This Legislation Could Cap Travel Nurse Pay, Staffing Agencies Accused of "Price Gouging"
Updated 2/3/2022
It’s no secret that there has been a disparity in agency nurse and staff nurse wages over the past year and a half. And the disparity is becoming increasingly bigger as the weeks pass by. Travel nurse pay has never been higher since the pandemic started, with August numbers showing a weekly average rate of over $2.5K, compared to a December 2019 average weekly pay of just over $1K. And as staffing issues continue to plague the entire country, they show no signs of slowing down.
However, in an attempt to stop the ballooning wages—and perhaps better balance the gap between staff and travel nurse pay—some states have introduced legislation to cap agency nurse pay. As you can imagine, the idea has a lot of people talking, so here’s more on what the legislation is proposing, and how nurses are responding.
State and Federal Moves
During the pandemic, there have been both state and federal moves towards enacting legislation specifically aimed towards more regulation for staffing agencies and limiting travel nurse pay rates. Most recently, the American Health Care Association/National Center for Assisted Living, LeadingAge and a coalition of long-term care and senior living organizations sent a letter to White House officials warning against the “price gouging” happening in staffing agencies and how the practice is harmful to both patients and providers, who receive fixed reimbursement primarily through Medicare and Medicaid.
That letter was followed by another one, signed by 200 supporters, urging Congress to enlist federal agencies with competition and consumer protection authority to investigate the conduct of nurse staffing agencies to determine if it is the product of anticompetitive activity and/or violates consumer protection laws. The letter cited that nursing staffing agencies are sometimes taking as much as 40% of the fee collected from hospitals, adding that continuing to pay the high fees to staffing agencies is “ simply unsustainable.”
Supporters behind the movement to cap travel nurses’ pay say that the pandemic has thrust the need for more requirements for staffing agencies into a major spotlight and that ignoring the financial and regulatory issues brought on could lead to long-term impacts.
Nationally, the American Health Care Association (AHCA) sent a letter to the Federal Trade Commission (FTC), urging the FTC to use its authority to protect consumers from anti-competitive and unfair practices regarding agency staffing. Statewide, Massachusetts and Minnesota are the only two states to already have agency wage caps in place, but some states did make initial moves to address high wages during the pandemic. (Although, notably, Massachusetts raised its caps by 35% for the amount agency staff for nursing homes could be paid during the pandemic.) In Minnesota, wages were also raised, but only slightly: agency RNs can make a max of $58.08/hour at regular pay and up to $99.90/hour for holiday pay.
Other states have tried to make some kind of moves towards regulating staffing agencies. For instance, with the advent of the pandemic, Connecticut prohibited profiteering during emergencies, with violators subject to fines by the state Department of Consumer Protection and the Office of the Attorney General. The New York State Health Care Facilities Association has also tried to introduce legislation but has not been successful yet. So far, Pennsylvania is the only state that appears to have the most concrete plan in place for moving forward with legislation specifically aimed at regulating staffing agencies.
What the Legislation Says
Although the legislation in Pennsylvania hasn’t been formally introduced yet, Pennsylvania Representative Timothy R. Bonner wrote a memorandum on November 5, 2021, that he plans to introduce Pennsylvania Health Care Association (PHCA)-supported legislation that will “require Contract Health Care Service Agencies who provide temporary employment in nursing homes, assisted living residences and personal care homes to register with the Department of Human Services (DHS) as a condition of their operations in Pennsylvania.”
As part of the requirements, the proposed legislation would establish maximum rates on agency health care personnel. Bonner noted that nursing homes in Pennsylvania lost 18% of their workforce, with 68% of the state’s facilities struggling to meet minimum staffing requirements. As a result—like many other healthcare facilities in the nation—agency staff filled those needs. However, in his memo, Bonner cited a statistic that 39% of the surveyed facilities said that they would not be able to afford to keep their facilities open for more than one year.
Part of that, he added, was the added cost of paying staffing agencies. In some cases, wages have ballooned to over 400% above the median wage rate for long-term care facility staff. Additionally, some of the facilities themselves have lost their own staff to travel agencies. And because long-term care facilities are funded primarily through Medicare (70% of all care in the state’s facilities are through the Medicare program), paying high agency staff wages has significantly drained Medicare funds as well.
Although the legislation would incorporate a cap on agency pay, it also aims to allow state agencies oversight of supplemental health care service agencies, which they currently do not have. That would include everything from registration requirements to an established system for reporting and penalties.
“Recognizing the increased role that these agencies play in the day-to-day operations of nearly 700 nursing homes and 1200 assisted living residences and personal care homes, we must ensure they are operating in a manner that supports the long-term care sector and high-quality resident care,” Bonner wrote.
What Nurses Think
As you can imagine, travel nurses have something to say about this legislation. In a travel nursing group on Facebook, over 270 comments poured in during a discussion on travel nurse wage caps.
Some nurses hinted that they would strike if legislation capping pay came to pass, while others warned that there would be no need for a formal strike--travel nurses could simply not pick up new assignments, making staffing shortages even worse.
“I have just had my best year ever. I could easily sit out for 6 months or change careers,” wrote one nurse. “They do not want to screw around with nurses right now. It is curious that people making legal policy don't possess the professional credentials to do our jobs but believe that they know better than us anyway,” this nurse added.
Other nurses pointed out that a wage cap could potentially put both patients and healthcare facilities at risk amidst another COVID-19 surge or even another health emergency. “If they try to cap RN pay, what will happen if there’s another COVID surge,” commented another nurse. “Let’s say they cap our rate at 5K, if there’s another surge they will most likely not get much RN’s wanting to help. So they better tread lightly otherwise they will have bigger problems in their hands. A severe nursing shortage.”
Another commenter chimed in to agree with Celne: “Right?” wrote a nurse. “If they cap, why would anyone want to go help with surges. I’m not going into a hot mess doing more work when I can stay capped right where I am for less work.”
There is also a Change.org petition circulating online as a result of the letter to Congress that aims to stop the efforts to cap travel nurses pay. “We all know that wage caps are going to have a detrimental effect on staffing, forcing even more nurses to give up working at the bedside and further worsening the problem at hand,” the petition reads. “What about encouraging legislation to protect the safety and rights of nurses? What about legislation to nationalize safe nurse-to-patient ratios? What about legislation to set a fair, competitive minimum pay for nursing? Reach out to your elected officials and voice your concerns. There are many solutions out there, but this isn't one of them.”
It’s left to be determined exactly if the legislation will pass and what the possible ramifications could be for both the travel nursing industry as well as the ongoing nursing shortage.
