Home Health Review Choice Demonstration Expands to California: Selection Period, Review Options, and Compliance Steps

The Centers for Medicare & Medicaid Services (CMS) is expanding the Review Choice Demonstration for Home Health Services (RCD) to California. According to CMS's RCD web page, the demonstration will apply to billing periods beginning on or after January 18, 2027, and will include all California home health agencies (HHAs) that bill Medicare Administrative Contractor (MAC) Jurisdiction 6, served by Wellpoint Federal. HHAs must choose a review option during a selection period that runs from November 16, 2026, through December 16, 2026. Agencies that do not choose will be placed in postpayment review by default.

CMS has also stated that implementation depends on approval of revisions to the demonstration's Paperwork Reduction Act information collection, CMS-10599 (OMB control number 0938-1311). CMS published a notice requesting emergency clearance of that revision, scheduled to appear in the Federal Register on November 2, 2026. Providers should watch for updates in case dates change.

For California HHAs, RCD is a major change. Under the demonstration, every home health billing period is reviewed, either before the final claim is submitted or after it is paid, until the agency shows a high level of compliance. This article explains what RCD is, why CMS is expanding it to California, how the selection period works, the review choices, the compliance threshold, and the steps HHAs should take now. It is educational and does not replace legal or professional advice.

What Is the Review Choice Demonstration?

RCD is a Medicare demonstration that requires HHAs in participating states to show compliance with Medicare home health requirements through one of several review options. CMS describes it as offering flexibility and choice for HHAs, along with risk-based changes that reduce review burden for agencies that demonstrate compliance.

RCD began in Illinois in 2019 and later expanded to Ohio, Texas, North Carolina, Florida, and Oklahoma, all served by Palmetto GBA in Jurisdiction M. Effective June 1, 2024, CMS extended the demonstration for an additional five years. California is the first expansion into Jurisdiction 6.

The demonstration grew out of CMS's earlier Pre-Claim Review Demonstration for Home Health Services, which CMS paused in 2017 and revised to add more choices for providers.

Why California?

CMS has explained in its information collection materials that the demonstration is intended to help develop improved procedures for identifying, investigating, and prosecuting potential Medicare fraud and to make sure home health payments are appropriate. In its emergency clearance request, CMS stated that delaying the California expansion would allow continued harm to the public from fraud in the Medicare home health benefit in the state. OIG and law enforcement have repeatedly identified home health in parts of California as an area of concern.

For legitimate agencies, the expansion means added administrative work. It also gives compliant agencies a way to demonstrate compliance and earn reduced review over time.

Key Dates

According to CMS:

• Selection period start date: November 16, 2026.

• Selection period end date: December 16, 2026.

• Demonstration start date: billing periods beginning on or after January 18, 2027.

These dates depend on approval of the information collection revision. Check CMS's RCD page and Wellpoint Federal's website for updates.

Who Is Included?

CMS states that the demonstration will include all California HHAs that bill MAC Jurisdiction 6 (Wellpoint Federal). The RCD Operational Guide lists certain exclusions. Based on the guide:

• Requests for Anticipated Payment and Notices of Admission are not subject to review under the demonstration and are submitted as usual.

• Certain claim types are excluded, such as claims for Veterans Affairs and Indian Health Service, Part A to Part B rebilling, demand bills, and no-pay bills.

• HHAs under review by a Unified Program Integrity Contractor (UPIC) are excluded from the demonstration while that review continues.

• The demonstration applies only to Medicare Fee-for-Service beneficiaries, not Medicare Advantage enrollees.

Agencies should confirm their status with Wellpoint Federal and review the current Operational Guide.

The Initial Review Choices

California HHAs may choose from two initial review options.

Choice 1: Pre-Claim Review

Under pre-claim review, the HHA submits a request with supporting documentation to the MAC before submitting the final claim for a 30-day billing period. The MAC reviews the documentation and issues a decision.

• If the request is provisionally affirmed, the claim is expected to be paid when submitted correctly, unless there are technical errors or other problems not known at the time of review.

• If the request is non-affirmed, the HHA may correct the problem and resubmit. The Operational Guide does not state a limit on resubmissions.

• The guide says the MAC will make decisions within 10 business days, excluding federal holidays, for both initial requests and resubmissions.

• Each decision includes a Unique Tracking Number (UTN), which must be placed on the claim whether the decision was affirmed or non-affirmed.

