HCS/430 Week 2: Licensure, Accreditation and the Survey Process, sample paper

From State License to Medicare Certification: Why a New Home Health Agency Chose Accreditation With Deemed Status and How It Prepared for Its First Survey

[Student Name]

University of Phoenix

HCS/430: Legal Issues in Health Care: Regulation and Compliance

Week 2 Assignment

[Instructor Name]

[Date]

The agency, founders and events are a composite written for a model paper.

Two composite registered nurses with long experience in hospital discharge planning decided to open a home health agency in a growing suburban county. They had seen patients go home from the hospital and wait a week for a nurse to visit. Their plan depended on Medicare, which pays for most home health care for older adults. Before their agency could bill Medicare for a single visit, it had to pass three gates: a state license, compliance with the federal conditions of participation and an initial survey confirming that compliance. A home health agency that cannot bill Medicare is, for most practical purposes, not yet in business. This paper explains each gate and how the founders passed them.

Gate 1: State Licensure

Licensure is the state's permission to operate, and it is mandatory (Pozgar, 2023). In the founders' state, the health department licenses home health agencies. The application required proof of ownership and management, a named administrator and director of nursing meeting qualification rules, written policies, proof of liability insurance and the professional licenses of clinical staff. The health department reviewed the application and conducted an inspection of the office and records before issuing a license.

The license allowed the agency to serve patients in the state, but not to bill Medicare.

Gate 2: The Conditions of Participation

To be paid by Medicare, a home health agency must meet the federal Conditions of Participation: Home Health Agencies, a set of rules covering patient rights, comprehensive assessment, care planning, quality assessment and performance improvement, infection control, skilled professional services, home health aide training and supervision, clinical records and emergency preparedness. Several have specific timing requirements. For example, an initial assessment must occur within 48 hours of referral or the patient's return home, unless the physician orders otherwise, and the comprehensive assessment must be completed within five days after the start of care.

The founders built their policies around these rules. They also met the federal requirement that a new agency show it has enough initial operating funds, or capitalization, to operate for its first three months, which CMS verifies before certification.

Gate 3: The Initial Survey

Compliance must be verified by an onsite survey. A new agency can request its initial survey from the state survey agency, which inspects on behalf of CMS, or from an accrediting organization that CMS has approved to grant deemed status for home health agencies. Under the federal rules for approving accrediting organizations, an organization whose standards meet or exceed the Medicare conditions may survey providers, and a provider it accredits is deemed to meet those conditions (Application and Re-application Procedures for National Accrediting Organizations, 2024).

Before either survey, the agency must be operating: it must have served a minimum number of patients, some of them still active, so that surveyors can review real care. Since the agency could not bill Medicare yet, the founders served the first patients under private pay and commercial insurance contracts.

Why the Founders Chose Accreditation

The founders chose an accrediting organization for three reasons. First, timing: state survey agencies place initial surveys of new home health agencies at a low priority, and in their state the wait was more than a year, while the accrediting organization could schedule a survey within about three months of application. Second, the accreditation provided a consultation guide and standards manual that helped them prepare. Third, accreditation was recognized by some commercial insurers and hospital referral partners as a mark of quality.

The choice had costs: application and survey fees, and accreditation standards that in some areas went beyond the Medicare conditions. The founders judged that the time saved was worth the cost, since every month without certification meant turning away Medicare patients.

Preparing for the Survey

Surveyors review policies, clinical records and staff files, visit patients' homes with clinicians and interview patients and staff. The founders prepared by testing their own work against the conditions.

They audited every patient record against the assessment deadlines and care plan requirements. They reviewed staff files for licenses, competency checks for home health aides and aide supervision, which must occur at least every 14 days when a patient also receives skilled services. They conducted mock home visits in which one founder observed the other's clinicians for infection control and patient teaching. They tested their emergency preparedness plan with a tabletop exercise simulating a winter storm. And they reviewed their quality program, which tracked hospitalizations, falls and patient complaints.

Hospitalization mattered for more than the survey. Li (2024), in a national study of more than 1.8 million Medicare home health patients, found that those treated by the highest-rated agency available in their area had lower risks of hospitalization and spent more days independently at home. The founders wanted a quality program that would move those outcomes, not only pass inspection.

The Survey and Its Results

The three-day survey found the agency substantially compliant with two findings: one aide supervision visit was completed on day 16 rather than by day 14, and one patient's emergency plan lacked an evacuation contact. The agency submitted a plan of correction, including a scheduling alert for supervision visits and a revised emergency plan form. The accrediting organization accepted the plan and recommended accreditation, and CMS then issued the agency's Medicare provider agreement.

Ongoing Obligations

Certification is not permanent. Accredited home health agencies are resurveyed at least every three years, surveys are unannounced and complaints can trigger a survey at any time. The state license must be renewed on its own schedule. CMS also conducts validation surveys of a sample of accredited providers to check that accrediting organizations are applying the standards properly.

Conclusion

A new home health agency must pass three gates: state licensure, the federal conditions of participation and a survey confirming compliance. Choosing accreditation with deemed status let the founders reach certification months sooner, at some cost. Careful preparation against the conditions, focused on the requirements surveyors examine most closely, produced a successful survey. The same systems that satisfy surveyors also support what matters most: safe care and patients who stay at home.

References

Application and Re-application Procedures for National Accrediting Organizations, 42 C.F.R. § 488.5 (2024).

Conditions of Participation: Home Health Agencies, 42 C.F.R. pt. 484 (2024).

Li, J. (2024). Home health agencies with high quality of patient care star ratings reduced short-term hospitalization rates and increased days independently at home. Medical Care, 62(1), 11-20. https://doi.org/10.1097/MLR.0000000000001930

Pozgar, G. D. (2023). Legal aspects of health care administration (14th ed.). Jones & Bartlett Learning.