Before You Start a Home Health Agency: Understanding the Certificate of Need Process
The Pre-Licensing Requirement Many Aspiring Home Health Agency Owners Don't Know About
When aspiring entrepreneurs tell me they want to start a Home Health Agency, one of the first things they usually want to know is:
“What do I need to do to get licensed?”
But depending on the state, licensing may not actually be your first major hurdle.
Before some prospective Home Health Agency owners can move forward with the traditional licensing process, they may first have to answer a much bigger question:
Will the state allow another Home Health Agency to enter this market?
Welcome to the world of the Certificate of Need, commonly referred to as a CON.
And if you're considering opening a skilled Home Health Agency, this is a regulatory process you need to understand BEFORE you spend thousands of dollars building a business around the assumption that obtaining a license is simply a matter of completing an application.
What Is a Certificate of Need?
A Certificate of Need is a state regulatory approval process that requires certain health care providers to obtain approval before establishing, expanding, acquiring, or making certain significant changes to health care facilities or services.
CON laws are not unique to Home Health Agencies.
Depending on the state, CON programs can apply to hospitals, nursing facilities, hospices, home health agencies, ambulatory surgery centers, diagnostic services and other health care facilities or services.
The basic concept is this:
Before allowing another provider or service into the market, the state may require evidence that the additional health care resource is actually needed.
Today, CON laws vary dramatically from one state to another. The National Conference of State Legislatures reports that 35 states plus Washington, D.C., operate some form of CON program, but that does NOT mean all 35 states require CON approval for Home Health Agencies.
That distinction is extremely important.
A state can have a CON program for hospitals, nursing facilities or other health care services without requiring a CON to establish a Home Health Agency.
Which States Currently Apply CON Requirements to Home Health?
Alabama
Arkansas
Connecticut
District of Columbia
Georgia
Hawaii
Kentucky
Maryland
Mississippi
New Jersey
New York
North Carolina
Rhode Island
South Carolina
Tennessee
Washington
West Virginia
The National Alliance for Care at Home's May 2026 CON review confirms HHA CON requirements in Alabama, Arkansas, Connecticut, Washington, D.C., Georgia, Hawaii, Kentucky, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Tennessee, Washington and West Virginia. Maryland separately maintains a specific Home Health Agency CON review process through the Maryland Health Care Commission.
IMPORTANT: This list should never replace researching your individual state.
CON laws change. States repeal requirements, modify them, create exemptions and change which services are subject to review.
And even when a state requires CON review for Home Health Agencies, it does not necessarily mean that every applicant or every transaction follows exactly the same process.
CON and Home Health Licensure Are NOT the Same Thing
This is probably the biggest misconception I want aspiring Home Health Agency owners to understand.
Getting your CON is not necessarily getting your Home Health Agency license.
The CON process may occur BEFORE the licensing process.
Think of it this way:
Certificate of Need
“Has the state determined that this proposed health care project or service can move forward?”
Then:
State Licensure
“Has this agency met the regulatory requirements necessary to operate?”
Then, when applicable:
Medicare Certification
“Has this agency satisfied the applicable federal requirements to participate in the Medicare program?”
Those are different regulatory gates.
Depending upon your state and business model, your journey could look something like:
Business Development
↓
Market Research
↓
Certificate of Need / Need Determination
↓
State Home Health Agency Licensing
↓
Survey / Inspection
↓
Accreditation or State Survey, when applicable
↓
Medicare Certification & Enrollment
↓
Payor Credentialing
That is very different from:
“Form an LLC, write some policies, submit an application and open a Home Health Agency.”
A CON Is NOT Guaranteed
This is where things become particularly important.
A Certificate of Need is not simply another form that you complete, pay for and automatically receive.
Your application can be approved.
It can be approved with conditions.
It can be denied.
And in some states or circumstances, you may be competing with other organizations for a limited identified need.
