Enhancing Office Productivity with Pay for Performance

Practice owners who integrate such programs can reap rewards

Enhancing Office Productivity With Pay for Performance

Practice owners who integrate such employee programs can reap rewards.

As the medical industry faces greater regulatory and reimbursement scrutiny, today's retinal practices need more from their employees. However, office managers and physician owners alike have been unable to answer one basic question: How do we motivate employees to actually do more?

In Abraham Maslow's book, Motivation and Personality, the American psychologist explained that people, even as employees, are motivated by the existence of unsatisfied needs. The existence of these needs motivates employees to "do more" and "do better." As such, the focus should then be on the planning, development, and implementation of well-defined personnel evaluation systems that motivate employees to do more, reward doing better, and make a career out of what was once considered a job.

Figure 1. Insurance Clerk

Entry       $10.00 - $10.75 1 Year Required
Level Two $10.76 - $12.00 2 Years Required
Level Three $12.01 - $14.00   3 Years Required
Level Four $14.01 - $16.00    4 Years Required

Unfortunately, for too long, medical practices have focused on providing employees with the lower-level needs such as "cost-of-living increases."

Throughout 15 years of rigorous consulting, I have yet to find 1 practice that has benefited from giving its employees cost of living increases.

Such increases should, in my opinion, be universally stricken from use as they are devoid of an effective performance instrument that creates a "win/win" relationship between the employee and employer. In order to get more from employees, we must focus on moving them across the hierarchy toward their social, ego, and self-actualization needs.

Therefore, this article will explain how to motivate employees as well as provide an outline on setting up a pay-for-performance program.


Figure 2.    Insurance Clerk: Level 1

• Successfully completed the company orientation program
• Implements company core values successfully
• Policy and procedure manual orientation completed and documented
• OSHA training completed and documented
• HIPAA training completed and documented
• Maintains practice and patient confidentiality
• Must abide by all company rules and regulations
• Answers the phone appropriately by the third ring and according to company protocol
• Consistently demonstrates a high degree of customer service
• Consistently greets patients in a warm and friendly manner
• Accurately answers all billing questions for the practice and patients
• Must have general knowledge top 20 CPT and ICD-9 Codes for ophthalmology
• Must have understanding of ophthalmic terms, procedures, and testing
• Must be able to properly reconcile each day
• Performs daily back-ups as required by company policies
• Must successfully complete the business office skills assessment (written and practical) with 95% accuracy or greater

Level 2

• Completely mastered entry level
• Must be able to handle all mail correspondence from insurance companies
• Must be able to properly post all charges within 24 hours
• Processes all electronic and paper claims within 24 hours when properly submitted or corrected
• Ensures all secondary claims are filed within 24 hours
• Ensures all denied claims are properly corrected and resubmitted within 72 hours
• Processes all patient statements in accordance with practice protocols
• Ensures all claims that are 35 days old are evaluated and corrected for errors and re-filed accordingly
• Must be able to completely handle all insurance and patient bill calls
• Must be completely familiar with the practice computer software

Level 3

• Completely mastered level 2
• Must be completely familiar with the insurance appeals process
• Ensures all fee schedules are current and up to date
• Must be able to properly conduct a chart to superbill audit
• Must be able to properly complete the tracking of all ECP reports for acceptance or denials
• Ensures patient and insurance refunds are current
• Ensures the aging of accounts receivable are consistent with ophthalmology standards
• Must have an outstanding knowledge of modifiers
• Maintains rules and regulations for insurance carriers
• Ensures physicians are properly credentialed
• Ensures all patient and insurance refunds are current

Level 4

• Completely mastered level 3
• Must be able to process all aspects of accounts receivable
• Must be completely familiar with all aspects of ophthalmic coding
• Must be able to process all requested patient and management reports
• Must have an above average knowledge of billing and compliance issues
• Must be able to perform at least 1 other requested practice job description
• Provide suggestions on how to improve customer service and efficiency
• Must be able to fill in for the supervisor as needed
• Assumes other duties as assigned without difficulty

Pay for performance requires full involvement from owners, management, and employees. After all, the point is to move your employees out of their comfort zone — a position with which most become apprehensive. As such, it is incumbent upon the management of the practice to fully involve the staff, providing them with the rule book for success and asking them ahead of time if there is any expectation that is unclear. Office administrators need to identify, both orally and in writing, the expectations for each of the job positions within the organization. Most of the time, staff members want to do a good job — they just do not know what is expected of them. Staff members should receive their individual career ladder and pay grades and sign release statements indicating that they understand the company's goals of the program. The goal is to manifest a corporate culture that promotes an ownership mentality at the staff level and rewards accountability. This straightforward approach will not only pay dividends for the partners of the practice, but it will also ensure high-quality performance, efficiency, and teamwork.


The curriculum of pay for performance is twofold. The first, the "do better" component, is a bonus program. The second, the "do more" component, is an annual merit salary adjustment based upon well-defined levels of responsibility. Both components utilize a career ladder that is used as the basis for the employee's bonus and annual merit salary adjustment. The inclusion of both components ensures that employees are not only responsible for mastering their duties, but that they will take on additional responsibilities as well.

