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It means you get paid $40.00 per service provided, and the employer gets $60.00 for services. That is a 60/40 spit for contractor work. Usually, you may be able to use an office in the bldg without paying for a location yourself, for example. Normally, you are responsible for ensuring your taxes are taken out of your check too.
Does this apply to insurance payments and private pay clients?
The office will give 60% to the practice and 40% to you based on the reimbursement rate of the insurance or private pay client. For instance, if insurance pays $90 per session, you make $36 per session. Try to factor in any other benefits the office offers such as shared health insurance, office space, etc.