Frequently Asked Questions

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Q: I attended your seminar, finally opened my practice and now am happy to say I’m growing.  I have extra office space and am considering whether to sub-lease to another therapist. Where I can advertise office space availability

A: First, congratulations on starting your practice. I am always happy to hear about another therapist endeavoring to realize their dream of private practice.  Second, I applaud your entrepreneurial spirit in developing another income stream by renting office space.  Before you advertise the office space, I recommend consulting an attorney to draw up a contract.  The contract should specify, costs (we recommend an hourly rate rather than a percentage), services, office availability, current malpractice and office insurance, types of therapy allowed, termination clause, record storage and length of contract, etc.

Once the contract is in place, then you can advertise the office space.  An ad in your states professional association/organization or division newsletter.  These are usually low cost or free for members.  If you are not a member, join.  Another option would be to look for a mental health provider’s listserv on the internet for you ad. And lastly, good old “word of mouth” by spreading the word in the local therapeutic community.

Q: I am in the process of opening a second practice office across town.  At my current location I charge $120.00 per hour.  I’m only on two insurance plans and don’t want to deal with anymore. My research shows that the area of town for my second practice, most clients are self-pay and therapist’s fees range from $80-$115. I’m concerned my present fee is too high and might not be able to grow my new practice. In your seminar you mentioned not being too low, so I thought I would charge $110.00 per hour. If I decide to change my fee schedule, say to $110.00 instead of my current $120.00, do I inform my current clients who are paying $120.00 of this change?

A: Of course! I don’t think they’ll complain. However, I hear a couple of other questions here (spoken like a true counselor). First, how do you set a reasonable and fair fee? (see fee setting video in the professional development section) You have used the best method (community standard) in surveying other therapists in your area to help determine a fee range. We have always recommended against setting a low fee as a marketing strategy. While cost is important, reputation, clinical excellence, referral source recommendation and accessibility drive client choice. Second, can you charge different fees depending on location and/or community standard? I don’t recommend it. Set a fair and reasonable fee and be consistent.  Moreover, since you are paneled with two insurance companies they will consider your lower fee to be your fee and may have some problems with your billing practices. Lastly, different fees for clients can be get in the way of the counseling relationship.

Q: My accountant and supervisor stated that I could use my social security number rather than get a Employer Identification Number (Tax ID).

A: Your accountant and supervisor are correct, but don’t advise it, The reason being that if you bill insurance, box 25 on the CMS 1500 (standard form to bill insurance) requires a Tax ID or Social Security number.  If you enter your Social Security number it can be sent all over the world to process the claim (not a good thing) and ultimately will be printed on the explanation of benefits sent to the client.  That’s why we recommend getting the tax ID. Go to irs.gov to get the number.

Q: I have a just started a “limited” private practice which I am working to expand.  I have a question, though about billing.  I am on a few insurance panels, namely, Aetna, Cigna, Magellan, Healthcorp, and Medicaid.  My understanding is that when you agree to take on one of their members, you agree to charge them only their co-pay and accept whatever the contracted amount is from the insurance company.  So, if my fee is $120 and Aetna pays the portion of the $55 after the co-pay- that’s it- I can’t bill for the remainder.  Is that correct?  Every therapist I know will charge their clients for the balance.  Am I doing something wrong or are they doing something unethical?

A: Congratulations! Sounds like you have your practice up and running and you want to it legally as well as ethically. We have been asked this question before and it seems some therapists don’t read the contracts or feel they don’t have to abide by them.  Big practice mistake. Here’s the deal:  For example, if your contract with Cigna states the fee is $70.00 and the co-pay is $15.00 you agree to accept $55.00 from Cigna (co-pay + insurance payment = $70.00) you have to waive the remaining $50.00 of your $120.00 fee.  If you bill the client for that remaining $50.00 that’s called balance billing and not only is unethical but it’s considered fraud. You are doing the right thing and the others are open to potentially big problems. Keep up the ethical work.

Q: What about a sliding fee schedule?

A: One of the most frequently asked questions regarding fees is, “What about a sliding scale?”  My advice is to resist this idea.  Many clinicians starting a private practice initially offer a sliding scale—probably because the agencies they have worked for do so—and later abandon the idea.  If clients feel they can’t pay your standard fee, chances are they won’t pay a reduced fee.  The 80/20 rule applies here: 20% of your clients will take up 80% of your time.  In this case, that 20% will be the clients to whom you offer a sliding fee scale.

Moreover, if you are billing insurance and you charge different fees, which fee is your fee? If you charge insurance companies more and reduce fees for others that could be considered fraud. Also, if clients realize you are charging different fees that could cause some issues. Lastly, if you reduce a fee and the client informs you they are buying a brand new car or going on an expensive vacation that could get in the way of providing effective treatment!

Rather than reducing your rates, consider taking on a few clients pro bono (at no charge).

Pro bono is a Latin phrase for professional work undertaken voluntarily and without payment. Pro bono service uses the specific skills of professionals to provide services to those who are unable to afford them. Rather than reduce a fee, I recommend that you treat 1-2 clients per week pro bono. That way you can give back and help others who cannot afford a private mental health professional.

Some clients can afford ½ hour appointments if clinically appropriate. Scheduling these clients, back to back to get you your full hourly fee and provides your client with another cost effect alternative. (Taken from the Complete Guide to Private Practice)

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