Counseling Today, Private Practice in Counseling

The slippery slope of sliding fee scales

Robert J. Walsh and Norman C. Dasenbrook February 17, 2007

Q: I purchased your book after being in private practice for 20 years and find it helpful, even now. You give an example of a bill sent to an insurance company. It shows an “amount waived.” You recommend against using a “sliding fee scale.” You also advise billing the full fee to insurance companies. What is the difference between a sliding fee scale and “amount waived”?

A: Great question, and we are glad you liked the book. You are correct that we do not recommend a “sliding fee scale” because they are difficult to administer fairly.

The amount waived is the fee reduction for most third party payers that is on the client explanation of benefits. As you know, most managed care and insurance companies have preset fees and/or pay a percentage of your usual and customary fee. We recommend billing these third party payers your full fee, and they will waive the amount over the fee limit. That way you don’t charge different fees based on the contracts with different third party payers.

Q: I would like to start a limited private practice. Rather than rent my own office and have all the start-up costs, it would seem more cost effective to subrent space from an existing practice. Typically, how is that done?

A: First, congratulations not only on making the decision to start your own practice but also taking the next step to actually do it. Second, as Steven Covey says, “Begin with the end in mind.” Third, whatever you do, get it in writing. Fourth, have an attorney review the document. Following are some other considerations:

What do you need?

Before approaching an existing practice, know what you are looking for and what you need. Then you can negotiate rent, services and price.

Are you just looking for an office one night a week and Saturday mornings? Do you need your own office exclusively so you can decorate your way and see clients whenever? Do you need billing or secretarial services, or will you handle that yourself? Who pays for office insurance? Do you need access to a copier, fax machine, computer, conference room, etc.? Do you expect referrals from the practice? If so, how are new clients handled when they call the practice but specify a particular counselor? What is the protocol for on-call or after-hours coverage for emergencies? Do you need the practice to have corporate contracts with managed health care and insurance companies that cover all licensed staff, or will you pursue these yourself? If all goes well, what are the possibilities of becoming a partner in the practice?

Also, when approaching an existing practice to rent space, think outside the box. In our book and in the “Start-up” bulletin on ACA’s website (www.counseling.org) under “Private Practice Pointers,” we have been recommending approaching physicians to sublet office space. Back in the early eighties, Bob set up practice in a large pediatrician group practice because his niche was children!

Financial agreement

When renting office and support services (space, office equipment and support staff) from an existing practice, it is becoming more common to be asked to pay a percentage of your billings or collections. We always worry about the appearance of “fee splitting,” especially if you receive referrals from the practice. We would recommend paying a “flat fee” per hour or a monthly charge for X amount of time. 

For example, if you charge $100 an hour, agree to pay $30 to the practice rather than 30 percent. To us, it is cleaner and avoids the perception of paying for referrals. Depending on the office and services, never consider paying more than $40 per $100 of fees billed or collected.

Practice restrictions

How long a contract does the practice require? Remember that this protects you as well as the practice. Avoid month-to-month agreements and detail what the conditions are for early termination by you and/or the practice.

Try to avoid signing a “noncompete clause” if you can. These agreements usually stipulate that you cannot practice for a certain amount of time and within a certain geographical range (counties or mileage radius) of the existing practice.

Should you decide to leave (to start your own practice) or be asked to leave the practice (creative differences or egos), you need to have an agreement in place to determine what happens to your current clients, past clients and client records and what happens when new clients contact the old practice requesting to see you. While this may be awkward, we have fielded many questions about this topic and threats of lawsuits. It is good client care and good business to have this decided before you start.

We hope this provides you with some ideas in pursuing your goal and, perhaps more important, questions to ask yourself. Just as in our work with clients, if we know the desired outcome the path becomes clearer. Moreover, setting up your practice is a business venture. Business success favors the prepared person.

Q: I have been in private practice for three years and have done my own insurance billing. I recently married, and my husband, who is retired, is going to take over the role of my insurance billing manager. We have discussed the necessity for him to honor all forms of confidentiality and become compliant with the HIPAA guidelines. Do you know of a form that has been created for support staff to sign to acknowledge their compliance? If so, would you tell me how I can find it?

A: HIPAA only looks for best effort to meet the spirit of the law. We are not lawyers, nor is this legal advice, but we find that a typed letter of agreement between you and your billing manager (husband) to comply with HIPAA confidentiality constitutes meeting the requirements. You can also make him your compliance officer if he works for you in your practice. You simply need a letter saying he is your compliance officer. Place all HIPAA files, including these, in a folder marked “HIPAA.” This should cover your bases.

After spending a lot of time researching this, we found that it wasn’t as complicated as we first anticipated. Norm spent 60 hours and has all the guidelines and forms on disk in our book, The Complete Guide to Private Practice for Mental Health Professionals (www.counseling-privatepractice.com). We hope this helps.

Q: I recently changed my private practice address and phone number. Do I remember correctly that there is one website where I can submit this information without having to go to the five or six insurance companies to whose panels I belong?

A: Yes, it is the Council for Affordable Quality Healthcare at https://caqh.geoaccess.com/. If you are unsure what CAQH is, go to ACA’s website in the Member’s Only section and under “Private Practice Pointers,” you will find the information you need to do this.

You can call one of the managed care or insurance companies that you are currently with to get a CAQH identifier number. It has to be one of the companies covered by CAQH. Tell them you have changes in your provider information. 

Q: I am a member of ACA and a licensed professional counselor who left a big psychiatric hospital for private practice. I was very successful at my job and assumed that I would make it in private practice. I work in Pennsylvania. When I went to get a Medicare number, they said they only credential clinical social workers. I believe that my state licensing board makes no distinction between those two degrees. What can you suggest regarding getting a Medicare number and getting onto insurance boards?

A: You’re right. Most states now consider counselors and social workers as equal (finally). You can get on most insurance panels, but Medicare is a different issue. Federal law allows M.D.s, Ph.D.s and social workers to bill Medicare. ACA continues its efforts to change Medicare legislation and is close to that goal.

Until the law changes, we have one other possibility for billing Medicare: the “incident to” provision. Visit www.wpsic.com/medicare/policies/wisconsin/phys004.pdf, which should shed light on your issue. The “Private Practice Pointers” section of ACA’s website also has helpful private practice information on working with Medicare through the “incident to” provision.

Be sure to attend the ACA Convention in Detroit, March 21-25. Consider attending our preconference Learning Institute on private practice. Also visit the ACA Career Center throughout the conference to see mini-presentations on private practice topics.

Finally, stop by our booth, Walsh and Dasenbrook Consulting, at the exposition center and preview our book The Complete Guide to Private Practice for Licensed Mental Health Professionals. Hope to see you there!