Some States Taking Matters Into Their Own Hands to Curb Price Gouging Staffing Agencies

Price gouging typically refers to retailers taking advantage of spikes in demand by charging exorbitant prices, often after a state of emergency. Over the course of the pandemic, however, health care officials have found it’s not just retailers that are guilty of the practice.

Accused of jacking up wages and providing poor quality care with no accountability, staffing agencies continue to draw ire across the sector.

Some in the skilled nursing industry think it’s time for the states, of which 29 currently have regulations and safeguards to prevent price gouging, to intervene.

In Pennsylvania for instance, where nursing homes have incurred an 18% loss to their workforce since the pandemic began, long-term care providers are working with lawmakers to hold staffing agencies more accountable.

Last year alone, CNAs, LPNS and RNs saw a wage increase of about 80% across the board in the state, but those markups have ballooned in 2021 with some agencies offering wage hikes that can sometimes be two to four times the market average.

“We’re big believers in free market,” Quality Life Services Chief Administrative Officer Susie Tack Beardsley told Skilled Nursing News. “Unfortunately, we’re not in an industry where that works because we can’t change our pricing to our customers. That’s predetermined by CMS.”

Part of the reason frustration toward staffing agencies is building is the timing.

As ProMedica Vice President for Government Relations and Advocacy Brian Perry put it, staffing agencies seemingly couldn’t let a good crisis go to waste.

“We are in the middle of a nationally declared state of emergency. If this was a hurricane and I was a gas station charging $25 a gallon, I’d go straight to jail,” he explained. “[Staffing agencies] see a ripe workforce pandemic, they realize they can jack up prices and the provider community has no choice.”

With facilities in 28 states, including Pennsylvania, ProMedica is working with state officials across the country to address the issue alongside a national push to limit the price gouging.

Legislation proposed in the state seeks to establish new requirements for contract health care service agencies that provide temporary employment in nursing homes, assisted living residences and personal care homes, such as requiring them to register with the Department of Human Services as a condition of their operations.

“This proposed legislation would establish maximum rates on agency health care personnel to end the practice of ‘gouging’ the Medicaid program and Pennsylvania taxpayers, which was already exacerbated by the COVID-19 pandemic,” Pennsylvania Rep. Timothy R. Bonner wrote in a memorandum sent to all members of the state’s House of Representatives in November.

It would also require a system for reporting and establishing penalties. The measure is supported by the Pennsylvania Health Care Association.

“With this legislation, the number one thing is rate caps because for providers that are beholden to a Medicaid reimbursement system, this is simply unsustainable. Two, there needs to be oversight,” Pennsylvania Health Care Association President and CEO Zach Shamberg told Skilled Nursing News. “Our hope in Pennsylvania is that we can fast track this legislation that we can garner support in both our house and senate as well as with our governor, to ensure that this gets done as soon as possible.”

He said he’s working with lawmakers in the state to cap the rates that agencies can charge at 150% of the median wage rate average over the last three years.

“Two states already have wage rate caps in place, Minnesota and Massachusetts. Other states are taking steps to do this already, like Illinois and Missouri, and we worked closely with the Missouri Health Care Association that also used that 150% number,” he said. “We thought that was a fair representation and number.”

The Illinois Health Care Association, on the other hand, is focused on eliminating the non-compete clauses that agencies offer along with also establishing wage rate caps.

“Our window for addressing this is in a weird place right now [due to the short veto session in the state],” Illinois Health Care Association Executive Director Matt Hartman told Skilled Nursing News. “We’ve been in some negotiations with other stakeholders in the sector and with the Department of Health Care and Family Services on some rate reform legislation and part of that takes a deep look at staffing.”

Hartman has seen agencies charge for over $175 an hour for a registered nurse.

“We’ve seen situations where agencies will tell folks they will send staff but that they also have to sign a contract for eight weeks, regardless if you only need them for three shifts,” he added. “So very aggressive moves on the part of these agencies. I would say there’s absolutely price gouging in play there.”

Hearing reports that staff agencies are taking 40% of the wage hikes for themselves, Perry thinks it’s time for state and federal officials to step in.

“If the government is laying out all these funds to go to the bedside for direct care to nursing and caring for our elders and 40% is going in the pockets of staffing agencies, that’s not going to the bedside, it’s taking advantage of the crisis that we’re in right now and that just seems beyond the pale,” he added.

Perry has heard examples of nurses leaving a job and showing back up at the same location 48 hours later with providers paying five times their original salary, and the markups only seem to be increasing.

“We had an agency that we had just negotiated a company-wide contract in July and in September, they wanted a 29% increase,” Quality Life Services CEO Steve Tack added. 

Like many other operators out there, the Butler, Penn.-based operator has been forced to limit admissions at its facilities due to staffing shortages as it continues efforts to rebuild census to pre-pandemic levels. 

“One of the things that we struggle with is that we’ll schedule an agency nurse and they won’t show up, or they call off and it might be a 12 hour shift, so not only you’re paying top dollar, but you have so little control,” Beardsley said.

Just this past week Beardsley saw an agency recruiting on Facebook, claiming that they are not paid by Medicare and Medicaid, therefore, they’re not subject to the vaccination mandate so if nurses don’t want to be vaccinated they could go work for them.

“We’re the ones then as the operator as the license holder, held accountable by CMS for having only vaccinated employees,” Beardsley added. 

Correction: An error was made in a quote attribution in the story. SNN regrets the error.