Michael Griffin, JD, LCSW
Staff Attorney
The Therapist
July/August 2018

Most therapists in clinical practice will occasionally encounter difficult or confusing circumstances involving fees, payments, and insurance. Fortunately, most of the problems in this area can be resolved (or prevented) by the consistent application of sound policies and procedures.

Provide Adequate Information
Problems that involve fees, payments and insurance often occur as a result of providing inadequate or incomplete information to a new or prospective client.¹ It isn’t hard to understand why: A preliminary phone call with a prospective client is usually brief and an anxious caller may want to hurriedly describe a difficult situation and ask several questions of the therapist in a span of a few minutes. In such situations, a therapist may feel reluctant to interrupt the caller in order to inform him or her of the fee, fearing that it may be interpreted as being more interested in the fee than the problems of the client. However, clients generally do understand the need to discuss the issue of fees during the initial call when the therapist explains the fact that California law, and ethical standards, requires him or her to provide adequate information regarding fees to a new or prospective client, prior to rendering services.^{2 3 4}

It is important to remember that the therapist’s fee is only one aspect of his or her payment related policies. Other feerelated issues to address with new clients include, (but are not limited to): Cancellation policies and any related charges; information regarding acceptable forms of payment (including the use of credit or debit cards), and charges applicable to checks returned by the bank. Providers who accept health insurance should provide their clients with information concerning issues such as billing practices, copayments and deductibles, and the client’s responsibility in the event that their insurance plan is cancelled or lapses. Clients should also be asked to inform the provider as soon as possible regarding changes, (actual or anticipated), to their insurance coverage. While there is no requirement that the foregoing information be provided in writing, it is best to construct clear written policies on these matters, and to provide them at the earliest opportunity to clients (or to the client’s parent, guardian, or other financially responsible party). Providers are also advised to review all of their office policies with clients and not to assume that an individual has carefully read, or agrees with, the materials that are provided to him or her at the start of treatment. Information is easily overlooked or forgotten by clients who may be having difficulty concentrating on the nuances of forms and documents in the midst of a crisis. While tedious, it is well worth the time to ask the client whether he or she has any questions about any of the information provided to him or her in order to identify potential problems and to avoid misunderstandings. In the event that there is a difference of opinion as to some issue, such as the amount of a client’s co-payment or deductible, or a concern is raised over the client’s ability to pay, it is best to address such issues immediately and not to defer their resolution to a later time. Payment related problems tend to worsen over time, interfere with the therapeutic relationship, and may lead to bigger problems (such as complaints to the licensing board or the filing of an ethics complaint) if not addressed in a timely manner.

COMMON QUESTIONS
Many therapists have similar questions about how to handle issues involving fees, payments and insurance. It may be helpful therefore, to address a number of such questions:

What should a therapist document when there is a reduced fee agreement?
Any client may experience financial problems which impact his or her ability to pay for treatment, and a therapist is free (as a general rule) to consider a reduced fee for that person, if doing so will permit the client to continue to receive needed services. There is no exact formula to apply here, as every client, and circumstance, is unique and the therapist’s determination on such issues should be considered in the light of the client’s needs. When a therapist determines that it is appropriate to accommodate a client’s need for a reduced fee, it is advisable to document such an agreement in writing, including the reasons for entering into the agreement. The relevant terms and conditions should also be stated, such as a time limitation, or an expectation that the client will inform the therapist about a change of his or her financial circumstances.

Is it permissible for a therapist to set a higher fee for insurance companies than for uninsured persons, or to waive insurance copayments?
A provider who engaged in a practice of routinely charging insurance companies a higher fee than that which he or she ordinarily charged to uninsured individuals, or, who routinely waived required copayments from his or her clients, could be subject to allegations of fraud. ^{5 6 7} A determination of fraud would require proof that the provider knowingly and intentionally misrepresented material facts to an insurer as to his or her fee, and the company justifiably relied upon such information when paying the provider.⁸ Generally speaking, providers are not likely to be accused of fraud for reducing a client’s fee or waiving a copayment for someone in economic distress.⁹ Because a provider’s actions would be considered in light of the relevant facts and circumstances, it is again advisable for providers to document the reasons for entering into a reduced fee agreement.

