Nursing intensity billing

Hospital nursing care has traditionally been billed using a fixed daily room and board rate. This approach hides the variability of nursing care within and across nursing units and does not align nursing costs with daily charges for actual patient care. Anew nursing intensity billing (NIB) model for assigning hospital daily room charges is proposed, and initial results are reported.

Two charge methods, one using traditional room and board daily billing and another using an NIB approach, were developed for 12 adult medical or surgical units at the Medical University of South Carolina (MUSC) Medical Center using retrospective data from January 1 to May 31, 2005. The room and board charge was assigned as private room or intermediate care based primarily on patient location. The NIB model added an additional focused care charge between private and intermediate care, and the charge for the 3 levels was based on daily nursing intensity entered as actual hours of nursing care delivered. The mean and sum of charges were compared between the 2 methods. Charge rates were simulated at $700, $950, and $1,200 for the 3 levels, which correlated with the existing proprietary room rates. Nursing cost-to-charge ratios were calculated for room and board and NIB methods.

The NIB model resulted in a 32.2% increase in charges or a total sum of $4,870,250 for the 12 nursing units over the 5-month period. The variability of nursing cost-to-charge ratio was reduced from 0.34 to 0.80 for room and board to 0.33 to 0.45 for the NIB method.

The NIB method of assigning charges based on nursing intensity rather than on patient location increased overall charges and more evenly distributed direct nursing costs to daily charges. Assigning charges based on nursing intensity is appealing as it reflects actual care given in the acute care environment. The NIB provides evidence to support higher charge rates and has the ability to redistribute hospital charges based on nursing care. The relationship between increased daily hospital charges and actual reimbursement is unknown.