Hospitals Slow to Shift Medicare Referrals from SNFs to Home Health

Fewer Medicare fee-for-service (FFS) beneficiaries have been going to skilled nursing facilities over the last nine years, in part because hospitals are referring to home health more frequently.

However, it is only in certain areas across the country where hospital referral patterns have changed to favor home health, according to a newly released analysis from Washington, D.C.-based consulting firm Avalere Health.

In 2009, there were 1,808 SNF days per 1,000 Medicare FFS beneficiaries, and that fell to 1,539 days per FFS beneficiary in 2016, Avalere found. That’s a 15% drop.


The major cause appears to be an overall reduction in hospital inpatient stays, meaning there have been fewer patients to be discharged to SNFs. Hospitals have come under intense scrutiny for unnecessary inpatient admissions, and this contributed to more observation stays—these are classified as outpatient visits, and observation patients do not qualify for subsequent Medicare SNF coverage.

Secondarily, with the rise of value-based care and alternative payment models, there have been more financial rewards for providers and payors that can keep seniors out of the hospital and treat them in less costly settings, Avalere noted.


Yet, looking at the country as a whole, the new payment models have not changed hospital referral patterns, Avalere Vice President Fred Bentley told Home Health Care News. There has not been a change in the proportion of discharged FFS beneficiaries going to SNFs versus home health or other post-acute settings, the firm’s analysis found.

“We were looking at an aggregate picture across the United States,” Bentley told HHCN. “That said, there are markets where … there is a lot more aggressive management of post-acute care benefits, where you see substitution of home health for skilled nursing.”

One example would be the 34 markets taking part in the mandatory Comprehensive Care for Joint Replacement (CJR) program, he said. Under this program, hospitals are responsible for managing outcomes and spending for a whole 90-day episode of care for orthopedic patients, so they are incentivized to work closely with high-quality home health agencies rather than more expensive SNFs.

In addition to initiatives like CJR gaining traction, there’s reason to believe that growing enrollment in Medicare Advantage will accelerate the substitution of home health for SNF use, Bentley noted. Medicare Advantage payors are private-sector insurance companies that are highly attuned to post-acute spending and outcomes.

Ultimately, both skilled nursing and home health should benefit from the “silver tsunami” of aging baby boomers, he emphasized.

Currently, the oldest boomers are 72 years old, and skilled nursing use accelerates around 75. So, although the aging of the population has been moving at a “glacial pace” relative to some other changes in the health care system, it is the big-picture trend that will drive more post-acute care going forward, Bentley said.

“You don’t flip a switch in 2021 and [see] a huge growth in volume, but that’s when … it will start,” he said.

Written by Tim Mullaney

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