• If a claim is submitted without a pre-claim review decision, it is stopped for prepayment review. If it is found payable, the guide states it is subject to a 25 percent payment reduction that cannot be appealed or passed to the beneficiary.

Pre-claim review gives HHAs feedback before billing and avoids postpayment overpayments for affirmed claims. It requires a reliable intake and submission process.

Choice 2: Postpayment Review

Under postpayment review, the HHA submits claims as usual and the MAC pays them. The MAC then sends an ADR for each claim.

• The HHA has 45 days to submit documentation.

• The MAC has 60 days to review it and decide.

• If the claim is denied, the overpayment is recovered through the standard process, and the HHA keeps its normal appeal rights.

• If the HHA does not respond, the MAC issues a notice of overpayment and begins recovery.

Postpayment review keeps cash flow closer to normal at first, but it creates a constant stream of ADRs and the risk of overpayments and recoupment.

The Default

CMS states that California HHAs that do not make an initial selection will be placed in Choice 2, Postpayment Review.

The 90 Percent Threshold and Later Choices

Six-Month Review Cycles

Performance is measured in six-month cycles. According to the Operational Guide, an HHA that reaches a 90 percent or greater full provisional affirmation rate (for pre-claim review) or claim approval rate (for postpayment review), based on at least 10 pre-claim requests or claims in the cycle, becomes eligible for additional choices. Only fully affirmed decisions count toward the pre-claim review affirmation rate.

Subsequent Choices

Agencies that meet the threshold may choose from:

• Choice 1: Pre-Claim Review.

• Choice 3: Selective Postpayment Review, in which the MAC reviews a random sample of claims every six months, based on the prior six months' claim volume.

• Choice 4: Spot Check Review, in which the MAC randomly selects 5 percent of claims for prepayment review. The HHA must maintain a 90 percent claim approval rate to remain in this choice.

According to the guide, agencies that qualify but do not make a selection are placed in Choice 3 and remain there for the rest of the demonstration.

Falling Below the Threshold

Agencies that fall below 90 percent, or that have fewer than 10 requests or claims in a cycle, must choose again from the two initial options.

A Note on the Former Payment-Reduction Option

Earlier versions of RCD included an option for minimal review with a 25 percent payment reduction. CMS removed that option from initial selections in the 2024 extension, and the current Operational Guide renumbers the remaining choices. The 25 percent reduction still applies to claims submitted without a required pre-claim review decision.

How to Make a Selection

CMS directs California HHAs to Wellpoint Federal's website for choice selection instructions. Agencies should:

• Confirm they have access to Wellpoint Federal's provider portal.

• Identify who in the organization is authorized to make the selection.

• Review the selection instructions carefully.

• Make the selection within the November 16 to December 16, 2026 window.

• Keep a copy of the confirmation.

Choosing Between Pre-Claim Review and Postpayment Review

Factors Favoring Pre-Claim Review

• The agency wants feedback before billing.

• The agency wants to avoid postpayment overpayments, recoupment, and interest.

• The agency has, or can build, a reliable process for assembling documentation soon after admission.

• The agency has strong relationships with certifying physicians and practitioners and can obtain signed documentation quickly.

• The agency wants to reach the 90 percent threshold with fewer financial surprises.

Factors Favoring Postpayment Review

• The agency is concerned about delays in submitting final claims while awaiting pre-claim decisions.

• The agency is confident in its documentation and prefers to respond to ADRs after payment.

• The agency has cash reserves and a strong ADR process.

Risks to Weigh

• Pre-claim review: delays if documentation is incomplete at the time of request, and the 25 percent reduction for claims submitted without a decision.

• Postpayment review: ADRs for every claim, the risk of denials and recoupment, and potential interest on overpayments.

Questions to Ask

• How quickly can we obtain signed plans of care and face-to-face documentation?

• What is our recent denial and ADR history?

• What would our cash flow look like under each option?

• Do we have staff to manage either process?

• What do our internal audits show about our documentation?

There is no single right answer. Many agencies in existing RCD states have chosen pre-claim review because it provides feedback before billing, but each agency should decide based on its own operations.

What Reviewers Look For

RCD reviews focus on the Medicare home health eligibility and documentation requirements. Based on the Operational Guide and Medicare rules, reviewers look for:

• Homebound status, meaning the patient meets both criteria in the Medicare definition.

• The patient is under the care of a physician or allowed practitioner.

• Services are furnished under a plan of care that is established and periodically reviewed by a physician or allowed practitioner.

