HOW TO CREATE A SLIDING FEE SCALE FOR YOUR MEDICAL PRACTICE
It is an undeniable fact that health care is expensive. When it comes to paying for health care, we’re not all equal. All individuals’ circumstances are unique, yet everyone has a right to healthcare, regardless of income.
But how can we make it work? This is where introducing a Sliding Fee Scale for your medical practice comes into play. This payment model makes it easier for patients to pay for their treatment while supporting the financial health of your medical practice.
WHAT IS A SLIDING FEE SCALE?
A sliding fee scale is a payment model designed to assist patients who cannot afford care, such as those who are low-income or must pay for their own care. It takes time to create, set up, and operate a sliding fee scale. Let’s review the steps to follow to set one up for your practice.
DETERMINE THE COST OF RUNNING YOUR PRACTICE
You likely already know how much it costs to run your practice, but maybe not. Either way, the first step is to get a firm handle on your operating costs.
ADD UP EXPENSES
List the costs of running your medical practice for one year. Include all expenses, even ones you don’t normally think about. Ensure that both hard and soft expenses like insurance, rent, loan interest, employee salaries, and office and medical supplies are included.
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.
IDENTIFY TYPICAL FEES IN YOUR SPOT
You should know the customary charges for healthcare services in your area. These numbers can vary greatly in different parts of the country, so you must research.
DECIDE ON YOUR MINIMUM MONTHLY INCOME
After you have completed the first step, determine one year’s expenses and divide that by 12 to determine how much you need each month.
USE PAST NUMBERS TO DETERMINE PATIENTS PER MONTH
Look at the patient records of previous years and see how many patients you’ve seen in the past year. Divide that number by 12 to find the average number of 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
The U.S. is required to do so. The Department of Health and Human Services sets fees based on the patient’s income and a minimum and maximum amount you have set. Use the Federal Poverty Guide.
Patients whose income is at or below 100% of the Federal Poverty Level (FPL) will be required to pay the minimum amount, while those above that threshold will pay incrementally until they reach the maximum amount you have set.
CREATE THE WRITTEN POLICY AND APPLICATION
Next, you will need to create a written plan to define your sliding fee scale. Make the document easier to read and understand by using bold type, bullet points, and short, concise sentences as needed. By making the letter easier to read, you reduce the risk of patients saying they didn’t understand it because the letters were confusing.
The policy needs to include information about the following:
- How to Qualify
- How to Re-certify
- Documentation required 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 patients may have insurance, they may still need assistance paying their medical bills. You’ll want to address this in your fee policy.
For insured patients, the amount charged should not exceed the maximum allowed for their specific pay class, regardless of their insurance coverage.
For example, an insured patient receives treatment with a maximum fee of $150. Their insurance copay is $90, but based on the sliding fee scale, they qualify to pay $70 under 150 percent of the Federal Poverty Guidelines. In this case, the patient would pay $70 instead of the $90 copay, provided there are no insurance contracts or legal issues.
Be sure to consult your third-party payers and/or private legal counsel to ensure that 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 on 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 crucial to stay informed and take the time to evaluate how your sliding fee policy is working for your patients and your bottom line. It may be necessary to adjust the numbers over time, so ensure you monitor how the process works for your needs.
Ultimately, creating and implementing a sliding fee structure can help you serve your patients and maintain a solid financial foundation for your practice.
CONCLUSION
The sliding fee scale is a proactive approach to medical interventions to ensure that quality healthcare remains accessible to all, irrespective of the financial situation of a patient. By carefully estimating operating costs, setting realistic income targets, and conforming to federal poverty guidelines, practices can implement a fair and transparent payment system.
A sliding fee scale not only addresses budget constraints but also builds on the promise of quality health care, patient support, and the continuity of the medical profession.
