To start a home health agency in California, you need to form a business entity, hire a qualified Administrator and a registered-nurse Director of Patient Care Services, meet financial and insurance requirements, obtain a state license from the California Department of Public Health (CDPH), and then apply for Medicare certification and Medi-Cal enrollment before you can bill for care. Plan on several months and a meaningful capital commitment before your first patient visit.
Hire Your Administrator and Director of Patient Care Services First
Finding the right leadership is the single biggest bottleneck for new agencies, so start recruiting before anything else. California requires every home health agency to have two named leaders in place: an Administrator and a Director of Patient Care Services (DPCS). You cannot submit a credible license application without both.
Under federal Medicare standards, anyone hired as a home health agency administrator on or after January 13, 2018 must hold at least an undergraduate degree (or be a licensed physician or registered nurse) and have at least one year of supervisory or administrative experience in home health care or a related health care program.1eCFR. 42 CFR 484.115 – Condition of Participation: Personnel Qualifications The administrator runs day-to-day operations and must ensure a qualified clinical manager is available during all operating hours.2eCFR. 42 CFR 484.105 – Condition of Participation: Organization and Administration of Services
The DPCS oversees all clinical services and must be a registered nurse. California offers two qualification tracks: an RN with a baccalaureate or higher degree in nursing or a health-related field plus three years of qualifying experience in the last five years, or an RN with four years of qualifying experience in the last five years. Either track requires at least one of those years in a supervisory or administrative role at a home health agency, primary care clinic, or health facility.3Legal Information Institute. California Code of Regulations Title 22 Section 74703 – Director of Patient Care Services
Budget for Bonds, Reserves, Insurance, and Fees
Several financial obligations hit before your first billable visit, and underfunded startups do not survive this stage.
Surety Bonds
Agencies that participate in Medicare and Medicaid need a separate surety bond for each program. For Medicaid (Medi-Cal in California), the bond must be the greater of $50,000 or 15 percent of the agency’s annual Medicaid payments; a brand-new agency with no payment history starts at the $50,000 floor.4Medicaid.gov. State Medicaid Director Letter – Surety Bond and Capitalization Requirements for Home Health Agencies Medicare carries its own separate bond requirement.5eCFR. 42 CFR Part 489 Subpart F – Surety Bond Requirements for HHAs Annual premiums typically run a few thousand dollars depending on the bond amount and your credit profile.
Initial Reserve Operating Funds
Medicare requires new home health agencies to prove they have enough cash on hand to operate for three months after receiving billing privileges, excluding any projected Medicare payments. CMS calculates the figure using the average cost per visit of comparable agencies in their first year, multiplied by your projected visits for the first three months. You must document these funds when you submit the Medicare application and maintain them through the initial enrollment period.6eCFR. 42 CFR 489.28 – Special Capitalization Requirements for HHAs
Insurance
Professional liability coverage of at least $1,000,000 per occurrence and $3,000,000 in aggregate is the industry standard in California. You will also need general liability coverage and workers’ compensation for all employees, which is mandatory under California law.
License and Enrollment Fees
The CDPH statewide license fee for a home health agency is $2,946 for the 2025–26 fiscal year, and it is non-refundable.7California Department of Public Health. Health Care Facility Licensing Fees The Medicare enrollment application fee is $750 for calendar year 2026, also non-refundable.8Centers for Medicare and Medicaid Services. Medicare Provider Enrollment
Set Up the Business and Get an NPI
Register your agency as a corporation, LLC, or other entity with the California Secretary of State; most agencies choose a corporation or LLC.9California Secretary of State. Starting a Business – Entity Types Get a federal Employer Identification Number from the IRS (free, available online), and lease a physical office in a commercially zoned location. CDPH will inspect the office during the licensing survey, and a home address will not satisfy operational standards.
Apply for a Type 2 (organizational) National Provider Identifier through the National Plan and Provider Enumeration System.10CMS NPPES. Apply for an NPI You will select a healthcare taxonomy code identifying the organization as a home health agency; the National Uniform Claim Committee publishes these codes and updates them twice a year.11Centers for Medicare and Medicaid Services. Find Your Taxonomy Code Get the NPI early, because you need it for the Medicare application.
Submit a Complete CDPH Application the First Time
The application goes to the CDPH Licensing and Certification Program with the license fee. Your package needs to show the agency is ready to operate: a defined scope of services (skilled nursing, physical, occupational, and speech therapy, home health aide services, medical social services, or some combination), a written operational manual covering patient rights, infection control, emergency preparedness, clinical protocols, quality assurance, and discharge planning, and personnel files for the Administrator, DPCS, and other staff documenting licenses, qualifications, and Live Scan background checks.
A major procedural change took effect on July 1, 2025. CDPH no longer treats applications as “incomplete” and holds them open. If your submission is missing anything, the department issues a one-time prescreen letter requesting the items. Miss that deadline and your application is denied and closed, forcing you to start over with a new application and a new fee. The same rule applies during full review: if CDPH requests additional information and you miss the deadline, the application is denied.12California Department of Public Health. AFL 25-19 Submit a carefully reviewed, complete package from the start.
