The move is new evidence of the turbulence in the home-care industry under Gov. Andrew M. Cuomo's sweeping redesign of Medicaid, which has transferred tens of thousands of people receiving long-term help from a fee-for-service system to managed care, in an effort to save money and reduce nursing home use.
In April, New York suspended enrollment in the managed long-term care plans run by VNS, including VNS Choice, the largest in the state with more than 20,000 enrollees.
Jason Helgerson, the state's Medicaid chief, demanded that VNS and two dozen other managed-care companies conduct audits of the customers they had signed up through social adult day care centers, including ones documented in an article in The New York Times that described elderly people seen playing table tennis at the centers or bicycling away with free takeout food.
One such center in the Bronx figured in a political corruption case, its owners accused of bribing a state assemblyman to help them squelch competition.
At the time, Mr. Helgerson vowed to recoup every penny spent for enrollees found ineligible for long-term care, and set Thursday as the deadline for managed-care companies to complete the internal audits. Companies in the city get roughly $3,800 a month from Medicaid for each person they enroll, out of which they pay for long-term services from a network of providers, from social day care and home health aides to nursing-home care. Day care centers are paid as much as $90 a day for each client.
Neither Mr. Helgerson nor VNS officials would discuss the results of the audits on Thursday. But a VNS nurse in Brooklyn who was among those laid off said that by July the agency had found more than 800 of its new managed care enrollees in that borough ineligible and unenrolled them, which represented some $20 million in fees to be returned.
"We have been pretty much waiting for the ax to fall since the whole scandal with day care," the nurse said, speaking on condition of anonymity because VNS forbids employees to speak to the news media and the layoffs do not take effect until Nov. 24, with pay and benefits to continue until January.
Still, the size of the layoff was a shock, the nurse said, describing a tearful scene in the Brooklyn office on Wednesday in which everyone hired since January 2012 for managed long-term care was terminated, including 58 nurses, eight social workers, nine physical therapists and many office managers — as much as 40 percent of each team handling such cases.
"There was crying, there was hyperventilating," the nurse said. "Their greediness has ruined the lives of so many people."
Richard Rothstein, a spokesman for VNS, would not answer questions about the unenrollments or the exact number of layoffs, but denied rumors that the agency was considering selling its managed care plan.
"No part of VNSNY CHOICE is for sale and we remain committed to serving our membership," he said.
In a prepared statement, Mr. Rothstein said the staff reduction represented less than 3 percent of the century-old agency's 19,000 employees, and included some working in its certified home health agencies, financed mainly by Medicare. The statement attributed the layoffs in part to changes in state and federal reimbursement under the Affordable Care Act, and said that VNS was "actively transforming the way it delivers home and community based care.
"Unfortunately, part of this transformation requires a reduction in staff, as well as important steps to eliminate redundancies in programs and services while simultaneously increasing efficiency and quality of care," the statement said.
The New York redesign gives managed-care companies, rather than the government or an independent agency, main responsibility for determining eligibility for managed long-term care. That creates a conflict of interest, warned a report that Mr. Helgerson received in the spring from representatives of 20 advocacy agencies for low-income and disabled people. While plans were eagerly signing up people like the robust clients of social day care centers, some of the neediest, like bed-bound elderly suffering from dementia, were not being allowed to enroll, or were being denied the hours of service they needed without a meaningful chance to appeal, the report documented.
James C. Cox, the Medicaid Inspector General, said his office was currently reviewing 54 social adult day care centers and seven managed long-term care plans, and has referred the VNS case to the Medicaid Fraud Control unit.
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