Less than 100 years ago, many nurses were still being paid directly for their services. Patients and families paid private duty nurses for nursing care at home, as needed, in the 19th century, and when hospitals became prominent health care delivery organizations in the early 20th century, private duty nurses increasingly provided care in hospital settings.
"There was a direct economic relationship between nurse and patient," says John Welton, PhD, RN, professor emeritus at the University of Colorado College of Nursing. Nursing services were billed independently from physician and hospital services, as itemized for the patient upon discharge.
That shifted during the 1930s when nurses transitioned from private duty to hospital employment and hospitals started bundling nursing services into the room rate.
"Nursing historians believe that, at that time, reimbursement for nursing services was modeled after the hospitality industry that bills a fixed rate for cleaning services as part of the room rate," says Olga Yakusheva, PhD, MSE, a member of the ANA Enterprise Research Council.
Fast forward to the present: Nursing payrolls are the largest chunk of hospitals' budgets, with RN labor costs accounting for approximately 25% of a hospital's operating budget, according to Welton. Faced with tight budgets and under pressure to trim costs, hospitals have little incentive to maintain or increase nurse staffing.
"The economic truth is that it costs them less per patient day when a nurse takes care of more patients," Welton says. A hospital receives the same amount of money for the care of eight patients whether one nurse, two nurses, or three nurses provide the care. It's more profitable for hospitals to employ fewer nurses.
"Under the current reimbursement model, nursing is just a very costly overhead," Yakusheva says. "Without direct reimbursement for nursing services, hospitals have an economic disincentive to hiring nurses, improving nurses' working conditions and staffing, and adequately compensating nurses."
RETHINKING REIMBURSEMENT PRACTICES
In response to nationwide nurse staffing shortages, the Commission for Nurse Reimbursement was launched in April to change the way nursing care is valued and reimbursed.
"We have more nurses in the United States than ever before. But there is a shortage of nurses willing to work in health care environments as they are today, and that's largely because health care systems staff nurses to the lowest cost denominator, from an economic perspective, as opposed to a level that is safe for the nurses to do their job and deliver the kind of care patients need to survive in health environments today," says Rebecca Love, MSN, RN, FIEL, Commission for Nurse Reimbursement cochair.
Nurse staffing levels have been a point of concern for decades, and the current nurse shortage began well before the COVID-19 pandemic. The pandemic, however, greatly increased nurse workloads and stress, with more than 60% of nurses reporting an increased workload due to the pandemic, according to an April report from the National Council of State Boards of Nursing (NCSBN). This research, part of a biennial nursing workforce study from the NCSBN and the National Forum of State Nursing Workforce Centers, also revealed that approximately 100,000 RNs left the workforce due to stress and burnout. These factors, in addition to retirement, were cited by an additional 610,000 RNs who said they had an "intent to leave" the workforce by 2027, according to the study.
Seventy-nine percent of nurses currently in the workforce report that their units are "inadequately staffed," according to Nurse.org's 2023 State of Nursing Report.
A return to direct nurse billing and reimbursement would "change nursing from a cost center to a revenue center" for hospitals and "create incentives for hospitals to better staff nursing care," Welton says. "The current work to recognize nurses as a revenue center is an attempt to overcome historical oversight and incorporate nursing care into a business model that prices the nursing product to demonstrate the value of our work."
Previous attempts to link payment to nursing care have not been successful. When the current reimbursement model based on diagnosis-related groups (DRG) was developed, nursing care was initially defined as a unique cost center, and a nursing intensity weight was proposed to adjust for differences in the nursing resources provided to each patient. However, when the DRG-based payment system was adopted in 1983, nursing was "subsumed within the 'accommodation cost center,' or 'room and board,'" Welton says.
"Historically, they've tried to keep nurses far away from the money," says Love. "Over the last 40 years, there have been several attempts to try to get nurses out of room rates that have largely failed."
'ALTERNATIVE WAYS TO VALUE NURSING CARE'
The current push for nurse reimbursement is different, both Welton and Love say, because of the context within which it's taking place: the number of nurses who've left the profession since the pandemic and the current staffing crisis illustrate that many are refusing to work in systems that undervalue their work or fail to provide them with the resources they need to provide safe care.
"Because of all the volatility in health care right now, I think we have a really good opportunity to move forward," Welton says. "The time has come to say, we've been doing this for 90 years now, and it's not working. Let's come up with alternative ways to value nursing care from a business standpoint."
The quality of nursing care directly contributes to patient outcomes, and Welton's past research has shown that the direct costs of nursing care are not aligned with current billing and reimbursement practices. What is needed, Yakusheva says, is "a new reimbursement model that supports nursing as a professional service that directly contributes to patient outcomes, and not a labor cost."
The Commission for Nurse Reimbursement is working alongside various nursing organizations, including the ANA Enterprise which includes the American Nurses Association, the American Nurses Foundation, and the American Nurses Credentialing Center. Members of the organization and volunteers are planning a conference that will likely occur in 2024. They are also exploring various models of nurse reimbursement.
"We don't yet know exactly which model will be best for this. One of the models we're looking most carefully at is how they handled it for occupational and physical therapy," Love says. "Currently, hospitals are basically reimbursed for the amount of time an occupational therapist spends with the patient based on a level of acuity."
Members of the commission know that nurse reimbursement won't likely happen any time soon. "We know this is going to be hard. It's going to be the fight of our careers," Love says. "Our goal is to have the Center for Medicare and Medicaid Innovation run an experiment in at least one state in the next five years."
HOW TO GET INVOLVED
"It is critically important that the entire nursing profession, including nurses of all ranks, understand the importance of these initiatives and unite in their support for nursing reimbursement reform," Yakusheva says. "Issues plaguing the nursing workforce are decades old, and so is the conversation about the need to return to direct reimbursement for nursing services. While COVID-19 elevated the conversation to the national level, without grassroots support, the momentum could once again be lost. Now is the time."
Nurses who want to support the effort for direct nurse reimbursement can explore the following options:
Volunteer. You can contact the Commission for Nurse Reimbursement via its website to express your interest.
Show support on social media. Follow the Commission for Nurse Reimbursement on LinkedIn, Facebook, Instagram, and X (formerly Twitter). "Like" and share the organization's posts to spread awareness and encourage conversation.
Share your story. Nurses have historically been hesitant to share their stories because of concerns about patient privacy. But the Health Insurance Portability and Accountability Act doesn't preclude nurses from talking about their working conditions or the value nurses bring to patient care.
Connect. "To be successful, nurses must find ways to ally with patient advocacy groups, physicians, hospitals, and payers," Yakusheva says. "A well-designed, value-informed nursing reimbursement system has the potential not only to stabilize and support the nursing profession but also to achieve better patient outcomes; improve the quality and efficiency of interprofessional team care; and reduce wasteful, low-value care. A strong multistakeholder coalition is more likely to achieve this goal."