Skilled Nursing Providers Getting Squeezed As More Patients Go to IRFs Amid Pandemic

During Covid-19, skilled nursing facilities have seen their admissions squeezed as more patients have gone straight from hospitals to their own homes for recovery. But more complex cases are also being diverted away from SNFs, toward inpatient rehabilitation facilities (IRFs) and long-term acute-care hospitals (LTACs).

It’s a trend highlighted in an analysis from consulting firm ATI Advisory, and the change in referral streams again emphasizes the tough battle that skilled nursing providers face as hospital discharge patterns change.

The research, which incorporated interviews as well as Medicare Fee-For-Service (FFS) claims data analysis, showed that skilled nursing facilities have seen some of their patients go to HHA facilities. This stands to reason, as institutional settings were seen as more dangerous from an infection control perspective during Covid-19.

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Role of LTAC Hospitals in COVID-19 Pandemic (ATI Advisory)

“As SNFs shares ticked down, HHAs, in turn, increased their share of total Medicare FFS STACH (short-term acute care hospital) discharges, receiving almost 20% of STACH discharge volume in May 2020, suggesting these settings have taken in some share of the patients who would have otherwise gone to SNFs,” the study says. “These patients and their clinicians have expressed concerns about COVID-19 exposure during the course of post-acute recovery and rehabilitation in SNFs.”

Fear of Covid-19 infection was not the only reason for lower SNF referral volumes, with other factors including a decrease in elective surgeries and a mild flu season, Isaac Dole, managing director at Birchwood Healthcare Partners, told Skilled Nursing News. Chicago-based Birchwood owns 23 nursing homes and senior housing communities.

“Home health volume has definitely increased as there has been a big push by hospitals and families to discharge to non-institutional settings during the pandemic,” Dole said. “We have a small home health that experienced a volume increase, but I have talked with other operators in the industry who saw somewhat comparably off-setting volume between their home health and SNF portfolios.”

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And the shifts toward home health appear to be persisting, according to a study from Avalere Health, released September 2020. The study indicates that hospital discharges to home health agencies were rebounding much faster than at skilled nursing facilities.

Discharges to home health reportedly experienced a year-over-year increase in June 2020, at 4.6% greater discharge volume compared to June 2019, while discharges to SNF remained notably below pre-pandemic levels at a 25.4% decrease in year-over-year discharges.

The role of IRFs

The push to home health is not surprising during a global health pandemic where social distancing and staying home were key, but for some SNF operators, IRFs and LTACs have also been a major cause of reduced patient volume.

Role of LTAC Hospitals in COVID-19 Pandemic (ATI Advisory)

Hospital discharges to both settings increased between 2019 and 2020, while SNF referrals dropped, ATI Advisory data shows.

ATI researchers see LTACs as providing a “critical relief valve” during COVID, admitting patients on a timely basis and serving the most medically complex patient. And it’s true that IRF capacity is much smaller than SNF capacity on a national basis. There are about 1.7 million SNF beds to 27,000 IRFs beds, Dole noted.

Still, some in the industry see these numbers as part of a much more alarming trend.

Brian Cloch, a principal at the Chicagoland-based skilled nursing facility owner/operator Innovative Health, feels it is the taxpayers who are ultimately losing.

“I think the shift has led to higher costs, worse outcomes, and higher readmission rates,” he explained in a conversation with SNN. “What’s happening during COVID, acute rehab facilities like Encompass have become really aggressive about getting the volume that would normally go to a skilled nursing facility.”

As somebody who recently built three new short-term rehab facilities in Chicago that “look like the Four Seasons,” Cloch wants to see those patients stay in SNFs.

“We’re not getting the volume we want,” he explained. “We built private suites and private rooms and we’re not getting volume because what is happening right now is we use a referral system, and say it goes out to like 20 different places … We’re saying yes and places like Encompass are saying yes and for families being offered both … it’s a no-brainer to go to the acute rehab.”

That’s because of various factors, including staffing.

“The staffing ratio at [a SNF] might be one nurse to every 10 to 15 patients… the staffing ratio at [an IRF] might be one nurse to every five patients,” Cloch said.

For Encompass Health CEO Mark Tarr, the explanation for the rise in IRF business is simple.

“From a post-acute perspective, the patients that we’re treating in our IRFs really cannot go directly home from the hospital,” Tarr said during a quarterly earnings call last summer. “They require an inpatient stay. So (for) those patients, it becomes a choice between an IRF and SNF in almost all cases — and I would ask you for your opinion as to how the skilled nursing facilities have distinguished themselves during this pandemic.”

While consumers might be understandably cautious about SNFs in light of Covid-19 infection rates, and drawn to the higher staffing ratios at IRFs, that additional labor comes at a cost. The staffing is necessary because these settings are meant to care for higher acuity patients, but Cloch is concerned that people with less intensive needs are also going to IRFs.

“I think that most of the referral volume that’s been redirected to acute rehab is Medicare Fee-For-Service… There’s no gatekeeper, nobody is paying attention,” he added.

This situation flies in the face of value-based care goals being pursued by managed care organizations, which take pains to make sure that patients are in the lowest-cost setting that is appropriate for their needs.

“I don’t blame the family … but as a taxpayer are you happy paying $3,000 a day for somebody that should only cost $600,” he asked. “We’re losing, we’re getting crushed because we are not getting the volume to support our overhead.”

Recent rule changes designed to keep patients out of hospitals also haven’t helped SNFs.

For example, the CARES Act Provision, signed into law in March, increases Medicare access to post-acute care during the COVID-19 pandemic, providing acute care hospitals some flexibility to transfer patients out of their facilities into alternative care settings.

As part of the provision, the three-hour rule, which requires that a beneficiary participate in at least three hours of intensive rehabilitation at least five days per week to be admitted to an IRF, was waived.

It also maintains that long-term care hospitals can have more than 50% of their cases be less intensive.

“This is a huge issue for the SNF industry and a huge windfall for IRFs to be able to take SNF-level patients at IRF rates, which are five to six times a SNF,” Cloch added.

Lessons learned from the pandemic

For Birchwood Healthcare Partners, with most of its properties in rural locations, the prevalence of IRFs has been minimal.

“I am sure the IRF setting was responsible for SNF decreases at specific SNFs … but I would expect significant percentage variability in IRFs as the responsible variable nationally for decreased census over the last year,” Dole said.

For SNF operators trying to get back to normal and drive discharge volume back to their beds, Dole has seen many ways they are getting creative and looking to improve.

“SNFs are trying hard to develop programming to differentiate themselves from other settings, including the home,” he added. “There has been an increase in behavioral programming in SNFs, as well as specialized clinical programs that cannot be replicated in the hospital or home at comparable cost and care results.”

And for the researchers at ATI Advisory, the demands of the pandemic reshaped referral patterns in some ways that might be short-lived and others that might be longer-lasting — and in the best-case scenario, lessons learned will ultimately help drive more efficiencies and better patient care.

“Our hope is that experience gained from the pandemic can help us identify ways in which we can efficiently use each part of the post-acute care continuum, and preserve access to appropriate care, which may require the use of certain flexibilities that can accelerate care to specific populations when needed through the CARES waivers, prior authorization relief, and other tools,” ATI Advisory Researcher Conner Esworthy told SNN.

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