Developing and Implementing a Discount Fee Schedule

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Safety-net providers are eligible to apply for recruitment and retention assistance from the National Health Service Corps (NHSC).  Safety-net providers are community and/or migrant health centers, free clinics, mobile clinics, homeless centers, school-based centers, and other sites/providers that provide “significant” care to the low income population.  This package includes materials that may be helpful to you in meeting National Health Service Corps (NHSC) requirements.  These requirements include:

• Using a discounted/sliding fee schedule to ensure that no financial barriers to care exist for those who meet certain financial eligibility criteria;
• Posting a statement indicating that no one who is unable to pay will be denied access to services;
• Maintaining a full-time clinical practice, working a minimum of 40 hours per week for at least 45 weeks per year; and
• Having a policy of non-discrimination, in the provision of health care services. 

DISCOUNTED/SLIDING FEE SCHEDULE

Information 

What is a discounted/sliding fee schedule?

Discounted/sliding fee schedules are locally derived mechanisms (discounts) to address how to equitably charge patients for services rendered.  The mechanism must be in writing.  Fees are set based on federal poverty guidelines; patient eligibility is determined by annual income and family size.  Schedules are established and implemented to ensure that a non-discriminatory, uniform, and reasonable charge is consistently and evenly applied, on a routine basis.  For patients whose income and family size place them below poverty, a "typical" nominal fee is often between $7 and $15; patients between 101-200% of poverty are expected to pay some percentage of the full fee.  A discounted/sliding fee schedule applies only to amounts assessed to patients.  Billing for third party coverage, i.e. Medicare, Medicaid, private insurance carriers, etc., is set at the usual and customary full charge. 

Why have a discounted/sliding fee schedule?

Federal requirements prescribe that a locally determined discounted/sliding fee schedule be used, and that services be provided either at no fee or a nominal fee, as determined by the provider.  The reasonableness of fees, and the percent of a full fee that is assessed, may be subject to review/challenge by federal reviewers during routine reviews by duly authorized federal staff, or their state counterparts.

To which patients does a discounted/sliding fee schedule apply?

By joining the NHSC and accepting these licensed health care professionals into your practice, you are agreeing to apply the discounted/sliding fee schedule equally, consistently, on a continuous basis, to all recipients of services in the entirety of the site/location, without regard to the particular practitioner that treats them. 

How should a discounted/sliding fee schedule be developed?

Each safety-net provider should take the following into consideration when developing a discounted/sliding fee schedule:

• Policy must be in writing and non-discriminatory;
• No patient is denied services due to an inability to pay;
• Signage is posted to ensure that patients are aware of availability of discounted/sliding fee;
• Patients complete a written application to determine financial eligibility for the discounted/sliding fee;
• A patient’s privacy is protected;
• Records are kept to account for each visit and corresponding charges (if any);
• Patients below poverty are charged a nominal fee or not charged at all;
• Providers may establish any number of incremental percentages (discount pay class) as they find appropriate between 100-200% of poverty;
• Patients above 200% of poverty may be charged the full fee for the service(s), or; providers may continue to charge incremental percentages for services when patient income is above 200% of poverty, until 100% of the full fee is reached.

How and when is patient eligibility determined?

The simplest approach is to accept the patient’s word at the time the request is made.  On future visits, it may be appropriate to require some form of verification.  Verification will typically include tax returns and current pay stubs.  In addition to annualized income verification, eligibility may be based on current participation in certain federal/state public assistance programs, examples of which include the following:

• Social Security Income (Disability);
• Temporary Assistance for Needy Families;
• Free or Reduced School Lunch Program;
• Other public assistance programs. 

Whose income should be counted?

Many safety-net providers count only the mother, father, and dependent children under 18 as the family.  Other adults in the household, even though related, are considered separately.

Is every patient’s income reviewed?

This is up to the individual practice.  Whatever methodology is applied, it must be non-discriminatory, uniform and evenly applied.

How long should discount status be extended?

This is up to the practice.  Many safety-net providers re-evaluate eligibility on an annual or semi-annual basis.  As with any registration data, staff should ask at each visit whether anything has changed since the last visit.  If income has changed this should trigger a re-evaluation.

Sample Schedule of Income Thresholds Based upon 2007 Federal Poverty Guidelines

Six Discounted/Sliding Fee Pay Classes

Note: The income ceiling for the minimum fee pay class is equal to the federal poverty level.  The 2007 federal poverty guideline increases by $3,480 for each family member.

Note: The monthly schedule is equal to the annual schedule divided by 12 months.

Sample Schedule of Income Thresholds Based upon 2007 Federal Poverty Guidelines

Five Discounted/Sliding Fee Pay Classes

Note: The income ceiling for the minimum fee pay class is equal to the federal poverty level.  The 2007 federal poverty guideline increases by $3,480 for each family member.

Note: The monthly schedule is equal to the annual schedule divided by 12 months.

SAMPLE POLICY

ABC Clinic Discount Fee Policy 

Policy

It is the policy of ABC Healthcare to provide essential services regardless of the patient’s ability to pay. Discounts are offered depending upon household income and size. A sliding fee schedule is used to calculate the basic discount and is updated each year using the federal poverty guidelines. Once approved, the discount will be honored for six months, after which the patient must reapply.

