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What You Need to Know About a Travel Nurse Pay Cap

August 15, 2022

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Fusion Medical Staffing

Pay CapYou may have heard about caps on travel nurse pay and wondered what it means for your career. There’s a lot happening in federal and state governments that have many healthcare travelers concerned traveler pay rates will be lowered.

Here’s what you need to know about what travel nurse pay caps are, the legislation on them, and what happens next.

Note: The following information was up to date at the time of publication, but changes after the time of publication may impact the accuracy of the information.

 

What You Need to Know About a Travel Nurse Pay Cap



What is the travel nurse pay cap?

There are some healthcare facilities, hospital lobbies, and legislators that want to limit how much travel nurse agencies can charge hospitals and healthcare facilities, or in other words, put a cap on their bill rate. A bill rate is the total amount a healthcare staffing agency charges a hospital or healthcare facility for each traveler they place.

The bill rate goes toward paying the traveler as well as travel nursing agency costs like recruiting, HR, benefits, travel reimbursements, payroll taxes, worker’s compensation, unemployment insurance payments, and more. Additionally, Toby Malara, vice president of government relations for the American Staffing Association (ASA), a trade group for the staffing industry, maintains most of the association’s nursing staffing agencies have seen their profits remain “relatively stable” during the pandemic.

It's important to note that a lot of the legislation or calls to investigate agencies doesn’t explicitly call for travel nurse pay caps. However, it’s understandable why some healthcare professionals are nervous caps on agencies’ rates could translate to caps on what travel nurses and agency health care personnel who travel can earn. Hence, the worry about travel nurse pay caps.

Why cap travel nurses pay?

But why do these organizations want to put a max on bill rates? Well, travel nurse agencies are being accused of price gouging during COVID-19 or requesting higher rates for travel nurses than needed. So, let’s take a step back and investigate what was going on in the market at the time.

Why were travel nurse staffing agencies' pay rates higher during COVID?

At the highest end of the spectrum, crisis pay rates reached $10,000 a week during the peak of the pandemic. Compare that to today’s rates of about $3,000 a week and it seems steep. However, there are a lot of factors that go into why rates got that high.

For starters, a healthcare staffing shortage, particularly a nursing shortage, existed well before COVID arrived, and the pandemic has only exacerbated it. When hospitals are short-staffed due to an inability to find or hire talent, staff-to-patient ratios become dangerous. Existing staff must work harder and face burnout, all while likely being underpaid. Add COVID to the mix and the situation became much worse.

One solution is to fill this shortage by hiring more nurses. Employing more nurses is safer for patients and makes it less likely for staff to burn out and quit. However, hiring more staff nurses isn’t always an expense a hospital wants to take on, especially during an uncertain time like COVID. Enter travel nurses. While bringing on travel nurses is expensive too, it’s a short-term expense that hospitals are more comfortable making.

So, hospitals utilized travel nurses to meet the demands of COVID. However, for travelers to drop everything and travel to remote areas, work long, grueling hours, and constantly risk COVID infection, they needed higher pay, meaning agencies needed to charge higher bill rates.

The American Staffing Association also points out that while travel nurse pay has increased, so have the demands of the job. Over the past two years, healthcare workers have dealt with stress, burnout, overwork, physical danger, and animosity from coworkers, patients, and hospital visitors.

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Is Congress trying to cap travel nurse pay?

Yes and no. Price gouging accusations have stirred up heightened government scrutiny and action taken by legislators and hospital lobbyists, but they haven’t explicitly called for a cap on traveler pay. Here’s a timeline of what’s been happening:

Feb. 4, 2021: The American Health Association (AHA) sent a letter to Acting Chairwoman Rebecca Slaughter

  • Asked Slaughter to employ the Federal Trade Commission (FTC) to “investigate reports of anticompetitive pricing by nurse-staffing agencies.”

Oct. 8, 2021: LeadingAge, a network of non-profit aging services, sent a letter to the Chairwoman of the FTC, Lina Khan

  • Asked the FTC to “protect consumers and taxpayers from anti-competitive and unfair practices to investigate these activities and take appropriate action to protect long-term care providers and the seniors they serve.”

