How Home Health Providers, Payers Are Adapting To New Referral Patterns

Prior to the COVID-19 pandemic, it wasn’t uncommon for home health agencies and other post-acute care providers to beg hospitals to be a part of their post-acute networks.

Three years later, that’s generally not the case. The referral patterns in home-based care have seen a radical shift, and agency leaders are still adjusting to those changes and making adjustments on the fly.

“We were used to hearing from hospitals that we had to have a five star rating, have to have a medical director and all these other ancillary services,” Health Dimensions Group (HDG) CEO Erin Shvetzoff Hennessey said at Aging Media Network’s Continuum conference in December. “Now, the hospitals are realizing that the patients that they need help discharging don’t always fit into this five star model. These are difficult patients and sometimes difficult patients result in survey activity that doesn’t move you into the five star category. So, if you start to create this preferred provider network, it gets a little too preferred — and they need post-acute care to take these patients and to clear the hospital out.”


HDG operates a portfolio of 25 senior living communities across eight states. It also has a major contingent of skilled nursing properties.

Hennessey said that, because patients being discharged from the hospital are more complicated than they were before, two different referral groups are starting to emerge.

Health Dimensions Group (HDG) CEO Erin Shvetzoff Hennessey speaks at Aging Media Network’s Continuum conference in December.

On one side, there are the five star referral partners who meet all the certain metrics that hospitals like to see.


“And then there’s this off-to-the-side network where we know that discharge planners are really connecting with post-acute,” Hennessey said. “These are the providers saying yes. Now we have this formal network and this informal network that’s actually getting patients moved.”

Referrals to home health care have been on a steady increase over the last three years. At the same time, providers are rejecting them at an unprecedented rate.

As hospitals try to place patients in the hands of appropriate post-acute care providers, skilled nursing facilities’ referral volume has rebounded.

For a health system like Ascension, owning assets is an important piece of the puzzle for the company’s success. However, it doesn’t own enough assets.

“I don’t know that any system can own all the assets that they need to take care of the continuum,” Lisa Musgrave, SVP of post-acute and at-home services at Ascension, said. “For us, building the referral network has been critical.”

Ascension is a faith-based health system that also provides at-home and post-acute care services.

In order to keep up with the ballooning referrals, and as hospitals depend more and more on post-acute providers, finding the right referral partners has been critical post-pandemic.

Musgrave has found that above all else, acuity is king.

“We’re looking for people who will partner with us on taking those patients that are higher acuity,” Musgrave said. “It is now all about acuity. It is about behavioral health issues and who’s going to partner with us to take those difficult-to-place patients and who will communicate with us across the continuum. We’re looking for partners who are going to just work with us to move patients out.”

There’s also a delicate balance that home health agencies have to toe. Casting too wide of a referral net can be disadvantageous for agencies that are focused on quality and outcomes.

Having too small of a referral network, on the other hand, can lead to stagnation.

“We say our referral networks are just narrow enough,” Musgrave said. “And probably just deep enough. We don’t want to have too many people in our network, because we know that if we send all our troubled patients to the people who are great partners and we send all the good patients to somebody else, that it’s not going to work. We’re really trying hard to narrow our networks to the best communicators, the best partners, the best players in our market and make that ratio work financially for our provider networks.”

Another significant shift providers are grappling with is whether these complicated patients belong in a home health setting or a skilled nursing setting.

Bill Gammie, the senior director of post-acute utilization for Kaiser Permanente, is in the middle of that push and pull.

“We saw SNF utilization hovering around 18% pre-pandemic,” Gammie said. “In 2021, it went down to about 15% — now we’re seeing it go back up a bit. That shift has forced us to ask ourselves, ‘Who are the right members to go to skilled nursing and is there an over-utilization of skilled nursing outside of the direct clinical need?’”

Kaiser Permanente is one of the largest health systems and medical groups in the country. Its health plans cover 13 million people across eight states.

Bill Gammie, the senior director of post-acute utilization for Kaiser Permanente, speaks at Aging Media Network’s Continuum in December.

Its home-based care network is made up of about 26 agencies, including companies like LHC Group, Bayada Home Health Care and Pavilion Medical Home Care & Staffing.

As a payer, Gammie said it’s difficult to balance those two goals at once: making sure complicated patients get the care that they need, while also making sure not to default to a SNF based on need.

“We know that there are those additional needs — mostly custodial — and we know our benefit designs have limits,” Gammie said. “We had to look at pattern shifts and were involved in family members avoiding going to SNFs because of all the stories that were happening during the pandemic [at these facilities]. At the time, families stepped up and provided those custodial needs.”

Now that things have normalized, agencies and payers are trying to find a new, right balance.

“We have to be stewards to the benefit,” Gammie said. “We want to see the proper referral patterns to skilled nursing and home health. But at the same time — as we’ve seen this resurgence of utilization of skilled nursing — those gaps in custodial needs and how families have or don’t have resources to support members to be healthy at home, that’s still a challenge that we’re working to solve for.”

Hennessey, a lifelong skilled care veteran, echoed that sentiment.

“Skilled care is where my heart is,” she said. “But people shouldn’t be in skilled care if they don’t need to be in skilled care. It’s not always a clinical need that brings someone to skilled care — it’s oftentimes a cycle of social need mixed with the clinical needs. When we talk about that in-between: that’s the home.”

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