What Does Per Diem Mean in Healthcare? Staffing, Pay and Billing

Per diem is Latin for "per day." In healthcare, it has three meanings: a clinician who works shifts as needed instead of a fixed schedule; a payment method where a payer pays a fixed amount for each day of care; and a daily allowance for travel costs, common in travel nursing. Which one someone means depends on whether you're talking about jobs, billing, or travel.

The three meanings at a glance

Meaning	Who uses the term	Example
Per diem staffing	Nurses, CNAs, therapists, techs, staffing teams	"I work per diem in the ER, two or three shifts a month."
Per diem reimbursement	Billers, payer contract analysts, finance teams	"Medicare pays this nursing home a daily rate under PDPM."
Per diem stipend	Travel nurses, recruiters, payroll	"My contract includes a weekly lodging and meals stipend."

1. Per diem staffing: working as needed

A per diem employee works when the facility needs them and when they're available, with no guaranteed hours. The term is used interchangeably with PRN (from the Latin pro re nata, "as needed"). Facilities use per diem staff to cover vacations, sick calls, census spikes, and hard-to-fill shifts.

Pay: usually a higher hourly rate than staff positions, to offset the lack of benefits.
Benefits: typically no health insurance, retirement match, or paid time off.
Commitment: many employers require a minimum, such as a few shifts a month and some weekends or holidays.
Ways to work: a hospital's internal per diem or float pool, a staffing agency, or a shift marketplace app. Employers may hire you as a W-2 employee; some apps classify workers as 1099 contractors, which changes your taxes.

Per diem vs other job types

Type	Schedule	Benefits	Typical length
Per diem (PRN)	Shifts you pick, as needed	Usually none	Ongoing
Part-time	Fixed hours below full time	Often prorated	Ongoing
Travel nurse	Full-time hours at one facility	Through the agency	Contracts, often 13 weeks
Locum tenens	Fills a provider vacancy	Through the agency	Days to months

Travel nurses are not per diem staff. They're contract workers who often receive per diem stipends, the third meaning below.

2. Per diem reimbursement: paying a fixed rate per day

In billing, per diem is a payment method: the payer pays a set amount for each day of covered care, regardless of the exact services given that day. It's different from a DRG or case rate, which pays one amount per stay, and from fee-for-service, which pays per service.

How Medicare pays by setting (FY 2027, starting October 1, 2026)

Setting	Payment unit	FY 2027 base rate
Skilled nursing facility (SNF)	Per day, case-mix adjusted under PDPM	Six components; urban unadjusted rates total about $536 before case-mix
Inpatient psychiatric facility	Per day	$912.13, after CMS's October 2026 correction
Hospice	Per day, by level of care	$236.33 routine home care, days 1–60
Acute care hospital	Per discharge (MS-DRG)	Not per diem
Inpatient rehabilitation	Per discharge	Not per diem
Home health	Per 30-day period	Not per diem

Example: how a SNF per diem is built under PDPM

Medicare adds six components, each adjusted for the patient's case-mix group. For an urban patient in FY 2027 with these groups:

Component	FY 2027 urban rate
Physical therapy (group D)	$140.20
Occupational therapy (group D)	$104.55
Speech-language pathology (group A)	$18.52
Nursing (HBC1)	$237.64
Non-therapy ancillaries (group E)	$92.70
Non-case-mix component	$120.91
Daily rate	$714.52

The rate changes during the stay. Non-therapy ancillaries are paid at 3 times the rate for days 1–3, so those days pay about $899.92. PT and OT rates drop 2% every 7 days after day 20, so days 21–27 pay about $709.62. From day 21, the patient owes a daily coinsurance ($217 a day in 2026), and Medicare pays the rest.

Hospice per diem rates, FY 2027 (corrected)

Revenue code	Level of care	Daily rate
0651	Routine home care, days 1–60	$236.33
0651	Routine home care, days 61+	$186.33
0652	Continuous home care (24 hours)	$1,726.08 ($71.92 an hour)
0655	Inpatient respite care	$545.93
0656	General inpatient care	$1,231.51

Medicaid and commercial per diem. State Medicaid programs pay nursing homes a daily rate, often case-mix adjusted. Commercial insurers sometimes pay hospitals per inpatient day, with different rates by level of care (medical-surgical, ICU, NICU). These contracts usually add a stop-loss or outlier provision for very expensive stays and carve out high-cost items, such as implants, for separate payment.

Per diem vs DRG: who carries the risk? Under a per diem, the hospital earns more for each extra day, so payers push for shorter stays through concurrent review. Under a DRG, the hospital is paid the same regardless of length of stay, so it carries the cost of extra days.

How per diem claims are billed

Per diem services are billed on the UB-04 (837I) with units equal to covered days.

SNFs report revenue code 0022 with a HIPPS code that carries the patient's PDPM groups.
Hospices bill revenue codes 0651, 0652, 0655, or 0656 by level of care.
Hospitals with per diem contracts bill room-and-board revenue codes by level of care, plus carve-out items on separate lines.

Common per diem denials include days without authorization for a continued stay, a level-of-care change not documented, and days past the benefit limit, such as SNF day 101.

3. Per diem stipends: daily travel allowances

The third meaning is a daily allowance for lodging, meals, and incidentals while working away from home. Travel nurse agencies often base stipends on federal GSA rates. For FY 2027 (October 1, 2026 to September 30, 2027), the standard GSA rate is $113 a night for lodging plus $68 a day for meals and incidental expenses, $181 in total. Higher-cost cities have higher limits.

Stipends are generally tax-free only if you keep a permanent tax home and are paying duplicate living expenses while on assignment. Without a tax home, the IRS treats them as taxable income, so check with a tax professional.

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