Skilled Nursing Vs. Home Health: Referral Trends Shift Due to Acuity, Staffing Shortages, Regulation

After years in which Medicare policy and Covid-19 drove more hospital referrals to home health, skilled nursing facilities recently have seen referrals surge, thanks to a variety of factors.

Referral trends through January 2023 showed a jump in patients sent to the nursing home while at the same time rejection rates for home health agency referrals increased, according to data compiled by care coordination company CarePort.

Specifically, there was a 113% jump in nursing home referrals, while home health agency referral rejection rates hit an “all-time high” at 76% between December and January for the space.


Such data falls in line with another analysis conducted by ATI Advisory last month, which showed SNFs overtaking home health care in admissions as hospital discharges normalize.

And so, even as hospitals are initially giving patients home health referrals, the staffing shortage and logistics of the home health setting mean that home health agencies are rejecting the referrals at a greater rate. As a result, hospitals end up diverting patients more often to nursing homes.

Presumably, the rise in home health rejections reflects that hospitals are sending out more referrals to home health agencies, as they’re finding it harder to place patients in facilities, according to CarePort. Data could also reflect an increase in higher acuity patients, or show the impact of staffing shortages in home health.


“It makes a lot of sense, given what we’re seeing on the acute side,” said Lissy Hu, president of Connected Networks at CarePort, powered by WellSky. “One of the things that we’ve seen on the acute care side is just increased acuity of patients going into the hospital; their comorbidity score has gone up.”

Using the Van Walraven Comorbidity Score, Hu said she has seen a 17% increase in neurological disorders, a 16% increase in alcohol use disorders, and an 8% increase in pulmonary diseases.

Hu believes these trends will persist well into the future. Looking at demographics, the U.S. has an aging population with more diabetes, more heart conditions, and kidney disease, she said.

“These higher acuity patients are the ones that will need post discharge care, whether it’s at a skilled nursing facility or in their home,” she said.

However, given that it may be harder for the home health care setting to accept referrals for more acute patients, the referrals to the SNF setting are up. But there are also other factors driving this trend.

Acuity, staffing and cost savings as referral drivers

Cindy Wade, president of Maine hospital provider LincolnHealth, said home health agencies also continue to struggle with workforce challenges alongside the skilled nursing setting. She considers staffing woes to be the main driver behind home health rejection rates.

The referral rejection rate for SNFs was 80%, according to CarePort data.

“We’re seeing referral rejection rates at unprecedented levels, both on the home health and on the skilled nursing facility side. That’s creating longer length of [hospital] stays for patients,” said Hu.

LincolnHealth is one of nine local hospital systems in Maine, run by not-for-profit integrated health system MaineHealth; the system also runs its own home health care agency.

Although both nursing home and home health is impacted by the labor shortage, the home health setting is more sensitive. Also, the nursing home setting allows visits by health care professionals in a more efficient manner.

“[Home health agencies] have streamlined their operations and their ability to process referrals, but this comes down to having enough staff to go out and actually do the visit,” said Wade. “It’s nursing, but not just nursing. It’s physical therapists and occupational therapists.”

Still, until both settings are able to recruit more staff or get more people through school to staff such specialties, Wade said, they will struggle to accept referrals in a timely manner.

“Once [home health agencies have] accepted a referral, they have a certain amount of time before they have to open a case,” said Wade. “If they don’t feel they’re going to be able to meet the needs of the patient, then a lot of times they’ll decline the case. It comes down to just straight up workforce, the lack of workforce. I think we’ll continue to see that as an issue.”

Dina Lipowich, vice president of clinical operations at Lutheran Life Communities in Illinois, said referral patterns have been affected by a constant push-pull between rising acuity among patients and a desire to, especially on the Medicare side, push patients to the less costly home health setting.

But, given the rising acuity of patients, sending more serious patients to home health might not be the best direction even though this was the preferred path pre-pandemic.

“I think Medicare and our managed care payers want us to think about alternatives to the cost of post-acute care for everyone,” said Lipowich. “The reality is, Americans are living longer. They have more medical comorbidities and medical conditions that require this 24-hour nursing care at that skill level. It’s a bit of a conundrum.”

Lipowich also echoed Wade’s reasoning with staffing shortages, while adding that home health care agencies appear to be more selective with who they accept, being more discerning in terms of who meets home health guidelines.

Pre-pandemic efforts to divert patients to home health took into account lower costs associated with home health, Lipowich said. One cost-related metric, Medicare spending per beneficiary, was a huge driver to have more patients opt for home health.

“The way that that particular claims metric works is, any time a Medicare beneficiary goes into the hospital, any post-acute spend 30 days out is connected to that hospital stay,” said Lipowich. “Imagine what happens when a Medicare beneficiary goes into the hospital and goes home; there’s nominal spend on the part of Medicare. But let’s say that same beneficiary goes into the nursing home – well, Medicare is spending a lot more for that stay now.”

Hospitals at this time, around 2010 or later, took the position that they wanted to decrease referrals to SNFs, that is until the pandemic left acute care settings saturated with patients, she said.

“We needed to move that patient along somewhere where they can be taken care of, continue receiving their therapies, their medications; they were fragile, debilitated, and deconditioned after their Covid hospital stay,” said Lipowich. “To that end, I think we may have seen potentially more referrals to nursing homes.”

De-saturating hospitals as post-acute care demand rises

At the state level, Wade said there has been some “significant work” done to help home health agencies accommodate referrals, but it will be a while before hospitals systems see this change dramatically.

Referral strategies on the part of hospital systems haven’t really changed, Wade said. But, like the rest of the country, LincolnHealth is seeing a dramatic increase in patients without safe disposition options.

CarePort data also found the average length of stay for hospitals is almost one day longer compared to 2019 – but that statistic is going back down. Longer lengths of stay in the hospital peaked in winter 2022, according to CarePort data.

Still, patients being discharged to skilled nursing facilities have seen a longer length of stay, an increase of 12%, Hu said. What she’s seeing in the data highlights how connected the care continuum is, she said.

“There’s more demand for both, right? There’s more demand for all types of post-acute care, whether it’s a skilled nursing facility or home health, and that has to do with the complexity of patients that we’re seeing come into the hospital,” said Hu.

In terms of the recent increase in SNF referrals, Wade sees that as a reflection of shifting regulation rather than acute care preference. In the early days of the pandemic, nursing homes weren’t allowed to take Covid patients – they’d stay in the hospital for a significant amount of time until they were cleared for release, Wade said.

“​​We’re able to swing patients as long as we can show medical necessity for that,” said Wade. ”It’s really a daily review of patients and the status of appropriate clinical disposition; how do we navigate that?”

Furthermore, at the height of the pandemic, if a nursing home resident got Covid in the facility and there was an outbreak situation, the facility would close to admissions.

“There were highly regulated rules around when they could then accept patients again,” Wade said of SNFs at that time. “I think that caused the biggest amount of delay. It wasn’t coming from the acute care side, like we were worried about putting somebody in a nursing home or assisted living facility during the pandemic. It was more that those facilities were unable to accept patients due to all those other barriers.”

Leveraging technology may help alleviate hospital saturation and help with staffing challenges in all care settings, as workforce initiatives rush to catch up with today’s need, Hu said.

“A lot of these trends are going to drive changes in the way that acute and post-acute care providers connect with one another, using technology to get connected,” said Hu. “At the end of the day, you’ve got to become more efficient and more targeted in terms of which patients need which interventions.”

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