How are bonuses negotiated

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R ELATIVE VALUE UNITS (RVUs)are used within healthcare organizations to indi-cate resources re quired when determining physician fee schedules. While RVUs typically compose the core of physician fees and are often used in physician incentive plans, these units are not always utilized in advanced prac- tice registered nurse (APRN) mod- els. APRNs have become integral to the provision of quality, cost- effective health care throughout the continuum of care. As health care organizations respond to physician shortages and reim- bursement shifts, the number of APRNs is increasing rapidly, and finding a market advantage for hir- ing and retaining APRNs is imper- ative. Therefore, an innovative incentive plan for APRNs was cre- ated that incorporated both pro- ductivity and quality metrics. Data were gathered before and after

implementation of this program to determine its effectiveness on pro – vider outcomes. The program and associated outcomes are des crib ed.

Background Relative value units. RVUs

reflect the relative resources required to furnish a physician fee schedule service. The Centers for Medicare & Medicaid Services (CMS) and other private insurers use the Medicare Physician Fee Schedule (MPFS) to reimburse physician services. The MPFS became effective January 1, 1992 and is funded by Part B. Three sep- arate RVUs are associated with the calculation of a payment und er the MPFS: work RVUs (wRVUs) reflect the relative time and intensity associated with providing a serv- ice and equals ap proximately 50% of the total payment; practice expense RVUs (reflect costs such as renting office space, buying sup-

EXECUTIVE SUMMARY Advanced practice registered

nurses (APRNs) are integral to the provision of quality, cost- effective health care throughout the continuum of care.

To promote job satisfaction and ultimately decrease turnover, an APRN incentive plan based on productivity and quality was formulated.

Clinical productivity in the incentive plan was measured by national benchmarks for work relative value units for nonphysician providers.

After the first year of implemen- tation, APRNs were paid more for additional productivity and quality and the institution had an increase in patient visits and charges.

The incentive plan is a win-win for hospitals that employ APRNs.

Catherine A. Rhodes Mavis Bechtle Molly McNett

An Incentive Pay Plan for Advanced Practice Registered Nurses: Impact

On Provider and Organizational Outcomes

ACKNOWLEDGMENT: The authors ack – nowledge the support and guidance received from Jane Fusilero, MSN, MBA, RN, former vice president and chief nurs- ing officer of The MetroHealth System. The authors also acknowledge support from Dan Lewis, Vice President, Human Resources, The MetroHealth System, dur- ing implementation of this project.

Instructions for Continuing Nursing Education Contact Hours appear on page 132.


CATHERINE A. RHODES, MSN, APRN, WHNP-BC, RNC-OB, SANE-A, is Women’s Health Care Nurse Practitioner and Sexual Assault Nurse Examiner, The MetroHealth System, Cleveland, OH.

MAVIS BECHTLE, MSN, RN, FACHE, is Vice President and Chief Nursing Officer, The MetroHealth System, Cleveland, OH.

MOLLY McNETT, PhD, RN, CNRN, is Director, Nursing Research, The MetroHealth System, Cleveland, OH.



NURSING ECONOMIC$/May-June 2015/Vol. 33/No. 3126

plies and equipment, and staff); and malpractice RVUs (reflect the relative costs of purchasing mal- practice insurance and therefore varies by specialty) (CMS, 2012).

A review of the literature fail – ed to yield descriptions of incen- tive-based programs for APRNs in a hospital setting based specifical- ly on wRVUs. However, within the current organization, a physician incentive plan based on wRVUs had been in place for several years. Physicians were given a default base salary of 90% of the total compensation benchmark. The adjusted base salary was then determined by average perform- ance relative to RVU benchmark for 2 previous calendar years. This model was not adopted for APRNs, however, as variations ex isted in scope of practice for APRNs in dif- ferent departments, and not all were billing providers. Therefore, productivity-based wRVUs would not be at the median benchmark for many of the APRNs, unfairly impacting their compensation.

APRN incentive models. Pro – fit-sharing APRN incentive mod- els are described by Buppert (2006) and Kenny and Balzer (2010). These plans involve a per- centage of profits after cost and benefits paid from revenues. A contract between the APRN and the employer is involved in these models. The practice needs to be vetted and Buppert (2006) recom- mends that if collections in a prac- tice are less than 95% effective, the APRN should ask for a per- centage of the billings rather than the collections to ensure the APRN is incentivized appropriate- ly. This became the base of the model implemented within the organization. This organization is a county-subsidized hospital with a mission to care for all regardless of ability to pay. Therefore, the collection rate is much lower than the 40% described by Buppert (2006). This made full implemen- tation of the Buppert model diffi- cult and not attainable for most APRNs. Another separate incen-

tive plan outlined by Buppert describes taking capitated fees received and dispensing based either by number of APRN visits or by panel size. This pertains to practices that are in a capitated reimbursement situation, and thus was not applicable to many areas of the institution.

