IPS: It's just more trouble all the way around
IPS: It's just more trouble all the way around
Providers describe impact of landmark legislation
Providers are singing the blues over interim payment system (IPS) implementation - with good reason. Many believe the two-year stopgap measure is so flawed, they would rather plunge headfirst into a prospective payment system (PPS), even though they must scramble to meet its operational requirements.>
HCFA estimates that two-thirds of providers will be over the revised cost limits announced in January, up from 30% pre-IPS. Dayle Berke, director of government affairs, National Association for Home Care (NAHC), placed the figure as high as 75%. Providers face another 15% reduction in October 1999, regardless of PPS implementation status.
"I believe, overnight, many agencies will file cost reports and declare bankruptcy [because they cannot operate under the revised cost limits]," says Tony Zizzamia, administrator for St. Joseph Hospital Home Health Care Services in Augusta, GA.
Hospitals absorb agency reductions
With the IPS train steaming down the tracks, providers are doing all they can to bring costs down and continue operating until PPS rolls into the station. St. Joseph's is now benefiting from an intensive utilization review it conducted several years ago. The effort helped staff focus on appropriately identifying skill needs and managing care, and placed it below regional utilization averages, says Zizzamia.
Still, IPS will significantly impact the agency. He projects "negligible" impact from per beneficiary limits, but estimates that the revised cost limits will effectively cancel St. Joseph's approximate $1 million administrative cost shift to the home health agency.
Although the hospital remains committed to its home health operations, Zizzamia says he is currently evaluating whether the agency and its three branch offices' should remain hospital-based or become independent affiliates of the facility.
The administrators of both Mount Sinai Hospital Home Health Agency and Montefiore Medical Center Home Health Agency, two of New York City's largest home care providers, say their programs will experience multi-million dollar reductions as a result of IPS. While both expect marginal profitability during the initial IPS phase, Ann Baxter, associate hospital director for Mount Sinai, and Susan Schulmerich, executive director for Montefiore, forecast red bottom lines with the second-wave cost limit reduction.
Strapped with high wage rates, unionized staff, and generous hospital benefit structures, the agencies have limited cost-reduction wiggle room. Both are focused on productivity enhancements.
"Even one-tenth of a visit increase each day has a significant impact when you spread it over a [large volume of business]," Baxter says.
Both agencies are investing in information technology to decrease documentation times. Mount Sinai also redistributed office resources to handle more administrative functions for field staff, such as making follow-up phone calls. Montefiore created work stations in the medical center's satellite clinics where field staff can send and receive information, complete documentation, and make follow-up phone calls without navigating through the agency's congested Bronx service area to reach the main office.
Mount Sinai will also benefit from the hospital's recent affiliation with New York University Hospital, which does not have its own home care program. Baxter plans to expand services adding only direct care and related support positions, spreading her existing overhead across a much larger visit volume.
Independent providers predict they will fare no better than their hospital-based counterparts. Texoma Community Health Services Inc. in Vernon, TX, implemented a number of cost reduction measures over the past six months, says Jeanne Tucker, administrator and owner. "We literally rebuilt the agency from scratch," she says. The agency's calendar-based fiscal year prompted fast action. "I couldn't wait [until HCFA announces the per beneficiary limits] to make changes."
So far, the agency has changed its health insurance coverage, decreased paid time off, closed a branch office, reduced mileage reimbursement by 5 cents per mile, eliminated per visit staff, and reduced its part-time staff through both attrition and force reduction. Other changes may come; Tucker continually evaluates and adjusts operations as new information appears.
Kaye Smith, RN, director of clinical services and co-owner of Eastman, GA-based Three Rivers Home Health Services Inc., estimates the company needs to lower its utilization by 10 days to succeed under new cost limits. Smith expects to meet that target by changing the agency's patient mix coupled with cost reductions. The company plans to balance its many long-term, high utilization patients with those requiring acute, short-term care.
Physician education is a critical component of the strategy, says Smith. Three Rivers also implemented a hiring freeze and reduced staff through attrition. "We are not concerned about our viability, but we may be smaller in the future," she adds.
Although providers have blitzed Capitol Hill, decrying IPS' impact on their agencies, they acknowledge that winds of change blowing through the 105th Congress are weak.
"I've advised my members to hope for the best, but expect the worse," says Anita Bradberry, executive director of Texas Association for Home Care. With Congressional action unlikely, the industry is hunkered down for at least a two-year siege.
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