Prospective payment by diagnosis-related groups (DRGs) has influenced hospital care in at least two ways: patients are experiencing shorter hospital stay and they are being discharged in a less healthy state than in the past. As a result, home health agencies are reporting an increase in the number of patients needing services, with the majority of these patients being sicker, older, and requiring more complex care. As hospital-based care shifts to community care, the impact on community home health agencies continues to increase. To date, little has been written about role changes for community health nurses, especially home health nurses, as a result of the ripple effect of DRGs. The authors suggest likely changes in the caring, counseling, and coordination aspects of the nurse's role. The community health nurse's role is evolving into one that requires expertise in advanced technologies, more sophisticated assessment and counseling skills, and a more comprehensive case management component. Concomitant alterations must be made in resource requirements and distribution. Such changes provide opportunities for innovative and creative nursing strategies.