The Visiting Nurse Association of Rhode Island plans to climb out of debt and turn a profit within 18 months as a result of its major restructuring announced last week.
Rhode Island’s largest home-care provider laid off 129 workers, or 40 percent of its staff, and said it will pull out of a contract with Blue Cross & Blue Shield’s HMO BlueCHiP — the third managed-care contract VNA-RI has walked away from in the past year.
E. Colby Cameron, chairman of the VNA-RI board of directors, said termination of the BlueCHiP contract is part of the organization’s plan to move away from managed-care contracts. VNA-RI instead will focus on Medicare and Medicaid patients, because those programs cover the cost of care better than managed care, Cameron said.
“We just can’t make money on the basis of what (managed care) is giving us for reimbursement rates,” Cameron said. BlueCHiP covers $95 per patient visit, Cameron said, while VNA-RI’s average cost is $143 per patient visit.
“Why should we continue to provide services when we’re not being reimbursed our costs?” Cameron said. VNA-RI has been losing about $400,000 a month, he said. “With the new Medicare (prospective payment system), at least we can break even.”
That hasn’t been the case in recent years, as home-care providers have seen reimbursement rates from Medicare cut drastically as a result of an interim payment system established by Congress’ Balanced Budget Act of 1997.
Since then, national home-health reimbursement has been slashed by nearly $70 billion – more than four times greater than Congress initially intended, according to the National Association for Home Care. The number of home-care providers has dropped by nearly a third, largely as a result of the cutbacks.
But home-health providers are more confident that Medicare’s new prospective payment system, which took effect in October, will help reverse the negative effects of the 1997 legislation. “The statistics we have give us great comfort that we can manage within these (PPS) parameters,” Cameron said. “VNAs can do it and they are doing it.”
Still, that doesn’t mean other home-care providers are abandoning managed-care contracts in favor of taking on more Medicare patients.
In fact, some home-health providers have said that the new Medicare PPS has allowed them to negotiate better reimbursement rates with HMOs under the Medicare+Choice program.
“The PPS has allowed us to manage Medicare and Medicaid patients more successfully, but it’s also enhanced our ability to work with HMOs that serve those patients,” said Elaine Stephens, President and CEO of the Visiting Nurse Service of Greater Rhode Island. “It’s given us a better opportunity to look at those lines of business than ever before.”
Stephens said VNS of Greater Rhode Island has a “very positive working relationship” with BlueCHiP. She said the new Medicare PPS, along with VNS’s own restructuring implemented two years ago, has allowed the home-health provider to turn the corner financially.
VNA-RI’s restructuring will eliminate far-flung service areas, allowing nurses to “spend more time in the home and less time on the road,” Cameron said. The association will stop seeing patients in Massachusetts and South County, he said. It will also eliminate two small programs and shut an administrative office in Warren, relocating its staff to another office in Lincoln.
The association hopes to drive down its average patient-visit cost to $120 as a result of the streamlining. That average cost, Cameron said, should fall in line with reimbursement levels under the new Medicare prospective payment system.
VNA-RI’s restructuring will trim its patient base from 1,100 to about 900.
The association is moving patients to other providers, Cameron said. “Our biggest concern is to make sure this is a seamless transition for our patients,” he said.