• The patient needs skilled services, such as intermittent skilled nursing, physical therapy, speech-language pathology, or continuing occupational therapy.

• A face-to-face encounter occurred no more than 90 days before or within 30 days after the start of care, was related to the primary reason for home health, and was performed by an allowed provider type, with the date documented by the certifying practitioner.

• Certification and recertification requirements are met.

• Signatures and dates are valid.

Medicare's home health requirements appear in Section 1814(a) and Section 1835(a) of the Social Security Act, 42 CFR 409 Subpart E, 42 CFR 424.22, and Chapter 7 of the Medicare Benefit Policy Manual.

Compliance Steps for California HHAs

Before December 16, 2026

• Review the CMS RCD page, Operational Guide, and FAQs.

• Monitor Wellpoint Federal's website for California-specific instructions and education.

• Set up access to Wellpoint Federal's provider portal.

• Conduct an internal audit of recent episodes to measure documentation compliance.

• Decide on a review choice and make the selection.

Before January 18, 2027

• Build workflows for the chosen option.

• Train intake, clinical, and billing staff.

• Communicate with referring and certifying physicians about documentation requirements. CMS has published an RCD letter for physicians and practitioners that agencies may share.

• Update EHR templates and checklists.

• Plan for cash flow.

• Confirm billing systems can capture UTNs.

After the Demonstration Begins

• Track affirmation or approval rates by cycle.

• Analyze non-affirmations and denials for root causes.

• Provide ongoing education.

• Appeal incorrect denials.

• Monitor progress toward the 90 percent threshold.

How RCD Fits With Other Medicare Reviews

RCD does not replace every other form of oversight. Agencies should understand how it interacts with other reviews.

• UPIC reviews. According to the Operational Guide, HHAs under UPIC review are excluded from the demonstration while that review continues. A UPIC review generally signals a higher-risk situation, and agencies in that position should involve experienced counsel.

• Other contractors. RCD review is performed by the MAC. Other contractors, such as the Comprehensive Error Rate Testing program, continue their own activities. CMS's materials note that agencies receiving the 25 percent reduction under the former minimal-review option could be subject to Recovery Audit Contractor review, which shows that other review programs remain in place.

• Claim edits and technical denials. A provisional affirmation under pre-claim review does not guarantee payment. Claims may still be denied for technical billing errors or information that was not available at the time of review.

• 60-day overpayment rule. If RCD results reveal problems that may also affect claims paid before the demonstration, agencies should evaluate their obligations under 42 CFR 401.305 to report and return identified overpayments.

Appeal Rights Under RCD

Understanding appeal rights helps agencies plan.

• Pre-claim review non-affirmations. The Operational Guide explains that there is no separate appeal process for a non-affirmed pre-claim decision. The agency may correct the problem and resubmit. If the agency submits the claim after a non-affirmation, the resulting claim determination is an initial determination that can be appealed through the standard Medicare appeals process.

• Postpayment denials. Claims denied under postpayment review follow the standard overpayment and appeal process. Filing a redetermination within 30 days of the demand letter, and a reconsideration within 60 days of the redetermination decision, limits recoupment during the first two levels of appeal under 42 CFR 405.379.

• The 25 percent reduction. The Operational Guide states that the 25 percent reduction for claims submitted without a required pre-claim decision cannot be appealed.

Agencies should track appeal outcomes alongside affirmation rates. Overturned denials may matter for revenue even if they do not change the agency's status for the cycle.

Impact on Beneficiaries

RCD is designed so that beneficiaries can continue to receive medically necessary home health services. The Operational Guide states that the 25 percent reduction for claims submitted without a pre-claim decision cannot be passed on to the beneficiary. Agencies should continue to follow Medicare's beneficiary notice requirements, such as the Advance Beneficiary Notice of Noncoverage (Form CMS-R-131) when appropriate, and should avoid delaying necessary care while waiting for administrative steps. Pre-claim review may be requested after care begins and before the final claim, so services can start while documentation is assembled.

A Decision Framework for Leadership

Agency leaders may find it helpful to frame the selection decision around five questions:

• Documentation readiness. What percentage of recent billing periods would likely be fully affirmed? An internal audit provides the best estimate.

• Operational capacity. Do we have the staff and systems to assemble and submit packets for every billing period, or to respond to an ADR for every claim?

• Financial resilience. Can we absorb delays in final claims under pre-claim review, or recoupment of denied claims under postpayment review?

• Referral source readiness. How quickly do our certifying practitioners provide signed documentation and supporting records?