The importance of including quality measures as well as pro- ductivity in APRN incentive plans

has been discussed (Buppert, 2006, 2010; Chu, Wang, & Dai, 2009; Hofmann, 2009; Mackey, Rooney, & Skinner, 2009; Scott, 2009). Incorporation of incentive plans can increase quality, patient satisfaction, and provider job sat- isfaction (Challis, 2009; Duffin & Brannigan, 2008; McDonald, Harrison, & Checkland, 2008). While incentives can facilitate attracting, motivating, and retaining nurses (Mackey et

An Incentive Pay Plan for Advanced Practice Registered Nurses: Impact on Provider and Organizational Outcomes



Figure 1. Quality Data: Incentive Program –

Criteria Scoring Workflows





No No Score = 0

Score = 2

Score = 1

End Quality

Quality Score ____

Satisfactory 360 evaluation

Appropriate indicators

Appropriate indicators



127NURSING ECONOMIC$/May-June 2015/Vol. 33/No. 3

An Incentive Pay Plan for Advanced Practice Registered Nurses: Impact on Provider and Organizational Outcomes


al., 2009), they must be carefully de – signed to avoid loss of intrinsic motivation (McDonald et al., 2008), decreased quality and morale (Hofmann, 2009) or re warding volume without quality measures (Scott, 2009).

Innovative APRN incentive plan. Previous informal surveys of APRNs within the organization re – vealed APRNs’ current pay struc- ture as a key dissatisfier within

the group. This was consistent with other reports in the literature regarding key dissatisfiers among APRNs, which also included lack of monetary bonuses, reward dis- tribution, and compensation for activities beyond duties (DeMilt, Fitzpatrick, & McNulty, 2011). To promote job satisfaction and ulti- mately decrease turnover, an APRN incentive plan based on productivity and quality was for-

mulated and presented to senior administration. Items included payment in excess of median wRVU; quality as indicated by the appropriate patient outcome met- rics for the role (see Figure 1); patient satisfaction scores (see Figure 2); participation in profes- sional organizations, presenta- tions, and publications (see Figure 3); and student education (see Figure 4).

Clinical productivity in the incentive plan was measured by national Medical Group Manage – ment Association (MGMA) bench- marks for wRVUs for nonphysi- cian providers (2009). The bench- mark used for each APRN was dependent on specialty and cho- sen by department with input by the APRN director of nursing. The benchmarks were the median for the comparable group the APRN was assigned. A 3-year rolling average was used to reduce year- to-year fluctuation. Each APRN had a percent effort assigned in the areas of patient care (clinical time). This percent effort was agreed upon by the department administrator. The wRVUs used in the productivity incentive are those for which the APRN was the billing provider. This information was generated directly from the billing reports. The quarterly in – centive uses the 3 months of wRVUs generated during that quarter. The APRN receives a dol- lar amount for every 5% above the median MGMA nonphysician pro – vider RVU benchmark in her or his area of specialty. This produc- tivity portion of the incentive is calculated and paid quarterly.

The quality incentive in – cludes results of chart audits, out- come measures, 360 degree evalu- ations (self, peer, manager, co- worker), patient satisfaction data, and participation in APRN meet- ings, committees, activities, pro- fessional organizations, national presentations, research, and stu- dent/staff training (see Figures 1- 4). This portion of the incentive is a predetermined amount annually

Figure 2. Patient Satisfaction Data: Incentive Program –

Criteria Scoring Workflows

End Patient Satisfaction


Less than 2

Less than 2

2 or more

No 2 or


Patient Satisfaction Score ____

Substantiated complaints

Meets QDM or self-assessment


Score = 1

Score = 2

Substantiated complaints

Score = 0

Patient Satisfaction



NURSING ECONOMIC$/May-June 2015/Vol. 33/No. 3128

prorated by full-time equivalent, and paid once per year after all quality measures for each APRN are evaluated.

Methods This project was designed as a

quality measure to evaluate imple- mentation of an APRN incentive plan in a 731-bed academic coun- ty health system encompassing a Level I trauma inpatient medical center, rehabilitation hospital, two long-term care centers, an outpa- tient surgery center, and a network of community-based health care centers. This county hospital has a mission to provide outstanding

primary, secondary, and tertiary care to all county residents regard- less of ability to pay. It serves diverse and vulnerable popula- tions and is unique in the area for its demonstrated commitment to providing care for the public. The hospital system is committed to responding to community needs, improving the health status of the urban region, and controlling health care costs. It supports 13 community clinics serving many vulnerable populations in the Cleveland area. It is a Magnet® nursing certified system and pro- vides regional trauma coverage to northeast Ohio. It employs ap –

proximately 1,200 RNs including approximately 120 APRNs, 500 physicians, and 350 medical resi- dents in various specialties.

