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Written by: Bob Habasevich, PT on Wednesday, August 3, 2011 Posted in: Inpatient Rehab

The Association of Rehabilitation Nursessupports a discussion list serve where its members and others communicate in open forum about the issues confronting the practice of rehabilitation nursing.  Frequently, the same topic re-emerges regarding nurse staffing of rehab units.  Usually, someone asks if anyone can share their staffing grid or matrix or patient to nurse ratios.  Recently an interesting question was asked,  “What percent of a DRG or CMG cost is attributable to nursing?” and suddenly the conversation has taken on a different dimension of significant perception; that nursing cost and Medicare payment is somehow proportional.

I don’t know if anyone keeps this statistic, but we know that nursing costs are reported annually by Medicare providers on their cost reports. CMS uses nursing costs and all other costs to calculate the annual Medicare payment rate. The question could be addressed by asking, “What percent of all hospitals’ total reported costs are nursing?”

Having looked at a few costs reports over the years, I can say that this percentage differs widely from hospital to hospital and this limited view of all Medicare providers makes it impossible to estimate an average or range with any degree of confidence.  However, the total nursing cost reported annually is a value that represents a percentage of cost for all providers nationally.  How any provider’s reported nursing cost as a percentage of that providers total cost compares to the nation’s average is a discussion to be addressed at a later time.  For now, the consideration that nursing costs have a relationship with payment is a greater interest.

Consider that nursing costs are a percentage of all costs and that estimate does not change as long as the payment rate remains the same, usually this is for the entire CMS fiscal year.  With nursing costs estimates remaining constant with the base rate payment, this ratio could be used to estimate nursing cost to vary as total costs vary by patient. CMS calculates annually a cost ratio index for each classification of patient in the Medicare program for IRFs.  This cost weighting factor is commonly referred to as the case mix index or CMI and it enables the comparison of cost across patient classifications.  The CMI differs proportionally to the estimates of care costs.  The higher the CMI the higher the cost associated with caring for that patient.  And with this methodology it is assumed the nursing costs vary proportionally to total cost and CMI.

It is CMI that estimates the proportional value of nursing cost specific to each patient. If the CMI is aggregated for all patients in the hospital at any given time, that ratio could predict the nursing cost or requirement for that patient population.  It is for this reason the CMI is described as a surrogate for acuity in IRFs.  How those cost estimates are distributed across the hospital and to an individual patient, for the time being, are the prerogative of each nursing department, therein creating the wide variance in the nursing cost percentages seen on the cost reports.