Hospital nursing costs, billing, and reimbursement

Hospital nursing care accounts for approximately a quarter to a third of the hospital operating budget and nearly half of all direct care costs. Direct and indirect nursing expenditures are rolled up into cost centers and treated as a fixed cost then billed at set daily room rates that match to revenue codes placed into the hospital billing abstract (UB-92). Reimbursement for hospital care is based primarily on the medical diagnosis such as the diagnostic-related group (DRG) and principal procedures. Hospitals are not reimbursed for different levels of nursing intensity within these DRGs, essentially hiding the variability of nursing care. These findings show that nursing intensity and estimated direct nursing costs vary significantly within and across similar nursing units despite being billed at the same daily room and board rate. A nurse-centric accounting and billing model may provide a better fit between hospital costs, charges, and reimbursement.