How Does a Home Health Care Agency Get Paid?
Healthcare business resources for your growing business.
How does home health agency get paid?
Starting a home health care agency raises a lot of questions—and one of the most important is: How does a home health agency get paid? Whether you plan to offer skilled services under Medicare or Medicaid, or non-medical personal care and companion services through private pay, your agency’s long-term success depends on a strategic understanding of revenue sources, reimbursement processes, and proper planning.
At Certified Homecare Consulting, we help you build a profitable business from the ground up. This page explains the main payment channels, planning essentials, and how your agency can get paid—fast, legally, and consistently.
Business Planning for a Home Health Care Agency
Before launching your agency, a strong business plan is essential. It determines your eligibility for reimbursements, guides your payer enrollment strategy, and serves as the roadmap for building a profitable home health care business.
Key Questions to Address:
What services will your agency provide (skilled nursing, therapy, personal care, companionship)?
Who is your target demographic, and is there demand in your service area?
What payers will you accept: Private Pay? Medicaid? Medicare? Private Insurance?
What are local competitors charging, and how will you position your pricing?
Who will run the agency—do you meet qualifications or need to hire an RN/Administrator?
What are your state’s licensing requirements or moratoriums?
What capital will you need to cover expenses before reimbursements start?
Proper planning saves time and money, reduces denial risk, and helps ensure your agency gets paid promptly and profitably.
What Payment options can a new home health care agency apply for?
1. Private Pay (Out-of-Pocket)
Private pay clients pay directly for services, often at rates between $25–$135/hour, depending on your location and service level. While not everyone can afford private pay, this model offers the highest margins and quickest payments.
2. Medicare (Federal Reimbursement)
Medicare pays for skilled home health services for eligible patients, but only after your agency is fully accredited and approved by CMS. The process includes:
Capitalization requirements (ranging from $35,000–$150,000+ depending on your MAC region)
Accreditation from CHAP, ACHC, or The Joint Commission (starting at $9,800+)
Application to one of three Medicare Administrative Contractors (MACs): NGS, CGS, or Palmetto
CMS Certification and assignment of a Provider Transaction Number (PTAN) / CMS Certification Number (CCN)
Once approved, you can begin billing Medicare and other insurers that work with CMS.
Timeline: Medicare enrollment and approval can take 11–18 months, so plan for operating costs in advance.
3. Medicaid (State & Federal Reimbursement)
Medicaid offers long-term care payment opportunities, but every state is different:
Some states have open enrollment, while others enforce moratoriums or bidding processes
Many require Medicare certification first
Reimbursement rates vary widely and may be influenced by Managed Care Organizations (MCOs)
Despite challenges, Medicaid opens doors to serving a large, underserved population. It’s a smart long-term play for agencies that want to scale.
4. Private Insurance (Third-Party Payors)
Agencies can also work with private insurance companies like:
Blue Cross Blue Shield
Aetna
United Healthcare
Most private insurers require your agency to be credentialed—sometimes only after you’ve gained Medicare certification. Some allow one-time payments for out-of-network claims, but that’s not the norm.
5. State Grants & Waiver Programs
State-funded programs can reimburse agencies for services delivered to specific populations (e.g., Veterans, the elderly, or disabled adults). These vary greatly by state and may require special applications, audits, or partnerships.
Billing, Claims Management & Profitability
Agencies only get paid if billing is done correctly. Mistakes can delay or deny payment and reduce profits.
We recommend working with a home health billing specialist or third-party billing company. These professionals usually charge just 2–5% of collected revenue and ensure that:
Claims are filed correctly and on time
All eligible services and supplies are billed
Follow-up is performed for denied or underpaid claims
Pro Tip: Never leave money on the table. Maximizing revenue starts with smart billing.
How does a Home Health Agency get paid through Medicare?
How does a home health agency get paid through Medicare? Start by determining if you have the financial stability in order to get through the process. Licensed home health agency’s don’t get paid by insurances immediately once licensed it can take 11 – 18 months to get all the enrollments needed to bill insurance. Application to the corresponding Medicare Administrative Contractor (MAC) is important.
There are only 3 in the United States:
The application process will require that the agency meets capitalization requirements which can be anywhere from $35,000 to $150, 000 depending on where in the country the home health agency applies. Capitalization requirements are set to determine the ability of the home health agency to operate for at least 1 year. Reimbursement is the mode of payment which also means the home health agency will have to pay out 100% to service the client with payroll before getting paid/reimbursed.