Contracted therapists should carefully consider the terms and conditions of their agreements with third-party payers. The contractual agreements of in-network therapists with insurance carriers may contain restrictions on the therapist’s authority to take certain actions, such as waiving or reducing a client’s required copayment. Similarly, it is important to point out that contracted providers are prohibited from “balance billing” a client, which is charging a client the difference between the provider’s full fee and the contracted rate. Actions taken by a contracted therapist which are contrary to the terms of his or her agreement with a health plan could lead to the plan terminating its contractual relationship with the therapist. To avoid such consequences, providers are advised to speak with a representative of the plan’s provider relations office before engaging in uncertain or questionable billing practices.

Is it permissible to charge a client, or the client’s insurance plan for missed sessions?
Insurance plans provide reimbursement for covered services that have been rendered to an insured individual. Charges that may be applicable in the event of a missed appointment (or for an appointment that was cancelled with insufficient notice) could be charged to a client (but not to the insurance plan), as long as the client had previously been informed of such a policy. Here again providers are urged to check the terms of their contracts with managed care plans, or contact a plan representative, to determine whether in-network therapists are prohibited from charging clients for missed sessions (Medi-Cal providers, for example, are not permitted to do so).¹⁰

Should a client be allowed to accrue a debt to a therapist for unpaid fees?
Generally speaking, it is not desirable to allow a client to accrue a significant debt to his or her therapist for unpaid fees.¹¹ Among other things, allowing a client to accrue a debt to the therapist for unpaid fees may damage the therapeutic relationship. A client in debt to his or her therapist may feel that the cost of therapy is contributing to his or her financial problems, or that he or she is a burden to the therapist until the debt is rectified. Alternately, a therapist who is owed an ever-increasing debt from his or her client may find that it is progressively difficult to maintain a positive therapeutic relationship with the client. It is also possible that the accrual of unpaid fees over time may constitute the development of a creditor-debtor relationship between therapist and client. If such were the case, it would be an example of a dual relationship and a potential conflict of interest for the therapist. While a dual relationship is not per se unethical, the CAMFT Code of Ethics cautions therapists to avoid dual relationships that are reasonably likely to impair professional judgment or lead to exploitation.¹²

How should a therapist respond if a client’s health insurance lapses?
On occasion, a client’s health insurance coverage may be canceled or lapse during the course of treatment. Should that unfortunate event occur, the therapist and his or her client may be confronted with several problems, the resolution of which, again, depends upon the client’s particular needs and circumstances. A client who loses his or her health insurance benefits (especially if it was unanticipated) may be distressed over the possible loss of his or her relationship with the therapist. That client would probably have a need for continued care, and there is a related issue of how to handle any unpaid fees. In this situation, it would be helpful if the therapist’s office policies included information about the client’s financial responsibility in the event that his or her insurance is cancelled or lapses. But the absence of such a policy would not prevent the therapist from charging the client for services that were rendered and ultimately declined by the client’s insurance plan due to a loss of coverage.

Realistically, when a client loses his or her health insurance coverage, he or she may be financially unable to continue in treatment. The therapist would be free to consider a reduced fee but there is no requirement to do so, and a referral to an alternative source of treatment may also be considered, if appropriate. While there is no blanket requirement that would obligate the therapist to offer continued treatment in this circumstance, ethically, the termination of any client’s treatment must be conducted in an appropriate manner. ¹³ However, it is important to remember that a therapist is always expected to exercise sound clinical judgment. Therefore, if termination is being considered, even though there may be difficult financial considerations, the therapist should consider whether the client may be placed at risk if his or her treatment was prematurely discontinued in the absence of treatment alternatives for him or her.

If a client elects not to use his or her health insurance, are there implications for a therapist who is contracted with the health plan?