The state may evaluate issues including:
Population and demographics
Geographic service area
Existing Home Health Agencies
Utilization of current providers
Whether patients currently have adequate provider choice
Underserved communities
Access to care
Health disparities
Financial feasibility
Staffing availability
Quality
Projected patient volume
Existing capacity
Cost effectiveness
Your proposed scope of services
Your experience
Your ability to operate the proposed agency
The effect another provider could have on the existing health care delivery system
This is why I tell aspiring Home Health Agency owners:
Market research isn't just something you put into a business plan.
In a CON state, market research can become part of the argument for why your agency should exist.
What Happens During the Certificate of Need Process?
1. Determine Whether Your Project Requires CON Approval
Start here.
Don't assume that because your state operates a CON program, your proposed Home Health Agency automatically requires one.
Determine whether CON applies to:
A brand-new Home Health Agency
Expansion into another county
Addition of a service
Acquisition of another agency
Change of ownership
Relocation
Addition of a branch
Other applicable transactions
Also research exemptions.
Some states have exemptions or alternative review processes for particular projects.
2. Determine Whether the State Has Identified a Need
This can become one of the most important parts of the entire process.
Some states use formal methodologies to determine whether additional Home Health capacity is needed.
Maryland gives us an excellent current example.
For its recent Home Health Agency CON review, the Maryland Health Care Commission identified qualifying jurisdictions based on factors including highly concentrated HHA markets and insufficient choice among quality-performing Home Health Agencies.
That means an entrepreneur shouldn't simply say:
“Prince George's County has a large senior population, so I want to open there.”
The state's analysis can be much more sophisticated than that.
It may examine provider concentration, utilization, consumer choice, quality and other measures.
3. Determine Whether YOU Are Eligible to Apply
Here's something that may surprise people.
Even if the state identifies a need for another Home Health Agency, that does not necessarily mean any entrepreneur can apply for the CON.
Again, Maryland provides a strong real-world example.
For its recent HHA review, eligible applicants included certain existing Medicare-certified HHAs, qualifying hospitals and nursing homes, and certain Maryland Residential Service Agencies providing skilled nursing services. The Commission also established performance qualifications using CMS Care Compare measures for applicable applicants.
That is a major distinction.
There can be:
Need in the market
AND
Eligibility requirements for the applicant.
You may need both.
4. Letter of Intent or Preliminary Filing
Some states require applicants to submit a Letter of Intent before filing the full CON application.
There may also be specific application cycles.
That means you may not be able to decide on Monday that you want to open an HHA and simply submit your CON application on Friday.
There can be designated filing periods.
For example, Maryland's 2025–2026 Home Health CON cycle had scheduled periods for Letters of Intent, and the Commission reported in March 2026 that its HHA CON review cycle was nearing its final Letter of Intent deadline.
Missing a filing deadline could therefore materially delay your project.
5. Preparing the CON Application
This is where applicants may discover how different CON is from an ordinary business application.
Depending on the state, your CON application may require substantial information about your proposed organization.
That can include:
Ownership & Organization
Who owns the company? What is the organizational structure? What health care experience does the organization have?
Proposed Services
What exactly will the Home Health Agency provide?
Geographic Service Area
Which counties or communities will you serve?
Population
Who lives within the proposed market?
Demonstration of Need
Why does this community need another Home Health Agency?
Existing Providers
Who is already serving the market?
Utilization
Is existing Home Health capacity being adequately utilized?
Access
Are patients having difficulty accessing services?
Health Equity
Are there underserved or vulnerable populations whose needs are not being adequately addressed?
Financial Feasibility
Can the proposed agency financially sustain itself?
Staffing
Where will the agency obtain qualified nurses, therapists, aides and other professionals?
Quality
How will the organization demonstrate and maintain quality?
Projected Utilization
How many patients do you realistically anticipate serving?
Maryland's current applications demonstrate just how detailed this can become. Applicants may be required to define service-area populations, explain assumptions, identify data sources, develop utilization projections and complete statistical projection tables.
That is far beyond “fill in the blanks.”
6. Completeness Review
Once an application is submitted, the state may determine whether it is complete enough to proceed through formal review.
The agency may request additional information or clarification.
Your application being received does not mean your project has been approved.
And it certainly does not mean your agency is licensed.