The project was reviewed and approved by the institutional re – view board within the organiza- tion as a quality improvement project with the intent to dissemi- nate findings. All APRNs within the organization and working in the inpatient and outpatient set- tings (except certified registered nurse anesthetists and per-diem employees) were notified of the plan at staff meetings by the direc- tor of advanced practice nursing, chief nursing officer, and the

An Incentive Pay Plan for Advanced Practice Registered Nurses: Impact on Provider and Organizational Outcomes

SERIES Figure 3.

Professional Participation: Incentive Program – Criteria Scoring Workflows

Score = 0

Score = 2

End Professional

















Member of APN committee with documented


Professional organization officer

or committee member

Present lecture or poster

or publish professionally



Professional or institutional


Attend 50% of meetings

Attend 50% of APN meetings

Professional Score _____

Score = 1

Attend 51% or more APN


Attend 50% of meetings

Attendance or participation in

hospital or professional organization committee




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ature as items that affect job satis- faction in the workplace. The sur- vey has been sent to all APRNs annually since 2008. Participants were notified in the email they could participate in the satisfac- tion survey anonymously and vol- untarily. All survey results (pre and post) were categorized and analyzed in aggregate form. No identifying information was gath- ered.

To evaluate the impact of the incentive plan on productivity measures, wRVUs were reviewed pre and post-implementation. For the quality incentive, aggregate data were gathered pre and post- incentive implementation from APRN evaluations. Data included self, supervisor, peer, and ancil- lary staff evaluation as well as patient satisfaction surveys from outside vendor, self-administered patient satisfaction data for those not covered by that survey (main- ly inpatient, long-term care, psy- chiatry, and emergency depart- ment APRNs), number of hours APRNs precepted students, publi- cations by APRNs, and type of leadership activities APRNs held both within the institution and for outside organizations.

Results Of the 116 APRNs invited, 63

(54%) completed the pre-imple- mentation survey. Of the 129 recipients invited, 66 (51%) com- pleted the post-implementation survey. Overall job satisfaction improved 1.6% after implementa- tion of the incentive plan. How – ever, many changes in the institu- tion during the year affected job satisfaction, including a reduction in workforce, reorganization of departments, and chang es in work environment. Leader ship in the organization changed and a serv- ice line organizational structure was implemented. This led to con- solidation of some roles and change in others. The expectation that more time was spent seeing patients and less on administra- tive tasks was pervasive for physi-

An Incentive Pay Plan for Advanced Practice Registered Nurses: Impact on Provider and Organizational Outcomes


financial administrator for the plan. The information was also posted on the intranet site for APRNs.

To evaluate the impact of the APRN incentive plan on job satis- faction, all APRNs were emailed information about the project with

a link to complete an anonymous survey both prior to implementa- tion of the incentive plan, and then again after the plan had been in place for 1 year. The investiga- tor-developed job satisfaction sur- vey included 23 Likert scale scored items identified in the liter-

Figure 4. APRN Training Hours

Score = 2

Score = 1

Training hours

Train/Precept/ Mentor in graduate



Score = 0

End Training

>96 hours



1-96 hours

Training Score _____



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stayed the same and the one that decreased involved satisfaction in communication. However, the over – all score for communication satis- faction increased by 6.6%.

When evaluating productivi- ty data post-implementation, the total wRVUs increased 19.5% over the year prior to implementa- tion of the incentive plan. Of the 62 APRNs who were working the entire year prior and the entire year after the program was imple- mented, 40 (65%) had an increase in the percentage of wRVUs over median benchmark, 12 (19%) remained the same, and 10 (16%) decreased. When evaluating pro- fessional activity data post-imple- mentation, significant increases were seen for all areas (see Figure 6). Largest increases post-imple- mentation were seen for APRN attendance at staff meetings (139%) and number of publications. APRN precepting also in creas ed, as evi- denced by a 41% increase in num- ber of APRN students who were precepted, a 53% increase in the number of APRNs who were will- ing to serve as preceptors, and a 66% increase in the number of hours APRNs spent precepting students.

