Fees In Therapy: Summary and Guidelines

By Ofer Zur, Ph.D.

  • Money is one of the more complex issues facing therapists and clients, especially at the beginning of treatment, and many therapists tend to avoid exploring this important topic.
  • Money is one of the most important parameters that define psychotherapy. Gutheil and Gabbard write, “Money is a boundary in the sense of defining the business nature of the therapeutic relationship. This is not love; it’s work” (1993, p. 192). Thus the fee and fee arrangement are important determinants of the nature of the therapeutic process and the boundary of the patient-therapist relationship.
  • In the section on ‘Fees and Billing’ in therapists’ office policies, therapists should try to clearly provide details explaining the following: fees, consequences of missed sessions, late cancellation, debt collection policies, insurance reimbursement, etc.
  • Therapists should try to come to an agreement as soon as possible with their clients on the fee structure. Some of the most common options are:
    • Full fee
    • Sliding scale
    • No fee
    • Bartering for goods
    • Bartering for services
  • While most therapists come to an agreement on a certain fixed rate, others agree on a rate that fluctuates with clients’ income or other considerations. Regardless of what the arrangement is, therapists should try to document the agreement and, when necessary, its rationale. At times signed consent by clients is advisable.
  • The sliding scale is a very common and acceptable form of fee arrangement. This allows clients to pay what they can afford in a flexible, individually tailored way. As with any fee arrangement, therapists should try to clearly articulate, preferably in writing, and agree upon the arrangement. The concern with the sliding scale is that it can put therapists and clients in a conflict of interest where clients may have an investment in presenting a scaled down financial picture in order to obtain a lower rate. If this negotiation takes place at the beginning of therapy, it can contaminate the therapeutic relationship. Some factors, such as retirement investments, upcoming inheritance, etc., cannot be easily factored into the equation of the sliding scale.
  • Therapists should take into account the ethical considerations of fees. Summary of the Codes of Ethics on fees and payment issues
  • The therapist should try to come to a fee agreement as soon as possible after the start of therapy.
  • There is a view among therapists that clients who pay more for therapy value it more and are likely to benefit more from clinical work. Some go further and suggest that the higher the financial and other sacrifices clients make for therapy, the more likely the client is to gain from therapy. These (most probably) self-serving beliefs are not conclusively supported by research. Some research has shown that those patients who are engaged in no-fee therapy neither value it less not gain less than those who pay.
  • Sometimes patients’ financial situations change in the course of therapy. Sometimes patients lose their jobs, homes or health insurance, get sick or are faced with unexpected new financial burdens. Therapists should be open to and flexible about changing the fee arrangements to accommodate changes in clients’ lives.
  • Therapists should not engage in misdiagnosis in billing.
  • Therapists should report procedure codes accurately, i.e., use individual code only for individual sessions.
  • The fee is also a clinical issue. Therapists should try to be flexible and sensitive about money issues. Different fee arrangements have different meanings for different clients. Therapists should explore these meanings when and if appropriate.
  • Therapists should allow for free or very low fee sessions in their practices.
  • Therapists should document all fee arrangements and if or when they change.
  • Different theoretical orientations sometimes guide the type and extent of discussion regarding fee. Psychodynamic psychotherapists are more likely to focus on unconscious, transferencial and counter-transferencial dynamics regarding fees. Feminist therapists may focus on justice issues and reducing the power differential between therapists and clients by reducing the fee.
  • Different settings may require different approaches to fee setting. Agricultural and rural communities are likely to be more accepting of bartering of goods.
  • Therapists should consult with an expert colleague whenever concerns arise, and of course, document the consultation.
  • When appropriate, therapists should educate their clients about the benefits of private pay and the risks of managed care in regard to confidentiality, privacy, continuity, control of care, etc.
  • Therapists should be flexible with missed sessions and late cancellations due to illness, transportation problems etc.
  • Therapists should be careful with bartering arrangements. Bartering for goods, especially when one can assess their fair market value, is often less complicated and less complex than bartering for services. Unlike bartering for goods, bartering for services is always a dual relationship. Therapists should try to consult in complex cases. (extensive article on bartering)
  • In general, collecting the co-payment from a client according to the contract with the insurance company, managed care company, Medicare, Medicaid, etc., is the prudent thing to do. You cannot charge an insured client less (or more) than you have contractually agreed to with his or her managed-care or insurance company unless you get an authorization to do so. Check your contract or agreement with the third party prior to forgiving the co-pay. Advertising or offering to waive co-payments or deductibles for Medicare or Medicaid patients can be considered fraud. 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 co-payments and deductibles” should be treated as an exception rather than as a routine practice. According to APA Practice Directorate (12/07) “If a Medicare beneficiary cannot afford the charges for co-payments 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.”
  • You have no obligation to treat people who cannot afford your fee or those who, for whatever reason, do not pay you. If a client no longer pays your fees, you have the right to terminate. If you choose to terminate with such clients, make sure you do it clinically appropriately, legally and ethically. It is best that you make a termination plan, discuss it with the client, give referrals, offer to consult with the subsequent therapists, keep good records, etc. Termination guidelines
  • Billing methods have changed drastically since the introduction of HIPAA in 2003. Most experts agree that even if you do not submit electronic billing it is important to be HIPAA compliant. This is because HIPAA is most likely to become the standard of care. (HIPAA general info. HIPAA related billing information.)
  • Several studies have confirmed that payment methods, such as out-of-pocket, managed care and insurance billing, have significant impact on DSM diagnosis assigned to patients by their therapists.
  • Therapists should be careful of the accumulation of debt by clients. Large debts by clients tend to be clinically very tricky and burdensome. If the therapist does let a client accumulate debt, s/he should try to document the reasons (i.e., patient’s house is on the market) and should try to consult in complex cases.
  • Therapists should collect debts with caution. Therapists should think twice before using a collection agency, because you increase the likelihood of a complaint being filed against you with your licensing board. Therapists should make sure debt collection is mentioned in the office policies. Before therapists inform their clients that they are about to submit the debt to collection, they should send a couple of letters inviting the client to develop an affordable payment plan.
  • Fee splitting, or what is better known as a “kickback”, is a practice where a referral source gets a fee for their services. While common in medicine, business and law, it is more complex and generally considered unethical in mental health. This is both an ethical and legal concern as it indirectly draws a third party into the therapeutic relationship and can also create a conflict of interest. The APA Code of Ethics (2016) is very clear on the issue of referral fees. In section 6.07 Referrals and Fees it states: “When psychologists pay, receive payment from, or divide fees with another professional, other than in an employer-employee relationship, the payment to each is based on the services provided (clinical, consultative, administrative, or other) and is not based on the referral itself.” While some fee splitting is legal and regulated by the Federal Trade Commission (FTC), it may still present a boundary and ethical issue for psychotherapists.
  • It is important that therapists should explore their own personal thoughts, feelings and issues in regard to money. Many clinical and ethical complications stem from therapists’ mishandling of money due to their ambivalence about money issues and lack of training and education in how to handle it.

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