7. Public Comment, Opposition and Competitive Review
Another part of CON that surprises aspiring agency owners is that this can be a public regulatory process.
Depending upon the state's procedures, interested parties may have opportunities to review or comment on proposed projects.
Existing providers may participate.
There can also be situations in which multiple applicants are competing to satisfy the same identified need.
This does not mean an existing provider automatically gets to block new competition.
It means the state is making a health-planning determination, and the impact on the existing delivery system may be one factor considered.
8. The State Makes Its Decision
After completing the applicable review process, the state may:
Approve the CON
Approve the CON with conditions
or
Deny the CON
And yes—Home Health CON applications really do get denied.
Three Real Home Health CON Cases
These are not hypothetical scenarios.
They are real organizations that went through actual regulatory review.
CASE STUDY #1: CareNet Health Systems / Lorien Health Systems — APPROVED
In Maryland, CareNet Health Systems and Services, doing business as Lorien Health Systems–Mt. Airy, pursued approval to establish a Home Health Agency serving Carroll County.
The Maryland Health Care Commission approved the project with an approved project cost of approximately $230,000.
The case demonstrates that a new HHA can successfully navigate CON review—but only after satisfying the applicable regulatory criteria.
CASE STUDY #2: Thrive Healthcare Services — APPROVED
In Washington, D.C., Thrive Healthcare Services, LLC sought approval to establish pediatric and adult home healthcare services.
The District's official CON records show the project was approved January 24, 2024.
I particularly like this example because it illustrates something I teach entrepreneurs constantly:
Know who you serve.
This wasn't simply presented as:
“We want to start a Home Health Agency.”
The proposed project identified pediatric and adult home health services.
Your service model matters.
Your market matters.
Your population matters.
CASE STUDY #3: Kahak Health Care Services — DENIED
Now let's look at the other side.
Kahak, Inc., doing business as Kahak Health Care Services, applied in Washington, D.C., to establish a Home Health Agency.
The District's official CON records show the application was denied March 15, 2024.
I intentionally include this example because entrepreneurs need realistic information.
Submitting a CON application does not guarantee approval.
And unless we are reviewing the state's underlying findings explaining a denial, we should not speculate about why a particular applicant was unsuccessful.
The lesson is simpler:
There was a real applicant.
There was a real application.
And the answer was no.
That's why entrepreneurs need to understand this process before making significant financial commitments.
Then Comes Licensure
Suppose you receive CON approval.
Congratulations.
But you may still have work to do.
Depending upon the state, you may now move into:
State licensing
Policies and procedures
Administrator and clinical leadership requirements
Staffing requirements
Office requirements
Background checks
Insurance
Emergency preparedness
Clinical documentation systems
Survey preparation
Accreditation
State inspection
Medicare certification
Medicare provider enrollment
Medicaid enrollment
Managed Care credentialing
CON approval is a milestone. It is not necessarily the finish line.
And Now There's Another Issue Home Health Entrepreneurs Need to Watch: Medicare's 2026 Moratorium
This conversation has become even more important in 2026.
On May 13, 2026, CMS implemented a nationwide temporary moratorium on new Medicare enrollment for Home Health Agencies and hospices.
The initial moratorium is six months, and CMS states that it may be extended in additional six-month increments. CMS says the action is aimed at combating fraud, waste and abuse. Initial HHA enrollment applications covered by the moratorium are denied while it remains in effect, subject to applicable exceptions and timing rules.
That does NOT mean:
“You can no longer start a Home Health Agency.”
State licensure and Medicare enrollment are separate issues.
But if your business model depends on becoming a Medicare-certified HHA, this development matters enormously.
What Happens When the Medicare Moratorium Ends?
This is where I want to clearly separate what we know from what I am watching.
What We Know
CMS has already signaled increased scrutiny around provider enrollment and program integrity.
Its proposed CY 2027 Home Health rule includes additional Medicare provider-enrollment provisions intended to reduce improper payments and strengthen CMS's ability to address problematic providers.
CMS has also issued updated HHA guidance in 2026, including guidance concerning acceptance-to-service requirements.
So increased federal scrutiny is not theoretical.
