Hospice Agency Startup Guide: Step-by-Step Requirements and Documentation Tips

Launching a hospice agency requires a deep understanding of federal and state regulations, Medicare Conditions of Participation (CoPs), clinical and operational standards, and extensive documentation preparation. Hospice is one of the most highly regulated sectors of healthcare, and new providers must demonstrate regulatory readiness long before their first patient admission. This comprehensive guide offers a clear, step-by-step roadmap to successfully start a hospice agency, avoid common compliance pitfalls, and ensure your organization is prepared for certification surveys and long-term operational success.

1. Understanding the Hospice Care Model

Before navigating the regulatory and business processes, it is essential to understand the hospice philosophy and care structure. Hospice is a Medicare benefit designed for patients diagnosed with a terminal illness and a life expectancy of six months or less if the disease runs its normal course. The focus of care shifts from curative treatment to comfort-centered interventions such as pain management, symptom control, emotional support, and psychosocial care.

Hospice services include:

• Skilled nursing

• Social work

• Certified home health aide services

• Spiritual counseling

• Physician oversight

• Volunteer support

• Bereavement services for at least 13 months after death

New agencies must demonstrate the ability to deliver these services consistently and in compliance with CoPs.

2. Business Formation and Organizational Structure

Your first actionable step is establishing the legal and structural foundation of your hospice agency:

Choose a Business Entity

Most agencies operate as an LLC, S-Corporation, or C-Corporation, depending on liability needs, tax preference, and investment structure.

Secure an Employer Identification Number (EIN)

This is required for staffing, payroll, banking, and tax purposes.

Register with the State

Each state requires licensure to operate hospice services. This includes application submissions, facility documentation, zoning verification (if required), and payment of fees.

Develop Governance Documents

Medicare CoPs require a governing body responsible for:

• Agency oversight

• Fiscal management

• Quality assurance

• Appointing the Administrator and Clinical Director (Director of Patient Care Services)

Your bylaws and organizational chart must reflect these roles.

3. Medicare Certification and State Licensure Requirements

State Licensing Requirements

Every state has specific hospice licensing standards, including:

• Policies and procedures

• Infection control programs

• Emergency preparedness plans

• Personnel requirements

• Clinical practice standards

• Survey readiness documentation

Most states require a successful state survey before forwarding your application to CMS for Medicare approval.

Medicare Enrollment (CMS Form 855A)

To become a Medicare-certified hospice provider, you must:

1. Submit CMS Form 855A

2. Register your NPI

3. Complete PECOS enrollment

4. Undergo fingerprint-based background checks (when required)

5. Confirm ownership interest disclosures

The Survey

Once your agency is operational and has admitted a minimum number of patients as required by your state and CMS, a state surveyor or accrediting body (ACHC, CHAP, TJC) will complete a full review of:

• Personnel files

• Clinical records

• Policies & procedures

• Emergency preparedness compliance

• IDG (Interdisciplinary Group) documentation

• Quality Assurance & Performance Improvement (QAPI) program

• Patient plan of care

• Visit notes and clinical documentation

• Medication management

• Patient rights implementation

Survey readiness is one of the most challenging tasks for a new hospice agency; deficiencies can significantly delay Medicare certification.

4. Hospice Staffing Requirements

The Medicare CoPs for hospice (42 CFR Part 418) outline clear staffing requirements:

Administrator

• Responsible for day-to-day operations

• Ensures regulatory compliance

• Must be full-time or meet state-specific conditions

Director of Patient Care Services (Clinical Director / DON)

• Oversees clinical operations

• Must be a registered nurse with appropriate experience

• Ensures patient care policies are implemented

Interdisciplinary Group (IDG) Requirements

At minimum, the hospice must have:

• RN Case Managers (must provide direct skilled nursing care)

• Social Worker

• Hospice Physician (Medical Director)

• Spiritual Counselor

• CHHAs

• Volunteers (required; agencies must track volunteer hours equal to at least 5% of total care hours)

Personnel files must include:

• Licensure verification

• Background checks

• Health screenings

• Orientation and competency validation

• Training logs

• Emergency preparedness training compliance

5. Required Hospice Policies and Procedures

Medicare CoPs mandate that hospice agencies have comprehensive policies covering clinical and operational functions. Essential sections include:

• Admission & eligibility determination

• Initial and comprehensive assessments

• Plan of care development

• Medication management and controlled substances procedures

• Interdisciplinary Group (IDG) processes

• Emergency preparedness program

• Infection prevention and control

• Bereavement program

• Patient rights and responsibilities

• Complaint and grievance procedures

• Documentation standards

• QAPI program structure

• Discharge and revocation procedures

Well-developed P&P manuals help guide agency staff and demonstrate preparedness during state surveys.

