Accounting for home health, hospice & home care agencies

Most CPAs will take on accounting for home health agencies. What they won't tell you upfront is that they've never prepared a CMS-1728-20 cost report, don't know what a hospice aggregate cap calculation looks like, and have never reconciled CILA billing with an Illinois DHS reimbursement schedule.

We have. Soriaga & Associates has served home health agencies, hospice providers, home care organizations, and wound care practices in Illinois since 1985. Carl Soriaga has 48 years of direct experience with Medicare-reimbursed healthcare providers — the compliance requirements, the reimbursement structures, and the financial reporting that general accountants routinely miss.

If you're an Illinois home health or hospice operator, you've probably already sensed that your books don't quite fit the way your reimbursements work. There's a reason for that. Here's what we do about it.

Why home health & hospice agencies need a specialized CPA

Healthcare accounting isn't accounting with a few extra steps. The reimbursement model is different, the compliance obligations are different, and the audit exposure is different.

Medicare and Medicaid reimbursements are tied to cost reports filed annually. Those reports are not tax returns. They're a detailed accounting of allowable costs, overhead allocations, and service volumes that CMS uses to verify payment accuracy. File an incorrect cost report and you're looking at settlements, repayment demands, and in serious cases, exclusion from Medicare participation.

Beyond cost reports, home health and hospice agencies face operational accounting challenges that don't come up in typical small business engagements: tracking visit-based revenue against budgeted costs, managing payroll for a field-based workforce, and reconciling insurance reimbursements against expected contract rates.

What a general accountant gets wrong

The most common problem we see when a home health agency switches to us from a general CPA: their books don't align with their cost report. The previous accountant did solid work by general standards — clean financials, timely returns — but nobody reconciled the financial statements to the cost report structure. That discrepancy either gets corrected at a cost or gets filed and creates a Medicare audit flag.

The second most common problem is no one has been tracking the hospice aggregate cap. Hospice agencies operating near the cap need to know their position quarterly, not after the fiscal year closes.

Our accounting services for home health & hospice

We offer a complete accounting engagement for home health agencies, hospice organizations, home care providers, and wound care practices. You don't need to piece together a general CPA for taxes and a separate consultant for cost reports. We handle both.

Medicare and Medicaid cost reports

We prepare the CMS-1728-20 (home health) and CMS-1984 (hospice) cost reports annually. This includes data gathering, allocation calculations, reconciliation to your financial statements, and submission support. If prior years were prepared elsewhere, we can review them before the statute of limitations closes.

For Medicaid, we work with Illinois-specific reimbursement schedules and understand the documentation requirements for program participation.

Bookkeeping and financial statements

Monthly bookkeeping for home health agencies requires a chart of accounts structured to mirror the cost report categories. We set this up correctly from the start, which means your financial statements are always reconcilable to what Medicare expects to see.

We prepare monthly financials with the detail healthcare operators need: revenue by payer, cost per visit, and overhead as a percentage of total costs.

Payroll services

Field-based healthcare workforces are payroll-intensive — multiple pay types, mileage reimbursements, different rates by service level. We process payroll for home health and hospice agencies across Illinois and handle all quarterly and annual filings.

Tax preparation

Business tax returns for Medicare-participating entities carry specific considerations that general preparers often miss. We prepare federal and Illinois state returns for S-corps, LLCs, and partnerships in the home health and hospice space.

Consulting at $250/hour

Some agencies need a periodic engagement rather than a full-service relationship: a cost report review, help with a new service line, or support preparing for a Medicare audit. We offer consulting at $250 per hour with no long-term contract required. First consultation is free.

Industries we serve

Home health agencies

Licensed home health agencies billing Medicare Part A for skilled nursing, physical therapy, occupational therapy, and home health aide services. We handle the full accounting and annual cost report cycle.

Hospice agencies

Hospice providers face a reporting structure unlike any other Medicare provider. The aggregate cap calculation alone requires quarterly tracking and an annual self-determined cap report. We've prepared these for Illinois hospice agencies for decades, and we know what an agency close to the cap actually needs to do about it.

Home care providers

Non-medical home care agencies billing Medicaid or private pay require different accounting structures than Medicare-certified agencies, but many of the same payroll and operational challenges apply. We serve both licensed and unlicensed home care providers.

Wound care practices

Wound care is a completely underserved segment in specialized healthcare accounting. Most wound care practices are run by clinicians who aren't certain whether their billing is being reconciled properly against their contracts. We bring the same Medicare reimbursement expertise to wound care that we apply to home health agencies — and most wound care providers we've spoken with are surprised to learn how much was falling through the cracks.

Illinois state programs we support

Illinois operates several state-funded programs that home care providers participate in: CILA (Community Integrated Living Arrangements), IDOA (Illinois Department on Aging), and DHS (Department of Human Services) home services programs. Each has its own billing structure, reimbursement schedule, and reporting requirements.

We prepare annual cost reports and financial statements for Illinois providers participating in CILA, IDOA, and DHS programs — the same compliance discipline we bring to Medicare cost reports, applied to state program requirements.

Why choose Soriaga & Associates

We're a small firm. Carl Soriaga works with clients directly — you won't be handed off to a junior staff member after the first meeting. The firm has been operating from Lisle, Illinois since 1985, and healthcare accounting has been a core part of the practice for most of that time.

The firms that compete with us on this work are typically larger practices where healthcare is one service line among many, or national consulting firms where Illinois-specific program knowledge is an afterthought. We focus on Illinois providers. We know the Illinois Medicaid schedules. We've watched the regulatory cycles run around more than once, and that context matters when something changes in how CMS calculates reimbursements.

Frequently asked questions

What is a Medicare cost report for home health agencies?

A Medicare cost report (CMS-1728-20) is an annual financial filing that home health agencies submit to their Medicare Administrative Contractor. It details allowable costs, patient visit data, and overhead allocations. CMS uses the report to verify that Medicare reimbursements are accurate and to calculate any settlement owed to or from the agency. Incorrect or missing cost reports can trigger audits and repayment demands.

How is hospice accounting different from regular accounting?

Hospice agencies face a unique Medicare payment structure that includes an aggregate cap — a ceiling on total Medicare payments per beneficiary served in a cap period. Agencies that exceed the cap owe the difference back to Medicare. Tracking that exposure requires ongoing calculation throughout the fiscal year, not just at year-end. Hospice accounting also involves per-diem billing at four distinct care levels, which requires revenue tracking at a granularity most general accounting systems are not built to handle.

Do wound care practices need a specialized CPA?

Most wound care practices bill through physician or clinic billing rather than Medicare home health billing, but the reimbursement reconciliation and cost management challenges are similar. A CPA with healthcare reimbursement experience will identify billing inefficiencies and cost allocation issues that a general practitioner will not recognize. For wound care practices that also coordinate home visits, the overlap with home health billing adds another layer of complexity.

What does the hospice aggregate cap mean for our finances?

The hospice aggregate cap limits total Medicare payments per beneficiary your agency has served in a given cap period. If total Medicare payments exceed the cap calculation, your agency must repay the difference. The cap is self-determined — your agency calculates and reports your own position annually. Agencies that do not track this quarterly often face large unexpected repayments at year-end. We prepare the self-determined cap report and provide quarterly estimates so there are no surprises.

How much does healthcare accounting cost for home health agencies?

Our fee depends on the scope of engagement. Cost report preparation is priced per report at $1,6000. Full accounting packages that include bookkeeping, payroll, tax preparation, and cost reports are quoted based on agency size and visit volume. Consulting is available at $250 per hour with no retainer required. We offer a free initial consultation to assess your situation before quoting any fee.