What CMS Gets Wrong About Referral Rejection Rates In Home Health Care

In light of the increasing need for post-acute care, hospitals are grappling with challenges tied to ensuring patients are directed to the most suitable post-discharge care setting.

While referral volume to home health agencies continues to be higher than pre-pandemic levels, rejection rates continue to be a major pain point for providers.

Home health agencies are not only getting more referrals in total, but they are also seeing an uptick in referrals per patient. This surge is a consequence of acute care providers facing challenges in promptly arranging post-acute care for their patients.

Rejection rates for home health agencies reached a record high – averaging 76% – in December 2022. That’s a significant rise from the 54% seen in 2019.

This topic – home health providers’ collective ability to accept patients – was directly addressed in the Centers for Medicare & Medicaid Services (CMS) 2024 final payment rule. While providers believe CMS rate cuts have hindered home health access, the agency disagrees.

“CMS looked closely at our data to ensure the payment rate adequately covers the costs reported by [home health agencies], without creating unnecessary hardship to providers and maintaining access to quality services for all beneficiaries,” CMS wrote in its 2024 final rule. “Maintaining access is one of CMS’s priorities when making policy decisions. We do not intend to obstruct the provision of home health services to any beneficiary who qualifies for this benefit.”

As home health stakeholders lobby Congress to counter Medicare cuts, they still question this view.

“It was a little perplexing to read in the final rule that CMS had a bit of a dismissive tone when it comes to referral rejection rates,” Bud Langham, the executive vice president of clinical excellence and strategy at Enhabit Home Health and Hospice, told Home Health Care News. “I think, as a group, we were disappointed to see that they were so dismissive of the data that was brought forth.”

The Dallas-based Enhabit is one of the largest independent providers of home health and hospice care in the country. Its footprint includes over 250 home health locations and over 100 hospice locations across 34 states.

Timely access to care

Over the past few years, CMS has made it clear that moving to value is one of the agency’s main missions. Part of that mission is for providers to make sure they offer timely access to care for patients.

Home health agencies have made it clear to CMS that record high referral rejection rates are a major problem for the industry. Patients being discharged from the hospital are being rejected by agencies that would otherwise care for patients, but either can’t afford to or don’t have the staff to do so.

When agencies brought this data to CMS, they were largely met with a shrug.

“When you bring data to CMS, normally they ask a lot of questions,” Langham said. “Certainly their responses in the final rule seemed dismissive rather than curious. Rarely do you get the why when you’re doing observational research. You just see something and you say, ‘Oh my goodness, look at this trend. Let’s try to understand it.’ I was expecting CMS to lean in and ask more questions, and we just didn’t see that.”

Instead, providers are working on the assumption that CMS believes patients who need care will get care eventually. But therein lies one of the issues: when patients get care – and how quickly they get care – is now tied to reimbursement.

That contrast is coupled with the fact that the overall number of traditional Medicare beneficiaries is shrinking.

The number of traditional Medicare users has fallen from 3.1 million to 2.8 million users since 2021. Expenditures have fallen by $800 million from 2021 to 2022.

“Medicare home health utilization is shrinking, and CMS knows this,” Langham said. “When referral rejection rates are higher than ever, and you combine that with the shrinking Medicare program, it should make you curious to just make sure that the beneficiaries are getting what they need.”

The Patient-Driven Groupings Model (PDGM) divides home health episodes into payment periods, and timely initiation of care is critical to ensure that the episode is properly categorized. Timely access also contributes to the efficiency of care delivery. It can help prevent complications or deterioration in the patient’s condition, potentially reducing the overall cost of care.

That also factors into payment under the now nationwide Home Health Value-Based Purchasing (HHVBP) Model.

It should be common sense that no one should ever wait for health care, but it’s especially important in home health care, Langham explained.

“In our industry, there is a unique pressure for timeliness, because about half of the patients that come to the home health industry come to us from an inpatient setting,” he said. “When we get a referral from a patient, and once they leave the health system’s doors and start the journey home, there is so much that they have to do. Pick up their medications, fill a prescription, make sure there’s food in the fridge, that their thermostat is at the right temperature. All of these things have to be in line, and so the quicker we can get into their home and meet them, the quicker we can do that.”

Rejection rates increasing

Timely access to care and high referral rejection rates aren’t just a home health problem; they’re care continuum problems.

“Any delays in getting patients to the next level of care results in prolonged length of stay in the hospital,” Lissy Hu, president of connected networks at WellSky, told HHCN. “Timely access to care is important from a patient level, it’s important from a health system level, it’s important for the total cost of care, and it’s important in ensuring that we’re delivering high value care and high-quality care in the lowest-cost setting.”

According to WellSky’s data, patients discharged to home health in 2022 saw an 11% increase in their average length of stay at the hospital. Some of that may be tied to hospitals and home health agencies taking care of sicker and more complicated patients, but the correlation between discharges and rejection rates is undeniable, Hu said.

Another data point Hu pointed out that suggests timely access to care is part of the issue is health systems seeing double the number of referrals per patient through a skilled nursing facility (SNF) or home health agency.

For example, when a hospital discharges a patient to a home health agency, it is sending out an average of four referrals instead of two.

“If it were getting easier to secure home health services, then you wouldn’t expect that the case managers would be sending more referrals for patients,” Hu said. “You would expect that to be stable or declining. Instead, you’re seeing a 100% increase.”