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Institute an incentive plan to increase coding productivity

HIM Connection, December 12, 2006

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Before implementing any financially based incentive plan, obtain approval from your organization's administration and human resources (HR) department. To gain their support, demonstrate that the plan will result in cost savings by reducing contracted staff or the use of overtime; improving unbilled days or days in accounts receivable; or reducing turnover of coding staff.

There are four common components of an incentive plan

• Premise
• Eligibility
• Standards or performance expectations
• Reward

The premise
This is a statement or set of statements that describe what the plan will achieve or ensure. For example:

The incentive plan shall reward individual productivity in excess of the established performance standards at a quality level of 96% or higher, when there are no records left uncoded for more than six days following discharge and the unbilled amount is equal to or less than $3 million.

The premise establishes the global parameters for the plan. In this example, the incentive payment is individual-based, but it does require teamwork for individual coders to achieve the goal.

Eligibility
In this section of the plan, management defines who may be eligible for incentive compensation. For example:

All coders who have been employed one or more years with the surgery center are eligible to participate in the plan if they have achieved the minimum productivity standards for two consecutive pay periods.

Performance standards
Managers should encourage staff to stretch, but it's unreasonable to expect that all staff members will be able to achieve at the same level as your highest producer. Therefore, managers may want to establish an expectation that is the midpoint between the average calculated and the highest producer's performance.

The reward
Once you finalize the other components of the plan, you as the manger, in cooperation with human resources, must determine the incentive payment. There are several ways to do so:

• Speak to human resources. They may have a policy that states that the amount may not exceed a percentage of the current employee's hourly wage or of the team's average hourly rate. Or human resources may require that the payment be equal to the payment in place in other departments.
• If you are developing the plan to offset contracted assistance, then you can tie the payment to the cost of contracted staff.

Regardless of the method you use, the amount you select should result in cost savings for the organization, as well as additional compensation for the employees involved. For example:

The current contracted coder is paid $30 per/hour and codes an average of five inpatient records per hour for a cost of $6 per/record. If the organization pays coders $3 for each additional inpatient record, then the organization saves $3 on the cost of using an outside source.

Editor's note: The above article was adapted from the book Coder Productivity: Tapping your Team's Talents to Improve Quality and Reduce Accounts Receivable by Rose Dunn, RHIA, CPA. For more information or to order, call 877/727-1728 or go to www.hcmarketplace.com/prod-4059.html.

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