Why Don't Hospitals Staff Nurses Better?

As nurses, we ae always pretty quick to answer that question with one word, money. However, if you understand how Medicare reimbursement works, that answer holds no merit at all. Most of us are aware that Medicare shifted their reimbursement structure from a Fee For Service (FFS) schedule to a Pay per Performance (PPS) schedule several years ago. This paradigm shift changed the reimbursement system from an item by item, billed charges system to a very complex and convoluted formula system that adjusts payments for any number of variables including patient diagnosis, where the hospital is geographically, certain metrics, if the hospital is a teaching hospital, how many Medicaid patients are served at the hospital, and many more. On the surface, this seemed like an excellent way to preserve Medicare funding. Many hospital claimed that this reduction in CMS funding was a reason why they could not afford to staff the facilities with more nurses. They banked on the belief that nurses would never figure out the complex reimbursement system. Well, that era is ending and here are the three words we need to combat the fallacy that administrators want us to believe: MEDICARE COST REPORTING.

So what is Medicare Cost Reporting, you ask? It is a provision under the CMS system that requires hospitals report any and all costs associated with delivering care to the Medicare and Medicaid population served by that facility. This is in ADDITION to the DRG (diagnosis related grouping) in which the hospital was already paid on when they billed for each patient hospital admission. I know this one has you scratching your head. When a patient is admitted to a hospital, they have a diagnosis. That diagnosis falls under a DRG code which the hospital bills for. The hospital is reimbursed by CMS based on that convoluted formula and, in turn, the hospital is expected to deliver all hospital inpatient care to the patient with that DRG payment. Administrators claim that this is never enough money and that they can’t hire more nurses because that reimbursement is never enough. Cue Medicare Cost Reporting. Monthly, hospitals are required to submit a line by line, item by item report to the Healthcare Cost Reporting Information System (HCRIS), which includes, you guessed it, the cost of nursing. Then on a regular schedule, Medicare reimburses the hospitals the cost reporting associated money. This reimbursement is formula based (and prior DRG reimbursement is considered), and is not a dollar for dollar amount, but we all know that an aspirin does not cost $5, however, if the hospital reports to the HCRIS system that an aspirin costs $5, that is what the hospital is reimbursed on under Medicare Cost Reporting. In a nutshell, if a hospital has higher costs associated with hiring more nurses to deliver care to the Medicare and Medicaid population, they can include that on the report and are reimbursed for it. More nurses will cost more up front, but CMS will pay them back.

What is going to be administrations excuse now for not staffing appropriately? At your hospital’s next Town Hall meeting, ask your CFO what their most recent Medicare Cost Reporting reimbursement check looked like. The more nurses know about reimbursement systems, the more leverage we have to fight back!