What can you expect under IPS belt-tightening?

With the Interim Payment System already here, system-based home care agencies may find little room to maneuver to improve their bottom lines, but there are a few simple strategies that can help.

Lorraine Waters, RN, C, BSN, MA, director of Southern Home Care at Clark Memorial Hospital in Jeffersonville, IN, looks at the IPS as being similar to managed care. In the short term, with Medicare, the inefficient agencies, i.e., the ones over the cost limits, will benefit. But in the long run, the agencies who do more with less will survive under the Prospective Payment System slated for 1999.

To get her staff to accept the new concept of reimbursement, Waters relied on teaching inservices. "Staff education is by far the most important thing," she says. "I started teaching it as soon as I figured out what IPS was. The [staff] were absolutely amazed. People aren't going to change behavior unless they understand why."

To help spread the word, Waters developed a list of strategies for survival under the Balanced Budget Act's IPS provision, which she shared with staff. (See Survival Techniques for Home Care, p. 55.) And in anticipation of the per beneficiary cap, she estimated her agency's 1998 per visit cost limits to show staff the world they were going to be living and working in. (See 1998 Per Visit Cost Limit Calculations, p. 57.) "What's going to happen [with IPS] is unknown. HCFA is not using our figures. They are using their own figures for the unduplicated census. We are out there providing care, and we don't know what we're getting reimbursed. I don't know of any other industry that does that," she says.

Waters says she began preparing her agency for change months ago - not for IPS but for managed care. Waters compares the Medicare reimbursement cuts with operating under a managed care system.

"The efficient agencies will be the ones with low numbers of visits per patient. We've already been doing that - not for IPS but to get ready for managed care. We don't have a large penetration of managed care in our area yet, but it's coming. "We've never been over our cost caps. We've had to do a lot of adjustments on budgets," Waters explains.

The most obvious reaction to cutbacks is for agencies to trim personnel, but so far, that has not been necessary at Southern Home Care, Waters says. That may change, however.

"We don't anticipate laying anyone off, but we are more cautious about replacing people who leave. We recently eliminated two support staff positions when those people left. And we have two nursing positions we're leaving open for the time being."

But the reality of IPS is close to home. "I know of two agencies in our area that have closed and another that is probably going to. These were the ones who had high reliance on venipuncture and chronic patients. They were freestanding. Some for profit; some not for profit. But IPS hurts everybody across the board." Of course, freestanding agencies are not the ones that stand to lose money with IPS, she says. "Hospitals will lose a good bit of the cost shift. They've got to operate efficiently and stay under caps."

Fading revenues under IPS affecting the cost shift and the benefit's eventual elimination under a home health prospective payment system will offer hospitals less incentive to run home health agencies, Waters says.

"Those hospitals that have a firm commitment to the integrated system of care concept or see that home health is still an advantage for the cost shift, just not as much as it has been, will stay in home care," Waters says. "But I expect a lot of hospitals will be taking a strong look at home care."