How to Start a Hospice Agency in California: A Step-by-Step Guide

Starting a hospice agency in California is both a meaningful mission and a highly regulated process. Hospice care plays a critical role in supporting patients with life-limiting illnesses by focusing on comfort, dignity, and quality of life. Because hospice is reimbursed under Medicare and overseen closely by both state and federal regulators, launching an agency requires significant planning, compliance readiness, and operational structure.

This guide provides a detailed, step-by-step breakdown of how to start a hospice agency in California, with a strong focus on regulations from the California Department of Public Health (CDPH) and Medicare’s Conditions of Participation (CoPs). Whether you are entering the field for the first time or expanding your healthcare portfolio, understanding each stage of the process is essential for long-term success.

Why Start a Hospice Agency in California?

California has a growing need for hospice services driven by:

• An aging population

• Increased awareness of end-of-life care options

• A healthcare shift toward comfort-focused, patient-centered care

• Significant cultural diversity requiring specialized approaches

Despite the opportunity, California is also one of the most heavily regulated states for hospice providers. This ensures quality but also means that agencies must be structured from day one to meet stringent legal, operational, and clinical standards.

Step 1: Understand State and Federal Regulations

Before forming your organization, you must understand that hospice agencies in California must operate under both:

1. California State Licensing Requirements (CDPH)

California hospice licensing is governed by Title 22 and Health & Safety Code requirements. CDPH evaluates:

• Policies & procedures

• Staffing structure

• Physical location

• Administrative operations

• Quality assurance programs

• Safety and infection control systems

CDPH also performs an on-site survey before granting a license. Learn More

2. Federal Medicare Conditions of Participation (CoPs)

If you want to serve Medicare beneficiaries — which nearly all hospices do — you must comply with the CMS CoPs (42 CFR §418). Learn More. Key areas include:

• Patient rights

• Clinical documentation

• Plan of care requirements

• IDG (Interdisciplinary Group) structure

• RN Case Management

• Bereavement program

• QAPI program

• Volunteer requirements (5% rule)

• Hospice Aide competency

• Medical Director oversight

These CoPs define the daily operations of every Medicare-certified hospice in the country.

Step 2: Establish Your Business Structure

Like any healthcare organization, you must legally establish your entity.

Choose a Business Type

• Corporation

• LLC

• Nonprofit

• Partnership

Most hospice owners choose an LLC or corporation for liability protection.

Register Your Business

File your formation documents with:

• California Secretary of State

• IRS (EIN application)

• Franchise Tax Board

You will also need:

• A business bank account

• Appropriate insurance (liability, professional, workers’ comp)

• A written operating agreement or bylaws

Step 3: Secure a Physical Location

California requires that hospice providers have a physical office location that meets CDPH standards, including:

Required Criteria

• A private, commercial office space (not residential)

• HIPAA-compliant document storage

• Dedicated areas for administration, training, and patient coordination

• Phone, fax, and secure internet access

• Emergency preparedness and safety compliance

Surveyors will inspect the site to ensure it is suitable for professional healthcare operations.

Step 4: Develop Your Policies & Procedures

Your policies and procedures must align with:

• CDPH licensing requirements

• Federal Medicare CoPs (42 CFR Part 418)

• OSHA and infection control standards. Learn More

• Emergency preparedness rules
  Learn more.
  

These policies must be:

• Comprehensive

• Agency-specific

• Reflective of actual planned operations

Surveyors heavily scrutinize these documents to ensure they are not generic.

Step 5: Build a Qualified Hospice Team

To open a hospice agency in California, you must hire key staff before your initial survey.

Required Positions

• Administrator (experienced in healthcare operations)

• Alternate Administrator

• Clinical Director / Director of Patient Care Services (DPCS) — must be an RN with hospice experience

• Medical Director (physician licensed in CA)

• Interdisciplinary Group (IDG) members:

  • RN Case Manager

  • Social Worker

  • Chaplain

  • Medical Director

• Hospice Aides (CNAs)

• Volunteers (required to meet Medicare’s 5% rule)

Staff Competency Requirements

Medicare requires validated competencies for:

• Hospice aides

• RN assessments

• Medication management

• Infection control

• Emergency preparedness

You must also maintain:

• HR documentation

• Licenses and credentials

• Job descriptions

• Orientation and annual training records

Step 6: Build Your Operational Systems

Having strong operational systems is essential for passing surveys and ensuring compliance.

