The pandemic pushed nurses to their breaking point. Even today, higher-acuity patients and short staffing scenarios remain. Combine this with the aging American population, and there’s no wonder burnout and a sense of underappreciation plague the nursing workforce. The time is now for nurses to unify and advocate for meaningful change to help sustain our profession into the future.
The nursing workforce crisis is an urgent issue that requires action. A group of nursing and healthcare professionals felt this urgency, which led to the creation of the Commission for Nursing Reimbursement in May 2023. The organization aims to modernize how nursing care is recognized and reimbursed.
However, the Commission can’t do this work alone. We must mobilize the nursing community to reshape the reimbursement model and create a structure of sustainability for the nursing workforce that allows us to support the future of healthcare. This change requires nurses from the bedside to the C-Suite to understand the basics of nurse reimbursement and how changes can impact patient outcomes and keep nurses at the bedside. Nursing professional development (NPD) practitioners and leaders can lead the way in educating bedside nurses about the pivotal work being done.
The Importance of Understanding Reimbursement
An April 2023 survey (Martin) revealed that 800,000 nurses are considering leaving the profession by 2027 due to feelings of burnout, exhaustion, and underappreciation. While there are many schools of thought on the reasons for these plans, the root cause started over 100 years ago when nursing care was rolled into the hospital room rate.
Today, nursing remains hidden as a routine overhead cost in hospital bills, which means the more patients each nurse provides care to per shift, the more money the hospital makes. Minimal staffing and higher patient-to-nurse ratios become an incentive for hospital leaders, leaving nurses feeling overworked, emotionally drained, and undervalued. The “do more with less” mentality fails to create an infrastructure that supports nursing or patient outcomes. It can also come with nursing workforce cuts that can eliminate entire departments of nurses focused on educating others on best practices, nursing research, and evidence-based practice measures.
To create a nursing workforce that endures, it is essential to appropriately reimburse nursing care to demonstrate the vital role and immense value nurses play in the healthcare ecosystem. Sadly, many bedside nurses do not have this knowledge, leaving them feeling powerless and thinking there may be nothing they can do to affect change within nursing care delivery. However, by partnering with nursing professional development practitioners, more nurses can begin mobilizing the workforce to stir a powerful new grassroots nursing movement.
The History of Nursing Reimbursement
Most nurses worked directly for patients in their homes up to the 1930s. This practice changed in 1935 when the Social Security Act emerged and embedded nursing costs in room and board rates, much like housekeeping costs in the hotel industry. Nursing care became part of the hospital system, removing nurses' power to achieve individual revenue by caring for patients in their homes. They were now employees of hospitals and lacked a direct connection to revenue and the bottom line.
Nursing continued in this manner for many years. Medicare emerged in 1965, but nothing changed in nursing reimbursement. Then, in 1983, a significant change happened to the Medicare program when Congress adopted the Medicare Inpatient Prospective Payment System (Scott, 1984). This system paid hospitals a fixed rate per case according to the Diagnosis Related Groups (DRGs). DRGs represent categories of patients with similar diagnoses and treatment costs. When a patient’s care is reimbursed based on a DRG, the hospital receives the same amount of money no matter how long the patient stays in the hospital or how much the patient’s care actually cost. This means that keeping a patient longer or spending more on the patient’s care than the patient’s DRG allows, results in a cost that’s not reimbursed; on the other hand, any length of stay or cost savings below the DRG payment go directly into the hospital’s profit. This change motivated hospitals to reduce the patients’ average length of stay and move care to the home, boosting the home care industry and rapidly growing home care agencies. This change also left behind higher-patients who received care from smaller nursing staff, increasing nurse-to-patient ratios.
Nursing Reimbursement Model Development
The Commission for Nurse Reimbursement is developing several nursing reimbursement models to disseminate to various political and healthcare professionals. Circulating multiple models will advance the nurse reimbursement conversation and raise awareness about the lack of a sustainable nursing reimbursement structure. A few of the models under consideration include:
- The nursing intensity model that would capture nursing care provided to each patient based the intensity of nursing care (Welton, 2017).
- The current procedural terminology (CPT) code reimbursement model would allow nursing departments to bill for the care provided to individual patients.
- The DRG-based nursing reimbursement model would separate nursing’s payment from the room rate and create a separate nursing reimbursement payment (Yakusheva, 2024) .
We don’t know which model will resonate with decision-makers, policymakers, and stakeholders within the healthcare system and government agencies. However, we know something must change to keep nurses at the bedside, and providing multiple models is the best way to start this conversation. We also know that improving nurse-to-patient ratios positively impacts patient outcomes, which is always the desired effect (Levins, 2023).
