How to Create a Sliding Fee Scale for Your Medical Practice

How to Create a Sliding Fee Scale for Your Medical Practice

When it comes to paying for health care, we’re not all equal. Every person has different circumstances but at the end of the day, we all have healthcare needs.

This is where introducing a Sliding Fee Scale for your medical practice comes into play. This payment system makes it easier for patients to pay their medical bills and can ultimately help your practice’s bottom line.  

What is a Sliding Fee Scale?

A sliding fee scale is a payment model providers can use to care for patients who cannot afford care otherwise, for example, those with low-income or who need to self-pay. It allows patients to be able to afford your services and thus make the payments.

It takes time to create, set up and get a sliding fee scale up and running. Let’s go through the steps to follow to get one set up for your practice.

Determine the Cost of Running Your Practice

You likely already know how much it takes to run your practice, but maybe not. Either way, the first step is to get a firm handle on your exact operating costs.  

Add up expenses

First things first. Make a list of all the expenses it takes to run your medical practice for a year. Include all the costs, even those you don’t normally think about. Make sure the hard and soft costs are included such as insurance, lease payments, interest on loans, employee salaries, as well as office supplies and medical supplies.   

Set your Salary

Next, determine what you want your take-home salary will be. Add that to the expenses above.

Plan Your Sliding Fee Scale

Once you have a solid idea of how much it will take to run your practice for a year, you can focus on creating a sliding scale. Be sure to take time in the planning stage to ensure solid numbers before moving on.

Determine Typical Fees for Your Area

You’ll need to determine the customary fees for health services in your area. These numbers can largely vary for different parts of the country so you must do your research.

Decide on Your Minimum Monthly Income  

Once you’ve determined your expenses for one year, divide that number by 12 to determine how much income you need each month.

Use Past Numbers to Determine Patients Per Month  

Look back at previous records to figure out how many patients you’ve seen over the past year. Divide that number by 12 to determine your average patients per month.

Set Minimum Fees You Can Charge

Next, divide the monthly minimum income by your average clients per month to determine the minimum fee you can charge.

This step needs to be done for each service you offer and can get tedious. However, putting the time in at the beginning of the process will pay off as you go.  

Create Your Sliding Fee Scale

Once the plan is complete, create the actual sliding scale you will use.

Use Federal Poverty Limits

Use the U.S. Federal Poverty Guidelines to determine the fees to charge based on the patient’s income and your predetermined minimum and maximum fees.

Patients who are at or below 100% of the Federal Poverty Level (FPL) will pay the minimum fee while those above that limit will pay incrementally more until reaching the maximum fee you set.

Create the Written Policy and Application

Next, you’ll need to develop the written policy to explain your sliding fee scale. Make the document easy to read and understand by using bolding, bullet points as needed and short, concise sentences. By making the document easy to read, you’ll lessen the risk of patients claiming they didn’t understand because the paperwork was confusing.

The policy needs to include information about the following:

  • How to qualify
  • How to re-certify
  • Documentation needed to qualify (insurance, proof of income, family/household size, residency, etc)
  • Fee schedule

Once the policy is written, you’ll need an application for patients to fill out once they determine they are eligible for your sliding fee scale.

The application process needs to be as efficient as possible to ensure the administrative costs do not hinder the helpfulness of the sliding fee scale.

Establish a Policy for Patients with Insurance

Even though a patient may have insurance, they may still need assistance paying their medical bill. You’ll want to address this in your fee policy.

For patients with insurance, the maximum amount an eligible patient in a particular pay class can pay regardless of insurance status should be charged.

For instance, an insured patient receives a treatment for which a maximum fee of $150 applies. Based on this patient’s insurance plan, their copay would be $90. Based on their application for your sliding fee scale, its determined they would be at 150 percent of the Federal Poverty Guidelines and would pay $70 based on your sliding fee schedule. For this patient, rather than paying their typical $90 copay, they would pay the $70 from your fee schedule, as long as there are no insurance contract issues or other legal concerns.  

Be sure to consult your third-party payers and/or private legal counsel to be certain discounting patients out of pocket costs is permissible according to the contracts in place.

Be Consistent

Once you have a solid policy in place, it is important to be consistent in your offerings.

Spread the Word

Now that the planning and creation of your sliding fee schedule is complete, it’s time to spread the word! How will you let your patients know? Will you post it to your Facebook page? Pin a tweet? Post it on your website? Hang a sign in your office? Perhaps do all of these things!

Assess and Update as Needed  

As with all new policies, it’s imperative to take time to get feedback and assess how your sliding fee schedule is doing for your patients as well as your bottom line. You may find you need to tinker with the numbers as you go, but be sure to keep an eye on how it’s working for you.

At the end of the day, creating and implementing a sliding fee schedule can help you serve your patients and help maintain a strong financial base for your practice.

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