Discount Application Process

A completed application including required documentation of the home address, household income, and insurance coverage must be on file and approved by the business office before a discount will be granted.  If the applicant appears to be eligible for Medicaid, a written denial of coverage by Medicaid may also be required.

Adolescent patients seeking confidential care are exempt from the application process and services are provided at the nominal rate.  

Services Covered and Excluded

Medical: The discount is applied to all in-office services and Off-site services supplied by ABC Clinic health care providers.

Pharmacy: Samples are provided, when available, without charge.

Lab & X-ray: The discount is applied to in-office laboratory and x-ray services. Reference laboratory tests and consulting radiology interpretations are excluded.

“SAMPLE” HEALTH CENTER

Discounted/Sliding Fee Application

It is the “Sample” Health Center policy to provide essential services regardless of the patient’s ability to pay.  Discounts are offered depending upon family income and size.  Please complete the following information and return to the front desk to determine if you or members of your family are eligible for a discount.

The discount will apply to all services received at the center but not those services which are purchased from outside such as reference laboratory testing, drugs, x-ray interpretation by a consulting radiologist, and similar services.  In the hope that your economic health improves, discounts apply only to current, not future services.  This form must be completed for each visit.  Please inquire at the front desk if you have questions.

Number of related persons living in your household:  __________

Total household income: (complete one column)

Note: Include income from all related persons in household and income from all sources including gross wages, tips, social security, disability, pensions, annuities, veterans payments, net business or self employment, alimony, child support, military, unemployment, public aid, and other.

I certify that the family size and income information shown above is correct.  Copies of tax returns, pay stubs, and other information verifying income may be required before a discount is approved.

Name (Print)

Signature/Date

Office Use Only

Patient Name                  

Discount

Date of Service                 

Approved by

“SAMPLE” HEALTH CENTER

Family Assistance Plan Application

Please list spouse and dependents under age 18

Annual Household Income

I certify that the information shown above is correct and understand verification is required for approval.

Name (Print)

Signature/Date

Office Use Only

Pay class approved:

Effective date:

Approved by:

Expiration date:

FEDERAL POVERTY GUIDELINES

What are the federal poverty guidelines?

The poverty guidelines are a version of the income thresholds used by the Census Bureau to estimate people in poverty.  The thresholds are expressed as the annual income levels below which the person or family members are considered in poverty.  The income threshold increases by a constant amount for each additional family member.  The guidelines are updated annually to account for increases in the Consumer Price Index.

Who issues the poverty guidelines?

HHS is required by law to issue the guidelines.  HHS guidelines determine 100% of the Federal Poverty Level (FPL). 

Where can you get the current poverty guidelines?

The guidelines are published annually in the Federal Register and usually appear by early February.  Updates may be found at http://aspe.hhs.gov/poverty/.

2007 HHS Poverty Guidelines

SOURCE:  Federal Register, Vol. 72, No. 15, January 24, 2007, pp. 3147-3148.

PUBLIC NOTICE SIGNAGE

The following examples show it is not required that a posting give all the details about the discount policy, nor is it required to post the actual discounted/sliding fee schedule.  It is recommended that the sign be posted in a conspicuous location such as beside the front desk.  It may be helpful to have the sign in several languages.

Sample Discount Fee Policy Signs

(Words to this effect are okay)

Notice to Patients:

This practice serves all patients regardless of ability to pay

Discounts for essential services are offered depending upon family size and income

You may apply for a discount at the front desk

* * *

AVISO PARA LOS PACIENTES

ESTE CENTRO DE SALUD ATENDERA A TODOS LOS PACIENTES, SIN IMPORTAR SU CAPACIDAD DE PAGO.

LOS DESCUENTO POR SERVICIOS ESENCIALES VARIARAN Y SON OFRECIDOS DEPENDIENDO DEL NUMERO DE SUS FAMILIARES Y DE SU SUELDO.

USTED PODRA APLICAR PARA EL DESCUENTO CON LA RECEPCIONISTA EN EL ESCRITORIO DEL FRENTE DE LA CLINICA.

GRACIAS.

NOTICE

THIS PRACTICE HAS ADOPTED THE FOLLOWING POLICIES FOR CHARGES FOR HEALTH CARE SERVICES

We will charge persons receiving health services at the usual and customary rate prevailing in this area.  Health services will be provided at no charge, or at a reduced charge, to persons unable to pay for services.  In addition, persons will be charged for services to the extent that payment will be made by a third party authorized or under legal obligation to pay the charges.

We will not discriminate against any person receiving health services because of their inability to pay for services, or because payment for the health services will be made under Part A or B of Title XVIII (“Medicare”) or Title XIX (“Medicaid”) of the Social Security Act.

We will accept assignment under the Social Security Act for all services for which payment may be made under Part B of Title XVIII (“Medicare”) of the Act.

We have an agreement with the State agency which administers the State plan for medical assistance under Title XIX (“Medicaid”) of the Social Security Act to provide services to persons entitled to medical assistance under the plan.