Pass the State Licensing Survey
Once CDPH accepts the application, surveyors visit your office. They verify that the physical space meets operational standards, your policies and procedures are practical rather than boilerplate, personnel files contain the required credentials and background checks, and the agency is genuinely ready to serve patients safely. Surveyors interview staff, walk through how clinical processes would actually work, and look for gaps between what your policies promise and what you can deliver.13California Legislative Information. California Health and Safety Code 1725-1727.5 – Home Health Agencies If they identify deficiencies, you will correct them and may undergo a follow-up visit before CDPH issues the license.
Apply for Medicare Certification
With the state license in hand, apply for Medicare certification. Nearly every home health agency does this, because the vast majority of patients are covered by Medicare or Medi-Cal.
Medicare enrollment for institutional providers uses Form CMS-855A, submitted electronically through the Provider Enrollment, Chain, and Ownership System (PECOS) or on paper to the designated Medicare Administrative Contractor.14Centers for Medicare and Medicaid Services. Medicare Enrollment Application – Institutional Providers The application collects detailed ownership, management, and organizational information and requires your state license and NPI.15Centers for Medicare and Medicaid Services. Medicare Enrollment for Institutional Providers
Your agency must meet the Medicare Conditions of Participation (CoPs), the minimum health and safety standards for the program.16Centers for Medicare and Medicaid Services. Home Health Agencies – Conditions of Participation The CoPs cover patient rights, assessments, care planning, quality assessment and performance improvement, infection control, emergency preparedness, clinical records, and personnel qualifications.17eCFR. 42 CFR Part 484 – Home Health Services Compliance is verified through a federal survey, typically conducted by CDPH on behalf of CMS. After the contractor processes your application and the survey confirms compliance, CMS issues a CMS Certification Number (CCN) and you can begin billing Medicare.
You can also pursue accreditation from a CMS-approved accrediting organization in place of waiting for a state-led federal survey. Three organizations hold deemed status for home health: the Accreditation Commission for Health Care (ACHC), the Community Health Accreditation Partner (CHAP), and The Joint Commission.18Centers for Medicare and Medicaid Services. Accrediting Organization Contacts for Prospective Clients A deemed-status survey produces both accreditation and a recommendation for CMS approval. Agencies often choose this route for more predictable scheduling and consultative support, but accreditation is not free, so weigh the cost against the time savings.
Enroll in Medi-Cal
Medicare certification is a prerequisite for Medi-Cal enrollment. Once CMS has certified your agency, you apply to the California Department of Health Care Services Provider Enrollment Division. This requires the separate Medi-Cal surety bond starting at $50,000, and the state’s application review, credentialing, and approval take additional weeks before you can bill the program.4Medicaid.gov. State Medicaid Director Letter – Surety Bond and Capitalization Requirements for Home Health Agencies
What Compliance Looks Like Once You’re Open
Licensure is the start, not the end. Ongoing obligations, if neglected, can lead to payment reductions, fines, or loss of certification.
OASIS Data
Every Medicare-certified home health agency must collect and submit Outcome and Assessment Information Set (OASIS) data. As of July 1, 2025, OASIS submission is mandatory for patients with any payer source, not just Medicare beneficiaries. Assessments are required at the start of care, at least every 60 days during the care episode, within 48 hours of a hospital return, and at discharge. Patients under 18, maternity patients, and those receiving only personal care or housekeeping are exempt. Agencies that fail to submit required OASIS data face a 2 percentage point reduction in their annual home health payment update.19Centers for Medicare and Medicaid Services. Home Health Quality Reporting Requirements
Electronic Visit Verification
The 21st Century Cures Act requires states to use Electronic Visit Verification for Medicaid home health services involving an in-home visit; the compliance deadline for home health was January 1, 2023.20Medicaid.gov. Electronic Visit Verification You will need an EVV system that electronically verifies visit details for Medi-Cal patients.
Exclusion Screening
Before hiring any employee and on a routine basis after, screen all staff against the Office of Inspector General’s List of Excluded Individuals and Entities. Employing an excluded person exposes the agency to civil monetary penalties.21Office of Inspector General. Exclusions Program This is one of the easiest steps to automate and one of the most expensive to skip.
Clinical Record Retention
Federal rules require clinical records to be retained for at least five years after discharge, unless California law requires longer.22eCFR. 42 CFR 484.110 – Condition of Participation: Clinical Records If the agency closes, you must tell the state where records will be stored. Patients and their representatives can request copies, and you must provide them within four business days.
Quality Assessment and Performance Improvement
The CoPs require an ongoing QAPI program: data on your agency’s performance, identification of shortfalls in outcomes or processes, and measurable improvements.17eCFR. 42 CFR Part 484 – Home Health Services Surveyors at recertification will examine the records and expect to see active work, not a binder on a shelf.