The two payers at a glance
Two programs that fund completely different care
Medicare and Medicaid get spoken about as if they were interchangeable, but for a home care agency they are different businesses with different doors in.
- Medicare is the federal insurance program for people 65+ and certain people with disabilities. Its home health benefit pays for intermittent skilled care: nursing and therapy visits for a homebound patient recovering from an illness, surgery, or hospitalization, delivered in short episodes by a Medicare-certified home health agency. It does not pay for ongoing help with bathing, dressing, meals, or supervision.
- Medicaid (NJ FamilyCare in New Jersey) is the state-federal program for people with limited income, and it is the primary payer for long-term services and supports: the personal care assistance and home-based supportive care that lets seniors and people with disabilities live at home instead of a nursing facility. In NJ, that care flows through the MLTSS managed care program and its five MCOs.
In other words: Medicare buys recovery visits, Medicaid buys daily living. And daily living is where the volume, the recurring hours, and the long client relationships are.
Why Medicare home care is effectively stopped in New Jersey
This is the part that surprises out-of-state operators and new founders most: in New Jersey, you cannot simply start a Medicare home health agency. Several barriers stack on top of each other, and together they have frozen the Medicare side of the market for new entrants.
1. The Certificate of Need freeze
New Jersey is a Certificate of Need (CN) state for home health agencies. Under state law, a new Medicare-certified home health agency needs a CN from the Department of Health before it can be licensed, and the Department only accepts applications when it formally opens a "call" for them. The state postponed its scheduled call back in 2016 and has kept the window shut since, which means no meaningful path to a new Medicare home health license has existed in New Jersey for roughly a decade. The only practical way in is acquiring one of the existing licensed agencies, which trade at steep seven-figure premiums precisely because the supply is frozen.
2. The license you can get doesn't take Medicare
The license that is open to new agencies, the Health Care Service Firm (HCSF) registration through the Division of Consumer Affairs, allows you to provide personal care and even skilled services, but an HCSF cannot bill Medicare. So the accessible license and the Medicare benefit simply don't connect: the door you can walk through leads to Medicaid, VA, LTC insurance, and private pay, not Medicare.
3. Federal scrutiny reinforced the freeze
CMS itself imposed a moratorium on enrolling new home health agencies in New Jersey from 2016 until it was lifted in early 2019, citing fraud-risk concentration in the region. The federal moratorium is gone, but it never mattered much here: the state CN freeze was in place before it and remains in place after it.
4. Even inside, the economics are tightening
For the agencies that already hold Medicare certification, the benefit keeps getting squeezed. CMS's CY 2026 home health rule cut aggregate Medicare payments by an estimated 1.3% (about $220 million), the fourth consecutive year of permanent "behavioral adjustment" reductions under PDGM, with a further temporary reduction layered on top. Add rising Medicare Advantage penetration pulling volume out of traditional Medicare, and the closed club isn't the growth story it once was: episodes are short, margins are compressing, and referral volume is migrating.
The bottom line: for a new or growing NJ home care agency, Medicare isn't a strategy. It's a locked door with shrinking prizes behind it. Waiting for the state to reopen CN applications is not a plan.
Medicare vs Medicaid, side by side
| Medicare home health | Medicaid (NJ FamilyCare / MLTSS) | |
|---|---|---|
| Can a new NJ agency enroll? | Effectively no: Certificate of Need required, applications closed for years | Yes: HCSF license, accreditation, NJMMIS enrollment, then MCO contracts |
| License type | Medicare-certified home health agency (CN-gated) | Health Care Service Firm (no CN) |
| What it pays for | Intermittent skilled nursing and therapy for homebound patients | Long-term services: ongoing personal care, home-based supportive care, respite |
| Client duration | Short episodes tied to recovery | Recurring weekly hours, often for years |
| Payment trend | Aggregate cuts four years running; MA diverting volume | MLTSS expanding as NJ shifts long-term care into the home |
| Enrollment cap | Supply frozen at the license level | No MLTSS enrollment cap, no client waitlist |
| Who you bill | CMS via a MAC | One of five MCOs (or NJMMIS fee-for-service) |
Why Medicaid is the growth engine
Everything that blocks Medicare in New Jersey is inverted on the Medicaid side:
- The door is open. There is no Certificate of Need for the HCSF license. A new agency can register, get accredited, enroll with the state, and contract with the five NJ FamilyCare MCOs. It's the same path our credentialing team runs for agencies every week.
