Will States Reign in Nurse Staffing Agencies?

A letter about staffing agency price gouging that members of Congress sent to the White House has some corners of the nursing community abuzz about possible implications, particularly whether the growing scrutiny could lead to state-level restrictions.

The letter asked the COVID-19 Response Team to investigate nurse staffing agencies for allegedly “artificially inflating” prices during a crisis by charging hospitals exorbitantly for the services of their nurses, citing reports representatives say they’ve received.

For nurses, alarm bells began to ring. An investigation into staffing agency prices could mean more legislation to cap what staffing agencies can charge hospitals and other facilities in some states, and in the process, some noted online, limit wages for nurses themselves.

The American Nursing Association (ANA) wrote in an email to MedPage Today that it supports an effort like this only if it targets agencies themselves while protecting nurse pay. “If legislation were to directly impact [staffing agency] overhead, then we believe nurses’ pay would not be impacted,” the organization wrote. “However, if staffing agencies were capped at a certain percentage of pre-pandemic rates, then nurses could potentially see a decrease in wages.”

Travel nurses, though a small percentage of total nurses, have been afforded a chance to choose better compensation and work more flexible hours during a time when they may have felt overworked and undervalued, ANA wrote in a separate statement. The association reiterated to MedPage Today that travel nurses should not be negatively impacted in the process of reigning in price gouging.

ANA suggested instead that Congress should enact policies that would help retain and attract nurses, adjust the Medicare area wage index, and restrict mandatory overtime. It also backed enacting laws like the Dr. Lorna Breen Health Care Provider Protection bill, which would establish grants for workplaces that promote healthcare worker mental health, and the Future Advancement of Academic Nursing bill, which would provide support for nursing schools in underserved areas.

The letter itself said nothing about capping wages, although a widely viewed Reddit post characterized it as “large attempts in Congress right now to cap nurse (especially travel nurse) pay.” The letter-writers framed their concerns as a problem with the agencies themselves and their cut of the ballooning prices, citing reports of agencies “taking 40% or more of the amount being charged to the hospitals for themselves in profits.” Nurses themselves, they imply, aren’t reaping most of the benefits.

Meanwhile, some nursing home associations and hospitals said lower costs for temporary staffing would allow them to hire more nurses and relieve short-staffed facilities, thereby improving the nurse-to-patient ratio. But on a Facebook group for travel nurses, a post about striking if states attempt to cap travel nurse wages garnered a thousand likes and over 300 comments. “If anyone is foolish enough to try to cap RN pay, it is going to make an already bad staffing problem much worse. Critically worse,” one comment read. “How about we cap the pay of all the fat-cat CEOs and administrators?”

Landry Seedig, group president and chief operating officer of nursing and allied solutions at AMN Healthcare, a leading staffing agency, told MedPage Today in an email that they’re charging more to attract limited nurses in a shortage. “Hospitals set bill rates for all travel nurses,” Seedig said. “Many hospitals throughout the country would be overwhelmed if not for travel nurses and other travel healthcare professionals.”

Although 42 states have existing “price gouging” laws that go into effect in an emergency, few have had laws specifically regulating staffing agency services until the pandemic exacerbated frustrations with the delivery of healthcare.

Minnesota enacted a law in 2001 requiring nursing service agencies to register with the state and to not charge nursing homes a rate more than 150% of the average wage rate for their specific employee role and designated geographic area. In December 2020, the state published new hourly rates effective Jan. 1, 2021, to accommodate pandemic staffing needs. They also allowed agencies to apply for wage cap waivers in an emergency.

Massachusetts in March 2020 adopted an emergency amendment to expand an existing law from prohibiting price gouging for petroleum to now cover goods and services too. The state already had existing caps on rates staffing agencies can charge both hospitals and nursing homes for nurses and other healthcare staff, including travel nurses. In May 2020, the state raised the cap by 35% for nursing facilities for the COVID-19 emergency. It also sent a memo in February 2021 reminding staffing agencies that they could be disciplined for going over the rates.

Other states are considering similar laws.

In Pennsylvania, state Rep. Timothy Bonner (R) introduced a bill that, he wrote in a November 2021 memo, “would establish maximum rates on agency health care personnel to end the practice of ‘gouging’ the Medicaid program and Pennsylvania taxpayers, which was already exacerbated by the COVID -19 pandemic.” Like Minnesota, staffing agencies would have to register with the state’s Department of Human Services.

In Connecticut, the AP reports, state nursing home associations hoping for legislative action on staffing agency pricing have met with the governor to discuss caps on agencies.

Illinois recently amended its Freedom to Work Act, protecting some workers from non-compete and non-solicit clauses, potentially reducing the power of staffing agencies and making it easier for temporary healthcare workers to be hired as permanent staff.

  • Sophie Putka is an enterprise and investigative writer for MedPage Today. Her work has appeared in the Wall Street Journal, Discover, Business Insider, Inverse, Cannabis Wire, and more. She joined MedPage Today in August of 2021. follow

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