In my consultations with therapists nationwide, I help them strategize on how to keep more of their hard-earned money — without working harder.

While there are many factors we can’t control, I am struck by how often these therapists are leaving thousands of dollars on the table each year due to one thing they can control:  their cancellation policy.

Can you bill for missed sessions?

It’s true, insurance generally won’t cover missed/late-cancelled sessions, and shouldn’t be billed for them, though some Employee Assistance Programs may allow you to count it as one session, or some may even pay for no-shows — check your contract.

However, if you are a network provider with the client’s insurance, most insurance plans allow you to charge the client directly for the missed or late-cancelled session.  Of course, there are some conditions:  Usually, network providers are only allowed to charge your insurance contracted rate.  In addition, the client must have signed your cancellation policy in advance, which spells out how much advance notice is needed to avoid the charge, and the amount of the charge.  Out-of-network therapists can charge clients up to their full fee for missed sessions.

The bigger issue

What I find sad is that most therapists tell me that while they have cancellation policy, but they don’t consistently — or ever — enforce it. 

So why aren’t we charging clients regularly for missed sessions?  We are compassionate — we know clients are busy, and things come up.  We want to be seen as kind and flexible.  We feel guilty charging for a session when no service was provided.  And while we spend our days encouraging clients to express feelings, the truth is most of us really don’t want them to be mad at us.  We may even be afraid the client will terminate, which could result in a larger income loss.  But maybe the deeper reason has to do with our own relationship with money, and our discomfort seeing ourselves as small business owners.

But would you question an airline that charged you if you missed a flight?  A hotel that charged for a late-cancelled reservation?  In both cases, a service was not provided.   So, why don’t we think of a missed therapy session in the same way?  In all cases, the business was prepared to provide the service, but the client’s late cancellation means the business doesn’t have time to fill the reserved space, and loses money.

The financial impact

It may feel like a small amount you forgive here and there.  But this can add up to thousands of dollars in lost income. 

Do the math: Imagine you started collecting on two missed sessions each week, then multiply that income by 48 weeks/year (I’m giving you 4 weeks for vacation).  If you charge $150, this could represent $14,400 a year.  That’s how much more you’d be making annually if you collected for those missed sessions.

Now it’s your turn:  Multiply the average amount you charge per session  by the number of missed sessions you average per week (be honest) by the number of weeks you work each year.

6 Cancellation Policy Tips

1. Have a clear cancellation policy and communicate it to clients.  Spell it out in your treatment agreement and go over it verbally with them in the first session.  Identify exactly what the missed session fee will be, and if you are in-network, that they must pay more than a copayment.
2. Enforce your no-show policy — consistently.  Otherwise, as with inconsistent discipline in parenting, we encourage boundary-testing by clients.  Therapists with clear boundaries tend to have clients who attend more regularly.  Consider: what message do you send when you have a policy but then don’t enforce it?  Remember the brilliant phrase: “we teach people how to treat us.”
3. Know your exceptions and make them clear. It’s OK to make exceptions to your policy.  I don’t charge when the client had no control of the cancellation, and no way of knowing they would have to miss the appointment (ex. medical emergency or waking up sick). I do charge for most work conflicts because I don’t want to make it easy for a client to put work before self-care.  Some therapists allow one missed session for no charge, and charge for any missed after that.
4. Charge the full amount you would have collected for the session, not a reduced “missed session fee.”Otherwise, why are you taking a loss due to their missed session?  Again, in-network providers can only charge their contracted rate with the health plan for a missed session.
5. Don’t allow a late-cancelled session to be rescheduled later in the week for free. In this scenario, the client is essentially taking two of your slots and paying for one.  Even more significantly, it sets up an expectation that you’ll allow this in the future.
6. Get a Credit Card Authorization at the intake session so you can charge for missed sessions as they occur.  Not only does this help ensure you are paid, even if the client never comes back, but often clients don’t seem to feel as bad about the charge when it is on their credit card.  (I have a sample Credit Card Authorization in my Sample Forms Packet, available here).

Some Helpful Scripts

• When a client late-cancels, gently remind them of the fee: Say “I’m so sorry — I know you’re busy, and I hate to charge you in full (not just your copay) for a session when you won’t get the benefit.  So, if there is any way you can make it I hope you can work it out.”  It is amazing to me how often they work it out so they can show up.
• If they are unable to come due to a work conflict: “I’m sorry, as you know I reserve that time for you, so I will have to charge you in full — not just your copayment — for the session.  But once you’ve paid I can give you an invoice for the missed session and you might be able to get your company to reimburse you.”  I’ve actually had employers reimburse clients for missed sessions.  Make sure any invoice you give a client clearly indicates it was a missed session.

My challenge to you

Your client’s lives will always be chaotic and busy — I understand.  But you don’t need to pay for it.  Each week, it is normal that you will have a certain amount of income lost due to things you can’t control — unfilled hours, vacations, sudden emergencies and illnesses (yours or clients’). You don’t need to add to that by not collecting on missed sessions that you should have collected on.

Also, a firm cancellation policy serves a therapeutic function:  It role models clear boundaries, that you will follow through with what you say you will do, and it challenges clients to make therapy (and themselves) a priority.