Adapting your ERP to the pay-per-visit model

Learn how modern healthcare organizations can transform their ERP systems to support the pay-per-visit model and enhance the patient experience.

Healthcare organizations face unique challenges in staffing and scheduling personnel, and one of the growing challenges is the management of pay-per-visit rather than by-the-hour or through salary. While the pay-per-visit model is most prevalent for home health nursing and therapy, it is increasing with the use of telehealth and may contribute to more providers following this model. Tracking and accounting for these differing pay models within your enterprise resource planning (ERP) solution requires coordination between compensation, time tracking and payroll modules.

Technical considerations of the pay-per-visit model

When considering utilizing your ERP to manage a per-visit pay model, you will need to ensure that the base HCM system can house the necessary components. These include, but are not limited to, job groups which identify exemption status, visit types, compensation plans, potential use of additional jobs for blended employees, and the method to capture time and visit information. Since a clinical system is needed for patient scheduling and tracking, an integration may be considered to capture time and visit information. This type of integration does not negate the need for the ERP system to process time and payroll calculations.

Transparency in compensation and pay practices can be critical to employee engagement in a competitive market. Maintaining multiple pay rates to include hourly or salary plans, base-unit rate for visit calculations, along with rates for each visit type can seem overwhelming to the human resources administration team. This effort has benefits throughout the system and employee lifecycle beginning with recruiting and ending with payroll. The candidate experience is enhanced when offer letters include pay-per-visit unit rate and applicable pay or productivity modifiers by rate type. It is important for an employee to clearly see the expected rate-by-visit type and show that rate, along with the number of visits performed, on the paystub. Housing the rates directly in the ERP also allows for clear communication of changes including generation of wage theft notices as required by law in some states.

Challenges of adapting the pay-per-visit model to your ERP

One challenge in configuring pay per visit in the ERP is the significant complexities for overtime calculations and absence accruals. The time worked during the visits including preparation and documentation is typically paid as part of the visit rate. Although this time is considered worked time, the time should not be paid under the hourly or salary rate plan. Time tracking software should calculate overtime for regular hours worked and provide calculations for identifying overtime from this non-paid time as well.

The time-tracking calculations will flow to payroll for appropriate payout of premium pay based on the blended rate for the period. This is another challenge in configuring pay per visit within an ERP that requires knowledgeable subject matter experts and trusted implementation partners. Overtime on regular hours is typically referred to as “time and a half” and is calculated as the hourly rate X 1.5. Overtime paid for hours worked as part of a visit must account for a blended pay rate, which includes all wages received in the time period. In addition, the “time” in “time and a half” is paid under the visit rate, which reduces the premium pay for overtime to only the “half.” That concept written out is not very clear. Explaining the concept to employees who are new to the pay-per-visit model can be difficult unless the HR and payroll teams thoroughly understand the model themselves and the system supports these complexities.

Transparency is key

With the regulatory challenges that are common in healthcare, including the significant shift for home health, companies need systems that are configured to manage complexities and provide accurate results. Reporting on these results for regulatory agencies including EEO and ACA is a minimum requirement with reporting on productivity and staffing levels—a critical component for managing the business effectively. Employees who receive accurate and clear paystubs and total reward statements have confidence in their employer, which leads to higher employee satisfaction, patient satisfaction and brand strength.

How Cognizant’s Workday practice can help

If you are planning for your initial implementation, or wondering how these decisions fit within your transformation, our strategic implementation planning services can help. We have specific components focused on job architecture and compensation architecture that can help align your philosophies, strategies, data and processes. During implementation, our HCM consulting team will work with you to understand both your current state of operations as well as your intended state to build the solutions that work for you in your environment.

If you are already live and need help making this change, we can evaluate your goals and objectives, review your configuration for enabling those objectives, and develop a plan to close the gap. Additionally, our team of consultants can work through the process of making those updates to your production environment.