New federal rules harm VNA and many of its patients

The Vineyard Nursing Association headquarters. — File photo by Ralph Stewart

Updated,11 am, November 27

The Vineyard Nursing Association (VNA) took a revenue hit of about $466,000 in the first half of 2013, largely because of changes in insurance reimbursement rules, federal spending reductions, and a decline in the agency’s patient census. The income loss has led the agency to reduce staff and trim hours for administrators. It has complicated the lives of some former patients whose need for visiting nurse services continues although money to pay for those services has been slashed, And, it has led VNA to mount an immediate $250,000 fundraising effort, to which organization board members will contribute $100,000 to kick things off.

VNA has cut four to 10 hours for fewer than 20 percent of the staff of 90, according to Amy Houghton, business and development director. The agency’s senior team saw their salaries reduced, mostly among administrative staff. Positions for one nurse on Nantucket and one full-time physical therapist on Martha’s Vineyard were eliminated. although physical therapy services will be offered by five therapists paid on a per-diem basis.

VNA operates on a budget approaching $4 million a year, almost all of that from third party payors, including Medicare and Medicaid, the balance from private insurance and private pay. Since 2009, Homecare organizations have had Medicare reimbursement rates cut. In the next four years the cuts proposed will chop 13.5 percent off reimbursement rates.

“This year,” VNA chief executive Robert Tonti wrote in a November 19 statement, “revenue for patient services has decreased 13 percent, with Medicare and third party insurance programs responsible for 84 percent of our shortfall.

“The drop in revenues and increase in expenses over the past year are due to Affordable Care Act reductions in reimbursement rates by two percent, sequestration reductions on Medicare reimbursements by two percent, increased compliance and regulatory systems and policies that make accessing home care benefits more restrictive, and seasonality of workforce demands and balance of having the right workforce at the right time.

“The long-term financial stability of a small home care agency like the VNA is increasingly difficult with reimbursement reductions and the high cost of providing health care services, largely in the area of clinical salaries and benefits.”


VNA revenue fell to $3.2 million this year, from $3.7 million in 2012. The Medicare share of income was 65 percent, or $2.4 million in 2012, 63 percent, or $2 million this year. All numbers have been supplied by VNA for the respective years to date, ending in September. The decline in Medicare income, $390,000, accounted for 84 percent of the total income loss. Overall, the agency’s year to date revenue decline amounted to about $467,000. The difference between the reduced Medicare revenue and the total revenue loss, about $77,000 represents the decline in VNA’s private care business at Nantucket. Medicare’s contribution to VNA’s income has fallen since 2007, when it accounted for 75 percent of VNA revenue.

“On Nantucket,” Ms. Houghton explained, “we had problems attracting and retaining a workforce of home health aides to meet the needs of the summer seasonal population and keeping them engaged in the off-season. Additionally, on Nantucket there is a much larger underground workforce and there are two competing agencies that provide home health aides. Our pay rates for aides are among the top in the state (and nationally), but we cannot compete with the wages the other agencies provide — or the housing that the underground live-in care provides.”

New rules exclude some patients

“In April 2011, new regulations [required] a ‘face-to-face’ attestation by a referring physician indicating that the physician has seen the patient either 90 days before referral or within 30 days of the patient’s start of care with the home care agency.

“As part of the new policies, the VNA met with physicians at MV Hospital to review the regulations regarding the face-to-face requirements. This coincided with the appointment of a new clinical director who took the opportunity to use the face-to-face policies as a springboard to introductions.

“The VNA is scrutinizing referrals more than ever before. We do not have a reserve or an endowment that permits us to offer free care. If a physician does not sign a face-to-face attestation, the VNA does not get paid. There is no recourse to go to the physician. Physicians do not pay any penalty for a referral that does not meet Medicare guidelines.”

Tim Walsh, chief executive at the Martha’s Vineyard Hospital, says the challenges facing VNA are common in the home care sector.

“”The VNA is an important part of the whole continuum of care for patients after they leave the hospital,” Mr. Walsh said Monday. “Their struggles reflect the larger industry-wide dilemma of increasing demand and costs, and lower payments. Windemere is caught in the same vise that is affecting the VNA, and we are watching the VNA situation carefully.”

Homebound, the test

Medicare demands that patients be homebound, under its qualifying tests, and that they have a need for skilled care. New qualifying rules became effective on November 19.

According to Medicare, a patient is not homebound if he or she may get the medical care, treatment and instruction at a clinic, a doctor’s office, or other outpatient setting. Reimbursement depends on documenting the certification of the homebound status for the duration of care. In an effort to monitor these certifications, Ms. Houghton says, home care agencies must respond to increased demands for documentation. The process can delay Medicare reimbursements, and it requires vigorous efforts to describe peculiar, Vineyard related conditions limiting patient access to clinics and physicians. These new, stricter and more limiting regulations have contributed to a 15 to 20 percent reduction in VNA’s patient census, according to Ms. Houghton.

“In some cases, the VNA must refuse to accept a patient into our care because the patient does not meet the homebound and skilled need requirements,” Ms. Houghton said.

Not only have reimbursement rates declined, but reductions as a result of the federal government sequester reduced agency income. Taken together, the cuts amounted to about $120,000, Ms. Houghton says.

In human terms

Ms. Houghton described a patient, “A guy in his 50’s with a Commonwealth Care insurance policy.”

This man had open heart surgery at the end of October, went back to the hospital because of a post-surgical infection, then was discharged to his home a week later. He was told to “give himself two different kinds of IV medications, seven doses a day using two different kinds of pumps to inject the medication. He also has diabetes. He has no caregiver.”

Ms. Houghton identifies the gulf in care into which this VNA patient may fall. He is ambulatory, but getting to a clinic, the hospital, or his physician several times a day is nonsensical, expensive and perhaps not even possible. VNA has not learned yet whether insurance will reimburse for the cost of this man’s care, Ms. Houghton said.

“In the past week, we have made six visits but have no guarantee that we will get paid. We will continue to go to ensure he gets the care he needs, but it is an example of how our revenue gets very tight. He belongs in a skilled nursing facility, but his insurance isn’t good enough. To expect this level of medical sophistication after heart surgery with no caregiver seems unconscionable.”

Other VNA patients visited by VNA caregivers may be able to get out to visit a senior center once a week, but they benefit from VNA visits to check on their accurate use of medications, their diets, changes in their overall health, and to interrupt their isolation.

Filling in the gaps

Both Mr. Tonti and Ms. Houghton say that collaboration among VNA, Martha’s Vineyard Hospital, Elder Services, independent clinics, and other service organizations will be required to serve those whose Medicare and other insurance benefits will no longer meet their needs. There is no ready answer to who’ll pay.

“We are engaging in conversations with other organizations on and off Island, to see if there are economies of scale that might be achieved through partnership or affiliation. Home care is not going away on Martha’s Vineyard,” Ms. Houghton said.

This story has been updated to correct a reference to reduction in hours for VNA employees. Hours have not been reduced for nurses who see VNA patients, rather they have been reduced for agency administrators. DAC