There was also an increase in the number of completed annual evaluations that were deemed sat- isfactory (18%). An increased number of APRNs (14%) also had patient satisfaction reports that were at or above recommended median benchmarks. Lastly, APRNs participating in leadership activi- ties increased by 25%.

Implications for Nursing Findings from this project aid –

ed in evaluating the effectiveness of a newly implemented incentive plan for APRNs. Data are used to refine components of the incentive plan as well as identify new meth- ods that may continue to improve APRN satisfaction rates within the institution. There were much high- er gains in the quality and produc- tivity areas of the incentive plan than in the satisfaction scores.

An Incentive Pay Plan for Advanced Practice Registered Nurses: Impact on Provider and Organizational Outcomes

SERIES Figure 5.

Mean APRN Satisfaction Scores Before and After Incentive Plan










Customer Focus

CommunicationProfessional Development

AutonomyWork Conditions

Overall Satisfaction

3.13 3.18

2.16 2.43

2.68 2.80 2.74


2.56 2.73



Figure 6. Professional Activities among APRNs Before and After Incentive Plan








Outside Leadership

PublicationsStaff MeetingsSatisfaction with Care








4 8

4 5

cians, physician assistants, and APRNs.

The most significant satisfac- tion gains post-implementation were seen with orientation (25%), job content (16%), and working conditions (13%) (see Figure 5). Smaller gains were seen with sat-

isfaction with a customer-focused approach (11%), professional de – velopment (10%), communication (7%), and autonomy (4%). Of the remaining measures, there was slight improvement of all but three items, two stayed the same and one decreased. The two that



131NURSING ECONOMIC$/May-June 2015/Vol. 33/No. 3

This may partially be due to other organizational chang es that have taken place in the institution over the past year as described earlier. The quality in centive is cumber- some and falls on one individual in the institution. With electronic medical record and many automat- ed systems gathering information on providers, patient outcomes, and timeliness of chart documen- tation, this portion may be revised to streamline data collection. The incentive plan for APRNs is a win- win for hospitals that employ APRNs. The criteria include pro- ductivity standards based on MGMA data and quality data including national standards/mea- sures. The plan also includes patient satisfaction scores and pro- fessional scholarship incentives including research, publication, and participation in professional organizations. The hospital stands to gain increased access for patients, higher quality and cus- tomer service scores, and more staff engaged in research, publica- tion, and professional organiza- tions.

The institution is moving towards performance-based pay increases so this is a step in that direction. Base pay was increased for APRNs in the first year this pro- gram was in place due to market

survey and information shared with senior leadership during the implementation process. The over – all wRVUs increased by 19.5%, the number of patient visits in creased 15.8%, and the charges from those visits increased 12.3% over the previous year. With the incentive pay, APRNs were paid more for additional productivity and quali- ty and the institution ex perienced an increase in patient visits and charges. The recruitment benefit has also been positive for ambula- tory network sites. $

REFERENCES Buppert, C. (2006). Productivity incentive

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Buppert, C. (2010). How are bonuses negotiated? Journal for Nurse Practitioners, 6(9), 673-674.

Centers for Medicare & Medicaid Services (CMS). (2012). How to use the searchable Medicare Physician Fee Schedule (MPFS). Retrieved from Education/Medicare-Learning- N e t w o r k – M L N / M L N P r o d u c t s / downloads/How_to_MPFS_Booklet_ ICN901344.pdf

Challis, A.M. (2009). An appreciative inquiry approach to RN retention. Nursing Management, 40(7), 9-13.

Chu, H.L., Wang, C.-C., & Dai, Y.-T. (2009). A study of a nursing department per- formance measurement system: The balanced scorecard and the analytic hierarchy process. Nursing Econo – mic$, 27(6), 401-407.

DeMilt, D.G., Fitzpatrick, J.J., & McNulty, S.R. (2011). Nurse practitioners’ job satisfaction and intent to leave cur- rent positions, the nursing profes- sion, and the nurse practitioner role as a direct care provider. Journal of American Academy of Nurse Practi – tioners, 23, 42-50.

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Kenny, K., & Balzer, A. (2010, June). Divi – sion of advanced practice nursing within an academic teaching center. Poster session presented at the 25th Annual Conference of American Academy of Nurse Practitioners, Phoenix, AZ.

Mackey, T., Rooney, L., & Skinner, L. (2009). Pay for NP performance? The Nurse Practitioner, 34(4), 48-51.

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Medical Group Management Association (MGMA). (2009). Private practice compensation and production sur- vey for faculty and management: 2010 report based on 2009 data. Franktown, CO: Glacier Publishing Services, Inc.

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An Incentive Pay Plan for Advanced Practice Registered Nurses: Impact on Provider and Organizational Outcomes


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