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What is a Fee Schedule?

A curious female therapist with question marks above her head wondering "What is a fee schedule?"

What is a Fee Schedule?

In general, a fee schedule for a mental health provider is an outline of the cost associated with the services that they provide to their clients. The phrase "fee schedule" can refer to two different sets of rates, one designated by you and often referred to as your cash rate, and the other designated by the insurance company often called allowed amounts or contracted rates.

The Two Types of Fee Schedule

There are two different types of fee schedule that you will need to be familiar with. The first is your practice's fee schedule of cash rates. The fee schedule of cash rates is set by the practice owner, and is a list of their rates for services that they would charge any cash pay clients. The second type of fee schedule is an insurance company fee schedule of allowed amounts. The fee schedule of allowed amounts is set by each insurance company, and is the rate that a provider agrees to accept as payment for any clients with that insurance.

Your Practice's Fee Schedule of Cash Rates

As mentioned above, your fee schedule of cash rates is dictated by you as the practice owner, or the owner of a practice that you work for. Any patients who are not using insurance will pay your cash rate that you set for services. There is a lot of freedom in setting your cash rates, however we encourage you to set realistic amounts based on considerations such as what your competitors in your area are charging, your target demographic and their spending limits, your education level and any areas of specialty you may have.

For your fee schedule of cash rates you can choose to set different rates for each CPT code, similar to how insurance fee schedules are set up, or you can choose to have groups of codes that all fall under the same rate. You will want to make sure that you can clearly communicate your fees to your clients throughout their treatment.

The Insurance Company Fee Schedule of Allowed Amounts

The insurance company fee schedule is the breakdown of what the insurance company will pay for specific services, otherwise known as the contracted rate or allowed amount. It is sometimes sent as part of the contract with the insurance company, however it could also be a separate document. It will likely be a table that includes a list of CPT codes, and the dollar value that the insurance company is agreeing to pay for that particular code, sometimes broken down by level or type of license. You will have a different fee schedule for every insurance company that you are credentialed with.

Insurance company fee schedules are proprietary information, and insurance companies will often be very strict about giving this document out to anyone other than the provider whose name is on the contract. Insurance fee schedules are not to be shared among providers, and when you are sharing the fee information with a patient, avoid sharing the entire insurance fee schedule. Tailor the information to your patient and only share the relevant CPT codes and associated costs to the patient’s treatment.

If you are missing your insurance fee schedule, you can request this from the insurance company similar to how you would request a contract. In fact, if you are also missing your contract we would recommend requesting both of these documents from the insurance company. Insurance fee schedules will typically only be released to contracted providers, and if you are not yet credentialed with an insurance company you will most likely not be able to see their fee schedule. This is dependent on the insurance company policy. As a credentialed provider, it is possible that your fee schedule may be accessible through an online portal, and you could check there before calling the insurance company to request the fee schedule.

Knowing your insurance fee schedule is critical to running a successful practice, especially with the recent implementation of the No Surprises Act. Your insurance fee schedule along with eligibility checks are the greatest tools in providing good faith estimates to your patients. For more information on good faith estimates and compliance with the new law, check out our article on the No Surprises Act.

It is extremely helpful for you to have a copy of your insurance fee schedule so that you can verify that you are getting paid what you should be getting paid by the insurance company according to your contract. Knowing your insurance fee schedule is also helpful in submitting claims for the correct amounts to begin with, and in providing information for benefit checks. You will also need to know your insurance fee schedule in order to determine the amount a patient owes for a coinsurance, as the amount that they would owe is a calculation of the percentage of the contracted rate.

Applied Use of Fee Schedules in Your Practice and Billing

As a practice owner, you can use the information on your fee schedules to project revenue. This is a much more accurate method than using an insurance aging report, as the aging reports typically show the full cash value of a session (the cash rate from your fee schedule) rather than the expected contracted amount from insurance (the allowed amount from the insurance fee schedule). This is because providers may choose to bill insurance at their cash rate which is often higher than the insurance contracted rate. It is a strategy that can help to maximize your insurance revenue, and is something that our billers have helped many providers with. While you won't make your full cash rate for insurance patients, billing to insurance at the cash rate can ensure that you are receiving the entire allowed amount. You can use the numbers on a fee schedule to create projections of income in your practice, or you can set goals for yourself on the average number of sessions you would need to complete in a week to meet a specific level of income.

Have copies of your contracts and fee schedules and still feel lost? It may be time to hire a billing company. Practice Solutions billers are highly skilled in interpreting fee schedules in order to keep your billing neat and compliant. As a client of Practice Solutions, your biller would be able to answer any specific questions you have on insurance billing and how your fee schedule fits in! Contact us today on our website to learn more!

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