HealthJune 26, 2024

Shifting the payment paradigm for nurses and why direct reimbursement is critical

The current financial model for healthcare is failing. With nursing services folded into hospital room charges much like housekeeping is included in hotel room bills, the implication is that nursing care isn’t as valuable as physician care. Nurses don’t have billable services, by and large. This devaluing stands to have a profound impact on the healthcare industry, from staffing to quality of care.

It wasn’t always this way: In the early 1900s, nurses enjoyed independent careers and constituted a powerful lobby. When hospitals took notice and began to recruit nurses from their private positions to hospital-based roles, they recognized the value of nurses and billed for their services the same as they did for physicians until the 1930s when insurance came into play. Hospitals shifted from billable nursing services to included-with-the-room charges, which allowed them to make more money.

This financial model may be a thing of the past, if the Reimagining Nursing (RN) Initiative, started by the American Nurses Foundation, and the Commission for Nurse Reimbursement have anything to do with it. The RN Initiative focuses on enabling nurses to design a future where they are valued and compensated for the expertise and care they provide. The Commission concentrates on ideating a solution that changes the way the Centers for Medicaid & Medicare Services reimburse for nursing services and proposing it to Congress.

For decades, healthcare in the United States has operated under an outdated financial model — one that allows physicians within a health system to bill for their services. Nurses are largely exempt from this practice, however, having their professional services fees rolled into the hospital bill as part of the hospital room charges. In general, there’s no real direct reimbursement for nurses regardless of the role (care management, coordination, etc.). Many nursing services are billed under a physician’s national provider identifier, rather than a nurse’s own, because higher rates are available under federal policy.

What may look like an accounting issue at first glance is actually a far greater problem. The lack of payment for nursing care and coordination diminishes the contribution of nurses to patient outcomes and their commitment to quality, safety, and efficiency. Nursing isn’t prioritized for investment since nurses don’t typically receive direct payment — in fact, nursing is usually one of the first on the chopping block when difficult financial decisions need to be made. This devaluing only compounds the ongoing nurse shortage, making the profession less desirable.

Transitioning from billable services to hidden charges

Historically, this wasn’t always the case. Around the turn of the 20th century, nursing was the largest vehicle for women’s financial independence. Because hospital conditions were deplorable, most people hired private duty nurses. These nurses enjoyed running their own businesses, billing directly for their services and growing to be a powerful lobby. Hospitals began to take notice and started bringing in nurses to advance patient care. Initially, nursing care was a line item much like physicians’ services.

But by the 1930s, insurance factored in and hospitals searched for a different financial model, one that would make them more money. They looked at the hospitality industry, where housekeeping services are folded into the room charge and determined that to be a viable model for hospitals. Nursing went from being a billable service to a covert fee within the hospital room charge — and it all served to eliminate the value of nursing.

The landscape for reimbursement is shifting

Today, there’s a burgeoning movement to change that. The Reimagining Nursing (RN) Initiative, started by the American Nurses Foundation, strives to enable nurses to design a future where they are valued and compensated for the expertise and care they provide. With projects funded by a $14 million grant, the RN Initiative hopes to transform the industry and reshape nursing through extraordinary improvement to access, care, and outcomes. These projects range from combining the expertise of nurses with artificial intelligence to create prediction models that can improve patient outcomes to focusing on new practice models.

With the mission of modernizing the reimbursement structure for nursing services, the Commission for Nurse Reimbursement launched in 2023. This commission came to life as a result of the continuing nursing shortage, focusing on changing the way the Centers for Medicaid and Medicare Services reimburses for nursing services. By partnering with healthcare groups and nursing organizations, the Commission hopes to come up with a viable solution that can be proposed to Congress that both promotes the interests of 5 million nurses and reduces the cost of quality healthcare.

Just recently Renee Ellmers, BSN, RN joined the organization as the new Commissioner and former Congresswoman from North Carolina. As a nurse, Congresswoman, and consultant, her personal and professional experiences have shaped her understanding of the complexities and challenges surrounding nurse reimbursement. “As a nurse with 25 years of clinical experience and currently a Graduate Nursing student at the University of Michigan, I have personally experienced the complexities and challenges surrounding nurse reimbursement,” says Ellmers. “My unique journey, which includes serving in Congress and working at the Department of Health and Human Services, has given me a profound understanding of how crucial and multifaceted this issue is.”

Strengthened by the groundswell of support for direct reimbursement and giving nurses the ability to bill for services, the stage is set for change. By eliminating a failed financial model, the industry stands to elevate care and outcomes, decrease costs, mitigate staffing shortages — and restore nursing to the valued, rightful role it has played over the decades.

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