• Risk tolerance. Do we prefer to resolve problems before billing, or after payment?

Document the decision, the data behind it, and who approved it. That record helps the agency revisit the decision at the end of each cycle.

Key Terms

• Billing period: the 30-day period for which a home health claim is submitted.

• Provisional affirmation: a pre-claim review decision that the documentation appears to meet Medicare requirements.

• Non-affirmation: a decision that the documentation does not meet requirements.

• UTN: the Unique Tracking Number assigned to each pre-claim review decision and placed on the claim.

• Affirmation rate: the share of pre-claim review requests that are fully affirmed in a cycle.

• Claim approval rate: the share of claims approved on review in a cycle.

• Cycle: the six-month period used to measure performance.

Common Mistakes to Avoid

• Missing the selection window and defaulting to postpayment review without considering the options.

• Assuming documentation is compliant without auditing it.

• Submitting final claims without a pre-claim review decision under Choice 1.

• Failing to put the UTN on claims.

• Missing ADR deadlines under Choice 2.

• Not involving certifying physicians early.

• Not planning for cash flow.

Frequently Asked Questions

When does the California RCD start?

CMS states that it applies to billing periods beginning on or after January 18, 2027, subject to approval of the information collection revision.

When must California HHAs make a selection?

Between November 16 and December 16, 2026.

What happens if an HHA does not choose?

It is placed in Choice 2, Postpayment Review.

What is the compliance threshold?

A 90 percent or greater affirmation or claim approval rate, based on at least 10 requests or claims in a six-month cycle.

Can non-affirmed pre-claim review decisions be appealed?

There is no separate appeal for a non-affirmation. The HHA may resubmit, or submit the claim, which results in an initial determination that can be appealed through the standard process.

Conclusion

The expansion of the Home Health Review Choice Demonstration to California will require every California HHA billing Jurisdiction 6 to prove compliance on every billing period until it reaches the 90 percent threshold. The selection period from November 16 to December 16, 2026, gives agencies a short window to decide between pre-claim review and postpayment review. Agencies that audit their documentation now, choose the option that fits their operations, build reliable workflows, and engage certifying physicians early will be in the best position to reach the threshold and earn reduced review.

How HealthBridge Can Help

HealthBridge is a healthcare management consulting firm that helps home health agencies prepare for the Review Choice Demonstration by auditing documentation, evaluating review options, building pre-claim review and ADR workflows, training staff, and tracking affirmation rates. If your agency is preparing for RCD in California, please get in touch with us. We will be happy to help you with this topic.

References

• Centers for Medicare & Medicaid Services. Review Choice Demonstration for Home Health Services. https://www.cms.gov/research-statistics-data-and-systems/monitoring-programs/medicare-ffs-compliance-programs/review-choice-demonstration/review-choice-demonstration-for-home-health-services

• Centers for Medicare & Medicaid Services. Review Choice Demonstration for Home Health Services Operational Guide. https://www.cms.gov/research-statistics-data-and-systems/monitoring-programs/medicare-ffs-compliance-programs/review-choice-demonstration/downloads/rcd-operational-guide.pdf

• Centers for Medicare & Medicaid Services. Review Choice Demonstration for Home Health Services Frequently Asked Questions. https://www.cms.gov/research-statistics-data-and-systems/monitoring-programs/medicare-ffs-compliance-programs/review-choice-demonstration/downloads/rcd-faqs.pdf

• Federal Register Public Inspection. Agency Information Collection Activities: Review Choice Demonstration for Home Health Services, CMS-10599 (Document 2026-22297). https://public-inspection.federalregister.gov/2026-22297.pdf

• Centers for Medicare & Medicaid Services. Medicare Benefit Policy Manual, Chapter 7, Home Health Services. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c07.pdf

• Electronic Code of Federal Regulations. 42 CFR Part 409, Subpart E, Home Health Services Under Hospital Insurance. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-409/subpart-E

• Electronic Code of Federal Regulations. 42 CFR 424.22, Requirements for Home Health Services. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-B/part-424/subpart-B/section-424.22

• U.S. Social Security Administration. Social Security Act, Section 1814, Conditions of and Limitations on Payment for Services. https://www.ssa.gov/OP_Home/ssact/title18/1814.htm

• U.S. Social Security Administration. Social Security Act, Section 1835, Procedure for Payment of Claims of Providers of Services. https://www.ssa.gov/OP_Home/ssact/title18/1835.htm