Starting a home health or hospice agency in California takes far longer than new owners expect. Between paperwork, long wait times, and multiple levels of review, the process is intensive. Agencies sometimes spend years and tens of thousands of dollars only to get stuck because:
- A document was missing
- An office lease didn’t line up
- The wrong sequence of steps was followed
*This article was written in consultation with Mariam Treystman.
At The Home Health Consultant, we’ve guided countless agency owners through this process; from setting up the corporation all the way to receiving the final Medicare tie-in notice. We know exactly what California requires, what CDPH looks for, and what accreditors expect.
*This article is not a comprehensive manual. It’s a general overarching look at the major steps involved in starting a California agency.
Each stage comes with its own detailed requirements, but this roadmap will give you the clarity you need to understand how the process fits together.
What Is the First Step to Starting a Home Health or Hospice Agency in California?
The process begins the same as any business: company setup. Before you touch applications or surveys, you need to legally form your business.
- Choose your entity type. Almost all agencies in Southern California form a corporation. Whether you choose S-corp or C-corp will depend on your tax strategy, so consult your accountant.
- Apply for a Tax ID (EIN). When you receive it, you’ll get an official IRS document. *Keep the original safe. You’ll need it for nearly every application step, and replacing it later is extremely difficult.
- Apply for your NPI (National Provider Identifier). Just like your tax ID, this number will appear on nearly every state, federal, and accreditor application you file. You can’t move forward in the process without your NPI.
- Create communication systems. Set up a phone line and email. It doesn’t need to be a custom domain; Gmail or Yahoo work fine for regulatory purposes.
We recommend a cell phone or VoIP, because landlines in California are expensive. Plus these online options give you physical flexibility during long application waiting periods.
- Secure an office lease. Your corporation’s name must be on the lease. After signing, update your corporate records to match the new address. Regulators will cross-check this at every stage.
- Open a business bank account. You’ll need this for later steps like capitalization checks.
Once the foundation is set, the next step is to obtain your identifiers and hire the key staff who will represent your agency.
What Staff Are Required Before Applying?
Every great business is built with the help of the right people. Home health and hospice agencies are no exception. Next, you’ll need to hire the right reportable position in place.
Reportable Staff Position in Home Health (CA):
- Administrator
- Director of Patient Care Services (DPCS) (*You’ll also need a DPCS designee, but that role is not reportable in the application and can be hired closer to the survey process.)
- Administrator designee
Reportable Staff Positions in Hospice (CA):
- Administrator
- DPCS
- Administrator designee
- DPCS designee
- Medical director (*You’ll also need a medical director designee, but that role is not reportable in the application and can be hired closer to the survey process.)
Once your leadership is secured, you can begin preparing your application with CDPH.
What Is the CDPH Application Process for New Agencies?
The California Department of Public Health (CDPH) application collects:
- Corporate information
- Office information (including proof of lease)
- Staff information (resumes & qualifications for reportable positions)
*Important best practice: Wait to apply with your Medicare Administrative Contractor (MAC) until after CDPH approves your application.
If you’re confused about what MACs are and their role in the application process, check out the article below before reading further.
CDPH review can take 8 months to 2 years, and in that time a lot can change. Offices move, staff resign, or qualifications change. If you apply to the MAC before CDPH approves your application, you’ll likely end up re-submitting everything.
Once CDPH approves your application, you’re ready to prepare for your licensure survey and apply to your MAC.
What Is the MAC Application Process for New Agencies?
Your Medicare Administrative Contractor (MAC) handles the federal side of the approval process. The MAC that services agencies in California is NGS.
The MAC application requires three major elements:
- Business information: Corporate structure, office details, and staff information must all match the records you submitted to CDPH.
- Banking setup: You’ll need to provide details so Medicare can send payments directly into your business account.
- Verification checks: The MAC will schedule a site visit to confirm your office exists, is operational, and isn’t being shared with another business.
They will also perform a capitalization review to ensure your agency has enough funds to cover patient care costs before Medicare reimbursements begin. To do this, you’ll need to provide proof of funds in the company bank account.