Medicare enrollees also have to be accredited typically through a third-party accreditation organization of which 3 are nationally accepted.
- Joint Commission
- Community Health Accreditation Partner (CHAP)
- Accreditation Commission for Health Care (ACHC)
Accreditation organizations also cost money to go through their processes which can range from $9,800 or more.
State Accreditation is possible in some states but the wait times will vary and can take upwards of 2 to 3 years in some cases.
Home Health Agencies get paid only after they are accredited and accepted by the Center for Medicaid and Medicare Services and receive a provider transaction number (PTAN) also known as a CMS Certification Number (CCN). Once this happens, the provider may start billing CMS and other supplementary insurances working with CMS to obtain reimbursement.
How does a Home Health Agency get paid through Medicaid?
How does a home health agency get paid through Medicaid ? This Question comes up quite a bit and it’s all about enrollment availability. State agencies have their own requirements and an application for services must be submitted with fees if applicable. States requirements will vary from state to state but the same thing is usually a constant they want to see that an agency is Medicare certified in most instances. Managed Care Organizations sometimes also are involved and pre set rates, in some cases the reimbursements rates are low and can be harder to make a profit but in others it is fairly based. Contracting with the state Medicaid system is never a bad idea as you can services more patients this way and open up communication with the surrounding community.
Find out more by contacting us so we can go over what your options are for your state!
Profitability of a Home Health Care Agency
At the heart of every home health care agency is a dual mission: to deliver compassionate, quality care—and to build a profitable business that sustains and grows over time. Profitability is not just possible in this industry; when done right, it can be substantial.
The Basics of Home Health Care Profitability
The formula is simple:
Revenue – Expenses = Profit
Let’s break that down in real-world terms.
The average reimbursement rate for non-medical home care services is around $24 per hour. Operating costs—including caregiver wages, payroll taxes, and overhead—typically range from $16 to $17 per hour. That leaves a gross margin of approximately $7 to $8 per hour, or about a 30-35% profit margin.
Of course, service rates and expenses vary by market, payer source, and service level. But even conservative estimates point to healthy profitability—especially when the agency is well-managed, properly staffed, and leverages efficient systems.
Profit Per Client (Weekly Example Based on 33% Profit Margin)
| Billable Hours | Revenue @ $24/hr | Profit @ 33% Margin |
|---|---|---|
| 40 hours | $960 | $316.80 |
| 80 hours | $1,920 | $633.60 |
| 120 hours | $2,880 | $950.40 |
| 160 hours | $3,840 | $1,267.20 |
| 200 hours | $4,800 | $1,584.00 |
Client Volume = Predictable Growth
Your profitability scales with your billable hours and census (number of active clients). The number of hours a client requires will vary depending on the level of care:
Companion Care: ~9–12 hours per week
Personal Care (ADLs + IADLs): ~15–20 hours per week
Comprehensive Care Plans: ~30–44 hours per week
For simplicity, let’s assume an average of 26 billable hours per client per week.
Weekly Profit Based on Active Client Census
| Clients | Total Hours | Weekly Revenue | Profit @ 33% Margin |
|---|---|---|---|
| 50 | 1,300 hrs | $31,200 | $10,296 |
| 100 | 2,600 hrs | $62,400 | $20,592 |
| 150 | 3,900 hrs | $93,600 | $30,888 |
| 200 | 5,200 hrs | $124,800 | $41,184 |
Final Thoughts
Home health care agencies have strong profit potential—but the key lies in structure, strategy, and scalability. With proper intake systems, efficient scheduling, and a sound hiring strategy, even a small agency can turn a healthy profit while making a meaningful difference in people’s lives.
At Certified Homecare Consulting, we specialize in helping entrepreneurs launch and scale profitable home health care businesses. From licensing to lifetime consulting, we position our clients for long-term success.
Consultation for a Home Health Care Agency
Hiring professional helps can make a world of difference and take out the worry of prolonging the processes which will cost more money than hiring professionals. Certified’s home health care consultants know the process, have working relationships with state officials, and will greatly reduce the amount of time for licensing and certification. Building professional marketing tools, proper implementation of business planning, and setting the home health care agency up for success is what we do. Call us today to find out more about your state.
