Medical Billing Incentive Plans that Inspire: 10 Tips for Success

Medical billingThe best performance incentive plans are the ones that work, of course, but what works for employees – cash or days off – might not be what your organization can afford. Incentive plans that are effective at motivating billers must be affordable and targeted to specific results. Most importantly, they must be finite - that is, not a permanent entitlement.

Put careful thought into the design, goals and timing of any incentive plan – big or small. Use these 10 tips to shape your organization’s incentives for billers:

1.  Recognize that the revenue cycle is a function of many factors
Billing is an operational process, not a desk or a department. Your incentive plan should recognize that everyone in the organization plays a role in the process. Collection rates improve when front office employees remember to ask for copayments from every patient who owes one. Days in accounts receivables can decline if schedulers remind patients who call to schedule an appointment about any copayments or past-due balances. An effective plan influences behavior by tying rewards to specific targets; for example, always producing accurate registrations or always collecting time-of-service payments. Because many staff work in teams, base at least half of the reward on team performance and the remainder on individual achievement. It will give everyone a reason to work together.

 2.  If YOU don't have the money, don't even go there!
Nothing deflates employee morale faster than cancelling a popular incentive program. Keep your incentive programs cost under control by capping individual distributions at $100 per month or less. An exception might be when the incentive program is meant to replace part of employees’ salaries. In most cases, you’ll find that relatively modest incentives– $25 or $50 a month–are appreciated by employees and will inspire them to better performance.

 3. You get what you pay for. If you incent for speed, you will get it – but also the inaccuracy that comes with higher speed.
Give careful thought to the range of unintended consequences your incentives might inspire. Want to reward a biller for posting claims faster? Don’t be surprised if error rates go up because some employees skip important steps in their quest to work faster. Want to reward billers for resolving 100 percent of denied claims within 30 days? Be careful that they don’t start reclassifying claims denied for missing documentation, unbundling, medical necessity and other ‘noncontractual adjustments’ as contractual adjustments (e.g., the contracted allowable discount). Of course, most employees are conscientious. All the same, don’t be shocked when people go in the direction in which your incentives push them.

4. Not every account is the same.
Many organizations assign accounts to billers based on payer. That’s helpful for building core knowledge about a payer. It’s not so great if the new incentive plan holds the person working Medicaid accounts to the same standard as the person working Medicare accounts. Specialty differences also can make a big difference in how long claims remain in accounts receivable – and the work involved in getting claims paid. Before implementing your incentive plan, work with employees to ‘weight’ the various payers, using Medicare as the standard; they’ll have a good sense of the differences. In many states, Medicaid consumes twice as many resources – and time - as Medicare; Workers’ Compensation may be three times as hard. The weightings won’t be precise, but your incentive has a far better chance of success if performance goals – say, 25 days in receivables outstanding for Medicare, but 50 for Medicaid -- are relevant to the payer mix, as well as to your organization and your market. Expect to revise goals over time – a change in your computer systems or payer mix, or new software in the state’s Workers’ Compensation program – can change things dramatically.

5. Distribute in a timely manner.
Memories are short. Keep the incentives tightly linked to the performance by distributing rewards soon after the end of the monitoring period, no more than 30 days. Because monetary rewards are – sadly – taxable income, you might find it easiest to distribute them as part of the employees’ regular paychecks. Make sure to give each employee earning a cash incentive a written statement of the gross amount of the reward. Distribute the statement separately, either with or before payroll distribution, so employees can see what they earned before Uncle Sam and the state took their cuts.

6. Establish clear expectations regarding measurements, including formulae.
A clearly drawn incentive program is immediately understandable and can be easily tracked by participants. If the plan is too complex, billers won’t understand what you want them to accomplish. Worse, they question the plan’s – and your – fairness. If the indicators and formulae are clear, employees will know what to do reach your intended goals. Spur competition by making and displaying charts of progress on indicators or distribute printouts at each staff meeting. It will make a bigger impact than burying the progress reports in the computer network.

7. Keep in mind…less is more.
The mantra “less is more” isn’t just for environmentalists. Small rewards – $25 to $50 per month – can be quite effective. Ask billers to suggest reward amounts; you might be surprised at the relatively modest amounts they consider worthy. The same goes for incentive plan criteria: keep them short and sweet so everyone will understand what they need to do to succeed.

8. Put the plan in writing.
It sounds so obvious, but your plan must be written down and readily available to employees. Hand out copies when you announce the plan and put copies on your organization’s intranet or internal server.

9. Evaluate annually.
Review your incentive plan’s overall results annually against the performance it is supposed to inspire. In some cases, you may be able to put a cash value on the plan’s impact: for example, the number of reduced denials from practice-caused errors times the cost of reworking a denied claim. Once you reach a goal, such as collecting 100 percent of patient copayments at time of service, move on to other targets.

10. Consider non-monetary awards.
The problem with most financial incentive plans is that they become an expectation, which means they are no longer motivating better performance but merely maintaining the status quo. Staff may come to view the additional cash as part of their normal compensation. They may even start depending on it. After the plan expires, morale (and results) can suffer as staff perceive that you took something away from them.

You can alleviate many of these issues by sticking to short-term plans–three to six months. Better still, consider a non-monetary incentive plan. Non-monetary awards can work well, and maybe better than cash awards, because they are perceived as more spontaneous and sincere.

Try these ideas to reward billers for reaching goals:

  • Offer an award – a fancy trophy, or a simple certificate.
  • Give a bag of popcorn, two movie passes and a note that reads: “Thank you for all of your hard work; Hope you’ll relax this weekend!”
  • Place a rose in a vase on the employee’s desk with a note that reads: “For all you do, this bud’s for you!”
  • Send a bouquet of flowers to an employee’s home with the message: “Where would we be without you? Thank you!”
  • Provide complimentary dinner delivery – or make trays of lasagna for everyone; accompany with the note: “Thank you for your hard work – hope you’ll take the night off”
  • Don an apron, and walk around with ice cream sundaes and fixings.
  • Host a BBQ behind your building – for lunch, or take home.
  • Allow a casual dress Friday.

When choosing incentives – and there are as many as you can imagine – opt for the ones that best fit your management style and your organization’s culture.

The most effective reward – monetary or non- monetary – is simply to say “thank you.” To incent billers, say “thank you” more often, or take the time to write a “thank you” note to each employee as a way of demonstrating your appreciation for a job well done.

About the Author

Elizabeth Woodcock, MBA, FACMPE, CPC is a professional speaker, trainer and author specializing in medical practice management. She has focused on medical practice...

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