The capitalization review often surprises new agencies. Medicare wants to be certain you can sustain care during payment gaps, so demonstrating financial stability is just as important as showing compliance.
What Happens During the Licensure Survey for California Agencies?
Licensure surveys in California are not conducted by CDPH. Instead, you must choose one of the three national accreditors:
- The Accreditation Commission for Healthcare (ACHC)
- Community Health Accreditation Partner (CHAP)
- The Joint Commission (TJC)
If you’re wondering which accreditor will be the best fit for your agency, the article below will help you decide.
During your licensure survey, surveyors will review:
- Your company set up
- Your office setup
- Written policies and procedures
- HR files for required staff
- A sample admission package and sample chart
Passing the licensure survey is critical because it allows you to see and treat patients. Before this, you cannot admit or care for patients, which you need to pass your Medicare survey.
Once licensed, you’ll need to move quickly to the accreditation survey to gain Medicare billing privileges.
What Is the Accreditation Survey and Why Is It Required?
The accreditation survey is where your agency demonstrates compliance with Medicare Conditions of Participation and accreditor standards.
You must have active patients for this survey.
- In home health, this typically means 10 unduplicated patients served (7 of those patients must be active at the time of the survey).
- In hospice, this means around 5 patients. 3 of these patients must be active at the time of survey, the other 2 must be discharged.
During the accreditation survey, surveyors check how you actually deliver care, not just your setup. They’ll review:
- HR programs
- Office systems
- Admission packages
- Patient charts
- Patient visits
- How you’ve implemented administrative compliance
Pro Tip: If you didn’t like how your accreditor handled the licensure survey, this is the easiest point to switch. Expect about $2,000 extra if you change accreditors, but it’s smoother now than after full accreditation.
Passing accreditation is a huge milestone, but it’s not the end of the road. There’s still one final step before you can bill Medicare.
What Is the Provider Application and Tie-In Notice?
The provider application is like your final exam. You must gather everything, and we mean everything. Before submitting your provider application you’ll need:
- CDPH approval
- Proof your agency has its license
- Proof you passed your accreditation survey
- Your NPI
- Your business/corporate paperwork
- Your survey census
All of this must then be submitted to CDPH.
From there:
- CDPH processes it and sends it to the Center for Medicare and Medicaid Services (CMS).
- CMS processes it and forwards it to your MAC (NGS for California-based agencies).
- The MAC conducts at least one more site visit (to confirm your office is legitimate)
- The MAC conducts another capitalization check (to confirm you have enough funds to treat patients before Medicare pays you).
Once complete, you’ll receive your Tie-In Notice. A Tie-In-Notice is the official notification that your provider number has been issued and connected to the billing system.
At this point, you can submit claims to Medicare and begin billing.
How Can Home Health and Hospice Agencies Be Ready for Every Step?
Opening a home health or hospice agency in California is a long, layered process:
- Company setup
- Staffing
- CDPH application
- MAC application
- Licensure survey
- Accreditation survey
- Provider tie-in.
Each stage has its own risks. This could be losing a staff member during CDPH’s 2-year application processing backlog, or failing capitalization checks. At any stage an unexpected issue can all stall your progress or require you to restart from scratch.
Pro Tip: To keep up with CDPH’s current application processing timelines, follow us on Instagram for monthly updates @thehomehealthconsultant.
Again, we can’t stress this enough, this is a long article but it’s still just a general overarching look at the process for starting an agency. To explain the entire process accurately, we’d need to write a book! (And we might be working on one…)
But for a deeper look into a specific part of the process, read our guide: What To Do After Passing Your Accreditation Survey & Before Receiving Your Provider Number. This is a time that many new agency owners waste, but it can make or break your agency’s starting days.
*Disclaimer: The content provided in this article is not intended to be, nor should it be construed as, legal, financial, or professional advice. No consultant-client relationship is established by engaging with this content. You should seek the advice of a qualified attorney, financial advisor, or other professional regarding any legal or business matters. The consultant assumes no liability for any actions taken based on the information provided.