It is already happening.
What We Do NOT Know
CMS has NOT announced that when the moratorium ends it will require states to establish Certificate of Need programs for Home Health Agencies.
And I would not tell an entrepreneur that this is coming unless and until CMS or a state actually proposes such a requirement.
CON programs are primarily creatures of state law today.
The federal nationwide health-planning mandate that helped drive CON adoption decades ago was repealed effective in 1987, leaving states to decide whether to maintain, modify or repeal their CON programs.
What I Am Watching
Here's my question:
As CMS increases scrutiny of new Home Health Agency enrollment, will some states independently reconsider how easily new HHAs are allowed to enter their markets?
Could we see states:
Strengthen licensing requirements?
Increase financial requirements?
Require more operational experience?
Tighten Administrator or clinical leadership qualifications?
Increase survey scrutiny?
Add additional pre-licensing reviews?
Modify existing CON programs?
Reconsider need-determination requirements?
Increase oversight of changes of ownership?
Develop other market-entry controls?
Possibly.
But that's a regulatory trend to watch, not a current fact or CMS mandate.
And there's another possibility: some states could move in the opposite direction and reduce CON restrictions in an effort to encourage competition and improve access.
CON policy remains politically and economically debated, and states continue to modify these laws in different directions. NCSL notes that recent state legislation has included both narrowing CON oversight and other targeted changes.
That's why Home Health entrepreneurs should watch both federal AND state regulation.
The Bigger Lesson for Aspiring Home Health Agency Owners
Starting a Home Health Agency is very different from simply registering a business.
You are entering one of the most highly regulated industries in America.
And the deeper you move into skilled services, Medicare, Medicaid and government-funded health care, the more important regulatory literacy becomes.
Before you invest heavily in your agency, understand:
What license do I need?
Does my state require a Certificate of Need?
Does my specific project trigger CON review?
Is there currently an identified need?
Am I even eligible to apply?
Is there an application window?
What will I have to demonstrate?
What happens if my CON is denied?
What comes after CON approval?
Can I currently enroll in Medicare?
What regulatory changes are pending?
Those questions can save you months—and potentially thousands of dollars.
Home Care Is NOT the Same as Home Health
One final distinction is critical.
This article is specifically discussing Home Health Agencies and the applicable CON process.
Do not automatically apply this information to a non-medical Home Care agency.
A state may treat:
Personal Care
Companion Care
Homemaker Services
Private Duty Nursing
Skilled Home Health
Medicare-Certified Home Health
very differently.
Even within a CON state, the requirement may apply to one service category and not another.
Your first job as an entrepreneur is to determine what business you are actually trying to start.
Then research the regulations that apply to THAT business.
My Final Advice: Research Before You Spend
There is a tendency in the start-up space to make starting a health care agency sound simple:
“Get your LLC.”
“Get an EIN.”
“Buy some policies.”
“Apply for your license.”
But regulated health care doesn't always work that way.
Sometimes the most important work happens before the licensing application ever gets submitted.
Certificate of Need is a perfect example.
The state may essentially be asking you to prove:
Why this agency?
Why this service?
Why this location?
Why now?
And sometimes the answer will be yes.
Sometimes it will be yes—with conditions.
And sometimes the answer will be no.
That's why understanding the business, researching the market, understanding your state's regulations and developing a realistic financial and operational plan should happen BEFORE you rush to submit an application.
Licensing is not the business. Licensing gives you permission to operate the business.
And in a Certificate of Need state, there may be another regulatory door you have to walk through before you ever reach licensing.
About the Author
Laseandia “Sean” Pounds | Savvy Business Chick™
Home Care Business Coach, Consultant & Mentor
Helping aspiring and existing Home Care and Home Health Care entrepreneurs understand licensing, compliance, operations, marketing and what it actually takes to build the business behind the license.
Regulatory Disclaimer: Certificate of Need laws, licensing requirements, application cycles, exemptions and Medicare enrollment policies can change. This article is educational and does not constitute legal advice. Always verify current requirements directly with the applicable state regulatory agency and CMS before making licensing, investment or business decisions.
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