 per session for couples or family counseling. Student interns may offer sessions at a flat rate of $30. Clients pay a one-time $65 lifetime membership fee to access the network. There are no fees for therapists to participate in Open Path.
This blog post is provided for informational purposes only and is not intended as legal, business, medical, or insurance advice. Laws relating to health insurance and coverage are complex, and their application can vary widely depending on individual circumstances and state laws. Similarly, decisions regarding mental health care should be made with the guidance of qualified health care providers. We strongly recommend consulting with a qualified attorney or legal advisor, insurance representative, and/or medical professional to discuss your specific situation and how the laws apply to you or your situation.
