Recent Federal and State Legislative Actions Targeting Healthcare Job Placements | Mintz – Health Care Viewpoints

The shortage of nurses and health workers during the COVID-19 pandemic has led to a significant increase in the use of temporary health workers. legislature and health care provider have called on the Federal Trade Commission (FTC) and the White House COVID-19 Response Team to launch investigations into allegations of price gouging and potentially anti-competitive activities by nurse staffing agencies.

In addition, the House and Senate brought accompanying bills entitled “Travel Nursing Transparency Studies Act‘, which would require the Government Accountability Office (GAO) to conduct a study and report to Congress on the business and payment practices of nurse staffing agencies and the impact of hiring travel nurses across the healthcare space during the COVID-19 pandemic . The study would examine:

  • the difference between the amount that nursing staffing agencies charged healthcare facilities and the amount they paid their contracted nurses,
  • to what extent agencies could offer more transparency in relation to these payments,
  • how federal funds were used to pay such agencies during the COVID-19-related staffing shortages, and
  • the impact of market reaction in states that imposed caps on the payment of traveling nurses.

The increase in the use of traveling nurses has also resulted in state legislatures prioritizing the regulation of healthcare staffing agencies. States generally define healthcare staffing agencies to include any facility that contracts with healthcare facilities to provide medical staff on a temporary basis. Below is a summary of recent and proposed state legislation that may require licensing or registration of healthcare staffing providers and/or nursing care pools.

Enacted Legislation

  • Connecticut. Connecticut passed legislation Obligation to register and pay an annual registration fee for “temporary caregivers” effective January 1, 2023. In addition, effective July 1st, 2023, temporary caregivers must file annual expense reports including income and expenses, average number of nursing staff, average Fees charged by type of nurse and healthcare facility, and the states where the agency’s nurse is located. The law also requires the Department of Social Services to assess the rates that care homes charge the authorities and set maximum rates for such services.
  • Iowa. Iowa passed a new law Beginning July 1, 2022, “healthcare employment agencies” must register with the Department of Inspections and Appeals (DIA) and pay an annual registration fee of $500. Among other things, the law prohibits healthcare employment agencies from:
    • Restricting the employment opportunities of healthcare workers, including the use of non-compete clauses in contracts with a healthcare worker or healthcare facility, or
    • Demand penalties or other compensation when a healthcare worker becomes a permanent employee of their assigned healthcare facility.

Subsequent legislation passed effective June 21, 2022 makes the provisions preventing agencies from including or enforcing non-compete clauses and demanding liquidated damages effective only for contracts entered into on or after January 1, 2019. In addition, the law requires that healthcare employment agencies that place medical workers on Medicare or Medicaid require healthcare facilities to submit quarterly reports to DIA detailing the average amount the facility is billed and the average amount , which is paid to health care workers.

  • Illinois. Illinois recently changed its Nurse Agency Licensing Acteffective July 1, 2022, to prohibit the following nurse recruitment agencies from engaging in the following activities:
    • Entering into agreements not to compete with registered nurses and certified nursing assistants (CNAs), which includes any limitations on the employee’s ability to work for another employer or in a particular geographic area.
    • Demanding payment of penalties or other compensation when a healthcare facility hires a temporary worker as a permanent employee.
    • “Recruitment of potential employees on the premises of a healthcare facility.”

The law, as amended, requires nursing staffing agencies to file new healthcare facility contracts, including full disclosure of healthcare facility fees and agency employee compensation, with the Illinois Department of Labor (IDOL) within five business days of their closing date . Agencies are required to produce quarterly reports detailing the average amounts billed to healthcare facilities, average amounts paid to agency employees, and average work-related costs. The amended law also requires the agency to pay nurses and CNAs wages equal to the wages listed in the agency contract submitted to IDOL or face penalties.

  • Louisiana. Louisiana passed a new law effective August 1, 2022 which newly requires “nurse recruitment agencies” to obtain a license and pay a biennial fee of $1,200. The law prohibits nursing staffing agencies and healthcare facilities from requiring temporary workers to seek recruitment as a condition of employment in their contracts. In addition, the law prohibits nurse recruitment agencies from offering financial incentives to temporary workers for the recruitment of permanent health care facility workers as employees of the nurse recruitment agency. In addition, recruitment agencies may only charge a fee for converting recruiters to permanent health facility employees under certain conditions (i.e., payable by the facility, reduced pro rata based on how long the temporary worker has been providing services). on behalf of nursing staff placement, etc.).
  • Oregon. Oregon’s new law mandates “temporary employment agencies.” to apply for a permit and pay the appropriate fee. The new law stipulates that temporary employment agencies may only collect fees from healthcare providers for hiring temporary workers as permanent employees and pay fees from healthcare providers if the company hires employees of the healthcare provider if: 1) the employment agency or healthcare facilities directly order solicit employment, and 2) the contract between the temp agency and the healthcare provider enables either party to collect or receive the fees described above. The legal provisions apply from July 1, 2023.

Specifically, the law also requires that the Oregon Board of Health prepare a report that describes the process by which the Board of Health sets maximum rates that a temping agency may charge a company for services provided by its employees.

Proposed Legislation

  • Ohio. Ohio has introduced a bill This would require “healthcare staffing agencies” to submit annual registrations and applicable fees. The proposed law would require healthcare staffing agencies to provide healthcare providers with a schedule of fees and charges that cannot be changed without 30 days’ prior written notice and prohibit healthcare staffing agencies from hiring permanent employees of the healthcare provider. Healthcare staffing agencies would be prohibited from restricting the employment opportunities of their employees, including through the use of non-compete clauses, payment of penalties or compensation to staffing agencies who are hired as permanent employees of the healthcare provider, or by a staff member of a recruitment agency paying money, to terminate the employment relationship or to accept a takeover of the employment relationship. The proposed law would also prohibit healthcare staffing agencies from billing or receiving payment from healthcare providers for relevant licensed healthcare professionals. The proposed law prohibits billing or receiving payments at a rate in excess of 150% of the statewide median hourly wage for this category of professionals, as determined by the Department of Medicaid using expense reports for the most recent calendar year with a specified median wage.
  • Pennsylvania. Pennsylvania has introduced a bill this would require “temporary health services agencies” to register with the state annually, pay the appropriate fee, and provide a list of each agency’s location. Among other requirements, the proposed law would prohibit temporary employment agencies and healthcare organizations from restricting the employment opportunities of their staff.

We will continue to monitor and report on state legislative efforts to regulate healthcare staffing agencies.

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