How much should your therapist be charging for your services?

By and large, health professionals are not supposed to talk to each other about how much they charge. In theory, this is because they might “conspire” with each other to only charge a certain amount. The supposed risk to consumers is there will be no “competition” among health professionals, that prices will be driven up, increased to the extent that consumers will be unable to purchase services they need at reasonable rates because the prices are “the same (high rates) all over.”

This is not just “in theory.” These principles are governed by federal laws, and doctors and therapists can certainly pay substantial damages and go to prison if they work together to set rates.

These rules have had the effect that it is always challenging for therapists to readily find out what others may be charging, either for the purpose of helping them set rates so that their therapy practices can be reasonably profitable (and whether or not there should be any profit motive in providing health care at all is certainly worthy of extended discussion) and whether they might actually be able to set their prices lower than a nearby competitor. The lack of transparency in prices has had the perverse effect of potentially decreasing competition, driving up prices, and limiting consumer access.

A lot of this is in the process of changing. The consumer movement has empowered consumers to be able to see behind the curtain of costs and prices. Changes ushered in with the Affordable Care Act are dramatically affecting the ways health professionals may work together to provide services and set prices. There is increasing transparency in the health care market. This is good for consumers and health professionals.

In 2009, a major insurance company was found to have been “cooking the books” in terms of what they reported doctors usually charged (the old “usual and customary” term), and therefore how much they would pay for health services. Of course they underestimated how much services were “worth.” This meant that health professionals would be reimbursed less and, if they had deductibles or co-insurance, consumers would pay more. A successful lawsuit by the NY State Attorney General led to the creation of an independent, nonprofit company with the purpose of collecting and reporting to consumers what doctors really are charging for health services. This is the FAIR Health system, and you can read much more about it at http://www.fairhealthconsumer.org.

One of the key features of FAIR Health is that any consumer can easily look up what health professionals really are charging for particular health services, in your area (by ZIP code).

As an example, I went to http://www.fairhealthconsumer.org/ today and looked up the going rates for many common mental health services in my area. What I found is shown in the following graph. Fair Health reports these charges at the “80th percentile,” meaning only 20% of providers charge more.

If you are about to have an elective health service and want to know whether what your provider is charging is fair — or how it compares with other providers regionally

  • Ask your provider for the “CPT Code” for the service they are going to provide. “CPT” stands for “Current Procedural Terminology” and is the universally accepted way for health professionals to identify the services they provide.
  • Ask your provider how much they will charge for this service.
  • Go to http://www.fairhealthconsumer.org/ and look up the CPT pricing in your area.

If your health professional is not willing to give you this information, while I certainly do not want to give you advice about purchasing health services, in my opinion, this health professional is not being straightforward and may have something to hide. Such as their charge is substantially higher than local peers. Of course you will not base your purchase of the service on price alone.

Not having these quotes would be like driving into a gas station, going to the pump, and not actually being sure whether what you are getting is gas, at what mixture, and at what price. After you put whatever it is into your vehicle then you will find out what you purchased and how much you will be charged. Do you buy any other goods or services like this?

Of course with the new openness and potential for competition that FAIR Health and the Affordable Care Act provide, this should also serve as a reminder to mental health professionals that you are now able to obtain a transparent look at what the “going rate” really is in your area, not the distorted “usual and customary” previously reported by insurance companies, with their vested interests in suppressing rates. Time will tell whether these influences cause prices to rise — with the possibility that all mental health providers will want to charge what most others are charging — or decrease, due to better competition and increased transparency of local rates.

We’ll be watching and reporting these rates over time.

When you call me for an appointment, ask if my charges are within these ranges, more, or less.

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