Purpose: To examine the changes in nurse staffing in hospitals after implementing the policy of differentiating inpatient nursing fees by staffing grades. Method: The study sample included 43 tertiary hospitals, 185 general hospitals, and 282 non-general hospitals that were operating in both 1999 and 2008. Nurse staffing grade was categorized from Grade 1 (highest) to 6 (lowest) in 1999 or Grade 7 in 2008, based on the nurse-to-bed ratio. Results: Tertiary hospitals at Grade 3 and Grade 4 accounted for 49% and 35%, respectively, in 2008, whereas 63% were Grade 6 in 1999. General hospitals at Grade 6 decreased from 87% to 48%. In non-general hospitals, little change was found in the staffing distribution, in that 92% still remained in Grade 6 or 7 in 2008. Forty tertiary hospitals (93%) and 45% of general hospitals improved their staffing grades, while only 7% of non-general hospitals did. Greater likelihood of improvement in staffing grades was found in general hospitals located in metropolitan areas or having 250 or more beds. Conclusion: Elaboration of the financial incentive system is needed to increase the policy impact on staffing improvement.