6. Preparing Clinical Documentation Systems

Documentation is the backbone of hospice compliance and Medicare billing. Failure to maintain accurate and complete clinical records is a leading cause of survey deficiencies and payment denials.

Choose an EMR System

Select a hospice-specific EMR that supports:

• IDG documentation

• CTI (Certification of Terminal Illness)

• Negative charting to demonstrate decline

• Visit note templates

• Medication profiles

• Bereavement logs

• QAPI data extraction

Develop Standardized Templates

Your agency must create templates consistent with CoPs, including:

• RN initial assessment

• MSW assessment

• Spiritual assessment

• Volunteer documentation

• Plan of Care (POC) updates

• IDG meeting minutes

• Skilled nursing visit notes focused on symptom management and decline indicators

7. Certification of Terminal Illness (CTI) and Physician Narrative Requirements

Medicare requires that the hospice physician and attending physician (if any) certify that:

• The patient’s life expectancy is six months or less

• Documentation supports terminal status

CTIs must include:

• Clinical findings

• Decline patterns

• Comorbidities

• Physician signature & date

• Detailed narrative written by the certifying physician

Narratives must be individualized, descriptive, and consistent with clinical documentation to avoid claim denials.

8. Emergency Preparedness Program Requirements

Under 42 CFR §418.113, hospice agencies must implement a full emergency preparedness program that includes:

• Risk Assessment & Hazards Vulnerability Analysis (HVA)

• Communication Plan (with local emergency systems, staff, and CMS guidelines)

• Policies & Procedures for emergency operations

• Training and Testing Requirements, including:

  • Annual full-scale exercise

  • Tabletop exercise

  • Staff training

New agencies must complete all emergency preparedness components before their state survey.

9. QAPI (Quality Assurance & Performance Improvement) Requirements

Medicare requires hospice agencies to implement a robust QAPI program designed to measure, evaluate, and improve patient care quality.

Your QAPI program must include:

• Written QAPI plan

• Performance indicators

• Data collection methods

• Root cause analysis techniques

• Quarterly QAPI committee meetings

• Action plans and follow-up evaluations

Surveyors often cite new agencies for having QAPI programs that are incomplete or not implemented effectively.

10. Preparing for State and Medicare Survey

Survey readiness is one of the most intensive phases of the hospice startup process. Agencies should perform weekly internal audits leading up to survey.

Key Areas Surveyors Will Review

• Patient charts

• IDG compliance

• Visit frequency compliance with the POC

• CTI and physician narrative accuracy

• Medication reconciliation documentation

• Emergency preparedness logs

• Personnel files and competencies

• Infection control procedures

• QAPI documentation

• Volunteer program structure

To increase survey success, many agencies hire an external consulting firm to conduct mock surveys and identify vulnerabilities early.

11. Financial Planning, Budgeting, and Billing Setup

New hospice providers must prepare financially for the startup phase, as Medicare payments begin only after certification.

Key Financial Components

• Billing and coding processes

• HIPAA-compliant software

• Medicare hospice benefit billing codes

• Cash-flow planning

• Insurance credentialing (if applicable)

• Budgeting for staffing, marketing, and operating expenses

Accurate and timely billing is essential to maintain stable cash flow during the early stages of operation.

12. Marketing, Community Outreach, and Referral Development

A strong referral pipeline is essential to hospice sustainability.

Strategies include:

• Building relationships with physicians, hospitals, home health agencies, and SNFs

• Branding and marketing materials

• Digital presence (SEO-optimized website, social media, Google business listing)

• Community workshops and outreach

Clear messaging on hospice philosophy and value is crucial to patient and family education.

Conclusion

Starting a hospice agency requires a complex set of clinical, operational, regulatory, and administrative steps. By understanding Medicare Conditions of Participation, implementing robust policies, ensuring documentation accuracy, and preparing for surveys, new providers can build a compliant and compassionate organization that delivers high-quality end-of-life care.

For expert guidance, startup assistance, policy development, mock surveys, and operational support, SummitRidge Consulting provides comprehensive healthcare consulting and management solutions to help hospice providers achieve compliance and organizational excellence.