Nov. 15, 2021: Sen. Mark Kelly, Sen. Bill Cassidy, Rep. Doris Matsui, and Rep. David McKinley sent a letter to COVID-19 Response Team Coordinator Jeffrey Zients

  • Asked Zients to enlist a federal agency to investigate "the extreme prices being reported for nurse staffing agencies from hospitals in our states, and the concern that certain staffing agencies may be taking advantage of these difficult circumstances to increase their profits at the expense of patients and the hospitals that treat them."

Jan. 24, 2022: 200 members of Congress sent a similar letter to Zients

  • Asked Zients to ask the FTC to determine if the rates agencies were charging are “the product of anticompetitive activity and/or violates consumer protection laws.”

Jan. 27, 2022: The AHA, along with the American Health Care Association (AHCA) and the National Center for Assisted Living (NCAL) sent another letter to Zients

  • Reiterated the same concerns but added that their “concerns focus directly on the agencies and not the personnel they represent.”

Feb. 2, 2022: The AHA made a statement

  • Continued to “urge the FTC to investigate these reports of anticompetitive conduct from staffing agencies that are exacerbating workforce shortages and straining the health care system,” and “ask that Congress look into this pressing matter and coordinate with the FTC and other agencies where appropriate.”

Feb. 10, 2022: U.S. Senate Committee on Health, Education, Labor & Pensions held a hearing on Pandemic-Related Workforce Shortage in Health Care

  • Discussed healthcare staffing shortages and agencies potentially "taking advantage of a very dangerous situation." 

Jun. 6, 2022: U.S. Sen. Kevin Cramer of North Dakota introduced the Travel Nursing Agency Transparency Study Act

  • If passed, this bill would require the Government Accountability Office (GAO) to conduct a study on the business practices of staffing agencies, including potential price gouging, and taking of excessive profits. It would also look at the difference between how much agencies charged health care institutions and how much they paid contracted nurses as well as investigate how states that imposed caps to contract nurse pay were affected by such caps.

The FTC has not responded to whether they’re investigating this issue.

What states are trying to cap travel nurse pay?

While the matter is slow moving at the federal level, states have been passing legislation restricting healthcare staffing agencies and the rates they can charge while trying to establish maximum rates, even before the pandemic. Here’s what legislation has been introduced and the status of that legislation by state. Some legislation may be deemed as a “grey area” because the language of the bill is vague and/or it’s not clear if the legislation will affect travel registered nurse salaries.

California - bill failed, grey area

SB 1212

Requires healthcare staffing agencies to report billing information to the state and makes increasing "nonlabor costs, as defined, for health care personnel by more than 10%" during a state of emergency.

Colorado - law, grey area

SB 22-210

Calls for a task force to discuss “recommendations for determining caps and other limitations on service rates and the amount that supplemental health care staffing agencies may charge for each category of health care workers providing services to health care facilities."

Connecticut - law

HB 5313

Requires Department of Social Services to set maximum rates healthcare staffing agencies can charge in nursing home settings.

Idaho - bill failed

SB 1300

Doesn’t allow a healthcare staffing agency to charge an “exorbitant or excessive increased price” during a declared emergency.

Illinois - law, grey area

HB 4666

Healthcare staffing agencies must report rates and fees they charge and restricts non-competes.

Indiana - bill failed

HB 1332

A healthcare staffing agency commits price gouging if an agency's charge is more than three times the fair market value of the healthcare services of a healthcare employee or temporary worker. 

Iowa - law, grey area

HB 2521

Requires healthcare staffing agencies to register, report bill rates and travel pay rates, and limits non-competes.

Kansas - bill failed

HB 2534

A healthcare staffing agency can’t bill or receive payments from an adult care home or a hospital long-term care unit at a rate higher than 200% of the sum of the weighted average wage rate, plus a factor determined by the secretary to incorporate payroll taxes for the applicable employee classification for the geographic group.

Kentucky - law

HB 282

Healthcare staffing agencies can’t solicit or recruit current staff, must report pay rates, limit non-competes, and can’t charge more than 10% of what prices were before during a declared emergency unless they can prove an additional cost is related as imposed by a supplier or additional cost of labor.

Louisiana - law, grey area

HB 958

Provides for licensure and regulation of healthcare staffing agencies including limiting non-competes and the ability to investigate as necessary.

Maryland - bill failed

HB 800 & SB 565

Prohibits healthcare staffing agencies from charging 10% more of the price charged prior to the state of emergency during a state of emergency and for the 90 days following the end of an emergency.

