means one thing to me:
THOSE DARN DEDUCTIBLES!
With most health plans, benefits renew on January 1. Yeah, the dial goes back to ZERO. It’s the most awful time of the year.
Let’s begin by looking at what a deductible is. It is the amount a client must pay IN FULL out of their pocket, each plan year before an insurance policy will make ANY payment. That means your clients are responsible to pay the contracted fee in full for sessions if you are in-network with their plan.
If you are out of network, the client is responsible for paying the full amount you bill to the insurance plan. OUCH.
Most commercial plan deductibles are a significant amount. In 2021, just under 60% of people with employer-based plans had deductibles of more than $1,000. (Source: Kaiser Family Foundation 2021 Employer Health Benefits Survey)
So what does this mean for you as the clinician?
Once the clocks turned over on January 1 at 12:01 am., there’s now a different mindset you’ll have to adopt in the coming weeks, to protect YOUR income! You work hard with clients and it’s so discouraging if you don’t get paid.
What will you do this New Year to avoid a drastic reduction in income??
Talking about money with clients is something many therapists find difficult.
Often it is because we have money challenges of our own that have not been addressed. Some of it may simply be a lack of business knowledge. Graduate programs don’t teach the business aspects of private practice. Internships may or may not offer a glimpse of financial management, but internships often don’t occur in private practice settings. Many newly-licensed therapists start out working for large group practices, which may have in-person employees whose job it is to collect the money.
The new online venture-capital-backed enterprises, such as Headway or Alma, also give therapists no experience in directly requesting fees for therapy – the platform collects for you.
By the time therapists are ready to open a private practice, we’re woefully unprepared for the reality of having to ask the client to pay for their session.
It can be hard to play two roles, that of both therapist and businessperson. However, IT IS POSSIBLE if you are prepared and know how to manage finances with your clients.
Here are 8 SPECIFIC recommendations to help you with getting paid:
1. Take care of the “business” part of the session at the beginning of the hour.
It’s much easier to collect money before dealing with serious emotional issues. You haven’t yet sat with the client’s pain for an hour.
You can say to the client, let’s take care of your payment now so we can focus on you for the rest of your time! They LOVE this because they see you care about them and not just their money. Furthermore, at the end of a session, your task is to make sure you end on a hopeful note, give homework, wrap everything up, make notes, and schedule the next appointment. Collecting money adds yet another task. If the session runs late, you also have the complication that your next client might be waiting for you, and it’s tempting to put off collecting money until next time. And the next…and so on.
2. Collect something each visit, even if it’s an estimated amount.
Develop consent forms that clearly explain what your policy is and your reasons for it. And if you’ve put a policy in writing…then stick to it! Consistency is therapeutic. If you waver in your management of the financial side of your business – you won’t last long! There’s a saying “You can’t take HOPE to the bank”! In other words, you MUST be in charge of your money and not your money be in charge of you.
3. Don’t ask “Do you want to pay today?”
Instead, ask “HOW would you like to pay today?” Words are so very important! This one three-letter word demonstrates your expectations to your client and gives them an understanding of what they need to do. Put it in therapeutic terms for yourself: You are setting boundaries and letting the client know that payment is not optional. You must establish this from session #1! This keeps you from resenting your client and frees you to do what you do best – therapy. If you have currently-established clients who are falling behind in payments, the first of a New Year is the perfect time to revisit and set those boundaries. DO IT NOW!
4. Keep a credit card on file and suggest an autopay arrangement.
These days, with so many clinicians working online, it is essential. But even if you are seeing clients in the office it is best practice to have a card on file.
Whenever we subscribe to a service for ourselves, it is common to place a credit/debit card on file with that service. WHY should you be any different? You are providing a valuable service. I’ve discovered even with merchant fees being 2-3%, therapists still come out ahead if they use a credit/debit card autopay arrangement.
Consider this: If you didn’t have the service/option of charging credit/debit cards…
- Some clients can or will not use cash or checks.
- If you see clients online – how would you get paid?
- Many patients want to pay with Health Savings Accounts or Flex Spending cards – which are typically only debit cards, not an account on which they can write you a paper check.
Prior to instituting payment on file arrangements, a “good” client collection rate using traditional mailed bills was roughly 80%. If you can raise that higher than 83% (and you can – most autopay practices net over 95%!) then you’ve negated the merchant fees and come out ahead. Plus, merchant fees are tax-deductible business expenses.
When a client leaves your office without making a payment, you’ve reduced your chance of getting paid by 50%.
Might as well flip a coin…
Because you just gave up control of YOUR income!
5. Money can often be an emotional subject… But don’t avoid your client’s feelings or challenges around money. Work on it as you would any other therapeutic issue. Ignoring or not talking about payment tells your client that “it’s not all that important. My therapist will understand if I don’t pay them.” Is that really the message you would like to send?
6. That said, don’t ignore your own emotions and issues around money. Do what you need to do to address them. Reach out to a business coach, a colleague you respect, or a therapist who specializes in this area. Running a business isn’t for the weak. Give yourself some credit for what you have already accomplished, but understand that NO ONE DOES IT ALONE!
7. Discuss concerns you have with your clients. For instance, you can say:
“Asking you to pay something every visit is to ensure the bill never gets so high that it becomes a source of anxiety for you.”
“I don’t want there to be any surprises for you when it comes to the bill.”
“Please, always talk to me if you are having problems paying your therapy bill.”
The important points here are
- model open, honest communication
- handle your own money challenges
- part of being a professional is managing your business finances
- never let the therapy bill become the big elephant in the room – the issue no one talks about. If for no other reason than…how therapeutic is that?
- You need to get paid!
8. Practice makes perfect. It may seem obvious, but it’s true. The more you follow the above seven steps, the easier you will find the task of handling finances with patients in a businesslike, non-emotional manner. And the flip side is…the more you avoid or procrastinate at it, the HARDER it gets. There’s only one time to start, and that’s NOW.
At all times, your behavior around financial issues should model the healthy,
adaptive behaviors that you are trying to help your client learn.
DO NOT ALLOW A CLIENT’S BALANCE TO BECOME SO HIGH THAT:
- It becomes a source of anxiety for your client.
- It becomes a source of anxiety and/or resentment for you.
- It becomes uncollectible and you are giving away free services.
If at all possible, you should never allow a client to carry a balance. At worst, stay no more than one visit behind. In Part 2, I will discuss how insurance factors into this.
Managing deductibles is a constant revenue cycle of
- verifying benefits/accumulations
- submitting claims
- posting, collecting, reconciling, invoicing
- and repeat…and repeat!! Like self-employment in general, it’s not for the faint of heart.
Given that high deductibles are so common, I’m always surprised that more therapists don’t ask me this important question:
If I’m in-network, am I allowed to collect my full contracted rate ahead of the claims being submitted/adjudicated?
That’s the first question I’ll answer when you join me here for Those Darn Deductibles – Part 2: The Questions You Need to have Answered, but Were Afraid to Ask.
WAIT!!! Don’t go yet!
Why didn’t you discuss Verification of Benefits? Isn’t that a strategy you recommend?
Absolutely! Verify eligibility & benefits, file claims promptly (and electronically), and use employee-assistance benefits at the start of the year (if available). Make sure insurance claim results are credited and client payments are posted in a timely manner and reconciled so that you know what to collect BEFORE the client shows up. But even with all of that, there is always uncertainty when dealing with insurance. Part 2 of “Those Darn Deductibles” dives further into those headaches.
