Iowa state capitol with storm clouds in background

A bill to increase regulation over temporary staffing agencies and legally cap what they can charge nursing homes advanced through an Iowa Legislature committee Thursday. 

The policy proposal has earned support from state long-term care leaders, who hope it could help nursing homes reduce rising costs of care in the midst of a national staffing crisis. However, the bill also raised concerns about creating a chilly labor market for some nurses.

The version of the bill advanced by the House Health and Human Services subcommittee includes a provision capping the amount that agencies can charge for temporary care work. 

According to the bill, Iowa’s Department of Health and Human Services would annually publish the legal cap in September to take effect Jan. 1 of the following year. That cap could not legally exceed 150% of the statewide average paid to nurses of the same category in the previous year. 

The bill also would require staffing agencies to register annually with the Iowa DHHS or be prohibited from contracting with any state healthcare providers. Agencies would also be barred from preventing workers being hired permanently by facilities and from charging those workers fees or damages for becoming full time employees.

Policymakers back providers

LeadingAge Iowa threw its support behind the bill Friday.

“The average nursing facility paid over three times as much … for agency nurse staffing in 2022 than in 2020,” Shannon Strickler, president and CEO of the nonprofit association, told McKnight’s Long-Term Care News. “Without further reforms, the out-of-control costs will continue to drain taxpayer dollars and the assets of older Iowans. LeadingAge Iowa supports limitations on how much temporary staffing agencies can charge to protect against price gouging.”

The bill is the latest example of state lawmakers attempting to rein in labor costs for nursing homes. Facilities already struggling with the national staffing shortage are often forced to rely heavily on agency work. That has compelled some agencies to charge exorbitant rates that some industry experts have described as “profiteering.”

While it would not directly impact staffing levels, the Iowa bill is aimed at helping facilities lower their existing labor costs, which would free up funds for hiring more staff or for other needed expenses, its proponents point out.

Bill’s opponents speak out

Agency executives and state nurse advocates pushed back against the policy, according to Iowa Public Radio — arguing it is overly aggressive and potentially damaging to the Iowa work environment.

The bill’s current form fails to account for differing care worker specialities, according to Amy Campbell, a lobbyist for the Iowa Nurses Association — a state branch of the American Nurses Association.

“One set rate is probably not going to be appropriate since you have different specialty categories in that as well,” Campbell said.

Leaders of the Iowa Health Care Association disagreed, however, telling McKnight’s that the only parties forced to sacrifice for the new cap will be agencies themselves.

“The bill does not limit or otherwise interfere with the earning power of temporary healthcare workers,” said Brent Willett, president and CEO of IHCA. “Instead, it establishes what a staffing agency may charge a provider. This means as an agency approaches the charge threshold established in the bill, it may be necessary for the agency to reduce its profit margin to comply with the allowable maximum charges.”

A provision in the bill prohibits agencies from using the yearly cap as an excuse to cut back on pay raises for their workers.

Lawmakers acknowledged the bill will likely see further amendments before potentially passing the Iowa Legislature. 

The bill joins a small but growing tide of similar bills around the US, including at least 11 proposed state measures, that were under consideration in 2023. 

Regardless of this bill’s future success, Iowa’s state government has taken long-term care funding seriously in recent years — passing $15 million in new funding in 2023. By some metrics, the state is already the best in the nation for eldercare.