For nearly a decade, the federal government has overpaid hospitals that own nursing schools an estimated $310 million, and now the Centers for Medicare and Medicaid Services want that money back.
CMS posted a notice online in late 2020 stating that due to an agency error, nursing schools were overpaid by Medicare from 2008 through 2018 and needed to return that money. For many of the providers, that money will come due this summer unless a congressional effort to forgive the debts is successful.
For these 118 schools and their hospitals, which collectively graduate about 5,000 nurses per year, an unexpected bill from the government totaling hundreds of thousands or several millions of dollars has put holes in their budgets during a pandemic and threatened plans to expand enrollment in the face of a growing workforce crisis.
Schools and hospitals argue a pandemic is the worst possible time to recoup money from them given the demand for nurses that has led to increased staffing costs and drained hospital budgets.
"These dollars have already been spent years ago, and what they're (CMS) is doing is clawing it back out of Medicare payments to the system," said Heather Meade, a principal at Ernst and Young in Washington, D.C. where she represents Wellforce, a not-for-profit health system in Massachusetts that owns a nursing school. "Maybe during some other time frame, that wouldn't be as egregious, but in the middle of a pandemic? Like many hospitals, Wellforce is upside down because of COVID and the staffing shortage."
Wellforce, which graduates about 100 nursing students a year, owes about $8.3 million to CMS and has been spending about $3 million per week on temporary staffing.
Going forward, hospital-owned nursing schools will also face an estimated 17% cut compared to what they have been receiving in the past, potentially causing some hospitals to make changes at their nursing schools.
Wellforce is evaluating what it can do to cut costs at the school, including reducing enrollment and staffing or supports offered to students.
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