- Demand is structural, not cyclical. New Jersey's older-adult population is growing faster than any other age segment, and the state has spent a decade deliberately rebalancing long-term care out of nursing homes and into the community through MLTSS. Every year, more of the state's long-term care spend arrives as home care hours.
- No caps, no waitlists. MLTSS has no enrollment cap. Your census is limited by your caregiver workforce and your payer contracts, not by program capacity.
- Five contracts, five referral streams. Members choose (and switch) among five MCOs, so each additional plan contract makes your agency visible to a new slice of the market. Agencies contracted with all five compound their referral surface; agencies with one or two stay invisible to most eligible clients.
- Long client relationships. MLTSS clients receive authorized weekly hours on an ongoing basis. One admitted client can represent years of recurring revenue: a fundamentally better growth unit than a 30-day recovery episode.
- Adjacent payers stack on top. The same HCSF license opens VA Community Care, long-term care insurance, and private pay. That's a diversified book without ever touching the Medicare wall.
None of this makes Medicaid effortless: enrollment is slow, every MCO has its own credentialing process, and EVV compliance is unforgiving. But those are operational problems with known solutions, not regulatory walls. The difference matters: hard-but-open beats closed.
What this means for your agency
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Stop waiting on Medicare
Don't build a plan around a CN call that hasn't come in a decade, and don't overpay for a Medicare license unless acquisition is genuinely your strategy. The opportunity cost of waiting is measured in Medicaid referrals you're not taking.
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Run the Medicaid prerequisites in parallel
HCSF registration, accreditation, and NJMMIS enrollment stack on top of each other. Sequence them right and you cut months off the timeline.
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Contract with all five MCOs, not one
Each plan has its own process and quirks. Our payer-by-payer guides cover Horizon, Aetna, UHC, Wellpoint, and Fidelis individually. The agencies that grow fastest hold all five contracts and let no referral bounce.
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Add VA Community Care as your second engine
It's federal, it's separate from Medicaid, and it uses the license you already have. The VA guide covers how the channel opens.
Frequently asked questions
Can I open a new Medicare-certified home health agency in New Jersey?
Effectively no. New Jersey requires a Certificate of Need for Medicare-certified home health agencies, and the Department of Health has kept the application window closed for years. In practice the only way in is buying an existing licensed agency: an acquisition, not a startup path.
Can a Health Care Service Firm bill Medicare?
No. The HCSF license, the one most NJ home care agencies operate under, does not qualify an agency to bill Medicare, even for skilled services. It does qualify you for NJ FamilyCare MLTSS, VA Community Care, long-term care insurance, and private pay.
Does Medicare pay for long-term personal care at home?
No. Medicare's home health benefit covers intermittent skilled care for homebound patients in short episodes. Ongoing help with bathing, dressing, meals, and daily living (the bulk of home care demand) is funded in New Jersey primarily by Medicaid through MLTSS.
Is there a cap on how many Medicaid clients my agency can serve?
No. MLTSS has no enrollment cap and no waitlist. Your capacity is limited by your caregiver workforce and how many of the five NJ FamilyCare plans you're contracted with, which is why holding all five contracts matters.
Build on the payer that's actually open
The Medicaid path (HCSF registration, accreditation, state enrollment, and contracts with all five MCOs) is exactly what our credentialing team runs for agencies every week. Fill out the short credentialing form and we handle the rest.
This article is provided for general information and reflects our understanding of the New Jersey market and federal policy as of July 2026. Regulations and payment rules change, so always confirm current requirements with the NJ Department of Health and CMS directly. See also: the New Jersey Medicaid home care agency guide and the payer-by-payer enrollment guides.