You must establish systems for:

• Referral processes

• Consent and admission documentation

• Clinical notes and care planning

• Medication management

• Coordination with attending physicians

• Hospice care levels (Routine, Respite, General Inpatient, Continuous Care)

• Claims billing

• Compliance and QAPI oversight

• Volunteer management

• Bereavement program

Most hospices use an EMR (Electronic Medical Record) system built for hospice care to ensure documentation meets Medicare audit standards.

Step 7: Submit Your CDPH Hospice License Application

Your application to CDPH must include:

• Application forms

• Ownership documents

• Organizational chart

• Policies and procedures

• Job descriptions

• Governing body structure

• Personnel requirements

• Service area definition

CDPH will review your application and schedule an initial licensing survey.

Step 8: Pass the CDPH Initial Licensing Survey

During the licensing survey, CDPH will examine every detail of your agency, including:

Surveyors will review:

• Compliance with Title 22

• Physical environment

• Policies and procedures

• Personnel files

• Orientation and competency records

• Emergency preparedness plan

• Infection prevention plan

• QAPI program structure

• Patient rights materials
  Learn More.

You must demonstrate readiness to begin operations even if you do not yet have patients.

Passing this survey grants you your California Hospice License.

Step 9: Apply for Medicare Certification

After receiving your state license, you may apply for:

• Medicare Enrollment (CMS 855A) Learn More.

• Provider-based agreement with CMS

• CHOW documentation (if applicable)

Survey Option

You may choose:

• CMS certification survey (free but long wait times)

• Accreditation (ACHC/CHAP/The Joint Commission) — faster but has fees

After your survey, CMS will review your compliance and issue your Medicare Provider Number (PTAN).

Step 10: Admit Patients and Complete the 3-Patient Requirement

To finalize your certification, Medicare require

• Admission of at least 3 hospice patients

• Full IDG involvement

• Documentation proving CoP compliance
  Learn More

Surveyors will review clinical notes, care plans, and the eligibility determination for each patient.

Step 11: Establish Your Medicare Billing System

Once certified, you must establish:

• Claims submission systems

• Payroll-based journal reporting (if applicable)

• Hospice billing codes and processes

• Revenue cycle management workflows

• Cap and reimbursement monitoring

• Aggregate Cap tracking
  Learn More.

California hospices must also ensure compliance with Medi-Cal (if enrolling).

Step 12: Maintain Ongoing Compliance (QAPI, IDG, CoPs)

Once operational, your hospice must maintain strict compliance with ongoing Medicare and state requirements. Learn More.

This includes:

• Weekly IDG meetings

• Required RN supervisory visits

• Continuous volunteer compliance (5% rule)

• Annual program evaluations

• QAPI documentation and measurable analytics

• Clinical documentation accuracy

• Emergency preparedness training. Learn More.

• Annual competency testing

• Quarterly Governing Body meetings

• Leadership oversight

A strong compliance and quality program protects your hospice from:

• ADR audits

• Survey deficiencies

• Payment denials

• Potential revocation

Conclusion: Start Your Hospice Agency with Expert Support

Launching a hospice agency in California requires careful planning, regulatory knowledge, and precise implementation of every operational and clinical system. Because hospice is one of the most heavily monitored healthcare sectors, most agencies choose to work with a consulting and management partner that specializes in CDPH licensing, Medicare certification, and hospice compliance requirements.

HealthBridge provides full-service consulting solutions — including licensing, operations setup, policies and procedures, Medicare compliance, QAPI programs, ADR support, and ongoing management services — to ensure your hospice agency opens successfully and remains compliant long-term.