Written and maintained by CASRAI Editorial Board
Last updated
Who this is for: someone planning a home health agency in the United States who needs to know which federal rules shape the setup, and where supply and equipment planning fits in. This is general regulatory information, not legal, financial or medical advice.
Short answer: starting a home health agency means deciding whether you will be a Medicare-certified agency or a non-certified one, getting licensed under your state or local law, and, if you want to enter Medicare, proving you hold enough “initial reserve operating funds” and meeting the federal conditions of participation in 42 CFR part 484. Federal rules say a lot about funds and infection control, but neither 42 CFR 489.28 nor 484.70 lists products, so supply planning has to be built from your own policies and the conditions you must meet.
What you need
A decision: Medicare-certified or not
CMS states that a home health agency (HHA) must be licensed under State or local law, or approved as meeting State or local licensing standards, and must meet federal health and safety requirements to take part in Medicare. The survey is conducted under CMS protocols (CMS home health agencies page, checked 2026-10-30). Licensing rules differ by state, so contact your state health department for the specific process; this page does not describe any single state’s steps.
Initial reserve operating funds (42 CFR 489.28)
If your agency is entering Medicare on or after January 1, 1998, including a new HHA created by a change of ownership that results in a new provider number, 42 CFR 489.28 requires “initial reserve operating funds.” Per the regulation text (eCFR, checked 2026-10-30):
- The funds must be available when you submit the application and throughout enrollment, up to the end of the three-month period after Medicare billing privileges are conveyed.
- The amount must be sufficient for that three-month period, not counting actual or projected Medicare accounts receivable.
- The amount is measured against comparison data: the average cost per visit of three or more similarly situated HHAs in their first year, multiplied by your projected visits for your first three months, with a floor based on the comparison agencies’ average number of visits (paragraphs (b) and (c)).
- Proof, at a minimum, is a copy of the account statement(s) holding the funds plus an attestation from an officer of the bank or other financial institution, where the institution offers one, that the funds are in the account and immediately available (paragraph (d)).
- At least 50 percent of the required amount must be non-borrowed, including funds the owner invested in the business. The rest may come from borrowing or a line of credit from an unrelated lender (paragraph (d)); borrowed funds held in separate accounts need their own proof (paragraph (e)).
- Cash equivalents such as Treasury bills, commercial paper and money market funds can count only if they are readily convertible to a known amount of cash during the three-month period (paragraph (d)).
The federal conditions of participation
Subpart B of 42 CFR part 484 sets the conditions an HHA must meet. The headings below are selected conditions from subpart B, as published in the eCFR (checked 2026-10-30).
| Section | Condition of participation |
|---|---|
| 484.50 | Patient rights |
| 484.55 | Comprehensive assessment of patients |
| 484.58 | Discharge planning |
| 484.60 | Care planning, coordination of services, and quality of care |
| 484.65 | Quality assessment and performance improvement (QAPI) |
| 484.70 | Infection prevention and control |
| 484.75 | Skilled professional services |
| 484.80 | Home health aide services |
Steps
- Choose your path. Decide whether you intend to enter Medicare. That choice decides whether 42 CFR 489.28 and part 484 apply to you.
- Contact your state health department to learn the licensing requirements that apply where you will operate. Requirements vary by state.
- Size and document your reserve funds if entering Medicare: gather the account statements and the bank officer attestation described above, and keep borrowed and non-borrowed funds clearly documented.
- Read each part 484 condition against how you plan to operate, so your policies and written procedures address every condition before survey.
- Draft your infection control program first. Section 484.70 requires the HHA to maintain and document an infection control program aimed at preventing and controlling infections and communicable diseases. It must follow accepted standards of practice, including standard precautions; run as a coordinated agency-wide program for surveillance, identification, prevention, control and investigation that is part of QAPI; and include infection control education for staff, patients and caregivers.
- Build your supply and equipment plan from those documents. The regulations state conditions, not product lists. Take the items your own infection control program, care plans and aide services require, and write them down with the policy each supports. For examples of what other home-care settings stock, see our home health aide supply kit guide and the durable medical equipment list.
Supply procurement and the federal rules
Home health supply procurement is not described in 42 CFR 489.28 or 484.70. Section 484.70 requires an infection control program that follows accepted standards, including standard precautions, so the supplies that program relies on belong in your plan. Beyond that, an agency’s stocking decisions are its own and should be set with its clinical leadership. Comparable checklists for other settings are in the nursing home supply checklist and the group home medical supply checklist; those settings have different rules, so use them only as format examples. If you are weighing ownership of larger items, see the rent vs buy home medical equipment guide.
What can go wrong
- Funds not available early enough. The reserve must exist when you submit the application and stay available through enrollment and the three-month period; money that arrives later does not meet the rule as written.
- Counting Medicare receivables. 489.28 excludes actual or projected Medicare accounts receivable from the reserve.
- Too little non-borrowed money. At least 50 percent must be non-borrowed.
- Illiquid assets. A cash equivalent that cannot readily be converted to a known amount of cash does not qualify.
- Assuming a change of ownership avoids the rule. A change of ownership that results in a new provider number is treated as a new HHA under 489.28(a).
- Infection control that exists only on paper. 484.70 requires the program to be maintained and documented, and to include education for staff, patients and caregivers.
When to get professional help
Consult your state health department for licensing, and a healthcare attorney or qualified healthcare accountant for entity structure, reserve fund calculations and Medicare enrollment. This page summarises regulation text and cannot tell you the amount your agency must hold or whether your state’s rules differ.
FAQ
How do I start a home health agency?
Decide whether you will be Medicare-certified, obtain a license under your state or local law, and, for Medicare, show initial reserve operating funds under 42 CFR 489.28 and meet the part 484 conditions of participation. State licensing steps vary, so start with your state health department.
How is starting a home health agency different from starting a home health care agency?
The two phrases are used interchangeably in searches. What matters legally is whether the agency is licensed in its state and whether it enters Medicare, because the federal funds and conditions-of-participation rules apply to HHAs entering that program.
What supplies does a home health agency need?
Neither 42 CFR 489.28 nor 484.70 lists supplies. Section 484.70 requires an infection control program that follows accepted standards, including standard precautions, so the supplies that program relies on belong in your plan. Beyond that, build the list from your own policies.
What is home health supply procurement?
It is how an agency sources the items its policies and care plans call for. Neither 42 CFR 489.28 nor 484.70 prescribes a procurement method.
What medical supplies do home health agencies use?
That depends on the services an agency provides and the care plans it follows. The regulations cited here do not name products. See the linked supply kit and equipment list guides for general examples from other home-care contexts.
How much money do I need to start?
For Medicare entry, 489.28 sets a formula based on comparison agencies’ data and your projected visits rather than a fixed dollar figure. CMS, working through its contractor, determines the amount, so a healthcare accountant can help you plan.
Sources
- eCFR, 42 CFR 489.28, Special capitalization requirements for HHAs: ecfr.gov/current/title-42/part-489/section-489.28 (checked 2026-10-30).
- eCFR, 42 CFR 484.70, Condition of participation: Infection prevention and control: ecfr.gov/current/title-42/part-484/section-484.70 (checked 2026-10-30).
- eCFR, 42 CFR part 484, subpart B, condition headings: ecfr.gov/current/title-42/part-484 (checked 2026-10-30).
- CMS, Home Health Agencies (certification and compliance): cms.gov home health agencies page (checked 2026-10-30).
