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WASHINGTON — The federal government miscalculated funding for hospital-based nursing schools for nearly two decades, and now the Biden administration is forcing them to pay up during the worst health care workforce crisis in decades.

Nursing schools across the country say it could force cutbacks and even closures. OSF HealthCare, based in Illinois, is already weighing which of its two nursing schools will close.


“CMS is well-intentioned in trying to fix something, but the way they are doing it is tone-deaf, by taking money from nursing schools during the pandemic,” said Chris Manson, vice president of government relations for the system. OSF estimates the government could demand $11.5 million from them for old miscalculations.

The colleges didn’t submit any wrong information. The error was a mistake on the government’s part. About 120 colleges were blindsided last fall by the government demanding the money back. Analysts hired by the nursing schools estimate around $1 billion may be eligible for clawbacks.

The colleges have pleaded with officials to find another solution, particularly during the pandemic, but the Trump administration’s position was that once it realized its mistake, it had no choice but to pursue debt collection. President Biden has not yet named a Medicare and Medicaid chief, but his administration said Friday that it is sticking by the prior decision.


“How do you wrap your head around that 18 years ago they made a mistake and it was never identified? What kind of incompetence does this, and then expects reimbursement from those who in good faith accepted the money and made sure students were educated with these dollars?” said Brenda Beshears, the president of Blessing-Rieman College of Nursing and Health Sciences in Quincy, Ill.

As the Covid-19 pandemic has spread, hospitals across the country have faced challenges with an exhausted workforce stretched thin. Because outbreaks are so widespread, there is less capacity to surge frontline workers to virus hot spots. Hospitals are hiring traveling nurses, who are paid multiples of what typical nursing staff are paid. The demands have only increased as hospitals have been tapped to help with vaccinations.

Nursing students at Blessing-Rieman have helped its affiliated health system with the Covid-19 response, Beshears said. They assisted with Covid-19 rapid testing efforts and, with faculty supervision, helped administer vaccines. The school provides a workforce pipeline in a rural area — Blessing Hospital is 100 miles from another major medical center, Beshears said.

The mistake came to CMS’s attention because about 50 hospitals realized their physician training programs were being underpaid by Medicare — essentially, some of the funds were inappropriately going to nursing programs instead. The hospitals with physician training programs appealed to CMS and won. But several systems involved in the effort including Northwell Health, Montefiore Health System, and Ochsner Health said they were simply advocating to get the funds they were entitled to, not necessarily for nursing programs to be penalized.

“It was CMS’s decision to also retroactively recoup payments from [hospital-based nursing and allied health] programs,” said Jeffrey Haeffner, vice president of corporate finance at Northwell Health.

A CMS spokesperson said the schools have to return the erroneous payments by June 2022 because CMS is legally obligated to collect debts owed to the agency. An extended payment plan is available for those who cannot pay in that time frame.

Lawmakers including Sens. Tammy Duckworth (D-Ill.), Sherrod Brown (D-Ohio), Tom Carper (D-Del.), Bob Casey (D-Pa), Chris Coons (D-Del.), Dick Durbin (D-Ill.), Kirsten Gillibrand (D-N.Y.), Bob Menendez (D-N.J.), and Cory Booker (D-N.J.) and 21 House members of both parties have asked congressional leaders and the administration to find a solution to avoid forcing nursing schools to pay back CMS for the mistake, but they have not had success so far.

Nate Brandstater, the president of Kettering College, said it has been difficult to convince either regulators or legislators to act because there’s a gray area on whether the agency needs a legislative change.

The hospital-based nursing schools argue there may be another solution, such as using some of the remaining funds in a Covid-19 relief grant pool for health care providers to make CMS whole. In the meantime, they realize the middlemen that handle payment logistics for the government could ask the schools to pay the agency back at any moment.

Jean Paddock, who took over the presidency of Aultman College in 2018, said the nursing and allied health school is facing a more than $7 million surprise debt to CMS, and pay cuts going forward. The school has about 350 students in total.

“This is the most urgent issue I have faced in my presidency,” she said. “I do lose sleep over it.”

  • Sounds like it is the Trumps that started this and the Bidens are not able to stop it b/c the Trump appointee is still in power and repubs dragging their feet to make a point at the expense of our healthcare. Tired of the hypocrites. Sounds like politics once again is negatively impacting healthcare for Americans. Time to get some healthcare friendly congress and senate in place.

  • The title of this colored article is misleading : it was the Trump administration that discovered the error and initiated correction seeking pay-back. But the writer states “now the Biden administration is forcing them to pay up”. Biden does not hap-hazardly make changes – he listens to experts. So once a new Medicare and Medicaid chief is in place there could very well be a change to that recouperation. Biden has only been Pres for 3 weeks, and the enormous mess inherited from the prior Pres takes time to clear up.

    • The term hospital based nursing schools is rather awkward. Most of those mentioned in the article are identified as “colleges”. It appears that there is some fuzziness in the definitions. Additionally, it would be helpful to know if these schools are non-profit or for profit. There continues to be a demand for financially accessible nursing education programs that are academic institutions rather than hospitals.

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