ACA Blog

Deb Legge
Jun 22, 2011

Setting Fees – Do Your Homework

One of the first questions I get from my Private Practice Mentoring students is “How do I know how much to charge? It’s a great question. The answer isn’t as straightforward as some may like, but there are several things to consider when setting your fees (for both private pay and for insurance reimbursement). Some have to do with your market, and others have to do with your business model. Here’s an overview…

One of the first steps to take when determining what you will charge for your services is what do others in your market charge for the same services? Don’t be shy – ask your colleagues. Do a market survey and find the range that exists with your peers. Give them a call and let them know that you are updating your fee schedule and would like to know what they charge for X, Y, and Z. Let them know that you’d be happy to reciprocate when it comes time for them to do the same.
Next, check to see the “usual and customary” rates established by insurance companies in your area (for your market, as reimbursements will likely differ between zip codes/markets). If you are not doing so already, be sure to distinguish between your Initial Assessment (CPT code 90801) and Follow Ups (CPT code 90806) as the reimbursement rates are usually significantly higher for 90801.

Once you have your data, you can sit down and create a fee schedule. You can come up with your “posted fees” – the fees you will bill EVERY insurance company. You’ll want to be sure your posted fees are at least as high as the reimbursement rates of the highest paying insurance company you surveyed.

For example, if the highest reimbursement you found for 90801 in your market is $150 and you are billing $125, that doesn’t make sense. You don’t want to leave any money on the table. Insurance companies are only going to reimburse according to your contracted fee schedule. That means that no matter what you bill, they are only going to pay you what they said they were going to pay you when you signed the contract. Don’t worry about billing to high – worry about billing too low!

When it comes to private pay, you will have to determine what fee you will settle for (if it will be less than the posted fee you set for insurance). Some folks do charge more for the initial assessment however; it is more common to have one set fee that applies to both Initial Assessment and Follow Ups. You may have a higher fee for family sessions or couples counseling.

The private fees you set should be informed by your data, but what you charge will definitely be an expression of your business philosophy. Some of you will do the market survey and then set your fees low in hopes of attracting more clients. This is done most often for folks just starting out. Others of you will do the survey and then set your fees somewhere in the middle. This is a comfort zone for many therapists. Still others of you will do your research and then set your fees at (or a bit above) the top. This takes confidence and a mindset of abundance.

None of these strategies are “wrong”. In fact, each of them is “right” for the right reasons.

Those who are just starting out and want to charge lower fees justify this strategy with a goal of quickly building a practice. It involves longer hours to make a living and an ongoing process of raising fees over time, but if this is your compromise for taking the leap of faith – then by all means, do it!

Those who choose the middle ground may find it difficult to ever get away from that comfort zone. You many always find comfort in knowing that others are being paid less, and frustration in knowing that others are being paid more – BUT… this will be your safe way to run your practice.

The folks who gravitate toward the top of the scale are usually of the mindset: “If my fees are higher, the perceived value of me and my services will be higher”. There is something to be said for that attitude (and for that reasoning). Valuing you and your services begins with you. For some, this starts with the fee schedule.

One thing I try to reinforce at InfluentialTherapist.com is, whatever your modus operandi, be sure you’ve done your homework and you’ve thought through your business philosophy. Your fee schedule should be a well informed and well thought out expression of who you are as a private practice clinician.

Take care!



Deborah Legge is a counselor, an assistant professor, specializes in coaching counselors in private practice, and is the founder of InfluentialTherapist.com

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