Each career ladder has a specific job description with multiple levels of expertise, ranging from entry level to level 3 or 4. Each level is accompanied by a corresponding entry-level pay grade and a maximum hourly rate. Employees' job performance is evaluated on their career-ladder level, and a score is derived from the evaluation summary assessment described below.

Based on the assessment score, both the bonus and merit increase are calculated. As a result, employees will either remain in their current career-ladder level with identified areas of needed improvement, or if the score reflects that all job responsibilities were mastered, employees will be moved to the next level of the career ladder and corresponding pay grade.

The potential bonus amount that we recommend for the staff is usually 4%. The 4% should be divided equally into two 6-month evaluation periods, 2% for each period. Evaluations should be conducted on the employee's anniversary date and the subsequent 6-month period following the anniversary month.

This prevents the manager from being overburdened by conducting numerous evaluations in a short time period. In order to be eligible for the program, an employee must have been with the organization for 6 months of continuous employment and must have successfully completed a
3-month initial performance evaluation.

The following steps can help to develop an effective pay-for-performance program:

All partners must be committed. All principals and partners in practice should realize that a program of this magnitude will be an investment in their staff. It will enhance the company core values, maximize customer service, improve productivity, augment skill level, decrease turnover, enhance morale, and improve the bottom-line financial results of the corporation. As there will be resistance from some staff members, partners must be consistently supportive of the program when there is negativity and resistance from staff members who try to derail the program. Without full partner cooperation and support, the program cannot be successful.

Management support. A variation from the daily routine can precipitate stress at the management level. Because office managers will be involved with the implementation of the mechanics of the pay-for-performance system, they must be in complete support of all aspects of the program. The supervisory and upper level management staff must be trained in proper human resource compliance techniques and how to properly conduct a staff review. Compliance with all necessary issues pertaining to current labor law should be addressed with management. They will also need to learn how to use the program as an instrument for success, promoting job enrichment for all.

Make a 1-Year commitment. In today's complex society we have all been programmed for instant gratification. For a pay-for-performance program to be properly implemented, partners and management will need to be patient and understand that it will take a minimum of 1 year to be successful. Staying the course is vital, even if challenges arise.

Develop a wage and salary program. Each position within the practice should be carefully evaluated for duties, roles, responsibilities, and levels of pay. For the majority of positions within the practice, we recommend 4 levels of pay grades (for a breakdown of the levels and a job example, review Figure 1). Following a review of current wage and salary benchmarks for the given marketplace, the pay grades are assigned in ascending increments to the respective levels of the career ladder. For example, at an entry level position, you will need to determine what the market requires to hire a person to perform a certain task at the very basic level with minimum experience for a particular job description. In return, the entry level position would pay at the 25 percentile of the wage and salary benchmark, and a level 4 employee should be paid in accordance to the 100 percentile. As a control, we also recommend that each position has requirements for tenure within each level. Analysis of the pay grades should be conducted annually to ensure that they are fair and consistent within the demographics of your marketplace. Data are available through national wage and salary studies conducted for geographical regions.

Develop career ladders. Once the basic responsibilities and pay requirements of the job description have been determined, career ladders must be developed for each job classification (front desk receptionist, technician). This is a critical step within the development of the program.

For each of the levels, well-defined job requirements must be noted along with any essential skills and abilities that are needed for the position. Clearly state the requirements of the job at every level and identify the expectations for success. The expectation is for employees to function at their highest legal capability in an effort to support, cultivate, and enhance the physician's success within the practice (Figure 2 is an example of a 4-level career ladder that has been developed for an insurance clerk).

Figure 3

• Score of 9.5 to 10.00 = Full bonus plus 4% increase in pay or move to the lowest level of next career ladder
• Score of 9.0 to 9.4 = 90% of bonus potential plus 3% increase in pay
• Score of 8.0 to 8.9 = 60% of bonus potential plus 2% increase in pay
• Score of 7.5 to 7.9 = 25% of bonus potential with no pay adjustment
• Score Below 7.5 = No bonus or pay adjustment

Create an evaluation summary tool. After all of the other steps have been completed, an evaluation tool is developed to score the employee based upon his/her performance. A spreadsheet containing pre-designed formulas can be used to derive the employee's performance rating from the criteria listed above. The employee is also rated on overall judgment, productivity, attendance, punctuality, customer service, demeanor, teamwork, and capabilities as a technical expert. Once all job criteria are rated, the employee's composite performance evaluation score is derived and merit pay and bonus increases are determined (an example is provided in Figure 3).

Human resource compliance. It is important to make sure that practices do not violate any federal or state human resource laws. We recommend that physicians develop a disclaimer that is published in the employee handbook identifying the rules and expectations of the program. Office managers need to document that employees understand the requirements of their jobs and how they will be paid on their individual and team performance.

In writing, it should be made clear the program may, at the discretion of management, be modified or cancelled at any time. Within a union environment, it might be a good idea to review the program structure with a labor attorney prior to the implementation of the program.

Employees are no different than any other investment for which you spend time and money in hopes of receiving a return on investment. However, people need to be motivated in order to produce results. Pay for performance can motivate employees to do more and reward them for doing better.

Joseph Carroll is founder, president, and CEO of Advantage Administration, Inc., a full-service medical consulting company. He can be reached by phone at (866)217-4214 or by e-mail at