This is not an uncommon scenario. A client is free to decide not to utilize his or her health insurance for services provided by a psychotherapist. Problems can arise however, if the client is meeting with a therapist who is contracted with his or her health plan, and the client later changes his or her mind about the use of such benefits. Not surprisingly, the client may eventually reconsider the financial impact of paying out of pocket for services that are covered by his or her insurance. If the client ultimately attempts to seek reimbursement from the plan, the plan will send the client an explanation of benefits, (“EOB”), stating that he or she is not responsible for paying more than the contracted rate for the services rendered. Should that occur, the client may ask the therapist to reimburse him or her for any fees which exceed the contracted rates, and, the health plan may also contact the therapist regarding the matter to ask why the provider did not bill the client’s health plan and charge the client the applicable copayment, coinsurance or deductible.^{14 15}

It’s a tough position for any therapist to be in: If the client elected to enter into a fee agreement with a therapist which did not involve the use of his or her insurance, the therapist may be disinclined to refund any fees to that client. The client was certainly free to pay out of pocket and not use his or her health insurance for the services in question. However, depending on the facts and circumstances, the health plan may threaten to terminate its relationship with the therapist based upon an allegation of breach of contract. Even if the therapist elected to reimburse the client related to services already rendered, if therapy was ongoing, it would be difficult to overcome the impact of such a dispute on the therapeutic relationship. In light of these issues, therapists who accept insurance should clarify whether a prospective client is, or is not, covered by a health plan to which the therapist is under contract, and if so, to determine what the client’s anticipated financial responsibility is under the provisions of the plan. Should the therapist determine that he or she is a contracted provider for the individual’s health plan, even if the client elects not to use his or her health plan, it would be risky, at best, to enter into any agreement wherein the client pays the therapist an amount that is above the contracted rates.

Most Problems are Predictable and Preventable
In the course of practice, therapists are likely to encounter a variety of issues involving fees, payments and insurance which can be challenging for the therapist who may be unfamiliar with the relevant complexities or potential pitfalls. Fortunately, with the benefit of experience, most therapists will learn to effectively solve or avoid most of the problems that tend to arise in these areas.

Michael Griffin, JD, LCSW, is a staff attorney at CAMFT. Michael is available to answer member calls regarding legal, ethical, and licensure issues.

Endnotes
¹ The terms “client” and “patient” are used synonymously in this article.
² Business & Professions Code, §4982(n).
³ Code of Ethics, §9.3 Disclosure of Fees
⁴ See, Tran-Lien, Ann, JD, “Ten Reminders for Therapists about Fees,” The Therapist, May/June, 2014 ⁵ “Copayment” is the fee that an insured is required to pay a provider under the terms of a health plan for a covered health care service after paying the deductible. https://www.healthcare.gov/glossary/copayment/
⁶ California Physician’s Legal Handbook, (Jan., 2017)
⁷ Calif. Penal Code, §550 provides that it is unlawful to knowingly present a false or fraudulent claim, or to knowingly submit false or misleading information to an insurance company.
⁸ Id.
⁹ Id.
¹⁰ The terms “contracted” or “in-network” are synonymous in this discussion and refer to therapists who are contracted with an insurance plan.
¹¹ There is no precise threshold for what constitutes significant in this context and the determination should be based upon the particular facts and circumstances. Relevant factors to consider include the amount owed, the client’s financial resources, and the likelihood that the client will be able to reimburse the therapist in a timely manner.
¹² Code of Ethics, §1.2 Dual Relationships-Definition
¹³ Code of Ethics, §1.3.1 Termination
¹⁴ “Coinsurance” is the percentage of costs that may be applicable to a covered service after paying a deductible. https://www.healthcare.gov/glossary/co-insurance/
¹⁵ “Deductible” is the amount that an insured must pay for services before the plan begins to pay. https://www.healthcare.gov/glossary/deductible/

This article is not intended to serve as legal advice and is offered for educational purposes only. The information provided should not be used as a substitute for independent legal advice and it is not intended to address every situation that