Massachusetts - law

101 CMR 345

Travel nurse rates are capped based on area, day of the week, and type of nurse.

Note: During the pandemic, Massachusetts raised its caps by 35 percent.

Minnesota - law

Statute 144A

The most that a travel RN in a nursing home can earn per hour during non-holidays is $62.36, according to the documentation provided by the state’s Department of Health.

Note: They allowed changes to the max rates on a case-by-case basis during the pandemic.

Missouri - bill failed

HB 2605

A healthcare staffing agency can’t bill or receive two payments from a health care facility at a rate higher than 150 percent of the sum of the average wage rate, plus a factor to incorporate payroll taxes for the applicable employee, if necessary.

SB 1222

There can’t be a “gross disparity” between the price charged or offered for the services and either the price at which the same service was sold or offered by the agency in its usual course of business immediately prior to the onset of a declared emergency, or the price at which the same or similar service is readily obtainable from other health care staffing agencies.

New York - bill failed

AO1461

Imposes criminal penalties for price gouging of an unconscionably excessive price during periods of “abnormal disruption” including medical services.

SB S4565

A price will be deemed excessive if the price exceeds, by at least 10%, the price at which the service was sold immediately prior to the state of emergency unless the price charged is because of additional costs imposed by the supplier or other costs of providing the good. In such situations, the price will be excessive if it represents a 10% increase in the amount of markup from cost, compared to the markup customarily applied by the seller in the usual course of business immediately prior to the state of emergency.

Ohio - in progress

HB 466 

Healthcare staffing agencies are prohibited from billing or receiving payments from health care providers for any category of health care personnel listed in the Medicaid cost reports submitted under existing law at a rate that is higher than 150% of the statewide direct care median hourly wage for that category of personnel. The agency may charge the provider an additional hourly amount of not more than 10% of the maximum rate for the individual if providing care to patients with an infectious disease for which a declared public health emergency is in effect.

Oregon - law

SB 1549

Requires temporary staffing agencies to apply for a license to operate in the state, as well as annually evaluate and implement maximum rates agencies may charge.

Pennsylvania - in progress

HB 2293

A healthcare staffing agency can’t bill or receive payments from a healthcare facility at a rate higher than 150 percent of the sum of the average rate…determined by the department and reported on an annual basis. The maximum rate includes all administrative fees, contract fees, or other special charges, in addition to the hourly rate for the healthcare personnel supplied to a healthcare facility.

Rhode Island - bill failed

H. 8032

Prohibits healthcare staffing agencies from charging more than "two hundred percent (200%) of the regional average hourly wage of each position" and requires them to report to the department of health. Also prohibits agencies from charging conversion fees or recruiting permanent staff who work for their clients.

Tennessee - law, grey area

SB 2463

A study of the use of temporary staffing provided by healthcare staffing agencies in long-term care facilities. Investigates costs paid by nursing homes for temporary staff provided by healthcare staffing agencies, the effect those costs may have on the TennCare program, the impact any increases in charges for temporary healthcare staffing have on assisted care living facilities, and practices that would improve the quality of long-term care facility resident care while reducing costs to the TennCare program.

What happens next with the cap on travel nurse pay?

When it comes to this legislation, there may be unintentional consequences or consequences that may not seem obvious. For instance, any time legislation limits travel nurse agencies' bill rates, that may in turn limit a traveler's pay rate, as that’s part of the total bill rate. Additionally, limits on what agencies can charge during a declared emergency may seem logical, but in cases like the pandemic, higher rates were necessary to supply the demand hospitals needed.

Capping the amount of money a travel nursing staffing agency can charge a hospital or healthcare facility could worsen healthcare shortages, driving registered nurses to work in other states or leave the profession entirely. States that have passed such legislation may feel the impact of greater nursing shortages in their hospitals if travelers decide to take assignments in areas with better pay.

 

 

This change and heightened scrutiny may cause you to worry, but travelers don’t need to panic. One of the ways you can take back control as a healthcare traveler is to work with a trusted recruiter at Fusion Medical Staffing. On our platform, you can keep tabs on the market and observe how different states are being affected. We work hard to ensure our rates are accurate and transparent, so you know what’s going on and can make the best choice for yourself.

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