Hospitals must recognize the economic value of nurses. As long as nursing remains a cost to care, there will be a reluctance to invest in the nursing profession. Unfortunately, many nurses are unaware that there is no direct reimbursement structure for the care they provide. This lack of knowledge keeps the collective voice of nurses quiet while the need for a sustainable workforce remains.
Using Your Voice to Help
Nursing is changing. The “eat your young” mentality has lost its power, and we’ve joined forces to use a powerful tool—our collective voice. Nurses can initiate conversations with hospital leadership about reimbursement, engage with state or local officials, leverage social media to raise awareness, and actively participate in organizations like the Commission for Nursing Reimbursement. It's time to claim our revenue line on the hospital bill and highlight the invaluable asset that nursing services represent.
Nursing reimbursement is not just a financial matter; it's about patient care and outcomes. Through unity and advocacy, nurses can spearhead the reform needed to make nursing visible, valued, and sustainable. The journey toward reimbursement reform is a collective effort, and by taking these steps, you can join the revolution to pave the way for a brighter future in healthcare.
References
Design and development of the Diagnosis Related Group ( ... (n.d.). https://www.cms.gov/icd10m/version37-fullcode-cms/fullcode_cms/Design_and_development_of_the_Diagnosis_Related_Group_(DRGs).pdf
Levins, B. H., Levins, H., Meline, B. M., Meline, M., Kamara, B. K., Kamara, K., Wilson, B. J. F., & Wilson, J. F. (2023, January 9). How inadequate hospital staffing continues to burn out nurses and threaten patients. Penn LDI. https://ldi.upenn.edu/our-work/research-updates/how-inadequate-hospital-staffing-continues-to-burn-out-nurses-and-threaten-patients/#:~:text=Over%20the%20last%2020%20years,to%20and%20including%20unnecessary%20death.
Martin, B., Kaminski-Ozturk, N., O’Hara, C., & Smiley, R. (2023). Examining the impact of the COVID-19 pandemic on burnout and stress among U.S. nurses. Journal of Nursing Regulation, 14(1), 4–12. https://doi.org/10.1016/s2155-8256(23)00063-7
Scott, S. J. (1984). The Medicare Prospective Payment System. The American Journal of Occupational Therapy, 38(5), 330–334. https://doi.org/10.5014/ajot.38.5.330
Social Security. Social Security History. (n.d.). https://www.ssa.gov/history/35act.html
Welton, J. M. (2017, August 1). Measuring nursing care value. Grantome. https://www.grantome.com/grant/NIH/R03-HS025495-01
Yakusheva, O., & Rambur, B. (2024) How the hospital reimbursement model harms nursing quality and what to do about it. Health Affairs . https://www.healthaffairs.org/content/forefront/hospital-reimbursement-model-harms-nursing-quality-and-do
Melissa L. Mills, RN, BSN, MHA
Executive Director, Commission for Nurse Reimbursement
Melissa is an accomplished nurse whose expertise spans leadership, education, curriculum development, and operational management. Her clinical experience is deeply rooted in long-term care, home care, and hospice settings. Melissa is also a proactive member of the Commission for Nurse Reimbursement, where she plays a pivotal role in advocating for modernization in reimbursement practices. She is deeply committed to addressing critical issues within the nursing profession, including the nursing shortage, burnout, and the need for robust workforce development initiatives to enhance care across the nursing continuum.
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Olga Yakusheva, PhD, FAAN(h)
Economist and Professor, University of Michigan
Dr. Olga Yakusheva is an economist and a professor of nursing and public health at the University of Michigan. Furthermore, she holds the position of the economics editor for the International Journal of Nursing Studies.
Dr. Yakusheva has an academic background in mathematics (BS) and economics (MS, PhD), specializing in economic theory and methods and big data analytics. She completed post-doctoral training in health services research at the Yale Schools of Medicine and Public Health. For the past 10 years, Dr. Yakusheva has been a member of the nursing faculty at the University of Michigan. Born in Almaty, Kazakhstan, she now lives in Ann Arbor, MI, with her partner and two children.
Internationally recognized as an expert on the economic value of nursing and its contribution to patient, societal, and organizational outcomes, Dr. Yakusheva is one of the leading economists influencing national nursing policy. In 2023, she was inducted as an Honorary Fellow of the American Academy of Nursing.
Dr. Yakusheva presently serves as an economic advisor to the ANA Enterprise, the ANA Enterprise Research Council, and The Joint Commission’s Nurse Stakeholder Committee. Alongside a nursing colleague, she co-directs the ANA’s new initiative, "Framing and Articulating the Economic Value of the Nursing Profession." This includes leading the upcoming national summit, "Re-imagining the Economic Value of Nursing." Dr. Yakusheva is the lead author of a recent six-part series in Nursing Outlook titled “Value-informed nursing practice and leadership.”