How to Set a Fee Schedule for Unemployed and Uninsured Patients

We have a long way to go before the world gets back to normal (or some semblance of normal), but we’ve made good progress. According to this report from the Bureau of Labor Statistics, unemployment fell to roughly 8.4% in August. That’s substantially better than the 14.7% unemployment rate reported in April—but there’s still a huge number of unemployed (and consequently, uninsured) people in the US. For the 8.4% of working adults who are unemployed, money is tight, and healthcare coverage is often nonexistent—but that doesn’t mean their need for care has gone away. These patients could theoretically seek out cash-pay healthcare services, but many of those come at a premium.

So, how do you, as a provider, set a cash-based fee schedule that both serves a struggling community and pays the bills? Read on to find out. 

1. Calculate your treatment costs. 

The first step to creating a cash-pay fee schedule (especially one that serves patients who are struggling financially) is to calculate the bare minimum cost of providing treatment in your clinic. (Yeah, you’ve gotta do some math. Sorry about that!)  

Expenses

Start by tallying up all of your annual expenses—both fixed and flexible. Consider rent, loans, salaries, employee healthcare costs, taxes, equipment purchases (e.g., masks and TheraBands), and any other business expenses you can think of. Don’t forget to include a small cushion for emergencies. Heidi Jannenga actually recommends that every “business—regardless of size—should have a three-to-six-month emergency cash reserve.”

Now that you know your required minimum gross income, “divide that by the number of weeks you plan to work in a year, factoring in vacation and personal leave. The number you get is your weekly gross income. Then, divide that amount by the number of patients you can realistically see in a week.” If you have other staff therapists at your clinic, don’t forget to account for their patient load capacities. 

You should end up with an average per-visit dollar amount that, at minimum, will keep your clinic doors open. So, that’s your minimum cash-pay visit fee. 

Competitors

During this stage, set aside some time to research what other providers in your local market are charging for cash-based services. Finding a range of what they’re charging (e.g., between $80 and $140) will help you keep your fee schedule competitive and in line with demand. Besides, your competitors may have already drawn up their own plans for treating financially insecure patients, and they could give you some ideas on how to tackle your clinic’s fee schedule.  

2. Create a financial hardship policy—and stick to it. 

Now that you have an idea of what you need to charge to keep your clinic open while remaining competitive in your market, it’s time to set some prices and—more importantly—create a financial hardship policy. Now, keep in mind that I’m not a lawyer, but to my understanding, you’re generally allowed to provide discounted or differently priced healthcare services to uninsured patients if you create a uniform method for charging those patients (e.g., a clear financial hardship policy). 

It’s up to you what that hardship policy looks like. You could offer:

• a flat discount to unemployed patients;
• a discount to patients who pay in full on the date of service;
• discounts for a fixed amount of time (e.g., two months), as this provider suggests; or
• a more flexible charging system (namely, a sliding fee schedule). 

Sliding Fee Schedules

A sliding fee schedule is more or less what it sounds like: a fee schedule that changes based on the patient’s current income. Many providers use the US Federal Poverty Guidelines to set their scale. For example, patients who are at or below the federal poverty guideline in their state would pay the lowest rate you’re willing to offer. Patients who make more than twice the guideline would pay the next highest rate, those who make more than three times the guideline would pay the next highest rate, and so on and so forth—until you reach your regular cash-pay rate (i.e., the amount that would cover your expenses and allow you to profit). 

Drawbacks

Now, while a sliding fee schedule can be a great financial tool, it’s far from perfect. Meredith Castin warns that sliding-scale payment systems “are difficult to enforce and can cause major billing headaches. Plus, patients may talk to one another and start to resent what they perceive as unfair treatment.” 

Financial Hardship Application 

No matter how you choose to craft your financial hardship policy, you’ll want to include a financial hardship application that patients must fill out to confirm that they qualify. This application should include: 

• a quick overview of the financial hardship policy, 
• an explanation of how to qualify, 
• a list of the documentation needed to qualify (e.g., proof of income, family household or size, etc.), and 
• your fee schedule. 

Laying everything out in simple, easy-to-understand terms will help streamline the process and prevent misunderstandings. Keep in mind that while it’s a good idea to verify that patients qualify for your discounted or differently priced services, you don’t want to make the process too tedious. 

3. Check your legal boxes. 

I already touched on this in section two, but it bears repeating: to my knowledge (and again, I’m not a lawyer), offering discounted or differently priced services to uninsured patients is generally okay—so long as you create a uniform discounting model. 

That said, be very careful not to inadvertently offer a discounted or differently priced service to an insured patient without first looking into the insurance’s rules. Insured patients (especially Medicare beneficiaries) are subject to different guidelines. Some payer contracts forbid providers from undercutting their reimbursement rates, and Medicare has its own set of strict cash-pay rules. Additionally, some states have laws about offering discounted or differently priced services to patients. While these rules typically apply to insured patients, it’s always a good idea to check in with a legal expert who is familiar with the laws in your locale to ensure you’re in the green. 

And yes, I get it—doling out a bunch of money to speak to a lawyer may feel like a frivolous expense right now, but it’s a heck of a lot cheaper than getting tied up in a costly lawsuit due to fraud or kickback violations. 

Money is tight right now for a lot of people, but the need for medical care lives on. By creating a fee schedule that accounts for financial hardship, your practice can help meet that need during a very tough time. I think that’s something worthwhile; don’t you?